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PIERMONT HTS., INC. v. DORFMAN

April 19, 1993

PIERMONT HEIGHTS, INC., Plaintiff,
v.
BURTON DORFMAN, DORFMAN McCORMACK LYNCH & PHILLIPS, SONIA AGUIRRE, MICHAEL RIZZO, and CARMINE RIZZO, a/k/a CARMELO RIZZO, Defendants.



The opinion of the court was delivered by: THOMAS P. GRIESA

 This is an action by a Virginia corporation against three individuals who reside in New York and a law firm which is located in New York. Various common law causes of action are asserted which need not be described, and jurisdiction is asserted based on diversity of citizenship.

 Certain defendants have moved to dismiss for lack of subject matter jurisdiction, asserting that the diversity was fabricated in violation of 28 U.S.C. § OB59. The contention is that plaintiff Piermont Heights, Inc., which is in fact a Virginia corporation, was incorporated in that state solely to create diversity, and that this was a device to avoid having the action brought by that company's predecessor corporation, a New York company of the same name.

 The motion is denied.

 FACTS

 In 1989 Piermont Heights, Inc., a New York corporation (hereafter "the New York corporation") sold certain real estate to one of the defendants. The purchaser needed to finance part of the price. This led to certain mortgages and promissory notes. After default on part of the indebtedness, a controversy arose about the genuineness of the signature of a co-signer of certain instruments, and other matters, and litigation followed. In July 1991 the New York corporation filed suit in Supreme Court, Rockland County, against the alleged co-signer, defendant Carmelo Rizzo. The New York corporation voluntarily discontinued this action on January 30, 1992. The attorney for the New York corporation filed an affirmation at that time stating that the New York corporation planned to retain new counsel and to institute a larger suit in another forum against additional parties.

 On January 23, 1992, one week before the discontinuance of the state court action, Rhodes prepared and executed a Certificate of Merger in accordance with New York law, and Articles of Merger in accordance with Virginia law. On January 29, 1992 the Certificate of Merger was filed with and accepted by the Virginia State Corporation Commission. However, because of the omission of certain tax forms from the initial filing in New York, the Certificate of Merger was not accepted for filing in New York until October 16, 1992. On that latter date, the dissolution of Piermont, New York and its merger with Piermont, Virginia became final.

 The present federal court action was commenced on March 13, 1992, and as already described it is brought by the Virginia corporation. If the action had been brought by the New York corporation, there would have been no diversity of citizenship and no federal jurisdiction.

 The motion to dismiss for lack of jurisdiction was filed on August 25, 1992.

 The Virginia corporation commenced an action in Supreme Court, Rockland County in December 1992 against the same defendants, and alleging the same causes of action, as in the federal suit.

 DISCUSSION

 Defendants' first argue that subject matter jurisdiction is lacking because, at the time this action was instituted, the New York corporation still existed and was the owner of the debts and other claims on which the action is brought. It may be that, at the time this action was instituted in March 1992, the Virginia corporation had not fully acquired the debt and the other claims being sued upon. However, that matter has been cured, and we now have a suit by the Virginia corporation which is presently the owner of the causes of action.

 The real problem is whether jurisdiction is defeated because of a violation of 28 U.S.C. ...


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