The opinion of the court was delivered by: KEVIN THOMAS DUFFY
KEVIN THOMAS DUFFY, D.J.:
Defendants move pursuant to Fed. R. Civ. P. 12(b)(2) for an order dismissing the Complaint against Defendants R.M.R. & Associates ("RMR") and Select Medical Delivery Systems ("SMDS") on the grounds that the court lacks personal jurisdiction. Defendants also move to dismiss the entire Complaint pursuant Fed. R. Civ. P. 12(b)(3), claiming that this court is an improper venue for this matter. In the alternative, Defendants move to dismiss or transfer the Complaint on the grounds of forum non conveniens pursuant to 28 U.S.C. §§ 1404(a) (1976 & Supp. 1993). For the following reasons, Defendants' Motion to Dismiss is granted.
Plaintiff, Sanford Friedman ("Friedman"), is an Indiana resident.
All the Defendants are Illinois residents, except for Revenue Management of New York, Inc. ("RMNY"), which is a New York resident. Friedman owns 50% of the shares of RMNY. The other 50% is owned by RMR. Defendant, Ronald McLaughlin ("McLaughlin"), is a shareholder and director of both RMR and SMDS, and, along with Friedman, is also a director of RMNY. Compl. PP 8-14.
RMNY, a New York corporation, provides debt collection services to hospitals and other medical centers in New York City. McLaughlin Aff. P 4. While RMNY has a New York City office, it has no employees in New York, and it principally conducts its affairs from a Chicago office. Id.
In his Complaint, Friedman alleges, inter alia, that McLaughlin and RMR mismanaged RMNY, committed acts of fraud, misrepresentation, and waste, and have breached the fiduciary duty owed to him. Compl. PP 26-28. The Complaint raises eight causes of action. Counts 1 through 3 (the "Dissolution Counts") request a judgment and decree dissolving RMNY pursuant to New York law. See New York Bus. Corp. Law §§ 1104 & 1104-a (McKinney 1986). Compl. PP 29-37. Count 4 requests a judgment and decree setting aside certain transactions, providing an account of these transactions, and enjoining further waste. See New York Bus. Corp. Law § 720. Compl. PP 38-40. Count 5 requests an order appointing a public accountant to audit the records of the three corporate defendants. See New York Bus. Corp. Law § 1113. Compl. PP 40-43. Counts 6 and 7 allege fraud and intentional tort respectively on the part of McLaughlin. Compl. PP 44-51. Finally, Count 8 alleges that all the Defendants engaged in a pattern of activity in violation of federal racketeering laws. Compl. P 52-56.
1. Subject Matter Jurisdiction
While Defendants' Motion to Dismiss is based on lack of personal jurisdiction and improper venue, See Fed. R. Civ. P. 12(b)(2) & (3), I find, however, that this court lacks subject matter jurisdiction over the Dissolution Counts. Rule 12(h)(3) authorizes me to dismiss an action "whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter." Fed. R. Civ. P. 12(h)(3). See Bernstein v. Universal Pictures, Inc., 517 F.2d 976, 978 (2d Cir. 1975) ("There can be little doubt that a district court should be alert to terminate an action under Rule 12(h)(3) when lack of subject matter jurisdiction becomes apparent."). Moreover, the parties have suggested that subject matter jurisdiction is lacking with respect to the Dissolution Counts. See Plaintiff's Mem. of Law, at 18-19.
Several cases at the district court level of this circuit have held that federal courts do not have subject matter jurisdiction over actions to dissolve New York corporations under New York law. See, e.g., Harrison v. CBCH Realty, Inc., 1992 WL 105839 at *4 (N.D.N.Y. Aug. 13, 1992) (Scullin, J.); Cuddle Wit, Inc. v. Chan, 1990 U.S. Dist. LEXIS 10202 at *3-4, 1990 WL 115620 at *2 (S.D.N.Y. Aug. 7, 1990) (Keenan, J.); Codos v. National Diagnostic Corp., 711 F. Supp. 75, 78 (E.D.N.Y. 1989) (McLaughlin, J.). Although the Court of Appeals for the Second Circuit has not addressed this issue, I agree with the sound reasoning of my brothers.
A corporation is a creature of state law. Its very existence depends on state law. Any powers a corporation may possess are conferred upon it by state law. See, e.g., N.Y. Bus. Corp. Law § 202 (granting New York corporations specific powers). Indeed, the "period of its existence is determined solely by state law." Codos, 711 F. Supp. at 78 (quoting Conklin v. United States Shipbuilding Co., 140 F. 219, 222 (C.C.D.N.J. 1905)). To grant an order to dissolve a New York corporation, I would be using a power not granted to me as well as usurping a power that rightfully belongs to the State of New York.
Here, the Dissolution Counts request an order to dissolve a New York corporation. This court has no jurisdiction to do so. Accordingly, Counts 1 through 3 are dismissed without ...