The opinion of the court was delivered by: Sweet, District Judge.
Plaintiffs Briarpatch Limited L.P. ("Briarpatch" or the
"Partnership") and Gerard F. Rubin ("Rubin") (collectively,
"Plaintiffs") have moved, pursuant to Rule 19, Fed.R.Civ.P., and
28 U.S.C. § 1447(e), to amend their complaint, add necessary
parties, and remand the action to the Supreme Court of the State
of New York, New York County. Defendant Stephen V. Pate ("Pate")
has moved, pursuant to Fed. R.Civ.P. 12(b)(2), to dismiss the
complaint for lack of personal jurisdiction. For the reasons set
forth below, Plaintiffs' motion will be granted. Because the
action will be remanded for lack of subject matter jurisdiction,
Pate's motion to dismiss will not be addressed.*fn1
Plaintiff Briarpatch is a limited partnership.
Plaintiff Rubin is the sole limited and winding up partner of
Defendant Pate is a Texas resident and citizen.
Background and Prior Proceedings
A "briar" (or "brier") is "a plant . . . with a woody thorny or
prickly stem" or "a mass or twig of these." Webster's New
Collegiate Dictionary 138 (1977). A "briarpatch" is thus a kind
of thorny, tangled thicket, an apt metaphor for the
jurisdictional thicket the instant motion requires this Court to
Briarpatch was formed on January 1, 1994 between Rubin, as sole
limited partner, and five general partners — Briarpatch
Construction Corp., Briarpatch Film Corp., Briarpatch Releasing
Corp., Briarpatch Theater Corp., and Sansho Company, Inc. (the
"General Partners") — for the primary purpose of developing
motion pictures or stage plays from certain literary properties.
The General Partners were incorporated under New York law, each
had its principal place of business in New York, and each at all
times was owned and controlled by Robert Geisler ("Geisler")
and John Roberdeau ("Roberdeau"), who were at all times the
directors and key officers of the General Partners. Each of the
General Partners was dissolved by proclamation of the Secretary
of State of New York at various dates between June 24, 1992 and
September 24, 1997.
In December 1998, Plaintiffs filed suit in New York Supreme
Court against Geisler and Roberdeau (the "1998 New York Action"),
alleging causes of action for fraud and fraudulent concealment,
breach of fiduciary duty, conversion and trover, unjust
enrichment, and an accounting with respect to the
misappropriation and diversion by Geisler and Roberdeau of
rights, properties, receipts, remuneration, and opportunities
belonging to the Partnership.
On March 1, 1999, Judge Gammerman issued a preliminary
injunction (the "March 1, 1999 Injunction") in favor of
Plaintiffs in the 1998 New York Action. The injunction found that
the Partnership's projects included, among other things, "The
Thin Red Line," "The White Hotel," "The English Speaker," and
"Sansho the Bailiff." Geisler and Roberdeau were enjoined from
transferring, pledging, hypothecating, or otherwise disposing of
any rights to or in the projects. A copy of the transcript of the
March 1, 1999 hearing was filed by Plaintiffs with and recorded
in the United States Copyright Office on March 19, 1999 at volume
3422, pages 454-55.
On July 12, 1999, following a five day trial, Judge Tompkins
issued a decision (the "July 12 New York State Court Decision")
finding for Plaintiffs on their fraud and fraudulent concealment,
breach of fiduciary duty, and conversion and misappropriation
claims. Judge Tompkins also found that as of January 1, 1994, the
Partnership became the beneficial owner of all rights to "The
Thin Red Line," "The White Hotel," "The English Speaker," "Sansho
the Bailiff," "Secret Friends," and "Sunday in the Park with
George," (the "Projects") that all rights acquired thereafter
with respect to the Projects also belonged to the Partnership,
and that those rights had vested.
Meanwhile, in August 1997, Pate brought an action in Texas
state court (the "Texas Action") against Geisler Roberdeau, Inc.,
Briarpatch Film Corp., Geisler, and Roberdeau (the "Texas
Defendants"). That action arose out of investments made by Pate
beginning in 1995 to entities controlled by Geisler and Roberdeau
involved in motion picture production. Pate ultimately invested
$748,281.81 in these projects. The complaint set forth a two-year
scheme by Geisler and Roberdeau to induce Pate to advance these
sums for the production of "The Thin Red Line," a feature film.
The complaint further alleged that Geisler and Roberdeau misled
Pate about the status of the project, then transferred the rights
to another entity. Pate brought claims for fraud, breach of
contract, unjust enrichment, and other causes of action. The
Texas Defendants removed the case to the United States District
Court for the Southern District of Texas.
In late 1997, the parties in the Texas Action entered into a
settlement agreement, the terms of which included provision of a
promissory note by the Texas Defendants in the amount of
$1,000,000 (the "Promissory Note"), secured by rights to two film
projects, "The English Speaker" and "The White Hotel." The Texas
Defendants represented that they had authority to grant a
security interest in the collateral to Pate. Pate subsequently
filed UCC financing statements with the New York Department of
State and the United States Copyright Office in November 1997
recording his security interest in the properties.
The Texas Defendants later breached their obligations under the
Promissory Note, which the parties resolved by entering into a
consent judgment in the Texas Action in the principal amount of
the Note, $1,000,000, which the court entered on July 17, 1999.
Pate then sought to realize on the security for the Note, and
properties owned by the defendants in the Texas Action. On July
20, 1999, Pate brought an application in Texas federal court
seeking a "turnover" of the Texas Defendants' non-exempt
property, or, in the alternative, for a judicial foreclosure of
Pate's collateral (the "Texas Application").
On July 27, 1999, Plaintiffs filed papers in the Texas Action
opposing Pate's requested relief, contending that Pate's security
interest was invalid and that plaintiff (in this action)
Briarpatch had superior rights to the properties at issue. The
Texas district court judge presiding over the action scheduled a
hearing on the application for September 17, 1999, expressing a
willingness to decide the question of priority. Plaintiffs were
unwilling to consent to the Texas court's jurisdiction, however.
Meanwhile, Plaintiffs had filed this action in New York State
Supreme Court, New York County, on July 9, 1999, seeking a
declaration that Pate did not have any valid interest in the
properties at issue in the Texas Action, because the Texas
Defendants were not authorized to grant any such interest.
However, the limited partnership agreement of Briarpatch Ltd.,
L.P. gave the General Partners (who were among, or controlled by,
the Texas Defendants) the "unrestricted right to sell or assign,
and to pledge, mortgage or otherwise hypothecate, any Project,
either in whole or in part, without obtaining the consent of
Rubin." (Goldin Aff. Exh. 1 Attach. 1 ¶¶ 3.1-3.2.) Rubin also
acknowledged in the agreement that "he does not and shall not
have any right, title or interest of any kind whatsoever in or to
any Project (including, without limitation, any copyrights or any
income derived therefrom)" and agreed that the general partners
of the partnership could register its copyrights in "such party
as Briarpatch in its sole business discretion may determine
proper." (Id. ¶¶ 4.1-4.2.)
The Briarpatch Ltd., L.P. partnership agreement also contained
a broad arbitration clause, under which "[a]ny controversy,
claim, dispute or question arising out of, or in connection with,
or in relation to, the validity, interpretation, performance or
nonperformance of this Agreement, or any breach thereof, shall be
determined and settled by arbitration in New York before a single
arbitrator." (Id. ¶ 16.)
On July 22, 1999, Plaintiffs filed an amended complaint in this
action, adding citations to the July 12 New York State Court
On August 16, 1999, Pate removed this action to this Court on
the basis of diversity of citizenship.
On August 28, 1999, Plaintiffs filed the instant motion,
seeking to add six corporations as defendants: the five General
Partners, and Geisler Roberdeau, Inc. (the "New Defendants").
Geisler Roberdeau, Inc., is, like each of the ...