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TEAM OBSOLETE LTD. v. A.H.R.M.A. LTD.

September 7, 2005.

TEAM OBSOLETE Ltd., TEAM OBSOLETE PRODUCTS, Ltd., TEAM OBSOLETE PROMOTIONS INC. NEW YORK CORPORATIONS, ROBERT T. IANNUCCI, JIM REDMAN, RICK VESCO as Executor of the Estate of Don Vesco, DAVE ROPER, LON McCROSKEY, M.D., ERIK GREEN and JOHN KAIN, Plaintiffs,
v.
A.H.R.M.A. Ltd. and AMERICAN MOTORCYCLIST ASSOCIATION, INC., Defendants.



The opinion of the court was delivered by: I. LEO GLASSER, Senior District Judge

MEMORANDUM AND ORDER

This action involves vintage motorcycle racing and the organization of racing events by defendants American Historic Racing Motorcycle Association ("AHRMA") and American Motorcyclist Association ("AMA"). The individual plaintiffs*fn1 are riders of historic motorcycles. Plaintiff Team Obsolete is a corporation that sponsors motorcycle riders, including the plaintiffs, and owns and maintains historic motorcycles. Plaintiff Robert Iannucci ("Iannucci") is the principle shareholder of Team Obsolete. This dispute concerns the alleged exclusion of plaintiffs from events sanctioned or organized by defendants because of their sponsorship by Team Obsolete. Pending before the Court are defendants' motions to dismiss the Third Amended Complaint.

FACTS

  The facts of this dispute are set forth in detail in this Court's March 24, 2003 Memorandum and Order, reported at 216 F.R.D. 29 (E.D.N.Y. 2003) ("Team Obsolete I"), familiarity with which is assumed. Briefly, for purposes of these motions, the Court details the procedural history of this litigation. Plaintiffs commenced this action by filing a complaint on March 12, 2001, in which they asserted, inter alia, federal antitrust law and various state law claims. Thereafter, they filed an Amended Complaint on September 12, 2002. See Affidavit of Greg S. Zucker ("Zucker Aff.") Ex. H. Defendants moved for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c) and plaintiffs moved for leave to further amend the complaint.*fn2 In Team Obsolete I, the Court, among other things, dismissed plaintiffs' Sherman Act antitrust claims. See id. at 18-19. Additionally, the Court dismissed the California unfair practices claim as to Team Obsolete and Iannucci, see id. at 21, but refused to dismiss that claim with respect to the Riders. Id. at 22. Finally, the Court granted plaintiffs leave to file an amended complaint in accordance with its memorandum and order, which it directed them to file within 20 days of the order. See id. at 10, 30.

  Plaintiffs then filed a Second Amended Complaint dated June 19, 2003. On October 15, 2004, they filed yet another complaint, the Third Amended Complaint. Pending before the Court are defendants' motions to dismiss that version of the complaint.*fn3

  DISCUSSION Defendants move to dismiss plaintiffs' complaint for failure to state a claim for relief and for lack of subject matter jurisdiction.*fn4 When deciding a motion to dismiss for failure to state a claim for relief under Fed.R.Civ.P. 12(b)(6), a court takes the facts as alleged in the complaint to be true, and must draw all reasonable inferences from those facts in favor of the plaintiff. See Ortiz v. Cornetta, 867 F.2d 146, 149 (2d Cir. 1989). A court must not dismiss a complaint "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of [its] claim which would entitle [the plaintiff] to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). "[M]otions to dismiss for [lack of] subject matter jurisdiction under Rule 12(b)(1) are reviewed under the same standards as motions to dismiss for failure to state a claim under Rule 12(b)(6)." Walker v. New York, 345 F. Supp. 2d 283, 286 (E.D.N.Y. 2004) (citations omitted). Furthermore, "[i]n deciding a motion to dismiss for lack of subject matter jurisdiction, the Court may consider evidentiary matters outside the pleadings, such as affidavits and exhibits." Evans Med. Ltd. v. Am. Cyanamid Co., 980 F. Supp. 132, 135 (S.D.N.Y. 1997).

  I. Leave to Amend

  In the Third Amended Complaint, plaintiffs assert new causes of action against defendants. Defendants urge this Court to dismiss those claims. See AHRMA Mem. at 1; AMA Reply Mem. at 4. In a letter to Magistrate Judge Levy dated May 14, 2004, which followed several conferences between the parties, plaintiffs requested an extension of time in which to file and serve an amended complaint. In that letter, plaintiffs' counsel acknowledged that, in light of Team Obsolete I, the amended complaint "would reduce the claims and the parties to the litigation rather than add or clarify any existing causes of action." See Zucker Aff. Ex. A (emphasis added). Judge Levy "so ordered" plaintiffs' request for an extension of time on May 17, 2004. Defendant AHRMA then submitted a letter to Judge Levy dated May 19, 2004 in which it requested that plaintiffs be directed to "remove from their proposed amended complaint extraneous facts that were offered in support of claims which no longer exist in this action." See id. Ex. B. By order dated May 24, 2004, Judge Levy directed plaintiffs to "serve a streamlined complaint, pared to the essentials of their remaining claims." See id. (emphasis added). Defendants argue that Judge Levy's order precludes plaintiffs from asserting any new causes of action. See AMA Mem. at 2-3. The Court agrees. Federal Rule of Civil Procedure 15(a) provides that "a party may amend the party's pleading only by leave of court or by written consent of the adverse party" after the right to amend has expired. Judge Levy's May 24, 2004 order is explicit in its direction that plaintiffs not assert additional causes of action in their amended complaint. Accordingly, the Court dismisses the following causes of action in the Third Amended Complaint with prejudice: (1) Count Two for breach of contract by Team Obsolete against AHRMA; (2) Count Ten for breach of contract based on a third-party beneficiary relationship by Iannucci against AHRMA; (3) Count Eleven for breach of contract based on a third-party beneficiary relationship by the Riders against AHRMA; (4) Count Twelve for breach of contract based on a third-party beneficiary relationship by Team Obsolete against AHRMA; (5) Count Fourteen for breach of contract by Iannucci against AMA; (6) Count Fifteen for breach of contract by the Riders against AMA; and (7) Count Sixteen asserting a derivative claim against AHRMA based on its alleged breach of its fiduciary duties to its members.

  In addition, AHRMA moves to dismiss the ninth cause of action asserted by Roper for negligent interference with a contract. See AHRMA Mem. at 7. In his order dated December 6, 2004, Judge Levy indicated, "Plaintiff will withdraw 9th cause of action." See Zucker Aff. Ex. Z. Accordingly, the Court dismisses that cause of action.

  II. Subject Matter Jurisdiction

  Defendants move to dismiss the complaint for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1).*fn5 AMA argues that since this Court dismissed plaintiffs' federal claims in Team Obsolete I, plaintiffs must satisfy the requirements for diversity jurisdiction in order for the Court to have jurisdiction over this action. In Team Obsolete I, this Court denied AHRMA's motion to dismiss the state law claims for lack of diversity jurisdiction. It found that plaintiffs satisfied the requirements for diversity jurisdiction by alleging "that the controversy exceeds $75,000." Id. at 25.*fn6 Plaintiffs amended their jurisdictional allegations in the Third Amended Complaint.

  The requirements for diversity jurisdiction are set forth in 28 U.S.C. § 1332(a): "The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . (1) citizens of different States." Although defendants do not dispute that the parties are diverse, they argue that plaintiffs fail to meet the $75,000 amount-in-controversy requirement under § 1332(a). See AMA Mem. at 11.

  The Supreme Court set forth the rule governing dismissal for failure to sufficiently allege the jurisdictional amount for diversity jurisdiction as follows: "[U]nless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-9 (1938) (footnotes omitted). The court has a duty to dismiss the claim if it finds that recovery never could have amounted to more than $75,000. Id. at 290. See also Arnold v. Troccoli, 344 F.2d 842, 845 (2d Cir. 1965) (district court has a duty to further the congressional purpose behind 28 U.S.C. § 1332 of reducing diversity tort cases in federal court by dismissing claims where alleged jurisdictional amount is insufficient). Where, as in this case, several plaintiffs assert claims that are "separate and distinct, . . . each plaintiff must satisfy the jurisdictional-amount requirements for suit in the federal courts." Local 538 United Bhd. of Carpenters & Joiners of Am. v. U.S. Fidelity & Guar. Co., 154 F.3d 52, 55 (2d Cir. 1998) (distinguishing cases where aggregation of claims to satisfy the jurisdictional amount is permissible because plaintiffs seek to enforce a single title or right in which they have a common and undivided interest) (internal quotations omitted) (citing Zhan v. Int'l Paper Co., 414 U.S. 291, 294 (1973)).

  With regard to Count Three for breach of contract, AHRMA argues that the Riders (excluding Roper) fail to allege facts supporting the damages they claim. See AHRMA Mem. at 4. Plaintiffs allege that they were members in good standing of the AHRMA and that they submitted timely renewal applications for membership to that association. Pursuant to its own rules AHRMA is obligated to accept applications for participation in races from its members unless events are booked. AHRMA is alleged to have breached its contract with the Riders by precluding them from participating in various races because of their Team Obsolete sponsorship. The Riders claim that they were injured in an amount not ...


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