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Remsen Funding Corp. v. Ocean West Holding Corp.

November 1, 2007

REMSEN FUNDING CORPORATION, PLAINTIFF,
v.
OCEAN WEST HOLDING CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Denise Cote, District Judge

OPINION AND ORDER

The plaintiff Remsen Funding Corporation of New York ("RFC") filed this action for breach of contract and declaratory judgment against the defendant Ocean West Holding Corporation ("OWHC"), now known as AskMeNow Inc. ("AMN"), on December 18, 2006.*fn1 Permission to file an amended complaint ("Complaint") was granted pursuant to a stipulation and order of July 25, 2007.*fn2

In the Complaint, RFC seeks damages and equitable relief principally for the defendant's refusal to issue warrant shares to RFC pursuant to a 2002 agreement between the parties. For the following reasons, the motion to dismiss is denied.

FACTS

The following facts are taken from the Complaint, unless otherwise noted. By written agreement ("Agreement") dated November 15, 2002, OWHC engaged RFC to assist it in seeking "capital and/or a capital partner." OWHC agreed to provide RFC with compensation, including warrants to purchase 300,000 shares of common stock of OWHC within a fixed price range.*fn3 The Agreement provided that the "warrants shall be good for a period of five years from the date of issue." It provides that OWHC would cause their registration to take effect without cost to [RFC], the warrant holder. . . . The term of the warrant shall be extended in the event that the Company fails to register the shares. In addition, [OWHC] agrees to make good on any loss as a result of their failure to initiate registration of the necessary shares. [OWHC] agrees to extend the exercise period of the warrants in accordance with any delays in registration of the underlying securities due to any action or inaction on the part of [OWHC], its representatives or the State or Federal governing body involved in such a registration.

The Agreement was drafted by RFC's counsel and signed by both parties.

On September 11, 2003, OWHC issued a common stock purchase warrant ("Warrant") to RFC. The Warrant gave RFC the right to purchase 300,000 shares of OWHC common stock ("Warrant Shares") at a purchase price of 25 cents per share, the bottom of the price range specified in the Agreement, for an exercise price of $75,000. The Warrant states that it "is being issued in connection with the Remsen Funding Corporation Agreement . . ., dated as of August 15, 2002,*fn4 between the Company and the Holder and is subject to its terms." The Warrant stated that it would terminate on August 15, 2007, which is three months shy of the fifth anniversary of the Agreement. The Warrant also stated that it "shall constitute a contract under the laws and jurisdiction of California and for all purposes shall be construed in accordance with and governed by the laws of said state without regard to its conflict of law, principles or rules."

On September 14, 2005, OWHC registered 18,647,276 shares of its common stock for resale. It did not give RFC notice of this registration filing and did not include or refer to the Warrant Shares. OWHC refused to issue the Warrant Shares.

On or about "December 26, 2007," OWHC amended the common stock registration statement to include the Warrant Shares. According to the Complaint, however, it continues to deny that the Agreement and Warrant are valid obligations. Since the time of the amended registration, OWHC has delayed registration of the Warrant Shares by refusing to give timely, truthful, complete, or accurate responses to comments made by the Securities and Exchange Commission ("SEC").

DISCUSSION

I. Subject Matter Jurisdiction

The first issue to be addressed is whether there is subject matter jurisdiction over this action. Parties seeking to invoke diversity jurisdiction must be of diverse citizenship and the amount in controversy must exceed the sum or value of $75,000, exclusive of costs and interest. 28 U.S.C. § 1332(a). The parties agree that they are diverse.

The amount in controversy requirement of Section 1332(a) is determined at the time the complaint is filed. Hall v. EarthLink Network, Inc., 396 F.3d 500, 506 (2d Cir. 2005). There is a presumption that the face of a complaint is a good faith representation of the actual amount in controversy, which presumption can only be rebutted by showing to "a legal certainty that the plaintiff could not recover the amount alleged or that the damages alleged were feigned to satisfy jurisdictional minimums." Colavito v. New York Organ Donor Network, Inc., 438 F.3d 214, 221 (2d Cir. 2006) (citation omitted); see also Hall, 396 F.3d at 507 n.5 (citation omitted).

"The Supreme Court has held that, in actions for declaratory or injunctive relief, which . . . are equitable in nature, the amount in controversy is measured by the value of the object of the litigation." DiTolla v. Doral Dental IPA of New York, 469 F.3d 271, 276 (2d Cir. 2006) (citing Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 347 (1977)). "Different state claims brought by a single plaintiff may ...


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