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BGC Partners, Inc. v. Avison Young (Canada), Inc.

United States District Court, S.D. New York

January 18, 2013

BGC PARTNERS, INC., and G & E Acquisition Company, LLC, Plaintiffs,
AVISON YOUNG (CANADA), INC., Avison Young (USA), Inc., Avison Young— New York, LLC, Avison Young— Nevada, LLC, Avison Young— Washington, D.C., LLC, Avison Young— Chicago, LLC, Avison Young— New England, LLC, Avison Young Atlanta, LLC, Avison Young— Southern California, Ltd., and Avison Young— Pittsburgh, Ltd., Defendants.

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C. William Phillips, Esq., Covington & Burling LLP, York, NY, for Plaintiffs.

Andrew Brian Clubok, Esq., Beth Ann Williams, Esq., Kirkland & Ellis LLP, New York, NY, for Defendants.


SHIRA A. SCHEINDLIN, District Judge.


Plaintiffs BGC Partners, Inc. and G & E Acquisition Company, LLC (together " BGC" ) have moved to remand this case to state court or, alternatively, for this Court to abstain. They argue that the Court lacks subject matter jurisdiction because the parties are not diverse and all the claims arise under state law.[1] Moreover, plaintiffs argue, even if federal jurisdiction exists, the Court should abstain under either 28 U.S.C. § 1334(c)(2) (mandatory abstention) or 28 U.S.C. § 1334(c)(1) (equitable

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absention).[2] Defendants oppose both arguments.


Defendant Avison Young is one of Canada's largest real estate brokerages. Until 2008, Avison Young's current Chairman and Chief Executive Officer, Mark Rose, was the president of Grubb & Ellis (" G & E" ), which was one of the largest brokerages in the United States before it declared bankruptcy in February, 2012.[4] On March 27, 2012, BGC purchased, " free and clear of any liens or interest," all of G & E's rights, properties and assets including " Business Opportunities." [5] Plaintiffs allege that after Rose left G & E in 2008, Avison Young began targeting G & E personnel and stealing commissions, business and business opportunities from the company, and continued to do so after BGC purchased G & E.[6] Specifically, they allege that defendants " continued their enterprise even after G & E filed for bankruptcy bye repeatedly committing criminal theft from a bankruptcy estate in violation of 18 U.S.C. § 152." [7] Plaintiffs allege that defendants have carried out this scheme by: (i) inducing G & E brokers to break their employment or independent contractor agreements; (ii) assisting larceny by these brokers and rewarding them for stealing business opportunities from G & E; (iii) inducing affiliates of G & E to breach their affiliation agreements; and (iv) inducing affiliate offices of G & E to breach their affiliation agreements and become affiliates of Avison Young.[8]

On August 2, 2012, BGC filed suit in the Supreme Court of the State of New York, New York County (" NY Supreme Court" ) against all of the Avison Young entities believed to have participated in the alleged scheme to steal assets and offices, including Avison Young-New York (" AY— New York" ), a New York company headquartered

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in New York.[9] The Complaint states seven state-law claims: two for tortious interference with contractual relationships, one for tortious interference with prospective business relationships, one for unjust enrichment, two for aiding and abetting breach of fiduciary duty and the duty of fidelity, and one for injunctive relief. [10] On August 31, 2012, defendant Avison Young-Nevada filed a Notice of Removal pursuant to 28 U.S.C. § 1446 alleging two grounds for removal: (1) that complete diversity exists and the case is removable pursuant to 28 U.S.C. §§ 1332 and 1441; and (2) that the case is " related to" a pending bankruptcy proceeding and removable pursuant to 28 U.S.C. §§ 1334(b) and 1452(a).[11]


Removal jurisdiction is strictly construed in view of the significant federalism concerns it raises,[12] and any doubts are resolved against removability.[13] Defendants, as the parties seeking removal, bear the burden of establishing subject matter jurisdiction.[14]


A. Diversity Jurisdiction

A district court has original jurisdiction of a civil action " where the matter in controversy exceeds the sum or value of $75,000" and the action is between " citizens of different States." [15] " [I]dentity of citizenship between a plaintiff and a defendant is sufficient to defeat federal diversity jurisdiction." [16] A plaintiff " may not defeat a federal court's diversity jurisdiction and a defendant's right of removal by merely joining as defendants parties with no real connection with the controversy." [17] However, the standard for establishing " fraudulent joinder" is high— the defendant " must demonstrate, by clear and convincing evidence, either that there has been outright fraud committed in ...

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