United States District Court, E.D. New York
STEVEN MANNEY and JOSEPH LEONARDO, as assignees of Bassline Digital Inc., Plaintiffs,
RALF REICHERT and INTERGROOVE U.S., INC., Defendants.
OPINION AND ORDER
SANDRA J. FEUERSTEIN, District Judge.
On or about May 10, 2013, plaintiffs Steven Manney and Joseph Leonardo (collectively, "plaintiffs"), as assignees of Bassline Digital Inc. ("Bassline"), commenced an action in the Supreme Court of the State of New York, County of Nassau ("the state court") against defendant Intergroove U.S., Inc. ("Intergroove U.S.") and Ralf Reichert ("Reichert"), alleging one (1) claim seeking, inter alia, compensatory and punitive damages for fraud in the inducement. On August 5, 2013, Reichert filed a notice of removal pursuant to 28 U.S.C. §§ 1441(b) and 1446, removing the action to this Court pursuant to this Court's diversity jurisdiction under 28 U.S.C. § 1332(a). Thereafter, (1) plaintiffs moved pursuant to 28 U.S.C. § 1447(c) to remand this matter to the state court; (2) Reichert moved to dismiss the action against him pursuant to Rules 12(b)(2), (3) and (6) of the Federal Rules of Civil Procedure for Jack of in personam jurisdiction, improper venue and failure to state a cause of action, respectively, and on the basis of forum non conveniens ; and (3) plaintiffs filed separate motions seeking to strike Reichert's motion to dismiss and reply to plaintiffs' opposition to the motion to dismiss. For the reasons stated herein, plaintiffs' motions are denied and decision is deferred on Reichert's motions to dismiss.
A. Factual Allegations
I. The Parties
Plaintiffs commenced this action as the assignees of Bassline, a Delaware corporation licensed to do business in the State of New York, which has its principal place of business at 53 East Merrick Road, Suite 173, Freeport, New York 11520. (Complaint ["Compl."], ¶ 1). Plaintiffs are primarily engaged in the business of video production. (Compl., ¶ 5).
Reichert is a resident of Offenbach, Germany and a citizen of the Federal Republic of Germany. (Notice of Removal ["Rem."], ¶ 7). Reichert is the managing director of Intergroove Media GMBH ("Intergroove Media"), formerly known as Intergroove Tontrager Vertreibs GMBH, (Compl., ¶¶ 2, 6; see Rem., ¶ 12 [referring to Reichert as Intergroove Media's managing director]), which, according to plaintiffs, is a German corporation with its principal places of business in Frankfurt and Offenbach Am Main, Germany. (Compl., ¶ 2). Intergroove Media "is engaged in the business of distributing pre-recorded videos (DVDs) and pre-recorded music." (Compl., ¶ 6).
Plaintiffs allege, "[u]pon information and belief, " that Intergroove U.S. is a New York corporation with a principal place of business at 622 Broadway, Suite 3b, New York, New York 10012, and is a wholly-owned subsidiary of Intergroove Media. (Compl., ¶¶ 3, 7). According to Reichert, Intergroove U.S. "is a dissolved and defunct New York corporation that was fraudulently joined to prevent diversity, " (Rem., ¶ 9); Intergroove Media never had more than a fifteen percent (15%) interest in Intergroove U.S., (Rem., ¶ 10); and Intergroove Media sold its interest in Intergroove U.S. in 2002. (Id.) Reichert asserts: (1) that in 1995, a company named "Under Cover Music Group New York, Inc." ("UCMG-NY") started doing business under the name "Intergroove U.S;" (2) that in 1996, UCMG-NY formed Intergroove U.S. as its wholly-owned subsidiary, having two hundred (200) shares of common stock; (3) that in the same year, Intergroove Media purchased from Intergroove U.S. thirty (30) of its two hundred (200) shares of stock; (4) that on or about August 27, 2002, Intergroove Media sold all of its thirty (30) shares in Intergroove U.S. to UCMG Europe AG ("UCMG Europe"); (5) that neither Intergroove Media nor Reichert has ever owned any interest in UCMG Europe, nor have they had any ownership interest in Intergroove U.S. since August 27, 2002; (6) that in or about March 2003, UCMG Europe filed insolvency proceedings in Germany; (7) that Intergroove U.S. was dissolved by proclamation of the Secretary of State of the State of New York published on January 25, 2012 pursuant to New York Tax Law; (8) that Intergroove U.S. had not filed a biennial statement or any other documents with the New York State Department of State since December 30, 1998; and (9) that there is no company answering to the name "Intergroove U.S., Inc." at the address currently listed on the New York Secretary of State website. (Rem., ¶¶ 11-13).
2. The Parties' Business Relationship
Plaintiffs allege that between approximately June 28, 2008 through July 9, 2008, Peter Matthias ("Matthias") traveled to New York and met with plaintiffs. (Compl., ¶ 8). According to plaintiffs, during that time: (1) it was agreed that Matthias would be their "exclusive agent/representative in Europe in order to solicit Plaintiffs [sic] video service, " (id.); and (2) "Intergroove [Media] was discussed." (Id.)
Plaintiffs allege that in September 2008, Matthias "negotiated a deal with Intergroove [Media]." (Compl., ¶ 8). According to plaintiffs, "Matthias was to share with Plaintiffs in the revenue generated from Intergroove [Media]." Id.
In late November 2008, "Matthias arranged a meeting with Plaintiffs and RalfReichert[, ] managing director of Intergroove [Media], and in late December 2008 an agreement was reached." (Compl., ¶ 9). According to plaintiffs, "[o]n or about December 23, 2008, after being contacted by Matthias, [they] through Bassline * * *, entered into a contract ["the December 2008 Contract"] whereby Bassline would deliver approximately twenty-five (25) to thirty (30) video productions to Intergroove [Media], and Intergroove [Media] would pay Bassline at a rate of $650.00 per hour for the Plaintiffs [sic] services * * *." (Compl., ¶ 10).
Plaintiffs allege that between approximately January 2009 and July 2009, they delivered twenty-seven (27) video productions to Intergroove Media "in a timely manner" pursuant to the December 2008 Contract, (Compl., ¶ 11), and sent several invoices to Intergroove Media requesting payment for their services. (Compl., ¶ 12). Specifically, plaintiffs sent the following invoices to Intergroove Media: (a) a February 1, 2009 invoice containing total charges of one hundred eighty thousand seven hundred dollars ($180, 700.00); (b) a March I, 2009 invoice containing total charges of one hundred ninety-one thousand four hundred twenty-five dollars ($191, 425.00); (c) an April 1, 2009 invoice containing total charges of sixty-six thousand nine hundred fifty dollars ($66, 950.00); (d) a May 1, 2009 invoice containing total charges of one hundred fifty-one thousand four hundred fifty dollars ($151, 450.00); and (e) a June 1, 2009 invoice containing total charges of one hundred ninety-one thousand one hundred dollars ($191, 100.00). (Id.) According to plaintiffs on or about March 29, 2009 and June 30, 2009, Intergroove Media made payments of nine thousand four hundred fourteen dollars and seventyfive cents ($9, 414. 75) and seven thousand six hundred seventy-five dollars and twenty cents ($7, 675.20), respectively, towards the balance due plaintiffs. (Compl., ¶¶ 13-14). In addition, on or about July 6, 2009, plaintiffs "made an adjustment to the amount of $433.05 to Intergroove [Media]." (Compl., ¶ 15). Thus, according to plaintiffs, "[a]s of July 7, 2009, and continuing to the current date, pursuant to the December Contract, Intergroove [Media] has a balance due and owing to the Plaintiffs in the sum of $764, 102.00." (Compl., ¶ 16).
On or about June 29, 2009, plaintiffs met with Reichert and Matthias in Germany to demand payment from Intergroove Media on the balance due them of the invoices. (Compl., ¶¶ 17-18). According to plaintiffs, Reichert promised to provide payment "and stated that they [sic] had a subsidiary corporation which was to be a guarantor that payments would be made." (Compl., ¶ 19). "The subsidiary corporation being the defendant Intergroove U.S., Inc." (Id.)
Plaintiffs allege that "[n]o payments were forthcoming, and it was discovered by [them] that Ralf Reichert and Matthias made a new deal with another corporation, thus eliminating [them] from any further involvement with the Defendants." (Compl., ¶ 20; see also Compl., ¶ 29 ["Plaintiffs subsequently discovered that the Defendant Reichert had made arrangements with another company to do work for Intergroove [Media] with Reichert's approval and thus eliminating the Plaintiffs from participation of the proceeds."]) According to plaintiffs, they "demanded payment from the guarantor Intergroove U.S. which was refused." (Compl., ¶ 30).
Plaintiffs allege, "[u]pon information and belief, " that Reichert "received the proceeds [for plaintiffs' video productions] from Intergroove [Media] without remitting any portion due to [them] and * * * is wrongfully in possession of [their] money." (Compl., ¶ 31).
B. Procedural History
1. Previous Litigation
On January 11, 2010, Bassline commenced an action in this Court against Intergroove Media (" the Bassline action"), alleging claims for breach of contract; goods and services sold and delivered; implied contract; unjust enrichment; and promissory estoppel, which was assigned to the Honorable Arthur D. Spatt, United States District Judge, under docket number 10-cv-0097. On March 26, 2010, Senior Judge Spatt entered a default judgment against Intergroove Media based upon its failure to answer the complaint or to otherwise appear in the Bassline action, and referred the matter to the Honorable E. Thomas Boyle, former United States Magistrate Judge, to hear and determine the amount of damages to be awarded to Bassline. Magistrate Judge Boyle issued a report and recommendation dated July 29, 2010 ("the Report"), recommending that the default judgment against Intergroove Media be vacated for lack of personal jurisdiction since Intergroove Media had never been served with process in that action. By memorandum of decision and order dated October 7, 2010, Senior Judge Spatt adopted the Report in its entirety; vacated the default judgment against Intergroove Media; and dismissed Bassline's complaint against Intergroove Media without prejudice based upon Bassline's failure to effect proper service upon it. Judgment was entered against Bassline in the Bassline action on October 13, 2010.
On or about July 12, 2010, plaintiffs, in their purported capacity as "assignees of Bassline Digital Inc., " commenced an action ("Manney I") against Intergroove Media, Matthias and Eva Matthias (collectively, "the Matthias defendants" or "the Matthias parties") and Intergroove U.S. in the state court, alleging the same claims against Intergroove Media as had been asserted in the Bassline action, with the exception that they omitted their claim based upon promissory estoppel and added a claim of fraud in the inducement. Specifically, the Manney I complaint asserted claims for breach of contract; work, labor and services rendered; implied contract; unjust enrichment; and fraud in the inducement relating to the defendants' purported failure to pay invoices sent to Intergroove Media on February 1, 2009, March 1, 2009, April 1, 2009, May 1, 2009 and June 1, 2009 in the total amount of seven hundred sixty-four thousand one hundred two dollars ($764, 102.00). On October 1, 2010, Intergroove Media removed Manney I to this Court pursuant to 28 U.S.C. §§ 1441(b) and 1446, based upon this Court's diversity jurisdiction under 28 U.S.C. § 1332, and the action was assigned to me under docket number 10-cv-4493. By order dated November 30, 2011, inter alia, the branches of the defendants' respective motions seeking dismissal of Manney I based upon plaintiffs' lack of legal capacity to sue were granted and Manney I was dismissed in its entirety without prejudice. Judgment was entered against plaintiffs in Manney I on December 6, 2011. By opinion and order dated September 28, 2012, plaintiffs' motion for reconsideration of the November 30, 2011 order and final judgment was denied. By opinion and order dated March 24, 2014, plaintiffs' subsequent motion seeking relief from the September 28, 2012 order pursuant to Rule 60(b) of the Federal Rules of Civil Procedure was denied.
According to Reichert, on March 29, 2012, Intergroove Media and the Matthias parties commenced an action ("the Darmstadt action") against plaintiffs in the court in Darmstadt, Germany ("the Darmstadt court") seeking, inter alia, judgment declaring: (I) that neither Intergroove Media nor the Matthias parties entered into any contract with plaintiffs in or after 2008; and (2) that plaintiffs do not have any claim for remuneration against Intergroove Media or the Matthias ...