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 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 lack 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 moved pursuant to Rule 12(f) of the Federal Rules of Civil Procedure to strike Reichert's first motion to dismiss and his opposition to their motion to remand this action to the state court. By order dated March 28, 2014 ("the March Order"), plaintiffs' motions were denied, plaintiffs' claims against Intergroove U.S. were dismissed without prejudice pursuant to Rule 21 of the Federal Rules of Civil Procedure and decision was deferred on Reichert's motions to dismiss.
Pending before the Court, in addition to Reichert's motions to dismiss, are plaintiffs' motions (1) seeking, inter alia, leave to amend the complaint pursuant to Rules 15(a), 19 and 20 of the Federal Rules of Civil Procedure to join Intergroove Media GmbH ("Intergroove Media"), Peter Matthias ("P. Matthias") and Eva Matthias ("E. Matthias") as additional defendants in this action; and (2) seeking reconsideration of the March Order pursuant to Local Civil Rule 6.3 and Rule 54(b) of the Federal Rules of Civil Procedure. For the reasons set forth below, plaintiffs' motion for reconsideration is granted; plaintiffs' motion to amend the complaint is denied; upon reconsideration, the Court adheres to its determination of the March Order; the branch of Reichert's first motion seeking dismissal of the complaint against him pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is granted; and the branch of Reichert's first motion seeking dismissal of the complaint against him pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure for improper venue and his motion seeking dismissal of the complaint on the basis of forum non conveniens are denied as moot.
A. Factual Allegations in Original Complaint
1. The Parties
Plaintiffs are citizens of the State of New York and 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 in New York. (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, 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).
2. The Parties' Business Relationship
Plaintiffs allege that between approximately June 28, 2008 through July 9, 2008, P. Matthias traveled to New York and met with them. (Compl., ¶ 8). According to plaintiffs, during that time: (1) it was agreed that P. 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, P. Matthias "negotiated a deal with Intergroove [Media]." (Compl., ¶ 8). According to plaintiffs, "[P.] Matthias was to share with [them] in the revenue generated from Intergroove [Media]." Id.
In late November 2008, "[P.] Matthias arranged a meeting with Plaintiffs and Ralf Reichert[, ] 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 [P.] 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 [Medial would pay Bassline at a rate of $650.00 per hour for the Plaintiff's [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 1, 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 seventy-five cents ($9, 414.75) and seven thousand six hundred seventy-five dollars and twenty cents ($7, 675.20), respectively, towards the balance due them. (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 P. 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 [P.] 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. Factual Allegations in Proposed Amended Complaint
The following additional facts are alleged in the proposed amended complaint:
P. Matthias and E. Matthias (collectively, "the Matthias defendants") are German Nationals who reside in Kembs, France, (Amended Complaint ["Amend. Compl."], ¶ 5), and, "upon information and belief, " are "individuals who acted as private entrepreneurs, and undisclosed agents and intermediaries of Intergroove [Media] * * *." (Amend. Compl., ¶ 9).
In addition to alleging that Intergroove U.S. is a wholly owned subsidiary of Intergroove Media, the proposed amended complaint also alleges, "upon information and belief, " that Intergroove U.S. "has acted as a mere instrumentality of Intergroove [Media], subject to the complete control and domination of Intergroove [Media] and doing business and operating as Intergroove [Media] in the United States and has been in all respects the alter ego of Intergroove [Media]." (Amend. Compl., ¶ 8).
The proposed amended complaint alleges: (1) that during plaintiffs' meetings with the Matthias defendants in June and July 2008, the Matthias defendants, in addition to making the representations alleged in the original complaint, "falsely and fraudulently failed to disclose and concealed the truth that they were already acting as agents for Intergroove [Media] * * * with intent * * * to defraud and deceive the plaintiffs[, ]" (Amend. Compl., ¶ 11); (2) that "[p]laintiffs did not know the truth and relied on the false misrepresentations and concealments to [their] detriment[, ]" (id.); (3) that on or about July 5, 2008, the Matthias defendants "further stated and represented to Manney that Intergroove [Media] maintained a New York office operating as [Intergroove] U.S.[, ]" (Amend. Compl., ¶ 12); and (4) that on or about July 6, 2008, "P. Matthias during conversations with Leonardo * * * repeated essentially the identical representations to Leonardo[, ]" (id.).
In addition, the proposed amended complaint alleges that on or about July 7, 2008, Manney asked the Matthias defendants "if they could arrange work for Plaintiffs [sic] video service company through the [Intergroove] U.S. office after they had further explained that [Intergroove] U.S. was located in lower Manhattan." (Amend. Compl., ¶ 13). According to plaintiffs, the Matthias defendants (1) represented to Manney (a) "that Intergroove [Media] handled some of the [Intergroove] U.S. affairs through the parent company Intergroove [Media] located abroad in Offenbach, Germany[, ]" (Amend. Compl., ¶ 14); (b) "that they had an informal and casual business relationship with Intergroove [Media], Ralf Reichert and an individual and financier named Joachim Keil (Keil') whereby they had acted as independent agents for sellers of products in sales to Intergroove [Media], when in truth [they] had acted as agents for Intergroove [Media] * * *[, ]" (Amend. Compl., ¶ 15); (c) "that Keil was the owner of a music company called Daredo * * * and that Keil and Reichert conduct business deals together in the field of music publishing[, ]" (Amend. Compl., ¶ 16); (d) "that Daredo also had an office in lower Manhattan and that [Intergroove] U.S. sub-distributed Daredo product [sic] in New York State and across the United States[, ]" (Amend. Compl., ¶ 17); and (e) "that P. Matthias had been travelling [sic] back and forth to New York from Europe as an agent for Daredo and Keil[, ]" (Amend. Compl., ¶ 18), (2) invited plaintiffs "to visit Intergroove [Media] ...