Briarpatch Ltd. v. Phoenix Pictures, Inc.

Citation373 F.3d 296
Decision Date25 June 2004
Docket NumberNo. 03-7015.,03-7015.
PartiesBRIARPATCH LIMITED, L.P., Gerard F. Rubin, Plaintiffs-Appellants, v. PHOENIX PICTURES, INC., Michael Medavoy, Defendants-Appellees, Geisler Roberdeau, Inc., Terence Malick, Defendants.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Barry L. Goldin, Law Offices of Barry L. Goldin, Allentown, PA, for Plaintiffs-Appellants.

Vincent H. Chieffo, New York, N.Y. (Ronald D. Lefton, Gregory A. Brehm, Greenberg Traurig, LLP, New York, N.Y., of counsel), for Defendants-Appellees.

Before: CARDAMONE, SOTOMAYOR, and KATZMANN, Circuit Judges.

CARDAMONE, Circuit Judge.

Because this appeal involves the rights to films and plays, it is appropriate and helpful to begin by listing the cast of characters. Plaintiff Briarpatch Limited, L.P. (Briarpatch) is a limited partnership plaintiff Gerard F. Rubin is the sole limited and winding up partner of Briarpatch. Defendant Geisler Roberdeau, Inc. is a dissolved New York corporation owned and controlled by Robert Geisler and John Roberdeau. Defendant Phoenix Pictures, Inc. (Phoenix) is a producer of motion pictures; defendant Morris Medavoy (not "Michael" as is incorrectly listed in the caption) is the founder and chairman of Phoenix. Defendant Terrence Malick (not "Terence" as is incorrectly listed in the caption) is a writer and director of films including "The Thin Red Line."

As this case illustrates, chicanery is no stranger to some of those engaged in the film industry. This litigation centers on Rubin's contention that Geisler and Roberdeau conned him and Briarpatch out of proceeds from "The Thin Red Line" and various other motion picture and theater productions. Rubin claims they did this in concert with Phoenix, Medavoy, and Malick, and that they used Geisler Roberdeau, Inc. as a conduit for their ill-gotten gains.

BACKGROUND

Briarpatch, the limited partnership, was formed in 1994 to develop, produce, present, and exploit various entertainment related projects. While Rubin was the sole limited partner, there were five general partners that, under the partnership agreement, had "complete, exclusive and unqualified control of all aspects of the business of the [p]artnership," and the "unrestricted right to sell or assign, and to pledge, mortgage or otherwise hypothecate, any [of the partnership's projects], either in whole or in part, without obtaining the consent of Rubin." All five general partners were corporations owned and controlled by Robert Geisler and John Roberdeau, meaning that those two individuals had complete control over Briarpatch's business. All the general partner corporations are presently dissolved and Rubin, as noted, is now the designated winding up partner for Briarpatch. Defendant Geisler Roberdeau, Inc. is also owned and controlled by Geisler and Roberdeau, but it is not connected to Briarpatch.

Rubin claims to have contributed more than $6 million of his own funds towards Briarpatch's entertainment projects, with the expectation that he would reap the rewards (in the form of partnership distributions) if the projects were successful. One of the projects was to culminate in a motion picture called "The Thin Red Line," based on an existing novel by James Jones. The partnership used Rubin's money to acquire the motion picture rights to "The Thin Red Line," and to pay defendant Malick to turn the novel into a screenplay.

Before this project could be completed, Geisler and Roberdeau purported to sell the rights to "The Thin Red Line" to defendant Phoenix. Instead of distributing the proceeds from this sale among Briarpatch's partners, Geisler and Roberdeau kept the proceeds for themselves in the accounts of their personal corporation, Geisler Roberdeau, Inc. After the sale, Phoenix oversaw the completion of "The Thin Red Line" motion picture, and earned a substantial profit from it. The movie was nominated for seven Academy Awards.

In December 1998 Rubin and Briarpatch sued Geisler and Roberdeau in New York State Supreme Court, stating causes of action for fraud and fraudulent concealment, breach of fiduciary duty, conversion and trover, unjust enrichment, and an accounting. Plaintiffs alleged Geisler and Roberdeau had used their control over Briarpatch to divert to themselves benefits and opportunities generated by Briarpatch's entertainment projects, including "The Thin Red Line."

After a trial, the state court granted plaintiffs a declaratory judgment, constructive trust, and an equitable lien with respect to Briarpatch's entertainment projects. The state court decision dated July 12, 1999 found that "The Thin Red Line," and certain other projects, were owned by the plaintiff partnership and did not belong to Geisler, Roberdeau, their affiliated corporations, or the Briarpatch general partners. The court granted plaintiffs a judgment for the $1.5 million that Geisler and Roberdeau had converted from the proceeds paid to them by Phoenix for "The Thin Red Line," and a permanent injunction directing, among other things, that Geisler and Roberdeau turn over all of Briarpatch's property to Briarpatch and provide an accounting. The New York Supreme Court entered judgment on this decision on October 14, 1999 and ordered that a referee be assigned to monitor the turning over of property and the accounting. Geisler and Roberdeau appealed this judgment in 1999 and that appeal is apparently still pending.

Plaintiffs commenced the present action in the New York Supreme Court on August 18, 1999. They asserted claims against defendants Malick, Phoenix, Medavoy, and Geisler Roberdeau, Inc. for conspiring in and aiding and abetting Geisler and Roberdeau's breach of fiduciary duty to Briarpatch. Plaintiffs also brought claims against Geisler Roberdeau, Inc. for trover and conversion, and unjust enrichment; against Phoenix for unjust enrichment and a declaration of rights; and against Malick for breach of contract, unjust enrichment, and a declaration of rights. Plaintiffs sought over $4 million in damages.

Defendants responded by removing the suit to the United States District Court for the Southern District of New York (Sweet, J.) on September 10, 1999. Plaintiffs then moved pursuant to 28 U.S.C. § 1447(c) to remand the action to State Supreme Court. The district court denied the motion and dismissed the claims against the only non-diverse party, Geisler Roberdeau, Inc., in an opinion and order dated March 1, 2000. On June 26, 2001, the district court denied plaintiffs leave to amend their complaint to add additional parties, and on November 6, 2001, it dismissed the claims against Malick based on his settlement with plaintiffs. Finally, the district court granted summary judgment in favor of Phoenix and Medavoy on October 30, 2002. With no claims remaining, it entered a judgment dismissing the complaint in its entirety on December 9, 2002. From this judgment and these orders plaintiffs appeal.

DISCUSSION

Plaintiffs have presented two challenges for us to resolve on this appeal: first, the denial of their motion to have the case remanded to the New York State Supreme Court and, second, the district court's grant of summary judgment in favor of defendants Phoenix and Medavoy. We note plaintiffs also purport to challenge the denial of their motion to amend their complaint. But, since this issue is only mentioned in the beginning of their brief and never argued or noted again, we deem it abandoned. See, e.g., Smalls v. Batista, 191 F.3d 272, 277 (2d Cir.1999).

We start with the remand motion. Mindful that a district court's erroneous failure to remand does not, by itself, necessitate reversal, we view the critical issue to be whether the district court had subject matter jurisdiction at any time before it rendered judgment. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 75-78, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996).

When reviewing the district court's assumption of subject matter jurisdiction, we accept its findings of fact unless they are clearly erroneous, while examining questions of law de novo. See McGinty v. New York, 251 F.3d 84, 90 (2d Cir.2001). There are two possible grounds on which the district court's jurisdiction might have been anchored in this case: diversity of citizenship and copyright law. If any of plaintiffs' claims can be based on these jurisdictional grounds, their other claims possibly may be based on supplemental jurisdiction.

I Diversity of Citizenship

Congress has given the federal district courts original jurisdiction over civil actions between "citizens of different States" where, as here, the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a) (2000). The citizenship requirement for diversity jurisdiction has been interpreted to mean complete diversity so that each plaintiff's citizenship must be different from the citizenship of each defendant. See Caterpillar, 519 U.S. at 68, 117 S.Ct. 467.

It is undisputed that plaintiffs in this case are New York citizens for jurisdictional purposes. It is also undisputed that defendant Geisler Roberdeau, Inc. is a New York citizen, but that the other defendants are not. Thus, if Geisler Roberdeau, Inc. was a properly joined defendant, complete diversity is lacking. The district court relied on the doctrine of fraudulent joinder to rule that Geisler Roberdeau, Inc. was not a properly joined defendant.

The doctrine of fraudulent joinder is meant to prevent plaintiffs from joining non-diverse parties in an effort to defeat federal jurisdiction. Under the doctrine, courts overlook the presence of a non-diverse defendant if from the pleadings there is no possibility that the claims against that defendant could be asserted in state court. See Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir.1998). The defendant bears the heavy burden of proving this circumstance by clear and convincing evidence, with all factual and legal ambiguities...

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