Biktasheva v. Red Square Sports, Inc., No. CIV.A.DKC 2004-2366.

• Decision Date: 28 April 2005
• Docket Number: No. CIV.A.DKC 2004-2366.
• Citation: 366 F.Supp.2d 289
• Parties: Lyudmila BIKTASHEVA, et al. v. RED SQUARE SPORTS, INC.
• Court: U.S. District Court — District of Maryland

366 F.Supp.2d 289

Lyudmila BIKTASHEVA, et al. v. RED SQUARE SPORTS, INC.

No. CIV.A.DKC 2004-2366.

United States District Court, D. Maryland.

April 28, 2005.

COPYRIGHT MATERIAL OMITTED

Theodore P. Stein, Esquire, Theodore P. Stein, P.C., Rockville, for defendant.

MEMORANDUM OPINION

CHASANOW, District Judge.

Presently pending and ready for resolution are the motions of Defendant Red Square Sports, Inc. to dismiss pursuant to Fed.R.Civ.P. 12(b)(1), (5), and (6), or, alternatively, for summary judgment pursuant to Fed.R.Civ.P. 56 (paper nos. 4, 6). The issues are fully briefed and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, the court grants Defendant's second motion to dismiss for lack of subject matter jurisdiction, but Plaintiffs will be permitted to move for leave to amend.

I. Background

Plaintiffs Lyudmila Biktasheva and Silviya Skvortsova are professional athletes and citizens of the Russian Federation. Defendant, a Maryland corporation, provides agent and management services to professional athletes. In late 2001, Defendant negotiated endorsement contracts with Nike, Inc., for both Plaintiffs. Each Plaintiff signed a contract with Defendant, whereby Defendant agreed to provide professional athletic agent and management services in exchange for a 10% commission on Plaintiffs' endorsement and appearances fees. Each Plaintiff also signed an endorsement contract with Nike.

Plaintiffs contend that Defendant told them they would each receive approximately $3,000 per year pursuant to the Nike contracts, but that the contracts actually required Nike to pay each Plaintiff i 10,000, or approximately $12,000 per year. Each Plaintiff further contends that Defendant arranged for Nike to pay Defendant directly, and that Defendant then paid each Plaintiff only approximately $3,000 annually instead of the roughly $12,000 owed.

In their complaint, Plaintiffs asserted claims for breach of contract and conversion, and each requested compensatory and punitive damages "of an amount greater than $75,000," plus interest, attorney's fees and costs. Paper no. 1, at 4. In response, Defendant filed a paper titled "Defendant's Special Appearance Motion to Dismiss," (paper no. 4), but that motion was submitted by Defendant's registered agent, and without proper counsel, in violation of Local Rule 101, which states that, subject only to exceptions not applicable here, "only members of the Bar of this Court may appear as counsel in civil cases. Only individuals may represent themselves." Defendant, through counsel, then properly moved to dismiss, or, alternatively, for summary judgment. Paper no. 6. In that motion, Defendant asserted, as it had in its original motion to dismiss, that the court lacked both personal jurisdiction, due to insufficient service, and subject matter jurisdiction, because the amount in controversy did not exceed $75,000 per plaintiff. Defendant further asserted that Plaintiffs' conversion claim was insufficient as a matter of law. Finally, Defendant argued that, because it attached an affidavit stating that "[a]t all times pertinent to this matter, the plaintiffs were paid all monies due to them," paper no. 6, Ex. A (Decl. of Konstantin Selinevich), and because Plaintiff had as yet submitted no affidavit or evidence to the contrary, Defendant should be awarded summary judgment on the breach of contract claim.

Because the issues raised in Defendant's first, improperly filed motion to dismiss are all also raised in its subsequent, proper motion to dismiss, the first motion will be denied as moot, and the court will proceed only on the second motion.

In their response to Defendant's motion, Plaintiffs conceded that their conversion claim was without merit, agreed to drop that claim from their complaint, and filed an Amended Complaint, pursuant to Fed.R.Civ.P. 15(a), which allows a plaintiff to amend a pleading "once as a matter of course at any time before a responsive pleading is served."¹ Plaintiffs reasserted their breach of contract claim (count I), introduced new claims for breach of the principal-agency relationship (count II), breach of fiduciary duty (count III), fraud (count IV), and fraudulent inducement (count V), and requested the same relief. Paper no. 13. Plaintiffs argued, however, that the court had both personal and subject matter jurisdiction, and they submitted their own affidavits contradicting Defendant's contention that Plaintiffs had been fully paid, thus creating a dispute of material fact to avoid summary judgment. Paper no. 14.

Pursuant to a consent motion granted paperlessly by the court, Defendant in a single reply addressed both the arguments raised in Plaintiff's opposition brief and the claims first introduced in the amended complaint. Paper no. 17. Plaintiffs did not respond to Defendant's arguments regarding the new claims.

II. Sufficiency of Service

Defendant contends that Plaintiffs' service of process upon him was insufficient. The court disagrees.

Fed.R.Civ.P. 12(b)(5) provides that a motion to dismiss may be based on "insufficiency of service of process." The requirements for service of process are set forth in Fed.R.Civ.P. 4. Rule 4(e)(1) states that service may be effected upon an individual "pursuant to the law of the state in which the district court is located, or in which service is effected, for the service of a summons upon the defendant in an action brought in the courts of general jurisdiction of the State," and Rule 4(h) renders Rule 4(e)(1) equally applicable to service upon corporations. See Rule 4(h) ("service upon a ... corporation ... shall be effected: (1) in a judicial district of the United States in the manner prescribed for individuals by subdivision (e)(1) ...."). In Maryland, service of process is governed in part by Md. Rule 2-124, which states:

Service may be made upon a corporation ... by serving two copies of the summons, complaint, and all other papers filed with it, together with the requisite fee, upon the State Department of Assessments and Taxation if (i) the entity has no resident agent; (ii) the resident agent is dead or is no longer at the address for service of process maintained with the State Department of Assessments and Taxation; or (iii) two good faith attempts on separate days to serve the resident agent have failed.

Md. Rule 2-124(o).

Here, Plaintiffs' service of process upon Defendant was sufficient. Defendant argues that Plaintiffs' process servers made only one attempt to serve its resident agent before serving the State Department of Assessments and Taxation ("SDAT"), instead of two as required by Rule 2-124(o)(iii). In response, Plaintiffs argue correctly that because their process server determined that Defendant's resident agent is no longer at the address reflected in SDAT's records,² see paper no. 3, affidavit of Ed Cihlar (noting "Resident Agent No Longer at Address Given"), their subsequent service to SDAT, see id. (Defendant "Served at SDAT"), was proper under Rule 2-124(o)(ii). That Plaintiffs subsequently continued to attempt, unsuccessfully, to serve Defendant personally by locating a valid address for its resident agent in Gaithersburg, Maryland, is laudable but unnecessary to establish that process was properly served.

III. Subject Matter Jurisdiction

Defendant contends that the court lacks subject matter jurisdiction over this matter. The court agrees.

Motions to dismiss for lack of subject matter jurisdiction are governed by Fed.R.Civ.P. 12(b)(1). The plaintiff bears the burden of proving that subject matter jurisdiction properly exists in the federal court. See Evans v. B.F. Perkins Co., a Div. of Standex Int'l Corp., 166 F.3d 642, 647 (4th Cir.1999). In a 12(b)(1) motion, the court "may consider evidence outside the pleadings" to help determine whether it has jurisdiction over the case before it. Richmond, Fredericksburg & Potomac R.R. Co. v. U.S., 945 F.2d 765, 768 (4th Cir.1991); see also Evans, 166 F.3d at 647. The court should grant the 12(b)(1) motion "only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Richmond, 945 F.2d at 768.

Plaintiffs assert that this court has subject matter jurisdiction in this case pursuant to 28 U.S.C. § 1332(a). That statute grants original jurisdiction to this court in "all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between ... (2) citizens of a State and citizens or subjects of a foreign state...." Id. Each plaintiff must demonstrate the jurisdictional basis and allege the necessary amount in controversy. Feikema v. Texaco, 16 F.3d 1408, 1412 (4th Cir.1994) (citing Schlesinger v. Councilman, 420 U.S. 738, 744 n. 9, 95 S.Ct. 1300, 43 L.Ed.2d 591 (1975)). It is undisputed that Plaintiffs are citizens of the Russian Federation and that Defendant is a Maryland corporation, satisfying the statute's diversity requirement; and Plaintiffs' amended complaint requests that each Plaintiff receive "compensatory and punitive damages of an amount greater than $75,000, as well as restitution of any fees paid to Defendant, pre- and post-judgment interest, attorneys' fees and costs...." Paper no. 13, at 5. Plaintiffs therefore contend that they have met the requirements of § 1332(a).

Defendant, however, contends that Plaintiffs have not stated claims for more than $75,000 each. Defendant asserts that "the actual amount in controversy is no more than $18,000 per plaintiff," and that therefore, "plaintiffs have pinned all of their hopes for meeting the amount in controversy requirement on obtaining punitive damages of approximately $60,000 each." Paper no. 17, at 9. Defendant then argues that the amended complaint fails to state any claim for which punitive damages can be awarded, id, and that, consequently, Plaintiffs have failed to state claims...