Gross Found., Inc. v. Goldner
| Decision Date | 04 December 2012 |
| Docket Number | 12 Civ. 1496 (ILG) (RER) |
| Parties | GROSS FOUNDATION, INC., Plaintiff, v. SOLOMON GOLDNER, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Plaintiff Gross Foundation, Inc. ("plaintiff" or "Gross Foundation"), a not-for-profit corporation, brings this action against Solomon Goldner ("defendant" or "Goldner"), alleging that defendant breached a written guaranty agreement between the parties. Plaintiff also brings an unjust enrichment claim for the same underlying conduct. Before the Court is defendant's motion to dismiss plaintiff's claims for insufficient service of process pursuant to Federal Rule of Civil Procedure 12(b)(5) and for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6). For the following reasons, defendant's motion is granted in part and denied in part.
The following facts are taken from plaintiff's Complaint, and are presumed true for purposes of the pending motion, as well as from documents that are incorporated by reference in the Complaint and documents of which the Court may take judicial notice.1 On December 10, 2002, plaintiff, a New York not-for-profit corporation, purchased two skilled nursing facilities located in Kansas. Complaint dated March 26, 2012 ("Compl.") ¶ 7. Plaintiff purchased the facility known as Infinia at Arma (the "Arma Facility") from Ivy at Arma, Ltd., a Utah corporation. Compl. ¶¶ 8–9. Plaintiff purchased the facility known as Infinia at Abilene (the "Abilene Facility," together with the Arma Facility, the "Facilities") from Infinia Properties of Abilene, LLC, a Utah limited liability company. Compl. ¶¶ 8, 10.
At the time of the purchase, plaintiff entered into a Purchase Option and Right of First Refusal Agreement ("Option Agreement") with Ivy at Arma, Ltd. and Infinia Properties of Abilene, LLC (jointly, the "Optionee"). Compl. ¶ 11. The Option Agreement provided Optionee with the option to repurchase the Facilities from plaintiff under certain circumstances ("purchase option") and imposed upon the Optionee the obligation to repurchase the Facilities from plaintiff under other circumstances ("put option"). Declaration of Solomon Goldner in Support of Reply ("Goldner Reply Decl."), Ex. A (Option Agreement) (Dkt. No. 15).
Also at the time of the purchase, plaintiff leased the Arma Facility to Infinia at Arma, Inc., and leased the Abilene Facility to Infinia at Abilene, Inc.2 See Goldner Reply Decl., Ex. A (Option Agreement). Finally, at or about the same time of the purchase, plaintiff and defendant signed a guaranty agreement ("Guaranty"), wherein defendant guaranteed to plaintiff, upon plaintiff's due exercise of its put option pursuant to the Option Agreement, full payment of the purchase price payable by the Optionee. Compl. ¶ 12; Declaration of Solomon Goldner ("Goldner Decl."), Ex. 4 (Guaranty) (Dkt. No. 5).
On December 1, 2003, Infinia at Arma, Inc. and Infinia at Abilene, Inc. filed bankruptcy petitions in the United States Bankruptcy Court, Central District of Utah. Declaration of Jeff Leung ("Leung Decl."), Exs. 1–2 (Dkt. No. 10). On December 6, 2004, the bankruptcy court issued its Findings of Fact, Conclusions of Law and Order Confirming Modified Third Amended Joint Plan of Liquidation Filed by the Debtors. Leung Decl., Ex. 5. Also on December 6, 2004, plaintiff exercised its put option. Compl. ¶ 13; see Goldner Decl., Ex. 2 ("Option Demand Letter"). Plaintiff's Option Demand Letter states:
Reference is hereby made to the Option Agreement dated December 10, 2002 between yourselves and Gross Foundation, Inc. regarding the repurchase of the Arma & Abilene Facilities. We are hereby exercising our Put Option requiring you to repurchase the Facilities according to the terms of the Option Agreement. We understand that this exercise may be subject to the approval of the Bankruptcy Court. We are going thru [sic] this procedure in order to protect our rights against yourselves and/or certain Guarantor(s). Please advise us of your intentions on this matter.
The purchase price for the Facilities at the time was $3,808,154. Compl. ¶ 13.
As of March 22, 2007, the Optionee had not paid plaintiff for the Facilities. Compl. ¶ 14. Subsequently, plaintiff and defendant signed two additional agreements. On March 22, 2007, the parties signed the first agreement, limiting defendant's liability to $2,600,000 and extending any statute of limitation on the original Guaranty through April 1, 2011. Compl. ¶¶ 15, 18–19. On March 17, 2011, the parties signed the second agreement, further extending the statute of limitation through April 1, 2012.3 Compl. ¶¶ 20, 23.
Plaintiff commenced this action on March 27, 2012, alleging that, under the Guaranty and the two subsequent agreements, defendant owes plaintiff $600,000 for the Facilities.4 Compl. ¶ 24.
On May 29, 2012, defendant moved to dismiss plaintiff's Complaint, accompanied by a Memorandum of Law in Support of Motion to Dismiss ("Def.'s Mem."), a Declaration by defendant ("Goldner Decl."), and a Declaration by defendant's attorney ("Leung Decl."). Dkt. Nos. 3, 4, 5 & 10. On June 19, 2012, plaintiff filed a Memorandum of Law in Opposition ("Pl.'s Opp'n"), accompanied by a Declaration by plaintiff's attorney ("Weg Decl."). Dkt. Nos. 11 & 12. On June 29, 2012, defendant filed his Reply in Further Support of Motion to Dismiss ("Def.'s Reply"), accompanied by a second Declaration by defendant ("Goldner Reply Decl."). Dkt. Nos. 14 & 15. On July 6, 2012, plaintiff moved to strike arguments that defendant raised for the first time in his reply. Dkt. No. 16. On July 10, 2012, defendant responded to the motion, explaining that he raised those arguments in the event that the Court converts the motion to dismiss into a motion for summary judgment. Dkt. No. 17.
To defeat a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(5), the plaintiff bears the burden of proof that defendant was adequately served with process. Dickerson v. Napolitano, 604 F.3d 732, 752 (2d Cir. 2010). "On review of a motion challenging service of process, the court considers the parties' pleadings andaffidavits in the light most favorable to the non-moving party." Krape v. PDK Labs Inc., 194 F.R.D. 82, 84 (S.D.N.Y. 1999). "[I]n considering a motion to dismiss pursuant to 12(b)(5) for insufficiency of process, a Court must look to matters outside the complaint to determine whether it has jurisdiction." Darden v. DaimlerChrysler N. Am. Holding Corp., 191 F. Supp. 2d 382, 387 (S.D.N.Y. 2002).
On a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court assesses the formal feasibility of the plaintiff's claim for relief by applying a "plausibility standard." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 560 (2007). As the Second Circuit has explained, following the Supreme Court's decision in Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Court is guided by two principles. Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009).
First, "although 'a court must accept as true all of the allegations contained in a complaint,' that 'tenet' is inapplicable to legal conclusions and '[t]hreadbare recitals of the elements of a cause of action, unsupported by mere conclusory statements, do not suffice.'" Id. (quoting Iqbal, 556 U.S. at 678). Second, "'only a complaint that states a plausible claim for relief survives a motion to dismiss,' and '[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'" Id. (quoting Iqbal, 556 U.S. at 679). To be sufficient, a complaint not only must include a short, plain statement of the claim showing the pleader is entitled to relief, Fed. R. Civ. P. 8(a), but also Twombly, 550 U.S. at 544 (internal citations omitted).
Defendant moves to dismiss plaintiff's Complaint pursuant to Rule 12(b)(5) for insufficient service of process. Def.'s Mem. at 10–12. Plaintiff claims that service was proper under Rule 4(e)(1), which permits service in accordance with the law of the state "where the district court is located or where service is made." Pl.'s Opp'n at 2–3. Because this Court is located in New York, plaintiff relies on New York Civil Practice Law and Rules ("CPLR") § 308(4). Pl.'s Opp'n at 3–5. Service under § 308(4) is proper only if service cannot be made with "due diligence" pursuant to § 308(1), which requires delivery to the person to be served, or § 308(2), which requires delivery to "a person of suitable age and discretion" at the workplace or home of the person to be served. CPLR § 308(4). Service under § 308(4), commonly referred to as "nail and mail" service, is effected "by affixing the summons to the door of either the actual place of business, dwelling place or usual place of abode within the state of the person to be served"; and then by mailing the summons to the person "at his or her last known residence," or mailing the summons via first class mail to "his or her actual place of business." CPLR § 308(4).
In his declaration, defendant attests that service was never made pursuant to § 308(1) or § 308(2), but concedes that plaintiff had the summons affixed to his home and mailed to his home. Goldner Decl. ¶¶ 2–12. Defendant argues only that plaintiff has not sufficiently established the prerequisite of "due diligence" to make service proper under § 308(4). Def.'s Reply at 11–13.
The requirement of due diligence "must be strictly observed, given the reduced likelihood that a summons served pursuant to that section will be...
To continue reading
Request your trial