Gurlea v. Dudley
| Decision Date | 30 March 2023 |
| Docket Number | 3:22-cv-0024 |
| Parties | DOUGLAS GURLEA, THOMAS BRUNT IV, and SHANE BRUNT, Plaintiffs, v. GEORGE H.T. DUDLEY and DUDLEY NEWMAN FEUERZEIG LLP, Defendants. |
| Court | U.S. District Court — Virgin Islands |
Attorneys:
MICHAEL L. SHEESLEY, ESQ., MLSPC ST. THOMAS, U.S. VIRGIN ISLANDS FOR PLAINTIFFS DOUGLAS GURLEA, THOMAS BRUNT IV, AND SHANE BRUNT
OMID ZAREH, ESQ., TRACEY KEIJ-DENTON, ESQ., WEINBERG ZAREH MALKIN PRICE, LLP NEW YORK, NEW YORK FOR PLAINTIFFS DOUGLAS GURLEA THOMAS BRUNT IV, AND SHANE BRUNT
J DARYL DODSON, ESQ., MOORE, DODSON AND RUSSEL ST. THOMAS, U.S VIRGIN ISLANDS FOR DEFENDANTS GEORGE H.T. DUDLEY AND DUDLEY NEWMAN FEUERZEIG LLP
JOHN P. MORGENSTERN, ESQ., GAVIN FUNG, ESQ., O'HAGAN MEYER PHILADELPHIA, PENNSYLVANIA FOR DEFENDANTS GEORGE H.T. DUDLEY AND DUDLEY NEWMAN FEUERZEIG LLP
THIS MATTER comes before the Court, sua sponte, on the Amended Complaint of Plaintiffs Douglas Gurlea, Thomas Brunt IV, and Shane Brunt (“the Plaintiffs”). (ECF No. 25.)
For the reasons set forth herein, this matter will be dismissed without prejudice for lack of subject-matter jurisdiction.
Plaintiffs Douglas Gurlea, Thomas Brunt, and Shane Brunt are individual former owners of Heavy Materials, LLC (“Heavy Materials”), a concrete company in the U.S. Virgin Islands. See id. at 1. The Defendants, George Dudley (“Dudley”) and his law firm Dudley Newman Feuerzeig LLP (“the firm”) (collectively “the Defendants”), represented the Plaintiffs and Heavy Materials, LLC from the time of the concrete company's founding in 2005 through 2015, when the Plaintiffs sold the company to U.S. Concrete. See id. at 4. According to the Verified Complaint, while the defendant George Dudley was the attorney for Heavy Materials, he advised the company and the Plaintiffs on two agreements that Heavy Materials entered into with Spartan Concrete in 2013. Id. at 7. The Plaintiffs allege that during the negotiations of those two agreements, “George Dudley-explicitly and repeatedly-advised the Plaintiffs that these agreements did not violate antitrust law despite the fact that Dudley was not an expert in antitrust law, did not purport to practice antitrust law, and upon information and belief did not adequately research antitrust law or consult antitrust experts.” Id. at 8. The Plaintiffs claim that due to Dudley's failure to become adequately informed on antitrust law or bring in an antitrust law expert, the Plaintiffs were not made aware of the “significant local and federal antitrust issues which [have now] caused Plaintiffs catastrophic harm,” including an extensive criminal investigation and possible prosecution, multiple civil lawsuits in which they have been or may be called as witnesses or Defendants, and extensive legal fees to defend themselves from the foregoing or other future liabilities. (ECF No. 25 at 8, 14.)
Because of these alleged harms, the Plaintiffs filed a Verified Complaint against the Defendants on April 9, 2022. (ECF No. 1.) The Plaintiffs subsequently filed an Amended Complaint on July 15, 2022. (ECF No. 25.) The Amended Complaint asserts that the Defendants' alleged misconduct constituted legal malpractice. Id. at 38. Additionally, the Plaintiffs claim that, in the alternative, Dudley's conduct resulted in a breach of contract, and the Defendants' collective conduct constituted: (1) a breach of fiduciary duty; (2) a breach of the covenant of good faith and fair dealing, and (3) negligence. Id. at 40-44.
Although the Plaintiffs' causes of action all derive from Virgin Islands law, the Plaintiffs maintain that this Court has general federal question jurisdiction over this case. Id. at 2. Specifically, the Plaintiffs allege that:
This Court has federal question jurisdiction over this case pursuant to 28 U.S.C. [§] 1331 because the causes of action arise under the laws of the United States generally referred to as The Sherman Antitrust Act, The Clayton Act, and the Federal Trade Commission Act. The federal antitrust issues at the heart of Plaintiffs' case are disputed, substantial and can be considered by a federal forum “without disturbing any congressionally approved balance of federal and state judicial responsibilities.” Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005).
Id. The Defendants did not challenge whether the Court has subject-matter jurisdiction over this case. Accordingly, the Court raised the issue sua sponte.
On March 6, 2023, the Court issued an Order noting its concerns about the potential lack of subject-matter jurisdiction in this case. (ECF No. 48.) The March 6th Order also directed the parties to brief whether the Court had the authority to exercise general federal question jurisdiction in this matter. Id. The Plaintiffs filed their supplemental memorandum on March 17, 2023. (ECF No. 49.) In the supplemental brief, Plaintiffs contend that their claims meet the requirements set out in both Grable and Gunn because in order to resolve the malpractice claim, the Court will need to “necessarily determine, inter alia whether the calculated structuring of these agreements posed a risk of violating federal antitrust laws” and whether “Defendants advice, conduct, and legal research (or lack thereof), presented an impermissible risk to Plaintiffs that the two agreements would run afoul of federal antitrust statutes prohibiting contracts ‘in restraint of trade or commerce.”' Id. at 4. According to the Plaintiffs, similar federal antitrust analyses are necessary to resolve their breach of contract claim, as well as the remaining counts for breach of fiduciary duty, breach of the covenant of good faith and fair dealing, and negligence. See id. at 5.
Additionally, the Plaintiffs assert that the federal legal issues are actually in dispute because the “parties dispute the interpretation and requirements of federal antitrust laws and regulations.” Id. Furthermore, the Plaintiffs believe that the federal law questions are substantial because they are necessary to resolve this case and will potentially impact numerous “future regulatory and judicial actions with respect to corporate and competitive behavior.” Id. They also assert that exercising federal question jurisdiction would not disturb the balance of state and federal court responsibilities given that federal antitrust law is the exclusive jurisdiction of federal courts and because federal courts often decide similar state law claims. See id. at 3, 6.
The Defendants filed their response on March 27, 2023, indicating they “take no position on whether this Court has subject-matter jurisdiction over Plaintiffs' claims.” (ECF No. 50.) With the matter fully briefed, the issue of the Court's subject-matter jurisdiction is now properly before the Court.
A. Subject-Matter Jurisdiction
Federal courts are “courts of limited jurisdiction,”[1] and therefore, may not hear a claim unless specifically authorized by Congress.[2] Mims v. Arrow Financial Services, LLC, 565 U.S. 368, 376 (2012) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 378 (1994)); Hertz Corp. v. Friend, 559 U.S. 77, 84 (2010).[3] This requirement is referred to as “subject-matter jurisdiction.”[4] Because subject-matter jurisdiction is a constitutional prerequisite for a federal court to hear a case, the district judge has an “independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party.” Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006) (citations omitted); United States v. Cotton, 535 U.S. 625, 630 (2000) (“Because subject-matter jurisdiction involves a court's power to hear a case, it can never be forfeited or waived.”); Smith v. Kansas City Title & Tr. Co., 255 U.S. 180, 199 (1921).[5] Accordingly, Federal Rule of Civil Procedure 12(h)(3) mandates a court to, sua sponte, dismiss a complaint in its entirety as soon as the court discovers that it lacks subject-matter jurisdiction. See Fed.R.Civ.P. 12(h)(3); Arbaugh, 546 U.S. at 514 (citing 16 Moore § 106.66[1], pp. 106-88 to 106-89).
Given that Congress must provide the federal courts with authority to hear a case, “a plaintiff may invoke the jurisdiction of a federal court only pursuant to a statutory grant of authority to adjudicate the asserted claim.” Clinton County Com'rs v. U.S. E.P.A., 116 F.3d 1018, 1021 (3d Cir. 1997) (). While a specific federal statute may entitle a party to federal jurisdiction,[6]the primary way original subject-matter jurisdiction arises is through the diversity and general federal question jurisdiction statutes. See 28 U.S.C. § 1332(a) (diversity); 28 U.S.C. § 1331 (federal question). Since the Plaintiffs have not identified a special statute conferring jurisdiction, nor have they offered a basis for diversity jurisdiction, the Court will focus its inquiry on federal question jurisdiction. See Kokkonen, 511 U.S. at 377 (“It is to be presumed that a cause lies outside [the federal court's] limited jurisdiction”) (citing Turner v. Bank of North America, 4 U.S. (4 Dall.) 8, 11 (1799); Davis v. Wells Fargo, 824 F.3d 333, 349 (3d Cir. 2016) () (citation omitted).[7]
i. Federal Question Jurisdiction (28 U.S.C. § 1331)
Pursuant to 28 U.SC. § 1331, Congress has provided the federal courts with general federal question jurisdiction “over all civil actions arising under the Constitution Laws, or treaties of the United States.” (emphasis added). In other words, federal courts maintain...
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