Modern Indus. Firebrick Corp. v. Shenango Inc.

• Court: U.S. District Court — Western District of New York
• Writing for the Court: WILLIAM M. SKRETNY
• Decision Date: 20 June 2012
• Docket Number: 11-CV-959
• Citation: Modern Indus. Firebrick Corp. v. Shenango Inc., 11-CV-959 (W.D. N.Y. Jun 20, 2012)
• Parties: MODERN INDUSTRIAL FIREBRICK CORP., Plaintiff, v. SHENANGO INCORPORATED, DTE COKE HOLDINGS, LLC, and DTE ENERGY SERVICES, INC., Defendants.

MODERN INDUSTRIAL FIREBRICK CORP., Plaintiff, v. SHENANGO INCORPORATED, DTE COKE HOLDINGS, LLC, and DTE ENERGY SERVICES, INC., Defendants.

11-CV-959

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NEW YORK

Dated: June 20, 2012

DECISION AND ORDER

I. INTRODUCTION

Plaintiff commenced this action for breach of contract and misrepresentation on September 28, 2011 by filing a Summons and Complaint in the Supreme Court for the State of New York, Niagara County. Defendants removed the action to this Court, alleging that federal subject matter jurisdiction existed based upon diversity of citizenship. Pending before this Court are Plaintiff's Motion to Remand and Defendants' Cross-Motion to Dismiss the Complaint or Transfer Venue. These motions are fully briefed and the Court finds that oral argument is not necessary. For the reasons stated below, Plaintiffs' Motion to Remand is denied, and Defendants' Motion to Dismiss is granted.

II. BACKGROUND

As alleged in the Complaint, Plaintiff and Defendant Shenango Incorporated ("Shenango") "entered into a contract whereby [Plaintiff] would provide certain services for Shenango through 2008 (the 'Agreement')." Complaint, Docket No. 1-1, ¶ 23. Plaintiff supplied Shenango with coke oven repair products and services for Shenango'sPennsylvania coke battery from May 1, 2005 until January 31, 2008. Compl. ¶ 22. As a result of the Agreement, Plaintiff "mobilized employees and purchased and maintained labor and materials necessary to complete the [p]roject," including the purchase of special materials and manufacture of products for Shenango. Compl. ¶ 25. Shenango informed Plaintiff in January 2008 that the project was delayed. Compl. ¶ 26. Plaintiff was subsequently informed in an April 2008 letter from Shenango that as of that month, Defendant DTE Coke Holdings ("DTE Coke"), a wholly owned subsidiary of Defendant DTE Energy Services, Inc. ("DTE Energy"), had acquired all of Shenango's stock. Compl. ¶ 27, Ex. A. The letter assured Plaintiff that "[t]he acquisition of Shenango by DTE Coke . . .will have no impact o[n] your existing contract with Shenango. Shenango will remain as the counterparty to your contract." Compl. Ex. A.

Plaintiff further alleges that "[i]n reliance on Shenango's reaffirmation of the Agreement in the Letter, [Plaintiff] continued to maintain the labor and materials necessary to complete the [p]roject." Compl. ¶ 30. Shenango again told Plaintiff that the project would be delayed. Compl. ¶ 31. In June 2008, Plaintiff was informed by "DTE Coke . . . that its products and services under the Agreement were not required." Compl. ¶ 32. Plaintiff commenced the present action in September 2011, asserting causes of action for (1) breach of contract, (2) intentional misrepresentation, and (3) negligent misrepresentation.

III. DISCUSSION

A. Plaintiff's Motion to Remand

Considering first Plaintiff's Motion to Remand,¹ inasmuch as this motion raises the issue of subject matter jurisdiction. see Rhulen Agency, Inc. v Alabama Ins. Guar. Ass'n, 896 F.2d 674, 678 (2d Cir 1990), a defendant may remove an action commenced in state court to a federal district court pursuant to 28 USC § 1441 (a) where the district court has original jurisdiction over the matter. Federal jurisdiction predicated on diversity of citizenship requires that all adverse parties be citizens of different states, and that no properly joined defendant be a citizen of the forum state. 28 U.S.C. §§ 1332 (a)(1); 1441 (b); Herrick Co., Inc. v SCS Commc'ns, Inc., 251 F.3d 315, 322 (2d Cir 2001).

Plaintiff argues that remand is warranted here because Defendants' Notice of Removal fails to adequately allege the identity and citizenship of the members of DTE Coke, a limited liability company. Pl's Mem of Law, Docket No. 10, at 4-5. "For diversity purposes, the citizenship of a limited liability company ('LLC') depends upon the citizenship of its members." Mackason v. Diamond Fin. LLC, 347 F.Supp.2d 53, 55 (S.D.N.Y. 2004), citing Handelsman v. Bedford Vill. Assoc. Ltd. P'ship, 213 F.3d 48, 51 (2d Cir.2000). Contrary to Plaintiff's contentions, the citizenship of DTE Coke's sole member can bediscerned from the allegations in the Notice of Removal and attached Complaint. See Docket No. 1. Plaintiff itself alleged in the Complaint that "DTE Energy Services is the owner of DTE Coke Holdings," and the attached exhibit to that document similarly reflects that DTE Coke is "a wholly owned subsidiary of DTE Energy Services." Compl. ¶ 9, Ex A. Thus, the Complaint alleges that DTE Energy is the only owner of DTE Coke, and therefore the only member, and as the Notice of Removal states that DTE Energy is a corporate citizen of Michigan, the facts necessary to discern complete diversity are alleged.

Further, when the factual assertions contained in a defendant's required short and plain statement of the grounds for removal are challenged, the removing defendant must support those allegations by competent proof. 28 U.S.C. § 1446 (a); United Food & Commercial Workers Union, Local 919, AFL-CIO v CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir 1994). Here, Defendants responded to Plaintiff's Motion to Remand with, inter alia, the corporate disclosure required pursuant to Fed. R. Civ. P. 7.1 (a) and the affidavit of DTE Energy's Senior Vice President and General Counsel. These documents also indicate that DTE Coke is a wholly owned subsidiary of DTE Energy and both entities are corporate citizens of Michigan. Schmidt Aff. Ex. D; Endler Aff. ¶¶ 7-10. Plaintiff does not dispute these averments that no other members exist whose citizenship needs to be alleged, therefore these assertions may be considered as true for purposes of this motion. Trumps v Harley of New York Associates, 94-CV-7080, 1995 WL 656983, *3 (S.D.N.Y. Nov. 8, 1995)(unchallenged assertions in removal petition and affidavits presumed true), citing Wilson v Republic Iron & Steel Co., 257 U.S. 92, 97-98, 42 S.Ct. 35, 66 L.Ed. 144 (1921). Plaintiff's motion to remand to state court is denied.

B. Motion to Dismiss

Defendants move to dismiss the Complaint pursuant to Rule 12(b)(2) against Defendants DTE Coke and Shenango for lack of personal jurisdiction, and to dismiss the Complaint as against Defendant DTE Energy pursuant to Rule 12 (b)(6) for failure to state a claim. In the event this Court denies the motion to dismiss, Defendants alternatively request that the matter be transferred to the Western District of Pennsylvania.

1. Personal Jurisdiction

This Court will first address the issue of personal jurisdiction. See generally Rationis Enters., Inc. of Panama v. AEP/Borden Indus., 261 F.3d 264, 267 (2d Cir. 2001). Subject to certain constitutional limitations of due process, the breadth of a federal court's personal jurisdiction is determined by the law of the state in which the district court is located. Thomas v. Ashcroft, 470 F.3d 491, 495 (2d Cir. 2006); Henderson v. INS, 157 F.3d 106, 123 (2d Cir. 1998). Where the district court relies solely on the pleadings and supporting affidavits, as is the case here, the burden on a plaintiff facing a motion to dismiss pursuant to Fed. R. Civ. P. 12 (b)(2) is to establish only a prima facie showing of personal jurisdiction. Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994); see Mattel, Inc. v. Barbie-Club.com, 310 F.3d 293, 298 (2d Cir. 2002)(prior to discovery, a plaintiff's burden is a lenient one requiring only legally sufficient allegations of jurisdiction). Although the court need not draw argumentative inferences in the plaintiff's favor, the pleadings and affidavits are considered in a light most favorable to the plaintiff. Robinson, 21 F.3d at 507; CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986).

Notably, Defendants argue that personal jurisdiction is lacking over only Defendants DTE Coke and Shenango, relying on their argument that DTE Energy is not a proper party to the action for dismissal of the Complaint against that entity. Defs. Mem. of Law, Docket No. 14-1, at 14-15. With respect to Shenango and DTE Coke, Plaintiff argues in opposition that personal jurisdiction over these entities is proper under New York's long-arm statute, N.Y. CPLR 302 (a), because these Defendants transacted business within New York state, committed a tort within the state, and/or committed a tort outside the state that caused injury within New York. Pl's Mem. of Law in Opp'n, Docket No. 17, at 7-15. Because the reach of New York's long-arm statute is not as extensive as the scope permissible pursuant to federal constitutional authority, the statutory inquiry will be conducted first. Best Van Lines, Inc. v. Walker, 490 F.3d 239, 244 (2d Cir. 2007)(only where jurisdiction is statutorily permissible is the issue of constitutionality addressed).

a. Transacts Business

CPLR 302 (a)(1) states that a court may exercise personal jurisdiction over a non-domiciliary who in person or through an agent "[t]ransacts any business within the state or contracts anywhere to supply goods or services in the state." Personal jurisdiction pursuant to this provision also requires that there be an articulable nexus or substantial relationship between the transaction of business and the cause of action being sued upon. Sunward Electr, Inc. v. McDonald, 362 F.3d 17, 23 (2d Cir. 2004). A single purposeful act in New York may be sufficient to meet the 'transacting business' element if it is established that the defendant purposefully availed him- or herself of the privilege of conducting business in New York, thereby invoking the benefits and protections of this state's laws.Kahn Lucas Lancaster, Inc. v. Lark Int'l. Ltd., 956 F.Supp. 1131, 1135 (S.D.N.Y. 1997); see CutCo Indus., Inc., 806 F.2d at 365, citing McKee Electric Co. v. Rauland-Borg Corp., 20 N.Y.2d 377, 382 (N.Y. 1967).

Defendants cannot be said to have contracted to supply goods and services within New York state, as the Agreement at issue was for Plai...