Spellman v. Express Dynamics, LLC

• Decision Date: 15 December 2015
• Docket Number: Civ. No. 2:15-cv-03257 (WHW) (CLW)
• Citation: 150 F.Supp.3d 378
• Parties: Raymond Spellman, Plaintiff, v. Express Dynamics, LLC, d/b/a WorkXpress, Defendant.
• Court: U.S. District Court — District of New Jersey

150 F.Supp.3d 378

Raymond Spellman, Plaintiff,

v.Express Dynamics, LLC, d/b/a WorkXpress, Defendant.

Civ. No. 2:15-cv-03257 (WHW) (CLW)

United States District Court, D. New Jersey.

Signed December 15, 2015

Christopher J. Dalton, Buchanan, Ingersoll & Rooney, PC, Newark, NJ, for Plaintiff.

Amanda Lavis, Rhoads & Sinon LLP, Harrisburg, PA, for Defendant.

OPINION

Walls

, Senior District Judge

Defendant Express Dynamics, LLC, d/b/a WorkXpress (“WorkXpress”) moves to dismiss this action, arguing that it is duplicative with ongoing litigation in Pennsylvania and that this Court should abstain. Alternatively, Defendant moves for the Court to dismiss certain counts and to stay the action pending a decision in Pennsylvania. Decided without oral argument under Federal Rule of Civil Procedure 78

, Defendant's motion is denied.

FACTUAL AND PROCEDURAL BACKGROUND

WorkXpress is a Pennsylvania software development company that designs business software. Compl., ECF No. 1-1 ¶¶ 2, 6. Plaintiff Raymond Spellman, a New Jersey resident, claims that he devised the company's marketing plans and gave the company its name during its “start up phases.” Id. ¶¶ 7-9. He claims that he “was to be compensated” by WorkXpress for this work but never received payment. Id. ¶¶ 10-11. Spellman later marketed WorkXpress's software to Servolift, another company. Id. ¶ 15. He asserts that he entered into a “verbal and written agreement” with WorkXpress that entitled him to 40% of the revenues the company earned from its sales to Servolift, along with $1,500 per month in licensing fees. Id. ¶¶ 19-28, 38. Spellman was also to provide Servolift with customer service and be the exclusive point of contact between the two companies. Id. ¶¶ 30, 51. He contends that WorkXpress stopped paying him in April, 2009 and that he has not received the payments he is owed since that date. Id. ¶ 47. He also contends that Defendant directly communicated with Servolift without his knowledge or consent. Id. ¶¶ 51-52. Spellman claims he was owed $43,200 as of March 31,2015 and expects to be owed $180,000 over the remaining life of the contract. Id. ¶¶ 48-50.

On February 9, 2010, WorkXpress brought an action against Spellman in the Court of Common Pleas in Cumberland County, Pennsylvania (the “Pennsylvania action”). Cert, of Amanda Lavis (“Lavis Cert.”), Ex. A, ECF No. 21-4. In that action, WorkXpress sought a declaratory judgment that it had the right to terminate its oral contract with Spellman at will because the contract did not specify a definite time or necessary conditions. Id. ¶¶ 22-33. Spellman answered this complaint and raised several affirmative defenses, including the doctrines of unjust enrichment and breach of contract. Lavis Cert., Ex. B ¶¶ 35-50. Spellman also claimed that he performed “all of his duties with respect to the subject in issue.” Id. ¶ 51. The parties' litigation in Pennsylvania remains ongoing. Mot. to Dismiss, ECF No. 21-2 at 1.

Acting pro se, Spellman initiated this action on March 31, 2015 in the Superior Court of New Jersey. See generally Compl. WorkXpress removed it to this Court on May 11, 2015. Notice of Removal, ECF No. 1. Spellman brings claims for breach of contract, breach of the duty of good faith and fair dealing, and unjust enrichment. Compl. ¶ 54-69. On July 28, 2015, this Court granted a motion by Defendant to dismiss the action based on defective service of process after finding that removal had been proper because the case satisfied the test for diversity jurisdiction. ECF No. 12. Spellman, who is now represented, moved to reopen the case on September 8, 2015, and his motion was granted on September 24. ECF Nos. 16–17. Express brought this motion to dismiss on October 16, 2015.

Defendant describes this litigation as “an attempt to circumvent a failed Motion to Transfer Venue in the Pennsylvania Action.” Mot. to Dismiss at 7. It argues that the complaint should be dismissed (1) under the Colorado River

abstention doctrine, id. at 11-16, (2) under the first-filed rule, id. at 16-18, and (3) according to New Jersey procedural law, id. at 18-20. If the Court does not dismiss the complaint in its entirety, Defendant argues that it should dismiss the claims for unjust enrichment and breach of the duty of good faith and fair dealing and should stay these proceedings pending the resolution of the Pennsylvania action. Id. at 20-25.

DISCUSSION

The Court first addresses Defendant's abstention arguments. Because the Court will not abstain, it will address the assertion that the unjust enrichment and breach of the duty of good faith and fair dealing claims should be dismissed. Finally, the grant of a stay will be considered.

1. The Court will not abstain under the grounds asserted by Defendant.

a. Colorado River

abstention is not warranted because the actions are not parallel and Defendant has not demonstrated extraordinary circumstances.

A federal court may abstain “either by staying or dismissing a pending federal action, when there is a parallel ongoing state court proceeding” under the Colorado River

doctrine. Nationwide Mut. Fire Ins. Co. v. George V. Hamilton, Inc. , 571 F.3d 299, 307 (3d Cir. 2009) (citing Colorado River Water Conserv. Dist. v.

United States , 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) ). The doctrine of abstention is “an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it.” Colorado River, 424 U.S. at 813, 96 S.Ct. 1236 (quoting Cty. of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188–89, 79 S.Ct. 1060, 3 L.Ed.2d 1163 (1959) ). “Colorado River abstention must be grounded on more than just the interest in avoiding duplicative litigation.” Spring City Corp. v. Am. Bldgs. Co., 193 F.3d 165, 171–72 (3d Cir.1999).

The threshold question in determining whether abstention is appropriate is whether there is a parallel state proceeding. Yang v. Tsui, 416 F.3d 199, 204 n. 5 (3d Cir.2005)

. Two proceedings are parallel “when they ‘involve the same parties and substantially identical claims, raising nearly identical allegations and issues,’ and when plaintiffs in each forum seek the same remedies.”

Golden Gate Nat. Senior Care, LLC v. Minich , 629 Fed.Appx. 348, 350–51, 2015 WL 6111426 at *2 (3d Cir. Oct. 16, 2015)

(quoting Yang, 416 F.3d at 204 n. 5 and citing Harris v. Pernsley , 755 F.2d 338, 346 (3d Cir.1985) ).

If two proceedings are parallel, a court then applies a six-part test to determine whether there are “extraordinary circumstances” that justify abstention, analyzing: (1) which court first assumed jurisdiction over property in an in rem case, (2) “the inconvenience of the federal forum,” (3) “the desirability of avoiding piecemeal litigation,” (4) “the order in which jurisdiction was obtained,” (5) “whether federal or state law controls,” and (6) “whether the state court will adequately protect the interests of the parties.” Nationwide, 571 F.3d at 308

. No single factor is determinative, and the “balancing of factors is 'heavily weighted in favor of the exercise of jurisdiction.”' Id. (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 16, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ).

i. These actions are not parallel.

The action here and the action in Pennsylvania both involve Spellman and WorkXpress. The majority of the allegations in both actions involve the alleged termination of the parties' Servolift contract, but here, unlike in Pennsylvania, Spellman has also alleged that he did not receive agreed-upon payments for his work in creating Defendant's marketing plans and naming the company's products. Compl. ¶¶ 8-11.

Spellman's causes of action here are for breach of contract, unjust enrichment, and breach of the duty of good faith and fair dealing. Id. ¶¶ 54-69. In Pennsylvania, WorkXpress seeks a declaratory judgment that it had the right to “terminate its relationships with [Spellman] at will.” ECF No. 21-4 ¶ 33. Spellman's answer in Pennsylvania has asserted the doctrines of unjust enrichment and breach of contract as affirmative defenses. Lavis Cert., Ex. B ¶¶ 35-50. His answer also claims that he performed all of his contractual duties. Id. ¶ 51.

The differences between these two actions are too significant to consider them parallel. Spellman claims here that he was not compensated for the planning he did for Defendant, an allegation that has not been made in Pennsylvania. And although he has raised his breach of contract and unjust enrichment theories as affirmative defenses in Pennsylvania, here he has also brought a claim for a breach of the duty of good faith and fair dealing, which does not appear in the other action. Most importantly, these “cases are not truly parallel since the federal court plaintiff[ seeks] money damages while the state court plaintiff [ does] not.” Harris, 755 F.2d at 346

. Should WorkXpress prevail in Pennsylvania, at least some of this action would likely be barred by the principle of res judicata. But if Spellman prevails there, the litigation here must continue to determine damages. Because damages are an issue in only one of these actions, they are not parallel. See

Golden Gate, 629 Fed.Appx. at 350–51, 2015 WL 6111426 at *2 ; Harris, 755 F.2d at 346 ; Clark v. Lacy, 376 F.3d 682, 687 (7th Cir.2004) (lawsuits parallel if the “relief requested in this case is substantially similar to that requested in the [state] action”) (emphasis removed).

ii. There are no extraordinary circumstances to justify abstention.

Although the Court is not required to consider whether these actions present extraordinary circumstances because they are not parallel, it notes for the sake of argument that they would not satisfy the test outlined in Nationwide Mutual.

The “general rule regarding simultaneous litigation of similar issues in both state and federal courts is that both actions may proceed until one has come to judgment, at which point that judgment may create a res judicata or collateral estoppel effect on the...