JOSEPH H. RODRIGUEZ, District Judge.
This case comes before the Court on Plaintiff, Counterclaim Defendant's, Motion to Dismiss Defendants, Counterclaim Plaintiffs', Counterclaims to 800 Cooper Finance's Amended Complaint [Dkt. No. 59] pursuant to Fed. R. Civ. P. 12(b)(1). For the Reasons that follow the Court denies Counterclaim Defendant's Motion.
This matter concerns the collection of a debt allegedly owed to 800 Cooper Finance, LLC ("800 Cooper Finance" or "Counterclaim Defendant") by Defendants/Counterclaim Plaintiffs, Shu-Lin Liu and Jolin Chiaolin Tsao ("Counterclaim Plaintiffs"). The Counterclaim Plaintiffs are the sole members of KL Holdings, LLC ("KL Holdings") which had an ongoing loan relationship with PNC bank for many years. Counterclaim Plaintiffs executed Guarantees for KL Holdings to secure its debt incurred with PNC. Amend. Compl. ¶ 6. 800 Cooper Finance was a Delaware Limited Liability Company until its recent dissolution. "On January 22, 2016, PNC Bank assigned the KL Holdings debt to 800 Cooper, along with all rights and powers relating to the Commercial Guarantees."
Counterclaim Plaintiffs allege that its initial PNC loans were secured by a mortgage on a parcel of real estate owned by KL Holdings, referred to as the "Bridgeview Property." Amend. Counterclaim ¶ 8. Counterclaim Plaintiffs were also personal guarantees on that mortgage. At some point in 2015, KL Holdings entered into an agreement of sale for the Bridgeview Property with a company, Kamgirsons, Inc. That agreement was terminated in November 2015 after information on the loans at issue were provided.
800 Cooper Finance initially filed a Complaint in this Court for Confession of Judgment regarding the "debt" it purchased; particularly, 800 Cooper Finance sought monies owed on a line of credit and two business loans that it declared KL Holdings defaulted on. [Dkt Nos. 1,15]. Counterclaim Defendant brought this action against Counterclaim Plaintiffs as the grantors of the debt owed. It required the following payments:
Amend. Compl. ¶ 57. Counterclaim Plaintiffs argue that 800 Cooper Finance's pleadings included "excessive and improper calculations" of interest and collection fees due and failed to account for the loan extensions previously agreed to by PNC. Amend. Counterclaim ¶ 11. Counterclaim Plaintiffs disputed those amounts and reserved affirmative defenses to 800 Cooper Finance's confession of judgment in its initial Answer to the Amended Complaint. [
Additionally, Counterclaim Plaintiffs requested documentation confirming the costs and fees allegedly incurred by 800 Cooper Finance, which it then charged to them; Cooper Finance did not provide any documents. Amend. Counterclaim ¶ 23. 800 Cooper Finance also rejected Counterclaim Plaintiffs' request to reduce the amount of payment demanded and refused to place the disputed amounts in escrow.
After payment of the Debt, in January 2017, 800 Cooper Finance obtained a certificate of cancellation from the State of Delaware.
Another order was entered on April 6, 2018 granting Counterclaim Plaintiffs leave to file their revised proposed pleading. Counterclaim Plaintiffs' Amended Answer proposes Counterclaims for Breach of Contract (Count I), Conversion (Count II), Unjust Enrichment (Count II), Improper Cancelation of 800 Cooper Finance (Count IV), and Improper Distribution of LLC Assets (Count V). [Dkt. No. 54]. In response, Counterclaim Defendant filed the current Motion to Dismiss for Lack of Jurisdiction on two grounds asserting that: (1) the Court lacks subject matter jurisdiction because 800 Cooper Finance is no longer in existence; and (2) Counterclaim Plaintiffs' assertions are insufficient to establish the amount in controversy requirement for diversity jurisdiction. [Dkt. No. 59; Counterclaim Def. Brf. at 5-6].
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) may involve either a facial challenge to subject matter jurisdiction or a factual challenge to the jurisdictional allegations.
First, Counterclaim Defendant argues that because 800 Cooper Finance is dissolved, it is no longer amenable to suit and the Court should, therefore, dismiss the Counterclaims against it. The Court disagrees.
Under Section 18-803 of Delaware's Limited Liability Act:
Del. Code Ann. tit. 6, § 18-803 (emphasis added). Thus,
Section 18-804 of the Delaware Limited Liability Act (the "LLC Act") governs the distribution of a dissolved LLC's assets.
Del. Code Ann. tit. 6, § 18-804. Accordingly, under Delaware law, a court may allow suit against a dissolved LLC where plaintiff
Here, Counterclaim Plaintiffs specifically claim improper cancelation of 800 Cooper Finance and further allege that 800 Cooper Finance failed to wind up its affairs in accordance with Section 18-804(b) of the Delaware LLC Act. Amend. Counterclaim ¶ 38. The proper analysis is to determine whether Counterclaim Plaintiffs claim is plausible on its face in order to sustain action against 800 Cooper Finance. Accordingly, the Court agrees with Counterclaim Plaintiffs; 800 Cooper Finance's argument that it is not amenable to suit is a substantive defense to the Counterclaims against it.
"A claim has facial plausibility
The Court need not accept "`unsupported conclusions and unwarranted inferences,'"
The Court finds that Counterclaim Plaintiffs have articulated sufficient facts to state a claim that the voluntary cancelation of 800 Cooper was improper under Delaware law. First, it pleads that 800 Cooper Finance filed a certificate of cancelation while the present case in this Court was still pending, and the Docket reflects the same. Prior to voluntarily dismissing the matter, Counterclaim Defendant voluntarily dissolved as a company while it was a party to this action that it commenced. Counterclaim Plaintiffs' Amended Answer and Counterclaim further pleads that 800 Cooper Finance "knew that there was an ongoing unresolved dispute regarding the amount due under the subject loan, and that as a result of a payoff demand . . . a claim could be asserted for a return of the amounts paid in excess." Amend. Counterclaim ¶ 41. According to the pleadings, Counterclaim Plaintiffs had requested (1) a reduction in the payoff demand, and (2) for all disputed amounts owed to be held in escrow.
"[A] dissolved LLC must provide for all claims—`including all contingent, conditional or unmatured contractual claims'—that are `known to the limited liability company.'
800 Cooper Finance next argues that "[t]o the extent redress may be possible as to a dissolved limited liability company, Counterclaim Plaintiffs must attempt to seek same in the State of Delaware, as the Delaware Code does not confer jurisdiction on this Court." Counterclaim Def. Brf. at 6. Defendant's do not cite any legal authority for this proposition. To the contrary, the Chancery Court of Delaware has held that "[w]hen a Delaware state statute assigns exclusive jurisdiction to a particular Delaware court, the statute is allocating jurisdiction among the Delaware courts. The state is not making a claim against the world that no court outside of Delaware can exercise jurisdiction over that type of case."
Moreover, courts outside of Delaware have addressed the exact type of claims before this Court, each concerning a dissolved Delaware entity and breach of contract claims.
Having found that 800 Cooper Finance is amenable to suit at this time and furthermore, that the claims against it may properly be addressed in a court outside the State of Delaware, the Court will address whether the Counterclaims should be dismissed because the amount in controversy is insufficient to sustain diversity jurisdiction.
Pursuant to 28 U.S.C.A. § 1332, district courts have "original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States." The Court will "discern the amount in controversy by consulting the face of the complaint and accepting the plaintiff's good faith allegations."
Counterclaim Plaintiffs' Amended Answer alleges a total amount in controversy in excess of $100,000. They are claiming recovery for the disputed amounts paid to 800 Cooper Finance in fulfilment of its supposed debt (totaling over $83,000) as well as interest costs for their bridge loan (in excess of $16,000) and legal fees to secure the release of mortgage from 800 Cooper Finance (in excess of $1,500). First, Counterclaim Defendant contends that there is no legal basis alleged or existing for recovery of any costs incurred for Counterclaim Plaintiffs' bridge loan. Second, it argues that "Counterclaim Plaintiffs cannot prove they are entitled to the $1,500 in legal fees to secure the release of the Mortgage."
Even assuming arguendo that on the face of the Amended Answer as pled, these amounts were not recoverable to a legal certainty, Counterclaim Plaintiffs' remaining claims for all amounts overpaid to Counterclaim Defendant alone surpass the amount in controversy requirement. Counterclaim Plaintiffs' allege that the amounts pursued exceeded what was legally due and owing. Their Amended Answer specifically alleges that they requested documents confirming the collection of certain costs and fees actually incurred with no avail; and that 800 Cooper Finance's demand of unwarranted debts before discharging their mortgage was a breach of loan documents. Counterclaim Plaintiffs' specifically allege why each cost or fee was disputed; and thus, why 800 Cooper Finance is obligated to return excess amounts originally demanded and paid. For example, the Amended Answer alleges that 800 Cooper demanded charges and fees not recoverable after acceleration of the loan, fees for services undocumented, and collection costs without a judicial determination prior to a complaint for confession of judgment or documentation supporting such costs. Amend. Counterclaim ¶ 22.
The Counterclaim Defendant does not dispute any facts on which jurisdiction depends. Alternatively, 800 Cooper Finance argues that they were entitled to the types of payments demanded, which is not disputed in this matter. Counterclaim Plaintiffs assert claims to recover the amounts it overpaid to 800 Cooper and damages resulting from breach of contract and conversion. 800 Cooper Finance's contention is that "[d]ebtor's waived any right to object to the amount of fees or the imposition of default interest by paying all sums in full and inducing 800 Cooper to sign a satisfaction of the mortgage and note." Counterclaim Def. Brf. at 10. It provides no legal basis for this assertion and provides no evidence that the disputed payments were duly and legally owed to it. Accepting the plaintiff's good faith allegations set forth in its Amended Answer and Counterclaim, the amount in controversy requirement is satisfied. The Counterclaims present to a legal certainty an amount in controversy over $75,000.
The Court further finds that Plaintiffs' Counterclaims are also properly before this Court under to supplemental jurisdiction. To be sure, such a separate basis for subject matter jurisdiction was alleged in Counterclaim Plaintiffs Amended Answer and Counterclaim under 28 U.S.C. § 137.
28 U.S.C.A. § 1367. "The rule applies even to claims asserted by or against additional parties."
In this case, there is also no question that the Counterclaims asserted are so closely related to 800 Cooper Finance's initial claims so as to form part of the same case or controversy. Counterclaim Plaintiffs' claims against 800 Cooper Finance arose directly from the original suit. They seek redress for breach of contract, conversion and unjust enrichment arising out of Counterclaim Defendant's actions in collecting a debt (the initial basis of this suit). Additionally, it is alleged that 800 Cooper Finance then canceled its certification of formation and distributed its assets—the money Counterclaim plaintiffs paid to it pursuant to this action—improperly and in violation of Delaware law. Counterclaim Plaintiffs seek to have 800 Cooper Finance repay them the disputed amounts, which they contest were wrongfully collected as a result of this action for confession of judgment. Therefore, the counterclaims in this case derive from a "common nucleus of operative fact" and thus, the Court has jurisdiction pursuant to 28 U.S.C.A. § 1367.
For the foregoing reasons, the Court finds that there is subject matter jurisdiction over the Counterclaims asserted in this case by Defendants/Counterclaim Plaintiffs. Therefore, the Court denies Plaintiff/Counterclaim Defendant's Motion to dismiss.
An appropriate Order shall issue.