BFT Advisors, LLC v. Long

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BFT ADVISORS, LLC Plaintiff, v. JAMES LONG a/k/a/ JIM LONG, Defendant, and BROWN-LONGPLEX, LLC; TIVERTON RECREATION, LLC; LONGPLEX, LLC; LONGPLEX II HOLDCO, LLC; and JLPH ACQUISITIONS CO., INC.; Reach and Apply Defendants.

No. 21-CV-10994-AK

United States District Court, D. Massachusetts

June 3, 2022

MEMORANDUM AND ORDER OF DISMISSAL FOR LACK OF SUBJECT MATTER JURISDICTION

ANGEL KELLEY U.S. DISTRICT JUDGE

Plaintiff BFT Advisors, LLC (“Plaintiff” or “BFT”) asserts seven state and common law claims against Defendants James Long, a/k/a/ Jim Long (“Long”); and Brown-Longplex, LLC; Tiverton Recreation, LLC; Longplex, LLC; Longplex II Holdco, LLC; and JLPH Acquisitions Co., Inc., as Reach and Apply Defendants. Currently pending before the Court is a Motion to Dismiss filed by Long and three of the five named Reach and Apply Defendants: Tiverton Recreation, LLC; Longplex, LLC; and JLPH Acquisitions Co., Inc. (hereinafter, collectively, the “Moving Defendants”). [Dkt. 18 (“Defs.' Mot.”)]. For the reasons set forth below, the Moving Defendants' Motion to Dismiss is GRANTED, and the case is DISMISSED in its entirety for lack of subject matter jurisdiction.

I. FACTUAL & PROCEDURAL BACKGROUND

This case arises out of a contractual dispute between BFT, a finance and real estate consulting company [Dkt. 1 (“Compl.”) at ¶ 1], and Defendant Long and associated Defendant entities, all stemming from BFT's investment in Long's companies and project of building a sports and entertainment complex in Tiverton, Rhode Island [id. at ¶¶ 12-15]. In July 2015, BFT alleges it and Long entered into a contract whereby BFT would be compensated for its consulting work and ability to raise capital for Long's project “primarily through a 10% interest in the future company the Defendant planned to form to hold the real estate and building in.” [Id. at ¶¶ 14-15]. After a period of approximately two years where Plaintiff alleges Long was unable to pay various debts on time and the project became “financially distressed” [id. at ¶¶ 21-27], the parties continued to negotiate; and in May 2017, Plaintiff states it sold 5% of its interest in Long's company^[1] back to Long in exchange for an amount payable over five years [id. at ¶ 27].

Nevertheless BFT alleges that Long continued to fail to repay the various debts owed to Plaintiff, and that attempts at continued negotiations in the years following the parties' May 2017 agreement broke down, culminating in Plaintiff's repeated attempts to reach Long “without success.” [Id. at ¶¶ 28-34]. BFT alleges that in 2019, Long's sports and entertainment complex “was reorganized with no payments made to the [Plaintiff] and with no communication at all, ” and that BFT believes the complex “is now open, functioning, ” and using at least some of the assets BFT provided Long but for which it has not been repaid. [Id. at ¶¶ 35-36].

On the basis of the factual allegations outlined above, BFT filed suit against Defendant Long and entity Defendants Brown-Longplex, LLC; Tiverton Recreation, LLC; Longplex, LLC; Longplex II Holdco, LLC; and JLPH Acquisitions Co., Inc. (hereinafter, “Reach and Apply Defendants”^[2]), naming all entity Defendants as “Reach and Apply Defendants.” [Id.] BFT filed its complaint with this Court on June 15, 2021 and brings claims of conversion (Count I); breach of contract (Count II); fraudulent misrepresentation (Count III); unjust enrichment (Count IV); breach of the covenant of good faith and fair dealing (Count V); violation of Mass. Gen. Laws ch. 93A (Count VI); and a reach and apply action (Count VII). All claims are brought against Long individually except for Count VII, which is brought against the Reach and Apply Defendants. [Id.]

The Moving Defendants filed their Motion to Dismiss [Dkt. 18, Defs.' Mot.] on December 23, 2021, along with an accompanying memorandum of law [Dkt. 19, (“Defs.' Mem. Supp. Mot.”)]. Following the Court's grant of an extension of time to respond [see Dkts. 21, 24], Plaintiff timely filed a brief in opposition to the motion to dismiss on January 20, 2022 [Dkt. 26 (“Pl.'s Opp'n”)].

With regard to the two entity Defendants not joined in the filing of the present motion to dismiss, Brown-Longplex, LLC has not entered an appearance or filed any responsive pleading. Longplex II Holdco, LLC, which is represented by separate counsel than the Moving Defendants, filed an answer to Plaintiff's complaint on January 28, 2022. [Dkt. 29]. The differing procedural posture for some Defendants has no bearing on the Court's ultimate finding that it does not have subject matter jurisdiction to hear this case; and as such, the Court need not engage with the non-Moving Defendants' actions or inaction in adjudicating this motion and issuing the present Order.

II. DISCUSSION

The Moving Defendants advance several arguments in support of their motion to dismiss, beginning with the assertion this Court lacks subject matter jurisdiction due to lack of complete diversity between the parties. [Dkt. 19, Defs.' Mem. Supp. Mot. at 5-8]. They also argue the Court lacks personal jurisdiction over certain entity Defendants [id. at 8-13], that Fed.R.Civ.P. 12(b)(6) requires dismissal due to a contractual agreement between the parties selecting Massachusetts state courts as the forum for any related litigation [id. at 13-14], and that Plaintiff has failed to plausibly state a claim as to Counts I, II, IV, and VII [id. at 14-23].

The Court “must resolve questions pertaining to its subject-matter jurisdiction before it may address the merits of a case.” Donahue v. City of Boston, 304 F.3d 110, 117 (1st Cir. 2002) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101-02 (1998)). Accordingly, because the Court finds it does not properly have subject matter jurisdiction over this action due to lack of complete diversity between the parties, as discussed below, the Court need not and does not delve into the Moving Defendants' remaining arguments in support of dismissal.

a. Federal Diversity Jurisdiction

Federal courts are of limited jurisdiction and may generally only adjudicate civil actions arising under federal laws, see 28 U.S.C. § 1331, and those where parties have complete diversity of state citizenship and the amount in controversy exceeds $75, 000, see id. § 1332. “The existence of subject-matter jurisdiction ‘is never presumed, '” Fafel v. Dipaola, 399 F.3d 403, 410 (1st Cir. 2005) (quoting Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir. 1998)), and federal courts “have a duty to ensure that they are not called upon to adjudicate cases which in fact fall outside the jurisdiction conferred by Congress, ” Esquilm-Mendoza v. Don King Prods., Inc., 638 F.3d 1, 3 (1st Cir. 2011); see also CE Design Ltd. v. Am. Econ. Ins. Co., 755 F.3d 39, 43 (1st Cir. 2014) (describing federal courts' “responsibility to police the border of federal jurisdiction”).

The party asserting federal jurisdiction is responsible for establishing that such jurisdiction exists. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Spielman v. Genzyme Corp., 251 F.3d 1, 4 (1st Cir. 2001). When a Defendant has moved for dismissal based on lack of subject matter jurisdiction, “the party invoking the jurisdiction of a federal court carries the burden of proving its existence.” Kersey v. Prudential Ins. Agency, LLC, No. 15-CV-14186-GAO, 2017 WL 5162006, at *6 (D. Mass. Feb. 3, 2017) (quoting Johansen v. United States, 506 F.3d 65, 68 (1st Cir. 2007) (quotations and citations omitted)). Moreover, “it is black-letter law that jurisdiction must be apparent from the face of the plaintiffs' pleading.” Id. (quoting PCS 2000 LP v. Romulus Telecomms., Inc., 148 F.3d 32, 35 (1st Cir. 1998)).

“[D]iversity jurisdiction requires complete diversity of citizenship as between all plaintiffs and all defendants.” Connectu LLC v. Zuckerberg, 522 F.3d 82, 91 (1st Cir. 2008). When parties include limited liability companies, the citizenship of such an entity “is determined by the citizenship of all of its members.” D.B. Zwirn Special Opportunities Fund, L.P. v. Mehrotra, 661 F.3d 124, 125 (1st Cir. 2011) (citation omitted). Finally, claims of federal subject matter jurisdiction must be “plausible on [their] face, ” see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), pursuant to federal pleading requirements.

In Plaintiff's Complaint [Dkt. 1, Compl.], BFT fails to adequately allege diversity jurisdiction pursuant to the standards set by, inter alia, D.B. Zwirn, 661 F.3d at 125 and Kersey, 2017 WL 5162006, at *6. Not only does BFT fail to plead facts pertaining to the identity, number, and citizenship of its own members, instead offering only its state of incorporation and “usual place of business” [id. at ¶ 1], but it similarly fails to do so for all entity Defendants, pleading simply that each entity's state of incorporation and place of business makes them Rhode Island limited liability companies [id. at ¶¶ 3-7]. Moreover, Plaintiff does not properly plead allegations regarding the citizenship of Defendant Long, providing a Rhode Island address at which it claims he “resid[es], ” but making no allegation as to where he is domiciled [id. ¶ 2], as is required for pleading party citizenship, see Bank One, Tex., N.A. v. Montle, 964 F.2d 48, 53 (1st Cir. 1992); Padilla-Mangual v. Pavia Hosp., 516 F.3d 29, 31 (1st Cir. 2008).

Nevertheless the Moving Defendants' memorandum in support of their motion to dismiss provides relevant information regarding the membership of two of the LLC entity Defendants, indicating these entities are, in fact, Massachusetts citizens for the purposes of diversity jurisdiction. [Defs.' Mem. Supp. Mot. at 7-8]. The Moving Defendants state that Longplex, LLC and Longplex II Holdco,...