Opinion
Civil Action No. 03-3139.
March 8, 2004
MEMORANDUM/ORDER
Facts and History:
On May 16, 2003, plaintiff, Gary Tyler, a resident of Alabama, filed this diversity action on behalf of himself and William M. Hendrickson, Inc. ("Hendrickson"), a Pennsylvania corporation, asserting five counts against defendants George O'Neill and Hendrickson. These counts include: (1) action for appointment of receiver for Hendrickson; (2) action for accounting of Hendrickson; (3) action for dissolution of Hendrickson; (4) action for breach of fiduciary duty; and (5) action for fraud. In response to the filing of plaintiffs' action, defendants have filed two motions to dismiss, which this court will presently address.
In his complaint Tyler alleges that he is a 10% shareholder in Hendrickson, a company which, according to Tyler, maintains its principal place of business at the residence of O'Neill. Tyler avers that O'Neill resides in Voorhees, N.J. and is the president and 90% shareholder of Hendrickson. The complaint states that O'Neill purchased all outstanding shares of Hendrickson in 1981 from Donald Rook and Tyler purchased 400 of these shares for $20,000.00. O'Neill maintains, however, that no Hendrickson stock was ever issued to Tyler and, accordingly, that O'Neill holds 100% of the shares of the company.
In 1997, Tyler brought suit in this court against O'Neill, O'Neill's wife and Hendrickson. Tyler v. O'Neill, No. 97-3353 (E.D.Pa. filed May 12, 1997). In that suit Tyler asserted claims for breach of fiduciary duty and fraud, together with RICO claims. Hendrickson was subsequently dropped as a defendant, and the case proceeded to trial. On June 5, 1998, the jury returned a verdict against O'Neill and his wife on Tyler's breach of fiduciary duty and fraud claims in the amount of $225,000. However, judgment was ultimately entered for defendants because the court found plaintiff's breach of fiduciary duty and fraud claims to be barred by the statute of limitations.
Tyler subsequently brought another suit in this court against O'Neill and Hendrickson. Tyler v. O'Neill, No. 99-136 (E.D.Pa. filed Jan. 11, 1999). This suit was ultimately dismissed on res judicata grounds. Tyler v. O'Neill, 52 F. Supp.2d 471 (E.D.Pa. 1999), affirmed, 225 F.3d 650 (3d Cir. 2000).
In November, 2002, Tyler filed suit in the Court of Common Pleas "to compel the production of documents pursuant to his rights as a shareholder." The court granted Tyler relief, ordering O'Neill to allow Tyler, or his representative, access to the company's books, which were in a storage facility in New Jersey. The court instructed Tyler, or his representative, to "enter upon the premises with the copying facility . . . so you can copy or write down whatever you want," because the records were not to be removed. In 2003, Tyler's representative reviewed the records. However, despite the Common Pleas Court Judge's instruction, Tyler's representative did not bring a mechanism for making copies to the storage facility.
On May 16, 2003, plaintiff filed a new federal action, which is the action presently pending before this court. Tyler now alleges that the books and records that his representative reviewed demonstrated that "O'Neill concealed his mismanagement of Hendrickson from Tyler, which [in 2000] resulted in the loss of Hendrickson's main customer, Amtrak, and the demise of the business," and that "O'Neill continued to take all benefits from Hendrickson for himself and, apparently, sold the property of Hendrickson [at an auction in September, 2001] and diverted the proceeds to himself." In response to Tyler's complaint, defendants filed two motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons stated below, defendants' motions are denied.
Discussion:
In reviewing a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the court must accept as true the facts alleged in the complaint, together with all reasonable inferences that can be drawn therefrom and construe them in the light most favorable to the plaintiff. Sturm v. Clark, 835 F.2d 1009, 1011 (3d Cir. 1987). Dismissal under Rule 12(b)(6) for failure to state a claim is limited to those instances where it is certain that no relief could be granted under any set of facts that could be proved. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988).
O'Neill has raised two arguments to support his motions to dismiss. First he contends that "Mr. Tyler has no standing as a shareholder of Wm. M. Hendrickson, Inc." because the "judgment by the court in the . . . plaintiff's prior action precludes the claim of stock ownership in this action." Next he maintains that Tyler "cannot meet the jurisdictional requirements of the Federal Court" because Tyler asserted in his complaint "that there is no way of ascertaining the amount owed to him, since [Tyler] was unable to make copies."
Defendants' first assertion provides little support. If anything, both the 1997 and 1999 cases affirmed Tyler's standing as a shareholder. Indeed, in affirming the 1999 district court's decision, the Court of Appeals stated:
We note, however, that the District Court's judgment does not affect Tyler's status as a shareholder of Hendrickson. Thus, although his present claims are barred, the prior judgment does not immunize O'Neill or Hendrickson from suit for post-judgment acts that interfere with Tyler's rights as a shareholder.Tyler v. O'Neill, No. 99-1577, mem. op. at 5-6 (3d Cir. June 9, 2000).
Defendants' second assertion also fails. To satisfy the $75,000 requirement of 28 U.S.C. § 1332, Tyler need only make a "good faith allegation" of the amount in controversy. Dardovitch v. Haltzman, 190 F.3d 125, 135 (3d Cir. 1999) (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938), which stated, "The sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal."). Tyler, in his complaint, alleges compensatory damages in excess of $100,000. While he does not indicate how he arrived at this figure, it seems safe to assume that (1) his allegations that O'Neill's mismanagement of the company resulted in Hendrickson's loss of its main customer — Amtrak — and (2) O'Neill sold Hendrickson property at an auction, would satisfy § 1332's amount-in-controversy pleading requirement. Moreover, defendants have not alleged that Tyler, in asserting his claim for compensatory damages, was not acting in good faith, nor have defendants shown, to a legal certainty, that the claim is for less than the jurisdictional amount.
Thus, for the foregoing reasons, it is hereby ORDERED that defendants' motions to dismiss plaintiff's complaint (#6 and #7) are DENIED.