Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Cooper v. Rucci

April 7, 2008

GARY COOPER, A SHAREHOLDER DERIVATIVELY ON BEHALF OF WALDEN POND DEVELOPMENT, INC., A PENNSYLVANIA CORP., PLAINTIFF,
v.
SEBASTIAN RUCCI, DEFENDANT.



The opinion of the court was delivered by: Nora Barry Fischer United States District Judge

MEMORANDUM OPINION and ORDER

This case stems from a business dispute between the Plaintiff, Gary Cooper (hereinafter, "Plaintiff"), and the Defendant, Sebastian Rucci (hereinafter, "Defendant"), relating to the development of real property located in Cranberry Township, Pennsylvania. On or about June 16, 2003, the Plaintiff and Defendant formed a Pennsylvania Corporation, Walden Pond Development, Inc. ("Walden Pond"), for the purpose of carrying out the development project, which consisted of three phases. Pending before the Court is Defendant's Motion to Dismiss for Lack of Standing or Subject Matter Jurisdiction or For Judgment on the Pleadings [82].

The Court draws the relevant facts from Plaintiff's well-pled Complaint. The Defendant was to do all the work required to make the developed property ready for sale and subdivide it for sale as residential lots. The Plaintiff was to provide capital for expenses for the project. Both the Plaintiff and Defendant intended for each to have a fifty-percent ownership interest in the Walden Pond Corporation. (Docket No. 23 at 3-4).

At some point after the commencement of Phases I and II of the project, Plaintiff began to suspect that corporate money was being misused or diverted from the corporation by Defendant. After examining corporate bank statements provided to Plaintiff by the Defendant and comparing them to corporate bank statements obtained directly from the corporation's bank, the Plaintiff discovered large discrepancies. The Plaintiff then obtained copies of checks written by Defendant against the Walden Pond corporate account and discovered that Defendant had spent large sums of money on unauthorized expenses, including personal expenses. (Docket No. 23, 5-7).

As of November 1, 2006, all of the residential lots in Phase I and II had been sold, with the exception of four lots. Plaintiff alleges that one of these four remaining lots was later sold by the Defendant, who then diverted the $120,000 purchase price from Walden Pond. According to the Plaintiff, Defendant then recorded a deed transferring the three remaining unsold lots to him for one dollar. Finally, the Plaintiff alleges that Defendant, through another corporation owned or controlled by the Defendant, purchased the property for Phase III of the development. According to the Plaintiff, this purchase was a corporate opportunity held only by Walden Pond and the Defendant usurped this opportunity for his own benefit to the detriment of Walden Pond. (Doc. No. 23, at 7-8).*fn1

Plaintiff brought suit seeking to set aside any transfer of Walden Pond's real property to the Defendant and to collect damages against the Defendant. The Plaintiff is currently a shareholder, officer and director of Walden Pond and was a shareholder at the time of all the transactions complained of above.*fn2 (Docket No. 23, at 3).

PROCEDURAL HISTORY

On January 5, 2007, Plaintiff initiated the instant action in the name of Walden Pond by filing a Complaint in Equity in the Court of Common Pleas of Butler County, Pennsylvania. On January 10, 2007, Defendant filed a Notice of Removal. (Docket No. 1). On January 30, 2007, Plaintiff filed a Motion to Amend the Complaint to convert the action into a shareholder derivative action. (Docket No. 10). On June 5, 2007, the Court orally granted Plaintiff's Motion toAmend the Complaint, which Plaintiff filed the same day. (Docket Nos. 22 & 23).

On December 26, 2007, Defendant filed an Answer and Counterclaim to the First Amended Complaint (Docket No. 80) as well as the instant pending motion. (Docket No. 82). On January 15, 2008, Plaintiff filed Plaintiff's Answer and Affirmative Defenses to Counterclaim (Docket No. 85) and Plaintiff's Brief in Opposition to Motion to Dismiss for Lack of Standing or Subject Matter Jurisdiction or for Judgment on the Pleadings. (Docket No. 86). On January 27, 2008, Plaintiff filed a Reply to the Response to the Motion to Dismiss for Lack of Standing or Subject Matter Jurisdiction or for Judgment on the Pleadings. (Docket No. 89). This motion is now ripe for disposition.

STANDARD

The Court notes that Defendant's motion to dismiss for lack of standing or subject matter jurisdiction contains an alternative motion for judgment on the pleadings. Because Defendant's argument for judgment on the pleadings is wholly intertwined with the standing issue, and because resolution of the standing issue moots the arguments raised for judgment on the pleadings, the Court will resolve the instant motion under the standard applicable to motions to dismiss under rule 12(b)(1) of the Federal Rules of Civil Procedure.

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) challenges the lack of subject matter jurisdiction over a plaintiff's claims. See Fed. R. Civ. Pro. 12(b)(1). "At issue in a Rule 12(b)(1) motion is the court's 'very power to hear the case.' " Petruska v. Gannon University, 462 F.3d 294, 302 (3d Cir. 2006) (quoting Mortenson v. First Federal Savings and Loan Association, 549 F.2d 884, 891 (3d Cir. 1977)). In reviewing a motion to dismiss pursuant to Rule 12(b)(1), the court must distinguish between facial attacks and factual attacks. Petruska, 462 F.3d at 302.

A facial attack challenges the sufficiency of the pleadings, and the court must accept the plaintiff's allegations as true. Id. When a defendant attacks a complaint on its face, he "[asserts] that considering the allegations of the complaint as true, and drawing all reasonable inferences in favor of [plaintiff], the allegations of the complaint are insufficient to establish a federal cause of action." Mullen v. Thompson, 155 F.Supp.2d 448, 451 (W.D. Pa. 2001). Dismissal is proper under Rule 12(b)(1) only when "the claim clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or ... is wholly insubstantial and frivolous." Kehr Packages, Inc. v. Fidelcor, Inc., , 1409 (3d Cir. 1991), cert. denied, 501 U.S. 1222 (1991) (quoting Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946)).

On the other hand, when a defendant launches a factual attack on subject matter jurisdiction, "no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims. Moreover, the plaintiff will have the burden of proof that jurisdiction does in fact exist." Petruska, 462 F.3d at 302 (quoting Mortenson, 549 F.2d at 891). In a factual scenario, the court must weigh the evidence relating to jurisdiction, with discretion to allow ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.