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Segal v. Strausser Enterprises

November 19, 2009

KENNETH SEGAL; ADAM SEGAL, AS TRUSTEE FOR AND ON BEHALF OF THE KAREN AND KENNETH SEGAL DESCENDENTS TRUST; AND SEGAL AND MOREL, INC., PLAINTIFFS
v.
STRAUSSER ENTERPRISES, INC.; GARY STRAUSSER; AND LEONARD MELLON, DEFENDANTS



The opinion of the court was delivered by: James Knoll Gardner, United States District Judge

OPINION

This matter is before the court on Defendants' Joint Motion to Dismiss or Stay Litigation and Compel Arbitration, which motion was filed January 4, 2008 on behalf of all defendants. On September 2, 2008 I heard oral argument on the motion to dismiss and took the matter under advisement. For the reasons that follow, I deny the motion to dismiss.

JURISDICTION

This action is properly before this court based on diversity jurisdiction pursuant to 28 U.S.C. § 1332. All plaintiffs are citizens of the State of New Jersey, and all defendants are citizens of the Commonwealth of Pennsylvania.

Specifically, plaintiff Kenneth Segal is a citizen of the State of New Jersey. Adam Segal, who is a plaintiff in his capacity as the sole trustee and on behalf of the Karen and Kenneth Segal Descendants Trust ("Trust"), is a citizen of the State of New Jersey. Moreover, all of the Trust's beneficiaries are citizens of New Jersey. See Emerald Investors Trust v. Gaunt Parsippany Partners, 492 F.3d 192 (3d Cir. 2007). Plaintiff Segal and Morel, Inc. ("S&M") is a corporation organized under the laws of the State of New Jersey and maintains its principal place of business in Bridgewater, New Jersey.

Defendant Strausser Enterprises, Inc. ("SEI") is a corporation organized under the laws of Pennsylvania and maintains its principal place of business in Easton, Pennsylvania. Defendants Gary Strausser ("Strausser") and Leonard Mellon are citizens of the Commonwealth of Pennsylvania. The amount in controversy is in excess of $75,000.

VENUE

Venue is proper pursuant to 28 U.S.C. § 1391(a)(2) because the events giving rise to plaintiffs' claims allegedly occurred within this judicial district.

PROCEDURAL HISTORY

Plaintiffs initiated this action on November 5, 2007 by filing a four-count civil Complaint against SEI, Strausser and SEI's attorney, Leonard Mellon. The Complaint alleges four state-law claims: tortious interference with contract (Count I), tortious interference with prospective contractual relations (Count II), malicious prosecution under the Dragonetti Act, 42 Pa.C.S.A. §§ 8351-8354 (Count III), and abuse of process (Count IV).

The action arises from purchase agreements whereby plaintiff S&M contracted to purchase several parcels of land from defendant SEI. At issue for purposes of the motion to dismiss is the narrow question of whether plaintiffs are required to submit a dispute involving a "right of first refusal" clause to arbitration pursuant to the purchase agreements.*fn1

On January 4, 2008, defendants filed the within Joint Motion to Dismiss or Stay Litigation and Compel Arbitration, which seeks to dismiss the Complaint in its entirety. Defendants filed a supplemental memorandum in support of their motion to dismiss on January 9, 2008. The motion avers that the lawsuit arises from a contract which contains a mandatory arbitration clause, and therefore the Complaint should be dismissed and the case remanded for arbitration. Plaintiffs filed their response in opposition to the joint motion to dismiss on January 31, 2008. Numerous reply briefs and supplemental memoranda have been filed, as set forth in the accompanying Order.

By letter dated August 29, 2008, the Strausser defendants withdrew their support for the motion to dismiss. Therefore, the motion to dismiss is operative on behalf of defendant Mellon only.

On September 2, 2008, I heard oral argument on the motion to dismiss and took the matter under advisement.

By Order dated September 26, 2008, pursuant to Rule 12(d) of the Federal Rules of Civil Procedure, I converted the motion to dismiss to a motion for summary judgment on the issue of arbitrability because evaluation of the motion to dismiss requires consideration of materials outside the pleadings.*fn2

Accordingly, the applicable standard of review is the summary judgment standard set forth in Rule 56 of the Federal Rules of Civil Procedure, set forth below. However, because the motion is styled a "motion to dismiss", ...


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