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Phoenicia Sports & Entertainment, LLC v. New York Cosmos

August 2, 2012

PHOENICIA SPORTS & ENTERTAINMENT, LLC,
PLAINTIFF,
v.
NEW YORK COSMOS, LLC, DEFENDANT.



The opinion of the court was delivered by: Baylson, J.

MEMORANDUM RE: DEFENDANT'S MOTION TO DISMISS, OR IN THE ALTERNATIVE, TO TRANSFER VENUE

I. Introduction

Plaintiff Phoenicia Sports & Entertainment, LLC ("Phoenicia") brings this action against Defendant New York Cosmos, LLC ("Cosmos") for breach of contract. Cosmos moves to dismiss Plaintiff's Complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). In the alternative, Cosmos moves to transfer venue pursuant to 28 U.S.C. § 1404(a). For the following reasons, Cosmos's Motion will be DENIED.

II. Factual and Procedural History

The following facts are alleged in the Complaint, contained within documents attached to the Complaint, or the product of jurisdictional discovery ordered by the Court. See In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) ("[A] document integral to or explicitly relied upon in the complaint may be considered without converting the motion to dismiss into one for summary judgment.") (internal quotation marks and alteration omitted); Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996) ("[O]nce a defendant has raised a jurisdictional defense, a plaintiff bears the burden of proving by affidavits or other competent evidence that jurisdiction is proper.").

Phoenicia is a Pennsylvania corporation that provides marketing, management, and sponsorship services to members of the sports and entertainment industry. Compl. ¶¶ 1, 3. Its principal office is located in Bethlehem, Pennsylvania. Compl. ¶ 1. Christopher Lencheski, President of Phoenicia, lives in Center Valley, Pennsylvania, and conducts much of his work for Phoenicia either from his home or from the office in Bethlehem. Lencheski Aff. ¶ 3.

Cosmos is a Delaware corporation that owns and manages the New York Cosmos professional soccer club. Compl. ¶ 4; Removal Notice ¶ 5. Cosmos's only office is located in New York, New York. Compl. ¶ 2; Fraga Dep. 40:6-24. Cosmos does not have any employees in Pennsylvania. Fraga Dep. 40:25-41:4.

In January and February of 2011, Phoenicia entered into negotiations with Cosmos to provide it with various marketing and sponsorship opportunities. Compl. ¶ 6. Mr. Lencheski traveled to New York at least twice to meet with Cosmos and their executive director, Joseph Fraga, as part of these negotiations. Fraga Dep. 21:13-21:22; 41:5-43:16. On February 18, 2011, Phoenicia sent a contract proposal to Cosmos (the "February 18 Proposal") regarding a possible long-term relationship, but Cosmos never signed it or otherwise agreed to it. Compl. ¶¶ 6-7, Ex.

1. The negotiations culminated without resolution.

Phoenicia had a client, the Justice Entertainment Group ("JEG"), which provided sports and entertainment opportunities in Las Vegas. Compl. ¶ 8. In February and March of 2011, Phoenicia and Cosmos negotiated a new, narrower agreement in which Phoenicia would facilitate a contract between Cosmos and JEG in return for a specified commission. Compl. ¶ 9; Lencheski Aff. ¶ 3. These negotiations consisted mainly of at least twelve phone calls between Mr. Fraga, working in New York, and Mr. Lencheski, working in Pennsylvania. Lencheski Aff. ¶ 3; Fraga Dep. 21:23-22:20. Mr. Fraga knew that Mr. Lencheski was in Pennsylvania during these calls. Fraga Dep. 21:23-22:20.

As a result of these telephone negotiations, Fraga (on behalf of Cosmos) and Lencheski (on behalf of Phoenicia) entered into an oral agreement providing that Phoenicia would be paid a 20% commission of gross revenue for "putting Cosmos together" with JEG to produce soccer events in Las Vegas. Compl. ¶ 9. Phoenicia also offered to lower its commission to 10% if Cosmos agreed to the long-term February 18 Proposal within five business days of any contract entered into between Cosmos and JEG. Compl. ¶ 9.

On March 25, 2011, Phoenicia sent Cosmos an email that read, in part: Please allow this email to serve as written confirmation of our verbal agreement that Phoenicia Sports & Entertainment, LLC will receive a 20% commission on gross revenue from the present opportunity for the Las Vegas match event with our client Justice Entertainment Group and Cosmos, as fee for joining the two parties together in a mutually beneficial arrangement for the event. However, should you become a full time client of Phoenicia, as would be evidenced by agreeing to and signing our proposal for services as sent to you and your executive management on February 17th,*fn1 then the commission due Phoenicia on the aforementioned transaction will be reduced to 10% on gross revenue as is our common courtesy to existing clients. The latter opportunity for a reduced commission for services rendered would need to be exercised within five (5) business days of acceptance of Phoenicia's clients' Las Vegas match event Offer Letter.

Compl. Ex. 2.

On March 30, 2011, Mr. Fraga, on behalf of Cosmos, responded by sending an email to Mr. Lencheski that stated, in relevant part, "The arrangement below has been reviewed and accepted by our management. I will also need [sic] review the term sheet with you once more before engaging your client in this endeavor." Compl. Ex. 2.

Following the March 30th email, Phoenicia orchestrated negotiations between Cosmos and JEG. Lencheski Aff. ¶ 5. During these negotiations, Cosmos operated from its office in New York, JEG operated in Nevada, and Phoenicia operated mainly from Pennsylvania. Lencheski Aff. ¶ 5. Phoenicia's role in the negotiations consisted of, among other things, forwarding contract proposals from JEG to Cosmos and initiating weekly telephone conferences. Fraga Dep. 26:17-32:5. During the negotiations, Mr. Fraga also sent emails to Mr. Lencheski, although he never physically entered Pennsylvania. Fraga Dep. 33:11-34:4. While Mr. Fraga did not know where Phoenicia employees were at the time of these telephone calls and emails, he knew that Phoenicia did much of its work out of its Bethlehem, Pennsylvania office. Fraga Dep. 26:17-32:5.

As a result of Phoenicia's efforts, Cosmos and JEG agreed to a letter of intent on April 7, 2011. Compl. ¶ 11; Lencheski Aff. ¶¶ 5-6. The letter stipulated that Cosmos would receive $1,000,000 a year for three years in exchange for participating in various soccer events in Las Vegas. Compl. ¶ 11, Ex. 3. On May 11, 2011, Cosmos and JEG entered into a formal written agreement based on the letter of intent. Compl. ¶ 12. Pursuant to the oral agreement between Phoenicia and Cosmos, Cosmos had five days to agree to the February 18 Proposal to reduce Phoenicia's commission from 20% to 10%. They did not do so. Compl. ¶ 14.

An initial payment of $250,000.00 was paid to Cosmos by JEG pursuant to the terms of the May 11, 2011 contract. Compl. ¶ 15. Phoenicia invoiced Cosmos for 20% of the $250,000.00, or $50,000.00, on or about June 13, 2011. Compl. ¶ 15, Ex. 5. Phoenicia listed its Bethlehem, Pennsylvania address on the invoice. Compl. Ex. 5. Cosmos then paid Phoenicia the $50,000.00 balance by hand delivering a check to Mr. Lencheski while he was in New York City. Compl. ¶ 16; Lencheski Aff. ¶ 6.

On October 28, 2011, Cosmos unilaterally cancelled the May 11 contract with JEG days before the next payment of $750,000.00 was due. Compl. ¶ 17, Ex. 6. Phoenicia demanded payment from Cosmos for the remaining commission fees ($550,000.00)*fn2 , but Cosmos refused. Compl. ¶¶ 23-24.

Phoenicia brought suit against Cosmos in the Northampton County Court of Common Pleas for breach of contract. Compl. ¶ 25. Specifically, Phoenicia alleged that by canceling the contract with JEG (which reduced the expected gross revenue), and by refusing to pay Phoenicia its earned commission, Cosmos has breached its contract with Phoenicia.

On February 14, 2012, Cosmos removed the case to this Court. (ECF No. 1). On March 13, 2012, Cosmos filed a Motion to Dismiss. (ECF No. 8). On March 16, 2012, Phoenicia filed a motion for discovery related to the issue of personal jurisdiction, which the Court granted on April 2, 2012. (ECF No. 13). As part of that discovery, the parties deposed Mr. Fraga. Phoenicia then filed a timely response to the Motion, and Cosmos timely replied. (ECF Nos. 18-19).

III. Summary of Cosmos's Motion

Cosmos first seeks dismissal for lack of personal jurisdiction under Rule 12(b)(2). Cosmos contends that it does not have the minimum contacts with Pennsylvania necessary for the exercise of specific jurisdiction. Additionally, Cosmos claims that it would be unduly burdened by having to litigate in Pennsylvania, rather than its home forum of New York. In the alternative, Cosmos moves to transfer the case to the Southern District of New York.

Cosmos also moves to dismiss the Complaint under Rule 12(b)(6). Cosmos argues that the New York Statute of Frauds bars Phoenicia's breach of contract claim because the alleged contract is an oral agreement which (1) could not be performed within one year; (2) is for commission in exchange for negotiating a business opportunity; and (3) is not sufficiently memorialized in writing.

Additionally, Cosmos claims that the alleged oral agreement is unenforceable because it is indefinite as to its material terms. Specifically, Cosmos contends that the failure to define "gross revenue" renders the fee ambiguous and that the existence of two compensation ...


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