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Rich v. Housman

United States District Court, M.D. Pennsylvania

March 6, 2014

BRIAN RICH, Plaintiff


MALACHY E. MANNION, District Judge

Presently before the court is the defendants' motion to dismiss made pursuant to Fed. R. Civ. Pro. 12(b)(2) and 12(b)(6). The motion argues that the case should be dismissed for lack of subject matter jurisdiction because the court does not have personal jurisdiction over the defendants and the amount in controversy does not meet the statutory threshold. The motion further contends that dismissal is appropriate because this court is an improper venue. Because the court finds it lacks personal jurisdiction over the defendants, the case will be dismissed.

I. Factual Background

This case arises from failed property transaction that occurred between July and December, 2012. The plaintiff, Brian Rich, owned a piece of property located in Ocean County, New Jersey that he put up for sale sometime before July 2012. The plaintiff is domiciled in Pennsylvania. In July 2012, the defendants, Jay and Elizabeth Hausman, offered to purchase the plaintiff's New Jersey property. The defendants are domiciled in New York. After some negotiations between the parties, a contract for sale was drawn-up setting the selling price at $950, 000. (Doc. 2. The contract for sale is entitled "NEW JERSEY ASSOCIATION OF REALTORS STANDARD FORM OF REAL ESTATE CONTRACT" and only applies New Jersey and federal laws. (Id.).

The defendants were required to secure a mortgage in the amount of $712, 500 by October 15, 2012. If the defendants failed to obtain financing, either party "may void this agreement by written notice to the other party." According to the contract, the plaintiff was represented by LBI Realty Group, LLC, located in Ship Bottom, New Jersey. LBI Realty Group was also to hold the defendants' deposit of $95, 000, which was transferred to that agency sometime before August 6, 2012. The defendants were represented by Anderson Agency, located in Haven Beach, New Jersey. The defendants signed the contract on July 31, 2012 in New York and then the plaintiff signed the contract in Pottsville, Pennsylvania on August, 2, 2012. According to the plaintiff, either the defendants or their agents forwarded the contract to him.[1]

After the October 15, 2012 deadline passed and the defendants were unable to obtain a mortgage, the defendants, through their New Jersey counsel, contacted the plaintiff's attorney at his office in Pottsville, Pennsylvania. The defendants requested a two week extension to obtain the proper financing. (Doc. 10, Att. 2). After an exchange of several emails between counsel for both parties, they agreed to a two week extension with November 2, 2012 serving as the new closing date. Before that date came to pass, however, a massive storm system, better known as Hurricane Sandy or Super Storm Sandy, devastated New Jersey. This storm caused significant damage in Ocean County where the plaintiff's property was located. (Doc. 10, Att. 2).

On December 4, 2012, after the storm passed and the area began to recover, the defendants, through counsel, informed the plaintiff that they had again failed to obtain financing and were terminating the contract pursuant to the financing clause. The plaintiff's attorney responded that same day, stating the plaintiff wanted to see if he could use his banking contacts to obtain a mortgage or take the mortgage note on himself. The defendants' attorney said she would present the idea to the defendants. (Id.). Despite attempts to consummate the agreement, on January 4, 2013, the defendants again notified the plaintiff they were terminating the contract because they could not obtain financing. (Id.). They also noted that there was significant damage from Hurricane Sandy in the areas immediately surrounding the property. They requested the money held in escrow be returned immediately.

On March 15, 2013, the defendants' attorneys again contact plaintiff's counsel and demanded the funds from the escrow account be released immediately. Between January and March, 2013, defendants' counsel attempted to call the plaintiff's attorney several times without success. Sometime before July 2013, the plaintiff sold the property for $925, 000, $25, 000 less than the contract price between the parties. (Doc. 10, Att. 1). After that sale, the plaintiff demanded $25, 000 in exchange for releasing the remaining escrow funds.

On July 2, 2013, Defendant Jay Housman, representing himself and his wife, sent a letter to the plaintiff's attorney demanding the return of the funds held in escrow by the plaintiff's New Jersey realtor. In that letter, attorney Housman rejected the plaintiff's offer and demanded the return of the entire security deposit by July 8, 2013 at 5:00 P.M. If the plaintiff failed to follow these instructions, the defendants threatened legal action. (Doc. 10, Att. 3). It does not appear the plaintiff has released the $95, 000 to the defendants at this juncture. This suit followed two weeks later.

II. Procedural Background

The plaintiff filed his complaint on July 22, 2013. (Doc. 1). The complaint asserts a single-count breach of contract claim, alleging damages of $150, 000, excluding his $25, 000 claim for attorneys' costs and fees, and the right to retain the $95, 000 security deposit held in escrow. On September 19, 2013, the defendants filed a motion to dismiss, (Doc. 7), and brief in support, (Doc. 8), claiming that the court lacks subject matter jurisdiction and also that this court is an improper venue. The plaintiff filed his brief in opposition on October 8, 2013. (Doc. 10). The defendants filed their reply brief on October 23, 2013. (Doc. 11). The plaintiff filed a sur-reply brief on October 30, 2013. (Doc. 12).[2] The case is now ripe for the court's decision.

III. Legal Standard

Rule 12(b)(2) provides for the dismissal of a complaint if the plaintiff fails to establish that the court has personal jurisdiction over a party. Fed.R. Civ.P.12(b)(2). Rule 12(b)(3) in conjunction with 28 U.S.C. ยง1391, requires the court to dismiss the case if the plaintiff fails to show that the district in which the suit is brought is the proper venue. Fed.R.Civ.P. 12(b)(3).

Rule 12(b)(2) requires the court to accept the truth of factual allegations in the complaint relating to jurisdiction and the reasonable inferences that flow therefrom unless the moving party produces evidence tending to contradict the existence of jurisdiction. In re Chocolate Confectionary Antitrust Litigation, 674 F.Supp.2d 580, 595 (M.D.Pa. 2009). In other words, a party may rely entirely on allegations unless and until the moving party presents the court with actual evidence to the contrary. Id. ; Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004) ("when the court does not hold an evidentiary hearing on the motion to dismiss, ... the plaintiff is entitled to have its allegations taken as true and all factual disputes drawn in its favor."); but see, ...

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