Partner Reinsurance Company Ltd. v.RPM Mortgage, Inc.et al
- Paul Engelmayer
- 1:18-cv-05831
- U.S. District Court · Southern District of New York
- 6
In Partner Reinsurance v. RPM Mortgage, Judge Engelmayer denied defendants’ jurisdictional dismissal motion, finding constitutional standing while preserving contractual-standing arguments.
PartnerRe may continue pursuing the case in federal court because the court rejected the challenge to its constitutional standing. RPM and LendUS may still argue later that PartnerRe lacks a contractual right to sue under the merger agreement.
What happened
Partner Reinsurance Company Ltd. sued RPM Mortgage, Inc. and LendUS, LLC over a merger agreement under which RPM was to acquire Entitle Direct Group, Inc.; the merger never closed. Defendants argued that PartnerRe lacked standing to sue and that the court therefore lacked authority to hear the case.
The court found that PartnerRe had constitutional standing because it alleged that RPM’s failure to close caused it to lose many millions of dollars and that damages could remedy that injury. The court distinguished this from defendants’ separate argument that PartnerRe was not entitled to sue under the contract, which concerned contract interpretation rather than the court’s constitutional authority.
Judge Paul A. Engelmayer denied defendants’ motion to dismiss for lack of subject-matter jurisdiction, without prejudice to their right to raise the contractual-standing argument later in a summary-judgment motion or bench trial.
The detailed version
- Partner Reinsurance Company Ltd. v.RPM Mortgage, Inc.et al · No. 1:18-cv-05831
- Paul Engelmayer
- June 3, 2020
Background
In February 2017, RPM Mortgage, Inc. (RPM), Entitle Direct Group, Inc. (Entitle), and Partner Reinsurance Company Ltd. (PartnerRe), acting as Entitle’s “Stockholder Representative,” entered into an Agreement and Plan of Merger. Under that agreement, RPM would acquire Entitle, a title insurance company. The merger did not close.
After fact discovery had ended, RPM and LendUS, LLC argued that PartnerRe lacked standing and that the court therefore lacked subject-matter jurisdiction. They moved under Federal Rule of Civil Procedure 12(h) to dismiss for lack of jurisdiction.
Standing Analysis
The court explained that constitutional standing is required for federal jurisdiction and has three elements: an injury, a connection between that injury and the defendant’s conduct, and a remedy that could address the injury. The court held that PartnerRe satisfied those requirements. PartnerRe alleged that RPM failed to appear for the closing and later refused to close the merger, causing Entitle to be acquired by another purchaser for significantly less money and to incur additional expenses. The court found that PartnerRe alleged an injury of many millions of dollars and that damages could remedy it.
Defendants also argued that PartnerRe could not sue for breach of the merger agreement under Delaware law because it was not a proper party, third-party beneficiary, or valid assignee of the agreement. The court held that this argument concerned contractual standing—whether PartnerRe had a right to sue under the agreement—not constitutional standing or subject-matter jurisdiction. The court did not resolve that contractual issue. It stated that the issue could be raised later in a motion for summary judgment or at a bench trial.
Disposition
Judge Paul A. Engelmayer denied defendants’ motion to dismiss for lack of subject-matter jurisdiction, without prejudice to defendants’ right to argue later that PartnerRe lacked contractual standing. The court also directed the Clerk of Court to close the motions pending at docket numbers 72, 76, 78, and 81. The opinion stated that a follow-up order addressing the next steps in the case would issue shortly.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.