Patrick Capital Markets, LLC v. Ascend Real Estate Partners, L.P.

Background

Patrick Capital Markets, LLC sued Ascend Real Estate Partners, L.P.; Rabina Properties, LLC; Maidad (Mickey) Rabina; Joshua Rabina; and Jardan 520, LLC. Patrick Capital Markets alleged that it was owed fees under an August 23, 2018 Placement Agent Agreement with Ascend. The agreement required Patrick Capital Markets to help market certain investments and identify investors, while Ascend agreed to pay a fee for qualifying investments by investors Patrick Capital Markets introduced.

Patrick Capital Markets alleged that it introduced prospective investors in connection with investments that were not originally listed in the agreement’s schedules. It claimed the parties later changed the agreement through their conduct and communications to cover those investors and to include Rabina Properties. Patrick Capital Markets sought fees and asserted claims for breach of contract, breach of the implied duty of good faith and fair dealing, unjust enrichment, quantum meruit, and tortious interference with contract.

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which concerns whether a complaint states a legally sufficient claim. They alternatively sought to sever and transfer the claims against Ascend to a federal court in Delaware under the federal transfer statute, citing the agreement’s Delaware forum-selection clause.

Jurisdictional Analysis

The court addressed subject-matter jurisdiction before considering the defendants’ arguments. Subject-matter jurisdiction is the court’s legal authority to hear a case. The complaint relied on diversity jurisdiction, which generally requires every plaintiff to be a citizen of a different state from every defendant. For limited-liability companies and other noncorporate entities, citizenship depends on the citizenship of their members, partners, or other constituent owners.

The court found the allegations insufficient. Although Patrick Capital Markets alleged that it was a Missouri limited-liability company and that all its members were Missouri citizens, it did not identify those members. The allegations concerning Ascend did not establish whether Mickey Rabina and Joshua Rabina were limited or general partners or whether other general partners existed. The allegations concerning Rabina Properties did not identify all of its members. The allegations concerning Jardan identified two constituent entities but did not identify the partners or members of those entities.

Because the complaint did not identify the relevant owners and their citizenship, the court could not determine whether complete diversity existed. The court emphasized that it could not assume jurisdiction in order to decide the merits of the claims.

Disposition

The court held that it could not reach the contract and other merits arguments because federal jurisdiction had not been established. It dismissed the complaint for lack of jurisdiction, with leave to replead within 20 days so Patrick Capital Markets could attempt to correct the jurisdictional deficiencies. The court also canceled the scheduled argument and directed the clerk to terminate the defendants’ motion. Judge Alvin K. Hellerstein did not decide whether Patrick Capital Markets had a valid claim or whether the Delaware forum-selection clause required transfer.