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Ferrara v. Munro

United States District Court, D. Connecticut

March 23, 2018





         This breach of contract action, relating to failure to pay commissions on the sale of alpacas, is currently before the Court on Defendants' Motion to Dismiss, Doc. 14.[1] When filed, the motion was on behalf of both the individual defendant (Ryen Munro) and the corporate defendant (Tripping Gnome Farm, LLC) (sometimes, "TGF"). Subsequently, and while the motion to dismiss was pending, TGF filed a voluntary petition for bankruptcy in the District of Maine. This Ruling resolves the motion to dismiss the complaint, and also considers the changed circumstances resulting from TGF's bankruptcy proceeding.

         According to the allegations of the complaint, Plaintiffs Louis Ferrara and Melissa Ferrara are citizens of Connecticut. The Ferraras do business under the trade name of the third Plaintiff, New England Alpacas, whose principal place of business is located in Killingworth, Connecticut.

         Plaintiffs bring this action against defendants Ryen Munro and Tripping Gnome Farm, LLC ("Defendants"), seeking contractual damages "arising from the Defendants' refusal to pay the Plaintiffs commission on the Defendants' sale of certain alpaca[s] to non-party Pamela Brewster and her company Stillmeadow Farm, LLC, " located in Stonington, Connecticut. Doc. 1 ("Complaint"), ¶ 1. Plaintiffs allege that they entered into a binding contract with Defendants "under which the Defendants were obligated to pay the Plaintiffs a commission on the sale of alpacas by Defendants to Ms. Brewster and her company during a two-year period ending June 19, 2013." Id.. With respect to these alpaca sales, however, Defendants have allegedly "repeatedly refused to pay [Plaintiffs] the commission owed." Id.

         In their Complaint, Plaintiffs have included the following state law claims against both Defendants: breach of contract, unjust enrichment, breach of the implied covenant of good faith and fair dealing, and violation of Connecticut's Unfair Trade Practices, Conn. Gen. Stat. § 42-110a, et seq. In addition, Plaintiffs assert a claim against individual defendant Munro for tortious interference with contractual relations. Since Plaintiffs assert only state law claims, they base this Court's subject matter jurisdiction solely on diversity of citizenship under 28 U.S.C. § 1332(a)(1).[2]Doc. 1, ¶ 2.

         Pending before the Court is Defendants' "Motion to Dismiss" pursuant to Rules 12(b)(2), b(3), and b(6) of the Federal Rules of Civil Procedure. Doc. 14. In particular, defendant Ryen Munro moves to dismiss the action against him for lack of personal jurisdiction under Rule 12(b)(2). In addition, both defendants, Munro and Tripping Gnome Farm, LLC, move to dismiss the action based on Connecticut's "prior pending action doctrine, " which, as Defendants assert, "applies in this diversity case, as well as federal abstention principles."[3] Doc. 14, at 1.


         The Court previously intended to resolve the motion to dismiss [Doc. 14] in its entirety herein. However, on October 10, 2017, counsel for Tripping Gnome Farm, LLC ("TGF") filed a notice of "Suggestion of Bankruptcy, " informing the Court that on October 6, 2017, TGF filed a voluntary petition for relief under Chapter 7 of Title 11 of the United States Bankruptcy Code, 11 U.S.C. § 101 et seq., in the United States Bankruptcy Court for the District of Maine.[4] Doc. 32.

         In the notice of bankruptcy, TGF's counsel stated, "[p]ursuant to Section 362(a) of the Code, this action is stayed." That is something of an overstatement. Pursuant to 11 U.S.C. § 362(a), the captioned action in this Court was automatically stayed against TGF, the defendant debtor upon the filing of its bankruptcy petition in the District of Maine. As to individual defendant Ryen Munro, there has been no suggestion to the Court, or evidence presented, that a bankruptcy filing was made by him as an individual. In general, the automatic stay is limited to debtors and does not encompass non-bankrupt co-defendants. See Teachers Ins. & Annuity Ass'n of America v. Butler, 803 F.2d 61, 65 (2d Cir. 1986) ("It is well-established that stays pursuant to § 362(a) are limited to debtors and do not encompass non-bankrupt co-defendants."); see also Queenie, Ltd. v. Nygard Int'l, 321 F.3d 282, 287 (2d Cir. 2003) ("[A] suit against a codefendant is not automatically stayed by the debtor's bankruptcy filing.") (quoting 3 Collier on Bankruptcy § 362.03[3][d] (15th ed.2002)); Thomson Kernaghan & Co. v. Global Intellicom, Inc., Nos. 99 Civ. 3005(DLC), 99 Civ. 3015(DLC), 2000 WL 640653, at *14 (S.D.N.Y. May 17, 2000) (Except in "unusual circumstances, " "Section 362 limits the extension of an automatic stay to a proceeding against the debtor"- i.e., does not encompass non-bankrupt co-defendants.); In re Metal Center, 31 B.R. 458, 462 (D.Conn.1983) ("Generally, the automatic stay does not apply to proceedings against nondebtors."); Austin v. Unarco Indus., Inc., 705 F.2d 1, 4-5 (1st Cir.1983) ("[T]he Bankruptcy Court was correct in deciding that the automatic stay provisions of 11 U.S.C. § 362(a) apply only to the bankrupt debtor."), cert. denied, 463 U.S. 1247 (1983).

         Because there has been no showing that defendant Munro is a bankruptcy debtor, there is no applicable § 362(a) stay of this action against him.[5] Accordingly, the action is stayed against debtor TGF, but remains active with respect to defendant Munro.[6] The Court will proceed in resolving the motion to dismiss as to this non-debtor individual defendant. In light of the stay, claims pending against TGF will not be impacted by the Court's ruling on the motion to dismiss. Those claims will remain in effect and stayed.


         The main dispute at issue in this case arises from an alleged contract which Plaintiffs assert they entered with Tripping Gnome Farm, LLC (also "TGF"). Prior to June 20, 2011, Plaintiffs engaged "in the business of buying, raising, selling and brokering the sale of alpacas" at their place of business in Killingworth, Connecticut. Doc. 1, ¶ 8. Plaintiffs allege that Defendants, who "engaged in the business of breeding, raising, selling, and brokering the sales of alpacas, " deceived them into disclosing the name of an interested alpaca buyer "by falsely leading the Plaintiffs to believe that if [they] did so, the Defendants would pay [them] the commissions set forth in the Contract." Doc. 1, ¶¶ 9, 64. Thereafter, by "refusing to pay the agreed-to commissions, and by Munro preventing TGF from doing so, the Defendants gained an unfair business advantage over the Plaintiffs and all other similar businesses in that the Defendants illegally and unfairly made their products and services cheaper to sell to Connecticut residents." Id., ¶ 65. Plaintiffs allege that Defendants' conduct has been "immoral, unethical, oppressive, . . . unscrupulous, " and offensive to the public policy of Connecticut. Id., ¶ 68.

         In contrast, Defendants allege that no binding written contract exists because, inter alia, Defendants "never signed." Doc. 15, at 1. Munro states in his Declaration that "[t]he Plaintiffs and the Defendant Tripping Gnome Farm, LLC never agreed on the terms of the Master Contract that was sent" and "[t]his lawsuit is based on the unsigned, draft Master Contract." Doc. 16, ¶¶ 8-9. The alleged "Agreement, " as presented by Plaintiffs, contains only the signatures of Melissa Ferrara and Louis Ferrara. Doc. 22, Ex. A ("Brokering and Boarding Contract"), at 12. No signature of Ryen Munro, in either his individual capacity or as a member or manager of TGF, appears on that contract.

         Defendants argue that, despite the lack of a binding contract, Plaintiffs have commenced a series of "four cases between Defendants and Plaintiffs" regarding this same contract dispute. Id., at 1-2. Defendants describe the four cases as follows:

(1) an action that Tripping Gnome filed in the Cumberland County, Maine Superior Court (PORSC-CV-2014-00157), seeking a declaratory judgment with respect to the parties' rights and obligations (the "Maine Case");
(2) an action that Plaintiffs subsequently filed in Connecticut Superior Court (MMX-CV14-6011790-S) (the "First Connecticut Case"), as a result of which the Maine Case was stayed;
(3) another action that Plaintiffs filed in Connecticut Superior Court (MMX-CV15-6013059-S) (the "Pending Connecticut Case"), which is nearly identical to both the First Connecticut Case and the instant case and which was filed after rulings adverse to Plaintiffs in the First Connecticut Case, thus allowing Plaintiffs to continue to pursue essentially the same case regardless of those adverse rulings; and
(4) now, the present case, in this federal Court.

Doc. 15, at 1-2.

         Defendants state that three of the four cases - "all but the First Connecticut Case [(2), above], which Plaintiffs voluntarily withdrew after filing the Pending Connecticut case" - remain. Id., at 2. According to Defendants, Plaintiffs have "repeatedly and unjustifiably tried to drag Ryen Munro into . . . three Connecticut cases as a party despite the absence of any allegations that Mr. Munro acted in any capacity other than as a manager of Tripping Gnome." Id. Moreover, each time the Connecticut Superior Court has ruled against Plaintiffs, they "have disregarded the ruling and tried again." Id. Defendants conclude that the present action before this Court is "no more than the latest harassing effort to pursue Ryen Munro, and also to effectively create an 'insurance policy' in the event that the pending Connecticut litigation is dismissed." Id. Moreover, "[t]he prior dismissals of Ryen Munro from Connecticut state court actions should be followed by his dismissal from this case as well." Id.


         A. Standard for Dismissal under Rule 12(b)(2), Fed. R. Civ. P., for Lack of Personal Jurisdiction

         Defendant Ryen Munro moves to dismiss Plaintiffs' complaint for lack of personal jurisdiction under Rule 12(b)(2), Fed.R.Civ.P. In support of his motion, he claims that this Court cannot exercise personal jurisdiction over him under Connecticut's long-arm statute, Conn. Gen Stat. § 52-59b, because he lacks the requisite minimum contacts with either the state of Connecticut or this District.

         A motion to dismiss must be granted if a court lacks personal jurisdiction over a defendant. Fed.R.Civ.P. 12(b)(2). On a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), "the plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996) (citing Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir.1994)). Prior to discovery, a plaintiff may defeat the motion "based on legally sufficient allegations of jurisdiction." Metro. Life Ins. Co., 84 F.3d at 566 (citation omitted). "A prima facie case [of personal jurisdiction] requires nonconclusory fact-specific allegations or evidence showing that activity that constitutes the basis of jurisdiction has taken place." Chirag v. MT Marida Marguerite Schiffahrts, 604 Fed.Appx. 16, 19 (2d Cir.2015) (citing Jazini v. Nissan Motor Co., 148 F.3d 181, 186 (2d Cir.1998)).

         In general, the district court may exercise discretion in determining the best procedural approach to decide a 12(b)(2) motion for lack of personal jurisdiction. Specifically, "[i]n deciding a pretrial motion to dismiss for lack of personal jurisdiction a district court has considerable procedural leeway" and "may determine the motion on the basis of affidavits alone; or it may permit discovery in aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion." Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84 (2d Cir. 2013) (per curiam) (quoting Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)). See also, e.g., Blau v. Allianz Life Ins. Co. of N. Am., 124 F.Supp.3d 161, 170 (E.D.N.Y. 2015).

         Because a motion to dismiss for lack of personal jurisdiction is "inherently a matter requiring the resolution of factual issues outside of the pleadings . . . all pertinent documentation submitted by the parties may be considered in deciding the motion.” Energy Brands, Inc. v. Spiritual Brands, Inc., 571 F.Supp.2d 458, 463 (S.D.N.Y. 2008) (quoting Pilates, Inc. v. Pilates Inst., Inc., 891 F.Supp. 175, 178 n. 2 (S.D.N.Y. 1995)). When considering the motion, the court must construe the pleadings liberally for the benefit of the plaintiffs. Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985).

         When no evidentiary hearing is held, but extensive discovery has been conducted, "the plaintiff's prima facie showing, necessary to defeat a jurisdiction testing motion, must include an averment of facts that, if credited by [the ultimate trier of fact], would suffice to establish jurisdiction over the defendant." Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990), cert. denied, 498 U.S. 854 (1990). As described above, absent an evidentiary hearing, when the motion is "decided on the basis of affidavits and other written materials, the plaintiff need only make a prima facie showing." MacDermid, Inc. v. Deiter, 702 F.3d 725, 727 (2d Cir. 2012) (citation omitted). In that instance, "the allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits."[7] Id.

         In a diversity or federal question case, personal jurisdiction is determined by the law of the state in which the district court sits. See Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d Cir.1997); Arrowsmith v. United Press Int'l, 320 F.2d 219, 231 (2d Cir.1963). If the exercise of jurisdiction is appropriate under that state's statute, the court then must decide whether such exercise comports with the requisites of constitutional Fourteenth Amendment due process. Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996), cert. denied, 519 U.S.107 (1996). See also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980); Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

         B. Personal Jurisdiction over Ryen Munro

         A defendant's conduct is sufficient for the exercise of personal jurisdiction if: (1) the conduct satisfies the requirements of the relevant state's long-arm statute, and (2) the conduct satisfies the "minimum contacts" requirement of the Due Process Clause of the Fourteenth Amendment. See, e.g., Doe v. Ciolli, 611 F.Supp.2d 216, 220-21 (D. Conn. 2009) (citing Inset Sys., Inc. v. Instruction Set, Inc., 937 F.Supp. 161, 163 (D.Conn.1996)) .

         As for the law of Connecticut, "the state where the district court is located, " the applicable statute, Conn. Gen. Stat. § 52-59b (captioned "Jurisdiction of courts over nonresident individuals") states in relevant part:

(a) As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident individual . . . who in person or through an agent: (1) Transacts any business within the state; (2) commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; (3) commits a tortious act outside the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if such person or agent (A) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (B) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; (4) owns, uses or possesses any real property situated within the state; or (5) uses a computer, as defined in subdivision (1) of subsection (a) of section 53-451, or a computer network, as defined in subdivision (3) of subsection (a) of said section, located within the state.

         As discussed more fully below, Plaintiffs argue that there is personal jurisdiction over Munro pursuant to Conn. Gen. Stat. §§ 52-59b(a)(1) (defendant "[t]ransacts any business" in Connecticut) and (a)(3) (defendant "commits a tortious act outside the state causing injury to person or property within the state").

         1. Proper Service of Process

         In order for this Court to exercise personal jurisdiction over Defendant Munro, there must first be an appropriate service of process upon him, providing him with adequate notice of the claim.[8]Then there must be an adequate basis for jurisdiction.

         Under Federal Rule of Civil Procedure 4(e), "[u]nless federal law provides otherwise, an individual . . . may be served in a judicial district of the United States by: (1) following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made;" or by "delivering a copy of the summons and of the complaint to the individual personally;" "leaving a copy of each at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there;" or "delivering a copy of each to an agent authorized by appointment or by law to receive service of process."

         Moreover, "[a]ny nonresident individual . . . over whom a court may exercise personal jurisdiction, . . . shall be deemed to have appointed the Secretary of the State as [his] attorney and to have agreed that any process in any civil action brought against the nonresident individual . . . may be served upon the Secretary of the State and shall have the same validity as if served upon the nonresident individual . . . personally." Conn. Gen. Stat.§ 52-59b(c).

         According to the case docket, in compliance with Conn. Gen. Stat. § 52-59b, Munro was served on September 15, 2016, by Robert S. Miller, State Marshal for New Haven County, who left a copy of the summons and complaint with the Secretary of State of Connecticut, as Agent for Service. See Doc. 6 ("Summons Returned Executed, " 9/1/2016). Also on that date, Miller sent a copy of the summons and complaint by certified mail, return receipt requested to: Ryen Munro, 64 Lupine Lane, Freeport, ME 04032. Id. Upon these facts in the case record, there appears to have been proper service upon Munro under Connecticut's long-arm Statute, Conn. Gen. Stat. § 52-59b(c).[9] Moreover, Munro has not challenged the method of service upon him. The Court thus finds that proper service has been effected and proceeds to the next requirement for the exercise of personal jurisdiction

         2. Connecticut's Long-Arm Statute

         Turning to the specific language of Connecticut's long-arm statute, the Court must determine whether Connecticut law confers any basis for this Court to exercise jurisdiction over defendant Ryen Munro. Plaintiffs assert that "Munro is a nonresident who transact[ed] business in this state, and who committed a tortious act outside the state causing injury to the Plaintiffs in Connecticut, while deriving substantial revenue from alpaca[-]used, and alpaca-related services rendered, in Connecticut." Doc. 24, at 14.

         a. Transaction of Business under Conn. Gen. Stat. § 52-59b(a)(1)

         In support of personal jurisdiction based on transaction of business, Plaintiffs state that Munro sent telephone and email communications into Connecticut and therefore engaged in conduct within this state pursuant to Conn. Gen. Stat. § 52-59b. Factually, Plaintiffs allege that Munro "personally participated in the conduct constituting contractual breaches and tortious conduct." Doc. 24, at 15. "The contract was negotiated between the Plaintiffs and Munro in significant part over the telephone and by electronic mail while the Plaintiffs were physically located in Connecticut." Doc. 1, ¶ 14. "On or about June 17, 2011, Munro accepted the Plaintiffs' offer to enter a contract which incorporated the terms of the Plaintiffs' standard Brokering and Boarding Contract, modified by the negotiations between the parties." Id., ΒΆ 16. "On or about June 20, 2011, the Plaintiffs performed their obligations under the Contract by disclosing Ms. Brewster's name and contact information to Munro via ...

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