Free Redacted Document - District Court of Delaware - Delaware

Case 1:06-cv-00004-SLR

Document 18-3

Filed 09/25/2006

Page 1 of 14

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

................................
CONTEC CORPORATION,

Plaintiff,

AT O'CLOCK M LAWRENCE K. B A E W , Clerk UTEA

-vREMOTE SOLUTION CO.,

................................
DAVID N. HURD United States District Judge

Defendant.

ORDER Pursuant to the oral decision of the Court, entered into the record after hearing oral ~ g u m e non September 26, 2003, in Albany, New York, it is hereby t ORDERED that

1. The complaint is DISMISSED for lack of subject matter jurisdiction, without
prejudice to file an amended complaint on or before October 10, 2003; and 2. The motion and cross motion are DISMISSED as moot, without prejudice to renew within thirty days after the filing of an amended complaint, if any. IT IS SO ORDERED.

Dated: September 26, 2003 Utica, New York.

10/02/03

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Document 18-3

NOLAN H E L . L e -

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK

COPY

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - CONTEC CORPORATION,

Plaintiff,

REHOTE SOLUTION CO., LTD.,

Defendant.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

TNWSCRIPT OF PROCEEDINGS h e l d in

and for the

United States District C o u r t , Northern D i s t r i c t of N e w York,

at the James T. Foley United S t a t e s Courthouse,

445

Broadway,

Albany, New York 1 2 2 0 7 , on FRIDAY, SEPTEMBER 26, 2003,

before the HCIN. DAVID N. HURD, United States D i s t r l c t C o u r t Judge.

THERESA J. BERICAL, R P R , CRR UNITED STATES COURT REPORTER - NDNY

10/02/03

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.NOLAN HELLER Filed 09/25/2006 Document 18-3 Page 3 of 14

@lo03 --

APPEARANCES :

FOR THE PLAINTIFF:

McNAMEE, LOCHNER LAW FIRM
BY:
G.

KIMBALL WILLIAMS, ESQ.
-and-

PENNIE

&

EDM,ONDS LAW FIRM

BY:

KENNETH L. STEIN, ESQ.

FOR THE DEFENDANT:

NOLAN, HELLEY LAW FIRM
BY:

JUSTIN A . RELLER, ESQ.
-and-

FINGER, SLANINA LAW FIRM

BY:

DAVID FINGER, ESQ.

THERESA J. BERICAL, RPR, CRR UNITED STATES COURT REPORTER - NDNY

10/02/03

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Contec v. Remote Solution - 03-CV-910

3

(Court convened a t 12:37 PM.)

THE CLERK:

Contec Corporation versus Remote

Solution Con~pany, 03 -CV910. Counselors, your appearance for Che r e c o r d ,
please.

MR. STEIN: Ken Stein, for Contec

Corporation, from Pennie

&

Edmonds.
Kim Williams, from McNamee,

MR. WILLIAMS:

Lochner, Titus

&

Williams, for Contec Corporation.
&

MR. HELLER: Justin Heller, Nolan

Heller,

on behalf of Remote S o l u t i o n .
MR. FINGER:

David Elnger, F i n g e r

&

Slanina,

on behalf of Remote Solution Company, admitted.
MR. HELLER: Your Honor, just p r o c e d u r a l l y ,

w e filed a p r o hac v i c e motion on b e h a l f of Mr. Finger.

I

just don't know whether it has been s i g n e d yet.
THE COURT;

Yes,

it h a s been signed and

Mr. Finger, you are now authorized to practice law in t h e
Northern District of N e w York with regards to this c a s e . MR. FINGER:

Thank you, your Honor.

MR. WILLIAMS:
1 s true f o r

Your Honor, I believe the same

Mr. S t e i n .
THE COURT:
M R , STEIN:

All right.

Good morning, your Honor.

Contec's motion seeks to compel Remote Solution t o

THERESA J. B E R I C A L , R P R , CRR U N I T E D STATES COURT REPORTER - NDNY

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Contec v . Remote Solution

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arbitrate

-THE COURT:

All right, you're all here now.

Let me just get this out of the way right now.

The Second Circuit has reminded us District
judges on more occasions than I care to admit that we should
not
--

be careful never to go in and take matters without

s u b j e c t matter jurisdiction. T h e r e ' s been more appeals

where, all of a sudden, the Second C i r c u i t says that there's

no subject matter jurisdiction and why has the District
Judge been spending all this time.

Now, in this case, the plaintiff is Contec

Corporation, and I know t h a t y o u ' v e s u b m i t t e d an a f f i d a v i t
and reply that the contract at issue here is before Contec,

LP, and y o u ' r e t h e successor i n interest, but that's not in

the complaint as i t s t a n d s .

And as I see it, until you file

an amended complaint - - and I'll give you time - - t h a t I
have no s u b j e c t matter jurisdiction on this matter at this

time.
And what I a m proposing to do is to dismiss

t h e c a s e w i t h o u t p r e j u d i c e and give you some time to file an
amended compl-aint so t h a t I do have subject matter

jurisdiction, and then we can proceed f u r t h e r , becauee your
complaint does not give me subject matter jurisdiction,
u n l e s s you can t e l l me otherwise.

I mean, I know you

replied, and you may very well have jurisdiction under the

THERESA J. BERIUXL, RPR, CRR UNITED STATES COURT REPORTER - NDNY

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Contec v. Remote Solution - 03-CV-910

proper circumstances, but I don't believe 1 have it right

now.
T h a t ' s where w e stand.
And

I am not gonna be

subjected to the Second Circuit wondering why I'm hearing
argument and spending my time on this until I do. Can you

tell me why I shouldn't do what I am proposing to do?

MR. STEIN: I believe that Contec Corporation
has assumed Contec, L P 1 s rights under the contract.
THE COURT: Yes, I know what you said.
the contract, as alleged in the complaint, is between
But

Contec, LP, and Remote Solutions, and there's nothing of

what you're t e l l i n g me that's in the complaint. What you
have said in reply may very well give me subject matter

jurisdiction, but it's nok in the complaint and that's where
we start with and that's where they would have an

opportunity to challenge this or whatever.

But it's not in

the complaint, and at the moment, it's a collateral issue.
MR. STEIN:
I believe that the complaint doe8

say that the agreement's between Contec Corporation and

Remote Solution. THE COURT: between?

Well, who is t h e contract

Who are the two parties to the contract that

you're trying to enforce?
MR. STEIN: The original parties that signed
t h e contract were Contec, LP, and Remote Solution. Contec,

THERESA J. BERICAL, RPR, CRR UNITED STATES COURT REPORTER - NDNY

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Contec v. Remote Solution

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LP, changed form, first to Contec, LLC, and then changed form to Contec Corporation.
THE COURT:
Is t h a t i n t h e complaint?

MR. STEIN :
THE COURT:

What ?

Is that in the complaint? I d o n ' t believe t h a t those two

MR. STEIN:

facts are in the complaint, but the complaint refers only to
the contract between Contec Corporation, which is the only

entity that exists at t h e p r e s e n t t i m e , and Remote S o l u t i o n .
THE COURT:

Do you have the contract?

Who is

the contract between?
MR. STEIN:

A t t h e time t h e c o n t r a c t was

signed, it was between Contec, LP, and Remote Solution.
THE COURT:

Okay.

MR. STEIN: Contec, LP, no longer exists. It
changed form to LLC and then to the Corporation.

THE COURT:

Ie that In the cornplalnt?

Did

that situation, that you have a contract t h a t now you a r e
representing the successor in interest to that, is that in

the cornplalnt?

I mean, we have two separate entities here

is what I'm f a c c d with in the complaint. You have the

contract wlth Contec, LP, but the plaintiff here is Contec Corporation.
MR. STEIN: Right.
I think that the

complaint only alleges that there's an agreement between

THERESA J. BERICAL, R P R , CRR UNITED STATES COURT REPORTER - NDNY

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Contec Corporation at this polnt and Remote Solution, which
I belleve is accurate.
THE COURT:

I t ' s not accurate.

The contract

is between Contec, LP, and Remote Solution.
MR. STEIN:

Right.

But Contec Corporation

assumed the rights of Contec, LP, under the agreement, so I
think it is - - I believe it's - -

THE COURT:

Why not file an amended complaint

and get that straightened out so we don't have any issue
here?
I am willing to give you t l m e to file an amended

complaint.
MR. STEIN:

Okay.

THE COURT: But I just b e l i e v e t h a t therela
some ambiguity here.

And I don't know what the defendant's
They raised the

position is in regarde t o that issue.

question here In their response, you raised the I s s u e .
Well, let me hear from the defendant.

What's

your position on t h l s matter?

You raised the issue, and I

jhst want to be sure t h a t if I go t h r o u g h t h e effort of
deciding this case on the merits that I have jurisdiction.

That's all 1 want. h d do you agree to accept an amended
complaint? Or what's your position?

MR. FINGER: Your Honor, again, first,
initially, l e t me thank the Court for allowlng me to
practice here today.

THERESA J. BERICAL, R P R , CRR UNITED STATES COURT REPORTER - NDNY

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1 'think there's another issue that adds to

your Honor's concern. Although it's not stated in any of the papers, the Contec Corporation is not a New York entity, it's a Delaware entity. They have not said that in the
papers.
And.

so, under the Federal Arbitration Act, the law

of t h a t does not c o n f e r subject matter jurisdiction. So,
there is a diversity i ~ s u ethat has to be established factually.
And I agree, t h e Court doesn't have

jurisdiction, because it doesn't have facts in the complaint eetablishing a prima facie right on behalf of Contec Corporation. We believe that your Honor's approach is appropriate, that the matter should be dismissed without prejudice, allow them to file a new action, new complaint, and we are happy to go from there.
THE COURT: All right. Mr. Stein, do you
want t o be h e a r d further before I
--

I mean, this is

--

MR. STEIN: Yes, I would. As to the new
point Mr. Finger just raised about Contec Corporation, the complaint says, in paragraph one, that Contec Corporation is
a Delaware corporation. And that's yet another argument

that he's raising

--

MR. FINGER: Your Honor, he's right, it does
say in the complaint.
I was in error.

It does refer t o a

Delaware corporation, I apologize.

THERESA J. BERICAL, RPR, CRR UNITED STATES COURT REPORTER - NDNY

10/02/03

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THE COURT: All right.

MR. STEIN: I guess I'm just wondering if
it's possible for me to - - because T haven't thought about
this issue before.
In fact, before the opposition was filed

by Remote Solution, there was never any disagreement on the

part of Remote Solution that the agreement at issue here
a p p l i e d to Contec Corporation as Contec Corporation.

I

think that's well-established by the evidence that I put

forward in the reply brief.
THE COURT:

As I said before, the Second

C i r c u i t warns u s and wants u s to sua sponte check subject

matter jurisdiction. They get very upset when there's an

appeal and it turns out there's no s u b j e c t matter
jurisdiction and the parties and the judge did not raise it.
And we're supposed to look into these issues right away so

that it doesn't go to the Second Circuit after a two-week
t r i a l and then, f i n a l l y , somebody, the losing party usually,

will all of a sudden come up to the Second Circuit and raise

the iasue that, gee, there was never subject matter jurisdiction. Well, they get sanctioned for not raising the

issue earlier, but the whole case then gets thrown out and
two weeks are wasted.
facing here.
And so, I believe I know what I am going to
do and I am ready to do it, unless either one wants to - -

And that's just what I look like I'm

THERESA J . BERICAL, RPR, CRR UNITED STATES COURT REPORTER - NDNY

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Contec v . Remote Solution - 03-CV-910

MR. STEIN:

Well, I have two requests.

One

request is that I can go back to the office to look i n t o the
issue and maybe convince you that t h e r e is subject matter

jurisdiction by filing a paper.

And the second is if we

could just file t h e amended complaint without dismissing the originally-filed complaint.

THE COURT: Anything further? MR. WILLIAMS:
observations:

Your Honor, just two

One is the complaint does allege a contract

with Contec and Remote; that's admitted in the answer. The
answer says there was such a contract. The motion papers served by Remote say the same thing. That's what's on the
face

of the complaint. What the Court is doing looking at

the underlying documents, I understand t h a t , but the o t h e r
point I make, your Honor, I believe the parties are all
h e r e , the i s s u e i s fully briefed, it's a matter of a

technicality, at b e s t .

I think we can amend nunc pro tunc

now and decide the matter which is otherwise to be decided.
THE COURT:

All right. Contrary to what you

just said, Mr. Williams, this i s not merely a technicality.
This i s a matter whether I have jurisdiction or authority to

do a n y t h i n g in this matter.

And as we now stand, pursuant

to Federal Rule Civil Procedure 12(h) ( 3 ) , an action must be
dismissed when it a p p e a r s that ~ubjectmatter jurisdiction is l a c k i n g .
Here, plaintiff seeks relief based upon an

THERESA J. BERICAL, RPR, CRR
UNITED STATES COURT REPORTER

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NDNY

10/02/03

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admitted contract between Contec, LP, regardless of what I s in the complaint, and defendant Remote Solution. The
plaintiff, Contec Corp., is not a signatory to the contract

and, therefore, lacks standing to assert rights under it.

No reference is made in the complaint to Contec, LP, at all. Contec Corporation argues in reply that it the successor in interest to Contec, LP, and Contec, LLC,
1s

and, therefore, is a party to the agreement.

Further,

Contec Corp. contends that Remote Solution walved any
objection to an assignment of contractual rights or i s

equitably estopped from asserting that the mere change of corporate form constitute8 an assignment prohibited by the agreement. While it appears that Contec Corp. may be

correct, that a change in corporate form, i.e., a successor
in lnterest would not conflict wlth the nonassignment
clause, it st111 appears, from the face of the complaint,
that subject matter jurlsdict~onis lacking. In fact, at

present, subject matter jurisdiction is, in fact, lacking. Therefore, the complaint wlll be dismissed, without prejudice, to file an amended complaint
asserting

proper subject matter juri~dictionon or before Oct~ber10,
2003.

The motion and cross-motion in this case are

dismissed a8 moot, without prejudice, to renew within
30 days after the filing of the amended complaint, if any.

I

THERESA S . BERICAL, R P R , CRR UNITED STATES COURT REPORTER - NDNY

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Anything further, gentlemen?

MR. HELLER: No, Judge.
MR. STEIN:

No, your Honor.

(This matter a d j o u r n e d at 1 2 : 5 2 PM.)

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CERTIFICATION:

I, THERESA J. BERTCAL, R P R , CRR, O f f i c i a l Court
Reporter in and for t h e United States District Court, Northern

District of New York, do hereby certify t h a t I attended at

the time and place s e t forth in the heading hereof; that f
did make a stenographic record of the proceedings h e l d in

this matter and cause t h e aame to be transcribed; that the
foregoing is a true and correct transcript of the same and
the whole thereof.

THERESA J.

BERICAL,

RPR, CRR

Official Court Reporter

DATE: October 2 , 2 0 0 3

THERESA J. BERICAL, R P R , CRR UNITED STATES COURT REPORTER - NDNY