American Capital Acquisitions v. Fortigent LLC , 595 F. App'x 113 ( 2014 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 14-1926
_____________
AMERICAN CAPITAL ACQUISITIONS PARTNERS LLC;
LEE ARGUSH; NICHOLAS MARINIELLO; ALAN F. GAVORNIK,
Appellants
v.
FORTIGENT LLC; ANDREW PUTTERMAN
______________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Civil No. 13-cv-05571)
District Judge: Honorable Anne E. Thompson
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Submitted Under Third Circuit LAR 34.1(a)
November 20, 2014
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Before: SMITH, HARDIMAN and BARRY, Circuit Judges
(Opinion Filed: December 11, 2014)
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OPINION*
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BARRY, Circuit Judge
American Capital Acquisitions Partners LLC, Lee Argush, Nicholas Mariniello,
*
This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
and Alan F. Gavornik (unless otherwise noted, together “ACA” or “Appellants”) appeal
from the order of the District Court dismissing their complaint against Fortigent LLC and
Andrew Putterman (unless otherwise noted, together “Appellees”). We will affirm.
I. Background1
Argush, Mariniello, and Gavornik are the owners of ACA, which was co-owner of
Concord Wealth Management (“Concord”). In April 2011, ACA sold its equity interest
in Concord to LPL Holdings, Inc. via a Stock Purchase Agreement (the “SPA”).
Thereafter, Concord became a subsidiary of LPL Holdings (referred to herein and in the
District Court’s opinion as “Concord-LPL”), and Argush, Mariniello, and Gavornik
became senior executives of Concord-LPL and at-will employees of LPL Financial,
another subsidiary of LPL Holdings. They executed employment agreements with LPL
Financial which provided for additional compensation in the event that Concord-LPL
reached certain revenue targets, and, in the SPA, LPL Holdings agreed to make additional
purchase price payments to ACA provided that Concord-LPL reached certain time-
sensitive revenue targets. In April 2012, LPL Holdings became affiliated with Fortigent,
LLC. Thereafter, Argush was directed to report to Putterman, Fortigent’s CEO.
On August 9, 2013, ACA filed a complaint in the Superior Court of New Jersey,
alleging claims for tortious interference with prospective advantage (Count I), tortious
interference with contract (Count II), and civil conspiracy (Count III) against Fortigent
and Putterman. ACA alleged that Fortigent and Putterman learned of the additional
1
In reviewing the grant of a motion to dismiss, we accept all facts pleaded in the
complaint as true. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009).
2
payments that would flow to ACA if the revenue targets were met and attempted to
prevent them from achieving the revenue targets in various ways.
On September 19, 2013, Appellees removed the case to District Court based on
diversity jurisdiction, 28 U.S.C. § 1332. ACA did not contest removal. Appellees then
moved to dismiss Count I pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), and to
dismiss Counts II and III pursuant to Rule 12(b)(6). On March 24, 2014, the Court
granted the motion to dismiss with respect to all counts.
The District Court dismissed Count I pursuant to Rule 12(b)(1), holding that ACA
lacked standing because it claimed damages based on tortious interference with Concord-
LPL, a non-party, and had “not established that any of Plaintiffs’ own prospective
economic relationships, separate and distinct from Concord-LPL’s prospective economic
relationships, were damaged by Defendants’ actions.” Am. Capital Acquisition Partners,
LLC v. Fortigent, LLC, Civ. No. 13-5571, 2014 WL 1210580, *4 (D.N.J. Mar. 24, 2014).
With respect to Count II, the Court held that ACA failed to state a claim because
Fortigent cannot be held liable for interfering with contracts to which LPL Holdings and
LPL Financial—corporate affiliates—are parties, unless ACA adequately pleaded facts to
indicate that Fortigent sought to injure it in bad faith, which the Court held that it had
failed to do. The Court dismissed Count II with respect to Putterman because ACA
pleaded no facts to indicate that he was acting outside the scope of his employment, and
held that Count II also failed because the complaint failed to adequately allege a breach
of contract as required for a claim of tortious interference with contract. Finally, the
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Court dismissed Count III for failure to state a claim because it concluded that LPL
Holdings, LPL Financial, Fortigent, and Putterman were legally incapable of forming a
conspiracy, and because ACA failed to allege facts to suggest the existence of an
unlawful means or purpose.
Appellants argue on appeal that the District Court erred when it failed to remand
the entire case to state court after it concluded that it lacked subject matter jurisdiction
with respect to Count I. They also argue that the Court erred in concluding that Counts II
and III failed to state a claim, and in failing to provide them an opportunity to file an
amended complaint.
II. Jurisdiction and Standard of Review
The District Court had jurisdiction pursuant to 28 U.S.C. § 1332, and we have
jurisdiction pursuant to 28 U.S.C. § 1291. Our review of a district court’s dismissal
pursuant to Rule 12(b)(6) and its jurisdictional determinations is plenary. Ballentine v.
United States, 486 F.3d 806, 808 (3d Cir. 2007).
III. Analysis
A. Remand of the Entire Action
Appellants do not contest the District Court’s determination that they lacked
standing with respect to Count I. They argue, however, that given that finding, the Court
should have remanded the entire matter to state court. Appellants never raised this
argument before now; thus, we are left without any analysis to review. As we have held,
“It is axiomatic that arguments asserted for the first time on appeal are deemed to be
4
waived and consequently are not susceptible to review in this Court absent exceptional
circumstances.” Tri-M Grp., LLC v. Sharp, 638 F.3d 406, 416 (3d Cir. 2011) (internal
quotation marks and citation omitted). We do, however, retain discretion to address such
arguments, as “the waiver principle is only a rule of practice and may be relaxed
whenever the public interest or justice so warrants.” Id. (quotation marks and citation
omitted).
Appellants have made no attempt to explain why they failed to raise this argument
before the District Court. Thus, we may consider it waived. Even if they had not waived
the argument, however, it is clearly foreclosed by Supreme Court precedent and,
therefore, unavailing.
Title 28 U.S.C. § 1447(c) provides: “If at any time before final judgment it
appears that the district court lacks subject matter jurisdiction, the case shall be
remanded.” When read literally, the statute could support Appellants’ argument in favor
of remand. The Supreme Court, however, has rejected any such reading of § 1447(c). In
Wisconsin Department of Corrections v. Schacht, 524 U.S. 381, 391-93 (1998),
defendants removed a case to federal court, and then claimed that certain claims brought
against the State were barred by the Eleventh Amendment. Plaintiff argued that, pursuant
to § 1447(c), “if the ‘district court lacks subject matter jurisdiction’ over any claim, then
every claim, i.e., the entire ‘case’ must be ‘remanded’ to the state court.” Id. at 391
(quoting § 1447(c)). The Supreme Court rejected plaintiff’s interpretation of § 1447(c),
holding that “the statute refers to an instance in which a federal court ‘lacks subject
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matter jurisdiction’ over a ‘case,’ and not simply over one claim within a case.” Id. at
392. It held that the proper assertion of an Eleventh Amendment bar as to certain claims
“does not destroy removal jurisdiction over the remaining claims,” and noted that the
purpose of § 1447, which was to specify procedures for remand where removal is
defective, did not favor plaintiff’s interpretation. Id.
Similarly, here, Appellees’ successful challenge to Count I on the basis of standing
did not destroy jurisdiction over the remaining claims. This was not a case, for example,
in which a claim was dismissed because it was discovered that it had been brought
against a non-diverse party, thus destroying diversity jurisdiction.2 Therefore, for the
same reasons the Supreme Court rejected the plaintiff’s reading of § 1447(c) in Schacht,
we reject Appellants’ interpretation of § 1447(c) as requiring remand of the entire case.
See also Shaw v. Marriott Int’l, Inc., 605 F.3d 1039, 1044 (D.C. Cir. 2010) (applying
Schacht and holding that remand of an entire case to state court was not warranted where
some, but not all, plaintiffs were found to have lacked standing); Lee v. Am. Nat’l Ins.
Co., 260 F.3d 997, 1006 (9th Cir. 2001) (applying Schacht and rejecting the argument
that because the district court lacked subject matter jurisdiction over one claim, the entire
case must be remanded).
2
For the first time in their reply brief, Appellants argue that the dismissal of Count I may
have affected the basis for removal because it may have impacted the amount in
controversy. (See Reply Br. at 3-4.) The Notice of Removal, however, calculated the
amount in controversy based on Count II, which alone created a sufficient basis for the
$75,000 threshold.
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B. Remand of Count I
The question remains whether the District Court should have remanded Count I to
state court instead of dismissing it. As Appellees point out, in Schacht, the Supreme
Court left this question open. See 524 U.S. at 392 (observing that one could read
§ 1447(c) to require remand “only of the relevant claims,” but not the entire case). In
Shaw v. Marriott International, a D.C. Circuit case applying Schacht in a similar context,
the court concluded that some, but not all, plaintiffs in a removed case lacked standing.
605 F.3d at 1044. While the D.C. Circuit refused to order remand of the entire case to
state court, it did remand the claims of those plaintiffs who lacked standing to the district
court “so that it may determine the appropriate disposition.” Id. Thus, one could read
Shaw to suggest that it may have been appropriate for the District Court in this case to
remand Count I to state court. In Lee v. American National Insurance Co., the Ninth
Circuit likewise applied Schacht and rejected the argument that the entire case should be
remanded because some, but not all, of the plaintiff’s claims were standing-deficient, but
held that those claims would “have to be disposed of in some manner on remand to the
district court,” either by dismissal by the court or voluntary dismissal by the plaintiff.
260 F.3d at 1006. The court observed that “there should be no obstacle to [plaintiff’s]
refiling [the standing-deficient claims] in state court,” id., but held that it “need not
decide” whether the district court should remand the standing-deficient claims to state
court because plaintiff’s “consistent position on this appeal has been that his case must be
remanded in its entirety,” id. at 1007, and plaintiff failed to present a “specific, cogent
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argument for our consideration on appeal.” Id. (quotation marks and citation omitted).
As Appellees also point out, Appellants failed to argue in their opening brief to us
that the District Court erred in dismissing, rather than remanding, Count I, nor did they
argue this point to that Court. For this reason, we may consider it waived. We have held
that “an appellant’s failure to identify or argue an issue in his opening brief constitutes
waiver of that issue on appeal,” absent extraordinary circumstances. United States v.
Albertson, 645 F.3d 191, 195 (3d Cir. 2011) (quoting United States v. Pelullo, 399 F.3d
197, 222 (3d Cir. 2005)). Here, Appellants have presented no extraordinary
circumstances to justify their failure to raise this issue, arguing only that Appellees would
not be prejudiced were the Court to consider the issue because Appellees were the ones
who “introduced a Schacht-based argument” and then made an “intentional decision not
to brief the partial remand issue.” (Reply Br. at 13-14.) As in Lee, however, until their
reply brief, it was Appellants’ “consistent position on this appeal” that the case “must be
remanded in its entirety,” 260 F.3d at 1007, and they fail to present a compelling
argument in favor of partial remand. We consider the issue waived.
C. Rule 12(b)(6) Dismissal of Counts II and III
Appellants contend that the District Court erred in dismissing Counts II and III
because it based its decision on grounds of “privilege” and “justification” that, under
New Jersey law, are affirmative defenses for which Appellees had the burden of proof.
Appellants contend that the Court violated the principles of Erie R. Co. v. Tompkins, 304
U.S. 64, 78-80 (1938), by applying non-New Jersey caselaw to dismiss Counts II and III,
8
and impermissibly applied a higher pleading standard, based on non-New Jersey law, in
dismissing Count II.
Once again, the District Court never had the opportunity to consider this argument
because Appellants failed to raise it before the Court. See Tri-M Grp., 638 F.3d at 416.
As before, we consider the argument waived, as there are no extraordinary circumstances
justifying Appellants’ failure and so no reasoned consideration of it by the Court.3
D. Leave to Amend
Finally, Appellants argue that the District Court erred in failing to grant them an
opportunity to amend their complaint, despite the fact that they never requested leave to
amend. We disagree. “[I]n ordinary civil litigation it is hardly error for a district court to
enter final judgment after granting a Rule 12(b)(6) motion to dismiss when the plaintiff
has not properly requested leave to amend its complaint.” Fletcher-Harlee Corp. v. Pote
Concrete Contractors, Inc., 482 F.3d 247, 253 (3d Cir. 2007).
IV. Conclusion
We will affirm the order of the District Court.
3
Were we to consider the argument, however, we would conclude that the District Court
ultimately did not err in dismissing Counts II and III on the stated grounds. We have held
that “a complaint may be subject to dismissal under Rule 12(b)(6) when an affirmative
defense . . . appears on its face.” ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir.
1994); see Ball v. Famiglio, 726 F.3d 448, 461 (3d Cir. 2013). Thus, to the extent the
Court dismissed the claims based on the existence of affirmative defenses, those defenses
were apparent from the face of the complaint, and the Court was well within its rights to
determine that no tortious interference with contract or civil conspiracy claim could lie,
given the corporate affiliations of the various parties and the lack of adequate factual
allegations.
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