CSM Corp. v. HRI Lodging, LLC

          Christopher W. Madel, Todd L. Hennan, and Ellen M. Ahrens, Madel PA, for Plaintiff.

          Eric E. Walker and Keith G. Klein, Perkins Coie LLP, and Arthur G. Boylan and Peter McElligott, Anthony Ostlund Baer & Louwagie PA, for Defendants.

          MEMORANDUM OPINION AND ORDER

          SUSAN RICHARD NELSON UNITED STATES DISTRICT JUDGE

         In August of 2018, Defendants removed this case to federal court asserting diversity jurisdiction, and promptly filed a motion to dismiss Plaintiff's complaint on res judicata grounds. However, because both Plaintiff CSM Corporation and Defendants Urban Minneapolis Plymouth Building, LLC and Urban Minneapolis Plymouth Tenant, LLC, are Minnesota citizens, and because there was no indication that Plaintiff “fraudulently joined” those two Defendants, as that term is defined under Eighth Circuit case law, see Filla v. Norfolk So. Ry. Co., 336 F.3d 806 (8th Cir. 2003), Plaintiff moved to remand this case to state court for lack of complete diversity of citizenship. In the alternative, Plaintiff also contended that Defendants' res judicata-based motion to dismiss was meritless.

         Because the Court agrees with Plaintiff that it lacks subject matter jurisdiction over this dispute, the Court declines to consider Defendants' motion to dismiss, and accordingly remands this case back to state court.

         I. BACKGROUND

         This is a dispute between two hotel developers over allegedly nefarious business practices. Put simply, Plaintiff alleges that Defendants clandestinely worked with one of Plaintiff's former senior executives, a man named Michael Coolidge, to steal lucrative business opportunities from Plaintiff, and then hire Coolidge away from Plaintiff to help Defendants consummate these business opportunities, namely, the purchase and development of the “Plymouth Building Embassy Suites” in downtown Minneapolis.

         For purposes of subject matter jurisdiction, however, only the following allegations from Plaintiff's Amended Complaint (Doc. No. 30) and Defendants' Fed.R.Civ.P. 7.1 corporate disclosure statements (Doc Nos. 6-11), are relevant:

         First, Plaintiff CSM “is a corporation organized under the laws of Minnesota, with its principal place of business in Minneapolis, Minnesota.” (Am. Compl. ¶ 6.)

         Second, Defendant Urban Minneapolis Plymouth Tenant, LLC “is a limited liability company organized under the laws of Delaware with a principal place of business in Minneapolis, Minnesota” (id. ¶ 12), and a membership that includes Minnesota corporation U.S. Bancorp Community Development Corporation. (See Plymouth Tenant Rule 7.1 Statement [Doc. No. 10]; Hennan Affidavit [Doc. No. 31-2] ¶ 2.)

         Third, Defendant Urban Minneapolis Plymouth Building, LLC “is a limited liability company organized under the laws of Delaware with a principal place of business in Minneapolis, Minnesota” (Am. Compl. ¶ 11), and a membership that includes Defendant Urban Minneapolis Plymouth Tenant, LLC. (See Plymouth Building Rule 7.1 Statement [Doc. No. 9].)

         Fourth, Plaintiff alleges that, in May 2015, these two “Plymouth Building Defendants” acquired, and then began operating, “the Plymouth Building and Embassy Suites Flag for Downtown Minneapolis for the benefit of HRI and themselves, ” all while “knowing” that this purchase and development resulted from Mr. Coolidge's breach of his contractual and fiduciary duties. (See Am. Compl. ¶¶ 35, 150, 153.)

         Fifth, more specifically, Plaintiff alleges that the Plymouth Building Defendants either tortiously interfered with Plaintiff and Mr. Coolidge's contract, or aided and abetted the other Defendants in tortious interference, because “the Plymouth Building Defendants knowingly induced and encouraged Coolidge to breach the provision of the Employment Agreements barring him from pursuing CSM opportunities within a year after the termination of his CSM employment [in October 2014], and assisted Coolidge in breaching the same, by, inter alia, acquiring the Plymouth Building and the Embassy Suites Flag in Downtown Minneapolis for their benefit and the benefit of HRI Defendants and others at CSM's expense and operating the same.” (Id. ¶ 161; see also id. ¶¶ 197-99 (aiding and abetting).)

         Sixth, Plaintiff alleges that, through the aforementioned conduct, the Plymouth Building Defendants “substantially assisted Coolidge in breaching his ...