United States District Court, D. Minnesota
ORDER REMANDING TO STATE COURT
WILHELMINA M. WRIGHT, UNITED STATES DISTRICT JUDGE
the Court are Plaintiffs' motion to remand for lack of
subject-matter jurisdiction, (Dkt. 14), and Defendants'
motion to dismiss for lack of personal jurisdiction, (Dkt.
3). For the reasons addressed below, Plaintiffs' motion
is granted and this matter is remanded to Hennepin County
are Stan Tenenbaum, a Minnesota resident, and One-Eighty
Ventures, Ltd, a Minnesota financial consulting firm in which
Tenenbaum is the sole shareholder. Defendants are Paul
Bialick and four of his companies-Texas Ski Ranch, LP (TSR);
Texas Ski Ranch Holdings, LP (TSR Holdings); B&B Burgers,
LLC; and CMA Holdings Inc. Bialick is a Texas resident and a
principal officer in TSR, TSR Holdings, B&B Burgers, and
CMA Holdings. TSR is a Texas limited partnership that
operates a sports facility located in Texas. TSR is wholly
owned by TSR Holdings, which is also a Texas limited
partnership. At the time of the events giving rise to this
litigation, B&B Burgers, a Texas limited liability
company, owned and operated Burger King fast food franchises
in Texas. CMA Holdings, a Texas corporation, owns the Texas
real estate where one of the Burger King restaurants is
located. The parties agree that Tenenbaum is a partner at TSR
and TSR Holdings, but they dispute whether Tenenbaum is a
member of B&B Burgers or CMA Holdings.
allege that Tenenbaum, through One-Eighty Ventures, entered
into a Consulting Agreement in April 2008 with TSR, B&B
Burgers, and CMA Holdings.Under the Consulting Agreement,
Plaintiffs would provide financial consulting services in
exchange for $2, 000 per month in compensation, a 10 percent
equity interest in both B&B Burgers and CMA Holdings, and
a 5 percent equity interest in TSR.
allege that the parties to the Consulting Agreement amended
the agreement's compensation structure in June 2008.
Under their compensation structure, Tenenbaum was required to
submit “incentive fee forms” when One-Eighty
Ventures completed qualifying work. Plaintiffs allege that
the amended Consulting Agreement contemplates that Tenenbaum
could become an equal partner in B&B Burgers and CMA
Holdings and that, if he did so, Tenenbaum no longer would be
required to submit incentive fee forms.
allege that they provided financial consulting services
pursuant to the Consulting Agreement over the following years
and submitted corresponding incentive fee forms. And
Plaintiffs contend that, as a result of Tenenbaum's
efforts, he “triggered earning a 50% partner
interest” in B&B Burgers and CMA Holdings.
Believing that he was an equal partner, Tenenbaum stopped
submitting incentive fee forms to B&B Burgers and CMA
Holdings. But, Plaintiffs allege, Tenenbaum continued to
submit incentive fee forms for the work he performed for TSR
during this time.
working relationship between the parties to the Consulting
Agreement continued in this manner until 2018, when Tenenbaum
and Bialick decided to sell the Burger King franchises and
properties that B&B Burgers and CMA Holdings owned. On
March 26, 2018, Tenenbaum received an email from an attorney
at B&B Burgers and CMA Holdings stating that Tenenbaum is
not a “member, manager, shareholder, director, officer
or agent of either CMA Holdings or B&B Burgers.”
Tenenbaum contends that Bialick “froze him out”
of subsequent business negotiations. In response to the March
26, 2018 email, Tenenbaum began submitting incentive fee
forms to B&B Burgers and CMA Holdings again. Plaintiffs
assert that Defendants have “refused to acknowledge or
pay any amounts due” for the incentive fees submitted
to B&B Burgers and CMA Holdings and have “stopped
paying” the TSR incentive fees.
filed a complaint in Hennepin County District Court on
January 8, 2019, alleging claims for breach of contract,
promissory estoppel, unjust enrichment, account stated,
breach of fiduciary duties, and violations of Minnesota
statutes. Defendants removed the case to federal district
court on diversity jurisdiction grounds. Plaintiffs now seek
to remand the case to Hennepin County District Court.
Defendants oppose Plaintiffs' motion to remand and move
to dismiss the case for lack of personal jurisdiction.
the Court are Plaintiffs' motion to remand to Hennepin
County District Court and Defendants' motion to dismiss
for lack of personal jurisdiction. Because Plaintiffs'
motion addresses a threshold issue, subject-matter
jurisdiction, Plaintiffs' motion is addressed first.
See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574,
578 (1999) (explaining that, generally, a federal court
addresses subject-matter jurisdiction questions before
personal jurisdiction questions).
Motion to Remand
move to remand this case for lack of diversity jurisdiction.
Plaintiffs are Minnesota citizens. And the parties agree that
two Defendants-TSR and TSR Holdings- also are Minnesota
citizens. But Defendants argue that, because TSR and TSR
Holdings were fraudulently joined, the Minnesota citizenship
of TSR and TSR Holdings does not defeat complete diversity
between Plaintiffs and Defendants. Plaintiffs counter that
TSR, at least, is a proper party, and TSR's Minnesota
citizenship divests this Court of subject-matter
case is removed from state court, a federal court must remand
the case “[i]f at any time before final
judgment it appears that the district court lacks subject
matter jurisdiction.” 28 U.S.C. § 1447(c)
(emphasis added); accord In re Atlas Van Lines,
Inc., 209 F.3d 1064, 1066 (8th Cir. 2000). The burden of
proving federal jurisdiction always remains “on the
party seeking to establish it.” Great Rivers
Habitat All. v. Fed. EmergencyMgmt. Agency,
615 F.3d 985, 988 (8th Cir. 2010). All doubts ...