Stelor Productions, v. Silvers

Filing 19

MOTION by Steven A. Silvers to dismiss for lack of subject matter jurisdiction and standing (rb, Deputy Clerk)

Case 9:05-cv-80393-DTKH

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORID A STELOR PRODUCTIONS, L .L .C ., a CASE NO . 05-80393-CIV-HURLEY Delaware corporation , f/k/a STELOR Magistrate Hopkins PRODUCTIONS, INC . , Plaintiff,
V. STEVEN A . SILVERS, a Flo rida resident, Defendant,
rj

SILVERS' MOTION TO DISMISS FOR LAC K OF SUBJECT MATTER JURISDICTION AND STANDING Defendant, Steven A . Silvers ("Silvers"), moves to dismiss the action filed by Stelor Productions, LLC ("Stelor") for lack of matter jurisdiction, pursuant to Rule 12(b)(1), Federal Rules of Civil Procedure . The only basis for subject matter jurisdiction - - diversity jurisdiction - - is absent in this case because the amount in controversy is limited by the contract at issue and falls far below $75,000 . Further, Stelor has failed to adequately allege its citizenship, precluding subject matter jurisdiction from attaching . Rule 12(h), Federal Rules of Civil Procedure provides : "Wherever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action ." As explained below, the operative complaint lacks sufficient allegations as to citizenship, and because the License Agreement sued upon limits any recovery, subject matter jurisdiction does not appear evident . Jurisdictional Amoun t It is virtually impossible for Stelor's claim to amount to $75,000, the monetary requirement for diversity jurisdiction . 28 U.S.C. § 1332 .

I of3 2525 Ponce de Leon, 9th Floor, Miami , Florida 33134 1 Phone 305 . 372.1800 I Fax [phone] I kttlaw.com

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Stelor's claims are based on its alleged rights under the License Agreement (Exhibit "A") . Such claims cannot suppo rt a claim for $75,000, as a matter of law ', because the agreement expressly limits damages . Stelor, apparently to dep ri ve Silvers of any me an ingful remedy for its

breach, drafted the agreement and inse rt ed the following provision : LIMITATION OF LIABILITY EACH PARTY'S LIABILITY TO THE OTHER UNDER THIS AGREEMENT FOR CLA IMS RELAT ING TO THIS AGREEMENT, WHETHER FOR BREACH OF CONTRACT OR IN TORT, SHALL BE LIMITED TO THE AGGREGATE ROYALTY FEES PA ID BY LICENSEE TO LICENSOR DURING THE TWELVE MONTH PERIOD PRECEDING THE CLA IM . License Agreement (Exhibit "A") ¶XIII(B) . It is undisputed that Stelor has not paid a penny in royalties to Silvers in the 3 years of the License Agreement . See Silvers Decl ., ¶116(b), 23(a) . Stelor has recently advanced royalties in the amount of $17,000, but these will be credited against royalties due for Stelor's sales of Licensed Products in the 6 month post-termination period . See License Agreement, ¶X(B) . In any event, these advances, assuming Stelor could recover them, fall well below the requisite amount for diversity jurisdiction. Since Stelor's maximum potential damages for any claims based on the License Agreement amount to, at most, $17,000, there is no diversity jurisdiction . Lack of Standing and Citizenshi p Stelor lacks standing to bring this case and has not pled the requisites for subject matter jurisdiction . Silvers' former licensee is Stelor Productions, Inc . ("Stelor, Inc .") . See License

Agreement (Exhibit "A") . Under the agreement, Stelor, Inc . is precluded from assigning its rights to another entity, absent Silvers' consent . ¶XXI, License Agreement, (Exhibit "A") . Silvers has no t
' As Stelor admits, it filed this case in response to Silvers' termination of the License Agreement . Assuming the termination is a breach of the contract, as Stelor contends, Stelor's sole remedy is for damages . Shearson Lehman Hutton, Inc . v . Meyer , 561 So .2d 1331, 1332 (5'h DCA 1990) (injunctive relief is not available to prevent termination of the agreement as only remedy is damages) . Thus, any alleged "value"' of an injunction, or lack of an injunction, is meaningless for diversity purposes .

2 of 3 2525 Ponce de Leon, 9th Floor, Miami , Florida 33134 1 Phone [phone] Fax [phone] kttlaw.com

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consented to an assignment, and Plaintiff does not alleges it holds the license ri ghts by assignment from Stelor, Inc. Yet, this case is brought by another entity - - Stelor Productions, LLC. It appears, therefore , the Plaintiff lacks standing to b ri ng this action . If Stelor Productions , LLC is the proper plaintiff, then the complaint lacks allegations sufficient to confer subject matter jurisdiction . In the 11`h Circuit, a limited liability company - - like plaintiff - - is deemed a citizen of any state of which any of its members is a citizen for purposes of diversity jurisdiction . Rolling Greens MHP, LP v. Comcast SCH Holdings, L .L .C., 374 F .3d 1020, 1022 (1 Ph Cir . 2004). And, it is up to the limited liability comp any/party invoking diversity If any member

juri sdiction - - Stelor - - to specifically allege the citizenship of all its members . Id. resides in Florida - - Silvers' place of citizenship - - diversity is destroyed.

Stelor has failed to

sufficiently plead its members ' citizenship to establish jurisdiction as required by Rolling Greens .2 Until Stelor properly pleads these details, the Cou rt cannot determine whether subject ma tt er juri sdiction exists . CONCLUSION This case should be dismissed for lack of subject matter jurisdiction and/or standing . Respectfully submitted , DIMOND, KAPLAN & ROTHSTEIN, P .A . Counsel for Defendant 200 S . E . First Street , Suite 708 Miami, FL 3313 1 Telephone : [phone] Adam T . Rabin, Esq . KOZYAK TROPIN & THROCKMORTON, P .A . CoCounsel for Defendant 2525 Ponce de Leon, 9`h Floor Coral Gables , Flo ri da 33134 Telephone : [phone] Fax : (305 ) 372-3508

By : Kenneth R. Hartmann , Flori da Bar No : 664286 Gail M . McQuilkin, Flo ri da Bar No . 96933 8
2Stelor recently filed the Declaration of Steven A . Esrig, containing the parenthetical statement that none of the LLC's members reside in Florida . Esrig Decl ., ¶28(a) . Putting aside questions as to Mr. Esrig's thoroughness or credibility, Stelor needs to specifically allege, in the next complaint, the identity of each member and that member's citizenship .

3 of 3 2525 Ponce de Leon, 9th Floor , Miami , Florida 33134 1 Phone 305.372 . 1800 1 Fax 305 . 372 .3508 1 kttlaw .com

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CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was mailed thi s day of May, 2005, to : Kevin C . Kaplan, Esq ., Daniel F . Blonsky, Esq . and David Zack, Esq ., Burlington, Weil, Schwiep, Kaplan & Blonsky, P .A., Counsel for Plaintiff, Office in the Grove, Penthouse A, 2699 South Bayshore Drive, Miami, FL 33133 .

Bv : Kenneth R. Hartmann

3339/101/253048 .1

4 of 3 2525 Ponce de Leon, 9th Floor, Miami, Florida 33134 1 Phone 305 .372 . 1800 1 Fax [phone] kttlaw.com

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E XHIBIT "A"

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Exhibit A
LICENSE, DISTRIBUTIO N AND MANUFACTURING AGREEMEN T
This LICENSE, DISTRIBUTION AND MANUFACTURING AGREEMENT between Steven A. Silvers and Stelor Productions , Inc . is effective as of June 1, 2002 and is entered into by and between Steven A . Silvers (LICENSOR), an Individual , whose official address is 3741 NE 163`a Street, PMB #325, North Miami Beach, FL 33160 and Stelor Productions, Inc . (LICENSEE), a Delaware corporati on wi th its current offices located at : 14701 Mockingbird Drive, Darnestown , Maryland, 20874 .

WITNESSETH WHEREAS , LICENSOR is th e sole and exclusive owner of th e GOOGLES characters iden tified more fully in "Schedule A" attached hereto (the "Licensed Proper ty") ; WHEREAS , LICENSOR is the sole .and exclusive owner of the GOOGLES trademarks identi fied more fully in "Schedule A" attached hereto (the "Licensed Trademarks") ; WHEREAS , LICENSOR has the power and auth ori ty to grant to LICENSEE the right ; privilege and license to use, manufacture , distri bute, and sell th ose types of products th at incorporate or are otherwise based on the Licensed Property as identified in "Schedule A" attached hereto (the "Licensed Products") and to use the Licensed Trademarks on or in association with such Licensed Products ; WHEREAS, LICENSEE has or will have the ability to manufacture, have manufactured, have submanufactured , distribute an d sell or have sold and distributed th e Licensed Products in the Licensed Terri tory more clearly defi ned in Schedule A (the Territory) and to use the Trademark(s) on or in associatiun-with the-Licensed-Products ; . ~_ WHEREAS , LICENSEE desires to obtain from LICENSOR an exclusive license to use , manufacture, have manufactured and sell Licensed Products in the Terri to ry and to use the Licensed Trademarks on or in associati on wi th th e Licensed Products ; WHEREAS, LICENSEE has agreed , pursuant to a letter agreement , to act as a consultant for LICENSOR ; and NOW, THEREFORE, in considerati on of the promises an d agreements set forth herein , the parties, each intending to be legally bound hereby , do hereby agree as follows : I`LTCENSE-GRANT A. LICENSOR hereby grants to LICENSEE , for the Term of this Agreement as- recited in "Schedule A " attached hereto, the exclusive (even as to LICENSOR), worldwide, sub licensable ri ght an d license to use, reproduce , modify, create de ri vative works of, m an ufacture , have manufactured , market, advertise, sell, distri bute , display, perform, and otherwise commercialize th e Licensed Products and Licensed Properties in the Ter ritory . The license includes a license under any an d all intellectual proper ty ri ghts and interests th erein, including by way of explanati on, products which deal wi th th e creati ve characters known as The Googles , anything th at contains th e letters GOO (in upper or lower case) toge th er wi th any and all products , which comprise and which will comp ri se those characters, likenesses, which include Iggle , Oogle, Oggle, Gooroo , Goo tian(s), the planet Goo, slides, computer web site( s), membership lists, clubs, materi als, patterns , prototypes, logos , trademarks , se rvice marks , clothing, merch andise, educational products , marketing an d promotional data and too ! s, packaging and advertising , modi fi cati ons, updates and vari ati ons , and all other items associated therewith ether in singular or plural

F EXHIBIT

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........... .B . LICENSOR agrees to .indemnify-and hold harmless LICENSEE ; its officers ; directors,agents and employees , against all costs , expenses and losses (including reasonable a tt orneys ' fees and costs) incurred through claims of third parties against LICENSEE based on or arising from (i) any infringement, misappropriation or other related action involving the Licensed Intellectual Property or Licensed Trademarks ; or (ii) any breach of LICENSOR's obligations, representations, warranti%~'3 or duties under this agreement. C . With respect to any claims falling within the scope of the foregoing indemnifications : (i) each party agrees promptly to notify the other of and keep the other fully advised with respect to such claims and the progress of any suits in which the other party is not participating ; (ii) each party shall have the right to assume, at its sole expense, the defense of a claim or suit made or filed against the other party; (iii) each party shall have the right to participate, at its sole expense, in any suit instituted against it ; and (iv) a party assuming the defense of a claim or suit against the other party shall not settle such claim or suit without the prior written approval of the other party, which approval shall not be unreasonably withheld or" delayed . XIII. LIMITATION OF LIABILITY A . IN NO EVENT WILL EITHER PARTY BE LIABLE UNDER THIS AGREEMENT FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT (INCLUDING LOSS OF PROFITS, USE, DATA, OR OTHER ECONOMIC ADVANTAGE), NO MATTER WHAT THEORY OF LIABILITY, EVEN IF THE EXCLUSIVE REMEDIES PROVIDED FOR IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE AND EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OR PROBABILITY OF SUCH DAMAGES . THE PROVISIONS OF THIS SECTION "LIMITATION OF LIABILITY" ALLOCATE THE RISKS UNDER THIS AGREE MENT BETWEEN LICENSOR AND LICENSEE AND THE PARTIES HAVE RELIED UPON THE LIMITATIONS SET FORTH HEREIN IN DETERMINING WHETHER TO ENTER INTO THIS AGREEMENT . __ . B . EACH PARTY'S LIABILITY TO THE OTHER UNDER THIS AGREEMENT FOR CLAIMS RELATING TO THIS AGREEMENT,- WHETHER FOR BREACH OF CONTRACT (R IN TORT, SHALL BE LIMITED TO THE AGGREGATE ROYALTY FEES PAID BY LICENSEE TO LICENSOR DURING THE TWELVE MONTH PERIOD PRECEDING THE CLAIM. XIV. INSURANCE ' LICENSEE shall, throughout the Tenn of this Agreement, obtain and maintain at its own cost and expense from a qualified insurance company licensed to do business -as required by state and federal law(s), standard Product Liability Insurance naming LICENSOR as an additionally named insured . Such policy shall provide protection against any and all claims , demands and causes of action arising out of any defects or failure to perform, alleged or otherwise, of the Licensed Products or any material used in connection -therewith-oF-tay-use-thereo -the-amount-of-coverage-shall--be spec fied-in -"Hchedub,-~achedhereto . LICENSEE agrees to fu rnish LICENSOR a certificate of insurance evidencing same within ninety (90) days after issuance of same, and, in no event, shall LICENSEE manufacture, distribute or sell the Licensed Products prior to receipt by LICENSOR of such evidence of insurance . XV. FORCE MAJEURE LICENSEE shall not be liable for any failure of performance hereunder due to causes beyond its reasonable con tr ol, including but not limited to acts of God, fire, explosion, vandalism , strikes , lockouts, work stoppages, other labor difficulti es, supplier failures , storm or o th er similar catas trophes, any law, order, regulati on , directi on, action or request of th e state, local or federal government or of any government agency, commission , court, bureau, corporation or oth er instrumentality of any one or more of such governments, or of any civil or military authority , national emergencies , insurrections , ri ots , or wars .

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORID A STELOR PRODUCTIONS, L .L .C ., a CASE NO . 05-80393-CIV-HURLEY Delaware corporation , f/k/a STELOR Magistrate Hopkins PRODUCTIONS, INC . , Plaintiff, V. STEVEN A . SILVERS, a Florida resident, Defendant ,

ORDER GRANTING SILVERS' TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION AND STANDIN G
THIS CAUSE came before the Court on Silvers' Motion to Dismiss for Lack of Subject Matter Jurisdiction and Standing. The Court having reviewed the pleadings, and been duly advised in the premises , IT IS ORDERED AND ADJUDGED that : 1 . Silvers' Motion to Dismiss for Lack of Subject Matter Jurisdiction and Standing is GRANTED . DONE AND ORDERED in Chambers at Palm Beach County, Florida thi s day of , 2005.

U .S . DISTRICT COURT JUDGE Copies furnished to : Kenneth R. Hartmann, Esq . Kevin C. Kaplan, Esq .
3339/101/253126 .1

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SERVICE LIST W/FAX NOS .

Kenneth R. Hartmann, Esq . Kozyak Tropin & Throckmorton, P .A . 2525 Ponce de Leo n 9`'' Floor Coral Gables, FL 33134 Fax : [phone] Kevin C . Kaplan, Esq. Burlington Weil Schwiep Kaplan & Blonsky 2699 S . Bayshore Drive, Penthous e Miami, Florida 33133 Fax : [phone]