DiPaolo v. Princeton Search LLC
Filing
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Memorandum of Opinion and Order: The Court GRANTS plaintiff's motion to dismiss the breach of contract counterclaim. Defendant's counterclaim for misappropriation of property and trade secrets remains pending. Judge Patricia A. Gaughan on 2/6/14. (Related Doc # 15 ) (LC,S)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
Jeffrey A. DiPaolo
Plaintiff,
vs.
Princeton Search, LLC
Defendant.
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CASE NO. 1:13 CV 2185
JUDGE PATRICIA A. GAUGHAN
Memorandum of Opinion and Order
Introduction
This matter is before the Court on Plaintiff’s Motion to Dismiss Counterclaim for
breach of contract (Doc. 15). This case arises out of plaintiff’s employment with defendant.
For the reasons that follow, the motion is GRANTED.
Facts
Plaintiff, Jeffrey A. DiPaolo, brought this action in state court against defendant,
Princeton Search, LLC (“Princeton Search”), his former employer, alleging age
discrimination in his termination. Defendant removed the case to this Court on the basis of
diversity jurisdiction. Defendant thereafter filed a counterclaim against plaintiff. Count 1 of
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the counterclaim alleges a claim for breach of contract against plaintiff for violating his
employment agreement. Count 2 alleges a claim for misappropriation of property and trade
secrets.
Plaintiff was previously employed by Management Recruiters International, Inc.
(“MRI”), a personal placement service business. Around June 1, 1992, plaintiff entered into a
Manager’s Employment Agreement (“Agreement”) with MRI. On September 18, 2002,
Princeton Search, a New Jersey limited liability company, Princeton Search - Cleveland, LLC
(“Princeton Cleveland”), an Ohio limited liability company, and David Campeas entered into
an Asset Purchase Agreement with MRI. Pursuant to the Asset Purchase Agreement, all of
MRI’s employment agreements, including the Agreement, were assigned to Princeton
Cleveland on September 30, 2002. (Doc. 7-3).
Defendant filed a preliminary injunction seeking to enforce the Agreement. The
assignment document (the “Assignment”) indicated that the Agreement had been assigned by
MRI to Princeton Cleveland and not to defendant Princeton Search. The Court, therefore,
denied defendant’s motion for a preliminary injunction on the grounds that defendant failed to
establish by clear and convincing evidence that it was entitled to enforce plaintiff’s noncompete agreement.
This matter is before the Court on plaintiff’s motion to dismiss the breach of contract
counterclaim. Defendant opposes the motion.
Standard of Review
When considering a motion to dismiss plaintiff's complaint pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure, the allegations of the complaint must be taken as true
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and construed liberally in favor of plaintiff. Lawrence v. Chancery Court of Tenn., 188 F.3d
687 (6th Cir. 1999). The complaint is only to be dismissed if the plaintiff can prove no set of
facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41,
78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Hammond v. Baldwin, 866 F.2d 172 (6th Cir. 1989).
In ruling on a Rule 12(b)(6) motion, a court “may consider the Complaint and any
exhibits attached thereto, public records, items appearing in the record of the case and
exhibits attached to defendant's motion to dismiss so long as they are referred to in the
Complaint and are central to the claims contained therein.” Bassett v. Nat'l Collegiate Athletic
Ass'n, 528 F.3d 426, 430 (6th Cir. 2008) (citing Amini v. Oberlin Coll., 259 F.3d 493, 502
(6th Cir. 2001)). However, “when a written instrument contradicts allegations in the
complaint to which it is attached, the exhibit trumps the allegations.” Williams v.
CitiMortgage, Inc., 498 Fed. Appx. 532, 536 (6th Cir. 2012) (quoting N. Ind. Gun & Outdoor
Shows, Inc. v. City of S. Bend, 163 F.3d 449, 454 (7th Cir. 1998)).
Discussion
Plaintiff argues that the counterclaim must be dismissed because Princeton Search
lacks standing to enforce the Agreement assigned to Princeton Cleveland. Plaintiff argues
that the Assignment, which was attached to defendant’s pleading, establishes that the
Agreement was assigned by MRI to Princeton Cleveland and not to defendant, as defendant
alleged in its counterclaim. Because the terms of the Assignment contradict the pleadings,
plaintiff argues that defendant has failed to state a claim under which it is entitled to relief.
Defendant responds that it has stated a plausible claim against plaintiff and therefore
the motion to dismiss should be denied.
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Upon review, the Court finds that defendant’s counterclaim for breach of contract
must be dismissed.
Sitting in diversity, the substantive law of Ohio applies. Erie R.R. Co. v. Tompkins,
304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Standing is a jurisdictional requirement that
a party have a real interest in the subject matter of the action. Fed. Home Loan Mtge. Corp. v.
Schwartzwald, 134 Ohio St.3d 13, 979 N.E.2d 1214, 1219, 2012–Ohio–5017, ¶ 21–22. In
Ohio, “an action for a breach of contract can only be maintained by the parties to the contract
or those deriving rights from the contracting parties.” American Rock Mechanics, Inc. v.
Thermex Energy Corp., 80 Ohio App.3d 53, 58, 608 N.E.2d 830 (1992) (citing United States
Fidelity & Guaranty Co. v. Truck & Concrete Equipment Co., 21 Ohio St.2d 244, 250, 257
N.E.2d 380 (Ohio 1970)).
Defendant is correct that the Court’s inquiry on a motion to dismiss is whether or not a
plausible claim has been stated in the pleadings. However, defendant cannot survive a motion
to dismiss because the Assignment it attached plainly contradicts its pleadings and so it does
not state a plausible claim. Creelgroup, Inc. v. NGS American, Inc., 518 Fed. Appx. 343, 347
(6th Cir. 2013) (quoting Williams v. CitiMortgage, Inc., 498 Fed. Appx. 532 (6th Cir. 2012))
(“[W]hen a written instrument contradicts allegations in the complaint to which it is attached,
the exhibit trumps the allegations.”); Fayetteville Investors v. Commercial Builders, Inc., 936
F.2d 1462, 1465 (4th Cir. 1991).
Defendant’s counterclaim alleged: “On September 30, 2002, DiPaolo’s Employment
Agreement was formally assigned to Princeton Search by means of an Assignment of
Employment Agreements.” (Doc. 6 p. 5-6). However, the Assignment attached to the
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counterclaim clearly indicates that the Agreement was assigned to Princeton Cleveland. (Doc.
5-2). The Assignment states:
This Assignment dated September 30, 2002 (this “Agreement”), is entered into
by Management Recruiters International, Inc., a Delaware corporation (“Seller”), in
favor of PRINCETON SEARCH - CLEVELAND LLC, an Ohio limited liability
company (“Buyer”).
WHEREAS, Seller, and DAVID CAMPEAS, PRINCETON SEARCH, LLC
and Buyer have entered into an Asset Purchase Agreement dated September 18, 2002
(the “Purchase Agreement”) pursuant to which Seller has agreed to assign to Buyer all
of the Employment Agreements and Confidentiality Agreement between Seller and its
Employees, and Buyer has agreed to accept such assignment and perform the
obligations of the employer thereunder arising after the Closing Date.
...
1. Seller hereby assigns to Buyer and Buyer hereby accepts the assignment of the
Employment Agreement of the Employees of the Seller as of the Closing Date.
...
(Doc. 5-2) (emphasis added).
In its opposition to the motion to dismiss, defendant presents part of the Asset
Purchase Agreement, seeking to clarify the meaning of “Buyer” in the Assignment to
demonstrate that it encompassed defendant. This document was not attached to defendant’s
counterclaim, nor was it referenced in the counterclaim. As such, the Court will not consider
it.1
The terms of the Assignment contradict the terms of defendant’s counterclaim. Thus,
defendant’s counterclaim for breach of contract fails to state a claim for relief because it has
not plead sufficient facts to show that it was entitled to enforce the Agreement. See Beard v.
New York Live Ins. & Annuity Corp., No. 12AP–977, 2013 Ohio 3700 (10th Ohio App. 2013)
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Rule 12(b)(6) states that if “maters outside the pleading are presented to and not
excluded by the court, the motion shall be treated as one for summary judgment
and disposed of as provided in Rule 56, ....” The Court declines to consider
defendant’s attachments. See Bank One, Columbus, Ohio N.A. v. Financial
Ventures, LLC, No. C2–01–0049, 2002 WL 484307 at n.4 (S.D. Ohio March 26,
2002).
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(dismissing a claim for lack of standing on a 12(b)(6) motion where plaintiff was not named
in contract he attached to his pleading). See also Creelgroup, 518 Fed. Appx at 346
(concluding that plaintiff failed to state a claim for breach of contract under Michigan law
when it could not establish it was a party to the contract).
Conclusion
For the foregoing reasons, the Court GRANTS plaintiff’s motion to dismiss the breach
of contract counterclaim. Defendant’s counterclaim for misappropriation of property and
trade secrets remains pending.
IT IS SO ORDERED.
/s/ Patricia A. Gaughan
PATRICIA A. GAUGHAN
United States District Judge
Dated: 2/6/14
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