Hudson County News Co. v. Metro Associates, Inc.

141 F.R.D. 386, 1992 WL 65735
CourtDistrict Court, D. Massachusetts
DecidedMarch 19, 1992
DocketCiv. A. No. 91-10124
StatusPublished
Cited by7 cases

This text of 141 F.R.D. 386 (Hudson County News Co. v. Metro Associates, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hudson County News Co. v. Metro Associates, Inc., 141 F.R.D. 386, 1992 WL 65735 (D. Mass. 1992).

Opinion

ORDER

DAVID S. NELSON, District Judge.

The plaintiffs have filed this action seeking declaratory judgment, pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, to the effect that the plaintiffs have not violated the Federal Racketeer Influenced and Corrupt Organizations Act (RICO)1 or any other federal statute. The defendants have filed two motions to dismiss2 pursuant to Fed.R.Civ.P. 12(b)(6) for lack of subject matter jurisdiction, or, alternately, in this court’s discretion under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201. The matter was referred to Magistrate Judge Alexander for a recommendation on the defendants’ motions to dismiss.

On December 30, 1991, in a Findings and Recommendations report (“Findings”), the magistrate judge issued her findings that the RICO dispute was not ripe for judicial consideration, therefore, there was no federal question in this case. Magistrate Judge Alexander recommended dismissing this action under the discretion provided to this court by the Declaratory Judgment Act.

Having reviewed the magistrate’s recommendations, as well as the submissions of the parties, and there being no opposition thereto, this court agrees with the Findings. That is, no federal question presently exists in this case and the discretion granted to the court under 28 U.S.C. § 2201 shall be invoked to deny jurisdiction. Accordingly, this court ALLOWS and ADOPTS the Findings and Recommendations and orders this complaint dismissed.

SO ORDERED.

FINDINGS AND RECOMMENDATIONS ON DEFENDANTS’ MOTIONS TO DISMISS (# 11, # 18)

December 30, 1991

ALEXANDER, United States Magistrate Judge.

The instant motions to dismiss have been referred to this Court. All defendants move this Court to dismiss the case pursuant to Fed.R.Civ.P. 12(b)(6) for lack of sub[388]*388ject matter jurisdiction or, alternatively, in this Court’s discretion under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201.

The following are the allegations of the complaint in summary form. Defendant Metro Associates, Inc., formerly known as Blackwood, Inc., was in the business of selling and distributing magazines, books and newspapers until February 22, 1990. Defendant Metro Leasing, Inc., formerly known as Blackwood Leasing, leased motor vehicles to Blackwood, Inc., until February 22, 1990. During 1989, plaintiff Hudson County News Company (Hudson) and Holyoke News Company, Inc. (Holyoke) began to negotiate with the Blackwood entities for the purchase of their assets. Several months of negotiations culminated in various agreements, which are now at issue. Under an Asset Purchase Agreement, Holyoke would purchase all of the assets of the Blackwood entities. Defendants Lewis A. Black and Sara Black, the sole shareholders of the Blackwood entities, formed Consulting Non-Competition Agreements with Holyoke. Lewis Black agreed to sell to other parties real estate that he had formerly leased to Blackwood. Holyoke, in turn, would sell some of the assets it acquired from the Blackwood entities to Hudson.

The dispute in this ease arose from a disagreement over accounting. The purchase price and amounts payable under the non-competition agreements are linked to the sales of Blackwood, Inc. Defendants Achille A. Apicella and Einbinder, Young & Apicella, the accountants for the Blacks and the Blackwood entities, did not provide Blackwood’s 1988 net sales figures, impairing for some months the calculation of the purchase price and non-competition agreements, which were estimated at the closing, with provisions made for adjustment upon determination of the sales figures. The dispute centers on whether Blackwood’s sales to defendant Metro News, Inc. (New-stands), formerly known as The New-stands, Inc. and also purchased by the plaintiffs, are “inter-company” sales, thus excluding them from calculation of Black-wood’s 1988 sales figures.

In the fall of 1990, defendants represented to plaintiffs that a higher purchase price was appropriate, including sales from Blackwood to Newstands in the calculation. Plaintiffs have filed a Demand for Arbitration, pursuant to a clause in the Asset Purchase Agreement for resolving disputes concerning the calculation of the sales figures. The Blackwood entities and the Blacks notified plaintiffs that they were considering filing a lawsuit against the plaintiffs under the Federal Racketeer Influenced and Corrupt Organizations Act (RICO)1 and under Mass.Gen.L. ch. 93A if the plaintiffs did not pay them approximately $1.3 million to account for “inter-company” sales. In a letter dated November 12, 1990, from defendant Black’s attorney to Holyoke, defendants made this representation, apparently basing their belief that a cause of action existed under RICO on plaintiffs’ failure to inform defendants that the Asset Purchase Agreement and Consulting Non-Competition Agreements would exclude “inter-company” sales, given plaintiffs’ knowledge that defendants wanted a higher purchase price and higher non-competition payments.

Since filing the complaint, defendants have changed counsel. Defendants’ current counsel assert that they do not believe they presently have a claim under RICO. Defendants have filed an action against plaintiffs in Massachusetts Superior Court, asserting breach of implied covenants of good faith and fair dealing, misrepresentations and violation of Mass.Gen.L. ch. 93A.

Plaintiffs request that this Court issue a declaratory judgment pursuant to 28 U.S.C. § 2201 to the effect that plaintiffs have not violated RICO or any other federal statute. Plaintiffs request a declaration that they are not obligated to pay additional monies to the defendants on account of “inter-company” sales. Plaintiffs also request costs, including attorneys’ fees of maintaining this action. The defendants request that this Court dismiss the action either for [389]*389lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(6) or in its discretion under 28 U.S.C. § 2201.

This Court shall dismiss any action for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “[T]he Court must accept the factual allegations set forth in the complaint as true and must draw all reasonable inferences in favor of the plaintiffs____ Furthermore, the complaint should not be dismissed unless it appears beyond doubt that the plaintiffs can prove no set of facts which would entitle them to relief.” Kuney International, S.A. v. Dilanni, 746 F.Supp.

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Bluebook (online)
141 F.R.D. 386, 1992 WL 65735, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hudson-county-news-co-v-metro-associates-inc-mad-1992.