Johnson v. Student Funding Group, LLC

• Court: Superior Court of Delaware
• Decided: January 26, 2015
• Docket: 14C-08-098
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY

CURTIS JOHNSON, ) Plaintiff, ) v. ) ) STUDENT FUNDING GROUP, ) C.A. No. N14C-08-098 ALR LLC, a Delaware Limited Liability ) Company, & SERGIO SOTOLONGO, ) Individually, ) Defendants. )

Upon Defendants’ Motion to Dismiss — DENIED

Submitted: December 1, 2014 Decided: January 26, 2015

Curtis Johnson, Plaintiff, filed this action in August 2014 alleging that

Sergio Sotolongo and Student Funding Group, Defendants, breached the Deferred

Compensation Agreement (“DCA”) and alleging violations of the Delaware Wage

Payment & Collection Act (“WPCA”). Defendants have moved to dismiss

Plaintiff’s complaint for failure to state a claim upon which relief can be granted,

for lack of subject matter jurisdiction, and on statute of limitations grounds.

Plaintiff opposes the motion to dismiss.

Upon consideration of Defendants’ motion to dismiss and Plaintiff’s

opposition thereto, the Court finds as follows: 1. “A motion to dismiss must be decided solely upon the allegations in the

complaint.”1 The Court shall accept all “well-pleaded” allegations as true

and make all reasonable inferences in favor of the non-moving party.2

Factual allegations, even if vague, are “well-pleaded” if they provide notice

of the claim to the other party. 3 The Court should deny the motion if the

claimant “may recover under any reasonably conceivable set of

circumstances susceptible of proof.”4

2. Generally, the Court will not consider matters outside of the pleadings when

considering a motion to dismiss.5 However, if a party presents extraneous

documents in support of its motion to dismiss, it is within the Court’s

discretion to include or exclude the extraneous documents from its

consideration.6 If the Court excludes the extraneous documents from its

consideration, the motion to dismiss remains preserved. 7 On the other hand,

1 Am. Bottling Co. v. Crescent/Mach I Partners, L.P., 2009 WL 3290729, at *2 (Del. Super. Sept. 30, 2009). 2 Spence v. Funk, 396 A.2d 967, 968 (Del. 1978); Ramunno v. Cawley, 705 A.2d 1029, 1034 (Del. 1998). 3 Spence, 396 A.2d at 968. 4 Id. 5 Super. Ct. Civ. R. 12(b); In re Santa Fe Pac. Corp. S’holder Litig., 669 A.2d 59, 68 (Del. 1995). 6 Doe 30’s Mother v. Bradley, 58 A.3d 429, 444 (Del. Super. 2012) (explaining that the trial court has “full discretion to accept and consider extraneous submissions when adjudicating a motion to dismiss under 12(b)(6).”). See also Vanderbilt Income & Growth Assoc., L.L.C. v. Arvida/JMB Managers, Inc., 691 A.2d 609, 612-13 (Del. 1996). 7 Super. Ct. Civ. R. 12(b)(6) (“If on a [12(b)(6)] motion . . . matters outside the pleadings are presented to and not excluded by the Court, the motion shall be treated as one for summary judgment.”) (emphasis added). 2 if the Court considers the extraneous documents, the Court shall treat the

motion to dismiss as a motion for summary judgment, unless an exception

applies. 8

3. There are two instances where the Court’s consideration of extraneous

documents will not require conversion of the motion to dismiss to a motion

for summary judgment. “The first exception is when the document is

integral to the plaintiff’s claim and incorporated into the complaint . . . [t]he

second exception is when the document is not being relied upon to prove the

truth of its contents.”9

4. In presenting the motion to dismiss, Defendants have relied upon matters

outside the pleadings, including a copy of the Executive Employment

Agreement (“EEA”) and an affidavit by Defendant Sergio Sotolongo.

Defendants argue that the Court should review the EEA upon consideration

of the motion to dismiss because the EEA is “incorporated by reference” in

the DCA and is therefore “integral to Plaintiff’s claims and Complaint.” 10 In

opposition, Plaintiff takes the position that the documents appended to

8 In re Santa Fe Pac. Corp, 669 A.2d at 69. 9 Vanderbilt Income & Growth Assoc., L.L.C., 691 A.2d at 613 (citing In re Santa Fe Pac. Corp. S’holder Litig., 669 A.2d 59, 70 (Del. 1995)). 10 Defs.’ Reply at 4. 3 Defendants’ motion are matters outside the pleadings and that Court should

not consider any reference to the documents by Defendants. 11

5. Here, consideration of the extraneous documents requires conversion of the

motion to dismiss to a motion for summary judgment because neither

exception applies. While Plaintiff’s complaint does incorporate the EEA by

reference, the Court finds that the EEA is not integral to Plaintiff’s claim

because Plaintiff’s claim alleges breach of the DCA, the contract succeeding

the terminated EEA. Likewise, Defendants submitted an affidavit of

Defendant Sergio Sotolongo, seeking to verify the contents and the truth of

the EEA.12

6. Accordingly, the Court shall exclude the extraneous documents from its

consideration of Defendants’ motion to dismiss. If Defendants want the

Court to consider the extraneous documents, Defendants may file a motion

for summary judgment.

7. Plaintiff’s complaint is “well-pleaded” and states a claim upon which relief

may be granted. As a result, dismissal for failure to state a claim is

inappropriate.

11 Pl.’s Answer at 3. 12 In re Santa Fe Pac. Corp., 669 A.2d at 70 (permitting consideration of outside documents when “the documents are the very documents that are alleged to contain the various misrepresentations or omissions and are relevant not to prove the truth of their contents but only to determine what the documents stated.”) (internal quotation marks omitted). 4 8. Next, dismissal for lack of jurisdiction is inappropriate because the DCA

includes a choice of law provision and provides Delaware as the exclusive

forum to resolve disputes arising out of the DCA. Generally, Delaware

courts will honor such choice of law provisions “so long as the jurisdiction

selected bears some material relationship to the transaction.” 13 A material

relationship exists here because Defendant Student Funding Group is a

Delaware limited liability company.

9. Finally, it is premature for the Court to dismiss Plaintiff’s claim as time-

barred because, without discovery, it is unclear when Plaintiff’s claim

accrued and/or if the alleged violation by Defendants is ongoing and may

trigger new causes of action. Under these circumstances, Defendants are not

entitled to dismissal as a matter of law for lack of jurisdiction or on the basis

of statute of limitations.

NOW, THEREFORE, this 26th day of January, 2015, Defendants’ Motion

to Dismiss is hereby DENIED.

IT IS SO ORDERED.

Andrea L. Rocanelli __________________________________ The Honorable Andrea L. Rocanelli

13 J.S. Alberici Constr. Co. v. Mid-West Conveyor Co., 750 A.2d 518, 520 (Del. 2000). 5