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Hunter Innovations Co. v. Travelers Indemnity Co. of Connecticut

March 31, 2009

HUNTER INNOVATIONS COMPANY, PLAINTIFF,
v.
THE TRAVELERS INDEMNITY CO. OF CONNECTICUT, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Paul L. Friedman United States District Judge

MEMORANDUM OPINION

This diversity action arises from an alleged contractual relationship between plaintiff Hunter Innovations Company ("HIC") and defendant The Travelers Indemnity Company of Connecticut ("Travelers"). The matter is before the Court on defendants' motion to dismiss. After careful consideration of the parties' papers, and the entire record in the case, the Court will grant defendants' motion.*fn1

I. BACKGROUND

HIC is a Virginia business that provides repair, improvement and refurbishment services for historical properties. See Compl. ¶ 1. On December 12, 2003, defendants (Travelers and Stephen Brady, a Technical Specialist in Property Claim Services for Travelers) offered a contract to HIC to repair and refurbish a property insured by Travelers and located in the District of Columbia. See id. ¶¶ 5--6. The contract called for HIC to make an accounting of its time and materials in order to receive payment for that amount plus an additional amount for overhead expenses and profit. See id. ¶ 7. HIC accepted the terms of the contract and completed the work on the property. See id.

Following completion of the repairs, a dispute arose as to the accuracy of HIC's accounting of its costs. See id. ¶ 13. Defendants concluded that the cost of completion of the repairs was $210,214.21, substantially less than the $318,555.12 claimed by HIC. See id. ¶¶ 11, 13. Because of this discrepancy, after crediting a check issued by Travelers for the lesser amount on June 22, 2005, HIC alleges that it is still owed $189,193.88. See id. ¶ 14. On April 17, 2008, HIC filed suit in this Court asserting claims for breach of contract, fraud, unjust enrichment, and in quantum meruit.*fn2 Defendants now move to dismiss under Rule 12(b)(6), arguing, among other grounds, that plaintiff lacks standing to sue in this Court.*fn3

II. STANDARD OF REVIEW

As a threshold jurisdictional matter, the Court must address defendants' challenge to plaintiff's standing to sue. See A.N.S.W.E.R. Coalition v. Kempthorne, 493 F. Supp. 2d 34, 41 (2007). Federal courts are courts of limited jurisdiction. They therefore may hear only cases entrusted to them by a grant of power contained in either the Constitution or in an act of Congress. See, e.g., Beethoven.com L.L.C. v. Librarian of Congress, 394 F.3d 939, 945 (D.C. Cir. 2005); Best v. United States, 522 F. Supp. 2d 252, 254 (D.D.C. 2007); Srour v. Barnes, 670 F. Supp. 18, 20 (D.D.C.1987) (citing City of Kenosha v. Bruno, 412 U.S. 507, 511 (1973)). A federal court has no subject matter jurisdiction where the plaintiff lacks standing. See A.N.S.W.E.R. Coalition v. Kempthorne, 493 F. Supp. 2d at 42 (citing Worth v. Jackson, 451 F. 3d 854, 855 (D.C. Cir. 2006)). Accordingly, the Court will treat plaintiff's motion to dismiss for lack of standing as a motion to dismiss for lack of subject matter jurisdiction brought under Rule 12(b)(1) of the Federal Rules of Civil Procedure. See, e.g., Telephone & Data Sys., Inc. v. American Cellular Network Corp., 966 F.2d 696, 699 (D.C. Cir. 1992) (treating statutory requirement that foreign corporation register to do business in the District of Columbia prior to maintaining suit there as jurisdictional bar).

Under Rule 12(b)(1), plaintiff bears the burden of establishing subject matter jurisdiction. See Kokkonen v. Guardian Life Insurance Co., 511 U.S. 375, 377 (1994); Moms Against Mercury v. FDA, 483 F.3d 824, 828 (D.C. Cir. 2007) (citing Georgiades v. Martin-Trigona, 729 F.2d 831, 833 n.4 (D.C. Cir. 1984)). In determining whether to grant a motion to dismiss for lack of subject matter jurisdiction, the Court must accept all of the factual allegations in the complaint as true. The Court, however, need not accept factual inferences drawn by plaintiff if those inferences are not supported by facts alleged in the complaint, nor must it accept plaintiff's legal conclusions. See Best v. United States, 522 F. Supp. 2d at 255; Primax Recoveries, Inc. v. Lee, 260 F. Supp. 2d 43, 47 (D.D.C. 2003).

III. DISCUSSION

In support of their motion to dismiss, defendants assert that plaintiff lacks standing for two separate reasons: (1) HIC is an unincorporated association and, according to the law of the District of Columbia, unincorporated associations may not sue in their own names; and (2) James Hunter is conducting business under the unregistered trade name "Hunter Innovations Company" and thus HIC is prohibited by statute from maintaining suit in any court in the District of Columbia.

A. Unincorporated Association Status

Defendants argue that HIC is an unincorporated association and therefore that the common law of the District of Columbia prohibits it from bringing suit in its own name. An unincorporated association is a "collection of persons united for collective purpose generally formed under common law right of contract." Pritchett v. Stillwell, 604 A.2d 886, 889 (D.C. 1992) (citation omitted). In contrast, a sole proprietorship is a business form characterized by a single natural person who owns all the assets of the business; is responsible for all debts of the business; and is entitled to all the profits of business. See id.; see also Reclade v. ITT Hartford, 492 S.E.2d 435, 437 (Va. 1997) (ruling on a question of Virginia law certified by the District of Columbia Court of Appeals) (quoting Black's Law Dictionary 1392 (6th ed. 1990)). A sole proprietorship is an entity that is so identified with its owner that the business either must undergo a fundamental change or cease to exist upon the owner's death or retirement. See Pritchett v. Stillwell, 604 A.2d at 889. A sole proprietorship cannot be an unincorporated association. See id.

HIC relies on an affidavit from James F. Hunter in support of its argument that it is a sole proprietorship, not an unincorporated association. See Opp., Affidavit of James F. Hunter ("First Hunter Aff."). Mr. Hunter states that HIC is a sole proprietorship - he alone runs HIC; he makes all the decisions regarding the business; he is personally responsible for all the debts of HIC; and he is entitled to all the profits of HIC. See First Hunter Aff. ΒΆ 3. Mr. Hunter does not have any partners in his business, nor is HIC "owned or operated by a collection of persons united for collective purpose pursuant to a contract." See id. Mr. Hunter further states that HIC will cease to exist at the time of his retirement or death. See id. Defendants do not contest these statements in their reply. Based upon the statements in Mr. Hunter's affidavit, the Court concludes ...


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