United States District Court, W.D. Virginia, Roanoke Division
Michael F. Urbanski United States District Judge
pending before the court in this breach of contract case are
defendant 10 South Street Associates, LLC's second motion
to dismiss for failure to state a claim pursuant to Federal
Rule of Civil Procedure 12(b)(6) or, in the alternative,
motion for summary judgment (ECF No. 44), and its third
motion to dismiss for lack of subject matter jurisdiction
pursuant to Rule 12(b)(1) (ECF No. 63). At a hearing held
on the former motion on May 2, 2016, the court questioned
whether it had subject matter jurisdiction over this case
pursuant to 28 U.S.C. § 1332-specifically, whether the
amount in controversy exceeds the $75, 000 jurisdictional
threshold. The court took 10 South Street's Rule 12(b)(6)
motion under advisement, ed a period of jurisdictional
discovery, and allowed time for further briefing. 10 South
Street thereafter filed its Rule 12(b)(1) motion. The issues
have been fully briefed and are now ripe for adjudication.
forth in detail below, the court finds there is a genuine
issue of material fact as to the amount of any fee due
plaintiff Brian Wishneff & Associates
("Wishneff') under the contract and the payment
schedule for such a fee. The court therefore cannot find to a
legal certainty that Wishneff is unable to recover an amount
exceeding the jurisdictional threshold. As such, 10 South
Street's third motion to dismiss pursuant to Rule
12(b)(1) will be DENIED.
because there is a genuine issue of material fact as to
whether 10 South Street owes any fee to Wishneff for its
performance under the contract prior to termination, 10 South
Street's Rule 12(b)(6) motion, which the court will treat
as a motion for summary judgment, will be DENIED. This matter
will be set down for further proceedings.
South Street is a real estate developer designated by the
City of New York for the potential renovation of the former
Battery Maritime Building at the southern tip of Manhattan
("the Project"). In connection with the
Project's development, 10 South Street sought to utilize
the federal and state historic tax credit program to assist
in funding a portion of the renovation cost. To that end, 10
South Street enlisted the consulting services of plaintiff
Brian Wishneff & Associates to locate and secure historic
tax credit ("HTC") investors and other financial
incentives. 10 South Street and Wishneff entered into the
Battery Maritime Building Historic Tax Credit Agreement on
October 26, 2009 ("the Agreement"). Wishneff s
obligations under the Agreement included managing the tax
credit process through to payment, evaluating ways to
maximize the Project's qualified rehabilitation expenses,
and securing at least three term sheets or offers from at
least three historic tax credit investors. The Agreement
provides in a section tided "Fees and Schedule"
that Wishneff shall earn a fee for its work
in an amount equal to 7% of the gross equity payment by the
historic tax credit Investor; however such a fee payment(s)
shall not exceed $1, 000, 000. If sufficient funds are
available from a credit investor and/or a bridge loan lender,
the Consultant [Wishneff] shall be paid 20% of its fee at
closing, 20% half-way through to closing, 45% at certificate
of occupancy or occupancy and 5% upon any final equity
payment by the Investor. In addition, the Consultant shall be
reimbursed on a monthly basis for direct expenses such as
travel, long distance calls and sending overnight packages,
whether a tax credit closing occurs or not. However, the
Consultant's expenses to be reimbursed shall not exceed
$10, 000 and such expenses shall be subtracted from the fee.
ECF No. 45-5, at 5. The Agreement also contains the following
If the Consultant [Wishneff] has not produced a term-sheet
from a historic tax credit investor within 90 days, then
after 90 days the Developer [10 South Street] may terminate
this Agreement at any time for convenience. If at any point
in the future the Developer withdraws from the project the
Developer can terminate for convenience. In addition, at any
time after the eighteen (18) month anniversary of execution
of this Agreement, the Developer may terminate this Agreement
for convenience. Upon such a termination, Consultant shall
deliver a list of all potential investors ("Potential
Investors") that it has contacted related to the HTCs
being generated by the Project. If any [sic] anytime in the
future, Developer proceeds with the Project and one of the
Protected Investors becomes an investor in any [historic tax
credits] generated by the Project, Consultant shall earn its
full fee pursuant to the Fee and Schedule section above. If,
however, Developer moves forward with a HTC investor that is
not one of the Protected Investors, Consultant shall earn
one-half (1/2) of the fee that it would have otherwise earned
under the Fee and Schedule section above.
Id. at 7.
second amended complaint, Wishneff alleges that it secured
PNC Bank as an HTC investor "with projected $37, 201,
038 in capital contributions" on January 24, 2012.
Second Am. Compl., ECF No. 68, at ¶ 15. Wishneff claims
mat at "the initial equity closing for the Project on or
about June 25, 2012, " PNC made an "initial equity
contribution of $200, 000 into the Project." 14 at
¶ 16. On December 10, 2012, Wishneff invoiced 10 South
Street for twenty percent of the fee it claims was due at the
closing of the PNC investor loan. Id. at ¶ 19.
10 Soum Street refused to make a payment. Id. On
March 26, 2015, Wishneff invoiced 10 South Street for twenty
percent of its fee that was due, and again 10 South Street
refused to make payment. Id. at ¶ 20. On July
27, 2015, 10 South Street served Wishneff with a "Notice
to Terminate Agreement, " in which defendant stated it
was withdrawing from the Project "for convenience."
Id. at ¶ 21. Wishneff filed the instant breach
of contract action on July 29, 2015, alleging that 10 South
Street breached the parties' Agreement by failing to pay
Wishneff its fee of seven percent of PNC's projected
contribution of $37, 201, 038, capped at $1, 000, 000.
Id. at ¶ 26. Wishneff claims this fee was
"earned when the HTC investor, PNC Bank, made its
investment." Id. at ¶ 27. Wishneff seeks
$1, 000, 000 plus interest and costs in its second amended
complaint. Id. at ¶ 28.
burden of proving subject matter jurisdction lies with the
plaintiff. See McNutt v. Gen. Motors Acceptance
Corp.. 298 U.S. 178, 189 (1936). On its face, Wishneff s
second amended complaint appears to satisfy the
amount-in-controversy requirement of § 1332, and
"[c]ourts generally determine the amount in controversy
by reference to the plaintiffs complaint." JTH Tax.
Inc. v. Frashier, 624 F.3d 635, 638 (4th Cir. 2010)
(citing Wiggins v. N. Am. Equitable Life Assurance
Co., 644 F.2d 1014, 1016 (4th Cir. 1981)
("Ordinarily the jurisdictional amount is determined by
the amount of the plaintiffs original claim, provided that
the claim is made in good faith.")).
the sum claimed by the plaintiff typically controls the
amount in controversy requirement, a court may dismiss an
action for lack of subject matter jurisdiction if
'"it is apparent, to a legal certainty,
that the plaintiff cannot recover the amount
claimed.'" Id. (quoting St. Paul
Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289
(1938)) (emphasis added by the Fourth Circuit).
Defendants, seeking dismissal of diversity actions for lack
of a sufficient amount in controversy, must therefore
shoulder a heavy burden. They must show "the legal
impossibility of recovery" to be "so certain as
virtually to negative the plaintiffs good faith in asserting
the claim." Wiggins v. N. Am. Equitable Life
Assurance Co., 644 F.2d 1014, 1017 (4th Cir. 1981)
(internal quotation omitted). A mere dispute over the
mathematical accuracy of a plaintiffs damages calculation
does not constitute such a showing. See McDonald v.
Patton, 240 F.2d 424, 425 (4th Cir. 1957) (noting that
plaintiffs may secure federal jurisdiction even when "it
is apparent on the face of the claim" that the claim to
the requisite amount is subject to a "valid
third motion to dismiss,  10 South Street argues Wishneff s claim
is a legal impossibility under the parties' Agreement.
The Agreement provides that Wishneff is entitled to seven
percent of the "gross equity payment by the historic tax
creditor Investor, " which fee is capped at $1, 000,
000. It further provides that "[i]f sufficient funds are
available, " Wishneff shall be paid "20% of its fee
at closing...." There is no dispute that PNC bank only
delivered $200, 000 in connection with the Project. 10 South
Street argues that, at best, Wishneff is entitled to seven
percent of that $200, 000 payment ($14, 000) and of that,
only twenty percent ($2, 800) was due at closing per the
insists that it is entitled to seven percent of PNC's
projected contribution of $37, 201, 038, capped at $1, 000,
000, twenty percent of which ($200, 000) was due at closing
on June 25, 2012. Wishneff asserts that "[t]he Fees and
Schedule section of the Agreement [between Wishneff and 10
South Street] must be read in total and in the context of the
original agreement that Wishneff had on the BMB
project." Pl's Opp. Br. to Third Mot. to Dismiss,
ECF No. 66, at 5. This contract between Wishneff and the
original developer of the Project, BMB Associates, LLC,
provided for a fee often percent of the amount paid by an HTC
investor, with no cap on the amount Wishneff could earn. See
Id. at Ex. 1. Stephen Benjamin, on behalf of BMB
Associates, negotiated this original contract with Wishneff.
Rule 30(b)(6) Dep. of 10 South Street Assoc, ECF No. 66-2, at
9. BMB Associates ultimately did not proceed with the
Project, and the entity dissolved during the ensuing
financial crisis. Id. 10 South Street later was
formed and began developing the Project "fresh."
Id. In connection with this new Project development,
a new Historic Tax Credit Agreement was executed between
Wishneff and 10 South Street, which Stephen Benjamin again
negotiated, this time on behalf of 10 South Street.
Id. at 10-11. Benjamin testified that in order to do
business a second time on the Project, Wishneff s fee had to
be lower because the ten percent rate was "inappropriate
for what we were doing." Id. at 12. Benjamin
also insisted on a cap. Id. Wishneff claims that it
specifically negotiated a front-loaded fee arrangement with
10 South Street in exchange for reducing its flat rate fee
from ten percent to seven percent and capping it at $1, 000,
000. According to Wishneff, this was a deviation from its
standard practice and the reason the payment schedule,
providing for Wishneff s fee to be paid in stages over the
course of the Project development, with twenty percent due at
closing, was incorporated into the Agreement. Pl's Opp.
Br. to Third Mot. to Dismiss, ECF No. 66, at 2, 3; Rule
30(b)(6) Dep. of Brian Wishneff & Assoc, ECF No. 66-3, at
90. Wishneff argues there are genuine issues of material fact
surrounding the fee it earned pursuant to the Agreement and
the schedule of payment of that fee. And because the amount
in controversy is in dispute, Wishneff asserts it would be
improper for the court to dismiss this case for lack of
jurisdiction pursuant to Rule 12(b)(1).
s argument is grounded in extrinsic evidence, yet it fails to
identify any ambiguity in the Agreement that would allow the
court to consider evidence outside the four corners of the
contract. See Greenfield v. Philles Records. Inc.,
98 N.Y.2d 562, 569, 780 N.E.2d 166, 170 (2002)
("Extrinsic evidence of the parties' intent may be
considered only if the agreement is ambiguous...
."). Nonetheless, ambiguity is ultimately an
issue of law for the court to decide. Id.
agreement is ambiguous when 'the agreement on its face is
reasonably susceptible of more than one
interpretation.'" Nappy v. Nappy. 40 A.D.3d
825, 826, 836 N.Y.S.2d 256, 257 (2007) (quoting Chimart
Assoc, v. Paul 66 N.Y.2d 570, 573, 498 N.Y.S.2d 344, 489
N.E.2d 231 (1986))).
A contract is unambiguous if the language it uses has "a
definite and precise meaning, unattended by danger of
misconception in the purport of the [agreement] itself, and
concerning which there is no reasonable basis for a
difference of opinion" (Breed v. Insurance Co. of N.
Am., 46 N.Y.2d 351, 355, 413 N.Y.S.2d 352, 385 N.E.2d
1280 , rearg. denied 46 N.Y.2d 940, 415
N.Y.S.2d 1027, 388 N.E.2d 372 ). Thus, if the agreement
on its face is reasonably susceptible of only one meaning, a
court is not free to alter the contract to reflect its
personal notions of fairness and equity (see e.g.
Teichman v. Community Hosp. of W. Suffolk, 87 N.Y.2d
514, 520, 640 N.Y.S.2d 472, 663 N.E.2d 628 ; First
Natl. Stores v. Yellowstone Shopping Ctr., 21 N.Y.2d
630, 638, 290 N.Y.S.2d 721, 237 N.E.2d 868, rearg.
denied 22 N.Y.2d 827, 292 N.Y.S.2d 1031, 239 N.E.2d 659
Greenfield, 98 N.Y.2d at 569-70, 780 N.E.2d at
170-71. In deciding whether an agreement is ambiguous, the
court "'should examine the entire contract and
consider the relation of the parties and the circumstances
under which it was executed.'" Nappy, 40
A.D.3d at 826, 836 N.Y.S.2d at 257 (quoting Kass v.
Kass, 91 N.Y.2d 554, 566, 673 N.Y.S.2d 350, 696 N.E.2d
174 (1998)). Having done so in this case, the court concludes
the Agreement is ambiguous- specifically the language in the
Fees and Schedule provision. The parties dispute the meaning
of the term "gross equity payment." Indeed, it is
reasonably susceptible of more than one interpretation. 10
South Street argues the word "payment" means
payment-funds actually delivered-and the only payment made by
PNC in connection with the Project was $200, 000. On the
other hand, the word "gross" suggests the parties
intended to calculate Wishneff s fee based on the aggregate
amount of capital contributions the HTC investor agreed to
contribute to the Project, as Wishneff argues. "Gross
equity payment" is not defined in the parties'
Agreement and its meaning is unclear.
is also ambiguity in the structured payment schedule. The
contract reads "the Consultant shall be paid 20% of its
fee at closing, 20% half-way through to closing, 45%
at certificate of occupancy or occupancy and 5% upon any
final equity payment by the Investor." ECF No. 45-5, at
5 (emphasis added). This makes little sense. On brief,
Wishneff substitutes the word "completion" for
"closing, " so that the second payment of 20% is
due "halfway through to completion." That might
well be what the parties intended, but that is not how the
these ambiguities, the court cannot find the contract
language has a definite and precise meaning. Extrinsic
evidence is therefore admissible to determine the
outside the four corners of the contract, the court agrees
with Wishneff that there are at least genuine issues of
material fact as to the fee potentially due Wishneff under
the Agreement, as well as the payment schedule for that fee.
The original contract between Wishneff and BMB Associates
provides for a ten percent fee and states: "The
Consultant shall be paid on the same schedule as the
Developer receives payments and/or benefits from the Historic
Tax Credit Investor and all other Incentives received."
Pl's Br. in Opp. to Third Mot. to Dismiss, ECF No. 66-1.
In the course of negotiating the second contract between
Wishneff and 10 South Street, Stephen Benjamin made
handwritten changes to this provision of the BMB Associates
contract. See 10 South Street Rule 30(b)(6) Dep., ECF No.
63-7, at 15.
crossed out the 10% figure and wrote in the margin: "7%
provided the total fee and expense reimbursement shall not
exceed $1, 000, 000." Id. As regards the
payment schedule, he crossed out "and all other
Incentives received" and wrote in the margin: "(if
developer receives 10% of the total credit payment amount the
consultant receives 10% of fee)." Id. Benjamin
testified that the lower fee, the cap, and the payment
schedule reflected in these handwritten changes were all his
suggestions. 10 South Street Rule 30(b)(6) Dep., ECF No.
66-2, at 12, 16.
these suggested changes-the reduction to a 7% fee and the $1,
000, 000 cap-were incorporated into the new Agreement between
Wishneff and 10 South Street. Benjamin's handwritten
change to the sentence setting out the payment schedule does
not appear in the final Agreement, however. Indeed, the
contract contains an entirely new payment schedule,
reinforcing Wishneff s Rule 30(b)(6) deposition testimony and
argument on brief that it wanted its ...