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Peguese v. Pnc Bank, N.A.

United States District Court, E.D. Michigan, Southern Division

May 6, 2015

GERALD PEGUESE, Plaintiff,
v.
PNC BANK, N.A., and DOMINIC GOYETTE, Defendants.

OPINION AND ORDER DISMISSING CASE FOR WANT OF JURISDICTION

DAVID M. LAWSON, District Judge.

Plaintiff Gerald Peguese filed a complaint in this Court against defendant PNC Bank alleging state law causes of action and invoking this Court's diversity jurisdiction. After the Bank filed a pair of motions to dismiss, Peguese filed an amended complaint "as a matter of course, " Fed.R.Civ.P. 15(a)(1)(B), within the time allowed by Rule 15(a)(1), adding a non-diverse defendant. The resulting jurisdictional issues were brought to the parties' attention by an order to show cause why the case should not be dismissed. Peguese's response to the order acknowledges that the added party destroys diversity, and he suggests that the Court should dismiss the case without prejudice and allow him to take his case to state court. The Bank says not so fast. It believes that when adding a party by amendment, a plaintiff first must obtain leave of court by motion under Rule 21; the non-diverse party was not joined properly; and, invoking the doctrine of fraudulent joinder, that party should be dropped so that diversity would be complete. The Bank then asks the Court to acknowledge its subject matter jurisdiction and to rule on its motion(s) to dismiss.

The issues presented are these: (1) When a plaintiff wants to amend his complaint to add a party within the 21-day window established by Rule 15(a)(1), may he do so as a matter of course, or must he file a motion under Rule 21?; (2) If the added defendant destroys subject matter jurisdiction, should the Court drop the party "on just terms" under Rule 21? The Court believes that Rule 15 governs the amendment, and therefore the amended complaint was filed properly. The Court also finds no good reason to drop the added defendant, which leads inevitably to the loss of subject matter jurisdiction and a dismissal of the case without prejudice.

I.

According to the amended complaint, Gerald Peguese, a Michigan citizen and a licensed mechanical and electrical engineer, had been certified as a minority mechanical contractor since 1999 and had been a minority vendor in the automotive industry in Michigan since 2001. Peguese founded E.L. Mechanical, Inc. ("ELM"), a minority contracting business. Defendant PNC Bank is incorporated in the State of Delaware with its principal place of business in Pennsylvania. Defendant Dominic Goyette, a Michigan citizen, had been a principal of Goyette Mechanical Company, Inc. ("Goyette Mechancial"), a mechanical contracting firm located in Flint, Michigan, for at least fifteen years. Dominic Goyette "controls" Goyette Mechanical.

In 2008, Goyette Mechanical partnered with ELM to obtain a share of the mechanical work in the automotive industry in the Detroit area. Under the partnership, Dominic Goyette agreed to mentor Peguese and provide assistance with payroll, bonding, and banking in exchange for Peguese seeking opportunities for minority contracting work in the automotive industry. Goyette also advised Peguese that he had the means personally to provide capital for the work that ELM performed.

In 2011, the Bank made a loan to Goyette Mechanical, ELM, and Goyette-West (another Goyette family entity) based on its pre-existing relationship with Dominic Goyette; Dominic Goyette was a guarantor on the loan. The Bank assigned Fred Mitchell as the loan officer. The plaintiff alleges that Fred Mitchell forged ELM's signature on the loan documents with the knowledge of Dominic Goyette and the Bank and only met with Gerald Peguese once or twice during the four or five years that ELM and Goyette Mechanical worked together. The plaintiff further alleges that funds were deposited into a bank account that Gerald Peguese and ELM could not access, neither Peguese nor ELM had check writing authority for the funds, the Bank never provided Peguese with a copy of the loan documents, and the content of the loan documents were never explained to Peguese.

The plaintiff alleges that Dominic Goyette controlled Peguese and the operations of ELM, including placing employees of Goyette Mechanical on the ELM payroll. The plaintiff alleges that Dominic Goyette threatened to withdraw his personal guaranty on the loan when Peguese asked for a raise, questioned the rent charged for ELM's office and warehouse, asked to select his own project manager and controller, and questioned Goyette Mechanical's management fees and bonuses. Although the Bank was made aware of these problems, the plaintiff alleges that the Bank never took steps to prevent Dominic Goyette from exercising improper control over ELM.

The plaintiff alleges that Dominic Goyette told him that the Bank wanted Goyette Mechanical to "take[ ]over" ELM in October 2012. Although Peguese requested his own line of credit, the Bank refused. The plaintiff says that Goyette Mechanical charged excessive rent, management, and legal fees, and misappropriated ELM's funds. The Bank, Peguese alleges, was aware of those fees, limited communication to Goyette Mechanical, and facilitated Goyette Mechanical's control over ELM by requiring ELM to participate in a cash collateral agreement with Goyette Mechanical.

The plaintiff alleges that Goyette Mechanical used accounts receivable on jobs it performed outside of its partnership with ELM. Peguese alleges that he requested, but was refused, documents showing what portion of the line of credit Goyette Mechanical owed. Moreover, the plaintiff alleges that the Bank failed to provide him and ELM with information in its possession relating to the manner in which Goyette Mechanical used the loan.

The plaintiff alleges that it requested a meeting with Goyette Mechanical personnel in July 2013 to state that ELM's minority certification was at risk because of Goyette Mechanical's control over ELM. The plaintiff also alleges that his attorney communicated the same concern to the Bank's representative and stated that it was essential that ELM have a separate line of credit in order to maintain ELM's minority status. Rather than providing a separate line of credit, the plaintiff alleges that Fred Mitchell falsely represented to the Michigan Minority Supplier Development Counsel that ELM had an independent line of credit.

The plaintiff alleges that the relationship between Goyette Mechanical and ELM deteriorated in the fall of 2013 and early 2014. The plaintiff contends that Goyette Mechanical and the Bank took the position that ELM was jointly liable with Goyette Mechanical for loan repayments in excess of five million dollars, but did not reveal how ELM's borrowing base could possibly justify that amount. As a result, the plaintiff alleges that ELM took steps to secure control of certain funds owed to ELM rather than deposit the funds into the PNC account.

In January 2014, Peguese terminated the partnership between ELM and Goyette Mechanical. The plaintiff alleges that the maximum amount of debt that ELM could have owed to the Bank in January 2014 was $1.7 million and the current debt is less than $15, 000. The plaintiff alleges that Goyette Mechanical and Dominic Goyette manipulated the line of credit by using ineligible ELM invoices as part of the borrowing base.

The plaintiff alleges that Dominic Goyette intentionally interfered with ELM's contractual relations with Chrysler and Federated Insurance, its insurance carrier, by filing an unauthorized insurance claim in ELM's name in January and February 2014 for work done at the Jefferson North Assembly Plant. The plaintiff avers that Dominic Goyette filed the claim to obtain funds to pay down the PNC loan. However, Peguese intervened and ...


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