Michael Goldstein v. Roxborough Real Estate LLC
677 F. App'x 796
| 3rd Cir. | 2017Background
- Michael Goldstein (pro se) sued Roxborough Real Estate, LLC (RRE) and RRE employee Brenda Hopkins in New Jersey state court for fraud, breach of partnership agreements, breach of fiduciary duty, negligent supervision, conversion, and related claims arising from four limited partnerships and associated loan guaranties; defendants removed to federal court.
- Goldstein alleges he was formerly a limited partner and guarantor, and now has assumed the role of general partner and acquired/assigned the limited partners’ and guarantors’ claims to himself (though one limited partner may be unreachable); he seeks relief both individually and on behalf/for the benefit of the partnerships and other partners.
- Defendants moved to dismiss and to compel arbitration under partnership agreements that require mediation then AAA arbitration applying Pennsylvania law; they also asserted lack of standing to sue some claims, and time-bar defenses, and sought dismissal with prejudice.
- The District Court denied remand (found complete diversity) and ordered the claims sent to AAA arbitration, administratively terminating the case; Goldstein appealed.
- The Third Circuit held it could not determine from the record whether Goldstein may proceed pro se to pursue claims that belong to the partnerships or other parties and vacated the District Court’s order, remanding for fact-finding on whether Goldstein sues in his individual capacity or improperly on behalf of entities/other persons.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Goldstein may proceed pro se to litigate claims belonging to limited partnerships or other parties | Goldstein asserts he assumed general partner role and acquired/assigned interests, so he can pursue claims personally | Defendants contend corporations/partnerships and other individuals cannot be represented pro se and Goldstein is improperly pursuing others’ claims | Vacated and remanded: District Court must determine via fact-finding whether Goldstein genuinely proceeds on his own behalf or improperly represents others |
| Whether Goldstein has standing under Pennsylvania law to bring direct (vs derivative) claims | Goldstein claims individual injuries and assigned rights (including guarantor claim) that permit direct actions | Defendants argue many claims allege injury to the partnerships and thus must be brought derivatively, not directly | Remanded for District Court to apply Pennsylvania standards (Weston/Kenworthy framework) to decide direct vs derivative status and standing |
| Enforceability of arbitration clause in partnership agreements | Goldstein implicitly challenges arbitration by litigating in court; he contends claims include individual rights (e.g., guarantor) possibly outside arbitration scope | Defendants point to broad "arising out of or relating to" mediation/arbitration clause and AAA rules; seek dismissal/compel arbitration | Court did not decide on arbitration: left for District Court to revisit after resolving who is proper plaintiff and standing issues |
| Timeliness and jurisdictional amount-in-controversy after claim filtering | Goldstein argues claims are timely and federal diversity exists | Defendants assert statutes of limitation bar claims and amount-in-controversy may be insufficient once derivative claims are eliminated | Court remanded so District Court can reassess timeliness and diversity jurisdiction after fact-finding on proper parties/claims |
Key Cases Cited
- Rowland v. Cal. Men’s Colony, 506 U.S. 194 (pro se litigant may not represent corporations or other entities in federal court)
- Simbraw, Inc. v. United States, 367 F.2d 373 (3d Cir.) (entities must be represented by counsel in federal court)
- Osei-Afriyie v. Med. Coll. of Pa., 937 F.2d 876 (3d Cir.) (one pro se litigant cannot represent other individuals)
- Green Tree Financial Corp.-Ala. v. Randolph, 531 U.S. 79 (arbitration orders and appealability principles)
- Weston v. Northampton Personal Care, Inc., 62 A.3d 947 (Pa. Super. Ct.) (test for whether limited partner’s claim is direct or derivative)
- Hill v. Ofalt, 85 A.3d 540 (Pa. Super. Ct.) (discussion of ALI Principles §7.01(d) on treating derivative claims as direct)