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Griggers v. Shopf

United States District Court, S.D. Indiana, Indianapolis Division

November 13, 2018

LARRY GRIGGERS, RC MANAGEMENT HOLDINGS, LLC, Plaintiffs,
v.
JUDITH A. SHOPF, Defendant.

          ORDER

          HON. JANE MAGNUS-STINSON, CHIEF JUDGE

         This case involves the sale of Plaintiff Larry Griggers' ownership interests in several Ruth's Chris restaurants to co-Plaintiff RC Management Holdings, LLC (“RC Management”). After Mr. Griggers and RC Management provided Defendant Judith Shopf an opportunity to exercise her rights of first refusal, they brought this suit for declaratory judgment. [Filing No. 12.] Presently pending before the Court is Ms. Shopf's Motion to Dismiss, in which she alleges that this Court lacks subject matter jurisdiction over this matter. [Filing No. 63.] Ms. Shopf's Motion is fully briefed[1] and is now ripe for the Court's review.

         After filing her Motion to Dismiss, Ms. Shopf died in August 2018. Plaintiffs now seek an order substituting her heirs as defendants in this matter. As such, the Court will also consider Plaintiffs' Motion to Substitute Party Defendant. [Filing No. 83.]

         For the reasons stated herein, the Court GRANTS both Plaintiffs' Motion to Substitute Party Defendant and Ms. Shopf's Motion to Dismiss.

         I.

         Applicable Legal Standard

          Federal Rule of Civil Procedure 12(b)(1) “allows a party to move to dismiss a claim for lack of subject matter jurisdiction.” Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). Jurisdiction is the “power to decide, ” and federal courts may only decide claims that fall within both a statutory grant of authority and the Constitution's limits on the judiciary. In re Chicago, R.I. & P.R. Co., 794 F.2d 1182, 1188 (7th Cir. 1986). The burden is on the party bringing the claim to demonstrate that subject matter jurisdiction exists. See Lee v. City of Chicago, 330 F.3d 456, 468 (7th Cir. 2003).

         “Motions to dismiss under 12(b)(1) are meant to test the sufficiency of the complaint, not to decide the merits of the case.” Ctr. for Dermatology & Skin Cancer, Ltd. v. Burwell, 770 F.3d 586, 588 (7th Cir. 2014). “In the context of a motion to dismiss for lack of subject matter jurisdiction, we accept as true the well pleaded factual allegations, drawing all reasonable inferences in favor of the plaintiff.” Iddir v. INS, 301 F.3d 492, 496 (7th Cir. 2002). In considering such a motion, “[t]he district court may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.” St. John's United Church of Christ v. City of Chicago, 502 F.3d 616, 625 (7th Cir. 2007) (citations omitted).

         II.

         Background

          Ms. Shopf's Motion comes before this Court seven months after the Court denied her previous Motion to Dismiss pursuant to Rules 12(b)(2) and 12(b)(6) in March 2018. [Filing No. 46.] In that Order, [Filing No. 46], the Court set forth the allegations contained in Plaintiffs' Amended Complaint, [Filing No. 10], and those allegations remain unchanged. As such, the Court incorporates by reference the background of its March 2018 Order, [Filing No. 46 at 4-9], and presents the following abbreviated summary of the facts.

         Since 1994, Larry Griggers has been Chairman and CEO of various Ruth's Chris entities in Indiana and Missouri, (collectively, “the Ruth's Chris entities”). [Filing No. 10 at 2.] Mr. Griggers' transfer of ownership and management of the Ruth's Chris entities was subject to a right of first refusal by other shareholders and unitholders of the Ruth's Chris entities. [Filing No. 10 at 3.]

         Judith Shopf, the widow of Mr. Griggers' former business partner, is a successor in interest to her late husband's ownership interest in the Ruth's Chris entities. [Filing No. 10 at 2-3.]

         In August 2017, after a member of RC Management made an offer to purchase Mr. Griggers' ownership interests in the Ruth's Chris entities, Ms. Shopf was provided with notice of the proposed transfer, along with the rest of the shareholders and eligible unitholders of each entity. [Filing No. 10 at 3-5.] In a letter dated September 11, 2017, Ms. Shopf's attorney challenged the transfer, arguing that a “bundled” sale was not permissible, the purchase price was unreasonably high, and the transaction violated the Ruth's Chris entities' governing documents. [Filing No. 10 at 7.] In response, Mr. Griggers extended the time for Ms. Shopf to exercise a right of first refusal. [Filing No. 10 at 7.]

         Notwithstanding Ms. Shopf's dispute concerning the proposed transaction, Mr. Griggers and RC Management closed on the transaction and signed an agreement (the “Provisional Agreement”) to honor Ms. Shopf's right of first ...


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