The opinion of the court was delivered by: Sweet, District Judge.
Defendant, The Westgate Group, Inc. ("Westgate"), has moved
pursuant to Federal Rule of Civil Procedure 12(b)(2) to
dismiss the complaint for lack of jurisdiction over the person
or, alternatively, pursuant to 28 U.S.C. § 1404(a) to transfer
this action to the United States District Court for the
Northern District of Texas. For the reasons set forth below,
the motion is granted in part.
Plaintiff PaineWebber Incorporated ("PaineWebber"), a
citizen of New York, brought this diversity action on August
21, 1989, alleging that Westgate, a citizen of Texas, had
failed to pay PaineWebber in excess of $740,000 allegedly due
for financial advice given under an agreement entered into by
Westgate in connection with its planned acquisition of United
Concrete Pipe Corporation. Westgate answered on September 12,
1989, asserting among other things, that the Court lacked
personal jurisdiction. On September 22, 1989, Westgate moved
to dismiss for lack of personal jurisdiction over Westgate or
to transfer the action to Dallas, Texas pursuant to 28 U.S.C. § 1404.
The facts are not in dispute. Westgate is a Texas
corporation, which, up through the date of the service of
process, maintained its principal place of business in Dallas,
Texas.*fn1 Westgate brokers real estate transactions and acts
as an advisor to real estate investors. It has never engaged
in this business or any other business in New York State.
Westgate does not maintain a New York office, phone listing or
bank account nor does it solicit business in New York. None of
the real estate transactions which it brokered or as to which
it acted as advisor occurred in New York or involved New York
In November of 1988, Westgate's President C. Frederick Wehba
("Wehba") was introduced to a representative of the Dallas
office of PaineWebber. The introduction occurred in Dallas.
After negotiations in Dallas, the parties agreed that
PaineWebber would act as Westgate's financial adviser in
Westgate's attempt to purchase United Concrete Pipe
Corporation ("United Pipe"). PaineWebber and Westgate executed
an engagement letter in Texas, typed on PaineWebber's Dallas
A PaineWebber representative from the Dallas office
accompanied Westgate's president to negotiating sessions with
United Pipe's owner, Hillsborough Holding Corporation
("Hillsborough"). Hillsborough is a Delaware Corporation with
a principal place of business in Tampa, Florida and United
Pipe is and was a Delaware corporation with facilities in
Texas, Utah, and California. Neither company was located in
New York. During the course of the representation, a
PaineWebber representative from Dallas accompanied Westgate's
president on negotiations or inspection visits related to the
United Pipe facilities in Texas, Utah and California.
In the engagement letter, PaineWebber agreed to use best
efforts to raise financing for the purchase of United Pipe.
Westgate is aware of only one contact that PaineWebber made in
furtherance of this obligation and that was to solicit a
Citicorp subsidiary in Dallas to provide financing for the
Eventually an agreement was reached whereby a newly-formed
corporation, UCP Holdings, Inc. ("UCP Holdings"), wholly-owned
by Wehba, agreed to purchase the shares of United Pipe. This
purchase contract was negotiated and executed in Dallas.
Westgate, although not the purchaser of United Pipe, was a
signatory to the purchase agreement in Texas. Westgate is not
a shareholder of UCP Holdings, and does not play any role in
Westgate claims that the sole contact with New York was
purely fortuitous and wholly unrelated to the instant claim:
Hillsborough was represented by the law firm of Simpson,
Thacher & Bartlett and for the convenience of Hillsborough and
its counsel, the closing in New York of Hillsborough's sale of
United Pipe was held in Simpson Thacher's New York offices.
The purchaser of United Pipe at the closing was not Westgate
but UCP Holdings. At the closing the parties signed a
modification of the Purchase Agreement. The modification had
no relation to the underlying claim in this suit.
PaineWebber alleges that Westgate engaged PaineWebber
precisely because PaineWebber was a New York investment
banking organization and because the underlying transaction
was primarily a New York transaction. Westgate sent numerous
telecopies and faxes regarding financial data and an
additional real estate matter to PaineWebber's New York
offices through the relevant time period in furtherance of the
contract with PaineWebber and involving New York. PaineWebber
similarly sent materials to Westgate from its New York Office.
Westgate and PaineWebber's New York Office exchanged phone
calls relating to the transaction several times each week.
PaineWebber performed various services, including document
reviews, revision of an LBO model, dissemination of
information and advisory services, on behalf of Westgate from
its New York Office. Finally, PaineWebber provided advising
services to Westgate during
the closing of the purchase of UCP Holdings, Wehba's
wholly-owned acquisition company.
The Purchase Agreement in this transaction refers to "Buyer,
Westgate and Wehba" as a group. Westgate and Wehba both were
parties to the Stock Purchase Agreement and Wehba was the sole
stockholder of Westgate and of UCP Holdings. Wehba guaranteed
the loans taken out by UCP Holdings and at the closing, Wehba
and both of his corporations entered into a second agreement
with the seller in which Wehba, Westgate, and UCP Holdings
were collectively defined as the "Buyer." The ...