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MILGRIM THOMAJAN & LEE P.C. v. NYCAL

September 26, 1991

MILGRIM THOMAJAN & LEE P.C., PLAINTIFF,
v.
NYCAL CORPORATION, ARIMATHAEA HOLDINGS LTD., SHEPHARD INSURANCE GROUP LTD. AND GRAHAM LACEY, DEFENDANTS.



The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge.

OPINION AND ORDER

This is an action for damages alleging breach of contract and fraud. Jurisdiction is based on diversity of citizenship. 28 U.S.C. § 1332. Defendants Nycal Corporation ("Nycal"), Arimathaea Holdings Ltd. ("Arimathaea"), Shephard Insurance Group Ltd. ("Shephard") and Graham Lacey ("Lacey") move: (1) pursuant to Fed.R.Civ.P. 12(b)(2) to dismiss the complaint for lack of personal jurisdiction; (2) pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss plaintiff's fraud claim for failure to state a claim upon which relief may be granted; (3) pursuant to Fed.R.Civ.P. 12(b)(1) to dismiss the complaint against Shephard for lack of subject matter jurisdiction; and (4) pursuant to 28 U.S.C. § 1404(a) to transfer this action to the United States District for the District of Columbia. For the reasons set forth below, defendants' motion is granted in part and denied in part.

BACKGROUND

Plaintiff Milgrim Thomajan & Lee ("Milgrim") is a Professional Corporation whose members are engaged in the practice of law and whose principal place of business is New York City. Defendant Nycal is a Delaware corporation whose principal place of business is Washington, D.C. Defendant Arimathaea is a Bermuda Corporation. Defendant Shephard is a Canadian Corporation whose principal place of business is British Columbia, Canada. Defendant Lacey is an alien presently residing in Washington, D.C. He is the Chairman, Chief Executive Officer, and President of all three defendant corporations.

Milgrim's complaint alleges that during 1989 and 1990, it was retained by Lacey to perform various legal services for each of the defendant corporations. The several agreements for Milgrim to render and for the defendants to pay for legal services were reached at meetings between Lacey and Milgrim partner Raymond Mantle in New York City. Milgrim further charges that at these meetings Lacey fraudulently represented his intention to cause the defendants to pay for Milgrim's services.

Milgrim asserts that pursuant to these agreements, it rendered legal services to the various defendants during 1989 and 1990. In addition, Milgrim claims that at defendant Shephard's request it retained the Chicago law firm of McBride Bakes and Coles ("the McBride firm") to serve as Shephard's local counsel in an Illinois transaction.

Milgrim has filed suit against the various defendants. Milgrim charges that portions of its legal fees have gone unpaid. Milgrim also alleges that the McBride firm has sued Milgrim to recover $36,084.36 in unpaid fees and disbursements for services rendered on behalf of Shephard. Therefore, Milgrim also seeks from Shephard the costs of defending the McBride suit and any damages to be incurred therein. An additional claim charges Lacey with causing the services for the corporations to be performed by means of fraud and seeks the entire indebtedness from him personally.

DISCUSSION

I. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

The defendants move pursuant to Fed.R.Civ.P. 12(b)(2) to dismiss the complaint for lack of personal jurisdiction. The plaintiff has the ultimate burden of establishing jurisdiction over the defendant by a preponderance of the evidence. Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981). At this stage of the litigation, however, Milgrim need only make out a prima facie case for jurisdiction through its pleadings and affidavits. Cutco Industries, Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986). Pleadings and affidavits are to be construed in the light most favorable to the plaintiff, and all doubts must be resolved in the plaintiff's favor. Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985).

Personal jurisdiction over a defendant in a diversity action is determined by the law of the state in which the court sits. Savin v. Ranier, 898 F.2d 304, 306 (2d Cir. 1990), citing Arrowsmith v. United Press International, 320 F.2d 219, 223 (2d Cir. 1963). Therefore, New York law governs this issue.

Milgrim argues that this Court has personal jurisdiction over the corporate defendants pursuant to N.Y.Civ.Prac.L. & R. § 302(a), New York's long-arm statute.*fn1 Specifically, plaintiff points to § 302(a)(1). To establish jurisdiction under this subsection, a two-part test must be satisfied: first, the defendant must "transact business" within New York; second, the claim must arise from that business activity. Cutco, 806 F.2d at 365. A non-domiciliary is said to transact business within the meaning of § 302(a)(1) when he "purposely avails [himself] of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws." Id.

Milgrim and the defendants set forth vastly different versions of the events leading to the formation of their contractual relationships. Construing the pleadings and affidavits in favor of Milgrim, this Court finds each of the corporate defendants did transact sufficient business with plaintiff in New York to support the ...


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