The opinion of the court was delivered by: Freeh, District Judge.
Defendant Mahmood Choudury has moved the Court to dismiss
this action for lack of personal jurisdiction, or, in the
alternative, for a transfer to the United States District Court
for the Eastern District of Pennsylvania. Plaintiff Generale
Bank ("Generale") opposes the motion to dismiss and has filed
a cross-motion for summary judgment. For the reasons stated
below, Choudury's motion to dismiss is granted. Accordingly, we
need not address Generale's motion for summary judgment.
In March 1989, Choudury, a Pennsylvania resident, purchased
an interest in a New York-based limited partnership,
Southampton Resort Co-op Associates, from a "financial
counselor," Mark Katzoff. The parties agree that all
negotiations between Katzoff and Choudury occurred in
Pennsylvania and that all partnership-related documents were
signed by Choudury in Pennsylvania. Choudury claims that he
understood the transaction to require only a $10,000 cash
contribution from him. However, among the documents signed by
Choudury were two promissory notes (the "Notes"), under which
he was obligated to pay the partnership or its lending
institution, U.S. Note Corporation, the $90,000 still owed for
his partnership interests.
At some later date, Generale purchased the Notes from U.S.
Note Corporation. After making one payment of $3,302.50 under
each of the Notes, Choudury has refused to pay any further
installments due, prompting this action.
Choudury contends that his contacts with New York State were
insufficient to establish personal jurisdiction in this Court.
Specifically, Choudury argues that a single contract with a
nonresident party does not automatically confer jurisdiction in
the proposed forum state. Because his contact with New York was
limited to investment in a New York-based limited partnership
and a single payment to a New York-based lender, Choudury
claims that it is unfair for New York courts to exercise
jurisdiction over him. Generale disagrees, claiming that
Choudury expressly consented to the jurisdiction of this Court
and that, in any event, Choudury's "purposeful contacts" with
New York permit us to hear this action.
In diversity actions such as this, questions of personal
jurisdiction are determined by the law of the forum state.
Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d
Cir. 1985). Thus, Generale argues that this Court has personal
jurisdiction over Choudury pursuant to CPLR 302(a)(1), which
provides that a court may exercise jurisdiction over a non-New
York domiciliary "who in person or through an agent . . .
transacts any business within the state." Under this section of
the New York long-arm statute, the cause of action must arise
from the acts which form the basis for the allegation that the
defendant transacts business within the state. Beacon
Enterprises, Inc. v. Menzies, 715 F.2d 757, 764 (2d Cir. 1983).
While a defendant need not be physically present in the state
to be subject to the jurisdiction of the New York courts,
Parke-Bernet Galleries, Inc. v. Franklyn, 26 N.Y.2d 13, 308
N YS.2d 337, 340, 256 N.E.2d 506 (1970), the defendant must
engage in "purposeful acts . . . in New York . . . in relation
to the contract." Sterling National Bank & Trust Co. v.
Fidelity Mortgage Investors, 510 F.2d 870, 873 (2d Cir. 1975).
Generale relies on First City Federal Savings Bank v. Dennis,
680 F. Supp. 579 (S.D.N.Y. 1988), to argue that investment in a
New York business venture, execution of a promissory note
payable in New York, and payment of installments under that
note are sufficient to satisfy the requirements of CPLR
302(a)(1). However, Guaranty misreads the Dennis case. It is
well-established under New York law and in this Court that even
if New York is the site for payment on a promissory note, that
designation, standing alone, is insufficient to permit New York
courts to exercise jurisdiction over the defendant. See Plaza
Realty Investors v. Bailey, 484 F. Supp. 335, 345-46 (S.D.N Y
1979) (and cases cited). Dennis recognizes this basic rule,
quoting the court's statement in Plaza Realty that "a
nonresident payor on a promissory note made payable in New York
must have engaged in additional activities in New York to be
subject to jurisdiction here in an action on the promissory
note." 680 F. Supp. at 584.
Generale has not demonstrated that Choudury engaged in any
"additional activities" in New York. Generale's central claim
— that Choudury agreed to make payments in New York — is
questionable because Choudury claims he never even knew the
documents he was signing were loan agreements. In any event,
even if Choudury did agree to pay the installments in New York,
without more that agreement does not establish jurisdiction.
Accordingly, the action is dismissed for lack of personal