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DAVID TUNICK, INC. v. KORNFELD

February 2, 1993

DAVID TUNICK, INC., Plaintiff,
v.
E.W. KORNFELD and GALERIE KORNFELD UND CIE, Defendants.


Edelstein


The opinion of the court was delivered by: DAVID N. EDELSTEIN

OPINION & ORDER

EDELSTEIN, District Judge:

 This action arises from Mr. E.W. Kornfeld's and Galerie Kornfeld und Cie's (the "defendants") sale of a signed Picasso print to plaintiff, David Tunick, Inc. ("Tunick" or "plaintiff"). Plaintiff alleges that defendants sold Tunick a print of Le Minotourmachie which defendants represented was signed by Pablo Picasso but which, in fact, bears a forged signature. As a result, plaintiff has brought this action alleging fraud, misrepresentation, breach of the duties of honesty and good faith in fair dealing, and breach of fiduciary duty. Defendants have denied these allegations and, on January 15, 1992, they filed a motion seeking either dismissal of this action, summary judgment or judgment on the pleadings.

 DISCUSSION

 I. Defendants' Motion to Dismiss the Amended Complaint

 a. Personal Jurisdiction Over Defendant E.W. Kornfeld

 Where, as here, a plaintiff invokes a federal district court's diversity jurisdiction, personal jurisdiction over a defendant is determined by reference to the jurisdictional statutes of the state in which the district court sits. See Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120 (2d Cir. 1984); PainWebber Inc. v. The Westgate Group, 748 F. Supp. 115, 118 (S.D.N.Y. 1990). Thus, this Court must look to the jurisdictional statutes of the State of New York in order to determine whether Mr. Kornfeld is subject to this Court's jurisdiction.

 When a question of personal jurisdiction is decided without & full evidentiary hearing, plaintiff need make only a prima facie showing that jurisdiction exists. Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981). However, where there has been discovery on issues relating to jurisdiction, plaintiff is required to prove by a preponderance of the evidence the existence of contacts with the relevant forum sufficient to support jurisdiction. See Grill v. Walt Disney Co., 683 F. Supp. 66, 67-68 (S.D.N.Y. 1988); see also Volkswagenwerk, 751 F.2d at 120. At a pre-motion conference held on December 19, 1991, this Court stayed discovery in this action pending consideration of dispositive motions. This stay was memorialized in a January 17, 1992 scheduling order which was signed by the Honorable Robert Sweet acting as Part I Judge. In a Memorandum & Order dated January 5, 1993, this Court permitted discovery to proceed on the issue of this Court's jurisdiction. *fn1" Thus, plaintiff is required to demonstrate defendant's contacts with New York by a preponderance of the evidence in order for this Court to find that it has personal jurisdiction over Mr. Kornfeld.

 On January 14, 1993 and January 15, 1993 this Court held a hearing (the "Jurisdiction Hearing") to determine whether defendant E.W. Kornfeld is subject to personal jurisdiction in New York under New York Civil Practice Law and Rules ("CPLR") § 302(a)(1) or § 302(a)(3). Plaintiff contends that this Court has jurisdiction over Mr. Kornfeld pursuant to CPA § 302(a)(3). In relevant part, that Section of the New York long arm statute empowers a court to exercise jurisdiction over a non-resident who

 CPLR § 302(a)(3) (emphasis added); see Ronar, Inc. v. Wallace, 649 F. Supp. 310, 316 (S.D.N.Y. 1986); Trafalgar Capital Corp. v. Oil Producers Equip., 555 F. Supp. 305, 310 (S.D.N.Y. 1983).

 The Court finds that plaintiff has demonstrated that Mr. E.W. Kornfeld is subject to jurisdiction under CPA § 302(a)(3). *fn2" Construing the record in the light most favorable to plaintiff, see Pentel of America, Ltd. v. Sanford Corp., 1992 U.S. Dist. LEXIS 11136, (S.D.N.Y. July 28, 1992), *7-*8 plaintiff has made a prima facie showing that Mr. Kornfeld committed a tortious act outside New York that caused injury to plaintiff inside New York. In addition, Tunick has satisfied, by a preponderance of the evidence, subsections (i) and (ii) of CPLR § 302(a)(3), only one of which is necessary to a finding of personal jurisdiction.

 With regard to CPA § 302(a)(3)(i), the Jurisdiction Hearing demonstrated that Mr. Kornfeld regularly does and solicits business in New York. Mr. Kornfeld has purchased works of art for his personal collection from New York art galleries and collectors. The sale of paintings to New York collectors and galleries has earned Mr. Kornfeld substantial revenues. Furthermore, Mr. Kornfeld has engaged in a persistent course of conduct in New York, not only through the above activities, but also by engaging in substantial non-business activities in New York. For example, several of the paintings that Mr. Kornfeld owns have been, or currently are being, displayed in museums located in or around New York City. Thus, plaintiff has satisfied CPLR § 302(a)(3)(i).

 Plaintiff has also satisfied the requirements of CPLR § 302(a)(3)(ii). If it is shown at trial that Mr. Kornfeld engaged in fraudulent practices, it would be reasonable to infer that he knew, or should have known, that his actions would have consequences in New York State; after all, the print of Le Minotourmachie which is the subject of this dispute was sold to a New York entity with which Mr. Kornfeld had a pre-existing relationship. Furthermore, Mr. Kornfeld's testimony at the Jurisdiction Hearing demonstrated that he personally derives substantial revenue from international commerce via ...


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