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SNYDER v. MADERA BROADCASTING

January 17, 1995

LYNDON R. SNYDER, a/k/a LYNDON SNYDER and MARJORIE SNYDER a/k/a MARJORIE H. SNYDER, Plaintiffs, against MADERA BROADCASTING, INC., and BRUCE DARYL OWENS, Defendants.

John R. Bartels, UNITED STATES DISTRICT JUDGE


The opinion of the court was delivered by: JOHN R. BARTELS

MEMORANDUM-DECISION AND ORDER

 Defendant Madera Broadcasting, Inc. ("Madera") moves this Court under Rules 12(b)(1) and (2) of the Federal Rules of Civil procedure for an order dismissing this action on the grounds that the Court lacks jurisdiction over defendant and the subject matter of this litigation. Madera also moves under Rule 56 for partial summary judgment, arguing that at least a portion of plaintiffs' claim is barred by the applicable statute of limitations. In addition, defendant urges this Court to transfer the action to the Eastern District of California on forum non conveniens grounds. For the reasons set forth below, defendant's motions are denied in their entirety.

 Background

 This action seeks repayment of fourteen separate promissory notes executed by defendant Bruce Owens, as president and on behalf of defendant Madera, a California corporation. Plaintiff Lyndon Snyder, a shareholder of Madera, and his wife Marjorie -- both New York residents -- are the owners and holders of the subject notes. The notes, executed between December 1985 and January 1990, represent total indebtedness of $ 71,043.59.

 The parties' business relationship allegedly began when, in response to plaintiffs' employment advertisement, Madera mailed a corporate prospectus to plaintiffs in New York. A series of telephone calls from defendant to plaintiffs ensued, culminating in the loans at issue. Plaintiffs allege that defendant prepared the necessary loan documents, mailed them to plaintiffs in New York, and then executed the notes in California before forwarding them to plaintiffs.

 The terms of each note obligate Madera to pay to plaintiffs a minimum installment each month until the note is paid in full. Thirteen of the fourteen notes contain acceleration clauses, which grant plaintiffs the option, upon default in any payment, of declaring the total outstanding principal and interest on the note immediately due and payable. The fourteenth note is atypical in that it contains no acceleration clause and is the only note designating California law as the law governing the interpretation and construction of the note.

 Madera acknowledges the existence of the subject notes and its failure to make payment thereon, but argues that the statute of limitations has run on a substantial, and indeed pivotal, portion of plaintiffs' claim for repayment. Defendant asserts that the fraction of plaintiffs' claim which remains timely falls below the statutory threshold needed to maintain diversity jurisdiction. Madera also argues that its contact with this forum is insufficient to confer jurisdiction, and seeks to transfer the action to what it claims provides a more convenient forum, the Eastern District of California.

 Discussion

 1. Defendant's Motion to Dismiss for Lack of Personal Jurisdiction

 Although plaintiffs ultimately bear the burden of establishing that this Court has jurisdiction over Madera, in defending the present motion they need only make a prima facie showing that jurisdiction exists. Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.), cert. denied, 498 U.S. 854, 111 S. Ct. 150, 112 L. Ed. 2d 116 (1990); Welinsky v. Resort of the World D.N.V., 839 F.2d 928, 930 (2d Cir. 1988); Hoffritz for Cutlery Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985). Construing, as it must, all allegations in plaintiffs' favor, A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993), the Court finds that plaintiffs have made the requisite showing.

 Personal jurisdiction in a diversity action turns upon the law of the forum state. Savin v. Ranier, 898 F.2d 304, 306 (2d Cir. 1990); Hoffritz for Cutlery, 763 F.2d at 57. Here, jurisdiction is governed by section 302 of the New York Civil Practice Law and Rules ("CPLR"), New York's long-arm statute. Plaintiffs invoke jurisdiction under section 302(a)(1) of the long-arm, which grants the court jurisdiction over any non-domiciliary "who in person or through an agent: 1. transacts any business within the state or contracts any where to supply goods or services in the state." To establish jurisdiction under the "transacting business" prong of this section, plaintiffs must demonstrate both that Madera transacted business within New York and that the subject claim arose from Madera's in-state business activity. CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986).

 Courts generally look to the "totality of the circumstances" surrounding a non-domiciliary's in-state activity to determine whether a party has "transacted business" within the meaning of section 302(a)(1). Sterling Nat'l Bank & Trust Co. v. Fidelity Mortgage Investors, 510 F.2d 870, 873 (2d Cir. 1975); First City Federal Sav. Bank v. Dennis, 680 F. Supp. 579, 583 (S.D.N.Y. 1988). When reviewing the sum of a nonresident defendant's activities, the court also must ascertain whether constitutional due process requirements have been met. Due process ensures that an out-of-state defendant has had certain minimal contact with the forum, such that he reasonably can "anticipate being haled into court there." World-Wide Volkswagen v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567, 62 L. Ed. 2d 490 (1980). Section 302 and due process concerns are satisfied where an out-of-state defendant's "activities constitute purposeful efforts to invoke the benefits and protection of New York law." First City Federal Sav. Bank, 680 F. Supp. at 584 (citing Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1239, 2 L. Ed. 2d 1283 [1958]).

 Under the principles outlined above, the Court finds that the totality of forum contacts involved here renders Madera amenable to this Court's jurisdiction. Defendant urges that the fact that payment on the promissory notes was to be made in New York alone is insufficient to confer jurisdiction over Madera as maker of the notes. The Court recognizes that "the mere designation of New York as the site for payment on a promissory note" has been held "insufficient to confer jurisdiction over a nonresident defendant," Plaza Realty Investors v. Bailey, 484 F. Supp. 335, 346 (S.D.N.Y. 1979); Generale Bank v. Choudury, 776 F. Supp. 123, 124 (S.D.N.Y. 1991), and agrees that proper exercise of jurisdiction requires additional forum contacts. First City Federal Sav. Bank, 680 F. Supp. at 584; Plaza Realty Investors, 484 F. Supp. at 346. However, the place of payment remains a factor, and indeed "a significant contact," to be considered in determining whether to retain jurisdiction, First City Federal Sav. Bank, 680 F. Supp. at 586, and this is not a case where the only New York contact related to the subject notes is the fact that they were made payable here. Rather, Madera engaged in continuous, purposeful activity in New York sufficient to confer jurisdiction under CPLR 302(a)(1).

 The circumstances surrounding execution of the promissory notes collectively demonstrate that defendant did much more than simply agree to perform its payment obligations in New York. Indeed, Madera acted as the catalyst which ignited a lengthy, and profitable, business relationship when it originally mailed the prospectus to plaintiffs in New York in an attempt to solicit funds. Madera then procured the subject loans through a series of telephone calls to plaintiffs in New York, and allegedly prepared the requisite documentation for the loans and mailed these papers, along with the executed notes, to plaintiffs in this forum. *fn1" Madera then nurtured and continued to reap the benefits of a lasting financial relationship with resident plaintiffs through a series of communications relating to the loans that began as early as the winter of 1985, and spanned at least a seven-year period. The frequency and duration of these communications remain proper considerations ...


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