The opinion of the court was delivered by: SEYBERT
This is a mortgage-foreclosure action, based upon diversity jurisdiction, that has been commenced by plaintiff 5-Star Management, Inc. ["5-Star"] to enforce its rights pursuant to a mortgage, given by defendant John A. Rogers, that plaintiff holds on certain real property located in East Hampton, New York. As a result of the default of codefendant Albuquerque Allsuite Associates ["Allsuite"] on its obligations pursuant to a promissory note that is secured by Rogers' East Hampton property, plaintiff 5-Star brought this action to foreclose on the mortgage securing said property. In addition to defendants Rogers and Allsuite, the complaint names as defendants a number of persons and entities that have interests in the East Hampton property.
Pending before the Court are two separate motions. First, defendant Allsuite moves to dismiss this action against it for lack of personal jurisdiction. Second, defendants Rogers and Allsuite move to dismiss the complaint for failure to state a cause of action, or alternatively to transfer this case to the United States District Court for the District of New Mexico.
On or about August 13, 1984, for value received, Albuquerque Allsuite Partners, Ltd. and Allsuite Management Company duly executed and delivered to Albuquerque Federal Savings and Loan Association ["AFS&L"] a demand note whereby they promised to pay the principal sum of $ 400,000.00 with interest thereon. Compl. P 23. The remaining principal on this note was later restructured pursuant to a Master Loan Agreement dated January 27, 1988. Compl. P 28, Ex. D. As collateral security for the payment of the demand note, Rogers executed and delivered to AFS&L a mortgage dated August 13, 1984, whereby he mortgaged his East Hampton property in fee [the "Mortgage"]. Compl. P 24, Ex. B. The note and Mortgage were given to AFS&L as constituent parts of a Loan Consolidation Agreement dated August 13, 1984 between AFS&L and Allsuite. Compl. P 26.
In 1988, Allsuite duly executed and delivered to AFS&L a promissory note [the "Note"] whereby it promised to pay the principal sum of $ 520,000.00 with interest thereon. Compl. P 27, Ex. C. The Note was given pursuant to the terms of a Master Loan Agreement (restructuring and extending the outstanding indebtedness) dated January 27, 1988, and was secured by the Mortgage. Compl. P 28, Ex. D.
On or about July 18, 1991, for purposes of modifying and restating the notes and mortgages described herein, defendant Allsuite executed, duly acknowledged and delivered to the Resolution Trust Corporation ["RTC"], as Receiver for ABQ Federal Savings Bank, successor in interest to AFS&L, an Agreement Modifying and/or Restating Notes, Loan Agreement, Mortgage, Security Agreement and Deeds of Trust [the "Modification Agreement"] whereby said notes and mortgages were modified and restated. Compl. P 29, Ex. E. The Modification Agreement specifically provided that all state-law issues of construction with respect to the documents thereby modified (including the Mortgage) would be determined under the laws of the State of New Mexico. Compl. Ex. E P 27, at 23.
On or about July 18, 1991, as part of the consideration for the making of the Modification Agreement, Rogers duly executed, acknowledged and delivered to RTC an Unconditional Continuing Guaranty [the "Guaranty"] wherein he unconditionally guaranteed the "full and prompt payment, performance and discharge (whether by acceleration or otherwise) of Three Million Dollars ($ 3,000,000.00) of the total of any and all present and future indebtedness, obligations and liabilities of [Allsuite] . . . ." Compl. P 32, Ex. G P 1, at 1.
By Assignment of Mortgage dated January 11, 1995, RTC, for value received, assigned its interest in and to the Mortgage to plaintiff. Compl. P 31, Ex. F. In addition, by Quitclaim Assignment and Assumption of Rights Under Agreement, dated January 11, 1995, RTC assigned its interest in and to the Guaranty to plaintiff. Compl. P 33, Ex. H.
Defendant Allsuite did not comply with the terms and conditions of the applicable note as it failed to pay all unpaid principal, interest, and other fees and charges due and owing on the maturity date of the note, August 1, 1992. Compl. P 36. This default continued for a substantial period of time through and including January 11, 1995, the date that RTC assigned the Mortgage to plaintiff.
By letter dated May 18, 1995, plaintiff 5-Star gave defendants Rogers and Allsuite written notice of the events of default and demanded that said default be remedied by June 5, 1995. Compl. P 39, Ex. I. Thereafter, by letter dated June 6, 1995, 5-Star gave written notice of its demand for payment and declared the entire amount secured by the Mortgage immediately due and payable. Compl. P 40, Ex. J. As of June 5, 1995, the balance of principal and interest and other charges due and owing, and secured by the Mortgage, totalled $ 477,500.00. Compl. P 41. On August 3, 1995, plaintiff filed the instant mortgage-foreclosure action in this Court.
The Court notes that the complaint does not specifically allege that plaintiff is the holder of the promissory note secured by the Mortgage.
Pending before the Court are two separate motions. First, defendant Allsuite moves pursuant to Fed. R. Civ. P. 12(b)(2) to dismiss this action against it for lack of personal jurisdiction. Second, defendants Rogers and Allsuite move pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the complaint for failure to state a claim on the grounds that, under New Mexico law, the mortgage that plaintiff holds is unenforceable because plaintiff is not the holder of the underlying promissory note secured by said mortgage. With respect to this second application, the parties do not dispute that New Mexico law applies to this case and that the Supreme Court of New Mexico has not spoken concerning this issue. In the alternative, Rogers and Allsuite seek to transfer this case to the United States District Court for the District of New Mexico pursuant to 28 U.S.C. § 1404(a).
I. Allsuite's Motion to Dismiss for Lack of Personal Jurisdiction
Defendant Allsuite, a New Mexico joint venture, moves pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure to dismiss plaintiff's complaint against it for lack of personal jurisdiction. In support of its application, Allsuite asserts that the complaint fails to make a prima facie showing that this Court has personal jurisdiction over it because Allsuite conducts no business in New York and has no contacts with New York, and moreover because the underlying loan transactions were negotiated, executed and delivered in New Mexico. Plaintiff, in turn, contends that this Court has personal jurisdiction over Allsuite on the basis that Rogers, Allsuite's general partner, used real property located in New York State on Allsuite's behalf while acting as Allsuite's agent. More specifically, plaintiff contends that by using real property located in New York [the "New York Property"] as collateral to secure the loan made to Allsuite that is the subject of this action, Allsuite, through the acts of its agent Rogers, rendered itself amenable to suit on causes of action stemming from that loan.
"In order to defeat a motion to dismiss for lack of personal jurisdiction . . ., plaintiff must make a prima facie showing of facts that, if credited by the trier of fact, would suffice to establish jurisdiction over the defendant."
Bicicletas Windsor, S.A. v. Bicycle Corp., 783 F. Supp. 781, 783 (S.D.N.Y. 1992); see Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994); Volkswagen De Mexico, S.A. v. Germanischer Lloyd, 768 F. Supp. 1023, 1027 (S.D.N.Y. 1991). In making this determination, "all pleadings and affidavits must be construed in the light most favorable to plaintiff and all doubts resolved in [its] favor." Volkswagen De Mexico, 768 F. Supp. at 1027.
The determination of whether the Court has personal jurisdiction over Allsuite involves two distinct steps. First, the acts of the non-domiciliary defendant must be within the scope of New York's long-arm statute. Second, personal jurisdiction must comport with the Due Process Clause of the Fifth and Fourteenth Amendments. See Marriott PLP Corp. v. Tuschman, 904 F. Supp. 461, 464 (D.Md. 1995), ...