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BONNIE & CO. FASHIONS v. BANKERS TRUST CO.

August 21, 1998

BONNIE & COMPANY FASHIONS, Inc. and BONNIE BOERER, individually, Plaintiffs, against BANKERS TRUST COMPANY, Defendant.


The opinion of the court was delivered by: EDELSTEIN

OPINION & ORDER

 EDELSTEIN, District Judge :

 This case involves a commercial dispute over a factoring agreement. The facts and procedural history of this action have been previously set forth and thus familiarity is assumed. See Bonnie & Co. Fashions, Inc. v. Bankers Trust Co., 945 F. Supp. 693 (S.D.N.Y. 1996). Accordingly, only the facts necessary to resolve the instant matter will be reviewed. Currently before this Court is Defendant's, Bankers Trust Company ("BTC"), motion to dismiss for want of subject matter jurisdiction.

 Facts

 Bonnie & Company Fashions, Inc. ("Bonnie & Co.") was incorporated in New Jersey on October 11, 1983 for the purpose of manufacturing and selling of women's clothing. On December 1, 1983, Bonnie & Co. applied for authority to conduct business in New York. Bonnie & Co. then entered into a factoring agreement with BTC in June 1984. Complaint P 8. On January 2, 1990, Bonnie & Co. notified BTC that it had adopted a plan of liquidation and that it was terminating the Factoring Agreement 60 days thereafter. (Letter from M. David Baker, Esq. to John F. Contrucci of 1/2/90.)

 On January 15, 1991, Plaintiffs initiated this action based upon diversity jurisdiction. The Complaint alleges that Plaintiffs are New Jersey citizens and that the corporation's principal place of business was New Jersey. Complaint P 1. The Complaint also states that BTC is a New York corporation, with its principal place of business in New York. Id. P 2. Defendant, until now, had never challenged this court's jurisdiction. *fn1"

 Defendant alleges that Bonnie & Co.'s principal place of business was New York and thus diversity jurisdiction is lacking. Accordingly, BTC asserts that this action must be dismissed. In support of their allegations, Defendant argues that Plaintiffs are judicially estopped from arguing that Bonnie & Co.'s principal place of business was anywhere but New York because Plaintiffs represented to the United States District Court for the Southern District of Florida that the corporation was a New York Citizen. See Bankers Trust Company's Supplemental Memorandum of Law in Support of Motion to Dismiss at 1-2.

 In the alternative, Defendant argues that Bonnie & Co.'s last principal place of business was New York. In support of this argument, Defendant asserts that the company's actions indicate that its principal place of business was New York. BTC states that 1407 Broadway, New York, New York was the place where Bonnie & Co. had its main office, and had its most extensive contact with and greatest impact upon the general public. Memorandum of Law in Support of Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction at 3-4. Defendant also states that Bonnie & Co.'s "Additional Terms" to its form contracts establish that Bonnie & Co.'s principal place of business was New York. For example, BTC notes that the "Additional Terms" provided that customer requests for authorization slips to return merchandise must be made to 1407 Broadway, New York, New York, see Additional Terms of Contract P 3, and that disputes arising between customers and Bonnie & Co. shall be brought in a New York State court and governed by New York law. Id. P 4.

 Moreover, BTC argues that Plaintiffs made representations that demonstrate that Bonnie & Co.'s principal place of business was New York. For instance, Defendant states that in Bonnie & Co.'s application to conduct business in New York, Bonnie & Co. identified its office as 1407 Broadway, New York, New York. See Application of Bonnie & Co. and Company Fashions, Inc. for Authority to Conduct Business in the State of New York P 4 attached to Affidavit of David B Eizenman in Support of Defendants Motion to Dismiss ("Eizenman Aff.") as Ex. 3. Additionally, BTC maintains that in the Factoring Agreement, Bonnie & Co. represented and warranted that 1407 Broadway, New York, New York was its principal place of business, and the office where its books and records would be maintained. See Factoring Agreement P 4.3 attached to Eizenman Aff. as Ex. 4; Certificate of Resolutions and Incumbency attached to Eizenman Aff. as Ex. 4. BTC further asserts that Bonnie & Co.'s bookkeeper testified that 1407 Broadway, New York, New York was its principal place of business. Deposition of Zeena Kaufman at 39.

 Plaintiffs, in response, argue that Bonnie & Co.'s principal place of business, at all times, was New Jersey. First, Plaintiffs contend that Bonnie & Co.'s principal place of business prior to adopting its plan of liquidation was New Jersey. Plaintiffs' Memorandum of Law in Opposition to Bankers Trust Co.'s Motion to Dismiss for Lack of Subject Matter Jurisdiction at 2. In support of this assertion Plaintiffs state that although some administrative functions were performed in the company's showroom in New York, "Bonnie & Co.'s true 'locus of operations' and 'nerve center' were in New Jersey" where the company's director and key employees formulated corporate policy and performed all of the design work. *fn2" Id. Additionally, Plaintiffs state that New Jersey was where the company's inventory was maintained, invoiced and shipped to customers. Id.

 Second, Plaintiffs argue that Bonnie & Co.'s last principal place of business after liquidation was New Jersey. Plaintiffs claim that Bonnie & Co. did not become an inactive corporation until ten months after its New York office was closed. Id. at 1-2. In that time period, Plaintiffs assert, the company conducted "substantial business activity" at its headquarters in New Jersey. Id. at 2. The business activity, conducted by full-time employees, included collecting $ 4 million in outstanding receivables from sales, reconciling Bonnie & Co.'s factor account with BTC and reconciling and paying sales commissions. Id.

 Discussion

 Judicial Estoppel

 BTC argues that Plaintiffs are judicially estopped from claiming that Bonnie & Co.'s principal place of business is New Jersey because Plaintiffs, in a previous litigation, represented to a United States District Court for the Southern District of Florida that Bonnie & Co. was a New York citizen with its principal place of business in New York. On June 27, 1990, Plaintiffs filed with the United States District Court for the Southern District of Florida removal papers in a Florida action in which they stated that Bonnie & Co. was a "New York corporation with its principal place of business in New York," and was a New York citizen. Notice of Removal at 1, eMTe Corp. v. Bonnie & Co. & Co. Fashions, Inc. No. 90-1497 (S.D.Fl. 1990) attached as Exhibit 1 to Affidavit of John D. Boykim, Esq. in Further Support of Motion to Dismiss ("Boykim Aff."). Thereafter, on February 27, 1991 and April 29, 1991 Plaintiffs again represented that Bonnie & Co. was a New York ...


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