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NASSAR v. FLORIDA FLEET SALES INC.

February 4, 1999

HUSSEIN NASSAR AND INSEARCH MARKETING AND TRADING COMPANY, PLAINTIFFS,
v.
FLORIDA FLEET SALES INC.; TNC, INC.; FREDERICK ROCCANTI, PRESIDENT OF FLORIDA FLEET SALES INC. AND TNC; FRED M. DELLORFANO, ATTORNEY-IN-FACT FOR FLORIDA FLEET SALES INC.; EX-IM INTERNATIONAL, LTD.; ANTHONY DELLORFANO, PRESIDENT OF EX-IM INTERNATIONAL; NATIONAL BANK OF KUWAIT SAK, NEW YORK BRANCH; WORLDWIDE SURETY COMPANY; AND WORLDWIDE BUSINESS SERVICES INC., DEFENDANTS.



The opinion of the court was delivered by: Cote, District Judge.

  OPINION AND ORDER

Plaintiffs seek to recover against the defendants for a veriety of actions relating to the sale and export of a number of trucks. Defendant Fred M. Dellorfano ("Dellorfano"), who was involved with plaintiffs' subcontractor, has filed a motion to dismiss on the ground that this Court lacks personal jurisdiction over him. For the reasons stated, Dellorfano's motion is denied.

BACKGROUND

This case involves a fairly complex sales transaction, many of the facts of which are described in this Court's Opinion and Order dated January 5, 1999, granting the motion for summary judgment of National Bank of Kuwait, New York, New York ("NBK New York"). NBK New York was the advising and confirming bank under the letter of credit that was used to effect payment for the sales transaction.

The relevant facts for this motion to dismiss are undisputed. Dellorfano was never a resident of New York and has never maintained a place of business in New York. Dellorfano does not have any employees or agents in New York and has never maintained an office, mailing address, or telephone number in New York. Dellorfano has never owned any assets, never paid any taxes, or maintained a bank account in New York.*fn1

The principal New York actions alleged by plaintiffs consist of (1) Dellorfano participating in a meeting in New York on October 10, 1991, where a performance bond was presented and Dellorfano received an assignment of proceeds for 10%, equal to $303,662.50, of the letter of credit amount to facilitate the sale of the trucks, and (2) another meeting on December 9, 1991, in New York that resulted in Dellorfano entering into an escrow agreement for the release of funds equaling $440,000 under the letter of credit ("Escrow Agreement") to his escrow account in Massachusetts. Dellorfano admits that during the course of the sales transaction, he had two or three meetings with plaintiffs at the offices of NBK New York with respect to draws on the letter of credit. Dellorfano alleges, however, that at these meetings he was present as attorney-in-fact for Florida Fleet Sales, Inc. ("Florida Fleet"), a Florida entity that was a second beneficiary under the letter of credit and a subcontractor of plaintiffs. Plaintiffs had subcontracted with defendant Roccanti to supply the trucks through either Florida Fleet or another entity controlled by him (the "Truck Agreement"). The Truck Agreement was entered into in Atlanta, Georgia in September or October of 1991.

This action was filed on December 16, 1997, and alleges six causes of action. Dellorfano states that a similar action is pending in federal court in the District of Massachusetts. Three of the six causes of action in this District's complaint name Dellorfano. Each of these sound in contract rather than tort. The first and sixth causes of action allege that Dellorfano breached the Truck Agreement by failing to deliver the trucks. The fifth cause of action alleges that Dellorfano breached the Escrow Agreement.

DISCUSSION

In a diversity case or a case arising under a federal law that does not provide for service of process on a party outside the state, the issue of personal jurisdiction must be determined according to the law of the forum state. See Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 29 (2d Cir. 1996). "If the exercise of jurisdiction is appropriate under [the state's statutes], the court then must decide whether such exercise comports with the requisites of due process." Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997). It is well established that on a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, "the plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). Where, as here, discovery has taken place, this showing includes factual allegations that would establish jurisdiction. See id.

Plaintiffs argue both (1) that this Court has general jurisdiction over Dellorfano under CPLR § 301, and (2) that this Court has specific jurisdiction over defendant under CPLR § 302(a). Dellorfano denies that the Court has general jurisdiction over him. He does not deny that his contacts with New York provide a basis for jurisdiction under Section 302(a) for all three causes of action. He argues, however, that the facts as alleged in the amended complaint are insufficient as a matter of law and that he is protected by the fiduciary shield doctrine. Plaintiff is not limited to the facts pleaded in the complaint and may meet its jurisdictional burden through facts pleaded in response to the Rule 12(b)(2) motion. See Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). Similarly, Dellorfano's reliance on the fiduciary shield doctrine is misplaced; the New York Court of Appeals held in Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195, 199, 522 N.E.2d 40 (1988), that this doctrine should not apply to any provision of New York's long-arm statute. See also Retail Software Serv. Inc. v. Lashlee, 854 F.2d 18, 22 (2d Cir. 1988).

There is personal jurisdiction over Dellorfano for the causes of action at stake here. Under CPLR § 302(a)(1), New York's long-arm statute, a court may exercise personal jurisdiction over an out-of-state defendant if that defendant "transacts any business within the state" and the cause of action "arise[s] from" those transactions. See Agency Rent A Car, 98 F.3d at 29. This test must be met for each cause of action asserted. See CPLR § 302(c). With respect to the "arising under" prong, a claim arises out of a party's transaction of business in New York if there is "a substantial nexus" between the transaction of business and the cause of action sued upon. See, e.g., Agency Rent A Car, 98 F.3d at 31; McGowan v. Smith, 52 N.Y.2d 268, 437 N.Y.S.2d 643, 645, 419 N.E.2d 321 (1981).

In order to meet the "transacting business" element, a plaintiff must show that the defendant "purposefully avail[ed] [itself] of the privilege of conducting activities within [New York], thus invoking, the benefits and protections of its laws." CutCo Indus., 806 F.2d at 365 (citation and quotation marks omitted). Courts should examine the totality of defendant's contacts with New York, rather than focus on each isolated event. Id.

Although a single purposeful act in New York can be sufficient to support jurisdiction, see Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195, 198, 522 N.E.2d 40 (1995), the nature and quality of the New York contacts must be examined to determine their significance. George Reiner & Co. v. Schwartz, 41 N.Y.2d 648, 394 N.Y.S.2d 844, 847, 363 N.E.2d 551 (1977). In judging whether there are sufficient contacts, the New York Court of Appeals has cautioned that

  we should not forget that defendants, as a rule, should be
  subject to suit where they are normally found, that is, at
  their pre-eminent headquarters or where they ...

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