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UNLIMITED CARE, INC. v. VISITING NURSE ASS'N

March 31, 1999

UNLIMITED CARE, INC., PLAINTIFF,
v.
VISITING NURSE ASSOCIATION OF EASTERN MASSACHUSETTS, INC., DEFENDANT.



The opinion of the court was delivered by: William C. Conner, Senior District Judge.

  OPINION AND ORDER

In this diversity action, plaintiff Unlimited Care, Inc. ("UCI") alleges that defendant Visiting Nurse Association of Eastern Massachusetts, Inc. ("VNA"), has breached its services agreements with UCI's wholly owned subsidiary by failing to tender payment for services rendered. Defendant moves to dismiss plaintiff's complaint pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction and pursuant to Fed.R.Civ.P. 12(b)(3) for improper venue. In the alternative, defendant moves to dismiss on the ground of forum non conveniens. Plaintiff requested that, in the event the Court found that it lacked jurisdiction, the action be transferred pursuant to 28 U.S.C. § 1404(a) or § 1406(a) rather than dismissed. For the reasons discussed below, the action is hereby transferred to the District of Massachusetts.

BACKGROUND

The following facts are undisputed except as otherwise noted. Plaintiff UCI is a corporation organized and existing under the laws of the State of New York, with its principal place of business in White Plains, New York. It is a provider of home health care professional services. Defendant VNA is a Massachusetts nonprofit corporation with its principal and only place of business in Somerville, Massachusetts.

In 1995, VNA entered into a Professional Services Agreement (the "Agreement") with a Massachusetts corporation also named Unlimited Care, Inc. ("UCIM"), with its principal place of business in Boston, Massachusetts. UCIM is a wholly-owned subsidiary of UCI. UCI does not dispute that all contract negotiations took place at UCIM's offices in Boston, Massachusetts. The Agreement was executed by VNA in Massachusetts on May 19, 1995. UCIM then forwarded the agreement to UCI in New York where it was executed by Harriet Smith, as President of UCIM, on June 1, 1995. Under the terms of the Agreement, UCIM agreed to provide the services of home health care professionals to VNA patients in Massachusetts and to invoice VNA for such services on a weekly basis. All services rendered by UCIM pursuant to the Agreement were performed in Massachusetts by employees of UCIM. The only "performance" required of VNA was to compensate UCIM for its services promptly upon receipt of such invoices. The Agreement did not provide an address to which VNA was to remit payment. All time logs were prepared in UCIM's Boston office and were printed on forms containing the Boston address. All invoices submitted to VNA were printed on forms containing UCIM's Boston address but requested that payment be remitted to UCI in White Plains, New York.*fn1 VNA complied with this request and mailed its payments to New York.

Plaintiff UCI brought this action in diversity seeking to recover amounts allegedly due and owing under the Agreement. UCI alleges that it is a proper party plaintiff because it is an intended third-party beneficiary of the Agreement, or alternatively, because UCIM assigned all rights to payment under the Agreement to UCI.*fn2 UCI further alleges that all collection efforts with respect to the alleged delinquent accounts (i.e., telephone calls and correspondence) were made by UCI from its office in White Plains, New York.

DISCUSSION

I. Personal Jurisdiction

Plaintiff bears the burden of establishing this Court's jurisdiction over the defendant. See Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). The nature of the plaintiff's obligation, however, "varies depending on the procedural posture of the litigation." Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). Prior to discovery, a motion to dismiss pursuant to Rule 12(b)(2) may be defeated if the plaintiff's complaint and affidavits contain sufficient allegations to establish a prima facie showing of jurisdiction. See id. Moreover, the court must assume the truth of the plaintiff's factual allegations. See id.

In diversity actions, the extent of the Court's personal jurisdiction is governed by New York law, as circumscribed by the Due Process Clause of the United States Constitution. See, Metropolitan Life Ins., 84 F.3d at 567; Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963). UCI asserts jurisdiction over VNA on the basis of § 302(a)(1) of New York's Long Arm Statute. N.Y.C.P.L.R. § 302(a)(1). This section provides that "a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent transacts any business within the state," and the cause of action arises therefrom. As interpreted by the New York Court of Appeals, the exercise of jurisdiction under this provision will comport with the due process guarantees only if "`the defendant purposefully avails itself of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws.'" McKee Elec. Co. v. Rauland-Borg Corp., 20 N.Y.2d 377, 382, 229 N.E.2d 604, 607, 283 N.Y.S.2d 34, 38 (1967) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)); accord Cut-Co Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986).

Applying those factors, it is clear that VNA did not transact business in New York. The Agreement was negotiated by VNA and UCIM in Massachusetts. VNA executed the contract in Massachusetts.*fn3 At no time was a representative of VNA physically present in New York. Further, the Agreement contains a choice-law-clause that provides: "XVIII. APPLICABLE LAW: This Agreement shall be governed by and construed under the laws of the Commonwealth of Massachusetts." All services to be rendered by UCIM were to be rendered in Massachusetts by employees of UCIM. VNA is obligated, under the terms of the Agreement, to render payment to UCIM upon receipt of invoices which UCIM is to provide on a weekly basis. Nothing in the Agreement contractually obligates VNA to remit its payments to UCI in New York. Indeed, there is absolutely no mention of UCI in the Agreement. Certainly, the Agreement does not contemplate any form of on-going contractual relationship between VNA and a New York corporation (i.e., UCI).

Plaintiff contends that VNA transacted business in New York by virtue of the following: (1) VNA mailed payments due under the Agreement to UCI in New York; (2) VNA made promises to pay outstanding balances while speaking by telephone with UCI employees who were located in New York; and (3) as a result of these contacts, VNA was aware that it was engaged in an on-going business relationship with a New York corporation.

Assuming the truth of all such jurisdictional averments, defendant's conduct does not constitute the transaction of business in New York within the meaning of C.P.L.R. ยง 302(a)(1). The consensual (but not contractually required) mailing of payments to UCI in New York, standing alone, does not convey jurisdiction over VNA. See, e.g., Roper Starch Worldwide, Inc. v. Reymer & Assoc., Inc., 2 F. Supp.2d 470, 475 (S.D.N.Y. 1998) ("merely sending payment to New York is not sufficient to establish personal jurisdiction over a defendant"); Continental Field Service Corp. v. ITEC Intern., Inc., 894 F. Supp. 151, 154 (S.D.N.Y. 1995) ("this passive accommodation does not establish the requisite purposeful activity to justify ...


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