In September, 1997, as a consequence of the bankruptcy
proceeding, the Defendants were merged into a new entity known as
GAR, Inc., which was formed in part to resolve existing claims
against them that arose prior to the bankruptcy filing.
On December 16, 1996, United States Bankruptcy Judge Novalyn L.
Winfield directed the parties to proceed to mediation on the
Plaintiffs' claims. Between January 8, 1997 and July 6, 1998, the
Plaintiffs made four written requests to Great American
Recreation, Inc.; Skadden, Arps, Slate, Meagher, & Flom LLP,
Great American's counsel; and Evanston Insurance Company to
schedule the court-ordered mediation. Great American's only
response to the Plaintiffs' correspondence was a settlement offer
made by Michael Sangalli, the Vice President & CFO of Great
American Recreation, Inc., on July 11, 1997.
On July 6, 1998 the Bankruptcy Court granted the Plaintiffs'
motion to terminate the automatic stay as it related to this
action. On July 15, 1998 and August 6, 1998 the Plaintiffs sent
letters to Great American Recreation; its counsel; and Robert
Drexel, Esq. of GAR, Inc., advising them of the pending lawsuit
and demanding that the Great American file an answer. Great
American nevertheless did not respond to the complaint. On
November 4, 1998, this Court heard oral argument on the
Plaintiffs' motion for a default judgment. Although Mr. Drexel,
counsel for GAR, Inc. appeared at this time, no objection was
made to the relief requested by the Plaintiffs, and on November
9, 1998 a default judgment was ordered on the issue of liability.
Great American now moves to vacate the November 9, 1998 default
under Fed. R. Civ. P. 60(b) on the grounds that confusion
resulting from the bankruptcy proceedings over who was to
represent Great American and that there was a dispute over
whether the Plaintiffs' claims were covered by insurance which
caused the default. In addition, Great American argues that this
Court lacks personal jurisdiction over it, and that the complaint
should be dismissed pursuant to Fed. R. Civ. P. 12(b)(2) or, in
the alternative, the case should be transferred to the District
of New Jersey.
A. As to Personal Jurisdiction over Great American
The Court's first consideration in this case is whether
personal jurisdiction exists over Great American in New York. In
a 12(b)(2) motion the plaintiff bears the burden of demonstrating
that the court has jurisdiction over the defendant. See Bank
Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779,
784 (2d Cir. 1999); Kernan v. Kurz-Hastings, Inc.,
175 F.3d 236, 240 (2d Cir. 1999), citing Metropolitan Life Ins. Co. v.
Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). If the
court relies on pleadings and the affidavits alone, the plaintiff
is only required to make a prima facie showing of jurisdiction,
including an averment of facts that, if credited by the ultimate
trier of fact, sufficiently establishes jurisdiction over the
defendants. See Kernan v. Kurz-Hastings, Inc., 175 F.3d 236,
240 (2d Cir. 1999); Jazini v. Nissan Motor Co. Ltd.,
148 F.3d 181, 184 (2d Cir. 1998). Moreover, the pleadings and affidavits
should be construed in light most favorable to the plaintiff and
all doubts resolved in its favor. A.I. Trade Finance, Inc. v.
Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993).
Personal jurisdiction over a nonresident defendant in a federal
diversity action is determined by the law of the forum state.
Id.; Jazini, 148 F.3d at 183-84. As a result, the court must
look to New York's personal jurisdiction statutes, N.Y.CPLR §§
301 and 302, to determine whether the Plaintiffs have made a
prima facie showing of personal jurisdiction over Great American.
If the exercise of jurisdiction is appropriate under the statute,
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).
The Plaintiffs do not specify the particular jurisdictional
theory they believe applies in this case. On the facts presented,
the Court can conceive of only three possible jurisdictional
bases for reaching Great American: that Great American is "doing
business" in New York and subject to jurisdiction under CPLR §
301; that Great American "transacts business" in New York State
under CPLR § 302(a)(1) and the claims at issue arise from the
business transacted in New York; or that Great American committed
a tort outside New York State that causes injury within New York
under CPLR § 302(a)(3).
(i) As to Great American "doing business" under CPLR § 301
CPLR § 301 confers jurisdiction over a non-domiciliary
defendant "on causes of action wholly unrelated to acts done in
New York," when the defendant is "engaged in such a continuous
and systematic course of `doing business' [in New York] as to
warrant a finding of its `presence' in the jurisdiction." Ball,
902 F.2d at 198. A corporation is "doing business" in New York
and subject to personal jurisdiction with respect to any cause of
action, related or unrelated to the New York contacts, if it does
business in New York "not occasionally or casually, but with a
fair measure of permanence and continuity." Ugalde v. Dyncorp.,
Inc., 2000 WL 217502 at *4 (S.D.N.Y. 2000), quoting Hoffritz
for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 58 (2d Cir.
Courts examine a number of factors when determining whether a
corporation is "doing business" in New York, including: (i)
whether the corporation has an office in New York; (ii) whether
the corporation has solicited business in New York; (iii) whether
the corporation has bank accounts or property in New York; and
(iv) whether the corporation has employees in New York. See
Hoffritz, 763 F.2d at 58. However, it is well settled in this
jurisdiction that "[a] defendant's solicitation of business alone
cannot justify a finding of presence in New York pursuant to
section 301." Anderson v. Indiana Black Expo, Inc., 81 F. Supp. 2
d 494, 500 (S.D.N.Y. 2000) citing Laufer v. Ostrow, 55 N.Y.2d 305,
310, 449 N.Y.S.2d 456, 434 N.E.2d 692 (1982).
The Court is not persuaded that Great American was engaged in a
continuous and systematic course of doing business in New York as
to warrant a finding of its presence in New York for
jurisdictional purposes under CPLR § 301. The Plaintiffs have not
alleged that Great American maintains any offices, bank accounts,
property, or employees in New York State. The Plaintiffs allege
only that Great American aggressively solicits business in New
If a foreign corporation engages in substantial solicitation in
New York State, courts have engaged in a "solicitation-plus"
analysis for purposes of determining whether presence
jurisdiction exists. Landoil Resources Corp. v. Alexander &
Alexander Services, Inc., 918 F.2d 1039, 1044-45 (2d Cir. 1990).
In Aquascutum of London v. S.S. American Champion,
426 F.2d 205, 209-10 (2d Cir. 1970) the court explained the "plus"
component of the doctrine as follows:
The New York cases on when a foreign carrier is
`doing business' in New York reveal that while the
`solicitation-plus' rule is adhered to, once
solicitation is found in any substantial degree very
little more is necessary to a conclusion of `doing
business.' . . . However, all the cases we have
discovered which find personal jurisdiction under the
`solicitation-plus' rubric have involved either some
financial or commercial dealings in New York.
Even assuming that Great American engages in extensive
solicitation in New York, the Plaintiffs have nevertheless failed
to allege any additional financial or commercial dealings in New
York to satisfy the "plus" element of the "solicitation-plus"
test. The Plaintiffs' brief mentions only three facts supporting
a claim of jurisdiction in New York: (i) that Great American
advertises heavily in New York; (ii) that it derives substantial
revenue from interstate commerce; and (iii) that it has had 2,400
personal injury claims made against it, and that "obviously, a
significant number of those proofs of personal injury claim had
to involve New York residents." However, neither proof that Great
American attracts a interstate clientele nor a supposition that
some New York residents attending the park suffer injuries is
sufficient to satisfy the solicitation-plus rule. Absent a
showing that Great American has some additional commercial
dealings with New York over and above successfully directing
solicitations towards New York residents, the Court lacks
jurisdiction over it under a "doing business" theory.
Accordingly, the Court finds that it does not have general
jurisdiction over the defendants pursuant to CPLR § 301.
(ii) As to Great American "Transacting Business" Under CPLR §
CPLR 302(a)(1) confers jurisdiction over a foreign corporation
that "transacts business within the state or contracts anywhere
to provide goods and services in the state" if there is a "direct
relationship between the cause of action and the in state
conduct." Fort Knox Music, Inc. v. Baptiste, 203 F.3d 193, 196
(2d Cir. 2000); Credit Lyonnais Securities (USA), Inc. v.
Alcantara, 183 F.3d 151, 153 (2d Cir. 1999).
Injuries resulting from recreational activities held outside
the New York State, but advertised within the state have
regularly been found to bear "too remote a relationship to the
advertising and contractual activity claimed to be the
transaction of business in the state to warrant a conclusion that
the injuries arose from the instate activity." Diskin v.
Starck, 538 F. Supp. 877 (E.D.N.Y. 1982) (solicitation in New
York by summer camp in Vermont insufficient to warrant
jurisdiction in New York for injuries suffered by patrons at
camp). The Plaintiffs' case falls squarely within a line of cases
rejecting "transacting business" jurisdiction over out-of-state
ski resorts that advertised in New York. See Chamberlain v.
Peak, 155 A.D.2d 768, 769, 547 N.Y.S.2d 706, 707 (3d Dept. 1989)
(plaintiff's ski injury in Massachusetts was "too remote" from
defendant's sales and promotional activities in New York);
Wisselman v. Mount Snow Ltd., 524 F. Supp. 78 (E.D.N.Y. 1981)
(no jurisdiction in ski injury case over Vermont corporation
which advertised, bought materials, and sent agents into New
York). Like these cases, the Plaintiffs here have not alleged any
other transaction of business in New York by Great American other
than mere solicitation.
Under these circumstances, the Court finds that Great American
was not "transacting business" in New York State sufficient to
create jurisdiction under CPLR § 302(a)(1).
(iii) As to tortious act jurisdiction under CPLR § 302(a)(3)
CPLR § 302(a)(3) extends jurisdiction over a non-domiciliary who
"commits a tortious act without the state causing injury to
persons or property within the state," if the defendant engages
in certain level of business activity in the state. See
Bensusan, 126 F.3d at 28, 29; Diskin, 538 F. Supp. at 880.
The thrust of the statute is directed to the "imparting of the
original injury within the State of New York and not the
resultant damage, in order that jurisdiction might be
effectuated." Bramwell v. Tucker, 107 A.D.2d 731, 733,
484 N.Y.S.2d 92 (2d Dept. 1985), quoting Kramer v. Hotel Los
Monteros, 57 A.D.2d 756, 757, 394 N.Y.S.2d 415 (1st Dept. 1977);
see also Diskin, 538 F. Supp. at 879 (the statute's "essential
predicate is that the injury giving rise to the plaintiffs' claim
occur within the state."). The mere residence or domicile in New
York of an injured plaintiff does not constitute injury within
the state for the purpose of establishing jurisdiction
under CPLR 302(a)(3) where the injury occurred elsewhere.
Bramwell, 107 A.D.2d at 732-33, 484 N.Y.S.2d at 93, citing
McGowan v. Smith, 52 N.Y.2d 268, 274-75, 437 N.Y.S.2d 643,
419 N.E.2d 321 (1981) and Fantis Foods v. Standard Importing Co.,
49 N.Y.2d 317, 326-327, 425 N.Y.S.2d 783, 402 N.E.2d 122 (1980).
As the Second Department recognized in Bramwell, "[t]o hold
otherwise would open a veritable Pandora's box of litigation
subjecting every conceivable prospective defendant involved in an
accident with a New York domiciliary to defend against actions
brought against them in the state of New York." Bramwell, 107
A.D.2d at 733, 484 N.Y.S.2d at 93.
Here, the Plaintiffs admit that Marie suffered her injury in
New Jersey. While she continues to suffer the damages resulting
from that accident at her home in New York, the locus of the
injury was not in the State of New York, and thus, outside the
scope of CPLR § 302(a)(3).
Accordingly, the Court finds that the Plaintiffs have failed to
demonstrate any basis for asserting personal jurisdiction over
Great American. While this would ordinarily be a sufficient basis
to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(2),
the unusual posture of this case warrants additional discussion
of the remainder of Great American's motion in light of the
Court's lack of personal jurisdiction.
B. As to vacating default judgment against Great American
Federal Rules of Civil Procedure 60(b) governs the granting of
relief from a judgment for reasons other then clerical error. The
rule provides that:
On motion and upon such terms as are just, the court
may relieve a party or a party's legal representative
from a final judgment, order, or proceeding for the
following reasons: (1) mistake, inadvertence,
surprise, or excusable neglect . . .; (4) the
judgment is void . . . or (6) any other reason
justifying relief from the operation of the judgment.
Great American argues that it should be relieved from the default
under Rule 60(b)(1) for "excusable neglect." It contends that
there existed "great confusion with regard to the authority of
[GAR, Inc.] to resolve claims such as this one. . .; [t]hese
factors, coupled with the fact that no one seemed to be aware
that there was applicable insurance coverage for plaintiffs'
claim which would have prompted the notification of a carrier
demonstrate that defendants' default was not willful."
In evaluating a motion to vacate a default judgment premised on
a claim of excusable neglect, the court considers whether default
was willful, whether defendant has a meritorious defense, and the
level of prejudice that may occur to nondefaulting party if
relief is granted. S.E.C. v. McNulty, 137 F.3d 732, 738 (2d
Cir. 1998); United We Stand America, Inc. v. United We Stand,
America New York, Inc., 128 F.3d 86, 89 (2d Cir. 1997). While
"willful" is defined as conduct that is more than merely
negligent or careless, willfulness may be inferred where a
party's conduct was egregious and not adequately explained.
McNulty, 137 F.3d at 738-39 and cases cited therein.
Here, the Court is not satisfied with Great American's
explanation for its failure to act on the Plaintiffs' complaint.
While Great American acknowledges that GAR, Inc. was specifically
created "to resolve claims which arose prior to defendants'
filing for bankruptcy, such as plaintiffs', through mediation,"
the record indicates that Great American ignored four requests by
the Plaintiffs to schedule that mediation. The Court is convinced
that this same lackadaisical attitude towards the instant lawsuit
continued after the lifting of the automatic stay. Great
American's excuse is particularly disingenuous as it claims
"confusion as to who, if anyone, could represent it" in the
instant lawsuit while the bankruptcy case proceeded, yet it never
sought clarification from the Bankruptcy Court or anyone else on
Accordingly, the Court would deny Great American's motion to
vacate the default judgment on the grounds of excusable neglect.
However, because the Court has already found that it lacked
personal jurisdiction over Great American at the time the default
judgment was entered, it must nevertheless vacate the judgment
pursuant to Fed. R. Civ. P. 60(b)(4) on the grounds that the
judgment is void. Triad Energy Corp. v. McNell, 110 F.R.D. 382,
385 (S.D.N.Y. 1986) (if the court lacks personal jurisdiction
over a defendant, any judgment rendered by that court is void).
When a judgment is void, the court has no discretion and must
grant a motion to vacate it. See id. at 384; Leab v. Streit,
584 F. Supp. 748, 760 (S.D.N.Y. 1984).
C. As to transfer of venue
Great American has moved in the alternative to dismissal, for a
transfer of venue to the District of New Jersey pursuant to
28 U.S.C. § 1404 and 1406. The decision to transfer an action lies
within discretion of the court. See Minnette v. Time Warner,
997 F.2d 1023, 1027 (2d Cir. 1993); McCulley v. Anglers Cove
Condominium Association, Inc., 977 F. Supp. 177 (E.D.N.Y. 1997)
(citing Cellutech, Inc. v. Centennial Cellular Corp.,
871 F. Supp. 46, 50 (D.D.C. 1994)).
The absence of personal jurisdiction does not frustrate the
Court's power to transfer a case to a district where venue is
proper. Goldlawr, Inc. v. Heiman, 369 U.S. 463, 82 S.Ct. 913, 8
L.Ed.2d 39 (1962) ("The language of § 1406(a) is amply broad
enough to authorize the transfer of cases . . . whether the court
in which it (sic) was filed had personal jurisdiction over the
defendants or not."). The Second Circuit also recognizes the
authority under 28 U.S.C. § 1404 and 1406 to transfer a case "in
the interests of justice" even where personal jurisdiction is
lacking and venue is improper. Corke v. Sameiet M.S. Song of
Norway, 572 F.2d 77, 80 (2d Cir. 1978); see also Tomchuck v.
Union Trust Co., 875 F. Supp. 242, 243 (S.D.N.Y. 1995)
(recognizing that a transfer of venue may be granted even in the
absence of personal jurisdiction); Troyer v. Karcagi,
488 F. Supp. 1200, 1206-07 (S.D.N.Y. 1980).
While the court clearly has the authority to transfer the case
at bar, the determinative question is whether a transfer is in
the interest of justice. See 28 U.S.C. § 1404(a); and 1406(a). A
majority of courts have held that transferring an action is more
appropriate than dismissal when such action will likely cause
future statute of limitations problems. See e.g., Corke, 572
F.2d at 80. In the instant case the Court finds that the
interests of justice favor transfer of the case to the District
of New Jersey as the two year statute of limitations for personal
injuries on the Plaintiffs' 1995 accident has long since run. See
N.J. ST 2A:14-2. The Court finds no bad faith on the part of the
Plaintiffs in filing their complaint in this district and
recognizes that the applicable statute of limitations had run out
while the case was subject to the automatic stay resulting from
Great American's bankruptcy case.
Therefore, the court orders that this case be transferred to
the District of New Jersey, where both venue and personal
jurisdiction are proper. See 28 U.S.C. § 1332 and 1391.
For the foregoing reasons, the Defendants' motions to vacate
the default judgment are GRANTED pursuant to Fed. R. Civ. P.
60(b)(4). The Defendants' motions to transfer the case to the
District of New Jersey are GRANTED. The Clerk of the Court is
directed to transmit the case to the Clerk of the United States
District Court for the District of New Jersey for further
proceedings. The Clerk is then directed to close this case.
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