The opinion of the court was delivered by: Barrington D. Parker, Jr., District Judge.
MEMORANDUM DECISION AND ORDER
Plaintiff J.L.B. Equities, Inc., a Delaware corporation located in
Elmsford, New York ("JLB"), commenced this diversity action in September
1999 against Ocwen Financial Corporation ("Ocwen") alleging breach of
contract. Ocwen moves to dismiss the Complaint on the grounds that (i)
this Court lacks personal jurisdiction over the defendant, and (ii) venue
is not proper in this District. See Fed.R.Civ.P. 12(b)(2) & (3). For
the following reasons, the defendant's motion is granted.
Ocwen is a publicly traded holding company located in Florida with
assets totaling almost $3.3 billion. It owns a number of subsidiaries
engaged in financial services. Its primary function is cash management,
deciding where to invest the available cash of its subsidiaries.
According to the plaintiff, Ocwen maintains a custodial account-which has
held over $2 billion worth of securities and generated nearly $25 million
in interest income from 1997 to 1999 — with the Bank of New York,
which is located in New York. Moreover, JLB contends that one of Ocwen's
banking subsidiaries, Ocwen Federal Bank (the "Bank" or the "Ocwen
Bank"), owns and sells real property in New York, services New York
mortgages and solicits brokered deposits in New York. The Court assumes,
for purposes of this motion, that the Ocwen Bank is subject to the
general jurisdiction of the New York courts.
According to the Complaint, JLB arranged a relationship between City
Mortgage Company, a United Kingdom company located in London, England
("City Mortgage"), and Greenwich International, Ltd., a Bermuda
corporation located in London, England ("Greenwich"), whereby City
Mortgage sold mortgages originated in the U.K. to Greenwich, which would
then securitize the mortgages. In May 1995, City Mortgage entered into a
contract agreeing to pay JLB a commission based upon the value of the
mortgages which were originated by City Mortgage and securitized by
Greenwich (the "Fee Agreement").
In April 1998, City Mortgage's parent company, Cityscape Financial
Corporation ("Cityscape"), sold substantially all of City Mortgage's
assets to Ocwen pursuant to a sale agreement (the "Asset Sale
Agreement"). According to the plaintiff, Ocwen agreed to assume most of
City Mortgage's outstanding contracts on that date, including the Fee
Agreement. The Complaint alleges that in June and November 1998,
Greenwich securitized mortgages worth over £ 340 million on behalf
of Ocwen, a substantial portion of which included loans originated by
City Mortgage. According to the plaintiff, these securitizations
triggered Ocwen's obligation to make payments to JLB under the Fee
Agreement. To date, since Ocwen has not made any payments to JLB, JLB
filed this action.
In early 2000, Ocwen moved to dismiss the Complaint on the grounds that
this Court lacked personal jurisdiction and that venue was not proper in
this District. Fed.R.Civ.P. 12(b)(2) & (3). By Order on May 24,
2000, this Court found that the defendant's motion was premature and
ordered the parties to conduct discovery on the issue of jurisdiction.
Currently before the Court is defendant's reinstated motion —
discovery having been completed-seeking dismissal of the Complaint on the
grounds previously stated.
In a diversity action, personal jurisdiction is governed by the law of
the forum state. See United States v. First Nat'l City Bank, 379 U.S. 378,
381-82, 85 S.Ct. 528, 13 L.Ed.2d 365 (1965); Arrowsmith v. United Press
Int'l, 320 F.2d 219, 223 (2d Cir. 1963) (en banc). In responding to a
Rule 12(b)(2) motion, the plaintiff "bears the burden of proving by a
preponderance of the evidence that personal jurisdiction exists." Landoil
Resources Corp. v. Alexander & Alexander Services, Inc., 918 F.2d 1039,
1043 (2d Cir. 1990). Because the Court has not held a hearing on the
issue, the plaintiff need only make a prima facie showing of
jurisdiction. Moreover, "all pleadings and affidavits must be construed
in the light most favorable to [the plaintiff] and all doubts must be
resolved in the [plaintiff's] favor." Id.; Hoffritz For Cutlery, Inc. v.
Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985). Where, as here, however,
the parties have engaged in extensive discovery concerning the
defendant's contacts with the state, JLB's prima facie showing must
include an averment of facts that, if credited by the trier of fact,
would suffice to establish personal jurisdiction over Ocwen. Bank
Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784
(2d Cir. 1999).
The Court must follow a two-step procedure to determine whether
personal jurisdiction exists. First, the Court must decide whether a
statutory basis for personal jurisdiction exists under the New York Civil
Practice Law and Rules (the "C.P.L.R."). Second, if a statutory basis
does exist, the Court must conduct a constitutional inquiry to determine
whether the exercise of personal jurisdiction is consistent with the
requirements of due process. See International Shoe Co. v. Washington,
326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Because the Court finds
there is no statutory basis to exercise personal jurisdiction over
Ocwen, it does not reach the constitutional due process issue.
Section 301, as construed by the New York courts, permits the general
exercise of personal jurisdiction over a foreign corporation if it is
"engaged in such a continuous and systematic course of doing business
here as to warrant a finding of its presence in this jurisdiction."
McGowan v. Smith, 52 N.Y.2d 268, 272, 419 N.E.2d 321, 437 N.Y.S.2d 643
quotations omitted). Accordingly, "New York law requires that the
defendant be present in New York "not occasionally or casually, but with
a fair measure of permanence and continuity.'" Landoil, 918 F.2d at 1043
(quoting Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267, 115 N.E. 915
The test has been described as simple and pragmatic, but necessarily
fact sensitive. See Bryant v. Finnish Nat'l Airline, 15 N.Y.2d 426, 432,
208 N.E.2d 439, 260 N.Y.S.2d 625 (1965); Landoil, 918 F.2d at 1043. In
(determining jurisdiction, New York courts have generally focused on the
following factors: "The existence of an office in New York; the
solicitation of business in New York; the presence of bank accounts or
other property in New York; and the presence of employees or agents in
New York." Id.
JLB does not dispute the defendant's contention that Ocwen maintains no
New York office, has no personnel in New York and does not solicit
business directly in New York. Rather, JLB asserts that Ocwen is "doing
business" in the state in two ways: (1) by buying and selling securities
through its custodial account with the Bank of New ...