Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


December 12, 2001


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


This is one of many lawsuits rising out of the parties' business dealings in Texas. 3H Enterprises (3H) and Steven Hochman (Hochman), plaintiffs in this action, allege an abuse of process by Teresa Santellanes and Mauro Santellanes (collectively "the Santellanes") and their attorney in Texas John Steven Dwyre (Dwyre). Before this Court are Defendants' motions to dismiss for lack of subject matter jurisdiction, lack of personal jurisdiction, failure to state a claim, and res judicata. Additionally, Defendants move for sanctions against Plaintiff Hochman and his attorney.

I. Procedural Background

"This motion was originally filed by the Defendants pro se.*fn1 Plaintiffs responded to that motion. While a decision was pending, the Santellanes Defendants obtained New York counsel, who requested permission to file supplemental motion papers. Permission was granted, and Plaintiffs have responded to the Santellanes' motion papers as well. Thus, the Court makes the following decision based upon all of the submissions.

II. Factual Background

The Santellanes are residents of Texas. Dwyre was their attorney in the prior New York and Texas actions. 3H is a business incorporated in Delaware County, New York, that was, prior to the Texas lawsuit, doing business in Texas. Hochman is the sole shareholder, director and officer of 3H. Compl. ¶ 2. 3H is in the business of buying and selling mortgages. Hochman Aff. ¶ 2. Sometime in 2000, the Santellanes contracted to sell a mortgage to 3H. Compl. ¶ 3. The Santellanes did not complete the transaction. 3H alleges that it was the Santellanes who breached the contract without cause. Compl. ¶ 4. All of 3H's contracts contained forum selection clauses and liquidated damages clauses. Following the Santellanes refusal to go through with the contract, 3H brought suit in Delaware County, New York, the place listed in the forum selection clause. That action was dismissed on the basis of forum non conveniens. Compl. ¶ 6. 3H filed a notice of appeal, but that appeal remained unperfected. Compl. ¶ 7. Following the dismissal of the New York lawsuit, the Santellanes, with Dwyre as their attorney, brought suit in a Texas court alleging that 3H was engaged in a fraudulent scheme. That action sought damages and injunctive relief. Compl. ¶ 8. 3H contested jurisdiction in the matter and lost. Texas Judgment, p. 1-2. 3H then answered in the action through its Texas attorneys. Texas Judgment, p. 1. Following the answer, 3H discharged its counsel and did not proceed further in the action. Hochman Aff. ¶ 2. Hochman states in his affidavit that "I then decided, on May 22, to cut our losses and discharge Texas counsel and deal somehow with whatever legitimate consequences might follow." Hochman Aff. ¶ 6.

The Santellanes through Dwyre then moved for a default judgment. Compl. ¶ 10. The Texas Court found that 3H, without cause, decreased the amount of money the Santellanes were to receive and attempted to force them to take less money. Texas Judgment, p. 5, ¶¶ 7-8. The Court awarded damages to the Santellanes and attorney's fees to Dwyre. Compl. ¶ 10; Texas Judgment, p. 7. An injunction was also issued. Compl. ¶ 10; Texas Judgment, p. 12, ¶ 7; see also Permanent Injunction. It is undisputed that neither 3H nor Hochman has paid either the judgment to the Santellanes or the attorney's fees award to Dwyre.

It now appears that after having a similar judgment rendered in Florida, 3H ceased doing business entirely. Neither of these judgments has been paid by 3H. Mendelson Aff. ¶ 2; Dwyre Aff. ¶ 12. Plaintiff Hochman contends that he stopped doing business in other states for business reasons, but stopped doing business in Texas solely because of the injunction issued against him. Hochman Second Aff. ¶¶ 3-5.

During the Texas litigation, while 3H was still actually defending the action,*fn2 Dwyre served a notice to take the deposition of Hochman in New York. Hochman moved to quash the notice, but his motion was denied. The Court issued an order allowing Hochman the choice of appearing for deposition in Texas on a specific date or arranging for a deposition in New York with the costs to be paid by him.

Hochman failed to appear on the specified date, or to arrange for a New York deposition after being ordered by the Texas court to do so. Def.Mem.L., Ex. "3," Texas order. Thereafter Dwyre moved for contempt and various discovery sanctions, including the striking of defendant's answer and judgment as a matter of law. In that motion, Dwyre states, "[d]eath penalty sanctions are warranted. This Defendant has failed to comply with an important order of this Court and is not cooperating with discovery." Id. An order resulted from this motion which states that "[d]efendant, Steve Hochman is commanded to appear and show cause why he should not be held in contempt of court for not appearing as ordered at his deposition on June 11, 2001." Id. at Order. Plaintiff Hochman contends that this was "an ex parte order commanding Hochman to appear in Texas for deposition on August 2, 2001, or face the `death penalty'." Compl. ¶ 11. Hochman never appeared before the Court to show cause why he should not be held in contempt. Following the failure of Plaintiff Hochman to appear for the third time, the Court entered a default judgment.

Plaintiffs now bring this action alleging that Dwyre and the Santellanes were motivated by malice against him, and thus abused process against him. He alleges that the default judgment in Texas effectively precludes him from doing business in Texas, and he asks this Court to award him damages for his emotional distress and his loss of business as a result of the Texas judgment.

Defendants move to dismiss the complaint for lack of jurisdiction, failure to state a claim upon which relief can be granted, and res judicata. Defendants also move for sanctions against Plaintiffs and their attorney. For the reasons that follow, Defendants motion to dismiss is granted.

III. Discussion

A. Personal Jurisdiction

Defendants contend that there is no personal jurisdiction over them because they lack the minimum contacts with New York.

On a motion to dismiss for lack of personal jurisdiction, the Plaintiff bears the burden of demonstrating the Court has jurisdiction. Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir. 1999). Where the motion to dismiss is made prior to discovery, the plaintiff can defeat the motion with "legally sufficient allegations of jurisdiction." Photoactive Productions, Inc. v. AL-OR International Ltd., 99 F. Supp.2d 281, 285 (E.D.N.Y. 2000) (citations omitted). Thus, the Plaintiff must make a "prima facie showing of jurisdiction." Photoactive Productions, 99 F. Supp.2d at 285 (citations omitted). In this diversity action, jurisdiction is determined by the law of the state in which the federal court sits. Mario Valente Collezioni, Ltd. v. Confezioni Semeraro Paolo, S.R.L., 264 F.3d 32, 35 (2d Cir. 2001); Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997). Thus, New York law determines whether jurisdiction exists.

1. New York Long Arm Jurisdiction

Plaintiffs seek to premise jurisdiction on New York's long-arm provision, C.P.L.R. 302(a). C.P.L.R. 302(a) does not requite the same level of contacts with New York as are required for jurisdiction under C.P.L.R. 301. However, in order to exert jurisdiction under C.P.L.R. 302, the cause of action must arise out of the established contacts. National Telephone Directory Consultants, Inc. v. Bellsouth Advertising & Publishing Corp., 25 F. Supp.2d 192 (S.D.N.Y. 1998) (citations omitted). Purposeful availment is the cornerstone of long-arm jurisdiction in New York. See Courtroom Television Network v. Focus Media, Inc., 264 A.D.2d 351, 695 N.Y.S.2d 17, 18 (1st Dep't 1999) (citations omitted), Thus, jurisdiction is appropriate where the party has projected itself into New York, and where it has put itself in the position to receive the benefits of New York law and commerce. National Telephone Directory, 25 F. Supp.2d at 196.

Further, when long arm jurisdiction is at issue, the Court must also ensure that the exercise of jurisdiction does not implicate constitutional concerns and will not offend "traditional notions of fair play and substantial justice." People v. Concert Connection, Ltd., 211 A.D.2d 310, 314, 629 N.Y.S.2d 254 (2nd Dep't 1995) (quoting International Shoe v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). Thus, certain "minimum contacts" must exist in order to confer jurisdiction on the Court. Mario Valente Collezioni, Ltd., 264 F.3d at 35 (federal law of minimum contacts determines whether exercise of jurisdiction is constitutional).

Plaintiffs makes a number of arguments regarding jurisdiction. The Court will address each in turn.

2. C.P.L.R. 302(a)(2)

Plaintiffs first seek to premise jurisdiction on C.P.L.R. 302(a)(2). That statute provides jurisdiction over a person who commits a tortious act within New York. In relying on this provision, Plaintiffs contend that because Defendant Dwyre issued process in New York, he committed a tortious act within the state. See Pl.Mem.L. 14. What Plaintiffs seem to ignore here is that the issuing of process is not the tortious act complained of. Abuse of process does not concern the issuance of process, but rather "`the improper use of process after it is regularly issued.'" Labensky v. County of Nassau, 6 F. Supp.2d 161, 177 (E.D.N.Y. 1998) (quoting Cook v. Sheldon, 41 F.3d 73, 80 (2d Cir. 1994)). It is this ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.