United States District Court, S.D. New York
April 12, 2004.
DAVID BRADLEY, Plaintiff, -against- ROGER STAUBACH, THE STAUBACH COMPANY MARK WAKELAND, Defendants
The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge
OPINION AND ORDER
David Bradley, appearing pro se, filed this diversity action against
Roger Staubach, The Staubach Company (TSC), and Mark Wakeland alleging
breach of contract, fraud, usury, breach of fiduciary duties, and
professional negligence in connection with a real estate transaction in
Ottawa, Canada. This Court previously dismissed the suit against Staubach
and Wakeland for lack of personal jurisdiction, and dismissed each cause
of action, except for breach of contract, for failure to state a claim.
Plaintiff was granted leave to amend his complaint, which he has since
done. The Amended Complaint added new jurisdictional allegations but is
otherwise identical to the original complaint. Staubach and Wakeland have
again moved to dismiss for lack of personal jurisdiction, and all defendants again move to dismiss for failure
to state a claim.
For the reasons stated below, the motion to dismiss for lack of
personal jurisdiction is granted with respect to Staubach and denied with
respect to Wakeland. The motion to dismiss for failure to state a claim
is granted in part and denied in part.
On May 27, 1999, David Bradley ("Bradley") obtained the right, title,
and interest to an "Agreement of Purchase and Sale" ("Purchase
Agreement"), pursuant to which Bradley agreed to purchase real property
(the "property") located in Ottawa, Canada, from John Bradley ("Seller").
See Plaintiffs Amended Complaint ("Complaint") ¶¶ 1-4; Net
Proceeds Agreement ("Proceeds Agreement"), Ex. 4 to Plaintiffs Opposition
to Defendants' Motion to Dismiss ("PI. Opp."), at 8. In February 2000,
Bradley entered into an oral agreement with the defendants (the "February
2000 Agreement"), whereby TSC agreed to reimburse all of Bradley's costs
and expenses relating to the purchase of the property from Seller, and
grant Bradley a loan in the amount of $50,000 Canadian Dollars. See Complaint ¶¶ 1-13. As consideration,
Bradley agreed to share his profits from the sale of the property with
non-party WEC 2000 Ottawa Land A Company ("WEC").*fn2 See
Proceeds Agreement, at 8-13. This agreement was formed under New
York Law. See Complaint at 10.*fn3
On April 7, 2000, Bradley and WEC executed the Net Proceeds Agreement.
See Proceeds Agreement at 8. The agreement provided that "all
proceeds from the Sale of the Property are and shall be solely and
exclusively owned by [WEC]," provided that, "[WEC] pay [Bradley] the Net
Proceeds Payment in cash at closing." Id. at 10. The agreement
defined "Net Proceeds Payment," and further provided that at the closing
of the purchase of the property, Bradley would "transfer and assign all
of [his] right, title and interest in and to the Purchase Agreement to
[WEC]." Id. at 8-10. WEC agreed to "consummate the closing of
the acquisition of the property from the Seller," and "reimburse
[Bradley] . . . pre-closing expenses. . . ." Id. at 10.
WEC purchased the property from Seller on April 10, 2000, and sold it
on May 13, 2003. See Complaint ¶ 1; Pl. Opp. at 5. Under the
terms of the Net Proceeds Agreement, Bradley was not entitled to any of the proceeds
from the sale. See Proceeds Agreement, at 8-10.
Bradley alleges five causes of action against the defendants. Claims I
and II allege that defendants "committed fraud and breach of contract" by
"deliberately failing to reimburse [Bradley] for his deposits on the
property, and . . . to honor the `loan.'" Complaint ¶¶ 14-15,
20-21, 34. Claims III and IV allege that as a result of the defendants'
negligence and breaches of fiduciary duty, plaintiff suffered injury in
the form of "lost business opportunity for the property." Id.
¶¶ 21-33. Finally, Claim V alleges that defendants violated New York
usury law by charging plaintiff 50% interest per annum on the $50,000
(Canadian) loan made under the terms of the February 2000 Agreement.
See id. ¶¶ 1-3, 19.
C. Moving Defendants
Roger Staubach is founder, Chief Executive Officer, and Chairman of the
Board of Directors of TSC. See id. at 9. Staubach has resided in
Dallas, Texas, since 1969. See id. ¶ 3; Declaration of Roger
Staubach ("Staubach Dec.") ¶ 2. Staubach has never met or spoken with
Bradley. See id. ¶ 3.
Mark Wakeland was a senior executive with the financial services division of TSC.*fn4 See Complaint at 11-12; Declaration
of Mark Wakeland ("Wakeland Dec.") ¶ 3. Wakeland is a resident of
Texas. See Complaint ¶ 2; Wakeland Dec. ¶ 2. He has only
been present in New York once, while changing aircraft at a New York
airport. See id. ¶ 5. Wakeland concedes knowing Bradley from
his employment at TSC. See id. ¶ 3.
TSC is a Texas corporation with its principal place of business in
Texas. See Complaint ¶ 3; Staubach Dec. ¶ 3. Bradley
alleges that he had dealings with the New York office of TSC, and that
this action arises out of those dealings. See Complaint at 8-14.
D. Jurisdictional Allegations
1. Roger Staubach
Bradley alleges that "Staubach is a substantial shareholder with a
dominant and influential equity stake" in TSC, and that Staubach benefits
from "TSC's deliberate and purposeful activities and business
transactions in New York." See id. at 9. Bradley further alleges
that Staubach "exercises extraordinary control" over the company and that
"TSC's activities in New York are done with the knowledge and consent of
Staubach." Id. Staubach is alleged to be a "key player" in the
New York real estate market. Id. at 8. According to Bradley, the February 2000 Agreement was entered into with Staubach's knowledge
and consent. See id. at 10. Finally, Staubach authorized an
$18,000 deposit for the purchase of the land in Canada. See id.
2. Mark Wakeland
Bradley alleges that Wakeland oversees TSC's New York office. See
id. at 12. Moreover, through the New York office Wakeland transacts
substantial and ongoing business in New York. Id. Bradley
further alleges that "Wakeland and TSC purposefully do business in New
York for the benefit of Wakeland. . . . Wakeland also receives
personal financial gain . . . from TSC's New York office's business,
revenue, and profits." Id. at 13.
Bradley alleges that Wakeland was a "key player" in the transaction
that gives rise to the complaint. Id. at 14. Specifically,
Wakeland negotiated and approved the February 2000 Agreement and
participated in resolving the "compensation" and "fund collection" issues
arising out of the execution of the February 2000 Agreement. Id.
at 14-15. Furthermore, Wakeland was the primary contact for the Canadian
bank that participated in financing the transaction, see id. at
15, and Wakeland worked with Staubach to obtain authorization for the
$18,000 used as a deposit for the purchase of the land. See id.
Finally, Wakeland had knowledge of, and consented to, all of TSC's New
York office's actions with respect to the disputed transaction. See id. at 11-13.
3. Plaintiffs Allegations
Plaintiff has alleged both general jurisdiction and specific
jurisdiction, under an agency theory, and has provided new allegations to
support both these theories. Plaintiff made no new allegations concerning
where the alleged torts were committed or where their effects were felt.
II. APPLICABLE LAW
A. Legal Standard
"Personal jurisdiction . . . represents a restriction on judicial
power as a matter of individual liberty." Ruhrgas Ag v. Marathon Oil
Co., 526 U.S. 574, 584 (1999) (quotations and citation omitted). A
court is obligated to dismiss an action against a defendant over which it
has no personal jurisdiction. See Fed.R.Civ.P. 12(b)(2);
see also In re Ski Train Fire in Kaprun, Austria on November 11,
2000, 2 30 F. Supp.2d 403,406 (S.D.N.Y. 2002). A plaintiff bears the
ultimate burden of establishing, by a preponderance of the evidence, that
the court has jurisdiction over a defendant. See Kernan v.
Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir. 1999). However,
"[p]rior to discovery, a plaintiff challenged by a jurisdiction testing
motion may defeat the motion by pleading in good faith . . . legally
sufficient allegations of jurisdiction, i.e., by making a prima facie
showing of jurisdiction." Jazini v. Nissan Motor Co.,
148 F.3d 181, 184 (2d Cir. 1998) (quotations and citation omitted); see also
Koehler v. Bank of Berm., Ltd., 101 F.3d 863, 865 (2d Cir. 1996).
Plaintiff "can make this showing through his own affidavits and
supporting materials, containing an averment of facts that, if
credited . . . would suffice to establish jurisdiction over the
defendant." Whitaker v. American Telecasting Inc.,
261 F.3d 196, 208 (2d Cir. 2001) (quotations and citations omitted). Thus, a
court may consider materials outside the pleadings, but must credit the
plaintiff's averments of jurisdictional facts as true. See Hsin Ten
Enter. USA, Inc. v. Clark Enter., 138 F. Supp.2d 449,452 (S.D.N.Y.
2000); Metropolitan Life, 84 F.3d at 567.
The determination of whether a federal court has personal jurisdiction
over a defendant is a two-step process. First, the court must
determine whether the plaintiff has shown that the defendant is subject
to personal jurisdiction under the forum state's laws. See
Metropolitan Life, 84 F.3d at 567. Second, the court must
evaluate whether its assertion of jurisdiction pursuant to the forum
state's laws comports with the requirements of due process. See
B. Section 301*fn5 A corporate defendant is subject to general jurisdiction under New York
law if it is "doing business" in the state. See N.Y. C.P.L.R.
§ 301 (McKinney 2003) (codifying caselaw that utilizes "doing
business" standard); Aerotel Ltd. v. Sprint Corp., 100 F. Supp.2d 189,
191 (S.D.N.Y. 2000). An individual "does not subject himself to
the CPLR 301 jurisdiction of our courts, however, unless he is doing
business in our State individually." Laufer v. Ostrow, 55 N.Y.2d 305,
313 (1982) (citation omitted)); see also Black v. USA Travel
Auth., Inc., No. 99 Civ. 11278, 2001 WL 761070, at *4 (S.D.N.Y. July
6, 2001) ("It is well-settled that where a corporation is doing business
in New York, an officer of the corporation does not subject himself
individually to 301 jurisdiction unless he is doing business in New York
personally." (quotations and citation omitted)).
C. Section 302
Under section 302(a)(1) of New York's long-arm statute, a court may
exercise personal jurisdiction over a nondomiciliary if "the
nondomiciliary  transact[s] business within the state, [and] the claim
against the nondomiciliary  arise[s] out of that business activity."
CutCo. Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.
1986).*fn6 A nondomiciliary "transacts business" in New York if it `"purposefully avails [itself] of the privilege of conducting
activities within New York, thus invoking the benefits and protections of
its laws.'" Id. (quoting McKee Electric Co. v. Rauland-Borg
Corp., 20 N.Y.2d 377, 382 (1967)).
Jurisdiction can be exercised over individual defendants under an
agency theory and to do so "plaintiff need not establish a formal agency
relationship." Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460,467
(1988). Rather, plaintiff "need only convince the court that [the
corporation] engaged in purposeful activities in this State in relation
to his transaction for the benefit of and with the knowledge and consent
of [the individual defendants] and that they exercised some control over
[the corporation] in the manner." Id. "At the heart of this
inquiry is whether the out-of-state corporate officers were `primary
actors in the transactions in New York' that gave rise to the litigation,
and not merely `some corporate employee[s] who . . . played no part
in' it." Karabu Corp. v. Gitner, 16 F. Supp.2d 319, 323
(S.D.N.Y. 1998) (quoting Retail Software Services, Inc. v.
Lashlee, 854 F.2d 18, 22 (2d Cir. 1988)). "Plaintiff's allegations
must `sufficiently detail the defendant's conduct so as to persuade a court
that defendant was a `primary actor' in the specific matter in question;
control cannot be shown based merely upon a defendant's title or
position . . . or upon conclusory allegations that the defendant
controls the corporation." In re Sumitomo Copper Litig.,
120 F. Supp.2d 328, 336 (S.D.N.Y. 2000) (quoting Karabu Corp.,
16 F. Supp.2d at 324).
D. Due Process
The Second Circuit has summarized the due process requirements for
exercising personal jurisdiction over a foreign defendant as follows:
The due process clause of the Fourteenth Amendment
permits a state to exercise personal jurisdiction
over a non-resident defendant with whom it has
certain minimum contacts such that the maintenance
of the suit does not offend traditional notions of
fair play and substantial justice. In determining
whether minimum contacts exist, the court
considers the relationship among the defendant,
the forum, and the litigation. To establish the
minimum contacts necessary to justify specific
jurisdiction, the plaintiff first must show that
his claim arises out of or relates to defendant's
contacts with the forum state. The plaintiff must
also show that the defendant purposefully availed
himself of the privilege of doing business in the
forum state and that the defendant could foresee
being haled into court there. If the plaintiff
satisfies these requirements, the court also
considers whether the assertion of jurisdiction
comports with traditional notions of fair play and
substantial justice that is, whether it is
reasonable under the circumstances of a particular
case. Chew v. Dietrich, 143 F.3d 24, 28 (2d Cir. 1998)
(alterations, citations and quotation marks omitted). There are two
components to the inquiry: first the court must determine
whether the defendant has sufficient contacts with the forum state to
justify the court's exercise of personal jurisdiction, and
second, the court must determine whether the assertion of
personal jurisdiction is reasonable under the circumstances of the
particular case. See Metropolitan Life, 84 F.3d at 567-68
(citing International Shoe Co. v. Washington, 326 U.S. 310, 316
Once the plaintiff has demonstrated the requisite minimum contacts
between the defendant and the forum state, the court must employ a
five-factor test to determine whether the assertion of personal
jurisdiction is reasonable. See Asahi Metal Indus. Co. v. Superior
Court, 480 U.S. 102, 112 (1987); Metropolitan Life, 84 F.3d
at 573. These factors are: (1) the burden that the exercise of
jurisdiction will impose on the defendant; (2) the interests of the forum
state in adjudicating the case; (3) the plaintiff's interest in obtaining
convenient and effective relief; (4) the most efficient resolution of the
controversy; and (5) the interests of the state in furthering substantive
social policies. See Asahi, 480 U.S. at 112; Burger King
Corp. v. Rudzewicz, 471 U.S. 462,476-77 (1985).
A. Jurisdiction Because there is no allegation that either Staubach or Wakeland
conducted business in New York in their individual capacities, section
301 does not provide a basis for jurisdiction.
Section 302(a)(1) also fails to provide a basis for jurisdiction over
Staubach. Bradley's argument for jurisdiction over Staubach consists
almost exclusively of conclusory allegations. The only act Staubach is
alleged to have performed is authorizing funding for a deposit on the
property, in accordance with the February 2000 Agreement. Merely
authorizing one part of a previously negotiated agreement does not make
Staubach a primary actor in this disputed transaction. Moreover, Staubach
has never met Bradley, or interacted with him, and did not play any role
in the negotiation of the agreement. Thus, Staubach cannot reasonably be
said to be a "primary actor" in this matter and section 302 does not
provide a basis for exercising jurisdiction over him.
With respect to Wakeland, Bradley has presented a prima facie
case for section 302 jurisdiction. Bradley alleges that Wakeland was a
"key figure" in the negotiation and approval of the February 2000
Agreement, served as the primary contact for the Canadian bank involved
in the transaction, participated in negotiation of the compensation and
"collection of fund" issues, and authorized payment of the deposit. These
allegations, collectively, indicate that Wakeland was a primary actor in the transaction, thus giving rise to
personal jurisdiction in New York.
Exercising jurisdiction over Wakeland based on these allegations would
not violate the requirements of due process. Contacts sufficient to
establish jurisdiction under C.P.L.R. § 302(a)(1) are sufficient to
meet the minimum contacts requirements of the Due Process clause. See
Stone v. Chung Pei Chemicals Indus., 790 F.2d 20, 21-22 (2d Cir.
1986); Stroock & Stroock & Lavan v. Valley Sys., No. 95
Civ. 6513, 1996 WL 11249, at *4 n.3 (S.D.N.Y. Jan. 11, 1996). It is also
reasonable to assert jurisdiction over Wakeland in New York under the
five-factor Asahi test. See Asahi, 480 U.S. at 107.
First, although there may be some difficulties associated with
requiring Wakeland to defend this suit in New York, the "conveniences of
modem communication and transportation ease what would have been a
serious burden only a few decades ago." Metropolitan Life, 84
F.3d at 574; see also Burger King, 471 U.S. at 483
(inconvenience must be "substantial  to achieve constitutional
magnitude) (emphasis in original). Thus, this factor favors the exercise
of jurisdiction over Wakeland.
Second, New York has a substantial interest in this litigation
because the relevant agreement is governed by New York law, and Bradley
is a New York resident. See Complaint at 9, ¶ 1. Thus, this factor
favors Bradley. See Burger King, 471 U.S. at 482-83;
Metropolitan Life, 84 F.3d at 574.
Third, because Bradley is a New York resident, he has a strong
interest in litigating this action in New York. See Asahi, 480
U.S. at 114-15; Metropolitan Life, 84 F.3d at 574. This is
particularly true given that Bradley is appearing pro se. Therefore, this
factor also favors Bradley.
Fourth, in determining whether adjudication in the forum state
would promote the efficient administration of justice, courts consider
where witnesses and evidence are likely to be located. See
Metropolitan Life, 84 F.3d at 574 (citing Caruth v.
International Psychoanalytical Ass'n, 59 F.3d 126, 129 (9th Cir.
1995)). The potential witnesses are located in New York, Texas, and
Canada. Moreover, documentary evidence is likely located in both New York
and Texas. As such, this factor is neutral.
Fifth, there does not appear to be any substantive social
policies that would be furthered by permitting this case to be heard in
New York. See Metropolitan Life, 84 F.3d at 575. However, there
are no substantive social policies that would be hindered by
allowing adjudication in New York. Therefore, this factor is also
neutral. See id.
In sum, the "reasonableness" inquiry favors assertion of jurisdiction in New York. Bradley has a strong interest in prosecuting the
action in this forum. Moreover, because New York law governs the dispute
and Bradley is a New York resident, New York has considerable interest in
adjudication of the action within its borders. The final two factors,
efficiency and social policy, do not favor either party. Therefore,
Bradley has made a prima facie showing that the assertion of
personal jurisdiction over Wakeland would not offend the requirements of
B. Jurisdictional Discovery
Because plaintiff has made a prima facie showing of
jurisdiction but has presented no evidence supporting his allegations,
Jurisdictional discovery is appropriate to determine if plaintiff s
allegations are factually supported. See Ball v. Metallurgie
Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). The
parties are ordered to engage in Jurisdictional discovery, not to exceed
sixty days in duration.*fn7
C. Failure to State A Claim
Despite an opportunity to amend his complaint, Bradley did not make any
changes or additions to his substantive claims, all of which, with the
exception of the contract claim, were previously dismissed. See
Nov. 19 Tr. at 11-16. Therefore, Bradley's claims for fraud, usury, breach of fiduciary duty,
and professional negligence are again dismissed, with prejudice, for the
reasons previously stated on the record. See id. at 12-17.
Because Bradley has properly stated a claim for breach of contract, and
defendants' motion to dismiss was previously denied, see id. at
11-12, the contract claim survives with respect to TSC and Wakeland.
Defendants' motion to dismiss for lack of personal jurisdiction is
granted with respect to Staubach and denied with respect to Wakeland.
Defendants' motion to dismiss for failure to state a claim is granted in
part and denied in part. The sole remaining claim is for breach of
contract. A conference is scheduled for April 27, 2004 at 4:30 p.m. The
clerk is directed to close this motion [docket #24] and dismiss the
action against Staubach.