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United States District Court, S.D. New York

April 12, 2004.


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


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.


  A. Background*fn1

  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.

  B. Complaint

  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.


  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 id. 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 (1945)).

  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 due process.

  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.


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