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MARANGA v. VIRA

May 3, 2005.

THEOPHILUS F. MARANGA and TAJ MARAN INTERNATIONAL CORPORATION, Plaintiffs,
v.
ARVIND VIRA and MAVI, LLC, Defendants.



The opinion of the court was delivered by: LEONARD SAND, Senior District Judge

MEMORANDUM AND ORDER

Plaintiffs Theophilus F. Maranga ("Maranga"), a resident of New York, and Taj Maran International Corporation ("Taj Maran"), a New York corporation with principal place of business in New York of which Maranga is President, bring this diversity action against defendants Arvind Vira ("Vira"), a Louisiana resident, and Mavi, LLC ("Mavi"), purportedly a Louisiana corporation having its principal place of business in Louisiana.*fn1 Maranga and Taj Maran (collectively "Plaintiffs") allege that Vira and Mavi (collectively "Defendants") provided false financial records and committed commercial bribery in connection with their sale to Plaintiffs of the Econo Lodge Motel in Gretna, Louisiana. Defendants have moved to dismiss the Complaint pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure for lack of personal jurisdiction, or in the alternative to transfer the case to the U.S. District Court for the Eastern District of Louisiana. For the reasons stated below, Defendants' motion to dismiss is granted, rendering Defendants' motion to transfer moot.

I. Legal Standard

  "On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff[s] bear? the burden of showing that the court has jurisdiction over the defendant[s]." Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir. 1999); Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). The Court in adjudicating such a motion has discretion either to "rely on pleadings and affidavits" or to "hold? an evidentiary hearing," CutCo Industries, Inc. v. Naughton, 806 F.2d 361, 364 (2d Cir. 1986). "Where, as here, [the] [C]ourt relies on pleadings and affidavits, rather than conducting a `full-blown evidentiary hearing,' the plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant." DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001) (quoting Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999), in turn quoting Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)).

  "In determining whether a plaintiff has met this burden, we will not draw `argumentative inferences' in the plaintiff's favor . . . [but] will, however, construe jurisdictional allegations liberally and take as true uncontroverted factual allegations." Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994) (quoting Atl. Mut. Ins. Co. v. Balfour Maclaine Int'l, Ltd., 968 F.2d 196, 198 (2d Cir. 1992)). Even as to those factual allegations that are controverted, "[w]e construe the pleadings and affidavits in the light most favorable to [Plaintiffs], resolving all doubts in [their] favor." DiStefano, 286 F.3d at 84.

  II. Factual Background

  Resolving doubts in Plaintiffs' favor, the following relevant facts can be gleaned from the Complaint and the affidavits submitted by Maranga and Vira in connection with this motion, as clarified at oral argument. Defendant Vira is a resident of the State of Louisiana, and defendant Mavi is organized under that State's laws*fn2 and has its principal place of business there. Vira is the president of the corporation that is the "non-member manager" of Mavi. (Vira Aff. ¶ 3.) Neither Vira nor Mavi have any property, bank account, mailing address, or telephone listing in the State of New York. Mavi does not have a license to do business in New York, have any employees in New York, have a registered agent in New York, or pay or owe taxes in New York; its purpose as an entity was the ownership of the Econo Lodge Motel located in Gretna, Louisiana (the "Motel"). In February or March of 2002, however, defendant Vira placed an advertisement in Indian Abroad, a newspaper which is published in New York State, offering to sell the Motel. Mavi also placed an advertisement in the nationally circulated newspaper Gujarat Times offering to sell the Motel; this advertisement requested that potential buyers contact Vira at his Louisiana telephone number.

  Nagindas Modi ("Modi"), an acquaintance of Maranga's, brought the Indian Abroad advertisement regarding the Motel to Maranga's attention in February 2002. Sometime between February and May of 2002,*fn3 Modi contacted Vira at Maranga's request to express an interest in purchasing the Motel.*fn4 In the course of the ensuing negotiations, Maranga traveled to Gretna with Modi, but "the bulk of the negotiations were conducted by telephone, fax communications and mails [sic]" (Maranga Aff. ¶ 8). There were roughly twenty phone calls "either emanating from New York or Gretna, Louisiana" during the negotiations (id.), and defendant Vira sent various "pieces of documents" to Maranga's office in New York "by fax and by mail" (id. ¶ 9). Vira also "asked for and received [Maranga's] financial and banking information to enable him [to] do due diligence on [Maranga's] financial background in New York." (Id. ¶ 10.) Vira did not, however, at any point travel to New York to conduct the negotiations;*fn5 in fact, Vira has never traveled to New York to conduct business, but rather has "traveled to New York less than ten times in the last five years for tourism and vacation purposes only." (Vira Aff. ¶¶ 7-8.)

  In the course of the negotiations, Maranga informed Vira "that he was new to the hotel business and was being assisted by his agent at the time, Nagindas Modi, who had a little bit more knowledge in the hospitality industry than himself." (Compl. ¶ 9.) Vira later contacted Modi and offered him $20,000 if he could convince Maranga to purchase the Motel; Vira gave Modi a check for $2,000 as a down-payment on this $20,000 payment, but later put a "stop payment" order on that check. While "the check was delivered in Louisiana" (Tr. at 6), Modi attempted to negotiate the check in New York. "The commercial bribe that . . . Vira? offered to Mr. Modi explains the pressure and the lies Mr. Modi told [Maranga] in New York to get [him] to purchase the Motel." (Maranga Aff. ¶ 13.) When Vira offered and paid this bribe, he did so on behalf of not only himself but also Mavi.*fn6

  In addition to offering Modi this bribe, Defendants provided false and misleading financial records regarding the profitability of the Motel. These records, which made up "the bulk of the financial records for the . . . Motel" that were given to Maranga, "painted a far rosier picture of the economic viability of the Motel than was the case." (Maranga Aff. ¶ 11.) The records "were tendered with intent to deceive the plaintiffs and with the intent that the plaintiffs rely upon them and to induce the plaintiffs to purchase the [Motel]." (Compl. ¶ 12.) Plaintiffs believed these records to be true, and were induced by them to purchase the Motel.

  Defendant Vira also "represented to the plaintiffs that he had intimate knowledge of the hotel business," that "the intended purchase was an economically wise one and that [plaintiffs] could not lose," and that "he was so sure of the profitability of the property that he was willing to hold the mortgage on the property." (Compl. ¶ 10.) Vira further promised that one Cindy Bishop, whom he introduced as a former manager of the Motel, would "assist in the management of the property on behalf of the plaintiffs, if the plaintiffs bought the [M]otel." (Id.) "The defendants, acting through the said Cindy Bishop, induced the plaintiffs to purchase the [M]otel," but "[l]ater on, the defendants caused the said Cindy Bishop to stop working for the plaintiffs and go work for the defendants." (Id.) In reliance on the various representations that Vira had made, "both direct and through his agents" (Compl. ¶ 14), Maranga agreed on behalf of Taj Maran to purchase the Motel. The purchase agreement and associated closing documents were executed in Louisiana in July 2002.

  Taj Maran made mortgage payments under the purchase agreement for two years, but when Plaintiffs "attempted to refinance the mortgage loan," (Compl. ¶ 13), they discovered that the financial records had been false. A foreclosure proceeding was commenced in Louisiana based on Defendants' allegation that Taj Maran had stopped making the required mortgage payments to Mavi. In response, Plaintiffs filed this action in the Southern District of New York.

  III. Analysis

  "In diversity cases, federal courts must look to the forum state's long-arm statute to determine if personal jurisdiction may be obtained over a nonresident defendant." Savin v. Ranier, 898 F.2d 304, 306 (2d Cir. 1990). If the forum state's long-arm laws indicate that jurisdiction may be obtained, the Court then must "assess whether the court's assertion of jurisdiction under these laws comports with the requirements of due process." Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996) (citing Savin, 898 F.2d at 306). Because the forum state here is New York, the statutory and constitutional inquiries are distinct, as "the New York long-arm statute . . . does not provide for in personam jurisdiction in every case in which due process would permit it," Talbot v. Johnson Newspaper Corp., 522 N.E.2d 1027, 1029 (N.Y. 1988). Cf. Metropolitan Life Ins. Co., 84 F.3d at 567 (because "[c]ourts have interpreted the relevant Vermont long-arm statute . . . as reflecting a `clear policy to assert jurisdiction over individual defendants to the full extent permitted by the Due Process Clause'," the ...


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