United States District Court, E.D. New York
August 18, 2005.
ADP INVESTOR COMMUNICATION SERVICES, INC., Plaintiff,
IN HOUSE ATTORNEY SERVICES, INC. and CRAIG OSBOURNE, Defendants.
The opinion of the court was delivered by: THOMAS PLATT, District Judge
MEMORANDUM OPINION and ORDER
Defendants In House Attorney Services, Inc. ("In House") and
Mr. Craig Osbourne ("Osbourne") (collectively "Defendants") move
to dismiss Plaintiff ADP Investor Communication Services, Inc.'s
("ADP") Amended Complaint pursuant to Federal Rule of Civil
Procedure ("Rule") 12(b)(2). In the alternative, Defendants move
this Court to dismiss counts two and three of the Amended
Complaint pursuant to Rule 12(b)(6).
ADP brings three claims: i) breach of contract against In
House; ii) unjust enrichment against In House; and iii)
conversion against both Defendants.
For the following reasons, Defendants' motions are DENIED.
Factual Summary ADP is a Delaware corporation with its principal place of
business in Edgewood, New York. (Am. Compl. ¶ 4.) In House is a
California corporation and has its principal place of business in
Los Angeles, California. (Id. ¶ 5.) Osbourne is the president and
founder of In House and is a resident of the State of California.
(Id. ¶ 6.)
In early 2003, In House submitted and won a bid to print proxy
materials and prepare the same for mailing on behalf of the
debtors of Peregrine Systems, Inc. ("Peregrine"), a corporation
that had filed for bankruptcy in the U.S. Bankruptcy Court in the
District of Delaware. (Id. ¶¶ 10, 11.)
At some point during the Spring of 2003, In House telephoned
Mr. Aleck Masouas, an employee at ADP's Edgewood, New York
facility, to inquire as to whether ADP was interested in handling
the task of mailing the proxy materials to the Peregrine
shareholders. (Id. ¶ 11.) The Defendants' version as to who
initiated the contract differs. According to Osbourne, after In
House was awarded the contract to produce the proxy materials,
Peregrine's counsel communicated with Osbourne to inform him that
ADP had been chosen to mail the Peregrine materials. (Osbourne
Aff. ¶ 10.)
In any event, before the Parties reached an agreement, In House
and ADP's representatives located at ADP's Edgewood, New York
headquarters exchanged several phone conversations and emails. (Am. Compl. ¶
12.) ADP anticipated that the cost to mail the Peregrine
materials would be high. (Id. ¶ 13.) Therefore, as ADP was aware
that Peregrine was in financial straits, ADP requested
pre-payment. (Id.) In House wired the sum of $835,070 to ADP as
pre-payment. (Id.) ADP agreed to reimburse In House the
difference between the pre-payment and the actual cost of the
mailings after they completed the project. (Id.)
In House prepared the Peregrine materials and then shipped them
to ADP's Edgewood, New York headquarters in June, 2003. (Am.
Compl. ¶¶ 15-16.) ADP in turn processed and mailed these
materials to the Peregrine shareholders. (Id. ¶ 16.) ADP also
mailed reminder letters to the Peregrine shareholders. (Id.)
After completing the Peregrine project, ADP calculated that In
House incurred charges totaling $570,407.20. (Am. Compl. ¶ 17.)
Keeping with their agreement, ADP wired to In House a refund of
$277,699.89 on or about September 11, 2003. (Id. ¶ 18.) According
to ADP, this amount was incorrect as they later calculated that
the actual amount due to In House was only $264,662.80. (Id.) ADP
then wired a second refund check for the "correct" amount to In
House on or about January 14, 2004. (Id.)
Osbourne acknowledged in a telephone call that In House
received two checks. (Id. ¶ 19; Osbourne Aff. ¶ 19.) Osbourne
also acknowledged that during a phone conversation with a member
of ADP's Finance Department in May, 2004, he stated that he thought the refund amount was larger
than expected. (Am. Compl. ¶ 19.) Osbourne and In House, however,
did not return the first payment to ADP, despite repeated
requests to do so. (Id. ¶¶ 19-21.)
Osbourne contends that it is his understanding that the two
payments were installment payments and that together they equaled
the accurate amount of monies owed to In House. (Osbourne Aff. ¶
ADP alleges that this Court has personal jurisdiction over the
Defendants under New York's long arm statute, N.Y. Civ. Prac. L.
& R. ("CPLR") § 302(a)(1), in that the Defendants have transacted
business in New York and ADP's claims arise out of Defendants'
purposeful business activity in New York. (Am. Compl. ¶ 9.) In
addition, on its claim for conversion, ADP argues that this Court
has personal jurisdiction over Defendants under both CPLR §§
302(a)(1) and 302(a)(3). (Id.)
On a motion to dismiss for lack of personal jurisdiction
pursuant to Rule 12(b)(2), the plaintiff bears the burden to
establish jurisdiction. See In re Magnetic Audiotape Antitrust
Litig., 334 F.3d 204, 206 (2d Cir. 2003); Freeplay Music, Inc.
v. Cox Radio, Inc., No. 04-5238, 2005 U.S. Dist. LEXIS 12397, *5
(S.D.N.Y. June 23, 2005). "A plaintiff must establish the court's
jurisdiction with respect to each claim asserted." Sunward Elecs., Inc. v.
McDonald, 362 F.3d 17, 24 (2d Cir. 2004). Where no
jurisdictional discovery has been conducted as is the case here
the plaintiff need only establish a prima facie case, and
allegations of jurisdictional fact must be construed in a light
most favorable to the plaintiff. See CutCo Indus. Inc. v.
Naughton, 806 F.2d 361, 365 (2d Cir. 1986). The motion may be
denied if those allegations suffice as a matter of law. Magnetic
Audiotape, 334 F.3d at 206.
In order to prevail under Rule 12(b)(6), a defendant must show
that the plaintiff can prove no set of facts in support of its
claim which would entitle plaintiff to relief. Alnwick v.
European Micro Holdings Inc., 281 F. Supp. 2d 629, 637 (E.D.N.Y.
2003). Courts must accept as true all of the factual allegations
set out in the complaint, and draw inferences from those
allegations in the light most favorable to the plaintiff. Id.
"Under Rule 12(b)(6), a court `must confine its consideration to
facts stated on the face of the complaint, in documents appended
to the complaint or incorporated in the complaint by reference,
and to matters of which judicial notice may be taken.'" Id.
(quoting Tarshis v. Riese Org., 211 F.3d 30, 35 (2d Cir. 2000),
abrogated on other grounds, Swierkiewicz v. Sorema N.A.,
534 U.S. 506 (2002) (quoting Conley v. Gibson, 355 U.S. 41, 45-46
Unlike a motion to dismiss pursuant to Rule 12(b)(6), deciding
a Rule 12(b)(2) motion necessarily requires resolution of factual
matters outside the pleadings:
In deciding a pretrial motion to dismiss for lack of
personal jurisdiction a district court has
considerable procedural leeway. It may determine the
motion on the basis of affidavits alone; or it may
permit discovery in aid of the motion; or it may
conduct an evidentiary hearing on the merits of the
motion. If the court chooses not to conduct a
full-blown evidentiary hearing on the motion, the
plaintiff need make only a prima facie showing of
jurisdiction through its own affidavits and
supporting materials. Eventually, of course, the
plaintiff must establish jurisdiction by a
preponderance of the evidence, either at a pretrial
evidentiary hearing or at trial. But until such a
hearing is held, a prima facie showing suffices,
notwithstanding any controverting presentation by the
moving party, to defeat the motion.
Marine Midland Bank, N.A. v. Miller, 664 F.2d 899
, 904 (2d Cir.
1981) (citations omitted); see also Pilates, Inc. v. Pilates
Inst., Inc., 891 F. Supp. 175, 178 n. 2 (S.D.N.Y. 1995).
Accordingly, this Court will consider Craig Osbourne's affidavit
(as well as affidavits submitted by ADP) for the purpose of
deciding whether this Court has jurisdiction over In House.
A. Whether this Court may exercise personal jurisdiction over
"Personal jurisdiction over a defendant in a diversity action
is determined by the law of the forum in which the court sits."
CutCo Indus., 806 F.2d at 365. ADP asserts that personal jurisdiction over In House
is proper under CPLR § 302(a)(1):
§ 302. Personal jurisdiction by acts of
(a) Acts which are the basis of jurisdiction. As to a
cause of action arising from any of the acts
enumerated in this section, a court may exercise
personal jurisdiction over any non-domiciliary, or
his executor or administrator, who in person or
through an agent:
1. transacts any business within the state or
contracts anywhere to supply goods or services in the
state; . . .
N.Y. Civ. Prac. L. & R 302(a)(1).
In this Circuit, courts consider the following factors when
deciding whether an out-of-state defendant transacts business in
(i) whether the defendant has an on-going contractual
relationship with a New York corporation; (ii)
whether the contract was negotiated or executed in
New York, and whether, after the contract is executed
with a New York business, the defendant visited New
York for the purpose of meeting with parties to the
contract regarding the relationship; (iii) whether
the contract contains a choice-of-law clause; and
(iv) whether the contract requires franchisees to
send notices and payments into the forum state or
subjects them to supervision by the corporation in
the forum state.
Agency Rent A Car Sys. v. Grand Rent A Car Corp., 98 F.3d 25,
29 (2d Cir. 1996) (internal citations omitted). Notably, none of
these factors are dispositive, and courts must ultimately decide
whether personal jurisdiction exists based on the "totality of
the circumstances." Id. As such, "`precedents under § 302 are
of limited value.'" Cooper, Robertson & Partners, L.L.P. v.
Vail, 143 F. Supp. 2d 367
, 370 (S.D.N.Y. 2001) (quoting Berk v. Nemetz,
646 F. Supp. 1080, 1085 (S.D.N.Y. 1986)). The overriding concern, then, is
whether the defendant has "purposefully avail[ed] [himself] of
the privilege of conducting activities within [New York], thus
invoking the benefits and protections of its laws." Cutco
Indus., 806 F.2d at 365 (internal quotations marks omitted).
ADP also contends that this Court may exercise personal
jurisdiction over Osbourne on its conversion claims. "Although
jurisdiction over a corporation is normally premised upon
jurisdiction over an individual defendant through agency
principles, the opposite is also possible: a corporation can act
as the agent of a corporate officer so that its activities here
can subject the officer to jurisdiction under CPLR § 302(a)(1)."
Champion Motor Group v. Visone Corvette, 992 F. Supp. 203, 206
(E.D.N.Y. 1998). "Before a defendant corporation may be found to
be acting as the agent of a corporate officer, courts require
that the officer be a `primary actor' in the transaction carried
out by the corporation. Id. "To make a prima facie showing of
`control,' a plaintiff's allegations must sufficiently detail the
defendant's conduct so as to persuade a court that the defendant
was a `primary actor' in the specific matter in question; control
cannot be shown based merely upon a defendant's title or position
within the corporation, or upon conclusory allegations that the
defendant controls the corporation." Karabu Corp. v. Gitner,
16 F. Supp. 2d 319, 324 (S.D.N.Y. 1998). The four criterion for personal jurisdiction under CPLR §
302(1)(a) discussed in Agency Rent A Car Sys., do not apply to
the Defendants, except that ADP performed its end of the
agreement in New York. ADP asserts, however, that the following
facts are nonetheless indicative of Defendants' purposeful
engagement in New York activities: i) In House initiated the
Peregrine mailing project by contacting an employee and agent of
ADP to negotiate the contract;*fn1 ii) Osbourne made several
phone calls and sent e-mails to ADP representatives at the
Edgewood, New York facility during the contract negotiations;
iii) In House shipped the Peregrine materials to ADP's processing
facility in New York; and iv) the performance of the contract
occurred in New York. In sum, ADP contends that the Defendants
actively sought to do business in New York by contacting, and
contracting with, a New York firm.
Defendants argue that, to the extent that there was a business
transaction with the Defendants, it was a "one shot deal."
(Def.'s Mem. Mot. Dismiss at 9.) Defendants also argue that the "only contacts with
New York with respect to ADP were a few phone calls and a few
In House's "one shot deal" argument is without merit. "A single
transaction of business is sufficient to give rise to
jurisdiction under CPLR § 302(a)(1), even where the defendant
never enters the state, if the claim arises out of the
transaction." Citigroup Inc. v. City Holding Co.,
97 F. Supp. 2d 549, 564 (S.D.N.Y. 2000) (emphasis added). Here, ADP's claim
"arises out of the transaction" as ADP is seeking the return of
funds that it believes it erroneously sent to the Defendants as
part of the Peregrine project. Furthermore, the "one shot deal"
between the Parties did not occur overnight, but rather developed
over time through several phone calls and e-mails. "Any contract
negotiations evidencing a purposeful invocation of the laws of
the forum state are transactions of business for purposes of New
York's long arm statute." Catsimatidis v. Innovative Travel
Group, Inc., 650 F. Supp. 748, 751 (S.D.N.Y. 1986). Face to face
negotiations in New York are not required. Id.
Responding to Defendants' second argument, that telephone calls
and emails sent into New York by a non-domiciliary defendant are
insufficient to establish jurisdiction, ADP correctly points out
that in an age of advanced communications technology, physical
presence of the defendant in New York is no longer dispositive.
Agency Rent A Car Sys., 98 F.3d at 30 ("Indeed, we question whether, in an age of e-mail and teleconferencing, the absence of
actual personal visits to the forum is any longer of critical
consequence.") ADP also cites Courtroom TV Network v. Focus
Media, 264 A.D.2d 351, 695 N.Y.S.2d 17 (1st Dep't 1999),
where the court found personal jurisdiction over a California
corporation in a breach of contract suit even though the parties
negotiated the entire contract by telephone and correspondence.
The defendant, an advertising firm, with no offices, employees or
an agent for the purpose of service of process in New York, sent
materials into New York to be reviewed and ultimately broadcast
on plaintiff's cable television station. 264 A.D.2d at 352,
695 N.Y.S.2d at 18. The court held that personal jurisdiction was
proper under CPLR § 302(a)(1), for two reasons. First, defendant
"intended the performance of the contract to occur in New York,"
and second, because the defendant created the television
advertisements later broadcast by the plaintiffs, it had a
"`crucial role' in creating the substance of the transaction,
amounting to doing business in New York." 264 A.D.2d at 353,
695 N.Y.S.2d at 19.
Similarly, in this case, In House created the Peregrine
materials, which were then shipped to ADP's Edgewood, New York
facility for processing and mailing. From New York, ADP sent the
materials to Peregrine's shareholders. The performance of the
contract, as expected, occurred entirely in New York. The holding
in Courtroom TV demonstrates that in a breach of contract case
where the performance of the contract takes place in New York, a finding
that the non-New York domiciliary also held telephonic and
electronic communications with the New York corporation is enough
to satisfy the transacting business test.
Although they concede that ADP's arguments and case law are
correct on these two issues, Defendants argue that in all of the
cases ADP cites in their opposition papers, the defendants
involved had much greater connections to New York. (Defs.' Reply
Mem. at 3-4.) For example, Defendants point out that in
Citigroup, the defendant also maintained a comprehensive,
interactive website and solicited customers in New York with a
direct mailings, which the court found to be indicative of
soliciting business. 97 F. Supp. 2d at 565-66.
Defendants can cite New York personal jurisdiction cases ad
infinitum, pointing out the differences between the facts of
those cases with the facts in this case. In the end, however,
courts must determine on an individual basis whether or not the
contacts in a particular case satisfy the New York long-arm
statute "by an analysis of the totality of the circumstances."
Premier Lending Servs. v. J.L.J. Assocs., 924 F. Supp. 13, 15
(S.D.N.Y. 1996). Under "the totality of the circumstances test
analysis," this Court finds that ADP has thus far made a prima
facie showing personal jurisdiction over the Defendants pursuant
to CPLR § 302(a)(1). Jurisdiction is properly predicated on the
following factual grounds: i) the substantial performance of the
contract occurred in New York; ii) Defendants created, then mailed into New York, the Peregrine materials; iii)
Osbourne communicated with ADP by telephone and email on several
occasions in connection with the subject contract; iv) ADP's
claim arises out of the single contract with the Defendants; and
v) Defendants initially contacted ADP, a New York firm, in order
to complete its contract with Peregrine. Collectively these facts
are enough to defeat Defendants' Rule 12(b)(2) motion as to both
In House and Osbourne.
After determining that jurisdiction is proper under New York's
long-arm statute, courts must assess whether asserting personal
jurisdiction over a defendant does not violate their rights under
the Fourteenth Amendment's due process clause. See A.I. Trade
Fin. v. Petra Bank, 989 F.2d 76, 82 (2d Cir. 1993). Keeping in
mind that "satisfaction of the section 302(a)(1) criteria will
generally meet federal due-process requirements," Kelly v. MD
Buyline, Inc., 2 F. Supp. 2d 420, 431 (S.D.N.Y. 1998), this
Court finds that the due process requirements are satisfied in
this case notwithstanding Defendants' decision to forego
addressing this issue.
In this Circuit, the due process analysis begins with two
questions in order to determine whether the state has "minimum
contacts" with defendant "such that the maintenance of the suit
does not offend `traditional notions of fair play and substantial
justice.'" Chaiken v. VV Publ. Corp., 119 F.3d 1018, 1027 (2d Cir. 1997) (quoting Calder v. Jones, 465 U.S. 783, 788 (1984)
(quoting Milliken v. Meyer, 311 U.S. 457, 463, (1940) and
International Shoe Co. v. Washington, 326 U.S. 310, 316,
(1945)). First, whether the plaintiff's claim arises out of or
relates to defendant's contacts with the forum state; and second,
whether the plaintiff has shown that the defendant has
purposefully availed himself of the privilege of doing business
in the forum state. Chew v. Dietrich, 143 F.3d 24, 28 (2d Cir.
1998). "Once minimum contacts have been established, the
reasonableness of the exercise of jurisdiction must be determined
by an evaluation of several factors including `the burden on the
defendant, the interests of the forum State, and the plaintiff's
interest in obtaining relief.'" A.I. Trade Fin., 989 F.2d at 83
(quoting Asahi Metal Indus. Co. v. Superior Court of Cal.,
480 U.S. 102, 113 (1987)).
Defendants here do not directly address ADP's due process
arguments, but instead contend that since personal jurisdiction
over defendants under New York's long-arm statute is
unattainable, this Court need not reach the due process issue.
(Defs.' Mem. Mot. Dismiss at 6, n. 3.) This Court disagrees and
finds that ADP has met its burden in demonstrating that
exercising personal jurisdiction over the defendants would not
violate their due process rights. The Amended Complaint makes
clear that the three causes of action arise out of the agreement
Defendants negotiated with ADP with respect to the Peregrine
material and the agreement's subsequent execution in New York.
Accepting the facts in a light most favorable to ADP for the purpose of deciding this
motion, ADP properly asserts that the Defendants "purposefully
availed" themselves of doing business in New York by initiating
contact with ADP to handle the Peregrine mailing. Finally,
Defendants could have reasonably foreseen being haled into court
in New York when they engaged ADP, a New York company, to
complete its winning bid on the Peregrine project. See Arch
Specialty Ins. Co. v. Entm't Specialty Ins. Servs., No. 04-1852,
2005 U.S. Dist. LEXIS 4746, *18 (S.D.N.Y. 2005) (finding that
defendants could have reasonably foreseen being haled into court
in New York when they retained the services of a broker to
procure an insurance policy from a company working out of a New
York office). For all these reasons, exerting jurisdiction over
the Defendants will not violate "traditional notions of fair play
and substantial justice."
B. Whether Personal Jurisdiction Exists Over ADP's Conversion
This Court agrees with ADP that the extension of jurisdiction
over the Defendants for ADP's conversion claim is proper under
this section for the same reason personal jurisdiction is
justified under CPLR § 302(a)(1) for its breach of contract and
unjust enrichment claims, as described above. (Pl.'s Opp. Mem. at
13.) Fashion Fragrance & Cosmetics v. Croddick, No. 02-6294,
2003 U.S. Dist. LEXIS 2220, *18-19 (S.D.N.Y. Feb. 11, 2003)
(finding that unjust enrichment and conversion claims arise out of the same alleged
activity found to have conferred jurisdiction under the
transacting business prong of Rule 302(a)(1)).
C. Whether Plaintiff Has Stated A Claim for Unjust
In order to state a claim for unjust enrichment under New York
law, "a plaintiff must show that (1) defendant was enriched, (2)
the enrichment was at the plaintiff's expense and (3) the
circumstances were such that equity and good conscience require
defendant to make restitution." Violette v. Armonk Assocs.,
L.P., 872 F. Supp. 1279, 1282 (S.D.N.Y. 1995). ADP claims that
In House refuses to return the first wire transfer of funds sent
allegedly in error, and consequently, In House received services
"greatly in excess of what it has actually paid." (Amend. Compl.
¶¶ 32, 33; Pl.'s Opp. Mem. at 15.)
Defendants argue that ADP cannot sustain its second claim for
unjust enrichment because unjust enrichment is an action sounding
in quasi-contract. (Defs.' Mem. at 12.) ADP's unjust enrichment
claim is therefore precluded because, "[u]nder New York law, `the
existence of an express contract between the plaintiff and
[defendants] governing the particular subject matter of its claim
for unjust enrichment precludes the plaintiff from maintaining a
cause of action sounding in quasi-contract against
[defendants].'" Strojmaterialintorg v. Russian Am. Commercial Corp., 815 F. Supp. 103, 106 (E.D.N.Y.
1993) (quoting Metropolitan Elec. Mfg. v. Herbert Const.,
183 A.D.2d 758, 583 N.Y.S.2d 497, 498 (2d Dep't 1992).
ADP responds that their claim for unjust enrichment is
different in that the cases cited by the Defendants involve an
express written contract, whereas in this case "a series of phone
calls and emails" and invoices sent to In House constitutes the
contract. (Pls.' Opp. Mem. at 16.) Indeed, any mention of an
express, written contract between the Parties is absent from the
Defendants reply that the existence of either an oral or
written contract precludes a claim for unjust enrichment. See,
e.g., Dimario v. Coppola, 10 F. Supp. 2d 213, 226 (E.D.N.Y.
1998) ("A full, and clear oral agreement will also bar a claim
for unjust enrichment in the absence of overreaching."). This
response is fruitless as ADP is not arguing that its
quasi-contract claim should stand because it claims that the
contract it had with the Defendants was an oral (not written)
agreement. Rather, ADP's argument is that regardless of the
manner in which the agreement with the Defendants manifested
itself, it is not an express contract, that is, its meaning is
unclear and ambiguous. See Black's Law Dictionary 620 (8th
ed. 2004) ("Clearly and unmistakably communicated; directly
stated."). As such, "[a]n alternative theory of unjust enrichment
is permitted where the existence or enforceability of a contract is in dispute." Louros v. Cyr,
175 F. Supp. 2d 497, 514 (S.D.N.Y. 2001).
This Court has covered this ground before:
The undersigned is reluctant at this stage in the
litigation to dismiss Plaintiff's claim for unjust
enrichment given the presence of various disputed
facts, particularly those concerning [defendant's]
alleged termination of the contract. The preclusion
of Plaintiff's unjust enrichment claim at this early
juncture, before any substantive discovery has
occurred, would leave Plaintiff with virtually no
relief sounding in quasi-contract if, at a later
stage, the [contract] was found to be invalid.
CosmoCom, Inc. v. Marconi Communs. Int'l, Ltd.,
261 F. Supp. 2d 179, 187 (E.D.N.Y. 2003) (Platt, J.).
Accordingly, this Court will not preclude ADP at this time from
going forward from with its unjust enrichment claim given the
factual dispute over whether the Parties had an express contract.
D. The Conversion Claim Fails as a Matter of Law.
Defendants next argue that ADP has failed to plead a proper
Defendants concede that New York law controls, because if a
tort took place it would have been felt by ADP in New York. See
Hutton v. Priddy's Auction Galleries, Inc., 275 F. Supp. 2d 428,
433 (S.D.N.Y. 2003) (holding that where New York is the locus of the tort, New York law governs the
cause of action.). Under New York law, "conversion is any
unauthorized exercise of dominion or control over property by one
who is not the owner of the property which interferes with and is
in defiance of a superior possessory right of another in the
property." Louros v. Cyr, 175 F. Supp. 2d 497, 515 (S.D.N.Y.
2001) (quoting Meese v. Miller, 79 A.D.2d 237,
436 N.Y.S.2d 496, 500 (N.Y.App. Div. 1981)). In order to plead a viable claim
for conversion, a plaintiff must allege that they demanded return
of the property was made and were met with refusal. Id.
ADP responds that the conversion claim is different from the
breach of contract claim as the former is against both In House
and Osbourne. ADP alleges that its employees contacted Osbourne
in an effort to retain possession and control over the allegedly
mistaken wire transfer, and that Osbourne refused to return the
same. (Am. Compl. ¶ 19.) Therefore, Osbourne, as well as In
House, is individually liable to ADP for allegedly converting the
contested funds. ADP has properly pled a claim for conversion
separate and distinct from its breach of contract claim.*fn2 Defendants argue that ADP's conversion claim must nevertheless
fail for two reasons: i) under New York law, a claim for
conversion will not lie where the same damages are being sought
for a breach of contract, and ii) that under New York law a
conversion claim is unavailable for cases of mistaken payment.
(Defs.' Mem. Mot. Dismiss at 11-13.)
Defendants cite Peters Griffin Woodward, Inc. v. WCSC, Inc.,
88 A.D.2d 883, 452 N.Y.S.2d 599 (1st Dept. 1982), for the
proposition that in New York a conversion claim will not lie
where the damages sought are the same damages the plaintiff seeks
to recover on a breach of contract claim. The holding in Peters
Griffin is inapposite to the facts of this case. Briefly, in
Peters Griffin, the plaintiff contracted with the first
defendant to be their national sales representative. The
plaintiff alleged that the first defendant contracted instead
with the second defendant, and as a result, the plaintiff claimed
that the first defendant owed them certain commissions totaling
over $15,000. 88 A.D.2d at 883, 452 N.Y.S.2d at 600. The court
held that an action for conversion cannot be validly maintained
where damages "are merely being sought for breach of contract."
88 A.D.2d at 884, Id. at 600. (emphasis added.) The court went on
to state that the plaintiff's conversion claim failed because
"plaintiff has never had ownership, possession or control of
the money constituting the . . . commissions . . . therefore no
action in conversion may be brought against [defendants] on that theory." Id. (emphasis added.)
In this case, ADP claims the Defendants converted the initial
$277, 699.89 after ADP wired to them the funds. (Am. Compl. ¶
37.) That is, ADP alleges that it had "ownership, possession or
control" of the $277,699.89 before sending the money to the
Defendants. As such, ADP's conversion claim does comport with the
requirements for a conversion claim in New York as set forth in
the Peters Griffin case.
Defendants also cite language in Jewish Natl. Fund, Inc. v.
Garland, No. 83-7796, 1985 U.S. Dist. LEXIS 23715, *7 (S.D.N.Y.
Jan. 3, 1985), in support of its second argument, that under New
York law a conversion claim for mistaken payment may not stand:
"[A] mere claim of monies paid out by mistake based on contract
will not support an action for conversion." (Defs.' Reply Mem. at
8-9.) The Defendants use of this language is disingenuous, as the
sentence is preceded by the caveat that "although money may be
the subject of a conversion, the money must constitute a
specifically identifiable fund which defendant was under a duty
to deliver to plaintiff." 1985 U.S. Dist. LEXIS 23715 at *7; see
also Marine Midland Bank v. John E. Russo Produce Co.,
65 A.D.2d 950, 952, 410 N.Y.S.2d 730, 734 (4th Dep't 1978). Therefore, "an
action will lie under New York law for conversion of money where
there is an obligation to return or otherwise treat in a
particular manner the specific money in question . . . and that money is specifically identifiable." Vanderbilt Univ.
v. Dipsters Corp., No. 84-7215, 1986 U.S. Dist. LEXIS 20533, *8
(S.D.N.Y. September 17, 1986) (emphasis added).
Courts have discussed what is meant by an "identifiable fund."
The identification of a named bank account has been found to
satisfy the identifiable fund requirement. Lenczycki v. Shearson
Lehman Hutton, Inc., 238 A.D.2d 248, 656 N.Y.S.2d 609 (1st
Dep't 1997) (holding that where the plaintiff names a "specific,
named bank account," the funds were sufficiently identifiable).
Also, the conversion claim must be for recovery of a particular
and "definite sum of money, although the specific bills are not
identified. . . ." Jones v. McHugh, 37 A.D.2d 878,
325 N.Y.S.2d 102 (3d Dep't 1971).
In this case, ADP alleges in its Amended Complaint that it
seeks "a specifically identifiable sum of money . . . sent by
wire transfer from [ADP's] account with JP Morgan Chase in New
York to In House's bank account at California Bank & Trust c/o
ILCS." (Am. Compl. ¶ 38.)*fn3 ADP also states the exact
amount of the wire transfer, $277,699.89. (Id. ¶ 18.) This Court
finds then that ADP properly alleges an identifiable sum of money and
therefore ADP's conversion claim does not fail as a matter of
ADP has satisfied its burden by demonstrating that this Court
may exercise personal jurisdiction over both Defendants and that
its claims for unjust enrichment and conversion are adequately
pled. Defendants' motion to dismiss ADP's Amended Complaint for
lack of personal jurisdiction and its Rule 12(b)(6) motion to
dismiss ADP's claims for unjust enrichment and conversion are
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