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Moscato v. MDM Group

July 30, 2008

JOSEPH MOSCATO, PLAINTIFF,
v.
MDM GROUP, INC., DEFENDANT.



The opinion of the court was delivered by: Kimba M. Wood, U.S.D.J.

Opinion and Order

Plaintiff Joseph Moscato ("Plaintiff") brings this diversity action against Defendant MDM Group, Inc. ("MDM"), alleging that MDM wrongfully refused to remove restrictions on MDM stock owned by Plaintiff. In an unopposed motion,*fn1 MDM moves to dismiss this action pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction.*fn2 MDM argues, inter alia, that a previous decision dismissing an action between Plaintiff and MDM for lack of personal jurisdiction has collateral estoppel effect. See Moscato v. MDM Group, Inc. ("Moscato I"), No. 04 Civ. 2487, 2005 WL 146806 (S.D.N.Y. Jan. 21, 2005) (Daniels, J.).

For the reasons stated below, the Court GRANTS MDM's motion and dismisses Plaintiff's case. No later than August 10, 2008, either party may reopen this case by filing a motion to transfer venue in lieu of dismissal pursuant to 28 U.S.C. § 1631.

I. Background A. Plaintiff's Allegations*fn3

In 2002, Plaintiff purchased shares of MDM stock ("the MDM shares"). The MDM shares were subject to certain resale restrictions and contained a legend marking these restrictions. (Compl. ¶¶ 7, 8.) Plaintiff alleges that he had a right to sell the MDM shares without restriction after two years. (Compl. ¶ 8.)

In 2004, two years after he purchased the MDM shares, Plaintiff requested that MDM's transfer agent, Signature Stock Transfer Incorporated ("Signature"), reissue the MDM shares without restrictions. (Compl. ¶ 9.) Signature refused to reissue the shares. (Compl. ¶ 10.) Plaintiff alleges that this refusal was part of a conspiracy, in which MDM participated, to artificially inflate MDM share prices by wrongfully preventing Plaintiff from selling his shares. (Compl. ¶ 12.)

Plaintiff alleges eight causes of action against MDM: (1) violation of the New York Uniform Commercial Code; (2) breach of the covenant of good faith and fair dealing; (3) conversion; (4) interference with prospective economic advantage; (5) fraud; (6) breach of fiduciary duty; (7) negligence; and (8) slander of title.

B. Procedural History

Plaintiff commenced the current action ("Moscato II") in New York State Supreme Court, New York County, on September 2, 2005, and served a copy of the Summons and Complaint on MDM on November 10, 2005. On December 9, 2005, MDM removed this action to the United States District Court for the Southern District of New York. On January 5, 2006, MDM filed a motion to dismiss for lack of personal jurisdiction and asserted that Moscato I's personal jurisdiction ruling has issue preclusive effect. At a conference on March 7, 2006, the Court granted Plaintiff permission to conduct limited jurisdictional discovery regarding whether MDM has a New York office.*fn4

On March 30, 2007, the Court held a conference to determine whether it has subject matter jurisdiction over this action.*fn5

Specifically, the Court considered whether New York was MDM's principal place of business at the time this action was filed, as alleged in the Complaint. During this conference, the Court reviewed Plaintiff's evidence supporting his allegation that MDM has a New York office. The Court found that New York was not MDM's principal place of business at the time this action was filed. Accordingly, the Court concluded that it has subject matter jurisdiction over this case.*fn6 However, the Court did not consider whether it has personal jurisdiction over MDM.*fn7 (See Mar. 30, 2007 Tr. 16-17.)

C. Plaintiff's Previous Action

Plaintiff previously filed an action against MDM, Moscato I, in this district on March 30, 2004.*fn8 Plaintiff asserted the same eight causes of action against MDM, and alleged virtually identical underlying facts.*fn9 However, while the Moscato II Complaint alleged that MDM maintained its principal offices in New York, see supra note 5, the Moscato I Complaint did not include this allegation.

MDM moved to dismiss Moscato I for lack of personal jurisdiction, and Plaintiff opposed the motion. In his opposition, Plaintiff alleged that MDM "has had offices at the following address 45 John St., Suite 900, [New York] . . . until they moved to 122 E. 42nd [Street, New York]," and presented billing correspondence and two bank statements that cited the 122 E. 42nd Street address. Plaintiff also alleged that MDM pays rent for use of the 122 E. 42nd Street building, and asserted that discovery would ...


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