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Duke, Holzman, Photiadis & Gresens LLP v. Cosentino

January 8, 2009


The opinion of the court was delivered by: Michael A. Telesca United States District Judge



By motion dated June 20, 2008, defendant James A. Cosentino ("defendant" and/or "Cosentino"), moves to dismiss the Complaint*fn1 pursuant to Rule 12(b)(2) and 12(b)(4) of the Federal Rules of Civil Procedure on grounds that: (1) this Court lacks personal jurisdiction over the defendant and (2) the Summons and Complaint were not properly served on defendant.*fn2 Alternatively, defendant moves to transfer this matter to the Southern District of Florida pursuant to 28 U.S.C. §§1391(a) and 1404(a) on the basis that venue is improper in the Western District of New York. Plaintiff Duke, Holzman, Photiadis & Gresens LLP ("plaintiff" and/or "DHPG") opposes defendant's motion arguing that personal jurisdiction exists and requests that the case not be transferred to the Southern District of Florida. For the reasons set forth below, Cosentino's motion to dismiss or to transfer is denied.


Plaintiff is a New York limited liability partnership and citizen. While defendant resides in Florida, he is also a well-established businessman in Western New York. According to the plaintiff, Cosentino is the Chief Executive Officer ("CEO") and upon information and belief, principal stockholder of Krispy Kreme Donut in Cheektowaga, New York. The debts underlying two separate personal guarantees at issue in this action concern funds loaned to two Western New York restaurants principally owned and operated by defendant, namely The Pier, Inc. and Family Restaurants of Broadway, Inc. These underlying debts matured without payment in full by defendant. The debt due on the guarantees exceeds $560,000.

On May 12, 2008, plaintiff commenced an action in the Supreme Court of the State of New York, Erie County (the "State Court"), by filing a motion for summary judgment in lieu of complaint pursuant to CPLR § 3213. Thereafter, on June 13, 2008, defendant removed this action from the State Court to this Court by filing a Notice of Removal filed pursuant to 28 U.S.C. §§ 1441 and 1446 as well as the Federal Rules of Civil Procedure 81(c).


I. Jurisdiction

Defendant moves to dismiss the complaint on grounds that this Court has no jurisdiction over him. Defendant claims that while he resided and operated restaurant entities in New York for many years, personally and through wholly-owned companies, he is now a permanent resident of Florida. In addition, defendant argues that the New York businesses that serves as primary obligors on the loan guarantees subject to this lawsuit no longer conduct business operations. See Cosentino Affidavit, ¶ 15. Plaintiff contends that defendant is subject to personal jurisdiction in New York pursuant to the New York "long arm" statute. Where no federal statute governing personal jurisdiction is applicable, the long arm statute of the State in which the District Court sits is applicable. Ins. Corp. of Ireland v. Compagnie Des Bauxites, 456 U.S. 694 (1982).

Defendant claims to be an out-of-state resident and as such "[p]ersonal jurisdiction of a federal court over a non-resident defendant is governed by the law of the state in which the court sits-subject, of course, to certain constitutional limitations of due process." See Kronish v. United States, 150 F.3d 112, 130 (2d Cir.1998) (citing Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 510 (2d Cir.1994)); see also Best Van Lines, Inc. v. Walker, 490 F.3d 239, 242 (2d Cir. 2007).

On defendant's motion to dismiss for lack of personal jurisdiction, plaintiff has the burden of proving that the court has jurisdiction over defendant. See Thomas v. Ashcroft, 470 F.3d 491, 495 (2d Cir.2006) ("In order to survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing that jurisdiction exists"); Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). Where, as in this case, discovery has not been conducted, plaintiff meets this burden by making a prima facie showing of jurisdiction, and courts should interpret plaintiff's complaint and supporting affidavits in a light most favorable to plaintiff. See PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997).

A. New York's Long-Arm Statute

Pursuant to New York's long-arm statute, "a court may exercise personal jurisdiction over any non-domiciliary," who "transacts any business within the state." See C.P.L.R. 302(a)(1); see also Diversified Financial Systems, Inc. v. Bertrum, 1999 WL 714081, *3 (S.D.N.Y.1999); Dimensional Media Assocs., Inc. v. Optical Prods. Dev. Corp., 42 F.Supp.2d 312, 317 (S.D.N.Y.1999). The guarantee of the debt of a New York corporation by a non-domiciliary, in like circumstances, has been held by this court to provide New York courts with jurisdiction over the non-domiciliary and subject the nondomiciliary guarantor to personal jurisdiction within the state. See Rielly Co., Inc. v. Lisa B. Inc., 181 A.D.2d 269, 271 (3d Dept. 1992) ("[T]he fact that [a] guarantee was to be performed here [New York] [i]s sufficient to satisfy long-arm jurisdiction.")

Here, plaintiff alleges and defendant does not deny*fn3 that Cosentino personally guaranteed payment of debt identified in the promissory note dated March 30, 2000 to Family Restaurants of Broadway, Inc. In addition, plaintiff alleges and defendant does not deny that defendant personally guaranteed 50% of the principal and interest on the loans identified in the January 27, 2000 revolving credit note and January 27, 2000 amended promissory note to The Pier, Inc. f/k/a The Hop, Inc. Further, defendant personally issued partial payments on the underlying debts in Erie County, New York, including payments after he alleges he declared his domicile to be in Florida. Moreover, defendant was domiciled in New York when he agreed to guarantee the notes.*fn4 See Leblanc v. Kahn, 418 N.Y.S.2d 841, 842 (Sup.Ct. Westchester County 1979) ("Defendant cannot avail himself of the privilege of conducting activities ...

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