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Friedman v. Schwartz

March 12, 2009

COREY FRIEDMAN, PLAINTIFF,
v.
MARK SCHWARTZ, DEFENDANT.



The opinion of the court was delivered by: Joanna Seybert, U.S.D.J.

MEMORANDUM AND ORDER

SEYBERT, District Judge

Plaintiff Corey Friedman ("Plaintiff") commenced this action seeking to recover the principal sum of one hundred thousand dollars ($100,000.00), plus interest he allegedly loaned to Defendant Mark Schwartz ("Defendant"). Presently before the Court is Defendant's motion to dismiss. Defendant fails to state the Rule numbers corresponding to his grounds for his motion to dismiss. Nevertheless, the Court liberally construes the papers of a pro se litigant, and finds his motion to be adequately pled. Defendant is seeking dismissal pursuant to Federal Rules of Civil Procedure 12(b)(2) (lack of personal jurisdiction), 12(b)(3) (improper venue), 12(b)(6) (failure to state a claim upon which relief can be granted), the doctrine of forum non conveniens, and the Statute of Frauds. In the alternative, Defendant seeks to transfer venue pursuant to 28 U.S.C. § 1404(a).

For the reasons discussed below, Defendant's motion to dismiss is DENIED and his motion to transfer venue is DENIED.

BACKGROUND

From the documents available to this Court, it appears that Plaintiff first filed suit against the Defendant on July 16, 2007. See Friedman v. Schwartz, No. 07-CV-2884 (E.D.N.Y. May 30, 2008). Based on the docket in that case, it is clear that Plaintiff voluntarily dismissed the action because he failed to properly serve the Defendant. Here, Defendant states in his motion to dismiss that he was improperly served again, but he waives his objections to improper service. Therefore, the service of process requirements are deemed satisfied.

This case arises out of an alleged breach of contract. Plaintiff is seeking to recover $100,000.00, plus interest, representing money he loaned to Defendant on October 1, 2003. According to the Complaint and the papers filed by Plaintiff in connection with the instant motion, Plaintiff met Defendant in the summer of 2003 in New York City when Defendant was in the process of producing a show called "Harmony." After spending several evenings with the Defendant, Plaintiff was persuaded to become an investor in the production. After making an initial investment in the production, Plaintiff was solicited by Defendant to invest additional monies during meetings held in New York City and Plaintiff's residence in Sands Point, New York. Defendant allegedly represented that he would give Plaintiff a lien on his condominium in Florida as security for the loan. Eventually, Plaintiff agreed to loan Defendant personally $100,000.00 with interest at the rate of ten percent and payable on demand (the "Contract"). Accordingly, Plaintiff wired the funds to Defendant at a bank account maintained by Defendant for the show at JP Morgan Chase, located at 3 Times Square, New York, New York. The letter of authorization indicates that Defendant maintained an office for the show at 254 West 44th Street, New York, New York, but Defendant disputes this fact.

Despite completing the wire, Plaintiff never received documentation memorializing the agreement with Defendant. After wiring the money, however, there were some contacts between the Plaintiff and Defendant, though it is unclear who initiated the contacts on all occasions. Plaintiff alleges that at least on one occasion he spoke to Defendant on the phone regarding the Contract. In addition, Plaintiff alleges, and Defendant admits, that the parties exchanged e-mails on several occasions and discussed the debt repayment.

In response to Plaintiff's allegations, Defendant first asserts that Plaintiff loaned the funds to Harmony on Broadway, LLC ("Harmony, LLC") and not to him personally. He contends he was simply an officer of that entity and authorized to act on its behalf; thus, he cannot be held liable for debts of the institution. Defendant also moves for dismissal on the grounds below.

DISCUSSION

I. Motion to Dismiss for Lack of Personal Jurisdiction: Rule 12(b)(2)

A. Rule 12(b)(2) Standard

"On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). "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." ADP Investor Commun. Servs. v. In House Atty. Servs., 390 F. Supp. 2d 212, 217 (E.D.N.Y. 2005). Where, as here, a defendant's 12(b)(2) motion is "made before any discovery, [a plaintiff] need only allege facts constituting a prima facie showing of personal jurisdiction." PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997); see also Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981). In opposing a Rule 12(b)(2) motion prior to discovery, "[w]here a court [has chosen] 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." Grand River Enters. Six Nations, Ltd. v. Pryor, 425 F.3d 158, 165 (2d Cir. 2005) (internal quotations marks and citations omitted) (alteration in original). Furthermore, "[w]here the issue is addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor." Wickers Sportswear, Inc. v. Gentry Mills, Inc., 411 F. Supp. 2d 202, 205-206 (E.D.N.Y. 2006) (quoting Whitaker v. American Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001)).

To decide "a question of personal jurisdiction, district courts must conduct a two-part analysis, looking first to the state's long-arm statute and then analyzing whether jurisdiction comports with federal due process." Mario Valente Collezioni, Ltd. v. Confezioni Semeraro Paolo, S.R.L., 264 F.3d 32, 37 (2d Cir. 2001). The two part analysis is sequential; if the district court finds no basis for long arm jurisdiction, it need not engage in a federal due process analysis. Bensusan Rest. Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997).

A party may be subject to either general or specific jurisdiction in New York. General jurisdiction exists if the defendant's contacts with New York are so substantial that personal jurisdiction exists over any dispute. See Nautilus Ins. Co. v. Adventure Outdoors, Inc., No. 06-CV-3350, 2007 U.S. Dist. LEXIS 94478, at *6-7 (E.D.N.Y. Dec. 27, 2007) ("For general jurisdiction, i.e., exercise of jurisdiction over any dispute involving the party, plaintiff's cause of action need not arise out of defendant's contacts with the forum state -- rather, the defendant's contacts with the state must be substantial."). In addition, New York courts can obtain general personal jurisdiction over a natural person if the party (1) is domiciled in New York, (2) consents to personal jurisdiction, or (3) is served while he is present in New York state.

In the alternative, a party may be subject to personal jurisdiction of New York courts through specific personal jurisdiction if the party's interaction with the state satisfies any one of the tests outlined in New York's long-arm statute. The statute grants personal jurisdiction over a non-domiciliary if that party: (1) transacts business within the state or contracts to supply goods or services in the state, (2) commits a tortious act, other than defamation, within the state, (3) commits a tortious act outside the state causing injury to a person or property within the state, if the defendant (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or (4) owns, uses, or possesses real property in New York. See N.Y. C.P.L.R. § 302(a).

B. Rule 12(b)(2) Application

Here, Plaintiff fails to allege sufficient facts to establish general jurisdiction over the Defendant. Defendant was not served with process while in New York, does not consent to this Court's personal jurisdiction, and is not domiciled within the state. Morever, Plaintiff fails to allege sufficient facts demonstrating that Defendant has such substantial contacts, that should be subjected to general personal jurisdiction. Nevertheless, this Court may still exercise specific personal jurisdiction if Plaintiff has sufficiently pled facts to establish the requirements of N.Y. C.P.L.R. § 302(a). Of the four methods of obtaining long-arm jurisdiction, Defendant's actions might be classified as "transacting business" under § 302(a)(1).*fn1

The "transacting business" test under C.P.L.R. § 302(a)(1) requires the purposeful availment of the privilege of conducting activities within New York, thus invoking the benefits and protections of its laws, not regular and systematic activities like the "doing business" standard required for general jurisdiction. See Palace Exploration Co. v. Petroleum Dev. Co., 41 F. Supp. 2d 427, 432 (S.D.N.Y. 1998) (citing CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 364 (2d Cir. 1986); see Wilhelmshaven Acquisition Corp. v. Asher, 810 F. Supp. 108, 111-12 (S.D.N.Y. 1993); PaineWebber, Inc. v. Westgate Group, Inc., 748 F. Supp. 115, 118 (S.D.N.Y. 1990). In other words, § 302(a)(1) requires "a certain quality, rather than a specific quantity, of contacts with the forum. U.S. Theatre Corp. v. Gunwyn/Lansburgh Ltd. P'ship, 825 F. Supp. 594, 595 (S.D.N.Y. 1993). In determining whether the contacts are of the appropriate nature, the court must look to the totality of the circumstances. See Palace Exploration, 41 F. Supp. 2d at 432 (citing Sterling Nat'l Bank v. Fidelity Mortgage Investors, 510 F.2d 870, 873 (2d Cir. 1975) and Pilates, Inc. v. Pilates Inst., Inc., 891 F. Supp. 175, 178 (S.D.N.Y. 1995)). Some of the factors to be considered by the Court include:

(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 executing a contract with a New York business, the defendant has visited New York for the purpose of meeting with parties to the contract regarding the relationship . . . .

Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22-23 (2d Cir. 2004) (quoting Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 29 (2d Cir. 1996) (internal citations omitted)).

In this case, Defendant's visit(s)*fn2 to New York, during which he negotiated the contract, weigh heavily on the Court's analysis. As a general matter, visits to the forum can be of variable significance for purposes of determining personal jurisdiction. While, a visit to the forum is a presumptively more significant contact than a phone call*fn3 or a letter, it too must be "purposeful" in order to sustain jurisdiction. See U.S. Theatre Corp. v. Gunwyn/Lansburgh Ltd. P'ship, 825 F. Supp. 594, 596 (S.D.N.Y. 1993). "When a non-resident defendant's visit to the forum allows him to purposefully avail himself of the benefits and protection of the forum's laws, one visit can be enough to sustain jurisdiction." Id. (citing George Reiner & Co., Inc. v. Schwartz, 363 N.E.2d 551, 552, 41 N.Y.2d 648, 394 N.Y.S.2d 844, 846 (1977) (one visit in which an employment agreement was made satisfied the requirements of the statute) and Hi Fashion Wigs, Inc. v. Peter Hammond Adver., Inc., 300 N.E.2d 421, 422, 32 N.Y.2d 583, 347 N.Y.S.2d 47, 49 (1973) (defendant's single visit to personally guarantee a contract was enough to sustain jurisdiction)). On the other hand, when the visit is not for the purpose of initiating or forming a relationship, but to alleviate problems under a pre-existing relationship, New York courts have declined to assert jurisdiction. See id. (citing, inter alia, McKee Elec. Co. v. Rauland-Borg Corp., 229 N.E.2d 604, 606, 20 N.Y.2d 377, 283 N.Y.S.2d 34, 36 (1967) (a few visits to New York by agent of defendant to discuss problems of representation agreement do not sustain jurisdiction); Concrete Detailing Servs., Inc. v. Thomsson Steel Co., Inc., 411 F. Supp. 1021, 1023 (S.D.N.Y. 1976) (one visit to New York by an officer of the defendant to discuss the general course of performance of a contract is not enough to assert jurisdiction); PaineWebber, Inc. v. Westgate Group, Inc., 748 F. Supp. 115, 119-120 (S.D.N.Y. 1990) (meeting in New York to modify purchase agreement does not create jurisdiction)).

The record thus far shows that Defendant: (1) met with Plaintiff in New York City on at least one occasion to convince him to enter into a loan agreement; (2) met with Plaintiff on at least one occasion at Plaintiff's home in Port Washington, New York for the same purpose; (3) may have maintained an office in New York for purposes of securing financing; (4) was attempting to secure financing so that he could open a show on Broadway, meaning that New York was the "center of gravity" of the transaction; (5) maintained a bank account at a branch of J.P. Morgan Chase located in New York; and (6) placed calls and sent e-mails to Plaintiff in New York after Plaintiff wired the money. Based on the Court's weighing of these factors for the purposes of this motion, it appears that Defendant purposefully availed himself to the privilege of conducting activities within New York, thus invoking the benefits and protections of its laws and making him subject to this Court's personal jurisdiction.

Accordingly, the Court DENIES Defendant's motion to dismiss pursuant to Rule 12(b)(2) based on ...


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