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Infinity Consulting Group, LLC v. American Cybersystems

May 30, 2010

INFINITY CONSULTING GROUP, LLC, INFINITY CONSULTING GROUP LATIN AMERICA, APS/BOTAL STAFFING INC., ICG OF AMERICA LLC, LUIGI FORINO AND ADAM FOX, PLAINTIFFS,
v.
AMERICAN CYBERSYSTEMS, INC., RAJIV SARDANA, AND NICK GOEL, DEFENDANTS.



The opinion of the court was delivered by: Seybert, District Judge

MEMORANDUM AND ORDER

On April 29, 2009, Plaintiffs filed suit against Defendants, alleging breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment and fraud. Defendants Rajiv Sardana and Nick Goel ("Individual Defendants") answered the Complaint but asserted personal jurisdiction defenses.

On February 3, 2010, the Court dismissed the Complaint sua sponte due to a pleading defect concerning this Court's subject matter jurisdiction. On February 4, 2010, Plaintiffs filed an Amended Complaint which corrected this defect, but was otherwise substantively similar. The Individual Defendants answered the Amended Complaint on February 18, 2010, asserting personal jurisdiction defenses, then moved to dismiss for lack of personal jurisdiction on February 24, 2010. For the foregoing reasons, Defendant Sardana's motion is DENIED but Defendant Goel's motion is GRANTED.

DISCUSSION

I. Standard Of Review

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). In deciding 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).

II. Alleged Forfeiture Of Personal Jurisdiction Defense

Plaintiffs principally argue that the Individual Defendants waived their jurisdictional defenses by "twice answer[ing]," waiting too long before moving to dismiss, and by participating in discovery.*fn1 The Court disagrees. As an initial matter, the Individual Defendants' answers did not forfeit their personal jurisdiction defenses because the answers expressly raised personal jurisdiction as a defense. See Fed. R. Civ. P. 12(h)(1)(B)(ii);

The gap in time is somewhat more troubling. The Individual Defendants let this litigation proceed for nearly ten months before moving to dismiss, and for more than eight months after they answered the initial Complaint. This is far from ideal. For, while "the passage of time alone is generally not sufficient to indicate forfeiture of a procedural right, the time period provides the context in which to assess the significance of the defendant's conduct, both the litigation activity that occurred and the opportunities to litigate the jurisdictional issue that were forgone." Hamilton v. Atlas Turner, 197 F.3d 58, 61 (2d Cir. 1999). Thus, the longer a party delays before moving to dismiss, the more likely it is that the party has forfeited its right to obtain dismissal on jurisdictional grounds. Indeed, courts have found forfeiture when litigants waited as little as four months before moving based on jurisdictional defects. See Datskow v. Teledyne, Inc., 899 F.2d 1298, 1303 (2d Cir. 1990).

That being said, Plaintiffs have not met their burden in showing forfeiture here. Typically, courts have found forfeiture only if the party waited years before moving or engaged in substantial pre-trial activity.*fn2 Conversely, courts have generally declined to find forfeiture when a party waited only months, absent significant pre-trial activity. For example, in Phat Fashions, L.L.C. v. Phat Game Athletic Apparel, Inc., 00-CV-0201, 2001 WL 1041990, *3-4 (S.D.N.Y. 2001), the Court found that, "while regrettable," the defendant's thirteen month delay before moving did not suffice to forfeit its personal jurisdiction.*fn3 Here, the Individual Defendants waited less than ten months. And, while Plaintiffs do vaguely purport that the Individual Defendants "participated in the discovery process," Plaintiffs provide nothing to indicate what, exactly, this participation consisted of. Thus, Plaintiffs have not shown that the Individual Defendants have, in fact, forfeited their personal jurisdiction defenses through delay or active participation in this case.

III. Consent Through Contract

Plaintiffs' terse opposition brief does not assert that personal jurisdiction exists on any other grounds. Nevertheless, in the interests of justice, the Court has reviewed Plaintiffs' Amended Complaint and the exhibits attached thereto. And, considering these materials, the Court finds that Plaintiffs have met their burden as to Defendant Sardana, but not as to Defendant Goel.

Specifically, the Amended Complaint alleges that Defendant Sardana fraudulently induced Plaintiffs to enter into a contract for the purchase of a New York company's "ICG Division" by falsely representing to Plaintiffs that he intended to hire five additional full-time employees in the division's New York/New Jersey offices, thereby likely increasing the contract's "earn out" payments. Compl. ¶¶ 14-17. The Complaint further alleges that Defendant Sardana "execut[ed]" the contract. Compl. ¶ 15. And, while the signature is somewhat illegible, the contract appears to indicate that Defendant Sardana did, in fact, execute the contract on Defendant American Cybersytems' ("ACS") behalf. See Docket No. 23 at 61 (signature of ACS' "CEO & President); Compl. ¶ 8 (identifying Defendant Sardana as ...


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