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Cognitive Science LLC, Also Known As "Mindless Products, LLC v. Ira Kaufman and Online Advantage Inc.

December 17, 2010

COGNITIVE SCIENCE LLC, ALSO KNOWN AS "MINDLESS PRODUCTS, LLC," PLAINTIFF,
v.
IRA KAUFMAN AND ONLINE ADVANTAGE INC., A VIRGINIA CORPORATION D/B/A/ "OPTIMIZED STRATEGIES," DEFENDANTS.



The opinion of the court was delivered by: Scullin, Senior Judge

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiff Mindless Products, LLC, a limited liability corporation registered and located in New York State, brought this action against Defendants Ira Kaufman and Online Advantage, Inc., a corporation organized and located in Virginia, alleging that Defendants engaged in fraud, negligent misrepresentation, unjust enrichment, conversion, and breach of contract.

II. BACKGROUND

Plaintiff and Defendants executed a contract (the "Performance Agreement") that provided for Defendants to improve Plaintiff's website. The Performance Agreement required Defendants to improve Plaintiff's existing products website by replacing the content management system and the shopping cart portions of the site (the "products site") and to create a new website for Plaintiff for the sale of services and construct an online community for member communications (the "services site"). The agreement also provided for Plaintiff to deposit $15,000 toward a total fixed amount of $46,400. See id. at 8. Plaintiff terminated the Performance Agreement and asked Defendants to return a portion of the deposit. See Dkt. No. 8, Exhibit "1" attached thereto, at 3.

Currently before the Court is Defendants' motion to dismiss Plaintiff's claims for lack of personal jurisdiction and, alternatively, for failure to state a claim against Defendant Ira Kaufman. Also before the Court are Plaintiff's cross-motion for default judgment and Plaintiff's motion for partial summary judgment regarding its conversion claim. On October 27, 2010, the Court heard oral argument in support of, and in opposition to, these motions. At the close of argument, the Court indicated that it would deny all motions and informed the parties that it would issue a written decision explaining its reasons for its disposition regarding these motions.

III. DISCUSSION

A. Defendants' motion to dismiss for lack of personal jurisdiction

"[T]he plaintiff bears the burden of establishing that [a] court has personal jurisdiction over [a] defendant." Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999) (citation omitted). However, where discovery has not yet occurred, a "'plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant.'" Traver v. Officine Meccaniche Toshci S.P.A., 233 F. Supp. 2d 404, 408 (N.D.N.Y. 2002) (quotation omitted).

In addition, "'[t]he amenability of a foreign corporation to suit in a federal court in a diversity action is determined in accordance with the law of the state where the court sits[.]'" Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996) (quotation and other citation omitted). Consequently, the New York State long-arm statute, N.Y. C.P.L.R. § 302(a), applies here.

1. N.Y. C.P.L.R. § 302(a)(1)

Section 302(a)(1) states that "a court may exercise personal jurisdiction over any nondomiciliary . . . who in person or through an agent . . . transacts any business within the state[.]" N.Y. C.P.L.R. § 302(a)(1). It is well-settled that a single transaction may suffice for personal jurisdiction if it is of the right nature and quality. See Bank Brussels Lambert, 171 F.3d at 787 (citation omitted). In order to determine whether a transaction is sufficient to establish personal jurisdiction, no single criterion is dispositive; and a court will analyze the transaction based on the totality of the circumstances. See Toledo Peoria & Western Ry. Corp. v. S. Ill. Railcar Co., 84 F. Supp. 2d 340, 343 (N.D.N.Y. 2000) (citation omitted).

Among the factors that courts consider are

(1) whether the defendant has an on-going contractual relationship with a New York entity; (2) 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 . . .; (3) whether the contract is to be performed in New York; (4) whether the contract requires notices and payments to be sent to New York; and (5) whether the contract contains a New York choice-of-law clause.

Mortg. Funding Corp. v. Boyer Lake Pointe, LC, 379 F. Supp. 2d 282, 286 (E.D.N.Y. 2005); see also Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22-23 (2d Cir. 2004) (citation omitted).

In applying these stated criteria, the Court finds that Defendants do not appear to have an ongoing contractual relationship with Plaintiff. An ongoing contractual relationship generally does not exist where the contract at issue does not contemplate a long-term relationship and is the only contract between the litigants. See Burrows Paper Corp. v. R.G. Eng'g, Inc., 363 F. ...


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