The opinion of the court was delivered by: Seibel, J.
Before the Court are the motions of Defendants Craig Wallace and Wallace & Wallace (collectively, the "Wallace Defendants"), (Doc. 33), Martin Porter, (Doc. 37), and Proof of Funds ("POF"), Dane Gerous Brigadier, and Robert Edward Mayes, III (collectively, the "POF Defendants"), (Doc. 43). Porter and the POF Defendants seek dismissal of Plaintiff's Second Amended Complaint ("SAC"), (Doc. 29), under Federal Rules of Civil Procedure 12(b)(2) for lack of personal jurisdiction and 12(b)(6) for failure to state a claim. The Wallace Defendants join Plaintiff in opposing the motions to dismiss for lack of jurisdiction, but also move to dismiss two claims against them for failure to state a claim. For the following reasons, Porter's and the POF Defendants' motions are GRANTED IN PART and DENIED IN PART, and the Wallace Defendants' motion is GRANTED.
The facts (but not the conclusions) in the Amended Complaint are assumed to be true for the purposes of this Opinion. Plaintiff is a limited liability company organized under the laws of Nevada with its principal place of business in California. (SAC ¶ 1.) Porter, a citizen of Florida, Brigadier, a citizen of Ohio, and Mayes, a citizen of Tennessee, each informed Plaintiff that, as principals of POF, a limited liability company organized under the laws of and having a principal place of business in Pennsylvania, they could obtain a $16 million standby letter of credit (the "SLC") for Plaintiff from UBS AG Zurich ("UBS"). (Id. ¶¶ 2, 5--7, 11.) At all relevant times, Brigadier, Mayes, and Porter each represented that he worked for POF as a Managing Member, Chief Financial Officer and a Managing Member, and Director of Finance, respectively. (SAC ¶¶ 12--14.) Each of these Defendants, acting on behalf of POF, made representations to Plaintiff regarding the SLC in various telephone conversations and e-mails, and specifically in a written document entitled "Agreement for Obtaining a Standby Letter of Credit" that Porter sent by e-mail to Plaintiff on or about December 14, 2007 (the "SLC Agreement"), (SAC Ex. A). (SAC ¶ 11.) Prior to entering into the SLC Agreement, Plaintiff also received brochures allegedly prepared by Brigadier, Mayes, and Porter, on behalf of POF, that contained additional representations regarding POF's ability to acquire a standby letter of credit. (See SAC ¶¶ 15--17.)
Porter and the POF Defendants allegedly selected Craig Wallace, a citizen of New York, and his law firm, Wallace & Wallace, a partnership organized under the laws of and having a principal place of business in New York, to act as the Escrow Agent for the transaction. (SAC ¶ 26.) Information about the law firm and Wallace's former employment at the Kings County District Attorney's Office was displayed prominently on POF's website under the "Escrow Attorney" link. (Id. ¶ 27; see Declaration of Harry H. Wise, III ("Wise Decl."), (Doc. 48), Ex. B.)*fn1 Under an escrow agreement, to which Plaintiff, Porter as "Director of Finance," and Wallace & Wallace were signatories (the "Escrow Agreement"), (see SAC Ex. A, Annex E), the parties agreed that Plaintiff would wire-transfer $680,000 to the Wallace Defendants' Interest on Lawyer Account ("IOLA"), and that, upon the SLC being "placed on DTC/Euroclear or . . . received by [Plaintiff] and the Escrow Agent along with coordinates and authentication," the Wallace Defendants would disburse $440,000 to Porter and $240,000 to POF as an "arrangement fee," (see id. ¶ 3.2.1; SAC Ex. A, Annex B). POF was a third party beneficiary under the Escrow Agreement. (SAC Ex. A, Annex E ¶ 10.1.)
In reliance on the above-mentioned representations, Plaintiff entered into the SLC Agreement and wire-transferred $680,000 to the Wallace Defendants' IOLA account. (SAC ¶¶ 21, 29.) Defendants delivered the SLC to Plaintiff, (id. ¶ 24; see SAC Ex. B), and, in turn, the Wallace Defendants disbursed the funds to Porter and POF, (see SAC ¶ 32). In the months after Plaintiff entered into the SLC Agreement, Brigadier and Mayes made additional representations to Plaintiff regarding steps that were being taken to ensure the availability of the SLC funds. (See id. ¶ 19.) But a genuine $16 million standby letter of credit was never placed on DTC/Euroclear or received by Plaintiff or the Wallace Defendants along with coordinates and authentication. (See id. ¶¶ 30--31.) Rather-as Plaintiff subsequently learned from employees at UBS-the SLC it received from Porter was a fake that bore forged UBS signatures. (Id. ¶¶ 20, 24; see SAC Ex. B; Wise Decl. Ex. G.) Upon learning that the SLC was fraudulent, Plaintiff demanded the return of its $680,000, but Defendants failed to give Plaintiff its money back. (SAC ¶ 34.)
Plaintiff commenced this action by filing a Complaint on December 3, 2010, (Doc. 1), and subsequently amended it twice, (Docs. 3, 29). Plaintiff brings claims against all Defendants for violation of the Racketeer Influenced & Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964(c), fraud, conversion, and unjust enrichment, and also asserts claims solely against the Wallace Defendants for breach of the Escrow Agreement and gross negligence. Porter and the POF Defendants now move to dismiss the SAC under Rule 12(b)(2) for lack of personal jurisdiction, and all Defendants move to dismiss various claims under Rule 12(b)(6).
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (alteration in original) (citations and internal quotation marks omitted). Although Federal Rule of Civil Procedure 8 "marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, . . . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Iqbal, 129 S. Ct. at 1950.
In considering whether a complaint states a claim upon which relief can be granted, the Court may "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth," and then determine whether the remaining well-pleaded factual allegations, accepted as true, "plausibly give rise to an entitlement to relief." Id. Deciding whether a complaint states a plausible claim for relief is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not 'show[n]'-'that the pleader is entitled to relief.'" Id. (second alteration in original) (quoting Fed. R. Civ. P. 8(a)(2)).
At the motion to dismiss stage, the plaintiff must only make a prima facie showing by its pleadings and affidavits that the court has jurisdiction over each of the defendants. See CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 364--65 (2d Cir. 1986) (at trial, plaintiff must demonstrate personal jurisdiction by preponderance of the evidence). A federal court sitting in diversity looks to the law of the state in which it sits to ascertain whether it may exercise personal jurisdiction over a foreign defendant. See Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 124 (2d Cir. 2002). In such cases, the court must determine if the forum's law would confer jurisdiction through its long-arm statute, and then decide if the exercise of such jurisdiction is permissible under the Due Process Clause of the Fourteenth Amendment. Id.
Plaintiff contends that the Court has jurisdiction over Porter and the
POF Defendants (1) under either of two subsections of New York's
long-arm statute, N.Y. C.P.L.R. ("CPLR") 302(a)(1) or (a)(2); (2)
because Defendants-through Porter as POF's "Director of Finance"-
consented to "submit to the exclusive jurisdiction of the Courts of
New York" in connection with "any dispute relating to th[e] Escrow
Agreement"; or (3) based on the nationwide jurisdiction afforded to
plaintiffs under the RICO statute. (P's Mem. 5--11.)*fn2
Porter and the POF Defendants make various arguments
regarding why the Court lacks personal jurisdiction over them. For
example, they argue that they neither committed any acts nor were ever
present in New York,
(see Porter's Mem. 7; POF Ds' Mem. 7--8),*fn3
Plaintiff has failed to show that Porter and the POF Defendants had
sufficient control over the Wallace Defendants to deem them their
agents under CPLR 302(a)(1), (see Porter's Mem. 9--10; Porter's Reply
Mem. 2--3; POF Ds' Reply Mem. 3--
5),*fn4 and wiring money into New York State is
insufficient, by itself, to confer personal jurisdiction under CPLR
302(a)(1), (see Porter's Mem. 8--9; POF Ds' Mem. 10--12). The POF
Defendants also claim that the Wallace Defendants cannot be considered
their agents under CPLR 302(a)(1) because they did not choose the
Wallace Defendants to handle, collect, or disburse the money, as
demonstrated by the fact that they are not parties to the Escrow
Agreement. (See POF Ds' Reply Mem. 4--5.) The Wallace Defendants
oppose their co-Defendants' motions to dismiss for lack of personal
jurisdiction. (See Wallace Ds' Opp'n Mem.)*fn5 They
join Plaintiff's arguments that the Court has specific jurisdiction
over their co-Defendants, and further argue that the Court has general
jurisdiction over them because the Defendants all worked together over
a course of approximately twenty transactions, which demonstrates that
the other Defendants were engaged in a continuous and systematic
course of activity in New York. (Id. 3--5, 7--8.)
I find that jurisdiction exists, at the very least, under CPLR 302(a)(1). CPLR 302(a)(1) "gives New York personal jurisdiction over a nondomiciliary if two conditions are met: first, the nondomiciliary must 'transact business' [in person or through an agent] within the state; second, the claim against the nondomiciliary must arise out of that business activity." CutCo, 806 F.2d at 365; see Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 467 (1988) (Section 302(a)(1) is a "single act statute" pursuant to which "proof of one transaction in New York is sufficient to invoke jurisdiction") (internal quotation marks omitted). "A nondomiciliary 'transacts business' under CPLR 302(a)(1) when he 'purposefully avails [himself] of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws." CutCo, 806 F.2d at 365(alterations in original) (quoting McKee Elec. Co. v. Rauland-Borg Corp., 20 N.Y.2d 377, 382 (1967)). Further, a "claim 'arises out of' a defendant's transaction of business in New York when there exists a substantial nexus between the business transacted and the cause of action sued upon." Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 31 (2d Cir. 1996) (internal quotation marks omitted).
I first consider the question of whether, as Plaintiff claims, Porter and the POF Defendants transacted business in New York through the Wallace Defendants acting as their co-Defendants' agents. (See P's Mem. 6--8.) In determining whether an agency relationship exists for the purposes of CPLR 302, courts "have focused on the realities of the relationship in question rather than the formalities of agency law." CutCo, 806 F.2d at 366. "Whether a representative of the defendant qualifies as an agent for jurisdictional purposes does not turn on legalistic distinctions between being an agent or independent contractor," and "no showing of a formal relationship between the defendant and the agent is required." Robert Diaz Assocs. Enters., Inc. v. Elete, Inc., No. 03-CV-7758, 2004 WL 1087468, at *5 (S.D.N.Y. May 14, 2004) (internal quotation marks omitted). Rather, for the Wallace Defendants to be considered their co-Defendants' agents under CPLR 302(a)(1), their actions must have been done "for the benefit of, and with the knowledge and consent of" Porter and the POF Defendants, and Porter and the POF Defendants must have exercised at least "some control" over the Wallace Defendants. See CutCo, at 366 (internal quotation marks omitted). "[A] sufficient amount of control may involve the ability of the principal to influence such acts or decisions by virtue of the parties' respective roles." Cavu Releasing, LLC v. Fries, 419 F. Supp. 2d 388, 392 (S.D.N.Y. 2005) (internal quotation marks omitted).
Plaintiff has plausibly alleged that the Wallace Defendants acted for the benefit of both Porter and the POF Defendants. Plaintiff alleges that Porter and the POF Defendants specifically selected the New York-based Wallace Defendants to act as the Escrow Agent, and advertised their relationship with these Defendants on POF's website. (See SAC ¶¶ 26--28.) Pursuant to the Escrow Agreement, the Wallace Defendants were to, and ultimately did, deliver Plaintiff's funds to Porter and the POF Defendants, and then take a share of such disbursements for Escrow Agent fees and expenses. (See SAC ¶¶ 29, 32; SAC Ex. A, Annex E ¶ 3.2; SAC Ex. A, Annex B.) The Escrow Agreement demonstrates that the Wallace Defendants acted with the knowledge and consent of, at the very least, Porter, who was a signatory to the agreement and plausibly acted on behalf of the POF Defendants. (See SAC Ex. A, Annex E.) Moreover, the Escrow Agent's fees were paid out of the funds that the Wallace Defendants wired to POF, suggesting a relationship between the parties. (See SAC Ex. A, Annex B.) I also find a substantial nexus between the transaction of business in New York under the Escrow Agreement-in which the parties agreed to submit to the exclusive jurisdiction of New York courts-and Plaintiff's various claims against the Defendants. Indeed, without the Wallace Defendants' involvement in the SLC transaction, Defendants may not have been able to obtain Plaintiff's money because, as Plaintiff plausibly alleges, POF added information regarding the Wallace Defendants to its website "to give false comfort to potential victims of their fraud that the contemplated transactions were legitimate, and that funds delivered to defendants to be held in escrow would be protected." (SAC ¶ 28.) Although at this stage it is unclear what level of control Porter and the POF Defendants had over the Wallace Defendants, drawing all reasonable inferences in the light most favorable to Plaintiff, I find that Plaintiff has plausibly alleged that Porter and the POF Defendants transacted business through the Wallace Defendants in New York sufficient to confer personal jurisdiction pursuant to CPLR 302(a)(1).
Next, I must consider whether asserting personal jurisdiction over Porter and the POF Defendants would comport with due process. The due process analysis contains two parts: "the 'minimum contacts' inquiry and the 'reasonableness' inquiry." Licci v. Lebanese Canadian Bank, SAL, No. 10-CV-1306, 2012 WL 688809, at *5 (2d Cir. Mar. 5, 2012) (quoting Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 164 (2d Cir. 2010)); see Calder v. Jones, 465 U.S. 783, 788 (1984) (A non-resident defendant must have "certain minimum contacts [with the forum] . . . such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.") (second alteration in original) (internal quotation marks omitted). "Minimum contacts exist where the defendant 'purposefully availed itself of the privilege of doing business in the forum state and could 'reasonably anticipate being haled into court there.'" Pearson Educ., Inc. v. Shi, 525 F. Supp. 2d 551, 557 (S.D.N.Y. 2007) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474--75 (1985)). To determine whether asserting jurisdiction is reasonable under the circumstances-i.e., comports with traditional notions of fair play and substantial justice-a court considers five factors:
(1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; ...