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Freedom Mortgage Corp v. Platinum Home Mortgage Corp.; William Giambrone; Lee Gross; Jane King

September 12, 2012

FREEDOM MORTGAGE CORP., PLAINTIFF,
v.
PLATINUM HOME MORTGAGE CORP.; WILLIAM GIAMBRONE; LEE GROSS; JANE KING; MICHAEL YOUNG; KARLA KELLY; KIMBERLY CURTIN; WENDY DICKSON; LYNN SPANY; TERESA SHADICK; SHARON JONES-OTTO, AND MICHAEL LINSNER, DEFENDANTS.



The opinion of the court was delivered by: Glenn T. Suddaby, United States District Judge

MEMORANDUM-DECISION and ORDER

Currently before the Court, in this business tort action filed by Freedom Mortgage Corporation ("Plaintiff") against the above-captioned corporation and eleven individuals, is a motion to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2) filed by William Giambrone ("Defendant"). (Dkt. No. 28, Attach. 4.) For the reasons set forth below, Defendant's motion is denied without prejudice, with leave to renew after discovery is completed.

I. RELEVANT BACKGROUND

A. Plaintiff's Claims Against Defendant

Generally, liberally construed, Plaintiff's Amended Complaint asserts the following six claims against Defendant: (1) a claim that Defendant violated Plaintiff's contractual rights by aiding and abetting eight of Plaintiff's former employees in their breach of their confidentiality agreements; (2) a claim that Defendant violated Plaintiff's rights under the Illinois Trade Secrets Act by coordinating the misappropriation of Plaintiff's trade secrets in order to solicit business away from Plaintiff; (3) a claim that Defendant violated Plaintiff's rights under 18 U.S.C. § 1030 by conspiring to commit fraud with Plaintiff's former employees; (4) a claim that Defendant violated Plaintiff's property rights under New York State common law by encouraging and assisting Plaintiff's former employees to forego returning Plaintiff's wrongfully obtained trade secrets, and thus commit the tort of conversion; (5) a claim that Defendant violated Plaintiff's rights under New York State common law by interfering with Plaintiff's business advantage; and (6) a claim that Defendant violated Plaintiff's property rights by unjustly enriching himself at Plaintiff's expense. (See generally Dkt. No. 26, at ¶¶ 55-130 [Plf.'s Amend. Compl.].)

Generally, these six claims are based on the following allegations: (1) Plaintiff and Platinum Home Mortgage Corporation ("Platinum") are both mortgage lenders, Plaintiff being based in Clifton Park, New York, and Defendant being based in Illinois; (2) on or before May 1, 2011, Defendant, as president of Platinum, traveled to New York City for the National Mortgage Bankers Association Secondary Market Conference and Expo at the Marriott Marquis Hotel on Broadway; (3) while attending the conference over the course of the next three days, Defendant, Lee Gross, and another Platinum employee met at the Marriott with Jane King and another employee of Plaintiff for the purpose of discussing their leaving Plaintiff and bringing to Platinum one of Plaintiff's entire loan programs ("the Section 203(k) business"), in violation of confidentiality agreements executed between those employees and Plaintiff; and (4) during the following five months, Defendant and other Platinum employees successfully persuaded numerous employees to leave Plaintiff, join Platinum, and bring to Platinum Plaintiff's Section 203(k) business, in violation of those confidentiality agreements. (Id. at ¶¶ 1-54.)

Familiarity with Plaintiff's precise claims against Defendant, and the precise factual allegations supporting those claims, is assumed in this Decision and Order, which is intended primarily for review by the parties. (Id.)

B. Parties' Briefing on Defendant's Motion

Generally, in support of his motion to dismiss, Defendant argues that all of Plaintiff's claims against Defendant should be dismissed under Fed. R. Civ. P. 12(b)(2), because Plaintiff's Amended Complaint has failed to allege facts plausibly suggesting that the Defendant--a non-resident of New York who has no real estate, bank account or offices in New York--had sufficient contacts with New York State under New York's Civil Practice Law and Rules ("NY CPLR") §§ 301 and 302(a) and the Due Process Clause to confer on the Court personal jurisdiction over him. (See generally Dkt. No. 28, Attach. 4 [Def's. Memo. of Law].)

Generally, in Plaintiff's response to Defendant's motion, asserts the following three arguments: (1) based on the allegations contained in Plaintiff's Amended Complaint, and the sworn assertions contained in declarations presented by the parties (including the declaration of Sue Mintzer, who was present at the meeting at the Marriott in early-May 2011, as well as two declarations of Defendant himself), Defendant transacted business within New York State for purposes of NY CPLR § 302(a)(1), because during the meeting Defendant attempted to convince Plaintiff's employees to breach their confidentiality agreements with Plaintiff, violate their duties of loyalty owed to Plaintiff, and misappropriate Plaintiff's trade secrets in order to unjustly enrich Platinum;*fn1 (2) in any event, based on the allegations contained in Plaintiff's Amended Complaint, and the sworn assertions contained in declarations presented by the parties, Defendant committed a tort within New York State for purposes of NY CPLR § 302(a)(2); and (3) under the circumstances, exercising personal jurisdiction over Defendant comports with the Due Process Clause. (See generally Dkt. No. 16 [Plf.'s Opp'n Memo. of Law].)

Generally in his reply, Defendant asserts the following four arguments: (1) Plaintiff cites the incorrect standard of review in its opposition memorandum of law, citing the standard governing a motion filed pursuant to Fed. R. Civ. 12(b)(6), rather than a motion filed pursuant to Fed. R. Civ. P. 12(b)(2); (2) Plaintiff fails to allege facts plausibly suggesting, and/or adduce evidence establishing, that Defendant transacted business within New York State for purposes of NY CPLR § 302(a)(1), through the single, 30-45 minute meeting in question, the purpose of which has not been established;*fn2 (3) Plaintiff fails to allege facts plausibly suggesting, and/or adduce evidence establishing, that Defendant committed a tort within New York State for purposes of NY CPLR § 302(a)(2); and (4) Plaintiff fails to allege facts plausibly suggesting, and/or adduce evidence establishing, that exercising personal jurisdiction over Defendant comports with the Due Process Clause. (See generally Dkt. No. 36 [Def.'s Reply Memo. of Law].)

II. RELEVANT LEGAL STANDARD

"When a defendant moves to dismiss a complaint under Rule 12(b)(2) for want of personal jurisdiction, courts must perform a two-part analysis." Harris v. Ware, 04-CV-1120, 2005 WL 503935, at *1 (E.D.N.Y. Mar. 4, 2005). "First, personal jurisdiction over a defendant must be established under the law of the state where the federal court sits." Harris, 2005 WL 503935, at *1 (citing Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 [2d Cir.1999]). "Under Rule 4(k)(1)(A) of the Federal Rules of Civil Procedure, the service of a summons establishes personal jurisdiction over a defendant 'who could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district court is located.'" Id. (citation omitted). "Second, if jurisdiction is established under the governing statute, courts must determine whether the exercise of jurisdiction under the relevant state law would violate the defendant's due process rights." Id. (citation omitted)

The plaintiff "bears the burden of establishing that the court has jurisdiction over the defendant, since Defendant has served the Rule 12(b)(2) motion." Aldinger v. Segler, 04-CV-4405, 2005 WL 2591958, at *2 (S.D.N.Y. Oct. 13, 2005) (internal quotation marks and citation omitted). Unless a court conducts "a full-blown evidentiary hearing," the plaintiff only needs to make "a prima facie showing of jurisdiction through its own affidavits and supporting materials to survive a motion to dismiss under Rule 12(b)(2)." Harris, 2005 WL 503935, at *1 (internal quotation marks and citations omitted). "In other words, prior to discovery, a plaintiff may defeat a jurisdiction-testing motion by pleading in good faith, ... legally sufficient allegations of jurisdiction." Harris, 2005 WL 503935, at *1 (internal quotation marks and citations omitted). However, "[o]nce discovery regarding a defendant's contacts with the forum is conducted," the plaintiff's burden is heightened, ...


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