Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

Eastboro Found. Charitable Trust v. Penzer

United States District Court, S.D. New York

June 18, 2013

THE EASTBORO FOUNDATION CHARITABLE TRUST and JAMES BERNATH, Plaintiffs,
v.
ABRAHAM M. PENZER and JOSHUA ROTHENBERG, Defendants

Page 649

[Copyrighted Material Omitted]

Page 650

For The Eastboro Foundation Charitable Trust, James Bernath, Plaintiffs: Sheldon Eisenberger, The Law Office of Sheldon Eisenberger, New York, NY.

For Abraham M. Penzer, Defendant: Ruth Evon Idahosa-Howard, LEAD ATTORNEY, Lynn Marie Dukette, Furman, Kornfeld & Brennan LLP, New York, NY.

For Joshua Rothenberg, Defendant: Marvin L. Schwartz, LEAD ATTORNEY, Schwartz Burton LLP, Lakewood, NJ.

Page 651

OPINION AND ORDER

Andrew J. Peck, United States Magistrate Judge.

Plaintiffs Eastboro Foundation and James Bernath (collectively, " Bernath" ) bring this diversity action against defendants Abraham Penzer and Joshua Rothenberg, seeking $150,000 in damages resulting from an unsuccessful real estate transaction among the parties. (Dkt. No. 1: Compl.) Presently before the Court is Penzer's motion to dismiss for lack of personal jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(2). (Dkt. No. 8: Notice of Motion.) The parties have consented to decision of this motion by a Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Dkt. No. 23.) For the reasons set forth below, Penzer's motion is GRANTED and the case is dismissed without prejudice.[1]

FACTS[2]

Plaintiff Bernath asserts four causes of action: legal malpractice (Dkt. No. 1: Compl. ¶ ¶ 25-28), breach of fiduciary duty (id. ¶ ¶ 29-32), conversion, embezzlement and aiding and abetting thereof (id. ¶ ¶ 33-36), and unjust enrichment and aiding and abetting thereof (id. ¶ ¶ 37-40). All four claims are based on the core allegation that Bernath transferred $150,000 to attorney Penzer's New Jersey trust account for the purchase of New Jersey property, which Penzer then disbursed to Rothenberg who purchased the property himself. (Compl. ¶ ¶ 1-2, 14-15, 18-22, 28, 31, 34-35, 38-39.)

Parties

Plaintiff Bernath is a New York resident and partner at the CPA firm of Bernath & Rosenberg, P.C. in New York City. (Dkt. No. 1: Compl. ¶ 7; Dkt. No. 13: Bernath Aff. ¶ 3.) Plaintiff The Eastboro Foundation is a New York Charitable Trust with an office in New York City. (Compl. ¶ 6.) Defendant Penzer is a New Jersey resident and attorney whose law office is located in Lakewood, New Jersey. (Compl. ¶ ¶ 8, 12.) Defendant Rothenberg is a New Jersey resident and real estate developer whose office is also located in Lakewood, New Jersey. (Compl. ¶ ¶ 9, 13.)

Prior Transactions

In January and March 2010, Bernath formed RBRB Realty, LLC and RBRB Realty II, LLC, both New Jersey[3] limited liability companies with New Jersey addresses. (Dkt. No. 13: Bernath Aff. ¶ 6 & Ex. A: RBRB Formation Docs.) On February 16 and March 17, 2010, RBRB purchased two parcels of land being developed by Rothenberg in Lakewood, New Jersey. (Bernath Aff. ¶ ¶ 7-9.) For both purchases, Bernath sent wire transfers to Penzer's attorney trust account in New Jersey. (Dkt. No. 1: Compl. ¶ 16; Bernath Aff. ¶ 7; Dkt. No. 9: Penzer Aff. ¶ ¶ 7-8 & Exs. B-C: 2/16/10 & 3/12/10 Wire Receipts.) Penzer prepared both sets of closing documents on behalf of RBRB and was paid $1,000 for each one. (Bernath Aff. ¶ ¶ 7-9, 21; Bernath Aff. Exs. B-C: 2/16/10 & 3/17/10 Closing Docs.)[4]

Page 652

The Subject Transaction

In or around September 2010, Bernath intended to purchase a third parcel of land being developed by Rothenberg in Lakewood, New Jersey. (Dkt. No. 1: Compl. ¶ ¶ 1-2, 14-15, 22-23.) Bernath alleges that he " spoke with Penzer directly on the phone immediately prior to [his] making the very wire transfers which are the subject of this action" and " specifically recall[s] asking [Penzer] whether the wire transfers should be made into the same attorney escrow bank account as the previous two similar transactions . . . for the investment with Rothenberg in the Lakewood development." (Dkt. No. 13: Bernath Aff. ¶ 4.)[5] On September 8, 2010, Bernath made two wire transfers totaling $150,000 to Penzer's attorney trust account in New Jersey. (Compl. ¶ 14; Dkt. No. 9: Penzer Aff. Ex. D: 9/8/10 Wire Receipts.) When the third Lakewood transaction did not " come to fruition," Penzer disbursed Bernath's $150,000 to Rothenberg for the purchase of the New Jersey property on Rothenberg's behalf. (Compl. ¶ ¶ 18-24; Bernath Aff. ¶ ¶ 25-27.)

The New York Meeting

At some point after the $150,000 wire transfers were made, Penzer came to Bernath's office in New York City for a meeting " involving a business that [Penzer's] client was working on acquiring" in Bay Shore, New York--a potential transaction that admittedly is unrelated to the transaction presently at issue. (Dkt. No. 13: Bernath Aff. ¶ ¶ 13, 16-17; Dkt. No. 22: Penzer Reply Aff. ¶ 5.) Bernath alleges that he and Penzer also " discussed" the subject transaction at the meeting, but provides no information regarding the content, nature, duration, or any details of the alleged discussion. (Bernath Aff. ¶ ¶ 3, 13, 16-17.) According to Penzer, while he did see Bernath when he came to Bernath's office to meet with others, " the only communication that [Penzer] had with Bernath was merely to say 'hello' to him in passing." (Penzer Reply Aff. ¶ ¶ 3, 5-6.)

Page 653

Penzer's Legal Practice

Penzer is admitted to practice in New Jersey, New York and the District of Columbia. (Dkt. No. 1: Compl. ¶ 12; Dkt. No. 9: Penzer Aff. ¶ 3.) Penzer has been admitted to practice in New York since 1982, his bar membership is active and his next biennial registration is due in April 2014. (Penzer Aff. ¶ 3; Dkt. No. 13: Bernath Aff. ¶ ¶ 14-17 & Ex. D: N.Y.S. Unified Court Sys. Docs.) Penzer has appeared four times in New York courts, most recently in 1994. (Bernath Aff. ¶ 16 & Ex. D: N.Y.S. Unified Court Sys. Docs.) Penzer asserts that he has " not been before the New York Courts or actively engaged in the practice of law in the State of New York for nearly twenty (20) years (since 1994)." (Dkt. No. 22: Penzer Reply Aff. ¶ 8.)

Penzer's firm is incorporated only in New Jersey, his only place of business is the firm's office in Lakewood, New Jersey, and Penzer asserts that his practice is limited to New Jersey. (Compl. ¶ ¶ 8, 12; Penzer Aff. ¶ ¶ 3-5.) Bernath does not dispute that Penzer does not have employees, an office, address, bank account or telephone number in New York. (Penzer Aff. ¶ ¶ 4-5.) Penzer claims that he has no New York clients, and neither solicits business, markets, nor advertises in New York. (Penzer Aff. ¶ ¶ 4-5.) In opposition, Bernath alleges that Penzer is " practicing law in New York" by " working on New York transactions and representing New York clients." (Bernath Aff. ¶ 17.)

ANALYSIS

I. THE STANDARDS GOVERNING A MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

" On a Fed.R.Civ.P. 12(b)(2) motion to dismiss for lack of personal jurisdiction, plaintiff bears the burden of showing that the court has jurisdiction over the defendant." In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir. 2003); accord, e.g., MacDermid, Inc. v. Canciani, No. 12-1747-cv, 525 Fed.Appx. 8, 2013 WL 1943258 at *1 (2d Cir. May 13, 2013).[6]

" Where, as here, a court relies on pleadings and affidavits, rather than conducting a 'full-blown evidentiary hearing,' the plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant." Distefano v. Carozzi N. Am., Inc., 286 F.3d at 84; accord, e.g., MacDermid, Inc. v. Canciani, 2013 WL 1943258 at *1.[7] " '[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[.]'" Whitaker v. Am. Telecasting, Inc., 261 F.3d at 208 (quoting A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993)).[8]

Page 654

" In assessing whether personal jurisdiction is authorized, 'the court must look first to the [jurisdictional] statute of the forum state, in this instance New York.'" Whitaker v. Am. Telecasting, Inc., 261 F.3d at 208 (quoting Bensusan Rest. Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997)).[9] " 'If the exercise of jurisdiction is appropriate under that statute, the court must decide whether such exercise comports with the requisites of due process.'" Whitaker v. Am. Telecasting, Inc., 261 F.3d at 208.[10]

A. General Jurisdiction Under C.P.L.R. § 301

C.P.L.R. § 301 provides, cryptically, that a " court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore." Section 301 traditionally applies to persons actually present in New York and to corporations " 'doing business'" in New York, " 'not occasionally or casually, but with a fair degree of permanence and continuity.'" Hearst Corp. v. Goldberger, 96 Civ. 3620, 1997 WL 97097 at *8 (S.D.N.Y. Feb. 26, 1997) (Peck, M.J.) (quoting Joseph McLaughlin, Practice Commentary to CPLR § C301:1, § C:301:2 at pp. 7-9 (McKinney's 1990)); accord, e.g., United Mobile Techs., LLC v. Pegaso PCS, S.A. de C.V., No. 11-2813-CV, 509 Fed.Appx. 48, 2013 WL 335965 at *1 (2d Cir. Jan. 30, 2013) (" Under N.Y. C.P.L.R. § 301, general jurisdiction is established if the defendant is shown to have 'engaged in continuous, permanent, and substantial activity in New York.'" ).[11]

B. Specific Jurisdiction Under C.P.L.R. § 302(a)

New York " long-arm" jurisdiction is codified in C.P.L.R. § 302(a),[12] which provides:

(a) Acts which are the basis of jurisdiction. As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent:
1. transacts any business within the state or contracts anywhere to supply goods or services in the state; or
2. commits a tortious act within the state . . . ; or
3. commits a tortious act without the state causing injury to person or property within the state . . . if he
(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives

Page 655

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 any real property situated within the state.

C.P.L.R. § 302(a).

II. PENZER'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION IS GRANTED AND THE CASE DISMISSED

It is undisputed that Penzer has no address, phone number or employees in New York, and that his law firm is incorporated only in New Jersey with its only office located in New Jersey. (See page 5 above). There are no allegations that Penzer solicits business or advertises his services in New York. (See page 5 above.) Bernath's claims arise from the transfer of funds to Penzer's New Jersey attorney trust account for the purchase of New Jersey property, which funds were disbursed in New Jersey to a New Jersey resident, co-defendant Rothenberg. (See pages 3-4 above.)

A. Bernath Failed to Establish a Basis for C.P.L.R. § 301 General Jurisdiction Over Penzer

Bernath's argument for general jurisdiction is not based on evidence that Penzer has, for example, employees, an office, real estate, a bank account, or a phone listing in New York, or that he solicits or markets his services in New York, as typically would be required.[13] See, e.g., Saudi v. Marine Atl., Ltd., 306 F.Appx. 653, 655 (2d Cir. 2009); Weiss v. Barc, Inc., 12 Civ. 7571, 2013 WL 2355509 at *2 (S.D.N.Y. May 29, 2013). Rather, Bernath argues that Penzer's license to practice law in New York is comparable to a foreign company's registration to conduct business in New York, and thus automatically subjects Penzer to general jurisdiction. (Dkt. No. 14: Bernath Opp. Br. at 5-12.)

It is undisputed that an out-of-state company's registration to do business in New York is deemed a consent to general personal jurisdiction in New York. E.g., STX Panocean (UK) Co. v. Glory Wealth Shipping PTE Ltd., 560 F.3d 127, 131 (2d Cir. 2009) (" It is well-settled under New York law that registration under [N.Y. Bus. Corp. Law] § 1304 subjects foreign companies to personal jurisdiction in New York." ). There is no comparable caselaw, however, construing an attorney's license to practice law as an automatic consent to general personal jurisdiction; in fact, courts have rejected that argument on a number of occasions. See, e.g., Mangia Media Inc. v. Univ. Pipeline, Inc., 846 F.Supp.2d 319, 323 (E.D.N.Y. 2012) (" Plaintiff cites no authority for the broad exercise of general jurisdiction over each and every member of the Bar of this State." );

Page 656

Lans v. Adduci Mastriani & Schaumberg L.L.P., 786 F.Supp.2d 240, 284 n.29 (D.D.C. 2011) (" [I]t has been widely held that membership in a state Bar does not have any impact on the jurisdictional analysis." (collecting cases)); Worthington v. Small, 46 F.Supp.2d 1126, 1134 (D. Kan. 1999) (" In short, other than maintaining his Kansas law license, defendant has had very few contacts with Kansas in recent years. These limited contacts are not sufficiently 'continuous and systematic' to enable this court to exercise general jurisdiction over defendant." ).[14]

Nor do Penzer's " affirmative steps of renewing the [N.Y. attorney] registrations, paying the fees and completing the 24 accredited New York CLE credit hours every two years" (Bernath Opp. Br. at 10) command a different result. See Baker v. Eighth Judicial Dist. Court, 116 Nev. at 532-33, 999 P.2d at 1023-24 (" Although . . . nonresident bar members are regulated by our supreme court rules ('SCR'), we conclude that a nonresident bar member could comply with these rules without having continuous and systematic contact with the State of Nevada. In fact, a nonresident, nonpracticing bar member's compliance with the SCR could consist solely of sending a yearly check and an address update form upon relocation. Accordingly, we conclude that the district courts of Nevada lack general jurisdiction over [plaintiff] on the basis of his bar membership." (fn. omitted)); Advance Petroleum Serv., Inc. v. Cucullu, 614 So.2d 878, 880 (La.App. Div.) (no jurisdiction where defendant " graduated from a Louisiana Law School and is licensed to practice in Louisiana and has attended the requisite CLE courses to maintain his license" ), writ denied, 617 So.2d 911 (La. 1993).

Bernath relies heavily on Penzer's statutory appointment of a New York agent for service of process as required by the regulations

Page 657

governing non-resident members of the New York Bar:

Penzer consented to the exercise of personal jurisdiction when he registered to practice law in the State of New York, and accordingly designated the Clerk of the Appellate Division as his agent for service of process pursuant to the Rules of the Court of Appeals for the Admission of Attorneys and Counselors at Law, 22 NYCRR Part 520, Section 520.13. This is a similar concept to the requirement that a foreign corporation registering to do business here appoints the Secretary of State to accept service, and is deemed to have thereby consented to New York jurisdiction under CPLR Section 301 for all purposes, regardless of whether it actually engages in New York activities or whether the claim arises from such activities.

(Bernath Opp. Br. at 6.) This argument fails because the Business Corporation Law requires appointment of an agent for all purposes, whereas the attorney regulation only requires appointment of an agent for specific cases, i.e., actions arising from New York legal services.[15]

Because appointment of the Appellate Division as Penzer's agent only extends to the specific type of action stated in the regulation, it is not a consent to general jurisdiction. Cf., e.g., Advance Realty Assocs. v. Krupp, 636 F.Supp. 316, 317-18 (S.D.N.Y. 1986) (" Plaintiff argues that the registration . . . pursuant to N.Y. Gen. Bus. L. § 352-b manifests the defendants' consent to general jurisdiction in New York. . . . When a foreign individual or entity registers under § 352-b, it appoints the secretary of state to receive process for it 'in any action, investigation or proceeding brought or conducted by the attorney general under the provisions of' New York's securities laws. Obviously, this is not such an action. Defendants could not . . . consent to anything more than what the statute says. Mere registration pursuant to § 352-b does not create general jurisdiction over the defendants." ).[16]

Page 658

Accordingly, because Penzer's New York law licence is not deemed a consent to general jurisdiction, and because the present claims do not arise from legal services Penzer rendered in New York, Bernath has not established that personal jurisdiction over Penzer is appropriate under C.P.L.R. § 301.

B. Bernath Failed to Establish a Basis for C.P.L.R. § 302 Specific Jurisdiction Over Penzer

1. C.P.L.R. § 302(a)(1): Transaction of Business in New York

" Section 302(a)(1) is typically invoked for a cause of action against a defendant who breaches a contract with plaintiff, or commits a commercial tort against plaintiff in the course of transacting business or contracting to supply goods or services in New York." Beacon Enters., Inc. v. Menzies, 715 F.2d 757, 764 (2d Cir. 1983) (citations omitted); accord, e.g., Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 171 (2d Cir. 2010).

" '[I]n order for personal jurisdiction over [Penzer] to lie in New York [under C.P.L.R. § 302(a)(1), Penzer] must have transacted business in this state and the cause of action must arise out of such transaction.'" Rolls-Royce Motors, Inc. v. Charles Schmitt & Co., 657 F.Supp. 1040, 1050 (S.D.N.Y. 1987); accord, e.g., Reiss v. Steigrod, 866 F.Supp. 747, 749 (S.D.N.Y. 1994) (Sotomayor, D.J.). As the Court further explained in Rolls-Royce:

The test [under C.P.L.R. § 302(a)(1)] is hardly a precise one; the court must look at the aggregation of defendant's activities, coupled with the selective weighing of the various actions. Moreover, it is the " nature and quality, and not the amount of New York contacts [which] must be considered by the court." Primary factors to consider include the physical presence of defendant in New York, the risk of loss as it effects the New York transaction, and the extent to which the contract is performed in New York.

Rolls-Royce Motors, Inc. v. Charles Schmitt & Co., 657 F.Supp. at 1050-51 (citations omitted).

In arguing that Penzer transacted business in New York and that the claims arise out of that transaction, Bernath asserts that Penzer is " practicing law in New York on a regular ongoing basis" (Dkt. No. 14: Bernath Opp. Br. at 11), relying on: (a) Penzer's maintenance of a New York law license " with efforts in New York that include taking New York CLE courses, in order to invoke the benefits and privileges of doing business here," as well as Penzer's four New York court appearances between 1987 and 1994 (Bernath Opp. Br. at 10; Dkt. No. 13: Bernath Aff. Ex. D: N.Y.S. Unified Court Sys. Docs.); (b) Penzer's meeting at Bernath's New York office regarding a potential property transaction in Bay Shore, New York (Bernath Opp. Br. at 10-11); and (c) that " Bernath . . ., and [the RBRB] LLCs that [he] formed, were Penzer's clients on the two prior transactions, and the third identical transaction which is the subject [o]f this lawsuit" (Bernath Opp. Br. at 11; see pages 2-3 above).

a. New York Bar Membership and Court Appearances

Bernath's claims are based on an intended real estate transaction in New Jersey, namely, the purchase of New Jersey property from a New Jersey seller. (See page 3 above.) The acts and omissions alleged to constitute Penzer's attorney malpractice and the related claims of unlawfully disbursing Bernath's funds from Penzer's New Jersey attorney trust account to a New Jersey resident, also

Page 659

took place in New Jersey. (See pages 3-4 above.)

Accordingly, even assuming arguendo that Penzer's maintenance of an active New York license constitutes a transaction of business, Bernath's claims relate exclusively to actions Penzer took in New Jersey in connection with a New Jersey transaction, and thus do not arise from Penzer's membership in the New York bar. See, e.g., Lipin v. Hunt, 538 F.Supp.2d 590, 598 (S.D.N.Y. 2008) (" None of Plaintiff's causes of actions arise from [defendant's] admission to practice in New York. Even assuming that admission to the New York bar can be considered a transaction of business in New York and that acts taken as an attorney might 'arise from' that attorney's admission to practice, all of Plaintiff's allegations relating to actions taken by [defendant] in his capacity as a[n] attorney relate to actions taken in connection with proceedings in Maine courts. Such actions do not arise from [defendant's] admission to the New York bar in any way." ); [17] cf., e.g., Ghanem v. Kay, 624 F.Supp. 23, 25 n.6 (D.D.C. 1984); Johnson v. Ward, 4 N.Y.3d 516, 520, 829 N.E.2d 1201, 797 N.Y.S.2d 33, 35 (2005) (" Plaintiffs' cause of action arose out of [New Jersey] defendant's allegedly negligent driving in New Jersey, not from the issuance of a New York driver's license or vehicle registration. . . . The negligent driver could have had a license from any state, or no license--that defendant had a New York license and registration is merely coincidental. As such, plaintiffs cannot rely on CPLR 302(a)(1) to establish long-arm jurisdiction . . . ." ); Polansky v. Gelrod, 20 A.D.3d 663, 664, 798 N.Y.S.2d 762, 764 (3d Dep't 2005) (" [E]ven if [defendant's] license were deemed to constitute the transaction of business in the state, there is no allegation or proof of a substantial nexus between his transactions in New York and plaintiff's cause of action." ).

Penzer's appearances in New York courts in unrelated matters in 1987, 1991 and 1994 are jurisdictionally irrelevant. Penzer's last New York court appearance was nearly twenty years ago, which falls

Page 660

outside the scope of conduct courts generally consider in a personal jurisdiction analysis. See, e.g., Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 569-70 (2d Cir.) (holding a six-year limit on the conduct to be considered in jurisdictional analyses was reasonable, citing cases imposing limits ranging from three to seven years), cert. denied, 519 U.S. 1006, 1007, 117 S.Ct. 508, 508, 136 L.Ed.2d 398 (1996).[18] Moreover, as with Penzer's New York bar membership, the instant action is based entirely on conduct alleged to have taken place in New Jersey in connection with a New Jersey transaction, and does not arise from Penzer's decades-old practice in New York courts. (See cases cited at pages 15-16 & n.17 above.) In any event, courts decline to base personal jurisdiction on unrelated or insignificant court appearances. See, e.g., Mayes v. Leipziger, 674 F.2d 178, 185 (2d Cir. 1982) (finding no basis for jurisdiction over California attorneys who appeared in California action on behalf of New York client); Pisani v. Diener, No. 07-CV-5118, 2009 WL 749893 at *6 (E.D.N.Y. Mar. 17, 2009) (where claim was based on " attorney's conduct in connection with representing plaintiff in" foreign state and " plaintiff offers no argument or allegations that suggest that any of the alleged conduct . . . took place in New York," court held " there is no prima facie showing of personal jurisdiction" ); Worthington v. Small, 46 F.Supp.2d at 1131.

b. The New York Meeting and the Potential Bay Shore Transaction

The only conduct that occurred in New York was Penzer's attendance at a single meeting at Bernath's New York office, " the main purpose" of which was to meet with others regarding a potential transaction in Bay Shore, New York, during which Penzer also allegedly spoke with Bernath about the subject transaction. (Dkt. No. 14: Bernath Opp. Br. at 10-11; see page 4 above.) This meeting is relevant, Bernath suggests, because it shows that Penzer was conducting other business in New York, i.e., negotiating the potential purchase of property in Bay Shore, and because Penzer's alleged discussion with Bernath regarding the subject transaction provides a nexus between New York and the present claims.

For a single meeting in New York to justify the exercise of personal jurisdiction pursuant to C.P.L.R. § 302(a)(1), the meeting must have played " 'a significant role in establishing or substantially furthering the relationship of the parties.'" Three Five Compounds, Inc. v. Scram Techs., Inc., 11 Civ. 1616, 2011 WL 5838697 at *4 (S.D.N.Y. Nov. 21, 2011).[19] Meetings which are merely " exploratory, unproductive, or insubstantial are insufficient to establish" personal jurisdiction. United Computer Capital Corp. v. Secure Prods., L.P., 218 F.Supp.2d at 278.[20]

Page 661

As to Bernath's assertion that Penzer discussed the New Jersey real estate transaction with Bernath while Penzer was present in New York, Bernath provides no detail as to the content of the alleged discussion, and Penzer asserts that there was no discussion at all, merely a " 'hello'" in passing. (See page 4 above.) Bernath's allegations are inadequate to establish that this sole discussion in New York was sufficiently significant to establish a basis for personal jurisdiction. E.g., Three Five Compounds, Inc. v. Scram Techs., Inc., 2011 WL 5838697 at *4; United Computer Capital Corp. v. Secure Prods., L.P., 218 F.Supp.2d at 279 (" These meetings relate only indirectly to plaintiff's claims against defendants, representing mere link[s] in the chain of events leading to the claim[s] for which relief is sought, and they are insufficient to justify the assertion of personal jurisdiction over the defendants." (citation omitted)); McGowan v. Smith, 52 N.Y.2d 268, 272, 419 N.E.2d 321, 437 N.Y.S.2d 643, 645 (1981); Presidential Realty Corp. v. Michael Square W., Ltd., 44 N.Y.2d at 673-74, 405 N.Y.S.2d at 38 (" Jurisdiction, if any, under New York's long-arm statute would appear in this instance to turn on the extent of defendants' activities in New York State at the alleged conference . . . . No reliance can be placed on any attendant negotiations on that day since no proof is tendered . . . of the fact or the extent of any negotiations. Therefore on the record before us there is no proof of any contacts with this State other than the fact that the modification letter and the agreement were signed in New York. This is not sufficient to confer jurisdiction." ).[21]

Indeed, while no date is provided, it appears the meeting took place after the September 2010 wire transfers were complete, since they allegedly were discussed (see page 4 above); thus, the relationship between Penzer and Bernath that is at issue in this action already existed, and was not established or substantially furthered by this meeting. See, e.g., MEE Direct, LLC v. Tran Source Logistics, Inc., 12 Civ. 6916, 2012 WL 6700067 at *5 (S.D.N.Y. Dec. 26, 2012) (Plaintiff " alleges that [defendant] attended a freight review meeting, as well as two negotiations related to the allegedly converted funds, in its Manhattan offices. . . . [Plaintiff] does not allege that the meetings, which were conducted subsequent to the formation of the Agreement, were necessary to or substantially advanced its business relationship with [defendant]. Therefore, the meetings do not support the exercise of personal jurisdiction." (emphasis added)); Dogan v. Harbert Constr. Corp., 507 F.Supp. 254, 262

Page 662

(S.D.N.Y. 1980) (" The plaintiff also asserts that the August 29th meeting between the parties at [plaintiff's] attorney's office in New York constitutes a transaction of business here since the discussions were essential to the continuance of the contract between the parties. I disagree. [Plaintiff] declares that 'at the meeting we discussed the ongoing relationship between the parties and the obligations I felt [defendant] owed to me and SA/DO.' Such a meeting to discuss differences under an existing contract has no jurisdictional significance in New York." (citation omitted)); Greco v. Ulmer & Burne L.L.P., 23 Misc.3d 875, 889, 879 N.Y.S.2d 885, 897 (Sup.Ct. Kings Co. 2009) (" [E]ven if the alleged meetings did take place, there is no support for the claim that they were 'essential to the formation or continuance' of the relationship between [defendants] and plaintiffs, since they took place long after the Firm began its representation of the Trust and its trustee." (emphasis added)).

Bernath admits that the potential transaction in Bay Shore, New York was completely unrelated to the New Jersey transaction that is the subject of this action--it did not even involve Bernath--and thus it cannot be said that Bernath's claims arise from or are based on that transaction. See, e.g., Ferrante Equip. Co. v. Lasker-Goldman Corp., 26 N.Y.2d 280, 284, 258 N.E.2d 202, 309 N.Y.S.2d 913, 917 (1970); Greco v. Ulmer & Burne L.L.P., 23 Misc.3d at 888, 879 N.Y.S.2d at 896-97 (" [T]he court concludes that the [law firm] defendants are not subject to the jurisdiction of the courts of New York. . . . In the first instance, [the former trustee] is not a plaintiff in the instant action, so that any meetings that he may have had with the [law firm] defendants are irrelevant to a determination of whether movants are subject to jurisdiction here. . . . Also significant is the court's finding that [the former trustee's] claim that he met with [defendant attorneys] in New York is patently incredible in view of the fact that he fails to provide any details with regard to the alleged meetings . . . ." ).

c. Prior Representation in Two Previous Transactions

The evidence Bernath submits to prove that Penzer was Bernath's attorney in two prior transactions shows, if anything, that Penzer represented two New Jersey limited liability companies (RBRB) in these transactions. (See pages 2-3 above.) The transactions for which Penzer provided the alleged representations occurred in New Jersey, and involved the purchase of New Jersey property from New Jersey sellers on behalf of the New Jersey RBRB entities. (See pages 2-3 above.) Accordingly, the evidence of these prior transactions offers no support for Bernath's position.[22]

Page 663

Moreover, assuming arguendo that Bernath (rather than RBRB) was Penzer's client in these prior transactions (and even the subject transaction), New York courts decline to base the exercise of personal jurisdiction on the mere fact that an attorney's client was a New York resident where, as here, New York law was not implicated and the representation had no connection to New York. See, e.g., Mayes v. Leipziger, 674 F.2d 178, 185 (2d Cir. 1982) (" We do not believe that in these circumstances the New York courts would exercise jurisdiction solely on the basis that the defendants, from California, reported to their New York client and sought the wherewithal (i.e., funds, authority, and information) by means of letters and calls to New York to perform their non-New York services." ); Epstein v. Thompson, 09 Civ. 8696, 2010 WL 3199838 at *3 (S.D.N.Y. Aug. 12, 2010) (" The fact that an attorney's client resides in New York does not mean that the attorney transacts business in New York. Nor do contacts between out-of-state attorneys and New York clients confer jurisdiction over the attorneys, where, as here, the attorneys perform all legal work outside New York." (citation omitted)); Forgash v. Paley, 659 F.Supp. 728, 730-31 (S.D.N.Y. 1987) (" While [plaintiff] and [defendant] may have worked together previously to obtain financing for real estate in New York, defendants have not transacted business in New York with respect to the financing for the New Jersey property. . . . Moreover, a defendant, absent other factors, will not be subject to suit in New York simply because a New York resident solicited his services, or that the defendant placed telephone calls to and corresponded with a New York business in connection with the purchase and sale of out-of-state property." (fn. omitted)); Bill-Jay Mach. Tool Corp. v. Koster Indus., Inc., 29 A.D.3d 504, 505, 816 N.Y.S.2d 115, 117 (2d Dep't 2006) (" Although [plaintiff] did establish that [defendant] knew it was contracting with, and performing services for, a New York resident, such minimal contacts without more are insufficient to confer personal jurisdiction under New York's long-arm statute." ).[23]

2. C.P.L.R. § 302(a)(2): Tortious Act Committed in New York

Personal jurisdiction over Penzer is not appropriate under the second prong of New York's long-arm statute, C.P.L.R. § 302(a)(2). Bernath's claims arise out of a New Jersey attorney's conduct in connection with the disbursement of funds that Bernath transferred to a New Jersey bank account for a real estate transaction involving the purchase of New Jersey property from a New Jersey seller. (See pages 3-4 above.) Bernath does not allege that Penzer committed tortious acts within New York State. (Dkt. No. 1: Compl. ¶ ¶ 28, 31, 34-35, 38-39.)

Page 664

Bernath therefore has not made a prima facie showing that personal jurisdiction over Penzer is appropriate under C.P.L.R. § 302(a)(2). See, e.g., Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 789-90 (2d Cir. 1999) ( " At minimum, to qualify for jurisdiction under [C.P.L.R. § 302(a)(2)], 'a defendant's act or omission [must have] occur[red] within the state.' . . . [A] defendant's physical presence in New York is a prerequisite to jurisdiction under § 302(a)(2)." ); Bensusan Rest. Corp. v. King, 126 F.3d 25, 28-29 (2d Cir. 1997); Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 460, 209 N.E.2d 68, 261 N.Y.S.2d 8, 21, cert. denied, 382 U.S. 905, 86 S.Ct. 241, 15 L.Ed.2d 158 (1965); Lehigh Valley Indus., Inc. v. Birenbaum, 527 F.2d 87, 93-94 (2d Cir. 1975) (" [T]he bland assertion of conspiracy or agency is insufficient to establish jurisdiction for the purposes of section 302(a)(2)." ).

3. C.P.L.R. § 302(a)(3): Tortious Act Causing Injury in New York

Personal jurisdiction over Penzer is not appropriate under the third prong of New York's long-arm statute, C.P.L.R. § 302(a)(3). " '[C]ourts determining whether there is injury in New York sufficient to warrant § 302(a)(3) jurisdiction must generally apply a situs-of-injury test, which asks them to locate " the original event which caused the injury." '" Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 209 (2d Cir. 2001) (quoting Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 791 (2d Cir. 1999)); Distefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001). " '[T]he situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are felt by the plaintiff.'" Whitaker v. Am. Telecasting, Inc., 261 F.3d at 209 (quoting Mareno v. Rowe, 910 F.2d 1043, 1046 (2d Cir. 1990) (where plaintiff lived in New York and sued his New Jersey employer for wrongful discharge, situs of injury was location of events which caused injury, i.e., New Jersey, not place where economic consequences were felt, i.e., New York), cert. denied, 498 U.S. 1028, 111 S.Ct. 681, 112 L.Ed.2d 673 (1991)); see also, e.g., Hermann v. Sharon Hosp., Inc., 135 A.D.2d 682, 683, 522 N.Y.S.2d 581, 583 (2d Dep't 1987) (" The situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are subsequently felt by the plaintiff." ). As the Second Circuit has stated, " '[t]he occurrence of financial consequences in New York due to the fortuitous location of plaintiffs in New York is not a sufficient basis for jurisdiction under § 302(a)(3) where the underlying events took place outside New York.'" Whitaker v. Am. Telecasting, Inc., 261 F.3d at 209.[24] " Under the situs-of-injury test," where " the 'original event' that caused the economic harm to [Bernath] was [] the disbursement of the funds," the situs of Bernath's injury is the place where the funds were disbursed, here New Jersey. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d at 792.

Bernath's claims arise out of a New Jersey attorney's alleged misconduct in the disbursement of Bernath's funds, intended for the purchase of property in New Jersey, from a New Jersey bank account to a New Jersey resident. (See pages 3-4 above.) While Bernath alleges that Penzer committed tortious acts in New Jersey, the complaint does not

Page 665

contain any allegations that those alleged tortious acts had any effect in New York State sufficient to establish a basis for jurisdiction under C.P.L.R. § 302(a)(3).[25] Nor has Bernath submitted any evidence that Penzer expected his actions in New Jersey to have consequences in New York, see, e.g., Bensusan Rest. Corp. v. King, 126 F.3d 25, 29 (2d Cir. 1997) ( New York " restricted the exercise of jurisdiction under sub-paragraph [302] (a)(3) to persons who expect or should reasonably expect the tortious act to have consequences in [New York] state" ),[26] or that Penzer " regularly does or solicits business, or engages in any other persistent course of conduct" or " derives substantial revenue from interstate or international commerce." C.P.L.R. § 302(a)(3).[27]

Bernath has not made a prima facie showing that personal jurisdiction over Penzer is appropriate under the third prong of New York's long-arm statute, C.P.L.R. § 302(a)(3).[28]

CONCLUSION

For the reasons set forth above, Penzer's motion to dismiss (Dkt. No. 8) is

Page 666

GRANTED and the case is dismissed without prejudice.

SO ORDERED.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.