United States District Court, S.D. New York
OPINION & ORDER
PAUL A. CROTTY, District Judge.
Plaintiff Alzal Corporation ("Alzal") brings this action against Defendants Cinemacar II Inc., Cinemacar Leasing Inc. (collectively, "Cinemacar"), and Guy Carnazza ("Carnazza") (collectively, "Defendants"), the principal shareholder in Cinemacar, for breach of contract, unjust enrichment, and conversion. Attached to the complaint is a contract, dated September 12, 2011 (the "Contract"), between Cinemacar and Alzal which provides a New York forum selection clause. Lambros Motitis ("Motitis"), an independent contractor at Cinemacar, signed the Contract purportedly on behalf of Cinemacar. Carnazza was neither a party to nor mentioned in the Contract.
Defendants move to dismiss for lack of personal jurisdiction or, alternatively, improper venue, claiming that Motitis was not authorized to sign the Contract and that Defendants lack sufficient contacts in New York. As Plaintiff's counsel stated, "there are so many contradictory submissions on both sides, the Court needs to see the overall picture to figure out who is lying and who is telling the truth." See Plaintiff's Memorandum of Law in Opposition to Motion to Dismiss ("Pl.'s Br.") at 4. The Court held an evidentiary hearing on March 3, 2014. For the reasons stated on the record at the close of the hearing, Defendants' motion is GRANTED, in part, and DENIED, in part. The Court dismisses the claims against Carnazza, without prejudice, and transfers the case to the District Court of New Jersey for further proceedings.
In or around April, 2011, Carnazza, Igdalev, and Moscatello discussed entering into a business arrangement for the sale of used cars. Moscatello would locate the used cars; Igdalev, acting on behalf of Alzal, would provide the funding for purchasing the cars; and Carnazza would place the cars for resale on Cinemacar's lot in Westwood, New Jersey. During June or July of 2011, Carnazza hired Motitis, as an independent contractor, to arrange financing for Cinemacar's customers. At various times during the summer, the four men met to discuss the business arrangement at Cinemacar and restaurants in New Jersey. The parties verbally agreed to split the profits equally, or 25% for each party. Igdalev and Motitis worked out of the second floor of Cinemacar's office. When a car was purchased, Igdalev generally gave the title to Cinemacar in exchange for Alzal's portion of the sale.
On September 12, 2011, Igdalev and Motitis signed a contract that purported to bind Alzal and Cinemacar. The Contract provides for the following:
Cinemacar will pay Alzal 25% of their profit (the difference between Alzal's purchase price of the vehicle and the amount paid by the customer/purchaser plus any sums earned through financing or leasing the vehicle[)] within 30 days from the date that the vehicle is sold. If Cinemacar fails to pay Alzal the amount that is due from a sold vehicle in addition to Alzal's cost for any reason, the amount owed to Azal will be Alzal's cost plus $10, 000.00 as liquidated damages.
Pl.'s Hr'g Ex. 2, ¶ 3. The Contract also provides Alzal with 25% profit share of "vehicles for sale that are not owned or provided by Alzal during any period that Cinemacar is also in possession of vehicles owned or provided by Alzal." Id. ¶ 6. The Contract further provides that any dispute between Alzal and Cinemacar over the Contract be litigated in New York, id. ¶ 9, and that Cinemacar pay Alzal's costs and attorney's fees if Alzal initiates litigation, id. ¶ 10. Igdalev and Motitis signed the Contract in front of a notary public, and the Contract lists Motitis as "Finance Director" at Cinemacar. On or about November 18, 2011, Igdalev was removed from Cinemacar's office and the parties ceased operating under the terms of the agreement.
II. Procedural History
On November 13, 2012, Azal filed its complaint against Defendants, alleging that Defendants breached the September 12, 2011 contract. On February 15, 2013, Defendants moved to dismiss for lack of personal jurisdiction or improper venue. After reviewing the submissions, the Court concluded that there was a genuine dispute over personal jurisdiction and directed the parties to engage in discovery relating to jurisdiction and venue issues. See Order, ECF No. 23. On July 26, 2013, after discovery was completed, Defendants renewed their motion to dismiss. The question of personal jurisdiction hinged on credibility, and the Court therefore requested an evidentiary hearing. Specifically, the parties were to address the following issues: (1) whether Motitis had authority to sign the Contract on behalf of Cinemacar, and (2) whether any negotiations occurred in New York. On February 25, 2014, the Court entered an order describing the legal standard and disputed issues. See Order, ECF No. 49.
On March 3, 2014, the Court held the evidentiary hearing. James A. Moscatello ("Moscatello"), Richard Leibowitz ("Leibowitz"), Motitis, and Ilya Igdalev ("Igdalev") testified on behalf of Plaintiff. At the close of Plaintiff's evidence, Defendants moved for a determination that Plaintiff failed to establish by a preponderance of the evidence that there was personal jurisdiction. Ruling from the bench, the Court held that Motitis lacked the authority to sign the Contract and therefore personal jurisdiction could not be established based on the forum selection clause in the written agreement of September 12, 2011. The Court also held that Plaintiff failed to establish that Cinemacar or Carnazza had sufficient contacts in New York to subject them to personal jurisdiction. The Court stated its intention to transfer the case to the District of New Jersey, dismiss Carnazza from the case, and enter a short order to that effect.
I. Legal ...