United States District Court, S.D. New York
LINDA S. NEWMAN, Plaintiff,
CAPITOL LIFE INSURANCE COMPANY, Defendant
For Linda S. Newman, Plaintiff: Edward S. Stone, LEAD ATTORNEY, Edward S. Stone, Esq, New York, NY.
For The Capitol Life Insurance Company, Defendant: Mitchell Madden, LEAD ATTORNEY, The Law Offices of Mitchell Madden, Dallas, TX; Gregory Paul Vidler, Guzov Ofsink, New York, NY.
JED S. RAKOFF, UNITED STATES DISTRICT JUDGE.
Plaintiff Linda S. Newman, a resident of New York City, brought this suit against defendant Capitol Life Insurance Company (" Capitol Life" ), a Texas Corporation, for breach of contract, conversion, unjust enrichment, and breach of the implied covenant of good faith and fair dealing. Amended Complaint dated June 30, 2014 (" Amended Compl." ) ¶ ¶ 20-39. She alleges that in 1978, she purchased a retirement annuity issued by Capitol Life and serviced by Security First Life Insurance Company (" Security First" ) under a group contract from the now-defunct securities brokerage firm Shearson Hayden Stone (" Shearson" ), but has been unable to collect her annuity payments. Id. ¶ ¶ 9-11, 16-19. Capitol Life moved to dismiss the Amended Complaint for lack of personal jurisdiction and, with respect to the second, third, and fourth causes of action and demand for punitive damages, for failure to state a claim upon which relief may be granted. On August 29, 2014, after full briefing and oral argument, this Court issued a " bottom-line" Order granting defendant's motion to dismiss for lack of personal jurisdiction (without prejudice to re-filing in another jurisdiction). See Order, August 29, 2014. This Memorandum Order sets forth the reasons for that ruling.
The relevant factual allegations are as follows. Newman alleges that, at the time she purchased the annuity, she resided in New York City and maintained a brokerage account at Shearson, at which her primary contact was Mr. William Haber. Amended Compl. ¶ ¶ 5-6. Haber discussed the annuity purchase with her over the phone from her New York apartment and met with her at his New York office. Id. ¶ ¶ 6, 8. Following these discussions, Newman purchased an annuity under a Shearson group contract, which provided for minimum guaranteed payments of $545,556 in exchange for a one-time premium payment of $50,000. Id. ¶ ¶ 9-10. Sometime thereafter, she picked up the Annuity Certificate at Shearson's New York office, where it had been mailed by the servicer, Security First, to another Shearson broker, Mr. Lawrence Marcus. Id. ¶ 12.
Thus, according to Newman, the transaction was solicited, negotiated, and completed in New York City. Despite these allegations, however, the " Enrollment Form and Statement of Participant" attached to the Amended Complaint lists a New Jersey post office box as the annuitant's
address and indicates that it was executed in Millburn, New Jersey. See Amended Compl. ¶ 7 & Ex. A. The Enrollment Form is countersigned by Marcus. Id.
On defendant's jurisdictional motion, however, the Court can consider facts outside the pleadings. See Yellow Page Solutions, Inc. v. Bell A. Yellow Pages Co., 00 CIV. 5663, 2001 WL 1468168, at *1 (S.D.N.Y. Nov. 19, 2001). Capitol Life has adduced evidence that it is not and has never been licensed to do business in the State of New York, does not market or sell annuity contracts in New York or to New York residents, and has no office, employees, bank accounts, or property in New York. Declaration of Chad Alan Leiding dated June 12, 2014, ¶ 3-4. It does acknowledge that, around 1978, Marcus sold Capitol Life annuity products of the type Newman allegedly purchased in neighboring states, but avers that, to its knowledge, he never did so in New York. Second Declaration of Dan Carpenter dated July 16, 2014, ¶ ¶ 4-5; Declaration of Lawrence D. Marcus dated June 11, 2014, ¶ 4.
Newman has the burden to make a prima facie showing that jurisdiction exists by " pleading good faith allegations sufficient to establish jurisdiction." Capitol Records, LLC v. VideoEgg, Inc., 611 F.Supp.2d 349, 357 (S.D.N.Y. 2009). It is true that, absent an evidentiary hearing, pleadings and affidavits are construed " 'in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor, notwithstanding a controverting presentation by the moving party.'" Ross v. UKI Ltd., 02 Civ. 9297, 2004 WL 384885, at *3 (S.D.N.Y. Mar. 1, 2004) (quoting A.I. Trade Fin. Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993)). However, the Court is " 'not bound to accept as true a legal conclusion couched as a factual allegation.'" Jazini v. Nissan Motor Co., 148 F.3d 181, 185 (2d Cir. 1998) (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)).
In federal diversity cases such as this one, personal jurisdiction is governed by the law of the state in which the district court sits. Id. at 183-84. Newman asserts that the Court has personal jurisdiction over Capitol Life under two provisions of New York law. First, she invokes New York's long-arm statute, which provides: " 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 ... transacts any business within the state." N.Y. C.P.L.R. § 302(a)(1). To determine the existence of jurisdiction under this subsection, the Court must decide " (1) whether the defendant 'transacts any business' in New York and, if so, (2) whether this cause of action 'aris[es] from' such a business transaction." Best Van Lines, Inc. v. Walker, 490 F.3d 239, 246 (2d Cir. 2007) (internal citation omitted). Under the first prong, the Court looks to the " 'totality of the defendant's activities within the forum'" to determine whether it has engaged in " 'purposeful activity'" there. Id. (internal citations omitted). Under the second prong, the Court inquires whether there is " an articulable nexus, or a substantial relationship, between the claim asserted and the actions that occurred in New York." Id. (internal citation omitted).
Second, Newman alternatively relies on provisions of the New York Insurance Law that extend long-arm jurisdiction to non-resident insurers that engage in any of the following acts within New York, " effected by mail or otherwise" : " (A) the issuance or delivery of contracts of insurance to residents of this ...