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Duff & Phelps Securities, LLC v. Wisniewski

United States District Court, S.D. New York

July 5, 2017


          OPINION & ORDER

          VALERIE CAPRONI, United States District Judge

         Plaintiff Duff & Phelps Securities LLC (“D&P”), a New York investment bank, has sued Defendants Patricia and Raymond Wisniewski (collectively, the “Wisniewskis” or “Defendants”), New Jersey residents, for breach of contract. Compl. ¶¶ 1-3, 52-58.[1] The Wisniewskis move to dismiss for lack of personal jurisdiction, arguing that they never entered or purposefully directed any activities towards New York in connection with the disputed contract. Dkt. 15. For the following reasons, the Court holds that it lacks personal jurisdiction over the Defendants and therefore TRANSFERS this case to the District of New Jersey.

         BACKGROUND [2]

         In Fall 2015, the Wisniewskis sought to sell Ms. Wisniewski's thirty percent ownership interest, or acquire additional ownership interest, in National Retail Systems, Inc. (“NRS”), a New Jersey company. Patricia Decl. ¶¶ 2, 5; Raymond Decl. ¶¶ 2, 5; Usatine Decl. ¶ 2. The Wisniewskis' attorney, Warren Usatine of the law firm Cole Schotz, contacted various investment banks, including D&P. Usatine Decl. ¶ 3. In advance of a meeting at Cole Schotz's New Jersey office, Usatine Decl. ¶ 4, D&P sent Usatine an overview of D&P's qualifications and biographies of its employees, all of whom were disclosed as working in D&P's New York office. Melzer Decl. ¶ 5. D&P also prepared a non-disclosure agreement for NRS' confidential information, which D&P and NRS executed, and a fee proposal for D&P's services, which the Wisniewskis declined to accept. Melzer Decl. ¶¶ 6-8.

         Five months later, Usatine again contacted D&P to renew discussions about a potential engagement by the Wisniewskis. Usatine Decl. ¶ 8; Melzer Decl. ¶ 9. D&P submitted a revised proposal, which D&P converted into an engagement letter (“Agreement”) at Usatine's request. Melzer Decl. ¶¶ 9-13; Compl. ¶¶ 17-19. Defendants do not dispute that D&P drafted and prepared these documents in New York.

         Pursuant to the Agreement, the Wisniewskis agreed to retain D&P “to act as their exclusive financial advisor in connection with the potential sale of their interest in NRS.” Compl. ¶ 23 (quoting Compl. Ex. A (hereafter, “Agreement”) ¶ 1). The Agreement was divided into two phases: during Phase 1, D&P would advise on an auction process for the potential sale; in Phase 2, D&P would provide specified services related to the sale. Compl. ¶¶ 26-27 (citing Agreement ¶¶ 1, 2). The initial term of the Agreement was six months, after which the Agreement was automatically extended on a month-to-month basis, absent thirty days written notice of termination by either party. Compl. ¶ 25 (citing Agreement ¶ 13). In March 2016, the parties executed the Agreement-D&P from New York and the Wisniewskis from New Jersey. Compl. ¶¶ 21-22; Patricia Decl. ¶ 7; Raymond Decl. ¶ 7.

         In connection with Phase 1, D&P prepared a proposed auction process for the potential sale transaction. Melzer Decl. ¶¶ 18-21. D&P met with Mr. Wisniewski and Cole Schotz attorneys in New Jersey to discuss and finalize the auction process proposal. Melzer Decl. ¶ 20. D&P provided additional advice on the auction process through conference calls with the Wisniewskis and Cole Schotz. Melzer Decl. ¶ 21. Defendants do not dispute that, aside from its attendance at the New Jersey meeting, D&P performed all of its work in New York.

         In May 2016, the Wisniewskis abandoned the auction process. Compl. ¶ 42. Plaintiff alleges that the Wisniewskis violated the Agreement by continuing negotiations to sell their interest in NRS without informing D&P. Compl. ¶ 46. Plaintiff further alleges that the Wisniewskis sold their NRS ownership interest in August 2016 and that D&P is entitled to a transaction fee of at least $750, 000 under the Agreement. Compl. ¶¶ 48-51.

         Defendants move to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2), arguing that New York's long-arm statute does not support the exercise of personal jurisdiction over Defendants. Plaintiff argues that Defendants' deliberate engagement of a New York firm subjects them to personal jurisdiction in New York. For the following reasons, the Court agrees with Defendants and TRANSFERS this case to the District of New Jersey pursuant to 28 U.S.C. § 1631.


         “‘Prior to trial, [] when a motion to dismiss for lack of jurisdiction is decided on the basis of affidavits and other written materials, the plaintiff need only make a prima facie showing.'” MacDermid, Inc. v. Deiter, 702 F.3d 725, 727 (2d Cir. 2012) (quoting Seetransport Wiking Trader Schiffarhtsgesellschaft MBH & Co., Kommanditgesellschaft v. Navimpex Centrala Navala, 989 F.2d 572, 580 (2d Cir. 1993)). “With exceptions not relevant here, a district court sitting in a diversity action such as this may exercise personal jurisdiction to the same extent as the courts of general jurisdiction of the state in which it sits.” Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 124 (2d Cir. 2002) (citing Fed.R.Civ.P. 4(k)(1)(A)). Accordingly, the Court engages in a familiar two-step analysis, first determining whether plaintiffs have made a prima facie showing that defendants would be subject to personal jurisdiction under the laws of the forum state and then determining whether this exercise of jurisdiction would comport with the Due Process Clause of the Fourteenth Amendment. Id.

         “There are two types of personal jurisdiction: specific and general.” Sonera Holding B.V. v. Çukurova Holding A. §., 750 F.3d 221, 225 (2d Cir. 2014) (per curiam). Plaintiff here does not allege general personal jurisdiction but asserts that the Court has jurisdiction pursuant to N.Y. C.P.L.R. § 302(a)(1). That statute confers personal jurisdiction “over any non-domiciliary . . . who in person or through an agent[] transacts any business within the state or contracts anywhere to supply goods or services in the state.” N.Y. C.P.L.R. § 302(a)(1). Jurisdiction under section 302(a)(1) may be “proper ‘even though the defendant[s] never enter[] New York, so long as the defendant[s'] activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted.'” Fischbarg v. Doucet, 880 N.E.2d 22, 26 (N.Y. 2007) (quoting Deutsche Bank Sec, Inc. v. Mont. Bd. of Invs., 850 N.E.2d 1140, 1142 (N.Y. 2006)). No single event connecting a defendant to the forum state is dispositive. CutCo Indus. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986). The Court must consider the totality of the defendant's contacts with the forum state to determine whether jurisdiction is proper. Id. Although this “is an objective inquiry, it always requires a court to closely examine the defendant[s'] contacts for their quality.” Licci v. Lebanese Canadian Bank, 984 N.E.2d 893, 899-900 (N.Y. 2012).

         In evaluating a claim of personal jurisdiction under C.P.L.R. 302(a)(1), courts consider the so-called Agency Rent a Car factors: (i) does the defendant have an ongoing contractual relationship with a New York person or entity; (ii) was the contract at issue negotiated or executed in New York, and did the defendant visit New York for the purpose of meeting with parties to the contract regarding the relationship, after the contract was executed; (iii) is there a choice-of-law clause in the contract; and (iv) does the contract require the defendant to send notices and payments into New York or subject the defendant to supervision in New York. Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 29 (2d Cir. 1996); Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22-23 (2d Cir. 2004) (same). “Although all factors are relevant, no one factor is dispositive and other factors may be considered.” Sunward, 362 F.3d at 23. Ultimately, the existence vel non of personal jurisdiction is based on the totality of the circumstances. Id.

         Ongoing ...

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