United States District Court, S.D. New York
a breach of contract action involving finance leases for IT
equipment and services extended by non-party All Points
Solutions, Inc. d/b/a 3i International ("3i") to
Neighbors Global Holdings, LLC ("Neighbors
Global"), NEC Lufkin Emergency Center, LP
("Lufkin"), NEC Greeley Emergency Center, LP
("Greeley"), NEC West Warwick Emergency Center, LP
("West Warwick"), NEC Lubbock Emergency Center, LP
(“Lubbock"), Neighbors Legacy Holdings, Inc.
("Legacy Holdings"), Neighbors Health, LLC
("Neighbors Health"), and NEC Bellaire Emergency
Center, LP ("Bellaire") (collectively,
"defendants" or "Neighbors").
Signature Financial LLC ("Signature") - an assignee
of 3i - brings a fifteen-count complaint arising from
defendants' non-payment of rent. See Dkt. 1, Ex.
on September 6, 2017, moved to dismiss plaintiff's
complaint for lack of personal jurisdiction in New York and,
in the alternative, to transfer venue to the Southern
District of Texas pursuant to 28 U.S.C. § 1404. See Dkt.
12. Upon due consideration, by bottom-line Order dated
October 29, the Court denied defendants' motion in its
entirety. See Dkt. 24. This Opinion sets forth the
reasons for that ruling.
pertinent allegations are as follows:
a wholly-owned subsidiary of Signature Bank, a New
York-chartered bank, is a New York limited liability company
with its principal place of business in New York.
See Affidavit in Opposition of David McGowan
("McGowan Affidavit") ¶ 2, Dkt. 16.
Holdings is a Texas corporation with its principal place of
business in Texas and is wholly-owned by nine non-party
physicians who are residents of Texas. See Affidavit
of Francine A. Elliot in Support of Defendants' Motion to
Dismiss or Transfer ("Elliot Affidavit") ¶ 5,
Global is a Delaware limited liability company with its
principal place of business in Texas. Id. ¶ 4.
Neighbors Global is a wholly-owned subsidiary of Legacy
Holdings. Id. Neighbors Global owns Neighbors
Health, a Texas limited liability company with its principal
place of business in Texas. Id. ¶ 7. Lufkin,
Greeley, West Warwick, Lubbock, and Bellaire are all Texas
limited liability companies with their principal places of
business in Texas. Id. ¶ 6. They are each 99%
owned by non-party Neighbors GP, LLC, a Texas limited
liability company, and 1% owned by non-party NHS Emergency
Centers, LLC, a Texas limited liability company, both of
which are owned by Neighbors Health. Id. ¶ 6.
Health and its parent companies collectively own and operate
over thirty free-standing emergency medical centers in Texas,
Rhode Island, and Colorado. See id. Ex. A, ¶
about September 14, 2015, Neighbors Health entered into a
Master Equipment Lease Agreement ("Master Lease
960") with 3i, see Compl. ¶ 76, a Texas corporation
with its principal place of business in Texas, see
Elliot Affidavit ¶ 10. Pursuant to the terms of Master
Lease 960, 3i leased to Neighbors Health (via separate
Equipment Schedules) computers, servers, routers, copiers,
and other IT equipment. See Compl. ¶ 76.
Lease 960 was amended on November 6, 2015 to name Legacy
Holdings as lessee and Neighbors Health as co-lessee.
See McGowan Affidavit ¶¶ 15-16.
2016, pursuant to the terms of Master Lease 960, Legacy
Holdings and Neighbors Health executed Equipment Schedule
41343964 with 3i, naming Bellaire as a co-lessee.
Id. ¶ 18; id. Ex. J.
about July 15, 2016, Neighbors Global entered into a Master
Equipment Lease Agreement with 3i ("Master Lease
501"), identical in all relevant respects to Master
Lease 960. Id. ¶ 4. In September 2016,
Neighbors Global executed four Equipment Schedules with 3i,
one each with co-lessees Lufkin, Greeley, West Warwick, and
Lubbock (Equipment Schedules 41413430, 41421639, 41421644,
and 41421656, respectively). IcL ¶¶ 6-9;
id. Exs. B-E.
Leases 501 and 960 (the "Leases") each provide
that: "IF THE LESSOR OR ITS ASSIGNEE SHALL COMMENCE ANY
JUDICIAL PROCEEDING IN RELATION TO ANY MATTER ARISING UNDER A
LEASE, LESSEE, IRREVOCABLY AGREES THAT ANY SUCH MATTER MAY BE
ADJUDGED OR DETERMINED IN ANY COURT OR COURTS IN THE STATE OF
LESSOR'S OR ITS ASSIGNEE'S PRINCIPAL PLACE OF
BUSINESS, OR ANY COURT OR COURTS IN THE LESSEE'S STATE OF
RESIDENCE, OR IN ANY OTHER COURT HAVING JURSIDICTION OVER THE
LESSEE OR THE LESSEE'S ASSETS, ALL AT THE SOLE DISCRETION
OF THE LESSOR. LESSEE HEREBY IRREVOCABLY SUBMITS GENERALLY
AND UNCONDITIONALLY TO THE JURSIDICTION OF ANY SUCH COURT SO
ELECTED BY LESSOR IN RELATION TO SUCH MATTERS." McGowan
Affidavit, Exs. A, I (hereinafter, the "Lease")
Leases further include choice of law clauses, specifying New
Jersey law, Lease ¶ 25, and provide that
"Lessee's obligations to pay Rent in full when due
are absolute and unconditional and shall not be subject to
any abatement, reduction, set off, counterclaim, recoupment,
defense or other right which Lessee may have or assert
against Lessor, the supplier of the Equipment or any other
person or entity, " id. ¶ 4. Additionally,
the Leases contain assignment clauses stating: "Lessor
may, without notifying the Lessee, sell, assign, or transfer
this Lease and Lessor's rights to the Equipment. Lessee
agrees that the new owner will have the same rights and
benefits that Lessor has now under this Lease but not
Lessor's obligations." Id. ¶ 21.
or about July 20, 2015, assigned to non-party Everbank
Commercial Finance, Inc. ("Everbank") its rights
and remedies in and to Master Lease 960 and Master Lease 501,
as well as in and to Equipment Schedules 41343964, 41413430,
41421639, 41421644, and 41421656 ("the Equipment
Schedules"). See McGowan Affidavit ¶¶ 10, 19;
id. Ex. F.
pursuant to a Master Assignment Agreement by and between
Everbank and Signature dated May 23, 2012, Everbank, on July
7, 2016, assigned to Signature its rights and remedies under
Equipment Schedule 41343964 and, on October 13, 2016,
Everbank further assigned its rights and remedies under
Equipment Schedules 41413430, 41421639, 41421644, and
41421656. Id. ¶¶ 11, 20; id. Exs.
G-H; see also Compl. ¶¶ 25, 39, 53, 67,
around March 2017, Neighbors stopped making payments due
under the Schedules. See Compl. ¶¶ 22, 40, 54, 68,
On July 7, Signature commenced the instant action for
non-payment of rent in New York state court, and on August
11, Neighbors removed the case to this Court. See
Notice of Removal, Dkt. 1.
now move to dismiss plaintiff's complaint for lack of
personal jurisdiction and, in the alternative, to transfer
venue to the Southern District of Texas. See Dkt.
its burden to demonstrate personal jurisdiction over
Neighbors in New York, see Penguin Grp. (USA) Inc. v. Am.
Buddha, 609 F.3d 30, 34 (2d Cir. 2010), Signature
invokes Paragraph 25 of the Leases. As mentioned earlier,
Paragraph 25 states, in relevant part, that "[i]f the
lessor or its assignee shall commence any judicial proceeding
in relation" to the lease, the "lessee irrevocably
agrees that any such matter may be adjudged or
determined" in, inter alia, "any court or
courts in the state of lessor's or its assignee's
principal place of business[.]" Paragraph 25 further
provides that the "lessee hereby irrevocably submits
generally and unconditionally to the jurisdiction of any such
court so elected by lessor." Lease ¶ 25.
does not argue that this Court could or should find personal
jurisdiction over defendants in New York in the absence of
Paragraph 25. See, e.g., Dkts. 18, 20, 22. Signature
does not invoke New York's long-arm statute or argue that
defendants have purposefully availed themselves of the
privilege of doing business in New York. Signature does not
contend that defendants have sufficient "minimum
contacts" with New York such that the "maintenance
of the suit does not offend traditional notions of fair play
and substantial justice, " or that defendants have any
contacts with New York at all. Int'l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945). Indeed, there
appears to be no relationship between defendants and the
state of New York aside from the fact that lessor's
rights under the Leases (which defendants signed) were
assigned to Signature and Signature is based in New
York.See Compl. ¶ 1. Thus, the
maintenance of this suit in New York turns entirely on the
enforceability of Paragraph 25.
threshold matter, defendants contest the applicability of the
Lease terms to the instant dispute. See Defendants'
Memorandum of Law in Support of Motion to Dismiss
Plaintiff's Complaint For Lack of Personal Jurisdiction,
or in the Alternative, to Transfer Venue ("Def.
Mem.") 14, Dkt. 13. Although defendants concede that
they signed the Leases and that this suit arises out of their
non-payment of rent, they argue that only the Equipment
Schedules, and not the Master Leases, have been assigned to
this may be true, the Schedules expressly incorporate the
terms and conditions of the Leases. See McGowan
Affidavit, Exs. B, C, D, E, and J ("All the terms and
conditions of the Master Lease are incorporated herein and
made a part hereof."). Thus Paragraph 25 plainly applies
to suits arising under the Schedules.
further contend that Paragraph 25 applies only "at the
sole discretion of the Lessor" - in other words, at the
sole discretion of 3i. See Def. Mem. 14. But this
argument also fails. The Lease clearly provides that 3i has
the right to assign the Schedules and that, upon assignment,
"the new owner will have the same rights and
benefits" as 3i. Lease ¶ 21. Thus, Everbank
obtained all of 3i's rights when 3i assigned the Leases
and Schedules to ...