Mc Laughlin v Walker
Annotate this CaseDecided on June 6, 2005
Supreme Court, New York County
MARY UNDERHILL MC LAUGHLIN formerly known as MARY NORTON, Plaintiff,
against
JULIE WALKER, Defendant.
120344/02
Attorneys for Plaintiff:Morton Newburgh, Esq.
Silverstein, Langer, Newburgh & McElyea, LLP
500 Fifth Avenue Suite 1610
New York, NY 10110
(212) 302-5101
Attorneys for Defendant:Howard Karasik, Esq.
Sherman, Citron & Karasik, P.C.
152 West 57th Street
New York, NY 10019
(212) 582-7800
Louis B. York, J.
Defendant moves inter alia to dismiss for lack of jurisdiction on the ground that neither long-arm out-of-state service on defendant nor personal service in the state conferred jurisdiction on the defendant. Plaintiff cross-moves to compel compliance with disclosure demands. The Court has previously determined that service of process in the state was unsuccessful in obtaining jurisdiction. Left for decision is whether service on defendant in Rhode Island satisfied this Court's long-arm statute. Defendant also moves for dismissal on the ground that plaintiff has failed to assert a cause of action, failure to join a necessary party and forum non-conveniens.
Plaintiff is the former wife of Roy Norton. Defendant is his current wife. This is an action seeking to recover to enforce a Judgment of Dissolution of Marriage between defendant and Roy Norton of the Superior Court of Connecticut, which was entered in this court as a foreign judgment. Due to Norton's failure to pay arrears summary judgment on the foreign judgment has been entered in this court for $158,900.00.
In this action plaintiff alleges that a series of collusive arrangements between plaintiff and defendant, and their movement from state to state, has had the effect of fraudulently depriving the defendant of her alimony payments
Plaintiff is between 54 and 55 years old. Her motion papers state that she is holding down three jobs and has no retirement or savings accounts, having been a homemaker throughout her marriage of 23 years. She and her husband raised five children. She alleges that the Nortons take her children on all-expense vacations, live in a house on the beach in Newport Rhode Island and drive a BMW. At the end of their marriage, Norton had transferred assets to her which caused her to be investigated by the F.B.I. and to file for bankruptcy. Plaintiff's counsel has alleged that this pattern of transferring assets to avoid judgment creditors continues to be used by Norton. [*2]
In her deposition in Roy Norton's companion action, defendant testified that she and Roy Norton were shareholders and officers in several companies together, including Trade Resources International Limited in Bermuda where they also had a condominium. The corporation which was financed by a private offering plan was put together by the law firm of Dewey Ballantine. Defendant was in charge of marketing and Roy Norton was the president. Currently, they are in a venture called Finance Matrix. Roy Norton, she testified, is a consultant and money raiser. She is a shareholder. Finance Matrix is located at 180 Varick Street in Manhattan. The records are in storage, which they don't have access to because they have not paid the storage
company. They also owed money to their landlord in New York, who brought an eviction proceeding against them. They owe about $5,500 on their credit cards. Norton also has an outstanding judgment against him of $142,699 in favor of a law firm in Minnesota. There was also a deposit in defendant's and Norton's joint count of $87,000. There were also checks that came into the Finance Matrix account that went into the joint account and then was moved to defendant's account (Tr. Pp 46-47). Norton is a member of the New York Yacht Club, paying dues of about $1,500 a year.
Finance Matrix, located at 180 Varick Street in New York City, along with Trade Resources, which is no longer in existence, have been recently their sole source of income. Trade Resources also appears to have had offices located in New York. Plaintiff has stated that documents relating to Finance Matrix are stored in New York and they cannot retrieve them because of non-payment of their bill. Defendant was a resident of New York when plaintiff alleges that in conjunction with her activities with Finance Matrix and Roy Norton she committed many of the acts complained of.
The portion of the motion to dismiss because of lack of proper service of process in New York has already been decided in defendant's favor in a referee's hearing, the report of which has been confirmed. Defendant also contends that there can be no long-arm jurisdiction because the complaint does not allege it. She then goes on to state that she has not personally done business in New York.
Defendant argues that the complaint does not allege that she has done business in the state in her personal capacity, nor committed a tort in the state, nor benefitted from the activities that caused her to derive substantial benefits in New York, possessed real property in New York or committed any tortuous act in New York. She then goes on to describe in great detail the accounts she maintains with Roy Norton and how the alleged tortuous acts of conversion and concealment, if they occurred at all, occurred outside the state of New York.
Although the plaintiff may have omitted certain allegations from the complaint, such omissions may be cured by an affidavit in opposition to a motion for summary judgment (Auto Body Federation of the Empire State, Inc. v Albert Lewis, 80 AD2d 593 [2d Dept 1981]). Plaintiff has accomplished this by the extensive arguments raised in her papers. She [*3]has alleged acts and transactions which have occurred in New York via activities that defendant carried out in New York for New York based corporations. In support of the allegations she alleges that in New York, money was transferred from here to banks in sister jurisdictions in support of a fraudulent scheme to avoid Roy Norton's paying his creditors, including plaintiff. Much of this is illustrated, she claims, by their skipping from residencies in Connecticut, New York, Florida and Rhode Island.
Defendant may not hide behind the shield of the corporation for which she claims she has been working. Those acts may be construed as supporting Roy Norton's scheme to avoid
paying the plaintiff alimony she is entitled to. Defendant argues that her acts in behalf of the corporation are protected by the so-called fiduciary shield insulating a corporate agent from liability when he/she is acting in behalf of corporate interests. But that is a creation primarily of the federal courts, (See, e.g. United States v Montreal Trust Co., 358 F2d 239 [2d Cir cert den 384 US 919]) and has been rejected in the First Dept. (Hasbro Bradley v Coopers and Lybrand, 121 AD2d 870 [1st Dept.1986]). Defendant's reference to Laufer v Ostrow, 55 NY2d 305 [1982] is misplaced. That case was decided on CPLR 301 grounds which does not invoke our long-arm statute, CPLR 302(a), is the basis on which jurisdiction is being decided by this Court. To the extent that the Laufer Court may have commented on jurisdiction under CPLR 302(a), the Court of Appeals, in rejecting the fiduciary shield doctrine outright, stated:
The Laufer Court did note that the individual defendant was not subject to long-arm jurisdiction under CPLR 302. This was not because he was protected by the fiduciary shield, however, but because the claim was for a conversion which took place outside the State and no New York injury resulting from the defendant's tortious conduct was alleged. Kreutter v McFadden Oil Corp., 71 NY2d 460, 470 [1988]
In this case, the pleadings and affidavits may establish, that a corporation with offices in New York was used by the defendant, while in New York, to deprive the plaintiff of monies that should have been paid to her. That would establish, if true, that a conversion and fraudulent transaction with respect to defendant had occurred, at least in part, in New York. New York's long-arm statute "authorizes the Court to exercise jurisdiction over non-
domiciliaries for tort and contract claims arising from a defendant's transaction of business in this state. It is a single-act statute and proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York ..."(Kreutter 71NY2d at 467). The Court concludes that the plaintiff has successfully pleaded facts sufficient to deny the motion to dismiss.
The Court notes that the myriad of residences that the defendant and Roy Norton have occupied, coupled with various corporate transactions and deposits and withdrawals from [*4]various corporate and individual bank accounts, makes it extremely difficult to follow the facts and the money. Leniency in determining jurisdictional issues is mandated at this early stage of discovery. And while the portion of the motion to dismiss on the pleadings is denied, the Court denies the balance of the motion for summary judgment dismissal for lack of long-arm jurisdiction, as well as the balance of the motion to dismiss the complaint's causes of action, with leave to renew at the conclusion of discovery.
When discovery is completed, and the facts are fully developed, at least as much as is possible, the defendant may renew the undecided portions of her motion.
This leads us right into plaintiff's cross motion for compliance with its discovery demands. Plaintiff's disclosure requests, which are in abeyance, are to be responded to. Accordingly, it is
ORDERED that defendant's motion to dismiss the complaint is denied insofar as it is addressed to the pleading and the balance of the motion is denied with leave to renew at the conclusion of discovery; and it is further
ORDERED that the cross-motion is granted to the extent of requiring defendant to comply with the demands contained in Exhibit G appended to the cross-motion within thirty (30) days of the service of a copy of this decision with Notice of Entry; and it is further
ORDERED that the Clerk of the Part is directed to schedule a preliminary conference/status conference in IAS Part 2.
Dated: June 6, 2005Enter:
_______________________
Louis B. York, J.S.C.
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