Bluman v Labock Tech., Inc.

[*1] Bluman v Labock Tech., Inc. 2006 NY Slip Op 52335(U) [13 Misc 3d 1244(A)] Decided on December 5, 2006 Supreme Court, New York County Ling-Cohan, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 5, 2006
Supreme Court, New York County

Martin Bluman, Plaintiff,

against

Labock Technologies, Inc., Defendant.



600505/06

Doris Ling-Cohan, J.

Upon the foregoing papers, it is ordered that this motion is granted and the cross motion is denied, for the reasons set forth below.

Background

Plaintiff, a Florida resident [FN1], brings this action against defendant Labock Technologies, Inc. (Labock), a Florida corporation with its principal place of business located in Florida, for breach of contract, specific performance and unjust enrichment. The gravamen of the complaint is defendant's alleged failure to compensate plaintiff for his efforts to secure financing for its business, pursuant to an agreement negotiated between the two parties in or about October and November 2003. The agreement states that it is to be governed by the laws of the State of Florida (Aff. of John M. Quaranta, Esq. in Support of Motion [Quaranta Aff.], Ex. B).

Defendant moves, pursuant to CPLR 3211 (a) (8), for an order dismissing the complaint for lack of personal jurisdiction, or, in the alternative, dismissing the complaint, pursuant to [*2]CPLR 327 (a), on the grounds of forum non conveniens. Plaintiff cross-moves, pursuant to CPLR 3211 (d), for discovery on the issue of personal jurisdiction.

Discussion

1. Defendant's Motion to Dismiss the Complaint for Lack of Personal Jurisdiction

Defendant moves to dismiss the complaint, asserting that there is no personal jurisdiction pursuant to either CPLR 301 or CPLR 302, New York's long-arm statute. The general standard for personal jurisdiction over a foreign corporation, like defendant, requires "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice" (International Shoe Co. v State of Washington, Office of Unemployment Compensation and Placement, 326 U.S. 310, 316 [1945] [parenthetical supplied]; World-Wide Volkswagen Corp. v Woodson, 444 U.S. 286, 291-292 [1980]). A foreign corporation is "present" within this state, for the purpose of jurisdiction pursuant to CPLR 301, "if it is engaged in such a continuous and systematic course of doing business' here that a finding of its presence' in this jurisdiction is warranted" (Landoil Resources Corp. v Alexander & Alexander Servs. Corp., 77 NY2d 28, 33 [1980]; see also Bryant v Finnish Natl. Airline, 15 NY2d 426, 430 [1965]). The complaint does not allege that defendant engaged in a continuous and systematic course of doing business within New York. Indeed, the complaint contains no allegations concerning the business activities conducted by defendant within New York (Quaranta Aff., Ex. A). Defendant's General Counsel states that the corporation does not have an office or employees within New York State, nor does it own property or sell any products in this state (Quaranta Aff., at ¶ 4).

Plaintiff has submitted an affidavit asserting that he has been advised that defendant has filed documentation with the necessary New York regulatory authorities to sell securities within New York State ( [Bluman Aff.], at ¶ 8). Nevertheless, plaintiff has failed to specifically allege that defendant continuously and systematically conducted business in New York and, thus, there is no basis for personal jurisdiction over defendant pursuant to CPLR 301.

2. Long-Arm Jurisdiction Pursuant to CPLR 302 (a) (1)

The only other possible basis for personal jurisdiction over defendant is CPLR 302 (a) (1), New York's long-arm statute, which provides, in pertinent part: "(a) Acts which are the basis of jurisdiction. 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, or his executor or administrator, who in person or through an agent:1. Transacts any business within the state or contracts anywhere to supply goods or services in the state ..."

In order to establish long-arm jurisdiction pursuant to CPLR 302 (a) (1), plaintiff must set forth a sufficient nexus between the claims asserted in the complaint and a contract which was negotiated in New York or a transaction which occurred in this State (see Holness v Maritime Overseas Corp., 251 AD2d 220, 224 [1st Dept 1998]). The courts look to the "totality of circumstances" to determine whether a party has "transacted business" in this state, within the meaning of CPLR 302 (a) (1), considering factors including: "(1) whether the defendant has an ongoing contractual relationship with a New York [*3]corporation; (2) whether the contract was negotiated or executed in New York; (3) what the choice of law clause is in the contract; and (4) whether the contract requires notices and payments to be sent into the forum state or requires supervision by the corporation in the forum state."

Roper Starch Worldwide, Inc. v Reymer & Assocs., Inc., 2 F. Supp. 2d 470, 474 [SD NY 1998]).

In this case, none of the relevant factors establish a sufficient nexus between the breach of contract and related claims at issue in this litigation and New York. Defendant asserts that: (1) all of the negotiations leading up to the agreement between the parties occurred in Florida and none of these negotiations occurred in New York; (2) the contract was executed in Florida; (3) the agreement was performed in Florida; (4) all payments made pursuant to the agreement were made and accepted in Florida and (5) the agreement explicitly states that it is to be governed by Florida law (Reply Aff. of John M. Quaranta [Quaranta Reply Aff.], at ¶ 5).

Plaintiff does not dispute the above facts. In order to support his claim for personal jurisdiction over defendant in New York, however, plaintiff asserts that he conducted some of the negotiations with defendant's principals on his cell phone, which has a New York exchange (Bluman Aff., at ¶ 4). The mere fact that the parties may have exchanged telephone calls, faxes or mailings to and from a New York location, without more, is insufficient to confer long-arm jurisdiction pursuant to CPLR 302 (a) (1) (see Rothschild, Unterberg, Towbin v McTamney, 89 AD2d 540, 541 [1st Dept 1982], affd mem 59 NY2d 651 [1983] [fact that "defendant made a few telephone calls to plaintiff's representative in New York concerning a singe stock transaction" insufficient to confer personal jurisdiction pursuant to CPLR 302 [a] [1]]; On Line Mktg., Inc. v Norm Thompson Outfitters, Inc., US Dist Ct, SD NY, Baer, J, 99 Civ 10411, 2000 WL 426426 *3 [April 20, 2000]; Roper Starch Worldwide, Inc. v Reymer & Assocs., Inc., 2 F Supp. 2d at 474). Indeed, plaintiff makes the vague assertion that, "at the time of the Contract negotiations, I was either in New York or Florida" (Bluman Aff., at ¶ 4). Indeed, the fact that a cell phone uses a New York exchange does not necessarily mean that the calls originated from or were made to a location within this state. Even if some of the telephone calls related to the parties' negotiations emanated from or were made to locations within New York, this does not establish that defendant "projected" itself into New York in such a manner that it purposefully availed itself of the protection and benefits of New York law (see Roper Starch Worldwide, Inc. v Reymer & Assocs., Inc., 2 F Supp. 2d at 474; see also On Line Mktg. v Norm Thompson Outfitters, 2000 WL 426426 *3).

In addition to the alleged telephone calls between the parties, plaintiff mentions the fact that, in order to carry out his obligations under the agreement, he introduced defendant's president to Torrey Hills Capital (THC), a California company which is in the business of directly or indirectly providing funds to business entities. THC then introduced defendant to various investment banking entities, including Newbridge Securities [FN2] (Bluman Aff., at ¶ 8). Plaintiff asserts that, through his efforts, defendant raised approximately $8, 000, 000 and he [*4]believes "that much of that money was raised in New York" (id.). Even if the statements in plaintiff's affidavit are considered to be true, the solicitation of financing in New York by third-party entities is insufficient to establish that defendant, itself, purposefully availed itself of the protections and benefits of the laws of this state (see Roper Starch Worldwide v Reymer & Assocs., 2 F. Supp. 2d at 474).

Significantly, plaintiff has failed to allege that the causes of action asserted in the complaint arose out of any alleged business transactions by defendant within this state (see Holness v Maritime Overseas Corp., 251 AD2d at 224).

The cases cited by plaintiff in support of his jurisdictional arguments are distinguishable from the instant matter. In Deutsche Bank Sec., Inc. v Montana Bd. of Invs. (7 NY3d 65 [2006]), the defendant Montana Board of Investments (MBOI) dealt, over the telephone, directly with individuals in plaintiff's New York office to consummate the transaction which is the subject of the litigation. In Deutsche Bank Sec., Inc. v Montana Bd. of Invs. ( 7 NY3d at 71-72), the Court of Appeals stated: "As distinct from an out-of-state individual investor making a telephone call to a stockbroker in New York (see Rothschild, Unterberg, Towbin v McTamney, 59 NY2d 651 [1983]). MBOI is a sophisticated institutional trader that entered New York to transact business here by knowingly initiating and pursuing a negotiation with a DSBI employee in New York that culminated in the sale of $15 million in bonds. Negotiating substantial transactions such as this one was a major aspect of MBOI's mission part of its principal reason for being' (21 AD3d 90, 95 [2005] )."



As has been noted above, the Appellate Division opinion in Rothschild, Unterberg, Towbin v McTamney, which was affirmed by the Court of Appeals for the reasons stated therein, observed that the "defendant made a few telephone calls to plaintiff's representative in New York concerning a single stock transaction" (89 AD2d at 541). However, the defendant "had no representative in New York and no direct or personal involvement in any ongoing sale in New York" (id.). Accordingly, the court concluded that there was no personal jurisdiction over the defendant pursuant to CPLR 302 (a) (1).

Similarly, in Parke-Bernet Galleries, Inc. v Franklyn (26 NY2d 13 [1970]), defendant, a California resident, actively participated in an art auction at plaintiff's New York office, by dealing over the telephone through an employee of plaintiff who served as his agent, in order to purchase the paintings which were the subject of the litigation. Accordingly, the Court of Appeals concluded that long-arm jurisdiction existed over defendant pursuant to CPLR 302 (a) (1), although he was not physically present in New York while the sale of the paintings was negotiated. The Court emphasized the fact that the plaintiff had "direct and personal involvement in activities here" by projecting himself into the auction room in order to compete with other prospective purchasers, thereby purposefully availing himself of the privilege of the conducting business within New York (id., at 18). Even if the statements in plaintiff's affidavit are assumed to be correct, he does not allege that defendant was directly involved in business transactions within New York, which form the basis of the allegations in the complaint (compare Georgia-Pacific Corp. v Multimark's Intl., Ltd., 265 AD2d 109 [1st Dept 2000] [personal jurisdiction existed over defendant foreign corporation pursuant to CPLR 301, as it used a bank [*5]account in New York to receive payments for the products it purchased and resold]; HH Princess Zarina Zainal v America-Europe-Asia Intl. Trade and Mgt. Consultants Ltd., 248 AD2d 279 [1st Dept 1998] [personal jurisdiction established over defendant where the parties met in New York to negotiate a letter of intent and oral joint venture agreement, directly related to the creation of the alleged oral agreement which was allegedly breached]). In this case, neither the complaint, nor plaintiff's affidavit, allege that defendant was directly and purposefully involved in business transactions within this state. Accordingly, there is no basis for personal jurisdiction over defendant pursuant to CPLR 302 (a) (1), and, therefore, this case must be dismissed.

3. Plaintiff's Cross Motion for Discovery on Jurisdictional Issues Pursuant to CPLR 3211 (d)

Plaintiff has cross-moved for discovery pursuant to CPLR 3211 (d), asserting that facts

essential to oppose defendant's motion to dismiss for lack of personal jurisdiction may exist but cannot currently be stated. He relies upon the decision in Peterson v Spartan Indus., Inc. (33 NY2d 463 [1974]), a products liability personal injury case in which the Court of Appeals concluded that the plaintiff had made a "sufficient start" and shown that the argument that jurisdiction existed over defendant in New York was not frivolous, by revealing defendant's permission to sell and store its products in New York several years prior to the incident at issue, in order to justify discovery on the jurisdictional issues pursuant to CPLR 3211 (d) (id., at 467). In this case, by contrast, plaintiff has not made a "sufficient start" to establishing that defendant had the requisite minimum contacts with New York or purposefully engaged in business transactions within this state, in order to justify further discovery on the jurisdictional issue (see Insurance Co. of N. Am v EMCOR Group, Inc., 9 AD3d 319 [1st Dept 2004], distinguishing Peterson and declining to order further discovery on the issue as to whether personal jurisdiction existed over defendant subsidiary company, a California corporation with no minimum contacts in New York, despite the fact that insurance policy at issue in the declaratory judgment action was negotiated in New York by the subsidiary's parent company and its brokerage representative). Therefore, plaintiff's cross motion is denied.

4. Dismissal on the Grounds of Forum Non Conveniens

In the alternative, defendant moves to dismiss this action on the grounds that New York is

an inconvenient forum, within the meaning of CPLR 327 (a), which provides: "When the court finds that in the interest of substantial justice the action should be heard in another forum, the court , on the motion of any party, may stay or dismiss the action in whole or in part on any conditions that may be just. The domicile or residence in this state of any party to the action shall not preclude the court from staying or dismissing the action."

The doctrine of forum non conveniens is employed, at the discretion of the court, to dismiss actions which, "although jurisdictionally sound, would be better adjudicated elsewhere" (Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 479 [1984]). "The burden rests upon the defendant challenging the forum to demonstrate relevant private or public interest factors which militate against accepting the litigation" (id.). The court must consider and balance various competing factors, in order to exercise its sound discretion to determine whether to retain jurisdiction over the action (id.). The Court of Appeals then stated, "Among the factors to be considered are the burden on the New York courts, the potential hardship to the defendant, and the unavailability of [*6]an alternative forum in which plaintiff may bring suit" (id.).

Defendant emphasizes the fact that it will face significant hardship in litigating this action in New York, as the major witnesses to the negotiations resulting in the parties' contract, defendant's president and general counsel, are Florida residents, and the documents relating to this transaction are located in Florida (Quaranta Reply Aff., at ¶ ¶ 3 - 5). In addition, plaintiff can maintain an action against defendant in Florida. Plaintiff does not contest any of the above facts, but merely asserts tangentially, that the choice of Florida law to interpret the contract is not dispositive and this matter, which involves the interpretation of a contract, is of a type generally resolved in this jurisdiction and, thus, will not burden the New York courts. The cases cited by plaintiff, however, are distinguishable from the instant matter. Zainal v America-Europe-Asia Intl. Trade and Mgt. Consultants Ltd. (248 AD2d at 279), discussed above, involved an oral joint venture agreement negotiated between the parties in New York, which the court stated "would likely be governed by the law of this jurisdiction". In Sambee Corp. v Moustafa (216 AD2d 196 [1st Dept 1995]), the Appellate Division concluded that the defendant, unlike defendant at bar, failed to demonstrate, in detail, that he would incur a hardship by litigating the action in New York. In addition, the court observed that if this action were tried in another forum, essential witnesses from another entity would have to be transported there, and defendant had already won an action arising out of the same transaction in New York (id.).

Indeed, this action, involving Florida residents and an agreement entered into in Florida and governed by Florida law, more closely resembles actions which were dismissed on the grounds of forum non conveniens (see, e.g. Irrigation & Indus. Dev. Corp. v Indag, S.A., 37 NY2d 522 [1975], affg 44 AD2d 543 [1st Dept 1974] [action involved contract entered into in Europe and North Africa; witnesses and documents were located in Europe]; Nguyen v Banque Indosuez, 19 AD3d 292 [1st Dept 2005] [action involved termination of Vietnamese employees of French bank]; Edelman v Taittinger, S.A., 298 AD2d 301 [1st Dept 2002] [all of alleged wrongful acts occurred in France, where all of the witnesses and documents were located]; Muscarelle, Inc. v Fluoro Elec. Corp., 55 AD2d 526 [1st Dept 1976] [action involved contract governed by New Jersey law entered into by two New Jersey corporations]). Accordingly, assuming, for the sake of argument that personal jurisdiction exists over defendant in New York, this Court exercises its discretion to dismiss this action on the grounds of forum non conveniens, in view of the substantial hardship demonstrated by defendant in litigating this case in this forum and the availability of an alternative forum, Florida, in which plaintiff can litigate this matter.

Accordingly, it is

ORDERED that defendant's motion to dismiss this action is granted, and plaintiff's cross motion for discovery pursuant to CPLR 3211 (d) is denied; it is ordered that the Clerk shall enter judgment dismissing this action, with costs and disbursements; and it is further

ORDERED that, within 30 days of entry, defendant shall serve on plaintiff, a copy of this decision and order, together with notice of entry.

This constitutes the Decision and Order of the Court.

Dated:ENTER:,

Doris Ling-Cohan, JSC

Check One: [ X ] FINAL DISPOSITION [ ] NON-FINAL DISPOSITION [*7]

Check if Appropriate: [ ] DO NOT POST[] REFERENCE C:\htformat\f5233560.txt Footnotes

Footnote 1: Plaintiff asserts that, although he now resides in Florida, he "was a New York resident until 2003". He asserts that he still spends "a substantial amount of time in New York" and owns a business located in Deer Park, Suffolk County, New York (Affidavit of Marvin Bluman in support of Cross Motion [Bluman Aff.], at ¶ 2). The caption incorrectly designates the plaintiff as "Martin Bluman".

Footnote 2: Newbridge Securities Corporation is headquartered in Ft. Lauderdale, Florida, and has branch offices located in Florida, Arizona, Colorado, New Jersey and Suffolk County, New York (see website of www.newbridgesecurities.com).