Mobile Programming LLC v Tallapureddy
Annotate this CaseDecided on May 11, 2021
Supreme Court, New York County
Mobile Programming LLC, Plaintiff,
against
Prashanth Tallapureddy, 3AMIGOSIT LLC, and RACEDOG LTD., Defendants.
161883/2019
Vincent M. Lentini, Esq., Manhasset, NY, for defendants.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42 were read on this motion for DEFAULT JUDGMENT.
This action, brought by a Wyoming corporation against an Ohio resident and two Ohio limited-liability companies, arises from a contract to supply skilled labor to employers in California. Plaintiff moves for default judgment. Defendants cross-move to dismiss for lack of subject-matter jurisdiction. Plaintiff's motion is denied; defendants' cross-motion is granted.
BACKGROUND
Plaintiff, Mobile Programming LLC, is a corporation organized under the laws of Wyoming and authorized to conduct business in New York. (See NYSCEF No. 1 at ¶ 1; [*2]NYSCEF No. 38.) Defendant Prashanth Tallapureddy is an Ohio resident; defendants 3AmigosIT LLC and Racedog Ltd. are Ohio limited-liability companies controlled by Tallapureddy. (See NYSCEF No. 1 at ¶¶ 2-4.)
According to the allegations of the complaint, Mobile Programming and 3AmigosIT entered into an agreement for 3AmigosIT to supply skilled labor for clients of Mobile Programming. (See NYSCEF No. 1 at ¶ 6-7; NYSCEF No. 28 [contract].[FN1] ) This contractual arrangement went sour. Among other things, a computer programmer sourced by 3AmigosIT under the contract for a Mobile Programming client sued his employer in California for violations of California labor law.[FN2] (See NYSCEF No. 1 at ¶¶ 6, 8-10.) This litigation cost Mobile Programming not only the revenue it would have earned from that client on its existing contract, but also future revenue due to the loss of the client. (See id. at ¶¶ 11-12.)
Mobile Programming later brought this action in New York. The complaint alleges that jurisdiction is proper here because the contract affords "this Court . . . exclusive jurisdiction to adjudicate any dispute" between 3AmigosIT and Mobile Programming. (NYSCEF No. 1 at ¶ 7.) Mobile Programming sued 3AmigosIT, its principal (defendant Tallapureddy), and a related corporation also controlled by Tallapureddy (defendant Racedog).
Defendants failed to appear in the action after being served. Mobile Programming now moves for default judgment. Defendants oppose the motion and cross-move to dismiss for lack of subject-matter jurisdiction under CPLR 3211 (a) (2).
DISCUSSION
This court ordinarily would consider first whether plaintiff has satisfied the requirements of CPLR 3215 for entry of a default judgment. But defendants' challenge to this court's subject-matter jurisdiction must take priority.
As Mobile Programming points out, Supreme Court has general original jurisdiction in law and equity. (See NYSCEF No. 36 at ¶ 3, citing NY Const. art. VI, § 7.) But plaintiff is incorrect to say that this makes Supreme Court's subject-matter jurisdiction "unlimited." (Id. at ¶ 3.) To the contrary, the Legislature has expressly limited this court's jurisdiction in certain narrow contexts.
One such limit appears in Business Corporation Law (BCL) § 1314. Under that section, Supreme Court has subject-matter jurisdiction over actions brought by foreign corporations or [*3]non-residents against other foreign corporations only if (i) they fall into one of five specified categories (see BCL § 1314 [b]); or (ii) they fall within an exception to § 1314's limits that itself has been created by statute (see e.g. General Obligations Law (GOL) § 5-1402 [1].) If neither of these conditions is satisfied, Supreme Court lacks the power to hear the case. (See Techo-TM, LLC v Fireaway, Inc., 123 AD3d 610, 610 [1st Dept 2014].)
The limits established by BCL § 1314 (b) govern this action: as discussed above, Mobile Programming is a Wyoming corporation authorized to do business in New York as a foreign corporation, and the three defendants are residents or corporate citizens of Ohio. And the exception to these limits created by GOL § 5-1402 is not implicated here. That exception requires that an action (i) arise out of or relate to a contract that has a New York choice-of-law clause (which plaintiff has alleged here); (ii) provide for consent to the personal jurisdiction of the New York courts (which plaintiff has alleged here); and (iii) "cover[] in the aggregate[] not less than one million dollars" (which plaintiff has not alleged here).[FN3] (GOL § 5-1402 [1].)
The first three categories listed in BCL § 1314 (b) do not afford jurisdiction to this court. They involve actions in which the property or subject-matter of the litigation is located within New York, the underlying contract was made in New York or calls for performance in New York, or the cause of action otherwise arises in New York. (See BCL § 1314 [b] [1]-[3].) And Mobile Programming has not alleged that 3AmigosIT or Racedog does business or is authorized to do business in New York, as required to invoke the fifth jurisdictional category. (See BCL § 1314 [b] [5].)
Thus, the only basis for subject-matter jurisdiction in this case is BCL § 1314 (4): "[w]here, in any case not included in the preceding subparagraphs, a non-domiciliary would be subject to the personal jurisdiction of the courts of this state under section 302 of the civil practice law and rules." The subject-matter jurisdiction inquiry here, therefore, thus incorporates a personal-jurisdiction inquiry: whether long-arm personal jurisdiction over defendants exists under CPLR 302.[FN4] This court concludes that long-arm jurisdiction is absent.
Mobile Programming has not alleged that defendants transact business in New York; that they have contracted to supply goods or services in New York; that they have committed a tortious act in New York; or that they own, use, or possess real property in New York. (See CPLR 302 [a] [1]-[2], [4].) Its action instead is based on torts that defendants assertedly committed somewhere outside New York—whether in Ohio, California, or elsewhere. Mobile Programming has not, however, alleged that those "tortious act[s] without the state caus[ed] injury to person or property within the state." (CPLR 302 [a] [3].) Instead, the complaint alleges at most that Mobile Programming has an office in New York. (See NYSCEF No. 1 at ¶ 1.) But "a plaintiff may not for purposes of CPLR 302 jurisdiction rely solely upon [its] own activity in New York." (Laufer v Ostrow, 55 NY2d 305, 312 [1982].)
This court thus lacks long-arm personal jurisdiction over defendants under CPLR 302. And absent personal jurisdiction under that provision, BCL § 1314 [b] deprives this court of subject-matter jurisdiction. Mobile Programming's motion for a default judgment therefore is denied because the action must be dismissed for lack of jurisdiction.
Accordingly, it is hereby
ORDERED that the branch of defendants' cross-motion under CPLR 3211 seeking dismissal for lack of subject-matter jurisdiction is granted, and the action is dismissed, with costs and disbursements to be taxed by the Clerk of the Court upon submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff's motion for default judgment under CPLR 3215 is denied as academic; and it is further
ORDERED that defendants shall serve notice of entry on plaintiff; on the office of the General Clerk; and on the office of the County Clerk, which is directed to enter judgment accordingly.
5/11/2021 Footnotes
Footnote 1: The contract's preamble states that Mobile Programming is located in California and 3AmigosIT in Ohio. (See NYSCEF No. 28 at 1.)
Footnote 2: The complaint in the California action, attached as an exhibit to defendants' cross-motion to dismiss this action, states that the programmer, his employer, the work being performed, and the harms allegedly suffered, were each located in California. (See NYSCEF no. 29 at ¶¶ 1, 3, 13, 14.)
Footnote 3: Mobile Programming's complaint does not contain any allegation about the value of the contract between itself and 3AmigosIT. (See NYSCEF No. 1 at ¶¶ 6-8.) Nor does the consideration to be paid under the contract appear on the face of the only contractual document provided to this court. (See NYSCEF No. 28.) The complaint alleges that the contract between Mobile Programming and its client that 3AmigosIT assertedly undermined was worth only $560,000. (See NYSCEF No. 1 at ¶ 11.) And although Mobile Programming alleges that 3AmigosIT also cost it $1 million in future revenue from this client, there is no allegation that the lost revenue stemmed from contracts that had already been executed, as opposed to contracts that Mobile Programming anticipated being able to enter into down the road. (See id. at ¶ 12.)
Footnote 4: This inquiry cannot be resolved merely by reference to the personal-jurisdiction/forum-selection language in § 18 of the contract between Mobile Programming and 3AmigosIT, relied on by plaintiff. (See NYSCEF No. 36 at ¶¶ 13-16, referencing NYSCEF No. 28 at ¶ 18.) New York "does not recognize consent as a basis for long-arm jurisdiction." (Fireaway, 123 AD3d at 610.)
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