Opinion
02 Civ. 6802 (JGK)
August 22, 2003
OPINION AND ORDER
This is a diversity action arising out of an alleged loan transaction and investment between the plaintiff Isadore Landau ("Landau") and the defendants, New Horizon Partners, Inc. ("New Horizon"), LMC Holdings, Inc. ("LMC"), Spar2000 Sparkassa. E.F. ("Spar2000") and Jay Chapler ("Chapler"). The defendant Spar2000 has now moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction. For the reasons set forth below, Spar2000's motion is granted in part and denied in part.
I.
The relevant facts, as alleged in the Amended Complaint and the affidavits and declarations submitted by the parties in connection with the current motion, are as follows.
The plaintiff, Isadore Landau is a resident of the State of New York. (Compl. ¶ 4.) New Horizon was, at all relevant times, a corporation organized under the laws of the state of Connecticut. (Compl. ¶ 5.) The defendant LMC Holdings was a corporation organized under the laws of the State of Connecticut. (Compl. $6.)
In December, 2001, the plaintiff was approached by the defendant Chapler on behalf of New Horizon, and Chapler indicated that New Horizon had entered into an agreement with the Government of Taiwan to create an investment vehicle that would enable the Taiwanese government to invest in American projects. (Affirmation of Isadore Landau dated March 11, 2003 ("Landau Affirmation") ¶ 6.) Under the arrangement, the Government of Taiwan allegedly placed $1.6 billion in accounts into a Taiwanese Bank, ABN Amro Taipei, and New Horizon would be able to create a credit line against these deposits. (Id. II 7; Compl. II 14.) The credit lines were to be created for New Horizon by Spar2000, a Swedish corporation, that maintains the accounts into which the deposits had been placed. (Landau Affirmation II 7-8; Aff. of Ralf Ludwig ("Ludwig Aff.") sworn to Dec. 12, 2002 1 2-3.) Spar2000 a cooperative financial institution, organized under the laws of Sweden, provides services similar to a credit union. (Id. 1 2.)
Chapler indicated that Spar2000 was willing to allow New Horizon to establish a credit line, drawing on the funds deposited in Taiwan, if New Horizon would deposit $200,000 into a Spar2000 account. (Landau Affirmation 1 8; Compl. 1 16.) The plaintiff agreed to lend New Horizon the $200,000 which was to be deposited in a Spar2000 account, after being told that he would be the sole signatory on the Spar2000 account and that those funds could not be withdrawn without his signature. (Landau Affirmation I 8, 16.) Chapler also told the plaintiff that the funds could be withdrawn from the Spar2000 account if a credit line was not established by a date certain or "Withdrawal Date". (Id. II 8; Compl. I 18.)
The plaintiff received a letter on December 17, 2001 from Chapler that set forth these various terms and provided that the lender that provided the $200,000 investment would receive $400,000 in return from New Horizon, provided that the credit line was established. (Landau Affirmation 1 10; Letter dated Dec. 17, 2001 attached as exh. 1 to Landau Affirmation.) After receiving the December 17th letter, the plaintiff requested written confirmation concerning various aspects of the proposed investment and transaction. (Landau Affirmation 1 11.) The plaintiff received a letter dated December 18, 2001 from Ralf Ludwig, a director of Spar2000, that indicated that $1.6 Billion had been deposited into a Spar2000 account in Taiwan at ABN Armo Taipei for use by New Horizon. (Id. II 12.) The letter was sent from Spar2000 in Stockholm to New Horizon's offices in Connecticut and was addressed to Matthew Stockli. (Letter dated Dec. 18, 2002 attached as exh. 2 to Landau Affirmation.) Spar2000 also sent an additional letter on the same day to New Horizon's offices in Connecticut, also addressed to Matthew Stockli, that indicated that no fees would be deducted from the $200,000 deposited with Spar2000/ but that any fees would be recovered from subsequent deposits to the accounts. (Letter dated Dec. 18, 2002 attached as exh. 3 to Landau Affirmation.) The plaintiff also received this second letter. (Landau Affirmation II 13-14.)
A Note and Shareholder Agreement was executed on December 21, 2001 in Greenwich, Connecticut outlining the terms of the plaintiff's investment in New Horizon. (Exh. 4 attached to Landau Affirmation.)
Spar2000 conducts no activities in New York, although it created a subsidiary limited liability company to manage Spar2000's assets. (Ludwig Aff. 1 4.) This subsidiary never did any business, and never had any employees or offices in New York. (Id.) All of the Spar2000 accounts, including the accounts into which the plaintiff's $200,000 was deposited, were maintained in Sweden. (Id. 1 6.) There were two accounts into which funds were deposited and they were held in the names of Matthew Stoeckli and Leonard Mirroff, with the corporate sub-accounts held in the names of LMC Holdings of Sun City, Arizona and New Horizon Partners of Greenwich, Connecticut. (Id.) The mailing addresses of both accounts were in Greenwich, Connecticut. (Id.)
Pursuant to the Note and Shareholder Agreement, the plaintiff loaned New Horizon $200,000 to be deposited in the two Spar 2000 accounts. (Landau Affirmation i 16; Compl. II 20.) New Horizon provided checks totaling $200,000 to a fiduciary of Spar2000 located in California and subsequently those funds were deposited into the two Spar2000 accounts. (Ludwig Aff. II 6.) Spar2000's agent alleges that no one connected with Spar2000 came into New York nor did Spar2000 engage in any activities in New York in connection with the depositing of the funds provided by New Horizon. (Id. II 7.)
On or about January 25, 2002 Spar2000 confirmed in writing that the plaintiff's loan had been received and was placed into accounts for New Horizon and LMC Holdings. (Compl. II 22.)
The plaintiff contends that the defendants made various misrepresentations regarding his investment of $200,000, including that the plaintiff would be sole signatory on the bank account into which the funds were to be deposited; that no funds would be withdrawn from the account until the plaintiff' s investment was repaid; and that the plaintiff could withdraw the funds from the account after a date certain if the plaintiff's investment return was not realized by then. (Compl. II 10.)
After the plaintiff loaned New Horizon the $200,000 he began to have concerns and raise various issues with the defendants. A March, 2002 phone conversation took place between the plaintiff and Ralf Ludwig, in which the plaintiff communicated his concern about the security of his funds and his ability to withdraw the funds from the accounts. (Landau Affirmation II 22.)
After the date certain passed, the plaintiff attempted to withdraw his funds, and on August 2, 2002 demanded that the funds be delivered to him, but that demand was rejected by Spar2000. (Compl. II 11, 27.)
The plaintiff has raised five causes of action against Spar2000, including a claim for (1) breach of contract based on Spar2000's failure to return the $200,000 upon the plaintiff's demand (Compl. 11 26-29); (2) unjust enrichment based on Spar 2000's retention of the $200,000 for their own uses (Compl. 11 30-34); (3) conversion (Compl. II 35-37); (4) constructive trust (Compl. II 38-41); and (5) fraud, based on the alleged misrepresentations made to the plaintiff which allegedly caused the plaintiff to deposit the money in the Spar2000 accounts (Compl. II 49-53).
II.
Spar2000 has moved to dismiss the complaint for lack of personal jurisdiction. A district court has "broad discretion" in deciding such a motion, including the discretion to conduct an evidentiary hearing if the Court believes one is warranted. See CutCo Indus. v. Naughton, 806 F.2d 361, 364 (2d Cir. 1986). See also Clarendon Nat'l Ins. Co. v. Lan, 152 F. Supp.2d 506, 515 (S.D.N.Y. 2001). To survive a motion to dismiss where no evidentiary hearing is held, the plaintiff need only make a prima facie case that the defendant is subject to the Court's personal jurisdiction.See In re Magnetic Audiotape Antitrust Litio., 334 F.3d 204, 206 (2d Cir. 2003) ("Prior to discovery, a plaintiff may defeat a motion to dismiss based on legally sufficient allegations of jurisdiction."); PDK Labs. Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997); Rubinbaum LLP v. Related Corporate Partners V. L.P., 154 F. Supp.2d 481, 486 (S.D.N.Y. 2001). The Court must construe the pleadings and supporting affidavits in the light most favorable to the plaintiff. See id. The plaintiff eventually will have to establish jurisdiction by a preponderance of the evidence, either at trial or at a pre-trial evidentiary hearing. See CutCo Indus., 806 F.2d at 365; Marine Midland Bank. N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981). But at this stage, prior to discovery, the Court must "credit a plaintiff's averments of jurisdictional facts as true." In re Magnetic Audiotape, 334 F.3d at 206.
Spar 2000 mistakenly relies on First Capital Asset Management. Inc. v. Brickellbush, Inc., 218 F. Supp.2d 369, 388-89 (S.D.N.Y. 2002), for the proposition that, even before discovery, the standard on a motion to dismiss for lack of personal jurisdiction is similar to the standard on a motion for summary judgment. The plaintiff in First Capital was required to make a stronger showing than that required here because the court had previously authorized discovery on jurisdictional issues. See id. at 387. In this case, there has been no discovery at all. Therefore, the plaintiff is required only to make a prima facie showing of the Court's jurisdiction.
A district court sitting in diversity must apply the forum state's law in determining whether it has personal jurisdiction over a defendant. See CutCo Indus., 806 F.2d at 365; Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963) (en bane); Clarendon, 152 F. Supp.2d at 515. The Court must determine whether the forum state's law allows the exercise of personal jurisdiction and, if so, whether doing so comports with constitutional due process guarantees. See Int'l Shoe Co. v. State of Washington. 326 U.S. 310, 316 (1945); Clarendon, 152 F. Supp.2d at 515.
New York State provides for both general and specific personal jurisdiction. The general provision, found in New York Civil Practice Law and Rules ("CPLR") § 301, empowers a court to "exercise such jurisdiction over persons, property, or status as might have been exercised heretofore." CPLR § 301. In this case, the plaintiff has not argued that Spar2000 is amenable to suit under the general jurisdiction provision of New York's long arm statute, and argues only that Spar2000 is subject to specific jurisdiction under the long-arm statute.
A.
The plaintiff first argues that Spar2000 is subject to specific jurisdiction pursuant to CPLR 302(a)(1). That section authorizes jurisdiction where the defendant "transacts any business within the state or contracts anywhere to supply goods or services in the state." CPLR § 302(a)(1). As with all of the CPLR § 302 jurisdictional bases, the cause of action must arise from the specific jurisdictional basis, in this case, the defendant's specific business transactions in New York. See CPLR § 302(a). The New York Court of Appeals has interpreted this provision to require a defendant to have "engaged in purposeful activities" in New York, and that there be a "substantial relationship between the transaction and the claim asserted." Kreutter v. McFadden Oil Corp., 522 N.E.2d 40, 43-44 (N.Y. 1988).
Under the first prong of § 302(a)(1) jurisdiction, transacting business "has been interpreted to require a certain quality, rather than a specific quantity, of contacts with New York." Broad Horizons, Inc. v. Central Crude Ltd., No. 94 Civ. 1593, 1994 WL 623075, at *2 (S.D.N.Y. Nov. 9, 1994) (citation omitted); see also Int'l Customs Assocs., Inc. v. Ford Motor Co., 893 F. Supp. 1251, 1259 (S.D.N.Y. 1995), aff'd, 201 F.3d 431 (2d Cir. 1999); Cavalier Label Co., Inc. v. Polytam, Ltd., 687 F. Supp. 872, 876 (S.D.N.Y. 1988). "A nondomiciliary transacts business under CPLR § 302(a)(1) when he purposefully avails himself of the privilege of conducting activities within New York, thus invoking the benefits and protections of its laws." CutCo Indus., 806 F.2d at 365 (quotations and citations omitted). "Whether or not the contacts are of the appropriate nature must be determined by an analysis of the totality of the circumstances." United States Theatre Corp. v. Gunwyn/Lansburgh Ltd. P'ship, 825 F. Supp. 594, 596 (S.D.N.Y. 1993) (citations omitted).See also Clarendon, 152 F. Supp.2d at 516.
The plaintiff has failed to make a prima facie showing that this Court has personal jurisdiction over Spar2000 under § 302(a)(1). The plaintiff has raised various arguments as to why Spar2000 has transacted business in New York, but none of those arguments support the exercise of specific jurisdiction under § 302(a)(1) because the alleged activity by Spar2000 in New York does not relate to the specific claims in this case.
The plaintiff first points to the existence of a Spar2000 subsidiary in New York, which was inactive and never conducted any business. However, the mere existence of a subsidiary is insufficient to create jurisdiction under § 302(a)(1) when there is no allegation or evidence that the subsidiary was involved at all in the transactions underlying the plaintiff's claims. Moreover, even though the plaintiff argues that the subsidiary "manages assets" of Spar2000, given the fact that Spar2000 has indicated that the subsidiary has remained dormant and inactive, a fact to which the plaintiff has not responded, the Court could not conclude based on this limited record that the plaintiff has established a prima facie case of jurisdiction under § 302(a)(1) based on the subsidiary's activities in New York.
The plaintiff also argues that Spar2000 transacted business in New York because it sent to the plaintiff various faxes, emails and letters regarding the transaction with New Horizon to New York, All of this various correspondence was sent to New Horizon in its Connecticut offices and not to the plaintiff. For example, the two letters dated December 18, 2002 were sent from Spar2000 to New Horizon in Connecticut and were not addressed to the plaintiff. (See Exhs. 2 3 attached to Landau Affirmation). The same is true for a March 12, 2002 fax from Spar2000 to New Horizon and an email dated July 26, 2002 from Spar2000 to Michael Hampton, a New Horizon employee — neither was directed to the plaintiff and neither was sent by Spar2000 to the plaintiff in New York. (Landau Affirmation ii 28; Exhs. 8 and 9 attached to Landau Affirmation). Although these letters, faxes and email may have later been received by the plaintiff or copied to the plaintiff in New York, the sending of the letters were not actions taken by Spar2000 to transact business in New York, because the letters were sent to Connecticut. Moreover, the documents were not the transaction of business in New York with the plaintiff, because the letters make clear that Spar2000 was directing its correspondence to individuals at New Horizon and not to the plaintiff. In fact, the affidavit of Ralf Ludwig indicates that "[a]11 my dealings on behalf of Spar2000 concerning the New Horizon account were in Greenwich, Connecticut or Stockholm, Sweden," (Aff. of Ralf Ludwig ("Ludwig II Aff.") sworn to June 13, 2003 5 8.), and the plaintiff has not come forward with any evidence or allegation to dispute the statements in the Ludwig affidavit. (See Landau Affirmation II 24-28 (outlining various conversations and dealings between the plaintiff and Ludwig or Spar2000, but failing to allege that the dealings ever took place in New York).
To the extent the plaintiff bases his § 302(a)(1) jurisdictional argument on the December 17 letter, this letter is not even from Spar2000, but a letter from New Horizon in Greenwich outlining the terms of the proposed investment between the plaintiff and New Horizon. (See Exh. 1 attached to Landau Affirmation.)
The email to Hampton was addressed to his Yahoo internet address and could have been picked up anywhere. Ludwig advises that Hampton worked in Greenwich and actually received the email in Geneva. (Ludwig II Aff. II 15.)
The plaintiff also argues on the basis of a single recorded phone conversation between New Horizon, Spar2000 and the plaintiff that Spar2000 transacted business with the plaintiff in New York. Even assuming that the plaintiff was in New York when this conversation took place, the conversation occurred on March 27, 2002, which was three months after the occurrence of the transactions, namely the lending of the money to New Horizon and the representations causing those funds to be loaned, that form the basis of the plaintiff's claims.
Moreover, even if the letters, faxes and correspondence were mailed and addressed to the plaintiff and received by the plaintiff in New York and even if the March 27, 2002 phone conversation took place in New York and related to the plaintiff's claims, those activities by Spar2000 would not be of the kind sufficient to be considered to be transacting business under § 302(a)(1). New York courts have consistently held that telephone calls and correspondence sent into New York, by a non-domiciliary defendant who is outside New York, generally are insufficient to establish personal jurisdiction. Int'l Custom Assocs., 893 F. Supp. at 1261 (collecting cases); see also Hutton v. Priddy's Auction Galleries, Inc., No. 03 Civ. 751, 2003 WL 21511946, at *9 (S.D.N.Y. July 1, 2003) ("conducting negotiations by phone, fax or mail with a party in New York does not constitute the transaction of business within the state." (quotations omitted)); Worldwide Futgol Assocs., Inc. v. Event Entm't, Inc., 983 F. Supp. 173, 177 (E.D.N.Y. 1997) (collecting cases). Only where the "center of gravity" of the business transacted is New York, have courts found that telephone and mail contacts, standing alone, are sufficient to confer jurisdiction under § 302(a)(1). Nader v. Kurt Getschaw Phillip Getschaw, Inc., No. 99 Civ. 11556, 2000 WL 1471553, at *4 (S.D.N.Y. Sept. 29, 2000) (collecting cases); see also Hutton. 2003 WL 21511946, at *9 (finding no jurisdiction under § 302(a)(1) where out of state defendant's sole contacts with plaintiff in New York were negotiations over the telephone and ultimate contract was executed in Colorado).
In this case, there was no contract between the plaintiff and Spar2000/ but the contract between the plaintiff and New Horizon was executed in Connecticut, (Exh. 4 attached to Landau Affirmation), and the funds were deposited in Spar2000 accounts held in Sweden. It is clear that the actions of Spar2000 were directed in the first instance to New Horizon and New Horizon's representatives in Connecticut, because that was the party with whom Spar2000 allegedly had negotiated with in regards to opening a line of credit on the funds deposited in Taiwain. Thus, even if the correspondence or phone call was directed towards the plaintiff, the fact that the ultimate transaction, contract or activity by Spar2000 took place outside of New York and was purposefully directed towards Connecticut, the center of gravity of the transactions were outside of New York, and therefore Spar2000's alleged phone conversations and correspondence could not subject it to jurisdiction under § 302(a) (1). See, e.g., id. at *9-10; Nader, 2000 WL 1471553, at *7; Int'l Customs Assocs., 893 F. Supp. at 1262-63.
Finally, the plaintiff also attempts to argue for jurisdiction under § 302(a)(1) on the grounds that the funds ultimately deposited in the Spar2000 accounts were drawn from the plaintiff's New York bank account. This argument has no merit. The depositing of funds by Spar2000 from a New York account could not be considered to be the transaction of business in New York by Spar2000, sufficient to exercise specific jurisdiction over the claims raised by the plaintiff. The source of the funds that the plaintiff used does not indicate that Spar2000 ever transacted business in New York.Cf. Liungkvist v. Rainey Kelly Campbell Roalfe/Young Rubicam, Ltd., No. 01 Civ. 1681, 2001 WL 1254839, at *3 (S.D.N.Y. Oct. 19, 2001) ("Simply stated, an agreement to send payments to New York, without more, [cannot] constitute `transacting business' under section 302(a)(1)"); Colson Servs. Corp. v. Bank of Baltimore, 712 F. Supp. 28, 31-32 (S.D.N.Y. 1989) (finding defendant's wiring of funds to agent of plaintiff's predecessor in interest in New York in order to pay for certificate of deposit to be insufficient contacts under § 302(a)(1)). Moreover, the plaintiff never sent funds from New York to Spar2000. Rather, the plaintiff loaned funds to New Horizon, and New Horizon deposited the funds into the Spar2000 accounts. (Ludwig I Aff. ii 6 (noting that the checks were mailed from New Horizon in Connecticut to Spar2000's fiduciary in California); Ludwig II Aff. 1 5.) The plaintiff has come forward with no allegation or evidence to suggest that Spar2000 was taking money from the plaintiff in New York or engaging with the plaintiff in New York when it deposited $200,000 in two accounts in Sweden. The plaintiff's allegations are insufficient to make a prima facie case that the plaintiff's claims arise from Spar2000's transaction of business in New York under § 302(a)(1).
The plaintiff has, therefore, failed to establish a prima facie case of specific jurisdiction under § 302(a)(1).
B.
The plaintiff has also argued that Spar2000 is subject to personal jurisdiction pursuant to § 302(a)(3).
CPLR 302(a)(3) provides, in relevant part:
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:
. . . .
3. commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he
(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or
(ii) expects or should reasonably expects the act to have consequences in the state and derives substantial revenue from interstate or international commerce.
In order to determine whether there is a tortious injury in New York to warrant jurisdiction under § 302(a)(3) courts "must generally apply a situs-of-injury test which asks them to locate the `original event which caused the injury.'" Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 209 (2d Cir. 2001) (quoting Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez. 171 F.3d 779, 791 (2d Cir. 1999) (citation omitted)); see also DiStefano v. Carozzi North Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001). "The situs of the injury is the location of the original event which caused the injury not the location where the resultant damages are felt by the plaintiff."Whitaker, 261 F.3d at 209 (quotations omitted).
The plaintiff has alleged three tort causes of actions including conversion, unjust enrichment, and fraud. The torts of conversion and unjust enrichment could not give rise to jurisdiction under § 302(a) (3) because the situs of injury of those torts was in Sweden, not in New York. It is undisputed that the bank accounts holding the funds of the plaintiff were located and controlled in Sweden, and that Spar2000 manages its accounts from Sweden. (Ludwig Aff. 1 12.) Any alleged conversion of funds or unjust enrichment took place in Sweden, and not in New York, because the funds were located in Sweden.
The plaintiff argues, however, that because he suffered injuries in New York and the conversion and unjust enrichment had consequences for the plaintiff in New York, personal jurisdiction is proper with respect to the conversion and unjust enrichment claims. As the Court of Appeals has explained, "[t]he occurrence of financial consequences in New York due to the fortuitous location of plaintiffs in New York is not a sufficient basis for jurisdiction under § 302(a)(3) where the underlying events took place outside New York." Whitaker, 261 F.3d at 196 (quotations omitted). In this case, the conversion and unjust enrichment took place in Sweden, and therefore, the fact that the plaintiff suffered financial consequences in New York is not a sufficient basis to exercise jurisdiction over Spar2000 under § 302(a)(3). See id.
With respect to the remaining tort claim of fraud, Spar2000 also argues that there is no jurisdiction under § 302(a)(3). "The exercise of jurisdiction pursuant to section 302(a)(3) requires, at a bare minimum, that the complaint adequately allege a tortious act committed by the [defendant]." Anderson v. Indiana Black EXPO, Inc., 81 F. Supp.2d 494, 504 (S.D.N.Y. 2000). The plaintiff has alleged that Spar2000 committed fraud when it made various misrepresentations that caused the plaintiff to give money to New Horizon, and that personal jurisdiction is proper under § 302(a)(3) because even though Spar2000 may not have entered New York, the plaintiff was injured in New York by the fraud, that injury was reasonably foreseeable, and Spar2000 derives substantial revenue from international commerce.
For a claim of fraud the situs-of-injury inquiry is "where the first effect of the tort was located that ultimately produced the final economic injury." Bank Brussels Lambert, 171 F.3d at 792. Courts have "often found that the situs of injury is New York when the original reliance or other first event causing the injury occurs in New York, even if the defendant has never sent any misrepresentations into the state." Id. (collecting cases). Therefore, a properly pleaded claim of fraud in which the plaintiff alleges that it was defrauded while in New York by a non-domiciliary out of state defendant can give rise to specific jurisdiction under § 302(a)(3) when the first economic effect or injury occurs in New York.See, e.g., In re Sumitomo Copper Litig., 120 F. Supp.2d 328, 341 (S.D.N.Y. 2000).
To state a claim for fraud under New York law, the plaintiff must allege (i) a representation of material fact; (ii) falsity; (iii) scienter; (iv) reasonable reliance; and (v) injury. See Wells Fargo Bank Northwest, N.A. v. Taca Int'l Airlines, S.A., 247 F. Supp.2d 352, 363 (S.D.N.Y. 2002) (citing Manning v. Utilities Mut. Ins. Co.,. Inc., 254 F.3d 387, 400 (2d Cir. 2001)); see also Computerized Radiological Servs. v. Syntex Corp., 786 F.2d 72, 76 (2d Cir. 1986).
Spar2000 argues that it simply did not commit any fraud and therefore this Court could not exercise jurisdiction over Spar2000 with respect to the claim of fraud. As stated above, at this stage of the proceedings the plaintiff need only make legally sufficient allegations of jurisdiction, and the Court must accept plaintiff's averments of jurisdictional facts as true. See In re Magnetic Audiotape, 334 F.3d at 206. Here, Spar2000 has raised various arguments as to why there was no fraudulent conduct, including the fact that the letters alleged to contain fraudulent representations could not reasonably be read to constitute fraud and that the interpretations of the letter made by the plaintiff are unreasonable. In addition, Spar2000 argues that the plaintiff has not offered evidence to contradict the statements of Mr. Ludwig made in his affidavit that suggest that Spar2000 only learned of Mr. Landau's involvement in the alleged transactions late in the process. Although Spar2000 styles its arguments as reasons why the plaintiff's complaint fails to allege a claim of fraud, these arguments and the evidence cited to by Spar2000 in its papers all go beyond the Complaint and require the Court to evaluate the substantive merits of the fraud claim and could not be considered on a motion to dismiss. The plaintiff has made sufficient allegations that he was defrauded, that Spar2000 participated in that fraud, and that the fraud was directed against him in New York. Spar2000 does not dispute that it derives substantial revenue from international commerce. Therefore, the plaintiff, before discovery, has stated sufficient jurisdictional allegations for specific personal jurisdiction over Spar2000 under § 302(a)(3) with respect to his claim for fraud.
Spar2000 did not specifically address the claim for a constructive trust. To the extent that this claim is derivative of the plaintiff's claim that he was defrauded, the claim could not be dismissed. In any event, because the parties have not specifically briefed the issues relating to personal jurisdiction for the claim of a constructive trust, it would be premature to dismiss the claim at this time.
C.
The exercise of jurisdiction in this case would not violate the constitutional guarantee of due process because it complies with "traditional notions of fair play and substantial justice." Int'l Shoe Co. v. State of Washington, 326 U.S. 310, 316 (1945). See also Burnham v. Superior Court, 495 U.S. 604, 618 (1990); Asahi Metal Industry Co., Ltd, v. Superior Court, 480 U.S. 102, 105 (1987); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980).Under the Due Process clause, where a forum seeks to assert specific jurisdiction over an out-of-state defendant who has not consented to suit there, (1) the defendant must have "purposefully directed" its activities to residents of the forum state, (2) the litigation must result from alleged injuries that "arise out of or relate to" those activities, and (3) the exercise of jurisdiction must be reasonable such that the exercise of jurisdiction would comport with "fair play and substantial justice." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 477 (1985).
In Calder v. Jones, 465 U.S. 783 (1984), the Supreme Court found that a California court could exercise personal jurisdiction over two out-of-state defendants for claims of libel. In Calder, the plaintiff, a resident of California, sued the defendants for libel in connection with an article published in the National Enquirer and distributed in California. 465 U.S. at 784. The plaintiff sued the reporter who wrote the article and the editor, both of whom were Florida residents. Id. at 785-86. The Court found that the exercise of jurisdiction over these two defendants by the state court in California was consistent with due process, reasoning that the defendants engaged in allegedly tortious actions "expressly aimed at California." Id. at 789. The alleged act of libel directed at the plaintiff was an "injury that would be felt by [the plaintiff] in the State in which she lives and works." Id. at 790. Consequently, given the allegations of intentional acts directed at the plaintiff in California, the Court concluded that the defendants could reasonably expect to be sued in California, regardless of where the article was written or where the defendants resided. Id. Assertion of personal jurisdiction was proper because the defendants were "primary participants in an alleged wrongdoing intentionally directed at a California resident." Id.
Plaintiff has made sufficient allegations to meet the requirements ofCalder. Plaintiff claims that Spar2000 knew that its allegedly fraudulent representations were aimed at a New York resident, even if Spar2000's communications were for the most part directed to New Horizon in Connecticut. If the evidence at trial shows that Spar2000 engaged in intentional and tortious conduct aimed at the plaintiff in New York, then Spar2000 should reasonably have expected that the plaintiff would be injured in New York and that Spar2000 would be sued in New York. As was true in Calder, the plaintiff here "is the focus of the activities of the defendants out of which the suit arises." Calder, 465 U.S. at 788. Therefore, Spar2000 has sufficient contacts with New York that it must "reasonably anticipate being haled into court there" to answer for its alleged fraud. World-Wide Volkswagen. 444 U.S. at 297.
In determining the "reasonableness" of the assertion of jurisdiction, the Court should consider five factors: (1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial's system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering social substantive policies. Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 244 (2d Cir. 1999) (citations omitted). Courts should find the assertion of jurisdiction unconstitutional in only rare circumstances:
[W]here a defendant who purposefully has directed activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. Most such considerations usually may be accommodated through means short of finding jurisdiction unconstitutional. For example, . . . a defendant claiming substantial inconvenience may seek a change of venue.Burger King. 471 U.S. at 477; see also Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 568 (2d Cir. 1996).
This is not the rare case in which the defendant has presented any compelling circumstances. Spar2000 argues that it will be burdened by having to defend its practices and procedures regarding Swedish bank accounts before a United States court and under United States law. But Spar2000 is being called to defend its allegedly fraudulent representations to the plaintiff, not its account procedures. New York has a "manifest interest" in providing its residents with a convenient forum for redressing intentional injuries caused by out-of-state actors.See Burger King, 471 U.S. at 473. Sweden has little, if any, interest in adjudicating the controversy, and the plaintiff would be significantly burdened if he were forced to conduct his litigation in a Swedish court. A New York court can also provide a more efficient resolution of the controversy because the majority of the relevant witnesses and documents are located in New York and Connecticut. Therefore, the assertion of personal jurisdiction over the defendant would comport with "traditional notions of fair play and substantial justice." Int'l Shoe. 326 U.S. at 316 (citation omitted).
D.
In passing, and in the final section of its reply papers Spar2000 asks the Court to enforce the forum selection clause in the terms and conditions sheet creating the Spar2000 accounts. This argument was raised for the first time in Spar2000's reply papers and may not be considered for the purposes of this motion because the plaintiff had no opportunity to respond to such arguments, and in any event, full consideration and development of this issue requires that the argument be raised in the original moving papers. See Friends of Gateway v. Slater, 257 F.3d 74, 78 n. 3 (2d Cir. 2001); Ernst Haas Studio. Inc. v. Palm Press, Inc., 164 F.3d 110, 112 (2d Cir. 1999) (per curiam); see also Buxbaum v. Deutsche Bank AG, 316 F.R.D. 72, 79 n. 3 (S.D.N.Y. 2003).
CONCLUSION
The remaining arguments are either moot or without merit. For the reasons explained above, with the exception of the plaintiff's claims of fraud and constructive trust, Spar2000's motion to dismiss for lack of personal jurisdiction is granted.
SO ORDERED.