Opinion
No. 03 Civ. 8660 (WHP).
October 25, 2004
Daniel Pagano, Esq., Charles Diven, Esq., Attorney at Law, Peekskill, New York, Attorneys for Plaintiff.
Gloria B. Cherry, Esq., Braff, Harris Sukoneck, New York, NY, Attorneys for Defendants Edward Clamage and Maxwell Clamage.
Walter A. Kretz, Esq., Seiff Kretz Abercrombie, New York, NY, Attorneys for Defendant Metropolitan Plant Flower Corp.
ORDER
Plaintiff Norben Import Corp. ("Plaintiff" or "Norben") brings this diversity action alleging breach of contract, breach of fiduciary duty and fraud claims against defendants Metropolitan Import Corp. ("Metropolitan"), Edward Clamage and Maxwell Clamage (collectively, "Defendants"). Presently before this Court are Defendants' motions to dismiss for lack of personal jurisdiction, lack of venue, and failure to state a claim. For the following reasons, Defendants' motions are granted.
BACKGROUND
On October 19, 2001, Norben contracted with Metropolitan, an Illinois corporation, to ship floral goods to Metropolitan for sale to third parties. (Compl ¶¶ 3-4, 11, Ex. A.) The contract required shipment from Norben's offices in New Jersey to Metropolitan's offices in Illinois. (Compl. Ex. A.) New York law applies to the contract. (Compl. Ex. A.) Edward Clamage executed the contract on behalf of Metropolitan in his capacity as president and CEO. (Compl. Ex. A.) Both he and his brother, Maxwell Clamage, a vice president of Metropolitan, are Illinois residents. (Compl. Ex. C; Affidavit of Edward Clamage, dated December 5, 2003 ¶ 2; Affidavit of Maxwell Clamage, dated July 28, 2004 ¶ 2.)
In 1998, Metropolitan executed a promissory note in favor of Norben for goods previously purchased. (Compl. Ex. D.) The parties stipulated that New Jersey would have jurisdiction over conflicts involving that note. (Compl. Ex. D.) In its dealings with Defendants, Norben held itself out as a New Jersey corporation. (Compl. Exs. A, D.)
Beginning in October 2001, Norben shipped goods to Metropolitan under the contract. (Compl. ¶¶ 12-14.) On several occasions, the Clamages sent letters personally guaranteeing Metropolitan's payments. (Compl. Ex. C.) Those letters also stated the Clamages' understanding that any legal actions would be adjudicated in New York. (Compl. Ex. C.)
Although Defendants received the goods, and sold them to third parties, they failed to remit payment to Norben. (Compl. ¶¶ 15-20.) This action ensued.
DISCUSSION
I. Personal JurisdictionIn deciding a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure, this Court considers the facts alleged in the complaint as well as the affidavits submitted by the parties.See Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 196-98 (2d Cir. 1980). The pleadings and affidavits should be construed in the light most favorable to the plaintiff, and all doubts should be resolved in the plaintiff's favor "notwithstanding a controverting presentation by the moving party." Arista Tech., Inc. v. Arthur D. Little Enters, Inc., 125 F. Supp. 2d 641, 649 (E.D.N.Y. 2000); see A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993).
On a Rule 12(b)(2) motion, the plaintiff bears the burden of showing that the court has jurisdiction over the defendant. See Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999); Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1999). Where, as in this case, a court relies on the pleadings and affidavits, the plaintiff need only make a prima facie showing of jurisdiction by averring facts that sufficiently establish personal jurisdiction. See Credit Lyonnais Sec. U.S.A., Inc. v. Alcantara, 183 F.3d 151, 153 (2d Cir. 1999); Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir. 1998).
Personal jurisdiction over a non-resident defendant in a diversity action is determined under the law of the forum state.See A.I. Trade, 989 F.2d at 79-80. Accordingly, this Court must refer to New York's personal jurisdiction statutes, N.Y.C.P.L.R. § 301 and § 302, to determine whether Norben has made a prima facie showing of personal jurisdiction over Defendants.
A. General In Personam Jurisdiction
Non-resident defendants may be subject to either general or specific personal jurisdiction. Under C.P.L.R. § 301, general personal jurisdiction may be established if a foreign corporation is "engaged in such a continuous and systematic course of doing business [in New York] as to warrant a finding of its presence in this jurisdiction.". J.L.B. Equities, Inc. v. Owen Fin. Corp., 131 F. Supp. 2d 544, 547 (S.D.N.Y. 2001). To meet that test, the defendant must be present in New York "with a fair measure of permanence and continuity." Landoil Res. Corp. v. Alexander Alexander Servs., Inc., 918 F.2d 1039, 1043 (2d Cir. 1990). To determine whether there is general in personam jurisdiction, New York courts consider the following factors: (1) whether the defendant has an office in New York; (2) the presence of bank accounts or other property here; and (3) the presence of employees in the state. See Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 58 (2d Cir. 1985).
Neither the Clamages nor Metropolitan are subject to generalin personam jurisdiction in New York. The Clamages are Illinois residents who neither work in New York nor have property here. (Edward Clamage Aff. ¶¶ 2-3, 7-8; Maxwell Clamage Aff. ¶¶ 2-3, 7-8; Compl. ¶¶ 5-8.) Therefore, they do not have sufficiently continuous or permanent contact with New York for jurisdiction under Section 301. Cf. CES Indus., Inc. v. Minnesota Transition Charter Sch., 287 F. Supp. 2d 162, 166 (E.D.N.Y. 2003) (no general jurisdiction where "defendant did nothing more than order supplies and request services from plaintiff"); J.L.B., 131 F. Supp. 2d at 548-49 (no general jurisdiction even where defendant held bank account in New York and had a subsidiary in New York).
Similarly, Norben has not established jurisdiction over Metropolitan, an Illinois corporation. The record is bereft of any evidence showing a continuous and systematic course of doing business in New York. Metropolitan has no officer, bank account, property or employees in New York. Indeed, Norben points only to its October 2001 contract with Metropolitan and the prior promissory note. They are insufficient under Section 301 to establish general in personam jurisdiction. See Hoffritz, 763 F.2d at 58.
B. Specific or "Long Arm" Jurisdiction
Under C.P.L.R. § 302, a non-resident defendant may be subject to specific in personam jurisdiction if it transacts business within New York and the claim against the defendant arises out of that business activity. See Retail Software Servs., Inc. v. Lashlee, 854 F.2d 18, 22 (2d Cir. 1988); Mantello v. Hall, 947 F. Supp. 92, 99 (S.D.N.Y. 1996).
The Clamages argue that their dealings with Norben were solely in their capacity as Metropolitan's corporate officers. However, both Clamages personally guaranteed payment to Norben. (Compl. Ex. C.) Nevertheless, the parties' submissions do not show that the Clamages "purposefully availed [themselves] of the privilege of conducting activities within New York." CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986). The underlying contract was not negotiated in New York, and none of its terms implicate New York since Norben shipped goods from New Jersey to Illinois. (Compl. Ex. A.) The Clamages' letters asserting their understanding that any legal proceedings would be resolved in New York (Compl. Ex. C) are not part of the contract or promissory note. See Packer v. TDI Sys., Inc., 959 F. Supp. 192, 198 (S.D.N.Y. 1997) (no incorporation by reference of extrinsic documents unless contract expressly so provides). Indeed, the letter from Edward Clamage to that effect predates the parties' contract. (Compl. Ex. C.) Accordingly, there is an insufficient nexus between the parties' transaction and New York for in personam jurisdiction over the Clamages under Section 302. See Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 31 (2d Cir. 1996) ("A claim arises out of defendant's transaction of business in New York [under 302] when there exists a substantial nexus between the business transacted and the cause of action sued upon.") (emphasis added).
Plaintiff has also failed to demonstrate specific jurisdiction over Metropolitan. The promissory note Metropolitan executed for Norben contains a forum selection clause specifying New Jersey as the jurisdiction where legal disputes will be resolved (Compl. Ex. D) and, as noted above, the contract does not identify New York as a forum. (Compl. Ex. A.) Although the contract provides that New York law shall govern (Compl. Ex. A), such a provision is legally insufficient for personal jurisdiction under Section 302. See Cutco, 806 F.2d at 366 ("[A] choice of law provision in a contract does not constitute a voluntary submission to personal jurisdiction."); Premier Lending Servs., Inc. v. J.L.J. Assocs., 924 F. Supp. 13, 17 (S.D.N.Y. 1996). It is significant, moreover, that Norben held itself out as a New Jersey corporation since doing so rendered it foreseeable that Defendants might be hailed into New Jersey courts. (Compl. Exs. A, D.) See World-Wide Volkswagen Corp. v. Woodson, 44 U.S. 286, 297 (1980) (personal jurisdiction must be reasonably foreseeable to comport with federal due process). In that vein, during oral argument, Metropolitan offered to stipulate to jurisdiction in New Jersey.
Therefore, Norben has not demonstrated sufficient jurisdictional contacts by Metropolitan to allow personal jurisdiction over Defendants under New York's long-arm statute.
CONCLUSION
For the foregoing reasons, Metropolitan's motion to dismiss based on lack of personal jurisdiction is granted, and the Clamages' motion to dismiss for lack of personal jurisdiction is granted. The Clerk of the Court is directed to mark this case closed.
SO ORDERED.