101 McMurray, LLC v. Porter
| Decision Date | 23 March 2012 |
| Docket Number | No. 10-cv-9037 (CS),10-cv-9037 (CS) |
| Parties | 101 MCMURRAY, LLC, Plaintiff, v. MARTIN PORTER, CRAIG WALLACE, WALLACE & WALLACE, PROOF OF FUNDS, LLC, DANE GEROUS BRIGADIER, and ROBERT EDWARD MAYES, III, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Appearances:
Harry H. Wise, III
Law Offices of Harry H. Wise, III
New York, New York
Counsel for Plaintiff
New York, New York
Jonathan R. Harwood
Traub Lieberman Straus & Shrewsberry LLP
Hawthorne, New York
and Robert Edward Mayes, III
Before the Court are the motions of Defendants Craig Wallace and Wallace & Wallace (collectively, the "Wallace Defendants"), (Doc. 33), Martin Porter, (Doc. 37), and Proof of Funds ("POF"), Dane Gerous Brigadier, and Robert Edward Mayes, III (collectively, the "POF Defendants"), (Doc. 43). Porter and the POF Defendants seek dismissal of Plaintiff's Second Amended Complaint ("SAC"), (Doc. 29), under Federal Rules of Civil Procedure 12(b)(2) for lack of personal jurisdiction and 12(b)(6) for failure to state a claim. The Wallace Defendants join Plaintiff in opposing the motions to dismiss for lack of jurisdiction, but also move to dismiss two claims against them for failure to state a claim. For the following reasons, Porter's and the POF Defendants' motions are GRANTED IN PART and DENIED IN PART, and the Wallace Defendants' motion is GRANTED.
The facts (but not the conclusions) in the Amended Complaint are assumed to be true for the purposes of this Opinion. Plaintiff is a limited liability company organized under the laws of Nevada with its principal place of business in California. (SAC ¶ 1.) Porter, a citizen of Florida, Brigadier, a citizen of Ohio, and Mayes, a citizen of Tennessee, each informed Plaintiff that, as principals of POF, a limited liability company organized under the laws of and having a principal place of business in Pennsylvania, they could obtain a $16 million standby letter of credit (the "SLC") for Plaintiff from UBS AG Zurich ("UBS"). (Id. ¶¶ 2, 5-7, 11.) At all relevant times, Brigadier, Mayes, and Porter each represented that he worked for POF as a Managing Member, Chief Financial Officer and a Managing Member, and Director of Finance, respectively. (SAC ¶¶ 12-14.) Each of these Defendants, acting on behalf of POF, made representations to Plaintiff regarding the SLC in various telephone conversations and e-mails, and specifically in a writtendocument entitled "Agreement for Obtaining a Standby Letter of Credit" that Porter sent by e-mail to Plaintiff on or about December 14, 2007 (the "SLC Agreement"), (SAC Ex. A). (SAC ¶ 11.) Prior to entering into the SLC Agreement, Plaintiff also received brochures allegedly prepared by Brigadier, Mayes, and Porter, on behalf of POF, that contained additional representations regarding POF's ability to acquire a standby letter of credit. (See SAC ¶¶ 15-17.)
Porter and the POF Defendants allegedly selected Craig Wallace, a citizen of New York, and his law firm, Wallace & Wallace, a partnership organized under the laws of and having a principal place of business in New York, to act as the Escrow Agent for the transaction. (SAC ¶ 26.) Information about the law firm and Wallace's former employment at the Kings County District Attorney's Office was displayed prominently on POF's website under the "Escrow Attorney" link. (Id. ¶ 27; see Declaration of Harry H. Wise, III ("Wise Decl."), (Doc. 48), Ex. B.)1 Under an escrow agreement, to which Plaintiff, Porter as "Director of Finance," and Wallace & Wallace were signatories (the "Escrow Agreement"), , the parties agreed that Plaintiff would wire-transfer $680,000 to the Wallace Defendants' Interest on Lawyer Account ("IOLA"), and that, upon the SLC being "placed on DTC/Euroclear or . . . received by [Plaintiff] and the Escrow Agent along with coordinates and authentication," the Wallace Defendants would disburse $440,000 to Porter and $240,000 to POF as an "arrangementfee," . POF was a third party beneficiary under the Escrow Agreement. (SAC Ex. A, Annex E ¶ 10.1.)
In reliance on the abovementioned representations, Plaintiff entered into the SLC Agreement and wire-transferred $680,000 to the Wallace Defendants' IOLA account. (SAC ¶¶ 21, 29.) Defendants delivered the SLC to Plaintiff, (id. ¶ 24; see SAC Ex. B), and, in turn, the Wallace Defendants disbursed the funds to Porter and POF, (see SAC ¶ 32). In the months after Plaintiff entered into the SLC Agreement, Brigadier and Mayes made additional representations to Plaintiff regarding steps that were being taken to ensure the availability of the SLC funds. (See id. ¶ 19.) But a genuine $16 million standby letter of credit was never placed on DTC/Euroclear or received by Plaintiff or the Wallace Defendants along with coordinates and authentication. (See id. ¶¶ 30-31.) Rather—as Plaintiff subsequently learned from employees at UBS—the SLC it received from Porter was a fake that bore forged UBS signatures. (Id. ¶¶ 20, 24; see SAC Ex. B; Wise Decl. Ex. G.) Upon learning that the SLC was fraudulent, Plaintiff demanded the return of its $680,000, but Defendants failed to give Plaintiff its money back. (SAC ¶ 34.)
Plaintiff commenced this action by filing a Complaint on December 3, 2010, (Doc. 1), and subsequently amended it twice, (Docs. 3, 29). Plaintiff brings claims against all Defendants for violation of the Racketeer Influenced & Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964(c), fraud, conversion, and unjust enrichment, and also asserts claims solely against the Wallace Defendants for breach of the Escrow Agreement and gross negligence. Porter and the POF Defendants now move to dismiss the SAC under Rule 12(b)(2) for lack of personal jurisdiction, and all Defendants move to dismiss various claims under Rule 12(b)(6).
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (alteration in original) (citations and internal quotation marks omitted). Although Federal Rule of Civil Procedure 8 "marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, . . . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Iqbal, 129 S. Ct. at 1950.
In considering whether a complaint states a claim upon which relief can be granted, the Court may "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth," and then determine whether the remaining well-pleaded factual allegations, accepted as true, "plausibly give rise to an entitlement to relief." Id. Deciding whether a complaint states a plausible claim for relief is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]'—'that the pleader is entitled to relief.'" Id. () (quoting Fed. R. Civ. P. 8(a)(2)).
At the motion to dismiss stage, the plaintiff must only make a prima facie showing by its pleadings and affidavits that the court has jurisdiction over each of the defendants. See CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 364-65 (2d Cir. 1986) (). A federal court sitting in diversity looks to the law of the state in which it sits to ascertain whether it may exercise personal jurisdiction over a foreign defendant. See Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 124 (2d Cir. 2002). In such cases, the court must determine if the forum's law would confer jurisdiction through its long-arm statute, and then decide if the exercise of such jurisdiction is permissible under the Due Process Clause of the Fourteenth Amendment. Id.
Plaintiff contends that the Court has jurisdiction over Porter and the POF Defendants (1) under either of two subsections of New York's long-arm statute, N.Y. C.P.L.R. ("CPLR") 302(a)(1) or (a)(2); (2) because Defendants—through Porter as POF's "Director of Finance"— consented to "submit to the exclusive jurisdiction of the Courts of New York" in connection with "any dispute relating to th[e] Escrow Agreement"; or (3) based on the nationwide jurisdiction afforded to plaintiffs under the RICO statute. (P's Mem. 5-11.)2 Porter and the POF Defendants make various arguments regarding why the Court lacks personal jurisdiction over them. For example, they argue that they neither committed any acts nor were ever present in New York,(see Porter's Mem. 7; POF Ds' Mem. 7-8),3 Plaintiff has failed to show that Porter and the POF Defendants had sufficient control over the Wallace Defendants to deem them their agents under CPLR 302(a)(1), (see Porter...
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