Sarracco v. Ocwen Loan Servicing, LLC, 16–CV–221 (JFB) (GRB)

• Decision Date: 07 December 2016
• Docket Number: No 16–CV–221 (JFB) (GRB),16–CV–221 (JFB) (GRB)
• Parties: John R. SARRACCO, Plaintiff, v. OCWEN LOAN SERVICING, LLC, Caliber Home Loans, Inc., Phelan Hallinan Diamond & Jones PC, OneWest Bank FSB, and LSF9 Master Participation Trust, Defendants.
• Court: U.S. District Court — Eastern District of New York

220 F.Supp.3d 346

John R. SARRACCO, Plaintiff,

v.OCWEN LOAN SERVICING, LLC, Caliber Home Loans, Inc., Phelan Hallinan Diamond & Jones PC, OneWest Bank FSB, and LSF9 Master Participation Trust, Defendants.

No 16–CV–221 (JFB) (GRB)

United States District Court, E.D. New York.

Signed December 7, 2016

The attorney for the plaintiff is Steven B. Rabitz, Law Office of Steven Rabitz, PC, 94 Division Avenue, Massapequa, NY 11758.

The attorney for defendants Ocwen and OneWest is Constantine Philip Economides, Greenberg Traurig, LLP, 777 South Flagler Drive, Suite 300 East, West Palm Beach, FL 33401. The attorney for defendant Caliber Home Loans, Inc., is Kenneth S. Goodkind, Flaster Greenberg PC, 1810 Chapel Avenue West, Cherry Hill, NJ 08002. The attorney for defendant LSF9 is Christina Ann Parlapiano, Day Pitney LLP, 1 Jefferson Road, Parsippany, NJ 07054.

MEMORANDUM AND ORDER

Joseph F. Bianco, District Judge:

BACKGROUND

On January 10, 2006, John Sarracco ("plaintiff"), a New Jersey resident, obtained a loan in the amount of $385,000 from IndyMac Bank, F.S.B., which was secured by a mortgage on property located in Wantage, New Jersey ("the mortgage"). (Def. LSF9's Mem. Supp. Mot. Trans. Venue, ECF No. 26–1 at 2.) The mortgage was subsequently assigned to OneWest Bank, F.S.B. ("OneWest"), a California entity. (Id. ; Def. Phelan's Mem. Supp. Mot. Dismiss, ECF No. 23–1 at 1.)

In May 2009, OneWest filed a foreclosure complaint against plaintiff in the Superior Court of New Jersey as a result of plaintiff's failure to pay the mortgage. (LSF9's Mem. Supp. Mot. Trans. Venue 2.) In June 2013, final judgment was entered against plaintiff. The judgment was later assigned to Ocwen Loan Servicing, LLC ("Ocwen"), a Delaware entity, the following year. (Id. ) Ocwen retained Phelan Hallinan Diamond & Jones PC ("Phelan") to execute the judgment.¹ (Judith T. Romano Decl., Mar. 24, 2016, ECF No. 23–2 ("Romano Decl. I") ¶ 4.) The loan was subsequently sold to LSF9, and the servicing for the loan was transferred to Caliber Home Loans ("Caliber"). (LSF9's Mem. Supp. Mot. Trans. Venue 2.)

On January 14, 2016, plaintiff commenced this action, asserting claims under the federal Fair Debt Collection Practices Act ("FDCPA") arising from defendants' debt collection activities.² (Compl., ECF No. 1 at 1.)

On March 24, 2016, defendant Phelan, a law firm domiciled and with its principal place of business in New Jersey, moved to dismiss the claim against it for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). (Phelan's Mem. Supp. Mot. Dismiss 3, 9.) Phelan also requested the Court award Phelan its legal fees and costs, alleging plaintiff's Complaint was frivolous and filed in bad faith. (Phelan's Mot. Sanctions, ECF No. 24; Phelan's Mem. Supp. Mot. Sanctions, ECF No. 24–1 at 1.)

On March 25, 2016, defendant LSF9 Master Participation Trust ("LSF9") moved to transfer the venue of this action to the United States District Court for the District of New Jersey ("District of New Jersey") pursuant to 28 U.S.C. § 1404(a), arguing that no connection exists between the parties or the allegations in this case and the State of New York, that the District of New Jersey is the locus of the operative facts of the case, and that the District of New Jersey is a more convenient forum. (LSF9's Mem. Supp. Mot. Trans. Venue 1, 4.)

For the reasons stated below, the Court concludes that it does not have personal jurisdiction over Phelan. However, the Court does not grant Phelan's motion to dismiss. Instead, the Court transfers the instant case to the District of New Jersey under the authority of 28 U.S.C. §§ 1404(a) and 1406(a). Further, the Court denies Phelan's motion to impose sanctions on plaintiff.

DISCUSSION

I. PERSONAL JURISDICTION OVER DEFENDANT PHELAN

A. Applicable Law

1. Standard for a Rule 12(b)(2) Motion

On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of showing that the court has jurisdiction over the defendant. Metro. Life Ins. Co. v. Robertson–Ceco Corp. , 84 F.3d 560, 566 (2d Cir. 1996). However, prior to discovery, the plaintiff "need make only a prima facie showing of jurisdiction through its own affidavits and supporting materials" to defeat the motion. Welinsky v. Resort of the World D.N.V. , 839 F.2d 928, 930 (2d Cir. 1988) (quoting Marine Midland Bank, N.A. v. Miller , 664 F.2d 899, 904 (2d Cir. 1981) ). Furthermore, in considering a Rule 12(b)(2) motion, the pleadings and affidavits are to be construed in the light most favorable to plaintiff, the non-moving party, and all doubts are to be resolved in plaintiff's favor. DiStefano v. Carozzi N. Am., Inc. , 286 F.3d 81, 85 (2d Cir. 2001). However, a plaintiff's "unsupported allegations" can be rebutted by "direct, highly specific, testimonial evidence ...." Schenker v. Assicurazioni Genereali S.p.A., Consol. , No. 98 Civ. 9186 (MBM), 2002 WL 1560788, at *3 (S.D.N.Y. July 15, 2002).

2. C.P.L.R. § 301 and § 302

As a threshold matter, "[i]n a federal question case, where the defendant resides outside the forum state, federal courts apply the forum state's personal jurisdiction rules if the applicable federal statute does not provide for national service of process." Sunward Elecs., Inc. v. McDonald , 362 F.3d 17, 22 (2d Cir. 2004) (citation omitted). Because the FDCPA does not provide for national service of process, New York's Civil Practice Law and Rules ("C.P.L.R.") §§ 301 and 302 govern the instant action. See id . ; Fort Knox Music Inc. v. Baptiste , 203 F.3d 193, 196 (2d Cir. 2000).³

Under N.Y. C.P.L.R. § 301, New York's general jurisdiction statute, a court may exercise general personal jurisdiction over a non-domiciliary corporation that is "doing business" in New York. See McGowan v. Smith , 52 N.Y.2d 268, 272, 437 N.Y.S.2d 643, 419 N.E.2d 321 (1981). The "doing business" standard is "stringent, because a defendant who is found to be doing business in New York in a permanent and continuous manner may be sued in New York on causes of action wholly unrelated to acts done in New York." Overseas Media, Inc. v. Skvortsov , 407 F.Supp.2d 563, 567–68 (S.D.N.Y. 2006). A corporation is "doing business" in New York "if it does business in New York ‘not occasionally or casually, but with a fair measure of permanence and continuity.’ " Hoffritz for Cutlery, Inc. v. Amajac, Ltd. , 763 F.2d 55, 58 (2d Cir. 1985) (quoting Tauza v. Susquehanna Coal Co. , 220 N.Y. 259, 267, 115 N.E. 915, (1917) ); Wiwa v. Royal Dutch Petroleum Co. , 226 F.3d 88, 95 (2d Cir. 2000) (quoting Landoil Resources Corp. v. Alexander & Alexander Servs., Inc. , 918 F.2d 1039, 1043 (2d Cir. 1990) ). To determine whether a foreign corporation is doing business in New York, courts focus on a set of common factors, including: whether the company has an office in the state; whether it has any bank accounts or other property in the state; whether it solicits business in the state; whether it has a phone listing in the state; whether it does public relations work in the state; and whether it has individuals permanently located in the state to promote its interests. See Wiwa , 226 F.3d at 98 (citing Hoffritz , 763 F.2d at 58 ; Frummer v. Hilton Hotels Intern., Inc. , 19 N.Y.2d 533, 537, 281 N.Y.S.2d 41, 227 N.E.2d 851 (1967) )); Sound Around Inc. v. Audiobahn, Inc. , No. 07 CV 773 (RJD) (CLP), 2008 WL 5093599, at *4 (E.D.N.Y. Nov. 24, 2008). However, these factors are only intended to provide guidance—they do not amount to a "formula" for testing jurisdiction. As the Second Circuit has noted, "[t]here is no talismanic significance to any one contact or set of contacts that a defendant may have with a forum state; courts should assess the defendant's contacts as a whole. " Metro. Life Ins. Co. v. Robertson–Ceco Corp. , 84 F.3d 560, 570 (2d Cir. 1996) ; see also Wiwa , 226 F.3d at 95 (finding a fact-specific inquiry is necessary to determine whether a corporation's contacts with New York demonstrate "continuous, permanent and substantial activity" (quoting Landoil Res. Corp. , 918 F.2d at 1043 )).

Under N.Y. C.P.L.R. § 302, New York's long-arm statute,

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; or (2) commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; or (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 expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.

Notably, while the statute provides that the acts of an agent in a given forum may lead a court to find jurisdiction over its principal in that forum, the opposite is not true: When "an agent provides services to a principal," it is not the case that "any state in which the principal does business should be able to assert jurisdiction over that principal's agent ...." Birmingham Fire Ins. Co. of Pennsylvania v. KOA Fire & Marine Ins. Co., Ltd. , 572 F.Supp. 962, 967 (S.D.N.Y. 1983). Thus, in New York, where the agent's services are not related in any way to the principal's contacts in the state, any claim of personal jurisdiction in the state as to the principal cannot extend to the agent by virtue of the principal-agent relationship.

B. Analysis

As set forth below, the Court concludes that it does not have personal jurisdiction over Phelan.

1. Personal Jurisdiction Does Not Exist Over Phelan Under § 301 or § 302

Phelan is...