Andrew Greenberg, Inc. v. Sirtech Canada, Ltd.

• Decision Date: 16 December 2010
• Citation: 79 A.D.3d 1419,913 N.Y.S.2d 808
• Parties: ANDREW GREENBERG, INC., Respondent, v. SIRTECH CANADA, LTD., et al., Defendants, and Frederick Sirotek, Appellant.
• Court: New York Supreme Court — Appellate Division

913 N.Y.S.2d 808 79 A.D.3d 1419 ANDREW GREENBERG, INC., Respondent, v. SIRTECH CANADA, LTD., et al., Defendants, and Frederick Sirotek, Appellant. Supreme Court, Appellate Division, Third Department, New York. Dec. 16, 2010.

Leclair, Korona, Girodano & Cole, Rochester (Paul L. Leclair of counsel), for appellant.

Weiss & Associates, P.C., New York City (Matthew J. Weiss of counsel), for respondent.

Before: CARDONA, P.J., MERCURE, LAHTINEN, STEIN and GARRY, JJ.

MERCURE, J.

Appeal from an order of the Supreme Court (Ledina, J.), entered January 21, 2010 in Sullivan County, which denied defendant Frederick Sirotek's motion for summary judgment dismissing the complaint against him.

The underlying facts are more fully set forth in the various prior decisions of this Court and the Court of Appeals in these two consolidated actions for breach of contract, an accounting, trade secret misappropriation and tortious interference ( see Andrew Greenberg, Inc. v. Svane, Inc., 36 A.D.3d 1094, 830 N.Y.S.2d 358 [2007]; Andrew Greenberg, Inc. v. Sir-Tech Software, 2 A.D.3d 1042, 768 N.Y.S.2d 420 [2003], revd. 4 N.Y.3d 185, 791 N.Y.S.2d 504, 824 N.E.2d 944 [2005]; Andrew Greenberg, Inc. v. Sir-Tech Software, 297 A.D.2d 834, 746 N.Y.S.2d 736 [2002]; Andrew Greenberg, Inc. v. Sir-Tech Software, 245 A.D.2d 1004, 667 N.Y.S.2d 83 [1997] ). This appeal involves the denial of a motion by defendant Frederick Sirotek (hereinafter Sirotek) for summary judgment dismissing the sole remaining claim against him-sounding in trade secret misappropriation-on the ground that Supreme Court lacks personal jurisdiction over him.

As relevant here, plaintiff entered into a 1981 agreement with Sir-Tech Software, Inc. granting Sir-Tech the exclusive right to manufacture and market a computer game created by plaintiff and known as "Wizardry." The agreement, which was signed bySirotek as president of Sir-Tech, also prohibited the disclosure of any Wizardry product information without plaintiff's consent. Plaintiff commenced the first of these actions in 1992, after Sir-Tech ceased paying it royalties under the agreement, and subsequently added two Canadian successor corporations as defendants after discovering that Sir-Tech had transferred its assets to those corporations in 1998. In 2001, plaintiff commenced the second of these actions against the principals and officers of the corporate defendants-namely, Sirotek and his two sons, defendants Robert Sirotek and Norman Sirotek-alleging that they had disclosed trade secrets to the Canadian successor corporations.

Following joinder of issue, Sirotek's original 2003 motion to dismiss the complaint against him for lack of personal jurisdiction was continued by Supreme Court, pending additional discovery. Extensive motion practice, discovery and several appeals ensued, resulting in a decision by the Court of Appeals holding that the motion of the Canadian corporate defendants to dismiss for lack of personal jurisdiction must be denied under CPLR 302(a)(1) ( Andrew Greenberg, Inc. v. Sir-Tech Software, 4 N.Y.3d at 191, 791 N.Y.S.2d 504, 824 N.E.2d 944). In addition, this Court rejected the individual defendants' assertion that plaintiff's claim for trade secret misappropriation was either settled and released pursuant to a settlement agreement entered in the chapter 11 bankruptcy proceeding of Sir-Tech, or barred by the statute of limitations ( Andrew Greenberg, Inc. v. Svane, Inc., 36 A.D.3d at 1096-1098, 830 N.Y.S.2d 358). In 2009, Sirotek, who lives in Canada, sought summary judgment dismissing the remaining trade secret misappropriation claim on the ground that Supreme Court lacks personal jurisdiction over him. Supreme Court denied the motion, prompting this appeal.

We affirm. In determining whether the New York courts have personal jurisdiction over a non-domiciliary, such as Sirotek, a two-part analysis must be employed. First, it must be "determine[d] whether our long-arm statute (CPLR 302) confers jurisdiction over [him] in light of [his] contacts with this State" ( LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 214, 713 N.Y.S.2d 304, 735 N.E.2d 883 [2000] ). If so, it must then be "determine [d] whether the exercise of jurisdiction comports with due process" ( id. at 214, 713 N.Y.S.2d 304, 735 N.E.2d 883). We are mindful that CPLR 302 " 'does notconfer jurisdiction in every case where it is constitutionally permissible' " ( Ehrenfeld v. Bin Mahfouz, 9 N.Y.3d 501, 512, 851 N.Y.S.2d 381, 881 N.E.2d 830 [2007], quoting Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 471, 527 N.Y.S.2d 195, 522 N.E.2d 40 [1988] ), and the ultimate burden is upon plaintiff, as the party seeking to assert jurisdiction, to show that a proper basis for long-arm jurisdiction exists ( seeSPCA of Upstate N.Y., Inc. v. American Working Collie Assn., 74 A.D.3d 1464, 1465, 903 N.Y.S.2d 562 [2010]; Stardust Dance Prods., Ltd. v. Cruise Groups Intl., Inc., 63 A.D.3d 1262, 1264, 881 N.Y.S.2d 192 [2009] ).

As relevant here, long-arm jurisdiction under CPLR 302(a)(1) for tort and contract claims may be predicated on a showing that "(i) a defendant transacted business within the state and (ii) the cause of action arose from that transaction of business" ( Johnson v. Ward, 4 N.Y.3d 516, 519, 797 N.Y.S.2d 33, 829 N.E.2d 1201 [2005]; accord. SPCA of Upstate N.Y., Inc. v. American Working Collie Assn., 74 A.D.3d at 1465, 903 N.Y.S.2d 562). The Court of Appeals has held that "[t]he overriding criterion necessary to establish a transaction of business is some act by which the defendant purposefully avails itself of the privilege of conducting activities within [New York]" and thereby "invok[es] the benefits and protections of [our] laws" ( Ehrenfeld v. Bin Mahfouz, 9 N.Y.3d at 508, 851 N.Y.S.2d 381, 881 N.E.2d 830 [internal quotation marks and citations omitted] ). Furthermore, there must be a "substantial relationship" between defendant's purposeful activities and the cause of action asserted ( Kreutter v. McFadden Oil Corp., 71 N.Y.2d at 467, 527 N.Y.S.2d 195, 522 N.E.2d 40). Once the plaintiff establishes purposeful activities in the state that bear a substantial relationship to the claim asserted, "CPLR 302(a)(1) jurisdiction is proper even [if] the defendant never enters New York" ( Fischbarg v. Doucet, 9 N.Y.3d 375, 380, 849 N.Y.S.2d 501, 880 N.E.2d 22 [2007] [internal quotation marks and citations omitted] ).

Here, Sirotek acknowledges that he signed the 1981 agreement in his capacity as president of Sir-Tech, which was a New York corporation, and that he remained president during much of the 1980s. He argues, however, that there is no substantial relationship between his conduct in New York and plaintiff's remaining claim inasmuch as he retired from Sir-Tech in 1989, moved to Canada shortly thereafter, and-he avers-had no knowledge of the 1998 sale of Sir-Tech's assets to the defendant Canadian successor corporations. While this evidence established Sirotek's prima facie entitlement to summary judgment, we conclude that plaintiff raised triable issues of fact in opposition, warranting the denial of Sirotek's motion.

Plaintiff presented evidence that Sirotek remained on the board of directors of Sir-Tech until 1997. In 1996, Sirotek gave deposition testimony in the first of these actions stating that it was his own "mistake" that plaintiff was "overpaid" pursuant to the 1981 agreement and that plaintiff, whose principal he characterized as "greedy," was not entitled to additional royalties. Sirotek's son Robert indicated that an independent marketing firm spent "a number of years" prior to the 1998 sale-i.e., while Sirotek remained on the board of directors-seeking a buyer for Sir-Tech's assets, which it sold to raise money for itsdefense in the first action. In December 1997, the successor Canadian corporation, defendant Ontario 1259190, was formed, with Sirotek as a shareholder and sole director and his son Norman as president. Norman testified that the closely-held corporation was formed solely for the purpose of acquiring Sir-Tech's assets. Once Ontario1259190 purchased those assets in January 1998, it licensed them one month later to another closely-held successor Canadian corporation, defendant Sirtech Canada, which maintained an office in the City of...