Eastboro Found. Charitable Trust & James Bernath v. Penzer

• Decision Date: 18 June 2013
• Docket Number: No. 13 Civ. 1343(AJP).,13 Civ. 1343(AJP).
• Parties: The EASTBORO FOUNDATION CHARITABLE TRUST and James Bernath, Plaintiffs, v. Abraham M. PENZER and Joshua Rothenberg, Defendants.
• Court: U.S. District Court — Southern District of New York

950 F.Supp.2d 648

The EASTBORO FOUNDATION CHARITABLE TRUST and James Bernath, Plaintiffs,

v.Abraham M. PENZER and Joshua Rothenberg, Defendants.

No. 13 Civ. 1343(AJP).

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

June 18, 2013.

Sheldon Eisenberger, The Law Office of Sheldon Eisenberger, New York, NY, for Plaintiffs.

Ruth Evon Idahosa–Howard, Lynn Marie Dukette, Furman, Kornfeld & Brennan LLP, New York, NY, for Defendants.

OPINION AND ORDER

ANDREW J. PECK, United States Magistrate Judge:

Plaintiffs Eastboro Foundation and James Bernath (collectively, “Bernath”) bring this diversity action against defendants Abraham Penzer and Joshua Rothenberg, seeking $150,000 in damages resulting from an unsuccessful real estate transaction among the parties. (Dkt. No. 1: Compl.) Presently before the Court is Penzer's motion to dismiss for lack of personal jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(2). (Dkt. No. 8: Notice of Motion.) The parties have consented to decision of this motion by a Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Dkt. No. 23.) For the reasons set forth below, Penzer's motion is GRANTED and the case is dismissed without prejudice.¹

FACTS²

Plaintiff Bernath asserts four causes of action: legal malpractice (Dkt. No. 1: Compl. ¶¶ 25–28), breach of fiduciary duty ( id. ¶¶ 29–32), conversion, embezzlement and aiding and abetting thereof ( id. ¶¶ 33–36), and unjust enrichment and aiding and abetting thereof ( id. ¶¶ 37–40). All four claims are based on the core allegation that Bernath transferred $150,000 to attorney Penzer's New Jersey trust account for the purchase of New Jersey property, which Penzer then disbursed to Rothenberg who purchased the property himself. (Compl.¶¶ 1–2, 14–15, 18–22, 28, 31, 34–35, 38–39.)

Parties

Plaintiff Bernath is a New York resident and partner at the CPA firm of Bernath & Rosenberg, P.C. in New York City. (Dkt. No. 1: Compl. ¶ 7; Dkt. No. 13: Bernath Aff. ¶ 3.) Plaintiff The Eastboro Foundation is a New York Charitable Trust with an office in New York City. (Compl.¶ 6.) Defendant Penzer is a New Jersey resident and attorney whose law office is located in Lakewood, New Jersey. (Compl.¶¶ 8, 12.) Defendant Rothenberg is a New Jersey resident and real estate developer whose office is also located in Lakewood, New Jersey. (Compl.¶¶ 9, 13.)

Prior Transactions

In January and March 2010, Bernath formed RBRB Realty, LLC and RBRB Realty II, LLC,³ both New Jersey limited liability companies with New Jersey addresses. (Dkt. No. 13: Bernath Aff. ¶ 6 & Ex. A: RBRB Formation Docs.) On February 16 and March 17, 2010, RBRB purchased two parcels of land being developed by Rothenberg in Lakewood, New Jersey. (Bernath Aff. ¶¶ 7–9.) For both purchases, Bernath sent wire transfers to Penzer's attorney trust account in New Jersey. (Dkt. No. 1: Compl. ¶ 16; Bernath Aff. ¶ 7; Dkt. No. 9: Penzer Aff. ¶¶ 7–8 & Exs. B–C: 2/16/10 & 3/12/10 Wire Receipts.) Penzer prepared both sets of closing documents on behalf of RBRB and was paid $1,000 for each one. (Bernath Aff. ¶¶ 7–9, 21; Bernath Aff. Exs. B–C: 2/16/10 & 3/17/10 Closing Docs.) ⁴

The Subject Transaction

In or around September 2010, Bernath intended to purchase a third parcel of land being developed by Rothenberg in Lakewood, New Jersey. (Dkt. No. 1: Compl. ¶¶ 1–2, 14–15, 22–23.) Bernath alleges that he “spoke with Penzer directly on the phone immediately prior to [his] making the very wire transfers which are the subject of this action” and “specifically recall[s] asking [Penzer] whether the wire transfers should be made into the same attorney escrow bank account as the previous two similar transactions ... for the investment with Rothenberg in the Lakewood development.” (Dkt. No. 13: Bernath Aff. ¶ 4.) ⁵ On September 8, 2010, Bernath made two wire transfers totaling $150,000 to Penzer's attorney trust account in New Jersey. (Compl. ¶ 14; Dkt. No. 9: Penzer Aff. Ex. D: 9/8/10 Wire Receipts.) When the third Lakewood transaction did not “come to fruition,” Penzer disbursed Bernath's $150,000 to Rothenberg for the purchase of the New Jersey property on Rothenberg's behalf. (Compl. ¶¶ 18–24; Bernath Aff. ¶¶ 25–27.)

The New York Meeting

At some point after the $150,000 wire transfers were made, Penzer came to Bernath's office in New York City for a meeting “involving a business that [Penzer's] client was working on acquiring” in Bay Shore, New York—a potential transaction that admittedly is unrelated to the transaction presently at issue. (Dkt. No. 13: Bernath Aff. ¶¶ 13, 16–17; Dkt. No. 22: Penzer Reply Aff. ¶ 5.) Bernath alleges that he and Penzer also “discussed” the subject transaction at the meeting, but provides no information regarding the content, nature, duration, or any details of the alleged discussion. (Bernath Aff. ¶¶ 3, 13, 16–17.) According to Penzer, while he did see Bernath when he came to Bernath's office to meet with others, “the only communication that [Penzer] had with Bernath was merely to say ‘hello’ to him in passing.” (Penzer Reply Aff. ¶¶ 3, 5–6.)

Penzer's Legal Practice

Penzer is admitted to practice in New Jersey, New York and the District of Columbia. (Dkt. No. 1: Compl. ¶ 12; Dkt. No. 9: Penzer Aff. ¶ 3.) Penzer has been admitted to practice in New York since 1982, his bar membership is active and his next biennial registration is due in April 2014. (Penzer Aff. ¶ 3; Dkt. No. 13: Bernath Aff. ¶¶ 14–17 & Ex. D: N.Y.S. Unified Court Sys. Docs.) Penzer has appeared four times in New York courts, most recently in 1994. (Bernath Aff. ¶ 16 & Ex. D: N.Y.S. Unified Court Sys. Docs.) Penzer asserts that he has “not been before the New York Courts or actively engaged in the practice of law in the State of New York for nearly twenty (20) years (since 1994).” (Dkt. No. 22: Penzer Reply Aff. ¶ 8.)

Penzer's firm is incorporated only in New Jersey, his only place of business is the firm's office in Lakewood, New Jersey, and Penzer asserts that his practice is limited to New Jersey. (Compl. ¶¶ 8, 12; Penzer Aff. ¶¶ 3–5.) Bernath does not dispute that Penzer does not have employees, an office, address, bank account or telephone number in New York. (Penzer Aff. ¶¶ 4–5.) Penzer claims that he has no New York clients, and neither solicits business, markets, nor advertises in New York. (Penzer Aff. ¶¶ 4–5.) In opposition, Bernath alleges that Penzer is “practicing law in New York” by “working on New York transactions and representing New York clients.” (Bernath Aff. ¶ 17.)

ANALYSIS

I. THE STANDARDS GOVERNING A MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

“On a Fed.R.Civ.P. 12(b)(2) motion to dismiss for lack of personal jurisdiction, plaintiff bears the burden of showing that the court has jurisdiction over the defendant.” In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir.2003); accord, e.g., MacDermid, Inc. v. Canciani, 525 Fed.Appx. 8, 9-10, No. 12–1747–cv, 2013 WL 1943258 at *1 (2d Cir. May 13, 2013).⁶

“Where, as here, a court relies on pleadings and affidavits, rather than conducting a ‘full-blown evidentiary hearing,’ the plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant.” DiStefano v. Carozzi N. Am., Inc., 286 F.3d at 84;accord, e.g., MacDermid, Inc. v. Canciani, 525 Fed.Appx. at 10, 2013 WL 1943258 at *1.⁷ “ ‘[W]here the issue is addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor[.]’ ” Whitaker v. Am. Telecasting, Inc., 261 F.3d at 208 (quoting A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79–80 (2d Cir.1993)).⁸

“In assessing whether personal jurisdiction is authorized, ‘the court must look first to the [jurisdictional] statute of the forum state, in this instance New York.’ ” Whitaker v. Am. Telecasting, Inc., 261 F.3d at 208 (quoting Bensusan Rest. Corp. v. King, 126 F.3d 25, 27 (2d Cir.1997)).⁹ “ ‘If the exercise of jurisdiction is appropriate under that statute, the court must decide whether such exercise comports with the requisites of due process.’ ” Whitaker v. Am. Telecasting, Inc., 261 F.3d at 208.¹⁰

A. General Jurisdiction Under C.P.L.R. § 301

C.P.L.R. § 301 provides, cryptically, that a “court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore.” Section 301 traditionally applies to persons actually present in New York and to corporations “ ‘doing business' ” in New York, “ ‘not occasionally or casually, but with a fair degree of permanence and continuity.’ ” Hearst Corp. v. Goldberger, 96 Civ. 3620, 1997 WL 97097 at *8 (S.D.N.Y. Feb. 26, 1997) (Peck, M.J.) (quoting Joseph McLaughlin, Practice Commentary to CPLR § C301:1, § C:301:2 at pp. 7–9 (McKinney's 1990)); accord, e.g., United Mobile Techs., LLC v. Pegaso PCS, S.A. de C.V., 509 Fed.Appx. 48, 50 (2d Cir.2013) (“Under N.Y. C.P.L.R. § 301, general jurisdiction is established if the defendant is shown to have ‘engaged in continuous, permanent, and substantial activity in New York.’ ”).¹¹

B. Specific Jurisdiction Under C.P.L.R. § 302(a)

New York “long-arm” jurisdiction is codified in C.P.L.R. § 302(a), ¹² which provides:

(a) Acts which are the basis of jurisdiction. 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 ... 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 ...; or

3. commits a tortious act without the state causing injury to person or property within the state ... 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...