Hd Brous & Co. v. Synthesys Secure Technologies

• Decision Date: 04 November 2002
• Docket Number: No. 02CV910(ADS)(WDW).,02CV910(ADS)(WDW).
• Citation: 229 F.Supp.2d 191
• Parties: HD BROUS & CO., INC., Plaintiff, v. SYNTHESYS SECURE TECHNOLOGIES, INC. a/k/a Synthesys Technologies, Inc., Defendant.
• Court: U.S. District Court — Eastern District of New York

229 F.Supp.2d 191

HD BROUS & CO., INC., Plaintiff, v. SYNTHESYS SECURE TECHNOLOGIES, INC. a/k/a Synthesys Technologies, Inc., Defendant.

No. 02CV910(ADS)(WDW).

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

November 4, 2002.

COPYRIGHT MATERIAL OMITTED

Lazare Potter Giacovas & Kranjac LLP, by Robert A. Giacovas, Esq., of Counsel, New York, NY, for Plaintiff.

Kluger, Peretz, Kaplan & Berlin, P.A., Miami, FL, for Defendant.

Westerman Ball Ederer Miller & Sharfstein, LLP, by Stuart T. Rebish, Esq., of Counsel, Mineola, NY, for Defendant.

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

The plaintiff HD Brous & Company, Inc. ("Brous" or the "plaintiff") alleges that the defendant Synthesys Secure Technologies, Inc. a/k/a Synthesys Technologies, Inc. ("Synthesys" or the "defendant") breached an agreement to pay for investment banking services that Brous provided to it. Synthesys now moves to dismiss the complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure and on the ground of forum non conveniens. Alternatively, Synthesys moves to transfer venue to the Southern District of Florida pursuant to 28 U.S.C. § 1404(a).

I. BACKGROUND

The following facts are taken from the complaint unless otherwise noted. Brous is a Delaware corporation with its principal place of business in Great Neck, New York. It provides a full spectrum of financial and investment banking services to companies and individuals. Synthesys is a Florida corporation with its principal place of business in Boca Raton, Florida. It develops and markets software products that prevent identity theft and information security.

On or about June 20, 2001, Synthesys entered into a letter agreement with Brous entitled "Financial Advisory and Investment Banking Agreement" (the "Agreement"). The Agreement provided for Brous to identify and introduce a third-party with whom Synthesys could effect a sale or license of its technology, a joint venture or other relationship. Also, the Agreement provided that upon the completion of an "Eligible Transaction" between Synthesis and a third-party, Synthesys would pay Brous a fee of $60,000 plus additional compensation in the form of stock or fees depending on the type of transaction.

Thereafter, Brous provided Synthesys with analysis and advise that led to a "strategic alliance" with IMSure Network, Inc. ("IMSure"). Brous alleges that the "strategic alliance" was an "Eligible Transaction" under the Agreement triggering Synthesys' obligation to pay Brous $60,000 and 500,000 shares or 5% of its stock. On the other hand, Synthesys claims, among other things, that the IMSure transaction was never completed and refused to compensate Brous for its services.

On February 8, 2002, Brous filed a complaint against Synthesys in the Eastern District of New York. Brous asserts four claims: (1) breach of contract; (2) unjust enrichment; (3) constructive trust; and (4) quantum meruit. Presently before the Court is a motion by Synthesys to dismiss the complaint for lack of personal jurisdiction and forum non conveniens, or in the alternative, to transfer venue to the Southern District of Florida.

II. DISCUSSION

A. Personal Jurisdiction

1. The Standard

In responding to a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of showing that jurisdiction exists over the defendant. Distefano v. Carozzi North America, Inc., 286 F.3d 81, 84 (2d Cir.2001). The plaintiff's burden depends on the posture of the case. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir.1999). Without extensive discovery or an evidentiary hearing — as here — the plaintiff need only make a prima facie showing that personal jurisdiction exists over the defendant. Id.See also Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir.1998). At this early stage, a court must construe all pleadings and affidavits in the light most favorable to the plaintiff and any doubt must be resolved in favor of the plaintiff. Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir.1985) (citations omitted).

In a diversity case — as here — a court exercises personal jurisdiction over a party in accordance with the law of the forum state, subject to the requirements of due process under the United States Constitution. Whitaker v. Amer. Tele., Inc., 261 F.3d 196, 208 (2d Cir.2001). As such, the Court must look to New York's personal jurisdiction statutes, CPLR §§ 301 — general — and — 302 — long-arm — to determine whether Brous has made a prima facie showing of personal jurisdiction over Synthesys. If there is jurisdiction under the CPLR, then the Court evaluates whether the exercise of that jurisdiction comports with due process requirements.

2. CPLR § 302

Brous argues that jurisdiction exists under CPLR § 302(a)(1). Jurisdiction is established under Section 302(a)(1) where, (a) the defendant has transacted business within the state; and (b) the claim arises out of that activity. See Bank Brussels, 171 F.3d at 787. "Transacting business" under Section 302 requires only a minimal quantity of activity, provided that it is of the right nature and quality and, in making a determination, a court must examine the totality of the defendant's contact with the forum. Agency Rent A Car System, Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 29 (2d Cir.1996). Even a "single transaction would be sufficient to fulfill th[e] requirement." Bank Brussels, 171 F.3d at 787 (internal quotation marks and citation omitted).

Courts have noted the following factors, among others, as relevant to a determination whether a defendant has transacted business in New York: (1) the existence of a choice-of-law provision in a contract designating New York law to govern disputes between the parties, CutCo Industries, Inc. v. Naughton, 806 F.2d 361, 366-67 (2d Cir.1986); (2) the defendant's knowledge that services under a contract would be performed in New York, Nat'l Westminster Bank PLC v. Retirement Care Associates, Inc., No. 98-6023, 1999 WL 239677, at *2 (S.D.N.Y. Apr.23, 1999); (3) the defendant's physical presence in New York for the purposes of negotiating a business deal, Moyers v. Brown, No. 89-4935, 1990 WL 3183, at *4-5 (S.D.N.Y. Jan. 11, 1990); and (4) the defendant's frequent telephone calls and letters to the plaintiff located in New York over a couple of months, PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1109 (2d Cir.1997).

Viewing the pleadings and the affidavits in the light most favorable to Brous, the Court finds that the first element — "transacting business" in New York — is met. In particular, the Agreement provides for New York law to govern disputes between the parties. Also, Synthesys contracted with Brous for services that it knew would be performed in New York and were performed there. Further, Peter Letizia the President of Synthesys and a fellow employee John Tabor spent a full day in New York at Brous' offices meeting with investor groups and IMSure employees for the purpose of introducing them to Synthesys' business. Also, introducing Synthesys to potential investors was precisely the purpose of the Agreement. And finally, Synthesys communicated frequently with Brous in New York via e-mail, mail, fax and telephone pursuant to the Agreement.

Synthesys argues that Gates v. Pinnacle Communications Corp., 623 F.Supp. 38 (S.D.N.Y.1985) supports its position that it was not "transacting business" in New York. Gates involved allegations of breach of contract and fraud stemming from negotiations to finance and purchase a radio station in Nevada. Id. at 39. There, Judge Robert L. Carter of the Southern District of New York held that the defendant's one-hour meeting with the plaintiff at a New York hotel to finalize previously agreed to terms for the sale of the radio station was insufficient to establish the element of "transacting business" in New York. Id. at 39-42.

Even if Gates was binding precedent, it does not support Synthesys' position. In Gates, the only contact with New York was the one-hour meeting, see id. at 42, while in the instant case Letizia's and Tabor's full day meeting in New York involved Brous introducing them to IMSure, the party with whom they allegedly formed the "strategic alliance". Further, unlike in Gates, where the circumstances surrounding the agreement took place largely outside New York, see id. at 41, the Agreement in this case was drafted in New York and contemplated services to be performed there. Also, Synthesys sent frequent email, mail, faxes and made telephone calls to New York pursuant to the Agreement. Finally, unlike in Gates, the Agreement here contained a choice-of-law provision requiring New York law to govern disputes between the parties. Based upon the totality of the circumstances, the Court finds that Brous has made a prima facie showing that Synthesys transacted business in New York.

As to the second element — whether the claim arises from the business transactions in New York — the plaintiff must show that the action is "sufficiently related to the business transacted that it would not be unfair to deem it to arise out of the transacted business, and to subject the defendants to suit in New York." Hoffritz for Cutlery, 763 F.2d at 59. The plaintiff need only show "some articulable nexus between the business transacted and the cause of action sued upon." Beacon Enters., Inc. v. Menzies, 715 F.2d 757, 764 (2d Cir.1983) (internal quotation marks and citations omitted). In this case, there is a sufficient nexus between Synthesys' business activities in New York and the instant action because all of the above-noted activities relate either to the formation of the Agreement or to the services that Brous provided pursuant to the Agreement. As such, the second element is met.

Finally, the exercise of personal jurisdiction under Section 302 comports with the Due Process Clause of the United States...