LaRoss Partners, LLC v. Contact 911 Inc.

• Decision Date: 10 July 2012
• Docket Number: No. 11–CV–1980 (ADS)(ARL).,11–CV–1980 (ADS)(ARL).
• Citation: 874 F.Supp.2d 147
• Parties: LaROSS PARTNERS, LLC, Plaintiff, v. CONTACT 911 INC., and FamilyContact911.com, LLC, Defendants.
• Court: U.S. District Court — Eastern District of New York

874 F.Supp.2d 147

LaROSS PARTNERS, LLC, Plaintiff,

v.CONTACT 911 INC., and FamilyContact911.com, LLC, Defendants.

No. 11–CV–1980 (ADS)(ARL).

United States District Court,

E.D. New York.

July 10, 2012.

Magnozzi & Kye, LLP by Mark F. Magnozzi, Esq., Cynthia S. Butera, Esq., Of Counsel, Roslyn Heights, NY, for Plaintiff.

Moran Karamouzis LLP by Andrew P. Karamouzis, Esq., Of Counsel, Rockville Centre, NY, for Defendants.

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

The Plaintiff LaRoss Partners, LLC (“LaRoss”) commenced this action against Contact 911 Inc., (“Contact”) and FamilyContact911.com LLC (“Family”) based on claims of breach of contract, unjust enrichment, fraud, and conversion. The Defendants now move to dismiss the Plaintiff's amended complaint pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ.P.”) 12(b)(2) for lack of personal jurisdiction against Family and pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim. For the reasons stated below, the Defendants' motion to dismiss for lack of personal jurisdiction is denied and the motion to dismiss for failure to state a claim is granted in part and denied in part.

I. BACKGROUND

The Plaintiff is a New York corporation that provides various services for companies like the Defendants, which are Florida corporations that provide emergency contact solutions. The purpose of an emergency contact service is that in the midst of a catastrophic event, such as a terrorist attack or natural disaster, an individual can conveniently pass along a message in an automated fashion to those in one's “Contact List”. This service is charged to customers on their phone bill.

On August 3, 2007, LaRoss and Contact entered into an agreement (the “Agreement”) under which LaRoss would provide a number of services for Contact's internet based emergency service titled “Family Contact 911”.

One type of service LaRoss agreed to provide was to apply and process for Local Exchange Carrier (“LEC”) approval, specifically on behalf of the Family entity. LaRoss also contracted to provide a marketing program to sell the Family Contact 911 product. In addition, LaRoss agreed to perform Family Contact 911's billing. LaRoss used a third-party intermediary, the clearinghouse known as ILD Telecommunications (“ILD”), for this purpose. Under the Agreement, LaRoss would provide the billing services, retain a portion of the revenue, and remit the rest to Contact. In particular, LaRoss claims that it was to be paid for its services according to the terms of the Agreement, which was 40% of the Defendants' monthly billing settlement “net revenues”, as that term is defined in the Agreement.

The initial term of the Agreement was set at three years. The Agreement contained a forum selection clause, which stated “If such disputes cannot be resolved, then both retain the right to pursue legal or other remedies; with the venue for all such remedies to be set in Nassau County, State of New York, exclusively.” (Pl. Mem. in Opposition Ex. 1)

According to the Plaintiff, LaRoss provided the agreed services and by the terms of the Agreement, the revenues were split, until in or around March 2009. Throughout this time, the Plaintiff claims to have distributed the shared revenues to both the Contact and Family entities. The Plaintiff first asserts that, in or around March 2009, the Defendants communicated to the Plaintiff that they would take over the billing services, but that the remaining provisions of the Agreement would remain in force, including the revenue sharing provision. LaRoss claims that the Defendants made only one further payment of the LaRoss' revenue share, in March of 2009, despite subsequent assurances from the Defendants that the Plaintiff would be receiving its share of the net revenues realized from the billing to the Family Contact 911 customers under the Agreement.

On or about March 2, 2011, LaRoss filed suit in Nassau County Supreme Court, pursuing causes of action for breach of contract, fraud, conversion, accounting, and attorneys' fees against both parties, as well as an unjust enrichment claim against Family. On April 21, 2011, the case was removed to this Court.

On October 6, 2011, Family moved to dismiss the Plaintiff's amended complaint for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) and, in the alternative, to dismiss the Plaintiff's second (unjust enrichment), third (fraud), fourth (conversion), fifth (accounting) and sixth (attorney's fees) causes of action, for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). Contact joined in moving to dismiss the Plaintiff's third, fourth, fifth, and sixth causes of action for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). The Plaintiff opposes both motions.

II. AS TO PERSONAL JURISDICTION

A. Legal Standards

1. Standard on a Motion to Dismiss for Lack of Personal Jurisdiction

A plaintiff has the burden of establishing personal jurisdiction to defeat a Rule 12(b)(2) motion to dismiss. DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir.2001) (quoting Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir.1999)). In deciding a motion to dismiss for lack of personal jurisdiction, the Court may rely on materials that are outside the pleadings, including any affidavits submitted by the parties. DiStefano, 286 F.3d at 84. However, where, as here, the Court “relies on the pleadings and affidavits, and chooses not to conduct a ‘full-blown evidentiary hearing,’ plaintiffs need only make a prima facie showing of personal jurisdiction over the defendant.” Penguin Group (USA) Inc. v. American Buddha, 609 F.3d 30, 34–35 (2d Cir.2010); Porina v. Marward Shipping Co., Ltd., 521 F.3d 122, 126 (2d Cir.2008). “Such a showing entails making legally sufficient allegations of jurisdiction, including an averment of facts that, if credited, would suffice to establish jurisdiction over the defendant.” Penguin, 609 F.3d at 35 (internal quotations marks and alterations omitted). Furthermore, materials presented by the plaintiff should be construed in the light most favorable to the plaintiff and all doubts resolved in its favor. See A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79–80 (2d Cir.1993).

2. Forum Selection Clause

“Parties can consent to personal jurisdiction through forum-selection clauses in contractual agreements.” D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 103 (2d Cir.2006) (citing Nat'l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 315–16, 84 S.Ct. 411, 11 L.Ed.2d 354 (1964)). If the forum selection clause is both valid and applicable, “it is not necessary to analyze jurisdiction under New York's long-arm statute or federal constitutional requirements of due process.” American S.S. Owners Mut. Protection and Indem. Ass'n, Inc. v. Am. Boat Co., No. 11 Civ. 6804, 2012 WL 527209, at *2 (S.D.N.Y. Feb. 17, 2012) (quoting Export–Import Bank of the U.S. v. Hi–Films S.A. de C.V., No. 09 Civ. 3573, 2010 WL 3743826, at *4 (S.D.N.Y. Sep. 24, 2010)).

There is a strong presumption in favor of upholding the enforceability of forum selection clauses. Bluefire Wireless, Inc. v. Cloud9 Mobile Commc'ns, Ltd., No. 09 Civ. 7268, 2009 WL 4907060, at *3 (S.D.N.Y. Dec. 21, 2009) (“[t]he Second Circuit has endorsed an expansive reading of the scope of forum selection clauses, in keeping with the policy favoring their use.”) (citations omitted); see M/S Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 9–10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972); Roby v. Corp. of Lloyd's, 996 F.2d 1353, 1361 (2d Cir.1993). Forum selection clauses play a crucial role in ensuring predictability in contract formation. In re Refco Inc., Securities Litigation, No. 08 Civ. 3086, 2009 WL 5548666, at *5 (S.D.N.Y. Nov. 16, 2009) (“Both the Supreme Court and the Second Circuit have recognized that forum selection clauses have economic value and should be enforced in accordance with the expectations of the parties.”) (citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 594, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991); M/S Bremen, 407 U.S. at 13–15, 92 S.Ct. 1907;Aguas Lenders Recovery Group, LLC v. Suez, S.A., 585 F.3d 696, 699–700 (2d Cir.2009); Roby, 996 F.2d at 1363).

To enforce a forum selection clause, a party must show that: “(1) the clause was reasonably communicated to the party resisting enforcement; (2) the clause was mandatory and not merely permissive; and (3) the claims and parties involved in the suit are subject to the forum selection clause.” Tropp v. Corporation of Lloyd's, 385 Fed.Appx. 36, 37 (2d Cir.2010). Even if all three criteria are met, the opposing party may “make a sufficiently strong showing that ‘enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching.’ ” Phillips v. Audio Active Ltd., 494 F.3d 378, 383–84 (2d Cir.2007) (quoting M/S Bremen, 407 U.S. at 15, 92 S.Ct. 1907).

B. As to Whether the Forum Selection Clause is Enforceable Against Family

In the instant case, the Defendant Family moves to dismiss for lack of personal jurisdiction and asserts that, as a non-signatory, they are not bound by the forum selection clause in the Agreement. The dispute as to the applicability of the forum selection clause in this context largely concerns whether Family is an entirely separate company from Contact so that it should be treated as such under the law, or whether there are enough ties between Family and Contact so that it is fair and just to treat them similarly, at least for jurisdictional purposes at this stage of the proceedings. As set forth below, although the Plaintiff has the burden to demonstrate a prima facie case of personal jurisdiction, because the facts presented and because the materials presented by the Plaintiff are construed in the light most favorable to the Plaintiff, the Court finds that it is proper to apply the forum selection clause to the Family entity.

1. As to Whether the Clause Was...