Murray, Hollander, Sullivan & Bass v. Hem Research, Inc.

• Decision Date: 14 May 1985
• Court: New York Supreme Court — Appellate Division
• Parties: MURRAY, HOLLANDER, SULLIVAN & BASS, Plaintiff-Appellant-Respondent, v. HEM RESEARCH, INC. et al., Defendants-Respondents-Appellants.

Page 187

489 N.Y.S.2d 187

111 A.D.2d 63

MURRAY, HOLLANDER, SULLIVAN & BASS, Plaintiff-Appellant-Respondent, v. HEM RESEARCH, INC. et al., Defendants-Respondents-Appellants.

Supreme Court, Appellate Division First Department.

May 14, 1985.

E.B. Levine, New York City, for plaintiff-appellant-respondent.

A.M. Richardson, New York City, for defendants-respondents-appellants.

Before KUPFERMAN, J.P., and SULLIVAN, ASCH, KASSAL and ELLERIN, JJ.

MEMORANDUM DECISION.

Order of the Supreme Court, New York County, entered March 13, 1984, which granted defendants' motion to dismiss the complaint, is reversed on the law and the motion to dismiss is denied, with costs and disbursements payable to plaintiff.

HEM Research, Inc. is a corporation organized under the laws of Maryland with its principal place of business in Maryland. It is the sole general partner of the Maryland limited partnership, HEM Associates, also headquartered in Maryland. They are involved in the business of furnishing laboratory services and conducting medical research, particularly in the development of interferon.

HEM retained plaintiff New York law firm to do certain legal work in March 1980. Plaintiff's partner, Geoffrey Bass, was a director and officer of HEM Research, Inc. Plaintiff's October 1981 bill for services rendered between April 1 and September 30, 1981, amounting to $14,404, was not paid. HEM Research, Inc. executed an interest-bearing promissory note dated December 10, 1981, in that amount, due June 10, 1982. Defendant paid interest thereon monthly and plaintiff continued to render legal services. The principal amount of the note was not paid when due. Defendants also did not pay plaintiff's bill for $14,768 for services performed between October 1, 1981 through December 31, 1981, or plaintiff's bill for $39,779 for services performed between January 1 and July 1, 1982.

In November 1982, plaintiff law firm commenced an action against HEM Research, Inc. in New York Federal District Court (Southern District) seeking only recovery on said defendants' promissory note (representing April 1 through September 30, 1981 services). In November of 1982, plaintiff law firm later commenced this action in the Supreme Court, New York County, asserting seven causes of action, all basically for the later October 1, 1981 through July 1, 1982 services (two causes of action each for breach of contract, quantum meruit and account stated and a seventh cause of action for fraud in defendants deceiving plaintiff as to their intent to pay for further services by certain actions between November 1981 through June 1982).

In December 1982, in both the federal action and this state court action, the defendant parties moved to dismiss for lack of personal jurisdiction on the basis that the claims had no nexus to New York because the defendant parties did business only in Maryland. Defendants' motion to dismiss the state court action also invoked CPLR sec 3211(a)(4) and (7) on the ground that, given the prior federal action, plaintiff was improperly splitting its unitary cause of action.

In opposition to this motion, plaintiff's partner and defendant HEM Research, Inc.'s director and officer, Geoffrey Bass, asserted that defendants had transacted business in New York related to these causes of action as plaintiff law firm had been retained by Frederick Johnson, Vice President of HEM Research, Inc., at a March 6, 1980 meeting in New York; that Bass had repeatedly spoken by telephone to the President of HEM Research, Inc., Paul Came, at Came's New York weekend home in Loudonville, New York; that Bass and President Came met in New York City on December 22, 1981 and January 8, 1982, to negotiate payment of the April through September 1981 services (the subject of the federal action), which was essential to plaintiff's continued representation of defendants (and furnishes the basis for this action), with Came in the federal action, admitting that these meetings related to the October 1981 through June 1982 services which were the crux of this action. Further, Bass asserted that there had been seven other specified meetings in New York City between October 1, 1981 and May 1982, with President Came, concerning plaintiff's representation of HEM's business interests. As to the splitting a cause of action contention, Bass argued that the federal claim concerned services rendered during a different period and presented a different theory, the promissory note not being involved herein.

In reply, defendants' attorney submitted the papers on the federal action motion to dismiss, including President Came's affidavit. Therein it was asserted that there had been no negotiation in New York of the promissory note, but rather that Bass had enticed him to stop off in plaintiff's office to "ceremonially" sign the promissory note while Came was en route between Maryland and his New York weekend home. Came also maintained that plaintiff's representation had been unsatisfactory as it had caused a routine securities offering in Illinois to be rescinded, costing HEM $250,000. Further, it was maintained that plaintiff's bills had been "loaded up."

Special Term granted defendants' motion to dismiss pursuant to CPLR 3211(a)(8) on grounds of lack of personal jurisdiction, without mentioning the splitting of a cause of action theory at all.

It appears that the Federal District Court rejected defendant HEM Research, Inc.'s motion to dismiss the federal action on...