Nee v. HHM Financial Services, Inc., 87 Civ. 2187 (MP).
| Decision Date | 18 June 1987 |
| Docket Number | No. 87 Civ. 2187 (MP).,87 Civ. 2187 (MP). |
| Citation | 661 F. Supp. 1180 |
| Parties | Suzanne B. NEE, Plaintiff, v. HHM FINANCIAL SERVICES, INC. and Stephan L. Schneider, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Reaves & Yates by James A. Reaves, New York City, for plaintiff.
Levitt, Scott & Sternberg by Alan Scott, New York City, for defendants.
This is a motion pursuant to Fed.R.Civ.P. 12(b)(2) for an order dismissing plaintiff's complaint for lack of personal jurisdiction over the defendants.
Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 902 (2d Cir. 1981) (citations omitted).
The Court determines this motion on the basis of the affidavits and memoranda furnished by the parties, and the arguments of counsel.
Id. at 904 (citations omitted).
"When a court decides a motion to dismiss for lack of personal jurisdiction on the basis on affidavits and pleadings alone, it must resolve all doubts raised by the papers in the light most favorable to plaintiff." Interface Biomedical Laboratories v. Axiom Medical, Inc., 600 F.Supp. 731, 735 (E.D.N.Y.1985).
The law of the forum state, here the New York Civil Practice Law and Rules (CPLR), determines whether personal jurisdiction is present. See Arrowsmith v. United Press International, 320 F.2d 219, 233 (2d Cir.1961).
Under CPLR 301, a court has jurisdiction over a non-resident defendant "doing business" in New York.
The New York "long-arm" statute, at CPLR 302(a), provides jurisdiction as to a cause of action arising from the acts of a non-domiciliary defendant who in person or through an agent:
Long arm jurisdiction under CPLR 302(a)(1) "requires not only that the defendant `transact business' within this state, but also that plaintiff's cause of action arise out of such transaction." National Spinning Co. v. Talent Network, Inc., 481 F.Supp. 1243, 1245 (S.D.N.Y. 1979).
Plaintiff Nee, a New York resident, seeks recovery of monies allegedly held on her behalf by defendants Schneider and HHM. She claims that defendants (1) breached a contract entered February 2, 1986, (2) breached a fiduciary duty to plaintiff, and (3) unlawfully converted money held for plaintiff's account.
Defendant Schneider is a Pennsylvania resident, a certified public accountant, member of a Pennsylvania Professional Partnership (GSA), vice-president of a Delaware Holding Corporation (IHG), and vice-president of defendant HHM, which provides certain investment services. HHM is a corporation organized under the laws of the Cayman Islands and authorized to do business in Pennsylvania.
Schneider and Nee became acquainted in New York in 1984. Schneider performed accounting services for Pineapple Fitness, a New York corporation in which Nee was a shareholder and officer from 1984 through February 1986. Pineapple ran a health club located at 599 Broadway in New York City. Schneider maintains that accounting services for Pineapple were supplied out of GSA's Philadelphia office.
Nee asserts that she frequently met with Schneider in New York in connection with Schneider's Pineapple accounting work, and that during these meetings Schneider solicited her to make investments in HHM, to make Schneider her financial adviser, and to recommend potential investors to Schneider. Schneider denies discussing HHM with Nee prior to February 1986. He terms her suggestions that he solicited her personal investment business or asked her to refer investment clients as "sheer nonsense." However, when a personal jurisdiction motion to dismiss is decided on affidavits and the pleadings, the court must resolve disputed facts in the light most favorable to plaintiff. See Interface Biomedical Laboratories, 600 F.Supp. at 735.
In February 1986 Nee sold her interest in Pineapple to IHG, which she claims was Schneider's "corporate alter ego," in exchange for $20,000 and a promissory note for $45,000 payable in three installments. The transaction was consummated in St. Thomas, Virgin Islands. Nee claims that at that time Schneider suggested that she allow him to invest the initial $20,000 on her behalf, and that she agreed. The $20,000 was invested in a Cayman Island certificate of deposit through HHM.
In March 1986 Schneider met with Nee at her New York apartment. They discussed additional investment recommendations. Plaintiff alleges that at the meeting Schneider asked her to sign a power of attorney appointing Schneider personally and HHM as her attorneys in fact to make certain investments on her behalf. Schneider persuaded her to invest an additional $10,987.00 in an account receivable with a maturity date of August 17, 1987. Nee later executed the power of attorney and invested in the account receivable.
In August 1986 Nee telephoned Schneider in Philadelphia and requested that he send her the funds from the matured account receivable. On September 30, 1987 Schneider sent Nee $2,000 representing interest on the investment but never sent the $10,987 principal investment.
In October 1986 Schneider met again with Nee at her New York apartment. Allegedly, he recommended further investment of the $10,987.00. In response to Nee's request for return of the money, Schneider told her she must wait 2-3 months or incur a penalty. She agreed to wait. Nee claims this was a misrepresentation intended to induce her to allow Schneider to retain her funds until he "could fabricate an excuse to retain my funds permanently."
Schneider claims that he and plaintiff engaged in no further discussions regarding her relationship with HHM during the course of their New York meetings on unrelated business.
On January 9, 1987 Schneider advised Nee that he and HHM were refusing to return her funds because a third party (Pineapple) was asserting claims against Nee.
Nee demanded return of her funds in a letter dated February 27, 1987. Defendants refused.
A defendant is amenable to personal jurisdiction under CPLR 301 on any cause of action if he is "engaged in such a continuous and systematic course of `doing business' here as to warrant a finding of his presence in this jurisdiction." Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 762 (2d Cir.1983) (citations omitted). "The non-domiciliary must be `doing business' in New York not occasionally or casually, but with a fair measure of permanence and continuity." Id. (citations omitted).
"The mere solicitation of business" is not sufficient to find that a defendant is "doing business;" however, "substantial solicitation plus `very little more' ... will support such a finding." Katz Agency, Inc. v. Evening News Association, 514 F.Supp. 423, 427 (S.D.N.Y.1981) (citations omitted), aff'd, 705 F.2d 20 (2d Cir.1983). "The requisite `plus' may be satisfied by evidence of the defendant foreign corporation's `financial or commercial dealings in New York, or the defendant's holding himself out as operating in New York.'" Id. (citations omitted).
The pleadings and affidavits before the Court at this time indicate that defendants Schneider and HHM are not "doing business" in New York.
Plaintiff has not presented facts sufficient to demonstrate that either defendant has a permanent or continuous business presence in New York. Aside from Schneider's accounting services for Pineapple, plaintiff does not allege any other New York business dealings by defendants.1 Plaintiff does not dispute that Schneider's accounting services for Pineapple were performed outside New York. Plaintiff has not articulated substantial solicitation by defendants, merely occasional meetings with plaintiff at her New York apartment where she was solicited to invest in HHM by Schneider.
However, plaintiff claims that Schneider represented on several occasions that "he had numerous clients in New York City for whom he performed investment advisory and financial management services and that he met with these other clients on the occasions he was in New York to meet with me."
A single transaction of business in New York, out of which the cause of action accrues, may be sufficient for the assertion of long-arm jurisdiction under CPLR § 302(a)(1). Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 446, 261 N.Y.S.2d 8, 18, 209 N.E.2d 68, 75, cert. denied, 382 U.S. 905, 86 S.Ct. 241, 15 L.Ed.2d...
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