Signature Fin. LLC v. Neighbors Global Holdings, LLC
| Decision Date | 19 December 2017 |
| Docket Number | 17 Civ. 6089 |
| Citation | 281 F.Supp.3d 438 |
| Parties | SIGNATURE FINANCIAL LLC, Plaintiff, v. NEIGHBORS GLOBAL HOLDINGS, LLC, NEC Lufkin Emergency Center, LP, NEC Greeley Emergency Center, LP, NEC West Warwick Emergency Center, LP, NEC Lubbock Emergency Center, LP, Neighbors Legacy Holdings, Inc. f/k/a Neighbors Health System, Inc., Neighbors Health, LLC f/k/a Neighbors Health System, LLC, and NEC Bellaire Emergency Center, LP, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Robert Michael Tils, Lauren Marie Bernstein, Moritt Hock & Hamroff LLP, Garden City, NY, for Plaintiff.
Zane Christian Riester, McCarter & English, LLP, Newark, NJ, for Defendants.
This is a breach of contract action involving finance leases for IT equipment and services extended by non-party All Points Solutions, Inc. d/b/a 3i International ("3i") to Neighbors Global Holdings, LLC ("Neighbors Global"), NEC Lufkin Emergency Center, LP ("Lufkin"), NEC Greeley Emergency Center, LP ("Greeley"), NEC West Warwick Emergency Center, LP ("West Warwick"), NEC Lubbock Emergency Center, LP ("Lubbock"), Neighbors Legacy Holdings, Inc. ("Legacy Holdings"), Neighbors Health, LLC ("Neighbors Health"), and NEC Bellaire Emergency Center, LP ("Bellaire") (collectively, "defendants" or "Neighbors").
Plaintiff Signature Financial LLC ("Signature")—an assignee of 3i—brings a fifteen-count complaint arising from defendants' non-payment of rent. See Dkt. 1, Ex. A.
Defendants, on September 6, 2017, moved to dismiss plaintiff's complaint for lack of personal jurisdiction in New York and, in the alternative, to transfer venue to the Southern District of Texas pursuant to 28 U.S.C. § 1404. See Dkt. 12. Upon due consideration, by bottom-line Order dated October 29, the Court denied defendants' motion in its entirety. See Dkt. 24. This Opinion sets forth the reasons for that ruling.
The pertinent allegations are as follows:
Signature, a wholly-owned subsidiary of Signature Bank, a New York-chartered bank, is a New York limited liability company with its principal place of business in New York. See Affidavit in Opposition of David McGowan ("McGowan Affidavit") ¶ 2, Dkt. 16.
Legacy Holdings is a Texas corporation with its principal place of business in Texas and is wholly-owned by nine non-party physicians who are residents of Texas. See Affidavit of Francine A. Elliot in Support of Defendants' Motion to Dismiss or Transfer ("Elliot Affidavit") ¶ 5, Dkt. 14.
Neighbors Global is a Delaware limited liability company with its principal place of business in Texas. Id. ¶ 4. Neighbors Global is a wholly-owned subsidiary of Legacy Holdings. Id. Neighbors Global owns Neighbors Health, a Texas limited liability company with its principal place of business in Texas. Id. ¶ 7. Lufkin, Greeley, West Warwick, Lubbock, and Bellaire are all Texas limited liability companies with their principal places of business in Texas. Id. ¶ 6. They are each 99% owned by non-party Neighbors GP, LLC, a Texas limited liability company, and 1% owned by non-party NHS Emergency Centers, LLC, a Texas limited liability company, both of which are owned by Neighbors Health. Id. ¶ 6.
Neighbors Health and its parent companies collectively own and operate over thirty free-standing emergency medical centers in Texas, Rhode Island, and Colorado. See id. Ex. A, ¶ 40.
On or about September 14, 2015, Neighbors Health entered into a Master Equipment Lease Agreement ("Master Lease 960") with 3i, see Compl. ¶ 76, a Texas corporation with its principal place of business in Texas, see Elliot Affidavit ¶ 10. Pursuant to the terms of Master Lease 960, 3i leased to Neighbors Health (via separate Equipment Schedules) computers, servers, routers, copiers, and other IT equipment. See Compl. ¶ 76.
Master Lease 960 was amended on November 6, 2015 to name Legacy Holdings as lessee and Neighbors Health as co-lessee. See McGowan Affidavit ¶¶ 15–16.
In May 2016, pursuant to the terms of Master Lease 960, Legacy Holdings and Neighbors Health executed Equipment Schedule 41343964 with 3i, naming Bellaire as a co-lessee. Id. ¶ 18; id. Ex. J.
On or about July 15, 2016, Neighbors Global entered into a Master Equipment Lease Agreement with 3i ("Master Lease 501"), identical in all relevant respects to Master Lease 960. Id. ¶ 4. In September 2016, Neighbors Global executed four Equipment Schedules with 3i, one each with co-lessees Lufkin, Greeley, West Warwick, and Lubbock (Equipment Schedules 41413430, 41421639, 41421644, and 41421656, respectively). Id. ¶¶ 6–9; id. Exs. B–E.
Master Leases 501 and 960 (the "Leases") each provide that: McGowan Affidavit, Exs. A, I (hereinafter, the "Lease") ¶ 25.
The Leases further include choice of law clauses, specifying New Jersey law, Lease ¶ 25, and provide that "Lessee's obligations to pay Rent in full when due are absolute and unconditional and shall not be subject to any abatement, reduction, set off, counterclaim, recoupment, defense or other right which Lessee may have or assert against Lessor, the supplier of the Equipment or any other person or entity," id. ¶ 4. Additionally, the Leases contain assignment clauses stating: Id. ¶ 21.
3i, on or about July 20, 2015, assigned to non-party Everbank Commercial Finance, Inc. ("Everbank") its rights and remedies in and to Master Lease 960 and Master Lease 501, as well as in and to Equipment Schedules 41343964, 41413430, 41421639, 41421644, and 41421656 ("the Equipment Schedules"). See McGowan Affidavit ¶¶ 10, 19; id. Ex. F.
Thereafter, pursuant to a Master Assignment Agreement by and between Everbank and Signature dated May 23, 2012, Everbank, on July 7, 2016, assigned to Signature its rights and remedies under Equipment Schedule 41343964 and, on October 13, 2016, Everbank further assigned its rights and remedies under Equipment Schedules 41413430, 41421639, 41421644, and 41421656. Id. ¶¶ 11, 20; id. Exs. G–H; see also Compl. ¶¶ 25, 39, 53, 67, 91.
In or around March 2017, Neighbors stopped making payments due under the Schedules. See Compl. ¶¶ 22, 40, 54, 68, 92.1 On July 7, Signature commenced the instant action for non-payment of rent in New York state court, and on August 11, Neighbors removed the case to this Court. See Notice of Removal, Dkt. 1.
Defendants now move to dismiss plaintiff's complaint for lack of personal jurisdiction and, in the alternative, to transfer venue to the Southern District of Texas. See Dkt. 12.
To meet its burden to demonstrate personal jurisdiction over Neighbors in New York, see Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30, 34 (2d Cir. 2010), Signature invokes Paragraph 25 of the Leases. As mentioned earlier, Paragraph 25 states, in relevant part, that "[i]f the lessor or its assignee shall commence any judicial proceeding in relation" to the lease, the "lessee irrevocably agrees that any such matter may be adjudged or determined" in, inter alia, "any court or courts in the state of lessor's or its assignee's principal place of business[.]" Paragraph 25 further provides that the "lessee hereby irrevocably submits generally and unconditionally to the jurisdiction of any such court so elected by lessor." Lease ¶ 25.
Signature does not argue that this Court could or should find personal jurisdiction over defendants in New York in the absence of Paragraph 25. See, e.g., Dkts. 18, 20, 22. Signature does not invoke New York's long-arm statute or argue that defendants have purposefully availed themselves of the privilege of doing business in New York. Signature does not contend that defendants have sufficient "minimum contacts" with New York such that the "maintenance of the suit does not offend traditional notions of fair play and substantial justice," or that defendants have any contacts with New York at all. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Indeed, there appears to be no relationship between defendants and the state of New York aside from the fact that lessor's rights under the Leases (which defendants signed) were assigned to Signature and Signature is based in New York.2 See Compl. ¶ 1. Thus, the maintenance of this suit in New York turns entirely on the enforceability of Paragraph 25.
As a threshold matter, defendants contest the applicability of the Lease terms to the instant dispute. See Defendants' Memorandum of Law in Support of Motion to Dismiss Plaintiff's Complaint For Lack of Personal Jurisdiction, or in the Alternative, to Transfer Venue ("Def. Mem.") 14, Dkt. 13. Although defendants concede that they signed the Leases and that this suit arises out of their non-payment of rent, they argue that only the Equipment Schedules, and not the Master Leases, have been assigned to Signature. Id.
While this may be true, the Schedules expressly incorporate the terms and conditions of the Leases. See McGowan Affidavit, Exs. B, C, D, E, and J ("All the terms and conditions of the Master Lease are incorporated herein and made a part hereof."). Thus Paragraph 25 plainly applies to suits arising under the Schedules.
Defendants further contend that ...
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