Whitaker v. Fresno Telsat, Inc.

• Decision Date: 14 December 1999
• Docket Number: No. 99 Civ. 6059(SAS).,99 Civ. 6059(SAS).
• Citation: 87 F.Supp.2d 227
• Parties: Ridley M. WHITAKER, Plaintiff, v. FRESNO TELSAT, INC.; James A. Simon; American Telecasting, Inc.; Jas Partners, Ltd.; Rosenthal, Judell & Uchima, and John Doe Nos. 1-10 (which are individual and entities whose identities at this time are unknown), Defendants.
• Court: U.S. District Court — Southern District of New York

Page 227

87 F.Supp.2d 227

Ridley M. WHITAKER, Plaintiff, v. FRESNO TELSAT, INC.; James A. Simon; American Telecasting, Inc.; Jas Partners, Ltd.; Rosenthal, Judell & Uchima, and John Doe Nos. 1-10 (which are individual and entities whose identities at this time are unknown), Defendants.

No. 99 Civ. 6059(SAS).

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

December 14, 1999.

Ridley M. Whitaker, New York, NY, Plaintiff, pro se.

William H. Barrett, McDermott, Will & Emery, New York, NY, for Defendant ATI.

OPINION & ORDER

SCHEINDLIN, District Judge.

Defendant American Telecasting, Inc. ("ATI") moves, pursuant to Federal Rule of Civil Procedure 12(b)(2), to dismiss plaintiff's Amended Complaint which seeks payment of legal fees. Because this Court lacks personal jurisdiction over ATI, the motion is granted.

I. FACTS

The plaintiff in this action, Ridley M. Whitaker, is an attorney licensed to practice in the State of New York. The Amended Complaint alleges that plaintiff was injured as a result of a conspiracy among the defendants,¹ including ATI, to deprive plaintiff of fees allegedly due under a retainer agreement between plaintiff and defendant Fresno Telsat, Inc. ("FTI").² Amended Complaint ¶ 35. Pursuant to that agreement, plaintiff was to receive fees for legal services performed in connection with his representation of FTI from 1994 to 1998. Id. Such services included representation in a trial brought by FTI against ATI and other defendants venued in the State of California.³ Id. ¶ 17. FTI retained Whitaker in New York City, id., and the retainer agreement between FTI and Whitaker was negotiated and drafted in New York. See Opp. Mem. at 12.

ATI is a Delaware corporation whose main offices are located in Colorado. Affidavit of David K. Sentman, ATI's Senior Vice President and Chief Financial Officer, in Support of Motion to Dismiss, sworn to July 29, 1999 ("Sentman Aff."). ATI is not incorporated, licensed or qualified to do business in New York. Id. ¶ 4. ATI has no office, agents, employees, property, bank accounts or telephone listings in New York. Id. ATI has not appointed an agent for service of process in New York. Id. ATI does not market or sell any of its products in New York. Id. Nor does it otherwise transact any business in New York. Id. Finally, ATI has done nothing to avail itself of the laws of the State of New York with respect to this lawsuit. Id.

II. DISCUSSION

A. Legal Standard

In general, "the amenability of a foreign corporation to suit in a federal court in a diversity action is determined in accordance with the law of the state where the court sits, with `federal law' entering the picture only for the purpose of deciding whether a state's assertion of jurisdiction contravenes a constitutional guarantee." Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir.1963) (en banc).

District courts resolving issues of personal jurisdiction must therefore engage in a two-part analysis. First, they must determine whether there is jurisdiction over the defendant under the relevant forum state's laws — which, in this case, are the various subsections of New York's C.P.L.R. § 302(a) ... Second, they must determine whether an exercise of jurisdiction under these laws is consistent with federal due process requirements.

Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir.1999) (citing Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir.1996)).

The plaintiff bears the burden of establishing that the court has jurisdiction over the defendant when a Rule 12(b)(2) motion to dismiss is made. See Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir.1994). However, "`prior to discovery, a plaintiff challenged by a jurisdiction testing motion may defeat the motion by pleading in good faith, ..., legally sufficient allegations of jurisdiction.'" Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir.1998) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990)). Thus, a plaintiff "need make only a prima facie showing of jurisdiction through [his] own affidavits and supporting materials." Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981). Furthermore, "where the issue is addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor." A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir.1993).

B. New York's C.P.L.R. § 302(a)

New York's long-arm statute is codified in section 302 of its Civil Practice Law and Rules and provides for jurisdiction over any non-domiciliary who:

1. transacts any business within the state or contracts anywhere to supply goods or services in the state; or

2. commits a tortious act within the state, ...; or

3. commits a tortious act without the state causing injury to person or property within the state, ..., if [it]

(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or

(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.

N.Y. C.P.L.R. § 302 (McKinney 1990). Each of these subsections will be analyzed in turn.

1. C.P.L.R. § 302(a)(1)

During the months of June and July 1998, Martin S. Fletcher, an attorney, made numerous telephone calls to Whitaker in New York for the purpose of obtaining his consent to the sale of FTI's partnership interest. Opp. Mem. at 9. Plaintiff contends that as a result of these calls, ATI sought the benefit and protections of New York's laws or attempted to engage in business in New York. Plaintiff is wrong for two reasons.

First, Mr. Fletcher is legal counsel to FTI, not ATI. Affidavit of Martin T. Fletcher, Sr., sworn to September 30, 1999 ("Fletcher Aff."), ¶ 2. In his affidavit, Martin states: "At no time have I ever represented ATI in any matter. At no time did I act or undertake to act as attorney for or agent of ATI in any matter." Id. ¶ 5. More specifically, with regard to the communications he made to Whitaker, Martin states that all such communications were made by him as legal counsel for FTI. Id. ¶ 6. Given these representations, any actions taken by Fletcher cannot be imputed to ATI because Fletcher was working in his sole capacity as FTI's attorney.

Even assuming Fletcher's communications could be attributed to ATI, however, there still would be no jurisdiction under C.P.L.R. § 302(a)(1). Jurisdiction can rarely be based solely on defendant's telephone calls into New York. See Carlson v. Cuevas, 932 F.Supp. 76, 78 (S.D.N.Y.1996) (citing Beacon Enters., Inc. v. Menzies, 715 F.2d 757, 766 (2d Cir. 1983)). Only "[i]f the purpose of the calls is for the defendant to actively participate in business in New York, [can] they alone ... support a finding of New York long arm jurisdiction under C.P.L.R. § 302(a)(1)." Carlson, 932 F.Supp. at 78. This is certainly not the case here. "New York courts have held that conducting contractual negotiations by phone, fax or mail with a party in New York does not constitute the transaction of business within the state." Worldwide Futgol Assocs., Inc. v Event Entertainment, Inc., 983 F.Supp. 173, 177 (E.D.N.Y.1997). Accordingly, Fletcher's telephone calls to Whitaker requesting his consent to the sale of FTI's partnership interest, even if made on behalf of ATI, do not constitute transacting business within New York and, therefore, cannot sustain jurisdiction under C.P.L.R. § 302(a)(1).

2. C.P.L.R. § 302(a)(2)

Plaintiff cannot establish jurisdiction over ATI pursuant to this subsection because the Second Circuit has ruled that a defendant's physical presence in New York is required under § 302(a)(2). See Bensusan Restaurant Corp. v. King, 126 F.3d 25 (2d Cir.1997). Plaintiff nowhere alleges that ATI ever sent an officer, employee or agent into New York, and therefore jurisdiction cannot be predicated upon § 302(a)(2).

3. C.P.L.R. § 302(a)(3)(ii)

To establish jurisdiction under C.P.L.R. § 302(a)(3)(ii), Whitaker must show: (1) ATI's commission of a tort outside New York; (2) injury to Whitaker in New York; (3) that ATI should have reasonably foreseen New York consequences; and (4) that ATI derives substantial revenue from interstate commerce. See Popper v. Podhragy, 48 F.Supp.2d 268, 273 (S.D.N.Y.1998). The first requirement has been met as plaintiff has alleged that FTI and ATI conspired and falsely consummated a settlement in order to deprive him of his fee. Amended Complaint ¶¶ 100-01. The fourth requirement has also been met as plaintiff alleges that ATI has derived revenue in excess of 10 million dollars from interstate commerce. Id. ¶ 15.

Arguably, the third requirement has also been met. In National Westminster Bank PLC v. Retirement Care Assocs., Inc., 98 Civ. 6023, 1999 WL 239677 (S.D.N.Y. Apr. 23, 1999), the plaintiff ("NatWest") alleged that the defendants ("RCA" and "Sun") breached an engagement agreement in which RCA hired Nat-West to act as a financial advisor for a proposed merger between RCA and Sun. Id. at *1. The engagement agreement was drafted in New York by NatWest but was executed by RCA in Atlanta. Id. After the merger was consummated, RCA failed to pay NatWest. Id. at *2. Plaintiff asserted personal jurisdiction over RCA and Sun under C.P.L.R. § 302(a)(3)(ii) which defendants contested, arguing that the loss suffered by Natwest in New York "resulted solely by virtue of plaintiffs residence there." Id. at *3. The court disagreed, however, stating that

[i]n this case, there is no other injury than the financial injury to NatWest in New York. By allegedly interfering with the engagement agreement between RCA and NatWest, Sun knew that its actions were directed at avoiding a financial obligation to a New York...