Opinion
DOCKET NO. A-2420-14T3
10-20-2015
CANTONE RESEARCH, INC., CANTONE OFFICE CENTER, LLC, ANTHONY J. CANTONE, AND CHRISTINE L. CANTONE, Plaintiffs-Respondents, v. MICHAEL R. GARDNER, ESQUIRE, and LAW OFFICES OF MICHAEL R. GARDNER, Defendants-Appellants.
Jeffrey B. McCarron argued the cause for appellants (Swartz Campbell, LLC, attorneys; Mr. McCarron and Candidus K. Dougherty, on the briefs). Bennett J. Wasserman argued the cause for respondents (Davis, Saperstein & Salomon, P.C., attorneys; Mr. Wasserman, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fisher, Rothstadt, and Currier. On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket Nos. L-3403-13 and L-3441-13. Jeffrey B. McCarron argued the cause for appellants (Swartz Campbell, LLC, attorneys; Mr. McCarron and Candidus K. Dougherty, on the briefs). Bennett J. Wasserman argued the cause for respondents (Davis, Saperstein & Salomon, P.C., attorneys; Mr. Wasserman, of counsel and on the brief). PER CURIAM
Defendants Michael R. Gardner and his law firm appeal the denial of a motion to dismiss for lack of personal jurisdiction in this legal malpractice action. We find that Gardner had the requisite minimum contacts with New Jersey to support the exercise of personal jurisdiction over him. We, therefore, affirm the ruling of the trial judge.
This appeal arises from a legal malpractice action brought by plaintiffs Cantone Research, Inc. (CRI), Cantone Office Center (COC), Anthony Cantone, and Christine Cantone against Gardner regarding legal services provided in connection with a securities based real estate venture in Florida. Specifically, plaintiffs assert that Gardner, a Pennsylvania attorney and resident who is not licensed to practice in New Jersey, provided inaccurate legal advice and assistance regarding the application of New Jersey investment and securities law in connection with the real estate project.
CRI is a financial planning and investment management corporation incorporated under the laws of New Jersey whose principal place of business is Tinton Falls. COC is a limited liability company organized and formed under the laws of New Jersey. COC maintains offices in Tinton Falls.
We note the following facts that are pertinent to our decision. In November 2004, Gardner met with plaintiffs in New Jersey to discuss legal services he could provide to the real estate project. COC retained Gardner after that meeting. In September 2005, Esplanade Development, LLC, a Florida limited liability company, was formed for the purpose of developing a condominium complex in Orlando, Florida. Thereafter, in 2005 and 2007, to finance the venture, Esplanade issued two subordinated promissory notes which were purchased by COC. As the attorney for COC, Gardner drafted confidential disclosure memorandum and certificates of participation in an effort to collect investments to fund the notes. The certificates were sold to accredited investment clients of CRI.
In 2009, plaintiffs learned that the New Jersey Bureau of Securities had begun an investigation into CRI's sale of the certificates of participation and were advised that the required registration filings had not been done. As a result, plaintiffs assert they are subject to findings of violations of New Jersey securities laws and substantial monetary penalties. In response to the Bureau's inquiry, Gardner indicated that he had represented COC in connection with the Esplanade transaction.
Plaintiffs have not provided any of these documents from the Bureau.
Plaintiffs commenced two civil actions against Gardner regarding the 2005 and 2007 notes, respectively. Gardner filed a motion to remove both actions to the United States District Court for the District of New Jersey, claiming concurrent federal jurisdiction by virtue of diversity of citizenship. Plaintiffs opposed removal, arguing that no diversity of citizenship existed because the individually named plaintiffs, who are the sole members of COC, were domiciled in Pennsylvania. The district court found that no diversity jurisdiction existed and remanded both civil actions to the Monmouth County Superior Court, where the two actions were consolidated.
The Cantones also have a home in Matawan, New Jersey and their businesses are located in New Jersey.
Under federal precedent, the "citizenship of a limited liability company 'is determined by the citizenship of each of its members.'" Johnson v. Smithkline Beecham Corp., 724 F.3d 337, 348 (3d Cir. 2013) (quoting Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 418 (3d Cir. 2010)). In determining citizenship of such an unincorporated entity, the entity's principal place of business is irrelevant. Ibid. Because the district court determined that Christine and Anthony Cantone were domiciled in Pennsylvania, the court determined that COC was also a citizen of Pennsylvania, thus defeating diversity jurisdiction. We do not find the federal judge's conclusion as to diversity jurisdiction to be controlling on the issue of personal jurisdiction now before us.
In lieu of an answer, Gardner moved for dismissal on jurisdictional grounds. He also requested discovery or an evidentiary hearing relating to personal jurisdiction; these requests were denied at a conference. Thereafter, following oral argument, the trial judge denied Gardner's motion to dismiss by order and opinion dated October 10, 2014. A subsequent motion for reconsideration was denied. We granted leave to file an interlocutory appeal and a stay of the trial court proceeding.
Gardner argues that the trial judge erred in determining that plaintiffs had established minimum contacts as to his dealings with them in this matter, thus subjecting him to jurisdiction in New Jersey.
Gardner argued that he was not subject to general or specific jurisdiction in New Jersey. Because the trial judge found specific jurisdiction, he did not address the issue of general jurisdiction. Therefore, the issue of whether general jurisdiction existed is not before us.
To establish personal jurisdiction over a non-resident defendant in conformance with due process, our courts follow the two-part test developed in Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95, 102 (1945). Under this test:
"[d]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice."Applying this test in a particular case requires a two-step analysis.
[Lebel v. Everglades Marina, Inc., 115 N.J. 317, 322 (1989) (quoting Int'l Shoe, supra, 326 U.S. at 316, 66 S. Ct. at 158, 90 L. Ed. at 102).]
The first part of the test, "minimum contacts," focuses on "'the relationship among the defendant, the forum, and the litigation,'" id. at 323 (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S. Ct. 2569, 2579, 53 L. Ed. 2d 683, 698 (1977)), requiring "'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefit and protection of its laws,'" Waste Mgmt. Inc. v. Admiral Ins. Co., 138 N.J. 106, 120 (1994) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240, 2 L. Ed. 2d 1283, 1298 (1958)), cert. denied, 513 U.S. 1183, 115 S. Ct. 1175, 130 L. Ed. 2d 1128 (1995).
Once a court determines that a defendant's activities establish minimum contacts with the forum, the court must then inquire whether "fair play and substantial justice" support an exercise of jurisdiction. This determination requires evaluation of factors such as "the burden on the defendant, the interest of the forum State, and the plaintiff's interests in obtaining relief." Lebel, supra, 115 N.J. at 328 (quoting Asahi Medal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 113, 107 S. Ct. 1026, 1033, 94 L. Ed. 2d 92, 105 (1987)). In addition, the court must consider "'the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies.'" Asahi, supra, 480 U.S. at 113, 107 S. Ct. at 1033, 94 L. Ed. 2d at 105 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S. Ct. 559, 564, 62 L. Ed. 2d 490, 498 (1980)).
On a motion to dismiss for lack of personal jurisdiction, the plaintiff carries the burden to prove that the defendant's contacts with the forum state are sufficient to sustain the exercise of long-arm jurisdiction based on minimum contacts. Pressler & Verniero, Current N.J. Court Rules, comment 3.1.1 on R. 4:4-4 (2015); Jacobs v. Walt Disney World, Co., 309 N.J. Super. 443, 454 (App Div. 1998) (citing Advel Corp. v. Mecure, 58 N.J. 264, 268 (1971)). Once minimum contacts have been established, however, the burden shifts to the defendant who "'must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.'" Lebel, supra, 115 N.J. at 328 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S. Ct. 2174, 2184, 85 L. Ed. 2d 528, 544 (1985)).
In reviewing evidence supporting a plaintiff's jurisdictional claim, our courts "construe the State's long-arm jurisdictional provision, R. 4:4-4, as extending personal jurisdiction to the outermost limits afforded by due process under the United States Constitution," Mastondrea v. Occidental Hotels Mgmt. S.A., 391 N.J. Super. 261, 269 (App. Div. 2007), and liberally indulge an exercise of personal jurisdiction where "the facts reasonably support the presence of the flexible concepts of 'fair play and substantial justice,'" Ketcham v. Charles R. Lister Int'l, Inc., 167 N.J. Super. 5, 7 (App. Div.), certif. denied, 81 N.J. 339 (1979).
Because the question of personal jurisdiction is a mixed question of law and fact, appellate review is twofold. Citibank, N.A. v. Estate of Simpson, 290 N.J. Super. 519, 532 (App. Div. 1996). Thus, this court must examine the trial court's factual findings to determine if they are "supported by substantial, credible evidence" in the record. Mastondrea, supra, 391 N.J. Super. at 268. In considering whether the established facts support the court's exercise of personal jurisdiction over a defendant, however, this court reviews the legal determination of the trial court de novo. Ibid.; YA Global Invs., L.P. v. Cliff, 419 N.J. Super. 1, 8 (App. Div. 2011).
The trial judge relied on three allegations of plaintiffs for his findings of specific jurisdiction. He noted (1) that Gardner had physically travelled on three occasions into New Jersey to meet with plaintiffs and provide legal advice to them, (2) after the Bureau commenced its investigation, Gardner "made an appearance and communicated with the [Bureau] on plaintiffs' behalf in furtherance of his representation of plaintiffs," and (3) Gardner accepted "legal fees from plaintiffs through their New Jersey bank, and deposited those funds through his accounts with Commerce Bank in Cherry Hill, New Jersey." The trial judge recognized that Gardner disputed these allegations, but nonetheless, found he had "failed to present countervailing evidence which would rebut plaintiffs' burden of establishing subject matter and personal jurisdiction."
We first address the issue of the meetings in New Jersey. There are references by plaintiffs to an initial meeting where there was a discussion about municipal bond offerings. A second visit discussed private placements. As a result of those meetings, Gardner provided legal services to plaintiffs in several investment securities transactions. The Esplanade venture was not discussed at either of those meetings. In March 2004, a third meeting was held with plaintiffs in New Jersey. Ms. Cantone recalls that at that meeting
Gardner discussed the legal services he proposed to furnish and gave legal advice relating to the contemplated "Esplanade" transaction that COC, my husband and I were about to enter and how shares of those investments could be sold to the investment brokerage clients to CRI in New Jersey and elsewhere. Further, defendant Gardner also advised me how the services he would furnishIt was after that meeting that COC retained Gardner as legal counsel in connection with the Esplanade transaction.
would affect CRI's standing with regulatory agencies governing CRI's brokerage business.
In their complaint, however, plaintiffs allege that "[t]he concept for the investment/securities work . . . substantively began in 2005 [and] was for the Plaintiffs to invest and sell participation shares in the Esplanade promissory note." Gardner's argument on appeal hinges on that statement. He posits that to find specific jurisdiction, the 2004 meeting in New Jersey must have been the event that triggered the cause of action. In other words, Gardner maintains that to be subject to New Jersey jurisdiction he must have provided inaccurate legal advice or failed to provide correct legal advice during that 2004 meeting. We disagree.
In looking at minimum contacts, the focus is on the relationship among the defendant, the forum and the litigation and requires "'some act by which the defendant purposefully avail[ed] himself of the privilege of conducting activities within the forum state.'" Waste Mgmt., supra, 138 N.J. at 120 (quoting Hanson, supra, 357 U.S. at 253, 785 S. Ct. at 1239-40, 2 L. Ed. 2d at 1298). We conclude that this element is satisfied by Gardner's visits to New Jersey. The attorney- client relationship with the Cantones and their business entities began at the time he first met with them. Gardner subsequently provided legal advice to them and their business entities on different securities transactions including this Esplanade venture. The only physical meetings he held with COC and the Cantones took place in New Jersey. He was aware his client on this venture - COC - was located in Tinton Falls. Furthermore, Gardner was providing advice to his client COC on New Jersey securities law. He was aware that any advice he gave might be acted upon by the New Jersey principals of COC. We find that Gardner could reasonably have anticipated being haled into New Jersey for his actions or inactions. The meetings in New Jersey themselves were sufficient proof of minimum contacts. See Carteret Sav. Bank, FA v. Shushan, 95 F.2d 141, 150 (3rd Cir. 1992) (holding New Jersey consultation enough to establish jurisdiction in New Jersey).
New Jersey permits the exercise of personal jurisdiction over a nonresident defendant who committed a single tortious act, whether negligent or intentional, within New Jersey. Jacobs, supra, 309 N.J. Super. at 461 (citing Knight v. San Jacinto Club, Inc., 96 N.J. Super. 81, 90 (Law Div. 1967)). --------
We must then turn our attention to the inquiry of whether "fair play and substantial justice" supports an exercise of jurisdiction. The burden now shifts to Gardner to present a "'compelling case that the presence of some other considerations would render jurisdiction unreasonable.'" Lebel, supra, 115 N.J. at 328 (quoting Burger King, supra, 471 U.S. at 477, 105 S. Ct. at 2148, 85 L. Ed. 2d at 544). We do not find Gardner has presented any special burdens as New Jersey and Pennsylvania are contiguous states. See Avdel Corp. v. Mecure, 58 N.J. 264, 273 (1971). We also find New Jersey has an interest in this matter between plaintiffs who have a New Jersey home and place of business and an out-of-state attorney providing legal advice on New Jersey securities laws.
We are of the view that there were sufficient contacts on the part of Gardner with New Jersey, so as not to offend the "traditional notions of fair play and substantial justice," Int'l Shoe, supra, 326 U.S. at 316, 66 S. Ct. at 158, 90 L. Ed. at 102. We find the trial judge's factual findings were supported by sufficient evidence in the record and the exercise of personal jurisdiction is proper.
We affirm. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION