Opinion
20-CV-9788-VEC-KHP
05-19-2022
EMERY MUKENDI WAFWANA & ASSOCIATES, P.C. and MOISE KAPANDA MUKENDI as Executor of the Estate of Emery Mukendi Wafwana, Plaintiffs, v. DANIEL MENGARA, ELITE LAW FIRM, SCP and EUGENIE ELANGA MONKANGO, Defendants, and EMERY MUKENDI WAFWANA & ASSOCIES, SCP, Defendant Intervenor.
HONORABLE VALERIE E. CAPRONI, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION ON MOTION TO DISMISS
KATHARINE H. PARKER, UNITED STATES MAGISTRATE JUDGE
This is a trademark infringement action brought against four out-of-state Defendants for the alleged infringement of the website domain and name of a New York-based law firm (the “New York Firm”) following the death of the firm's sole shareholder, Emery Wafwana. The New York Firm brings this action together with Moise Kapanda Mukendi (“Mukendi”), Wafwana's son who was appointed in the Democratic Republic of the Congo (“DRC”) as the executor of Wafwana's estate and who anticipates being appointed executor of his estate in New Jersey.
Defendants in the action are: Wafwana & Associes, SCP (the “Congo Firm”), a law office based in the DRC, also founded by Wafwana; Elanga Monkango (“Monkango”), a DRC-based lawyer and partner at both the Congo Firm and the Elite Law Firm, SCP (“Elite Law Firm”); Elite Law Firm, a law firm established in the DRC by Monkango following Wafwana's death; and Daniel Mengara (“Mengara”), a Pennsylvania citizen and the individual who developed the New York Firm's website.
Before the Court is a Motion to Dismiss Plaintiffs' Second Amended Complaint (“SAC”) pursuant to Rules 12(b)(1), (2), and (6) of the Federal Rules of Civil Procedure (“FRCP”). The Motion was brought by Defendants the Congo Firm and Mengara. Defendants Monkango and Elite Law Firm, who have not yet been served, did not join the Motion to Dismiss, but Monkango submitted a declaration in support of the motion. (ECF No. 121.)
As discussed below, this dispute as currently postured has been brought in the wrong forum by parties who are not permitted to bring this action and against parties over some of whom this Court lacks personal jurisdiction.
Therefore, and for the reasons stated below, I respectfully recommend that Defendants' Motion to Dismiss be GRANTED and that the claims be dismissed without prejudice.
The Court accepts the allegations in the SAC as true for purposes of the Motion to Dismiss. Carter v. HealthPort Techs., LLC, 822 F.3d 47, 56-57 (2d Cir. 2016).
1. Formation of the Sister Law Firms, the Website, and the Mark
In or about 1996, Wafwana formed the Congo Firm, initially as a sole proprietorship. (SAC ¶ 19.) The Congo Firm bore the French name, “Emery Mukendi Wafwana & Associes SCP.” (Id.) Wafwana went on to establish six sister firms of the Congo Firm, including the New York Firm, which Wafwana established in or about 2010 as the sole shareholder. (Id. ¶¶ 13, 18.) The New York Firm bore the English name, “Emery Mukendi Wafwana and Associates” (“the Mark”), and it was the only firm to use this name. (Id. ¶ 63.)
At a time not specified in the SAC, Mengara, through his web development company, Global Web Company, was engaged by Wafwana to register the Website for the New York Firm at the domain “cabemery.org.” (Id. ¶ 46.) Because Mengara registered the domain for the Website, he retained the ability to alter the Website. (See id. ¶¶ 81, 101.)
Plaintiffs are unclear regarding when the Website was registered, and by whom. The SAC states that “[p]rior to Emery's death, [the New York Firm] engaged the services of Mengara . . . to register [the domain].” (SAC ¶ 46.) By contrast, the Dejean Declaration, submitted as an exhibit to Plaintiffs' Opposition to the Motion to Dismiss, indicates that Wafwana, in his individual capacity, hired Mengara to create the domain prior to the New York Firm's existence, and “assigned the Domain to the New York Firm at the time of its incorporation.” (ECF No. 113 ¶ 12.) The Congo Firm intervened because it contends it is the owner of the Website.
In or about 2016, Wafwana appointed Hegai Dejean (“Dejean”) as the corporate secretary for the New York Firm. (Id. ¶ 37.) The SAC does not allege that Dejean is licensed to practice law in the State of New York.
2. Death of Wafwana and Subsequent Scheme
On or about June 12, 2020, Wafwana died from complications related to COVID-19. (Id. ¶ 15.) At the time of his death, Wafwana owned a 95% stake in the Congo Firm. (Id. ¶ 20.) Monkango, a partner in the firm, owned a 3% stake. (Id. ¶ 21.) The remaining 2% stake is owned by the DRC-based attorney Jose Ilunga Kapanda, who is not individually named in this action. (ECF No. 121 ¶ 8.) At the time of his death, Wafwana was the owner and sole shareholder of the New York Firm. (Id. ¶ 37.)
Following Wafwana's death, Monkango engaged Mengara-the web developer who registered the Website domain-to alter the Website. (Id. ¶ 73.) Specifically, Monkango instructed Mengara to keep the New York Firm's Mark on the Website, but to change the contact information on the Website to that of Monkango's new firm, the Elite Law Firm. (Id. ¶¶ 82-83.) At Monkango's direction, Mengara also removed biographies of the employees of the New York Firm; removed New York Firm members' access to their email accounts; portrayed the Congo Firm as the “hub office” of Wafwana's collection of sister firms; and portrayed Monkango as the founding partner of the Congo Firm. (Id. ¶¶ 85, 107, 109.) Customers who visit the Website are now misled into thinking they are dealing with the New York Firm, when in fact the contact number on the Website leads them to Monkango and Elite Law Firm. (Id. ¶ 130.)
In exchange for Mengara's participation in the scheme to alter the New York Firm's website, Monkango retained Mengara to design a website for Elite Law Firm. (Id. ¶ 93.)
After Plaintiffs became aware of the changes to the Website, Dejean and Mukendi separately demanded that Mengara restore the Website, but Mengara refused to do so. (Id. ¶¶ 94-95, 101-04.)
3. Estate Proceedings in DRC and New Jersey
Following Wafwana's death, estate proceedings began in the DRC, and these remain ongoing. (Id. ¶ 23.) Mukendi was appointed as the executor of Wafwana's estate in the DRC, and a “co-liquidator” of the estate was also appointed. (Id. ¶¶ 24, 29.) The SAC does not allege that Mukendi is licensed to practice law in the State of New York. The co-liquidator has not appeared in this action. Additionally, estate proceedings are being commenced in Bergen County Surrogate's Court in New Jersey, where Wafwana resided. Mukendi is the “anticipated administrator” for these proceedings. (Id. ¶¶ 33-34.)
No parties have submitted any documentation of a will or testament by Wafwana.
4. The Instant Lawsuit
On November 23, 2020, the New York Firm filed an initial complaint against Mengara, alleging infringement of the Website and Mark in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); common law trademark infringement; and conversion. (ECF No. 5.) On June 25, 2021, Plaintiffs filed an amended complaint that added Plaintiff Mukendi and Defendants Elite Law Firm and Monkango. (ECF No. 61.) On September 7, 2021, the Congo Firm intervened as a Defendant on the basis that Plaintiffs raised a claim to the Website, in which the Congo Firm claims to retain an interest. (ECF No. 95.)
On September 24, 2021, Plaintiffs filed the SAC asserting five claims: (1) against all Defendants for use of the Website and the Mark in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (2) common law trademark infringement against all Defendants for use of the Website and the Mark; (3) breach of care against Mengara as bailee of the Website; (4) conversion of the Website against all Defendants; and (5) tortious interference against Monkango and Elite Law Firm. (SAC ¶¶ 123-70). Elite Law Firm and Monkango have not been served with the SAC. (ECF No. 115, n.4.) Monkango did, however, submit a certification in the instant action as a managing partner of the Congo Firm. (ECF No. 40-2.)
On October 28, 2021, Defendants Mengara and the Congo Firm moved to Dismiss the SAC pursuant to Rules 12(b)(1), (b)(2), and (b)(6) of the FRCP. (ECF Nos. 114, 117.) Mengara and the Congo Firm argue: (1) the Court lacks personal jurisdiction over Defendants, and alternatively, forum non conveniens requires dismissal of the action and removal to the DRC; (2) the Court lacks subject matter jurisdiction over this matter because Plaintiff Mukendi does not have standing; and (3) Plaintiff the New York Firm has failed to plausibly state a claim because it is not authorized to commence this action and because Plaintiffs' allegations in the SAC do not amount to plausible claims.
LEGAL STANDARD
1. Legal Standard Governing Motion to Dismiss Under Rule 12(b)(1)
Federal courts have inherent power under Rule 12(b)(1) to dismiss claims for which subject matter jurisdiction is lacking. Morrison v. Nat'l Austl. Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008). In considering a motion to dismiss under Rule 12(b)(1), the Court must accept as true all the material factual allegations and draw all reasonable inferences in favor of the plaintiff. Id. (citations omitted). The Court also “may refer to evidence outside the pleadings.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000).
“An objection to standing is properly made on a Rule 12(b)(1) motion.” Tasini v. N.Y. Times Co., 184 F.Supp.2d 350, 354-55 (S.D.N.Y. 2002) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 88-89 (1998)). “[T]he question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues.” Warth v. Seldin, 422 U.S. 490, 498 (1975). To survive a Rule 12(b)(1) motion to dismiss, there must be facts that make it plausible that the plaintiff has standing. Carter v. HealthPort Techs., LLC, 822 F.3d 47, 56-57 (2d Cir. 2016).
2. Legal Standard Governing Motion to Dismiss Under Rule 12(b)(2)
It is the plaintiff's burden, when served with a Rule 12(b)(2) motion to dismiss, to establish that the court has jurisdiction over the defendants. Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001) (citation omitted). A plaintiff may carry this burden “by pleading in good faith . . . legally sufficient allegations of jurisdiction.” Id. (citing Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir.1998)). A plaintiff may rely on affidavits and supporting materials to make this showing. Id. (citing Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981)). The court “must credit a plaintiff's allegations in support of jurisdiction.” PharmacyChecker.com, LLC v. Nat'l Ass'n of Bds. of Pharmacy, 530 F.Supp.3d 301, 321 (S.D.N.Y. 2021) (citing A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993)). Courts may rely on additional materials outside the pleading when ruling on 12(b)(2) motions. Minnie Rose LLC v. Yu, 169 F.Supp.3d 504, 510 (S.D.N.Y. 2016).
Federal Rule of Civil Procedure 12(h) provides that “[a] party waives” a Rule 12(b)(2) defense by “failing to either (i) make it by motion under this rule; or (ii) include it in a responsive pleading or in an amendment . . . as a matter of course.” Fed.R.Civ.P. 12(h).
3. Legal Standard Governing Motion to Dismiss Under Rule 12(b)(6)
For a complaint to survive a Rule 12(b)(6) motion to dismiss, the court must determine that the complaint contains “sufficient factual matter . . . to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is considered plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. While detailed factual allegations are not required, the complaint must contain more than mere “labels and conclusions or formulaic recitation of the elements of a cause of action.” Id.
When considering a motion to dismiss under Rule 12(b)(6), the court must accept all factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Cruz v. Beto, 405 U.S. 319, 322 (1972); Littlejohn v. City of New York, 795 F.3d 297, 306 (2d Cir. 2015). Nevertheless, “threadbare recitals of the elements of a cause of action” that are supported by “conclusory” statements and mere speculation are inadequate and subject to dismissal. Chavis v. Chappius, 618 F.3d 162, 170 (2d Cir. 2010) (quotation marks and citation omitted); see also Iqbal, 556 U.S. at 678 (“[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”).
“The court's consideration on a motion to dismiss is limited to the factual allegations in the complaint; documents incorporated by reference into the complaint; matters of which judicial notice may be taken; and documents either in plaintiff's possession or of which plaintiff had knowledge and relied on in bringing suit.” Messina v. Mazzeo, 854 F.Supp. 116, 128 (E.D.N.Y. 1994) (citing Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993)).
When a motion to dismiss is granted, the usual practice is to dismiss the claims without prejudice and grant plaintiff leave to amend the complaint. Hayden v. County of Nassau, 180 F.3d 42, 53 (2d Cir. 1999). Leave to amend should be granted unless there is evidence of undue delay, bad faith, undue prejudice, or futility. See Foman v. Davis, 371 U.S. 178, 182 (1962).
ANALYSIS
“Where, as here, the defendant[s] move[] for dismissal under Rule 12(b)(1) . . . as well as on other grounds, the court should consider the Rule 12(b)(1) challenge first.” U.S. ex rel. Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148, 1155-56 (2d Cir. 1993) (quotation marks and citation omitted). The court also generally must “pass on the jurisdictional issues before considering whether a claim was stated by the complaint.” Bella v. Bureaus Inv. Grp. Portfolio No. 15 LLC, 2019 WL 2295840, at *1 (E.D.N.Y. May 30, 2019). Accordingly, the Court first addresses Defendants' Rule 12(b)(1) argument, followed by their Rule 12(b)(2) arguments, and finally turns to their Rule 12(b)(6) arguments.
1. Rule 12(b)(1): Plaintiff Mukendi Lacks Standing to Bring the Claims.
“The party invoking federal jurisdiction bears the burden of establishing standing.” Hedges v. Obama, 724 F.3d 170, 188 (2d Cir. 2013) (quoting Clapper v. Amnesty Int'l USA, 568 U.S. 398, 411-12 (2013)). “[T]he irreducible constitutional minimum of standing contains three elements”: (1) “injury in fact,” (2) “a causal connection between the injury and the conduct complained of,” and (3) a likelihood “that the injury will be redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (quotation marks and citations omitted). “The injury-in-fact requirement demands not only the existence of a legally cognizable injury, but also that the plaintiff [himself] be ‘among the injured.'” Keepers, Inc. v. City of Milford, 807 F.3d 24, 42 (2d Cir. 2015) (quoting Lujan, 504 U.S. at 563).
Plaintiffs allege Mukendi has standing as the executor of Wafwana's estate in the DRC and “anticipated administrator” of Wafwana's estate in Bergen County. (SAC ¶¶ 24, 34.) But as executor of Wafwana's estate, Mukendi only has standing to bring claims for which Wafwana would have had standing in his personal capacity at the time of his death. Steinberger v. Lefkowitz, 634 Fed.Appx. 10, 11-12 (2d Cir. 2015). The question, then, is whether Wafwana himself would have had standing to bring these claims as sole shareholder of the New York Firm.
New York law clearly distinguishes a corporation from its shareholders. Barton v. Ne. Transp., Inc., 2022 WL 203593, at *9 (S.D.N.Y. Jan. 24, 2022). “A shareholder-even the sole shareholder-does not have standing to assert claims alleging wrongs to the corporation.” Jones v. Niagara Frontier Transp. Auth. (NFTA), 836 F.2d 731, 736 (2d Cir. 1987) (collecting cases). Even the sole shareholder of a corporation “will not have standing to pursue a claim where he cannot show that the defendant caused him an injury distinct from any injury to the corporation.” Gosain v. Texplas India Priv. Ltd., 2019 WL 5722051, at *7 (S.D.N.Y. Feb. 4, 2019) (citing Gianascio v. Giordano, 2003 WL 22999454, at *6 (S.D.N.Y. Dec. 19, 2003), report and recommendation adopted, 393 F.Supp.3d 368 (S.D.N.Y. 2019)). In other words, a shareholder does not have standing to assert claims where the “alleged wrongs [were] suffered by the corporation, not by plaintiff personally.” Gianascio, 2003 WL 22999454, at *6.
It follows, then, that because Mukendi “has standing to bring only those claims that his father . . . had standing to bring at the time of his death,” Mukendi “must plead facts that show a particularized injury to” Wafwana himself rather than the New York Firm. Steinberger, 634 Fed.Appx. at 11-12 .
The SAC does not allege that the Website or Mark in question were owned by Wafwana himself. Rather, the SAC alleges the Website and Mark were owned by the New York Firm. (SAC ¶¶ 41-42.) The SAC also does not allege any particularized injury to Wafwana. The SAC thus does not allege facts demonstrating that Wafwana had standing to bring these claims at the time of his death. Accordingly, Mukendi has failed to establish that he, as executor of Wafwana's estate, has standing to bring these claims. I therefore recommend that the motion to dismiss be granted without prejudice as to claims brought by Mukendi for lack of subject matter jurisdiction.
2. Rule 12(b)(2): The Court Lacks Personal Jurisdiction over Defendant Mengara.
Defendants the Congo Firm and Mengara argue that this Court lacks personal jurisdiction over them.
“Personal jurisdiction, unlike subject-matter jurisdiction, can . . . be purposely waived or inadvertently forfeited.” City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 133-34 (2d Cir. 2011). “[A] district court should not raise personal jurisdiction sua sponte when a defendant has appeared and consented, voluntarily or not, to the jurisdiction of the court.” Sinoying Logistics Pte Ltd. v. Yi Da Xin Trading Corp., 619 F.3d 207, 213 (2d Cir. 2010). One way that a party waives the 12(b)(2) defense is if it voluntarily intervenes in an action. John v. Sotheby's, Inc., 141 F.R.D. 29, 37 (S.D.N.Y. 1992). By joining this action as an intervening defendant, the Congo Firm waived the 12(b)(2) defense, and the Court can exercise personal jurisdiction over the Congo Firm.
Notably, Plaintiffs indicate that they “do[] not wish to sue” the Congo Firm at all and do not view their suit as one “against the Congo Office.” (ECF No. 112 at 6.) Plaintiffs' true grievance is with Mengara, over whom this Court lacks personal jurisdiction, as discussed below, and with Monkango and Elite Law Firm, who have not appeared in this action and who have not yet been served. Mengara has asserted that he has no interest in the outcome of this matter and that the dispute over ownership of the Website is between the New York and Congo Firms. (ECF No. 35-2.)
Regarding Defendant Mengara, a Pennsylvania citizen (SAC ¶ 9), the Court applies the forum state's long-arm statute to determine if the long-arm statute permits personal jurisdiction. Eades v. Kennedy, PC L. Offs., 799 F.3d 161, 168 (2d Cir. 2015) (citations omitted). Plaintiffs argue that jurisdiction over Mengara is present under New York's long-arm statutes, CPLR §§ 302(a)(1) and 302(a)(3).
CPLR § 302(a)(1) provides, in relevant part, that a court may exercise personal jurisdiction over a non-domiciliary who: (1) “transacts any business within the state or contracts anywhere to supply goods or services within the state” where (2) “the plaintiff's claim arises from the business that the non-domiciliary transacted in New York.” Best Van Lines, Inc. v. Walker, 490 F.3d 239, 246 (2d Cir. 2007) (citing Deutsche Bank Sec., Inc. v. Montana Bd. of Invs., 7 N.Y.3d 65, 71 (2006)).
Regarding the first factor, a defendant transacts business within the meaning of § 302(a)(1) when it “purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Id. at 246 (citing McKee Elec. Co. v. Rauland-Borg Corp., 20 N.Y.2d 377, 382 (1967)). “[P]roof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted.” Brown v. Web.com Grp., Inc., 57 F.Supp.3d 345, 356-57 (S.D.N.Y. 2014) (citing Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 467 (1988)). However, “[m]ore than limited contacts are required for purposeful activities sufficient to establish that the non-domiciliary transacted business.” Yih v. Taiwan Semiconductor Mfg. Co., 815 Fed.Appx. 571, 574 (2d Cir. 2020) (citing Coast to Coast Energy, Inc. v. Gasarch, 53 N.Y.S.3d 16, 18 (2017)). “[C]ourts consider a number of factors to determine whether a non-domiciliary, who was not physically present in the state, has nevertheless transacted business under New York's long-arm statute.” Mirman v. Feiner, 900 F.Supp.2d 305, 312 (E.D.N.Y. 2012). These factors include:
“(1) whether there was the purposeful creation of a continuing relationship with the plaintiff . . .; (2) whether the defendant on his own initiative . . . project[s] himself into New York to engage in a sustained and substantial transaction of business . . .; and (3) whether the defendant has purposely availed [himself] of the privilege of conducting activities within New York and thereby invoked the benefits and protections of its laws.”Id. (quotation marks and citations omitted).
In the present case, Plaintiffs do not allege that Mengara was ever physically present in New York. They allege that Mengara contracted with Wafwana to develop the Website; that Mengara's company invoiced the New York Firm for costs related to maintaining and hosting the Website; and that Mengara's company corresponded by email with the New York Firm to discuss payment of these costs. (SAC ¶ 46; ECF Nos. 113, 113-6, 113-8.) Plaintiffs do not allege that Mengara actually performed any services in New York, nor that he advertised in New York, traveled to New York, or targeted New York clients in any way.
These contacts are akin to those discussed in Mirman, 900 F.Supp.2d at 312-15. There, the defendant agreed to perform services for a New York-based plaintiff while the defendant remained in Connecticut. Id. at 312. The defendant never visited New York in person, but “communicate[d] from his office in Connecticut with Mirman in New York over phone, email, and fax.” Id. The court found that such contacts were insufficient to confer personal jurisdiction over the defendant, because “the quality and nature of [the defendant's] New York contacts demonstrate that he did not transact business in New York under CPLR § 302(a)(1),” and the defendant did not “avail himself of the privileges and benefits of conducting business in New York.” Id.
Here, too, Plaintiffs have not alleged contacts the quality or nature of which are sufficient to allow the Court to find that Mengara projected himself into New York or availed himself of the privilege of conducting business in New York. Rather, Mengara entered into an agreement with Wafwana from outside the State and conducted web-based services from outside the State. Mengara's company, Global Web Company, corresponded with the New York firm infrequently regarding invoices for small dollar amounts to cover the passive costs of hosting and maintaining the Website. Plaintiffs do not allege Mengara himself participated in these emails. Even if he had, such communications are “too limited to amount to a purposeful transaction of business in New York.” Yih, 815 Fed.Appx. at 574-75; see also Falow v. Cucci, 2003 WL 22999458, at *4 (S.D.N.Y. Dec. 19, 2003) (finding that sending “invoices to [P]laintiff's New York office” or transmitting “correspondences . . . there,” are activities that “do not constitute business transactions within the meaning of CPLR § 302(a)(1)” and are thus insufficient to confer jurisdiction).
The SAC also does not allege that Mengara knew he was dealing with a New York-based company when he agreed to set up the Website. The Dejean Declaration states Mengara corresponded with Wafwana (a New Jersey resident) to set up the Website before the New York Firm was even created, and that Wafwana subsequently assigned the Website to the New York Firm. (ECF No. 113 ¶ 12.) This fact weighs against a finding of personal jurisdiction, because “the requisite minimum contacts must provide a fair warning to the defendant of a possibility of being subject to the courts of the forum state,” and there is no fair warning if the defendant is not aware he is entering a contract with a New York-based entity. Avecmedia, Inc. v. Gottschalk, 2004 WL 1586411, at *6 (S.D.N.Y. July 14, 2004) (citation omitted).
Plaintiffs argue that Mengara's contacts with the state are akin to those in Fischbarg v. Doucet, 9 N.Y.3d 375 (2007)), a case in which long-arm jurisdiction was found to exist. (ECF No. 112 at 9.) But this case is distinguished from Fischbarg. In Fischbarg, the defendants actively sought the services of a New York attorney. 9 N.Y.3d at 382. Defendants communicated twice a week with the New York-based attorney over the course of eight months. Id. at 378, 382. It was “crucial” to the Fischbarg court's finding of personal jurisdiction that, by retaining a New York attorney, defendants were “protected by New York's laws regarding ‘the attorney-client relationship.'” Gordian Grp., LLC v. Syringa Expl., Inc., 168 F.Supp.3d 575, 585-86 (S.D.N.Y. 2016) (quoting Fischbarg, 9 N.Y.3d at 382).
Here, there are no allegations that Mengara actively sought to conduct business with a New York-based firm, nor that he communicated extensively with the New York Firm. See Yih, 815 Fed.Appx. at 574 (finding defendant's limited communications into New York insufficient to confer jurisdiction, and contrasting these communications with the “extensive” communication that occurred in Fischbarg); Mirman, 900 F.Supp.2d at 315 (finding that “unlike the defendants in Fischbarg,” the defendant did not “repeatedly project[ ] [himself] into New York” where he conducted services for a New York client from outside New York) (citing Fischbarg, 9 N.Y.3d at 385). There are also no allegations that Mengara benefitted from any specific New York laws by virtue of his relationship with the New York Firm. See Gordian Grp., LLC, 168 F.Supp.3d at 58586 (finding no personal jurisdiction existed over defendant where, unlike in Fischbarg, the contract in question “did not implicate any specific New York law by virtue of” the plaintiff's location in the state).
Plaintiffs also argue that jurisdiction exists under § 302(a)(3)(i), which provides that the Court has jurisdiction over an individual who (1) “commits a tortious act without the state,” (2) “causing injury to person or property within the state,” (3) “if he regularly does or solicits business, or engages in any other persistent course of conduct . . . in the state.” N.Y. C.P.L.R. § 302(a)(3)(i).
“[I]n the few cases where personal jurisdiction has been found to rest on § 302(a)(3)(i), courts have highlighted the intentional and continuous nature of the defendant's contact with the forum state.” Del Ponte by Del Ponte v. Universal City Dev. Partners, Ltd., 2007 WL 9819187, at *5 (S.D.N.Y. July 13, 2007) (collecting cases), report and recommendation adopted sub nom. Del Ponte v. Universal City Dev. Partners, Ltd., 2008 WL 169358 (S.D.N.Y. Jan. 16, 2008). “[T]he persistent course of conduct may involve a great range of human activity which[,] . . . because of its consistency, serves as a solid link of jurisdiction to New York.” Id. Key to the analysis is that the activity be “long-term (i.e., ‘persistent').” Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 126-27 (2d Cir. 2002) (finding defendants' renting of an apartment for eight years in Manhattan to be sufficient to constitute a persistent course of conduct in New York by the defendant). Also key is that the activity actually takes place “in the state,” and the statute does not apply to a course of conduct that “occurs outside the state.” Stein v. Annenberg Rsch. Inst., 1991 WL 143400, at *4 (S.D.N.Y. July 19, 1991).
Plaintiffs argue that (1) Mengara committed a tort when he converted the Website and the New York Firm's receivables; (2) the tort injured the New York Firm; and (3) Mengara engaged in a persistent course of conduct in New York when he developed the Website for the New York firm. (ECF No. 112 at 9.) However, the third prong is not met. The one-off act of developing a website from outside New York for use by a New York company does not constitute a persistent course of conduct in New York, and in fact it does not constitute conduct in New York at all. See, e.g., Pell v. Clarke, 1994 WL 74075, at *6 (S.D.N.Y. Mar. 9, 1994) (finding that where defendant conducted business with plaintiff after plaintiff moved to New York, this did not amount to conduct in New York for purposes of C.P.L.R. § 302(a)(3)); Stein, 1991 WL 143400, at *4. Indeed, Plaintiffs do not allege Mengara engaged in any activity inside the State of New York, let alone long-term or persistent activity.
Therefore, I respectfully recommend that Defendants' motion to dismiss be granted without prejudice as to the claims against Mengara for lack of personal jurisdiction but denied as to the Congo Firm on this basis.
Defendants Monkango and Elite Law Firm have not yet appeared in this action and therefore have neither raised the defense of personal jurisdiction, nor waived it. Shi v. Le, 2022 WL 1085420, at *4 (E.D.N.Y. Mar. 2, 2022), report and recommendation adopted, 2022 WL 896963 (E.D.N.Y. Mar. 28, 2022). It would be premature for the Court to consider the question of personal jurisdiction as to these Defendants now, and the Court is not required to do so; because it is clear the court has personal jurisdiction over the Congo Firm, the court may consider whether Plaintiffs have stated a claim without first determining whether it has personal jurisdiction over all Defendants. Chevron Corp. v. Naranjo, 667 F.3d 232, 247 (2d Cir. 2012). Because all claims should be dismissed pursuant to Rules 12(b)(1) and 12(b)(6), the question of jurisdiction over Monkango and Elite Law Firm is moot.
3. Rule 12(b)(6): The New York Firm has Failed to State a Claim.
Defendants argue the SAC must be dismissed because the New York Firm has brought this action “ultra vires,” without proper authorization, (ECF No. 118 at 16), and the New York Firm thus lacks capacity to sue pursuant to Rule 17(b) of the FRCP.
Capacity to sue concerns “a party's personal right to come into court.” Horowitz v. 148 S. Emerson Assocs. LLC, 888 F.3d 13, 26 n.4 (2d Cir. 2018). Whereas standing-discussed above- is a jurisdictional issue, capacity is “a procedural issue dealing with the personal qualifications of a party to litigate.” Id. (citing Wright & Miller, 6A Fed. Prac. & Proc. Civ. § 1559 (3d ed. 2017)). Accordingly, a plaintiff's lack of capacity to sue warrants dismissal of an action for failure to state a claim pursuant to Rule 12(b)(6). See e.g., Est. of Capo v. Haquif, 2019 WL 2498369, at *4 (S.D.N.Y. May 31, 2019); Manhattan Rev. LLC v. Yun, 2016 WL 6330474, at *3 (S.D.N.Y. Aug. 15, 2016), report and recommendation adopted, 2016 WL 6330409 (S.D.N.Y. Oct. 26, 2016).
Rule 17(b) sets forth the rules for determining the capacity of a party to sue in the federal district courts. The rule provides that capacity of a corporation to sue or be sued is determined “by the law under which it was organized.” Fed.R.Civ.P. 17(b). Accordingly, the capacity of the New York Firm to bring this suit is determined by New York law. See Wilmington Tr., Nat'l Ass'n v. Est. of McClendon, 287 F.Supp.3d 353, 373 (S.D.N.Y. 2018).
Under New York law, “[a] corporation can act only through its officers.” Michaels v. Lispenard Holding Corp., 201 N.Y.S.2d 611, 614 (App. Div. 1960); see also In re Grand Jury Subpoena Duces Tecum, 391 F.Supp. 1029, 1034 (S.D.N.Y. 1975). If the corporation is a “professional service corporation” such as a law firm, “no individual” may be an officer of that corporation “unless that person is authorized by law to practice in this state a profession which such corporation is authorized to practice ....” Liberty Mut. Ins. Co. v. Excel Imaging, P.C., 879 F.Supp.2d 243, 256 (E.D.N.Y. 2012) (citing N.Y. Bus. Corp. Law § 1508). In other words, a nonlawyer cannot be an officer of a New York law firm.
Because a corporation can only act through its officers, non-officers of a corporation typically are not authorized by New York law to sue on behalf of the corporation. See, e.g. Ocean Diagnostic Imaging, P.C. v. Merchants Mut. Ins. Co., 832 N.Y.S.2d 383, 384 (App. Term 2007); Bradley v. Weber, 473 N.Y.S.2d 89, 90 (App. Term 1983). In Ocean Diagnostic, the Appellate Term of the New York Supreme Court found that after the sole officer, director and shareholder of plaintiff corporation died, no officers or shareholders remained, and “for all practical purposes, [the corporation] was powerless to proceed” with its lawsuit. 832 N.Y.S.2d at 384. In Bradley, the Appellate Term considered whether the corporate secretary of a medical corporation could appear on behalf of the corporation in a small claims action. The court held that because the secretary was not a medical professional, she was not an officer of the corporation, and “[c]onsequently, she . . . would not be permitted to appear” on behalf of the corporation. Id.
Before Wafwana's death, he was the sole shareholder and sole officer of the New York Firm-a professional service corporation engaged in the practice of law. Like in Ocean Diagnostic and Bradley, when Wafwana died, the corporation continued to exist, but no officers or shareholders remained. Although Dejean bears the title “corporate secretary,” the SAC does not allege that he is an attorney, and therefore he is not an officer of the firm. Like the corporate secretary in Bradley, Dejean is not authorized to sue or be sued on behalf of the New York Firm. This deficiency is apparent from the face of the SAC. The New York Firm thus lacks the capacity to bring this action under Rule 17(b), and accordingly, it has failed to state its claims.
In order for the New York Firm to rectify its deficiency, it must bring suit through an officer, duly appointed under New York State law, who is authorized to practice law in the State of New York. Such a person would have both capacity to sue pursuant to the laws of the State of New York and standing to sue in federal court on behalf of the New York Firm. Because no such person has brought this action on behalf of the New York Firm, I respectfully recommend that the motion to dismiss be granted as to claims brought by the New York Firm, and that these claims be dismissed without prejudice.
CONCLUSION
For the reasons set forth above, I respectfully recommend that:
• The motion to dismiss be GRANTED under Rule 12(b)(1) as to claims brought by Mukendi against all Defendants because Mukendi lacks standing to assert the claims;
• The motion to dismiss be GRANTED under Rule 12(b)(2) as to claims brought against Mengara because the Court lacks personal jurisdiction over him;
• The motion to dismiss be GRANTED under Rule 12(b)(6) as to claims brought by the New York Firm against all Defendants, because the New York Firm lacks capacity to bring this action.
In sum, I respectfully recommend the motions at ECF Nos. 114 and 117 be GRANTED and the SAC be dismissed in its entirety without prejudice.
NOTICE
Plaintiffs shall have fourteen days from the service of this Report and Recommendation to file written objections to the Report and Recommendation, pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days only when service is made under Fed.R.Civ.P. 5(b)(2)(C) (mail), (D) (leaving with the clerk), or (F) (other means consented to by the parties)). Defendants shall have fourteen days to file written objections.
If Defendants file written objections to this Report and Recommendation, Plaintiffs may respond to the objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). If Plaintiffs file written objections, Defendants may respond to the objections within fourteen days. Objections and responses to objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Valerie E. Caproni at the United States Courthouse, 40 Foley Square, New York, NY 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Caproni. The failure to file these timely objections will result in a waiver of those objections for purposes of appeal. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).