Opinion
07 Civ. 365 (CSH) (ECF).
October 10, 2007
MEMORANDUM OPINION AND ORDER
In this diversity action plaintiff Robert D. Ginsberg, a New York citizen, sues defendant Government Properties Trust, Inc. ("GPT"), a real estate investment trust (or "REIT" in financial shorthand), incorporated in Maryland with its principal place of business in Nebraska, to recover for services plaintiff allegedly rendered to defendant in connection with a real estate transaction in Denver. Following discovery limited to the Court's jurisdiction, defendant now moves under Fed.R.Civ.P. 12(b)(2) to dismiss the action for lack of personal jurisdiction over it. In the alternative, defendant moves under 28 U.S.C. § 1404(a) to transfer venue to the District of Nebraska, or to dismiss the action under Fed.R.Civ.P. 12(b)(6) for failure to state a cause of action upon which relief can be granted.
For the reasons that follow, the Court denies defendant's motion in its entirety.
I. BACKGROUND
A. Factual Background
This factual account is based upon the factual allegations in the complaint, the affidavits submitted on the motion, and the evidence developed during the jurisdictional discovery.
GPT invests primarily in single tenant properties under long-term leases to the U.S. website states, "Our business consists of buying and managing recently built or renovated office properties primarily leased to the federal government, acting through the General Services Administration ('GSA'), the federal government's property management arm, under long-term leases. . . . Our tenants include the U.S. Department of Justice, the Drug Enforcement Administration, the Federal Bureau of Investigation and the Social Security Administration. We own each of our properties through separate wholly-owned entities." Aff. of Gerald Padian in Opp'n to Def.'s Mot. Dismiss, dated March 30, 2007 ("Padian Aff."), Ex. A. As of December 31, 2006, GPT owned 22 properties in 13 states aggregating 2.2 million square feet, and the company generated $44,279,000 in rental income for the calendar year 2006. See Padian Aff, Ex. E (citing March 15, 2007 Form 10-K filed by GPT with the SEC). Two of the 22 properties are located in New York state and were purchased by defendant in May of 2005. See Padian Aff., Ex. A. GPT purchased these properties, known as the Exchange Street Property (located at 186 Exchange Street, Buffalo NY) and the Niagara Center (located at 130 South Elmwood Avenue, Buffalo NY), by purchasing the companies that owned them, which then became wholly owned subsidiaries of GPT. See Letter-Brief by Martin C. Bryce, Jr., dated June 25, 2007 ("Bryce Letter"), at 2.
Beginning around May of 2004, plaintiff and two individuals named Richard Mark and Charmaine Mark (collectively, the "Marks") began a business venture in which they attempted to raise funding for investment in real property primarily occupied on a long term basis by the United States and/or state government departments and agencies. Compl. ¶ 6. Ginsberg and the Marks entered into discussions with defendant GPT throughout the second half of 2004 and allegedly entered into an oral agreement (the "Oral Agreement") in which the three of them would locate possible properties for purchase by GPT. Id. ¶ 9. Allegedly pursuant to this Oral Agreement, GPT listed Ginsberg on its website as GPT's "Managing Director, Finance," and Richard Mark and Charmaine Mark as "Managing Director of Acquisitions" and "Managing Director of Underwriting," respectively, and GPT gave all three business cards in the GPT name. Id. ¶ 10.
Allegedly pursuant to the Oral Agreement, Ginsberg and the Marks traveled to Denver in or about early October 2004 to meet with the owners of an Environmental Protection Agency building (the "EPA building"), located in Denver, in order to explore the possible purchase of this building by GPT. Id. ¶ 12.
In a Memorandum of Proposal prepared in or about October 2004 presented to the GPT Real Estate Committee for approval, Thomas D. Peschio, then President and CEO of GPT, stated that "over the last few months, we at GPT had had substantial interface with Richard and Charmaine Mark and Robert Ginsberg" and that "they have been sourcing, underwriting and structuring the prospective acquisition of a number of investment opportunities for GPT." Id. ¶ 11.
In or around December 2004, Ginsberg and the Marks agreed to end their business relationship. On February 18, 2005, GPT entered into a separate written agreement with Ginsberg (the "GPT-Ginsberg Agreement") and a separate agreement with the Marks. Id. ¶¶ 14, 15. Paragraph 15 of the GPT-Ginsberg Agreement states:
The Parties hereto acknowledge that prior to the signing of this Agreement, Robert Ginsberg worked in concert with Richard Mark and Charmaine Mark in anticipation of entering into a written agreement similar to this agreement with GPT. GPT hereby acknowledges that certain transactions from those work efforts are still in progress presently, including but not limited to the acquisition of 1201 Lloyd Street in Portland, Oregon and Niagara Center and 186 Exchange Place in Buffalo, New York, and should those transactions ultimately be consummated, GPT will pay to Robert Ginsberg at closing a fee in the amount equal to of [sic] 0.416% of the purchase prices for each transaction so closed.Id. ¶ 17.
Plaintiff Ginsberg alleges that after this GPT-Ginsberg Agreement was executed, GPT closed on three properties which Ginsberg/Marks had introduced to GPT, one in Oregon and two in New York, and Ginsberg was paid a fee of 0.416% of the purchase price for each of those three properties. Id. ¶ 20. On or about December 21, 2006, GPT publicly announced that it had purchased the EPA building for an approximate price of $91.3 million. GPT did not compensate Ginsberg in connection with this purchase. In this action, Ginsberg alleges that he is owed the fee of 0.416% of the purchase price of this building. GPT, for its part, maintains that "Ginsberg is not entitled to [the fee he seeks] because, among other things, he did not perform the services prescribed and called for in the Agreement and all such services performed in connection with GPT's purchase of that building were performed by Richard and Charmaine Mark and not Ginsberg." Decl. Thomas D. Peschio, dated February 26, 2007 ("Peschio Decl."), ¶ 10.
In Count I of the complaint, plaintiff alleges breach of contract and seeks $379,808, which is the 0.416% of $91 million purchase price of the EPA building, plus interest from December 21, 2006, costs, expenses, and attorney's fees. In Count II of the complaint he alleges that defendant is liable to him in quantum meruit in the amount of $379,808 plus interest, costs, and expenses for past services rendered. In Count III he seeks equitable relief for the same amount, plus interest, costs, and expenses.
B. Legal Arguments
In its motion defendant contends that this Court does not have personal jurisdiction over it because GPT has no meaningful contacts with the state of New York, either as a general matter or specifically relating to the transaction at issue in this case. GPT asserts that it is not incorporated in New York, has no offices or employees in New York, and the property that is the subject of this dispute is in Colorado. Def.'s Mem. in Supp. Mot. to Dismiss ("Def.'s Mem."), at 1. Plaintiff responds that defendant has contacts with New York sufficient to subject it to the Court's jurisdiction. Among other indicia, plaintiff points to GPT's status as a publicly traded REIT on the New York Stock Exchange, whose officers "regularly" come to New York for investment conferences, and to GPT's ownership of two properties in New York through two of its subsidiaries. Pl.'s Mem. in Opp'n, at 1. While defendant stresses that these properties are owned by GPT's subsidiaries and not by GPT itself, plaintiff argues that GPT should be deemed to be doing business in New York through those subsidiaries. Additionally, plaintiff argues that a "key meeting" between Ginsberg and GPT's then President and CEO Thomas Peschio pertaining to the issues in this action occurred in New York. Pl.'s Mem. in Opp'n, at 1.
In the alternative to its contention that the Court lacks personal jurisdiction over it, defendant asks the Court to transfer venue to the District Court for the District of Nebraska, pursuant to 28 U.S.C. § 1404(a), because the majority of documents relevant to the case and a number of witnesses that GPT will call are located in Nebraska and because a related action against GPT in that district has been brought by the Marks. See Def.'s Mem., at 11. Plaintiff counters that defendant has failed to demonstrate that the relevant factors weigh in favor of transfer. See Pl.'s Mem. in Opp'n, at 15.
Finally, defendant argues that even if this Court has personal jurisdiction and maintains the case in this District, plaintiff's complaint should be dismissed under Fed.R.Civ.P. 12(b)(6) because plaintiff has failed to state a claim upon which relief may be granted. Defendant maintains that the terms of the Ginsberg-GPT Agreement make clear that Ginsberg was engaged by GPT in the capacity of a real estate broker. Because Ginsberg is not licensed as a real estate under Colorado law, which defendant argues is the applicable law to plaintiff's claim, defendant maintains that Ginsberg cannot recover under the contract for services performed in connection with the EPA building in Colorado. See Def.'s Mem., at 14. Plaintiff, by contrast, asserts that he was never engaged in the capacity of a real estate broker and that his lack of a Colorado license is irrelevant to his right to recover under the contract. See Pl.'s Mem. in Opp'n, at 21. He argues that New York law, not Colorado law, applies but that even if Colorado law applies, he is entitled to recover under the GPT-Ginsberg Agreement.
After the present motion had been partially briefed, defendant wrote to the Court describing the parties' disagreement about whether discovery should proceed during the pendency of this motion. Defendant sought a stay of all discovery pending the Court's decision on the motion, and plaintiff wished discovery to proceed. By means of memo endorsement of defendant's letter summarizing the parties' positions, this Court on April 10, 2007 stayed all discovery except discovery with respect to personal jurisdiction. The parties have since engaged in jurisdictional discovery and have each submitted a letter-brief to the Court arguing that certain documents produced in discovery support their respective positions. Jurisdictional discovery having been completed, the jurisdictional issue is ripe for decision and I now decide the motion in its entirety.
II. DISCUSSION
A. Personal Jurisdiction
In a diversity action, personal jurisdiction is governed by the law of the forum state. See Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963) (en banc). The plaintiff "bears the burden of proving by a preponderance of the evidence that personal jurisdiction exists." Landoil Res. Corp. v. Alexander Alexander Servs., Inc., 918 F.2d 1039, 1043 (2d Cir. 1990). When, however, an evidentiary hearing has not been held, the plaintiff need only make a prima facie showing of jurisdiction, and "all pleadings and affidavits must be construed in the light most favorable to [the plaintiff] and all doubts must be resolved in the [plaintiff's] favor." Id.
A district court may permit a plaintiff to engage in limited jurisdictional discovery. See Filius v. Lot Polish Airlines, 907 F.2d 1328, 1332 (2d Cir. 1990). See also Ayyash v. Bank Al-Madina, No. 04 Civ. 9201, 2006 WL 587342, at *5 n. 7 (Mar. 9, 2006) (analyzing case law and concluding that plaintiff need not make a prima facie showing of jurisdiction prior to a district court's authorization of jurisdictional discovery). Once, however, the plaintiff has engaged in jurisdictional discovery, the "plaintiff's prima facie showing, necessary to defeat a jurisdiction testing motion, must include an averment of facts that, if credited by the ultimate trier of fact, would suffice to establish personal jurisdiction over the defendant." Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999) (internal brackets omitted) (citing Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996)). See also J.L.B. Equities, Inc. v. Ocwen Fin. Corp., 131 F. Supp. 2d 544, 547 (S.D.N.Y. 2001) (same).
In an earlier case, the Second Circuit said that after jurisdictional discovery had been completed, the plaintiff's burden to establish jurisdiction was measured by the preponderance of the evidence standard. See Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120 (2d Cir. 1984) ("Given that the district court permitted substantial discovery, [plaintiff] must now be held to the preponderance burden."). However, the Court of Appeals' later decision in Bank Brussels, cited and quoted in text, appears to retain the prima facie standard, even after jurisdictional discovery, albeit with the heightened requirement that having had the benefit of discovery, a plaintiff must be able to point to credible facts sufficient to subject defendant to the jurisdiction of the district court. Consequently, I disagree with the district court's decision on this point in Audiovisual Pub., Inc. v. Manor Care, Inc., No. 04 Civ. 98, 2006 WL 3511345, at *5 (W.D.N.Y. Dec. 05, 2006) (adopting report and recommendations of magistrate judge which, inter alia, concluded that after jurisdictional discovery, plaintiff's burden on its jurisdictional showing is the preponderance of the evidence standard), and agree with the decision of District Judge Barrington Parker (as he then was) in J.L.B. Equities, cited in text. See 131 F. Supp. 2d at 547 ("Where, as here, however, the parties have engaged in extensive discovery concerning the defendant's contacts with the state, JLB's prima face showing must include an averment of facts that, if credited by the trier of fact, would suffice to establish personal jurisdiction over Ocwen.") (citing Bank Brussels). I apply that standard in the case at bar.
In determining whether personal jurisdiction exists, the Court follows a two-step procedure. First the Court decides whether a statutory basis for personal jurisdiction exists under the law of the forum, here New York Civil Practice Law and Rules ("C.P.L.R."). If this statutory basis exists, the Court determines whether the exercise of personal jurisdiction comports with the federal guarantee of due process. See Int'l Shoe Co. v. Washingston, 326 U.S. 310 (1945).
1. C.P.L.R § 301
C.P.L.R. § 301 permits the general exercise of personal jurisdiction over a foreign corporation "doing business" in New York if the corporation is "present in New York not occasionally or casually, but with a fair measure of permanence and continuity." Landoil, 918 F.2d at 1043 (internal quotation marks and citation omitted). See McGowan v. Smith, 419 N.E.2d 321, 323 (N.Y. 1981) (personal jurisdiction appropriate under § 301 where defendant is "engaged in such a continuous and systematic course of doing business here as to warrant a finding of its presence in this jurisdiction.") (internal quotation marks omitted). Plaintiff's cause of action need not be related to defendant's New York activities for this provision to apply. The test is pragmatic and necessarily fact-sensitive. Landoil, 918 F.2d at 1043. New York courts have generally focused on the following factors as indicia of "permanence and continuity": "The existence of an office in New York; the solicitation of business in New York; the presence of bank accounts or other property in New York; and the presence of employees or agents in New York." Id. See also Stutts v. DeDietrich Group, 465 F. Supp. 2d 156, 161 (E.D.N.Y. 2006) (also considering whether defendant "engages in public relations in New York"). No single factor is dispositive. Schenker v. Assicurazioni Genereali S.P.A. Consol., No. 98 Civ. 9186, 2002 WL 1560788, at *2 (S.D.N.Y. July 15, 2002).
Plaintiff does not dispute defendant's contention that GPT is not incorporated in New York, maintains no offices in New York, and does not directly own property in New York. Rather, plaintiff contends that GPT is "doing business" in the state in the following ways: (1) through its listing on the New York Stock Exchange; (2) through regular visits to New York by Peschio and others involved with GPT to solicit business in the state; (3) through its maintenance of employees in the state; and (4) through the activities of its two subsidiaries in New York. The first three of these alleged contacts are direct; the last is an alleged indirect contact with the state. I will analyze them according to this division. i. GPT's Alleged Direct Contacts with New York
Plaintiff also notes as "significant" in the contacts analysis a lawsuit GPT initiated in the Supreme Court of New York in November 2006. See Pl.'s Mem. in Opp'n, at 5. Involvement in litigation does not fall within the generally used factors cited above, and courts have found that even situations where a defendant consents to jurisdiction for the purpose of another case or cases does not subject it to personal jurisdiction within the state for an unrelated case. See Klinghoffer v. S.N.C. Achille Lauro, 937 F.2d 44, 50 n. 5 (2d Cir. 1991) ("A party's consent to jurisdiction in one case, however, extends to that case alone."); Andros Compania Maritima S.A. v. Intertanker Ltd., 714 F. Supp. 669, 675 (S.D.N.Y. 1989) (defendant corporation's participation in "a handful of arbitrations and litigations" in New York does not amount to "doing business" in New York). Here, plaintiff points only to one prior lawsuit in New York. In addition, defendant GPT was a plaintiff in the prior action in New York and thus GPT can not even be said to have consented to the court's exercise of personal jurisdiction over it in the sense that it was relevant in Klinghoffer.
The first and second of the bases for jurisdiction offered by plaintiff pertain to whether the defendant is soliciting business in New York. Ginsberg alleges that GPT's "top officers" "regularly come to New York for investment conferences," Pl.'s Mem. in Opp'n, at 1, an allegation supported by his statement in an affidavit that Peschio and others have come to New York for an annual investor conference, and that Peschio himself has personally come for the past three years. Aff. of Robert D. Ginsberg in Opp'n to Def.'s Mot., dated March 28, 2007 ("Ginsberg Aff."), ¶ 14. Ginsberg also alleges that in November of 2004 Peschio came to New York to discuss both the substance of Ginsberg's relationship with GPT and GPT's interest in purchasing a large portfolio of properties being sold by another New York entity called Fortress. Ginsberg Aff. ¶¶ 14-16. Finally, plaintiff presents evidence of trips made by GPT representatives for meetings with GPT's lender, for property inspections, and for road shows. See Letter-Brief by Gerald Padian, dated June 18, 2007 ("Padian Letter"), Ex. L. Padian Letter. Plaintiff also maintains that Peschio came to New York in January 2005 to conduct due diligence for GPT's purchase of the Niagara Center and Exchange Street properties. See Pl.'s Mem. in Opp'n, at 8 (citing Ginsberg Aff. ¶ 14).
None of these direct contacts is sufficient to confer personal jurisdiction on GPT. Neither participation in a yearly conference nor attendance at isolated meetings or road shows indicates the defendant's "presence" in the state. See Schenker, 2002 WL 1560788, at *4 (even regular trips to New York by defendant's employees for business purposes only showed "occasional and isolated" contacts with the state). A stock exchange listing in New York by itself is also insufficient evidence of "doing business" in New York. Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 97 (2d Cir. 2000). However, a listing can be considered as evidence in conjunction with other indicia of doing business in the jurisdiction. Id.
That some of the meetings alleged concerned loans received by GPT from Wachovia Bank does not change the analysis. Courts have made clear that raising capital in the state does not rise to the level of a continuous and systematic course of "doing business." See Crucible Ventures, Inc. v. Futuresat Indus., Inc., No. 88 Civ. 4251, 1990 WL 16140, at *2 (S.D.N.Y. Feb. 15, 1990) (where plaintiff alleged that defendant's president had attended about 25 meetings in New York concerning various business loans, court did "not find, as a legal matter, that the solicitation and execution of business loans, alone and to the extent claimed by plaintiff, constitutes 'doing business' for jurisdictional purposes."). I include follow-up meetings pertaining to loans acquired in New York as falling within that category.
In support of his contention that GPT has employees in New York, plaintiff submits tax filings indicating that in 2005 GPT paid wages and other compensation of New York employees in the amount of $42,618. See Padian Letter, at 2 Ex.A. Defendant counters that the tax filings are not relevant indicia of GPT's own contacts with the state for two reasons: first, because under New York law, subsidiaries could file their own tax returns or GPT could file them on their behalf, see Bryce Letter, at 2; and second, since "[p]ersonal jurisdiction is determined as of the time of service of summons and complaint," Schenker, 2002 WL 1560788, at *4, the contacts indicated by the 2005 tax returns are irrelevant to the analysis of personal jurisdiction in 2007 when the complaint was filed. See Bryce Letter, at 2. Defendant maintains that its affidavit stating that GPT currently has no employees, offices, or bank accounts and solicits no business in New York is not rebutted by the tax filings from 2005. Id.
Defendant is correct that the personal jurisdiction analysis looks to see whether the defendant was "present" in New York at the time of the filing of the complaint. But it does not necessarily follow that GPT's 2005 tax return has no bearing on the jurisdictional issue. The "doing business" test is something more than a snapshot at the moment of the complaint's filing, as the test asks whether the defendant's contacts with the state are "continuous" and "systematic," an analysis which necessarily looks to a course of conduct existing over a period of time. See Schenker, 2002 WL 1560788, at *4 (S.D.N.Y. July 15, 2002) ("Courts sometimes have considered contacts that occurred at least as far as a year before the filing of the complaint, but those contacts are generally considered only to establish the pattern of contacts that existed at the moment the complaint was filed."). The 2005 tax submissions, which were allegedly filed by the company in September of 2006, might bear on the question if they create an inference that defendant was present in New York at the time of the complaint's filing. However, in the affidavit submitted by defendant, former CEO Peschio attests that GPT currently has no employees offices, employees, or property.
In sum, the evidence presented by plaintiff concerning GPT's direct contacts consists of GPT's listing on the New York stock exchange, certain visits to New York by its representatives, and statements concerning employees on a 2005 tax return, whose probative effect on the issue is undermined by Peschio's flat statement that GPT had no employees in New York at the crucial time. Because this evidence, even considered together, only suggests weak contacts, plaintiff has not made out a prima facie case for this Court's exercise of personal jurisdiction over GPT on the basis of its direct contacts with New York.
ii. GPT's Alleged Indirect Contacts with New York
As to the argument made by plaintiff concerning the activities of GPT's subsidiaries, it is well settled that the mere presence of a parent's subsidiary in New York does not subject the parent to personal jurisdiction in the state. See Beech Aircraft, 751 F.2d at 120. However, the acts of a New York subsidiary may be attributed to the foreign parent for jurisdictional purposes when the subsidiary is either an "agent" or a "mere department" of the foreign parent. Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir. 1998).
The test for determining whether the subsidiary is an agent of the parent is whether the subsidiary "does all the business which [the parent] could do were it here by its own officials." Frummer v. Hilton Hotels Int'l, Inc. 19 N.Y.2d 533, 537 (N.Y. 1967). In other words, one indicator of agency is whether the parent would be obliged to enter the market directly if the subsidiary was absent because the market is too important to the parent's welfare. See Bulova Watch Co., Inc. v. K. Hattori Co., Ltd., 508 F. Supp. 1322, 1342 (E.D.N.Y. 1981). An alternative approach looks to whether the subsidiaries are carrying out their own business or that of the parent. As the Court described two possible scenarios in Bellomo v. Penn. Life Co., 488 F. Supp. 744 (D.C.N.Y. 1980), "Where a holding company is nothing more than an investment mechanism [—] a device for diversifying risk through corporate acquisitions [—] the subsidiaries conduct business not as its agents but as its investments. The business of the parent is the business of investment, and that business is carried out at the parent level. Where, on the other hand, the subsidiaries are created by the parent, for tax or corporate finance purposes, to carry on business on its behalf, there is no basis for distinguishing between the business of the parent and the business of the subsidiaries." Id. at 746. See also Porter v. LSB Indus., Inc., 192 A.D.2d 205, 214-15 (N.Y.App.Div. 4th Dep't 1993) (defendant "is a holding company whose business is investment, which differs from the business of Summit [the subsidiary], which is distribution of machine tools. The business of the parent is carried out entirely at the parent level, and Summit cannot be deemed to be conducting the parent's business as its agent.").
In Beech Aircraft, the Second Circuit listed four factors to be used by courts in assessing whether a subsidiary is a "mere department" of the parent: (1) common ownership; (2) financial dependency of the subsidiary on the parent; (3) the degree to which the parent corporation interferes in the selection and assignment of the subsidiary's executive personnel and fails to observe corporate formalities; (4) the degree of control exercised by the parent over the marketing and operational policies of the subsidiary. Beech Aircraft, 751 F.2d at 120-22; Jazini, 148 F.2d at 185. The first of these factors is essential. Beech Aircraft, 751 F.2d at 120. Courts balance the remaining factors in determining whether the subsidiary acts "as a separate and independent entity." Knapp v. Consol. Rail Corp., No. 89 Civ. 1034S, 1992 WL 170891, at *3 (W.D.N.Y. July 7, 1992). "A subsidiary will be considered a 'mere department' only if the foreign parent's control of the subsidiary is so pervasive that the corporate separation is more formal than real." Porter, 192 A.D.2d at 213.
In this instance, the question of whether GPT actively controls the Exchange Street and Niagara Center properties in New York through control over its subsidiaries bears on whether the subsidiaries that own them — Acquest Government Leases, LLC ("Acquest") and Buffalo NY SSA, LLC ("Buffalo NY"), respectively — are either agents or "mere departments" of GPT. This is because if GPT merely acquires properties for investment purposes that the subsidiaries actually manage themselves, the parent would merely be a holding company, in which case it could not be said that the New York subsidiaries, as its agents, conduct GPT's real estate investment business for it. See J.L.B. Equities, 131 F. Supp. 2d at 549 (no evidence presented by plaintiff of agency relationship where parent's primary function is to hold equity securities of its subsidiaries and subsidiary is savings and loan institution engaged in financial services and servicing of mortgages); Porter, 192 A.D.2d at 214-15. On the other hand, if GPT actively manages the properties through its control of the New York subsidiaries, these subsidiaries could be said to carry out GPT's own property management business. As far as the "mere department" test is concerned, GPT's control over the New York subsidiaries bears both on the test's third prong (whether the parent and the subsidiaries observe corporate formalities) and its fourth prong (whether the parent controls the marketing and operational policies of the subsidiaries).
I do not discern in plaintiff's papers any allegations pertaining to whether GPT is financially dependent on its subsidiaries or vice versa. Plaintiff does state that GPT reported that it financed both the Niagara Center and Exchange Street properties in November 2006 with loans from Wachovia Bank in the amounts of $52.9 million and $2.8 million, respectively, see Pl.'s Mem. in Opp'n, at 8-9 (citing Padian Aff., Ex. E), but plaintiff does not explain how this bears on prong 2 of the "mere department" analysis, if at all. Nevertheless, even in the absence of evidence under prong 2, I conclude that if prongs (1), (3), and (4) of the "mere department" test weighed in favor of plaintiff, plaintiff could still make out a prima facie case that this Court possesses personal jurisdiction over GPT through the activities of its subsidiaries in New York. See Knapp, 1992 WL 170891, at *4-*6 (plaintiff made out prima facie case where, although it did not present much evidence concerning financial dependency, it presented evidence concerning a disregard of corporate formalities and parental control over the subsidiary).
It is not disputed that GPT's New York subsidiaries are wholly owned by GPT. However, the parties present starkly differing views on the relationship between these entities. Defendant describes the subsidiaries as independent entities and refers to "GPT's general lack of interference with them." Bryce Letter, at 3. Plaintiff, for its part, describes the subsidiaries as "holding companies" that hold properties effectively managed by GPT. See Pl.'s Mem. in Opp'n, at 8. Plaintiff presents a number of pieces of evidence in support of its position, some of which plaintiff acquired prior to jurisdictional discovery and some of which it acquired during discovery.
First, plaintiff submits as evidence numerous instances where GPT's postal address or email address is given as the address in relation to business of the New York subsidiaries. For instance, in a November 2006 complaint filed in Erie County, New York, the address given for Acquest is GPT's address. See Pl.'s Mem. in Opp'n, at 9 (citing Padian Aff. Ex. D). Additionally, according to information on file with the Small Business Administration, the email address for Buffalo NY is bschulze@gptrust.com, the address of a certain Beth A. Schulze, who is listed as GPT's Manager, Accounting Services and whose biography makes no mention that she works in any way for Buffalo NY. Id. (citing Padian Aff., Ex. G.). A copy of a service agreement for waste removal for the Exchange Street Property shows a billing address that is GPT's address. Padian Letter, Ex. D. And, finally, the New York Department of State website lists GPT's address as the address to which process for Buffalo NY and Acquest can be mailed. See Pl.'s Mem. in Opp'n, at 8-9 (citing Padian Aff., Ex. F.). I conclude that while each instance only amounts to a small quantum of evidence of a lack of corporate formalities and/or GPT's involvement in the day-to-day operations of its subsidiaries, collectively they add up to somewhat more substantial evidence. See Knapp, 1992 WL 170891, at *5 (fact that attorney for subsidiary represents parent "evidences a role of the parent in the day-to-day operations of the subsidiaries, or perhaps vice versa . . . [and] provides another example of common personnel within, and the shifting of personnel among, the corporations").
Additionally, plaintiff notes that in a Credit Agreement which GPT entered into with Wachovia Capital Markets on November 21, 2005, in which GPT was given a $50 million secured revolving credit facility secured by the "NY Properties" (defined to be Niagara Center and Exchange Street), the Agreement was signed only by GPT, not Buffalo NY or Acquest, the entities which owned the properties. See Pl.'s Mem. in Opp'n, at 9 (citing Padian Aff., Ex. H.). This I consider to be somewhat probative of a disregard of corporate formalities, as defendant has stressed that "[t]itle to the two New York properties has never been held by GPT." Bryce Letter, at 2 (emphasis in original). If that is so, GPT's ability to obtain a loan secured by the New York properties without the necessity of getting the permission of the titular owners of those properties appears to indicate a disregard of corporate formalities.
Finally, plaintiff offers various pieces of evidence to support its claim that both the Exchange Street property and the Niagara Center property are actively managed by GPT rather than merely being run by their subsidiary owners. With regard to the Exchange Street property, plaintiff alleges:
• Acquest's operating agreement shows that its affairs are managed by GPT as Acquest's sole member. See Padian Letter, Ex. B. Plaintiff argues that even though an amendment to the agreement states that as long as the first mortgage lien remains outstanding on the property there shall be appointed an independent co-Manager, this co-Manager still may be removed and replaced by GPT. Thus, plaintiff argues, Acquest remains under the operational control of GPT.
• Two management agreements concerning the hiring of an exclusive managing agent to manage the Exchange Street property indicate that the agent is to provide "GPTI" with weekly documentation of all purchase orders, and to solicit and receive GPTI's approval prior to authorizing non-budgeted expenditures in excess of $1000. See Padian Letter, Ex. C.
• GPT has entered into direct contracts with New York-based vendors, such as those for janitorial services, in which the services provided must be to the satisfaction of both Buffalo NY and GPT. See Padian Letter, at 3 Ex. D.
• GPT is the mortgage holder for the property. The two mortgages for the property were assigned to GPT on May 3, 2005. See Padian Letter, at 3.
Plaintiff infers that "GPTI" refers to "Government Properties Trust, Inc.," and I agree that this is a reasonable inference to make.
I find it peculiar that Buffalo NY, which does not own the Exchange Street property but rather the Niagara Center, should be the subsidiary executing the vendor services contract performed for the Exchange Street property. That same peculiarity extends to the vendor contracts for the Niagara Center discussed infra, which are executed by Acquest instead of Buffalo NY, the owner of the Niagara Center. However, neither plaintiff nor defendant has commented on this.
In response to these pieces of evidence, defendant argues that while plaintiff "does point to documents which he contends suggest that GPT may have authority to interfere in [the subsidiaries'] affairs," he "has failed to offer any evidence of GPT's actual involvement with its New York subsidiaries." Bryce Letter, at 3. The operating agreement for Acquest, for instance, "contains a laundry list of powers that the subsidiary possesses with respect to the daily operations of the property." Id. Defendant, in other words, makes a distinction between authority to control and actual control over the operations of the subsidiary. This, however, is a too-fine distinction to be made at this stage where plaintiff need only make out a prima facie case, see Beech Aircraft, 751 F.2d at 122 (looking, inter alia, to the contracts between parent aircraft manufacturer and its distributor subsidiaries in determining that parent exercised control over wholly owned subsidiary), and I conclude that each of these is some evidence from which a trier of fact could infer an absence of corporate formalities and direct control by GPT in the day-to-day management of the property.
With regard to the Niagara Center property, plaintiff presents the following similar evidence of control:
• The operating agreement for Buffalo NY states that GPT shall have the sole right to manage and control the operations and financial affairs of the company, subject to an amendment mirroring the amendment to the Exchange Street property operating agreement. See Padian Letter, at 3 Ex. F.
• GPT has entered into contracts with vendors in which services are required to be to the satisfaction of both Acquest and GPT. See Padian Letter, at 4 Ex. H.
• The management agreements executed for the property also require the agent to provide "GPTI" with weekly documentation and solicit GPTI's approval for certain non-budgeted expenditures. See Padian Letter, at 4 Ex. G.
• GPT holds the mortgage for the Niagara Center. See Padian Letter, at 4 Ex. I.
• An August 31, 2005 appraisal of the Niagara Center indicated that GPT was its owner. See Padian Letter, at 4 Ex. J.
• A September 6, 2006 letter from Acquest Development Company to Peschio encloses copies of mechanic's liens for work performed on the Niagara Center. See Padian Letter, at 4 Ex K.
Plaintiff makes the same argument with respect to Niagara Center's operating agreement, vendor contracts, management agreements, mortgage, and the letter concerning the mechanic's lien as it did for the Exchange Street property — that these indicate parental involvement in the operations of the subsidiary. I similarly find that collectively these are evidence from which a trier of fact could infer operational control. I do not, however, consider the appraisal relevant to the issue of parental control; the appraisal's designation of owner is irrelevant, as the appraisal was prepared by an outside firm for Wachovia Bank and this may not represent GPT's own understanding of the parent-subsidiary relationship.
In addition to these pieces of evidence that plaintiff urges me to consider in its attempt to demonstrate operational control by GPT over its New York subsidiaries, I also note from my own reading of the evidence presented that GPT's Form 10-K filed with the SEC, dated December 31, 2006, states under the heading "Operational Objectives" that in order to generate funds from operations of its portfolio of properties, GPT "focus[es] on the following activities": "Efficiently and effectively managing our portfolio of properties by maximizing revenues and controlling expenses, operating the properties on wealth building life-cycle cost basis, and providing rigorous and consistent property oversight. . . ." Padian Aff., Ex. E. Also, under the heading "Real Estate Management," the same filing states, "We perform asset and property management, and accounting and finance services relating to our properties." Id. Under a sub-heading, the Form 10-K provides, "Our property management functions include the coordination and oversight of tenant improvements and building services." Id. These descriptions suggest a significant level of involvement on the parent level in the day-to-day management of the properties. I take these descriptions to be some evidence from which a trier of fact might reasonably infer a degree of operational control.
Finally, while GPT's filing of tax returns on its subsidiaries' behalf, reporting of their income as its own, and seeking of certain property tax credits in its own name may not be evidence of direct presence by GPT in the state, a trier of fact might find that these actions bear on whether corporate formalities are observed between GPT and its subsidiaries. While defendant states that the parent is entitled under New York law to file tax returns on its subsidiaries' behalf, see Bryce Letter, at 2, defendant offers no evidence concerning this business practice; such a choice might merely be an accepted accounting practice that is neutral as to corporate formalities, or it might indicate a degree of corporate union between the entities. Thus, while the tax returns may not be evidence that GPT is directly "doing business" in New York, they may be relevant to the question of whether the subsidiaries are agents or "mere departments" of GPT, such that GPT is indirectly doing business in New York. See Stutts, 465 F. Supp. 2d at 165 (finding defendant's subsidiary not to be a "mere department" of defendant and quoting declaration of defendant representative noting, inter alia, that subsidiary kept its own books and records, filed its own United States tax return, and "otherwise observ[ed] all corporate formalities").
I also note that while in J.L.B. Equities the court did not consider the joint filing of an annual report to be indicative of control by the parent, see J.L.B. Equities, 131 F. Supp. 2d at 550 (that the parent has consolidated its annual report with subsidiary is "not a sufficient basis to show that the [subsidiary] is a mere department of the defendant" because "consolidated financial statements are required by generally accepted accounting principles where the parent corporation owns more than 50% of the subsidiary's stock" and this type of reporting is "typical"), an annual report is a different type of document than a tax return. Other than to say that parent companies are permitted in New York to file their subsidiaries' tax returns in their own name, defendant does not otherwise explain why filing in the subsidiaries' name and reporting the subsidiaries' income and seeking a tax credit stemming from their activities should not be a factor in considering whether to subject a parent to jurisdiction in the state.
Courts have found a prima facie case for personal jurisdiction successfully made where plaintiff presented evidence suggesting close ties between the parent and the subsidiary. See Obabueki v. Int'l Bus. Mach. Corp., No. 99 Civ. 11262, 2001 WL 921172, at *5 n. 10 (S.D.N.Y. Aug. 14, 2001) (plaintiff made out a prima facie case for jurisdiction where parent and subsidiaries have a "closer association" than in other cases); Knapp, 1992 WL 170891, at *6 (disregard of corporate formalities and parental control over subsidiary important to court's conclusion that plaintiff had made out a prima facie case for personal jurisdiction). Instances where courts have not found a subsidiary to be an agent or a mere department of a parent are readily distinguishable. In J.L.B. Equities, for instance, the plaintiff did "not present evidence indicating that corporate identities were compromised," instead relying on the fact that the two companies had overlapping officers and directors, which the court noted has been held not to be determinative of whether a subsidiary is a mere department of a parent. J.L.B. Equities, 131 F. Supp. 2d at 550 (citing Porter, 192 A.D.2d at 214). Here, the parties have not even presented evidence concerning the overlap in leadership between GPT and its subsidiaries, relying on other types of evidence to indicate the collapsing of corporate identities. Moreover, in J.L.B. Equities, the court found that the parent "maintains a very limited role with respect to its subsidiaries." Id. Plaintiffs here, by contrast, have submitted numerous pieces of evidence suggesting that GPT's role is much greater with respect to its subsidiaries. Also compare Bellomo, 488 F. Supp. 744, 745 (subsidiary not "mere department" of parent where plaintiff only alleged that defendant was a holding company engaged in business solely through its subsidiaries and that its annual report consolidated the earnings statements of the parent and subsidiaries and treated them as if they were all part of a common enterprise); and Porter, 192 A.D.2d at 214 (no evidence presented concerning a lack of corporate formalities or the control by the parent of the subsidiary's policies or operations).
Because the issues of control and observation of corporate formalities are so important to both the agency and "mere department" analysis in this case, and plaintiff has presented sufficient evidence to indicate control and an absence of corporate formalities, I conclude that plaintiff has made out a prima facie case that Acquest and Buffalo NY are agents or mere departments of GPT. Accordingly, plaintiff has also made out a prima facie case that this Court has personal jurisdiction over GPT through the activities of its subsidiaries.
2. C.P.L.R. § 302
Even if GPT were not "doing business" in New York through its subsidiaries and therefore subject to the Court's jurisdiction under C.P.L.R. § 301, I hold that the Court also has personal jurisdiction over GPT based on C.P.L.R. § 302.
New York's long-arm statute, C.P.L.R. § 302, provides, in relevant part:
(a) . . . As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent:
1. transacts any business within the state or contracts anywhere to supply goods or services in the state.
Jurisdiction is established under Section 302(a)(1) where, (a) the defendant has transacted any business within the state; and (b) the claim arises out of that activity. HD Brous Co., Inc. v. Synthesys Secure Tech., Inc., 229 F. Supp. 2d 191, 194 (E.D.N.Y. 2002) "'Transacting business' under Section 302 requires only a minimal quantity of activity, provided that it is of the right nature and quality and, in making a determination, a court must examine the totality of the defendant's contact with the forum." Id. See Schenker, 2002 WL 1560788, at *8 (explaining that the showing necessary to establish defendant has "transacted business" under § 302(a)(1) is "considerably less" than the showing to establish that a company was "doing business" under § 301). Even a "single transaction would be sufficient to fulfill th[e] requirement." Bank Brussels, 171 F.3d at 787. See also Kirkpatrick v. Rays Group, 71 F. Supp. 2d 204, 220 (W.D.N.Y. 1999) (§ 302(a)(1) is a "single act statute," meaning that "proof of one transaction in New York is sufficient to invoke jurisdiction, even if the defendant never enters the state, so long as the defendant's activities in New York were purposeful and there is a substantial relationship between the transaction and the claim asserted") (internal quotation marks and bracket omitted).
In determining whether a non-domiciliary "transacts business" in the state, courts look at a number of factors, including (1) the existence of a choice-of-law provision in a contract designating New York law to govern disputes between the parties; (2) the defendant's knowledge that services under a contract would be performed in New York; (3) the defendant's physical presence in New York for the purposes of negotiating a business deal; and (4) the defendant's frequent telephone calls and letters to the plaintiff located in New York over a couple of months. HD Brous Co., 229 F. Supp. 2d at 194 (citations omitted).
Plaintiff rests its claim for jurisdiction over GPT primarily on factor (3) cited above, citing a November 2004 dinner meeting between Peschio and Ginsberg in New York. Ginsberg states in his affidavit:
During this meeting Mr. Peschio and I discussed the employment proposal that had been made by GPT to Richard, Charmaine and me, our business philosophies and history, and various alternatives under which the parties could work together going forward. We also discussed GPT's interest in acquiring a portfolio of properties from an entity based in New York called Fortress Investment Group, and how Richard, Charmaine and I could assist in that process. . . . I also recall that during this November 2004 dinner meeting Mr. Peschio and I specifically discussed the status of the transactions that Richard, Charmaine and I were working on for GPT. Included in this discussion was the EPA Building in Denver, Colorado and the efforts made by Richard, Charmaine and me on GPT's behalf to buy this property.
Ginsberg Aff. ¶¶ 16, 17. Plaintiff claims that because this was a "key meeting," see Pl.'s Mem. in Opp'n, at 1, in which discussions included Ginsberg's work relationship with GPT, and specifically his efforts in connection with the EPA building at issue in this case, this New York meeting subjects defendant to this Court's personal jurisdiction under § 302.
I agree with plaintiff because I find that according to plaintiff's characterization of the contractual relationship between himself and defendant out of which this suit arises, this meeting could indeed have been a key meeting. Defendant maintains that GPT and Ginsberg "negotiated the contract via telephone, email, and facsimile. GPT made its calls and emails and sent its correspondence from its Nebraska headquarters. . . . The fact that GPT negotiated the contract outside of New York weighs against finding jurisdiction." See Def.'s Mem., at 8. This might be true under a narrow view of what is meant by "negotiations" for the transaction at issue here. The GPT-Ginsberg Agreement under which plaintiff is suing, however, specifically mentions certain prior efforts by Ginsberg on behalf of GPT which are covered under the GPT-Ginsberg Agreement. This Court has noted that "a meeting in New York, even one not intended to result in the formation of a contract, is sufficient for the exercise of long-arm jurisdiction where the discussions significantly advanced the formation of an agreement." Foremost Guar. Corp. v. Pub. Equities Corp., No 86 Civ. 6421, 1988 WL 125667, at *3 (S.D.N.Y. Nov. 10, 1988) (internal quotation marks and citation omitted) (meeting in New York, which "served as the springboard for the ongoing negotiations" concerning the sale at issue in the case, amounted to sufficient contacts to support finding of jurisdiction under § 302(a)(1)). Since the GPT-Ginsberg Agreement itself states that prior to that contract Ginsberg performed work "in anticipation" of entering into the agreement, and Peschio's earlier Memorandum of Proposal from October 2004 references "substantial interface" performed by Ginsberg that had not yet been "memorialized," see Ginsberg Aff., Ex. B., I find that a trier of fact could deem the 2004 dinner meeting to be "key" in the negotiation and formation of the GPT-Ginsberg Agreement. It bears remembering that the dinner meeting preceded execution of that Agreement by only about three months.
Defendant cites Gates v. Pinnacle Commc'n Corp., 623 F. Supp. 38 (S.D.N.Y. 1985) for the proposition that a "a single meeting in New York meets the requirements of N.Y. C.P.L.R. § 302(a)(1) only where that meeting is the beginning and end of negotiations." Id. at 42. However, Gates is distinguishable because the New York meeting in that case was followed by at least one subsequent meeting in D.C. and, according to plaintiff's view of the meeting, "merely finalized previously agreed-to terms." Id. In the case at bar, by contrast, the parties do not indicate whether there were other meetings leading to the formation of the GPT-Ginsberg Agreement, and in any event, neither party maintains that this meeting merely finalized previously agreed-to terms. To the extent that Gates articulates a more exacting test for personal jurisdiction than that in Foremost Guaranty Corp., I respectfully disagree and follow my decision in the latter case. So long as the New York meeting "significantly advanced the formation of an agreement" out of which the cause of action has arisen, Interface Biomed. Lab. v. Axiom Med., 600 F. Supp. 731, 736 (E.D.N.Y. 1985) (cited by Foremost Guar. Corp., 1988 WL 125667, at *3), § 302(a)(1) is satisfied. Also see id. at 735-36 ("It has been said that the relevant inquiry is whether the defendant has performed purposeful acts in New York in relation to the contract, albeit preliminarily or subsequent to its execution.") (citation and internal quotation marks omitted). Such a meeting therefore need not be "the beginning and end of negotiations," as required by Gates. See also HD Brous Co., 229 F. Supp. 2d at 195 (distinguishing Gates).
Additionally, plaintiff has provided evidence that defendant knew that services under the contract would be provided in New York, as GPT gave Ginsberg business cards referring to him as Managing Director, Finance of GPT, with a New York office address and telephone number. Ginsberg Aff. ¶ 13. See HD Brous Co., 229 F. Supp. 2d at 195 (taking into consideration the fact that defendant contracted with plaintiff "for services that it knew would be performed in New York" and also that defendant communicated frequently with plaintiff by email, fax, and telephone in New York pursuant to their agreement). This buttresses plaintiff's argument that defendant purposefully availed itself of New York for its transaction of business with Ginsberg. Based on a totality of the circumstances, I hold that plaintiff has made out a prima facie case that the court has jurisdiction over defendant GPT under § 302(a)(1).
3. Minimum Contacts Under International Shoe
The exercise of personal jurisdiction under New York law comports with constitutional due process only if the defendant has "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe, 326 U.S. at 316. By virtue of the activities of GPT's subsidiaries, with which it allegedly has close ties, and the numerous business trips GPT's employees allegedly make to the state, and its listing on the New York Stock Exchange, and the business discussions allegedly entered into with plaintiff relating to the issues in this action, I conclude that GPT has the requisite contacts; it has "purposefully avail[ed] itself of the privilege of conducting activities" in New York such that "it should reasonably anticipate being haled into court [here]." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 475 (1985) (citations omitted). Having also considered other factors relevant to the reasonableness inquiry, see Metropolitan Life Insurance, 84 F.3d at 568 (stating that a court should consider, inter alia, (1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies), I conclude that the assertion of personal jurisdiction over GPT here will not offend the standards of due process.
B. Transfer of Venue
1. Legal Standard 28 U.S.C. § 1404(a) provides, "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." The goal of § 1404(a) is "to prevent waste of time, energy and money and to protect litigants, witnesses and [the] public against unnecessary inconvenience and expense." Beatie Osborn LLP v. Patriot Scientific Corp., 431 F. Supp. 2d 367, 394 (S.D.N.Y. 2006) (citing Van Dusen v. Barrack, 376 U.S. 612, 616 (1964)) (internal quotation marks omitted). The party moving for a change of venue bears the burden of establishing by clear and convincing evidence that transfer is appropriate. Reliance Ins. Co. v. Six Star, Inc., 155 F. Supp. 2d 45, 56 (S.D.N.Y. 2001). A district court may transfer venue whether or not it has personal jurisdiction over the defendant. See Fort Knox Music Inc. v. Baptiste, 257 F.3d 108, 112 (2d Cir. 2001) (district court has the power to transfer venue even if personal jurisdiction over defendants is lacking).
District courts have broad discretion in determining whether transfer is warranted, and notions of convenience and fairness are considered on a case-by-case basis. D.H. Blair Co., Inc. v. Gottdiener, 462 F.3d 95, 106 (2d Cir. 2006). The factors considered by courts in the Second Circuit when deciding whether to transfer a case include: "(1) the convenience of witnesses; (2) the location of relevant documents and the relative ease of access to sources of proof; (3) the convenience of the parties; (4) the locus of the operative facts; (5) the availability of process to compel attendance of unwilling witnesses; (6) the relative means of the parties; (7) a forum's familiarity with the governing law; (8) the weight accorded a plaintiff's choice of forum; and (9) trial efficiency and the interests of justice, based on the totality of the circumstances." Am. Eagle Outfitters, Inc. v. Tala Bros. Corp., 2006 WL 2949932 (S.D.N.Y. Oct. 16, 2006); Lynch v. Nat. Prescription Admin'rs, 2004 WL 385156, at *2 (S.D.N.Y. Mar. 1, 2004). "There is no rigid formula for balancing these factors and no single one of them is determinative" in what is "essentially an equitable task left to the Court's discretion." Citigroup, Inc. v. City Holding Co., 97 F. Supp. 2d 549, 561 (S.D.N.Y. 2000) (internal quotation marks and citation omitted). In performing the analysis, however, the district court must "give due deference to the plaintiff's choice of forum which should not be disturbed unless the balance of convenience and justice weigh heavily in favor of defendant's forum." Id. (internal citations and quotation omitted); MK Sys. v. Schmidt, 2005 WL 590665, at *3 (S.D.N.Y. Mar. 10, 2005).
2. Application to This Case
Defendant has fallen far short of establishing by clear and convincing evidence that transfer is warranted. Defendant does not analyze the nine factors courts in this Circuit consider, not even in its reply brief, after plaintiff had in its opposition brief pointed out defendant's failure to perform the requisite analysis.
Defendant's basis for urging transfer appears to be the following three allegations: (1) the majority of witnesses GPT will call live and work in Nebraska; (2) a number of documents relating to the EPA building's procurement are located in Nebraska; and (3) Richard and Charmaine Mark have already brought an action in the District Court for the District of Nebraska, and "[t]hough the claims made in the respective actions are not identical, the Complaints raise similar issues." Def.'s Mem., at 11.
As far as the first two arguments are concerned, defendant has provided no evidentiary support whatsoever (again, even though plaintiff pointed out this failing in its opposition brief). This Court cannot consider factual allegations made solely in memoranda of law. See Cornell v. Assicurazioni Generali, S.p.A., No. 98 Civ. 1986, 2000 WL 1191124, at *1 (S.D.N.Y. Aug. 22, 2000), at *1 ("Plaintiffs make allegations in their memoranda of law and related appendices that do not appear in their complaints or affidavits. I may not consider them."). See also Stilley v. Am. Chambers Life Ins. Co., No. 91 Civ. 7022, 1992 WL 147906, at *2 (S.D.N.Y. Jun. 18, 1992) ("[B]riefs do not constitute evidence that the court can consider on a motion to dismiss."). Moreover, in the context of a motion to transfer venue, assertions regarding the convenience of witnesses must be made with a degree of detail. See Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 218 (2d Cir. 1978), rev'd on other grounds, 652 F.2d 278 (2d Cir. 1981) (movant must specify key witnesses to be called and make a general statement of what their testimony will cover); Am. Steamship Owners Mut. Protection Indem. Ass'n, Inc. v. Lafarge N. Am., Inc., 474 F. Supp. 2d 474, 482 (S.D.N.Y. 2007) (same). Finally, even if these were not insurmountable obstacles, which they are, defendant has only argued that it would be more convenient for GPT to try the case in Nebraska based on the location of witnesses and documents; defendant has not shown why, upon a comparison between the two districts, the location of witnesses and documents and other convenience indicators weigh in favor of transfer. See O'Brien v. Goldstar Tech., Inc., 812 F. Supp. 383, 386 (W.D.N.Y. 1993) (where transfer would merely switch the burden of inconvenience from one party to another, plaintiff's choice of forum should not be disturbed). And, finally, as far as the location of documents is concerned, this is not a factor carrying great weight. See LaFarge, 474 F. Supp. 2d at 484.
As for defendant's argument based on the existence of a related case in Nebraska, where defendant has not shown that any of the other factors weigh in its favor, this alone will not warrant transfer of the case. Moreover, I am not persuaded that the case in Nebraska has sufficient issues of fact and law in common to be considered related. The agreement under which the Marks are suing, an oral modification to a written contract between GPT and the Marks, is a separate contract from that under which Ginsberg is suing, and their claim arises not from non-payment relating to the Denver property but rather from an alleged improper termination by GPT. See Peschio Decl., Ex. A.
All told, defendant has failed to carry its burden in showing that transfer is warranted.
C. Failure to State a Claim under Rule 12(b)(6)
1. Legal Standard
For a plaintiff's complaint to survive dismissal under Rule 12(b)(6), the plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1974 (2007). In other words, the plaintiff "must provide the grounds upon which his claim rests through factual allegations sufficient to raise a right to relief above the speculative level." ATSI Comm., Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (citing Twombly, 127 S. Ct. at 1965) (internal quotation marks omitted). "[A] plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of actions will not do." Twombly, 127 S. Ct. at 1964-65 (internal quotation marks omitted). As the Second Circuit has recently stated, Twombly requires that a plaintiff satisfy "a flexible 'plausibility standard,' which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible." Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007).
The Second Circuit has made clear that the Rule 12(b)(6) "plausibility" standard the Supreme Court fashioned in Twombly is not confined to antitrust cases such as that one. See ATSI Communications, 493 F.3d at 98 n. 2 ("We have declined to read Twombly's flexible 'plausibility standard' as relating only to antitrust cases.") (citation omitted). ATSI Communications was a securities fraud case.
In deciding a motion to dismiss, the court "must accept as true all of the factual allegations set out in plaintiff's complaint, draw inferences from those allegations in the light most favorable to plaintiff, and construe the complaint liberally." Roth v. Jennings, 489 F.3d 499, 510 (2d Cir. 2007) (citation omitted). The court may also consider documents incorporated in the complaint by reference. Mortimer Off Shore Servs., Ltd. v. Fed. Republic of Germany, No. 05 Civ. 10669, 2007 WL 2822214, at *7 (S.D.N.Y. Sept. 27, 2007). However, "general, conclusory allegations need not be credited . . . when they are belied by more specific allegations of the complaint." Id. (citation and internal quotation marks omitted).
2. Application of the Law
In his complaint, plaintiff alleges:
Based on discussions that occurred throughout the second half of 2004, defendant GPT retained Ginsberg/Marks under an oral agreement in which Ginsberg/Marks were to locate possible federal or state government tenanted properties for purchase by GPT. In consideration for the services to be provided by Ginsberg/Marks, GPT agreed to pay them an aggregate fee of one and one-quarter (1.25%) percent of the purchase price of any property purchased by GPT (the 'Original GPT Agreement.').
Compl. ¶ 9. Plaintiff alleges that pursuant to this agreement, which I refer to as the Oral Agreement and which plaintiff refers to as the "Original GPT Agreement" in his papers, Ginsberg began performing services which he maintains included certain actions pertaining to the EPA building in Denver. Compl. ¶¶ 10-12. Plaintiff states that when he entered into the subsequent written GPT-Ginsberg Agreement, it "confirm[ed] the understanding that [he] had been working on certain transactions for GPT in concert with Richard and Charmaine Mark, that the work for these transactions was still in progress, and that if those transactions were ultimately consummated GPT would owe me a fee of .416% of the purchase price for each transaction so closed." Ginsberg. Aff. ¶ 20.
Ginsberg explains that 0.416% reflects his share — one third — of the 1.25% that GPT had agreed to collectively pay him, Richard Mark, and Charmaine Mark when the three of them were working together under the Oral Agreement with GPT. Compl. ¶ 18. In other words, the GPT-Ginsberg Agreement reflects the same compensation structure as that of the Oral Agreement.
As recited in full in Part I.A., supra, paragraph 15 of the GPT-Ginsberg Agreement states that the parties to the Agreement "hereto acknowledge" that prior to the signing of the GPT-Ginsberg Agreement, Ginsberg performed certain efforts and that "certain transactions from those work efforts are still in progress presently . . . and should those transactions ultimately be consummated, GPT will pay to Robert Ginsberg at closing a fee in the amount equal to of [sic] 0.416% of the purchase prices for each transaction so closed." Compl. ¶ 17 (quoting GPT-Ginsberg Agreement, attached as Ex. A). Plaintiff's claim is straightforward: when GPT did not compensate him following its closing of the EPA deal, it breached this GPT-Ginsberg Agreement.
Defendant's sole argument on the present motion based on Rule 12(b)(6) is that "[p]laintiff has not alleged the existence of a valid contract." Def.'s Mem., at 13. Defendant makes this statement after reciting the elements of a breach of contract claim under New York law: (1) the existence of an enforceable contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages. Def.'s Mem. at 12 (citing Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 525 (2d Cir. 1994)). Defendant goes on to say that New York law does not apply under a choice-of-law analysis and that the contract is invalid under the applicable Colorado law, because a Colorado statute makes it unlawful for any person to engage in the business or capacity of real estate broker in the state without first having obtained a real estate commission. See id. (citing Colo. Rev. Stat. § 12-61-102). Defendant quotes the statute's description of a real estate broker and compares this definition to the description of Ginsberg's duties in the GPT-Ginsberg Agreement. Because Ginsberg's duties are that of a real estate broker under the agreement, defendant contends, the applicable Colorado law renders the contract invalid.
The parties dispute whether, under New York law choice-of-law rules, New York or Colorado law applies to plaintiff's claim. But that issue need not be resolved at this juncture, as defendant has not asserted that there is a conflict between Colorado and New York law on an issue involved in this case. See K.T. v. Dash, 37 A.D.3d 107, 111 (N.Y.App.Div. 1st Dep't 2006) ("The first step in choice of law analysis is determining whether an actual conflict exists between the jurisdictions involved."); Elson v. Defren, 283 A.D.2d 109, 114 (N.Y. 1st Dept 2001) ("Where no conflict exists between the laws of the jurisdictions involved, there is no reason to engage in a choice of law analysis."). Defendant skips immediately to the choice of law analysis itself. Unpersuaded that there is a conflict of law, I will for the present continue to assume that New York law applies.
Plaintiff counters that Ginsberg's duties for which he is seeking compensation here are not just those of a real estate broker. Plaintiff provides evidentiary support for his position by way of an affidavit in which he states that under the Oral Agreement preceding the written Ginsberg-GPT Agreement, he was "to locate possible federal or state government tenanted properties for purchase by GPT. In addition, under the oral agreement the Marks and I were also responsible for advising GPT as to the strengths and weaknesses of the transactions, particularly regarding the governmental-related aspects, and helping GPT to structure the acquisition of the properties and to arrange financing for such acquisitions." Ginsberg Aff. ¶ 8. He also provides evidentiary support for his interpretation of his role in the form of the Memorandum of Proposal submitted by Peschio stating that "[o]ver the past few months, we at GPT have had substantial interface with Richard and Charmaine Mark and Robert Ginsberg. They have been sourcing, underwriting and structuring the prospective acquisition of a number of investment opportunities for GPT." Ginsberg Aff., Ex. B. Plaintiff maintains that this Memorandum of Proposal corroborates his allegations concerning the Oral Agreement, that the GPT-Ginsberg Agreement "memorialized" the Oral Agreement, and that the business activities he undertook on GPT's behalf were different in scope and kind than those performed by an ordinary, garden-variety real estate broker. This construction cannot be dismissed as implausible as a matter of law.
These divergent views about the characterization of the services Ginsberg agreed to perform under the GPT-Ginsberg Agreement may not be resolved at this juncture. At this stage in the case, plaintiff need only support his claim with a set of facts sufficient to "render entitlement to relief plausible." Twombly, 127 S. Ct. 1955, at 1973 n. 14. Plaintiff has adequately pled the elements of his claim, including the existence of a valid contract, and through his affidavit and other documentation supporting his interpretation of his contractual relationship with GPT, he has demonstrated that the claim is at least a plausible one.
Accordingly, I hold that plaintiff has stated adequately stated a claim upon which relief may be granted.
III. CONCLUSION
In view of the foregoing analysis, I deny defendant's motion in its entirety. Plaintiff has made out a prima facie case that this Court has personal jurisdiction, sufficient to defeat a motion to dismiss under Rule 12(b)(2), and defendant has not shown that transfer of the case to the District Court for the District of Nebraska is warranted. Plaintiff's complaint also survives a motion to dismiss under Rule 12(b)(6) as plaintiff has adequately stated the elements of his claim and provided evidence that plausibly supports such a claim.
Counsel are directed to attend a status conference in Room 17-C, 500 Pearl Street, on Wednesday, October 31, 2007 at 2 p.m.
It is SO ORDERED.