Opinion
19-609359
05-11-2020
Matthew MARGOLIN, Plaintiffs, v. SAVAGE YOUTH THE FILM, LLC, and Michael Peluso, Individually and as a Manager of Savage Youth the Film, LLC, Defendants.
PLAINTIFF'S ATTORNEYS: MARGOLIN BESUNDER LLP, 1050 OLD NICHOLS ROAD, STE 200, ISLANDIA, NY 11749 DEFENDANT'S ATTORNEY: VEDDER PRICE KAUFMAN, ESQS., 1633 BROADWAY, STE 47, NEW YORK, NY 10019
PLAINTIFF'S ATTORNEYS: MARGOLIN BESUNDER LLP, 1050 OLD NICHOLS ROAD, STE 200, ISLANDIA, NY 11749
DEFENDANT'S ATTORNEY: VEDDER PRICE KAUFMAN, ESQS., 1633 BROADWAY, STE 47, NEW YORK, NY 10019
Sanford Neil Berland, J.
It is,
ORDERED that motion sequence 001 by defendants pursuant to CPLR § 3211 (a)(8), seeking dismissal of plaintiff's complaint, is denied.
This is an action for breach of an agreement that plaintiff alleges he made with Savage Youth the Film, LLC and one its two managing members, Michael Peluso. Defendants are domiciliaries of the State of California and move, pursuant to CPLR 3211[a][8], to dismiss the complaint contending that the court is without personal jurisdiction over them. For the reasons that follow, the motion is denied.
"Upon a CPLR 3211 (a) (8) motion to dismiss for lack of personal jurisdiction, it is the plaintiff who bears the 'ultimate burden of proof' to establish a basis for such jurisdiction" ( Am./Intl. 1994 Venture v. Mau , 146 A.D.3d 40, 51-52, 42 N.Y.S.3d 188 [2d Dept. 2016], citing Daniel B. Katz & Assoc. Corp. v. Midland Rushmore, LLC , 90 A.D.3d 977, 978, 937 N.Y.S.2d [2011], quoting Cornely v. Dynamic HVAC Supply, LLC , 44 A.D.3d 986, 986, 845 N.Y.S.2d 797 [2007] ). "However, to successfully oppose such a motion, the plaintiff need only make a prima facie showing that the defendant was subject to the personal jurisdiction of the court" ( Mau , 146 A.D.3d 40, 51, 42 N.Y.S.3d 188 ; see Jacobs v. 201 Stephenson Corp ., 138 A.D.3d 693, 693-694, 30 N.Y.S.3d 134 [2016] ).
"To determine whether a non-domiciliary may be sued in New York, [the Court] first determine[s] whether our long-arm statute ( CPLR 302 ) confers jurisdiction over it in light of its contacts with this State" ( Mau , 146 A.D.3d 40, 51, 42 N.Y.S.3d 188, quoting LaMarca v. Pak-Mor Mfg. Co. , 95 N.Y.2d 210, 214, 713 N.Y.S.2d 304, 735 N.E.2d 883 [2000] ). "If the defendant's relationship with New York falls within the terms of CPLR 302, [the Court] determine[s] whether the exercise of jurisdiction comports with due process" ( LaMarca , 95 N.Y.2d 210, 214, 713 N.Y.S.2d 304, 735 N.E.2d 883 ).
Plaintiff grounds personal jurisdiction over the defendants in the "transacting-of-business" provision of the long-arm statute, CPLR 302[a][1], which provides, as pertinent here, as follows:
§ 302. Personal jurisdiction by acts of non-domiciliaries:
"(a) Acts which are the basis of jurisdiction. 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."
CPLR 302 (a) is a "single act statute" ( Kreutter v. McFadden Oil Corp. , 71 N.Y.2d 460, 467, 527 N.Y.S.2d 195, 522 N.E.2d 40 [1988] ; see Deutsche Bank Sec., Inc. v. Montana Bd. of Invs. , 7 N.Y.3d 65, 71, 818 N.Y.S.2d 164, 850 N.E.2d 1140 [2006] ). "[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" ( Kreutter v. McFadden Oil Corp ., 71 N.Y.2d 460, 467, 527 N.Y.S.2d 195, 522 N.E.2d 40 ; see Montana Bd. of Invs. , 7 N.Y.3d 65, 71, 818 N.Y.S.2d 164, 850 N.E.2d 1140 ). "Purposeful activities are those with which a defendant, through volitional acts, ‘avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws’ " ( Fischbarg v. Doucet , 9 N.Y.3d 375, 380, 849 N.Y.S.2d 501, 880 N.E.2d 22 [2007], quoting McKee Elec. Co. v. Rauland-Borg Corp ., 20 N.Y.2d 377, 382, 283 N.Y.S.2d 34, 229 N.E.2d 604 [1967] ). "It is not the number of contacts that is determinative of whether a defendant purposefully availed itself of the benefits and privileges of conducting business in New York, but rather 'the quality of the contacts’ " ( Mau , 146 A.D.3d 40, 52, 42 N.Y.S.3d 188, quoting Paterno v. Laser Spine Inst. , 24 N.Y.3d 370, 378, 998 N.Y.S.2d 720, 23 N.E.3d 988 [2014] ). "[A]lthough determining what facts constitute ‘purposeful availment' is an objective inquiry, it always requires a court to closely examine the defendant's contacts for their quality" ( Licci v. Lebanese Can. Bank, SAL , 20 N.Y.3d 327, 338, 960 N.Y.S.2d 695, 984 N.E.2d 893 [2012] ). "Whether a non-domiciliary has engaged in sufficient purposeful activity to confer jurisdiction in New York requires an examination of the totality of the circumstances" ( Farkas v. Farkas , 36 A.D.3d 852, 853, 830 N.Y.S.2d 220 [2007] ; compare Fischbarg , 9 N.Y.3d 375, 380, 849 N.Y.S.2d 501, 880 N.E.2d 22 (purposeful availment established where out-of-state defendants' calls, faxes and emails to retained New York attorney, the plaintiff, formed an attorney-client relationship and, thus, a transaction of business in New York), and Bank of India v. Essar Steel Holdings Ltd. , 2017 N.Y. Slip Op. 32032[U], 7, 2017 WL 4284557 [Sup. Ct., New York County 2017] (purposeful availment established where defendant negotiated and executed contracts in New York), with Davis v. Scottish Re Group Ltd. , 2016 N.Y. Slip Op. 31313[U], 6, 2016 WL 3688466 [Sup. Ct., New York County 2016] (retention of counsel and financial advisors located in New York to assist with tender offer to be consummated outside of New York, without more, insufficient to establish purposeful availment).
CPLR 302[a][1] also requires that the claim "arise" from the acts that constitute the transaction of business upon which jurisdiction is grounded. In Licci v. Lebanese Can. Bank , 20 N.Y.3d 327, 339-40, 960 N.Y.S.2d 695, 984 N.E.2d 893 [2012], the Court of Appeals explained that requirement as follows:
We have interpreted the second prong of the jurisdictional inquiry to require that, in light of all the circumstances, there must be an "articulable nexus" ( McGowan v. Smith , 52 N.Y.2d 268, 437 N.Y.S.2d 643, 419 N.E.2d 321 [1981] ) or "substantial relationship" ( Kreutter v. McFadden Oil Corp. , 71 N.Y.2d 460, 527 N.Y.S.2d 195, 522 N.E.2d 40 [1988] ) between the business transaction and the claim asserted. We have consistently held that causation is not required, and that the inquiry under the statute is relatively permissive (see McGowan , 52 N.Y.2d at 272, 437 N.Y.S.2d 643, 419 N.E.2d 321 ; Kreutter , 71 N.Y.2d at 467, 527 N.Y.S.2d 195, 522 N.E.2d 40 ). But these standards connote, at a minimum, a relatedness between the transaction and the legal claim such that the latter is not completely unmoored from the former, regardless of the ultimate merits of the claim. In effect, the "arise-from" prong limits the broader "transaction-of-business" prong to confer jurisdiction only over those claims in some way arguably connected to the transaction.
( id. , 20 N.Y.3d at 339-40, 960 N.Y.S.2d 695, 984 N.E.2d 893 [footnote omitted] ). "Thus, ‘jurisdiction is proper 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’ " ( Al Rushaid v. Pictet & Cie , 28 N.Y.3d 316, 323, 45 N.Y.S.3d 276, 68 N.E.3d 1 [2016], quoting Fischbarg v. Doucet , supra , 9 N.Y.3d at 380, 849 N.Y.S.2d 501, 880 N.E.2d 22 ).
Defendants contend that plaintiff cannot make the requisite prima facie showing of any basis for personal jurisdiction over them in New York because neither of them is domiciled in New York, neither maintains a business office in New York, they employed no one in New York, all of their direct interactions with the plaintiff occurred while they and plaintiff were outside New York, no "aspect" of the alleged agreement called for plaintiff to do anything in New York , there is no claim that any of plaintiff's interactions with the foreign investor he brought to the project occurred while plaintiff was in New York , and the acts that plaintiff claims constituted breaches of the alleged agreement — failing to pay him an agreed-upon 10%, or $5,000, fee for producing an investor, In Bloom S.A., that invested $50,000 in Savage Youth as well as an executive producer "credit" on the film for doing so — occurred outside New York. In response, plaintiff avers that he is and was a New York resident throughout his dealings with the defendants and cites the fact that the Savage Youth executive producer who initiated his involvement with the project and provided him a copy of the Savage Youth Investor Prospectus in April 2016 is an experienced film and television executive producer, producer and assistant producer who lives and works in New York ; that a New York law firm provided legal representation for Savage Youth; that he was instructed by defendants to have the lawyer for the investor contact a lawyer at that New York law firm to negotiate and finalize the investor's agreement with Savage Youth, and that he did so and thereafter was copied on numerous emails exchanged between the investor's lawyer and Savage Youth's New York lawyer; that he was told, evidently by defendant Peluso, that the same New York law firm was involved in securing "sale and distribution" for the film; that the exhibiting of the film at the Bushwick Film Festival in Brooklyn in October 2018 was, notwithstanding the defendants' contrary position and even though they received no income for the exhibition, because such festival exhibitions are used both to generate publicity for a film and to connect the filmmakers with potential buyers and distributors and Savage Youth was at the time without either.
Even while noting that the proposed written agreement between plaintiff and Savage Youth was signed by plaintiff, but not by either defendant, defendants argue that it provides further evidence that they did not purposefully avail themselves of benefits and privileges of conducting business in New York because one portion of the writing, entitled "Crew Deal Memo," recites that it is to be "governed and construed in accordance with California law as if this Agreement were executed and fully performed in California, regardless of where execution and performance hereunder may actually occur." Of course, there is no question that plaintiff, who avers that he is a New York domiciliary and, in the course of his dealings with defendants, provided them with a signed W-9 Request for Taxpayer Identification Number and Certification in which he certified to a Suffolk County address for himself and that he was a United States citizen or "other U.S. person," has submitted to the court's jurisdiction by bringing this action, and, in any event, the proposed agreement does not appear to have any provision restricting or otherwise governing forum selection.
Indeed, defendants note that in various posting attributed to plaintiff, he is described as having "moved to Italy a few years ago," "currently based in Milan," and "a film producer based in Milan, Italy," although they concede that his Instagram "handle" recites that that plaintiff is "based in Milan and sometimes New York," which is consistent with plaintiff's averment that he was "traveling back-and-forth from Italy" when he spoke with defendant Peluso from an Italian telephone number.
In his affidavit in support of the motion, Peluso concedes that the executive producer to whom plaintiff refers, Andrea Miler, is his mother-in-law and was an investor in the project and credited as an executive producer of the Savage Youth film.
In arguing for personal jurisdiction over the defendants in this action and in opposing their motion to dismiss it, plaintiff relies heavily on the Court of Appeals decision in Fischbarg v. Doucet , supra. In Fischbarg , the Court found personal jurisdiction obtained pursuant to CPLR 302[a][1] over California defendants, an individual and a corporation, who had hired the plaintiff, a New York lawyer, to represent the corporation in a lawsuit in Oregon. The plaintiff sued the defendants in New York to recover his unpaid legal fees. The retention and all of the communications between the plaintiff and the defendants had been conducted by telephone, email, facsimile or through the mails, and the plaintiff handled the Oregon action remotely. Rejecting the defendants argument that the plaintiff was attempting to bootstrap his own activities in New York into a basis for jurisdiction over them, the Court of Appeals held that the interactions between the defendants and plaintiff constituted both "purposeful activity" and the "transaction of business in New York" within the meaning of CPLR 302[a][1], concluding that:
Contrary to defendants' argument, this is not a case in which plaintiff is attempting to establish long-arm jurisdiction on the basis of his unilateral conduct in New York. We have previously held that an agent may not rely upon his or her own New York contacts on behalf of a principal to establish long-arm jurisdiction (see e.g. Glassman v. Hyder , 23 N.Y.2d 354, 362, 296 N.Y.S.2d 783, 244 N.E.2d 259 [1968] ["The acts of the independent broker within New York should not, however, be attributed to the owners so as to become acts of the owners in New York"]; Parke-Bernet , 26 N.Y.2d at 19 n. 2, 308 N.Y.S.2d 337, 256 N.E.2d 506 [explaining result in Glassman and similar cases] ). But this is not such a case. Here, it is defendants' solicitation of plaintiff in New York and their frequent communications with him in this
state that form the basis of jurisdiction.
( id. , 9 N.Y.3d at 383, 849 N.Y.S.2d 501, 880 N.E.2d 22 ). The Court also rejected the argument that the plaintiff's fee claim did not "arise from" the business they transacted in New York, but form the work he performed in the Oregon litigation:
[T]he present action arises out of defendants' transaction of business in New York. There is a substantial relationship between plaintiff's action for fees accrued during his representation of defendant ONAM in the Oregon action, defendants' solicitation of plaintiff in New York to represent ONAM in that action and defendants' communications with plaintiff in this state with respect to the Oregon matter (see Johnson v. Ward , 4 N.Y.3d 516, 519, 797 N.Y.S.2d 33, 829 N.E.2d 1201 [2005] ). These are not "merely coincidental" occurrences that have a tangential relationship to the present case (see id. at 520, 797 N.Y.S.2d 33, 829 N.E.2d 1201 ). They form the basis of this action and, indeed, plaintiff's claims for legal fees are directly dependent upon them.
( id. , 9 N.Y.3d at 384, 849 N.Y.S.2d 501, 880 N.E.2d 22 ). Moreover, the Court of Appeals held, the defendants' contacts with New York were sufficient to support the assertion of jurisdiction over them in this state without offending federal due process requirements:
[O]ur decision accords with due process. As we have explained, the United States Supreme Court's due process precedents provide that: "So long as a party avails itself of the benefits of the forum, has sufficient minimum contacts with it, and should reasonably expect to defend its actions there, due process is not offended if that party is subjected to jurisdiction even if not 'present' in that State" ( Kreutter , 71 N.Y.2d at 466, 527 N.Y.S.2d 195, 522 N.E.2d 40 ). Defendants here purposefully availed themselves of New York's legal services market by establishing a continuing attorney-client relationship with plaintiff. Their contacts here were sufficient, consisting of solicitation of plaintiff's services here and frequent communications with him. Given these facts, they should have reasonably expected to defend against a suit based on their relationship with plaintiff in New York (see e.g. [George] Reiner [& Co., Inc. v. Schwartz] , 41 N.Y.2d at 653, 394 N.Y.S.2d 844, 363 N.E.2d 551 [1977] [New York contacts that "contemplated and resulted in a continuing relationship ... certainly are of the nature and quality to be deemed sufficient to render
(defendants) liable to suit here"] ).
( id. , 9 N.Y.3d at 384-85, 849 N.Y.S.2d 501, 880 N.E.2d 22 ).
Subsequent decisions of the Court of Appeals and the Appellate Division have supplied added texture to the two-prong test of CPLR 302[1a][1]. See, e.g. , Al Rushaid v. Pictet & Cie , supra , 28 N.Y.3d 316, 45 N.Y.S.3d 276, 68 N.E.3d 1 [2016] ("; Paterno v. Laser Spine Inst. , 24 N.Y.3d 370, 998 N.Y.S.2d 720, 23 N.E.3d 988 [2014] ; C. Mahendra (N.Y.), LLC v. Natl. Gold & Diamond Ctr., Inc. , 125 A.D.3d 454, 457-58, 3 N.Y.S.3d 27 [1st Dept. 2015] ; Jim Beam Brands Co. v. Tequila Cuervo La Rojeña S.A. de C.V. , 63 A.D.3d 575, 576, 881 N.Y.S.2d 421 [1st Dept. 2009]. The holding in C. Mahendra (N.Y.), LLC v. Natl. Gold & Diamond Ctr., Inc . , supra , is especially instructive. There, the out-of-state defendant placed telephone orders to the New York plaintiff, a wholesale seller of loose diamonds, which would then ship diamonds of the designated size, type, price-range and description to the defendant "on memorandum" for consideration and subsequently invoice the defendant for the diamonds that were not returned. When the defendant failed to pay a number of invoices, the plaintiff brought suit against it in New York, invoking the forum selection clause in its invoices to defendant. Although the First Department agreed that the forum selection clause was an additional term that materially altered the contract between the parties and, therefore, was not binding on the defendant under UCC 2-207 ( id. , 125 A.D.3d at 456, 3 N.Y.S.3d 27 ), it held that the assertion of personal jurisdiction over the defendant in New York was proper under CPLR 302[a][1] :
CPLR 302 (a) (1) authorizes the assertion of long-arm jurisdiction over a non-domiciliary who "transacts any business within the state or contracts anywhere to supply goods or services in the state." CPLR 302 (a) (1) is a "single act statute"; accordingly, physical presence is not required and one New York transaction is sufficient for personal jurisdiction. The statute applies where the defendant's New York activities were purposeful and substantially related to the claim (see D & R Global Selections, S.L. v. Bodega Olegario Falcón Piñeiro , 90 A.D.3d 403, 404, 934 N.Y.S.2d 19 [1st Dept. 2011] ). " ‘Purposeful’ " activities are defined as " ‘those with which a defendant, through volitional acts, avails
itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws’ " ( id., quoting Fischbarg v. Doucet , 9 N.Y.3d 375, 380, 849 N.Y.S.2d 501, 880 N.E.2d 22 [2007] ).
( 125 A.D.3d at 457, 3 N.Y.S.3d 27 ). To the argument, accepted by the court below, that the communications between the parties over the terms of their transactions had been entirely by telephone and that the parties were relatively unsophisticated, at least as compared with the institutional parties involved in the case upon which the plaintiff had placed principal reliance, Deutsche Bank Sec., Inc. v. Montana Bd. of Invs ., 7 N.Y.3d 65, 818 N.Y.S.2d 164, 850 N.E.2d 1140 [2006], cert denied 549 U.S. 1095, 127 S.Ct. 832, 166 L.Ed.2d 665 [2006], the Appellate Division responded that the it is the "quality" and "purposefulness" of the defendant's contacts with the New York that determines whether long-arm jurisdiction may properly be asserted over it:
Here, the court did not assess defendant's conduct or defendant's purposeful availment of the privilege of doing business in this forum (see Fischbarg , 9 N.Y.3d at 380-381, 849 N.Y.S.2d 501, 880 N.E.2d 22 ). Although the motion court distinguished Deutsche Bank by pointing to the sophistication of the parties and the magnitude of the transactions in that case, those two factors do not determine the question of personal jurisdiction. On the contrary, as the Court of Appeals found in Fischbarg , the "quality of defendants' contacts" is the primary consideration in deciding the question of long-arm jurisdiction ( id . at 380, 849 N.Y.S.2d 501, 880 N.E.2d 22 ). That the circumstances of the defendant's telephone calls in this case were different from those in Deutsche Bank does not make defendant's calls any less "purposeful." While the business dealings in this case were not especially complex, they also did not fall on the opposite end of the spectrum—that is, a single consumer transaction (see Parke-Bernet Galleries v. Franklyn , 26 N.Y.2d 13, 17, 308 N.Y.S.2d 337, 256 N.E.2d 506 [1970] ). The quality of the defendant's conduct was sufficient to subject defendant to long-arm jurisdiction.
(125 AD3d at457-58).
Applying the "purposeful" test of Fischbarg , supra , and its progeny, it is impossible to accept defendants' argument that their contacts with New York are insufficient to satisfy the "transaction of business" prong of CPLR 302[a][1]. Among other things, they do not dispute that they retained a New York law firm to provide legal representation for their enterprise; that their executive producer and investor who provided plaintiff with their investment prospectus and brought about his involvement with the project lives and works in New York; that their investment agreement with the investor plaintiff claims to have brought to them was negotiated and finalized by their New York law firm; and that they exhibited their film, the object of their enterprise, at a film festival in New York, evidently without affording plaintiff the executive producer credit to which he claims he is entitled.
The second condition for the exercise of long-arm jurisdiction based upon the transaction of business in New York, the "arising from" requirement of CPLR 302[a], is also met here. As the Court of Appeals explained in its 2016 decision in Al Rushaid v. Pictet & Cie , supra , 28 N.Y.3d 316, 45 N.Y.S.3d 276, 68 N.E.3d 1 [2016] :
To satisfy the second prong of CPLR 302 (a) (1) that the cause of action arise from the contacts with New York, there must be an " ‘articulable nexus’ ...
or 'substantial relationship' ... between the business transaction and the claim asserted" ( Licci , 20 N.Y.3d at 339, 960 N.Y.S.2d 695, 984 N.E.2d 893 ). This inquiry is "relatively permissive" ( id. at 339, 960 N.Y.S.2d 695, 984 N.E.2d 893, citing McGowan v. Smith , 52 N.Y.2d 268, 437 N.Y.S.2d 643, 419 N.E.2d 321 [1981], and Kreutter v. McFadden Oil Corp. , 71 N.Y.2d 460, 527 N.Y.S.2d 195, 522 N.E.2d 40 [1988] ), and does not require causation, but merely "a relatedness between the transaction and the legal claim such that the latter is not completely unmoored from the former, regardless of the ultimate merits of the claim" ( Licci , 20 N.Y.3d at 339, 960 N.Y.S.2d 695, 984 N.E.2d 893 ). The claim need only be "in some way arguably connected to the transaction" ( id. at 340, 960 N.Y.S.2d 695, 984 N.E.2d 893 ).
( 28 N.Y.3d at 329, 45 N.Y.S.3d 276, 68 N.E.3d 1 [emphasis supplied] ). Here, plaintiff claims that defendants breached their agreement with him by failing to pay him the fee to which he asserts he was entitled for bringing to them an investor who invested $50,000 in their venture and for failing to give plaintiff executive producer credit on the film for doing so. Beyond plaintiff's contention that he was brought into his business interactions with the defendants by an executive producer and investor in the project who lives and works in New York, plaintiff claims, and defendants do not dispute, that the New York law firm they retained to represent their venture negotiated and concluded the investment agreement with that investor. And while defendants contend that they received no payment for exhibiting their film at the Bushwick film festival in Brooklyn, they do not dispute that they exhibited their film was exhibited there or, for that matter, that their commercial purposes were, as plaintiff alleges, served by their doing so. Thus, whether or not plaintiff was physically located in New York on some or all of those occasions when he and the defendants engaged in communications by email and telephone, there is nonetheless, as the Court of Appeals stated in Al Rushaid v. Pictet & Cie , supra , 28 N.Y.3d at 329, 45 N.Y.S.3d 276, 68 N.E.3d 1, quoting Licci v. Lebanese Can. Bank, SAL , supra , 20 N.Y.3d at 339, 960 N.Y.S.2d 695, 984 N.E.2d 893, a sufficient " ‘relatedness’ " between the defendants' transaction of business in New York and plaintiff's claims " ‘such that the latter is not completely unmoored form the former, regardless of the ultimate merits of the claim.’ "
For all of these reasons, the defendants motion to dismiss the complaint pursuant to CPLR § 3211 (a)(8) is denied.
The foregoing constitutes the decision and order of the Court.