Opinion
02 CIV. 3937 (DLC)
December 27, 2002
Lawrence G. Soicher, New York, NY, For Plaintiff.
James M. Sanders, Mark A. Robertson, Fulbright Jaworski L.L.P., New York, NY, For Defendants.
OPINION AND ORDER
In this diversity action, plaintiff Metropolitan Antiques Gems, Inc. ("Metropolitan") seeks to recover on a check signed by defendant Linda M. Beaumont ("Mrs. Beaumont") made payable to Metropolitan in the amount of $1,800,000 which was subsequently dishonored for insufficient funds. In the alternative, Metropolitan seeks to recover that amount for goods which it allegedly sold to Mrs. Beaumont. Metropolitan also seeks attorney's fees. Defendants move to dismiss the action for lack of personal jurisdiction pursuant to Rule 12(b)(2), Fed.R.Civ.P. For the reasons stated, defendants' motion is granted.
By Order dated September 17, 2002, this action had been transferred to the Northern District of Texas on the ground that it was interwined with a third party complaint which Mrs. Beaumont filed in American Express Travel Related Services Company, Inc. v. Linda Beaumont v. Central Park Antiques and Gems, Ltd. d/b/a Metropolitan Arts and Antiques, Civil Action No. CA3-01-CV-1869-R (the "Texas Case"). In the Texas Case, American Express Travel Related Services Company, Inc. brought suit against Mrs. Beaumont seeking to collect $674,249.82 from her for charges, interest, and late fees allegedly due and owning on her American Express account. On December 3, 2001, Beaumont impleaded Metropolitan in a third party complaint. On April 23, 2001, Beaumont amended her third party complaint. By Order dated October 9, 2002, the Honorable Jerry Buchmeyer dismissed with prejudice Mrs. Beaumont's complaint. Accordingly, this Court vacated its September 17 Order.
Background
The following facts are as alleged by plaintiff unless otherwise indicated. Metropolitan is a New York corporation with its principal place of business in New York. Metropolitan is a retailer of, among other things, objets d'art. Its President is Samuel Morano ("Morano"). Defendants are husband and wife and are residents of the State of Texas.Morano states that on July 11, 1999, Mrs. Beaumont entered Metropolitan's store in midtown Manhattan, bought various items, and discussed purchasing at a later date several additional items. On either July 13 or 14, she visited the store again, purchased further items, and again expressed interest in purchasing additional items at a later date. Morano alleges that Mrs. Beaumont discussed purchasing the items that are the subject of the instant action during her visits to Metropolitan's store in July.
Mrs. Beaumont's purchases on July 11 and either July 13 or 14 have been paid in full and are not in dispute.
Morano states that, shortly after her visits to the store, Mrs. Beaumont telephoned Metropolitan from her residence in Texas to discuss the purchase of further items. Mrs. Beaumont and Metropolitan then had further telephone discussions, some initiated by Mrs. Beaumont, some by Metropolitan.
Mrs. Beaumont offers a different account of her telephone communications with Metropolitan. She states that Metropolitan initiated those calls. Specifically, she states that a Metropolitan representative telephoned her at her residence in Texas, explained that Metropolitan was closing a gallery in California, and asked if a representative of Metropolitan could bring items to her residence for her to examine and consider purchasing. She states that she told them they could do so.
On August 4, representatives of Metropolitan came to Mrs. Beaumont's residence in Texas and displayed various items. Morano states that Metropolitan had previously prepared in its New York store a two-page invoice (the "Invoice"), which was nevertheless dated August 4, 1999, and on which was listed a total of forty-three items. The Invoice indicated that the items were delivered for a total amount of $2.6 million. In its "Comments" section, the Invoice indicated that $1.8 million was paid on August 4 and the balance of $800,000 was due on October 15, 1999. The Invoice further states:
See terms and conditions set forth on reverse side which are incorporated by reference herein. Acceptance of the item(s) described herein shall constitute your agreement with the terms and conditions of this sale as stated on the reverse side whether you sign this document or not.
The reverse of the Invoice states, inter alia, that "New York law shall apply to this purchase."
In exchange for the items listed in the Invoice, Mrs. Beaumont handed to Metropolitan's representatives Check No. 1645 (the "Check"), dated August 4, 1999, in the amount of $1.8 million made payable to Metropolitan. Mrs. Beaumont did not sign the Invoice.
On August 11, 1999, the Check was dishonored for insufficient funds. The parties do not dispute that Mrs. Beaumont remains in possession of the items listed in the Invoice.
Morano states that in August and September 1999, defendants issued two checks payable to Metropolitan in the amounts of $500,000 and $300,000 to pay down the $2.6 million they allegedly owed to Metropolitan. By letter to Metropolitan dated October 25, Mrs. Beaumont stated:
I will not be able to get any more money from the bank until the first of the year. Please charge $100,000 a month on the 20th of the month starting with October of 1999 for three months. I will have the availability of more money after that.
Defendants have attached to their motion a copy of Mrs. Beaumont's Amended Third Party Complaint in the Texas Case. Mrs. Beaumont's complaint alleges that Metropolitan improperly engaged in twenty-two separate charges to her American express card, each in the amount of $50,000, in the year 2000. Her complaint was dismissed on October 9, 2002.
Ronald R. Beaumont ("Mr. Beaumont") and Mrs. Beaumont state that neither of them owns any real property in New York, rents or leases any real property in New York, or has a bank account in New York. Mrs. Beaumont further states that in the last ten years, she has not been to New York more than two times per year.
Before July 1999, the last time she was in New York was 1996. Mr. Beaumont states that he travels to New York for business from time to time, but does not regularly conduct business in New York. Mr. Beaumont further states that he has never had any contact with Metropolitan or its representatives.
Discussion
In a diversity case, the issue of personal jurisdiction must be determined according to the law of the forum state. See Agency Rent A Car Sys., Inc. v. Grant Rent A Car Corp., 98 F.3d 25, 29 (2d Cir. 1996). "If the exercise of jurisdiction is appropriate under [the state's statutes], the court then must decide whether such exercise comports with the requisites of due process." Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997). It is well established that on a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, "the plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). Where, as here, there has been no discovery and no evidentiary hearing on the issue, a plaintiff "need only make a prima facie showing by its pleadings and affidavits that jurisdiction exists." CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986).
"[W]here the issue is addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor." A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993).
Metropolitan argues that this Court has long-arm jurisdiction over defendants pursuant to New York Civil Practice Law and Rules ("CPLR") § 302(a)(1), which allows the exercise of personal jurisdiction over an out-of-state defendant if the defendant "transacts any business within the state" and the cause of action "arises from" that business activity. See CutCo, 806 F.2d at 365. In order to meet the transacting business element under Section 302(a)(1), a plaintiff must show that the defendant "purposely availed himself of the privilege of conducting activities within New York and thereby invoked the benefits and protections of its laws." Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 171 F.3d 779, 787 (2d Cir. 1999) (citation omitted). At a minimum, "there must be some transaction attributable to the one sought to be held which occurs in New York." Id. (citation omitted) (emphasis in original). Although a single purposeful act in New York can be sufficient to support jurisdiction, see Longines-Wittnauer Watch Co. v. Barnes Reinecke, Inc., 15 N.Y.2d 443, 456 (1965), the nature and quality of the New York contacts must be examined to determine their significance. George Reiner Co. v. Schwartz, 41 N.Y.2d 648, 650 (1977). "No single event or contact connecting defendant to the forum state need be demonstrated; rather, the totality of all defendant's contacts with the forum state must indicate that the exercise of jurisdiction would be proper." CutCo, 806 F.2d at 365. The requisite "minimum contacts" must provide a fair warning to the defendant of the possibility of being subject to the jurisdiction of New York courts. See Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 466-67 (1988) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)).
Section 302(a) states:
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).
The second element necessary to establish personal jurisdiction under Section 302(a)(1) requires that the plaintiff's cause of action arise out of the defendant's transaction of business in New York. CPLR § 302(a)(1). A claim arises out of a party's transaction of business in New York if there is "a substantial nexus between the transaction of business and the cause of action sued upon." See, e.g., Agency Rent A Car, 98 F.3d at 31 (citation omitted); McGowan v. Smith, 52 N.Y.2d 268, 272 (1981).
Metropolitan argues that the telephone communications which it alleges Mrs. Beaumont initiated when she called it sometime after her visit to its store in mid-July 1999, the sending of checks from Texas to New York to pay for merchandise, and the New York choice of law provision in the Invoice are sufficient to support the exercise of personal jurisdiction over her. Under New York law, "jurisdiction can rarely be based solely on defendant's telephone calls into New York." Whitaker v. Fresno Telsat, Inc., 87 F. Supp.2d 227, 230 (S.D.N.Y. 1999). Only "[i]f the purpose of the calls is for the defendant to actively participate in business in New York, [may] they alone . . . support a finding of New York long arm jurisdiction under C.P.L.R. § 302(a)(1)." Carlson v. Cuevas, 932 F. Supp. 76, 78 (S.D.N.Y. 1996). "New York courts have held that conducting contractual negotiations by phone, fax or mail with a party in New York does not constitute the transaction of business within the state." Worldwide Futgol Assocs., Inc. v. Event Entertainment, Inc., 983 F. Supp. 173, 177 (E.D.N.Y. 1997).
Metropolitan argues that in addition to making telephone calls to its store, Mrs. Beaumont also inspected in July in New York the merchandise that she eventually bought in August in Texas. Even if Metropolitan's allegations are true, these contacts are not sufficient to justify the exercise of jurisdiction under New York law. Mrs. Beaumont did not purchase the goods in New York. Metropolitan does not deny that Mrs. Beaumont inspected the goods in Texas before she bought them, and that the goods and Invoice were exchanged for the Check in Texas.
See id. at 179 ("New York courts have held that even multiple meetings in New York, which were not for the purpose of executing or performing the contract at issue, were insufficient to confer jurisdiction under Section 302(a)(1) on an out-of-state defendant.").
Mrs. Beaumont's mailing of two checks to Metropolitan's store in New York is also not sufficient to establish personal jurisdiction. See Beekman Paper Co. v. National Paper Products, 909 F.2d 67, 68-69 (2d Cir. 1990) (Texas defendant's placing of order by telephone, exchange of product samples and approval, and mailing of check to New York company insufficient to establish personal jurisdiction over defendant).
Metropolitan argues that the New York choice of law provision in the Invoice justifies the exercise of personal jurisdiction over defendants. While a choice of law provision standing alone is not sufficient to confer jurisdiction, it is appropriate to accord some weight to it as a form of contact with New York under Section 302(a)(1). CutCo Indus., 806 F.2d at 367.
Nevertheless, given the paucity of defendants' contacts with New York in connection with the transaction at issue in the instant action, the Invoice's choice of law provision is not sufficient to support jurisdiction.
Finally, Metropolitan asks for a hearing to establish either that the defendants transacted business in New York in connection with this purchase or that they so regularly conduct business in New York that they could be said to be doing business in New York. Since the facts as alleged by Metropolitan have been insufficient to establish jurisdiction under Section 302(a)(1), and Metropolitan has been unable to show what additional facts would be presented at a hearing to establish jurisdiction under that section, there is no need to hold a hearing to establish specific jurisdiction over the defendants. There is also no need to hold a hearing to determine whether Metropolitan can establish general jurisdiction over defendants, who, it is undisputed, are Texas domiciliaries. Metropolitan has made no proffer of the facts it would prove at a hearing and has provided no legal analysis to suggest that it will be able to show that there is general jurisdiction over the defendants. Nor is Metropolitan entitled to discovery to try to develop a factual showing.
During the months between the filing of the motion to dismiss and the plaintiff's opposition papers, the plaintiff did not request the opportunity to take discovery. Given the inadequate factual and legal presentation in Metropolitan's papers, it would appear that any discovery would be little more than a fishing expedition.
The motion was served on June 25, the opposition on August 23.
Conclusion
For the reasons stated, defendants' motion to dismiss is granted. The Clerk of Court shall close the case.
SO ORDERED: