MATSUMOTO, District Judge:
Plaintiffs USHA Holdings, LLC ("USHA") and Atul Bhatara ("Bhatara") brought suit against defendants Franchise India Holdings, Limited ("Franchise India"), Francorp Advisors Private Limited ("FAPL"), and Gaurav Marya ("Marya") in the Supreme Court of New York, Queens County, by filing a Summons and Complaint dated June 14, 2012.
Many of the facts giving rise to this lawsuit are vigorously contested by the parties. In determining the facts relevant to defendants' motion to dismiss for lack of personal jurisdiction, the court has considered the Complaint and the various declarations and other evidence submitted by the parties.
Francorp International, Inc. ("Francorp"), which is not a party to this case, is
Bhatara was born and raised in Queens, New York, graduated from high school in Queens, then graduated from St. John's University in Queens, and resides in Queens. (Bhatara Dec. ¶¶ 92-94.) Bhatara has cerebral palsy, needs the assistance of companions to travel within India, and had experimental surgery performed on his legs, which cannot support the weight of his torso. (Id. ¶¶ 97-98, 103.) USHA is a New York LLC based in Queens, New York, and is the business entity used by Bhatara to conduct his investments. (Id. ¶ 91.)
Marya is domiciled in New Delhi, India. (Declaration of Gaurav Marya ("Marya Dec.") ¶ 44.) Marya is the principal and managing director of Franchise India and the managing director of FAPL. (Id. ¶¶ 1, 45-46.)
Franchise India is a private, closely-held corporation organized under the laws of the Republic of India with its principal place of business in New Delhi, India. (Id. ¶ 46.) All of the shareholders of Franchise India are relatives of Marya who reside in India. (Id. ¶ 45.) Franchise India assists investors who seek franchise opportunities by holding trade exhibitions and helping to broker business transactions. (Id. ¶ 47.) The company markets itself as the "World's #1 Franchise Site" and boasts partnerships with at least 6,930 global franchising opportunities, including the "Sesame Street Preschool" program and the Kenny Rogers Roasters franchise. (Bhatara Dec. ¶¶ 61-63.)
FAPL is a closely held, private corporation organized under the laws of the Republic of India on October 7, 2008, with its sole place of business in New Delhi, India. (Marya Dec. ¶¶ 19, 49-50.) Marya claims he and his brother own all of the shares of FAPL. (Id. ¶ 49.) But other evidence in the record, including an agreement signed by Marya on behalf of FAPL and Boroian on behalf of Francorp, shows that Marya owns 50 percent of the shares of FAPL and Bhatara owns 50 percent of the shares of FAPL. (Bhatara Dec., Ex. B.) Marya claims FAPL has 18 employees, all of whom are based in New Delhi. (Marya Dec. ¶ 70.)
Francorp was offering to sell a license that granted the purchaser the exclusive territorial right to implement Francorp's franchise consulting and development services within the Republic of India (the "License"). (Bhatara Dec. ¶ 2.) Bhatara claims that he and USHA purchased the License from Francorp on or about September 12, 2008, in exchange for a payment of $400,000. (Id. ¶ 15 & Ex. A; Boroian Dec. ¶¶ 5, 15.) A March 11, 2011 letter from Boroian to Bhatara states that Bhatara initially paid a $50,000 fee as an option for the License and $400,000 to purchase the License. (Bhatara Dec., Ex. A.)
After purchasing the License, Bhatara contacted Marya to discuss the use of the License. (Id. ¶ 19.) Marya claims, and plaintiffs do not dispute, that he and Bhatara had an initial meeting to discuss the license in New Delhi in "August or September of 2008," that they met the following day at Marya's office in New Delhi to discuss the License, and that Bhatara informed
On September 17, 2008, Marya sent an e-mail to Bhatara that included a one-page document entitled "Terms of MOU" (the "MOU") as an attachment. (Id. ¶ 14 & Ex. A.) The MOU, which neither Marya nor Bhatara signed, provided that "Atul Bhatara & Gaurav Marya will structure India JV to represent & Operate Francrop [sic] license in India," that "[b]oth parties will hold 50% is [sic] the India JV," and that "[b]oth Parties will sign MOU which will be binding for JV structure and License Agreement." (Id., Ex. A.) The MOU sent by Marya also stated that the joint venture would transfer $30,000 to Bhatara immediately upon the signing of the license agreement and $270,000 to Bhatara within one year of the signing. (Id.) Marya now claims that he "was not willing to invest such a sum in order to purchase the License." (Id. ¶ 12.)
The draft MOU called for the new Indian joint venture to be incorporated under the name "Usha Management consultants." (Id., Ex. A.) But Marya stated that he and Bhatara subsequently discussed forming the joint venture under the name "Francorp Advisors Private Limited." (Id. ¶ 17.) FAPL was formed in India on October 7, 2008. (Id. ¶ 19.)
On November 1, 2008, Marya flew from New Delhi, India to New York, landing on November 2, 2008. (Id. ¶ 22.) Marya claims he traveled to New York to meet with executives at the Famous Famiglia Pizza Corp. on November 3, 2008, at the request of Bhatara, although he had "no interest in a relationship" with Famous Famiglia. (Id.)
On November 1, 2008, Eugenie Wilson, an assistant manager at Franchise India e-mailed Bhatara to inform him that Deepika Handa, a legal advisor at Franchise India, would be e-mailing him a draft "Commercial Agreement," which Handa did e-mail to Bhatara later that same day. (Id. ¶ 23 & Ex. C.) Wilson also wrote in her e-mail to Bhatara that Marya "requests you to please carry a copy of the Agreement when you meet with him on the 2nd Nov [sic] for dinner." (Id.)
Bhatara and Marya met for dinner on November 2, 2008, at the BLT Steakhouse in White Plains, New York. (Bhatara Dec. ¶ 27.) Bhatara states that he brought a copy of the draft Commercial Agreement to dinner and "discussed its terms in detail" with Marya. (Id. ¶ 28.) At the end of the dinner, Bhatara stated that he and
Specifically, Bhatara claims that he and Marya confirmed that they would each own 50 percent of the joint venture in India, that Marya's interest would be established by actively operating the joint venture in India, and that Bhatara's interest would be secured by his existing equity in the License, for which he paid the full purchase price of $400,000, in addition to compensation from Marya in consideration for placing the ownership of the License in the joint venture. (Id.) Bhatara also claims that he and Marya resolved to "proceed by way of an agreement in principle until all remaining terms were resolved" because they were scheduled to fly to Illinois to meet with Francorp on November 4, 2008. (Id. ¶¶ 29, 31.)
Several terms in the draft Commercial Agreement are relevant to this motion. First, the Agreement stated that Marya and USHA, represented by is managing partner Bhatara, were the parties to the Agreement. (Marya Dec., Ex. C, p. 1.) Second, the agreement states that it "sets out the broad mutual understanding between the parties and reflects only the terms that are presently proposed by the parties concerned in order to set up standards and solutions for setting up and formation" of a joint venture in India. (Id.) Third, the agreement states that "the terms of this Agreement will arise and be executed only when all material rights, obligations, terms & conditions have been mutually agreed to and set forth in a `Definitive Agreement' including the Shareholder's Agreement, License Agreement and such other Agreements as the parties may mutually agree to execute from time to time." (Id. at p. 2.)
Fourth, Article 10 of the draft Commercial Agreement called for arbitration in New Delhi, India, and Article 14 stated that "[t]his Agreement shall be governed by and construed in accordance with the laws of India." (Id. at pp. 11-13.) Bhatara claims that "the nature and location of conflict resolution was amongst the final minor outstanding points of negotiation." (Bhatara Dec. ¶ 80.)
The Commercial Agreement also deviated in certain respects from a term sheet that Bhatara and Marya previously negotiated in late September 2008. (Id. ¶¶ 78-79 & Exs. K-L.) Specifically, a legal advisor to Bhatara e-mailed him in September 2008 to ask "whether the arbitration in USA will be binding on the parties located in India." (Id., Ex. L (emphasis added).) On November 4, 2008, Bhatara's legal advisor e-mailed him again to note that the draft Commercial Agreement provided for arbitration to be conducted under the Arbitration and Conciliation Act, 1996, or pursuant to the laws of India, rather than the "Federal Arbitration Act of the USA" provided in the Term Sheet. (Id., Ex. K.)
On November 4, 2008, Bhatara and Marya met with Boroian at Francorp's offices in Olympia Fields, Illinois. (Id. ¶ 31.) Bhatara and Marya told Boroian that they had reached an agreement in principle concerning their joint venture and wanted to proceed with their plan to use the License in India. (Id.) On November 5, 2008, the License was placed in the name of FAPL pursuant to a License Agreement for the License between Francorp and FAPL. (Id. ¶ 32; Marya Dec., Ex. D.) Although the License Agreement states that the Licensee, FAPL, has paid the Licensor, Francorp, $400,000 as consideration
Boroian signed the agreement for Francorp, and Marya signed the agreement for FAPL. (Id.) According to Exhibit 1 of the License Agreement, Marya and Bhatara stated that they each owned 50 percent of the shares FAPL, and Marya and Bhatara both signed a statement acknowledging they consented and submitted to Illinois courts and the federal district court located in or serving Cook County, Illinois for any suits concerning the License Agreement. (Id.)
Marya and Bhatara then returned to Queens, New York, and had a dinner at the Ramada Plaza near JFK Airport to celebrate and discuss their business relationship. (Bhatara Dec. ¶ 33.) At this dinner, Marya told Bhatara that they would finalize any outstanding items concerning their agreement in the coming weeks. (Id. ¶ 34.)
After returning to India, Marya sent an e-mail to Bhatara on November 8, 2008, stating "I am very excited about our new business partnership and am sure this new joint venture will be very fruitful and beneficial to our organizations." (Id. ¶ 35 & Ex. C.) On November 14, 2008, Marya e-mailed Bhatara and asked him to sign and return a consent letter that would appoint Bhatara a director of FAPL. (Id. ¶ 37 & Ex. D.) Bhatara signed the letter and returned it to Marya. (Id. ¶ 37.)
After November 14, 2008, Bhatara felt Marya became "increasingly unresponsive" to questions concerning the License. (Id. ¶ 38.) Bhatara stated that Marya told him he was reinvesting money derived from the License into FAPL and refused to further memorialize their agreement. (Id.)
Bhatara and Marya met several times in India after November 14, 2008. (Marya Dec. ¶ 39.) Marya and Bhatara met in Hyderabad, India around February 2009, in Chandigarh, India around May 2009, and in New Delhi, India, around June 2009. (Id.) Marya claims that there had been no meeting of the minds concerning the draft, that Bhatara did not seek shares in FAPL, and that Bhatara repeatedly sought to sell the License to Marya. (Id. ¶¶ 38-40.)
On July 11, 2011, Bhatara filed a demand for arbitration in Illinois. (Id. ¶ 40 & Ex. E.) But on February 2, 2012, the arbitration was dismissed for lack of jurisdiction because neither Bhatara nor Marya were parties to the Licensing Agreement between Francorp and FAPL. (Id. ¶ 43 & Ex. F.) In connection with this proposed arbitration proceeding, counsel for Marya stated that "[a]lthough [Bhatara] was listed as a 50% owner in FAPL [in the exhibits to the License Agreement], [Bhatara] never held equity in FAPL. [Marya] did not object to [Bhatara] characterizing himself as a 50% owner because, at that time, FAPL was less than a month old, and [Marya] believed and expected that [Bhatara] would subsequently fulfill his responsibilities to become a co-owner." (Bhatara Dec., Ex. M, p. 4 n. 5.)
On June 6, 2012, Boroian received an e-mail from a lawyer for plaintiffs informing him that plaintiffs were filing suit, and Boroian e-mailed Marya that same day, informing him of the lawsuit and asking
Franchise India was participating in the International Franchise Expo, which was taking place between June 15 and June 17, 2012, in New York City. (Marya Dec. ¶¶ 61-62.) Boroian saw Marya operating a booth at this exposition. (Boroian Dec. ¶ 31.) Marya claims that he had not planned to attend the International Franchise Expo but decided to leave Las Vegas, where he had originally planned to be during his trip, and go to New York to discuss the License with Marya and Boroian. (Marya Dec. ¶¶ 64-65.)
Bhatara e-mailed Marya and Boroian on June 11, 2012 to suggest a meeting to resolve the dispute concerning the License. (Marya Dec. ¶ 65.) At approximately 7:00 p.m. on June 16, 2012, Marya arrived at a Hilton Hotel located on the Avenue of the Americas in New York City. (Id. ¶ 67, Bhatara Dec. ¶¶ 50-51.) Marya claims he was immediately served with a Summons and Complaint after arriving, and no settlement meeting took place. (Marya Dec. ¶ 67.) But Bhatara and Bhatara's cousin, Vishal Sharma, claim they had a lengthy meeting with Marya, and that, at the conclusion of the meeting, Marya was served with multiple copies of the Summons and Complaint, both personally and on behalf of Franchise India and FAPL. (Bhatara Dec. ¶ 50; Declaration of Vishal Sharma, ¶ 3.)
Marya claims he agreed to meet with executives at Famous Famiglia Pizza Corp. on November 3, 2008, in White Plains, New York, at the request of Bhatara, even though he "had no interest in a relationship" with Famous Famiglia. (Marya Dec. ¶ 22.) But after Marya met with executives at Famous Famiglia, Franchise India entered into a business relationship with Famous Famiglia. (Bhatara Dec. ¶ 57.) Franchise India designated an employee to serve as Famous Famiglia's project manager, Franchise India represented Famous Famiglia in trade shows in India, and Franchise India advertised the Famous Famiglia brand in advertisements in India. (Id. ¶ 58 & Ex. F.)
Defendants first argue that this case should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(5) for insufficient service of process, arguing that plaintiffs used fraud or deceit to lure defendants into this jurisdiction. (Memorandum of Law in Support of Motion to Dismiss ("Mem."), 10/11/12, at 10.) This argument is meritless.
"[W]hen a defendant moves to dismiss under Rule 12(b)(5), the plaintiff bears the burden of proving adequate service."
When a case is removed from a state court, the federal district court must look to state law to determine whether service of process was valid. Marine Midland Bank v. Smith, No. 79 Civ. 1612, 1979 U.S. Dist. LEXIS 11753, at *4 (S.D.N.Y. June 13, 1979); see also DiCesare-Engler Prods., Inc. v. Mainman, Ltd., 421 F.Supp. 116, 120 (W.D.Pa.1976) ("In considering... service of process, the federal court must look to the law of the state in which the action was commenced to determine its validity.").
Under New York law, a plaintiff may effect service "by delivering the summons within the state to the person to be served." N.Y.C.P.L.R. § 308(1) (2014). "It has long been held that where a defendant has been lured into this jurisdiction by fraud or deceit in order that he may be served, the service so effected is invalid." Terlizzi v. Brodie, 38 A.D.2d 762, 329 N.Y.S.2d 589, 590 (1972); see also Wildeboer v. Tallant, No. 82 Civ. 4542, 1982 U.S. Dist. LEXIS 16072, at *3-4 (S.D.N.Y. Nov. 10, 1982) ("the use of false pretenses to entice a defendant from beyond the court's territorial jurisdiction to within it is ground for upsetting service"); Maydanik v. Cieri, 11 Misc.3d 1087(A), 819 N.Y.S.2d 849, 849 (N.Y.Sup.Ct.2006) ("service obtained through trickery or deceit will not be countenanced").
But "[i]f the invitation to defendant was a legitimate one and not a pretext, and the defendant was or should have been aware that there was likelihood of service upon him, no fraud or deceit was practiced upon the defendant and the service should not be set aside." Allen v. Betterly, 258 A.D. 907, 16 N.Y.S.2d 318, 319 (1939) (emphasis added); see also Marine Midland Bank, 1979 U.S. Dist. LEXIS 11753, at *5-6 (finding service proper where defendant was served after meeting with plaintiff in part because service "should not have come as a surprise to [defendant]" due to defendant's awareness of potential lawsuit); Waljohn Waterstop, Inc. v. Webster, 37 Misc.2d 96, 232 N.Y.S.2d 665, 666-67 (N.Y.Sup.Ct.1962) (finding no fraud or deceit where defendant was served with summons after coming to New York for meeting with plaintiff partly because "defendant had been told that the plaintiff would sue him if an agreement could not be reached").
Finally, if a defendant is already in the state, a substantial latitude to use trickery is permitted. See Gumperz v. Hofmann, 245 A.D. 622, 283 N.Y.S. 823, 825 (1935) ("We think that legal as well as practical considerations preponderate in favor of the rule that service is not to be invalidated merely because secured by a deception practiced on the defendant, which, in no true sense, was injurious to him. It may fairly be said that there is a duty upon persons within the jurisdiction to submit to the service of process."), aff'd, 271 N.Y. 544, 2 N.E.2d 687 (1936); see also Schwarz v. Artcraft Silk Hosiery Mills, Inc., 110 F.2d 465, 466 (2d Cir.1940) ("It is now settled in New York that misstatements which mislead a defendant and induce him to appear where service may be, and is, made upon him which otherwise would not have then been made afford no ground for vacating the service provided the trick does not lure the person served into the jurisdiction.") (emphasis added); American-European Art Assocs. v. Moquay, No. 93 CIV 6793, 1995 WL 317321, at *4, 1995 U.S. Dist. LEXIS 7113, at *10-11 (S.D.N.Y. May 23, 1995) (same).
Defendants argue that they were not properly served because plaintiffs allegedly
As a preliminary matter, Marya does not and cannot dispute that he was aware or should have been aware that there was a likelihood he would be served in connection with this lawsuit if he travelled to New York. Boroian forwarded Marya news of the plaintiffs' lawsuit in an e-mail on June 6, 2012 and urged Marya to "communicate with [plaintiffs] and negotiate a resolution before this goes any further." (Bhatara Dec., Ex. E.) Marya responded to Boroian's e-mail on June 9, 2012, claiming that "Francorp India and I have not defaulted to [sic] any commitments and agreements." (Id.) These e-mails show that Marya was informed about and knew of plaintiffs' pending lawsuit against him, Franchise India, and FAPL well before he met with Bhatara on June 16, 2012.
Nevertheless, Marya alleges that service was improper because he was lured into New York through fraud and deceit. Marya claims that he only travelled to New York after receiving an e-mail from Bhatara on June 11, 2012, suggesting a meeting. (Marya Dec. ¶¶ 64-65.) Marya also claims that when he arrived for the scheduled meeting with Bhatara at the Hilton Hotel on Avenue of the Americas in New York at 7:00 p.m. on June 16, 2012, he was immediately served with a Summons and Complaint, and no meeting actually took place. (Marya Dec. ¶ 67.)
Bhatara and his cousin, Vishal Sharma, however, have both submitted declarations alleging that they did in fact have a lengthy meeting with Marya at the hotel before he was served on June 16, 2012. (Bhatara Dec. ¶ 50; Declaration of Vishal Sharma, ¶ 3 (noting meeting "lasted approximately an hour.") Bhatara and Sharma are not unbiased declarants, but their accounts of the meeting are corroborated by the affidavits of the process server, Michael Gitlitz. Gitlitz averred that he served Marya at 8:30 p.m. on June 16, 2012, at the Hilton Hotel on Avenue of the Americas in New York City. (Affidavits of Michael Gitlitz, 6/26/12.) Marya has conceded that he arrived at the hotel at 7:00 p.m., (Marya Dec. ¶ 67), and the time of service in Gitlitz's affidavits — 8:30 p.m. — is consistent with the declarations by Bhatara and Bhatara's cousin Sharma that they met at some length with Marya at the hotel before Marya was served, (Bhatara Dec. ¶ 50; Declaration of Vishal Sharma, ¶ 3).
Even if Marya had somehow been tricked into going to the Hilton Hotel, service upon Marya, Franchise India, and FAPL would still be proper. The evidence shows that Marya intended to travel to
Marya claims that he only left Las Vegas, Nevada, and travelled to New York after Bhatara e-mailed him and Boroian on June 11, 2012, to suggest a meeting and that he had not previously planned to attend the International Franchise Expo in New York. (Marya Dec. ¶¶ 64-65.) Marya has not provided any explanation of what he was doing in Las Vegas or produced any evidence, such as e-mails, bills, travel documents, or other documents that would verify that he was actually in, or planned to travel to and remain in Las Vegas, and only changed his plans to travel to New York after receiving Bhatara's e-mail on June 11, 2012.
The evidence in the record contradicts Marya's assertions. Boroian e-mailed Marya on June 10, 2012, and referred in that e-mail to Marya's presence "in New York next week." (Bhatara Dec., Ex. E (emphasis added).) This e-mail shows that Boroian knew that Marya was already planning to travel to New York by June 10, 2012, a day before Bhatara had e-mailed Marya about a meeting in New York on June 11, 2912. (Marya Dec. ¶ 65.) Boroian also averred that "Marya was able to coordinate [his meeting with Bhatara] with related business involving his affiliate entity [Franchise India]," and that Marya operated a booth at the International Franchise Expo in New York City. (Boroian Dec. ¶¶ 29-31.)
Consequently, the court finds that Marya intended to travel to New York to participate in the International Franchise Expo before Bhatara e-mailed him on June 11, 2012, to suggest a meeting and that Marya did in fact participate in the International Franchise Expo. As a result, even if Bhatara had tricked Marya into meeting him at the Hilton after Marya was already in New York, service would still be proper because Marya was "not lure[d] ... into the jurisdiction," Schwarz, 110 F.2d at 466, and he had "a duty [as a person] within the jurisdiction to submit to the service of process," Gumperz, 283 N.Y.S. at 825.
In a motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) "the plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Mende v. Milestone Tech., Inc., 269 F.Supp.2d 246, 251 (S.D.N.Y.2003) (quoting Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir.1999)). But where "the court chooses not to conduct a full-blown evidentiary hearing on the motion, the plaintiff need make only a prima facie showing of jurisdiction through its own affidavits and supporting materials." Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981). Although the court "will not draw `argumentative inferences' in the plaintiff's favor," the court must "construe jurisdictional allegations liberally and take as true uncontroverted factual allegations." Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir.1994).
"A court sitting in diversity applies the law of the forum state in determining whether it has personal jurisdiction over the defendants." Agency Rent A Car Sys. v. Grand Rent A Car Corp., 98 F.3d 25,
In this case, plaintiffs have asserted jurisdiction under New York Civil Practice Law and Rules ("CPLR") sections 301 and 302. Plaintiffs argue this court has personal jurisdiction over defendants under three theories: transient jurisdiction, general jurisdiction, and specific jurisdiction. Each of these arguments will be considered in turn.
"Among the most firmly established principles of personal jurisdiction in American tradition is that the courts of a State have jurisdiction over nonresidents who are physically present in the State. The view developed early that each State had the power to hale before its courts any individual who could be found within its borders, and that once having acquired jurisdiction over such a person by properly serving him with process, the State could retain jurisdiction to enter judgment against him, no matter how fleeting his visit." Burnham v. Superior Court of Cal., 495 U.S. 604, 610-611, 110 S.Ct. 2105, 109 L.Ed.2d 631 (1990). It has been a "longstanding principle that service of process on a defendant within a jurisdiction, no matter how briefly, is sufficient to confer personal jurisdiction and that due process is not offended." American-European Art Assocs., 1995 WL 317321, at *3, 1995 U.S. Dist. LEXIS 7113, at *7; see also Opert v. Schmid, 535 F.Supp. 591, 593 (S.D.N.Y.1982) (court had personal jurisdiction over defendant who was served while in New York to attend U.S. Grand Prix event).
Under New York law, courts have personal jurisdiction pursuant to CPLR § 301 over individual defendants who have been properly served. E.g., In re Le, 168 Misc.2d 384, 637 N.Y.S.2d 614, 616 (N.Y.Sup.Ct.1995) ("the notion of transient jurisdiction has been codified in CPLR 301, which provides that `[a] court may exercise jurisdiction over persons, property, or status as might have been exercised heretofore'") (quoting N.Y.C.P.L.R. § 301); see also Rawstorne v. Maguire, 265 N.Y. 204, 192 N.E. 294, 295-96 (1934) ("Where there is `bodily presence' within the boundaries of the State there is opportunity for the exercise of the State's sovereignty, even though bodily presence is not accompanied by any intention to remain there permanently."). As explained in Discussion section I.B., this court has found that Marya, Franchise India, and FAPL were properly served in New York. Therefore, this court finds that plaintiffs have established jurisdiction over Marya under CPLR § 301 because he was properly served in the state.
As a preliminary matter, plaintiffs' argument that they "have unequivocally obtained jurisdiction over the Defendants, through this Court, due to the actual service of process upon the Defendants within New York State," (Opp. at 16), is incorrect as a matter of law. "The predicate for this State's jurisdiction [under CPLR § 301] over an unauthorized foreign corporation is the fact that it is doing business in the State and has thus created a constructive presence over which New York courts can exert general
"A foreign corporation is amenable to suit in New York courts under CPLR 301 if it has engaged in such a continuous and systematic course of `doing business' here that a finding of its `presence' in this jurisdiction is warranted." Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 77 N.Y.2d 28, 563 N.Y.S.2d 739, 565 N.E.2d 488, 490 (1990). "The test for doing business is a simple [and] pragmatic one, which varies in its application depending on the particular facts of each case. The court must be able to say from the facts that the corporation is present in the State not occasionally or casually, but with a fair measure of permanence and continuity." Id. (internal quotations and citations omitted) (alteration in original); see also Parsons v. Kal Kan Food, Inc., 68 A.D.3d 1501, 892 N.Y.S.2d 246, 247 (2009) (CPLR § 301 "permits New York courts to exercise jurisdiction over an entity that has engaged in a continuous and systematic course of doing business in this state, such that it may be said to have a presence here") (internal quotation and citation omitted).
"In assessing jurisdiction under this pragmatic standard, New York courts have generally focused on the following indicia of jurisdiction: 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." Landoil Resources Corp. v. Alexander & Alexander Servis., Inc., 918 F.2d 1039, 1043 (2d Cir.1990). "However, the `solicitation of business alone will not justify a finding of corporate presence in New York with respect to a foreign manufacturer or purveyor of services.'" Id. (quoting Laufer v. Ostrow, 55 N.Y.2d 305, 449 N.Y.S.2d 456, 434 N.E.2d 692, 694 (1982)).
"On the other hand, if the solicitation is substantial and continuous, and defendant engages in other activities of substance in the state, then personal jurisdiction may properly be found to exist." Id.; see also Schultz v. Safra Nat'l Bank, 377 Fed.Appx. 101, 102-03 (2d Cir.2010) (summary order) ("Solicitation alone will not ordinarily show that a defendant is doing business in New York, but where combined with evidence that the defendant engages in other activities of substance in the state, then personal jurisdiction may properly be found to exist.") (internal quotation and citation omitted). "Under this `solicitation-plus' rule, `once solicitation is found in any substantial degree very little more is necessary to a conclusion of `doing business.'" Landoil, 918 F.2d at 1044 (quoting Aquascutum of London, Inc. v. S.S. Am. Champion, 426 F.2d 205, 211 (2d Cir.1970)) (emphasis added). Still, "[t]o
Finally, the court is mindful that "[c]ontacts with the forum state should not be examined separately or in isolation. There is no talismanic significance to any one contact or set of contacts that a defendant may have with a forum state; courts should assess the defendant's contacts as a whole." Metro. Life Ins. Co., 84 F.3d at 570.
At the outset, the court notes there is no evidence that Franchise India and FAPL have offices, bank accounts or other property in New York, or any employees or agents in New York. In fact, all the evidence in the record shows that Franchise India and FAPL are based in India and primarily derive their revenue from operations outside New York. (Marya Dec. ¶¶ 44-47, 49-50, 70.)
Nevertheless, plaintiffs argue that various contacts between Marya, Franchise India, and New York, when viewed as whole, demonstrate that Franchise India has "engaged in such extensive activities within New York, that it must be subject to the general jurisdiction of New York's courts." (Opp. at 20.) Plaintiffs also assert that Franchise India and FAPL "appear to be inseparable" and that jurisdiction is thus appropriate over FAPL as well. (Id. at 21.)
Plaintiffs first point to various trips made by Marya to New York to solicit business. Plaintiffs allege that Marya travelled to New York in November 2008 to meet with executives of Famous Famiglia Pizza and Bhatara about the License and that he travelled to New York again in June 2012 to participate in the International Franchise Expo, during the course of which he met with Bhatara again. (Bhatara Dec. ¶¶ 27-28.) Plaintiffs also allege that Marya or another representative of Franchise India may have been to New York at least one additional time in connection with its business dealings with Famous Famiglia, but they concede that "it is presently unknown how often the Defendants actually enter this jurisdiction in connection with business." (Opp. at 21 (citing Bhatara Dec., Ex. F).) These random and sporadic solicitations on behalf of Franchise India, which amount to three trips over the course over four years based on the record before the court, considered on their own or in the aggregate, would be "insufficient to establish the systematic and continuous presence within the state that New York law requires." Landoil, 918 F.2d at 1045 (emphasis added).
Plaintiffs also argue that Franchise India solicits business from thousands of companies through its web page and that it has contractual franchising relationships with iconic companies that do business in New York, such as the Sesame Street Preschool program, the Kenny Rogers Roasters franchise, and Famous Famiglia. (Bhatara Dec. ¶¶ 57-58, 61-63, & Ex. F.) It is well-established, however, that "[t]he existence of contractual relationships with entities that happen to have operations in New York does not establish § 301 jurisdiction, because it does not
Moreover, "[t]he fact that a foreign corporation has a website accessible in New York is insufficient to confer jurisdiction under CPLR § 301." Spencer Trask Ventures, Inc. v. Archos S.A., No. 01 Civ. 1169, 2002 WL 417192, at *6, 2002 U.S. Dist. LEXIS 4396, at *22 (S.D.N.Y. Mar. 18, 2002); see also Nelson, 2007 WL 2781241, at *22, 2007 U.S. Dist. LEXIS 70455, at *65 (same); Northrop Grumman Overseas Serv. Corp. v. Banco Wiese Sudameris, No. 03 Civ. 1681, 2004 WL 2199547, at *7, 2004 U.S. Dist. LEXIS 19614, at *24 (S.D.N.Y. Sept. 29, 2004) ("courts have routinely held that the fact that a foreign corporation has an interactive website accessible to New York, without more, is insufficient to confer jurisdiction under CPLR § 301").
In this case, representatives of Franchise India and FAPL, which are based in India and primarily derive their revenues from operations outside New York, purportedly made three trips to the state to negotiate contracts for franchising opportunities outside New York and used a website to advertise franchising opportunities outside New York. (Marya Dec. ¶¶ 44-47, 49-50, 70; Bhatara Dec. ¶¶ 61-63.) "Through these activities, defendants, in essence, merely [were] secur[ing] the ... services they need[ed] ... [for] their business," such as creating new franchises outside New York. Mantello, 947 F.Supp. at 98. But Franchise India and FAPL were not "doing business" on a consistent and ongoing basis within New York as required for jurisdiction under CPLR § 301. Id.; cf. Agency Rent A Car Sys. v. Grand Rent A Car Corp., 916 F.Supp. 224, 228 (S.D.N.Y.) ("The purchase of goods from New York by a Defendant, even if on a large scale, would not, in and of itself, amount to `doing business' within the state.") (emphasis added), rev'd on other grounds, 98 F.3d 25 (2d Cir.1996). Therefore, the court finds that plaintiffs have failed to establish that this court has general jurisdiction over Franchise India and FAPL under CPLR § 301.
This court's exercise of specific jurisdiction over Franchise India and FAPL under CPLR § 302 depends on two issues: whether Marya was acting on behalf of those companies when he met with Bhatara in New York to negotiate a contract, and whether Bhatara has made a prima facie case that he and Marya, who was allegedly acting on behalf of Franchise India and FAPL, in fact entered into an agreement during their meeting in New York. The court will discuss these issues below.
Plaintiffs appear to assert that alter-ego or veil-piercing theories warrant a finding of personal jurisdiction, arguing that "there can be no dispute that Marya, Franchise India, and [FAPL] are indistinguishable, as they appear to jointly conduct business ... and both [FAPL] and Franchise India are controlled by Marya." (Opp. at 19.) To that end, plaintiffs argue that Marya controls Franchise India and FAPL and that they are "agents of one another." (Id.) Defendants, however, aver that, while Marya "is an owner of both entities, he is not the sole owner, and different persons own both entities." (Reply, 3/4/13, at 10.) They also point out that the draft Commercial Agreement does not mention Franchise India. (Id.)
"On an alter-ego claim for liability, the corporate veil will be pierced if a plaintiff can demonstrate that `the alleged dominating party exercised complete domination over the corporation with respect to the subject transaction and that such domination was used to commit a fraud or other wrong which injured [the] plaintiff.'" Cardell Fin. Corp. v. Suchodolski Assocs., No. 09 Civ. 6148, 2012 U.S. Dist. LEXIS 188295, at *47-48 (S.D.N.Y.) (quoting Miramax Film Corp. v. Abraham, No. 01 CV 5202, 2003 WL 22832384, at *7, 2003 U.S. Dist. LEXIS 21346, at *18 (S.D.N.Y. Nov. 25, 2003)), adopted by 896 F.Supp.2d 320 (S.D.N.Y.2012). "The standard for piercing the corporate veil for purposes of personal jurisdiction, however, is `a less stringent one.'" Id. (quoting Miramax, 2003 WL 22832384 at *7, 2003 U.S. Dist. LEXIS 21346 at *20). "If a corporation is merely a shell, the corporate veil may be pierced to impute jurisdiction even without a showing that the shell was used to perpetrate a fraud." Miramax, 2003 WL 22832384 at *7, 2003 U.S. Dist. LEXIS 21346 at *20-21.
"The critical inquiry is determining whether a corporation is a `shell' company is whether it is being used by the alleged dominating entity to advance its own personal interests as oppose[d] to furthering the corporate ends." Id. at *8, 2003 U.S. Dist. LEXIS 21346 at *21 (collecting cases). To determine if a corporation is being used as a shell, courts examine factors such as the failure to observe corporate formalities, inadequate capitalization, intermingling of personal and corporate funds, shared office space and phone numbers, or an overlap of ownership, directors, officers, and personnel. Id. at *8, 2003 U.S. Dist. LEXIS 21346 at *22.
Marya is the principal and managing director of Franchise India and the managing director of FAPL, all of the shareholders of Franchise India are relatives of Marya, and Marya asserts that he and his brother own the shares of FAPL. (Marya Dec. ¶¶ 1, 45, 49.) Yet because Defendants have asserted, and plaintiffs have not disputed, that Franchise India and FAPL were incorporated separately, are run separately, respect corporate formalities, and file separate tax returns in India, (Reply at 10), the court finds that plaintiffs have failed to establish a prima facie case that Franchise India and FAPL are alter egos of Marya or the same entity because there is no evidence or factual assertion that Marya dominates either entity "to advance [his] own personal interests as oppose[d] to furthering the corporate ends." Miramax, 2003 WL 22832384 at *8, 2003 U.S. Dist. LEXIS 21346 at *21.
Nevertheless, the evidence in the record establishes a prima facie case that Franchise India and FAPL are liable for the actions undertaken by Marya because
"[A]ctual authority is created by direct manifestations from the principal to the agent." Aleph Towers, LLC v. Ambit Tex., LLC, No. 12-CV-3488, 2013 WL 4517278, at *6 n. 10, 2013 U.S. Dist. LEXIS 120284, at *19 n. 10 (E.D.N.Y. Aug. 23, 2013) (quoting Peltz v. SHB Commodities, Inc., 115 F.3d 1082, 1088 (2d Cir.1997)). "[A]n agent has actual authority if the principal has granted the agent the power to enter into contracts on the principal's behalf, subject to whatever limitations the principal places on this power, either explicitly or implicitly." Hudson & Broad, Inc., 2013 WL 3203742 at *4, 2013 U.S. Dist. LEXIS 89207 at *11-12 (quoting Highland Capital Mgmt. v. Schneider, 607 F.3d 322, 327 (2d Cir.2010)).
Because Marya has admitted that he is the principal and managing director of Franchise India, the managing director and owner of 50 percent of the shares of FAPL, and in fact signed the License Agreement with Francorp on behalf of FAPL, he does not and cannot plausibly argue that he lacked actual authority to enter into contracts on behalf of either Franchise India or FAPL. (Marya Dec. ¶¶ 1, 45, 49, Ex. D.) In this case, Bhatara has asserted that he reached an agreement with Marya during a dinner in White Plains, New York on November 2, 2008. (Bhatara Dec. ¶¶ 27-28.) Although the draft agreement that Bhatara brought to the meeting with Marya does not mention Franchise India, (Marya Dec., Ex. C), Bhatara has attested that he understood the agreement plaintiffs entered into on November 2, 2008 was with, and would benefit, Marya, Franchise India, and FAPL, (Bhatara Dec. ¶¶ 6, 27-28).
Bhatara's claim is consistent with evidence in the record. First, in his e-mail discussions with Bhatara, Marya described the proposed joint venture as a "win-win for both companies" and anticipated "market[ing]" the Francorp license "aggressively" through Franchise India. (Bhatara Dec., Ex. I.) Second, a legal advisor at Franchise India e-mailed the draft Commercial Agreement to Bhatara for review before the meeting. (Marya Dec. ¶ 23 & Ex. C.) Finally, Marya, who regularly e-mailed Bhatara from his Franchise India e-mail address in connection with discussions about the proposed agreement, stated in an e-mail after the meeting that "this new joint venture will be very fruitful and beneficial to our organizations." (Bhatara Dec. ¶ 35 & Ex. C (emphasis added).) After giving appropriate deference to Bhatara's affidavit at this stage of the proceedings and considering the evidence in the record, the court finds that plaintiffs have established a prima facie case that Marya, who was the principal and managing director of Franchise India, negotiated a contract with Bhatara as an agent of Franchise India and on behalf of Franchise
"Apparent authority exists when a principal, either intentionally or by lack of ordinary care, induces [a third party] to believe that an individual has been authorized to act on its behalf." Aleph Towers, LLC, 2013 WL 4517278, at *6, 2013 U.S. Dist. LEXIS 120284, at *19 (quoting Peltz, 115 F.3d at 1088). "Apparent authority will only be found where words or conduct of the principal — not the agent — are communicated to a third party, which give rise to a reasonable belief and appearance that the agent possesses authority to enter into the specific transaction at issue." Edinburg Volunteer Fire Co., Inc. v. Danko Emergency Equip. Co., 55 A.D.3d 1108, 867 N.Y.S.2d 547, 549 (2008). Although the court has already found that Marya had the actual authority to act on behalf of Franchise India and FAPL, the court also finds that Bhatara would have been reasonably induced to believe that Marya was authorized to act on behalf of Franchise India and FAPL by virtue of the positions Marya purports to have held at both companies, and because a legal advisor at Franchise India e-mailed Bhatara a copy of the draft Commercial Agreement, and another employee at Franchise India instructed him to take a copy of the agreement to his meeting with Marya. (Marya Dec. ¶¶ 23-24 & Ex. C.)
Plaintiffs argue that specific jurisdiction is appropriate pursuant to CPLR § 302. (Opp. at 17-19.) Under CPLR § 302(a)(1), a New York court may exercise personal jurisdiction over a non-domiciliary "who in person or through an agent... transacts any business within the state or contracts anywhere to supply goods or services in the state." N.Y.C.P.L.R. § 302(a)(1). In order to evaluate if the statute is satisfied, the court analyzes whether the defendant "transacts any business" in New York and, if so, whether the cause of action "aris[es] from" such a business transaction. Best Van Lines, Inc. v. Walker, 490 F.3d 239, 246 (2d Cir. 2007) (citing Deutsche Bank Sec., Inc. v. Montana Bd. of Invs., 7 N.Y.3d 65, 818 N.Y.S.2d 164, 850 N.E.2d 1140, 1142 (2006)). For purposes of CPLR § 302(a)(1)'s "transaction of business" test, the New York Court of Appeals has held that "[t]he overriding criterion necessary to establish a transaction of business is some act by which the defendant purposefully
To determine whether a party in a breach of contract case has "transacted business" within the meaning of CPLR § 302(a)(1), the Second Circuit has explained that courts should examine four criteria:
"Although all factors are relevant, no one factor is dispositive and other factors may be considered." Id. at 23. "The ultimate determination is based on the totality of the circumstances." Id. (quotation and citation omitted).
According to New York law, a defendant's physical presence in the state at the time of the negotiation, making, or execution of a contract generally justifies a finding of purposeful availment and allows a court to exercise personal jurisdiction under CPLR § 302(a)(1) in a breach of contract case such as this one. See George Reiner & Co. v. Schwartz, 41 N.Y.2d 648, 394 N.Y.S.2d 844, 363 N.E.2d 551, 554 (1977) (finding jurisdiction on the basis that defendant "was physically present in New York at the time the contract ... was negotiated and made and the contract ... was the transaction out of which the cause of action arose"); see also Chang v. Gordon, No. 96 Civ. 0152, 1997 WL 563288, at *5, 1997 U.S. Dist. LEXIS 13570, at *14 (S.D.N.Y. Sept. 8, 1997) (a meeting in New York where parties agreed to exchange stock "is a sufficient contact to satisfy Plaintiffs' prima facie showing of jurisdiction"); Panaria Int'l, Inc. v. Hwan Chang Choi, No. 88 Civ. 8313, 1989 WL 39695, at *1-2, *2, 1989 U.S. Dist. LEXIS 4398, at *3, *5 (S.D.N.Y. Apr. 17, 1989) (holding that plaintiff's averment that he agreed, during a meeting in New York, to let defendant use his letter of credit to buy goods from another company "easily makes out a prima facie claim" for jurisdiction under CPLR § 302); Hi Fashion Wigs, Inc. v. Hammond Adver., Inc., 32 N.Y.2d 583, 347 N.Y.S.2d 47, 300 N.E.2d 421, 423 (1973) (holding that a third-party defendant's voluntary presence in the forum in order to deliver a guarantee was "[s]o essential ... to its validity and existence as a contract" that the defendant could be deemed to have purposefully availed himself of the forum); Parke-Bernet Galleries, Inc. v. Franklyn, 26 N.Y.2d 13, 308 N.Y.S.2d 337, 256 N.E.2d 506, 508 (1970) (observing that "where a defendant was physically present at the time the contract was made" presents "the clearest sort of case in which our courts would have 302 jurisdiction").
As a preliminary matter, the court must determine whether the parties agreed to arbitrate this dispute under the
The court next considers the other factors outlined by the Second Circuit in determining whether defendants transacted business in New York and can thus be subjected to specific jurisdiction under CPLR § 302(a)(1). Although Bhatara and Marya initially began their discussions in India and continued negotiations by e-mail, (Marya Dec. ¶¶ 12-18), Bhatara has attested that he and Marya "reached a resolution" on the "core of [their] agreement" at a dinner on November 2, 2008, at the BLT Steakhouse in White Plains, New York, (Bhatara Dec. ¶¶ 27-29). Specifically, Bhatara has stated that he and Marya agreed to each own 50 percent of FAPL, that Marya's interest would be established by operating FAPL in India, and that Bhatara's interest would be secured by his existing equity in the License, and "placing the ownership of the License within [FAPL]" for their mutual benefit. (Id. ¶ 28.) Bhatara would also receive "additional compensation from Marya." (Id.) Marya claims that the parties did not come to any agreement at this dinner, but he has provided no evidence to support this claim beyond various assertions. (Marya Dec. ¶¶ 38-40.)
Bhatara's claim that the parties negotiated a deal during this dinner in New York, however, is corroborated by the fact that a legal advisor at Franchise India e-mailed Bhatara a draft agreement on November 1, 2008, and another colleague of Marya at Franchise India e-mailed Bhatara that same day and told him to bring a copy of the draft to his dinner meeting with Marya. (Marya Dec. ¶ 23 & Ex. C.) On this record, it is not plausible that Marya's colleagues at Franchise India would e-mail Bhatara the draft Commercial Agreement and tell him to bring a copy of the document to a dinner if Marya and Bhatara did not in fact plan to substantively discuss the draft Commercial Agreement at the dinner.
Other evidence in the record corroborates Bhatara's claim that the parties reached an agreement during the November 2, 2008 dinner. First, Marya and Bhatara traveled to Illinois to meet with Boroian and execute the License Agreement, which was signed on November 5, 2008, by Marya on behalf of FAPL and Boroian on behalf of Francorp. (Id. ¶ 35.) The License Agreement specified that Bhatara's payment of $400,000 to Francorp for the
Second, Marya wrote in a subsequent e-mail to Bhatara on November 8, 2008, that he was "very excited about our new business partnership and am sure this new joint venture will be very fruitful and beneficial to our organizations," which shows that Marya believed he had reached an agreement with Bhatara. (Bhatara Dec. ¶ 35 & Ex. C (emphasis added).) Moreover, on November 14, 2008, Marya e-mailed Bhatara again, asking him to sign and return a consent letter to be appointed a director of FAPL, which Bhatara signed and returned. (Bhatara Dec. ¶ 37 & Ex. C.) It is unlikely that Marya would e-mail Bhatara to trumpet their agreement and take additional steps to follow up on the agreement if the parties had not in fact reached an agreement.
Based on appropriate deference to plaintiffs' assertions and the foregoing evidence, the court finds that plaintiffs have established a prima facie case that, (1) Marya travelled to New York to negotiate and finalize an agreement with plaintiffs on behalf of himself, Franchise India, and FAPL, on November 2, 2008, (2) that defendants entered into an contractual agreement with plaintiffs on that date that required defendants to send payments to plaintiffs in New York, (3) that defendants sent subsequent e-mails in New York confirming the agreement and requesting that plaintiffs sign and return additional documents, and (4) that the contractual agreement and alleged breach of the contractual agreement made in New York gave rise to this action. See Saldanha v. Baidyaroy, No. 91 Civ. 6413, 1992 WL 147669, at *4, 1992 U.S. Dist. LEXIS 8391, at *13 (S.D.N.Y. June 15, 1992) (finding personal jurisdiction because "[t]he Court reasonably may infer from plaintiff's affidavit that defendants' visits to New York were important steps in the contract formation process between the parties, since plaintiff asserts that it was during these trips to New York that defendants requested his services"); Cross & Cross Props., Ltd. v. Everett Allied Co., 664 F.Supp. 713, 716 (S.D.N.Y.1987) (personal jurisdiction established where president of defendant general partnership "was physically present in New York for negotiation of and agreement in principle to the contracts out of which cause of action arose"). The court further finds that, because "New York courts ... have adopted a prospective analysis in determining whether an ongoing contractual relationship exists," Aquiline Capital Partners LLC v. Finarch LLC, 861 F.Supp.2d 378, 387 (S.D.N.Y. 2012) (emphasis added) (quoting Schomann Int'l Corp. v. N. Wireless, Ltd., 35 F.Supp.2d 205, 209 (N.D.N.Y.1999)), and the agreement called for defendants to remit profits to plaintiffs, defendants and plaintiffs necessarily entered into an ongoing business relationship.
Thus, the first, second, and fourth factors of the Second Circuit's test for evaluating whether defendants transacted business in New York and can be subjected to personal jurisdiction under CPLR § 302(a)(1) favor plaintiffs, and the third factor does not apply in this case. See Sunward Elecs., Inc., 362 F.3d at 22. As a result, plaintiffs have established a prima facie case that this court has specific jurisdiction
A court's assertion of personal jurisdiction must comply with Constitutional due process in addition to satisfying the requirements of New York's long-arm jurisdiction statute. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 485-86, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ("the facts of each case must [always] be weighed in determining whether personal jurisdiction would comport with fair play and substantial justice") (internal quotation and citation omitted) (alteration in original). The due process requirement, as set forth in International Shoe Company v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), "protects a person without meaningful ties to the forum state from being subjected to binding judgments within its jurisdiction." Metro. Life Ins. Co., 84 F.3d at 567. The due process test has two prongs: "minimum contacts" and "reasonableness." Chloe, 616 F.3d at 171.
"[T]he minimum contacts inquiry overlaps significantly with the `transaction of business' inquiry under CPLR Section 302(a)(1)." Thorsen v. Sons of Norway, 996 F.Supp.2d 143, 158, No. 13-CV-2572, 2014 WL 507466, at *8, 2014 U.S. Dist. LEXIS 15283, at *27 (E.D.N.Y. Feb. 6, 2014); see also Best Van Lines, 490 F.3d at 247 ("It may be that the meaning of `transact[ing] business' for the purposes of section 302(a)(1) overlaps significantly with the constitutional `minimum contacts' doctrine.") (citing New York cases). "However, because New York's long-arm statute encompasses a wider range of activity than the minimum-contacts doctrine, the Court must undertake an additional analysis under the due process clause." Thorsen, 996 F.Supp.2d at 158, 2014 WL 507466 at *8, 2014 U.S. Dist. LEXIS 15283 at *27; see also Best Van Lines, 490 F.3d at 248 ("Some distance remains between the jurisdiction permitted by the Due Process Clause and that granted by New York's long-arm statute.").
"To establish the minimum contacts necessary to comport with the due process clause, the Court must determine that the defendant `purposefully avail[ed]' himself of the privilege of doing business in New York such that the defendant `should reasonably anticipate being haled into court there.'" Id. at 158, 2014 WL 507466 at *8, 2014 U.S. Dist. LEXIS 15283 at *27 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)); see also Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 242-243 (2d Cir.1999) (same).
For substantially the same reasons as set forth above in Discussion section II.B.2, the court finds that defendants purposefully availed themselves of the privilege of conducting business activities in New York and, thus, satisfy the "minimum contacts" inquiry of the Due Process Clause. Specifically, defendants travelled to New York and negotiated a contract in New York that required an ongoing business relationship with an individual and business in New York and the remittance of funds to New York. See supra Discussion section II.B.2. Consequently, it was reasonably foreseeable to defendants that they could be haled into New York for a breach of contract action arising from the contract they negotiated with the New York-based plaintiffs in New York.
The assertion of jurisdiction must also "comport[] with `traditional notions of fair play and substantial justice' that is, whether it is reasonable under the circumstances of the particular case." Metro. Life Ins. Co., 84 F.3d at 568 (quoting Int'l Shoe, 326 U.S. at 316, 66 S.Ct. 154). The Second Circuit has outlined five "reasonableness" factors:
Id.
Defendants, who are domiciled in India, will incur some burden as a result of having to defend this action in New York. (Marya Dec. ¶¶ 44-49.) "Although this burden is substantially diminished in today's modern age, it remains an important factor." Thorsen, 996 F.Supp.2d at 159, 2014 WL 507466 at *9, 2014 U.S. Dist. LEXIS 15283 at *29; see also Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 129-30 (2d Cir.2002) ("the conveniences of modern communication and transportation ease what would have been a serious burden only a few decades ago") (internal quotation and citation omitted). But defendants are already represented by counsel in New York and have travelled to the state at least two times in connection with the underlying events of this case, which "undercuts any claim of undue hardship or burden on these defendants." Thorsen, 996 F.Supp.2d at 159, 2014 WL 507466 at *9, 2014 U.S. Dist. LEXIS 15283 at *30. To the extent any witnesses require translators in Hindi, such translators are readily available in this district and the court expects that defendants will be able to continue the operations of their businesses through modern communications and technology when they are in New York for any court proceedings.
The court finds that New York has a strong interest in having this case adjudicated in New York because it has a significant interest "in providing effective means of redress" for plaintiffs, who are residents of New York state. McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957).
Here, Bhatara, a New York resident and citizen, and USHA, a New York LLC, have been deprived of a License for which Bhatara paid $400,000 to transfer to a joint venture in order to receive 50 percent of the shares in the joint venture, profits from the joint venture, and a role in the management of the joint venture. The court also finds that plaintiffs, including Bhatara, who suffers from cerebral palsy and would thus be physically and economically burdened by the costs and difficulties of travel to India and in Indi, (Bhatara Dec. ¶¶ 97-98), have a very strong interest in obtaining relief in the forum state where they reside and allegedly entered into a contract with defendants.
The fourth and fifth factors do not weigh in favor of either party. The court notes that the Eastern District of New York is fully capable of handling this case and that it has already found that plaintiffs have established a prima facie case that they did not agree to arbitrate issues arising out of the contract under the laws of India. See supra Discussion section II.B.2
"The doctrine of forum non conveniens permits a court to dismiss a claim even if the court is a permissible venue with proper jurisdiction over the claim." PT United Can Co. v. Crown Cork & Seal Co., 138 F.3d 65, 73 (2d Cir.1998) (emphasis in original); see also Sinochem Int'l v. Malay. Int'l Shipping Corp., 549 U.S. 422, 425, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) ("a federal district court may dismiss an action on the ground that a court abroad is the more appropriate and convenient forum for adjudicating the controversy" pursuant to the doctrine of forum non conveniens). Under the doctrine, "[t]he defendant bears the burden of demonstrating why the plaintiffs' choice of forum should be disturbed." Chirag v. MT Marida Marguerite Schiffahrts, 983 F.Supp.2d 188, 194, No. 3:12cv00879, 2013 WL 6052078, at *3, 2013 U.S. Dist. LEXIS 162877, at *10 (D.Conn. Nov. 15, 2013) (citing Karvelis v. Constellation Lines SA, 608 F.Supp. 966, 971-72 (S.D.N.Y.1985), aff'd, 806 F.2d 49 (2d Cir.1986)).
District courts have broad discretion to determine "where litigation will be most convenient" and where it "will serve the ends of justice." PT United Can, 138 F.3d at 73. But the Second Circuit has provided a "three-step process to guide the exercise of that discretion." Norex Petroleum Ltd. v. Access Indus., 416 F.3d 146, 153 (2d Cir.2005). First, the court must decide the degree of deference to award the plaintiff's choice of forum. Id. Second, the court must determine whether an adequate and available alternate forum exists in which the case may be heard. Id. Third, the court must balance the private and public interest factors identified by the Supreme Court in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947).
The private interest factors include ease of access to sources of proof, access to witnesses, where the evidence is located, enforceability of a potential judgment, and "all other practical problems that make trial of a case easy, expeditious and inexpensive." Id. at 508, 67 S.Ct. 839. The public interest factors include the administrative burden of litigating a case with a center of gravity that lies elsewhere, the difficulties of untangling problems in conflict of laws and making determinations about foreign law, the burden of a jury of deciding an essentially foreign case, and the "local interest in having localized controversies decided at home." Id. at 508-09, 67 S.Ct. 839.
The court finds, based on plaintiffs' assertions and evidence discussed at
"An alternate forum ordinarily is available and adequate if the defendants are amenable to process there and it permits litigation of the subject matter of the dispute." Chirag, 983 F.Supp.2d at 196, 2013 WL 6052078 at *5, 2013 U.S. Dist. LEXIS 162877 at *16 (citing Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 75 (2d Cir.2003)). The court finds that Indian courts would be an adequate and alternate forum to this dispute, given that it has also determined that plaintiffs' tort claim of conversion should be dismissed, see infra Discussion section V, and that defendants would be amenable to process in India.
The private interest factors in this case do not favor dismissal. Defendants have stated they do not have assets in this country. Still, most of the facts giving rise to this case appear to have occurred in New York or over electronic communications between the New York plaintiffs and the defendants in India, a large part of the evidence will concern e-mails and documents, many of which have already been produced to the court, and relatively few witnesses will likely be required for trial other than Marya and Bhatara. Although defendants have contested service, the court has found that they were properly served, and they have all retained New York counsel in this case. See supra Discussion section I. To the extent any foreign witnesses require translators, including Hindi translators, such translators are, as previously stated, readily available in this district.
The public interest factors also do not favor dismissal. The center of gravity of this case lies in New York, where the parties purportedly reached a meeting of the minds concerning a contract. Accordingly, there will likely be no serious concerns about making determinations about foreign laws or deciding a foreign case. There is also a strong local interest in deciding this controversy, which, despite all of its international overtones, is decidedly local in that it calls for factfinders to determine whether the parties entered into an agreement on November 2, 2008, during a dinner at the BLT Steakhouse in White Plains, New York, and then travelled to Illinois to enter into the License Agreement pursuant to their joint venture.
Because the public interest factors and the private interest factors do not favor
To survive a Rule 12(b)(6) motion to dismiss, "a complaint must plead `enough facts to state a claim to relief that is plausible on its face.'" Ruotolo v. City of New York, 514 F.3d 184, 188 (2d Cir.2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.... While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. at 678-79, 129 S.Ct. 1937.
The Second Circuit has "articulated several factors that help determine whether the parties intended to be bound in the absence of a document executed by both sides." Winston v. Mediafare Entm't Corp., 777 F.2d 78, 80 (2d Cir.1985). The should consider:
Id.
Finally, a "breach of contract claim will be dismissed where a plaintiff fails to allege `the essential terms of the parties' purported contract, including the specific provisions of the contract upon which liability is predicated.'" Aleph Towers, LLC, 2013 WL 4517278, at *6, 2013 U.S. Dist. LEXIS 120284, at *20 (quoting Martinez v. Vakko Holding A.S., No. 07 Civ. 3413, 2008 WL 2876529, at *2, 2008 U.S. Dist. LEXIS 56274, at *5 (S.D.N.Y. July 23, 2008)).
The court has already addressed the issue of whether the parties entered into a contract extensively in Discussion section II.B.2 and determined that plaintiffs have made a prima facie case that Marya travelled to New York to negotiate an agreement with Bhatara and USHA on behalf of himself, Franchise India, and FAPL, on November 2, 2008 and that defendants entered into an contractual agreement with plaintiffs on that date that required them to send payments to plaintiffs in New York.
After applying the factors specified by the Second Circuit in Winston, the court finds that, for the reasons provided in Discussion section II.B.2, the draft Commercial Agreement specified it was only a draft and the parties were discussing a complicated business agreement that would usually be committed to a writing. But Marya and Bhatara partially performed on the contract by taking steps to transfer the License to FAPL, and many of the material terms of the contract had been agreed upon. Thus, after reviewing the Complaint and drawing all reasonable inferences in favor of the plaintiffs, the court finds that plaintiffs have sufficiently alleged at this stage of the litigation that defendants breached the agreement by
Defendants' statute of frauds argument also fails. Defendants argue that New York's statute of frauds applies to this case because Article 6.1 of the draft Commercial Agreement states that "investments by the parties as toward the JV shall be locked in for a period of 2 years from the date of investment by [USHA] in the JV." (Mem. at 29; Marya Dec., Ex. C at p. 8.) Under New York's statute of frauds, as set forth in New York General Obligations Law § 5-701(a)(1), "[e]very agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged" if the agreement "[b]y its terms is not to be performed within one year from the making thereof." N.Y. Gen. Oblig. L. § 5-701(a)(1) (2014).
Still, "oral agreements that violate the Statute of Frauds are nonetheless enforceable where the party to be charged admits having entered into the contract." Matisoff v. Dobi, 90 N.Y.2d 127, 659 N.Y.S.2d 209, 681 N.E.2d 376, 380 (1997) (citing Cohon & Co. v. Russell, 23 N.Y.2d 569, 297 N.Y.S.2d 947, 245 N.E.2d 712, 715-16 (1969)); see also Ravnikar v. Latif, No. CV-07-1360, 2010 WL 3937327, at *4, 2010 U.S. Dist. LEXIS 106221, at *11-12 (E.D.N.Y. Oct. 5, 2010) (same); Taussig v. Clipper Grp., L.P., 16 A.D.3d 224, 790 N.Y.S.2d 602, 602 (2005) (same); see also Cole v. Macklowe, 40 A.D.3d 396, 836 N.Y.S.2d 568, 571 (2007) ("the statute was not enacted to enable defendants to interpose it as a bar to a contract fairly and admittedly made"). Consequently, the statute of frauds would not apply in this case because Marya has admitted entering into a joint venture with plaintiffs in his e-mail to Bhatara on November 8, 2008, in which he stated "I am very excited about our new business partnership and am sure this new joint venture will be very fruitful and beneficial to our organizations." (Bhatara Dec. ¶ 35 & Ex. C.)
Even if the statute of frauds did apply, "an agreement sufficient to satisfy the statute of frauds may be pieced together from separate writings" so long as "the separate writings together refer to the same subject matter or transaction and unequivocally establish all the essential elements of the contractual relationship ... such as price, terms, parties and a description of the subject matter" and "[a]t least one of the writings ... bear[s] the signature of the party to be charged." MMT Sales, LLC v. Acme Tel. Holdings, LLC, 30 Misc.3d 1241(A), No. 602156/09, 2011 WL 1107088, at *5, 2011 N.Y. Misc. LEXIS 1170, at *12 (N.Y.Sup.Ct. Mar. 21, 2011) (internal quotations and citations omitted) (collecting cases); see also Crabtree v. Elizabeth Arden Sales Corp., 305 N.Y. 48, 110 N.E.2d 551, 553 (1953) ("The statute of frauds does not require the memorandum to be in one document. It may be pieced
Here, the statute of frauds requirement is satisfied by the draft Commercial Agreement sent to Bhatara by the legal advisor for Franchise India, (Marya Dec., Ex. C), which was substantially similar to, and contained the essential and material terms of, the agreement Marya and Bhatara discussed and purportedly reached on November 2, 2008. Furthermore, Marya's November 8, 2008 e-mail to Bhatara, in which he stated "I am very excited about our new business partnership and am sure this new joint venture will be very fruitful and beneficial to our organizations," (Bhatara Dec. ¶ 35 & Ex. C), and Marya's e-mail dated November 14, 2008, requesting Bhatara's signature on a document in furtherance of the joint venture, (id. ¶ 37 & Ex. D), are additional writings that satisfy the statute of frauds.
Therefore, defendants' motion to dismiss the breach of contract claim under Federal Rule of Civil Procedure 12(b)(6) is denied.
Finally, defendants have moved to dismiss plaintiffs' conversion claim, arguing it is barred by the statute of limitations of three years in CPLR § 214(3) and is duplicative of the breach of contract claim. (Mem. at 29-30.) Defendants argue that the conversion claim accrued on November 14, 2008, the date from which, as plaintiffs allege in the Complaint, "Marya refused to communicate with the [P]laintiffs regarding the License/Licensee," (Complaint ¶ 33), and was time barred by November 14, 2011, well before plaintiffs filed suit in June 2012.
"New York applies a three-year statute of limitations for conversion." St. John's Univ. v. Bolton, 757 F.Supp.2d 144, 179 (E.D.N.Y.2010) (citing N.Y.C.P.L.R. § 214(3)). "A cause of action for conversion accrues when all of the facts necessary to sustain the cause of action have occurred, so that a party could obtain relief in court." State of New York v. Seventh Regiment Fund, 98 N.Y.2d 249, 746 N.Y.S.2d 637, 774 N.E.2d 702, 710 (2002) (quotation and citation omitted).
To state a claim for conversion under New York law, a plaintiff must allege that "(1) the property subject to conversion is a specific identifiable thing; (2) plaintiff had ownership, possession or control over the property before its conversion; and (3) defendant exercised an unauthorized dominion over the thing in question, to the alteration of its condition or to the exclusion of the plaintiff's rights." Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F.Supp.2d 162, 204 (S.D.N.Y.2011). "A cause of action for conversion is complete when the party in possession of the property openly interferes with the true owner's rights in it." Bolton, 757 F.Supp.2d at 179. "With respect to intangible property, an interference occurs when the party in possession acts in a manner incompatible with the plaintiff's rights in the property." Id.
Significantly, "the statute of limitations on a claim of conversion ... begins to accrue at the moment of conversion, regardless of when the conversion is
Plaintiffs argue that the claim for conversion did not arise until January 17, 2012, because Marya "strung ... Bhatara along for several years, offering vague explanations as to why profits were not being distributed." (Opp. at 30.) This assertion is irrelevant because it only addresses why plaintiffs did not discover their claim for conversion at an earlier date but does not state when the conversion claim first began to accrue. In this case, plaintiffs alleged that defendants "have improperly converted the License" by "excluding the Plaintiffs from the management and use of the License," (Complaint ¶ 59), and that, "[s]ubsequent to November 14, 2008," defendants "refused to communicate with the Plaintiffs regarding the License/Licensee," (id. ¶ 33). Plaintiffs' cause of action for conversion thus accrued on November 14, 2008, because defendants allegedly began improperly excluding plaintiffs from the management and use of the License on that date, and plaintiffs had the right to make a demand for the License on that date. (Id. ¶¶ 33-34, 59.) As a result, plaintiffs' claim for conversion is dismissed because plaintiffs did not file suit until June 2012, after the statute of limitations of three years for the conversion claim had expired on November 14, 2011.
For the foregoing reasons, the court grants defendants' motion to dismiss plaintiffs' claim for conversion, denies defendants' motion to dismiss plaintiffs' claim for breach of contract, and denies defendants' motion to dismiss the case for improper service, lack of personal jurisdiction, and forum non conveniens. The parties are ordered to appear in court for a status conference at 9:30 a.m. on April 8, 2014.
SO ORDERED.
