PER CURIAM.
Ronald B. Bruder ("Bruder") and Brookhill Capital Resources, Inc., ("Brookhill") (collectively "plaintiffs"), appeal from a February 4, 2014 order dismissing plaintiffs' complaint without prejudice for lack of personal jurisdiction over David Hillman ("Hillman"), SMC-Vienna Park, G.P. ("SMC"), Vienna Park, L.L.C. ("VPLLC"), Southern Management Corporation ("Southern"), and The Gallows Corporation ("Gallows") (collectively "defendants"). We reverse in part, affirm in part, and remand for further proceedings.
Plaintiffs formed a New Jersey limited partnership, Vienna Park, L.P. (the "Partnership") in 1984, and served as the general partners. Bruder was a New Jersey resident at the time of the Partnership's formation, and a New York resident at the time the underlying complaint was filed. Brookhill was a New Jersey corporation at all times. The Partnership's express purpose was to own and operate apartment buildings, specifically a 300-unit complex in Virginia.
The Partnership filed for bankruptcy in 1989 and emerged from bankruptcy in 1993 under an amended partnership agreement (the "Agreement") with Hillman. The Agreement converted plaintiffs' general partnership interests into limited partnership interests, and substituted Hillman or "any corporation or partnership owned or controlled by [Hillman]" as the general partner. The Agreement retained the Partnership's status as a New Jersey limited partnership.
Pursuant to the Agreement, Hillman substituted SMC, a company Hillman owned, as the general partner and designated Southern, another Hillman-owned entity, as the Partnership's manager. Between 1993 and 2007, Southern mailed monthly statements of accounts to the limited partners located in New Jersey and filed annual partnership reports with the New Jersey Department of Treasury, in exchange for payment from the Partnership.
In 2007, Hillman, through Southern and SMC, directed that the Partnership be converted into VPLLC as part of an overall strategy to refinance loans. Hillman executed a new operating agreement (the "OA") for VPLLC, transferring management to another of Hillman's entities, Gallows. The OA stated that the general and limited partners of the Partnership "agreed to enter into this [OA] to regulate the affairs of [VPLLC], the conduct of its business, and the relations of its [m]embers."
Plaintiffs alleged that they did not learn of the conversion until 2012 and promptly requested to review certain records and books, which Hillman denied. Plaintiffs then filed the underlying complaint to unwind the conversion and review the books and records of VPLLC. Plaintiffs maintained that the conversion was not only illegal because they were uninformed, but that the OA significantly altered their rights including exculpating VPLLC's manager from liability, creating new membership classes, and increasing fees paid to the management company.
Defendants filed a motion to dismiss the underlying complaint for lack of personal jurisdiction, lack of subject matter jurisdiction, failure to state a claim upon which relief can be granted, or in the alternative, summary judgment. Defendants primarily asserted that New Jersey did not have jurisdiction to adjudicate the underlying complaint because defendants did not have the requisite contacts with New Jersey. In their memorandum of law supporting the motion to dismiss, defendants made specific arguments in this regard on behalf of Hillman, Southern, and Gallows, and "expressly reserve[d] their rights pursuant to [
Defendants also claimed that the underlying complaint should be dismissed because plaintiffs had a limited interest in VPLLC, were aware of the Partnership's conversion to VPLLC, and accepted $568,500 in distributions from VPLLC. Defendants provided a December 7, 2006 letter issued by Hillman, on behalf of Southern, to all partners of entities owned by Hillman, indicating that because of a "new financing package" all partnerships other than "single tier [l]imited partnerships" would be converted into limited liability companies. Defendants provided copies of the Schedule K-1 forms issued to plaintiffs between 2007 and 2012 which listed VPLLC as the issuing entity.
The judge conducted oral argument and concluded in a written opinion that there was "no basis to establish that [a New Jersey court] has jurisdiction to entertain disputes between these parties." The judge subsequently dismissed the underlying complaint without prejudice, indicating that it was "clear that this case should more properly be adjudicated in the State of Virginia[,]" and entered the February 2014 order.
On appeal, plaintiffs argue that (1) VPLLC and SMC waived their personal jurisdiction defenses and (2) even if personal jurisdiction defenses were not waived as to VPLLC and SMC, New Jersey has personal jurisdiction over all defendants.
We begin by addressing plaintiffs' contention that VPLLC and SMC waived their personal jurisdiction defenses.
We review the trial court's ruling on a motion to dismiss for lack of jurisdiction at the inception of the case de novo.
Notwithstanding our view that personal jurisdiction is a right that may be waived, we have recognized that personal jurisdiction is a
Moreover, our court rules require that "`[a]ll pleadings shall be liberally construed in the interest of justice."
On this record, we conclude that VPLLC and SMC did not unequivocally waive their personal jurisdiction defenses. To the contrary, defendants, including VPLLC and SMC, specifically moved for dismissal of plaintiffs' complaint "with prejudice for lack of personal jurisdiction[.]" This placed plaintiffs on notice of defendants' intention to move for dismissal as it related to all defendants.
Although defendants' memorandum of law in support of the motion only raised personal jurisdiction arguments as to Southern, Hillman, and Gallows, defendants' counsel specifically reserved SMC and VPLLC's right to raise arguments in support of their motion to dismiss for lack of personal jurisdiction. Defendant's counsel also made clear at oral argument that New Jersey does not have jurisdiction over any of the defendants.
We next consider plaintiffs' argument that the judge erred in granting the motion to dismiss for lack of jurisdiction.
New Jersey courts may exercise personal jurisdiction over a non-resident defendant "to the uttermost limits permitted by the United States Constitution."
Personal jurisdiction is specific when "the claim is related to or arises out of the contacts in the forum[.]"
We apply the two-part test outlined in
The United State Supreme Court has "clarified the purposes of the `minimum contacts' doctrine: to protect a defendant against litigating in an inconvenient forum and to ensure that States not exceed their jurisdictional limits under our federal system."
Applying these well-settled principles, we conclude that New Jersey has specific personal jurisdiction over VPLLC, Hillman, SMC, and Southern.
VPLLC is a successor-in-interest to the Partnership, which was organized under the laws of New Jersey. It has been recognized that the "jurisdictional contacts of a predecessor corporation may be imputed to its successor corporation without offending due process."
The alleged unlawful actions of defendants Hillman, SMC, and Southern, namely converting a New Jersey limited partnership into VPLLC purportedly without proper notice, also grants New Jersey personal jurisdiction over these defendants. Our Supreme Court has previously held that when "a non-resident defendant purposely directs its activities to the forum, and the litigation results from alleged injuries that arise out of or relate to those activities, the forum may assert personal jurisdiction over the defendant."
Here, Hillman, SMC, and Southern were actively involved in the management of the Partnership, as indicated by the Agreement. Hillman admitted, in his certification attached to the motion to dismiss, that the Agreement was "negotiated (on behalf of myself or any corporation or partnership owned or controlled by me) for complete control and all voting rights of the Partnership as consideration for my capital investment in the Partnership." The Agreement further stated that SMC would be substituted as the general partner of the Partnership, and Southern would act as the Partnership's manager.
The alleged illegal act, dissolution of the Partnership, occurred while the Partnership was still in effect under New Jersey law. This is supported by the December 6, 2007 letter, apparently issued by Hillman on behalf of Southern, to inform plaintiffs and others of the pending reorganizations. Moreover, the alleged harmful act actually occurred in New Jersey, as indicated by the October 16, 2009 statement from the New Jersey Department of Treasury revoking the Partnership for "Failure to Pay Annual Reports."
Such facts go directly to the heart of New Jersey's interest in adjudicating the matter and it could therefore be expected that this action taken to dissolve the Partnership and form VPLLC would be subject to suit in New Jersey. The underlying complaint not only involves our laws of incorporation and dissolution, but the Partnership had, and VPLLC currently has, members who are New Jersey residents, including plaintiff Brookhill, and whose stake in the Partnership were converted to membership shares in VPLLC.
In addition, we note that SMC served as the general partner of the Partnership and Southern acted as its manager pursuant to the Agreement. Hillman was the sole owner of both of these entities. For fourteen years, from 1993 to 2007, SMC, Southern, and Hillman gained a benefit from the Partnership and purposefully availed themselves of the benefits of New Jersey law, including maintaining the Partnership under New Jersey law. Southern actively mailed correspondence, accounting statements, and tax documents into New Jersey over that period in exchange for management fees. Hillman and SMC also profited from the Partnership while it was organized under New Jersey law.
Defendants maintain that personal jurisdiction does not exist because the conversion of the Partnership to VPLLC occurred in Virginia, and because any ties to New Jersey were severed when the Partnership dissolved. This argument is not persuasive. It fails to recognize the fourteen years of contacts between Hillman, SMC, Southern and New Jersey. Furthermore, the purported illegal act is the dissolution of the Partnership. Defendants cannot assert that the complained of action destroyed personal jurisdiction, when but for that act there would be no claim.
We conclude that Gallows does not have the requisite contacts for New Jersey to exercise personal jurisdiction. Gallows is a Delaware-based corporation whose purpose is to act as manager of VPLLC. It has no ties to the Partnership and took no specific acts in New Jersey. Based upon the OA, Gallows was allowed to enter into a management agreement with Southern to continue its role as manager, thus insulating itself from contact with New Jersey. Unlike the other defendants, Gallows played no part in the supposed unlawful conversion.
Moreover, plaintiffs fail to illustrate any benefit that Gallows derived from New Jersey. This stands in contrast to the other defendants in this case. It also makes Gallows' contacts with New Jersey even less than those of the defendant in
Defendants assert in their brief that we can affirm the February 2014 order on the other grounds raised in their motion to dismiss. We decline to do so.
It is well-established that we "may exercise such original jurisdiction as is necessary to complete the determination of any matter on review."
Here, the judge made no findings as to the alternative grounds for affirmance raised by defendants. We have remanded similarly situated matters to the trial court with instructions to consider the alternative arguments that were raised, but not considered.
Reversed in part, affirmed in part, and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.