ANDREW J. PECK, United States Magistrate Judge:
Plaintiffs Eastboro Foundation and James Bernath (collectively, "Bernath") bring this diversity action against defendants Abraham Penzer and Joshua Rothenberg, seeking $150,000 in damages resulting from an unsuccessful real estate transaction among the parties. (Dkt. No. 1: Compl.) Presently before the Court is Penzer's motion to dismiss for lack of personal jurisdiction, pursuant to Fed. R.Civ.P. 12(b)(2). (Dkt. No. 8: Notice of Motion.) The parties have consented to decision of this motion by a Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Dkt. No. 23.) For the reasons set forth below, Penzer's motion is GRANTED and the case is dismissed without prejudice.
Plaintiff Bernath asserts four causes of action: legal malpractice (Dkt. No. 1: Compl. ¶¶ 25-28), breach of fiduciary duty (id. ¶¶ 29-32), conversion, embezzlement and aiding and abetting thereof (id. ¶¶ 33-36), and unjust enrichment and aiding and abetting thereof (id. ¶¶ 37-40). All four claims are based on the core allegation that Bernath transferred $150,000 to attorney Penzer's New Jersey trust account for the purchase of New Jersey property, which Penzer then disbursed to Rothenberg who purchased the property himself. (Compl. ¶¶ 1-2, 14-15, 18-22, 28, 31, 34-35, 38-39.)
Plaintiff Bernath is a New York resident and partner at the CPA firm of Bernath & Rosenberg, P.C. in New York City. (Dkt. No. 1: Compl. ¶ 7; Dkt. No. 13: Bernath Aff. ¶ 3.) Plaintiff The Eastboro Foundation is a New York Charitable Trust with an office in New York City. (Compl. ¶ 6.) Defendant Penzer is a New Jersey resident and attorney whose law office is located in Lakewood, New Jersey. (Compl. ¶¶ 8, 12.) Defendant Rothenberg is a New Jersey resident and real estate developer whose office is also located in Lakewood, New Jersey. (Compl. ¶¶ 9, 13.)
In January and March 2010, Bernath formed RBRB Realty, LLC and RBRB Realty II, LLC,
In or around September 2010, Bernath intended to purchase a third parcel of land being developed by Rothenberg in Lakewood, New Jersey. (Dkt. No. 1: Compl. ¶¶ 1-2, 14-15, 22-23.) Bernath alleges that he "spoke with Penzer directly on the phone immediately prior to [his] making the very wire transfers which are the subject of this action" and "specifically recall[s] asking [Penzer] whether the wire transfers should be made into the same attorney escrow bank account as the previous two similar transactions ... for the investment with Rothenberg in the Lakewood development." (Dkt. No. 13: Bernath Aff. ¶ 4.)
At some point after the $150,000 wire transfers were made, Penzer came to Bernath's office in New York City for a meeting "involving a business that [Penzer's] client was working on acquiring" in Bay Shore, New York—a potential transaction that admittedly is unrelated to the transaction presently at issue. (Dkt. No. 13: Bernath Aff. ¶¶ 13, 16-17; Dkt. No. 22: Penzer Reply Aff. ¶ 5.) Bernath alleges that he and Penzer also "discussed" the subject transaction at the meeting, but provides no information regarding the content, nature, duration, or any details of the alleged discussion. (Bernath Aff. ¶¶ 3, 13, 16-17.) According to Penzer, while he did see Bernath when he came to Bernath's office to meet with others, "the only communication that [Penzer] had with Bernath was merely to say `hello' to him in passing." (Penzer Reply Aff. ¶¶ 3, 5-6.)
Penzer is admitted to practice in New Jersey, New York and the District of Columbia. (Dkt. No. 1: Compl. ¶ 12; Dkt. No. 9: Penzer Aff. ¶ 3.) Penzer has been admitted to practice in New York since 1982, his bar membership is active and his next biennial registration is due in April 2014. (Penzer Aff. ¶ 3; Dkt. No. 13: Bernath Aff. ¶¶ 14-17 & Ex. D: N.Y.S. Unified Court Sys. Docs.) Penzer has appeared four times in New York courts, most recently in 1994. (Bernath Aff. ¶ 16 & Ex. D: N.Y.S. Unified Court Sys. Docs.) Penzer asserts that he has "not been before the New York Courts or actively engaged in the practice of law in the State of New York for nearly twenty (20) years (since 1994)." (Dkt. No. 22: Penzer Reply Aff. ¶ 8.)
Penzer's firm is incorporated only in New Jersey, his only place of business is the firm's office in Lakewood, New Jersey, and Penzer asserts that his practice is limited to New Jersey. (Compl. ¶¶ 8, 12; Penzer Aff. ¶¶ 3-5.) Bernath does not dispute that Penzer does not have employees, an office, address, bank account or telephone number in New York. (Penzer Aff. ¶¶ 4-5.) Penzer claims that he has no New York clients, and neither solicits business, markets, nor advertises in New York. (Penzer Aff. ¶¶ 4-5.) In opposition, Bernath alleges that Penzer is "practicing law in New York" by "working on New York transactions and representing New York clients." (Bernath Aff. ¶ 17.)
"On a Fed.R.Civ.P. 12(b)(2) motion to dismiss for lack of personal jurisdiction, plaintiff bears the burden of showing that the court has jurisdiction over the defendant." In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir. 2003); accord, e.g., MacDermid, Inc. v. Canciani, 525 Fed.Appx. 8, 9-10, No. 12-1747-cv, 2013 WL 1943258 at *1 (2d Cir. May 13, 2013).
"Where, as here, a court relies on pleadings and affidavits, rather than conducting a `full-blown evidentiary hearing,' the plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant." DiStefano v. Carozzi N. Am., Inc., 286 F.3d at 84; accord, e.g., MacDermid, Inc. v. Canciani, 525 Fed.Appx. at 10, 2013 WL 1943258 at *1.
C.P.L.R. § 301 provides, cryptically, that a "court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore." Section 301 traditionally applies to persons actually present in New York and to corporations "`doing business'" in New York, "`not occasionally or casually, but with a fair degree of permanence and continuity.'" Hearst Corp. v. Goldberger, 96 Civ. 3620, 1997 WL 97097 at *8 (S.D.N.Y. Feb. 26, 1997) (Peck, M.J.) (quoting Joseph McLaughlin, Practice Commentary to CPLR § C301:1, § C:301:2 at pp. 7-9 (McKinney's 1990)); accord, e.g., United Mobile Techs., LLC v. Pegaso PCS, S.A. de C.V., 509 Fed.Appx. 48, 50 (2d Cir.2013) ("Under N.Y. C.P.L.R. § 301, general jurisdiction is established if the defendant is shown to have `engaged in continuous, permanent, and substantial activity in New York.'").
New York "long-arm" jurisdiction is codified in C.P.L.R. § 302(a),
C.P.L.R. § 302(a).
It is undisputed that Penzer has no address, phone number or employees in New York, and that his law firm is incorporated only in New Jersey with its only office located in New Jersey. (See page 653 above). There are no allegations that Penzer solicits business or advertises his services in New York. (See page 653 above.) Bernath's claims arise from the transfer of funds to Penzer's New Jersey attorney trust account for the purchase of New Jersey property, which funds were disbursed in New Jersey to a New Jersey resident, co-defendant Rothenberg. (See pages 651-52 above).
Bernath's argument for general jurisdiction is not based on evidence that Penzer has, for example, employees, an office, real estate, a bank account, or a phone listing in New York, or that he solicits or markets his services in New York, as typically would be required.
It is undisputed that an out-of-state company's registration to do business in New York is deemed a consent to general personal jurisdiction in New York. E.g., STX Panocean (UK) Co. v. Glory Wealth Shipping Pte Ltd., 560 F.3d 127, 131 (2d Cir.2009) ("It is well-settled under New York law that registration under [N.Y. Bus. Corp. Law] § 1304 subjects foreign companies to personal jurisdiction in New York."). There is no comparable caselaw, however, construing an attorney's license to practice law as an automatic consent to general personal jurisdiction; in fact, courts have rejected that argument on a number of occasions. See, e.g., Mangia Media Inc. v. Univ. Pipeline, Inc., 846 F.Supp.2d 319, 323 (E.D.N.Y.2012) ("Plaintiff cites no authority for the broad exercise of general jurisdiction over each and every member of the Bar of this State.");
Nor do Penzer's "affirmative steps of renewing the [N.Y. attorney] registrations, paying the fees and completing the 24 accredited New York CLE credit hours every two years" (Bernath Opp. Br. at 10) command a different result. See Baker v. Eighth Judicial Dist. Court, 116 Nev. at 532-33, 999 P.2d at 1023-24 ("Although... nonresident bar members are regulated by our supreme court rules (`SCR'), we conclude that a nonresident bar member could comply with these rules without having continuous and systematic contact with the State of Nevada. In fact, a nonresident, nonpracticing bar member's compliance with the SCR could consist solely of sending a yearly check and an address update form upon relocation. Accordingly, we conclude that the district courts of Nevada lack general jurisdiction over [plaintiff] on the basis of his bar membership." (fn. omitted)); Advance Petroleum Serv., Inc. v. Cucullu, 614 So.2d 878, 880 (La.App.Div.) (no jurisdiction where defendant "graduated from a Louisiana Law School and is licensed to practice in Louisiana and has attended the requisite CLE courses to maintain his license"), writ denied, 617 So.2d 911 (La.1993).
Bernath relies heavily on Penzer's statutory appointment of a New York agent for service of process as required by the regulations
(Bernath Opp. Br. at 6.) This argument fails because the Business Corporation Law requires appointment of an agent for all purposes, whereas the attorney regulation only requires appointment of an agent for specific cases, i.e., actions arising from New York legal services.
Because appointment of the Appellate Division as Penzer's agent only extends to the specific type of action stated in the regulation, it is not a consent to general jurisdiction. Cf., e.g., Advance Realty Assocs. v. Krupp, 636 F.Supp. 316, 317-18 (S.D.N.Y.1986) ("Plaintiff argues that the registration ... pursuant to N.Y. Gen. Bus. L. § 352-b manifests the defendants' consent to general jurisdiction in New York.... When a foreign individual or entity registers under § 352-b, it appoints the secretary of state to receive process for it `in any action, investigation or proceeding brought or conducted by the attorney general under the provisions of New York's securities laws. Obviously, this is not such an action. Defendants could not... consent to anything more than what the statute says. Mere registration pursuant to § 352-b does not create general jurisdiction over the defendants.")
"Section 302(a)(1) is typically invoked for a cause of action against a defendant who breaches a contract with plaintiff, or commits a commercial tort against plaintiff in the course of transacting business or contracting to supply goods or services in New York." Beacon Enters., Inc. v. Menzies, 715 F.2d 757, 764 (2d Cir.1983) (citations omitted); accord, e.g., Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 171 (2d Cir.2010).
"`[I]n order for personal jurisdiction over [Penzer] to lie in New York [under C.P.L.R. § 302(a)(1), Penzer] must have transacted business in this state and the cause of action must arise out of such transaction.'" Rolls-Royce Motors, Inc. v. Charles Schmitt & Co., 657 F.Supp. 1040, 1050 (S.D.N.Y.1987); accord, e.g., Reiss v. Steigrod, 866 F.Supp. 747, 749 (S.D.N.Y.1994) (Sotomayor, D.J.). As the Court further explained in Rolls-Royce:
Rolls-Royce Motors, Inc. v. Charles Schmitt & Co., 657 F.Supp. at 1050-51 (citations omitted).
In arguing that Penzer transacted business in New York and that the claims arise out of that transaction, Bernath asserts that Penzer is "practicing law in New York on a regular ongoing basis" (Dkt. No. 14: Bernath Opp. Br. at 11), relying on: (a) Penzer's maintenance of a New York law license "with efforts in New York that include taking New York CLE courses, in order to invoke the benefits and privileges of doing business here," as well as Penzer's four New York court appearances between 1987 and 1994 (Bernath Opp. Br. at 10; Dkt. No. 13: Bernath Aff. Ex. D: N.Y.S. Unified Court Sys. Docs.); (b) Penzer's meeting at Bernath's New York office regarding a potential property transaction in Bay Shore, New York (Bernath Opp. Br. at 10-11); and (c) that "Bernath..., and [the RBRB] LLCs that [he] formed, were Penzer's clients on the two prior transactions, and the third identical transaction which is the subject [o]f this lawsuit" (Bernath Opp. Br. at 11; see pages 651-52 above).
Bernath's claims are based on an intended real estate transaction in New Jersey, namely, the purchase of New Jersey property from a New Jersey seller. (See page 651 above.) The acts and omissions alleged to constitute Penzer's attorney malpractice and the related claims of unlawfully disbursing Bernath's funds from Penzer's New Jersey attorney trust account to a New Jersey resident, also
Accordingly, even assuming arguendo that Penzer's maintenance of an active New York license constitutes a transaction of business, Bernath's claims relate exclusively to actions Penzer took in New Jersey in connection with a New Jersey transaction, and thus do not arise from Penzer's membership in the New York bar. See, e.g., Lipin v. Hunt, 538 F.Supp.2d 590, 598 (S.D.N.Y.2008) ("None of Plaintiffs causes of actions arise from [defendant's] admission to practice in New York. Even assuming that admission to the New York bar can be considered a transaction of business in New York and that acts taken as an attorney might `arise from' that attorney's admission to practice, all of Plaintiffs allegations relating to actions taken by [defendant] in his capacity as a[n] attorney relate to actions taken in connection with proceedings in Maine courts. Such actions do not arise from [defendant's] admission to the New York bar in any way.");
Penzer's appearances in New York courts in unrelated matters in 1987, 1991 and 1994 are jurisdictionally irrelevant. Penzer's last New York court appearance was nearly twenty years ago, which falls
The only conduct that occurred in New York was Penzer's attendance at a single meeting at Bernath's New York office, "the main purpose" of which was to meet with others regarding a potential transaction in Bay Shore, New York, during which Penzer also allegedly spoke with Bernath about the subject transaction. (Dkt. No. 14: Bernath Opp. Br. at 10-11; see page 652 above.) This meeting is relevant, Bernath suggests, because it shows that Penzer was conducting other business in New York, i.e., negotiating the potential purchase of property in Bay Shore, and because Penzer's alleged discussion with Bernath regarding the subject transaction provides a nexus between New York and the present claims.
For a single meeting in New York to justify the exercise of personal jurisdiction pursuant to C.P.L.R. § 302(a)(1), the meeting must have played "`a significant role in establishing or substantially furthering the relationship of the parties.'" Three Five Compounds, Inc. v. Scram Techs., Inc., 11 Civ. 1616, 2011 WL 5838697 at *4 (S.D.N.Y. Nov. 21, 2011).
Indeed, while no date is provided, it appears the meeting took place after the September 2010 wire transfers were complete, since they allegedly were discussed (see page 652 above); thus, the relationship between Penzer and Bernath that is at issue in this action already existed, and was not established or substantially furthered by this meeting. See, e.g., MEE Direct, LLC v. Tran Source Logistics, Inc., 12 Civ. 6916, 2012 WL 6700067 at *5 (S.D.N.Y. Dec. 26, 2012) (Plaintiff "alleges that [defendant] attended a freight review meeting, as well as two negotiations related to the allegedly converted funds, in its Manhattan offices.... [Plaintiff] does not allege that the meetings, which were conducted subsequent to the formation of the Agreement, were necessary to or substantially advanced its business relationship with [defendant]. Therefore, the meetings do not support the exercise of personal jurisdiction." (emphasis added)); Dogan v. Harbert Constr. Corp., 507 F.Supp. 254,
Bernath admits that the potential transaction in Bay Shore, New York was completely unrelated to the New Jersey transaction that is the subject of this action—it did not even involve Bernath—and thus it cannot be said that Bernath's claims arise from or are based on that transaction. See, e.g., Ferrante Equip. Co. v. Lasker-Goldman Corp., 26 N.Y.2d 280, 284, 309 N.Y.S.2d 913, 917, 258 N.E.2d 202 (1970); Greco v. Ulmer & Berne L.L.P., 23 Misc.3d at 888, 879 N.Y.S.2d at 896-97 ("[T]he court concludes that the [law firm] defendants are not subject to the jurisdiction of the courts of New York.... In the first instance, [the former trustee] is not a plaintiff in the instant action, so that any meetings that he may have had with the [law firm] defendants are irrelevant to a determination of whether movants are subject to jurisdiction here.... Also significant is the court's finding that [the former trustee's] claim that he met with [defendant attorneys] in New York is patently incredible in view of the fact that he fails to provide any details with regard to the alleged meetings....").
The evidence Bernath submits to prove that Penzer was Bernath's attorney in two prior transactions shows, if anything, that Penzer represented two New Jersey limited liability companies (RBRB) in these transactions. (See pages 651-52 above.) The transactions for which Penzer provided the alleged representations occurred in New Jersey, and involved the purchase of New Jersey property from New Jersey sellers on behalf of the New Jersey RBRB entities. (See pages 651-52 above.) Accordingly, the evidence of these prior transactions offers no support for Bernath's position.
Personal jurisdiction over Penzer is not appropriate under the second prong of New York's long-arm statute, C.P.L.R. § 302(a)(2). Bernath's claims arise out of a New Jersey attorney's conduct in connection with the disbursement of funds that Bernath transferred to a New Jersey bank account for a real estate transaction involving the purchase of New Jersey property from a New Jersey seller. (See pages 651-52 above.) Bernath does not allege that Penzer committed tortious acts within New York State. (Dkt. No. 1:
Personal jurisdiction over Penzer is not appropriate under the third prong of New York's long-arm statute, C.P.L.R. § 302(a)(3). "`[C]ourts determining whether there is injury in New York sufficient to warrant § 302(a)(3) jurisdiction must generally apply a situs-of-injury test, which asks them to locate "the original event which caused the injury."'" Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 209 (2d Cir.2001) (quoting Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 791 (2d Cir. 1999)); DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir.2001). "`[T]he situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are felt by the plaintiff" Whitaker v. Am. Telecasting, Inc., 261 F.3d at 209 (quoting Mareno v. Rowe, 910 F.2d 1043, 1046 (2d Cir.1990) (where plaintiff lived in New York and sued his New Jersey employer for wrongful discharge, situs of injury was location of events which caused injury, i.e., New Jersey, not place where economic consequences were felt, i.e., New York), cert. denied, 498 U.S. 1028, 111 S.Ct. 681, 112 L.Ed.2d 673 (1991)); see also, e.g., Hermann v. Sharon Hosp., Inc., 135 A.D.2d 682, 683, 522 N.Y.S.2d 581, 583 (2d Dep't 1987) ("The situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are subsequently felt by the plaintiff."). As the Second Circuit has stated, "`[t]he occurrence of financial consequences in New York due to the fortuitous location of plaintiffs in New York is not a sufficient basis for jurisdiction under § 302(a)(3) where the underlying events took place outside New York.'" Whitaker v. Am. Telecasting, Inc., 261 F.3d at 209.
Bernath's claims arise out of a New Jersey attorney's alleged misconduct in the disbursement of Bernath's funds, intended for the purchase of property in New Jersey, from a New Jersey bank account to a New Jersey resident. (See pages 651-52 above.) While Bernath alleges that Penzer committed tortious acts in New Jersey, the complaint does not
Bernath has not made a prima facie showing that personal jurisdiction over Penzer is appropriate under the third prong of New York's long-arm statute, C.P.L.R. § 302(a)(3).
For the reasons set forth above, Penzer's motion to dismiss (Dkt. No. 8) is
SO ORDERED.
Because Bernath has not made a prima facie showing that jurisdiction over Penzer is appropriate under any prong of New York's jurisdictional statutes, C.P.L.R. §§ 301, 302(a), the Court need not address the question of whether personal jurisdiction "`comports with the requisites of due process.'" E.g., Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208-09 (2d Cir.2001). Likewise, because dismissal is warranted on jurisdictional grounds, the Court need not address Penzer's alternative arguments for dismissal pursuant to Fed.R.Civ.P. 12(b)(6).
