Opinion
Civ. No. 98-3653 (DRD)
November 17, 1998
David O. Marcus, Esq., Bruce J. Ackerman, Esq., Shapiro Croland, for Plaintiff.
Steven R. Klein, Esq. Warren A. Usatine, Esq., Cole, Schotz, Meisel, Forman Leonard, P.A., for Defendants.
O P I N I O N
In this action for breach of contract and fraud defendants Security Zone, Inc. ("Security Zone"), Home Protection Services, Inc. ("HPS") (collectively with Security Zone the "Corporate Defendants"), Robert Odierna, Sr. ("Odierna Sr.") and Robert Odierna Jr. ("Odierna Jr.") (collectively with Odierna Sr. the "Individual Defendants") move to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) or for improper venue pursuant to Fed.R.Civ.P. 12(b)(3), or in the alternative to transfer this case to the Southern District of Florida pursuant to 28 U.S.C. § 1404. For the reasons set forth below, Defendants' motion will be denied in its entirety.
BACKGROUND
The facts relevant to this motion relate to Defendants' contacts with New Jersey with regard to the alleged fraud and breach of contract and whether those contacts establish this Court's personal jurisdiction over Defendants.
Plaintiff is a New Jersey corporation with its principal place of business in New Jersey. Plaintiff, the successor in interest to King Central, Inc. ("King"), is in the business of monitoring security alarm systems from its facility in Hackensack, New Jersey. Security Zone is a Florida corporation and is in the business of selling, installing and maintaining security alarm systems. HPS, an inactive Florida corporation, was in the same business as Security Zone until it transferred its accounts to Security Zone in October 1996. The Individual Defendants are residents of Florida. Odierna Jr. is an officer, director and shareholder of Security Zone. According to Defendants, Odierna Sr. was formerly the national sales manager of HPS but is not an officer, director, shareholder or employee of Security Zone. The Complaint, however, alleges that Odierna Sr. was an officer, director and/or shareholder of Security Zone and Home. Compl. ¶ 4.
The Complaint sets forth nine counts of fraud and breach of contract. Plaintiff's first three claims arise out of an agreement dated June 18, 1997 (the "Acquisition Agreement") whereby Plaintiff agreed to purchase from Security Zone certain of their customer accounts for $450,754.74, $397,656.54 of which was paid at closing and the balance was held as a reserve to secure Defendants' performance. Counts One and Two allege that Defendants committed fraud in connection with the Acquisition Agreement and that Defendants' conduct entitles Plaintiff to rescind the Acquisition Agreement and to damages. Count Three asserts that Defendants' actions constitute breach of the Acquisition Agreement.
Plaintiff's next five claims arise out of a series of agreements from 1996 (the "Installer Agreements") under which King provided to the Corporate Defendants monitoring services for certain of their customers. Counts Four through Eight assert that Defendants failed to pay the $88,554.31 due for the monitoring services provided under the Installer Agreements and seek to recover that amount. The remaining claim, Count Nine, alleges that the Corporate Defendants are the alter egos of the Individual Defendants and as such the Individual Defendants are responsible not only for their own fraudulent acts but for the liabilities incurred by the Corporate Defendants as well.
The contacts between Defendants and New Jersey can be summarized as follows. In 1996 King, through Peter Giacalone ("Giacalone"), its national sales manager based in New Jersey, initiated discussions with HPS regarding a potential purchase by King of certain of HPS's customer accounts and an assumption by King of certain of HPS's liabilities. According to Defendants, King approached HPS because King had recently obtained new financing. The negotiations took place over a two month period and consisted of many telephone calls (approximately 50, according to Defendants) and one face to face meeting when Giacalone visited HPS in Florida. These negotiations resulted in an agreement (the "1996 Agreement") which was executed by HPS in Florida on August 16, 1996 and returned to King in New Jersey. King's anticipated financing fell through and it never executed the 1996 Agreement or performed what were to be its obligations under that agreement.
Although the 1996 Agreement was only executed by Defendants and is not even mentioned in the Complaint, it should be noted that it included a forum selection clause and choice of law provision stating: "This Agreement shall be construed and interpreted according to the laws of the State of New Jersey, and venue with respect to any litigation shall be Bergen County, New Jersey." Odierna Jr. Reply Cert. Ex. A at ¶ 15.12.
On September 17, 1996 Defendants met with King at King's office in Hackensack. This was the only time Defendants met with Plaintiff in New Jersey. Plaintiff contends that the key provisions of the Acquisition Agreement were negotiated at this day-long meeting, while Defendants assert that the Acquisition Agreement was negotiated in 1997 primarily by telephone and through the mail. According to Defendants the September 17, 1996 meeting was only a three-hour lunch meeting and its purpose was to devise a plan for the Corporate Defendants to satisfy HPS's obligations to King and other creditors in the wake of King's breach of the 1996 Agreement. Defendants acknowledge, however, that the Installer Agreements resulted from the September 17, 1996 meeting. Odierna Reply Cert. ¶ 10. Under the Installer Agreements, which were dated February 29, 1996 but not executed until September 24, 1996, King agreed to provide monitoring services on HPS's former accounts from its central station monitoring facility in Hackensack. Few Cert. Ex. B. The Installer Agreements provide for New Jersey law to govern, and for New Jersey to be the forum for, all disputes arising under the agreements or in relation to the monitoring services to be performed thereunder:
This Agreement shall be governed by the laws of the State of New Jersey. Any and all disputes arising either under this agreement or in relation to any services provided in this agreement shall be resolved exclusively in the State Courts of New Jersey in Bergen County, New Jersey.Id. ¶ 15.
King's financing came through and in June 1997 the parties executed the Acquisition Agreement. Security Zone executed the Acquisition Agreement in Florida and King executed it in New Jersey. Under the Acquisition Agreement, King purchased 390 residential customer accounts from Security Zone, 13 of which were located in New Jersey, with an additional 100 accounts held as security. The Acquisition Agreement also required King to assume certain of Security Zone's obligations to its suppliers and distributors. The accounts purchased by King were to be serviced from King's facilities in New Jersey. The Acquisition Agreement provided that it "shall be construed in accordance with, and governed by, the laws of the State of New Jersey." Giacalone Cert. Ex. A at ¶ 26.
The relationship between the parties soon began to deteriorate and Plaintiff filed the Complaint on June 18, 1998 in the New Jersey Superior Court, Law Division, Bergen County. On August 5, 1998 Defendants removed the action to this Court pursuant to 28 U.S.C. § 1332. The instant motion was filed by Defendants on October 2, 1998 prior to any discovery being conducted.
STANDARDS
This court has personal jurisdiction over a defendant if (i) the exercise of personal jurisdiction over the party comports with the law of the state in which the District Court is situated and (ii) due process is not violated. See Provident Nat'l Bank v. California Federal Savings Loan Ass'n, 819 F.2d 434, 436 (3d Cir. 1987); Max Daetwyler Corp. v. Meyer, 762 F.2d 290, 293 (3d Cir.), cert. denied, 474 U.S. 980 (1985). These dual considerations are collapsed under New Jersey law since the State's long-arm rule extends "to the limits of the Fourteenth Amendment Due Process protection." Carteret Sav. Bank, F.A. v. Shushan, 954 F.2d 141, 145 (3d Cir.), cert. denied, 506 U.S. 817 (1992). Under Constitutional due process analysis, personal jurisdiction is proper where a defendant has "minimum contacts" with the forum state, "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); see also Giangola v. Walt Disney World Co., 753 F. Supp. 148, 154-56 (D.N.J. 1990). The central concern is the "predictability and fairness of the court taking jurisdiction over the defendant." Giangola, 753 F. Supp. at 155.
All jurisdictional allegations by a plaintiff are to be accepted as true and all disputed facts construed in its favor at the time when the motion to dismiss is originally made. Carteret, 954 F.2d at 142 n. 1; see also LaRose v. Sponco Mfg., Inc., 712 F. Supp. 455, 458 (D.N.J. 1989) ("pleadings and affidavits are to be considered in the light most favorable to the plaintiff, as non-moving party"). However, "a court is not precluded from revisiting the issue if it appears that the facts alleged to support jurisdiction are in dispute." Carteret, 954 F.2d at 142 n. 1.
Once a defendant raises the issue of personal jurisdiction, the plaintiff bears the burden of proving, by a preponderance of the evidence, facts sufficient to establish jurisdiction. Carteret, 954 F.2d at 146. A plaintiff may carry this burden by demonstrating with "reasonable particularity" that a defendant has the requisite forum-related activities. Giangola, 753 F. Supp. at 154. Depending on the nature of those activities, a court may exercise either general or specific jurisdiction, Carteret, 954 F.2d at 149, although courts have on occasion failed to distinguish between the two. Dollar Savings Bank v. First Security Bank of Utah, 746 F.2d 208, 212 (3d Cir. 1984).
"General jurisdiction may be invoked when the claim does not `arise out of or is unrelated to the defendant's contacts with the forum.'"Carteret, 954 F.2d at 149 (quoting Dollar Savings Bank, 746 F.2d at 211); see also Giangola, 753 F. Supp. at 154-55. A court obtains general jurisdiction over a party when a defendant's presence in that state is unrelated to the subject matter of the lawsuit but where the plaintiff shows continuous and systematic contact with the forum state and "substantially more than mere minimum contacts." Giangola, 753 F. Supp. at 154.
Specific (or transactional) jurisdiction is invoked where the defendant has no continuing presence in the forum state, but where the "claim is related to or arises out of the defendant's contacts with the forum."Carteret, 954 F.2d at 149. The focus of the specific jurisdiction inquiry is on minimum contacts, id. at 150, or the "purposeful acts by that party, directed toward a state, which make it reasonable for the defendant to anticipate being haled into court there." World Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 297 (1980); Giangola, 753 F. Supp. at 155. A plaintiff's unilateral activities cannot satisfy the requirement of minimum contacts with the forum. Hanson v. Denckla, 357 U.S. 235, 253 (1958).
Once the plaintiff has met the burden, however, the defendant "`must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.'" Carteret, 954 F.2d at 150 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1986)). Courts are to evaluate:
"the burden on the defendant," "the forum State's interest in adjudicating the dispute," "the plaintiff's interest in obtaining convenient and effective relief," "the interstate judicial system's interest in obtaining the most efficient resolution of controversies," and the "shared interest of the several States in furthering fundamental substantive policies."Id.
ANALYSIS
Defendants have adequately raised the issue of personal jurisdiction in this case. Thus, the burden shifts to Plaintiff to prove jurisdiction by a preponderance of the evidence. No facts in this case have been pled or otherwise alleged to suggest the existence of general jurisdiction; therefore, the question is whether specific jurisdiction is proper in this case.
Plaintiff asserts that Defendants are subject to specific jurisdiction by virtue of their contacts with New Jersey relating to Plaintiff's claim. It also asserts that jurisdiction exists because Defendants consented to jurisdiction in New Jersey.
Courts have held that where a nonresident defendant engages in purposeful or deliberate conduct specifically directed toward the forum state, ordinarily that alone suffices to confer jurisdiction over the nonresident defendant for claims related to or arising out of those activities. See, e.g., Mesalic v. Fiberfloat Corp., 897 F.2d 696, 701 (3d Cir. 1990) (finding that a "substantial connection" between defendant, a Florida corporation, and New Jersey was created in case arising out of defendant's sale of a boat to a New Jersey resident because defendant sent correspondence to plaintiff in New Jersey, delivered the boat to New Jersey, and on two occasions sent employees to New Jersey to perform repairs on the boat); Electro-Catheter Corp. v. Surgical Specialties Instrument Co., 587 F. Supp. 1446, 1454 (D.N.J. 1984) (noting that district courts in New Jersey have extended personal jurisdiction over commercial non-resident purchasers in suits arising from their business transactions in the state); Alchemie Int'l, Inc. v. Metal World, Inc., 523 F. Supp. 1039 (D.N.J. 1981) (in breach of contract suit, jurisdiction over nonresident defendant was properly exercised even though defendant did not visit the forum, where there were significant mail and telephone contacts with resident seller and the contract stated that New Jersey law would apply). Viewing the submissions in the present case in the light most favorable to Plaintiff, it is evident that the Installer Agreements resulted from Defendants' meeting with Plaintiff in New Jersey on September 17, 1996 and the Acquisition Agreement was negotiated at this meeting; Defendants and Plaintiff communicated concerning the Acquisition Agreement and the Installer Agreements extensively over the telephone and through the mail between New Jersey and Florida over the course of several months; the Acquisition Agreement included the purchase of Defendants' New Jersey accounts and contemplated servicing of those accounts from Plaintiff's New Jersey facility; the Acquisition Agreement and the Installer Agreements provide that they are to be governed by New Jersey law and the Installer Agreements provide that New Jersey is state court is to be the exclusive forum for all disputes arising under those agreements. In light of this evidence, it must be concluded that Plaintiff has proven by a preponderance of the evidence that Defendants' activities are sufficient to give rise to a valid exercise of this Court's specific personal jurisdiction over them. Moreover, while state court in Bergen County, New Jersey, rather than federal court in the District of New Jersey, was the forum selected by the parties in the Installer Agreements, this selection undercuts Defendants' argument that it would be unreasonable for them to anticipate being haled into court in New Jersey and unfair of this Court to take jurisdiction over them.
Defendants' alternative argument is that transfer to the Southern District of Florida is warranted under 28 U.S.C. § 1404(a), which provides in pertinent part:
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.Id. The purpose of § 1404(a) "is to prevent the waste `of time, energy and money' and `to protect litigants, witnesses and the public against unnecessary inconvenience and expense. . . .'" Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (quoting Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 26-27 (1960)).
The transfer of a case under 28 U.S.C. § 1404(a) from one district to another is within the sound discretion of the court, Norwood v. Kirkpatrick, 349 U.S. 29, 31-32 (1955); Parliament Import Co. v. Gibson Wine Co., 537 F. Supp. 72, 75 (E.D.Pa. 1982), but motions to transfer should not be liberally granted. Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970), cert. denied, 401 U.S. 910 (1971). Ordinarily, the plaintiff's choice of forum is given great weight. Shutte, 431 F.2d at 25. "Where the transfer would merely shift inconvenience from the defendant to the plaintiff, the plaintiff's choice of forum will not be disturbed." Parliament Import Co., 537 F. Supp. at 75. The burden is on the moving party to establish that a balancing of proper interests weighs in favor of the transfer, and unless the balance of convenience of the parties is strongly in favor of the defendant, the plaintiff's choice of forum should prevail. Shutte, 431 F.2d at 25.
The factors to be considered by a district court when determining whether to transfer a case may be summarized as follows:
1. Plaintiff's choice of forum;
2. Relative ease of access to sources of proof;
3. Availability of compulsory process for attendance of unwilling witnesses;
4. Cost of obtaining attendance of willing witnesses;
5. Possibility of a view of premises, if appropriate;
6. All other practical considerations making trial easy, expeditious and inexpensive;
7. Enforceability of a judgment if obtained;
8. Relative congestion of court dockets;
9. Relationship to the litigation of the community from which jurors will be drawn; and
10. Familiarity of the forum with the state law governing a diversity case.Supco Automotive Parts, Inc. v. Triangle Auto Spring Co., 538 F. Supp. 1187, 1191 (E.D.Pa. 1982) (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-509 (1947)). The motion must be supported by affidavits containing detailed factual statements relevant to the factors set forth above, including the potential principal witnesses expected to be called and a general statement of the substance of their testimony.Hernandez v. Graebel Van Lines, 761 F. Supp. 983, 987 (E.D.N.Y. 1991).
Defendants here have failed to meet their burden of demonstrating that the balance of convenience weighs strongly in favor of transfer. They merely assert that they reside in Florida (Odierna Aff. ¶¶ 2, 3, 5, 6); all witnesses and records they will produce are located in Florida (Id. ¶¶ 16-25); and the majority of their accounts are located in Florida (Id. ¶ 5). In short, they simply contend that a transfer would be more convenient for them; they make no attempt to balance the competing interests at hand. Defendants offer no evidence to demonstrate that access to sources of proof would be easier in Florida than New Jersey; the availability of compulsory process for attendance of unwilling witnesses would be greater in Florida than New Jersey; the cost of obtaining attendance of willing witnesses would be lower in Florida than New Jersey; all other practical considerations would make a trial in Florida easier, more expeditious and less expensive than a trial in New Jersey; the enforceability of a judgment if obtained would be easier in Florida than New Jersey; the Southern District of Florida's court docket is relatively less congested than the District of New Jersey's; or the community from which jurors will be drawn has any relationship to the litigation. As for the final factor, familiarity of the forum with the state law governing a diversity case, the parties agreed that New Jersey law would govern all disputes under the Installer Agreements and the Acquisition Agreement. Thus, transfer of venue to the Southern District of Florida is unwarranted.
It should also be noted that Plaintiff did not purposefully choose a forum that would place Defendants at a disadvantage in an attempt to gain tactical advantage. Plaintiff merely filed suit in the New Jersey Superior Court where its place of business is located and where the Installer Agreements provided for exclusive jurisdiction. See Bremen v. Zapata Off-Shore Co . , 407 U.S. 1 (1972); Rutherford v. Sherburne Corp . , 616 F. Supp. 1456, 1462 (D.N.J. 1985).
CONCLUSION
For the foregoing reasons, Defendants' motion will be denied in its entirety. An appropriate order follows.