Opinion
22-CV-4454 (PAE) (KHP)
11-21-2022
ILLIA KORNEA, et al Plaintiffs, v. JEFFREY A. MILLER, et al Defendants.
REPORT AND RECOMMENDATION ON MOTION TO DISMISS DEFENDANTS AND MOTION TO STRIKE
KATHARINE H. PARKER UNITED STATES MAGISTRATE JUDGE
TO: HONORABLE PAUL E. ENGELMAYER, United States District Judge
FROM: KATHARINE H. PARKER, United States Magistrate Judge
Pro se Plaintiffs Illia Kornea and Octavian Kecenovici, who are citizens of Pennsylvania, bring this action against pro se Defendants Jeffrey A. Miller, Patricia Miller, and Ahmed Raed, who are citizens of California. The Complaint is not a model of clarity. However, Plaintiffs attach a Joint Venture Agreement & Personal Guarantee (“Agreement”) to the Complaint, and this document appears to be the basis for the action. (Compl. 22-32.)
The Complaint does not contain numbered paragraphs or consistent page numbering. Citations to page numbers refer to the PDF page number.
The Agreement is between and among the Plaintiffs, another individual named Rachel Gendreau, and Defendant Jeffrey Miller. (Id. at 26.) Under the agreement, Plaintiffs and Gendreau agreed to provide funds for the purchase of marijuana from licensed bulk wholesalers on behalf of licensed distributors of marijuana for resale to end user retailers. (Id.) The Agreement contemplated multiple bulk purchases of marijuana, with each purchase and distribution to retailers taking about eight days. (Id.) The Agreement provided for an initial investment of $75,000 by Plaintiffs and Gendreau and then subsequent investments for each bulk purchase. (Id. 23.) The Agreement contemplates two transactions per month and profits from each purchase and sale of marijuana. It specifies that each $25,000 investment will generate $8,125 in profit to be split by the parties to the contract in specified amounts. (Id. at 27.) According to the agreement, “JM,” i.e. Jeffrey Miller, has relationships with distributors and wholesalers and those relationships are confidential and the “property” of Jeffrey Miller. (Id.) Jeffrey Miller also provides a “payment guarantee” to Plaintiffs and Gendreau to repay each $25,000 should any of the transactions using their investment money result in a loss. (Id.) The guarantee, however, expires upon Plaintiffs' and Gendreau's receipt of profits that exceed their initial investment amount of $25,000 each. (Id.) Miller also agreed to pay Plaintiffs' and Gendreau's attorney's fees and costs incurred in enforcing payment of the $25,000 guarantees to them. (Id.) Finally, the Agreement states that the joint venture will last for one year, subject to renewal in writing, conditioned on Jeffrey Miller's “ability to continue the Venture and that the marketplace supports the purpose of the Venture.” (Id. at 28.)
The Agreement contains a choice of law provision stating it will be governed by New York law and states that “all disputes [shall be] heard in New York City, New York.” (Id.)
Plaintiffs, Gendreau and Jeffrey Miller signed the Agreement. Defendants Patricia Miller and Ahmed Raed are not parties to the Agreement. Patricia Miller is alleged to be married (or formerly married) to Jeffrey Miller. (Id. at 16.) Raed is alleged to be the CEO of RadRelax LLC (“Radrelax”), a company incorporated in Wyoming, owned by Jeffrey Miller. (Id.)
Plaintiffs contend that Jeffrey Miller breached the Agreement by failing to pay promised profits from the purchase and sale of marijuana. According to Plaintiffs, they made the required initial investment. The Complaint does not state whether Plaintiffs made any further investments. However, Plaintiffs assert they were promised over $1.5 million return on investment with payments between $90,000 and $120,000 monthly for a period of 13 months. Plaintiffs appear to seek the amounts they were promised under the Agreement, costs of litigation, and, upon issuance of a judgment, post-judgment discovery regarding all property and assets of Jeffrey Miller, Patria Miller and companies under their control including RadRelax and FiberH LLC (“FiberH”).
There are no specific allegations concerning Patricia Miller apart from stating her marital relationship to Jeffrey Miller. That is, she is not accused of any wrongful acts toward Plaintiffs. Likewise, there are no specific allegations regarding misconduct or wrongful actions by Raed. The Complaint also was not served on Raed. (ECF No. 13; Summons returned unexecuted.) It was served on both Jeffrey and Patricia Miller. (ECF Nos. 6-7.)
Jeffrey Miller filed a motion to dismiss the claims against Patricia Miller and Raed on the grounds that the Court lacks personal jurisdiction over them and on the grounds that they are not alleged to have engaged in any wrongful conduct. (ECF No. 18.) Patricia Miller and Raed signed a “Joinder to Motion to Dismiss Certain Defendants” asking for the Court to dismiss the claims against them for the reasons set forth in the motion filed by Jeffrey Miller. (ECF No. 19.)
Miller was allegedly trained as a lawyer but was disbarred in New York and California.
Plaintiff submitted an opposition to the motion arguing that Patricia Miller and Raed are jointly and severally liable for the debt, relying on the Millers' marital status and the fact that they allegedly have a joint partner relationship with Jeffrey Miller in RadRelax and FiberH. (ECF No. 24.) Plaintiffs cite various laws including maritime law, concepts of restitution, contribution and indemnification, New York General Obligation Law 15-108 as the basis for maintaining claims against Patricia Miller and Raed.
Jeffrey Miller also moved to strike the Complaint pursuant to Federal Rule of Civil Procedure 12(f). (ECF No. 17.) The motion is aimed at “other causes of action and irrelevant allegations” in the pro se Complaint.
I address both motions in turn below.
DISCUSSION
A. MOTION TO DISMISS DEFENDANTS PATRICIA MILLER AND RAED
1. Service of Process
Federal Rule of Civil Procedure 4(m) requires service of a complaint within 90 days. The Complaint was filed on May 27, 2022. Service was due on August 5, 2022. Plaintiffs did not effectuate service on Raed within that time period. On July 13, 2022, Plaintiffs moved to compel Jeffrey Miller to provide them with an address for Raed. On August 10, 2022, Raed submitted a Joinder to the Motion to Dismiss that included his address, phone number, and email address. At an initial case management conference on August 25, 2022, Jeffrey Miller stated that he did not know Raed's address. The Court suggested that to the extent necessary, Plaintiffs could conduct online research to find Raed. Plaintiffs stated at a Case Management Conference on November 15, 2022 that they attempted to locate Raed through use of a private investigator, but were unsuccessful. To date, service on Raed has not been effectuated.
Rule 4(m) provides that the court must dismiss the action without prejudice if it has not been timely served or order that service be made within a specified time. Accordingly, the Complaint should be dismissed against Raed for failure of Plaintiffs to timely serve him. Additionally, as discussed below, the Court lacks personal jurisdiction over Raed.
2. Personal Jurisdiction
“In order to survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing that jurisdiction exists.” Thomas v. Ashcroft, 470 F.3d 491, 495 (2d Cir. 2006) (italics added). Where this determination is made prior to discovery, “the plaintiff's prima facie showing may be established solely by allegations.” Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990).
A court may exercise two types of personal jurisdiction over a defendant properly served with process: general and specific. Brown v. Lockheed Martin Corp., 814 F.3d 619, 624 (2d Cir. 2016). General jurisdiction subjects a defendant to suit on any claims, whether or not they arise from the defendant's dealings in the forum state. Int'lShoe Co. v. Washington, 326 U.S. 310, 318 (1945). For a court to exercise general jurisdiction over a defendant, (1) “state law must authorize general jurisdiction;” and (2) “jurisdiction must comport with constitutional due process principles.” Reich v. Lopez, 858 F.3d 55, 62-63 (2d Cir. 2017) (quotation marks and citation omitted). A federal court in New York, sitting in diversity, has general personal jurisdiction over a party pursuant to N.Y. CPLR § 301 where the defendant “engaged in such a continuous and systematic course of ‘doing business' in New York as to warrant a finding of its ‘presence' in the state.” Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir. 1998) (internal alterations and citation omitted). “The test for ‘doing business' is a simple and pragmatic one. . . . The court must be able to say from the facts that the [defendant] is present in the State not occasionally or casually, but with a fair measure of permanence and continuity.” Duravest, Inc. v. Viscardi, A.G., 581 F.Supp.2d 628, 633 (S.D.N.Y. 2008) (citing Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 77 N.Y.2d 28, 33 (1990)). In evaluating whether a defendant is “doing business” in New York, courts look to several factors, including: (1) “the existence of an office in New York”; (2) “the solicitation of business in the state”; (3) “the presence of bank accounts and other property in the state”; and (4) “the presence of employees of the foreign defendant in the state.” Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 58 (2d Cir. 1985).
The Complaint is devoid of any facts to suggest that Patricia Miller or Raed did business in New York. Both are alleged to live in California, and RadRelax, the business for which Raed serves as CEO is incorporated in Wyoming.
Specific jurisdiction also is lacking. N.Y. CPLR § 302 sets for different types of acts, occurring within New York, that can serve as the basis for jurisdiction. These include, inter alia, transacting business within the state or contracting to supply goods or services in the state, committing a tortious act within the state, committing a tortious act without the state but causing injury to a person or property within New York, and owning, using or possessing real property in New York. N.Y. CPLR § 302. None of these apply. The Complaint is utterly devoid of any facts about Patricia Miller or Raed from which the Court could assert specific jurisdiction over their persons. The only information provided is that they reside in California, that Patricia Miller is (or was) married to Jeffrey Miller, and that Raed is affiliated with an out-of-state business that is not a party to the Agreement at issue in the case.
Accordingly, the Complaint should be dismissed against Patricia Millar and Raed for lack of personal jurisdiction.
I do not address the remaining arguments in the parties' submissions because the above reasons are dispositive of the issue.
B. MOTION TO STRIKE PORTIONS OF THE COMPLAINT
Rule 12 states that the court “may strike from a pleading . . . any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12. “Federal Courts have discretion in deciding whether to grant motions to strike.” Capri Sun GmbH v. Am. Beverage Corp., 414 F.Supp.3d 414, 423 (S.D.N.Y. 2019) (citation omitted). However, motions to strike under Rule 12(f) are generally “disfavored and granted only if there is strong reason to do so.” Anderson News, L.L.C. v. Am. Media, Inc., 2013 WL 1746062, at *3 (S.D.N.Y. Apr. 23, 2013) (quotation marks and citation omitted); see also FRA S. p. A. v. Surg-O-Flex of Am., Inc., 415 F.Supp. 421, 427 (S.D.N.Y. 1976) (“Unless it is clear that the portion of the pleading has no bearing on the subject matter of the litigation and that its inclusion will prejudice the defendant, the complaint should remain intact.”); Arias-Zeballos v. Tan, 2006 WL 3075528, at *9 (S.D.N.Y. Oct. 26, 2006) (describing motions to strike as “generally disfavored”). “[C]ourts should not tamper with the pleadings unless there is a strong reason for so doing.” See Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976).
“To prevail on a [Rule 12(f)] motion to strike, a party must demonstrate that (1) no evidence in support of the allegations would be admissible; (2) that the allegations have no bearing on the issues in the case; and (3) that to permit the allegations to stand would result in prejudice to the movant.” Acco, Ltd. v. Rich Kids Jean Corp., 2016 WL 3144053, at *1 (S.D.N.Y. Apr. 11, 2016) (collecting cases). “Matters should be stricken on the basis of impertinence only where the allegation bears no possible relation whatsoever to the subject matter of the litigation.” AdvanceMe, Inc. v. Lenders Int'l, 2011 WL 6425488, at *2 (S.D.N.Y. Dec. 19, 2011) (citation omitted).
The motion to strike is more in the nature of a Rule 12(b)(6) motion for failure to state a claim than under Rule 12(f). Jeffrey Miller argues that the pro se Plaintiffs have made references to inapplicable law such as maritime and admiralty law, to inapplicable issues such as agricultural liens, and to New York's General Business Law (“GBL”) § 349, which provides for an action for deceptive business practices. He also argues that the pro se Plaintiffs have failed to allege any specific facts pertaining to Defendants Patricia Miller and Raed or regarding the businesses RadRelax or FiberH. (ECF No. 17 at 2-3.)
Insofar as I have recommended that the Complaint be dismissed against Patricia Miller and Raed for lack of personal jurisdiction and failure to timely serve Raed, I do not address the largely similar arguments for their dismissal in the motion to strike, which will be moot should the Court adopt my recommendation above.
As for the references to various laws, because all of the parties in this action are pro se, and because a motion to strike is not the appropriate motion on which to evaluate legal claims that can be construed from the Complaint, I recommend that the motion to strike be denied.
CONCLUSION
For the reasons set forth above, I recommend that the action be dismissed against Defendants Patricia Miller and Ahmed Raed and that the motion to strike be denied.