Opinion
Civil No. 01-05791 (JBS).
July 25, 2002
V. Scott Macom, Esq., Linwood, New Jersey, Attorney for Plaintiff.
Kenneth Howard Mack, Esq., Fox, Rothschild, O'Brien Frankel, LLP, Lawrenceville, New Jersey, Attorney for Defendant, Ronald Bloom.
OPINION
This matter comes before the Court on Defendant Ronald Bloom's motion to dismiss Plaintiff Robert D. Macom's Complaint for lack of jurisdiction pursuant to Rule 12(b)(2), Fed.R.Civ.P. or, alternatively, for improper venue pursuant to Rule 12(b)(3), Fed.R.Civ.P. Defendant Bloom also seeks to transfer this case to the Southern District of Florida in the event that it is not dismissed. For the following reasons, this Court will deny Defendant Bloom's motion to dismiss, as well as his motion to transfer, without prejudice to further discovery and renewed motion practice on the forgery issue.
I. BACKGROUND
In his complaint, plaintiff Robert Macom ("Macom") asserts that defendant Ronald Bloom ("Bloom"), with the assistance of his partner Daniel Nicholas ("Nicholas"), committed fraud, breach of contract, and fraudulent misrepresentation. (Compl. at 1.) Plaintiff alleges that, following some preliminary discussions, Mr. Bloom, a resident of Florida, invited Mr. Macom, a resident of the state of New Jersey, to meet and discuss on March 11, 2001, an equity financing deal for the acquisition of a medical practice, known as Medical One, located in New Jersey. (Compl. at 2.) At this meeting Mr. Nicholas assured Mr. Macom that he and Mr. Bloom could provide the necessary equity-financing partner that Mr. Macom required for the acquisition of the New Jersey medical practice. (Id.) Additionally, Mr. Nicholas presented Mr. Macom with a consultancy agreement that provided for an up-front fee to be paid by Mr. Macom in exchange for guarantees that Mr. Nicholas's and Mr. Bloom's valuable contacts would finance the purchase of Medical One. (Id.) This agreement also contained a forum selection clause, limiting all litigation stemming from the agreement to the state or federal courts of New Jersey. (Pl.'s Response Br. at 1-2.) For the next two months, the parties communicated by email and telephone regarding the acquisition of the New Jersey medical practice. (Compl. at 3-6.) Mr. Macom wired a total sum of thirty-thousand dollars from New Jersey to Mr. Nicholas and Mr. Bloom in Florida over the course of three transactions. (Id.) By May 15, 2001, Mr. Macom had discovered that the consultancy agreement with Mr. Nicholas and Mr. Bloom was a sham, allegedly designed to steal thirty-thousand dollars from him. (Compl. at 5-6.) On December 13, 2001, Mr. Macom filed a Complaint in this Court pursuant to the Racketeer Influenced Corrupt Organization Act, 18 U.S.C. §§ 1961, et seq., ("RICO"). On April 22, 2002, Mr. Bloom filed this Motion to dismiss for lack or personal jurisdiction and improper venue.
Mr. Bloom asserts that he did not sign this agreement, and that the signature on it is a forgery. (Decl. of Ronald Bloom at 2.) This issue will not be addressed in this motion to dismiss.
Because the existence of the contract itself is disputed as a forgery, this Court will not consider the impact of the forum selection clause upon the issues of personal jurisdiction, venue and transfer.
II. DISCUSSION
A. Defendant's Motion to Dismiss Pursuant to 12(b)(2)
In his motion to dismiss and his reply to plaintiff's response, Mr. Bloom claims that (1) he does not have sufficient minimum contacts with the state of New Jersey to subject himself to personal jurisdiction in the District of New Jersey, and (2) the signature on the agreement containing the forum selection clause is not his. Mr. Macom counters that (1) Mr. Bloom improperly raises the forgery issue, and (2) Mr. Bloom has willfully subjected himself to personal jurisdiction in the District of New Jersey under the minimum contacts standard. This Court finds that because Mr. Bloom has sufficient minimum contacts within the state of New Jersey, he may properly be hailed into court here.
The United States Supreme Court has established that a court can assert personal jurisdiction over a defendant where he or she "purposefully established `minimum contacts' in the forum state."Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). A defendant does so when he or she "purposely avails [him — or herself] of the privilege of conducting activities within the forum state." Id. at 475. See also Hanson v. Denkla, 357 U.S. 235, 253 (1958). The minimum contacts standard also requires that a defendant establish a "substantial connection" with the forum state. McGee v. International Life Ins. Co., 335 U.S. 220, 223 (1957). See also Burger King, 471 U.S. at 478. Additionally, due process requires that the defendant be able to reasonably foresee being hailed into court in the forum state. See World-Wide Volkswagen v. Woodson, 444 U.S. 286, 297 (1980).
In accordance with United States Supreme Court precedent, the Third Circuit has held that a contract alone does not satisfy the minimum contacts standard. See Mellon Bank (East) v. DiVeronica, 983 F.2d 551, 557 (3d Cir. 1993) (an individual does not subject him — or herself to personal jurisdiction merely by entering into a contract with a resident of the forum state).See also Amberson Holdings, LLC v. Westside Story Newspaper, 110 F. Supp. 2d 332, 336 (D.N.J. 2000); B.P. Chemicals Ltd. v. Formosa Chemical Fibre Corp., 229 F.3d 254, 261 (3d Cir. 2000) ("`The same is true of informal communications in furtherance of [such a] contract.'" (quoting Sunbelt Corp. v. Noble, Denton Associates, Inc., 5 F.3d 28, 32 (3d Cir. 1993))). But see Burger King, 471 U.S. at 479 ("prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing . . . must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum."). Moreover, mere advertisement or solicitation does not satisfy the minimum contacts standard. Amberson, 110 F. Supp. 2d at 336. Finally, when applying the minimum contacts standard, this Court should focus on the "relationship among the defendant, the forum and the litigation." Amberson, 110 F. Supp. 2d at 334 (quotingHelicopteros Nacionales de Colombia v. Hall, 466 U.S. 408 at 414 (1984)).
In this case, Mr. Bloom has willfully subjected himself to personal jurisdiction in the District of New Jersey under the minimum contacts standard. First, Mr. Bloom purposely availed himself of the privilege of conducting a business transaction within New Jersey by reaching out to and forming a business relationship with Mr. Macom, a New Jersey resident, that should have resulted in the purchase of a multi-million dollar medical practice located entirely in New Jersey. Second, Mr. Bloom solidified a substantial connection with the state of New Jersey when he formed a business deal with Mr. Macom that included a transfer of thirty thousand dollars from Mr. Macom in New Jersey to Mr. Bloom. Third, Mr. Bloom could have reasonably foreseen that he would be hailed into court in the state of New Jersey since he purposely targeted and formed a business relationship with Mr. Macom for the purpose of financing the acquisition of a New Jersey business and its property. Fourth, although a contract alone does not satisfy the minimum contacts standard, Mr. Bloom presumably understood that the future consequences of his agreement with Mr. Macom would be effective in New Jersey as the goal of the contract was to finance the purchase of a significant business and its property in the state of New Jersey. In addition, prior to the alleged signing of the actual contract, Mr. Bloom and Mr. Macom engaged in continuous negotiations regarding the New Jersey deal. After the contract was allegedly signed, and as far as Mr. Macom was concerned, he and Mr. Bloom continued to carry out the terms of the contract over the next two months through telephone conversations, a physical meeting, email and the thirty-thousand dollar transfer. Mr. Bloom's conduct does not constitute mere advertisement or solicitation. Instead, this Court finds that he purposefully and knowingly reached out specifically to Mr. Macom, a New Jersey resident, in order to form a business deal with its primary consequences to take effect in the state of New Jersey. Finally, this litigation arises directly out of the clear relationship that Mr. Bloom formed with the state of New Jersey through his dealings with Mr. Macom.
For the foregoing reasons, this Court finds that Mr. Bloom has established sufficient minimum contacts with the state of New Jersey to subject him to personal jurisdiction in this district.
Additionally, "once minimum contacts are established, the court must ensure that the maintenance of the lawsuit does not offend `traditional notions of fair play and substantial justice.'"Amberson Holdings, LLC v. Westside Story Newspaper, 110 F. Supp. 2d 332, 224 (D.N.J. 2000) (quoting International Shoe, 326 U.S. at 316). In determining whether the lawsuit offends these notions, a court should consider
(1) the burden on the defendant; (2) the forum state's interest in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the shared interest in the several states in furthering fundamental social policies.Telesis Mergers Acquisitions, Inc. v. Atlis Federal SVCS, Inc., 918 F. Supp. 823 (D.N.J. 1996) (citing Burger King, 471 U.S. at 477). When the defendant can reasonably foresee that his acts, including engagement in significant interstate commerce, will have significant consequences in another state, then it is reasonable to subject him to personal jurisdiction. Amberson, 110 F. Supp. 2d at 337.
Here, subjecting Mr. Bloom to personal jurisdiction in the District of New Jersey does not offend traditional notions of fair play and substantial justice. First, the burden on Mr. Bloom of litigating in the state of New Jersey is not so great as to offend due process. Not only has he retained a New Jersey attorney, the fact that he was not too inconvenienced to form a significant business relationship with a New Jersey resident, where the primary goal was to finance the purchase of a New Jersey business, also indicates that litigating in New Jersey would not be an unreasonable burden for Mr. Bloom to bear. Second, New Jersey has a strong interest in adjudicating this case since one of its citizens is allegedly the victim of a fraud that centered on the purchase of a New Jersey business and its property. Third, Mr. Macom, as the alleged victim, has a strong interest in keeping the litigation in his home forum of New Jersey to prevent further financial loss. Fourth, Mr. Bloom's home forum of Florida very likely has little interest in adjudicating a case where the subject of the litigation is more closely related to New Jersey and where a forum selection clause, if valid, would preclude litigation of the issue in Florida in any event. Finally, Mr. Bloom could reasonably foresee that a business transaction consisting of a transfer of thirty-thousand dollars constituted, in return for consulting services, significant interstate commerce with consequences in New Jersey. Thus, this Court finds that subjecting Mr. Bloom to personal jurisdiction does not offend the notions of fair play and substantial justice.
B. Defendant's Motion to Dismiss Pursuant to 12(b)(3)
Mr. Bloom seeks, alternatively, to dismiss Mr. Macom's Complaint for improper venue, pursuant to Fed.R.Civ.P. 12(b)(3) (which allows a defendant to make a motion for improper venue) and 28 U.S.C. § 1406(a) (which allows a district court to dismiss or transfer any case brought in the wrong district). Mr. Bloom's motion is based on the diversity venue statute, 28 U.S.C. § 1391(a), which provides
The venue statute in 28 U.S.C. § 1391(a), supra, applies in diversity cases, and indeed diversity of citizenship is present here. The second basis for this Court's subject matter jurisdiction is federal question jurisdiction under 28 U.S.C. § 1331, since the complaint also pleads a RICO claim under 18 U.S.C. § 1962(b), for which a civil suit may be brought in "any appropriate United States district court," pursuant to 18 U.S.C. § 1964(c). If venue is analyzed instead under the venue statute pertaining to federal question cases — namely, 28 U.S.C. § 1391(b) — the result is unchanged. Because under § 1391(b)(2) a substantial part of the property that is the subject of the action is situated in New Jersey, and a substantial part of the events occurred in New Jersey, venue in this district is appropriate.
A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same state, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which the defendants are subject to personal jurisdiction at the time the action is commenced.28 U.S.C. § 1391(a) (1992). As noted above, Mr. Bloom has sufficient contacts with the state of New Jersey to subject him to personal jurisdiction here. Thus, under the third prong of § 1391(a), this Court is an appropriate venue for this case.
This Court is also an appropriate venue under the second prong of § 1391(a) which requires that a substantial portion of the events took place, or that the property at issue is located, in the forum state. Although Mr. Bloom conducted negotiations with
Mr. Macom primarily from Florida, his business partner, Mr. Nicholas traveled to New Jersey in order complete the deal on behalf of both defendants. (Pl.'s Resp. to Def.'s Mot. for Dismissal at 12.) Additionally, Mr. Macom transferred thirty-thousand dollars from New Jersey to Florida, over the course of three transactions and two months, as payment for Mr. Bloom's and Mr. Nicholas's consulting services.
Thus, even if Mr. Bloom sought the appropriate equity-financing partner or committed fraud from Florida, this Court would still be an appropriate venue for this lawsuit since the purported purpose of the deal was to assist a New Jersey resident in financing the acquisition of a New Jersey medical practice and its property. See Park Inn Intern., L.L.C. v. Mody Enterprises, Inc., 105 F. Supp. 2d 370, 376 (D.N.J. 2000) ("The statute only requires a `substantial part' of the events to have occurred in the District to establish venue. It does not require a majority of the event to take place [t]here, nor that the challenged forum be the best forum for the lawsuit to be venued." (citing Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 294 (3d Cir. 1994)). Finally, all of the property at issue in this case is located in New Jersey, making this Court an appropriate venue.
C. Defendant's Request for Transfer Pursuant to Section 1404(a)
The question arises whether, even though New Jersey is a proper venue under 28 U.S.C. § 1391, the case should be transferred under 28 U.S.C. § 1404(a), as suggested in Defendants' brief. Section 1404(a) provides: "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." The defendant, as the party seeking transfer under § 1404(a), has the burden of demonstrating that the plaintiff's choice of forum should be overcome due to the manifest inconvenience to the parties participating in this New Jersey litigation. See Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995). The defendant has made no such showing, indeed it is not addressed by brief or affidavit, nor is it apparent that transferring this case to Mr. Bloom's home forum in the Southern District of Florida would maximize the overall convenience of all parties. Mr. Bloom has retained able New Jersey counsel, and co-defendant Daniel Nicholas is alleged to be a New York resident. It makes eminent good sense that the case remain venued in New Jersey. The motion to transfer this case under Section 1404(a) will be denied.
III. CONCLUSION
This Court finds that because Mr. Bloom satisfies the minimum contacts standard, this Court can subject Mr. Bloom to personal jurisdiction in the District of New Jersey without offending due process or traditional notions of fair play and substantial justice. Defendant Bloom's motion to dismiss for lack of personal jurisdiction and proper venue pursuant to 12(b)(2) and 12(b)(3), Fed.R.Civ.P., will be denied. Since this Court has determined that Mr. Bloom is subject to personal jurisdiction in the District of New Jersey, that the property at issue is located entirely in New Jersey, and that a substantial portion of the events took place in New Jersey, Mr. Bloom's improper venue claim is without merit and will also be denied. Similarly, defendant's motion to transfer this case to the Southern District of Florida will be denied. The accompanying Order is entered.
This determination is made without reference to the disputed New Jersey forum selection clause in the contract Bloom denies having signed. Independent of such forum selection clause, it appears that New Jersey is the proper venue in any event. In the event, however, that discovery discloses Bloom's signature to have been a forgery and that other allegations of the Complaint upon which the Court relies in this opinion are false, defendant can ask the Court to revisit this issue.
ORDER
THIS MATTER having come before the Court on Defendant Ronald Bloom's Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue [Docket Item 11-1]; and the Court having considered both parties' submissions; and for reasons set forth in the Opinion of today's date;IT IS on this day of July, 2002, hereby ORDERED that Defendant's Motion to Dismiss be DENIED ; and
IT IS FURTHER ORDERED that Defendant's request to transfer this case to the Southern District of Florida be DENIED.