Opinion
99 Civ. 12120 (MBM)
January 11, 2001
Seeger Weiss, New York NY, DAVID R. BUCHANAN, ESQ., SETH A. KATZ, ESQ., (Attorneys for Plaintiff).
Hunton Williams, New York NY, JOSEPH J. SALTARELLI, ESQ., (Attorney for Defendant Apelboim).
AMENDED OPINION and ORDER
In this diversity action, Jeffrey Namer sues Americom Networks International, Inc., Ael Apelboim, Stephen Doyle, and Dominick Zappia for conversion. Pursuant to Fed.R.Civ.P. 12(b)(2), defendant Apelboim moves to dismiss for lack of personal jurisdiction. For the reasons stated below, Apelboim's motion is denied.
I.
On June 2, 1998, Namer received 310,000 shares of Americom stock. (Katz Decl., Exh. A) Americom is a Florida coporation (id.), and its principal place of business is New York City (Comp. ¶ 2)
Apelboim is a citizen and resident of Israel. (Sherby Decl., Exh. 2) He owns approximately 44% of Americom's outstanding shares, and is its largest shareholder. (Id.) When Namer received his shares, Americom's sole director was Mary Ellen Tefarkis. (Katz Decl., Exh. A) That same day, Apelboim was elected as an additional director. (Id.) Subsequently, Dominick Zappia became a director and Tefarkis was removed. (Katz Decl., Exh. C, Tefarkis Decl. ¶ 3) Several days later, on May 14, 1999, Abelboim and Zappia voted to cancel Namer's and Tefarkis's shares. (Katz Decl., Exh. E) On December 16, 1999, Namer filed this suit.
II.
The plaintiff bears the burden of showing that the court has jurisdiction. See Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). When a defendant moves to dismiss for lack of personal jurisdiction prior to discovery, the plaintiff can satisfy that burden on the basis of "legally sufficient allegations of jurisdiction." Id. When the parties have conducted extensive discovery regarding jurisdiction, the plaintiff must aver facts that, if credited by the ultimate trier of fact, would suffice to establish jurisdiction.See id. Here, Namer appears to have requested some discovery of defendants, although it is unclear whether that discovery was "extensive." Nonetheless, because the facts averred by Namer can carry the heavier burden, I will apply it in this case.
III.
Namer argues that the court has personal jurisdiction over Abelboim under § 302(a)(1) of New York's long-arm statute which provides that "a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent . . . transacts any business within the state. . . ." N Y C.P.L.R. 302(a)(1) (McKinney 1990). Apelboim responds that he has not transacted any business in New York and that Namer's complaint fails to allege that he has done so. (Def. Mem. at 4) However, even if Apelboim has not personally transacted business in New York, he "can still be subject to personal jurisdiction under § 302(a)(1) . . . , if it can be shown that the corporation transacted business in New York as [his] agent." In re Sumitomo Conner Litig., 2000 W.L. 161962, No. 96 Civ. 4584 (S.D.N.Y. Oct. 30, 2000).
Namer need not show that a formal agency relationship existed between Apelboim and Americom. He must show only that 1) Americom engaged in purposeful activities in New York in relation to the stock cancellation; 2) for the benefit of and with the knowledge and consent of Apelboim; and 3) Apelboim exercised some control over Americom in the matter. See Retail Software Services Inc. v. Lashlee, 854 F.2d 18, 22 (2d Cir. 1988) (citing Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195 (1988).
Here, Americom engaged in purposeful activities in New York in relation to canceling Namer's shares. Americom's principal place of business is New York (Comp. ¶ 2), and on May 14, 1999, the corporation's board of directors voted to cancel the shares (Katz Decl., Exh. E). The board's only two members were Apelboim and Zappia (see id.), and Apelboim was in Israel (Sherby Decl, Exh. 2). Thus, the Board did not actually meet, nor vote, in New York to cancel the shares. However, the company's usual practice when adopting Board resolutions was for its counsel to draft the resolution in New York and fax it to Apelboim, who would then fax the resolution back to the company's New York offices. (Tefarkis Decl. ¶ 8) Apelboim has not produced any evidence suggesting that the company ever conducted its business outside New York, including on this occasion. I conclude, therefore, that Americom canceled Namer's shares from its New York office.
Americom's cancellation of Namer's shares benefited Apelboim by increasing his ownership. Further, Namer controlled Americom's decision in that the board could not have passed the resolution without Apelboim's approval. He was one of only two directors when Americom's board passed the resolution canceling Namer's shares.
Namer also must show that the court's exercise of jurisdiction over Apelboim under New York's long-arm statute does not violate the Fourteenth Amendment's Due Process Clause. See Metro Life Ins. Co., 84 F.3d at 566. In particular, the court must consider whether a defendant's contacts with the forum state are sufficient to justify the exercise of personal jurisdiction. See id. Where, as in this case, the court seeks to exercise "specific jurisdiction" over Apelboim for a claim arising out of Apelboim's contacts with the forum state, the court must find that Apelboim "purposefully directed his activities at residents of the forum . . . and the litigation results from alleged injuries that arise out of or relate to those activities." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). Here, Apelboim purposefully participated in the conduct of Americom's business as a member of its board, including the cancellation of Namer's shares — the allegedly unlawful event that produced this lawsuit.
The court must also consider whether the assertion of personal jurisdiction is consistent with "fair play and substantial justice." Id. at 476. However, once a plaintiff has established sufficient contacts with the forum state, the burden shifts to the defendant to "present a compelling case" that asserting jurisdiction will be unreasonable. Id. at 477. Apelboim has not so argued. Accordingly, I find that exercising jurisdiction over Namer satisfies New York's long-arm statute as well as the requirements of due process.
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For the reasons stated above, the motion to dismiss is denied.
SO ORDERED: