On Both Motions Affidavit of Norman Goldstein in Opposition as to Individual Defendants and supporting papers;

Transcription

1 SUPREME COURT - STATE OF NEW YORK I.A.S. PART 28 - NASSAU COUNTY Index No: /99 PRESENT: HON. LEONARD B. AUSTIN Justice of the Supreme Court NORMAN GOLDSTEIN, individually and as a shareholder, officer and director of Drugeria de LaValle, Inc. Plaintiff - against- MARTIN THUNA, DROGUERIA DE LA VALLE, INC., FMC DISTRIBUTORS OF PUERTO RICO, INC., Defendant. Motion R/D: Submission Date: 5-3 l-00 Motion Sequence No.: 00 1,002/ MOT D Attornev for Plaintiff Dennis M. Apfel, Esq Deer Park Avenue Deer Park, New York Attorney for Defendants Gellis & Melinger, LLP 137 Fifth Avenue - 11 th Floor New York, New York Upon the following papers read on Defendant Martin Thuna s Motion (#OOl) seeking dismissal on the grounds that the Court lacks in personam jurisdiction, forum non conviens and dismissal of individual causes of actions in the complaint and upon Defendant s Drogueria and FMC s motion (#002) seeking the same relief: Motion #OOl Notice of Motion; Affidavit of Martin G. Thuna and supporting papers; Motion #002 Notice of Motion; Affidavit of Wayne Thuna and supporting papers; Defendants Memorandum of Law; On Both Motions Affidavit of Norman Goldstein in Opposition as to Individual Defendants and supporting papers; 1

2 Affidavit of Norman Goldstein in Opposition as to Corporate Defendants and supporting papers; Plaintiffs Memorandum of Law; Reply Affidavit of Wayne Thuna; Reply Affidavit of Rich Ricci; Reply Memorandum of Law. A. The Parties BACKGROUND Defendant Martin Thuna ( Thuna ) is a resident of the Commonwealth of Puerto Rico. Defendant Drogueria de la Valle, Inc. ( Drogueria ) is a corporation incorporated under the laws of the Commonwealth of Puerto Rico with its sole place of business at Avenue De Diego No. 17, Arechio, Puerto Rico Drogueria is a wholesaler of drugs to independent pharmacies and hospitals in Puerto Rico. Defendant FMC Distributors of Puerto Rico, Inc. ( FMC ) is a corporation incorporated under the laws of the Commonwealth of Puerto Rico, with its sole place of business at Santiago De Los Cabeleros 3305 Ponce Harbor, Industrial Park, Ponce, Puerto Rico FMC is a manufacturerldistributer of medicinal products selling to wholesalers in Puerto Rico. Neither Drogueria nor FMC is authorized to do business in the State of New York. None of the Defendants has offices in New York. No Defendant sells goods in New York. No Defendant possesses real or personal property in New York. Defendants move to dismiss this action arguing the Court lacks in personam jurisdiction and that New York is an inconvenient forum. Alternatively, they seek dismissal of the various causes of actions in the complaint. In response, Plaintiff has 2

3 amended his complaint. This motion is addressed to the amended complaint. See, Saqe Realty Corp. v. Proskauer Rose. LLP, 251A.D.2d 35,675 N.Y.S.2d 14 (lst Dept. 1998). B. The Complaint and Amended Complaint The first cause of action in the complaint asserted a claim in fraud against all of the Defendants. The first cause of action in the amended complaint seeks a declaratory judgment that Goldstein is a 50% shareholder in each of the Defendant corporations. The second cause of action in the complaint asserted a claim in fraud against Thuna. In the amended complaint, the second cause of action asserts that same claim against Thuna and Sonia Jusino de Thuna ( Sonia ), although that claim is now asserted by Goldstein, both individually and derivatively. The third cause of action in the complaint sought an accounting for all of the Defendants. The amended complaint seeks that same relief. Both the fourth cause of action in the complaint and in the amended complaint seek recovery of the costs of the litigation, including legal fees and other related The Summons and Complaint, Request for Judicial Intervention and all related documents do not list Sonia as a party to this action. Her sudden inclusion in the caption of the amended complaint is insufficient to confer jurisdiction over her. By separate motion, Sonia moves for dismissal of the complaint against her. Additionally, Plaintiff, in his amended complaint, has unilaterally added the caption and added other parties. Such amendment is improper and is deemed a nullity herein. 3

4 expenses. Both the fifth cause of action in the complaint and in the amended complaint seek a declaratory judgment that Goldstein is a 50% shareholder in the corporate Defendants, duplicating the relief sought in the first cause of action in the amended complaint. The sixth cause of action in the complaint sought a declaratory judgment that Goldstein is a director of each of the corporate defendants, the same relief as sought in the sixth cause of action in the amended complaint. The seventh cause of action in the complaint sought judgment on behalf of Goldstein individually against Thuna and the corporate Defendants for waste and mismanagement. The same relief is sought in the seventh cause of action in the amended complaint, although a derivative claim is added. The eighth cause of action in the complaint sought to enjoin Thuna s sale of any stock in the corporate Defendants. Th.e eighth cause of action in the amended complaint seeks to enjoin the transfer of any stock in any of the corporate Defendants. The ninth cause of action in the complaint sought judgment for the damages caused by the Defendants alleged diversion and/or waste, on behalf of Goldstein individually and derivatively. This is the same relief as sought in the amended complaint s ninth cause of action, and in the seventh causes of action in both the complaint and the amended complaint. 4

5 The tenth cause of action in the complaint sought judgment against Thuna for the breach of his fiduciary duties to Goldstein. The tenth cause of action in the amended complaint seeks that same relief. The amended complaint adds a derivative claim to the tenth cause of action. The eleventh cause of action in the complaint and amended complaint seek recovery of punitive damages. DISCUSSION In opposition to the motion, Plaintiffs affidavit alleges that Thuna came to New York between 5 to 10 times to discuss business. There is no mention of in what year the New York visits took place. Plaintiff maintains that, Marty made promises to me when in New York that we would be equal shareholders in Drogueria (emphasis added). Apparently, no writing setting forth this understanding was created. Plaintiff also alleges that he negotiated the purchase of Drogueria in New York and that he sent $20, from New York representing the amount due under the contract of sale and $1 O,OOO.OO for the working capital of Drogueria. Plaintiff asserts that he or Norman Goldstein Associates, Inc. ( NGA ), which is not a party herein, acted as Drogueria s New York agent. Plaintiff also asserts that as Drogueria s agent in New York he negotiated and signed a $400, deal with Supreme Distributers, Inc. ( Supreme ), a Michigan company, for the benefit of Drogueria. The affidavit of Rich Ricci clarifies that the goods were purchased by Cosmopolitan Marketing, a Supreme 5

6 affiliate in Puerto Rico and then shipped by Supreme to its own national distribution center in Michigan. CPLR 302 sets forth the jurisdiction basis for New York to exercise jurisdiction over non-domiciliaries. In order to do so, Plaintiff must allege that Defendant: 1. Transacts business within the State or contracts anywhere to supply goods or services in the State; or 2. Commits a tortuous act within the State, except as to a cause of action for defamation of character arising from the act; or 3. Commits a tortuous act without the State causing injury to a person or property within the State except as to a cause of action for defamation of character arising from the act, if he (i) (ii) regularly does or solicits business, or engaged in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the State, or expects or should reasonably expect the act to have consequences in the State and derives substantial revenue from interstate or international commerce; or (4) Owns, uses or possesses any real property situated within the State. 6

7 Here, in Plaintiff s amended complaint, it is alleged that negotiations took place in New York and additional negotiations took place over the telephone. Plaintiff alleges that he paid $20, to complete the purchase of Drogueria and $10, for working capital and that such payments were made from New York. Plaintiff also alleges that from the inception of business of Drogueria, all purchases and sales were done through New York under the auspices of NGA, a corporation located in Hicksville, New York. In essence, Plaintiffs amended complaint has converted the action to a derivative suit and an action for declaratory judgment. Such an action is more appropriately brought in Puerto Rico, where Defendant corporations do business. The physical presence of Defendant Thuna in New York, on a few occasions, several years ago does not, in and of itself, transform the business dealings of Defendants into business transactions which would subject Defendants to long arm jurisdiction under CPLR 302. Riblet Products Corporation v. Naov, 191 A.D. 2d 626, 595 N.Y.S. 2d 228 (2nd Dept. 1993). Moreover, telephone and mail contacts alone cannot form a basis for jurisdiction over a Defendant who has not projected himself into New York in such a manner that he has purposely availed himself of the benefits and protections of its laws. Milken v. Holst, 205 A.D. 2d 508, 612 N.Y.S. 2d 660 (2nd Dept. 1994). In order to determine if long arm jurisdiction exists, the Court must consider whether a Defendant has engaged in sufficient purposeful activity in New York to confer 7

8 jurisdiction which requires an examination of the totality of the circumstances. Multi -,Modal Intern. Inc. v. Anqlia North America, Inc., 227 A.D. 2d 600, 643 N.Y.S. 2d 600 (2nd Dept. 1996). The burden of proving jurisdiction is upon the party asserting it. When challenged on jurisdiction, such party must sustain that burden by proof when conflicting affidavits raise questions of fact, credibility should be resolved by a. hearing. Steiner v. Steiner, 81 A.D. 2d 725, 439 N.Y.S. 2d 499 (3rd Dept. 1981). In this case, accepting Plaintiffs allegations and arguments in a light most favorable to Plaintiff, Plaintiff has failed to establish that Martin Thuna or FMC Distributers of Puerto Rico, Inc. transacted business in New York so as to satisfy CPLR 302. Plaintiff has established that in 1995 both Drogueria and Flar Medicine of Puerto Rico, Inc. (now apparently FMC) received funds from non-party NGA. Plaintiff maintains that based upon his activities and that of NGA, Defendants agent transacted business in New York. Plaintiff may not rely upon his own activities within this State as Defendants agent as a basis of jurisdiction. Haaz v. Armendaris, 31 N.Y. 2d 1040, 342 N.Y.S. 2d 70 (1973). A simple pragmatic test for determining whether a corporation is present in the State is the aggregate of the corporation s activities in the State such that it may be said to be present in the State not occasionally or casually, but with a fair measure of permanence or continuity... and it is the quality and nature of the corporations contacts 8

9 with the State sufficient to make it reasonable and just according to traditional notions of fair play and substantial justice that it be required to defend the action here. Laufer v. Ostrow, 55 N.Y. 2d 305,449 N.Y.S. 2d 456 (1982). In the case at bar, Plaintiff has failed to establish (and in his original complaint, he did not even plead) that Defendant corporations had any contact in New York after Simply put, Plaintiff has been unable to articulate any nexus with this State on the part of Defendants or that they are, or have been, transacting business in New York to justify jurisdiction being established here. See, McGowan v. Smith, 52 N.Y.2d 268, 437 N.Y.S.2d 643 (1981). To do so would violate all reasonable notions of due process. As such, the Defendant corporations cannot fairly be made to defend this action more appropriately brought in Puerto Rico, where these Defendants do business, in a foreign jurisdiction with which they have had no meaningful contact at all relevant times. This court lacks in personam jurisdiction over the named Defendants. Accordingly, it is, ORDERED, that Defendants motion to dismiss this action on grounds that the Court lacks jurisdiction over these Defendants is granted; and it is, ORDERED, that Defendants remaining applications are denied as moot. This constitutes the decision and Order of the Court. Dated: Mineola, NY August 17,200O 9