CAMMARATA ASSOCIATES v. KELLY CAPITAL LLC et al
OPINION. Signed by Judge Noel L. Hillman on 10/14/2016. (tf, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
FRANK S. CAMMARATA,
as successor to MHP II
doing business as
KELLY CAPITAL LLC and MICHAEL
THOMAS J. BURNS, III
150 JOHN F. KENNEDY PARKWAY
SHORT HILLS, NJ 07078
On behalf of plaintiff
JONATHAN DAVID HENRY
SHAWN LUNNEY KELLY
DENTONS US LLP
101 JFK PARKWAY
SHORT HILLS, NJ 07078-2708
On behalf of defendants
HILLMAN, District Judge
This case involves the claims of plaintiff, Frank S.
Cammarata, who does business as a sole proprietor under the name
Cammarata Associates, against defendants, Kelly Capital LLC and
Plaintiff alleges that defendants failed to pay
him a commission for his role in connecting defendants with a
Virginia-based tobacco company that sold escrow release funds.
Defendants have moved to dismiss plaintiff’s claims for lack of
personal jurisdiction and for his failure to state any viable
Plaintiff has cross-moved to file a third amended
For the reasons expressed below, defendants’ motion
to dismiss plaintiff’s claims for lack of personal jurisdiction
will be granted, and plaintiff’s motion for leave to amend his
complaint will be denied as moot.
The following allegations are set forth in plaintiff’s
In 2010, Kelly Capital was exploring escrow fund
asset purchase opportunities in the tobacco industry.
Capital was aware that Frank Cammarata, sole shareholder of MHP
II, had substantial contacts in the tobacco industry and a
working knowledge of asset purchase transactions with tobacco
Kelly Capital sought Cammarata’s assistance in
Defendants have moved to dismiss plaintiff’s current complaint,
and in response, plaintiff has moved for leave to file a third
amended complaint. Because the standard for assessing the
viability of a complaint is the same as the standard for
determining whether an amended complaint should be permitted,
Jablonski v. Pan American World Airways, Inc., 863 F.2d 289, 292
(3d Cir. 1988) (amendment of the complaint is futile if the
amendment will not cure the deficiency in the original complaint
or if the amended complaint cannot withstand a renewed motion to
dismiss), the Court will set forth the claims from the proposed
third amended complaint. (Docket No. 14-2.)
seeking and closing those types of transactions, 2 particularly
with S&M Brands (“S&M”), which had escrow release funds (“escrow
releases”) from the years 1999-2009 in the amount of
$182,491,650 available for purchase. 3
As discussed below, defendants contest that they contacted
plaintiff and instead contend that plaintiff reached out to
The Eastern District of Virginia explained the concept of
escrow fund assets, or escrow release funds, in a case that
resulted from Cammarata connecting Kelly Capital with S&M:
S & M has been a tobacco manufacturer and distributor of
cigarettes and other tobacco products since 1994. It is a
privately owned, family run corporation, with its principal
place of business in Keysville, Virginia, but it sells
tobacco products throughout the Eastern United States.
In the 1990's, several states initiated class actions
against tobacco manufacturers seeking compensation for
expenses incurred, or to be incurred, in treating diseases
associated with smoking tobacco. Those actions were settled
pursuant to a 1998 Master Settlement Agreement (“MSA”).
However, not all tobacco companies were parties to the
class actions or the MSA; and, to bring the non-signing
manufacturers into the fold and achieve the same result as
the MSA, states passed legislation.
As a result of the MSA or the state legislation, tobacco
manufacturers in Virginia and 45 other states are required
either to have signed the MSA or to contribute annually to
an escrow account certain sums for each carton of
cigarettes sold. The deposited funds must remain in escrow
for 25 years. While in escrow, those funds may be used
only to pay judgments on, or settlements of, tobaccorelated claims. At the end of 25 years, the depositing
company is entitled to the deposited funds then remaining
in the escrow account, i.e., the portion of the principal
that has not been used to pay judgments on, or settlements
of, tobacco-related claims. The deposited funds may be
invested, under tightly regulated circumstances, in very
restricted investment vehicles that produce interest
income. In essence, the deposited funds earn interest and
In response to that request, Cammarata formed MHP II for
the sole purpose of assisting Kelly Capital with its tobacco
escrow-releases purchase efforts.
On April 12, 2010, Kelly
Capital and MHP II entered into a Commission Agreement.
Pursuant to the Agreement, MHP II was to receive a commission of
five percent (5%) of the gross purchase price paid by Kelly
Capital to S&M for the subject escrow releases.
was payable at the time of the closing of each prospective
the depositing company is entitled to that interest, as it
S & M did not sign the MSA, and thus, as required by state
laws, it has established escrow accounts in each state in
which it sells cigarettes. The escrow accounts are
governed by an Escrow Agreement between S & M and a
national banking association. S & M has a separate escrow
account for each year in which it has sold cigarettes and
thereafter funded the escrow accounts.
The tobacco companies that establish, and fund, these
escrow accounts cannot sell, transfer, distribute, or use
the principal funds deposited in the accounts until
expiration of the 25–year period. However, they can sell
or distribute what are called “escrow releases.” An escrow
release, inter alia, vests in the purchasing entity: (1)
the right to the interest income earned from the funds that
have been deposited into the escrow accounts; and (2) the
right to receive any funds, principal or interest, that
remain in the escrow account at the end of the 25–year
Kelly Capital, LLC v. S & M Brands, Inc., 873 F. Supp. 2d 659,
662–63 (E.D. Va. 2012), amended (Aug. 14, 2012), as corrected
(Oct. 10, 2012), aff'd, 532 F. App'x 422 (4th Cir. 2013)
(internal citations omitted).
In July 2010, the parties amended their agreement.
amendment acknowledged that Kelly Capital had assigned its
interest in an Escrow Release Transfer Agreement (“ERTA”) with
S&M to a “related entity” - Kelly Escrow Fund V, a limited
liability company of which Kelly Capital is the sole member.
The amendment to the Commission Agreement further clarified, and
expressly stated, that Kelly Capital remained contractually
obligated to pay MHP II its commission pursuant to the terms of
the original Commission Agreement; and that the commission was
payable at the time the purchased asset was transferred to the
accounts of the related, third-party entity, or its financial
institution, rather than payable at the time of closing the
purchase of the escrow releases from S&M.
Kelly Capital or its related entities made two purchases of
escrow funds from S&M.
On April 16, 2010, Kelly Capital or its
related entities purchased $30 million of S&M escrow releases
for a purchase price of $10 million.
Kelly Capital owed MHP II
a commission of $500,000 for that transaction.
paid that commission to Cammarata.
On July 15, 2010, Kelly Capital/Kelly Escrow purchased an
additional $40 million of S&M escrow releases for a purchase
price of $13.6 million.
Pursuant to the amended Commission
Agreement, Kelly Capital owed MHP II a commission of $670,000
for the July 2010 transaction.
The disposition of the July 2010
escrow releases purchased by Kelly Capital/Kelly Escrow was
delayed, however, by a lawsuit initiated by Kelly Capital
against S&M regarding tax-liability issues that arose between
Kelly Capital and its related entities and S&M.
That matter was
litigated in the Eastern District of Virginia. 4
Prior to initiating its lawsuit against S&M, Kelly Capital
asked MHP II to amend the Commission Agreement for the express
purpose of altering the time at which MHP II’s Commission became
More specifically, in July 2010 Kelly Capital, through
a telephone call from Michael Kelly to Cammarata, informed MHP
II that it had to “warehouse” the $40 million in escrow releases
it had just purchased from S&M, and asked MHP II to agree to
wait for payment of its commission until it could free up the
escrow releases for disposition.
Kelly represented that the
process would take 60 to 90 days.
In reliance on that representation from Kelly, Cammarata
and MHP II granted Kelly Capital’s request by executing the
amendment prepared by Kelly Capital.
At the time he made that
representation to Cammarata, Michael Kelly knew that it was
false because Kelly Capital intended to, and did, file a lawsuit
against S&M in October 2010, which he knew would result in a
significant delay in the disposition of the subject escrow
See, supra, note 3.
By October 2014, the lawsuit was decided by a trial court,
affirmed on appeal, and resulted in the subject escrow releases
being available for disposition.
In the interim, MHP II
assigned all of its rights and interests in commissions due and
owing from Kelly Capital to Cammarata Associates.
On December 8, 2014, Cammarata Associates issued a demand
letter to Michael Kelly and Kelly Capital for the commission
payment due and owing on the July 2010 transaction.
Associates sent follow up demands for payment to Michael Kelly
and Kelly Capital on January 8, 2015 and February 10, 2015.
date, Kelly and Kelly Capital have not responded to those demand
letters, and Kelly Capital has not paid the commission due and
owing for the July 2010 purchase of escrow-releases from S&M.
Based on these allegations, plaintiff has lodged six counts
against defendants for breach of contract, fraudulent
inducement, negligent misrepresentation, breach of the implied
covenant of good faith and fair dealing, quantum meruit, and
unjust enrichment. 5
Defendants have moved to dismiss plaintiff’s claims on two
First, defendants argue that this Court cannot exercise
Plaintiff’s proposed third amended complaint has removed a
count for conversion, and has added counts for breach of the
implied covenant of good faith and fair dealing, quantum meruit,
and unjust enrichment.
personal jurisdiction over them.
Second, in the event that the
Court determines that personal jurisdiction exists, defendants
argue that all of plaintiff’s claims fail as a matter of law.
A. Subject Matter Jurisdiction
This Court has jurisdiction over this matter pursuant
to 28 U.S.C. § 1332 because there is complete diversity of
citizenship between the parties and the amount in
controversy exceeds $75,000.
Plaintiff Frank S. Cammarata,
the sole proprietor of Cammarata Associates, is a citizen
of New Jersey.
The sole member of defendant Kelly Capital
LLC is the Michael R. Kelly Trust, whose beneficial owner,
defendant Michael Kelly, is a citizen of the State of
B. Standard for Motion to Dismiss pursuant to Rule
Federal Rule of Civil Procedure 12(b)(2) provides for
dismissal of an action when the Court does not have personal
jurisdiction over a defendant.
“Once challenged, the plaintiff
bears the burden of establishing personal jurisdiction.”
O’Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (3d
Cir. 2007) (citing Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 150
(3d Cir. 2001)).
In deciding a motion to dismiss for lack of
personal jurisdiction, the Court must “accept all of the
plaintiff’s allegations as true and construe disputed facts in
favor of the plaintiff.”
Carteret Sav. Bank v. Shushan, 954
F.2d 141, 142 n.1 (3d Cir.), cert. denied, 506 U.S. 817 (1992)
(citations omitted). 6
A defendant is subject to the jurisdiction of a United
States district court if the defendant “is subject to the
jurisdiction of a court of general jurisdiction in the state
where the district court is located[.]”
Fed. R. Civ. P.
“A federal court sitting in New Jersey has
jurisdiction over parties to the extent provided under New
Jersey state law.”
Miller Yacht Sales, Inc. v. Smith, 384 F.3d
93, 96 (3d Cir. 2004)(citations omitted).
The New Jersey long-
arm statute “permits the exercise of personal jurisdiction to
the fullest limits of due process.”
IMO Indus., Inc. v. Kiekert
AG, 155 F.3d 254, 259 (3d Cir. 1998) (citing DeJames v.
There is a “significant procedural distinction” between a
motion pursuant to Rule 12(b)(2) and a motion pursuant to Rule
12(b)(6). Time Share Vacation Club v. Atlantic Resorts, Ltd.,
735 F.2d 61, 66 n.9 (3d Cir. 1984). “A Rule 12(b)(2) motion,
such as the motion made by the defendants here, is inherently a
matter which requires resolution of factual issues outside the
pleadings, i.e. whether in personam jurisdiction actually lies.
Once the defense has been raised, then the plaintiff must
sustain its burden of proof in establishing jurisdictional facts
through sworn affidavits or other competent evidence. . . . [A]t
no point may a plaintiff rely on the bare pleadings alone in
order to withstand a defendant's Rule 12(b)(2) motion to dismiss
for lack of in personam jurisdiction. Once the motion is made,
plaintiff must respond with actual proofs, not mere
allegations.” Id. (citation omitted).
Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir. 1981)).
Under the Due Process clause, the exercise of personal
jurisdiction over a non-resident defendant is appropriate when
the defendant has “certain minimum contacts with [the forum
state] such that the maintenance of the suit does not offend
‘traditional notions of fair play and substantial justice.’”
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting
Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
A defendant establishes minimum contacts by “‘purposefully
avail[ing] itself of the privilege of conducting activities
within the forum State,’” thereby invoking “‘the benefits and
protections of [the forum State’s] laws.’”
Asahi Metal Indus.
Co., Ltd. v. Sup. Ct. of California, 480 U.S. 102, 109 (1987)
(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475
This “purposeful availment” requirement assures that
the defendant could reasonably anticipate being haled into court
in the forum and is not haled into a forum as a result of
“random,” “fortuitous” or “attenuated” contacts with the forum
See World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297 (1980); see also Burger King Corp., 471 U.S. at 472,
475 (internal citations omitted).
In deciding whether a defendant’s contacts with a forum are
sufficient to confer personal jurisdiction over that party, the
Court must consider whether such contacts are related to or
arise out of the cause of action at issue in the case.
Court may exercise specific personal jurisdiction over a
defendant where the cause of action is related to or arises out
of activities by the defendant that took place within the forum
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466
U.S. 408, 414 n.8 (1984).
If the cause of action has no
relationship to a defendant’s contacts with a forum state, the
Court may nonetheless exercise general personal jurisdiction if
the defendant has conducted “continuous and systematic” business
activities in the forum state.
Id. at 416.
Once the Court determines that the defendant has minimum
contacts with the forum state, it must also consider whether the
assertion of personal jurisdiction over the defendant
“comport[s] with ‘fair play and substantial justice’” to satisfy
the due process test.
Burger King Corp., 471 U.S. at 476
(quoting Int’l Shoe, 326 U.S. at 320).
In this regard, it must
be reasonable to require the defendant to litigate the suit in
the forum state, and a court may consider the following factors
to determine reasonableness: 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
an efficient resolution of controversies, and the shared
interest of the several States in furthering fundamental
substantive social policies.
Id. at 477 (citing World Wide
Volkswagen, 444 U.S. at 292).
Standard for Motion to Dismiss
When considering a motion to dismiss a complaint for
failure to state a claim upon which relief can be granted
pursuant to Federal Rule of Civil Procedure 12(b)(6), a court
must accept all well-pleaded allegations in the complaint as
true and view them in the light most favorable to the plaintiff.
Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005).
It is well
settled that a pleading is sufficient if it contains “a short
and plain statement of the claim showing that the pleader is
entitled to relief.”
Fed. R. Civ. P. 8(a)(2).
liberal federal pleading rules, it is not necessary to plead
evidence, and it is not necessary to plead all the facts that
serve as a basis for the claim.
F.2d 434, 446 (3d Cir. 1977).
Bogosian v. Gulf Oil Corp., 562
However, “[a]lthough the Federal
Rules of Civil Procedure do not require a claimant to set forth
an intricately detailed description of the asserted basis for
relief, they do require that the pleadings give defendant fair
notice of what the plaintiff’s claim is and the grounds upon
which it rests.”
Baldwin Cnty. Welcome Ctr. v. Brown, 466 U.S.
147, 149-50 n.3 (1984) (quotation and citation omitted).
A district court, in weighing a motion to dismiss, asks
“‘not whether a plaintiff will ultimately prevail but whether
the claimant is entitled to offer evidence to support the
Bell Atlantic v. Twombly, 550 U.S. 544, 563 n.8 (2007)
(quoting Scheuer v. Rhoades, 416 U.S. 232, 236 (1974)); see also
Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (“Our decision in
Twombly expounded the pleading standard for ‘all civil actions’
. . . .”); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.
2009) (“Iqbal . . . provides the final nail-in-the-coffin for
the ‘no set of facts’ standard that applied to federal
complaints before Twombly.”).
Defendants argue that plaintiff cannot demonstrate that
they purposefully availed themselves of this forum sufficient to
allow the exercise of personal jurisdiction.
defendants, their contacts with New Jersey, as set forth by
plaintiff’s complaint, involve: (1) one phone call between
plaintiff and Kelly, (2) one email from defendants’ in-house
counsel to plaintiff, (3) two agreements in 2010 sent via email,
and (4) payment of one commission to plaintiff.
Defendants argue that S&M hired plaintiff as its broker,
plaintiff reached out to them in California – not the other way
around - and he then connected them with S&M, a Virginia
company, on a conference call.
Defendants never traveled to New
Jersey, or were physically present in New Jersey at any time,
and they claim that they were not aware that plaintiff was a New
Defendants point out that the agreements did
not contemplate that plaintiff would act on defendants’ behalf
from New Jersey, or even at all, and that plaintiff’s
involvement with defendants and S&M was limited to providing
introductory services concerning the S&M transaction.
Defendants further argue that the ultimate focus of the
agreements was to do business with a Virginia company that owned
Virginia tobacco escrow releases pursuant to Virginia law, and
they had not contemplated that they could be haled into New
Jersey court for claims arising out of these agreements. 7
In response to defendants’ arguments, plaintiff has
provided a certification to support his contention that this
Court can exercise personal jurisdiction over defendants. 8
Plaintiff’s certification states: (1) Kelly contacted plaintiff
about Kelly Capital’s interest in purchasing tobacco escrow
funds based on information he received from his brother, John
Kelly, who was plaintiff’s business associate, (2) Kelly and
Defendants also argue that there is no basis to exercise
jurisdiction over Kelly individually, as all of Kelly's actions
were undertaken in his capacity as the principal of Kelly
Capital, and not in his own individual capacity. Defendants
also argue that plaintiff cannot establish general jurisdiction
over them. Plaintiff does not appear to dispute these points.
The Court may consider a party’s affidavit in deciding a Rule
12(b)(2) motion. Time Share Vacation Club v. Atlantic Resorts,
Ltd., 735 F.2d 61, 66 n.9 (3d Cir. 1984).
Kelly Capital contacted plaintiff in New Jersey on numerous
occasions by telephone and electronic mail regarding the
proposed Broker Agreement, (3) Kelly Capital prepared the
Commission Agreement and sent it to plaintiff for review,
revision and signature in New Jersey, (4) the substantial
majority of work plaintiff performed in relation to the broker
services MHP II provided to Kelly Capital took place in New
Jersey, (5) when Kelly Capital paid MHP II its commission for
the first set of escrow funds it purchased from S&M, it sent
that payment to New Jersey, (6) when Kelly Capital wanted MHP II
to amend the Commission Agreement, Kelly Capital and Kelly
contacted plaintiff by electronic mail and by telephone in New
Jersey, and (7) Kelly Capital prepared the Amendment to the
Commission Agreement and sent it to plaintiff in New Jersey.
(Docket No. 13-1.)
In addition to his certification, plaintiff argues that
exercising jurisdiction over the defendants in this matter would
not violate notions of fair play and substantial justice.
Plaintiff is a New Jersey businessman and New Jersey citizen who
formed a New Jersey business entity that contracted with Kelly
Capital and performed the work that is the subject of this
action in New Jersey.
Plaintiff argues that he should not be
compelled to chase the defendants across the country to obtain
relief for damages he suffered in New Jersey.
argues that the interest in the most efficient resolution of
this controversy outweighs the minimal “burden” to the
defendants in defending this action in New Jersey, since
defendants have New Jersey counsel, can conduct written
discovery while in California, and can participate in other
discovery and litigation tasks through the use of technology
that will control costs and expenses that pertain to the
distance between California and New Jersey.
argues the fundamental substantive social policy supporting the
exercise of personal jurisdiction is clear: if a business entity
wants to contract with a New Jersey entity to perform services
on its behalf in New Jersey, and subsequently attempts to avoid
paying that New Jersey business for its services, it should be
fully prepared to be haled into Court in New Jersey to account
for its actions.
In response to plaintiff’s certification and arguments in
opposition to their motion, defendants argue that plaintiff’s
representation that Kelly reached out to plaintiff is
contradicted by his deposition testimony in the Virginia
litigation, where he testified that John Kelly, a citizen of
California, told plaintiff to send an informational package to
his brother Michael Kelly in California, which plaintiff did.
This version of who contacted whom is also supported by a
certification of Michael Kelly.
(Docket No. 18.)
Kelly also disputes plaintiff’s statement that the parties
conducted “numerous” phone calls and emails, and challenges why
plaintiff has not produced records of those calls and emails to
support that contention.
Kelly further contends that he did not
have any awareness of plaintiff’s residency, as plaintiff simply
served as the Virginia-based tobacco company’s broker to connect
it with an escrow fund release buyer.
Moreover, Kelly disputes
plaintiff’s description of his work being performed in New
Jersey, since plaintiff did not work for defendants, and instead
merely obtained a finder’s fee for connecting the two companies.
Finally, defendants argue that requiring them to defend
against plaintiff’s claims in this forum would violate fair play
and substantial justice because California defendants should not
be forced to litigate in New Jersey over Virginia escrow
releases when the New Jersey plaintiff reached out to
Defendants also argue that if plaintiff’s position
is adopted, it would allow plaintiff to create jurisdiction
through the happenstance of his residence.
The Court agrees with defendants.
As a primary matter, the
“fact that a non-resident has contracted with a resident of the
forum state is not, by itself, sufficient to justify personal
jurisdiction over the nonresident.”
Mellon Bank (East) PSFS,
Nat. Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992).
Instead, a court must look to the terms of the agreement, the
place and character of prior negotiations, contemplated future
consequences, or the course of dealings between the parties.
First, with regard to the terms of the agreement between
plaintiff and defendants, the two agreements do not mention or
implicate any particular state.
(Docket No. 1-2 and 1-3.)
the agreements, Kelly Capital is listed as a California limited
liability company, but plaintiff is simply listed as “MHP II
Corporation” without any reference to its location.
Moreover, the main agreement document makes clear that
plaintiff served as “an independent contractor to [Kelly
Capital] in order to provide introductory services concerning
the S&M Transaction and the Escrow Funds,” and that “MHP shall
not engage in any negotiations whatsoever on behalf of [Kelly
(Docket No. 1-2 at 2.)
The agreement further
elaborated on plaintiff’s very limited role in defendants’
business relationship with S&M:
MHP shall merely provide [Kelly Capital] with a contact
person with S&M and introduce Company to S&M as a viable
purchaser for the escrow releases related to the Escrow
Funds. MHP shall not in any way present any offer to
acquire the escrow releases related to the Escrow Funds
and/or in negotiate any of the terms of any such
acquisition. MHP shall not, however, have authority to
bind Company to any contract or agreement. MHP shall not
be responsible for performing any due diligence or other
investigation of any Escrow Fund, or for providing
professional advice with respect to any legal, tax,
engineering, construction or hazardous materials issues.
Company and MHP agree that their relationship is at arm's
length and is neither confidential nor fiduciary in nature.
MHP is not acting as and will not act as an employee at any
time. MHP is not and will not be entitled to any benefits
that the Company may offer its employees. MHP is solely an
independent contractor and such status can only changed by
a written agreement between the parties, which is signed by
(Docket No. 1-2 at 2-3.)
The only state mentioned by implication in this agreement
is Virginia, as plaintiff’s lone obligation to defendants was to
“merely provide” them with a contact person at S&M, which is
located in Virginia.
Neither the parties’ connection to New
Jersey, nor the interests of New Jersey, are implicated or even
remotely contemplated by the terms of this agreement. 9
Next, as to the place and character of the parties’
negotiations, future consequences, and the course of dealings,
even if the Court accepts that defendants first initiated
contact with plaintiff, 10 plaintiff’s own description of the
California is similarly not implicated by this agreement, other
than the description of Kelly Capital being a California limited
liability company. Defendants are not arguing, however, that
personal jurisdiction does not exist over them if plaintiff
filed suit against them in California.
The evidence more strongly suggests the opposite conclusion,
but in deciding a motion to dismiss for lack of jurisdiction, a
court is required to accept the plaintiff's allegations as true,
and is to construe disputed facts in favor of the plaintiff.
Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 457 (3d Cir.
2003). It is important to note, however, that who initiated the
relationship is not significant “[i]n the commercial milieu”;
rather “the intention to establish a common venture extending
over a substantial period of time is a more important
consideration.” General Electric Co. v. Deutz AG, 270 F.3d 144,
purpose of that contact weighs against personal jurisdiction
over defendants in New Jersey.
Plaintiff avers that defendants
were “exploring escrow fund asset purchase opportunities in the
tobacco industry,” they knew that he “had substantial contacts
in the tobacco industry and a working knowledge of asset
purchase transactions with tobacco companies,” and that
defendants wanted plaintiff’s assistance with connecting them
specifically with S&M in Virginia.
It is clear that regardless
of the domicile of plaintiff, or even defendants, a transaction
directly tied to Virginia was intended by the parties.
Plaintiff could have been located anywhere in the country – or
world for that matter - to facilitate the connection between
defendants and S&M, as there is no evidence that any physical
presence of the parties was required to broker the connection
between defendants and S&M or the agreement regarding
150 (3d Cir. 2001). We also note that while will accept
Plaintiffs’ version of the facts as it relates to this issue, in
general a self-serving affidavit without any other supporting
proof may not support a plaintiff’s burden of establishing
personal jurisdiction over a defendant. See Arrington v.
Colortyme, Inc., 972 F. Supp. 2d 733, 742 (W.D. Pa. 2013)
(“[T]he Court finds that this quantum of evidence--a short selfserving affidavit with no supporting documentation--cannot
itself sustain a factual attack on the Court's subject-matter
jurisdiction.”) (citing Washington v. Hovensa LLC, 652 F.3d 340,
346–47 (3d Cir. 2011); De Cavalcante v. C.I.R., 620 F.2d 23, 26–
27 (3d Cir. 1980) (when charged with making evidentiary
determinations, court may find that self-serving affidavits
absent evidentiary support are insufficiently probative)).
Tellingly, the Third Circuit judged the following scenario
to be a “close case”:
Defendants were limited partners in Virginia partnerships
developing real estate in Virginia who applied to Mellon
Bank, a Pennsylvania based lender, for loans that they
personally guaranteed. After the partnership defaulted,
Mellon Bank filed suit on the guarantees. We examined the
defendants' contacts for purposeful availment in
Pennsylvania, concluding that jurisdiction was proper
because the defendants had reach[ed] out beyond one state
and create[d] continuing relationships and obligations with
citizens of another state. We found particularly
compelling the fact that defendants had “purposely
directed” their activities into Pennsylvania: they
approached Mellon Bank; they chose to finance with Mellon
Bank when they could have financed elsewhere; they provided
Mellon Bank in Pennsylvania with sufficient documentation
so that they would obtain the loans; they sent updated
financial information to Mellon Bank; and they knew that
payments were to be mailed to Mellon Bank in Pennsylvania.
Mellon Bank (E.) PSFS, N.A. v. DiVeronica Bros., 983 F.2d 551,
557 (3d Cir. 1993) (discussing Mellon Bank (East) PSFS, Nat'l
Ass'n v. Farino, 960 F.2d 1217 (3d Cir. 1992)) (internal
quotation and citations omitted).
Even though “a court is
required to make an independent factual assessment of a
defendant's contacts with the forum when deciding whether it
possesses jurisdiction over that defendant,” and “citing cases
where other courts found other defendants in similar
circumstances to be subject to that court’s jurisdiction may or
may not be helpful,” Farino, 960 F.2d at 1224–25, if the set of
facts in Farino was held to be a “close case,” then the
situation in this case is far from close.
Courts have repeatedly held that “‘informational
communications in furtherance of [a contract between a resident
and a nonresident] does not establish the purposeful activity
necessary for a valid assertion of personal jurisdiction over
[the nonresident defendant].’”
Vetrotex Certainteed Corp. v.
Consol. Fiber Glass Prod. Co., 75 F.3d 147, 152 (3d Cir. 1996)
(quoting Sunbelt Corp. v. Noble, Denton & Assoc., Inc., 5 F.3d
28, 32 (3d Cir. 1993) (citing Stuart v. Spademan, 772 F.2d 1185,
1193 (5th Cir. 1985) (stating that “an exchange of
communications between a resident and a nonresident in
developing a contract is insufficient of itself to be
characterized as purposeful activity invoking the benefits and
protection of the forum state's laws”)).
In this case,
defendants’ connection to New Jersey by way of their finder’s
fee commission agreements with plaintiff was fortuitous and
random, not based out of the business goal of buying a Virginia
tobacco company’s escrow releases, but because plaintiff just so
happened to live in New Jersey.
That defendants contracted with a New Jersey company is
true and even interacted with plaintiffs in New Jersey pursuant
to that contract.
But beyond that there is little more.
allow personal jurisdiction based on these narrow and limited
contacts would undermine the general rule that merely entering
into a contract with a forum defendant is insufficient to
establish personal jurisdiction over such a defendant.
In short, defendants in this case did not deliberately
engage in significant activities in New Jersey, or create a
continuing obligation between them and plaintiff, or manifestly
avail themselves of the privilege of conducting business in New
See Burger King, 471 U.S. at 475.
Court cannot exercise personal jurisdiction over defendants to
resolve plaintiff’s claims against them. 11
Because the Court lacks personal jurisdiction over
defendants, defendants’ motion to dismiss plaintiff’s claims for
lack of personal jurisdiction will be granted, and plaintiff’s
motion for leave to file a third amended complaint will be
denied as moot.
An appropriate Order will be entered.
Date: October 14, 2016
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
As noted, infra note 9, plaintiff is not left without a forum
in which to prosecute his claims against defendants.
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