BONOMO v. CITRA CAPITAL MANAGEMENT, LLC et al
Filing
11
OPINION. Signed by Judge William H. Walls on 7/9/2012. (nr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DAVID P. BONOMO,
*
Plaintiff,
OPINION
:
v.
:
Civ. No. 2:1 1-04409-WHW-MCA
CITRA CAPTIAL MANAGEMENT, LLC,
CITRA REAL ESTATE CAPITAL
MANAGEMENT, LCC,
CITRA/NEWWORK HEALTHCARE
CAPITAL, LLC, MICHAEL I. JANDA, and
HERBERT SALTZMAN,
Defendants.
WaIlsg Senior District Judge
Citra Capital Management, LLC, Citra Real Estate Capital Management, LLC,
Citra!Newwork Healthcare Capital, LLC, Michael I. Janda, and Herbert Saltzman
(“Defendants”) move to dismiss the complaint of David P. Bonomo (“Plaintiff’) for lack of
personal jurisdiction pursuant to Federal Rule of Civil Procedure 1 2(b)(2) and improper venue
pursuant to Federal Rule of Civil Procedure 12(b)(3). In the alternative, Defendants request the
transfer of this case to the Central District of California pursuant to 28 USC.
§
1404(a) or
1406(a). This Court decides the motion without oral argument pursuant to Federal Rule of Civil
Procedure 78(b). Defendants’ motion is denied in part and granted in part.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff is an individual who resides in Summit, New Jersey. Compl.
¶ 1.
Defendant
Citra Capital Management, LLC is a limited liability company organized and existing under the
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laws of Illinois and has its principal place of business in Illinois.
j4 ¶2. Defendant Citra Real
Estate Capital Management, LLC is a limited liability company organized and existing under the
laws of California with its principal place of business also in California. jj.. ¶ 3. Defendant
Citra/Newwork Healthcare Capital, LLC is alleged to be a limited liability company organized
and existing under the laws of California with its principal place of business also in California.
JçI. ¶4. Collectively, “Citra” is alleged to be a financial advisory and capital placement business
that negotiates and secures debt and equity funding for healthcare providers, real estate
developers, and other clients. P1. Opp. at 3
Defendant Michael I. Janda resides in Florida and is alleged to be an owner and operator
of Citra.
Defendant Herbert Saltzman resides in California and is alleged to be an owner and
managing director of Citra. P1. Opp. at 3; Def. Mot. at 2.
Plaintiff and Defendants entered into an agreement (the “Agreement”) in or about March
2007, whereby Plaintiff was to be become a director at Citra and establish an east coast presence
in New Jersey for Citra. Compl. ¶9; P1. Opp. at 3. Under the Agreement, he was to receive a
base compensation, reimbursement for expenses, and annual bonuses. Compl.
¶ 12. Plaintiff
alleges that Defendants made various misleading statements to induce Plaintiff to enter into the
Agreement and that Plaintiff relied on these representations to enter into the Agreement.
jc ¶J
10-11. These representations involved statements regarding the capitalization of Citra, the scope
and nature of Citra’s operations, and the ability and intent of the Defendants to perform their
obligations to Plaintiff in good faith. Id.
¶ 10.
Plaintiff maintains that he performed his obligations under the Agreement through 2010,
but Defendants refused and failed to perform under the Agreement. Id.
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¶J 13-14. Plaintiff
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alleges that Defendants failed to pay Plaintiff as agreed to under the Agreement and had no
intention of doing so.
¶ 14.
On July 28, 2011, Plaintiff filed suit against Defendants seeking damages for breach of
contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty,
fraud, unjust enrichment, fraudulent transfer and accounting. Id.
¶11 17-41.
On January 19, 2012, Defendants moved to dismiss the complaint pursuant to Rule
12(b)(2) of the Federal Rules of Civil Procedure, or, in the alternative, to transfer venue pursuant
to 28 U.S.C.
§ 1406(a). Def. Mot. at 1. Defendants argue that this Court lacks personal
jurisdiction over them and that Plaintiff’s complaint should either be dismissed or transferred to
the Central District of California. Id. at 7.
STANDARD OF REVIEW
1. Personal Jurisdiction
A federal district court sitting in diversity “may assert personal jurisdiction over a
nonresident of the state in which the court sits to the extent authorized by the law of that state.”
D’Jamoos ex rd. Estate ofWeingeroffv. Pilatus Aircrafl Ltd., 566 F.3d 94, 102 (3d Cir. 2009)
(internal quotation marks and citations omitted). New Jersey’s long arm statute provides for
personal jurisdiction as far as is permitted by the Fourteenth Amendment to the United States
Constitution. See Carteret Say. Bank, FA v. Shushan, 954 F.2d 141, 145 (3d Cir. 1992);
DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir. 1981).
The due process clause of the Fourteenth Amendment permits a forum state to exercise
general personal jurisdiction over a non-resident defendant when that defendant has “continuous
and systematic” contacts with the state. See Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 414-15 (1984). The due process clause also allows a forum state to exercise
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specific personal jurisdiction over a non-resident defendant if the cause of action arises out of
that defendant’s “minimum contacts” with the forum state.
.
at 414. What qualifies as
sufficient contacts in any given case “will vary with the quality and nature of the defendant’s
activity, but it is essential in each case that there be some act by which the defendant
purposefully avails itself of the privilege of conducting activities within the forum State.”
Hanson v. Denckj, 357 U.S. 235, 253 (1958). It is critical that the defendant’s conduct and
connection with the forum are such that he should reasonably anticipate being haled into court
there. World-Wide Volkswagen Corp. v. Woodsop, 444 U.S. 286, 287 (1980).
Assuming minimum contacts have been established, a court may ask whether “the
assertion of personal jurisdiction would comport with ‘fair play and substantial justice.” Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985) (quoting Int’l. Shoe Co. v. Washington, 326
U.S. 310, 320 (1945)); Pennzoil Products Co. v. Colelli & Assoc., Inc., 149 F.3d 197, 201 (3d
Cir. 1998). Although this second inquiry need only be applied at a court’s discretion, see Mellon
Bank (East) PSFS, Nat. Ass’n v. FarinQ, 960 F.2d 1217, 1222 (3d Cir. 1992) (citing Rudzewicz,
471 U.S. at 476-77), courts have generally chosen to engage in this second tier of analysis in
determining questions of personal jurisdiction. $ç çg, Mesalic v. Fiberfloat Corporation, 897
F.2d 696, 70 1-02 (3d Cir. 1990) (considering notions of “fair play and substantial justice” in
deciding issue of personal jurisdiction). For personal jurisdiction to comport with “fair play and
substantial justice,” it must be reasonable to require the defendant to defend the suit in the forum
state. See World-Wide Volkswagen Corp., 444 U.S. at 292. To determine reasonableness, a
court considers the following factors: 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 the most efficient resolution of controversies,
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and the shared interest of the several States in furthering substantive social policies.
Only in
“rare cases [do the] minimum requirements inherent in the concept of fair play and substantial
justice.
.
.
defeat the reasonableness ofjurisdiction even [though] the defendant has purposefully
engaged in forum activities.” Asahi Metal Industry Co.. v. Super. Ct. of Cal., 480 U.S. 102, 116
(1987).
When a defendant moves to dismiss for lack of personal jurisdiction, “the burden falls
upon the plaintiff to come forward with sufficient facts to establish that jurisdiction is proper.
The plaintiff meets this burden and presents a prima facie case for the exercise of personal
jurisdiction by establishing with reasonable particularity sufficient contacts between each
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defendant and the forum state.” Mellon Bank (East) PSFS, Nat. Ass’n v. Farino 960 F.2d 1217,
1223 (3d Cir. 1992) (internal quotation marks and citations omitted). The plaintiff may establish
“jurisdictional facts through sworn affidavits or other competent evidence,” but may not rely on
“the bare pleadings alone in order to withstand a defendant’s” motion. Time Share Vacation
Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 66 n.9 (3d Cir. 1984); see also Miller Yacht Sales,
Inc. v. Smith, 384 F.3d 93, 101 n.6 (3d Cir. 2004). In deciding a motion to dismiss for lack of
personal jurisdiction, a court “must accept all of the plaintiff’s allegations as true and construe
disputed facts in favor of the plaintiff.” Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d
Cir. 2002) (internal quotation marks and citations omitted); see also D’Jamoos 566 F.3d at 102.
2. Venue
To survive a motion to dismiss for improper venue, the plaintiff must make a prima facie
showing of venue. Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir. 2004); Home Ins. Co. v.
Thomas Indus., Inc., 896 F.2d 1352, 1357 (11th Cir. 1990). Where jurisdiction is founded only
on diversity of citizenship, venue is proper in:
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(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 any defendant is subject to personal jurisdiction at the time the action is
commenced, if there is no district in which the action may otherwise be brought.
28 U.S.C.
§
1391(a). “For purposes of venue under this chapter, a defendant that is a corporation
shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at
the time the action is commenced.” 28 U.S.C.
§
1391(c).
3. Transfer of Venue
There are two sections of Code governing motions to transfer venue. “Section 1404(a)
provides for the transfer of a case where both the original and the requested venue are proper.
Section 1406, on the other hand, applies where the original venue is improper and provides for
either transfer or dismissal of the case.” Jumara v. State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir.
1995). If venue is improper in the district where the case was brought, the district court “shall
dismiss, or if it be in the interest ofjustice, transfer such case to any district or division in which
it could have been brought.” 28 U.S.C.
§
1406(a). The moving party must prove the impropriety
of the plaintiffs choice of venue. 2 MOORE’S FEDERAL PRACTICE
§
12.32[4j (3d ed.l999).
Even if venue is proper, the district court may transfer a case “[f]or the convenience of parties
and witnesses, in the interest ofjustice
....“
28 U.S.C.
§
1404(a).
DISCUSSION
1. Personal Jurisdiction
The Due Process Clause of the Fourteenth Amendment permits a forum state to exercise
general or specific personal jurisdiction over a non-resident defendant. Plaintiff does not suggest
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that the Court has general jurisdiction over Defendants nor does the Court find anything in the
record to support a finding of “continuous and systematic” contacts with New Jersey to support
an exercise of general jurisdiction over Defendants.
Plaintiff asserts that the Court has specific jurisdiction over Defendants. Defendants
assert that the Court lacks personal jurisdiction because Citra Capital Management, LLC has had
insufficient limited contacts with New Jersey and Citra Real Estate Capital Management, LLC
has had absolutely no business or other contacts with New Jersey. Defendants claim that neither
company has any offices, facilities, employees, agents, or licenses in New Jersey. Def. Mot at 3.
Defendants also allege that Citra/Newwork was never organized as a business entity and that
Defendants Janda and Saltzman have no geographical or business ties to New Jersey that would
give New Jersey courts personal jurisdiction over them. Def. Mot. at 2-3.
Plaintiff counters that Defendants Janda, Saltzman and Citra Capital Management have
established sufficient minimum contacts with New Jersey to subject them to personal jurisdiction
in this Court. P1. Opp. at 2-4. Plaintiff alleges the following:
(1) Plaintiff maintained a New Jersey office for Citra Capital Management, which was
within the Newwork, LLC office located in Newark, New Jersey. P1.
Opp. at 4.
(2) On behalf of Citra, Plaintiff worked out of Citra’s New Jersey office on several real
estate and healthcare transactions with Defendants Janda and Saltzman. P1. Opp. at 4.
One major project included “The Richardson Project,” which involved the acquisition
and rehabilitation of a commercial property located in Newark, New Jersey. Id.
(3) Janda and Saltzman personally traveled to New Jersey on more than one occasion in
connection with Plaintiff’s work for Citra. P1. Opp. at 5. As example, on October 3,
2009, Defendant Saltzman met with his son, the owner of Newwark, LLC who was
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increasingly involved in Citra’s business activity, and the Plaintiff for lunch in Jersey
City, New Jersey to discuss their collective efforts going forward. P1.
Opp. at 5.
At
this lunch, Defendant Saltzman made certain representatives, which Plaintiff relied on
in good faith to his detriment. Id. at 6. Defendant Saltzman paid for lunch with a
credit card. Id. On an earlier occasion, Defendants Saltzman and Janda, as well as
various Newwork employees attended a closing dinner in New York City in
recognition of the Richardson Project.
(4) In the course of negotiations Plaintiff received hundreds of communications from
Defendants directed to him in New Jersey regarding the transactions that Citra was
involved in. P1. Opp. at 5. These communications were by email, regular mail,
telephone and in person. Id. Plaintiff also received monthly consulting fees from
Citra by mail to his home in Summit, New Jersey, and by wire transfer to Wachovia
Bank in Summit, New Jersey (now known as Wells Fargo).
New Jersey courts have found that where the cause of action “arose out of the
defendant’s contacts within [New Jersey]” and where the contacts involved a “purposeful act” by
the defendant, sufficient minimum contacts exist for the exercise of personal jurisdiction over the
defendant. Waste Management. Inc. v. Admiral Insurance Co., 138 N.J 106, 123 (1994).
(internal citations omitted) (“[t]he more the defendant has purposefully directed its activities to
the forum state, and the greater the benefits it has received from its contacts with the forum state,
the more reasonable the exercise ofjurisdiction becomes”). The Court finds that Defendants
Janda, Saltzman and Citra Capital Management had sufficient contacts with New Jersey to
justify the Court’s exercise of personal jurisdiction over them. In particular, Defendants Janda
and Saltzman traveled to New Jersey pursuant to their contract with the Plaintiff. Further, Citra
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Capital Management had an office and conducted business in New Jersey. These facts
demonstrate that Defendants Janda, Saltzman and Citra Capital Management purposefully
availed themselves of the privilege of conducting activities within the forum State, and that they
should have “reasonably anticipated being haled into court” in New Jersey. World-Wide
Volkswagen Corp. 444 U.S. at 297 (citations omitted).
The Court also finds that the exercise of personal jurisdiction over Defendants Janda,
Saltzman and Citra Capital Management is reasonable in New Jersey and would not offend
“traditional notions of fair play and substantial justice.” International Shoe v. Washington, 326
U.S. 310, 320 (1945). Although Defendants do not live in any states adjoining New Jersey,
travel to New Jersey would present no special burden to defendants, as evidenced by their earlier
visits to New Jersey and the adjoining state of New York. The Court is not persuaded that trying
the case in New Jersey would compromise efficiency. In particular, the Court recognizes a
significant policy interest in protecting residents of its state against fraud, misrepresentation or
breach of contract in connection with interstate business transactions. As such, trying the case in
New Jersey and enhancing the practice of transparent business relationships across state borders
satisfies the prong of the shared interest of the several states in furthering substantive social
policies pursuant to the factors. Asahi Metal Industry Co., 480 U.S. at 116.
Because Plaintiff has established that Defendants Janda, Saltzman and Citra Capital
Management meet the required minimum contacts set out in International Shoe, and because the
fair play and substantial justice factors are satisfied by personal jurisdiction in New Jersey,
Defendants Janda, Saltzman and Citra Capital Management’s motion to dismiss pursuant
to Federal Rule of Civil Procedure 1 2(b)(2) is denied.
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On the other hand, Plaintiff has failed to establish that Citra/Newwork Healthcare
Capital, LLC is in fact an actual business entity over which the Court can exercise jurisdiction
over. Similarly, Plaintiff has not alleged with reasonable particularity any facts that show
sufficient contacts between Citra Real Estate Capital Management, LLC and New Jersey to
sustain a finding that Citra Real Estate has purposefully availed itself of the privilege of
conducting activities within New Jersey. It follows that Defendants Citra Real Estate Capital
Management and Citra/Newwork Healthcare Capital’s motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(2) is granted.
2. Venue
The Court need not consider whether venue is proper as to Defendants Citra Real Estate
Capital Management and Citra/Newwork Healthcare Capital because the Court does not have
personal jurisdiction over these defendants.
Defendants Janda, Saltzman and Citra Capital Management move to transfer venue under
28 U.S.C. § 1406(a), which allows a district court to transfer venue when venue has been laid in
the “wrong division or district.” However, venue is proper in this district. Venue is proper in “a
judicial district in which a substantial part of the events giving rise to the claim occurred.” 28
U.S.C. § 1391(a). Because the allegations in the Plaintiff’s opposition brief, which establish that
Defendants have sufficient minimum contacts with New Jersey to create personal jurisdiction,
also establish that “a substantial part of the events giving rise to [Plaintiff’s] claim occurred” in
New Jersey, venue is proper in this district. Because venue is proper and has not been laid in the
“wrong division or district,” Defendants Janda, Saltzman and Citra Capital Management’s
motion to transfer venue under § 1406(a) is denied.
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3. Transfer of Venue
Because this Court has dismissed the complaint for lack of personal jurisdiction over
Defendants Citra Real Estate Capital Management and Citra!Newwork Healthcare Capital, the
motion to transfer is relevant only to the remaining three defendants, Janda, Saltzman and Citra
Capital Management, who have the burden of demonstrating that litigating this action in
California is more appropriate than New Jersey. Jumara, 55 F.3d at 879.
While venue is proper in New Jersey, the Court may transfer the case to California under
§
1404(a). See Jumara, 55 F.3d at 878. In pertinent part, 28 U.S.C.
§
1404(a) provides that
“[f]or the convenience of parties and witnesses, in the interest ofjustice, a district court may
transfer any civil action to any other district or division where it might have been brought.” 28
U.S.C.
§
1404(a). Although a plaintiff’s chosen forum is afforded substantial deference, the
Third Circuit has directed that a district court must weigh “all relevant factors to determine
whether on balance the litigation would more conveniently proceed and the interests ofjustice be
better served by transfer to a different forum.” 28 U.S.C.
§
1404(a); Jumara, 55 F.3d at 879—80.
The court must consider both private interest and public interest concerns bearing on the
propriety of the requested transfer. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 30—31, 108
S.Ct. 2239, 101 L.Ed.2d 22 (1988).
Private factors include: (1) the plaintiff’s preferred forum; (2) the defendant’s preferred
forum; (3) where the claim arose; (4) the convenience of the witnesses to the extent they would
be unavailable at trial in one of the fora; and (5) the availability of documents and other
evidence. See id.
Public factors include: (1) the enforceability of the judgment; (2) practical considerations
that make trial easier or less expensive; (3) the relative administrative difficulty related to court
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congestion; (4) the relative importance of the fora in deciding the controversy; and (5) the
familiarity of the trial judge with the applicable state law in diversity cases.
Ich
The private interest factors here do not support transfer to the Central District of
California. The Plaintiff’s preferred forum is the District of New Jersey and this preference is
entitled to substantial deference. Jumara, 55 F.3d at 880; see Dagostino v. Bally’s Las
Vegas, No. 1 1—cv—0261 8, 2011 WL 5599859, at *3 (D.N.J. Nov.17, 2011) (“The plaintiff’s
forum preference is given great weight regardless of his personal circumstances.”). Defendants
argue that the Central District of California would be more convenient because all defendants are
subject to jurisdiction in California, while the Plaintiff argues that the forum would only be more
convenient for Defendant Saltzman because he is the only defendant domiciled in California.
Although the alternative forum may be convenient for one or more of the Defendants, transfer to
California would impose a greater burden on the Plaintiff, who lives in New Jersey. Compl.
¶ 1.
Travel to New Jersey would present no special burden on Defendants because they have traveled
to New Jersey, as well as near by New York. Moreover, the majority of events giving rise to the
claim occurred in New Jersey, including several business transactions between Plaintiff and
Defendants Janda and Saltzman. P1. Opp. at 4. Plaintiff also provides a list of twenty witnesses
in New Jersey, while Defendant only names one witness located in California.
As for the public factors, many of which were considered in the Court’s analysis of
traditional notions of fair play and substantial justice in the context of personal jurisdiction,
Defendants fail to demonstrate substantial factors which weigh in favor of transfer. The docket
of the District of New Jersey is no more or less conducive to an expeditious resolution of this
matter than the docket of the Central District of California. The state of New Jersey and its
residents have an interest in protecting themselves against defendants who engage in potential
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fraud or misrepresentation in business transactions. Finally, in addressing the choice of law
factor, as Defendants point out, the law of the state that has the most significant connections with
the parties and the action applies. NL Indus., Inc. v. Commercial Union Ins. Co., 65 F.3d 314,
319 (3d Cir. 1995). Here, Plaintiff has demonstrated that Defendants have engaged in sufficient
connection with New Jersey to subject them to personal jurisdiction. Plaintiff resides in New
Jersey, Defendant Citra Capital Management had an office in New Jersey, and Defendants Janda
and Saltzman have traveled to New Jersey on more than one occasion in connection with
Plaintiff’s work for Citra. Because New Jersey has the most significant connections with the
parties, New Jersey law should apply. This factor weighs heavily in favor of venue in New
Jersey as opposed to California. Defendants’ request for transfer pursuant to 28 U.S.C.
§
1404(a) is denied.
CONCLUSION
The Court dismisses this action with respect to Defendants Citra Real Estate Capital
Management and Citra!Newwork Healthcare Capital. The Court denies Defendants’ motion to
dismiss for lack of personal jurisdiction with respect to Defendants Janda, Saltzman and Citra
Capital Management’s and denies Defendants’ motion to transfer venue to the Central District of
California pursuant to 28 U.S.C.
§
1406(a) and 1404(a).
Judge
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