WILLIAMS et al v. ZHOU et al

Filing 98

MEMORANDUM/ORDER denying 87 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Kevin McNulty on 1/6/17. (DD, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

PAUL F. WILLIAMS and
MAKSWILL GROUP CORP.,
Civ. No. 14-5544 (KM) (MAH)

Plaintiffs,

MEMORANDUM AND ORDER
V.

YING ZHOU, GOULIANG TIAN &
JIAHAO INTERNATIONAL GROUP,
LTD.,
Defendants.

KEVIN MCNULTY, U.S.D.J.:
The defendants, Ying Zhou, Goiliang Tian, and Jiahao
International Group, LTD. (“Jiahao”), have filed a motion to dismis
s (ECF no.
87) for lack of subject matter and personal jurisdiction pursuant to
Fed. R. Civ.
P. 12(b)(1) and (2). For the reasons stated below, the motion will
be DENIED as
to subject matter jurisdiction. As to personal jurisdiction, the motion
is
DENIED as presented, because limited jurisdictional discovery is
required.
When such discovery is completed, the motion may be renewed.
I.

ALLLEGATIONS OF AMENDED COMPLAINT

The following facts are taken from Williams’ amended complaint.
They are assumed to be true for the purposes of this memorandum
only.
Plaintiff, Paul F. Williams, is a New Jersey citizen. Makswill Group
Corp. (“Makswill”) is a New Jersey corporation with principal place
of business
in New Jersey. Through Makswill, Williams operates a consultancy
business in
which he promotes and markets Antigua’s “Citizenship by Investm
ent Program”
(“CIP”). On or about March 26, 2013, Zhou, a New York citizen,
and Tian, a
Chinese citizen, contacted Williams after having viewed Maksw
ill’s contact
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information on Antigua’s official CIP website. Zhou and Tian represented to
Williams that they were “partners and co-owners” of JIAHAO, a Chinese
corporation, and “were in [the] business [of] securing applications for econom
ic
citizenship for Chinese nationals.” (Amend. Compi.
¶{ 1-5, 7-10, ECF No. 81)
At some point, the parties met in New Jersey and New York for a
“series of discussions that led to the formation of a verbal services agreement
authorizing and directing plaintiffs to be an intermediary in official discussions
with senior members of the Antiguan government including its Prime Minist
er.”
Williams and Makswill were thereafter “retained as consultants
to obtain a

[]

discounted price for their [i.e. Zhou, Tian, and Jiahao’s] clients applying for the
[CIP].” (Id. ¶ 11)
From April 4, 2014, through August 22, 2014, Williams “acted in
good faith representing defendants by preparing documents, entering
negotiations, and meeting[] with government officials[,] including the Prime
Minister, Attorney General and other Ministers of Government and their
attorneys to assist and confer benefit upon defendants.” That work included
traveling to Antigua twice on behalf of Zhou, Tian, and Jiahao. All told,
defendants racked up $322,500.00 in consultancy fees, which remain unpaid.
(Id. ¶J 12, 14-18)
The amended complaint asserts three causes of action: breach of
contract, unjust enrichment, and quantum meruit. Jurisdiction is based on
diversity subject matter jurisdiction. (Id. ¶j 20-37) Fact discovery is ongoing.
(ECF No. 93, 97)

In a declaration submitted in opposition to the motion to dismiss, Williams
avers that the meeting occurred on or about March 26, 2014 at a Cheesecake Factor
y
restaurant in Edison, New Jersey. (Williams Decl. 2. ECF No. 90-2)
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II.

DISCUSSION
A.

Standards
1.

Subject Matter Jurisdiction

Rule 12(b)(1) challenges may be either facial or factual attacks. See
2 Moore’s Federal Practice § 12.30[4] (3d ed. 2007); Mortensen v. First Fed.
Say.
& Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977). A facial challenge asserts
that
the complaint does not allege sufficient grounds to establish subject matter
jurisdiction. Iwanowa v. Ford Motor Co., 67 F. Supp. 2d 424, 438 (D.N.J
. 1999).
A court considering such a facial challenge assumes that the allegations
in the
complaint are true, and may dismiss the complaint only if it nevertheless
appears that the plaintiff will not be able to assert a colorable claim of subjec
t
matter jurisdiction. Cardio—Med. Assoc., Ltd. v. Crozer—Chester Med. Ctr.,
721
F.2d 68, 75 (3d Cir. 1983); Iwanowa, 67 F. Supp. 2d at 438
2.

Personal Jurisdiction

Once a defendant files a motion to dismiss for lack of personal
jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), the
plaintiff
bears the burden of establishing sufficient facts to show that jurisdiction
exists. Marten v. Goclwin, 499 F.3d 290, 295-96 (3d Cir. 2001). While
a court
must accept the plaintiffs 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), the court must still examine any evidence presented with regard
to
disputed factual allegations. See, e.g., Eurofins Pharma US Holdings
v.
BioAlliance Pharma SA, 623 F.3d 147, 155-56 (3d Cir. 2010) (examining
the
evidence supporting the plaintiff’s allegations); Patterson v. FB1, 893
F.2d 595,
603-04 (3d Cir. 1990) (‘“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 affidav
its

3

or

other competent evidence.”’) (quoting Time Share Vacation Club u. Ati. Resorts,
Ltd., 735 F.2d 61, 66 n.Y (3d Cir. 1984)).
The plaintiff “need only establish a prima facie case of personal
jurisdiction.” Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004).
Nevertheless, a plaintiff may not “rely on the bare pleadings alone” in order to
withstand a motion to dismiss for lack of personal jurisdiction; “[o]nce the
motion is made, plaintiff must respond with actual proofs, not mere
allegations.” Patterson, 893 F.2d at 604 (internal citations omitted); Time Share
Vacation Club, 735 F.2d at 66 n.9.
There are two kinds of personal jurisdiction that allow a district
court to hear a case involving a non-resident defendant: general and specific.
See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-4 15 &
n. 9 (1984). Specific jurisdiction, which is at issue in this case, relies on the
defendants’ forum-related activities that give rise to the plaintiffs claims. See
Helicopteros, 466 U.S. at 4 13-14. Establishing specific jurisdiction involves a
three-part inquiry: (1) whether the defendant purposefully directed its activities
at the forum; (2) whether the litigation arises out of or relates to at least one of
the contacts; and (3) whether the exercise of jurisdiction otherwise comports
with traditional notions of fair play and substantial justice. O’Connor v. Sandy
Lane Hotel Co., Ltd., 496 F.3d 312, 317 (3d Cir. 2007). The defendant need not
be physically located in the state while committing the alleged acts. Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985). Nor is specific jurisdiction
defeated merely because the bulk of harm occurred outside the forum. Keeton
v. Hustler Magazine, Inc., 465 U.S. 770, 780 (1984). A single act may satisfy the
minimum contacts test if it creates a substantial connection with the forum.
Burger King, 471 U.S. at 476 n. 18.
3.

Analysis

The motion to dismiss based for lack of subject matter jurisdiction
need only be addressed briefly. Title 28, United States Code, section 1332(a),
confers subject matter jurisdiction where the amount in controversy exceeds
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$75,000, and the action is between “(1) citizens of different States; [or]
(2)
citizens of a State and citizens or subjects of a foreign state” with
irrelevant
exceptions. Williams alleges an amount in controversy greater than
$75,000.
There is complete diversity between the parties—New Jersey plaintiffs
on one
side, and New York and Chinese defendants on the other. See genera
lly
Strawbridge v. Curtiss, 7 U.S. 267 (1806). The requirements of 28
U.S.C. §
1332(a) are therefore met. This Court possess subject matter jurisdi
ction over
this action. Defendants’ Fed. R. Civ. P. 12(b)(1) motion is DENIED.
2
The motion to dismiss based on lack of personal jurisdiction, on
the other hand, cannot be decided as presented. There are signifi
cant factual
gaps in William’s pleading, including—but not limited to—the actual locatio
n in
which the parties entered into the alleged joint venture, where perform
3
ance

Citing to Clifton G. Swiger v. Allegheny Energy, Inc., defendants argue that
“diversity can.. be challenged by foreign nationals who have principal
residences
outside the U.S.” (Def. Br. 7); 540 F.3d 179 (3d Cir. 2008). That case, howev
er,
involved a so-called “stateless partner”, i.e. a United States citizen domic
iled abroad
who is a partner in an unincorporated business association. Tian and Zhou
do not
argue that Jiahao is a partnership. Even if it were, though, Tian is not “statel
ess” in
the Swiger sense because he is in fact a Chinese citizen. See 28 U.S.C. 1332(a
)(2)
(“The district courts shall have original jurisdiction of all civil actions.
between
citizens of a State and citizens or subjects of a foreign state”) (emphasis
added).
The other authorities on which defendants rely are similarly inapposite. Nunez
Lozano v. Rederi, Ario v. Oceanic Operation Corp., Stein-Victor v. Cardigan
Shipping Co.,
and Giro v. Banco Espanol De Credito, S.A., for example, concern federal
question
subject matter jurisdiction, not diversity subject matter jurisdiction. 634
F.2d 135 (5th
Cir. 1980) (Jones Act); 204 F. Supp. 10 (S.D.N,Y. 1961) (same); 671 F. Supp.
997
(S.D.N.Y. 1987) (same); 98 Civ. 6195, 1999 U.S. Dist. 9673 (S.D.N.Y. June
28, 1999)
(RICO). United States v. Cesar James-Robinson, which involves the extrate
rritorial
application of a federal criminal statute, has no bearing on the diversity questio
n
presented here. 515 F. Supp. 1340 (S.D. Fla. 1981).
In the declaration accompanying his opposition brief, Williams asserts that
defendants “agreed to a joint venture with Maksill after a meeting in New
Jersey which
set forth the terms of the agreement.” That same meeting, Williams says, “serve
d as
the foundation for the joint venture established between the parties and
their
respective companies.” (Williams Deci. p. 2) It is unclear where, or when,
the alleged
joint venture agreement was actually consummated. Indeed, in a brief submit
ted in
opposition to an earlier (and mooted, see Mem. & Order ECF No. 72) motion
for
judgment on the pleadings “incorporated by reference” in his opposition brief
here,
Williams (then proceeding pro Se) indicated that “the parties were engage
d in a joint
2

.

.

5

.

was contemplated to occur, and the specific contacts, if any, the Zhou, Tian, or
Jiahao had with New Jersey (i.e., emails, phone calls, meetings, etc.) during the
alleged joint venture. The 1.2(b)(1) motion is therefore DENIED without
prejudice subject to renewal pending limited jurisdictional discovery.
“Although the plaintiff bears the burden of demonstrating facts
that support personal jurisdiction, courts are to assist the plaintiff by allowing
jurisdictional discovery unless the plaintiff’s claim is ‘clearly frivolous.”’ Toys
“R” Us, Inc., Step Two, S.A., 318 F.3d 446, 456 (3d Cir. 2003) (internal citations
omitted). Here, Williams has alleged and provided facts “that suggest with
reasonable particularity the possible existence of the requisite contacts
between the party and the forum state.” Id. The allegation that Williams met
with Tian and Zhou at their request in New Jersey to discuss a joint CIP
venture is non-frivolous, as is the allegation that defendants knew that all or
a
significant portion of the work Williams undertook pursuant to the agreement
would occur in New Jersey. That work—as well as the ongoing and evolving
negotiations surrounding the terms of the alleged joint venture itself—may well
have involved some exchange of telephone calls, email, and regular mail with
Williams in New Jersey. (Amend. Compi.
¶J 11-14, Williams Deci. p. 2- 3)
Specific evidence, however, is missing.
Accordingly, I will not simply grant the motion to dismiss based on
lack of personal jurisdiction, but will deny it, subject to renewal after some
limited discovery directed to the jurisdictional issues. One area to be explored
is the relationship between the New Jersey meeting and the alleged joint
venture agreement. Another is the specific contacts each individual defend
ant
had with New Jersey before and after that meeting. Such discovery must be

venture in the island of Antigua.” (ECF. No. 90-1,
p. 10)1 note that there appears to be
a consensus that some agreement was reduced to writing and signed, and that this
occurred on some date after the meeting. (Id. p. 10-11; Def. Br. 3, ECF No. 87-1)
These
questions, as well as the others outlined herein, should be addressed in the limited
jurisdictional discovery I have ordered here.
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focused on the existence, or not, of ties
to New Jersey that would justify the
exercise of personal jurisdiction.

ORDER
THIS MATTER having been opened to the
Court by defendants
Ying Zhou, Goiliang Tian, and Jiahao Inte
rnatil Group, LTD.’s motion to
dismiss pursuant to Fed. R. Civ. P. 12(b
)(1) and (2), (ECF No. 87); and plaintiffs
Paul F. Williams and Makswill Group Corp
. having filed an opposition,
(ECF No. 90); and defendants having filed
a reply, (ECF No. 92); and the Court
having reviewed the submissions and com
e to a decision without oral
argument, seeL. Civ. R. 9.1(f); for good
cause shown;
IT IS this 6th day of January, 2016
ORDERED that defendants’ motion to dism
iss for lack of subject
matter jurisdiction is DENIED; and it is
further
ORDERED that defendants’ motion to
dismiss for lack of personal
jurisdiction is DENIED without prejud
ice subject to renewal pending the
completion of limited jurisdictional disco
very as outlined above.

(c____

KEVIN MCNULTY
United States District

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