VAYN v. SCHAEN et al
Filing
29
OPINION. Signed by Judge Anne E. Thompson on 5/17/2016. (km)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
LEONID VAYN
Plaintiff,
Civ. No. 16-461
v.
OPINION
PATRICIA WOLFF SCHAEN a/k/a
PATRICIA ANN WOLFF, MELVYN
TANENBAUM, EVAN TANENBAUM,
JOHN J. ANDREWS, and JOHN or JANE
DOES 1-5
Defendants.
THOMPSON, U.S.D.J.
INTRODUCTION
This matter is before the Court upon two motions that both seek to dismiss the complaint
for lack of personal jurisdiction, or in the alternative, to transfer venue to the Eastern District of
New York. One motion was filed by Defendant Evan Tanenbaum (“Defendant Tanenbaum”).
(ECF No. 5). The second motion was filed by Defendant John J. Andrews (“Defendant
Andrews”). (ECF No. 20). Plaintiff Leonid Vayn (“Plaintiff”) opposed Defendant Tanenbaum’s
motion. (ECF No. 14). Since the defendants’ motions are quite similar, the Court will consider
Plaintiff’s arguments with regards to both motions. Plaintiff also cross-moves for leave to
conduct jurisdictional discovery. (ECF No. 14). The Court has decided all the motions based on
the written submissions of the parties and without oral argument pursuant to Local Civil Rule
78.1(b). For the reasons stated herein, the defendants’ motions will be granted, and Plaintiff’s
motion will be denied.
1
BACKGROUND
This case is about a purported scheme to borrow significant sums of money from Plaintiff
with the intention of never fully repaying Plaintiff. Plaintiffs’ allegations are as follows: Plaintiff
was introduced to Defendant Patricia Wolff Schaen through a friend of a friend in the summer of
2008. Defendant Schaen purported to be a New York City-based socialite who needed to borrow
money from someone outside of her social circle. She was willing to pay 20% per annum
interest on the loan. Plaintiff and Defendant Schaen met at her Fifth Avenue apartment in New
York City where they discussed the terms of the loan. Defendant Schaen told Plaintiff at this
meeting that her boyfriend was Melvyn Tanenbaum, a justice in the New York state court
system, and that his son, Evan Tanenbaum (“Defendant Tanenbaum”), was a lawyer who could
prepare the loan documents. Plaintiff agreed to loan Defendant Schaen $200,000 at 20%
interest, and Defendant Schaen said she would make sure Plaintiff received the loan documents
soon.
Plaintiff did not receive the loan documents for some time, and followed up with
Defendant Schaen. She told him that the delay was caused by Defendant Tanenbaum’s absence,
but that another attorney who shared office space with him, Defendant Andrews, could prepare
the documents using Defendant Tanenbaum’s standard forms. Plaintiff then received the loan
documents prepared by Defendant Andrews. Both Defendant Tanenbaum and Defendant
Andrews reside and work in Port Jefferson, New York. Plaintiff’s then-attorney Christopher
Costa reviewed the loan documents for Plaintiff. Attorney Costa asked Defendant Andrews to
revise the documents to state that the agreement would be governed by New Jersey law and that
the venue for any litigation would be in Mercer County, New Jersey, where Plaintiff lives.
Defendant Tanenbaum sent Attorney Costa revised documents, which stated that the venue for
any litigation would be in Mercer County, New Jersey, but also stated that New York law would
2
govern the agreement. Plaintiff believed that Defendant Tanenbaum’s insistence on New York
law was inconsequential. A few more emails were exchanged between Attorney Costa and
Defendant Tanenbaum, and eventually the agreement was executed and the loan was funded,
with New York law governing the agreement.
Defendant Schaen made payments on the loan, with some disruptions. In summer 2011,
while she was still paying off the loan, Defendant Schaen asked Plaintiff for another loan for
$50,000 at 20% interest, which Plaintiff agreed to. In October 2012, Defendant Schaen asked
Plaintiff for another loan for $20,000, again at 20% interest. She had been making some, though
not all of the payments due on the 2008 and 2011 loans, so Plaintiff agreed to make her the
$20,000 loan as well. Plaintiff believes that Defendant Tanenbaum prepared the loan documents
for both the 2011 and 2012 loans. In November 2013, Defendant Schaen asked for a loan of
$40,000 at 20% interest. Plaintiff declined to make this loan to Defenant Schaen. Thereafter,
Defendant Schaen refused to make any further payments on any of the loans.
In July 2015, Plaintiff wrote to Defendant Schaen, informing her that she was in default
on her loans and that he was accelerating the balances due. Defendant Schaen’s boyfriend Judge
Melvyn Tanenbaum responded to Plaintiff’s letter. He informed Plaintiff that the 20% rate of the
loans was illegal and usurious under New York law,1 so therefore Plaintiff’s claims were
unenforceable. He also threatened Plaintiff by asserting that Defendant Schaen could make
claims to recover the payments that she had previously made to Plaintiff. Plaintiff’s attorney
Christopher Costa responded to Judge Melvyn Tanenbaum’s letter. Attorney Costa attached a
calculation of the loan balances due utilizing New York’s maximum permissible lending rate of
16%, reflecting a balance due of $120,090. Plaintiff Schaen has refused to pay the balance.
1
The Court takes judicial notice that the 20% rate would have been legal under New Jersey law.
N.J. Stat. Ann. § 2C:21-19.
3
Plaintiff filed a complaint in New Jersey Superior Court on December 7, 2015.
Defendant Tanenbaum removed the case to this Court on January 27, 2016. Defendant
Tanenbaum then moved to dismiss Plaintiff’s complaint, or in the alternative, to transfer venue to
the Eastern District of New York. In response, Plaintiff amended his complaint, opposed
Defendant Tanenbaum’s motion, and cross moved for leave to conduct jurisdictional discovery.
Defendant Andrews then separately moved to dismiss Plaintiff’s amended complaint, or in the
alternative, to transfer venue to the Eastern District of New York. These three motions are
presently before the Court.
LEGAL STANDARDS
When reviewing a motion to dismiss, a district court “must accept the plaintiff’s
allegations as true and construe disputed facts in favor of the plaintiff.” Machulsky v. Hall, 210
F. Supp. 2d 531, 537 (D.N.J. 2002) (citing Carteret Savings Bank, F.A. v. Shushan, 954 F.2d
141, 142 n.1 (3d Cir. 1992)). To defeat a motion to dismiss for lack of personal jurisdiction, “the
plaintiff bears the burden of establishing with reasonable particularity sufficient contacts
between the defendant and the forum state to support jurisdiction.” Flagship Interval Owner’s
Ass’n, Inc. v. Philadelphia Furniture Mfg. Co., No. 09-1173, 2010 WL 1135736, at *3 (D.N.J.
Mar. 22, 2010) (quoting Provident Nat’l Bank v. Cal. Fed. Sav. & Loan Ass’n, 819 F.2d 434, 437
(3d Cir. 1987)). Where, as here, no evidentiary hearing was held on the jurisdictional issue, “the
plaintiff[s] need only establish a prima facie case of personal jurisdiction and the plaintiff[s] [are]
entitled to have [their] allegations taken as true and all factual disputes drawn in [their] favor.”
O’Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (3d Cir. 2007) (alteration in
original) (quoting Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004)).
A plaintiff may meet his burden by establishing that a court either has “general” or
“specific” jurisdiction. Provident Nat’l Bank, 819 F.2d at 437. A court can exercise specific
4
jurisdiction when a defendant purposely directs his activities at the forum, the litigation arises
out of at least one of those activities, and the exercise of jurisdiction would “comport with ‘fair
play and substantial justice.’” O'Connor, 496 F.3d at 317 (quoting Burger King v. Rudzewicz,
471 U.S. 462, 463 (1985)). If a defendant maintains “continuous and substantial” contacts with a
forum, a court can exercise general jurisdiction. Id. at 321.
ANALYSIS
Federal district courts “have personal jurisdiction over non-resident defendants to the
extent authorized under the law of the forum state in which the district court sits.” Sunbelt Corp.
v. Noble, Denton & Associates, Inc., 5 F.3d 28, 31 (3d Cir. 1993). New Jersey has a long-arm
statute that permits the assertion of personal jurisdiction to the same extent as the Fourteenth
Amendment to the United States Constitution. Carteret, 954 F.2d at 145. Therefore, federal
constitutional law must be applied to determine whether this Court has personal jurisdiction over
Defendant Tanenbaum or Defendant Andrews. See Decker v. Circus Circus Hotel, 49 F. Supp.
2d 743, 746 (D.N.J. 1999).
I.
Defendant Tanenbaum’s Motion
Plaintiff and Defendant Tanenbaum agree that Defendant Tanenbaum resides in New
York. Defendant Tanenbaum argues that even taking all allegations in the complaint as true,
Plaintiff has failed to demonstrate that this Court may exercise specific or general jurisdiction
over him. Plaintiff concedes that this Court lacks general jurisdiction over Defendant
Tanenbaum. Therefore, the Court will only discuss specific jurisdiction.
Specific jurisdiction exists when a defendant has sufficient minimum contacts with a
forum state that he “should reasonably anticipate being haled into court there.” World–Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Jurisdiction is proper “where the
contacts proximately result from actions by the defendant himself that create a ‘substantial
5
connection’ with the forum State.” Burger King Corp., 471 U.S. at 475 (citations omitted).
When performing a minimum contacts analysis, a court must find that the defendant purposefully
availed himself of “the privilege of conducting activities within the forum” in order to find
jurisdiction. Mellon Bank (E.) PSFS, N.A. v. DiVeronica Bros., 983 F.2d 551, 554 (3d Cir.
1993). The logic articulated by the Supreme Court is that “it is presumptively not unreasonable
to require [a defendant] to submit to the burdens of litigation in that forum” where his activities
have been “shielded by ‘the benefits and protections’ of the forum’s laws.” Burger King Corp.,
471 U.S. at 476 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). “[S]ome minimal
correspondence alone” is insufficient to show that a defendant has established the required
minimum contacts within a forum. Carteret, 954 F.2d at 149.
Plaintiff offers a list of twelve “activities” that Defendant Tanenbaum “purposefully
directed” at Plaintiff from 2008 through 2012. (Pl.’s Br. at 17-20, ECF No. 14-2). Nine of these
activities were emails, one was a phone call, and two are allegations that Defendant Tanenbaum
prepared the 2011 and 2012 loan documents. Plaintiff also offers a list of activities Defendant
Tanenbaum allegedly directed at another New Jersey resident who is not a party to this lawsuit.
(Id. at 20). However, since those activities are unrelated to the present litigation, the Court will
not consider them here. See Burger King Corp. 471 U.S. at 472 (describing the relevant
activities in a specific jurisdiction analysis as the activities that are related to or gave rise to the
plaintiff’s injury); cf. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416
(1984) (undertaking a general jurisdiction analysis of a defendant’s “continuous and systematic
general business contacts” in a forum.).
Plaintiff’s list of Defendant Tanenbaum’s activities is insufficient to demonstrate that
Defendant Tanenbaum had the requisite minimum contacts with New Jersey. Of the nine emails
listed, only seven were sent by Defendant Tanenbaum, and of those seven, only five were
6
addressed to Plaintiff’s then-attorney (the other two were addressed to Defendant Schaen, with
Attorney Costa copied on them). Defendant Tanenbaum only sent these emails to Plaintiff’s
attorney in order to facilitate Plaintiff’s agreements with Defendant Schaen. This fact weighs
against a finding that Defendant Tanenbaum purposefully directed his activities towards New
Jersey. Defendant Tanenbaum did not proactively seek “the privilege of conducting activities
within the forum.” Mellon Bank, 983 F.2d at 554. In cases where a defendant contracts directly
with a plaintiff, it is highly relevant if the contract is executed solely at the behest of the plaintiff.
See id. at 557 (an out-of-state defendant’s contract with a resident does not by itself allow a court
to exercise jurisdiction over the defendant, particularly when the contract was executed at the
resident’s request). Moreover, “a few calls or letters into the forum may be of only marginal
import if the dispute is focused outside the forum.” IMO Indus., Inc. v. Kiekert AG, 155 F.3d
254 (3d Cir. 1998). Plaintiff only met with Defendant Schaen in New York, agreed to have the
loan documents drawn up by Defendant Tanenbaum in New York, and the lynchpin of the entire
alleged fraud is New York’s usury law. New York is the focus of the parties’ dispute. Plaintiff
is unable to demonstrate that Defendant Tanenbaum purposefully established minimum contacts
in New Jersey; therefore, the Court cannot assert personal jurisdiction over Defendant
Tanenbaum based on a traditional minimum contacts analysis.
Plaintiff proposes an alternative framework for the Court to utilize to find personal
jurisdiction, an “effects test” that is specific to intentional torts. Plaintiff argues that Defendant
Tanenbaum intentionally committed fraud, which was “calculated to create an actionable event
in New Jersey, thereby giving New Jersey jurisdiction over him.” (Pl.’s Br. at 22, ECF No. 142). Plaintiff provides on-point New Jersey case law for this assertion. See, e.g, Blakey v. Cont’l
Airlines, Inc., 751 A.2d 538, 555 (N.J. 2000). However, Plaintiff does not fully explore the
requirements of the effects test that is used in intentional torts cases. In IMO Industries, Inc. v.
7
Kiekert AG, 155 F.3d 254 (3d Cir. 1998), the Third Circuit discussed the requirements of the
effects test in detail. The test has three required elements:
(1) The defendant committed an intentional tort;
(2) The plaintiff felt the brunt of the harm in the forum such that the forum can be
said to be the focal point of the harm suffered by the plaintiff as a result of that tort;
(3) The defendant expressly aimed his tortious conduct at the forum such that the
forum can be said to be the focal point of the tortious activity;
155 F.3d at 265-66. The third element cannot be satisfied solely by asserting that a defendant
knew that a plaintiff was located in the forum. Id. at 265. Rather, the third element requires that
a defendant “manifest behavior intentionally targeted at and focused on” the forum. Id. (quoting
ESAB Grp., Inc. v. Centricut, Inc., 126 F.3d 617, 625 (4th Cir. 1997)). Plaintiff has not carried
his burden on this element. The only evidence Plaintiff offers is that the loan documents specify
that the venue for a dispute between Plaintiff and Defendant Schaen must be Mercer County,
New Jersey. (Pl.’s Br. at 22, ECF No. 14-2). However, this clause was included because
Plaintiff’s attorney requested it, not because Defendant Tanenbaum wished to target New Jersey.
(Pl.’s Am. Compl. at ¶ 32, ECF No. 12). Therefore, Plaintiff fails to demonstrate that Defendant
Tanenbaum expressly aimed his conduct at New Jersey, and he cannot satisfy the third element
of the effects test. The Court does not need to consider the other two elements when the third
element is not met. Marten v. Godwin, 499 F.3d 290, 297 (3d Cir. 2007).
The Court finds that Plaintiff cannot establish that personal jurisdiction over Defendant
Tanenbaum is proper under the effects test, or under a traditional minimum contacts analysis.
Therefore, the claims against Defendant Tanenbaum will be dismissed for lack of personal
jurisdiction. Consequently, the Court will not reach Defendant Tanenbaum’s alternative
arguments on the proper venue for this matter.
8
II.
Plaintiff’s Cross Motion
Plaintiff cross moves for leave to conduct jurisdictional discovery to establish that
personal jurisdiction over Defendant Tanenbaum is proper. Courts should permit jurisdictional
discovery if a plaintiff “presents factual allegations that suggest ‘with reasonable particularity’
the possible existence of the requisite ‘contacts between [the party] and the forum state.’” Toys
"R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456 (3d Cir. 2003) (alteration in original) (quoting
Mellon Bank (E.) PSFS, Nat’l Ass’n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992)). Plaintiff
has not presented allegations that suggest the possible existence of the requisite contacts.
Plaintiff requests discovery from Defendant Tanenbaum to confirm the extent of the
communications between him and Plaintiff’s former attorney Christopher Costa. (Pl.’s Br. at 30,
ECF No. 14-2). However, Attorney Costa already submitted a certification and copies of the
emails between him and Defendant Tanenbaum. (ECF No. 14-6). There is no reason to think
that Defendant Tanenbaum would have information about additional communications with
Attorney Costa beyond what Attorney Costa has already provided to Plaintiff. Plaintiff also
requests discovery about Defendant Tanenbaum’s communications with other alleged victims of
the borrowing scheme. However, as explained in the previous section, Defendant Tanenbaum’s
communications with other alleged victims who are not parties to this case are not relevant to a
specific jurisdiction analysis.
Since Plaintiff has not presented factual allegations that suggest the possible existence of
contacts that would provide this Court with personal jurisdiction over Defendant Tanenbaum,
Plaintiff’s motion to conduct jurisdictional discovery will be denied.
III.
Defendant Andrews’ Motion
Defendant Andrews moves to dismiss the claims against him for lack of personal
jurisdiction, or in the alternative, to transfer venue to the Eastern District of New York.
9
Defendant Andrews had substantially less to do with the alleged borrowing scheme than
Defendant Tanenbaum, since Plaintiff alleges that Defendant Andrews only prepared the initial
draft of the 2008 documents when Defendant Tanenbaum was apparently out of the office. (Pl.’s
Am. Compl. at ¶¶ 29-34, ECF No. 12). Defendant Andrews was not involved in the
communications between Attorney Costa and Defendant Tanenbaum about the 2008 loan
documents, nor was he allegedly involved at any later date. Using the same analysis the Court
applied to Defendant Tanenbaum, the Court finds that it lacks personal jurisdiction over
Defendant Andrews. Defendant Andrews did not purposefully avail himself of the privilege of
conducting business in New Jersey, Mellon Bank, 983 F.2d at 554, nor did he expressly aim his
allegedly tortious conduct at New Jersey, IMO Indus., 155 F.3d at 266. Therefore, the claims
against Defendant Andrews will be dismissed for lack of personal jurisdiction.
CONCLUSION
For the reasons discussed above, Defendant Tanenbaum’s and Defendant Andrews’
motions to dismiss will be granted. An appropriate order will follow.
/s/ Anne E. Thompson
ANNE E. THOMPSON, U.S.D.J.
Date: May 17, 2016
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?