The Eastboro Foundation Charitable Trust et al v. Penzer et al

Filing 32

OPINION AND ORDER re: 8 FIRST MOTION to Dismiss the Complaint filed by Abraham M. Penzer. For the reasons set forth above, Penzer's motion to dismiss (Dkt. No. 8) is GRANTED and the case is dismissed without prejudice. (Signed by Magistrate Judge Andrew J. Peck on 6/18/2013) (lmb)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

-------------------------------------X

usDCSDNY
DOCUMENT
ELECTRONICALLy FILED

~~~:FILED: 06/1 fJ1/ 3

=

THE EASTBORO FOUNDATION CHARITABLE
TRUST and JAMES BERNATH,
13 Civ. 1343 (AJP)
Plaintiffs, ·
OPINION AND ORDER
-againstABRAHAM M. PENZER and JOSHUA
ROTHENBERG,
Defendants.

-------------------------------------X
ANDREW J. PECK, United States Magistrate Judge:

Plaintiffs Eastboro Foundation and James Bernath (collectively, "Bernath") bring this
diversity action against defendants Abraham Penzer and Joshua Rothenberg, seeking $150,000 in
damages resulting from an unsuccessful real estate transaction among the parties. (Dkt. No. 1:
Compl.) Presently before the Court is Penzer's motion to dismiss for lack of personal jurisdiction,
pursuant to Fed. R. Civ. P. 12(b)(2). (Dkt. No.8: Notice ofMotion.) The parties have consented
to decision of this motion by a Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Dkt. No. 23.) For
the reasons set forth below, Penzer's motion is GRANTED and the case is dismissed without
prejudiceY

1!

Rothenberg's subsequently-filed motion to dismiss for lack of personal jurisdiction (Dkt. No.
25) is mooted by this Opinion, since Bernath has stated that ifPenzer's motion to dismiss is
granted, Bernath will sue both defendants in New Jersey. (See Bernath Counsel
Eisenberger's June 17, 2013 Letter to the Court.)

2
FACTSY

Plaintiff Bernath asserts four causes of action: legal malpractice (Dkt. No. 1: Compl.
~~ 25-28), breach of fiduciary duty (id. ~~ 29-32), conversion, embezzlement and aiding and abetting

thereof(id. ~~ 33-36), and unjust enrichment and aiding and abetting thereof(id. ~~ 37-40). All four
claims are based on the core allegation that Bernath transferred $150,000 to attorney Penzer's New
Jersey trust account for the purchase of New Jersey property, which Penzer then disbursed to
Rothenberg who purchased the property himself. (Compl.

~~

1-2, 14-15, 18-22, 28, 31, 34-35, 38-

39.)

Parties
PlaintiffBernath is a New York resident and partner at the CPA firm ofBernath &
Rosenberg, P.C. in New York City. (Dkt. No. 1: Compl.

~

7; Dkt. No. 13: Bernath Aff.

~

3.)

PlaintiffThe Eastboro Foundation is a New York Charitable Trust with an office in New York City.
(Compl. ~ 6.) Defendant Penzer is a New Jersey resident and attorney whose law office is located
in Lakewood, New Jersey. (Compl. ~~ 8, 12.) Defendant Rothenberg is a New Jersey resident and
real estate developer whose office is also located in Lakewood, New Jersey. (Compl.

~~

9, 13.)

Prior Transactions
In January and March 2010, Bernath formed RBRB Realty, LLC and RBRB Realty
II, LLC,li both New Jersey limited liability companies with New Jersey addresses. (Dkt. No. 13:
Bernath Aff.

~

6 & Ex. A: RBRB Formation Docs.) On February 16 and March 17,2010, RBRB

purchased two parcels ofland being developed by Rothenberg in Lakewood, New Jersey. (Bernath

Y

The facts are undisputed unless otherwise indicated.

21

These entities are collectively and interchangeably referred to as "RBRB."

3
Aff. ~~ 7-9.) For both purchases, Bernath sent wire transfers to Penzer's attorney trust account in
New Jersey. (Dkt. No.1: Compl. ~ 16; Bernath Aff. ~ 7; Dkt. No.9: Penzer Aff. ~~ 7-8 & Exs. B-C:
2/16/10 & 3/12/10 Wire Receipts.) Penzer prepared both sets of closing documents on behalf of
RBRB and was paid $1,000 for each one. (Bernath Aff. ~~ 7-9, 21; Bernath Aff. Exs. B-C: 2116110
& 3/17/10 Closing Docs.):!!

The Subject Transaction
In or around September 2010, Bernath intended to purchase a third parcel ofland
being developed by Rothenberg in Lakewood, New Jersey. (Dkt. No.1: Compl. ~~ 1-2, 14-15,2223.) Bernath alleges that he "spoke with Penzer directly on the phone immediately prior to [his]
making the very wire transfers which are the subject ofthis action" and "specifically recall[ s] asking
[Penzer] whether the wire transfers should be made into the same attorney escrow bank account as
the previous two similar transactions ... for the investment with Rothenberg in the Lakewood
development." (Dkt. No. 13: Bernath Aff. ~ 4.)~ On September 8, 2010, Bernath made two wire

Bernath's opposition brief points out that a fax line appearing on the top of one of the closing
documents indicates it was faxed from Penzer, but there is no allegation that the fax was sent
to New York as opposed to RBRB's New Jersey locations. (Dkt. No. 14: Bernath Opp. Br.
at 14-15; Bernath Aff. Ex. C: 3/17/10 Closing Docs.; see generally Bernath Aff.)
There is no allegation that Penzer placed the call to Bernath, and in fact Bernath's
characterization of the phone call as one in which he was asking Penzer for information
suggests that it was Bernath who called Penzer. (Dkt. No. 14: Bernath Opp. Br. at 9; see also
Dkt. No. 22: Penzer Reply Aff. ~ 3: "I categorically deny that I ever spoke with Bernath
immediately before or directly after the September 8, 2010 transfer of funds into my attorney
trust account. At no time prior to or after the September 8, 2010 transactions did Bernath
telephone me (as he contends in opposition) to ask whether the wire transfers at issue should
be made into the same attorney escrow account as the previous February 2010 and March
2010 transactions.") In any event, even assuming arguendo that Penzer placed the call, a
single phone call is jurisdictionally insignificant under C.P.L.R. §§ 301 and 302(a). See,
~'Fox v. Boucher, 794 F.2d 34, 37 (2d Cir. 1986); Hearst Corp. v. Goldberger, 96 Civ.
3620, 1997 WL 97097 at *12 & n.14 (S.D.N.Y. Feb. 26, 1997) (Peck, M.J.) (collecting
(continued ... )

4
transfers totaling $150,000 to Penzer's attorney trust account in New Jersey. (Compl. ~ 14; Dkt. No.
9: Penzer Aff. Ex. D: 9/8/10 Wire Receipts.) When the third Lakewood transaction did not "come
to fruition," Penzer disbursed Bernath's $150,000 to Rothenberg for the purchase of the New Jersey
property on Rothenberg's behalf. (Compl.

~~

18-24; Bernath Aff.

~~

25-27.)

The New York Meetini:
At some point after the $150,000 wire transfers were made, Penzer came to Bernath's
office in New York City for a meeting "involving a business that [Penzer's] client was working on
acquiring" in Bay Shore, New York-a potential transaction that admittedly is unrelated to the
transaction presently at issue. (Dkt. No. 13: Bernath Aff. ~~ 13, 16-17; Dkt. No. 22: Penzer Reply
Aff. ~ 5.) Bernath alleges that he and Penzer also "discussed" the subject transaction at the meeting,
but provides no information regarding the content, nature, duration, or any details of the alleged
discussion. (Bernath Aff. ~~ 3, 13, 16-17.) According to Penzer, while he did see Bernath when he
came to Bernath's office to meet with others, "the only communication that [Penzer] had with
Bernath was merely to say 'hello' to him in passing." (Penzer Reply Aff.

21

~~

3, 5-6.)

( ••• continued)

cases); Reiss v. Steigrod, 866 F. Supp. 747, 750 (S.D.N.Y. 1994) (Sotomayor, D.J.) ("[A]n
isolated phone call to a New York company does not constitute transacting business in the
state."); Twine v. Levy, 746 F. Supp. 1202, 1205 (E.D.N.Y. 1990) (McLaughlin, D.J.)
("Several phone calls by defendant [attorney] from Washington to New York ... do not
establish a course of doing business in New York on the part of defendants that would even
approach the threshold of doing business for purposes ofCPLR 301."); First City Nat'l Bank
& Trust Co. v. Zuckerman, 682 F. Supp. 182, 183 (S.D.N.Y. 1987) ("[T]he only other
communication originated from plaintiff, seeking to verify the transaction. . . . In sum,
plaintiff has not shown that defendant voluntarily elected to invoke the benefits and
protections of the laws ofNew York.").

5

Penzer's Le~:al Practice
Penzer is admitted to practice in New Jersey, New York and the District of Columbia.
(Dkt. No. 1: Compl. ~ 12; Dkt. No.9: Penzer Aff. ~ 3.) Penzer has been admitted to practice in New
York since 1982, his bar membership is active and his next biennial registration is due in April20 14.
(Penzer Aff.

~

3; Dkt. No. 13: Bernath Aff.

~~

14-17 & Ex. D: N.Y.S. Unified Court Sys. Docs.)

Penzer has appeared four times in New York courts, most recently in 1994. (Bernath Aff.

~

16 &

Ex. D: N.Y.S. Unified Court Sys. Docs.) Penzer asserts that he has "not been before the New York
Courts or actively engaged in the practice oflaw in the State of New York for nearly twenty (20)
years (since 1994)." (Dkt. No. 22: Penzer Reply Aff.

~

8.)

Penzer's firm is incorporated only in New Jersey, his only place ofbusiness is the
firm's office in Lakewood, New Jersey, and Penzer asserts that his practice is limited to New Jersey.
(Compl.

~~

8, 12; Penzer Aff.

~~

3-5.) Bernath does not dispute that Penzer does not have

employees, an office, address, bank account or telephone number in New York. (Penzer Aff. ~~ 45.) Penzer claims that he has no New York clients, and neither solicits business, markets, nor
advertises in New York. (Penzer Aff.

~~

4-5.) In opposition, Bernath alleges that Penzer is

"practicing law in New York" by "working on New York transactions and representing New York
clients." (Bernath Aff.

~

17.)
ANALYSIS

I.

THE STANDARDS GOVERNING A MOTION TO DISMISS FOR LACK OF
PERSONAL JURISDICTION

"On a Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction,
plaintiff bears the burden of showing that the court has jurisdiction over the defendant." In re

6
Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir. 2003); accord,~, MacDermid,
Inc. v. Canciani, No. 12-1747-cv, 2013 WL 1943258 at *1 (2d Cir. May 13, 2013).21
"Where, as here, a court relies on pleadings and affidavits, rather than conducting a
'full-blown evidentiary hearing,' the plaintiff need only make a prima facie showing that the court
possesses personal jurisdiction over the defendant." DiStefano v. Carozzi N. Am., Inc., 286 F.3d
at 84; accord,~, MacDermid, Inc. v. Canciani, 2013 WL 1943258 at *lY '"[W]here the issue is
addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff and
doubts are resolved in the plaintiffs favor[.]"' Whitaker v. Am. Telecasting. Inc., 261 F.3d at 208
(quoting A.I. Trade Fin .. Inc. v. Petra Bank, 989 F.2d 76,79-80 (2d Cir. 1993)).§!
"In assessing whether personal jurisdiction is authorized, 'the court must look first
to the [jurisdictional] statute of the forum state, in this instance New York."' Whitaker v. Am.
Telecasting. Inc., 261 F.3d at 208 (quoting Bensusan Rest. Corp. v. King, 126 F.3d 25,27 (2d Cir.

§!

See,~, Grand River Enters. Six Nations. Ltd. v. Pryor, 425 F.3d 158, 165 (2d Cir. 2005),

cert. denied, 549 U.S. 951, 127 S. Ct. 379 (2006); DiStefano v. Carozzi N. Am., Inc., 286
F.3d 81, 84 (2d Cir. 2001); Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171
F.3d 779, 784 (2d Cir. 1999); Metro. Life Ins. Co. v. Robertson-Ceca Corp., 84 F.3d 560,
566 (2d Cir.), cert. denied, 519 U.S. 1006, 1007, 117 S. Ct. 508, 508 (1996).

z;

§!

See also,~, Grand River Enters. Six Nations, Ltd. v. Pryor, 425 F.3d at 165; Whitaker v.
Am. Telecasting. Inc., 261 F.3d 196,208 (2d Cir. 2001); Bank Brussels Lambert v. Fiddler
Gonzalez& Rodriguez, 171 F.3d at 784; Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184
(2d Cir. 1998); PDK Labs. Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997); Ball v.
Matallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 196-97 (2d Cir. ), cert. denied, 498 U.S.
854, 111 S. Ct. 150 (1990).
See,~, MacDermid. Inc. v. Canciani, 2013 WL 1943258 at *1; DiStefano v. Carozzi N.
Am .. Inc., 286 F.3d at 84; PDK Labs, Inc. v. Friedlander, 103 F.3d at 1108; CutCo Indus ..
Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986); Hoffritz for Cutlery, Inc. v. Amajac.
Ltd., 763 F.2d 55, 57 (2d Cir. 1985).

7
1997)).2L "'If the exercise of jurisdiction is appropriate under that statute, the court must decide
whether such exercise comports with the requisites of due process."' Whitaker v. Am. Telecasting,
Inc., 261 F.3d at 208.lQ/
A.

General Jurisdiction Under C.P.L.R. § 301

C.P.L.R. § 301 provides, cryptically, that a "court may exercise such jurisdiction over
persons, property, or status as might have been exercised heretofore." Section 301 traditionally
applies to persons actually present in New York and to corporations "'doing business"' in New York,
'"not occasionally or casually, but with a fair degree of permanence and continuity."' Hearst Corp.
v. Goldberger, 96 Civ. 3620, 1997 WL 97097 at *8 (S.D.N.Y. Feb. 26, 1997) (Peck, M.J.) (quoting
Joseph McLaughlin, Practice Commentary to CPLR § C301:1, § C:301:2 at pp. 7-9 (McKinney's
1990)); accord,~. United Mobile Techs., LLC v. Pegaso PCS, S.A. de C.V., No. 11-2813-CV,
2013 WL 335965 at* 1 (2d Cir. Jan. 30, 2013) ("Under N.Y. C.P.L.R. § 301, general jurisdiction
is established if the defendant is shown to have 'engaged in continuous, permanent, and substantial
activity in New York."').!l!

2!

See also,~. MacDermid. Inc. v. Canciani, 2013 WL 1943258 at *1; Grand River Enters.
Six Nations, Ltd. v. Pryor, 425 F.3d at 165; DiStefano v. Carozzi N. Am .. Inc., 286 F.3d at
84; Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d at 784; Metro. Life
Ins. Co. v. Robertson-Ceca Corp., 84 F.3d at 567.

!QI

See also,~. MacDermid, Inc. v. Canciani, 2013 WL 1943258 at *1; Grand River Enters.
Six Nations, Ltd. v. Pryor, 425 F.3d at 165; Bank Brussels Lambert v. Fiddler Gonzalez &
Rodriguez, 171 F.3d at 784; Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d at 567.

l1!

See also,~. Saudi v. Marine Atl., Ltd., 306 F. App'x 653,654-55 (2d Cir. 2009); Hoffritz
for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55,58 (2d Cir. 1985) (citing N.Y. cases); Beacon
Enters .. Inc. v. Menzies, 715 F.2d 757, 762 (2d Cir. 1983).

8

B.

Specific Jurisdiction Under C.P.L.R. § 302(a)
New York "long-arm" jurisdiction is codified in C.P .L.R. § 302(a),11' which provides:
(a) Acts which are the basis ofjurisdiction. As to a cause of action arising from any
of the acts enumerated in this section, a court may exercise personal jurisdiction over
any non-domiciliary ... who in person or through an agent:
1. transacts any business within the state or contracts anywhere to supply
goods or services in the state; or
2. commits a tortious act within the state ... ; or
3. commits a tortious act without the state causing injury to person or
property within the state ... if he
(i) regularly does or solicits business, or engages in any other
persistent course of conduct, or derives substantial revenue from
goods used or consumed or services rendered, in the state, or
(ii) expects or should reasonably expect the act to have consequences
in the state and derives substantial revenue from interstate or
international commerce; or
4. owns, uses or possesses any real property situated within the state.

C.P.L.R. § 302(a).

II.

PENZER'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
IS GRANTED AND THE CASE DISMISSED
It is undisputed that Penzer has no address, phone number or employees in New

York, and that his law firm is incorporated only in New Jersey with its only office located in New
Jersey. (See page 5 above). There are no allegations that Penzer solicits business or advertises his
services in New York. (See page 5 above.) Bernath's claims arise from the transfer of funds to

111

See,~.

PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108-09 (2d Cir. 1997); Agency
Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25,29 (2d Cir. 1996); Pyramyd
Stone Int'l Corp. v. Crosman Corp., 95 Civ. 6665, 1997WL 66778 at *10 (S.D.N.Y. Feb. 18,
1997); see generally 1 M. Silberberg, Civil Practice in the Southern District ofNew York
§§ 8:15-8:29 (2d ed. 2012).

9
Penzer's New Jersey attorney trust account for the purchase of New Jersey property, which funds
were disbursed in New Jersey to a New Jersey resident, co-defendant Rothenberg. (See pages 3-4
above.)
A.

Bernath Failed to Establish a Basis for C.P.L.R. § 301 General Jurisdiction
Over Penzer

Bernath's argument for general jurisdiction is not based on evidence that Penzer has,
for example, employees, an office, real estate, a bank account, or a phone listing in New York, or
that he solicits or markets his services in New York, as typically would be required.Jl' See, ~,
Saudi v. Marine Atl., Ltd., 306 F. App'x 653,655 (2d Cir. 2009); Weiss v. Bare, Inc., 12 Civ. 7571,
2013 WL 2355509 at *2 (S.D.N.Y. May 29, 2013). Rather, Bernath argues that Penzer's license to
practice law in New York is comparable to a foreign company's registration to conduct business in
New York, and thus automatically subjects Penzer to general jurisdiction. (Dkt. No. 14: Bernath
Opp. Br. at 5-12.)
It is undisputed that an out-of-state company's registration to do business in New
York is deemed a consent to general personal jurisdiction in New York. E.g., STX Panocean (UK)
Co. v. Glory Wealth Shipping PTE Ltd., 560 F.3d 127, 131 (2d Cir. 2009) ("It is well-settled under

.!l!

To the extent Bernath intended to make such an argument, it is rejected. Because the Court
finds that Penzer's New York contacts are insufficient even to meet the standard for
"transacting business" (see pages 13-23 below), Bernath's showing necessarily falls short of
the "doing business" standard, since C.P.L.R. § 301 requires considerably more than
C.P.L.R. § 302(a)(1). :E4., MWL Brasil Rodas & Eixos LTDA v. K-IV Enters. LLC, 661
F. Supp. 2d 419,425 (S.D.N.Y. 2009) ("Courts require a higher level of contacts in cases of
general jurisdiction than in cases of specific jurisdiction .... "); Hearst Corp. v. Goldberger,
96 Civ. 3620, 1997 WL 97097 at *8 (S.D.N.Y. Feb. 26, 1997) (Peck, M.J.) (Defendant's
"contacts with New York do not even establish 'transacting business' jurisdiction under
CPLR § 302. Those contacts therefore do not establish 'doing business' jurisdiction under
CPLR § 301 either." (collecting cases)); see also McGowan v. Smith, 52 N.Y.2d 268,27273,437 N.Y.S.2d 643,645 (1981).

10

New York law that registration under [N.Y. Bus. Corp. Law]§ 1304 subjects foreign companies to
personal jurisdiction in New York."). There is no comparable caselaw, however, construing an
attorney's license to practice law as an automatic consent to general personal jurisdiction; in fact,
courts have rejected that argument on a number of occasions.

See,~'

Mangia Media Inc. v. Univ.

Pipeline, Inc., 846 F. Supp. 2d 319, 323 (E.D.N.Y. 2012) ("Plaintiff cites no authority for the broad
exercise of general jurisdiction over each and every member of the Bar of this State."); Lans v.
Adduci Mastriani & Schaumberg L.L.P., 786 F. Supp. 2d 240, 284 n.29 (D.D.C. 2011) ("[I]t has
been widely held that membership in a state Bar does not have any impact on the jurisdictional
analysis." (collecting cases)); Worthington v. Small, 46 F. Supp. 2d 1126, 1134 (D. Kan. 1999) ("In
short, other than maintaining his Kansas law license, defendant has had very few contacts with
Kansas in recent years. These limited contacts are not sufficiently 'continuous and systematic' to
enable this court to exercise general jurisdiction over defendant. ").li1

See also,~' McCabe v. Floyd Rose Guitars, No. 10CV581, 2012 WL 1409627 at *3 (S.D.
Cal. Apr. 23, 2012) ("[T]hat [the firm's] attorneys are licensed in California ... does not
convince the Court that [the firm's] contacts are so systematic and continuous that general
jurisdiction is appropriate."); Santos v. Sacks, 697 F. Supp. 275, 281-82 (E.D. La. 1988)
("[M]embership in the Florida Bar does not, of itself, establish the minimum contacts
required by due process to confer personal jurisdiction over a nonresident defendant.
[Plaintiffs cited authority] only recognized that the requisite minimum contacts to sustain
'general jurisdiction' are established where a foreign corporation is qualified under Florida
law to transact business in Florida .... " (fn. omitted)); Baker v. Eighth Judicial Dist. Court,
116 Nev. 527, 532, 999 P.2d 1020, 1023 (2000) ("At least two jurisdictions have held that
membership in the state bar, in and of itself, does not subject an individual to general
jurisdiction in the state of membership because such contact is not substantial, continuous,
or systematic. We agree with [those] courts that state bar membership does not necessarily
implicate substantial, continuous, or systematic contact." (citations omitted)); Katz v. Katz,
310 N.J. Super. 25, 33, 707 A.2d 1353, 1356 (App. Div. 1998) ("[D]efendant's license to
practice law in this state does not afford a basis to exercise in personam jurisdiction over him
in a matter totally unrelated to his professional license. Our research has not disclosed a
reported New Jersey case which has considered the issue, but there are authorities from other
jurisdictions which have reached·such a conclusion. We agree with the views expressed in
(continued ... )

11

Nor do Penzer's "affirmative steps of renewing the [N.Y. attorney] registrations,
paying the fees and completing the 24 accredited New York CLE credit hours every two years"
(Bernath Opp. Br. at 10) command a different result. See Baker v. Eighth Judicial Dist. Court, 116
Nev. at 532-33,999 P.2d at 1023-24 ("Although ... nonresident bar members are regulated by our
supreme court rules ('SCR'), we conclude that a nonresident bar member could comply with these
rules without having continuous and systematic contact with the State of Nevada. In fact, a
nonresident, nonpracticing bar member's compliance with the SCR could consist solely of sending
a yearly check and an address update form upon relocation. Accordingly, we conclude that the
district courts of Nevada lack general jurisdiction over [plaintiff] on the basis of his bar
membership." (fn. omitted)); Advance Petroleum Serv., Inc. v. Cucullu, 614 So. 2d 878, 880 (La.
App. Div.) (no jurisdiction where defendant "graduated from a Louisiana Law School and is licensed
to practice in Louisiana and has attended the requisite CLE courses to maintain his license"), writ
denied, 617 So. 2d 911 (La. 1993).
Bernath relies heavily on Penzer's statutory appointment of a New York agent for
service of process as required by the regulations governing non-resident members of the New York
Bar:

HI

( ... continued)

Lebkuecherv. Loquasto, [255 Pa. Super. 608,611,389 A.2d 143, 145 (1978)], in which the
court said '[t]he mere possession of a license accomplishes nothing in the way of pecuniary
gain; it only broadens opportunities for such gain. It is the actual practice of a profession
in Pennsylvania and not the possession of the right to practice that brings a person within the
jurisdiction of a ... [c]ourt .... "' (collecting cases, emphasis added, citations omitted));
Crea v. Busby, 48 Cal. App. 4th 509,515,55 Cal. Rptr. 2d 513,516 (1996) ("[R]espondent's
contacts with California are insufficient to justify the exercise of general jurisdiction over
him. The only contact respondent has had with California is the maintenance of his
California law license.").

12
Penzer consented to the exercise of personal jurisdiction when he registered
to practice law in the State ofNew York, and accordingly designated the Clerk ofthe
Appellate Division as his agent for service of process pursuant to the Rules of the
Court of Appeals for the Admission of Attorneys and Counselors at Law, 22
NYCRR Part 520, Section 520.13. This is a similar concept to the requirement that
a foreign corporation registering to do business here appoints the Secretary of State
to accept service, and is deemed to have thereby consented to New York jurisdiction
under CPLR Section 301 for all purposes, regardless ofwhether it actually engages
in New York activities or whether the claim arises from such activities.
(Bernath Opp. Br. at 6.) This argument fails because the Business Corporation Law requires
appointment of an agent for all purposes, whereas the attorney regulation only requires appointment
of an agent for specific cases, i.e., actions arising from New York legal services.UI
Because appointment ofthe Appellate Division as Penzer's agent only extends to the
specific type of action stated in the regulation, it is not a consent to general jurisdiction. Cf., ~'
Advance Realty Assocs. v. Krupp, 636 F. Supp. 316,317-18 (S.D.N.Y. 1986) ("Plaintiff argues that
the registration ... pursuant to N.Y. Gen. Bus. L. § 352-b manifests the defendants' consent to
general jurisdiction in New York. ... When a foreign individual or entity registers under§ 352-b,
it appoints the secretary of state to receive process for it 'in any action, investigation or proceeding
brought or conducted by the attorney general under the provisions or New York's securities laws.
Obviously, this is not such an action. Defendants could not ... consent to anything more than what

121

Compare N.Y. Bus. Corp. Law§ 304(a) ("The secretary of state shall be the agent of every
domestic corporation and every authorized foreign corporation upon whom process against
the corporation maybe served."), and N.Y. Bus. Corp. Law§§ 304(b), 1304(a)(6), with N.Y.
Comp. Codes R. & Regs. tit. 22, § 520.13(a) ("Every applicant for admission to practice who
does not reside and is not employed full-time in the State shall be required, as a condition
of admission, to execute and file with the Appellate Division . . . a duly acknowledged
instrument ... designating the clerk of such Appellate Division as the applicant's agent upon
whom process may be served ... in any action or proceeding thereafter brought against the
applicant and arising out of or based upon any legal services rendered or offered to be
rendered by the applicant within the State." (emphasis added)).

13
the statute says. Mere registration pursuant to § 352-b does not create general jurisdiction over the
defendants.") .1.&1
Accordingly, because Penzer's New York law licence is not deemed a consent to
general jurisdiction, and because the present claims do not arise from legal services Penzer rendered
in New York, Bernath has not established that personal jurisdiction over Penzer is appropriate under
C.P.L.R. § 301.

B.

Bernath Failed to Establish a Basis for C.P.L.R. § 302 Specific Jurisdiction
Over Penzer
1.

C.P.L.R. § 302(a)(l): Transaction of Business in New York

"Section 302(a)(l) is typically invoked for a cause of action against a defendant who
breaches a contract with plaintiff, or commits a commercial tort against plaintiff in the course of
transacting business or contracting to supply goods or services in New York." Beacon Enters., Inc.
v. Menzies, 715 F.2d 757, 764 (2d Cir. 1983) (citations omitted);

accord,~.

Chloe v. Queen Bee

of Beverly Hills, LLC, 616 F.3d 158, 171 (2d Cir. 2010).

See also, ~. Arkwright Mut. Ins. Co. v. Scottsdale Ins. Co., 874 F. Supp. 601, 605
(S.D.N.Y. 1995); Weinstein v. KmartCorp., 99A.D.3d997, 997, 952N.Y.S.2d459,459 (2d
Dep't 2012) (Insurance company's "statutorily required appointment of the Superintendent
of Insurance as its agent for service of process 'in any proceeding against it on a contract
delivered or issued for delivery, or on a cause of action arising, in this state,' constituted a
consent to jurisdiction for claims within the scope of that appointment." (emphasis added,
citation omitted)); Muollo v. Crestwood Vill., Inc., 155 A.D.2d 420,421-22, 547 N.Y.S.2d
87, 88-89 (2d Dep't 1989) ("We reject the plaintiffs contention that a foreign corporation's
designation, under General Business Law§ 352-a(l) or§ 352-b(l), of the Secretary of State
as an agent to receive process, constitutes consent to personal jurisdiction in any action
brought in New York State .... Unlike Business Corporation Law §§ 304 and 1304, a
foreign corporation's appointment ofthe Secretary of State as an agent to receive process for
it under General Business Law § 352-a and§ 352-b is limited by the statute to receipt of
process in any action, investigation or proceeding brought or conducted by the AttorneyGeneral under the provisions of the Martin Act. Since this is not such an action, the
defendant cannot be deemed to have consented to the plaintiff acquiring personal jurisdiction
over it in this State.").

14
"'[I]n order for personal jurisdiction over [Penzer] to lie in New York [under C.P .L.R.

§ 302(a)( 1), Penzer] must have transacted business in this state and the cause of action must arise
out of such transaction.'" Rolls-Royce Motors, Inc. v. Charles Schmitt & Co., 657 F. Supp. 1040,
1050 (S.D.N.Y. 1987);

accord,~.

Reiss v. Steigrod, 866 F. Supp. 747, 749 (S.D.N.Y. 1994)

(Sotomayor, D.J.). As the Court further explained in Rolls-Royce:
The test [under C.P.L.R. § 302(a)(l)] is hardly a precise one; the court must look at
the aggregation of defendant's activities, coupled with the selective weighing of the
various actions. Moreover, it is the "nature and quality, and not the amount ofNew
York contacts [which] must be considered by the court." Primary factors to consider
include the physical presence of defendant in New York, the risk ofloss as it effects
the New York transaction, and the extent to which the contract is performed inN ew
York.
Rolls-Royce Motors, Inc. v. Charles Schmitt & Co., 657 F. Supp. at 1050-51 (citations omitted).
In arguing that Penzer transacted business in New York and that the claims arise out
of that transaction, Bernath asserts that Penzer is "practicing law in New York on a regular ongoing
basis" (Dkt. No. 14: Bernath Opp. Br. at 11), relying on: (a) Penzer's maintenance of a New York
law license "with efforts in New York that include taking New York CLE courses, in order to invoke
the benefits and privileges of doing business here," as well as Penzer's four New York court
appearances between 1987 and 1994 (Bernath Opp. Br. at 10; Dkt. No. 13: Bernath Aff. Ex. D:
N.Y.S. Unified Court Sys. Docs.); (b) Penzer's meeting at Bernath's New York office regarding a
potential property transaction in Bay Shore, New York (Bernath Opp. Br. at 10-11); and (c) that
"Bernath ... , and [the RBRB] LLCs that [he] formed, were Penzer's clients on the two prior
transactions, and the third identical transaction which is the subject [o]f this lawsuit" (Bernath Opp.
Br. at 11; see pages 2-3 above).

15

a.

New York Bar Membership and Court Appearances

Bernath's claims are based on an intended real estate transaction in New Jersey,
namely, the purchase of New Jersey property from a New Jersey seller. (See page 3 above.) The
acts and omissions alleged to constitute Penzer's attorney malpractice and the related claims of
unlawfully disbursing Bernath's funds from Penzer's New Jersey attorney trust account to a New
Jersey resident, also took place in New Jersey. (See pages 3-4 above.)
Accordingly, even assuming arguendo that Penzer's maintenance of an active New
York license constitutes a transaction of business, Bernath's claims relate exclusively to actions
Penzer took in New Jersey in connection with a New Jersey transaction, and thus do not arise from
Penzer's membership in the New York bar.

See,~'

Lipin v. Hunt, 538 F. Supp. 2d 590, 598

(S.D.N.Y. 2008) ("None of Plaintiffs causes of actions arise from [defendant's] admission to
practice in New York. Even assuming that admission to the New York bar can be considered a
transaction of business in New York and that acts taken as an attorney might 'arise from' that
attorney's admission to practice, all ofPlaintiffs allegations relating to actions taken by [defendant]
in his capacity as a[n] attorney relate to actions taken in connection with proceedings in Maine
courts. Such actions do not arise from [defendant's] admission to the New York bar in any way.");lZI

JJ.!

See also,~' BHC Interim Funding. LP v. Bracewell & Patterson, LLP, 02 Civ. 4695,2003
WL 21467544 at *8 (S.D.N.Y. June 25, 2003) ("Nor does the allegation that certain of
[defendant law firm's] lawyers are admitted to practice in New York establish, alone or in
combination with the client census allegations, purposeful availment. Plaintiffhas neither
alleged nor offered evidence that [defendant law firm] has made specific efforts to make
itself known in the New York legal market, or to establish a client base here."); Worthington
v. Small, 46 F. Supp. 2d 1126, 1130 (D. Kan. 1999) ("[P]laintiffs argument that defendant's
membership in the Kansas bar ... constitutes the 'transaction of business' for purposes of
long-arm jurisdiction is not persuasive."); Santos v. Sacks, 697 F. Supp. 275, 279-80 (E.D.
La. 1988) ("Plaintiffs allege that the [attorney] defendants are subject to personal jurisdiction
in Florida under ... the Florida long-arm statute because they practice law in Florida on a
(continued ... )

16
cf., ~'Ghanem v. Kay, 624 F. Supp. 23, 25 n.6 (D.D.C. 1984); Johnson v. Ward, 4 N.Y.3d 516,
520,797 N.Y.S.2d 33, 35 (2005) ("Plaintiffs' cause of action arose out of[New Jersey] defendant's
allegedly negligent driving inNew Jersey, not from the issuance of aNew York driver's license or
vehicle registration .... The negligent driver could have had a license from any state, or no
license-that defendant had a New York license and registration is merely coincidental. As such,
plaintiffs cannot rely on CPLR 302(a)(l) to establish long-arm jurisdiction .... "); Polansky v.
Gelrod, 20 A.D.3d 663, 664, 798 N.Y.S.2d 762, 764 (3d Dep't 2005) ("[E]ven if [defendant's]
license were deemed to constitute the transaction of business in the state, there is no allegation or
proof of a substantial nexus between his transactions in New York and plaintiffs cause of action.").
Penzer's appearances in New York courts in unrelated matters in 1987, 1991 and
1994 are jurisdictionally irrelevant. Penzer's last New York court appearance was nearly twenty
years ago, which falls outside the scope of conduct courts generally consider in a personal
jurisdiction analysis.

See,~'

Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F .3d 560, 569-70

(2d Cir.) (holding a six-year limit on the conduct to be considered in jurisdictional analyses was
reasonable, citing cases imposing limits ranging from three to seven years), cert. denied, 519 U.S.

111

( ... continued)
continuing basis .... Plaintiffs in the instant case have failed to satisfy the requirements of
[Florida's long-arm statute] because their malpractice action against the [attorney]
defendants is based on acts or omissions which occurred in Louisiana."); Crea v. Busby, 48
Cal. App. 4th 509,516,55 Cal. Rptr. 2d 513,516 (1996) ("[R]espondent's activities within
California are also insufficient for the state to exercise limited jurisdiction over him. First,
appellant's cause of action does not arise out of an act or transaction completed within
California; respondent's legal representation concerning the breach of the licensing
agreement took place entirely in Oregon. Secondly, respondent has not purposely availed
himself of the privileges of conducting activities in California, thereby invoking the benefits
and protection of its laws. There is no evidence of any purposeful activity on respondent's
part from which it can be inferred that he intended to conduct business in California, nor
does the maintenance of his California law license confer any benefit from or protection of
California law upon his legal practice in Oregon." (emphasis added)).

17
1006, 1007, 117 S. Ct. 508, 508 (1996) ..W Moreover, as with Penzer's New York bar membership,
the instant action is based entirely on conduct alleged to have taken place in New Jersey in
connection with a New Jersey transaction, and does not arise from Penzer's decades-old practice in
New York courts. (See cases cited at pages 15-16 & n.17 above.) In any event, courts decline to
base personal jurisdiction on unrelated or insignificant court appearances. See,

~.

Mayes v.

Leipziger, 674 F.2d 178, 185 (2d Cir. 1982) (finding no basis for jurisdiction over California
attorneys who appeared in California action on behalf of New York client); Pisani v. Diener, No.
07-CV-5118, 2009 WL 749893 at *6 (E.D.N.Y. Mar. 17, 2009) (where claim was based on
"attorney's conduct in connection with representing plaintiff in" foreign state and "plaintiff offers
no argument or allegations that suggest that any of the alleged conduct ... took place in New York,"
court held "there is no prima facie showing of personal jurisdiction"); Worthington v. Small, 46 F.
Supp. 2d at 1131.

b.

TheN ew York Meetine and the Potential Bay Shore Transaction

The only conduct that occurred in New York was Penzer's attendance at a single
meeting at Bernath's New York office, "the main purpose" of which was to meet with others
regarding a potential transaction in Bay Shore, New York, during which Penzer also allegedly spoke
with Bernath about the subject transaction. (Dkt. No. 14: Bernath Opp. Br. at 10-11; see page 4
above.) This meeting is relevant, Bernath suggests, because it shows that Penzer was conducting

.lli'

See also,~. Worthington v. Small, 46 F. Supp. 2d at 1134 ("Specifically, plaintiff alleges
that defendant, as an attorney licensed to practice law in Kansas, has represented clients in
seven cases filed in the United States District Court for the District of Kansas since 1990.
Significantly, however, only two of those cases were filed after 1992. Plaintiff also alleges
that defendant has appeared as a defendant in eight cases in Kansas state court. All of those
cases were filed in 1990 or 1991. In short, other than maintaining his Kansas law license,
defendant has had very few contacts with Kansas in recent years.").

18
other business in New York, i.e., negotiating the potential purchase of property in Bay Shore, and
because Penzer's alleged discussion with Bernath regarding the subject transaction provides a nexus
between New York and the present claims.
For a single meeting in New York to justify the exercise of personal jurisdiction
pursuant to C.P.L.R. § 302(a)(l), the meeting must have played "'a significant role in establishing
or substantially furthering the relationship of the parties."' Three Five Compounds, Inc. v. Scram
Techs., Inc., 11 Civ. 1616,2011 WL 5838697 at *4 (S.D.N.Y. Nov. 21, 2011).!21 Meetings which
are merely "exploratory, unproductive, or insubstantial are insufficient to establish" personal
jurisdiction. United Computer Capital Corp. v. Secure Prods., L.P., 218 F. Supp. 2d at 278.'1:Sl.1
As to Bernath's assertion that Penzer discussed theNew Jersey real estate transaction
with Bernath while Penzer was present in New York, Bernath provides no detail as to the content
of the alleged discussion, and Penzer asserts that there was no discussion at all, merely a "'hello"'
in passing. (See page 4 above.) Bernath's allegations are inadequate to establish that this sole
discussion in New York was sufficiently significant to establish a basis for personal jurisdiction.
Jig,_, Three Five Compounds. Inc. v. Scram Techs .. Inc., 2011 WL 5838697 at *4; United Computer
Capital Corp. v. Secure Prods., L.P., 218 F. Supp. 2d at 279 ("These meetings relate only indirectly

1.21

Accord,~.

?:S1I

See also,~. Buccellati Holding Italia SPA v. Laura Buccellati. LLC, 11 Civ. 7268,--- F.
Supp. 2d ----, 2013 WL 1248416 at *7 (S.D.N.Y. Mar. 27, 2013) ("Meetings and
communications that never result in a business relationship or transaction do not provide a
basis for the exercise of personal jurisdiction." (collecting cases)); Presidential Realty Corp.
v. Michael Square W., Ltd., 44 N.Y.2d 672, 673, 405 N.Y.S.2d 37, 38 (1978) ("[P]hysical
presence alone cannot talismanically transform any and all business dealings into business
transactions under CPLR 302.").

Druck Corp. v. Macro Fund (U.S.) Ltd., 102 F. App'x 192, 194 (2d Cir. 2004);
United Computer Capital Corp. v. Secure Prods .. L.P., 218 F. Supp. 2d 273,278 (N.D.N.Y.
2002).

19
to plaintiffs claims against defendants, representing mere link[ s] in the chain of events leading to
the claim[ s] for which relief is sought, and they are insufficient to justify the assertion of personal
jurisdiction over the defendants." (citation omitted)); McGowan v. Smith, 52 N.Y .2d 268, 272, 43 7
N.Y.S.2d 643,645 (1981); Presidential Realty Corp. v. Michael Square W., Ltd., 44 N.Y.2d at 67374,405 N.Y.S.2d at 38 ("Jurisdiction, if any, under New York's long-arm statute would appear in
this instance to turn on the extent of defendants' activities in New York State at the alleged
conference .... No reliance can be placed on any attendant negotiations on that day since no proof
is tendered ... of the fact or the extent of any negotiations. Therefore on the record before us there
is no proof of any contacts with this State other than the fact that the modification letter and the
agreement were signed in New York. This is not sufficient to confer jurisdiction. ").W
Indeed, while no date is provided, it appears the meeting took place after the
September 2010 wire transfers were complete, since they allegedly were discussed (see page 4
above); thus, the relationship between Penzer and Bernath that is at issue in this action already
existed, and was not established or substantially furthered by this meeting. See, ~. MEE Direct,
LLC v. Tran Source Logistics, Inc., 12 Civ. 6916,2012 WL 6700067 at *5 (S.D.N.Y. Dec. 26, 2012)

See,~. Sher v. Johnson, 911 F .2d 1357, 1363 (9th Cir. 1990) ("It may be said, of course,
that by coming to California in connection with the representation, the partnership conducted
its business in that state. We do not believe, however, that in the context of the 'parties'
actual course of dealing,' the partnership was availing itself of any significant California
privilege by coming into the state to talk to its client. The three trips to California ... appear
to have been little more than a convenience to the client, who would otherwise have had to
travel to Florida. We find these contacts too attenuated to create a 'substantial connection'
with California." (citation omitted)); see also,~. La Piel, Inc. v. Richina Leather Indus.
Co., No. 10-CV-1050, 2013 WL 1315125 at *13 (E.D.N.Y. Mar. 29, 2013); Winston &
Strawn v. Dong Won Sees. Co., 02 Civ. 0183,2002 WL 31444625 at *4 n.3 (S.D.N.Y. Nov.
1, 2002) ("The fraction of the time spent by [the attorney) in New York is insufficient to
result in a finding that performance of work associated with the California litigation occurred
in the state."); Nader v. Getschaw, 99 Civ. 11556,2000 WL 1471553 at *5 (S.D.N.Y. Sept.
29, 2000).

20
(Plaintiff" alleges that [defendant] attended a freight review meeting, as well as two negotiations
related to the allegedly converted funds, in its Manhattan offices .... [Plaintiff] does not allege that
the meetings, which were conducted subsequent to the formation of the Agreement, were necessary
to or substantially advanced its business relationship with [defendant]. Therefore, the meetings do
not support the exercise of personal jurisdiction." (emphasis added)); Dogan v. Harbert Constr.
Corp., 507 F. Supp. 254, 262 (S.D.N.Y. 1980) ("The plaintiff also asserts that the August 29th
meeting between the parties at [plaintiffs] attorney's office in New York constitutes a transaction
of business here since the discussions were essential to the continuance ofthe contract between the
parties. I disagree. [Plaintiff] declares that 'at the meeting we discussed the ongoing relationship
between the parties and the obligations I felt [defendant] owed to me and SA/DO.' Such a meeting
to discuss differences under an existing contract has no jurisdictional significance in New York."
(citation omitted)); Greco v. Ulmer & Berne L.L.P., 23 Misc. 3d 875, 889, 879 N.Y.S.2d 885, 897
(Sup. Ct. Kings Co. 2009) ("[E]ven ifthe alleged meetings did take place, there is no support for the
claim that they were 'essential to the formation or continuance' of the relationship between
[defendants] and plaintiffs, since they took place long after the Finn began its representation of the
Trust and its trustee." (emphasis added)).
Bernath admits that the potential transaction in Bay Shore, New York was completely
unrelated to the New Jersey transaction that is the subject of this action-it did not even involve
Bernath-and thus it cannot be said that Bernath's claims arise from or are based on that transaction.
See,~.

Ferrante Equip. Co. v. Lasker-Goldman Corp., 26 N.Y.2d 280, 284, 309 N.Y.S.2d 913,

917 (1970); Greco v. Ulmer & Berne L.L.P., 23 Misc. 3d at 888, 879 N.Y.S.2d at 896-97 ("[T]he
court concludes that the [law firm] defendants are not subject to the jurisdiction of the courts ofNew
York. ... In the first instance, [the former trustee] is not a plaintiff in the instant action, so that any

21
meetings that he may have had with the [law firm] defendants are irrelevant to a determination of
whether movants are subject to jurisdiction here .... Also significant is the court's finding that [the
former trustee's] claim that he met with [defendant attorneys] in New York is patently incredible in
view of the fact that he fails to provide any details with regard to the alleged meetings .... ").

c.

Prior Representation in Two Previous Transactions

The evidence Bernath submits to prove that Penzer was Bernath's attorney in two
prior transactions shows, if anything, that Penzer represented two New Jersey limited liability
companies (RBRB) in these transactions. (See pages 2-3 above.) The transactions for which Penzer
provided the alleged representations occurred in New Jersey, and involved the purchase ofNew
Jersey property from New Jersey sellers on behalf ofthe New Jersey RBRB entities. (See pages 2-3
above.) Accordingly, the evidence of these prior transactions offers no support for Bernath's
position.W

See,~. Becker Mall Props. v. Centura Bank, 93 Civ. 3730, 1993 WL 364456 at *1-2
(S.D.N.Y. Sept. 10, 1993) ("Plaintiffs arguments in favor ofjurisdiction under [C.P.L.R. §
302(a)(l)] are misplaced; while a single transaction of business may create personal
jurisdiction in certain circumstances, the present transaction does not present such
circumstances. The Lease in question originally executed in North Carolina by two North
Carolina entities pertains to property in North Carolina. That the North Carolina partnership
leasing the property was acquired eight year[s] later by a New Jersey partnership whose
managing agent is in New York does not give rise to a transaction ofbusiness. By virtue of
the fortuity of plaintiffs agent's location inN ew York, defendant has had to correspond by
telephone and mail with New York for matters relevant to the Lease and to the present
dispute. Such contacts are infinitesimal and do not indicate purposeful availment of the
privilege of conducting activities within the state of New York thus invoking the benefits
and protection of its laws." (fn. & quotations omitted)); Greco v. Ulmer & Berne L.L.P., 23
Misc. 3d 875, 878, 885, 879 N.Y.S.2d 885, 889, 894 (Sup. Ct. Kings Co. 2009) (declining
to exercise personal jurisdiction over law firm in malpractice action where "the Firm never
entered into a written retainer agreement with plaintiffs" and "when the Firm agreed to
represent the trustee and the Trust, the trustee was a Delaware entity").

22
Moreover, assuming arguendo that Bernath (rather than RBRB) was Penzer's client
in these prior transactions (and even the subject transaction), New York courts decline to base the
exercise of personal jurisdiction on the mere fact that an attorney's client was aNew York resident
where, as here, New York law was not implicated and the representation had no connection to New
York.

See,~,

Mayes v. Leipziger, 674 F.2d 178, 185 (2d Cir. 1982) ("We do not believe that in

these circumstances the New York courts would exercise jurisdiction solely on the basis that the
defendants, from California, reported to their New York client and sought the wherewithal (i.e.,
funds, authority, and information) by means of letters and calls to New York to perform their
non-New York services."); Epstein v. Thompson, 09 Civ. 8696,2010 WL 3199838 at *3 (S.D.N.Y.
Aug. 12, 2010) ("The fact that an attorney's client resides in New York does not mean that the
attorney transacts business in New York. Nor do contacts between out-of-state attorneys and New
York clients confer jurisdiction over the attorneys, where, as here, the attorneys perform all legal
work outside New York." (citation omitted)); Forgash v. Paley, 659 F. Supp. 728,730-31 (S.D.N.Y.
1987) ("While [plaintiff] and [defendant] may have worked together previously to obtain financing
for real estate in New York, defendants have not transacted business in New York with respect to
the financing for the New Jersey property .... Moreover, a defendant, absent other factors, will not
be subject to suit in New York simply because a New York resident solicited his services, or that
the defendant placed telephone calls to and corresponded with a New York business in connection
with the purchase and sale of out-of-state property." (fn. omitted)); Bill-Jay Mach. Tool Corp. v.
Koster Indus., Inc., 29 A.D.3d 504, 505, 816 N.Y.S.2d 115, 117 (2d Dep't 2006) ("Although
[plaintiff] did establish that [defendant] knew it was contracting with, and performing services for,

23
a New York resident, such minimal contacts without more are insufficient to confer personal
jurisdiction under New York's long-arm statute. ").lll
2.

C.P.L.R. § 302(a)(2): Tortious Act Committed in New York

Personal jurisdiction over Penzer is not appropriate under the second prong ofNew
York's long-arm statute, C.P.L.R. § 302(a)(2). Bernath's claims arise out of a New Jersey attorney's
conduct in connection with the disbursement of funds that Bernath transferred to a New Jersey bank
account for a real estate transaction involving the purchase of New Jersey property from a New
Jersey seller. (See pages 3-4 above.) Bernath does not allege that Penzer committed tortious acts
within New York State. (Dkt. No.1: Compl. ~~ 28, 31,34-35, 38-39.) Bernath therefore has not
made a prima facie showing that personal jurisdiction over Penzer is appropriate under C.P .L.R.
§ 302(a)(2).

See,~, Bank Brussels Lambertv.

Fiddler Gonzalez & Rodriguez, 171 F.3d 779,789-

90 (2d Cir. 1999) ("At minimum, to qualify for jurisdiction under [C.P.L.R. § 302(a)(2)], 'a
defendant's act or omission [must have] occur[red] within the state.' ... [A] defendant's physical
presence in New York is a prerequisite to jurisdiction under§ 302(a)(2)."); Bensusan Rest. Corp.
v. King, 126 F.3d 25, 28-29 (2d Cir. 1997); Longines-Wittnauer Watch Co. v. Barnes & Reinecke,
Inc., 15 N.Y.2d 443, 460, 261 N.Y.S.2d 8, 21, cert. denied, 382 U.S. 905, 86 S. Ct. 241 (1965);

lll

See also,~' Stair v. Calhoun, No. 07-CV-03906, 2009 WL 792189 at *7 (E.D.N.Y. Mar.
23, 2009); BHC Interim Funding, LP v. Bracewell & Patterson. LLP, 02 Civ. 4695, 2003
WL 21467544 at *8 (S.D.N.Y. June 25, 2003) ("That [defendant] has clients that are based
in New York is not indicative of such purposeful availment-Plaintiff does not allege that
[defendant] secured those clients by advertising in New York, or that it established any sort
of presence here in connection with those relationships."); Harris v. Mar. Asbestosis Legal
Clinic, 89 Civ. 7579, 1991 WL 2853 at *3 (S.D.N.Y. Jan. 10, 1991); Weiss v. Greenburg,
Traurig, Askew, Hoffman, Lipoff. Quentel & Wolff. P.A., 85 A.D.2d 861, 861, 446
N .Y .S.2d 44 7, 449 (3d Dep't 1981) ("The fact that defendant knew it was dealing with a New
York resident, or that its employees traveled to New York on two separate occasions to
attend depositions is not sufficient in and of itself to establish personal jurisdiction under
CPLR 302.").

24
Lehigh Valley Indus .. Inc. v. Birenbaum, 527 F.2d 87,93-94 (2d Cir. 1975) ("[T]he bland assertion
of conspiracy or agency is insufficient to establish jurisdiction for the purposes of section
302(a)(2).").
3.

C.P.L.R. § 302(a)(3): Tortious Act Causin2 Injury in New York

Personal jurisdiction over Penzer is not appropriate under the third prong of New
York's long-arm statute, C.P .L.R. § 302(a)(3 ). '"[C]ourts determining whether there is injury in New
York sufficient to warrant § 302(a)(3) jurisdiction must generally apply a situs-of-injury test, which
asks them to locate "the original event which caused the injury.'"" Whitaker v. Am. Telecasting.
Inc., 261 F.3d 196, 209 (2d Cir. 2001) (quoting Bank Brussels Lambert v. Fiddler Gonzalez &
Rodriguez, 171 F.3d 779, 791 (2d Cir. 1999)); DiStefano v. Carozzi N. Am .. Inc., 286 F.3d 81, 84
(2d Cir. 2001 ). "'[T]he situs of the injury is the location of the original event which caused the
injury, not the location where the resultant damages are felt by the plaintiff."' Whitaker v. Am.
Telecasting. Inc., 261 F.3d at 209 (quoting Mareno v. Rowe, 910 F.2d 1043, 1046 (2d Cir. 1990)
(where plaintifflived in New York and sued his New Jersey employer for wrongful discharge, situs
of injury was location of events which caused injury, i.e., New Jersey, not place where economic
consequences were felt, i.e., New York), cert. denied, 498 U.S. 1028, 111 S. Ct. 681 (1991)); see
also,~.

Hermann v. Sharon Hosp .. Inc., 135 A.D.2d 682,683,522 N.Y.S.2d 581,583 (2d Dep't

1987) ("The situs ofthe injury is the location ofthe original event which caused the injury, not the
location where the resultant damages are subsequently felt by the plaintiff."). As the Second Circuit
has stated, "'[t]he occurrence of financial consequences in New York due to the fortuitous location
of plaintiffs in New York is not a sufficient basis for jurisdiction under § 302(a)(3) where the
underlying events took place outside New York.'" Whitaker v. Am. Telecasting. Inc., 261 F.3d at

25
209.M-' "Under the situs-of-injury test," where "the 'original event' that caused the economic harm
to [Bernath] was [] the disbursement of the funds," the situs of Bernath's injury is the place where
the funds were disbursed, here New Jersey. Bank Brussels Lambert v. Fiddler Gonzalez &
Rodriguez, 171 F.3d at 792.
Bernath's claims arise out of a New Jersey attorney's alleged misconduct in the
disbursement of Bernath's funds, intended for the purchase of property in New Jersey, from a New
Jersey bank account to a New Jersey resident. (See pages 3-4 above.) While Bernath alleges that
Penzer committed tortious acts in New Jersey, the complaint does not contain any allegations that
those alleged tortious acts had any effect in New York State sufficient to establish a basis for
jurisdiction under C.P.L.R. § 302(a)(3).lli Nor has Bernath submitted any evidence that Penzer
expected his actions in New Jersey to have consequences in New York,

see,~'

Bensusan Rest.

Corp. v. King, 126 F.3d 25,29 (2d Cir. 1997) (New York "restricted the exercise of jurisdiction
under sub-paragraph [302] (a)(3) to persons who expect or should reasonably expect the tortious act
to have consequences in [New York] state"),~ or that Penzer "regularly does or solicits business,

W

See also,~' Twine v. Levy, 746 F. Supp. 1202, 1206 (E.D.N.Y. 1990) (McLaughlin, D.J.)
("That the plaintiff is domiciled in New York does not mean that New York is the situs of
the injury.").

lll

See,~' Nader v. Getschaw, 99 Civ. 11556, 2000 WL 1471553 at *5 (S.D.N.Y. Sept. 29,
2000); Twine v. Levy, 746 F. Supp. at 1206-07; Weiss v. Greenburg. Traurig. Askew.
Hoffman. Lipoff. Quentel & Wolff. P.A., 85 A.D.2d 861, 862,446 N.Y.S.2d 447, 449 (3d
Dep't 1981) ("[T]he situs of a nonphysical, commercial injury is where 'the critical events
associated with the dispute took place.' Since any alleged acts of legal malpractice took
place in Florida, and were related to a security interest in Florida property, it cannot be said
that injury was sustained in New York." (citations omitted)).

~

See also,~' Bill-Jay Mach. Tool Corp. v. Koster Indus .. Inc., 29 A.D.3d 504, 506, 816
N.Y.S.2d 115, 117-18 (2d Dep't 2006) ("Assuming, without deciding, that [defendant]
committed a 'tortious act' in California, [plaintiff} failed to establish, on this record, that
(continued ... )

26
or engages in any other persistent course of conduct" or" derives substantial revenue from interstate
or international commerce." C.P.L.R. § 302(a)(3).W
Bernath has not made a prima facie showing that personal jurisdiction over Penzer
is appropriate under the third prong ofNew York's long-arm statute, C.P.L.R. § 302(a)(3).~

?:&I

( ••• continued)

[defendant] expected or should reasonably have expected such tortious act to have
consequences in New York, as it is well settled that 'the indirect financial loss resulting from
the fact that the injured person resides or is domiciled [in New York],' without more, is
insufficient to confer jurisdiction under CPLR 302(a)(3)(ii).").
W

See,~' Reiss v. Steigrod, 866 F. Supp. 747, 750 (S.D.N.Y. 1994) (Sotomayor, D.J.);

Smith v. Morris & Manning, 647 F. Supp. 101, 104 (S.D.N.Y. 1986) ("The complaint does
not sufficiently allege, and the Court is convinced that the underlying facts do not establish,
that [defendant] 'regularly does or solicits business, or engages in any other persistent course
of conduct, or derives substantial revenue from services rendered, in the state or ... from
interstate or international commerce.' [Plaintiff] contends that [defendant's] corresponding
with him in New York by telephone and letters is sufficient to constitute 'persistent conduct'
in the state and that the fees he paid to the firm from New York are substantial revenues,
derived from services rendered in the state or from interstate commerce. The Court
disagrees .... [N]o personal jurisdiction exists over [defendant] by virtue of C.P.L.R. §
302(a)(3).").
~1

Personal jurisdiction over Penzer is not appropriate under the fourth prong of New York's
long-arm statute, C.P.L.R. § 302(a)(4). Bernath does not allege that Penzer owns, uses, or
possesses any real property situated within New York State. Penzer's affidavits confirm that
neither Penzer's law firm as an entity, nor Penzer as an individual, own any property or
assets in New York. (See page 5 above.) And even ifPenzer were held to own property in
New York, Bernath's claims do not "arise from" any such property.
Because Bernath has not made a prima facie showing that jurisdiction over Penzer is
appropriate under any prong of New York's jurisdictional statutes, C.P .L.R. §§ 301, 302(a),
the Court need not address the question of whether personal jurisdiction "'comports with the
requisites of due process."' E.g,_, Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208-09
(2d Cir. 2001 ). Likewise, because dismissal is warranted on jurisdictional grounds, the
Court need not address Penzer's alternative arguments for dismissal pursuant to Fed. R. Civ.
P. 12(b)(6).

27
CONCLUSION
For the reasons set forth above, Penzer's motion to dismiss (Dkt. No. 8)
GRANTED and the case is dismissed without prejudice.
SO ORDERED.
Dated:

New York, New York
June 18, 2013

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