Austin Environmental Corp. v. Margarita Express, LLC et al
ORDER terminating 55 Motion to Transfer Case; terminating 58 Motion to Dismiss for Lack of Jurisdiction; terminating 58 Motion to Transfer Case; terminating 65 Motion to Amend/Correct 55 MOTION to Transfer Case to the United S tates District Court for the Middle District of Pennsylvania., 58 FIRST MOTION to Dismiss for Lack of Jurisdiction .FIRST MOTION to Transfer Case to the U.S.D.C. Middle District Pennsylvania., 65 CROSS MOTION to Amend/ Correct Complaint., 68 MOTION to Strike Document No. 65 . ; terminating 68 Motion to Strike document 55 MOTION to Transfer Case to the United States District Court for the Middle District of Pennsylvania. fi led by Angel E. Perez-Reynoso, Margarita Express, LLC, 58 FIRST MOTION to Dismiss for Lack of Jurisdiction .FIRST MOTION to Transfer Case to the U.S.D.C. Middle District Pennsylvania. filed by Valley Truck Center, Inc., [65 ] CROSS MOTION to Amend/Correct Complaint. filed by Austin Environmental Corp., 68 MOTION to Strike Document No. 65 . filed by Angel E. Perez-Reynoso, Margarita Express, LLC from the record. Accordingly, the motion f iled by the Margarita Defendants is DENIED. Defendant Valley's motion to dismiss is GRANTED and Defendant Valley is terminated as a party to this action. Austin's cross-motion is GRANTED and Austin will file the amended complaint within 3 0 days of this order. The parties shall participate in a telephone conference before this Court on June 10, 2022 at 9:30 A.M. The Clerk is respectfully directed to terminate the motions (Dkts. 55, 58, 65, 68). SO ORDERED.. (Signed by Magistrate Judge Paul E. Davison on 5/5/2022) (ks)
Case 7:21-cv-04385-PED Document 94 Filed 05/06/22 Page 1 of 20
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
AUSTIN ENVIRONMENTAL CORP,
21 Civ. 4385 (FED)
- against -
MARGARITA EXPRESS, LLC, ANGEL E. PEREZ-
REYNOSO, VALLEY TRUCK CENTER, INC,
PAUL E. DAVISON, U.S.M.J.:
This Memorandum and Order addresses three separate motions. Defendant Margadta
Express, LLC ("Margarita") and Angel E. Perez-Reynoso ("Mr. Perez-Reynoso" and together
with Margarita, the "Margarita Defendants"), move to transfer this action to the Middle District
of Pennsylvania. Cross-defendant Valley Truck Center, Inc. ("Defendant Valley") moves to
dismiss for lack of jurisdiction, or, alternatively, to transfer this action to the Middle District of
Pennsylvania. Finally, Plaintiff Austin Environmental Coip. ("Austin" or "Plaintiff) crossmoves to amend its Complaint. The motions have been fully briefed. Oral argument was held on
For the reasons stated below, the motion filed by the Margarita Defendants is DENIED,
Defendant Valley's motion is GRANTED, and Austin's cross-motion is GRANTED.
The information in this section is taken from the Complaint with attached exhibits [Dkt.
I], the Margarita Defendants' declaration filed in support of it motion to transfer with its attached
exhibits [Diet. 56], and Defendant Valley's motion to dismiss [Dkt. 61].
Case 7:21-cv-04385-PED Document 94 Filed 05/06/22 Page 2 of 20
A. The Accident
The backdrop to this action is a single vehicle accident in Pennsylvania. On or around
June 15, 2018, Mr. Perez-Reynoso was driving a tractor that was owned by Margarita. Attached
to that tractor was a trailer owned by Austin. Margarita was allowed to use Austin s trailers
pursuant to an Equipment Lease agreement (the "Agreement") that the parties entered into on
Februaiy 27, 2018. While Mr. Perez-Reynoso was driving, one of the tires on Margarita's tractor
spontaneously blew out, which resulted in an accident. Defendant Valley was contracted to clear
the accident from the highway. Defendant Valley then stored the damaged tractor and the trailer
until it received payment from Margarita and Austin.
B. The Pennsylvania Action
Defendant Valley invoiced Margarita and Austin for the cost of cleaning up the highway
and for storing the remnants of the tractor and the trailer. When Margarita and Austin failed to
pay the invoice, Defendant Valley filed an action in the Court of Common Pleas of Lackawanna
County against Margarita and Austin for the invoice on August 20, 2018. The complaint
demanded payment of this invoice, which had at this point accrued to $56,411.51 and included
an additional $200.00 per day for the storage of the tractor and the trailer. Austin never
responded to the complaint and as a result, on December 11, 2018, Defendant Valley had a
default judgment entered against Austin. Austin later, on September 16, 2019, moved to strike or
open the judgment against it. On October 24, 2019, the Lackawanna County court denied
Austin's motion. On November 14, 2019, Defendant Valley filed to modify the judgment to
$ 109,911.51. Austin then attempted to appeal the matter on December 10, 2019 and filed a brief
in support of that appeal to the Superior Court of Pennsylvania. The Superior Court found
Case 7:21-cv-04385-PED Document 94 Filed 05/06/22 Page 3 of 20
Austin's appeal to be without merit on December 15, 2020.
While Defendant Valley was enforcing the judgment against Austin, the Margarita
Defendants responded to Defendant Valley's complaint. The Margarita Defendants and
Defendant Valley ultimately entered into a Joint Tortfeasor Release (the "Release") on January 9,
2020, whereby Defendant Valley agreed to release its claims against the Margarita Defendants in
exchange for $69,000.00.
C. Defendant Valley s Action in New York State
On April 6, 2021, Defendant Valley filed a motion for summary judgment in lieu of a
complaint in the Supreme Court of the State of New York, Westchester County, seeking to
enforce its Pemisylvaniajudgement against Austin. On May 18, 2021, Austin submitted its
opposition to Defendant Valley's motion for summary judgement. The Supreme Court granted
Defendant Valley's motion for summary judgment on September 22, 2021. Defendant Valley
had obtained a levy against one of Austin's bank accounts and was scheduled to execute that levy
on November 17, 2021. On November 16, 2021, Austin paid the full amount it owed on
Defendant Valley's judgment, $ 69,326.96. This matter has since been discontinued with
D. The Current Action
Austin filed this current action against the Margarita Defendants and Defendant Valley on
May 14, 2021. Austin filled this action seeking enforcement of the indemnification clause in its
Lease Equipment agreement with the Margarita Defendants, as well as common law
indemnification and contribution from the Margarita Defendants. Austin also brought an unjust
enrichment claim against Defendant Valley. On August 18, 2021, the Margarita Defendants filed
Case 7:21-cv-04385-PED Document 94 Filed 05/06/22 Page 4 of 20
a crossclaim against Defendant Valley seeking to enforce an indenmification provision in their
Release. Austin, however, ultimately dismissed its claim against Defendant Valley with
prejudice on December 17, 2021. Thus, Defendant Valley remains in this action only because of
the Margarita Defendants' crossclaim against it.
II. MOTION TO TRANSFER
The Margarita Defendants move to transfer this action to the Middle District of
Pennsylvania, arguing that the action could have been brought in the Middle District of
Pennsylvania and it wold be in the interest of justice and convenience to transfer to that district.
[Dkt. 55.] Austin opposed the motion. [Dkt. 65.] The Margarita Defendants filed a reply.
A. Applicable Law
District courts have broad discretion when it comes to deciding motions to transfer. In re
Cuyahoga Equip. Corp., 980F.2d 110, 117 (2d Cir. 1992). Section 1404(a) governs motions to
transfer and it provides: "For the convenience of parties and witnesses, in the interest of justice, a
district court may transfer any civil action to any other district or division where it might have
The threshold inquiry is "whether the action could have been brought in the transferee
district." Everlast World's Boxing Headquarters Corp. v. Ringside, Inc., 928 F. Supp. 2d 735,
743 (S.D.N.Y. 2013). If the answer is in the affirmative, then the court must determine whether
transfer would be appropriate. "Assessing whether transfer is a valid exercise of discretion
Defendant Valley also moved to transfer venue in the event that it was not dismissed
from the action. For the reasons discussed infra Part II, Defendant Valley's motion to dismiss is
granted and as a result, the Court need not address its motion to transfer.
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requires the Court to balance various factors: (1) the convenience of the witnesses; (2) the
convenience of the parties; (3) the location of relevant documents and the relative ease of access
to sources of proof; (4) the locus of operative facts; (5) the availability of process to compel the
attendance of unwilling witnesses; (6) the relative means of the parties; (7) the forum's
familiarity with the governing law; (8) the weight accorded the plaintiffs choice of forum; and
(9) trial efficiency and the interests of justice." Everlasf, 928 F. Supp. at 743. The party moving
for a change of venue bears the burden of establishing by clear and convincing evidence that
transfer is appropriate. Am. S.S. Owners Mnf. Prof. & Indem. Ass 'n, Inc. v. Lqfarge North Am.,
Inc., 474 P. Supp. 2d 474, 481 (S.D.N.Y. 2007)
Here, the threshold question as to whether this action could have been brought in the
Middle District of Pennsylvania is easily answered in the affirmative. Austin could have filed
this action in the Middle District of Pennsylvania. Margarita is a Pennsylvania limited liability
company with its principal place of business in Reading, Pennsylvania, Mr. Perez-Reynoso is a
resident of Pennsylvania, and Defendant Valley is a Pennsylvania corporation. [Dkt. 1.] Thus, if
Austin filed in the Middle District of Pennsylvania, the Middle District would have had
jurisdiction because all of the defendants are located within the state. See 28 U.S.C. § 1391 ("A
civil action may be brought in ... a judicial district in which any defendant resides, if all
defendants are residents of the State in which the district is located[.]") Indeed, Austin does not
argue otherwise. See Dkt. 65. Given that the Margarita Defendants have met the threshold
inquiry, this Court proceeds to weighing the factors.
1. Convenience of the Witnesses
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"The convenience of witnesses is an important consideration, and has often been
described as the single most important § 1404(a) factor." Everlast, 928 F. Supp. at 743. "When
weighing the convenience of the witnesses, courts must consider the materiality, nature, and
quality of each witness, not merely the number of witnesses in each district." Royal &
Szmalliance v. British Ainvays, 167 F. Supp. 2d 573, 577 (S.D.N.Y. 2001). "The convenience of
non-party witnesses is accorded more weight than that of party witnesses." Indian Harbor Ins.
Co. v. Factory Mut. Ins. Co., 419 P. Supp. 2d 395, 402 (S.D.N.Y. 2005).
Austin argues that the relevant witness for the Margarita Defendants in this action is Flor
Cortes, the owner ofMargarita, who executed the Agreement. [Dkt. 67 at 9.] Austin further
contends that, upon information and belief, Ms. Cortes resides in New York. The Margarita
Defendants argue that all of the witnesses it would need are located in Pennsylvania. [Dkt. 67 at
8.] The Margarita Defendants claim that the non-party witnesses it would need to call include
the police officer that responded to the accident, Bernard O'Malley, and an individual from the
towing company that actually removed the trailer and the tractor from the highway. The
Margarita Defendants further contend that they would also need the attorneys who negotiated the
Release between the Margarita Defendants and Defendant Valley as witnesses. In terms of party
witnesses, the Margarita Defendants point out that Margarita is a Pennsylvania limited liability
company, Mr. Perez-Reynoso resides in Pennsylvania, and that the witness who would testify on
behalf of Defendant Valley, Ms. Lisa Sabia, also resides in Pennsylvania.
The difference in the witnesses that each party believes the Margarita Defendants would
call is the result of a dispute between the parties as to the relevance of testimony concerning the
accident. Austin argues that because this is a contract dispute, the only witness that the Margarita
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Defendants would need is the individual who signed the Agreement, Ms. Cortes. In contrast, the
Margarita Defendants identify several witnesses, but provide that those witnesses would either
testilfy about the accident or about their Release with Defendant Valley. However, the Margarita
Defendants have failed to identify how exactly the accident, or their Release, relate to their
Agreement with Austin or the indemmflcation clause within that Agreement. Further, none of
the non-party witnesses the Margarita Defendants identified would be able to testify concerning
the Agreement. Because their testimony would not have any bearing on the Agreement, the
argument that they are witnesses relevant to this analysis is of no moment. Accordingly, I
conclude that this factor weighs in favor of the case staying in this district. See S.S. 0\\mers, 474
F.Supp.2d at 483-84.
2. Convenience of the Parties
A defendant moving for transfer must show both that the original forum is inconvenient
for it and that the plaintiff would not be substantially inconvenienced by a transfer." Everlast,
928 F. Supp. at 744. Where a group of defendants makes such a showing, that factor favors
transfer." Id. However, this factor is neutral where a transfer would "merely switch the burden
of inconvenience from one party to the other[.]" S.S. Owners, 474 F. Supp. 2d at 484.
The Margarita Defendants contend that the party defendants—Margarita and Mr. PerezReynoso—both reside in Pennsylvania. The Margarita Defendants also argue that Austin has
property within Pennsylvania and as ofFebruaiy 4, 2020, rented an office within the state.
Austin does not dispute these arguments. Accordingly, the Margarita Defendants have shown
that it would be inconvenienced in this forum, but Austin would not be substantially
inconvenienced by the transfer. Thus, this factor weighs in favor of transfer.
Case 7:21-cv-04385-PED Document 94 Filed 05/06/22 Page 8 of 20
3. Location of the Relevant Documents
"Given electronic discovery, and absent any concrete illustration of inconvenience to
either side relating to documents or other non-testimonial evidence, this factor does not
materially favor either venue. Everlast, 928 F. Supp. at 747. Here, neither party makes a
showing that the relevant documents are in a location that is only accessible in one fomm. The
Margarita Defendants make a passing reference to this Court's ability to compel Defendant
Valley's witness, Ms. Sabia, to appear and provide documents. However, the Margarita
Defendants fail to show how the documents provided by Ms. Sabia has any bearing on the
indemnification clause of their Agreement with Austin. Accordingly, this is a neutral factor.
4. Locus of Operative Facts
Similar to the location of material witnesses, the "locus of operative facts is a 'primary
factor' in determining whether to transfer venue. S.S. Owners, 474 F. Supp. 2d at 485. This is
because the locus of operative facts "has a bearing on where the 'center of gravity' of the action
rests." Id. In a case concerning an indemnification clause, the locus of operative facts is
determined by the location where the contract was negotiated or executed, and the location of the
event that triggers the indeiruaification clause. See United Rentals (North America) Inc. v. Contin
Enterprises, Inc., 2015 WL 7257864, at *9 (D. Conn. Nov. 17,2015).
Here, the Margarita Defendants argue that the location of the operative facts is in
Pennsylvania, because it is where the accident occurred, where the cleanup and storage were
performed, where the litigation occurred, and where Margarita negotiated its settlement
agreement with Defendant Valley. Austin contends that the locus of operative facts centers on
the Agreement, which was negotiated and signed in New York. Indeed, because this is a case
Case 7:21-cv-04385-PED Document 94 Filed 05/06/22 Page 9 of 20
that revolves around a contract, the locus of operative facts is determined by where the contract
was negotiated or executed. However, the location of the event that triggered the
indemnification clause is still relevant, and in the case at hand, that event occurred in
Pennsylvania. Nonetheless, because the event that triggered the mdemnification clause is not in
dispute here, less weight is given to the location of the event. Cf. United Rentals, 2015 WL
7257864, at ^9 (finding that the case should be b-ansferred to New York because it centered on
"whether the injuries allegedly suffered are of the type that are covered by the indemnification
provision"). Accordingly, this factor favors the case remaining in this district.
5. Availability of Process to Compel the Attendance of Unwilling Witnesses
The Court may only compel attendance at a trial, hearing, or deposition "within 100 miles
of where the person resides, is employed, or regularly transacts business in person; or ... within
the state where the person resides, is employed or regularly transacts business in person." Fed.
R. Civ. P. 45(c)(l)(A)-(B)(ii). The Margarita Defendants argue that this Court would have
trouble compelling Defendant Valley's witness, Ms. Sabia. However, as discussed supra, this
case does not require testimony from Ms. Sabia regarding the Agreement between Margarita and
Austin, because Ms. Sabia does not have knowledge regarding the Agreement. Accordingly, this
factor favors the action staying in this district.
6. Relative Means of the Parties
"In analyzing whether the relative means of the parties favors transfer, a court should
determine whether a party's financial situation would meanmgfLilly impede its ability to litigate
this case in either forum." Ivy Soc 'y Sports Grp., LLC v. Balconcesto Superior Nacional, 2009
WL 2252116, at *8 (S.D.N.Y. July 28, 2009) (quotation marks omitted). "[T]his factor has rarely
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been a dispositive reason to grant or deny a transfer motion[.P Schoenefeld v. New York, 2009
WL 1069159, at *3 (S.DXY. Apr. 16, 2009) (quotation marks omitted). Here, neither party
argues that it lacks the financial means to litigate this action in this district or in the Middle
District of Pennsylvania. Accordingly, this factor is neutral.
7. Forum's Familiarity with the Governing Law
In general, the forum's familiarity with the governing law is "one of the least important
factors in determining a motion to transfer, especially where no complex questions of foreign law
are involved." Everlast, 928 F. Supp. 2d at 747. "While federal courts in other states are capable
of construing New York law, especially in a straightforward contract [case], the forum's
familiarity with the governing law may be a factor even in contract cases." S.S. Owners, 474 F.
Supp. 2d at 486 (internal citation omitted). Here, Austin argues that New York law applies to the
Agreement and that as a result, this factor weighs in favor of the action staying in this district.
The Margarita Defendants do not address which law governs the Agreement, but instead argue in
their reply that their defense oflaches will be governed by Pennsylvania law. Nonetheless, one
of the reasons why this factor is accorded so little weight is because "federal courts are deemed
capable of applying the substantive law of other states." Prudential Sec. Inc. v. Norcom Dev.,
Inc., 1998 WL 397889, at *6 (S.D.N.Y. July 16, 1998). Thus, even if Pennsylvania law does
govern the Margarita Defendant's defense, this Court is perfectly capable of applying
Pennsylvania law. Further, given that there is no dispute that New York law governs the
Agreement, and the Agreement is the focus of this case, this factor ultimately favors staying in
8. Weight Accorded to PlaintifFs Choice of Forum
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A plaintiffs choice of forum is to be given substantial weight and should not be
disturbed unless the balance of convenience and justice weighs heavily in favor of defendant's
proposed forum. S.S. Owners, 474 F. Supp. 2d at 486 (quotation marks omitted). "This
deference is even greater where there is a material connection or significant contact between the
forum state and the events allegedly underlying the claim, or where the plaintiffs chosen forum
is its principal place of business." Id.
Austin argues that because its principal place of business is located in New York and
because New York is where the Agreement was negotiated and executed, this factor favors
remaining in this district. The Margarita Defendants do not contest this, but instead argue that
Austin is engaging in forum shopping. The Margarita Defendants argue there are four pieces of
evidence that indicate that Austin engaged in forum shopping. First, the Margarita Defendants
argue that the locus of operational facts is in Pennsylvania, which is where Austin should have
filed and its failure to do so is evidence of forum shopping. The Margarita Defendants next
argue that Austin responding to Defendant Valley's action In New York state court while
simultaneously failing to be a responsive litigant in the Pennsylvania action is further evidence of
forum shopping. The Margarita Defendants farther argue that the fact that Austin focused its oral
argument before the County Court in Pennsylvania on its indemnity claim against the Margarita
Defendants—as distinguished from its argument that Defendant Valley failed to properly serve
Austin—demonstrates that Austin originally intended to litigate the indemnity claim in
Pennsylvania, and has now engaged in forum shopping by filing this action in New York.
Finally, the Margarita Defendants argue that Austin's failures to obtain relief m the Pennsylvania
courts has motivated Austin to forum shop.
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None of these arguments, however, demonstrates forum shopping. "Forum shopping
occurs when a litigant selects a forum with only a slight connection to the factual circumstances
of his action, or where forum shopping alone motivated the choice." Starr Indem. & Liab. Co. v.
Brightstar Corp., 324 F. Supp. 3d 421, 434 (S.D.N.Y. 2018). Put another way, in order to show
that a plaintiff engaged in forum shopping, the defendant must show that the plaintiff "engage[d]
in some manipulative or deceptive behavior, or the ties between the litigation and the first forum
[are] . . . tenuous or de mmimis." Id, at 435. As discussed above, there are several factual
circumstances motivating Austin's choice of forum, including that the locus of operational facts
is in this forum. Further, this Court finds it unlikely forum shopping alone motivated Austin's
choice of forum here, and there is no evidence of manipulative or deceptive behavior.
Accordingly, this factor weighs in favor of Plaintiff s choice and that choice is given substantial
9. Trial Efficiency and the Interests of the Justice
In considering trial efficiency and the interests of justice, a court cannot ignore "the
benefits of consolidating related cases in a common forum are often substantial." Everlast, 928 F.
Supp. 2d at 747 (alteration omitted). "Such consolidation may advance the strong policy
interests of achieving efficient pretrial discovery, avoiding duplicative litigation, and avoiding
inconsistent results." Id.
Here, neither party advances an argument that it would be in the interest of trial efficiency
to either transfer the case, or have the case remain in this district. Nonetheless, because the
Margarita Defendants make much of the connection between Austin's current claim against it
and the crossclaim they have against Defendant Valley concerning its Release with Defendant
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Valley, it is worth acknowledging the potential overlap between these two cases. Both of these
cases indeed stem from the same accident that has been the subject of much litigation. However,
in terms of witnesses and facts, there is very little overlap. As the Margarita Defendants argued,
the non-party witnesses they would need to call would include the attorneys that negotiated the
Release. However, as discussed above, that has very little bearing on the Margarita Defendants'
Agreement with Austin. Further, the Margarita Defendants argued that it would need to call Ms.
Sabia for Defendant Valley. As discussed supra, this non-party witness would not have any
information relevant to the Agreement, but may indeed have information relevant to the Release.
Accordingly, because there would not be a substantial overlap between this litigation and the
Margarita Defendants' litigation concerning their Release with Defendant Valley, this factor does
not weigh in favor of consolidating the two actions. Nonetheless, because there is no argument
that this factor weighs in favor of remaining in this district, it is ultimately neutral.
Balancing these factors, this Court concludes that transfer of the action to the Middle
District of Pennsylvania is unwarranted. This case amounts to a discrete contractual dispute, and
under the circumstances, remaining in this district would be "the least abrasive method of
judicial administration." S.S. Owners, 474 F.Supp.2d at 491; see Sears, Roebuck &. Co. V. Allied
Commercial Corp., 1993 WL 257484 (N.D. 111. July 8, 1993) (declining to transfer even where
defendant had an indemnification clause in a settlement agreement with a non-party because the
action centered on a contract between plaintiff and defendant).
III. MOTION TO DISMISS FOR LACK OF JURISDICTION
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Defendant Valley has moved to dismiss the only remaining claim asserted against it—the
Margarita Defendants' crossclaim—because this Court lacks jurisdiction over it. [Dkt. 58.] The
Margarita Defendants opposed. [Dkt. 64.]3 Defendant Valley submitted a reply. [Dkt. 82.]
A. Applicable Law
"When a court chooses to rule on the question of personal jurisdiction without conducting
an evidentiary hearing, the party asserting personal jurisdiction need only make a prima facie
showing that jurisdiction exists. Economic Studies, Inc. v. Comcoa, Inc., 1993 WL 525902, at
*1 (S.D.N.Y. Dec. 16, 1993). "Absent an evidentiary hearing, all pleadings and affidavits are
construed, and all doubts resolved, in favor of the party asserting personal jurisdiction." Id.
Personal jurisdiction may be either specific or general. See Brown v. Lockheed Martin
Corp., 814 F.3d 619, 624 (2d Cir. 2016). Specific jurisdiction "is available when the cause of
action sued upon arises out of the defendant's activities in a state." Id. General jurisdiction, on
the other hand, "pennits a court to adjudicate any cause of action against the corporate defendant,
wherever arising, and whoever the plaintiff." Id. "To make out a prima facie case of personal
jurisdiction, whether based on general or specific personal jurisdiction, [the party asserting
personal jurisdiction] must establish both 'a statutory basis' for jurisdiction and that exercise of
such jurisdiction accords 'with constitutional due process principles/" Hiscox Ins. Co., Inc. v.
Bordenave, 2019 WL 2616338, at *4 (S.D.N.Y. June 26, 2019).
Austin also opposed Defendant Valley's motion, but only to the extent that Defendant
Valley joined the Margarita Defendants' motion to transfer. Otherwise, Austin essentially argued
that it did not need to address Defendant Valley's dismissal or transfer because it no longer had
any claims against Defendant Valley. Accordingly, Austin's arguments have no bearing on this
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New York exercises specific personal jurisdiction pursuant to N.Y. C.P.L.R. § 302. The
relevant provision ofC.P.L.R. § 3 02 provides that New York has specific personal jurisdiction
over a company that "transacts any business within the state or contracts anywhere to supply
goods or services in the state." C.P.L.R. § 302(a)(l). New York exercises general personal
jurisdiction pursuant to N.Y. C.P.L.R. § 301, which provides that New York has general
jurisdiction when "a company has engaged in such a continuous and systematic course of doing
business [in New York] that a finding of its presence [in New York] is warranted." Sonera
Holding B. V. v. Cukurova Holding AX, 750 F.3d 221, 224 (2d Cir. 2014) (internal quotation
1. The Court Lacks Specific Personal Jurisdiction Over Defendant Valley
The Margarita Defendants assert that New York has specific personal jurisdiction over
Defendant Valley because Defendant Valley transacted business in New York when it brought its
judgment against Austin in New York. "[I]n determining whether personal jurisdiction may be
exercised under section 302(a)(l), a court must decide (1) whether the defendant transacts any
business in New York and, if so, (2) whether this cause of action arises from such a business
transaction." Lfcci ex rel. Lied v. Lebanese Candadian Bank, SAL, 673 F.3d 50, 60 (2d Cir.
2012) (internal quotation marks and alteration omitted). A party transacts business in New York
if it has "purposely availed himself of the privilege of conducting activities within New York and
thereby invoked the benefits and protections of its laws." D.H. Blair & Co. v. Gottdiener, 462
F.3d 95, 104 (2d Cir.2006). "A suit will be deemed to have arisen out of a party's activities in
Case 7:21-cv-04385-PED Document 94 Filed 05/06/22 Page 16 of 20
New York if there is an articulable nexus, or a substantial relationship, between the claim
asserted and the actions that occurred in New York." Lied, 673 F.3d at 66.
Here, the Margarita Defendants claim that because Defendant Valley sought to enforce its
Pennsylvania judgement against Austin, that is sufficient to establish personal jurisdiction over a
party. Indeed, there are some cases where the act of litigating in New York is sufficient to confer
jurisdiction over subsequent, related actions. See S.E.C. v. Softpoint, Inc., 2012 WL 1681167, at
*3 (S.D.N.Y. May 9, 2012). However, such is not the case at hand. Defendant Valley brought
an action against Austin seeking to enforce its Pennsylvania judgment. This, arguably, is
transacting business in New York as Defendant Valley is "purposely availing" itself to the
"privileges of conducting activities within New York[.]" D.H. Blciir, 462 F.3d at 104.
Nonetheless, the articulable nexus or substantial relationship between Defendant Valley's action
of enforcing its judgment and the Margarita Defendants' crossclaim is "too attenuated." Johnson
v. Ward, 829 N.E.2d 1201, 1203 (N.Y. 2005). In the prior litigation, Defendant Valley sought to
enforce a Pennsylvania judgment against Austin, but in this current litigation, a completely
different party seeks to enforce a Release against it. Cf. Softpoint, 2012 WL 1681167, at *3
(finding personal jurisdiction where a defendant had previously litigated in New York and
plaintiff—the prevailing party in the prior action—was seeking to enforce that judgment).
Accordingly, this Court does not have specific personal jurisdiction over Defendant Valley.
Because this Court concludes that there is no specific personal jurisdiction under C.P.L.R. § 302,
it does not reach the due process analysis. See Nat'I Union Fire Ins. Co. Pittsbzirgh, PA v. UPS
Supply Chain Sols., Inc., 2021 WL 4868583 (S.D.N.Y. Oct. 18, 2021).
2. The Court Lacks General Personal Jurisdiction Over Defendant Valley
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Under New York law, a court in New York may exercise general jurisdiction over a
foreign defendant if the defendant "engaged in 'continuous, permanent, and substantial activity in
New York.'" Wwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir. 2000). However,
the Supreme Court in Daimler recently set a "high bar" for finding general Jurisdiction over a
foreign corporation. See Brown, 814 F,3d at 626. "Daimler established that, except in a truly
exceptional case, a corporate defendant may be treated as 'essentially at home' only where it is
incorporated or maintains its principal place of business—the 'paradigm' cases." Id. at 627. A
foreign corporation may still be subject to general jurisdiction in the exceptional case "where its
contacts are so continuous and systematic/ judged against the corporation's national and global
activities, that it is 'essentially at home' in that state. Gnccf Am., Inc. v. Weixing Li, 768 F.3d
122, 135 (2d Cir. 2013) (quoting Daimler, 571 U.S. at 139).
Here, Defendant Valley is a Pennsylvania corporation with its principal place of business
in Dunmore, Pennsylvania. It neither transacts business in New York, nor does it own property
within the state. Accordingly, Defendant Valley is not engaged in "continuous, permanent, and
substantial activity in New York." Whva, 226 F.3d at 95. Defendant Valley is also not the truly
exceptional case contemplated by the Supreme Court in Daimler as it is not maintaining contacts
that are so "continuous and systematic that it is "essentially at home" in this state. Gncci Am.,
768 F.3d at 135. Accordingly, this Court does not have general personal jurisdiction over
The Margarita Defendants do not argue that this Court has general jurisdiction over
Defendant Valley but instead rely upon the allegations in Austin's Complaint to assert
jurisdiction over Defendant Valley. However, the Complaint itself does not make siprima facie
Case 7:21-cv-04385-PED Document 94 Filed 05/06/22 Page 18 of 20
showing of jurisdiction, and the Margarita Defendants do not argue that any specific allegations
within the Complaint are sufficient to establish jurisdiction. Thus, the allegations in the
Complaint do not change this Court's jurisdiction analysis.
Based on the foregoing analysis, this Court concludes that it does not have personal
jurisdiction over Defendant Valley. Accordingly, the Margarita Defendants' crossclaim is
dismissed and Defendant Valley is terminated as a cross defendant.
IV. MOTION TO AMEND
Austin filed a cross-motion to amend its Complaint to dismiss the case without prejudice
as to Mr. Perez-Reynoso, and to update the information to reflect its stipulated dismissal of
Defendant Valley. [Dkt. 65.]5 The Margarita Defendants opposed. [Dkt. 78.]6 Austin submitted
a reply. [Dkt. 89.]
The Margarita Defendants also argue that this action must be dismissed in its entirety
pursuant to Rule 19(b) because Defendant Valley is a necessary party. Although on a cursory
review, this Court is skeptical as to whether Defendant Valley is indeed a necessary party, the
Margarita Defendants are within their rights to make that motion given that Defendant Valley is
now dismissed from this action.
Shortly after the filing of Austin's cross-motion, the Margarita Defendants moved to
strike the cross-motion. [Dkt. 68.] Under Rule 12(f), a court "may strike from a pleading an
insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R.
Civ. P. 12(f). The Margarita Defendant argue that Austin did not comply with this Court's
Individual Practices in filing its cross-motion and further contends that Austin's motion is not a
cross-motion but rather a separate motion to amend. [Diet. 68.] However, this Court finds that
does not satisfy the Motion to Strike standard as Austin's cross-motion is neither redundant,
immaterial, impertinent, nor scandalous, and as a result the cross-motion will not be stricken.
Accordingly, the Margarita Defendants' motion is denied.
At oral argument, counsel for the Margarita Defendants represented that they did not
oppose the dismissal of Mr. Perez-Reynoso.
Case 7:21-cv-04385-PED Document 94 Filed 05/06/22 Page 19 of 20
A. Applicable Law
Rule 15(a) provides that a district court "should freely give leave [to amend] when justice
so requires." "Although Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to
amend 'shall be freely given when justice so requires/ it is within the sound discretion of the
district court to grant or deny leave to amend." Kfm v. Kimm, 844 F.3d 98, 105 (2d Cir. 2018).
Leave to amend may be denied for good reason, including futility, bad faith, undue delay, or
undue prejudice to the opposing party." Id. (internal quotation marks omitted).
A motion to amend will be denied on the grounds offLitility/'ifthe proposed amendment
fails to state a legally cognizable claim or fails to raise triable issues of fact." AEP Energy Servs.
Gas Holding Co. v. Bank of Am., N.A., 626 F.3d 699, 726 (2d Cir. 2010). Thus, an amendment is
futile if it "could not withstand a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6)."
Lucentev. Int'l Bus. Machs. Corp,, 310 F.3d 243, 258 (2d Cir. 2002). An amendment, therefore,
will be denied if It does not plead sufficient facts to "state a claim to relief that is plausible on its
face." Bell Atlantic Corp. v. Twombly, 550 US. 544, 570 (2007).
Austin moves to amend its Complaint to dismiss its claim against Mr. Perez-Reynoso
without prejudice and to update the facts to reflect that it paid Defendant Valley the Pennsylvania
judgment. The Margarita Defendants argue that Austin s claims for contribution and common
law indemnity are obviously futile, and therefore this Court should deny Austin's motion to
amend in its entirety. However Austin's claims for contribution and common law indemnity
The Margarita Defendants also argue that this motion is not properly before this Court
because of the other pending motions. However, having addressed those motions, the Court now
turns to Austin's cross-motlon.
Case 7:21-cv-04385-PED Document 94 Filed 05/06/22 Page 20 of 20
were asserted in the original Complaint so Austin's amendment does not seek to add or change
any of the existing claims. As a result, the Margarita Defendants have no argument that the
amendment to the Complaint would be futile because these claims were already asserted in the
action. See Williams v. Koemgsmann, 2016 WL 8710386, at *2 (S.D.N.Y. June 10, 2016); see
also AEP Energy Servs. Gas Holding Co., 626 F.3d at 726 ("Leave to amend may be denied on
grounds of futility if the proposed amendment fails to state a legally cognizable claim or fails to
raise triable issues of fact." (emphasis added)). This Court further finds that it would be in the
interest of justice to allow Austin to amend its Complaint. Accordingly, Austin's motion to
amend would not be futile and Austin will be permitted to file its amended complaint.
Accordingly, the motion filed by the Margarita Defendants is DENIED. Defendant
Valley s motion to dismiss is GRANTED and Defendant Valley is terminated as a party to this
action. Austin s cross-motion is GRANTED and Austin will file the amended complaint within
30 days of this order. The parties shall participate in a telephone conference before this Court on
June 10, 2022 at 9:30 A.M. The Clerk is respectfully directed to terminate the motions (Dkts. 55,
Dated: May 5, 2022
White Plains, New York
United States Magistrate Judge
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