Aftokinito v. Millbrook 09-CV-415-JD 05/25/10 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Aftokinito Properties, Inc. and Stephan Condodemetrakv
v. Civil No. 09-cv-415-JD Opinion No. 2010 DNH 091
Millbrook Ventures, LLC, Pedro Torres, and Stephen Garofalo
O R D E R
Aftokinito Properties, Inc. ("API") and Stephan
Condodemetraky sued Millbrook Ventures, LLC ("Millbrook"), Pedro
Torres, and Stephen Garofalo in Rockingham County Superior Court
bringing claims for an accounting, breach of contract, unjust
enrichment, promissory estoppel, negligent or fraudulent
misrepresentation, intentional interference with contractual
relations, unfair and deceptive business practices, and wages.
The defendants removed the action to this court pursuant to 28
U.S.C. §§ 1332, 1441, and 1446, invoking this court's diversity
jurisdiction. The individual defendants move for dismissal on
the ground that this court lacks personal jurisdiction over them Background
Except where noted, the following facts are gleaned from the
plaintiffs' state court complaint1 and objection to the motion to
dismiss for lack of personal jurisdiction. API and
Condodemetraky allege that on March 26, 2009, API and Millbrook
entered into an agreement that API would be Millbrook's exclusive
marketing and sales agent for Silo Ridge, a golf course, spa, and
resort community under development in Amenia, New York. For its
services, API would be paid $125,000 on signing, $30,000 per
month thereafter, a $125,000 bonus after six months, and
■'■Although entitled "Verified Petition for an Accounting and Other Relief, Including Damages," the complaint is only certified to be to the best of Condodemetraky's "knowledge, information, and belief," and the oath similarly states that the statements are accurate to the best of Condodemetraky's "knowledge and belief." "A verified complaint may be treated as an affidavit only to the extent that it comports with the requirements of [Federal] Rule [of Civil Procedure] 56(e) . . . . It is apodictic that an affidavit made upon information and belief does not comply with Rule 56(e)." Sheinkopf v. Stone, 927 F.2d 1259, 1271 (1st Cir. 1991) (internal quotation marks and ellipses omitted). Condodemetraky's affidavit in support of the plaintiffs' objection to the motion to dismiss presents the same problem. Because the defendants did not challenge the use of the verified complaint or the Condodemetraky Affidavit as evidence, however, the statements that appear to be based on Condodemetraky's personal knowledge are considered as sworn testimony for purposes of this motion only. C f . Perez v. Volvo Car Corp., 247 F.3d 303, 315 (1st Cir. 2001) (stating, in summary judgment context, that trial court must be conspicuously and timely apprised of objection regarding deficient affidavit and ostensible defects or else the objection is waived).
2 commissions for sales beyond $35 million.2 According to the
complaint, the exclusivity was mutual: the plaintiffs stopped
working for current clients and stopped soliciting any other
business. Condodemetraky, API's president, became a full-time
employee of Millbrook, and API assigned its rights under the
contract to Condodemetraky.
The plaintiffs claim that the parties performed under the
contract for approximately six months but, in early October,
2009, the defendants said their services would no longer be
needed as of October 31, 2009. According to the plaintiffs, this
conversation occurred over the phone. Each of the plaintiffs'
claims relates to this alleged breach of contract.3
API is incorporated in New Hampshire with its principal
place of business in Derry, New Hampshire. Condodemetraky's
primary residence is also in Derry. Millbrook is a New York
2The agreement, entitled "Proposal for Millbrook Ventures LLC," was signed by Torres on behalf of Millbrook and by Condodemetraky on behalf of API. Compl., Exh. 1.
3The defendants' interpretation of events differs. According to their motion to dismiss, the "proposal" was terminated in April, after they discovered that the plaintiffs were not properly licensed securities brokers - a necessary prerequisite to performance under the "proposal". The defendants agree that Condodemetraky became a full-time Millbrook employee, but allege that the October conference call terminated only his employment, not the "proposal," which had been abandoned months earlier.
3 company with its principal place of business in Amenia, New York,
and a second office in Florida. Garofalo, the chief executive
officer of Millbrook, and Torres, the president and chief
operating officer, are both residents of Florida.4
Neither Torres nor Garofalo has ever lived in New Hampshire
or owned property, including banking or brokerage accounts, in
the state. The only time either defendant entered the state was
when Torres vacationed in New Hampshire for one week in 2000.
In support of personal jurisdiction, the plaintiffs state
that Millbrook has, on a regular basis, purposefully engaged in
commercial dealings with API and Condodemetraky. They allege
that Torres sought API's services and engaged in "extensive"
telephone and email communications with API during 2008 and the
beginning of 2009, which culminated in the signed agreement.
According to the plaintiffs, Torres and Garofalo knew that API is
a New Hampshire entity, that Condodemetraky is a New Hampshire
resident, and that the plaintiffs' work would be done primarily
in New Hampshire. Additionally, Condodemetraky became an
employee of Millbrook, earning $30,000 a month until October,
2009.
4Ihe complaint states that Garofalo and Torres have business addresses in Amenia, New York, but does not say where they reside. The defendants provide that information in their motion.
4 From March to October, 2009, the plaintiffs allege that
Condodemetraky worked primarily from New Hampshire and had almost
daily email and telephone communications with Torres, as well as
frequent conference calls with both Torres and Garofalo and
emails from both.
In July, 2009, Garofalo, through a company called First
Global Technology Corporation, leased a Ferrari for
Condodemetraky to use in connection with his work for Millbrook.
Garofalo signed the lease, and Condodemetraky guaranteed it.
Garofalo apparently also asked Condodemetraky to register the car
under his name and home address in Derry.
Standard of Review
"To hear a case, a court must have personal jurisdiction
over the parties, that is, the power to require the parties to
obey its decrees." Davnard v. Ness, Motlev, Loadholt, Richardson
& Poole, P .A . , 290 F.3d 42, 50 (1st Cir. 2002) (quotation marks
omitted). "The plaintiff bears the burden of proving the court's
personal jurisdiction over a defendant." Hannon v. Beard, 524
F.3d 275, 279 (1st Cir. 2008) (quotation marks omitted). When
the motion to dismiss is decided without an evidentiary hearing,
"the plaintiff must make a prima facie showing that the court has
personal jurisdiction over the defendant." Levesque v. Fletcher
5 Allen Health Care, No. 09-cv-55-SM, 2009 WL 4547744, at *1
(D.N.H. Nov. 30, 2009) (citing United Elec. Radio & Mach. Workers
of Am. v. 163 Pleasant St. Corp., 987 F.2d 39, 43 (1st Cir.
1993)). The court must "accept the plaintiff's (properly
documented) evidentiary proffers as true, and construe those
facts in the light most congenial to the plaintiff's
jurisdictional claim." Hannon, 524 F.3d at 279 (internal
quotation marks omitted). The court also considers any
uncontradicted facts adduced by the defendants. Mass. Sch. of
Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 34 (1st Cir.
1998).
Discussion
"An exercise of jurisdiction must be authorized by state
statute and must comply with the Constitution." Harlow v.
Children's Hosp., 432 F.3d 50, 57 (1st Cir. 2005). New
Hampshire's long-arm statute permits a court to exercise
jurisdiction to the same extent as the Constitution, so the only
inquiry that remains is what the Constitution permits. Phillips
Exeter Acad, v. Howard Phillips Fund, 196 F.3d 284, 287 (1st Cir.
1999).
Although a court's jurisdiction over a person may be either
general or specific, the plaintiffs do not argue that general
6 jurisdiction exists here. Specific jurisdiction "may only be
relied upon where the cause of action arises directly out of, or
relates to, the defendant's forum-based contacts." Cossaboon v.
Maine Med. Ctr., -- F.3d --- , 2010 WL 1078342, at *3 (1st Cir.
Mar. 25, 2010) (internal quotation marks and citation omitted).
"Due process requires . . . the existence of 'minimum contacts'
between the nonresident defendant and the forum." Neqron-Torres
v. Verizon Communic'ns, Inc., 478 F.3d 19, 24 (1st Cir. 2007).
The contacts must be sufficient "such that the maintenance of the
suit does not offend traditional notions of fair play and
substantial justice." Id. (quoting Int'l Shoe Co. v. Wash., Off,
of Unemployment, 326 U.S. 310, 316 (1945)).
The First Circuit "divides the constitutional analysis into
three categories: relatedness, purposeful availment, and
reasonableness." Flatten v. HG Bermuda Exempted Ltd., 437 F.3d
118, 135 (1st Cir. 2006) (internal quotation marks omitted). The
court "must ask whether the claim that undergirds the litigation
directly relates to or arises out of the defendant's contacts
with the forum [and] whether those contacts constitute purposeful
availment of the benefits and protections afforded by the forum's
laws." Phillips Exeter Acad., 196 F.3d at 288. "[I]f the
proponent's case clears the first two hurdles, the court then
must analyze the overall reasonableness of an exercise of
7 jurisdiction in light of a variety of pertinent factors that
touch upon the fundamental fairness of an exercise of
jurisdiction." Id. The defendants' relevant contacts with New
Hampshire must fulfill all three prongs before the court will
exercise personal jurisdiction. Id.
The jurisdictional inquiry is different for different types
of claims. Id. at 289 (approving "lower court's decision to
analyze the contract and tort claims discretely"). Here, the
plaintiffs have brought eight claims, of which seven name the
individual defendants. Of the seven, some are contract-based and
others are tort-based.
A. Contract-Based Claims
1. Relatedness
For contract-based claims, the court "must look to the
elements of the cause of action and ask whether the defendant's
contacts with the forum were instrumental either in the formation
of the contract or in its breach." Id. Here, the relatedness
prong is met. Condodemetraky states in his affidavit that the
defendants terminated their business relationship with the
plaintiffs during a conference call in October, and that
Condodemetraky was in New Hampshire during that call. Under the plaintiffs' theory of the case, the defendants contacted an
employee in New Hampshire in order to terminate the contract.
The October conference call was instrumental in the breach.
The plaintiffs have therefore made a prima facie showing of
relatedness.
2. Purposeful Availment
The purposeful availment prong is met "where the contacts
proximately result from actions by the defendant[s] [themselves]
that create a substantial connection with the forum State."
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)
(internal quotation marks and citations omitted). "[W]here the
defendant[s] deliberately ha[ve] engaged in significant
activities within a State . . . or ha[ve] created continuing
obligations between [themselves] and residents of the forum, . .
. [they] manifestly ha[ve] availed [themselves] of the privilege
of conducting business there." Id. at 475-76 (internal quotation
marks and citations omitted).
The court does not have jurisdiction merely because an out-
of-state defendant entered into a contractual relationship with
an in-state plaintiff. Phillips Exeter Acad., 196 F.3d at 288.
Instead, " 'prior negotiations and contemplated future
consequences, along with the terms of the contract and the
9 parties' actual course of dealing . . . must be evaluated in
determining whether the defendant purposefully established
minimum contacts within the forum.'" Id. at 290 (quoting Burger
King, 471 U.S. at 479). "The defendant[s'] contacts with the
forum state must be voluntary - that is, not based on the
unilateral actions of another party." Nowak v. Tak How
Investments, Ltd., 94 F.3d 708, 716 (1st Cir. 1996) . "In
addition, the defendant[s'] contacts with the forum state must be
such that he should reasonably anticipate being haled into court
there." Id.
The plaintiffs allege that the defendants knew they
contracted with and hired a New Hampshire resident and a New
Hampshire corporation, a fact supported by several pieces of
evidence. The first paragraph of the "Proposal for Millbrook
Ventures," signed by Torres, states that the proposal was
"developed by [API], a New Hampshire corporation, having its
principal place of business at 13 Berge Lane, Derry, New
Hampshire." Obj. to Mot. to Dismiss, Exh. B. Condodemetraky's
Federal Withholding Allowance Certificate ("Form W-4") submitted
to Millbrook lists the same address as his home. Mot. to
Dismiss, Exh. B. Condodemetraky's pay stub from Millbrook also
lists the same address. Obj., Exh. C.
10 Moreover, Torres and Condodemetraky negotiated some terms of
the contract through email, during which Condodemetraky asked
Torres to sign the contract and fax it to Condodemetraky "at
(603) 434-8755," a New Hampshire number. Obj., Exh. A.
Similarly, Condodemetraky's emails, sent to both Torres and
Garofalo, contain two numbers with 603 area codes. Id., Exhs. D,
E. The same 603 numbers are listed as Condodemetraky's numbers
not only before the contract was signed (see Obj., Exh. A), but
also after, when his email address and signature reflect that he
was an employee of Millbrook. See id., Exh. D. Condodemetraky
alleges, and the defendants do not deny, that they understood
that he would perform at least part of his work for Millbrook in
his New Hampshire office.
One further piece of evidence supports the purposeful
availment prong. Looking to the parties' actions under the
alleged contract, Garofalo leased a car for Condodemetraky to use
as a Millbrook employee and then asked Condodemetraky to register
it in New Hampshire. See Obj., Exh. F. Condodemetraky
registered it as requested. See Obj. to Mot. to Dismiss, Exh. G.
Thus, Garofalo purposefully availed himself of the benefits and
protections of New Hampshire law with respect to motor vehicle
registration.
11 Torres and Garofalo intentionally carried on a business
relationship with the plaintiffs that was intended to be
financially beneficial to the defendants. Their contacts with
the plaintiffs were voluntary, and their deliberate commercial
activities in New Hampshire made it reasonably foreseeable that
they would be subject to suit in the state. In addition to the
formation of an alleged contract with a New Hampshire resident
and corporation and the employment of the resident, the parties'
course of dealing also shows repeated purposeful availment of the
benefits and protections of New Hampshire's laws. The plaintiffs
have made a prima facie showing that the second prong of the
specific personal jurisdiction test is satisfied.
3. Reasonableness
The reasonableness prong is comprised of five "gestalt
factors":
(1) the defendant's burden of appearing, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies.
Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 209 (1st Cir.
1994) (citing Burger King, 471 U.S. at 477). This prong "evokes
a sliding scale: the weaker the plaintiff's showing on the first
12 two prongs . .., the less a defendant need show in terms of
unreasonableness to defeat jurisdiction." Id. at 210.
a. Defendants' Burden
The burden imposed on the defendants by litigating in New
Hampshire is not significant. Although they reside in Florida,
they maintain offices in New York and are developing a property
in Amenia, New York, approximately 200 miles from this court.5
"[I]nsofar as staging a defense in a foreign jurisdiction is
almost always inconvenient and/or costly, . . . this factor is
only meaningful where a party can demonstrate some kind of
special or unusual burden." N. Laminate Sales, Inc. v. Davis,
403 F.3d 14, 26 (1st Cir. 2005) (internal quotation marks and
citation omitted); see also Pritzker v. Yari, 42 F.3d 53, 64 (1st
Cir. 1994) (upholding Puerto Rico court's exercise of personal
jurisdiction over defendants from New York, and noting that,
"[i]n the modern era, the need to travel between New York and
Puerto Rico creates no especially ponderous burden for business
travelers") .
5Moreover, they argue that the case should proceed in New York, not Florida, which implies that they would not find it burdensome to appear in New York.
13 b. New Hampshire's Interest
The dispute arises from the alleged breach of a contract
involving a New Hampshire corporation, as well as the employment
of a New Hampshire resident. See Jet Wine & Spirits, Inc. v.
Bacardi & C o ., 298 F.3d 1, 12 (1st Cir. 2002) ("New Hampshire has
a legitimate and constitutional interest in regulating commercial
transactions that are performed within its borders, as well as in
enforcing the contracts entered by its businesses and in
protecting those businesses.") New Hampshire has a clear
interest in adjudicating this case, in which a New Hampshire
resident and a New Hampshire corporation claim to have been
inj ured.
The defendants argue that New Hampshire's interest in
adjudicating this case is far outweighed by New York's interest
in doing so, because New York law, not New Hampshire law, governs
the plaintiffs' claims. "[0]ur task," however, "is not to
compare the interest of the two sovereigns . . . but to determine
whether the forum state has an interest." Nowak, 94 F.3d at 718
(citing Sawtelle v. Farrell, 70 F.3d 1381, 1395 (1st Cir. 1995) ) .
New Hampshire "has a strong interest in protecting its citizens .
. . and it also has an interest in providing its citizens with a
convenient forum in which to assert their claims." Nowak, 94
F.3d at 718. Given New Hampshire's interest, it is not necessary
14 to determine at this time whether New York law governs any of the
claims at issue.
c. Plaintiffs' Interest
The plaintiffs have an obvious and demonstrated interest in
litigating in New Hampshire. Condodemetraky is a New Hampshire
resident and API is a New Hampshire corporation, making New
Hampshire the most convenient forum for them. Moreover, their
preference for New Hampshire is demonstrated by their filing suit
in a New Hampshire court and their statement of their preference
in the objection to the motion to dismiss.
d. The Judicial System's Interest
The defendants argue that the judicial system would prefer
the exercise of personal jurisdiction in New York because most of
the witnesses are in that state. The plaintiffs counter that
there are only a small number of witnesses and documents involved
in the case, and that if the evidence is located in New York, it
is easily accessed in New Hampshire. "Usually this factor is a
wash," and that is nearly the case in this instance. Nowak, 94
F.3d at 718 (citing Ticketmaster, 26 F.3d at 211, and Sawtelle,
70 F.3d at 1395). Although most of the witnesses are in New
York, there are apparently only a few of them, and there is
15 likely some evidence, including documents and witnesses, in New
Hampshire. Therefore it appears that the judicial system would
be only slightly burdened by this case proceeding in New
Hampshire.
e. The Common Interest of All Sovereigns
The final gestalt factor "addresses the interests of the
affected governments in substantive social policies." Nowak, 94
F.3d at 719. This factor favors neither side. Although the
plaintiffs are correct that New Hampshire has an interest in
"providing its citizens a forum to redress injuries," New York,
and possibly Florida, also "surely ha[ve] an interest in
providing a fair forum for [their] citizens [and corporations]
faced with allegations of misconduct." GT Solar Inc. v. Goi, No.
OS-cv-249-JL, 2009 WL 3417587, at *12 (D.N.H. Oct. 16, 2009).
3. Weighing the Gestalt Factors
The first and fourth gestalt factors weigh slightly in favor
of the defendants. On the other hand, the second factor is
somewhat helpful to the plaintiffs, and the third factor weighs
strongly in their favor. The fifth factor does not favor either
side. Having considered all of these factors, the court
16 concludes that the exercise of personal jurisdiction in New
Hampshire is reasonable.
B. Tort-Based Claims
In addition to the contract-based claims, the plaintiffs
alleged several tort-based claims. The personal jurisdiction
analysis for a tort-based claim is usually slightly different
from the analysis for a contract-based claim, but the court need
not undertake the analysis at this time. "[A] district court has
discretion to exercise personal jurisdiction over a claim that it
ordinarily lacks personal jurisdiction over only when that claim
arises out of the same common nucleus of operative fact as does a
claim that is within the in personam jurisdiction power of the
court." 4A Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 1069.7 (3d ed. 2010); see also GT Solar,
2 009 WL 3417587, at *12; D'Jamoos v. Atlas Aircraft Ctr., Inc.,
669 F. Supp. 2d 167, 174 (D.N.H. 2009).
Here, the tort claims arise from the same nucleus of fact as
the contract claims, namely, the circumstances surrounding the
beginning and end of the parties' business relationship and the
conduct and nature of that relationship. In particular, all the
claims relate to the interpretation of the alleged contract at
17 issue. Therefore, this court will exercise pendent personal
jurisdiction over the plaintiffs' tort claims.
Conclusion
For the foregoing reasons, the defendants' motion to dismiss
for lack of personal jurisdiction (doc. no. 17) is denied.
SO ORDERED.
VjJoseph a 3)tCiwu>, jh Jos’eph A. DiClerico, Jr. i*. United States District Judge
May 25, 2010
cc: Philip R. Braley, Esquire Christopher M. Ferguson, Esquire Bryan K. Gould, Esquire Arnold Rosenblatt, Esquire