Cohen v. BMW Invs. L.P.

144 F.Supp.3d 492

Richard B. COHEN, Plaintiff,

v.BMW INVESTMENTS L.P., Defendant.

No. 15cv3154 (DLC).

United States District Court, S.D. New York.

Signed Oct. 30, 2015.

Jay B. Itkowitz, Itkowitz & Harwood, New York, NY, for the plaintiff.

Jason Daniel Gerstein, DLA Piper U.S. LLP (N.Y.), New York, NY, for the defendant.

OPINION AND ORDER

DENISE COTE, District Judge.

This dispute arises from a fraudulent scheme by Philip Teplen (“Teplen”) and Clifford Roth (“Roth”) in which Roth and Teplen defrauded Richard Cohen (“Cohen”) of approximately $2.5 million.¹ Cohen filed this suit against BMW Investments, L.P. (“BMW”) seeking $300,000 that BMW had once deposited but later retrieved from Teplen. Cohen claims that he is entitled to the $300,000 that Teplen returned to BMW under claims of unjust enrichment or money had and received. BMW moved to dismiss for lack of personal jurisdiction and for failure to state a claim. For the reasons that follow, BMW's motion to dismiss for lack of personal jurisdiction is denied. Its motion to dismiss for failure to state a claim, however, is granted. Teplen returned an amount of money to BMW that had originally belonged to BMW and that BMW had a right to recover. Cohen has not pleaded facts sufficient to support a claim that BMW was unjustly enriched by the return of an amount of money it had given to Teplen.

Background

The following facts are taken from the complaint or from documents integral to those claims. Diversity jurisdiction exists here. Cohen is domiciled in New York. BMW is a limited partnership formed in Texas with its principal place of business there. The general partner of BMW is BMW Ventures, LLC, a limited liability company whose sole member is Wesley J. Mahone (“Mahone”), a Texas domiciliary.

Through transactions that began in 2011, Cohen lost over $2.5 million dollars in a fraud committed by Teplen and others. In 2011, Cohen consulted with Teplen about securing a loan for living and maintenance expenses. Although the underlying financial transactions were complex, the upshot of the loan agreement is that Cohen only received $681,229.02 of more than $3.2 million that were disbursed purportedly on Cohen's behalf. Teplen defrauded him of the rest.

In April 2012, Cohen sued Teplen and related defendants in state court for fraud, unjust enrichment, conversion, and other causes of action arising from this fraudulent loan. Teplen filed for Chapter 7 bankruptcy in April 2014. Cohen and Teplen settled the state court suit and, on February 20, 2015, judgment was entered against Teplen for $3,303,528.72. The court also found that the debt was not dischargeable in bankruptcy.

Teplen and Roth also attempted to defraud BMW. In November 2010, BMW executed an agreement with Exousia Advanced Materials, Inc. (“Exousia”), among other corporations (“Exousia Agreement”).

Roth was the CEO of Exousia and other corporations involved in this agreement. BMW agreed to invest a $1,250,000 capital contribution with Energy Lending Group 2010, LLC (“ELG”), and the agreement included the right to convert membership in ELG into shares of common stock in Exousia. After executing the Exousia Agreement, on Roth's advice BMW wired $300,000 to Teplen's trust account as an initial deposit on the $1.25 million investment. Teplen was supposed to hold this money in escrow until BMW instructed him to release the funds.

Instead of releasing the $300,000 when instructed to do so, Teplen withdrew the funds for his personal use. In January 2011, BMW exercised its contractual rights under the Exousia Agreement to opt out of the investment and have its $300,000 deposit returned. On April 14, 2011, Teplen returned BMW's $300,000 deposit via wire transfer.

Cohen alleges that Teplen returned BMW's $300,000 from funds that were taken from Cohen through the fraudulent loan. Cohen pleads several specific facts to support this claim. For example, the complaint reproduces an excerpt from Teplen's January 13, 2015 deposition in the state court litigation in which he confirmed that the $300,000 used to pay BMW originally came from Cohen's loan.

Cohen filed this suit on April 22, 2015 to recover the $300,000 that Teplen returned to BMW. His causes of action include state law claims for unjust enrichment and money had and received. On August 11, 2015, BMW brought this motion to dismiss arguing (1) that there is no personal jurisdiction here; and (2) that Cohen fails to state a claim under Rule 12(b)(6), Fed.R.Civ.P. The motion was fully submitted on October 2, 2015.

Discussion

When deciding a motion to dismiss under Rule 12(b), Fed.R.Civ.P., a court must “accept all allegations in the complaint as true and draw all inferences in the non-moving party's favor.” LaFaro v. New York Cardiothoracic Group, PLLC, 570 F.3d 471, 475 (2d Cir.2009). In deciding a motion to dismiss, the court considers “any written instrument attached to the complaint as an exhibit or any statements or documents incorporated in it by reference.” Stratte–McClure v. Morgan Stanley, 776 F.3d 94, 100 (2d Cir.2015) (citation omitted). The plaintiff attached fifteen exhibits to the complaint.

“In order to survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing that jurisdiction exists.” Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 167 (2d Cir.2013) (citation omitted) (“Licci II ”). In evaluating whether this standard is met, the pleadings and any supporting materials are construed in the light most favorable to the plaintiff. Id. “This showing may be made through the plaintiff's own affidavits and supporting materials, containing an averment of facts that, if credited, would suffice to establish jurisdiction over the defendant.” Southern New England Telephone Co. v. Global NAPs Inc., 624 F.3d 123, 138 (2d Cir.2010) (citation omitted). On the other hand, a court “will not draw argumentative inferences in the plaintiff's favor.” In re Terrorist Attacks on September 11, 2001, 538 F.3d 71, 93 (2d Cir.2008) (citation omitted). Furthermore, a plaintiff may not rely on conclusory statements without any supporting facts, as such allegations would “lack the factual specificity necessary to confer jurisdiction.” Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 185 (2d Cir.1998).

“To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege sufficient facts which, taken as true, state a plausible claim for relief.” Keiler v. Harlequin Enters. Ltd.,

751 F.3d 64, 68 (2d Cir.2014) ; Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (“[A] complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.”). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Parkcentral Global Hub Ltd. v. Porsche Auto. Holdings SE, 763 F.3d 198, 208 (2d Cir.2014) (citation omitted).

I. Personal Jurisdiction

There are two steps to analyzing personal jurisdiction:

To determine personal jurisdiction over a non-domiciliary ... [courts] first apply the forum state's long-arm statute. If the long-arm statute permits personal jurisdiction, [courts] analyze whether personal jurisdiction comports with due process protections established under the Constitution.

Eades v. Kennedy, PC Law Offices, 799 F.3d 161, 168 (2d Cir.2015) (citation omitted); MacDermid, Inc. v. Deiter, 702 F.3d 725 (2d Cir.2012) (using this two-step analysis in a diversity case). Cohen has satisfied both the state's long-arm statute and the constitutional requirements. Thus, there is personal jurisdiction over BMW.

A. New York's Long–Arm Statute

Cohen alleges that personal jurisdiction exists over BMW under CPLR § 302(a)(1), which provides in relevant part: “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 “transacts any business within the state.” To determine the existence of jurisdiction under section 302(a)(1), “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.” Best Van Lines, Inc. v. Walker, 490 F.3d 239, 246 (2d Cir.2007) (citation omitted).

“[S]ection 302 is a single act statute and proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities were purposeful and there is a substantial relationship between the transaction and the claim asserted.” Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 170 (2d Cir.2010) (citation omitted). “New York decisions, at least in their rhetoric, tend to conflate the long-arm statutory and constitutional analyses by focusing on ... whether the defendant's conduct constitutes ‘purposeful availment.’ ” Id. at 169 (citation omitted); see Paterno v. Laser Spine Inst., 112 A.D.3d 34, 973 N.Y.S.2d 681, 685 (2d Dep't 2013), aff'd, 24 N.Y.3d 370, 998 N.Y.S.2d 720, 23 N.E.3d 988 (2014) (“In determining the meaning of the phrase ‘transacts any business,’ ... an entity transacts business when it purposefully avails itself of the benefits and privileges of conducting business in New York.” (citation omitted)). “Although it is impossible to precisely fix those acts that constitute a transaction of business ... it is the quality of the defendants' New York contacts that is the primary consideration.” Fischbarg v. Doucet, 9 N.Y.3d 375, 380, 849 N.Y.S.2d 501, 880 N.E.2d 22 (2007).

A suit arises out of a transaction in New York “if there is an articulable nexus, or a substantial relationship, between the claim asserted and the actions that occurred in New York.” Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 66 (2d Cir.2012) (“Licci I ” ) (citation omitted). There is “no bright-line test for determining...