Jerusalem NY Enters. v. Huber Erectors & Hoisting, LLC

MEMORANDUM & ORDER

MARGO K. BRODIE, United States District Judge

Plaintiff Jerusalem NY Enterprises LLC commenced the above-captioned action on December 23, 2020, in the New York Supreme Court, Kings County, against Defendants Huber Erectors & Hoisting, LLC (“Huber”), Kakel Maintenance and Constructions (“Kakel”), Richard T. Lauer, Esq., and LauerLaw, LLC, seeking to recover damages for alleged prima facie tort, conversion, fraud, and abuse of process arising from the garnishment of a bank account owned by Plaintiff. (Notice of Removal ¶ 1, Docket Entry No. 1; Summons and Verified Compl. (“Compl.”) ¶¶ 16-20, annexed to Notice of Removal as Ex. A, Docket Entry No. 1-1.) On January 22, 2021, Defendants Richard T. Lauer, Esq., and LauerLaw, LLC (the “Lauer Defendants”) removed the action to this Court on the basis of diversity of citizenship jurisdiction pursuant to 28 U.S.C. §§ 1332 and 1441. (Notice of Removal ¶¶ 5-11.)

The Lauer Defendants now move to dismiss this action for lack of personal jurisdiction, improper venue, and failure to state a claim pursuant to Rules 12(b)(2), (b)(3), and (b)(6) of the

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Federal Rules of Civil Procedure, respectively, and Plaintiff opposes the motion.^[1] For the reasons set forth below, the Court grants the Lauer Defendants' motion and dismisses the Complaint against them for lack of personal jurisdiction.

I. Background

The Court assumes the truth of the factual allegations in the Complaint for the purposes of this Memorandum and Order.^[2]

a. The parties

Plaintiff is a domestic limited liability company that is “registered and conducts business in . . . New York.” (Compl. ¶¶ 1, 9.) Plaintiff is “managed and operated by an individual named Ezra Unger, ” (id. ¶ 9), who is “Plaintiff's sole member and is a citizen of New York, ” (Notice of Removal ¶ 6). Unger concurrently manages another legal entity called JNY Capital (“JNY”). (Id. ¶ 10.) Both Plaintiff and JNY are “New York based legal entities” with operational bank accounts “registered in . . . New York.” (Id. ¶ 18.) Plaintiff alleges “upon information and belief” that Defendant Lauer is an individual who resides in Ohio and that Defendant LauerLaw, LLC, is a “domestic limited liability company” that has “its principal place of business in . . .

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Ohio.” (Id. ¶¶ 5-6.) Defendant Lauer “is/was [a] licensed attorney that represents/represented Huber and Kakel, ” (id. ¶ 5), and “LauerLaw, LLC is/was representing Kakel and Huber, ” (id. ¶ 6).^[3] Plaintiff alleges “upon information and belief” that Huber is “a legal entity that is registered in . . . Washington and conducts business in . . . Ohio, ” (id. ¶ 2), and that Kakel is “a fictitious entity that lacks proper business registration and is not incorporated” but conducts business in Ohio, ^[4] (id. ¶ 3).

b. The Ohio action

This matter arises out of an action in Ohio (the “Ohio action”)^[5] brought by the City of Cincinnati in the Court of Common Pleas, Hamilton County, Ohio (the “Ohio Court”) against nonparties JNY and Cincinnati Terrace Associates LLC (“CTA”) as well as Huber and Kakel. (Id. ¶¶ 10-11.) “On October 17, 2019, Huber and Kakel filed a motion for summary judgment in [the] Ohio action, in which they contended that they ‘and JNY entered into a written contract pursuant to which Huber agreed to perform certain work.'” (Id. ¶ 13.) The Ohio Court granted summary judgment “in favor of Huber and Kakel and against JNY and CTA on their cross-claim, unopposed.” (Id. ¶ 15 (emphasis omitted).) The summary judgment “was non-final” and thus could be neither appealed nor “enforced by means of garnishment proceedings” at that point. (Id.)

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c. The alleged fraudulent garnishment entry

Although Plaintiff was never a defendant in the Ohio action and had “no relations” with Huber and Kakel through “litigation proceedings, business interactions or otherwise, ” Huber and Kakel and their attorneys - the Lauer Defendants - prematurely filed a garnishment entry against Plaintiff “in an attempt to collect funds under the non-final judgment.” (Id. ¶¶ 14, 16- 18.) Defendants were required “to go through judgment domestication procedures” in order to execute a garnishment entry in New York on the basis of a decision rendered in Ohio, but “Huber and Kakel . . . curtailed that process and submitted their [g]arnishment [e]ntry directly to Chase Bank (‘Chase') to freeze [Plaintiff's] New York bank account . . . funds.” (Id. ¶¶ 18-19.) In addition, even though Huber and Kakel knew that Plaintiff was an unrelated party, they submitted to Chase an “informational printout” on Plaintiff from the New York State Department of State in support of their request that Chase “freeze all accounts.” (Id. ¶ 28.) As a result, on August 6, 2020, Chase placed holds on Plaintiff's bank accounts “in the amount[s] of $862.03 and $36, 422.38.” (Id. ¶ 19.) Plaintiff “consistently and systematically” notified Huber and Kakel, their attorneys, and Chase of the fact that Chase had placed a hold against an improper party. (Id. ¶ 29.) Nevertheless, Plaintiff's funds were transferred to the Clerk of the Ohio Court pursuant to the fraudulent garnishment entry. (Id. ¶¶ 21, 30.) Subsequently, the Ohio Court “terminated the [g]arnishment [e]ntry on the grounds that the summary judgment was non-final.” (See Id. ¶¶ 16, 21.) Despite the Ohio Court's decision holding that “the garnishment entry was entered prematurely, ” the Clerk of the Ohio Court still retains Plaintiff's funds. (Id. ¶¶ 22, 31.)

d. Alleged systemic misconduct by Huber and Kakel

Plaintiff alleges “upon information and belief” that, at all relevant times, Huber “operated . . . without proper licensing” because “Huber's license was suspended on November

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6, 2017, ” as indicated in Washington's Department of State database, and that Kakel “does not maintain proper business registration.” (Id. ¶¶ 32-34.) Plaintiff alleges that taken together, these facts “are indicative of [a] pattern of systemic misconduct” that “culminated in Defendants' egregious attempts to improperly file a [g]arnishment [e]ntry against Plaintiff.” (Id. ¶¶ 35-36.)

e. Relief sought

Plaintiff contends that Defendants' actions “financially immobilized” Plaintiff by preventing Plaintiff “from paying its counterparties on time, [thereby] exposing Plaintiff to financial penalties for late payments.” (Id. ¶¶ 23-24.) In addition, because Plaintiff “was unable to utilize its frozen operational account to pay its employees, ” its “[e]mployees had to be laid off.” (Id. ¶ 25.) Plaintiff also suffered reputational damages with its clients; negative effects to its credit score, credit rating, and interest rates due to deteriorating business relations with its creditors; and the incursion of legal fees. (Id. ¶¶ 26-27.) Plaintiff seeks “$37, 284.41, along with treble damages, i.e.[, ] $149, 137.64, and legal fees” for prima facie tort, conversion, fraud, and abuse of process. (Id. at 10-11.)

II. Discussion

a. Standard of review

On a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, “[a] plaintiff bears the burden of demonstrating personal jurisdiction over a person or entity against whom it seeks to bring suit.” Troma Ent., Inc. v. Centennial Pictures Inc., 729 F.3d 215, 217 (2d Cir. 2013) (quoting Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30, 34 (2d Cir. 2010)). The showing a plaintiff must make to meet that burden is governed by a “sliding scale, ” which “varies depending on the procedural posture of the litigation.” Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84 (2d Cir. 2013)

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(quoting Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)). If a defendant challenges personal jurisdiction by filing a Rule 12(b)(2) motion, “the plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant.” JCorps Int'l, Inc. v. Charles & Lynn Schusterman Family Found., 828 Fed.Appx. 740, 742 (2d Cir. 2020) (quoting DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001)); see also Holmes v. Apple, 797 Fed.Appx. 557, 559 (2d Cir. 2019) (“A plaintiff has the burden of establishing personal jurisdiction over an entity against which it seeks to bring suit, and to survive a motion to dismiss for lack of such jurisdiction, ‘a plaintiff must make a prima facie showing that jurisdiction exists.'” (quoting Penguin Grp. (USA) Inc., 609 F.3d at 34-35)); Eades v. Kennedy, PC Law Offs., 799 F.3d 161, 167-68 (2d Cir. 2015) (same). Prior to discovery, a plaintiff need only plead “an averment of facts that, if credited by the ultimate trier of fact, would suffice to establish jurisdiction over the defendant.” Holmes, 797 Fed.Appx. at 559 (quoting Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010)); see also Dix v. Peters, 802 Fed.Appx. 25, 27 (2d Cir. 2020) (“Where the district court grants a Rule 12(b)(2) motion without an evidentiary hearing, we credit the plaintiff's averment of jurisdictional facts as true.” (citing Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996))); Chirag v. MT Marida Marguerite Schiffahrts, 604 Fed.Appx. 16, 19 (2d Cir. 2015) (“A prima facie case requires non-conclusory fact-specific allegations or evidence showing that activity that constitutes the basis of jurisdiction has taken place.” (citing Jazini v. Nissan Motor Co., 148 F.3d 181, 185 (2d Cir. 1998))). After discovery, the plaintiff's “prima facie showing must be factually supported.” Dorchester Fin. Sec., Inc., 722 F.3d at 85 (quoting Ball, 902 F.2d at 197). “Conclusory allegations based only on...