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.

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

, 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,

(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.,

(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 . ,

(1st Cir. 2002) (quotation marks

omitted). "The plaintiff bears the burden of proving the court's

personal jurisdiction over a defendant." Hannon v. Beard,

(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,

, at *1

(D.N.H. Nov. 30, 2009) (citing United Elec. Radio & Mach. Workers

of Am. v. 163 Pleasant St. Corp.,

(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,

(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,

(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.,

(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,

(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 --- ,

(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.,

(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."

(quoting Int'l Shoe Co. v. Wash., Off,

of Unemployment,

(1945)).

The First Circuit "divides the constitutional analysis into

three categories: relatedness, purposeful availment, and

reasonableness." Flatten v. HG Bermuda Exempted Ltd.,

(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.,

. "[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."

The defendants' relevant contacts with New

Hampshire must fulfill all three prongs before the court will

exercise personal jurisdiction.

The jurisdictional inquiry is different for different types

of claims.

(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."

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,

(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."

(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.,

.

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.'"

at 290 (quoting Burger

King,

). "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.,

(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."

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.

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

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,

(1st Cir.

1994) (citing Burger King,

). 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,

(1st Cir. 2005) (internal quotation marks and

citation omitted); see also Pritzker v. Yari,

(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 .,

(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,

(citing Sawtelle v. Farrell,

(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,

. 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,

(citing Ticketmaster,

, and Sawtelle,

). 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,

. 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,

, 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.,

(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

18