Jonas v. Estate of Leven
116 F. Supp. 3d 314
S.D.N.Y.2015Background
- Jonas, a New York investment adviser, alleges an oral 2006 agreement with Gustave Leven under which Leven would seed a Cayman Islands fund with $500 million (plus a $50 million hedge) and Jonas/Dutch Book Partners would manage it for fees and profit splits; no written agreement memorialized the oral $500 million commitment.
- Leven (through Barneli & Cie SA and related entities) in fact subscribed $50 million via a written Subscription Agreement for shares in a Cayman fund; those funds were wired from Switzerland/Europe and the Subscription Agreement was governed by Cayman law.
- Leven later liquidated the $50 million position; Jonas claims lost management fees and expected profits and seeks >$74 million plus indemnification for defense costs of a prior 2008 New York suit Barneli brought against Jonas.
- Plaintiffs sued multiple foreign defendants (individuals and entities in Switzerland, France, Panama, Israel, Belgium), alleging breach of contract and theories to attribute Barneli’s New York suit (agency/alter ego/hidden principal) to those defendants.
- Defendants moved to dismiss for lack of personal jurisdiction (Fed. R. Civ. P. 12(b)(2)) and failure to state a claim; the Court confined its decision to personal jurisdiction and dismissed the action with prejudice for lack of jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| General jurisdiction under N.Y. C.P.L.R. § 301 | Jonas is based in New York, so defendants who dealt with Jonas are subject to general jurisdiction | Defendants are foreign persons/entities who do not continuously and systematically do business in NY | No general jurisdiction — defendants are foreign and not shown to do continuous, systematic NY business |
| Specific jurisdiction under § 302(a)(1) (transacting business) — breach of oral agreement | Negotiations and business relationship with Jonas (NY principal place) bring defendants within §302(a)(1) | All substantive meetings, negotiations, funds, and contracting occurred in Europe/Cayman; limited contacts with NY (emails/calls) are insufficient | No specific jurisdiction: plaintiffs failed to show purposeful conduct by defendants in NY or satisfaction of Sunward factors |
| Specific jurisdiction under § 302(a)(3) (tort outside NY causing injury in NY) — fraud theory and lost fees | Defendants committed torts outside NY that caused injury (fees, lost profits) in NY; alleged fraud suffices | Claims are contract breaches, conclusory fraud allegations; no separate tort pleaded; defendants don’t derive substantial interstate revenue | No jurisdiction under §302(a)(3): breach-of-contract labels and conclusory fraud allegations do not convert to tort jurisdiction; revenue element not shown |
| Attribution of Barneli’s 2008 New York suit (agency / alter ego / §303) — basis for jurisdiction over other defendants | Barneli’s use of NY courts (and its bringing of the 2008 suit) can be imputed to defendants via agency, hidden principal, or alter-ego, and §303 designation applies | Plaintiffs fail to plead control/benefit required for agency; Panama law governs veil piercing (Barneli Panamanian) and plaintiffs did not prove Panama law exceptions; §303 expired with prior litigation | No jurisdiction: agency/alter ego allegations are conclusory and unsupported; Panama law and expert evidence show high bar for veil piercing; §303 does not apply post-termination of the prior suit |
Key Cases Cited
- Int’l Shoe Co. v. State of Wash., 326 U.S. 310 (established due process standard for personal jurisdiction)
- Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50 (2d Cir. 2012) (three-step test for personal jurisdiction in federal diversity cases applying state long-arm law)
- Sunward Elecs., Inc. v. McDonald, 362 F.3d 17 (2d Cir. 2004) (factors guiding §302(a)(1) transacting-business inquiry)
- Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779 (2d Cir. 1999) (use of forum law in diversity personal-jurisdiction analysis; plaintiff must plead tort elements for §302(a)(3))
- Paterno v. Laser Spine Inst., 24 N.Y.3d 370 (N.Y. 2014) (purposeful availment and quality of forum contacts under §302)
- Fischbarg v. Doucet, 9 N.Y.3d 375 (N.Y. 2007) (quality of defendant’s NY contacts is primary consideration for §302(a)(1))
- Amigo Foods Corp. v. Marine Midland Bank-New York, 39 N.Y.2d 391 (N.Y. 1976) (breach of contract is not a tort for long-arm §302(a)(3) purposes)