842 F. Supp. 2d 575
S.D.N.Y.2012Background
- Plaintiffs TAGC Management, TAGC I, and Total Access Global Capital sought to start a China credit card business and hired Lehman, Lee & Xu Ltd. for legal services; plaintiffs transferred over $1 million to defendants in escrow for the project.
- Lehman, Lee & Xu Ltd. and related entities and individuals headquartered in China/HK allegedly refused to return the funds after the relationship soured.
- Plaintiffs filed RICO, Exchange Act, Lanham Act, and state-law claims; pro se defendant Garner previously had a jurisdiction dismissal
- Defendants moved to dismiss for deficient service of process under Rule 12(b)(5); plaintiffs also sought attachment against Lehman, Lee & Xu Ltd.
- The court granted in part and denied in part the Rule 12(b)(5) motions, held service valid on Lehman, Lee & Xu Ltd., granted attachment against Lehman, Lee & Xu Ltd., and allowed proper service to proceed on Lehman, Jones & Partners (HK) Ltd.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over Edward and Karolina Lehman | Lehmans transacted business and acted as agents in NY | No NY contacts; not subject to NY jurisdiction | Lack of minimum contacts; no NY jurisdiction over individuals |
| Improper service on individuals | Service at 410 Park Ave and by Jane Smith sufficient | No valid service; 410 Park Ave not their actual place of business | Service insufficient as to individuals; not proper under CPLR 308/308(2) |
| Personal jurisdiction over corporate defendants (consent and non-consent) | Consent obtained in related California case gives NY jurisdiction | Consent cannot establish NY jurisdiction for all entities; missing NY transactions | Consent-based jurisdiction established for Lehman firm; not for other entities |
| Service on Lehman Jones & Partners (HK) Ltd. and others | Service by delivery at 410 Park Ave sufficient | Agent not authorized; improper service | Service improper on Lehman Jones & Partners (HK) Ltd. and other five corporates |
| Attachment of corporate defendants | Non-domiciled defendants have assets in NY; attachment warranted | Attachment inappropriate without showing NY assets or likelihood of enforcement | Attachment granted against Lehman, Lee & Xu, Ltd. as security for judgment |
Key Cases Cited
- Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560 (2d Cir. 1996) (two-prong test: minimum contacts and reasonableness; specific vs general jurisdiction)
- Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460 (1988) (fiduciary shield; single NY transaction can suffice when purposeful and related to claim)
- Darden v. DaimlerChrysler N. Am. Holding Corp., 191 F. Supp. 2d 382 (S.D.N.Y. 2002) (scope of Rule 12(b)(5) defense; look beyond the complaint for jurisdictional facts)
- Bank of Leumi Trust Co. v. Istim, Inc., 892 F. Supp. 478 (S.D.N.Y. 1995) (nonresident attachment standards; likelihood of enforcement)
- ITC Ent., Ltd. v. Nelson Film Partners, 714 F.2d 217 (2d Cir. 1983) (nonresident attachment rationale and purposes)