Monday, April 4, 2016

New York Declines Jurisdiction For Claims Against New Jersey Firm

A falling out among lawyer partners has led the New York Appellate Division for the Second Judicial Department to affirm dismissal on jurisdictional grounds.

In May 2012, the defendant Jeffrey G. Ephraim, an attorney residing in New Jersey, contacted the plaintiff, Ibrahim B. Shatara, an attorney residing in New York, to discuss forming a limited liability company for the purpose of practicing law. During ensuing negotiations, it was agreed that the defendant Luiza DiGiovanni would become a member of the newly formed company upon her admission to the New Jersey State Bar, and that the estate of DiGiovanni's father, who had been an attorney, would refer cases to Ephraim and the plaintiff. In June 2012, a certificate of formation of Ephraim & Shatara, LLC, was filed with the New Jersey Department of the Treasury. The main business address of Ephraim & Shatara, LLC, was located in Elizabeth, New Jersey. Additionally, since the plaintiff and Ephraim were both admitted to the New York State Bar, Ephraim & Shatara, LLC, filed an application for a certificate of authority for a foreign limited liability company to do business in New York State (see Limited Liability Company Law § 802[a]). Although that application was granted, the company failed to comply with the publication requirements (see Limited Liability Company Law § 802[b]) prior to the plaintiff's filing of a certificate of cancellation of Ephraim & Shatara, LLC, with the New Jersey Department of the Treasury in January 2013. The plaintiff alleges that Ephraim & Shatara, LLC, represented five clients in connection with proceedings in New York courts.

In February 2013, the plaintiff commenced the instant action against Ephraim, DiGiovanni, and the newly formed DiGiovanni & Ephraim, LLC (hereinafter DiGiovanni & Ephraim), to recover damages for, inter alia, fraud, conversion, and breach of contract in connection with the formation and dissolution of Ephraim & Shatara, LLC. The defendants were served with process in New Jersey. Thereafter, the defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(8) for lack of personal jurisdiction or, in the alternative, to dismiss the complaint pursuant to CPLR 327(a) on the ground of forum non conveniens or pursuant to CPLR 3211(a)(7) for failure to state a cause of action. The Supreme Court denied those branches of the motion which were to dismiss the complaint insofar as asserted against Ephraim and DiGiovanni & Ephraim pursuant to CPLR 3211(7) and (8) and CPLR 327(a), and directed a hearing on the issue of whether it was proper to exercise personal jurisdiction over DiGiovanni

...the plaintiff failed to establish, prima facie, that DiGiovanni & Ephraim was subject to the personal jurisdiction of the Supreme Court pursuant to CPLR 302.

(Mike Frisch)

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