Gabriel Fischbarg v. Suzanne Doucet, etc., et al.

In this appeal, we are asked to determine whether
Supreme Court properly exercised personal jurisdiction over
defendants, an individual and corporation, both residents of
California, who retained a New York attorney to represent the
corporation in an action brought in an Oregon federal court.

Because we conclude that defendants' retention and subsequent
communications with plaintiff in New York established a
continuing attorney-client relationship in this state and thereby
constitute the transaction of business under CPLR 302 (a) (1), we
hold that the exercise of jurisdiction was proper.

I.

In February 2001, defendant Suzanne Bell-Doucet, a
California resident and president of defendant Only New Age
Music, Inc. (ONAM), a California corporation, placed a telephone
call to plaintiff, attorney Gabriel Fischbarg, a member of the
New York bar, at his New York office. During the ensuing
conversation, the parties discussed plaintiff's potential
representation of ONAM in a lawsuit alleging breach of contract,
fraud and copyright infringement claims against Allegro Corp., a
non-party Oregon corporation. On February 23, Ms. Bell-Doucet
sent a letter to plaintiff's New York office to confirm that he
"offered to take this case on a [one-third] contingency" and that
she would pay him a $2,000 deposit "against expenses." Enclosed
with the February 23 letter were "contracts, copyrighted
material, [an] outline of events and copies of correspondence"
for plaintiff's review. According to plaintiff, after receiving
these materials, he entered into a retainer agreement with
defendants by telephone from his New York office.
On May 30, 2001, Allegro filed suit against ONAM in the
United States District Court for the District of Oregon.

Although plaintiff was admitted to that court pro hac vice,
during the course of the Oregon action, he was never physically
present in Oregon. Nor did he ever meet with plaintiffs in
California. Instead, plaintiff conducted his work pertaining to
the Oregon action -- allegedly 238.4 hours worth -- from New
York. He appeared at depositions and court conferences, and
argued a motion for summary judgment via telephone from New York.
In addition, defendants repeatedly communicated with
plaintiff in New York. According to plaintiff, over the course
of approximately nine months (May 2001 through January 2002)
during his representation of ONAM in the Oregon action, he spoke
with defendants by telephone at least twice per week regarding
their case.1 Plaintiff's time records also show that on at least
31 occasions defendants sent e-mails regarding the Oregon case to
plaintiff, that on three occasions they faxed materials to him,
and that defendants sent plaintiff documents, by either mail or
e-mail2, seven times.3

On January 15, 2002, a dispute regarding the terms of
plaintiff's retainer agreement arose. That same day, defendants
accepted plaintiff's e-mailed resignation as their attorney.4
While the Oregon action was still pending, plaintiff moved the
Oregon court for an order awarding him $57,096.05 for services
rendered prior to his resignation. The court denied plaintiff's
motion, concluding that it lacked personal and subject matter
jurisdiction over the fee dispute. But the Oregon court held
that a series of e-mails between plaintiff and defendant Doucet
prior to his resignation established his contractual right to "a
fair legal fee" at the conclusion of the Oregon action.

On January 10, 2005, defendants entered into a
settlement agreement that terminated the Oregon action. On
January 31, plaintiff initiated the present lawsuit seeking
damages for breach of contract and unjust enrichment. His
complaint recited no specific statutory basis for personal
jurisdiction over defendants. It simply alleged that defendant
Doucet "is an individual residing in Los Angeles, California" and
that defendant ONAM "is a California corporation doing business
in this State." Defendants responded with a motion to dismiss
for lack of personal jurisdiction under CPLR 3211 (a) (8).
Supreme Court denied the motion. It held that it could
properly exercise personal jurisdiction over defendants pursuant
to CPLR 302 (a) (1) because their "activities in retaining
plaintiff . . . [a] New York attorney[,] situated in New York, to
represent them in the Oregon action w[ere] purposeful and a
sufficient nexus exists between that retention . . . and the
instant claim regarding allegedly unpaid legal fees." The
Appellate Division, in a 3-2 decision, agreed.

The majority reasoned that by seeking out plaintiff's
representation in New York and "[b]y working with plaintiff on a
consistent basis . . . defendants 'transacted business' in New
York sufficient to subject themselves to this State's
jurisdiction" (38 AD3d 270, 274 [2007]). But two Justices
dissented, finding the defendants' contacts with this state
"insufficient" to confer CPLR 302 (a) (1) jurisdiction (id. at
276). The dissenters supported their reasoning with our decision
in Haar v Armendaris Corp. (31 NY2d 1040 [1973]), which they
interpreted as precluding plaintiff from relying upon his "own
activities in New York . . . to establish jurisdiction" (38 AD3d
at 278).

Thereafter, the Appellate Division granted defendants
leave to appeal to this Court and certified to us the question
whether its "order . . . which affirmed the order of the Supreme
Court [was] properly made?" We answer that question in the
affirmative.

II.

Defendants argue that they have transacted no business
in New York because they have not purposefully availed themselves
of the privileges and protections of our state's laws. According
to them, their retention of plaintiff and their communications --
by telephone, facsimile and e-mail -- with him are, as a matter
of law, insufficient predicates for long-arm jurisdiction.
Further, defendants contend that the courts below erroneously
relied upon plaintiff's unilateral New York activities to uphold
jurisdiction. Plaintiff argues to the contrary. We agree with
plaintiff.

CPLR 302 (a) (1) jurisdiction is proper "even though
the defendant never enters New York, so long as the defendant's
activities here were purposeful and there is a substantial
relationship between the transaction and the claim asserted"
(Deutsche Bank Sec., Inc. v Montana Bd. of Invs., 7 NY3d 65, 71
[2006] [quoting Kreutter v McFadden Oil Corp., 71 NY2d 460, 467
[1988]). Purposeful activities are those with which a defendant,
through volitional acts, "avails itself of the privilege of
conducting activities within the forum State, thus invoking the
privileges and benefits of its laws" (McKee Elec. Co. v Rauland-
Borg Corp., 20 NY2d 377, 382 [1967]; see also Ford v Unity Hosp.,
32 NY2d 464, 471 [1973] [holding that third-party defendant did
not engage in "purposeful[] avail[ment]" because it "purposefully
avoided any contacts with New York, limiting its agency agreement
. . . to certain States, excluding New York"]).

Not all purposeful activity, however, constitutes a
"transaction of business" within the meaning of CPLR 302 (a) (1).
Thus, we have held that "merely telephon[ing] a single order" to
New York requesting a shipment of goods to another state (see
Parke-Bernet Galleries, Inc. v Franklyn, 26 NY2d 13, 17 [1970]
[citing Katz & Son Billard Prods. v Correale & Sons, 20 NY2d 903
[1967]), the transitory presence of a corporate official here,
(see McKee, 20 NY2d at 382), and communications and shipments
sent here by an out-of-state doctor serving as a "consultant" to
plaintiff's New York physician (see Etra v Matta, 61 NY2d 455,
458-59 [1984]) do not support CPLR 302 (a) (1) jurisdiction.
Here, however, we are not presented with such limited contacts.
Instead, the case before us concerns defendants' purposeful
attempt to establish an attorney-client relationship here and
their direct participation in that relationship via calls, faxes
and e-mails that they projected into this state over many months.
Although it is impossible to precisely fix those acts that
constitute a transaction of business, our precedents establish
that it is the quality of the defendants' New York contacts that
is the primary consideration (see Siegel, New York Practice § 86
[citing Longines-Wittnauer Watch Co. v Barnes & Reinecke, Inc.,
15 NY2d 443 [1965]).

The quality of defendants' contacts here establish a
transaction of business in New York. Defendants sought out
plaintiff in New York and established an ongoing attorney-client
relationship with him. Plaintiff's time records and affidavit
demonstrate that during the course of the representation,
defendants communicated regularly with him in this state.5 These
facts are similar to those in Reiner & Co. v Schwartz (41 NY2d
648 [1977]). There, the defendant, a resident of Massachusetts,
traveled to New York in response to an advertisement, published
in the Boston Globe, seeking salesmen (see id. at 649). While
here, he entered into an agreement to work on defendant's behalf
in "the New England area," which was defined to exclude New York
(see id.). In concluding that CPLR 302 (a) (1) jurisdiction over
the defendant was proper in a breach of contract suit brought in
this state, we emphasized that the defendant's New York contacts
comprised "the purposeful creation of a continuing relationship
with a New York corporation" (id. at 653; see also id.
[distinguishing McKee because of the "nature and quality" of the
New York contact]). A continuing relationship was also
contemplated and created here, as evidenced by defendants'
retention letter and the many communications cited in plaintiff's
affidavit and time records, even though defendants never entered
New York.6

The fact that the defendant in Reiner was physically
present in New York, whereas defendants here were not, is
immaterial. It is well settled that "one need not be physically
present [here] . . . to be subject to the jurisdiction of our
courts under CPLR 302" (Parke-Bernet, 26 NY2d at 17). Indeed, we
re-affirmed this principle just last year in upholding long-arm
jurisdiction over a "sophisticated institutional trader" who
communicated with a New York securities broker using an "instant
messaging service" akin to e-mail (Deutsche Bank, 7 NY3d at 69,
71 [reasoning that "technological advances in communication,
enable a party to transact enormous volumes of business within a
state without physically entering it"]). Thus, even when
physical presence is lacking, jurisdiction may still be proper if
the defendant "on his [or her] own initiative . . . projects
himself [or herself]" into this state to engage in a "sustained
and substantial transaction of business" (see Parke-Bernet, 26
NY2d at 18). Accordingly, in Parke-Bernet we held that
exercising long-arm jurisdiction over the defendant, who actively
participated in a New York auction by means of an open telephone
line, was proper (see id. at 15, 19 [holding that "[t]he mere
fact that the defendant was able to arrange to conduct his
extensive and purposeful activity in New York without having to
physically come here does not enable him to avoid the
jurisdiction of our courts"]).

Like the defendant in Parke-Bernet, defendants here
have also engaged in sustained and substantial transaction of
business in New York. They contacted plaintiff here to retain
him and thereby projected themselves into our state's legal
services market (see Parke-Bernet, 26 NY2d at 18). Thereafter,
on their own volition, they continued their communications with
plaintiff here, utilizing his services and thus "invoking the
benefits and protections of our laws relating to" the attorneyclient
relationship (see id. [telephonic communication invoked
New York's auction laws]; see also Mayes v Leipziger, 674 F2d
178, 184 [2d Cir 1982] ["[I]n Parke-Bernet Galleries, the
defendant had projected itself by means of letters and calls into
market activity that was ongoing in New York, and hence had
purposefully availed itself of the privilege of conducting such
activities within the state"]).7 It is the nature and quality of
these contacts, through which defendants established a
substantial on-going professional commitment between themselves
and plaintiff, governed by the laws of our state, which support
long-arm jurisdiction.

Contrary to defendants' argument, this is not a case in
which plaintiff is attempting to establish long-arm jurisdiction
on the basis of his unilateral conduct in New York. We have
previously held that an agent may not rely upon his or her own
New York contacts on behalf of a principal to establish long-arm
jurisdiction (see e.g. Glassman v Hyder, 23 NY2d 354, 362 [1968]
["The acts of the independent broker within New York, should not,
however, be attributed to the owners so as to become acts of the
owners in New York"]; Parke-Bernet, 26 NY2d 19 n 2 [explaining
result in Glassman and similar cases]). But this is not such a
case. Here, it is defendants' solicitation of plaintiff in New
York and their frequent communications with him in this state
that form the basis of jurisdiction.

Haar v Armendaris Corp. (31 NY2d 1040 [1973] [adopting
dissenting opinion at 40 AD2d 769, 770]) is not to the contrary.
There, the defendant, a Delaware corporation, wrote to an
attorney located in Massachusetts, but admitted to the New York
bar, and requested that he negotiate with a New York corporation,
on its behalf (40 AD2d 769, 769 [1972]). The attorney traveled
to New York to carry out this task and sued for his legal fees
here, serving the defendant in Missouri (see id. at 770
[Capozzoli, J., dissenting]). Adopting the dissent, we reversed
the Appellate Division's finding of CPLR 302 (a) (1) jurisdiction
because the only support for such jurisdiction was an affidavit
indicating, "in [a] conclusory fashion," that "plaintiff had
negotiated in New York City . . . and had visited the Welfare
Island site here" (id.). As we noted in Parke-Bernet, such an
affidavit was insufficient because a plaintiff may not "rely []
on his own activities within the State rather than on defendant's
independent activities" to invoke long-arm jurisdiction (see id.
[quoting Parke-Bernet, 26 NY2d at 19 n 2]).

Unlike the plaintiff in Haar, plaintiff here has set
forth facts establishing that defendants did engage in activities
in New York. His affidavit and time records show that defendants
solicited plaintiff here by telephone and mail and regularly
communicated with him in New York during the course of an
attorney-client relationship (compare e.g. Etra, 61 NY2d at 458
[rejecting long-arm jurisdiction where defendant doctor was
solicited in Massachusetts, served as "consultant" to plaintiff's
New York doctor through written and telephonic communications,
and sent an experimental drug into New York]; Ehrenfeld v
Mahfouz, __ NY3d __, p. 14 [decided today] [no long-arm
jurisdiction where plaintiff relied upon her "unilateral
activities" in New York and a judgment issued by an English court
to establish a transaction of business in this state]). These
are proper predicates for CPLR 302 (a) (1) jurisdiction. In
contrast, the defendant in Haar had no New York contacts in
connection with the plaintiff's representation of it. Its
contacts were with its attorney in Massachusetts. Thus, Haar is
fully consistent with our decision here (cf. Mayes, 674 F2d at
185 ["So far as we are aware, no court has extended § 302(a)(1)
to reach a nondomiciliary who never entered New York, who was
solicited outside of New York to perform services outside of New
York, who performed outside of New York such services as were
performed, and who is alleged to have neglected to perform other
services outside of New York"]).8

III.

The courts below also properly concluded that the
present action arises out of defendants' transaction of business
in New York. There is a substantial relationship between
plaintiff's action for fees accrued during his representation of
defendant ONAM in the Oregon action, defendants' solicitation of
plaintiff in New York to represent ONAM in that action and
defendants' communications with plaintiff in this state with
respect to the Oregon matter (see Johnson v Ward, 4 NY3d 516, 519
[2005]). These are not "merely coincidental" occurrences that
have a tangential relationship to the present case (see id. at
520). They form the basis of this action and, indeed,
plaintiff's claims for legal fees are directly dependent upon
them.

Furthermore, our decision accords with due process. As
we have explained, the United States Supreme Court's due process
precedents provide that: "So long as a party avails itself of
the benefits of the forum, has sufficient minimum contacts with
it, and should reasonably expect to defend its actions there, due
process is not offended if that party is subjected to
jurisdiction even if not 'present' in that State" (Kreutter, 71
NY2d at 466). Defendants here purposefully availed themselves of
New York's legal services market by establishing a continuing
attorney-client relationship with defendant. Their contacts here
were sufficient, consisting of solicitation of plaintiff's
services here and frequent communications with him. Given these
facts, they should have reasonably expected to defend against a
suit based on their relationship with plaintiff in New York (see
e.g. Reiner, 41 NY2d at 653 [New York contacts that "contemplated
and resulted in a continuing relationship . . . certainly are of
the nature and quality to be deemed sufficient to render
[defendant] liable to suit here"]).

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http://www.courts.state.ny.us/ctapps/decisions/dec07/175opn07.pdf