| Andrew Greenberg, Inc. v Sirtech Can., Ltd. |
| 2010 NY Slip Op 09323 [79 AD3d 1419] |
| December 16, 2010 |
| Appellate Division, Third Department |
| Andrew Greenberg, Inc., Respondent, v Sirtech Canada, Ltd., et al.,Defendants, and Frederick Sirotek, Appellant. |
—[*1] Weiss & Associates, P.C., New York City (Matthew J. Weiss of counsel), forrespondent.
Mercure, J. Appeal from an order of the Supreme Court (Ledina, J.), entered January 21, 2010 inSullivan County, which denied defendant Frederick Sirotek's motion for summary judgment dismissingthe complaint against him.
The underlying facts are more fully set forth in the various prior decisions of this Court and theCourt of Appeals in these two consolidated actions for breach of contract, an accounting, trade secretmisappropriation and tortious interference (see Andrew Greenberg, Inc. v Svane, Inc., 36 AD3d 1094 [2007]; Andrew Greenberg, Inc. v Sir-TechSoftware, 2 AD3d 1042 [2003], revd 4 NY3d 185 [2005]; Andrew Greenberg,Inc. v Sir-Tech Software, 297 AD2d 834 [2002]; Andrew Greenberg, Inc. v Sir-TechSoftware, 245 AD2d 1004 [1997]). This appeal involves the denial of a motion by defendantFrederick Sirotek (hereinafter Sirotek) for summary judgment dismissing the sole remaining claimagainst him—sounding in trade secret misappropriation—on the ground that SupremeCourt lacks personal jurisdiction over him.
As relevant here, plaintiff entered into a 1981 agreement with Sir-Tech Software, Inc. grantingSir-Tech the exclusive right to manufacture and market a computer game created by [*2]plaintiff and known as "Wizardry." The agreement, which was signed bySirotek as president of Sir-Tech, also prohibited the disclosure of any Wizardry product informationwithout plaintiff's consent. Plaintiff commenced the first of these actions in 1992, after Sir-Tech ceasedpaying it royalties under the agreement, and subsequently added two Canadian successor corporationsas defendants after discovering that Sir-Tech had transferred its assets to those corporations in 1998. In2001, plaintiff commenced the second of these actions against the principals and officers of thecorporate defendants—namely, Sirotek and his two sons, defendants Robert Sirotek andNorman Sirotek—alleging that they had disclosed trade secrets to the Canadian successorcorporations.
Following joinder of issue, Sirotek's original 2003 motion to dismiss the complaint against him forlack of personal jurisdiction was continued by Supreme Court, pending additional discovery. Extensivemotion practice, discovery and several appeals ensued, resulting in a decision by the Court of Appealsholding that the motion of the Canadian corporate defendants to dismiss for lack of personal jurisdictionmust be denied under CPLR 302 (a) (1) (Andrew Greenberg, Inc. v Sir-Tech Software, 4NY3d at 191). In addition, this Court rejected the individual defendants' assertion that plaintiff's claimfor trade secret misappropriation was either settled and released pursuant to a settlement agreemententered in the chapter 11 bankruptcy proceeding of Sir-Tech, or barred by the statute of limitations(Andrew Greenberg, Inc. v Svane, Inc., 36 AD3d at 1096-1098). In 2009, Sirotek, who livesin Canada, sought summary judgment dismissing the remaining trade secret misappropriation claim onthe ground that Supreme Court lacks personal jurisdiction over him. Supreme Court denied the motion,prompting this appeal.
We affirm. In determining whether the New York courts have personal jurisdiction over anon-domiciliary, such as Sirotek, a two-part analysis must be employed. First, it must be "determine[d]whether our long-arm statute (CPLR 302) confers jurisdiction over [him] in light of [his] contacts withthis State" (LaMarca v Pak-Mor Mfg. Co., 95 NY2d 210, 214 [2000]). If so, it must then be"determine[d] whether the exercise of jurisdiction comports with due process" (id. at 214). Weare mindful that CPLR 302 " 'does not confer jurisdiction in every case where it is constitutionallypermissible' " (Ehrenfeld v Bin Mahfouz,9 NY3d 501, 512 [2007], quoting Kreutter v McFadden Oil Corp., 71 NY2d 460, 471[1988]), and the ultimate burden is upon plaintiff, as the party seeking to assert jurisdiction, to show thata proper basis for long-arm jurisdiction exists (see SPCA of Upstate N.Y., Inc. v American Working Collie Assn., 74AD3d 1464, 1465 [2010]; StardustDance Prods., Ltd. v Cruise Groups Intl., Inc., 63 AD3d 1262, 1264 [2009]).
As relevant here, long-arm jurisdiction under CPLR 302 (a) (1) for tort and contract claims may bepredicated on a showing that "(i) a defendant transacted business within the state and (ii) the cause ofaction arose from that transaction of business" (Johnson v Ward, 4 NY3d 516, 519 [2005]; accord SPCA ofUpstate N.Y., Inc. v American Working Collie Assn., 74 AD3d at 1465). The Court of Appealshas held that "[t]he overriding criterion necessary to establish a transaction of business is some act bywhich the defendant purposefully avails itself of the privilege of conducting activities within [New York]"and thereby "invok[es] the benefits and protections of [our] laws" (Ehrenfeld v Bin Mahfouz, 9NY3d at 508 [internal quotation marks and citations omitted]). Furthermore, there must be a"substantial relationship" between defendant's purposeful activities and the cause of action asserted(Kreutter v McFadden Oil Corp., 71 NY2d at 467). Once the plaintiff establishes purposefulactivities in the state that bear a substantial relationship to the claim asserted, "CPLR 302 (a) (1)jurisdiction is proper even [if] the defendant never enters New York" (Fischbarg v Doucet, 9 NY3d 375, 380[2007] [internal [*3]quotation marks omitted]).
Here, Sirotek acknowledges that he signed the 1981 agreement in his capacity as president ofSir-Tech, which was a New York corporation, and that he remained president during much of the1980s. He argues, however, that there is no substantial relationship between his conduct in New Yorkand plaintiff's remaining claim inasmuch as he retired from Sir-Tech in 1989, moved to Canada shortlythereafter, and—he avers—had no knowledge of the 1998 sale of Sir-Tech's assets to thedefendant Canadian successor corporations. While this evidence established Sirotek's prima facieentitlement to summary judgment, we conclude that plaintiff raised triable issues of fact in opposition,warranting the denial of Sirotek's motion.
Plaintiff presented evidence that Sirotek remained on the board of directors of Sir-Tech until 1997.In 1996, Sirotek gave deposition testimony in the first of these actions stating that it was his own"mistake" that plaintiff was "overpaid" pursuant to the 1981 agreement and that plaintiff, whose principalhe characterized as "greedy," was not entitled to additional royalties. Sirotek's son Robert indicated thatan independent marketing firm spent "a number of years" prior to the 1998 sale—i.e., whileSirotek remained on the board of directors—seeking a buyer for Sir-Tech's assets, which it soldto raise money for its defense in the first action. In December 1997, the successor Canadiancorporation, defendant Ontario 1259190, was formed, with Sirotek as a shareholder and sole directorand his son Norman as president. Norman testified that the closely-held corporation was formed solelyfor the purpose of acquiring Sir-Tech's assets. Once Ontario 1259190 purchased those assets inJanuary 1998, it licensed them one month later to another closely-held successor Canadiancorporation, defendant Sirtech Canada, which maintained an office in the City of Ogdensburg, St.Lawrence County. Sirotek was the president and sole director of Sirtech Canada when it was formedin 1994 and evidently remained president in 2002, when he signed the settlement agreement inSir-Tech's chapter 11 bankruptcy proceeding on behalf of himself individually and on behalf of SirtechCanada.[FN*]
In our view, this evidence—particularly in light of the closely-held nature of the corporationsinvolved—gives rise to questions of fact regarding whether Sirotek transacted business in thestate that was substantially related to plaintiff's cause of action (see Kreutter v McFadden OilCorp., 71 NY2d at 470-471; Longines-Wittnauer Watch Co. v Barnes & Reinecke, 15NY2d 443, 466-467 [1965], cert denied sub nom. Estwing Mfg. Co., Inc. v Singer, 382 US905 [1965]; Stardust Dance Prods., Ltd. v Cruise Groups Intl., Inc., 63 AD3d at 1265;Otterbourg, Steindler, Houston & Rosen v Shreve City Apts., 147 AD2d 327, 331-332[1989]; see also Sybron Corp. v Wetzel, 46 NY2d 197, 203-204 [1978]; see generallyW. Joseph McPhillips, Inc. v Ellis, 278 AD2d 682, 684 [2000]; Key Bank of N.Y. vGrossi, 227 AD2d 841, 843 [1996]). We further reject Sirotek's argument that the exercise ofpersonal jurisdiction over him by the New York courts would offend due process. "[A] State mayconstitutionally exercise [*4]jurisdiction over non-domiciliarydefendants, provided they ha[ve] certain minimum contacts with [the forum State] such that themaintenance of the suit does not offend traditional notions of fair play and substantial justice"(LaMarca v Pak-Mor Mfg. Co., 95 NY2d at 216 [internal quotation marks and citationsomitted]). In addition to the evidence of Sirotek's purposeful activity in New York detailed above, wenote that he both voluntarily participated in the federal bankruptcy proceeding to resolve a state lawclaim raised by plaintiff in this action and attempted to rely upon that settlement, which he signed, toobtain dismissal of plaintiff's remaining claims against him in this action (see Andrew Greenberg, Inc.v Svane, Inc., 36 AD3d at 1096-1098). "Use of the New York courts is a traditional justificationfor the exercise of personal jurisdiction over a nonresident" (Matter of Sayeh R., 91 NY2d306, 319 [1997] [citations omitted]; see Lynch v Austin, 96 AD2d 196, 199 [1983]) and,under the circumstances, the exercise of jurisdiction over Sirotek comports with due process (seeFischbarg v Doucet, 9 NY3d at 384-385; LaMarca v Pak-Mor Mfg. Co., 95 NY2d at217-219; Perkow v Frank W. Winne &Sons, Inc., 36 AD3d 1189, 1190-1191 [2007]).
Sirotek's remaining arguments are either rendered academic or, upon consideration, have beenfound to be lacking in merit.
Cardona, P.J., Lahtinen, Stein and Garry, JJ., concur. Ordered that the order is affirmed, withcosts.
Footnote *: The 2002 settlement agreementresolved Sir-Tech's claims against Sirotek, his sons, Ontario 1259190 and Sirtech Canada forfraudulent conveyance. A trustee determined that the fraudulent conveyance claim, which was initiallyasserted by plaintiff in the first action, was the property of the bankruptcy estate (AndrewGreenberg, Inc. v Svane, Inc., 36 AD3d at 1096). Sirtech Canada continued to market Wizardryproducts in New York (see Andrew Greenberg, Inc. v Sir-Tech Software, 4 NY3d at 190).