I think I saw this before.. but there sure is a lot of legal BS with this company..
Does Fonix sell technology or paper??
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
THIS SUMMARY ORDER WILL NOT BE PUBLISHED IN THE FEDERAL REPORTER AND MAY NOT
BE CITED AS PRECEDENTIAL AUTHORITY TO THIS OR ANY OTHER COURT, BUT MAY BE CALLED
TO THE ATTENTION OF THIS OR ANY OTHER COURT IN A SUBSEQUENT STAGE OF THIS CASE, IN
A RELATED CASE, OR IN ANY CASE FOR PURPOSES OF COLLATERAL ESTOPPEL OR RES
JUDICATA.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the United States
Courthouse, Foley Square, in the City of New York, on the 14th day of October, one thousand nine hundred and
ninety-nine.
PRESENT:
HON. DENNIS JACOBS,
HON. GUIDO CALABRESI,
HON. CHESTER J. STRAUB,
Circuit Judges.
________________________________________________________________
JOHN R. CLARKE, and PERPETUAL GROWTH FUNDS ADVISORS, INC.,
Plaintiffs-Appellants,
v.
No. 99-7279
FONIX CORPORATION, STEPHEN M. HICKS, SOUTHRIDGE CAPITAL MANAGEMENT, LLC, and
SOVEREIGN PARTNERS, L.P.,
Defendants-Appellees.
________________________________________________________________
Appearing for Appellants: David B. Cohen, Speno & Cohen, LLP, New York, NY (Sarah R. Speno, of counsel)
Appearing for Appellee Fonix Corp: Lyndon M. Tretter, Davis Weber & Edwards P.C., New York, NY (Emily
Granrud, of counsel)
Appearing for Appellees Hicks, Southridge Capital and Sovereign Partners: Martin P. Russo, MPR Law
Practice, New York, NY (Jason M. Ewasko, of counsel)
________________________________________________________________
Appeal from the United States District Court for the Southern District of New York (Robert P. Patterson, Jr.,
Judge).
AFTER ARGUMENT AND UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND
DECREED that the judgment of the District Court is hereby AFFIRMED.
________________________________________________________________
Plaintiffs John R. Clarke and Perpetual Growth Funds Advisors, Inc. (collectively "plaintiffs") appeal from an
order of the United States District Court for the Southern District of New York (Robert P. Patterson, Jr., Judge),
declining to reinstate the action against defendant Fonix Corporation, due to lack of personal jurisdiction and, in
the alternative, venue, and granting the motion of defendants Hicks, Southridge Capital Management, LLC, and
Sovereign Partners, L.P. (collectively "Hicks") to dismiss for lack of personal jurisdiction.
The dispute arises out of an agreement entered into between plaintiffs and Fonix on February 25, 1998
("Agreement"), providing for payment of a 5% commission fee to the plaintiffs "at closing of a financing
between Fonix . . . and an investor that is a result of an introduction by" plaintiffs. In early 1998, Hicks invested
$10 million in Fonix, for which the plaintiffs were paid $500,000 in commissions, as agreed by the parties.
According to the plaintiffs, however, Fonix breached the Agreement by not paying them commissions for all
subsequent investments in Fonix made by Hicks, and Hicks tortiously interfered with the Agreement.
Plaintiffs' argument regarding personal jurisdiction over Hicks under New York's long arm statute, C.P.L.R. §
301, rests solely on the allegation by one of plaintiffs' attorneys that Hicks "maintain[s] an office for the conduct
of business in the City of New York in care of Meridian Equities, 126 East 56th Street, New York, New York
10022." In order to be "doing business" in New York for purposes of § 301 a corporation must be "engaged in
such a continuous and systematic course of doing business here as to warrant a finding of its presence in this
jurisdiction." Landoil Resources Corp. v. Alexander & Alexander Servs., 918 F.2d 1039, 1043 (2d Cir. 1990)
(internal quotations omitted). The mere allegation that Hicks "maintains" an office in New York "in care of"
someone, after full discovery on issues of jurisdiction, is insufficient to meet the requirement of systematic
on-going contact.
As to Fonix, there is no dispute that the contract allegedly breached by Fonix was negotiated and executed
outside of New York. The sole connection to New York is the three or four meetings between Fonix and Hicks in
New York, during which the subsequent investments at issue may have been discussed. Therefore, irrespective
of personal jurisdiction over Fonix, venue in New York is lacking under 28 U.S.C. § 1391(a), both because,
absent jurisdiction over Hicks there is no particular reason why venue should be located in New York, and
because "a substantial part of the events or omissions giving rise to the [breach of contract] claim" did not arise
there. See 28 U.S.C. § 1391(a)(2).
For the reasons set forth above, the judgment of the District Court is hereby AFFIRMED. |
