July 30, 2007
RICHARD K. CACIOPPO, PLAINTIFF-APPELLANT,
POOL MART SERVICES, INC. D/B/A POOL MART,*FN1 RICHARD A. SHIRE, MICHELLE SHIRE, AND BRIAN RIFKIN D/B/A KENOBI SOLUTIONS, DEFENDANTS-RESPONDENTS, AND AQUABOTICS, INC.,*FN2 AND AQUABOTICS, A GENERAL PARTNERSHIP,*FN3 DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Essex County, L-6730-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted April 18, 2007
Before Judges Lefelt, Parrillo and Sapp-Peterson.
Plaintiff Richard K. Cacioppo appeals from the December 2, 2005 order dismissing his sixteen-count complaint filed against defendants Richard A. Shire and Michelle Shire (Shires) on jurisdictional grounds and the December 16, 2005 order dismissing defendant Brian Rifkin d/b/a Kenobi Solutions (Rifkin) for failure to state a claim upon which relief may be granted. He also appeals the January 20, 2006 order denying his motion for reconsideration of both dismissals. We reverse the dismissal of the complaint against the Shires and remand for further proceedings. We affirm the dismissal of the claims of negligence, negligent and intentional infliction of emotional distress asserted against Rifkin, but reverse the dismissal of plaintiff's negligent misrepresentation and fraud claims.
The complaint arises out of a failed business relationship initially created between the Shires*fn4 and plaintiff. From that relationship emerged the formation of Aquabotics, Inc., a wholesale and retail provider of pool cleaning equipment. The business relationship was formed in 2000 when plaintiff and the Shires engaged in discussions that plaintiff contends created an agreement to form Aquabotics, a partnership, which would eventually lead to incorporation. Plaintiff claims some of these discussions occurred in New Jersey. The only written records related to the parties' negotiations are e-mails memorializing some of the content of the conversations. There is also a partnership buyout agreement signed by the parties on August 5, 2004.
Aquabotics was incorporated as a Delaware corporation on February 17, 2000. It was also authorized to do business in New York as a foreign corporation under that name and under Pool Vac Superstore.Com., with its principal location listed as 127-17 Smithtown Boulevard, Nesconset, New York. The New York State Division of Corporations' records list plaintiff as the individual authorized to accept mail on behalf of the corporation in Manhassett, New York.
Rifkin was later retained to create the Aquabotics commercial websites, as the company was to operate exclusively through the Internet. Rifkin's business, Kenobi Solutions, is registered to do business in New Jersey, and its administrative, billing, and technical contacts are all located in Manalapan, New Jersey.
At some point, the relationship between the Shires and plaintiff became strained. On August 5, 2004, plaintiff filed a sixteen-count complaint which included requests for (1) declaratory relief, the issuance of a temporary injunction, and permanent injunctive relief; (2) dissolution of the partnership agreement that purportedly created Aquabotics; (3) dissolution of the Aquabotics Corporation; (4) partition of the partnership; and claims of (5) negligence; (6) slander per se, slander and libel; (7) negligent or intentional infliction of emotional distress; (8) breach of contract (Agreement 1); (9) breach of contract (Agreement 2); (10) rescission of contract; (11) fraudulent or negligent misrepresentation; (12) breach of fiduciary duty; (13) breach of covenant; (14) trespass to property and conversion; (15) negligence per se; and (16) forcible detainer/unlawful eviction.
On November 4, 2005, the Shires moved for dismissal of the complaint on the basis of a lack of personal jurisdiction. Rifkin also moved to dismiss the complaint for failure to state a claim upon which relief may be granted. Both motions were returnable on the same date and all parties expected oral argument. However, when plaintiff and the Shires' attorneys appeared, they were advised that the matter had been decided on the papers, although Rifkin's attorney did participate in oral argument. The court granted both motions. Thereafter, the court denied plaintiff's motions for reconsideration. The motion judge did not place reasons on the record during the original motion or the reconsideration motion, nor was there a subsequent written statement of reasons attached to the orders.
On November 17, 2006, the court conducted a hearing to reconstruct the record. The motion judge summarized his recollection of the events and the parties' counsel thereafter each supplemented the record. The court stated that the Shires' motion to dismiss was granted because "while the plaintiff did contest the allegations as to minimal contacts, in fact, there [was] no supporting documentation for same and, based on what was before the Court, it appeared that the defendant's position was, in fact, correct." As for Rifkin's motion to dismiss, the court found that "since it appeared that even from the plaintiff's complaint and submissions, he had no liability in this matter," it was properly granted. This appeal followed.
"A state court's assertion of personal jurisdiction over a defendant must comport with the due-process requirement of the fourteenth amendment. Rule 4:4-4, this state's equivalent of a long-arm statute, permits service of process on non-resident defendants consistent with due process of law." Charles Gendler & Co., Inc. v. Telecom Equip. Corp., 102 N.J. 460, 469 (1986) (internal quotations omitted). The rule has been construed as extending personal jurisdiction to the outer limits, as permitted by due process. Avdel Corp. v. Mecure, 58 N.J. 264, 268 (1971).
There are two types of personal jurisdiction, specific and general. Accura Zeisel Mach. Corp. v. Timco, Inc., 305 N.J. Super. 559, 565 (App. Div. 1997). Specific jurisdiction exists where a defendant's activities are purposely directed to the forum and the cause of action results from the alleged injuries that arise out of, or relate to, those activities. Citibank, N.A. v. Estate of Simpson, 290 N.J. Super. 519, 527 (App. Div. 1996). A defendant's conduct directed to the forum may include one isolated act. Charles Gendler & Co., Inc., supra, 102 N.J. at 471.
The threshold requirement for specific jurisdiction is the concept of "minimum contacts" where "there [is] some act by which the defendant purposefully avails [oneself] of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed. 2d 1283, 1298 (1958) (citing Int'l Shoe v. Wash., 326 U.S. 310, 319, 66 S.Ct. 154, 160, 90 L.Ed. 95, 104 (1945)); Lebel v. Everglades Marina, Inc., 115 N.J. 317, 323 (1989) (holding that the minimum contacts requirement is satisfied so long as the contacts resulted from a defendant's purposeful conduct and not the unilateral activities of a plaintiff).
General jurisdiction is established when the cause of action does not arise from or relate to a defendant's purposeful contact with the forum state, but, rather, when there are continuing and systematic contacts between the non-resident defendant and the forum state. Waste Mgmt., Inc. v. Admiral Ins. Co., 138 N.J. 106, 119 (1994); Lebel, supra, 115 N.J. at 323. "The plaintiff seeking to overcome the challenge of general jurisdiction must show substantially more than mere minimum contacts," Jacobs v. Walt Disney World, Co., 309 N.J. Super. 443, 453 (App. Div. 1998), a significantly higher standard than specific jurisdiction. Giangola v. Walt Disney World Co., 753 F. Supp. 148, 154-55 (D.N.J. 1990).
Additionally, if jurisdiction is otherwise proper, it must also be determined whether its assertion would offend "traditional notions of fair play and substantial justice." Int'l Shoe, supra, 326 U.S. at 316, 66 S.Ct. at 158, 90 L.Ed. at 102. The essential inquiry is "whether the offending party could reasonably anticipate that the forum state would have a substantial interest in vindicating the personal rights of the injured party." Blakey v. Cont'l Airlines, 164 N.J. 38, 69 (2000). A number of factors are considered, including "the burden on defendant, the interests of the forum state, the plaintiff's interest in obtaining relief, the interstate judicial system's interest in efficient resolution of disputes, and the shared interest of the states in furthering fundamental substantive social policies." Waste Mgmt., supra, 138 N.J. at 125. Once a showing of "minimum contacts" has been made, the nonresident defendant "must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Lebel, supra, 115 N.J. at 328 (quoting Burger King Corp. v. Rudzewicz, 471 N.J. 462, 477, 105 S.Ct. 2174, 2184, 85 L.Ed. 2d 528, 544 (1985)).
On appeal, plaintiff contends that sufficient facts have been alleged to establish specific jurisdiction. Plaintiff argues that in addition to negotiating the partnership agreement in New Jersey, Richard Shire visited New Jersey a number of times to form Aquabotics, the Shires operated Aquabotics through plaintiff and Rifkin, and conducted web and national advertisements from which over 300 New Jersey residences and businesses submitted online orders. Plaintiff contends these contacts were sufficient for the Shires to have predicted that they could be hauled into court in New Jersey. At the very least, plaintiff argues a plenary hearing was mandated due to the vigorously disputed and contradictory facts concerning the existence of a partnership agreement and purported forum activities, as evidenced by parties' certifications.
The motion judge agreed with the Shires that plaintiff presented insufficient proof that negotiations took place in New Jersey. The court reached this determination, however, without an evidentiary hearing or the allowance of discovery, both of which were requested by plaintiff. The negotiation of the agreement and the other alleged actions that plaintiff contends took place in New Jersey could potentially qualify as establishing both specific and/or general jurisdiction. Bayway Refining Co. v. State Util., Inc., 333 N.J. Super. 420, 431 (App. Div.) (noting that the existence of a contractual relationship alone will not sustain jurisdiction unless the nonresident-defendant, in the context of the overall business transactions related to the contract, could have reasonably contemplated significant activities or effects in the forum state), certif. denied, 165 N.J. 605 (2000). Thus, the trial court should have conducted an evidentiary hearing or allowed some discovery to proceed to determine whether a partnership agreement in fact existed, whether it was negotiated in New Jersey, and what, if any, of the Shires' activities took place that were purposely directed to New Jersey or that evidenced a systematic and continuous presence in New Jersey. See Blakey, supra, 164 N.J. at 70-71. Furthermore, the lack of any factual findings by the court additionally warrants reversal.
In Schwarz v. Schwarz, 328 N.J. Super. 275, 282 (App. Div. 2000), we noted that "an articulation of reasons is essential to the fair resolution of a case." Indeed, Rule 1:7-4(a) specifically provides that a court shall "find the facts and state its conclusions of law . . . on every motion decided by a written order that is appealable as of right." Moreover, Rule 1:6-2(f) provides in relevant part that,
[i]f the court has made findings of fact and conclusions of law explaining its disposition of the motion, the order shall indicate whether the findings and conclusions were written or oral and the date on which they were rendered. . . . If no such findings have been made, the court shall append to the order a statement of reasons for its disposition if it concludes that explanation is either necessary or appropriate. [Ibid.]
"Failure to perform that duty 'constitutes a disservice to the litigants, the attorneys and the appellate court.'" Curtis v. Finneran, 83 N.J. 563, 569-70 (1980) (quoting Kenwood Assocs. v. Bd. of Adj. Englewood, 141 N.J. Super. 1, 4 (App. Div. 1976)). We have repeatedly referenced this obligation in the context of appeals from dispositive orders. See, e.g., CNA Ins. Co. v. Cave, 332 N.J. Super. 185, 187 (App. Div.), certif. denied, 165 N.J. 678 (2000); Schwarz, supra, 328 N.J. Super. at 282; N.J. Dep't of Transp. v. Barton Inv. Assocs., 326 N.J. Super. 282, 287 (App. Div. 1999); Chambon v. Chambon, 238 N.J. Super. 225, 231-32 (App. Div. 1990).
Additionally, the reconstructed record did not cure the deficiencies in the court's earlier decisions. The court simply found that there was no evidence to support personal jurisdiction over the Shires beyond the allegations in the pleadings. At this early stage of the proceedings, however, if the pleadings and certifications suggest jurisdiction, at a minimum, jurisdictional discovery or an evidentiary hearing should be conducted rather than a dismissal. Blakey, supra, 164 N.J. at 70-71. As we noted in Jacobs, "[i]n the early stages of a proceeding 'where the factual record consists of only pleadings and affidavits, plaintiff's burden is satisfied by establishing a prima facie case of jurisdiction.'" Jacobs, supra, 309 N.J. Super. at 454 (quoting Cresswell v. Walt Disney Prod., 677 F. Supp. 284, 286 (M.D.Pa. 1987)).
Here, plaintiff's pleadings and affidavits, which must be liberally construed with the view towards determining whether a cause of action is suggested, allege sufficient facts to warrant further discovery. Id. at 462; see also Makopoulos v. Walt Disney World, Inc., 221 N.J. Super. 513, 518 (App. Div. 1987) (remand for further discovery required to determine whether solicitation provided a basis for personal jurisdiction), certif. denied, 117 N.J. 661 (1989).
As for the burden upon defendants in being subject to litigation in New Jersey, plaintiff contends it is "almost incidental" due to the voluntary entry of numerous business relationships with New Jersey residents and businesses, and the location of company headquarters less than an hour out of the state. We agree.
Plaintiff contends Rifkin's motion should not have been granted because his complaint contained sufficient factual allegations to survive a motion to dismiss for failure to state a claim.
Rule 4:6-2(e) permits the filing of a motion to dismiss for failure to state a claim upon which relief may be granted, in lieu of filing an answer. A motion brought pursuant to this rule is reviewed to determine "whether a cause of action is 'suggested' by the facts," with the plaintiff afforded "every reasonable inference of fact." Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 746 (1989). This analysis "is at once painstaking and undertaken with a generous and hospitable approach." Ibid. Appellate review of a trial court's determination over such a motion is governed by the same standard. Seidenberg v. Summit Bank, 348 N.J. Super. 243, 250 (App. Div. 2002).
In the instant appeal, plaintiff's complaints against Rifkin include negligence, negligent or intentional infliction of emotional distress, and fraudulent or negligent misrepresentation. Each of these will be discussed in turn.
Plaintiff contends Rifkin owed plaintiff a duty to perform his duties in a competent manner, which included monitoring and controlling the other named defendants and their employees and managing the business affairs of Aquabotics in a competent manner. To the extent the claim alleges Rifkin owed a duty to monitor employees of Aquabotics, the complaint contains no factual allegations that would support a claim of a duty to monitor. Furthermore, nothing in the pleadings suggests any special relationship beyond the contractual obligation to perform duties for which it was specifically retained, which did not include any monitoring or control over the Aquabotics employees.
As for plaintiff's claims of negligence, negligent and intentional infliction of emotional distress, plaintiff's verified complaint alleges that he retained Rifkin to host websites and provide technical Internet services. Plaintiff claims Rifkin denied him access to websites for which plaintiff had the exclusive right and access to use, causing plaintiff a loss of business and denial of profits due plaintiff from the business affairs of the Shires and Aquabotics. These contentions, when viewed with all favorable inferences accorded to plaintiff, may assert a cause of action for breach of contract, but do not establish a cause of action against Rifkin based upon negligence. See Saltiel v. GSI Consultants, Inc., 170 N.J. 297, 309-11 (2002) (noting that a tort remedy does not arise from a contractual relationship unless the breaching party owes an independent duty imposed by law).
Moreover, plaintiff's complaint fails to set forth any facts indicating that Rifkin's conduct was "extreme or outrageous" or even intentional. Consequently, the claim for intentional infliction of emotional distress, as pled, will not stand. See Young v. Hobart West Group, 385 N.J. Super. 448, 467-68 (App. Div. 2005).
Finally, plaintiff claims that Rifkin "falsely represented to plaintiff that he was competent and able to perform all services that he and Kenobi were retained for and could perform such services up to the standards of the industry and vocation in which Rifkin belonged." Plaintiff contends Rifkin also "failed to disclose he had insufficient ability or knowledge to perform said services, and made excuse after excuse why he had failed to perform said services." As a result, plaintiff maintains Aquabotics was "deprived of numerous sales that such services would have generated."
Negligent misrepresentation requires "[a]n incorrect statement, negligently made and justifiably relied on, [and] may be the basis for recovery of damages for economic loss . . . sustained as a consequence of that reliance." H. Rosenblum, Inc. v. Adler, 93 N.J. 324, 334 (1983). Fraud requires "a material misrepresentation of a presently existing or past fact," "knowledge or belief by the defendant of its falsity," "an intention that the other person rely on it," "reasonable reliance thereon by the other person," and "resulting damages." Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997). Although plaintiff's complaint does not specify whether the defendant's false representation was negligent or intentional, the facts alleged are adequate to set forth these claims.
We have carefully reviewed the remaining arguments advanced by plaintiff and find none to have sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
The order dismissing the complaint against the Shires is reversed and remanded for jurisdictional discovery and further proceedings. The order dismissing plaintiff's complaint against Rifkin for failure to state a claim upon which relief may be granted is reversed in part, and plaintiff's claims asserting negligent misrepresentation and fraud are reinstated. The dismissal of the remaining claims against Rifkin is affirmed. We do not retain jurisdiction.