This action, brought by plaintiff, Max Kozower, against numerous defendants, seeks damages for alleged breaches of contract and breaches of fiduciary duty. In June 2017, defendants David Fenton and Michael Fenton met with plaintiff in New York, seeking his investment in defendant Permafrost Energy Partners, LLC, a Florida LLC (PEP-FL).1 This meeting ended without execution of an agreement. In September 2020, PEP-FL again contacted plaintiff seeking a short-term loan. After several weeks of negotiations by phone and email, plaintiff agreed to lend PEP-FL a total of $200,000. Plaintiff did not end up lending PEP-FL the full amount, but rather only made a disbursement of $50,000 on November 4, 2020, and of $25,000 on November 20, 2020. There was no written agreement, and the parties dispute the exact terms. Plaintiff asserts that the terms of each of his November 2020 loans “were one year at 10 percent interest with an option to convert the loan to equity at a valuation of $2,200,000.” (NYSCEF No. 31 at 8.) He claims that “PEP-FL also agreed to pay [him] $5,000 per month for his consulting services.” (Id.) Defendants, however, contend that “[u]pon full funding, the term of the loan would be for 1 year, at a 10 percent interest rate” and carry the option to convert it to equity ownership in the company. (NYSCEF No. 17 at 6-7.) Plaintiff contends that in December 2020, David Fenton informed him that Michael Fenton had stolen PEP-FL funds. Defendant Stuart Levy commenced a lawsuit in New York (“the PEP New York Action”) against Michael Fenton. In the PEP New York Action, David Fenton submitted an affidavit in which he confirmed the existence of the loan agreement and the court’s jurisdiction over PEP-FL and Michael Fenton. The PEP New York Action later settled. Around the time of that settlement, PEP-FL sold all its assets and liabilities to an LLC created and owned by David Fenton and Levy: Permafrost Energy Partners, LLC, an Arizona LLC (PEP-AZ). Plaintiff asserts that defendants sought his release of the funds he lent to PEP-FL, but “because neither PEP-AZ nor PEP-FL would agree to actually repay the loan as part of the transaction or allow [him] to convert his debt into equity, [he] refused.” (NYSCEF No. 31 at 11.) Plaintiff further contends that as part of the acquisition, PEP-FL received cash that was then “distributed…to its members even though they were all aware of PEP-FL’s outstanding loan obligations to [him], and even though they were aware that PEP-FL’s distribution of this cash would render PEP-FL insolvent and thus unable to pay [him].” (Id. at 11-12.) In November 2021, plaintiff brought this action. He asserts four causes of action: (i) breach of contract against PEP-FL for allegedly failing to repay plaintiff’s loan or to allow plaintiff to convert those funds into equity (and failing to pay plaintiff for his consulting work); (ii) unjust enrichment against all defendants, based on PEP-FL’s retention of the money it allegedly owes plaintiff; (iii) breach of fiduciary duty against all defendants, except PEP-AZ, arising from the transfer of assets from PEP-FL to PEP-AZ; and (iv) aiding and abetting this breach of fiduciary duty, against all defendants except PEP-FL. In motion sequence 001, defendants PEP-AZ, David Fenton, and Levy move to dismiss the complaint based on forum non conveniens, lack of standing, and failure to state a cause of action. In motion sequence 002, defendants PEP-FL, Fenton Brothers Holdings, LLC, Tucker Frederickson, Gulfstream Investment Group LLC, Gemini Capital LLC, Access Enterprises, LLC, Michael Fenton, and Ira Fenton move to dismiss plaintiff’s complaint based on lack of personal jurisdiction, forum non conveniens, and failure to state a cause of action. The motions to dismiss are granted on forum non conveniens grounds.2 DISCUSSION CPLR 327 provides that “[w]hen the court finds that in the interest of substantial justice the action should be heard in another forum, the court, on the motion of any party, may stay or dismiss the action in whole or in part on any conditions that may be just.” Among the factors to consider in the forum non conveniens analysis “are the residency of the parties, the potential hardship to proposed witnesses, the availability of an alternative forum, the situs of the underlying action, and the burden which will be imposed upon the New York courts.” (Wentzel v. Allen Mach., 277 AD2d 446, 447 [2d Dept 2000]). The inquiry rests ultimately on “principles of justice, fairness, and convenience.” (Id.) a. Residency of the Parties Plaintiff is a resident of New York.3 Among defendants, only Levy resides in New York. PEP-AZ and David Fenton are residents of Arizona. And the remaining eight defendants — PEP-FL, Fenton Brothers Holdings, Tucker Frederickson, Gulfstream, Gemini, Access, Michael Fenton, and Ira Fenton — are residents of Florida. b. The Potential Hardship to Proposed Witnesses Plaintiff asserts that “the most relevant witnesses and documents in this action are in the form of Mr. Kozower and his own documents and they are both located in New York.” (NYSCEF No. 34 at 21.) But plaintiff does not specify what documents in his possession relate to this action, or why those documents, in particular, are most relevant to the claims and defenses in the action. Further, contrary to plaintiff’s contention, there are at least eight other relevant witnesses,4 all but one of whom reside outside New York. Defendants have submitted affidavits from the managers of Gemini, Gulfstream, Access, and PEP-FL, all Florida residents, attesting to the hardship that each would suffer from being forced to litigate an action in New York. (See NYSCEF No. 42 [Colussy affidavit, manager of Gemini]; NYSCEF No. 43 [Borg affidavit, manager of Gulfstream]; NYSCEF No. 44 [Glass affidavit, manager of Access]; NYSCEF No. 45 [Fenton affidavit, manager of PEP-FL].) c. Availability of an Alternative Forum Plaintiff does not provide evidence to suggest that Florida is unavailable as an alternative forum for resolution of this case. Plaintiff also does not allege that he would experience undue hardship if he were required to litigate in Florida. Further, defendants — including PEP-AZ, David Fenton, and Levy — agree that Florida is a more appropriate forum than New York. d. The Situs of the Underlying Action Plaintiff’s first cause of action concerns his breach-of-contract claim against PEP-FL based on their oral agreement under which plaintiff would lend PEP-FL $200,000 and work as a consultant. Plaintiff asserts that his second cause of action — alleging unjust enrichment against all defendants — also concerns this oral agreement to the extent that the “loan and consulting services benefitted each of the Defendants, by allowing [them]…to receive cash payouts for the sale of PEP-FL’s assets,” the value of which had increased thanks to plaintiff’s loan and services. (NYSCEF No. 2 at 47.) The third and fourth causes of action, however, concern only PEP-AZ’s purchase of PEP-FL’s assets. Plaintiff does not claim that defendants’ actions underlying the asset-purchase agreement had any connection to New York. Moreover, in terms of the loan agreement, the court concludes that only plaintiff’s consulting work was based in New York. The parties’ negotiations were communicated electronically by telephone and email between plaintiff, in New York, and Michael Fenton and David Fenton, in Florida and Arizona respectively. David Fenton and Michael Fenton met plaintiff in person in New York only once. This meeting did not conclude with execution of an agreement, or lead to negotiation of the agreement presently at issue. And defendants’ alleged failure to compensate plaintiff for his consulting work underlies only the first two of four causes of action. e. The Court’s Burden New York “courts should not be under any compulsion to add to their heavy burdens by accepting jurisdiction of a cause of action having no substantial nexus with New York.” (Silver v. Great Am. Ins. Co., 29 NY2d 356, 361 [1972].) This court concludes that New York lacks a substantial nexus to the present action. Ten of the twelve parties to the action reside outside New York; and the loan agreement was negotiated and executed electronically, with defendants residing in Florida and Arizona, and plaintiff residing in New York. The asset-purchase agreement was signed in Florida (see NYSCEF No. 41 at 10), and it provides that it is governed by Florida law (see NYSCEF No. 40 at 13). The court concludes that, considering these factors as a whole, this action is best heard in Florida rather than in the New York courts. Accordingly, it is ORDERED that the motion to dismiss under CPLR 327 brought by defendants PEP-AZ, David Fenton and Levy (mot seq 001) is granted; and it is further ORDERED that the motion to dismiss under CPLR 327 brought by defendants PEP-FL, FBHC, Tucker Frederickson, Gulfstream, Gemini, Access, Michael Fenton, and Ira Fenton (mot seq 002) is granted; and it is further ORDERED that the action is dismissed, no costs; and it is further ORDERED that plaintiff shall serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk, which shall enter judgment accordingly. Dated: February 8, 2023
