Jacob Breuer, Plaintiff, v. Davy Schwartz, Defendant. (2026)

The papers filed electronically via NYSCEF numbered 2 — 7, 10, 12 & 14 — 17 ("Motion") were read and considered herein. Upon such reading and consideration, the Motion is disposed as follows:

On March 11, 2026, Plaintiff Jacob Breuer, one of two members of a now non-operational limited liability corporation known as MBW Liquidators LLC ("MBW"), owning 50% of the entity, commenced this action against Defendant Davy Schwartz, the other member of MBW. The Complaint asserts causes of action for conversion, breach of fiduciary duty, an accounting, the formation of a constructive trust, tortious interference with contract, and injunctive relief against Defendant Schwartz both in his capacity as a member for MBW and individually. More specifically, Plaintiff Breuer alleges that notwithstanding his equal membership in MBW, Defendant Schwartz withdrew funds from MBW's bank account for his personal use; opened accounts in the name of MBW without granting access to Plaintiff Breuer; retained business funds, inventory, and receivables unbeknownst to Plaintiff Breuer; refused to distribute profits; and denied Plaintiff Breuer meaningful participation in MBW's management, operation, and control, including access to records and access to MBW's storefront and offices. Plaintiff Breuer also alleges that he entered into a commercial lease agreement in an effort to open a new business, which lease agreement Defendant Schwartz allegedly improperly interfered with and caused Plaintiff Breuer to breach.

Defendant Schwartz appeared by way of the instant Motion, which seeks an Order:

(i) dismissing the Complaint in its entirety, with prejudice, pursuant to CPLR 3211(a)(8), for lack of personal jurisdiction over Defendant Davy Schwartz;

(ii) in the alternative, dismissing the Complaint in its entirety pursuant to CPLR 327 on the ground of forum non conveniens, conditioned upon Defendant's consent to personal jurisdiction in the Superior Court of New Jersey;

(iii) in the alternative, dismissing the First, Second, Third, and Fourth Causes of Action pursuant to CPLR 3211(a)(3) for lack of standing, said claims being derivative claims belonging to nonparty MBW and not to Plaintiff individually;

(iv) in the alternative, dismissing the Complaint pursuant to CPLR 3211(a)(10) for failure to join MBW, a necessary party under CPLR 1001;

(v) in the alternative, dismissing the First, Fifth, and Sixth Causes of Action pursuant to CPLR 3211(a)(7) for failure to state a cause of action;

(vi) awarding Defendant his costs and disbursements of this action and reasonable attorneys' fees incurred in connection with this motion pursuant to 22 NYCRR § 130-1.1; and

(vii) granting such other and further relief as to this Court may seem just and proper.

Plaintiff Breuer opposes the Motion.

DISCUSSION

Defendant's Application for Dismissal for Lack of Personal Jurisdiction

"Although a plaintiff is not required to plead and prove personal jurisdiction in the complaint, where jurisdiction is contested, the ultimate burden of proof rests upon the plaintiff" (Skutnik v. Messina, 178 AD3d 744, 744 [2d Dept 2019] quoting Hopstein v. Cohen, 143 AD3d 859, 860 [2d Dept 2016]). "However, in opposing a motion to dismiss the complaint pursuant to CPLR 3211(a)(8) on the ground of lack of jurisdiction, a plaintiff need only make a prima facie showing that such jurisdiction exists" (Altman v. DiPreta, 204 AD3d 965, 967 [2d Dept 2022], quoting Lowy v. Chalkable, LLC, 186 AD3d 590, 591 [2d Dept 2020]).

New York's long-arm statute, CPLR § 302, extends personal jurisdiction to those nondomiciliaries who "transact[ ] any business within the state or contract[ ] anywhere to supply goods or services in the state," among other grounds set forth therein (CPLR § 302[a][1]). In Skutnik v. Messina, 178 AD3d 744 (2d Dept 2019), the Appellate Division, Second Department, wrote as follows with respect to the transacting business predicate of CPLR § 302(a):

"The CPLR 302(a)(1) jurisdictional inquiry is twofold: under the first prong the defendant must have conducted sufficient activities to have transacted business in the state, and under the second prong, the claims must arise from the transactions. The sufficient activities requirement is satisfied 'so long as the defendant's activities here were purposeful. Purposeful activities are those with which a defendant, through volitional acts, avails [himself or herself] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.

To satisfy the second prong of CPLR 302(a)(1) that the cause of action arise from the contacts with New York, there must be an articulable nexus or substantial relationship between the business transaction and the claim asserted. This inquiry is relatively permissive, and does not require causation, but merely a relatedness between the transaction and the legal claim such that the latter is not completely unmoored from the former, regardless of the ultimate merits of the claim. CPLR 302(a)(1) is a single act statute and proof of one transaction in New York is sufficient to invoke jurisdiction, 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.' (id. at 745 [internal citations and quotation marks omitted]).

"Communications by email, instant messaging, telephone, and regular mail may properly be considered a projection in New York for the purpose of transacting business" (JPS Capital Partners, LLC v. Silo Point Holding LLC, 24 Misc 3d 1234[A], *3 [Sup Ct, New York County 2009], citing Deutsche Bank Securities, Inc. v. Montana Bd. of Investments, 7NY3d 65, 71 [2006]; Fischbarg v. Doucet, 9 NY3d 375, 383 [2007]; and Parke-Bernet Galleries, Inc. v. Franklyn, 26 NY2d 13, 17 — 18 [1970]).

At bar, Defendant Schwartz contends that the Court lacks personal jurisdiction over him for the following reasons: that he is a resident and domiciliary of New Jersey; that he has no contacts with New York; that MBW is a limited liability company existing under the laws of New Jersey with its principal place of business in New Jersey; that MBW does not and never had contacts with New York; that MBW is not registered as a foreign limited liability company in New York; that MBW does not have a written operating agreement and is thus governed by the New Jersey Revised Uniform Limited Liability Company Act; that the Complaint does not plead any of the four predicates of CPLR § 302(a); and that even if either of the four predicates were met, the exercise of jurisdiction would violate the Due Process Clause of the U.S. Constitution in that Plaintiff is the only link between Defendant and the forum.

In opposition, Plaintiff Breuer submits as follows with regard to the branch of the Motion for dismissal pursuant to CPLR § 3211(a)(8) in relevant part: that Defendant's Affidavit is defective and inadmissible, because it was acknowledged by a Florida notary public certifying conformity with the laws of New Jersey; that Defendant Schwartz solicited capital contributions in excess of $100.000.00 for MBW from Plaintiff Breuer, a New York resident; that the communications for such solicitation and subsequent business dealings occurred in New York, the financing arrangements were entered into in New York, and the financing provided occurred in New York; that in the alternative, personal jurisdiction was established through CPLR § 302(a)(3) when Defendant Schwartz committed tortious acts through the loss of his $100,000.00 capital contribution, share of MBW's profits, and his lease interest, the economic injuries of which were felt in New York where Plaintiff Breuer resides.

In reply, Defendant Schwartz maintains as follows in relevant part: that Plaintiff attempts to rehabilitate the Complaint's failure to plead facts sufficient to confer personal jurisdiction over Defendant Schwartz through the submission of two conclusory statements that do not identify the date, place, medium, participants, or content of the event(s) that allegedly form the basis for personal jurisdiction; that case law cited to by Plaintiff Schwartz detracts from his argument in support of personal jurisdiction pursuant to CPLR § 302(a)(3); and that an injury does not occur within the state simply because plaintiff is a resident; that Plaintiff Schwartz does not address the remaining elements of CPLR § 302(a)(3).

As a threshold issue, Plaintiff's challenge of the certificate of conformity accompanying Defendant's Affirmation is without merit in light of the 2024 amendment to RPL § 299-a, which now provides that no certificate of conformity is required for an acknowledgment or proof taken without the state if taken by a notary public, among other officers listed in RPL § 299. Accordingly, because Defendant's Affirmation was acknowledged by a Florida notary public, it satisfies the requirements of CPLR § 2309(c).

In the matter at bar, it is certainly true that soliciting business from a New York resident and maintaining communications with said resident are sufficient to satisfy the transacting business predicate of CPLR § 302(a)(1) (see Fischbarg v. Doucet, 9 NY3d 375, 384 — 385 [2007] [holding that Californian defendants who solicited and communicated with a New York attorney to represent them in a legal proceeding in Oregon transacted business under CPLR § 302(a)(1)]; JPS Capital Partners, 899 NYS2d at *4 [holding that out-of-state residents' solicitation of and communications with New York limited liability company for the purpose of securing financing constituted transaction of business under CPLR § 302(a)(1)]). However, Plaintiff has provided nothing more than general statements of Defendant's alleged contacts with New York, namely that "communications with defendant Schwartz occurred in New York and all of the financing arrangements were entered into in New York, with the financing that I provided certainly occurring in New York" (NYSCEF Doc. No. 14, ¶4).¹ Plaintiff does not specify the date, extent, or content of the communications between him and Defendant, specifically whether Defendant unilaterally reached out to Plaintiff for the purpose of forming MBW and obtaining his capital contribution. "The nature and quality of the contacts are what are important for determining whether a defendant's activities are sufficiently purposeful with New York as to amount to the transaction of business within the state" (Mark C. Dillon, Practice Commentaries [McKinney's Cons Laws of NY, CPLR C3211:29]). Further, Defendant Schwartz affirms in support and reply that he executed no contract in New York, which is consistent with Plaintiff's failure to specify whether he, Defendant, or both entered into the "financial arrangement" in New York (NYSCEF Doc. No. 17, ¶5; see Sunward Electronics, Inc. v. McDonald, 362 F3d 17, 22 [2d Cir 2004] ["Several factors should be considered in determining whether an out-of-state defendant transacts business in New York, including . . . whether the contract was negotiated or executed in New York . . . "]). All such information should be within Plaintiff's personal knowledge but was for reasons unbeknownst to the Court, excluded from his Affirmation. It is also unclear how financing can be confined to a geographic location as Plaintiff alleges. Accordingly, on this record, Plaintiff has not sustained his prima facie burden through the submission of his affirmation that Defendant conducted sufficient purposeful activities in New York, which bore a substantial relationship to the subject matter of this action, so as to avail himself of the benefits and protections of New York's laws (see Cotia (USA) Ltd. v. Lynn Steel Corp., 134 AD3d 483, 484 [1st Dept 2015] [holding that conclusory assertions cannot support long-arm jurisdiction under CPLR § 302(a)(1)]; Yu v. Ma, 145 AD3d 577, 577 [1st Dept 2016]; Creative Photographers, Inc. v. Grupo Televisa, S.A.B., 763 FSupp3d 618 [SDNY 2025]).

Plaintiff's attempt to obtain personal jurisdiction over Defendant through CPLR § 302(a)(3) also fails, as the "the situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are subsequently felt by the plaintiff" (Carte v. Parkoff, 152 AD2d 615, 616 [2d Dept 1989]). Here, the alleged tortious acts are Defendant's refusal to allow Plaintiff to operate and control MBW, a limited liability company operating under the laws of New Jersey and headquartered in New Jersey, Defendant's conversion of MBW assets, and Defendant's tortious interference with Plaintiff's leasehold of a New Jersey property. In other words, the alleged torts occurred entirely within New Jersey. Although the economic consequences of such alleged torts may have been felt by Plaintiff in New York, same is insufficient for the purposes of CPLR § 302(a)(3) (see id. at 616). Therefore, Defendant Breuer's Motion to dismiss the Complaint pursuant to CPLR § 3211(a)(8) is granted.

Defendant's Applications for Dismissal for Lacking Standing & Failure to Join a Necessary Party

"Under New York law, courts look to the law of the state of incorporation in adjudicating a corporation's internal affairs, including questions as to the relationship between the corporation's shareholders and its directors, such as a shareholder derivative action (Seidl v. American Century Companies, Inc., 713 FSupp2d 249, 255 [SDNY 2010], citing Galef v. Alexander, 615 F2d 51, 68 [2d Cir 1980] and In re BP p.l.c. Derivative Litig., 507 FSupp2d 302, 307 — 308 [SDNY 2007]). Under New Jersey law, a member of an LLC may bring a derivative action provided that the member first either (1) demands from the other members that it bring an action to enforce the member's right, and the members do not do so within a reasonable time, or (2) such a demand would be futile (NJSA 42:2C-68). New York law imposes the same requirements under Business Corporation Law § 626(c), which is applicable to members of New York limited liability companies (see Recine v. Recine, 201 AD3d 827, 829 [2d Dept 2022]).

Defendant alleges that the first, second, third, and fourth causes of action are derivative claims and that Plaintiff has not pled pre-suit demand or demand futility relevant to said causes of action in order to establish his standing, thereby warranting dismissal under CPLR § 3211(a)(3) for lack of standing.

"To determine whether a complaint states a derivative or an individual cause of action, courts examine the nature of the wrongs alleged in the body of the complaint, not the plaintiff's designation or stated intention" Strasenburgh v. Straubmuller, 146 NJ 527, 551 [1996]). New Jersey law permits courts to construe derivative claims brought on behalf of closely held corporations as direct ones if doing so "will not (i) unfairly expose the corporation or the defendants to a multiplicity of actions, (ii) materially prejudice the interests of creditors of the corporation, or (iii) interfere with a fair distribution of the recovery among all interested persons" and if the condition precedents for derivative actions are inapplicable (Tully v. Mirz, 457 NJSuper 114, 125 [NJ Super App Div 2018]).

Here, some of the alleged wrongs that form the basis of Plaintiff's causes of action sound in direct claims, specifically Defendant's failure to distribute profits to Plaintiff and Defendant's refusal to provide Plaintiff with access to MBW's records and storefront. Other alleged wrongs sound in derivative claims, namely Defendant's conversion and misallocation of funds owned by MBW. Irrespective of said mixed nature, because MBW is closely held by Plaintiff and Defendant exclusively and because any demand by Plaintiff to Defendant would likely be futile, the Court, in its discretion, chooses to treat any and all of Plaintiff's derivative claims as direct claims, thereby excusing Plaintiff from having to meet procedural hurdles for a derivative action, which hurdles were not designed to apply in such a case (see Tully, 457 NJSuper at 125; Brown v. Brown, 323 NJSuper 30, 37 [NJ Super App Div 1999]). Therefore, Plaintiff was not required to plead pre-suit demand or demand futility pursuant to NJSA 42:2C-68 in connection with his first, second, third, or fourth causes of action, and Defendant's Motion to dismiss pursuant to CPLR § 3211(a)(3) is denied.

Notwithstanding the foregoing treatment of Plaintiff's derivative claims as direct claims, MBW remains a necessary party under CPLR § 1001, as any findings made in connection with the first, second, third, and fourth causes of action and the relief sought by Plaintiff would potentially adversely affect the rights and interests of MBW if granted (see Mason Tenders Dist. Council Welfare Fund v. Diamond Const. & Maintenance, Inc., 84 AD3d 754, 755 [2d Dept 2011]; Ji Juan Lin v. Bo Jin Zhu, 191 AD3d 652, 652 [2d Dept 2021]; Elfand v. Adams, 85 Misc 3d 1042, 1048 [Sup Ct, New York County 2024]).

Plaintiff maintains that in the event the Court finds that MBW is a necessary party, as it has, the proper course of action is to grant Plaintiff leave to amend the Complaint to join MBW. However, Plaintiff has not cross moved for such relief or presented any facts as to MBW's contacts with New York that subject MBW to this Court's jurisdiction without its consent or appearance. Thus, and because it would be prejudicial to MBW to proceed in this case without it, and the Court observes no impediment to Plaintiff commencing an action in New Jersey where MBW is headquartered and where Defendant Schwartz resides, the branch of Defendant's Motion to dismiss under CPLR § 3211(a)(10) for failing to join a necessary party is also granted.

In light of the aforesaid dismissals pursuant to CPLR §§ 3211(a)(8) and (a)(10), the Court need not reach Defendant's application to dismiss the first, fifth, and sixth causes of action pursuant to CPLR § 3211(a)(7) for failing to state a cause of action or to dismiss pursuant to CPLR § 327 on the ground of New York being an inconvenient forum. Said branches of Defendant Schwartz's Motion are denied as moot. Lastly, because Defendant Schwartz has not supported his application for costs, disbursements, and attorney's fees pursuant to 22 NYCRR § 130-1.1 in any way, despite noticing said application, same is also denied.

In light of the foregoing, it is hereby

ORDERED, that Defendant Davy Schwartz's Motion Sequence No. 1 is GRANTED to the extent set forth herein. The Complaint is DISMISSED pursuant to CPLR § 3211(a)(8) for a lack of personal jurisdiction over Defendant and pursuant to CPLR § 3211(a)(10) for failing to join a necessary party.

The foregoing constitutes the Decision & Order of this Court.

Dated: August 7, 2026

New City, New York

E N T E R:

HON. DAVID FRIED, A.J.S.C.

STATE OF NEW YORK

COUNTY OF ROCKLAND

FOOTNOTES

1.   The Court was unable to rely upon the allegations made in the Complaint in connection with determining the issue of personal jurisdiction, because the Complaint was not verified by Plaintiff.

David Fried, J.