Plaintiffs commenced this legal malpractice and breach of contract action against defendant Burris, Schoenberg & Walden, LLP, its former counsel, which represented them in an action in California. Defendant is a limited liability partnership formed under the laws of California, with its only office located in Los Angeles. Laura G. Brys Aff at 2.

In September 2005, after meeting with Donald Burris, a partner of the law firm, plaintiff Sands Brothers Venture Capital, LLC ("Sands Brothers") retained defendant Burris, Schoenberg & Walden, LLP to represent it in an action entitled Sands TAT Investment Advisory Ltd. and Sands Brothers Venture Capital, LLC v David Feldman, ZF Micro Devices, Inc., ZF Micro [*2]Solutions, Inc. and Does 1 through 1000 (the "California Action")^[FN1]. With regard to any disputes that might arise between the parties, the retainer agreement included an arbitration clause that stated:

By executing this letter, you agree that if any dispute should arise between you and the Firm of this agreement, our relationship with you or our performance of any current or future legal services, whether those services are the subject of this particular engagement letter or otherwise, that dispute will be governed by the laws of the State of California and submitted to a binding arbitration proceeding to be conducted in Los Angeles under the auspices, and the commercial arbitration rules of, the Alternative Resolution Centers ("ARC") in Los Angeles, California.

Brys Aff, Exh A at 3—4.

Defendant represented plaintiffs for over 2 years, throughout various stages of the lawsuit, including preparation of discovery, depositions, in-court appearances, and drafting of legal documents. However, in June 2008, defendant was relieved as plaintiffs' counsel. Plaintiffs refused to pay the legal bills, alleging that defendant overbilled and committed malpractice by omitting a breach of fiduciary claim from their amended complaint in the California Action. On December 1, 2009, defendant sent plaintiffs a letter requesting that the matter be submitted to arbitration, pursuant to the retainer agreement.

On or about March 15, 2010, plaintiffs commenced this action against defendant for legal malpractice and breach of contract. Defendant now moves to dismiss the complaint for lack of personal jurisdiction, pursuant to CPLR 3211(a)(8), or, in the alternative, to stay this litigation and compel arbitration, or, in the alternative, to transfer this matter to the Superior Court of California, County of Los Angeles, pursuant to CPLR 327. Defendant also seeks reasonable costs and attorneys' fees, pursuant to the retainer agreement.

Motion to Dismiss for Lack of Personal Jurisdiction

Defendant moves to dismiss the complaint, pursuant to CPLR 3211(a)(8), asserting that there is no personal jurisdiction. On a motion to dismiss, pursuant to CPLR 3211, the pleading is given a liberal construction and the facts alleged therein are accepted as true. Leon v Martinez, 84 NY2d 83, 87 (1994). The Court must view the jurisdictional allegations in a light most favorable to plaintiffs, the parties seeking to establish jurisdiction. Ed Moore Adv. Agency, Inc. v I.H.R., Inc., 114 AD2d 484, 486 (2d Dep't 1985). Once a defendant raises lack of personal jurisdiction as a defense and moves to dismiss, the plaintiff has the burden of proving a basis for in personam jurisdiction through sufficient evidence, including affidavits and relevant documents.

The general standard for personal jurisdiction over foreign corporations, like defendant, [*3]requires "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v State of Washington, Office of Unemployment Comp. and Placement, 326 US 310, 316 (1945) (internal quotation omitted); see also World-Wide Volkswagen Corp. v Woodson, 444 US 286, 291-92 (1980). A foreign corporation is "present" within this state, for the purpose of jurisdiction pursuant to CPLR 301, "if it has engaged in such a continuous and systematic course of doing business' here that a finding of its presence' in this jurisdiction is warranted." Landoil Resources Corp. v Alexander & Alexander Servs., Inc., 77 NY2d 28, 33 (1980); see also Bryant v Finnish Nat'l Airline, 15 NY2d 426, 430 (1965).

Plaintiffs cannot demonstrate that there is general jurisdiction in this case. Defendant does not do business in this State; moreover, the corporation does not have an office or employees within New York State, and none of its attorneys are licensed to practice law in this State. See Brys Aff ¶¶ 4—12.

However, plaintiffs assert that specific jurisdiction exists in New York over defendant, pursuant to CPLR 302(a)(1), New York's long-arm statute, which provides, in pertinent part:

(a) Acts which are the basis of jurisdiction. As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary, or his executor or administrator, who in person or through an agent:

1. Transacts any business within the state or contracts anywhere to supply goods or services in the state . . .

In order to be subject to personal jurisdiction pursuant to CPLR 302(a)(1), a defendant must engage in purposeful business activities or transactions in New York and there must be a substantial relationship between the defendant's business activities or transactions in this State and the claims asserted in the complaint. See Deutsche Bank Sec., Inc. v Montana Bd. of Invs., 7 NY3d 65, 71 (2006); Kreutter v McFadden Oil Corp., 71 NY2d 460, 467 (1988); Courtroom Television Network v Focus Media, Inc., 264 AD2d 351, 352 (1st Dep't 1999). Personal jurisdiction can be based upon a single transaction by a defendant in New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claims asserted. See Kreutter, 71 NY2d at 467; Parke-Bernet Galleries, Inc. v Franklyn, 26 NY2d 13, 16 (1969). Defendant is not required to be physically present in the forum state; certain actions may be sufficient based on "their nature and quality and the circumstances of their commission." Int'l Shoe Co., 326 US at 318.

Plaintiffs have established that the court has specific jurisdiction over defendant in this case. Although defendant does not have an office in New York, a partner, Donald Burris, flew to New York to meet with Sands Brothers' representatives at their New York office, to solicit business, and to negotiate defendant's representation of Sands Brothers in the California action. Scott B. Bailey Aff at ¶¶ 3—5. While most of its representation of plaintiffs in the California action occurred remotely, defendant did, in fact, enter the state of New York to negotiate this business deal. By doing so, defendant actively sought out an attorney-client relationship with a client in New York. Further, it repeatedly maintained communications with plaintiffs in New York, via phone, fax, email and regular mail. Id. � 13. [*4]

Similar to the case herein, the court in George Reiner & Co. v Schwartz, 41 NY2d 648 (1977), found that New York had jurisdiction over a Massachusetts resident in a contract dispute with his former New York employer. The court held that minimum contacts were established, even though the defendant was a Massachusetts resident and his employment took place outside of New York, since the Massachusetts resident came to New York to interview for the job and negotiated the contract underlying the dispute in New York. George Reiner & Co., 41 NY2d at 653.

Likewise, in Fischbarg v Doucet, 9 NY3d 375 (2007), the Court of Appeals held that New York had jurisdiction over a California corporation in a retainer dispute with its former New York counsel for an action in a court in Oregon. In that case, defendant contacted and solicited a New York attorney to represent her in the Oregon action. However, defendant never entered New York, but, instead, the retainer agreement was negotiated over the telephone and defendant sent a letter to plaintiff in New York to confirm its representation of her. Fischbarg, 9 NY3d at 377. Even under such facts, the court found that the actions of the California corporation to establish an attorney-client relationship constituted sufficient minimum contacts. Id. at 380—81. In finding jurisdiction, the Court of Appeals focused on the contacts between the New York attorney and its California client, namely, communications via phone, faxes and emails. The Court concluded that: "[D]efendants' retention and subsequent communications with plaintiff in New York established a continuing attorney-client relationship in this state and thereby constitute[d] the transaction of business under CPLR 302(a)(1)." Id. at 377.

Moreover, there is "a substantial relationship between the transaction and the claim asserted," as required to find that specific jurisdiction is appropriate. Fischbarg, 9 NY3d at 380 (internal citations and quotations omitted). The present action arises out of defendant's transaction of business in New York, i.e. the agreement between plaintiffs and defendant for defendant to represent plaintiffs in the California action. Similar to Fischbarg, there is a substantial relationship between plaintiffs' action for legal malpractice during defendant's representation of plaintiffs in the California action, defendant's solicitation of Sands Brothers in New York to represent it in that action and the parties' communications in this state with respect to the California matter. See id. at 384.

Further, in light of the fact that defendant has minimum contacts with the State and availed itself of the benefits of this State——by negotiating in New York to represent Sands Brothers in the California action and continued communications between it and plaintiffs——extending personal jurisdiction over defendant in this State does not violate due process, as maintaining this suit does not "offend traditional notions of fair play and substantial justice." Int'l Shoe Co., 326 US at 316; see World-Wide Volkswagen Corp., 444 US at 291—92. Defendant sought to establish a continuous attorney-client relationship with plaintiffs, thereby purposefully availing itself of the benefits of New York. See Fischbarg, 9 NY3d at 384—85.

Thus, as plaintiffs have demonstrated that this court has personal jurisdiction over defendant in this case, the motion by defendant to dismiss for lack of personal jurisdiction is denied. The part of defendant's motion which seeks attorneys' fees and costs if the complaint is dismissed is also denied, since jurisdiction is proper here, precluding dismissal.

Motion to Compel Arbitration

Defendant also moves, in the alternative, to stay this litigation and compel arbitration in [*5]California, pursuant to the parties' retainer agreement and the Federal Arbitration Act. As quoted above, the retainer agreement provides that "if any dispute should arise between [plaintiffs] and the Firm . . . that dispute will be . . . submitted to a binding arbitration proceeding to be conducted in Los Angeles." Brys Aff, Exh A at 3—4.

Plaintiffs oppose arbitration on multiple grounds, including that: the retainer agreement is unenforceable as it was a contract of adhesion and unconscionable; the arbitration clause is void; and defendant waived its right to arbitrate. Plaintiffs contend that the retainer agreement was presented to them on a "take-it-or-leave-it" basis and defendant took advantage of plaintiffs' urgent need to retain counsel. See Baily Aff ¶ 9. Plaintiffs further contend that defendant had "superior bargaining power in the relationship" and drafted the retainer agreement to be "one-sided." Opp Brief at 10.

Moreover, plaintiffs argue that the retainer agreement violated the California Mandatory Fee Arbitration Act ("MFAA"), which gives clients the right to non-binding arbitration over fee disputes. See California Business and Professional Code � 6200(a). Plaintiffs contend that, since defendant pursued binding arbitration in contravention of the above law, defendant has waived its right to seek arbitration pursuant to the retainer agreement.

As a preliminary matter, the claims at issue here fall within the scope of the arbitration provision contained in the retainer agreement. The arbitration provision stated that it applied to "all disputes [that] arise between [plaintiffs] and the Firm." Brys Aff, Exh A at 3—4. Thus, such broad language encompasses the claims of legal malpractice and breach of the retainer agreement itself alleged in the Complaint.

The Federal Arbitration Act, 9 USC � 1, et. seq. ("FAA"), governs the enforceability of the arbitration provision at issue here. The FAA applies to all contracts evidencing a transaction involving commerce, which has been interpreted broadly and held to apply to an arbitration provision between companies offering goods and/or services in different states. See 9 USC � 2; see, e.g., Southland Corp. v Keating, 465 US 1 (1984). The FAA reflects the strong public policy favoring arbitration of disputes — a policy that requires that arbitration clauses be construed as broadly as possible and that any doubt be resolved in favor of arbitration. See Smith Barney Shearson Inc. v Sacharow, 91 NY2d 39, 48 (1997); Kramer v Hammond, 943 F2d 176, 178 (2d Cir 1991).

Although the MFAA provides for non-binding arbitration in certain situations, i.e. in cases dealing solely with fee disputes, the within case is one in which plaintiff seeks affirmative relief in bringing legal malpractice and breach of contract claims in addition to disputing defendant's fees. However, the MFAA "is specifically inapplicable to claims for affirmative relief against the attorney for damages or otherwise based upon alleged malpractice or professional misconduct." Aguilar v Lerner, 32 Cal 4th 974, 984 (2004) (internal quotations and citations omitted). In such a situation, binding arbitration, as set forth in an agreement between the parties, is not precluded.

Plaintiff is incorrect in its assessment that the arbitration provision in the retainer agreement is void because the retainer agreement requires binding arbitration to resolve disputes, while the MFAA permits clients to elect to go to non-binding arbitration of fee disputes. The MFAA has been held to be one avenue or alternative that the parties can elect; however, it does not prevent the parties from going to binding arbitration should the parties not elect to go to a [*6]non-binding proceeding or the dispute could not be resolved in the non-binding proceeding. On this specific issue, the Supreme Court of California has stated:

[T]he two statutes may be rationally harmonized. . . . "Nothing in the MFAA makes a binding arbitration agreement unenforceable. The MFAA and the [California Arbitration Act] create two very different types of arbitration. Both may be given effect. Clients may, if they wish, request and obtain nonbinding arbitration under the MFAA. That arbitration may, and often will, resolve the dispute. But if the client does not request nonbinding arbitration, or if it is held but does not resolve the dispute, then the MFAA has played its role, and the matter would continue without it. Either party may then pursue judicial action unless the parties had agreed to binding arbitration. In that event, the [California Arbitration Act] would apply, and the dispute would go to binding arbitration. This conclusion is consistent with the statutory language of both the MFAA and the [California Arbitration Act] and the strong public policy in favor of binding arbitration as a means of resolving disputes."^[FN2]Schatz v Allen Matkins Leck Gamble & Mallory LLP, 45 Cal 4th 557, 574 (2009), quoting Aguilar, 32 Cal 4th at 990—91.

In this case, plaintiff did not elect to go to non-binding arbitration and, instead, commenced this action. By doing so, plaintiff has waived its right to non-binding arbitration. See Aguilar, 32 Cal 4th at 985. Thus, the terms of the arbitration clause in the retainer agreement come into effect and the parties shall proceed to binding arbitration, as set forth in that agreement.

Further, plaintiff has not demonstrated that the retainer agreement is void and unenforceable based on its other alleged grounds. Unconscionability "requires a showing that the contract was both procedurally and substantively unconscionable when made—i.e., some showing of an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party." Gillman v Chase Manhattan Bank, N.A., 73 NY2d 1, 10 (1988) (internal quotation omitted). Unconscionability is determined by examining the circumstances of the transaction when the contract was made, including "whether deceptive or high-pressured tactics were employed, the use of fine print in the contract, the experience and education of the party claiming unconscionability, and whether there was disparity in bargaining power." Id. at 11.

None of the facts presented by plaintiff support a finding of unconscionability or that the retainer agreement was a contract of adhesion. First, while plaintiffs assert that defendant took advantage of their urgent need for representation by telling them that, as corporations, they "needed to be represented by an attorney in the [a]ction", without more, such a conclusory statement is insufficient to show that there were any high-pressured tactics used on plaintiffs.^[FN3] Baily Aff ¶ 9. Second, although plaintiffs note that Scott Baily, the Chief Operating Officer of Sands Brothers at the time the parties entered into the retainer agreement, is not an attorney and [*7]had just come on the job a short time ago, the court notes that as a officer of a corporation, albeit a relatively new one, it is presumed that Mr. Baily was a sophisticated party capable of reading, understanding, and negotiating the retainer agreement entered into between the parties, absent any specific facts that show otherwise.

As plaintiffs are affirmatively challenging the services performed by defendant, as well as the billing practices of defendant, and disputing representations made by defendant in terms of who would be working on their case, the proper place to resolve all such issues is in an arbitration proceeding, pursuant to the retainer agreement. Thus, the part of defendant's motion seeking to compel arbitration is granted, and any further proceedings on this action are stayed, and the action is dismissed as provided below.

The Court has considered the parties' remaining contentions and found them to be unavailing.

Accordingly, it is

ORDERED that defendant's motion is granted to the extent that defendant seeks to compel arbitration and to stay this action, and denied in all other respects; and it is further

ORDERED that plaintiffs shall arbitrate their claims against defendant in accordance with the retainer agreement; and it is further

ORDERED that all proceedings in this action are hereby stayed, and dismissed, without prejudice to restore, if appropriate, upon completion of the arbitration; and it is further

ORDERED that within 30 days of entry of this order, defendant shall serve a copy of this order with notice of entry, upon plaintiffs.

Dated: September 14, 2010

Doris Ling-Cohan, J.S.C.