Defendant, Kristin Finger ("Finger"), moves to dismiss the complaint on the ground the court lacks personal jurisdiction over her. Plaintiffs, Stanley Bogal ("Stanley") and Frances Bogal ("Frances") (collectively "Bogal"), move for leave to serve an amended complaint.

Plaintiffs are the victims of a scheme concocted by Louis J. Pearlman ("Pearlman"). Pearlman was a mogul in the entertainment industry who founded Trans Continental Records Pearlman was involved in the recording and promotion of the Backstreet Boys and Nsync and other acts.

In the late 1980's, Pearlman began soliciting New York residents and others to invest in "federally insured accounts." He promised investors a rate of return in excess of that paid by banks, issued stock certificates indicating the investor's holding and issued bi-annual statements showing investors their principal and accrued interest.

The promotional information provided to Bogal on Trans Continental Airlines, Inc. ("TCA") masthead indicates that investors would be participating in high yield money market accounts only available to large corporations like TCA. The promotional material stated that the investment was FDIC insured for the first $100,000 and insured by Lloyd's of London for up to $1 million per account. The promotional material indicated that the investor would have full access to their money after 6 months.

However, money withdrawn between the 6th and 12th months would be subject to an interest penalty.

Pearlman initially operated his "investment" business from Bayside, and later Manhattan. At some point, Pearlman and his businesses moved their operations to Florida.

Pearlman wined and dined prospective investors. In 2006, he promised investors a return of 8 to 1 on invested capital on a pending Initial Public Offering ("IPO"). Based upon this representation, Frances invested additional fund.

When the IPO did not take place, he promised investors a significant profit from a three-way buyout or merger with Microsoft or Walt Disney, Inc. The buyout did not occur.

Frances request was never honored.

In December 2006, the Florida Office of Financial Regulation filed a complaint against Pearlman and his companies alleging that they had been engaged in savings and investment fraud. They alleged Pearlman and his companies had used falsified FDIC documents.^[FN1] By order of the Circuit Court, Ninth Judicial Circuit, Orange County Florida dated February 2, 2007, Gerald A. McHale, Jr. was appointed receiver over the assets of TCA, Trans Continental Airlines [*2]Travel Services, Inc. and Trans Continental Enterprises, LLC.^[FN2] The .Florida authorities allege Pearlman diverted hundreds of millions of dollars of investor money to himself.

Pearlman is also alleged to have issued financial statements from a non-existent accounting firm. Plaintiffs allege that these statements were prepared by Finger, who was the managing supervisor in charge of the investor accounts.

Bogal allege that some of the investors' money was diverted and misappropriated by Finger.

On March 1, 2007, Pearlman and TCA filed for bankruptcy in the United States Bankruptcy Court for the Middle District of Florida. On April 18, 2007, Louis J. Pearlman Enterprises, Inc. and Trans Continental Studios, Inc. filed for bankruptcy in the same court.

Pearlman has also been charged in a federal indictment with bank fraud and wire fraud. The federal criminal charges are pending in the United States District Court for the Middle District of Florida. Pearlman is incarcerated awaiting trial on these charges.

Finger is a resident and domiciliary of Florida. She avers that she was a salaried employee of a Florida corporation, Trans Continental Records, Inc. ("TCR"). TCR is a corporation organized and existing pursuant to the laws of Florida. It is not authorized to do business in New York. She asserts the only money she ever received from TCR was her salary and a $5,000 severance bonus.

Finger claims that any communication she had with New York residents was in her capacity as a salaried employee of a Florida corporation.

She further denies that she was the designated manager of TCA as agent for Transcontinental Airlines Travel Services, Inc., or that she was involved in the day-to-day management of investments made in those entities by New York residents. She asserts that she did not have authority to sign checks or withdraw or transfer funds from corporate accounts. She describes her role as secretarial and clerical. She asserts she was never an officer or director of any of the Trans Continental corporations. She denies having knowledge regarding the management of the various investor funds.

Finger asserts that she never solicited money from Bogal.

Bogal asserts that whenever she deposited money or withdrew money from her account, she dealt with Finger. On July 30, 2006, after the IPO and the merger did not take place, Frances wrote to TCA requesting that all but $1,000 of her money be wired to the Stanley Edward Bogal escrow account. She was repeatedly assured by Finger that her this would be done. She was assured for the final time in early July 2006 that the funds would be wired to her on July 5, 2006, as soon as the bank opened for business after the July 4th holiday. This never occurred.

Frances alleges she repeatedly called Finger to inquire about her money. Finger refused to take or return the calls.

Finger asserts she is not subject to the jurisdiction of New York's Courts.

Pearlman incorporated several Trans Continental entities, Trans Continental Airlines, Inc. Trans Continental Airlines Travel Services, Inc and Trans Continental Properties, Inc. all of which had offices in New York. However, TCR, Finger's employer, did not.

Although Plaintiffs designate their cross-motion as one to serve an amended complaint, in actuality, Plaintiffs are actually seeking leave to add as parties Elaine Calix a/k/a Elaine Bogal-[*3]Calix ("Elaine") and Luis Calix ("Luis") (collectively "Calix") and to serve a supplemental summons and amended complaint. Elaine and Luis are Frances' sister-in-law and brother-in-law. Elaine is Stanley's sister.

Plaintiff allege it was Calix who got them involved in Pearlman's swindle. In 1992, Elaine advised Frances of the opportunity to invest in Pearlman's entertainment company. Elaine attended several sessions for prospective investors hosted by Pearlman. Based upon Elaine's persistent entreaties, Frances finally invested money in Pearlman's business. Frances believed she was investing in TCA which she understood to be a holding company for Pearlman's business interests. Over time, Elaine made additional investments and withdrew funds.

A.Long-Arm Jurisdiction

The party asserting that the New York courts have jurisdiction over a non-domiciliary has the burden of establishing that a factual basis exists for the courts to exercise jurisdiction over the non-domiciliary or show that such evidence may exist. Roldan v. Dexter Folders, 178 AD2d 589 (2nd Dept. 1991); and Spectra Products, Inc. v. Indian River Citrus Specialties, Inc., 144 AD2d 832 (3rd Dept. 1988).

Bogal assert that Finger's communications with New York subject her to the jurisdiction of New York. They further assert that the New York activities of her employer subject her to New York's jurisdiction.

The general standard for the court exercising jurisdiction over a non-domiciliary is that the non-domiciliary has minimum contacts with the forum state such that the maintenance of the action in that forum does not offend the basic notions of substantial justice and fair play. International Shoe Co. v. State of Washington, 326 U.S. 310 (1945).The standard for jurisdiction is reasonableness; to wit: would the defendant be unduly burdened by having to defend an action in a jurisdiction outside her domicile. International Shoe Co. v. Washington, supra; Elman v. Belson, 32 AD2d 422 (2nd Dept. 1969); and Reiner v. Durand, 602 F. Supp. 849 (S.D.NY 1985)

Bogal asserts Finger is subject to New York's jurisdiction because she transacted business in the state. CPLR 302(a)(1). New York's long-arm statute is a "single transaction statute." One transaction of business in New York will be sufficient to subject a non-domiciliary to New York's jurisdiction provided that the non-domiciliary's engaged in purposeful activity in New York and there is a substantial relationship between the transaction and the cause of action. Kreutter v. McFadden Oil, Corp., 71 NY2d 460 (1988); Edelman v. Taittinger. S.A., 298 AD2d 301 (1st Dept. 2002); and People v. Concert Connection, Ltd., 211 AD2d 310 (2nd Dept. 1995).

In this situation, there is no evidence that Finger transacted business in New York. Finger lived and worked in Florida. She did not solicit Bogal to invest in Pearlman's scheme. Even if she managed the investment of money of New York residents, that activity took place in Florida in the office of TCR where Finger was employed.

Any assertion that TCR's purposeful activity in New York subjects Finger to New York's jurisdiction is bootstrapping. CPLR 302(a)(1) requires the person over whom jurisdiction is being asserted, not the person's employer, to engage in purposeful activity in New York. See, Flamel Technologies v. Soula, 16 Misc 3d 1129(A), (Sup. Ct. NY Co. 2007). Thus, CPLR 302(a)(1) does not provide this court with a basis for obtaining jurisdiction over Finger.

Bogal also asserts that CPLR 302(a)(3) provides a basis for personal jurisdiction over Bogal. [*4]CPLR 302(a)(3) permits the court to maintain jurisdiction over a non-domiciliary who commits a tortious act outside of New York that causes injury in New York and

"(i) regularly does or solicits business or engages in any other persistent course of conduct, or derives substantial revenue from goods use or services rendered in the state; or

(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate of international commerce." CPLR 302(a)(3)

While Plaintiffs allege causes of action in tort resulting in damage to Bogal, they offer no evidence that Finger regularly did or solicited business in New York or engaged in persistent course of conduct in New York. Bogal also fails to offer any evidence that Finger derived substantial revenue from interstate or international commerce. The fact that TCR engaged in activity in New York or derived revenue from interstate commerce is not sufficient to subject its employee, Finger, to the jurisdiction of the courts in New York. The statute requires that the person over whom New York is alleged to have jurisdiction engage in the predicate conduct.

Bogals' reliance upon Deutsche Bank Securities, Inc. v. Montana Board of Investments, 7 NY3d 65 (2006) is misplaced. In Deutsche Bank , the court distinguished between sophisticated business people who project themselves into New York electronically or telephonically to engage in business in New York and the ordinary person who makes telephone calls or communicates electronically with New York. While Finger's employer may be a sophisticated business entity that would be subject to the jurisdiction of New York the same is not true for Finger. There is simply no evidence that she availed herself of the benefits of New York, had sufficient minimum contacts with New York so that she should reasonably expected to be subject to New York's jurisdiction. See,Parke-Bernet Galleries, Inc. v. Franklyn, 26 NY2d 13 (1970).

Bogal does not offers evidence establishing Finger engaged in any meaningful or purposeful activity in New York so as to satisfy CPLR 302(a)(3).

The communications between Bogal and Finger were initiated by Bogal. The letters upon which Bogal rely are from Bogal to Finger. They are addressed to Finger at TCA's office in Orlando, Florida.

Although Bogal alleges Finger sent communications into New York, they fail to provide the court with copies of any documents prepared or sent by Finger. Mailing material into New York is insufficient activity to give New York jurisdiction over a non-domiciliary. See, Professional Personnel Mgt. Corp. v. Southwest Medical Assocs., Inc., 216 AD2d 958 (4th Dept. 1995)and J.E.T. Advertising Assoc., Inc. v. Lawn King, Inc., 84 AD2d 744 (2nd Dept. 1984).

The Courts have consistently held that telephone conversations had by defendant's representative with plaintiff from outside of New York do not constitute sufficient contact with New York so as to subject the non-domiciliary to New York's jurisdiction. Barington Capital Group, L.P. v. Arsenault, 281 AD2d 166 (1st Dept. 2001); L.F. Rothschild, Unterberg Towbin v. McTamney, 89 AD2d 540 (1st Dept. 1982); and M. Katz & Sons Billiard Prods., Inc. v. G. Correale & Sons, Inc., 26 AD2d 52 (1st Dept. 1966), affd., 20 NY2d 903 (1967). The phone calls [*5]which Bogal alleges give this Court jurisdiction were made by Bogal to Finger.

Bogal had the burden of establishing facts sufficient to establish long-arm jurisdiction. They failed to meet that burden. This Court lacks jurisdiction over Finger. The action against her should be dismissed.

B.Amended Complaint

Although Bogal designates the motion as one for leave to serve an amended complaint, the motion is actually one to add parties and for leave to serve a supplemental summons and amended complaint.

The proposed amended complaint alleges three causes of action against Calix; fraudulent representation, fraudulent inducement and unjust enrichment.

All of the actions are premised upon allegations that Calix were agents or representatives of Pearlman or his business entities who were paid by them to solicit "investors" in Pearlman's scheme.

The fraudulent representation action alleges that Stanley had serious health issues in 2003 and 2004. As a result, Plaintiffs advised Pearlman and Calix that they wanted to withdraw their investment.

Elaine discouraged Bogal from withdrawing the money. She advised Bogal that the Pearlman entities would be going public and that investors would make an 8 to 1 return on their investment. In reliance upon these representations, Bogal did not withdraw their investment from the Pearlman entities.

In February 2006, Calix advised Bogal that, although the books of the Pearlman entities were closed, because of Elaine's relationship with Pearlman, Bogal could invest additional money in the Pearlman entities before the IPO. Elaine allegedly assured Frances that the money was "federally insured." Pearlman and she also assured investors that the IPO was imminent and investors would make an 8 to 1 return when the Pearlman entities went public. That never happened.

Bogal alleges that the representations made to her by Calix regarding the Pearlman entities were false when Calix made them and that Calix knew these representations were false. In reliance upon these representation, Bogal did not withdraw their investment and made an additional investment.

The fraudulent inducement claim involves the additional investment made by Elaine in the Pearlman entities in March 2006. Frances alleges she was induced into making additional investments in the Pearlman entities based upon Elaine's representation regarding the money investors would make when the Pearlman entities went public. Frances alleges that in reliance upon these representations, she invested additional funds in the Pearlman entities. She alleges Frances knowingly made these false representation to induce Frances into investing more money.

The third cause of action against Calix is designated as a cause of action for unjust enrichment. Bogal alleges that Calix should be required to disgorge the money they received from Pearlman for enticing Bogal to invest in Pearlman's scheme. [*6]

"Leave to serve amended pleadings shall be freely given' absent prejudice and surprise resulting from the delay. (CPLR 3025[b]; see Lahey v. County of Ontario, 44 NY2d 934; Farouk v. McGraw Edison Corp., 229 AD2d 463)." Northbay Construction Co., Inc. v. Bauco Construction Corp., 275 AD2d 310, 311 (2nd Dept. 2000). See also, Nikac v. Rujak, 276 AD2d 443 (2nd Dept. 2000) and Goldstein v. St. John's Episcopal Hosp., 267 AD2d 426 (2nd Dept. 1999).

The determination of whether to deny or permit an amendment is entrusted to the sound discretion of the court. See, Liendo v. Long Island Jewish Med. Ctr., 273 AD2d 445 (2nd Dept. 2000); and Henderson v. Gulati, 270 AD2d 308 (2nd Dept. 2000)

The party seeking to leave to serve an amended pleading must make an evidentiary showing establishing merit of the proposed amendment. Joyce v. McKenna Assoc., Inc., 2 AD3d 592 (2nd Dept., 2003); and Morgan v. Prospect Park Associates Holding, L.P., 251 AD2d 306 (2nd Dept. 1998).

The Court will not consider the merits of the proposed amendment unless the proposed amendment is insufficient as a matter of law or is totally devoid of merit. Sunrise Plaza Assoc., L.P. v. International Summit Equities Corp., 288 AD2d 300 (2nd Dept. 2001); and Norman v. Ferrara, 107 AD2d 739 (2nd Dept. 1985). See also, Siegel, New York Practice 4th §237.

CPLR 1003 permits the Court to add parties "...at any stage of the action." See Schleidt v. Stamler, 106 AD2d 264 (1st Dept. 1984).

Bogal should be permitted to add Calix as Defendants in this case and to serve a supplemental summons and amended complaint alleging the fraud causes of action.

The elements of common law fraud are "representation of a material existing fact, falsity, scienter, deception and injury." Channel Master Corp. v. Aluminum Limited Sales Inc., 4 NY2d 403, 407 (1958). Plaintiff has provided sufficient evidentiary material to support the causes of action for fraud.

However, the cause of action for unjust enrichment is totally devoid of merit. To establish a claim for unjust enrichment, it must be established that the plaintiff performed services for the defendant which resulted in the defendant being unjustly enriched. Clark v. Daby, 300 AD2d 732 (3rd Dept. 2002); and Kagan v. K-Tel Entertainment, Inc., 172 AD2d 375 (1st Dept.1991). Plaintiff must establish that the services were performed at the request or behest of the defendant. Clark v. Daby, supra; Prestige Caterers v. Kaufman, 290 AD2d 295 (1st Dept. 2002); and Lakeville Pace Mechanical, Inc. v. Elmar Realty Corp., 276 AD2d 673 (2nd Dept. 2000).

Bogal did not render any services for Calix or in Calix' behalf. Thus, the cause of action does not state a claim for unjust enrichment.

Accordingly, it is,

ORDERED, that Defendant's motion to dismiss on the grounds the Court lacks personal jurisdiction over her is granted without prejudice to commencement of an action against Defendant Kristin Finger in an appropriate venue, if Plaintiffs are so advised; and it is further,

ORDERED, that Plaintiffs' motion for leave to add Elaine Calix a/k/a Elaine Bogal-Calix and [*7]Luis Calix as Defendants is granted; and it is further,

ORDERED, that Plaintiffs' motion for leave to serve a supplemental summons and amended complaint is granted to the extent that Plaintiffs shall be permitted to serve an amended complaint alleging the fraudulent representation and fraudulent inducement causes of action and, is in all other respects, denied.

This constitutes the decision and order of this Court.

Dated: Mineola, NY_____________________________

October 2, 2007Hon. LEONARD B. AUSTIN, J.S.C.