This action resulted from the business relationships of the parties in Citrus County, Florida, and its environs. Plaintiff Seth Appelbaum (APPELBAUM) alleges to be a Kings County resident, and it is undisputed that defendant Joseph Peter Palagonia a/k/a Joseph Palagonia (PALAGONIA), a former New York resident, is now a non-domiciliary of New York. The Court, in deciding the two instant orders to show cause and the cross-motion to dismiss, is confronted with three questions. First, does this Court have jurisdiction to attach payments owed to non-domiciliary PALAGONIA, pursuant to CPLR § 6201 and CPLR Rule 6212, from his sale [*2]of an interest in a New York business that has nothing to do with the instant action, for defendant's alleged tortious acts committed against plaintiff outside of the State of New York? Second, does this Court have personal jurisdiction of non-domiciliary defendant PALAGONIA, pursuant to New York's "long-arm" statute, CPLR § 302, for alleged out of state tortious acts, when defendant's only contacts with New York are payments owed to him pursuant to a note with a New York corporation and membership in a New York limited liability company (LLC)? Third, if personal jurisdiction cannot be asserted over non-domiciliary defendant PALAGONIA, does the Court have quasi in-rem jurisdiction, pursuant to CPLR § 314 (3), over non-domiciliary defendant PALAGONIA? The answer to all three jurisdictional questions is the same, No.

Plaintiff, by order to show cause signed on December 28, 2007 by the Hon.

Lawrence Knipel, moved ex parte for an order of attachment to levy on New York property owned by PALAGONIA or where a garnishee may be served. APPELBAUM claimed, in ¶ 3 of his affidavit in support of the order to show cause, that "Palagonia is currently a Florida resident, and he is indebted to me for at least $263,516.82. Moreover, it's probable that I will succeed on the merits of my claim," and in ¶ 9 of his affidavit in support of the order to show cause, that "[u]nbeknownst to me, Palagonia was abusing the trust and confidence I had placed in him. He was stealing money from me, forging my signature, and severely damaging my credit." Justice Knipel's order to show cause restrained and enjoined defendant, his agents, and garnishees from disposing of any property in which defendant has an interest. Justice Knipel crossed out proposed language staying all payments to PALAGONIA owed to him by Palagonia Bakery Co., Inc. (THE BAKERY), a New York business, from his sale of his interest in THE BAKERY.

In my February 29, 2008 short-form decision and order, I held that "[t]his Court interprets the OSC pending to mean that there are no restraints upon Palagonia Bakery paying to defendant Palagonia whatever monies are due to defendant Palagonia pursuant to any contract between Palagonia Bakery and defendant Palagonia."

Plaintiff presented to me, on March 4, 2008, a second or supplemental order to

show cause, again asking for an order of attachment to levy on property owned by PALAGONIA or where a garnishee may be served, and specifically "the payments

defendant is entitled to receive from Palagonia Bakery, Co., Inc. in respect of the sale of his interest in that entity," and for reargument of my February 29, 2008 decision and order, in that the restraints in the December 28, 2007 order to show cause did not apply to payments from THE BAKERY to PALAGONIA. Pending the hearing of the motion I restrained PALAGONIA from assigning or encumbering the BAKERY's note.

Defendant, by cross-motion, on March 19, 2008, moved to dismiss the action,

pursuant to CPLR Rule 3211 (a) (1) (2) (3) (7) (8) and (10), based upon documentary evidence, lack of subject matter jurisdiction, lack of capacity to sue, failure to state a cause of action, and plaintiff's failure to sue an entity which should be a party.

I heard oral argument on the orders to show cause and the cross-motion on April 25, 2008 and reserved decision. Plaintiff's orders to show cause to attach the monies owed by THE BAKERY to PALAGONIA are denied for lack of subject matter and personal jurisdiction. All stays are [*3]vacated. Reargument of my February 29, 2008 decision and order is denied. Defendant's cross-motion to dismiss for lack of subject matter and personal jurisdiction is granted.

Background

APPELBAUM claims that he and PALAGONIA were business associates in

Brooklyn, since the late 1990's. Then at a subsequent time, PALAGONIA abused

APPELBAUM's trust, stole money from APPELBAUM, forged his signature, and damaged his credit. APPELBAUM, in his verified complaint, alleges seven causes of action for tortious acts committed by PALAGONIA in Florida. These alleged acts include:

(1) making unauthorized credit card charges, in Florida, of more than

$65,000.00, for which APPELBAUM is responsible as guarantor;

(2) forging APPELBAUM's signature on an automobile lease for a BMW

and related financing agreements, in Ocala, Florida, and then ceasing to

make payments, resulting in the repossession of the vehicle and a potential deficiency claim exceeding $50,000.00;

(3) forging APPELBAUM's name to checks relating to a home equity

line of credit, for a Florida property, resulting in at least $35,600 in

improper charges;

(4) diverting more than $30,000.00 from the sale of two Florida properties

in Citrus Springs, Florida, and failing to contribute more than $9,000.00

to the parties' joint venture;

(5) defaulting on mortgage payments for a property in Lecanto, Citrus

County, Florida, owned jointly by plaintiff and defendant, resulting

in a mortgage foreclosure on the property, and a potential deficiency

judgment of more than $60,000.00; and

(6) destroying APPELBAUM's credit.

APPELBAUM, in ¶ 7 of his affidavit in support of his December 28, 2007 order to

show cause, and in ¶ 8 of his verified complaint, alleges that PALAGONIA was his

former employee in a New York real estate brokerage, called "Kings County Realty, LLC, (KCR)," formed in August 2004. This is incorrect. The 2006 Form 1065 Federal Partnership Income Tax Return shows that both APPELBAUM and PALAGONIA each had a 50% interest in KCR [exhibit A cross-motion]. APPELBAUM, in ¶ 15 of his affidavit in support of his December 28, 2007 order to show cause, and in ¶ 18 of his verified complaint, alleges that "[t]o conceal his misconduct, Palagonia caused at least three of the credit card companies to mail the monthly statements to him instead of to" APPELBAUM. However, an examination of credit card statements from four of the five credit card issuers demonstrated that monthly credit card statements were mailed directly to APPELBAUM at his Brooklyn address, 2925 West 5th Street, Apartment 2A, Brooklyn, New York 11224 [exhibits B, C, E, and F of December 28, 2007 order to show cause]. Therefore, it is incredulous to believe that APPELBAUM was unaware of these credit card charges.

All of the other alleged PALAGONIA tortious conduct took place in Florida. Plaintiff, in ¶ 4 of his April 1, 2008 reply affidavit, alleges that PALAGONIA's contacts with New York occurred at plaintiff's Brooklyn apartment, where: [*4]

Palagonia would stay for weeks at time, as our guest, sleeping on an

air mattress in the living room. It was in this apartment, and elsewhere

in Brooklyn, that we discussed our business and entered into our

contractual arrangements, including, but not limited to the business

of . . . KCR, the limitation of his use of KCR credit cards, our investment

in Florida real estate, and his commitment to pay all mortgage, real estate

taxes and other carrying costs for the . . . Florida home.

Defendant PALAGONIA, in ¶ 2 of his affidavit in opposition to the orders to show cause and in support of cross-motion, notes that attachment is "a drastic and extraordinary remedy" which can be granted if APPELBAUM meets the "heavy burden" of "a likelihood of success on the merits," and that APPELBAUM's motion for attachment "is based on a series of false statements and half-truths designed to mislead this Court into believing that I am a former employee' who absconded to Florida with his credit cards and check books, and proceeded to forge his signature to numerous instruments without his knowledge and consent." PALAGONIA, in ¶ 10, enumerates all of APPELBAUM's claims, and states that these claims "arose solely out of acts committed and/or business transacted in Florida." Lastly, in ¶ 12, PALAGONIA states "this Court should not underestimate the severity of the prejudice I will suffer if APPELBAUM is granted an order of attachment." PALAGONIA claims that the $2,000.00 weekly payments he receives from THE BAKERY "represent my principal source of income, and the seizure of these payments would make it nearly impossible for me to pay my day-to-day living expenses, including my alimony payments. I cannot subsist without these weekly payments."

Plaintiff, in his second or supplemental order to show cause, asks this Court, pursuant to CPLR Rule 2221, for reargument of my prior February 29, 2008 decision and order, in which I determined that the December 28, 2007 order to show cause, signed by Justice Knipel, does not apply to the payments PALAGONIA receives from THE BAKERY. A motion for leave to reargue is based on the assertion that matters of fact or law were allegedly overlooked or misapprehended by the court in determining the prior motion. (CPLR Rule 2221 [d] [2]). Plaintiff argues that I have misconstrued the law applicable to prejudgment orders of attachment. I did not misconstrue the law. Pending ruling on the original order to show cause, which restrained defendant, his agents and garnishees from disposing of any property, including the note by which THE BAKERY owed payments to PALAGONIA, I allowed defendant to continue to receive his payments from THE BAKERY. I reserved decision on the requested relief of a prejudgment order of attachment, which is addressed in this decision and order. The Court is cognizant of the holding in Foley v Roche (68 AD2d 558, 567 [1d Dept 1979]), that:

A motion for reargument, addressed to the discretion of the court, is

designed to afford a party an opportunity to establish that the court

overlooked or misapprehended the relevant facts, or misapplied any

controlling principle of law. Its purpose is not to serve as a vehicle to

permit the unsuccessful party to argue once again the very questions [*5]

previously decided (Fosdick v Town of Hempstead, 126 NY 651 [1891];

American Trading v Fish, 87 Misc 2d 193 [1975].

(See Adderley v State, 35 AD3d 1043 [3d Dept 2006]; Delgrosso v 1325 Limited Partnership, 306 AD2d 241 [2d Dept 2003]; Mooney v Vecchio, 305 AD2d 415 [2d Dept 2003]; F & G Heating Co. v Board of Education of the City of New York, 103 AD2d 791 [2d Dept 1984]).

Provisional remedy of attachment

The relief requested in plaintiff's orders to show cause for an order of attachment, pursuant to CPLR § 6201, on PALAGONIA's property in New York, including the payments owed to him by THE BAKERY, is a drastic provisional remedy, which is contrary to common law and strictly construed in favor of the party against whom the order of attachment is sought. (Kornblum v Kornblum, 34 AD3d 748 [2d Dept 2006]; Michaels Elec. Supply Corp. v Trott Elec. Inc., 231 AD2d 695 [2d Dept 1996]). The Court of Appeals, in Penoyar v Kelsey (150 NY 77, 80 [1896]), instructed:

execution, was created by the Code of Procedure, and has been

continued and extended by the Code of Civil Procedure . . . It is not

only created by statute, but has substantially none of the features

peculiar to the common-law remedy. As said by a recent writer,

'it amounts to the involuntary dispossession of the owner prior to any

adjudication to determine the rights of the parties. It violates every

principle of proprietary right held sacred by the common law. It is,

to some extent, equivalent to execution in advance of trial and

judgment. Property is taken, under legal process, at the instance of

one without even a claim of title from the possession of another whose

title is unquestioned; and though the mere taking does not work any

change in the ownership of the property, it seriously affects some of

the most important incidents of that ownership, and may even be the

means of thwarting the owner in his endeavors to meet the just

demands against him.' (Wade on Attachment, § 2.)

Owing to the statutory origin and harsh nature of this remedy

the section in question should be construed, in accordance with the

general rule applicable to statutes in derogation of the common law,

strictly in favor of those against whom it may be employed.

Attachment against a non-domiciliary has two purposes, to secure assets for a

money judgment or to provide a basis for quasi in rem jurisdiction. It is discretionary with the Court and granted upon a proper showing that a judgment might be rendered in plaintiff's favor. (CPLR § 6201; CPLR Rule 6212; Morgenthau v Avion Resources, Ltd., 49 AD3d 50, 58 [1d Dept 2007]; J.V.W. Investment, Ltd. v Kelleher, 41 AD3d 233, 234 [1d Dept 2007]). Judge Cardozo, in Zenith Bathing Pavilion, v Fair Oaks S.S. Corporation (240 NY 307, 312 - 313 [1925]), held, "[w]hat is sufficient for a pleading may be insufficient for attachment. To give support to that relief, the cause of action must be of a class enumerated in Civil Practice Act, § 902, and its existence and the damages recoverable must be proved by affidavit. Civil Practice [*6]Act, § 903 . . Provisional remedies are not granted for the asking." [Emphasis added]

Plaintiff must comply with CPLR Rule 6212 (a), and show in his motion for an order of attachment, "by affidavit and such other written evidence as may be submitted, that there is a cause of action, that it is probable that the plaintiff will succeed on the merits, that one or more grounds for attachment provided in section 6201 exist and that the amount demanded from the defendant exceeds all counterclaims known to the plaintiff." (See Capital Ventures International v Republic of Argentina, 443 F3d 214, 219 [2d Cir 2006]). In the instant action, plaintiff's affidavit and other evidence is replete with misrepresentations. Plaintiff claims that defendant was his employee with KCR, while there is proof that they are joint venturers and partners in KCR and their Florida activities. Further, since most of the credit card bills were sent to APPELBAUM'S Brooklyn apartment he had to be aware of the credit card charges. APPELBAUM authorized PALAGONIA to sign his name pursuant to a general power of attorney, executed by APPELBAUM on January 19, 2006, before a Kings County notary public [exhibit C of cross-motion]. Interestingly, APPELBAUM, in the general power of attorney, lists his address as 1710 West Spring Meadow Loop, Lecanto, Florida 34461, not his Brooklyn address. The notary public also states that APPELBAUM produced as identification a Florida driver's license, with the notary public listing the license number and the expiration date as November 21, 2002. Is APPELBAUM a New York or a Florida domiciliary?

APPELBAUM has failed to make a showing of a likelihood of success on the merits. His first cause of action, based on PALAGONIA's alleged unauthorized credit card charges, ignores that the account holders were KCR, not APPELBAUM. Thus, the cause of action belongs to KCR, and APPELBAUM did not bring it derivatively. Joint venturers cannot sue each other for money damages prior to a final accounting. (LaFleur v Montgomery, 70 AD2d 545 [1d Dept 1979]). Joint venturers APPELBAUM and PALAGONIA did not transact business in New York. They were partners in a Florida LLC, Citrus Realty Group (CRG), registered with the Division of Corporations of the Florida Department of State [exhibit E of cross motion]. This Court lacks subject matter jurisdiction to deal with an accounting of a Florida LLC, which invested solely in Florida real estate. (Rimawi v Atkins, 42 AD3d 799 [3d Dept 2007]). The cause of action relating to alleged fraud deals with an automobile lease in Florida. The other causes of action deal with Florida real estate ventures and their consequences. The Court does not have subject matter jurisdiction over alleged torts committed in Florida by a Florida resident.

APPELBAUM has failed to provide any evidentiary detail supporting his conclusory and perfunctory claim that PALAGONIA's tortious conduct outside of New York caused injury to [*7]persons or property in New York. He appears to believe that he was injured in New York because he alleges that he is a New York resident and the alleged financial loss will affect him in New York. However, in determining whether there is an injury in New York, New York courts apply a "situs of injury" test to see if CPLR § 302 (a) (3) secures personal jurisdiction. In Hermann v Sharon Hospital, Inc. (135 AD2d 682 [2d Dept 1987]), a New York plaintiff sued defendant Connecticut Hospital for alleged medical malpractice committed in Connecticut, which caused plaintiff to suffer injury in New York. The Appellate Division affirmed the Supreme Court, Dutchess County decision, which dismissed the action for lack of personal jurisdiction, holding, at 683, that "[t]he Supreme Court properly found that CPLR 302 (a) (3) is inapplicable here, since the alleged injury occurred in Connecticut. 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."

It is not sufficient that a New York resident might have suffered a financial loss which he felt in New York (Fantis Food, Inc. v Standard Importing Co., 49 NY 317 [1980]). Further, CPLR § 302 (a) (3) has two subclauses to obtain jurisdiction over a non-domiciliary, which were analyzed by the Court of Appeals in Ingraham v Carroll (90 NY2d 592 [1997]), at 596 - 597:

CPLR 302 (a) (3) the provision of New York's long-arm

statute at issue here, permits a court to exercise personal jurisdiction over a nondomiciliary who:

"3. commits a tortious act without the state causing injury to person

or property within the state . . . if he

"(i) regularly does or solicits business, or engages in any other

persistent course of conduct, or derives substantial revenue from

goods used or consumed 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 or

international commerce" (CPLR 302 [a] [3]) [emphasis supplied]).

Under this provision, the appellant must show both that an

injury occurred "within the state," and that the elements of either clause (i)

or (ii) have been satisfied. It is appropriate to point out that establishment

of long-arm jurisdiction in connection with a New York injury under either

clause does not implicate constitutional due process concerns. "[T]he

subdivision [302 (a) (3)] was not designed to go to the full limits of

permissible jurisdiction. The limitations contained in subparagraphs (i)

and (ii) were deliberately inserted to keep the provision 'well within

constitutional bounds' " (1 Weinstein-Korn-Miller, NY Civ Prac ¶ 302.14,

quoting 12th Ann Report of NY Jud Conf, at 341; see also McGowan v

Smith, 52 NY2d 268, 274 [1981]).

APPELBAUM, in the instant case, has not asserted anything other than an indirect financial loss resulting from his New York residence. He needed to invoke more than alleged consequences of New York financial loss to provide a basis for jurisdiction, pursuant to CPLR § 302 (a) (3), for defendant's alleged tortious activity in Florida. There are no allegations that PALAGONIA: regularly does business in New York; reasonably expects that his Florida activities will have consequences in New York; and, derives substantial revenue from interstate [*8]commerce.

To have long-arm jurisdiction based upon the transaction of business in New York, pursuant to CPLR § 302 (a) (1), APPELBAUM needed to identify alleged agreements entered into in New York. He has failed to do so. Plaintiff has failed to cite any legal authority holding that personal jurisdiction may be obtained over a non-domiciliary because he slept on an air mattress in plaintiff's living room and "discussed" Florida business ventures while in New York.

"When determining a motion to dismiss, the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory' (see Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Milstein, Felder & Steiner, 96 NY2d 300, 303 [2001]; Leon v Martinez, 84 NY2d 83, 87-88 [1994]). (Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 570-571 [2005]). It is clear in applying this standard that even if defendant PALAGONIA committed tortious acts in Florida against APPELBAUM, there is no evidence of injury to persons or property within New York, and no evidence of PALAGONIA transacting business in New York by making any agreements with APPELBAUM concerning Florida investments. Thus, PALAGONIA's cross-motion for dismissal for plaintiff's failure to obtain subject matter jurisdiction, pursuant to CPLR Rule 3211 (a) (2), and personal jurisdiction, pursuant to CPLR Rule 3211 (a) (8), is granted. This renders moot the Court ruling on the merits of any other substantive issues raised in the orders to show cause or the cross-motion.

Even though the instant action is dismissed for lack of subject matter and personal jurisdiction, the Court notes that plaintiff APPELBAUM could not obtain quasi in rem jurisdiction, even if defendant PALAGONIA had the requisite minimal contacts with New York, because of APPELBAUM's procedural violations. Quasi in rem jurisdiction allows a plaintiff who has a claim for money damages against a non-domiciliary defendant over whom he has no basis for personal jurisdiction to "attach" the non-domiciliary's property in New York. To obtain quasi in rem jurisdiction, plaintiff must proof to the Court that the minimal contacts for personal jurisdiction that were adopted in International Shoe Co. v Washington (326 US 310 [1945]) and its progeny for long-arm jurisdiction have been met. (Shaffer v Heitner, 433 US 186 [1977]). After proving minimal contacts, the levy must be made prior to service of the summons and complaint. (CPLR § 314 (3); Siegel, NY Prac § 104, at 187-188 [4th ed]). Since APPELBAUM served PALAGONIA with the summons and complaint before the issuance of any order of attachment, quasi in rem jurisdiction cannot be obtained, pursuant to CPLR § 314 (3), even if PALAGONIA's payments from THE BAKERY meet the minimal contact standard.

Accordingly, it is

ORDERED, that the orders to show cause of plaintiff APPELBAUM for an order of attachment, pursuant to CPLR § 6101 and CPLR Rule 6212, are denied; and it is further

ORDERED, that all stays in plaintiff APPELBAUM's orders to show cause are vacated; and [*9]it is further

ORDERED that the branch of the plaintiff APPELBAUM's supplemental order to show cause to reargue my February 29, 2008 decision and order with respect to the scope of restraints in the December 28, 2007 order to show cause is denied; and it is further

ORDERED, that the instant action is dismissed.

This constitutes the decision and order of the Court.

ENTER

__________________________

HON. ARTHUR M. SCHACK

J. S. C.