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SHEIKH v. MR. K'S RESTAURANT

June 10, 2005.

SAEED M. SHEIKH, Plaintiff,
v.
MR. K'S RESTAURANT, INC., Defendant.



The opinion of the court was delivered by: RICHARD ROBERTS, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff filed a complaint against the defendant ("the Restaurant"), alleging that the defendant breached a contract ("the Consulting Agreement") between the two parties by failing to compensate him under the contract's terms and that the defendant fraudulently induced him to sign a side agreement waiving his rights to such compensation. Defendant filed a motion to dismiss the complaint for lack of personal jurisdiction, or alternatively, for improper venue. Because plaintiff has alleged facts sufficient to show that this court has personal jurisdiction over the defendant under the District of Columbia's long-arm statute, and because venue is proper in this district, defendant's motion to dismiss will be denied.

BACKGROUND

  Plaintiff is a resident of Maryland who maintains a business office in the District of Columbia. (Compl. ¶ 1; Decl. of Saeed M. Sheikh ("Sheikh Decl.") ¶ 2.) Defendant is a New York corporation maintaining its principal place of business in New York. (Compl. ¶ 2.) In early 1997, Johnny Tsu Kau, defendant's president, contacted plaintiff at plaintiff's office and solicited his assistance in opening a Mr. K's Restaurant in New York.*fn1 (Compl. ¶ 7; Sheikh Decl. ¶ 3.) Plaintiff alleges that the defendant sought his consulting expertise in launching and managing the New York restaurant. (Compl. ¶ 7.)

  Shortly thereafter, both parties began to negotiate the compensation that plaintiff would receive for his consultation services. (Compl. ¶ 8.) Defendant forwarded a signed proposed Consulting Agreement to the plaintiff's office for plaintiff's approval and signature, and plaintiff there executed the document. (Sheikh Decl. ¶¶ 5-6.) Plaintiff alleges that just before he signed the Consulting Agreement, Kao held a secret meeting with plaintiff, outside the presence of plaintiff's counsel. (Id. ¶ 17.) Plaintiff claims that at the meeting, Kao presented plaintiff with papers that Kao asserted had been approved by plaintiff's counsel and were part of the overall Consulting Agreement. (Id. ¶¶ 17-18, 41.) The Consulting Agreement contains the following provision:
In consideration of [plaintiff's] past and continuing contributions to the [Restaurant] as a consultant, the [Restaurant] agrees to pay [plaintiff] 8% of all [its] net profits . . . for the first 5 years from the date the [Restaurant] opens to the public for daily business, and 2% of all [its] monthly gross receipts . . . for the second 5 years that the [Restaurant] is open for daily business.
(Compl. Ex. A.) The Restaurant opened for business in February 1998. (Compl. ¶ 25; Kao Aff. ¶ 1.)

  Plaintiff contends that all activities giving rise to the Consulting Agreement, including defendant's solicitation of plaintiff's services, telephone negotiations, execution of the contract, and performance of services,*fn2 occurred at the plaintiff's office in the District. (Mem. of P. & A. in Opp'n to Mot. to Dismiss at 2.) Plaintiff argues that defendant breached the Consulting Agreement by refusing to compensate him for his services under its terms. (Compl. ¶¶ 30-33; see also Compl. Ex. A.) Plaintiff also contends that after he made repeated requests for payment, counsel for the defendant produced a two-sentence side agreement, signed by the plaintiff, which defendant's counsel alleged replaced the Consulting Agreement and nullified the Restaurant's financial obligation to pay plaintiff two percent of its gross monthly profits during the second five years of its operation. (Compl. ¶ 34.)

  Plaintiff states that his counsel had in fact never seen or approved the side agreement, and that defendant did not provide copies of the papers to plaintiff or his counsel until after plaintiff's repeated requests for payment under the Consulting Agreement, nearly six years later. (Id. ¶¶ 18-19, 37.) Plaintiff maintains that insofar as he executed the side agreement during his secret meeting with Kao, defendant obtained plaintiff's signature through fraud, trickery, and intentional misrepresentations that the document had previously been approved by plaintiff's counsel. (Id. ¶¶ 49-50.)

  DISCUSSION

  I. PERSONAL JURISDICTION

  In a case where no discovery or evidentiary hearing has yet taken place, a plaintiff may defeat a motion to dismiss for lack of personal jurisdiction merely by making factual allegations sufficient to connect the defendant to the forum and establish a prima facie showing of jurisdiction. Nix v. Hoke, 62 F. Supp. 2d 110, 113 (D.D.C. 1999). A court must draw all reasonable inferences in favor of the plaintiff in ruling on a motion to dismiss a complaint for lack of personal jurisdiction. See GTE New Media Servs., Inc. v. Ameritech Corp., 21 F. Supp. 2d 27, 36 (D.D.C. 1998).

  The plaintiff has asserted federal subject matter jurisdiction on the basis of the parties' diversity of citizenship. 28 U.S.C. § 1332(a) (2000). Because plaintiff asserts no claim arising under federal law, personal jurisdiction over the defendant turns on District of Columbia law insofar as it is compatible with due process. See Steinberg v. Int'l Criminal Police Org., 672 F.2d 927, 930 (D.C. Cir. 1981). Plaintiff invokes the District's long-arm statute as the basis for the court's exercise of personal jurisdiction over the defendant. Two requirements must be met for personal jurisdiction to exist over a defendant in a diversity action under the District's long-arm statute. First, the long-arm statute must authorize exercising personal jurisdiction, and second, exercising personal jurisdiction must comport with due process. See id.

  A. Long-arm Statute

  The District of Columbia's long-arm statute states in relevant part: (a) A District of Columbia court may exercise personal jurisdiction over a person,*fn3 who acts directly or by an agent, as to a claim for relief arising from the person's —

 
(1) transacting any business in the District of Columbia;
(2) contracting to supply services in the District of Columbia; . . .
(b) When jurisdiction over a person is based solely upon this section, only a claim for relief arising from acts enumerated in this section may be asserted against him.
D.C. Code Ann. § 13-423 (2001). Therefore, to establish personal jurisdiction under section 13-423(a)(1), a plaintiff must make factual allegations (1) that the ...

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