Preview
INDEX NO. 650380/2024
NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
JENNIFER KAY & JOSHUA COHEN, Individually and Derivatively
on behalfof M.B.R.P. REST. INC. d/b/a THE STUMBLE INN,
MIRABI INC. d/b/a DOWN THE HATCH, THIRD AVE. REST., INC. Index No. 650380/2024
d/b/a JAKE’S DILEMMA, 442 AMSTERDAM REST., CORP. d/b/a
THE GIN MILL, MACDOUGAL REST. INC. d/b/a OFF THE Hon. Mary V. Rosado
WAGON, 149 SECOND AVE. REST. INC. d/b/a DOWNTOWN
SOCIAL, 134 WEST 3RD ST. REST. INC. d/b/a 3 SHEETS, 168
ORCHARD ST PARTNERS INC. d/b/a HAIR OF THE DOG, 587 Mot. Seq. #003
KING STREET RESTAURANT, LLC d/b/a UPTOWN SOCIAL, 23
ANN STREET RESTAURANT LLC d/b/a BODEGA/SHAREHOUSE,
B.B.L.L. INC. d/b/a CLEOS, KALEO INC. d/b/a JACK & GINGERS,
2258 WEST CHICAGO AVE PARTNERS LLC d/b/a FATSO’S LAST
STAND #1, 1982 N. CLYBOURN PARTNERS LLC d/b/a FATSO’S
LAST STAND #2, 442 AMSTERDAM REAL ESTATE CORP, 300
EAST 76TH STREET PARTNERS LLC, 109 MACDOUGAL
STREET PARTNERS LLC, 430 AMSTERDAM PARTNERS, LLC,
2048 WEST ARMITAGE PARTNERS LLC, and 1939 WEST
CHICAGO AVE PARTNERS LLC,
Plaintiffs,
Vv.
MITCHELL BANCHIK, MICHAEL ASCH, MNM2
MANGAGEMENT INC. d/b/a MNM2 MANAGEMENT, INC.,
M.B.R.P. REST. INC. d/b/a THE STUMBLE INN, MIRABI INC. d/b/a
DOWN THE HATCH, THIRD AVE. REST., INC. d/b/a JAKE’S
DILEMMA, 442 AMSTERDAM REST., CORP. d/b/a THE GIN
MILL, MACDOUGAL REST. INC. d/b/a OFF THE WAGON, 149
SECOND AVE. REST. INC. d/b/a DOWNTOWN SOCIAL, 134
WEST 3RD ST. REST. INC. d/b/a 3 SHEETS, 168 ORCHARD ST
PARTNERS INC. d/b/a HAIR OF THE DOG, 587 KING STREET
RESTAURANT, LLC d/b/a UPTOWN SOCIAL, 23 ANN STREET
RESTAURANT LLC d/b/a BODEGA/SHAREHOUSE, B.B.L.L. INC.
d/b/a CLEOS, KALEO INC. d/b/a JACK & GINGERS, 2258 WEST
CHICAGO AVE PARTNERS LLC d/b/a FATSO’S LAST STAND #1,
1982 N. CLYBOURN PARTNERS LLC d/b/a FATSO’S LAST
STAND #2, 442 AMSTERDAM REAL ESTATE CORP, 300 EAST
76TH STREET PARTNERS, LLC, 109 MACDOUGAL STREET
PARTNERS LLC, 430 AMSTERDAM PARTNERS, LLC, 2048
WEST ARMITAGE PARTNERS LLC, 1939 WEST CHICAGO AVE
PARTNERS LLC, MNM PROPERTIES, LLC, “MB TRUST 1”, “MB
TRUST 2”, “MA TRUST 1”, and “MA TRUST 2”
Defendants.
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REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF MOTION TO
DISMISS ON BEHALF OF 587 KING STREET RESTAURANT, LLC AND
23 ANN STREET RESTAURANT LLC
FARRELL FRITZ, P.C.
Attorneys for 587 King Street Restaurant, LLC
and 23 Ann Street Restaurant LLC
622 Third Avenue, Suite 37200
New York, New York 10017
(212) 687-1230
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NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES... i
PRELIMINARY STATEMENT
ARGUMENT
I THE SOUTH CAROLINA BARS HAVE CONSISTENTLY MAINTAINED
THEIR RIGHT UNDER THE OPERATING AGREEMENTS TO ARBITRATE
IN THE PROPER SOUTH CAROLINA FORUM WHERE PLAINTIFFS’
CLAIMS BELONG
IL. THE ARBITRABLE CLAIMS AGAINST THE SOUTH CAROLINA BARS
ARE NOT “INEXTRICABLY INTERTWINED” WITH THE NON-ARBITRABLE
CLAIMS AGAINST OTHER DEFENDANTS
Il. PLAINTIFFS OFFER NO EVIDENCE SUBSTANTIATING THE COURT’S
EXERCISE OF PERSONAL JURISDICTION OVER THE SOUTH CAROLINA
BARS
No General Jurisdiction Under CPLR 301
No Specific Jurisdiction Under CPLR 302(a)(1)
Cc No Due Process 11
CONCLUSION 12
CERTIFICATION OF COUNSEL 14
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TABLE OF AUTHORITIES
Page(s)
Cases
277 E 7th Street Condominium v 277 E 7th Street,
2021 N.Y. Slip Op. 30825 [Sup Ct, New York County 2021]
ALP Inc v Moskowitz,
204 AD 3d 454 [2022]
Aybar v Aybar,
37 NY3d 274 [2021]
Aybar v Aybar,
169 AD3d 137 [2d Dept 2019], affd, 37 NY3d 274 [2021]
Bank of Am. v. Apollo Enter. Solutions, LLC,
2010 WL 4323273 [SDNY, Nov. 1, 2010] 9, 10
Black v Phoenix Cayman Ltd.,
224 AD3d 494 [Ist Dept 2024] 10
Brennan v AG Becker Inc,
127 AD 2d 951 [3d Dept 1987]
Brocco v E. Metal Recycling Term. LL
211 AD3d 628 [Ist Dept 2022]...
Brown v V & R Adv., Inc.,
112 AD2d 856 [Ist Dept 1985], aff’d, 67 NY2d 772 [1986]
Breakaway Courier Corp. v Berkshire Hathaway, Inc.,
192 AD3d 501 [Ist Dept 2021] 10, 11
Cedar Capital Mgt. Group Inc. v Lillie,
79 Misc 3d 1238(A) [Sup Ct, New York County 2023] 8,9
Cohen v Ark Asset Holdings, Inc.,
268 AD2d 285 [Ist Dept 2000]
Daimler AG v Bauman,
571 US. 117 [2014]
Dean Witter Reynolds v Byrd,
470 U.S. 213 [1985]
Dembitzer v Chera,
305 AD2d 531 [2d Dept 2003]
i
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Donoso v New York Univ.,
160 AD3d 522 [Ist Dept 2018]
Flynn v Labor Ready, Inc.,
6 AD3d 492 [2d Dept 2004]
Hyde v Jewish Home Lifecare,
149 AD3d 674 [Ist Dept 2017]
International Shoe Co. v. Washington,
326 US 310 [1945] .... 12
Lake Harbor Advisors, LLC v Settlement Servi s Arbitration and Mediation, In
175 AD3d 479 [2d Dept 2019]
Lodal, Inc. v Home Ins. Co.,
309 AD2d 634 [Ist Dept 2003]
Lowy v Chalkable, LLC,
186 AD3d 590 [2d Dept 2020]
NBC Universal Media, LLC v Strauser,
190 AD3d 461 [Ist Dept 2021]...
Paterno v. Laser Spine Inst.
24 N.Y.3d 370 [2014]... 10
RAD Ventures Corp. v Gotthilf,
6 AD3d 415 [2d Dept 2004]
Renren, Inc. v XXX,
67 Misc 3d 1219(A) [Sup Ct, New York County 2020], aff'd sub nom. Matter of Renren, Inc., 192
AD3d 539 [Ist Dept 2021] 8,9
Sage Realty Corp. v Proskauer Rose LLP,
251 AD2d 35 [Ist Dept 1998]
Singer v Seavey,
83 AD3d 481 [Ist Dept 2011]
State of New York v Vayu, Inc
39 NY3d 330 [2023]...
State of Qatar v First Abu Dhabi Bank PJSC,
2022 N.Y. Slip Op. 31860[U], 4-5 [Sup Ct, NY County 2022] 12
Walden v Fiore,
571 US 277 [2014] 12
Willer v Kleinman,
114 AD3d 850 [2d Dept 2014]
iil
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Williams v Beemiller, Inc.,
33 NY3d 523 [2019] 12
Wolberg v IAI N. Am., Inc.,
161 AD3d 468 [Ist Dept 2018] 10
Statutes
Title 15, Chapter 48 of the Code of Laws of South Carolina
Rules
CPLR 301 1,8,9
CPLR 302(a)(1) 1,9, 10
CPLR 3211 (a) (8)
iv
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Defendants 587 King Street Restaurant, LLC (“587 King”) and 23 Ann Street Restaurant
LLC (“23 Ann”) (collectively, the “South Carolina Bars”), by and through their attorneys, Farrell
Fritz, P.C., hereby make a limited appearance to submit this reply memorandum of law in further
support of their motion to dismiss the complaint, dated January 25, 2024, as amended on March
16, 2024 (NYSCEF 117).!
PRELIMINARY STATEMENT
Plaintiffs cannot avoid the indisputable, dispositive fact that the Operating Agreements of
both South Carolina Bars mandate mediation and arbitration of disputes, with such ADR to take
place in Charleston, South Carolina (Asch Affirm. Exs. B and D [NYSCEF 104 and 106] at § 17)
—not in New York State court. The South Carolina Bars have staunchly defended their contractual
right to mediate and arbitrate Plaintiffs’ claims against them in South Carolina, and to that end
commenced proceedings in South Carolina state court to compel arbitration in that state. Plaintiffs”
claims against the South Carolina Bars have no place in this Court, period.
The Amended Complaint must also be dismissed as to the South Carolina Bars because
this New York Court does not have personal jurisdiction over them, whether under CPLR 301 or
302, nor would jurisdiction satisfy due process requirements for these veritably out-of-state
defendants. Plaintiffs offer nothing but conjecture in their attempt to drag the South Carolina Bars
into New York.
' By stipulation dated March 21, 2024, the parties agreed that: “Defendants 587 King Street Restaurant,
LLC d/b/a Uptown Social and 23 Ann Street Restaurant LLC d/b/a Bodega/Sharehouse (“South Carolina
Bar Defendants”) will rely on their pending dismissal motion in this action (Mot. Seq. #003) seeking
dismissal of all causes of action asserted against them in the Amended Complaint” (NYSCEF 119).
This Court may properly apply the South Carolina Bars’ dismissal motion to the Amended Complaint,
particularly where the “additional causes of action were essentially a ‘repackaging’ of the original claims”
(Donoso v New York Univ., 160 AD3d 522, 523 [Ist Dept 2018]; see also Sage Realty Corp. v Proskauer
Rose LLP, 251 AD2d 35, 38 [1st Dept 1998] [‘the moving party has the option to decide whether its motion
should be applied to the new pleadings”).
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The Amended Complaint must be dismissed as against the South Carolina Bars.
ARGUMENT
THE SOUTH CAROLINA BARS HAVE CONSISTENTLY MAINTAINED THEIR
RIGHT UNDER THE OPERATING AGREEMENTS TO ARBITRATE IN THE
PROPER SOUTH CAROLINA FORUM WHERE PLAINTIFFS’ CLAIMS BELONG
Plaintiffs do not argue that their claims against the South Carolina Bars are non-arbitrable.
Rather, they sidestep the dispositive fact that Plaintiffs’ claims are squarely within those broad and
mandatory ADR provisions by arguing that by moving to dismiss this action based on mandatory
arbitration and lack of jurisdiction, the South Carolina Bars waived their right to arbitrate.
The argument is absurd on its face. Plaintiffs contend that the mere fact that the South
Carolina Bars have put in a limited appearance in this action seeking dismissal for lack of
jurisdiction and mandatory arbitration (Opp. Br. at 9-10), and that they reasonably requested that
the New York JAMS administrator hold the NY JAMS Arbitration in abeyance until this Court
and the South Carolina state court determine the threshold jurisdictional issues respectively before
them (id.), constitutes a waiver of the right to arbitrate.
None of Plaintiffs’ authorities stands for that proposition. Rather, Plaintiffs’ cases stand
for the exact opposite: “A defendant who submits an answer, or submits a pre-answer motion to
dismiss the action, does not waive arbitration, especially if the arbitrability of the controversy is
asserted as a ground to dismiss the action” (Willer v Kleinman, 114 AD3d 850, 852 [2d Dept 2014]
[emphasis added];? Flynn v Labor Ready, Inc., 6 AD3d 492, 493 [2d Dept 2004] [Contrary to the
plaintiffs’ contention, Labor Ready did not waive its right to compel arbitration by serving a
? In Willer, the Court ultimately determined that the defendant did waive his right to arbitrate where there
was no written agreement to arbitrate, the defendant asserted counterclaims and sought and obtained
discovery in the state court action, and neither party took steps to proceed to arbitration prior to the motion,
none of which applies here.
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motion to dismiss prior to its answer, as a defendant is entitled to have the sufficiency of a
complaint tested before a duty to seek arbitration arises”]).>
The mere participation in litigation, without more, does not point to “an unequivocal
intention to waive arbitration rights” (Lodal, Inc. v Home Ins. Co., 309 AD2d 634, 634-35 [1st
Dept 2003] [rejecting petitioner-insured’s argument that insurer’s participation in related state
court litigation constituted waiver, where “it was petitioner that commenced the [litigation]; the
insurer did not choose the ‘litigation’ path.”] [emphasis in original]; see also NBC Universal
Media, LLC v Strauser, 190 AD3d 461, 461 [1st Dept 2021] [defendant’s limited participation in
related out-of-state litigation did not constitute waiver of arbitration]; Singer v Seavey, 83 AD3d
481, 482 [1st Dept 2011] [Defendants did not waive their right to arbitrate by moving to dismiss
the complaint and appealing from the partial denial of the motion’”]).
Plaintiffs do not, and cannot, dispute that:
e Plaintiffs, as members, are signatories to the Operating Agreements for 587
King and 23 Ann (Asch Affirm. Exs. B and D [NYSCEF 104 and 106]);
The Operating Agreements include broad-form mandatory mediation and
arbitration clauses (id. [Operating Agreements at § 17.15];
If mediation fails, the parties must submit any “conflict, controversy,
difference, or claim between or among the Company and its Members
arising out of, relating to or in connection with this Agreement” to
arbitration in accordance with the “South Carolina Uniform Arbitration Act,
> The balance of Plaintiffs’ cases are inapposite as they each concerned defendants who willingly
participated in the state court action through the pleadings, preliminary conference, and discovery stages of
the litigation before raising, for the first time, the issue of arbitrability in a post-joinder motion to compel
arbitration (Hyde v Jewish Home Lifecare, 149 AD3d 674, 674-75 [1st Dept 2017]) or motion for summary
judgment (Dembitzer v Chera, 305 AD2d 531 [2d Dept 2003]).
3
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Title 15, Chapter 48 of the Code of Laws of South Carolina” which
arbitration “shall be undertaken in Charleston, South Carolina.” (id. at §
17.17);
All Plaintiffs’ claims against the South Carolina Bars fall under the broad
arbitration clause in the Operating Agreements;
Plaintiffs followed none of the dispute resolution procedures clearly
dictated by the Operating Agreements; and
On February 13, 2024, the South Carolina Bars commenced a state court
action in Charleston, South Carolina to enforce the terms of the Operating
Agreements and require Plaintiffs to mediate and arbitrate their dispute in
the proper forum and venue (i.e. Charleston, South Carolina) (Asch Affirm.
Exs. F and G [NYSCEF 108 and 109]).
Plaintiffs conveniently gloss over the South Carolina Bars’ earliest efforts to notify them
of the mandatory mediation and arbitration provisions in the Operating Agreements, in response
to their improper inclusion of the South Carolina Bars in the NY JAMS Arbitration proceeding
(see NYSCEF 37 [Letter to M. Leon, dated January 22, 2024, demanding that Plaintiffs withdraw
the NY JAMS Arbitration as against the South Carolina Bars]). Likewise, Plaintiffs misleadingly
ignore the fact that from the very start of this lawsuit, the South Carolina Bars consistently have
maintained that Plaintiffs’ grievances properly belong in mediation and arbitration in Charleston,
South Carolina, not in New York (see NYSCEF 36 [Mahler Affirmation in opposition to TRO,
dated January 26, 2024, at § 3]; NYSCEF 71-77 [South Carolina Bars’ opposition to injunction
application, dated February 1, 2024]).
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In short, there is no way to construe the South Carolina Bars’ limited participation in this
action as a waiver of their right to arbitrate. Unlike Plaintiffs—who run roughshod over the South
Carolina Bars’ due process rights, contractual rights, as well as basic civil procedure—the South
Carolina Bars have done nothing but insist on their right to mediate and arbitrate this dispute in
the correct forum and in the correct venue.
IL. THE ARBITRABLE CLAIMS AGAINST THE SOUTH CAROLINA BARS ARE
NOT “INEXTRICABLY INTERTWINED” WITH THE NON-ARBITRABLE
CLAIMS AGAINST OTHER DEFENDANTS.
Unable to avoid the valid and binding agreement to arbitrate, Plaintiffs contend that the
arbitrable claims against the South Carolina Bars should nevertheless be heard in this New York
State Court judicial proceeding because the claims are “inextricably intertwined” with the non-
arbitrable claims against other defendants named in this action.
Plaintiffs already made, and lost, this exact argument before this Court in the related CPLR
7503 proceeding in their attempt to bootstrap in all arbitrable and non-arbitrable claims against all
defendants into the NY JAMS Arbitration (see Mahler Reply Affirm. Ex. K; MNM2 Management
Inc, et al. v Kay, et al., Index No. 650780/2024 [Rosado, J.], NYSCEF 53 [Decision and Order,
dated March 11, 2024, granting permanent stay of arbitration as to ten individual and corporate
arbitration-respondents]) (“CPLR 7503 Decision”). Plaintiffs nevertheless repeat the same
argument here, this time, to bootstrap all arbitrable and non-arbitrable claims against all defendants
into this action. Plaintiffs’ argument necessarily fails for the same reasons.
As this Court previously held, Plaintiffs’ argument that, “all facts, legal standards, legal
issues, and parties are the same or substantially the same” and “[t]he only differentiating factors
are the names and locations of the entities that Banchik and Asch created” (Opp Br. at 11), is
entirely unsupported (see Mahler Reply Affirm Ex. K [CPLR 7503 Decision at fn 2] [“For the
foregoing reasons, Respondents [Kay/Cohen] argument that their claims against the Petitioners
5
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must be arbitrated because they are inextricably linked with claims subject to arbitration is
similarly unsupported.”]).
Plaintiffs fail to plead, let alone demonstrate, that the parties are “the same or substantially
the same” with the only difference being the “names and locations of the entities that Banchik and
Asch created” (Opp. Br. at 11). The South Carolina Bars are limited liability companies formed
under the laws of South Carolina (Asch Affirm. § 7-10; Exs. A-D) (unlike the other corporate
defendants). The South Carolina Bars have individual Operating Agreements that govern the
rights and obligations of its members (Asch Affirm. Exs. B, D). The membership matrixes are
unique to each of the South Carolina Bars, as Plaintiffs acknowledge (see Kay Aff. {| 23-26
[identifying 23 members of 23 Ann and 18 members of 587 King]; Cohen Aff. {J 23-26 [same]).
The South Carolina Bars each operate a different bar/restaurant in South Carolina (see Kay Aff.
49 18, 20; Cohen Aff. $¥ 18, 20).
Furthermore, as evidenced by: (1) the jurisdictional challenges asserted by the South
Carolina Bars here (see Point III, infra) that the New York-based defendants do not share, (2) the
fact that some of the defendants have agreements to arbitrate, while others do not (see CPLR 7503
Decision); and (3) that the nature of Plaintiffs’ claims against the South Carolina and New York
Bar Defendants (challenging those entities’ 2023 and 2024 valuation of shares) have nothing to do
with Plaintiffs’ claims against the real estate-based New York and Chicago defendants, nor the
management defendants (largely challenging management fees), the legal issues concerning the
parties are obviously different as between the different defendants.
The Court should reject the unsubstantiated contention that the arbitrable claims against
the South Carolina Bars are “inextricably intertwined” with non-arbitrable claims against other
defendants, such that all claims against all parties should be resolved in this litigation. The
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“inextricably intertwined” doctrine is not intended to allow Plaintiffs to piggyback off the non-
arbitrable claims against other defendants to drag the South Carolina Bars into this judicial
proceeding.*
Even pretending Plaintiffs are correct that the arbitrable and non-arbitrable claims are
“inextricably intertwined,” the proper course is not to force South Carolina Bars to litigate these
claims in a foreign state court that also lacks personal jurisdiction over them, but to stay the state
court litigation pending the outcome of the arbitration (Cohen v Ark Asset Holdings, Inc., 268
AD2d 285, 285-86 [1st Dept 2000] [“Where arbitrable and nonarbitrable claims are inextricably
interwoven, the proper course is to stay judicial proceedings pending completion of the arbitration,
particularly where, as here, the determination of issues in arbitration may well dispose of
nonarbitrable matters”); Brown v V & R Adv., Inc., 112 AD2d 856, 861-62 [1st Dept 1985], aff'd,
67 NY2d 772 [1986] [“It is true that some of the parties are not subject to the arbitration clause,
but the need for bifurcated litigation is not a bar to enforcement of an arbitration agreement” citing
Dean Witter Reynolds v Byrd, 470 U.S. 213 [1985]; Lake Harbor Advisors, LLC v Settlement
Services Arbitration and Mediation, Inc., 175 AD3d 479, 480 [2d Dept 2019] [reversible error to
deny motion to compel arbitration, holding that “where arbitrable and nonarbitrable claims are
inextricably interwoven, the proper course is to stay judicial proceedings pending completion of
the arbitration”]; RAD Ventures Corp. v Gotthilf, 6 AD3d 415, 416 [2d Dept 2004] [reversible
error to deny motion to compel arbitration] [“the court should have granted the defendants’
4 Plaintiffs’ cited authorities are inapposite as they concerned mixed arbitrable and non-arbitrable claims
between the same or substantially similar parties, and concerned the same alleged conduct and legal issues
already being litigated in the state court action (see ALP Inc v Moskowitz 204 AD 3d 454, 456 [2022];
Brennan v AG Becker Inc, 127 AD 2d 951 [3d Dept 1987]; 277 E 7" Street Condominium v 277 E 7" Street,
2021 N.Y. Slip Op. 30825 [Sup Ct, New York County 2021]).
7
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separate motions to compel the plaintiff to arbitrate its claims against [corporate defendant] and
should have stayed prosecution of this action pending the completion of the arbitration’”]).
Til. PLAINTIFFS OFFER NO EVIDENCE SUBSTANTIATING THE COURT’S
EXERCISE OF PERSONAL JURISDICTION OVER THE SOUTH CAROLINA
BARS.
Plaintiffs fail to demonstrate general or specific personal jurisdiction over the South
Carolina Bars. “To successfully oppose a motion for lack of personal jurisdiction brought under
CPLR 3211 (a) (8), ‘the plaintiff must come forward with sufficient evidence, through affidavits
and relevant documents, to prove the existence of jurisdiction a (Cedar Capital Mgt. Group Inc. v
Lillie, 79 Misc 3d 1238(A) [Sup Ct, New York County 2023] quoting State of New York v Vayu,
Inc., 39 NY3d 330, 339 [2023]).
A. No General Jurisdiction Under CPLR 301
There is no general jurisdiction over the South Carolina Bars under CPLR 301 because the
South Carolina Bars are limited liability companies formed under the laws of South Carolina with
their sole places of business in Charleston, South Carolina (Asch Affirm. §] 7-10; 13-19) (see
Aybar v Aybar, 37 NY3d 274, 289 [2021] [“With respect to a corporation, the place of
incorporation and principal place of business are paradigm . . bases for general jurisdiction”
because these are places where a corporation “is fairly regarded as at home” citing Daimler AG v
Bauman, 571 U.S. 117, 137 [2014]; see, e.g., Brocco v E. Metal Recycling Term. LLC, 211 AD3d
628, 628 [lst Dept 2022] [“Supreme Court correctly dismissed the complaint against EMR for
lack of personal jurisdiction” where defendant was a Delaware Corporation with its principal place
of business in New Jersey]; Lowy v Chalkable, LLC, 186 AD3d 590, 591-92 [2d Dept 2020]
[affirming motion to dismiss for lack of personal jurisdiction where both defendant entities were
formed under the laws of Delaware and have their principal place of business in California];
Renren, Inc. v XXX, 67 Misc 3d 1219(A) [Sup Ct, New York County 2020], aff’d sub nom. Matter
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of Renren, Inc., 192 AD3d 539 [1st Dept 2021] [holding that defendants are not subject to general
personal jurisdiction in New York where “[n]one of the defendants are incorporated in New York
or have their principal places of business in New York”]).
Nor can the South Carolina Bars be deemed “at home” in New York under the extremely
limited “exceptional case” exception. New York courts have found that even corporate defendants
who indisputably engage in far more “substantial, continuous, and systematic course of business”
in New York than the South Carolina Bars (to wit, none) are nevertheless not deemed “at home”
here for the purposes of general personal jurisdiction (see e.g., Aybar v Aybar, 169 AD3d 137, 139
[2d Dept 2019], affd, 37 NY3d 274 [2021] [automobile manufacturer (Ford Motor Company) and
tire manufacturer (Goodyear Tire & Rubber Co.) not deemed “at home” in New York under CPLR
301 where neither company is incorporated in New York or has a principal place of business in
New York, where Ford’s economic contacts with New York were not so substantial as compared
to its contacts elsewhere in the country, and Goodyear did not specifically direct advertising of the
subject tire at New York residents]).
B. No Specific Jurisdiction Under CPLR 302(a)(1).
Nor is there is specific jurisdiction over the South Carolina Bars under CPLR 302 (a) (1).
Plaintiffs argue that the South Carolina Bars “transact business” in New York, purportedly through
their “alter ego” defendants Asch and Banchik. However, bare allegations of “alter ego” without
factual support are insufficient to establish alter ego jurisdiction (Cedar Capital Mgt. Group Inc.
v Lillie, 79 Misc 3d 1238(A) [Sup Ct, New York County 2023] [That Kent is alleged to be an
officer, director, manager, shareholder, member, managing member or principal in CAT and every
other corporate defendant is insufficient proof of complete domination.... Chehab’s affidavit and
the exhibits annexed thereto fail to offer sufficient factual support to establish alter ego
jurisdiction]; see also Bank of Am. v. Apollo Enter. Solutions, LLC, 2010 WL 4323273, *5
9
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[SDNY, Nov. 1, 2010] [no personal jurisdiction over out-of-state defendant where conclusory
allegations of alter ego status were made without factual support]).
Plaintiffs fail to specify actions undertaken by defendants Asch or Banchik on behalf of
the South Carolina Bars that would constitute “transacting business” in New York (the first prong
of CPLR 302(a)(1)), or how those acts have a nexus to the claims against the South Carolina Bars
(the second prong of CPLR 302(a)(1)) (see Black v Phoenix Cayman Ltd., 224 AD3d 494, 494-95
[1st Dept 2024] [“a New York court may exercise personal jurisdiction over a nondomiciliary if
he has purposefully transacted business within the state, and there is a ‘substantial relationship
between the transaction and the claim asserted oom | quoting Paterno v. Laser Spine Inst., 24 N.Y.3d
370, 376 [2014]).
Plaintiffs claim that a common marketing umbrella is a sufficient “nexus” (see Kay Aff. J
22, Ex 7). New York Courts reject such flimsy assertions, even where (unlike here) there exists a
formal parent-subsidiary relationship, absent evidence of complete dominion by the New York
affiliate (see, e.g, Wolberg v IAIN. Am., Inc., 161 AD3d 468, 468-69 [Ist Dept 2018] [Defendants
established that LAI North America, Inc. (IAINA), which does business in the State of New York,
is not a mere department of IAI, which operates primarily in Israel, and therefore that jurisdiction
over IAINA is not jurisdiction over IAI” where “IAINA showed that it observed corporate
formalities” and further rejecting “Plaintiff claimed that IAI had control over the approval of
IAINA’s annual budget during the 11 years he worked at IAINA. However, this does not
suffice.”]).
Indeed, Plaintiffs’ cited authority, Breakaway Courier Corp. v Berkshire Hathaway, Inc.,
192 AD3d 501, 502 [1st Dept 2021], perfectly encapsulates this rejection by New York courts of
personal jurisdiction via affiliate absent evidence of complete dominion. In Berkshire, the First
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Department held, “Plaintiffs failed to establish a basis for long-arm jurisdiction on the ground of
BHI’s purported dominion and control over certain subsidiaries” (id.). While the appellate court
considered the “overlap of certain directors or other officers of BHI and its subsidiaries” as “but
one factor in the analysis of whether these subsidiaries should, as plaintiffs contend, be considered
a ‘mere department’ of BHI,” the court found that plaintiffs failed to submit evidence that the New
York-based BHI “interfered in the selection and assignment of subsidiaries’ personnel, exercised
control over the subsidiaries’ marketing and operational policies or that the subsidiaries were
financially dependent on BHI” (id.). Furthermore, the appellate court expressly held that “[t]he use
of the ‘Berkshire Hathaway’ name in proposals, even if BHI knowingly allowed the use of its
name, logo, and the like in such materials, is insufficient to show jurisdiction” (id.). Finally,
plaintiffs’ conclusory allegation that the subsidiary “is a ‘pure captive’ owned by BHI” was
rejected where “their sole citation in support is to their own pleadings” (id.).
Here, too, Plaintiffs’ unsupported allegation that defendant MNM2 “manages the South
Carolina Bar Defendants,” generally handling “the marketing, accounting, and all operations of
the conglomerate entities (bars and real estate)” (Opp. Br. at 4) is insufficient to evidence complete
“dominion and control” over the South Carolina Bars to establish long-arm jurisdiction in New
York. The only “evidence” Plaintiffs submit are screenshots of “Eat, Drink & Be Merry” email
addresses for defendants Asch and Banchik, and website and bar branding that lists the names of
the affiliated bars (Kay Aff. Exs. 1-5, 7; Cohen Aff. Exs. 1-5, 7). This is altogether too tenuous to
hale the South Carolina-based Bars into New York.
C. No Due Process.
Finally, it would run afoul of well-established due process considerations to drag the South
Carolina Bars into the New York forum. Plaintiffs argue that, through defendants Banchik and
Asch, “the established connection with New York is seemingly infinite and it is only reasonable
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and practical for this Court to hear and decide upon the issues that are occurring across both the
New York and South Carolina entities” (Opp. Br. at 9). But, Plaintiffs fail to cite any authority that
stands for the proposition that minimum contacts can be established through others activities in
and with New York (see Walden v Fiore, 571 US 277, 284 [2014] [“We have consistently rejected
attempts to satisfy the defendant-focused ‘minimum contacts’ inquiry by demonstrating contacts
between the plaintiff (or third parties) and the forum State.”’]).
Plaintiffs do not contest that the South Carolina Bars operate bar/restaurants that do not
conduct any business in New York, operate offices in New York, or have employees in New York.
It would offend “traditional notions of fair play and substantial justice” to force the South Carolina
Bars to litigate in New York (see Williams v Beemiller, Inc., 33 NY3d 523, 528 [2019] citing
International Shoe Co. v. Washington, 326 US 310, 316 [1945]; see also State of Qatar v First
Abu Dhabi Bank PJSC, 2022 N.Y. Slip Op. 31860[U], 4-5 [Sup Ct, NY County 2022] [holding
defendant’s “extremely limited contacts with New York are too attenuated to satisfy the due
process requirements” where the defendant “does not conduct business in New York, operate
offices in New York, or have any employees in New York.”]).
CONCLUSION
For the foregoing reasons, and for the reasons set forth in the accompanying submission
by the New York-based Defendants, this Court should dismiss the Amended Complaint in its
entirety as to the South Carolina Bars.
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Dated: New York, New York
April 24, 2024
Respectfully Submitted,
FARRELL FRITZ, P.C.
By: Z/ Peter A. Mahler
Peter A. Mahler
Becky (Hyun Jeong) Baek
622 Third Avenue, Suite 32700
New York, New York 10017
Tel: (212) 687-1230
Attorneys for 587 King Street Restaurant,
LLC and 23 Ann Street Restaurant LLC
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CERTIFICATION OF COUNSEL
The foregoing Memorandum of Law was prepared by computer using Microsoft Word.
The total number of words in the document, excluding the caption, Table of Contents, Table of
Authorities, and signature block is 3,808. This certification complies with Rule 202.8-b of the
Uniform Civil Rules for the Supreme Court and the County Court.
By: Z/ Peter A. Mahler
Peter A. Mahler
14
FF\14523954.4
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INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK JENNIFER KAY & JOSHUA COHEN, Individually and Derivatively on behalfof M.B.R.P. REST. INC. d/b/a THE STUMBLE INN, MIRABI INC. d/b/a DOWN THE HATCH, THIRD AVE. REST., INC. Index No. 650380/2024 d/b/a JAKE’S DILEMMA, 442 AMSTERDAM REST., CORP. d/b/a THE GIN MILL, MACDOUGAL REST. INC. d/b/a OFF THE Hon. Mary V. Rosado WAGON, 149 SECOND AVE. REST. INC. d/b/a DOWNTOWN SOCIAL, 134 WEST 3RD ST. REST. INC. d/b/a 3 SHEETS, 168 ORCHARD ST PARTNERS INC. d/b/a HAIR OF THE DOG, 587 Mot. Seq. #003 KING STREET RESTAURANT, LLC d/b/a UPTOWN SOCIAL, 23 ANN STREET RESTAURANT LLC d/b/a BODEGA/SHAREHOUSE, B.B.L.L. INC. d/b/a CLEOS, KALEO INC. d/b/a JACK & GINGERS, 2258 WEST CHICAGO AVE PARTNERS LLC d/b/a FATSO’S LAST STAND #1, 1982 N. CLYBOURN PARTNERS LLC d/b/a FATSO’S LAST STAND #2, 442 AMSTERDAM REAL ESTATE CORP, 300 EAST 76TH STREET PARTNERS LLC, 109 MACDOUGAL STREET PARTNERS LLC, 430 AMSTERDAM PARTNERS, LLC, 2048 WEST ARMITAGE PARTNERS LLC, and 1939 WEST CHICAGO AVE PARTNERS LLC, Plaintiffs, Vv. MITCHELL BANCHIK, MICHAEL ASCH, MNM2 MANGAGEMENT INC. d/b/a MNM2 MANAGEMENT, INC., M.B.R.P. REST. INC. d/b/a THE STUMBLE INN, MIRABI INC. d/b/a DOWN THE HATCH, THIRD AVE. REST., INC. d/b/a JAKE’S DILEMMA, 442 AMSTERDAM REST., CORP. d/b/a THE GIN MILL, MACDOUGAL REST. INC. d/b/a OFF THE WAGON, 149 SECOND AVE. REST. INC. d/b/a DOWNTOWN SOCIAL, 134 WEST 3RD ST. REST. INC. d/b/a 3 SHEETS, 168 ORCHARD ST PARTNERS INC. d/b/a HAIR OF THE DOG, 587 KING STREET RESTAURANT, LLC d/b/a UPTOWN SOCIAL, 23 ANN STREET RESTAURANT LLC d/b/a BODEGA/SHAREHOUSE, B.B.L.L. INC. d/b/a CLEOS, KALEO INC. d/b/a JACK & GINGERS, 2258 WEST CHICAGO AVE PARTNERS LLC d/b/a FATSO’S LAST STAND #1, 1982 N. CLYBOURN PARTNERS LLC d/b/a FATSO’S LAST STAND #2, 442 AMSTERDAM REAL ESTATE CORP, 300 EAST 76TH STREET PARTNERS, LLC, 109 MACDOUGAL STREET PARTNERS LLC, 430 AMSTERDAM PARTNERS, LLC, 2048 WEST ARMITAGE PARTNERS LLC, 1939 WEST CHICAGO AVE PARTNERS LLC, MNM PROPERTIES, LLC, “MB TRUST 1”, “MB TRUST 2”, “MA TRUST 1”, and “MA TRUST 2” Defendants. 1 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF MOTION TO DISMISS ON BEHALF OF 587 KING STREET RESTAURANT, LLC AND 23 ANN STREET RESTAURANT LLC FARRELL FRITZ, P.C. Attorneys for 587 King Street Restaurant, LLC and 23 Ann Street Restaurant LLC 622 Third Avenue, Suite 37200 New York, New York 10017 (212) 687-1230 2 of 20 INDEX NO. 650380/2024 FILED: NEW YORK COUNTY CLERK 0472472024 12:11 PM NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 TABLE OF CONTENTS Page TABLE OF AUTHORITIES... i PRELIMINARY STATEMENT ARGUMENT I THE SOUTH CAROLINA BARS HAVE CONSISTENTLY MAINTAINED THEIR RIGHT UNDER THE OPERATING AGREEMENTS TO ARBITRATE IN THE PROPER SOUTH CAROLINA FORUM WHERE PLAINTIFFS’ CLAIMS BELONG IL. THE ARBITRABLE CLAIMS AGAINST THE SOUTH CAROLINA BARS ARE NOT “INEXTRICABLY INTERTWINED” WITH THE NON-ARBITRABLE CLAIMS AGAINST OTHER DEFENDANTS Il. PLAINTIFFS OFFER NO EVIDENCE SUBSTANTIATING THE COURT’S EXERCISE OF PERSONAL JURISDICTION OVER THE SOUTH CAROLINA BARS No General Jurisdiction Under CPLR 301 No Specific Jurisdiction Under CPLR 302(a)(1) Cc No Due Process 11 CONCLUSION 12 CERTIFICATION OF COUNSEL 14 3 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 TABLE OF AUTHORITIES Page(s) Cases 277 E 7th Street Condominium v 277 E 7th Street, 2021 N.Y. Slip Op. 30825 [Sup Ct, New York County 2021] ALP Inc v Moskowitz, 204 AD 3d 454 [2022] Aybar v Aybar, 37 NY3d 274 [2021] Aybar v Aybar, 169 AD3d 137 [2d Dept 2019], affd, 37 NY3d 274 [2021] Bank of Am. v. Apollo Enter. Solutions, LLC, 2010 WL 4323273 [SDNY, Nov. 1, 2010] 9, 10 Black v Phoenix Cayman Ltd., 224 AD3d 494 [Ist Dept 2024] 10 Brennan v AG Becker Inc, 127 AD 2d 951 [3d Dept 1987] Brocco v E. Metal Recycling Term. LL 211 AD3d 628 [Ist Dept 2022]... Brown v V & R Adv., Inc., 112 AD2d 856 [Ist Dept 1985], aff’d, 67 NY2d 772 [1986] Breakaway Courier Corp. v Berkshire Hathaway, Inc., 192 AD3d 501 [Ist Dept 2021] 10, 11 Cedar Capital Mgt. Group Inc. v Lillie, 79 Misc 3d 1238(A) [Sup Ct, New York County 2023] 8,9 Cohen v Ark Asset Holdings, Inc., 268 AD2d 285 [Ist Dept 2000] Daimler AG v Bauman, 571 US. 117 [2014] Dean Witter Reynolds v Byrd, 470 U.S. 213 [1985] Dembitzer v Chera, 305 AD2d 531 [2d Dept 2003] i 4 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 Donoso v New York Univ., 160 AD3d 522 [Ist Dept 2018] Flynn v Labor Ready, Inc., 6 AD3d 492 [2d Dept 2004] Hyde v Jewish Home Lifecare, 149 AD3d 674 [Ist Dept 2017] International Shoe Co. v. Washington, 326 US 310 [1945] .... 12 Lake Harbor Advisors, LLC v Settlement Servi s Arbitration and Mediation, In 175 AD3d 479 [2d Dept 2019] Lodal, Inc. v Home Ins. Co., 309 AD2d 634 [Ist Dept 2003] Lowy v Chalkable, LLC, 186 AD3d 590 [2d Dept 2020] NBC Universal Media, LLC v Strauser, 190 AD3d 461 [Ist Dept 2021]... Paterno v. Laser Spine Inst. 24 N.Y.3d 370 [2014]... 10 RAD Ventures Corp. v Gotthilf, 6 AD3d 415 [2d Dept 2004] Renren, Inc. v XXX, 67 Misc 3d 1219(A) [Sup Ct, New York County 2020], aff'd sub nom. Matter of Renren, Inc., 192 AD3d 539 [Ist Dept 2021] 8,9 Sage Realty Corp. v Proskauer Rose LLP, 251 AD2d 35 [Ist Dept 1998] Singer v Seavey, 83 AD3d 481 [Ist Dept 2011] State of New York v Vayu, Inc 39 NY3d 330 [2023]... State of Qatar v First Abu Dhabi Bank PJSC, 2022 N.Y. Slip Op. 31860[U], 4-5 [Sup Ct, NY County 2022] 12 Walden v Fiore, 571 US 277 [2014] 12 Willer v Kleinman, 114 AD3d 850 [2d Dept 2014] iil 5 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 Williams v Beemiller, Inc., 33 NY3d 523 [2019] 12 Wolberg v IAI N. Am., Inc., 161 AD3d 468 [Ist Dept 2018] 10 Statutes Title 15, Chapter 48 of the Code of Laws of South Carolina Rules CPLR 301 1,8,9 CPLR 302(a)(1) 1,9, 10 CPLR 3211 (a) (8) iv 6 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 Defendants 587 King Street Restaurant, LLC (“587 King”) and 23 Ann Street Restaurant LLC (“23 Ann”) (collectively, the “South Carolina Bars”), by and through their attorneys, Farrell Fritz, P.C., hereby make a limited appearance to submit this reply memorandum of law in further support of their motion to dismiss the complaint, dated January 25, 2024, as amended on March 16, 2024 (NYSCEF 117).! PRELIMINARY STATEMENT Plaintiffs cannot avoid the indisputable, dispositive fact that the Operating Agreements of both South Carolina Bars mandate mediation and arbitration of disputes, with such ADR to take place in Charleston, South Carolina (Asch Affirm. Exs. B and D [NYSCEF 104 and 106] at § 17) —not in New York State court. The South Carolina Bars have staunchly defended their contractual right to mediate and arbitrate Plaintiffs’ claims against them in South Carolina, and to that end commenced proceedings in South Carolina state court to compel arbitration in that state. Plaintiffs” claims against the South Carolina Bars have no place in this Court, period. The Amended Complaint must also be dismissed as to the South Carolina Bars because this New York Court does not have personal jurisdiction over them, whether under CPLR 301 or 302, nor would jurisdiction satisfy due process requirements for these veritably out-of-state defendants. Plaintiffs offer nothing but conjecture in their attempt to drag the South Carolina Bars into New York. ' By stipulation dated March 21, 2024, the parties agreed that: “Defendants 587 King Street Restaurant, LLC d/b/a Uptown Social and 23 Ann Street Restaurant LLC d/b/a Bodega/Sharehouse (“South Carolina Bar Defendants”) will rely on their pending dismissal motion in this action (Mot. Seq. #003) seeking dismissal of all causes of action asserted against them in the Amended Complaint” (NYSCEF 119). This Court may properly apply the South Carolina Bars’ dismissal motion to the Amended Complaint, particularly where the “additional causes of action were essentially a ‘repackaging’ of the original claims” (Donoso v New York Univ., 160 AD3d 522, 523 [Ist Dept 2018]; see also Sage Realty Corp. v Proskauer Rose LLP, 251 AD2d 35, 38 [1st Dept 1998] [‘the moving party has the option to decide whether its motion should be applied to the new pleadings”). 7 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 The Amended Complaint must be dismissed as against the South Carolina Bars. ARGUMENT THE SOUTH CAROLINA BARS HAVE CONSISTENTLY MAINTAINED THEIR RIGHT UNDER THE OPERATING AGREEMENTS TO ARBITRATE IN THE PROPER SOUTH CAROLINA FORUM WHERE PLAINTIFFS’ CLAIMS BELONG Plaintiffs do not argue that their claims against the South Carolina Bars are non-arbitrable. Rather, they sidestep the dispositive fact that Plaintiffs’ claims are squarely within those broad and mandatory ADR provisions by arguing that by moving to dismiss this action based on mandatory arbitration and lack of jurisdiction, the South Carolina Bars waived their right to arbitrate. The argument is absurd on its face. Plaintiffs contend that the mere fact that the South Carolina Bars have put in a limited appearance in this action seeking dismissal for lack of jurisdiction and mandatory arbitration (Opp. Br. at 9-10), and that they reasonably requested that the New York JAMS administrator hold the NY JAMS Arbitration in abeyance until this Court and the South Carolina state court determine the threshold jurisdictional issues respectively before them (id.), constitutes a waiver of the right to arbitrate. None of Plaintiffs’ authorities stands for that proposition. Rather, Plaintiffs’ cases stand for the exact opposite: “A defendant who submits an answer, or submits a pre-answer motion to dismiss the action, does not waive arbitration, especially if the arbitrability of the controversy is asserted as a ground to dismiss the action” (Willer v Kleinman, 114 AD3d 850, 852 [2d Dept 2014] [emphasis added];? Flynn v Labor Ready, Inc., 6 AD3d 492, 493 [2d Dept 2004] [Contrary to the plaintiffs’ contention, Labor Ready did not waive its right to compel arbitration by serving a ? In Willer, the Court ultimately determined that the defendant did waive his right to arbitrate where there was no written agreement to arbitrate, the defendant asserted counterclaims and sought and obtained discovery in the state court action, and neither party took steps to proceed to arbitration prior to the motion, none of which applies here. 8 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 motion to dismiss prior to its answer, as a defendant is entitled to have the sufficiency of a complaint tested before a duty to seek arbitration arises”]).> The mere participation in litigation, without more, does not point to “an unequivocal intention to waive arbitration rights” (Lodal, Inc. v Home Ins. Co., 309 AD2d 634, 634-35 [1st Dept 2003] [rejecting petitioner-insured’s argument that insurer’s participation in related state court litigation constituted waiver, where “it was petitioner that commenced the [litigation]; the insurer did not choose the ‘litigation’ path.”] [emphasis in original]; see also NBC Universal Media, LLC v Strauser, 190 AD3d 461, 461 [1st Dept 2021] [defendant’s limited participation in related out-of-state litigation did not constitute waiver of arbitration]; Singer v Seavey, 83 AD3d 481, 482 [1st Dept 2011] [Defendants did not waive their right to arbitrate by moving to dismiss the complaint and appealing from the partial denial of the motion’”]). Plaintiffs do not, and cannot, dispute that: e Plaintiffs, as members, are signatories to the Operating Agreements for 587 King and 23 Ann (Asch Affirm. Exs. B and D [NYSCEF 104 and 106]); The Operating Agreements include broad-form mandatory mediation and arbitration clauses (id. [Operating Agreements at § 17.15]; If mediation fails, the parties must submit any “conflict, controversy, difference, or claim between or among the Company and its Members arising out of, relating to or in connection with this Agreement” to arbitration in accordance with the “South Carolina Uniform Arbitration Act, > The balance of Plaintiffs’ cases are inapposite as they each concerned defendants who willingly participated in the state court action through the pleadings, preliminary conference, and discovery stages of the litigation before raising, for the first time, the issue of arbitrability in a post-joinder motion to compel arbitration (Hyde v Jewish Home Lifecare, 149 AD3d 674, 674-75 [1st Dept 2017]) or motion for summary judgment (Dembitzer v Chera, 305 AD2d 531 [2d Dept 2003]). 3 9 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 Title 15, Chapter 48 of the Code of Laws of South Carolina” which arbitration “shall be undertaken in Charleston, South Carolina.” (id. at § 17.17); All Plaintiffs’ claims against the South Carolina Bars fall under the broad arbitration clause in the Operating Agreements; Plaintiffs followed none of the dispute resolution procedures clearly dictated by the Operating Agreements; and On February 13, 2024, the South Carolina Bars commenced a state court action in Charleston, South Carolina to enforce the terms of the Operating Agreements and require Plaintiffs to mediate and arbitrate their dispute in the proper forum and venue (i.e. Charleston, South Carolina) (Asch Affirm. Exs. F and G [NYSCEF 108 and 109]). Plaintiffs conveniently gloss over the South Carolina Bars’ earliest efforts to notify them of the mandatory mediation and arbitration provisions in the Operating Agreements, in response to their improper inclusion of the South Carolina Bars in the NY JAMS Arbitration proceeding (see NYSCEF 37 [Letter to M. Leon, dated January 22, 2024, demanding that Plaintiffs withdraw the NY JAMS Arbitration as against the South Carolina Bars]). Likewise, Plaintiffs misleadingly ignore the fact that from the very start of this lawsuit, the South Carolina Bars consistently have maintained that Plaintiffs’ grievances properly belong in mediation and arbitration in Charleston, South Carolina, not in New York (see NYSCEF 36 [Mahler Affirmation in opposition to TRO, dated January 26, 2024, at § 3]; NYSCEF 71-77 [South Carolina Bars’ opposition to injunction application, dated February 1, 2024]). 10 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 In short, there is no way to construe the South Carolina Bars’ limited participation in this action as a waiver of their right to arbitrate. Unlike Plaintiffs—who run roughshod over the South Carolina Bars’ due process rights, contractual rights, as well as basic civil procedure—the South Carolina Bars have done nothing but insist on their right to mediate and arbitrate this dispute in the correct forum and in the correct venue. IL. THE ARBITRABLE CLAIMS AGAINST THE SOUTH CAROLINA BARS ARE NOT “INEXTRICABLY INTERTWINED” WITH THE NON-ARBITRABLE CLAIMS AGAINST OTHER DEFENDANTS. Unable to avoid the valid and binding agreement to arbitrate, Plaintiffs contend that the arbitrable claims against the South Carolina Bars should nevertheless be heard in this New York State Court judicial proceeding because the claims are “inextricably intertwined” with the non- arbitrable claims against other defendants named in this action. Plaintiffs already made, and lost, this exact argument before this Court in the related CPLR 7503 proceeding in their attempt to bootstrap in all arbitrable and non-arbitrable claims against all defendants into the NY JAMS Arbitration (see Mahler Reply Affirm. Ex. K; MNM2 Management Inc, et al. v Kay, et al., Index No. 650780/2024 [Rosado, J.], NYSCEF 53 [Decision and Order, dated March 11, 2024, granting permanent stay of arbitration as to ten individual and corporate arbitration-respondents]) (“CPLR 7503 Decision”). Plaintiffs nevertheless repeat the same argument here, this time, to bootstrap all arbitrable and non-arbitrable claims against all defendants into this action. Plaintiffs’ argument necessarily fails for the same reasons. As this Court previously held, Plaintiffs’ argument that, “all facts, legal standards, legal issues, and parties are the same or substantially the same” and “[t]he only differentiating factors are the names and locations of the entities that Banchik and Asch created” (Opp Br. at 11), is entirely unsupported (see Mahler Reply Affirm Ex. K [CPLR 7503 Decision at fn 2] [“For the foregoing reasons, Respondents [Kay/Cohen] argument that their claims against the Petitioners 5 11 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 must be arbitrated because they are inextricably linked with claims subject to arbitration is similarly unsupported.”]). Plaintiffs fail to plead, let alone demonstrate, that the parties are “the same or substantially the same” with the only difference being the “names and locations of the entities that Banchik and Asch created” (Opp. Br. at 11). The South Carolina Bars are limited liability companies formed under the laws of South Carolina (Asch Affirm. § 7-10; Exs. A-D) (unlike the other corporate defendants). The South Carolina Bars have individual Operating Agreements that govern the rights and obligations of its members (Asch Affirm. Exs. B, D). The membership matrixes are unique to each of the South Carolina Bars, as Plaintiffs acknowledge (see Kay Aff. {| 23-26 [identifying 23 members of 23 Ann and 18 members of 587 King]; Cohen Aff. {J 23-26 [same]). The South Carolina Bars each operate a different bar/restaurant in South Carolina (see Kay Aff. 49 18, 20; Cohen Aff. $¥ 18, 20). Furthermore, as evidenced by: (1) the jurisdictional challenges asserted by the South Carolina Bars here (see Point III, infra) that the New York-based defendants do not share, (2) the fact that some of the defendants have agreements to arbitrate, while others do not (see CPLR 7503 Decision); and (3) that the nature of Plaintiffs’ claims against the South Carolina and New York Bar Defendants (challenging those entities’ 2023 and 2024 valuation of shares) have nothing to do with Plaintiffs’ claims against the real estate-based New York and Chicago defendants, nor the management defendants (largely challenging management fees), the legal issues concerning the parties are obviously different as between the different defendants. The Court should reject the unsubstantiated contention that the arbitrable claims against the South Carolina Bars are “inextricably intertwined” with non-arbitrable claims against other defendants, such that all claims against all parties should be resolved in this litigation. The 12 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 “inextricably intertwined” doctrine is not intended to allow Plaintiffs to piggyback off the non- arbitrable claims against other defendants to drag the South Carolina Bars into this judicial proceeding.* Even pretending Plaintiffs are correct that the arbitrable and non-arbitrable claims are “inextricably intertwined,” the proper course is not to force South Carolina Bars to litigate these claims in a foreign state court that also lacks personal jurisdiction over them, but to stay the state court litigation pending the outcome of the arbitration (Cohen v Ark Asset Holdings, Inc., 268 AD2d 285, 285-86 [1st Dept 2000] [“Where arbitrable and nonarbitrable claims are inextricably interwoven, the proper course is to stay judicial proceedings pending completion of the arbitration, particularly where, as here, the determination of issues in arbitration may well dispose of nonarbitrable matters”); Brown v V & R Adv., Inc., 112 AD2d 856, 861-62 [1st Dept 1985], aff'd, 67 NY2d 772 [1986] [“It is true that some of the parties are not subject to the arbitration clause, but the need for bifurcated litigation is not a bar to enforcement of an arbitration agreement” citing Dean Witter Reynolds v Byrd, 470 U.S. 213 [1985]; Lake Harbor Advisors, LLC v Settlement Services Arbitration and Mediation, Inc., 175 AD3d 479, 480 [2d Dept 2019] [reversible error to deny motion to compel arbitration, holding that “where arbitrable and nonarbitrable claims are inextricably interwoven, the proper course is to stay judicial proceedings pending completion of the arbitration”]; RAD Ventures Corp. v Gotthilf, 6 AD3d 415, 416 [2d Dept 2004] [reversible error to deny motion to compel arbitration] [“the court should have granted the defendants’ 4 Plaintiffs’ cited authorities are inapposite as they concerned mixed arbitrable and non-arbitrable claims between the same or substantially similar parties, and concerned the same alleged conduct and legal issues already being litigated in the state court action (see ALP Inc v Moskowitz 204 AD 3d 454, 456 [2022]; Brennan v AG Becker Inc, 127 AD 2d 951 [3d Dept 1987]; 277 E 7" Street Condominium v 277 E 7" Street, 2021 N.Y. Slip Op. 30825 [Sup Ct, New York County 2021]). 7 13 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 separate motions to compel the plaintiff to arbitrate its claims against [corporate defendant] and should have stayed prosecution of this action pending the completion of the arbitration’”]). Til. PLAINTIFFS OFFER NO EVIDENCE SUBSTANTIATING THE COURT’S EXERCISE OF PERSONAL JURISDICTION OVER THE SOUTH CAROLINA BARS. Plaintiffs fail to demonstrate general or specific personal jurisdiction over the South Carolina Bars. “To successfully oppose a motion for lack of personal jurisdiction brought under CPLR 3211 (a) (8), ‘the plaintiff must come forward with sufficient evidence, through affidavits and relevant documents, to prove the existence of jurisdiction a (Cedar Capital Mgt. Group Inc. v Lillie, 79 Misc 3d 1238(A) [Sup Ct, New York County 2023] quoting State of New York v Vayu, Inc., 39 NY3d 330, 339 [2023]). A. No General Jurisdiction Under CPLR 301 There is no general jurisdiction over the South Carolina Bars under CPLR 301 because the South Carolina Bars are limited liability companies formed under the laws of South Carolina with their sole places of business in Charleston, South Carolina (Asch Affirm. §] 7-10; 13-19) (see Aybar v Aybar, 37 NY3d 274, 289 [2021] [“With respect to a corporation, the place of incorporation and principal place of business are paradigm . . bases for general jurisdiction” because these are places where a corporation “is fairly regarded as at home” citing Daimler AG v Bauman, 571 U.S. 117, 137 [2014]; see, e.g., Brocco v E. Metal Recycling Term. LLC, 211 AD3d 628, 628 [lst Dept 2022] [“Supreme Court correctly dismissed the complaint against EMR for lack of personal jurisdiction” where defendant was a Delaware Corporation with its principal place of business in New Jersey]; Lowy v Chalkable, LLC, 186 AD3d 590, 591-92 [2d Dept 2020] [affirming motion to dismiss for lack of personal jurisdiction where both defendant entities were formed under the laws of Delaware and have their principal place of business in California]; Renren, Inc. v XXX, 67 Misc 3d 1219(A) [Sup Ct, New York County 2020], aff’d sub nom. Matter 14 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 of Renren, Inc., 192 AD3d 539 [1st Dept 2021] [holding that defendants are not subject to general personal jurisdiction in New York where “[n]one of the defendants are incorporated in New York or have their principal places of business in New York”]). Nor can the South Carolina Bars be deemed “at home” in New York under the extremely limited “exceptional case” exception. New York courts have found that even corporate defendants who indisputably engage in far more “substantial, continuous, and systematic course of business” in New York than the South Carolina Bars (to wit, none) are nevertheless not deemed “at home” here for the purposes of general personal jurisdiction (see e.g., Aybar v Aybar, 169 AD3d 137, 139 [2d Dept 2019], affd, 37 NY3d 274 [2021] [automobile manufacturer (Ford Motor Company) and tire manufacturer (Goodyear Tire & Rubber Co.) not deemed “at home” in New York under CPLR 301 where neither company is incorporated in New York or has a principal place of business in New York, where Ford’s economic contacts with New York were not so substantial as compared to its contacts elsewhere in the country, and Goodyear did not specifically direct advertising of the subject tire at New York residents]). B. No Specific Jurisdiction Under CPLR 302(a)(1). Nor is there is specific jurisdiction over the South Carolina Bars under CPLR 302 (a) (1). Plaintiffs argue that the South Carolina Bars “transact business” in New York, purportedly through their “alter ego” defendants Asch and Banchik. However, bare allegations of “alter ego” without factual support are insufficient to establish alter ego jurisdiction (Cedar Capital Mgt. Group Inc. v Lillie, 79 Misc 3d 1238(A) [Sup Ct, New York County 2023] [That Kent is alleged to be an officer, director, manager, shareholder, member, managing member or principal in CAT and every other corporate defendant is insufficient proof of complete domination.... Chehab’s affidavit and the exhibits annexed thereto fail to offer sufficient factual support to establish alter ego jurisdiction]; see also Bank of Am. v. Apollo Enter. Solutions, LLC, 2010 WL 4323273, *5 9 15 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 [SDNY, Nov. 1, 2010] [no personal jurisdiction over out-of-state defendant where conclusory allegations of alter ego status were made without factual support]). Plaintiffs fail to specify actions undertaken by defendants Asch or Banchik on behalf of the South Carolina Bars that would constitute “transacting business” in New York (the first prong of CPLR 302(a)(1)), or how those acts have a nexus to the claims against the South Carolina Bars (the second prong of CPLR 302(a)(1)) (see Black v Phoenix Cayman Ltd., 224 AD3d 494, 494-95 [1st Dept 2024] [“a New York court may exercise personal jurisdiction over a nondomiciliary if he has purposefully transacted business within the state, and there is a ‘substantial relationship between the transaction and the claim asserted oom | quoting Paterno v. Laser Spine Inst., 24 N.Y.3d 370, 376 [2014]). Plaintiffs claim that a common marketing umbrella is a sufficient “nexus” (see Kay Aff. J 22, Ex 7). New York Courts reject such flimsy assertions, even where (unlike here) there exists a formal parent-subsidiary relationship, absent evidence of complete dominion by the New York affiliate (see, e.g, Wolberg v IAIN. Am., Inc., 161 AD3d 468, 468-69 [Ist Dept 2018] [Defendants established that LAI North America, Inc. (IAINA), which does business in the State of New York, is not a mere department of IAI, which operates primarily in Israel, and therefore that jurisdiction over IAINA is not jurisdiction over IAI” where “IAINA showed that it observed corporate formalities” and further rejecting “Plaintiff claimed that IAI had control over the approval of IAINA’s annual budget during the 11 years he worked at IAINA. However, this does not suffice.”]). Indeed, Plaintiffs’ cited authority, Breakaway Courier Corp. v Berkshire Hathaway, Inc., 192 AD3d 501, 502 [1st Dept 2021], perfectly encapsulates this rejection by New York courts of personal jurisdiction via affiliate absent evidence of complete dominion. In Berkshire, the First 10 16 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 Department held, “Plaintiffs failed to establish a basis for long-arm jurisdiction on the ground of BHI’s purported dominion and control over certain subsidiaries” (id.). While the appellate court considered the “overlap of certain directors or other officers of BHI and its subsidiaries” as “but one factor in the analysis of whether these subsidiaries should, as plaintiffs contend, be considered a ‘mere department’ of BHI,” the court found that plaintiffs failed to submit evidence that the New York-based BHI “interfered in the selection and assignment of subsidiaries’ personnel, exercised control over the subsidiaries’ marketing and operational policies or that the subsidiaries were financially dependent on BHI” (id.). Furthermore, the appellate court expressly held that “[t]he use of the ‘Berkshire Hathaway’ name in proposals, even if BHI knowingly allowed the use of its name, logo, and the like in such materials, is insufficient to show jurisdiction” (id.). Finally, plaintiffs’ conclusory allegation that the subsidiary “is a ‘pure captive’ owned by BHI” was rejected where “their sole citation in support is to their own pleadings” (id.). Here, too, Plaintiffs’ unsupported allegation that defendant MNM2 “manages the South Carolina Bar Defendants,” generally handling “the marketing, accounting, and all operations of the conglomerate entities (bars and real estate)” (Opp. Br. at 4) is insufficient to evidence complete “dominion and control” over the South Carolina Bars to establish long-arm jurisdiction in New York. The only “evidence” Plaintiffs submit are screenshots of “Eat, Drink & Be Merry” email addresses for defendants Asch and Banchik, and website and bar branding that lists the names of the affiliated bars (Kay Aff. Exs. 1-5, 7; Cohen Aff. Exs. 1-5, 7). This is altogether too tenuous to hale the South Carolina-based Bars into New York. C. No Due Process. Finally, it would run afoul of well-established due process considerations to drag the South Carolina Bars into the New York forum. Plaintiffs argue that, through defendants Banchik and Asch, “the established connection with New York is seemingly infinite and it is only reasonable 11 17 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 and practical for this Court to hear and decide upon the issues that are occurring across both the New York and South Carolina entities” (Opp. Br. at 9). But, Plaintiffs fail to cite any authority that stands for the proposition that minimum contacts can be established through others activities in and with New York (see Walden v Fiore, 571 US 277, 284 [2014] [“We have consistently rejected attempts to satisfy the defendant-focused ‘minimum contacts’ inquiry by demonstrating contacts between the plaintiff (or third parties) and the forum State.”’]). Plaintiffs do not contest that the South Carolina Bars operate bar/restaurants that do not conduct any business in New York, operate offices in New York, or have employees in New York. It would offend “traditional notions of fair play and substantial justice” to force the South Carolina Bars to litigate in New York (see Williams v Beemiller, Inc., 33 NY3d 523, 528 [2019] citing International Shoe Co. v. Washington, 326 US 310, 316 [1945]; see also State of Qatar v First Abu Dhabi Bank PJSC, 2022 N.Y. Slip Op. 31860[U], 4-5 [Sup Ct, NY County 2022] [holding defendant’s “extremely limited contacts with New York are too attenuated to satisfy the due process requirements” where the defendant “does not conduct business in New York, operate offices in New York, or have any employees in New York.”]). CONCLUSION For the foregoing reasons, and for the reasons set forth in the accompanying submission by the New York-based Defendants, this Court should dismiss the Amended Complaint in its entirety as to the South Carolina Bars. 12 18 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 Dated: New York, New York April 24, 2024 Respectfully Submitted, FARRELL FRITZ, P.C. By: Z/ Peter A. Mahler Peter A. Mahler Becky (Hyun Jeong) Baek 622 Third Avenue, Suite 32700 New York, New York 10017 Tel: (212) 687-1230 Attorneys for 587 King Street Restaurant, LLC and 23 Ann Street Restaurant LLC 13 19 of 20 INDEX NO. 650380/2024 NYSCEF DOC. NO. 192 RECEIVED NYSCEF: 04/24/2024 CERTIFICATION OF COUNSEL The foregoing Memorandum of Law was prepared by computer using Microsoft Word. The total number of words in the document, excluding the caption, Table of Contents, Table of Authorities, and signature block is 3,808. This certification complies with Rule 202.8-b of the Uniform Civil Rules for the Supreme Court and the County Court. By: Z/ Peter A. Mahler Peter A. Mahler 14 FF\14523954.4 20 of 20