NuMSP, LLC v. Etienne

Background

NuMSP, LLC sued David St. Etienne, Kenneth A. Raymond, Dulymus “Deuce” McAllister, and ProTek Solutions, Inc. NuMSP alleged claims including breach of contract, unfair competition, and misappropriation of trade secrets. The dispute arose after NuMSP purchased the assets of Ultimate Technical Services, Inc., an information-technology consulting business founded by St. Etienne.

The Asset Purchase and Sale Agreement required arbitration of disputes arising from the agreement and selected New York for court proceedings related to compelling arbitration or obtaining interim relief while arbitration was pending. A separate Non-Compete, Nonsolicitation and Assignment Agreement also contained New York forum-selection and choice-of-law provisions. NuMSP alleged that St. Etienne and Raymond violated their agreements by competing with NuMSP, soliciting its customers, and misappropriating confidential customer information, and that they acted with McAllister and ProTek.

Motions and jurisdiction

NuMSP sought a temporary restraining order and preliminary injunction. St. Etienne moved to dismiss on several grounds or, alternatively, to compel arbitration and stay the case. Raymond moved to dismiss. McAllister and ProTek jointly moved to dismiss.

The court first addressed personal jurisdiction, meaning its authority over a particular defendant. The court held that St. Etienne had consented to personal jurisdiction in New York through the forum-selection provisions in the agreements he signed. It concluded, however, that the Asset Purchase and Sale Agreement was the controlling agreement, that the Non-Compete Agreement was incorporated into it, and that the Asset Purchase and Sale Agreement’s mandatory arbitration provision governed the dispute.

The court also held that Raymond, McAllister, and ProTek were not bound by St. Etienne’s forum-selection clause. They were not parties to the Asset Purchase and Sale Agreement or the Non-Compete Agreement, and the court found that NuMSP had not shown they were closely related to St. Etienne or that it was foreseeable they would be bound by his agreement. The court further found that NuMSP had not shown that New York’s long-arm statute supplied jurisdiction over them. Because jurisdiction was lacking under New York law, the court did not address federal due-process requirements.

Rulings

The court denied St. Etienne’s motion to dismiss but granted his motion to compel arbitration under the Federal Arbitration Act. It held that NuMSP’s claims against him fell within the Asset Purchase and Sale Agreement’s arbitration clause and stayed the action as to St. Etienne pending arbitration. The court also concluded that the agreement did not allow NuMSP to seek interim relief from the court before an arbitration was actually pending.

The court granted Raymond’s, McAllister’s, and ProTek’s motions to dismiss for lack of personal jurisdiction and directed that they be dismissed from the case. It denied NuMSP’s motion for a temporary restraining order and preliminary injunction. Because of the arbitration ruling and the jurisdictional dismissals, the court did not address the defendants’ alternative grounds for dismissal. Judge Ronnie Abrams signed the order.