Ecogensus LLC v. Pacella
- Vernon Broderick
- 1:20-cv-03629
- U.S. District Court · Southern District of New York
- 14
In Ecogensus v. Pacella, Judge Broderick granted defendants’ motions to dismiss because plaintiffs did not establish personal jurisdiction in New York.
The plaintiffs’ claims against Matthew Pacella, Michael M. Melnik, Jay Edelson, Benjamin Richman, and Edelson PC were dismissed on the stated basis that the court lacked personal jurisdiction; the action was terminated.
What happened
In Ecogensus LLC v. Pacella, the plaintiffs alleged that former counsel Matthew Pacella and others pressured and threatened Bjørnulf Østvik, obtained money from him, and participated in a scheme involving his companies. The claims included federal Racketeer Influenced and Corrupt Organizations Act claims and other causes of action.
The court did not decide whether those claims were legally valid. Instead, it held that the plaintiffs had not shown that New York courts had authority over the defendants. The alleged New York conduct did not qualify as doing business in New York in a way connected to the claims, and the conduct that allegedly caused the payment occurred after the New York meeting.
Judge Vernon S. Broderick granted the defendants’ motions to dismiss based on lack of personal jurisdiction. He directed the Clerk of Court to close the open motions and terminate the action.
The detailed version
- Ecogensus LLC v. Pacella · No. 1:20-cv-03629
- Vernon Broderick
- Mar. 24, 2022
Background
The plaintiffs were Ecogensus LLC, Vikingpeak Energy Fuels LLC, Vikingpeak Management Company, LLC, Vikingpeak Capital Group LLC, and Bjørnulf Østvik. The defendants were Matthew Pacella, Michael M. Melnik, Jay Edelson, Benjamin Richman, and Edelson PC. The plaintiffs alleged that Pacella, a former counsel for the companies, and the other defendants participated in a scheme to obtain control of the companies through pressure and threats. The amended complaint asserted several causes of action, chiefly claims under the federal Racketeer Influenced and Corrupt Organizations Act.
According to the allegations, Pacella sought additional compensation from Østvik and later threatened to disclose confidential information and threaten Østvik’s safety unless Østvik paid him. The plaintiffs alleged that Østvik eventually paid Pacella $228,000 through a backdated personal legal-services bill. One meeting involving Pacella and Østvik occurred in New York City, but the alleged payment and conduct that led to it occurred after the trip to New York.
Personal Jurisdiction
The defendants moved to dismiss the First Amended Complaint. The court addressed personal jurisdiction—the court’s legal authority over a particular defendant—before reaching the merits of the claims. The plaintiffs argued that New York’s long-arm statute allowed the court to exercise specific jurisdiction over Pacella because of his New York contacts, and that jurisdiction over Pacella could support jurisdiction over the other defendants through agency, conspiracy, or a federal RICO theory.
The court rejected the plaintiffs’ argument under New York Civil Practice Law and Rules § 302(a)(1), which can allow jurisdiction over a defendant who purposefully conducts business in New York when the claim arises from that business. The court held that the First Amended Complaint did not allege that Pacella completed a relevant business transaction in New York. The New York threats were not alleged to be part of a jurisdictionally relevant business transaction, and the conduct that allegedly led Østvik to transfer money occurred after the New York meeting.
The court also rejected jurisdiction under § 302(a)(2), which can apply when a defendant commits a tort while physically present in New York. Although the complaint alleged that Pacella physically pushed Østvik during the New York dinner, it did not assert battery as a claim, and the other asserted claims did not rest on tortious conduct occurring in New York. The court further stated that New York does not recognize extortion as a tort or as a private cause of action. In addition, the plaintiffs did not show that their claims arose from Pacella’s New York contacts.
Disposition
The court granted the defendants’ motions to dismiss based on lack of personal jurisdiction. It directed the Clerk of Court to close all open motions and terminate the action. The court did not reach the merits of the plaintiffs’ substantive claims.
Read the full 14-page opinion on CourtListener, the free public archive maintained by the Free Law Project.