Starke v. Krupica

Background

Charles H. Starke filed a fraud action against Robert Brian Krupica. Starke alleged that, in 2017, Krupica told him he had started a business in Thailand called Lavish Global Imports and presented it as a lucrative investment opportunity. Krupica allegedly promised Starke a 50% ownership interest and a position as a company director if Starke invested.

Starke alleged that he wired money from his New York bank account to Krupica, including $125,000 as an initial investment and another $50,000 for additional startup capital. Starke also allegedly loaned Krupica $20,000 to help him purchase a house. During a three-day visit to New York in November 2017, Krupica allegedly discussed the business with Starke and reviewed related documents. Starke alleged that representations made during that visit led him to wire another $50,000 to Krupica.

After receiving no return on his investments, Starke hired an attorney in 2019 to investigate. He alleged that he learned in early 2021 that there were no sales receipts, inventory, or proof of any investment in the business. He asserted claims for fraud, misrepresentation, and money loaned.

Motion and Legal Standard

Krupica moved to dismiss the first amended complaint for lack of personal jurisdiction—the court’s authority to exercise power over a defendant. Because the court was deciding the motion based on the pleadings and affidavits rather than holding a full evidentiary hearing, Starke needed to make only an initial showing that jurisdiction existed. The court accepted Starke’s factual allegations as true and drew reasonable inferences in his favor for purposes of the motion.

The court analyzed personal jurisdiction under New York’s long-arm statute and the Due Process Clause of the United States Constitution. New York’s statute permits jurisdiction over a nonresident who transacts business in New York when the claim arises from that business activity. The constitutional analysis asks whether the defendant had sufficient purposeful contacts with New York and whether exercising jurisdiction would be reasonable and fair.

Analysis

The court held that Starke sufficiently showed that Krupica transacted business in New York. Starke alleged that Krupica solicited investments from a New York resident, received money wired from New York, and engaged in business meetings concerning the venture while physically present in New York. The court found that these allegations showed purposeful activity in New York and that all of Starke’s claims arose from that activity.

The court rejected Krupica’s argument that his November 2017 visit was only a family trip during which no business was discussed. At the motion-to-dismiss stage, the court treated the nature of the trip as a factual question and credited Starke’s account. The court also explained that a single purposeful business transaction can support jurisdiction even when a defendant does not enter New York.

The court separately concluded that exercising jurisdiction satisfied due process. According to the allegations, Krupica targeted a New York resident in an ongoing fraud scheme, received multiple wire transfers from New York, and made alleged misrepresentations while in New York. The court found these facts sufficient to show the required minimum contacts and purposeful targeting, and found no indication that jurisdiction would be unreasonable under the circumstances.

Disposition

The court denied Krupica’s September 16 motion to dismiss the first amended complaint for lack of personal jurisdiction. The opinion did not decide whether Starke ultimately proved his fraud, misrepresentation, or money-loaned claims.