| American BankNote Corp. v Daniele |
| 2007 NY Slip Op 08741 [45 AD3d 338] |
| November 13, 2007 |
| Appellate Division, First Department |
| American BankNote Corporation et al.,Respondents, v Hernan Daniel Daniele et al., Appellants. |
—[*1] Andrews Kurth LLP, New York City (Lynne M. Fischman Uniman of counsel), forrespondents.
Order, Supreme Court, New York County (Richard F. Braun, J.), entered March 2, 2006,which, to the extent appealed from, denied defendants' motion to dismiss on grounds of forumnon conveniens, granted plaintiffs leave to take jurisdictional discovery and ordered anevidentiary hearing on the jurisdictional issue, affirmed, with costs. Orders, same court andJustice, entered August 16 and September 12, 2006, which granted plaintiffs' respective motionsfor an extension of time to serve the summons and complaint and for an order of attachment,affirmed, with costs.
The motion court properly denied defendants' motion to dismiss for forum non conveniensafter considering the relevant factors (see Islamic Republic of Iran v Pahlavi, 62 NY2d474, 478-479 [1984], cert denied 469 US 1108 [1985]; Bank Hapoalim [Switzerland] Ltd. v BancaIntesa S.p.A., 26 AD3d 286, 287 [2006]). Factors militating in favor of permittingplaintiffs to proceed in New York include that the relevant documents are in English and locatedin New York or New Jersey, key witnesses who conducted the forensic investigation that broughtto light defendants' alleged wrongdoing reside in the New York metropolitan area, and otherwitnesses who will testify concerning defendants' impropriety are located in the United States,France, and India, making an Argentine forum no more convenient for these witnesses than NewYork. Further, New York is, plaintiffs contend, where defendant Daniele met with plaintiffs on aregular basis, where, during such meetings, he made false representations and false assurancesregarding the status of Transtex's operations, and where defendants' bank accounts, allegedly acentral part of the claimed fraudulent scheme and the means to siphon money stolen fromplaintiffs, are located. Given these allegations, defendants' claims that all relevant witnesses arein Argentina and that all relevant documents, also in Argentina, are in Spanish and would have tobe translated if litigated in New York are insufficient to "meet their heavy burden ofdemonstrating that plaintiffs' selection of New York as the forum for the within litigation is notin the interest of substantial justice" (Anagnostou v Stifel, 204 AD2d 61, 61 [1994]; see also Mionis v Bank Julius Baer & Co.,Ltd., 9 AD3d 280, 282 [2004]). That the parties in this action are nonresidents, undulyrelied upon by the dissent, is one, but only one, factor that may show inconvenience (BankHapoalim, 26 AD3d at 287). "[A] defendant's 'heavy burden' remains despite the plaintiff'sstatus as a nonresident" (id. at 287, quoting Mionis at 282, and citingAnagnostou). Defendants' assertion that they would experience significant hardshipdefending this action is mere speculation, given, inter alia, affidavits and documentation allegingthat defendants stole more than two million dollars. Contrary to the dissent, in so ruling, wemake no assumptions as to the veracity of either party's claims. Further, "[t]he fact that somedocumentary and testimonial evidence will have to be translated from [Spanish] into Englishdoes not render it more difficult for defendants to proceed in New York, and the courts of thisstate are fully capable of applying [Argentine] law, should such law be found governing in thiscase" (Mionis, 9 AD3d at 282; see also Intertec Contr. A/S v Turner Steiner Intl., S.A., 6 AD3d 1,6 [2004]).
Plaintiffs' pleadings, affidavits and accompanying documentation made a "sufficient start" towarrant further discovery on the issue of personal jurisdiction (see Peterson v SpartanIndus., 33 NY2d 463, 467 [1974]; Edelman v Taittinger, S.A., 298 AD2d 301[2002]). The allegation that defendants used their New York bank account to further theirmisdeeds may be sufficient to establish long-arm jurisdiction over defendants (see IndosuezIntl. Fin. v National Reserve Bank, 98 NY2d 238, 247 [2002]; Banco Ambrosiano vArtoc Bank & Trust, 62 NY2d 65, 72-73 [1984]; Banco Nacional Ultramarino vChan, 169 Misc 2d 182, 188-189 [1996], affd 240 AD2d 253 [1997]). In addition,plaintiffs alleged that defendant Daniele traveled to New York to conduct business for plaintiffs,and that he contracted to provide goods for clients in New York. Defendants' denial of thesejurisdictional allegations warranted the court's holding in abeyance the motion to dismiss for lackof jurisdiction pending a hearing (CPLR 2218; see e.g. Matter of Preferred Mut. Ins. Co. [FuGuan Chan], 267 AD2d 181 [1999]).
The court appropriately exercised its discretion in granting plaintiffs an extension of timepursuant to CPLR 306-b to serve the summons and complaint. Plaintiffs demonstrated goodcause for the extension by showing that they diligently attempted to serve defendants, and that anextension was warranted in the interest of justice (see Leader v Maroney, Ponzini &Spencer, 97 NY2d 95, 105-106 [2001]; Lippett v Education Alliance, 14 AD3d 430 [2005]; Matthews vSt. Vincent's Hosp. & Med. Ctr. of N.Y., 303 AD2d 327 [2003]).
The court properly found plaintiffs had produced sufficient evidentiary facts demonstratingprobable success on the merits to justify an order of attachment (CPLR 6212 [a]; seeConsidar, Inc. v Redi Corp. Establishment, 238 AD2d 111 [1997]; see also Olbi USA vAgapov, 283 AD2d 227 [2001]).
We have considered defendants' other arguments and find them unavailing.Concur—Mazzarelli, J.P., Friedman, Marlow and Malone, JJ.
McGuire, J., dissents in a memorandum as follows: I disagree with the majority's conclusionthat Supreme Court properly denied that aspect of defendants' motion seeking dismissal of thecomplaint on the ground of forum non conveniens. Accordingly, I respectfully dissent.[*2]
Plaintiff American BankNote Corporation (ABN) is aDelaware corporation with its principal place of business in New Jersey. Plaintiff ABN SouthAmerica (ABN SA) is a wholly owned subsidiary of ABN with its principal place of business inNew Jersey. Plaintiff Transtex SA (Transtex), a wholly owned subsidiary of ABN, is anArgentine company operating entirely in Argentina.
Plaintiffs commenced this action for breach of fiduciary duty, fraud and misappropriationagainst defendant Hernan Daniel Daniele, a resident of Argentina and the former president andCEO of Transtex, and his wife, defendant Diana Virginia Fernandez Rosas, for "aiding andabetting" her husband's alleged tortious conduct. According to the complaint, on or aboutNovember 1, 2005, plaintiffs discovered that Daniele, with the help of Rosas and othercoconspirators, undertook a course of conduct designed to steal plaintiffs' business as well asfunds owed to plaintiffs. Specifically, plaintiffs allege, among other things, that defendantscreated two corporations that compete with plaintiffs' businesses, and that defendantsmisappropriated, converted or otherwise stole funds belonging to plaintiffs. On the same datethat they commenced this action, plaintiffs moved, by order to show cause, for an order ofattachment of defendants' property in New York and obtained an order temporarily restrainingseveral bank accounts defendants maintained at Citibank and HSBC.
Defendants cross-moved to dismiss the complaint on the grounds of lack of personaljurisdiction—asserting there was no basis for personal jurisdiction and improperservice—and forum non conveniens. Daniele submitted an affidavit in which he averredthat he had been in New York only two times, on business trips in December 1999 and July2005, and that those trips had no connection with plaintiffs' causes of action. Rosas asserted thatshe had never been in New York. In opposition, plaintiffs argued that a basis for personaljurisdiction exists because, according to plaintiffs, defendants used New York bank accounts,including accounts at Citibank and HSBC, to deposit significant amounts of the money theyallegedly stole from plaintiffs. With regard to the forum non conveniens issue, plaintiffs relied onthe affidavit of Patrick Gentile, executive vice-president and chief financial officer of ABN, whoaverred that Daniele regularly traveled to New York to conduct business and was in regularcontact with ABN personnel in New York and New Jersey. Gentile also asserted that manywitnesses involved in the investigation that brought to light defendants' alleged misdeeds residein the New York metropolitan area.
Supreme Court found that plaintiffs had made sufficient allegations regarding defendants'contacts with New York to warrant a hearing on the issue of whether a basis for exercisingpersonal jurisdiction over defendants existed and ordered jurisdictional discovery to proceed.Thus, the court held in abeyance the first aspect of defendants' cross motion to dismiss pendingthe hearing. However, Supreme Court concluded that defendants failed to demonstrate that theaction should be dismissed on the ground of forum non conveniens, and denied the second aspectof defendants' cross motion.
In my view, even assuming that personal jurisdiction over defendants was obtained,dismissal is warranted because New York is not a convenient forum for this action. "When thecourt finds that in the interest of substantial justice the action should be heard in another forum,the court, on the motion of any party, may stay or dismiss the action in whole or in part on anyconditions that may be just" (CPLR 327 [a]). "The doctrine [of forum non conveniens] rests, inlarge part, on considerations of public policy and . . . our courts should not be underany compulsion to add to their heavy burdens by accepting jurisdiction of a cause of actionhaving no substantial nexus with New York" (Silver v Great Am. Ins. Co., 29 NY2d 356,361 [1972][*3][internal quotation marks and citation omitted];see Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 478 [1984] ["our courts are notrequired to add to their financial and administrative burdens by entertaining litigation which doesnot have any connection with this State"], cert denied 469 US 1108 [1985]). The factors acourt should consider in evaluating a motion to dismiss on the ground of forum non conveniensinclude: (1) the burden on the New York courts, (2) the potential hardship to the defendant, (3)the unavailability of an alternative forum in which plaintiff may bring suit, (4) the extent towhich the parties to the action are nonresidents, (5) whether the transaction out of which thecause of action arose occurred primarily in a foreign jurisdiction, (6) the location of potentialwitnesses and any relevant documents, and (7) the potential applicability of foreign law (seeIslamic Republic, 62 NY2d at 479-480; Shin-Etsu Chem. Co., Ltd. v ICICI Bank Ltd., 9 AD3d 171,177-178 [2004]; see also Bewers v American Home Prods. Corp., 99 AD2d 949 [1984],affd 64 NY2d 630 [1984]; World Point Trading PTE. v Credito Italiano, 225AD2d 153 [1996]).
Here, the causes of action asserted by plaintiffs do not have a "substantial nexus with NewYork" (Silver, 29 NY2d at 361). This dispute is between three related foreigncorporations and the former CEO of one of those entities who worked in Argentina. The causesof action arise from conduct occurring principally, if not exclusively, in Argentina (seeMillicom Intl. Cellular v Simon, 247 AD2d 223 [1998] [order granting motion to dismiss onforum non conveniens grounds affirmed where, among other things, "the crucial eventsunderlying the action occurred" in foreign country]) and Argentine law will all but certainlyapply (see Satz v McDonnell Douglas Corp., 244 F3d 1279 [11th Cir 2001] ["possibility"that District Court would have to apply Argentine law important factor in considering motion todismiss on grounds of forum non conveniens]; see also Neuter, Ltd. v Citibank, 239AD2d 213 [1997]).[FN1]
None of the parties are residents of New York; ABN is a Delaware corporation with itsprincipal place of business in New Jersey, ABN SA's principal place of business is in NewJersey, Transtex is an Argentine company operating entirely in Argentina, and defendants areboth residents of Argentina (see Blueye Nav. v Den Norske Bank, 239 AD2d 192[1997]). Both of the businesses that plaintiffs contend defendants created to compete withplaintiffs' businesses were incorporated in and have their principal offices in Argentina. The vastmajority (if not all) of the nonparty witnesses do not reside in New York (see Tilleke &Gibbins Intl. v Baker & McKenzie, 302 AD2d 328 [2003]; Union Bancaire Privee vNasser, 300 AD2d 49 [2002]), and plaintiffs fail to identify a single material witness whodoes reside in this State (see Brinson vChrysler Fin., 43 AD3d 846 [2d Dept 2007] [in opposition to [*4]defendants' evidence indicating that numerous witnesses residedoutside of New York State, plaintiff did not identify any nonparty witnesses who resided in NewYork]).
Gentile averred that "many key witnesses, including almost everyone involved in theinvestigation [into defendants' alleged tortious conduct], reside in New York or the metropolitanarea." Although Gentile went on to identify seven such individuals, including himself, he did notindicate which of these witnesses reside in New York and which reside outside New York but inthe metropolitan area. In any event, the presence in New York of one or a small number ofwitnesses would not be sufficient to keep this action in New York, especially since theseindividuals appear to be witnesses not to the alleged improper conduct but to the subsequentinvestigation into the conduct. Thus, the testimony these witnesses may provide regarding theirinvestigation is peripheral compared to evidence regarding the allegedly tortious conduct itself,which occurred principally (if not exclusively) in Argentina (see SMT Shipmanagement &Transp. Ltd. v Maritima Ordaz C.A., 2001 WL 930837, *8, 2001 US Dist LEXIS 11928,*28-32 [SD NY 2001, Lynch, J.], affd sub nom. David J. Joseph Co. v M/V BALTIC, 64Fed Appx 259 [2d Cir 2003]; see also Oil Basins Ltd. v Broken Hill Proprietary Co. Ltd.,613 F Supp 483, 489 [SD NY 1985]). Moreover, although plaintiffs and the majority rely on thepresence in the New York metropolitan area of, as the majority puts it, "key witnesses whoconducted the forensic investigation that brought to light defendants' alleged wrongdoing,"plaintiffs provide no reason to conclude that these investigators could testify on a nonhearsaybasis to anything relevant.
Moreover, a substantial portion of the documents relevant to this action are located inArgentina, Transtex's place of business, and are in Spanish. Defendants, who live approximately5,000 miles away from New York City, would experience substantial hardship if forced to defendthis action (see Mollendo Equip. Co. v Sekisan Trading Co., 56 AD2d 750 [1977],affd 43 NY2d 916 [1978]; Wentzel v Allen Mach., 277 AD2d 446, 447 [2000][order denying motion to dismiss on ground of forum non conveniens reversed and motiongranted where, among other things, defendants would have to travel 3,000 miles to defend NewYork action]).
Gentile's averment that Daniele "regularly travel[ed] to New York to conduct business" isbereft of any supporting detail and unsupported by any other evidence. Moreover, it is undisputedthat Daniele's wife has never been to New York. Of course, that Daniele may have traveled toNew York in the past, regardless of the frequency of such visits, is hardly relevant in ascertainingwhether New York is a convenient forum for the present action.
That defendants maintain bank accounts at Citibank and HSBC is an insufficient basis toaccept jurisdiction over plaintiffs' causes of action. Defendants opened these accounts inArgentine branches of those banks, and defendants assert that they maintain "U.S. dollaraccounts because of financial turmoil in [Argentina] . . . [and] [a]ll deposits intoth[o]se accounts were made by wire transfer initiated from the branch[es] located in Argentina."Daniele averred that on the two occasions he was in New York he did not make any deposits intothe accounts. Plaintiffs' conclusory and uncorroborated claims that defendants deposited intothose accounts funds belonging to plaintiffs, and that Daniele, while in New York, conductedtransactions with respect to those accounts at Citibank and HSBC, i.e., that the accounts werecentral to defendants' alleged tortious conduct, are insufficient to establish that plaintiffs' causesof action have a substantial nexus with New York (Silver, 29 NY2d at 361). That aforeign citizen maintains bank accounts with international banks that have branches or offices inNew York, standing alone, should not be sufficient to guarantee that New York will exercisejurisdiction over a dispute relating in some way to the accounts (see A & M Exports vMeridien Intl. Bank, 207 [*5]AD2d 741 [1994]). Rather, theexistence of such accounts must be considered along with all other relevant circumstancessurrounding the action (see Islamic Republic, 62 NY2d at 479 ["the court, afterconsidering and balancing the various competing (private and public) factors, must determine inthe exercise of its sound discretion whether to retain jurisdiction or not"]).
Although the majority contends, albeit in passing, that I "unduly rel[y]" on the nonresidentstatus of the parties, it acknowledges the relevance of that factor. The majority, however, ignoresor gives virtually no weight to two other relevant factors, that the transactions out of whichplaintiffs' causes of action arose occurred in Argentina, and the applicability of Argentine law(see Islamic Republic, 62 NY2d at 479-480). The majority concludes that it is "merespeculation" that defendants will experience hardship in defending this action in New York"given, inter alia, affidavits and documentation alleging that defendants stole more than twomillion dollars." Apparently, the majority first assumes that defendants stole $2 million fromplaintiffs, and then assumes that defendants possess part or all of those funds and can utilizethem to defend this action. The first assumption rests solely on affidavits from plaintiffs'employees, and ignores defendants' averment that they did not divert funds from plaintiffs. Thesecond assumption rests on nothing, and ignores defendants' averment that they do not have theresources to defend this action in New York. The majority claims that it "make[s] noassumptions as to the veracity of either party's claims." But if that is so, there is no reason for themajority to refer to "affidavits and documentation alleging that defendants stole more than twomillion dollars." In any event, that individual citizens of another nation—let alone onelocated thousands of miles from New York—with virtually no connection to New Yorkwould experience significant hardship defending a lawsuit in New York cannot reasonably bedoubted. Notably, apart from referring to these "affidavits and documentation," the majorityprovides no other reason to doubt that defendants would experience such hardship.[FN2]@FN2<#itl>Yoshida Print. Co. v Aiba (213 AD2d 275 [1995]), cited by Supreme Court,does not support the majority's disposition of this appeal. In Yoshida, this Court affirmedthe denial of the motion of the defendant, a New York resident, to dismiss on the ground offorum non conveniens, stating that "[n]either the fact that plaintiff is a Japanese corporation,whose witnesses may speak Japanese, nor the potential necessity of applying Japanese law,renders New York an inconvenient forum." (Id.) The Court noted that the plaintiffoffered to make the witnesses available at no cost to the defendant and that "[a]ny need totranslate documents into English does not warrant a contrary result." (Id.) Here, however,defendants' cross motion is supported by much more than the applicability of foreign law and theneed for translation of documents and testimony, including the non-New York residence of all ofthe parties and the significant hardship defendants would experience by having to defend thisaction in New York.
At bottom, this matter has "no substantial nexus with New York" (Silver, 29 NY2d at361), and after balancing all of the relevant factors, I believe that this action "would be betteradjudicated elsewhere" (Islamic Republic, 62 NY2d at 479), namely Argentina, anadequate, alternative forum (see Warter v Boston Sec., S.A., 380 F Supp 2d 1299, 1311[SD Fla 2004] [collecting cases holding that Argentina is an adequate forum]).[*6]
Accordingly, I would reverse, grant that aspect ofdefendants' cross motion seeking dismissal of the complaint on the basis of forum nonconveniens and dismiss the complaint. In light of my conclusion that dismissal is appropriate onthe ground of forum non conveniens, I need not reach defendants' contentions regarding the issueof personal jurisdiction.@FR3#@FN3#While there is some authority supporting the proposition that a court may not reach theissue of forum non conveniens when an unresolved question exists regarding whether the courthas jurisdiction over the defendants (Edelman v Taittinger, S.A., 298 AD2d 301, 303[2002]), I would follow the United States Supreme Court's unanimous decision in SinochemIntl. Co. Ltd. v Malaysia Intl. Shipping Corp. (549 US —, — , 127 S Ct 1184,1192 [2007] [a trial "court . . . may dispose of an action by a forum non conveniensdismissal, bypassing questions of subject-matter and personal jurisdiction, when considerationsof convenience, fairness, and judicial economy so warrant"]).
Footnote 1: "In the context of tort law, NewYork utilizes interest analysis to determine which of two competing jurisdictions has the greaterinterest in having its law applied in the litigation. The greater interest is determined by anevaluation of the facts or contacts which . . . relate to the purpose of the particularlaw in conflict. Two separate inquiries are thereby required to determine the greater interest: (1)what are the significant contacts and in which jurisdiction are they located; and, (2) whether thepurpose of the law is to regulate conduct or allocate loss" (Padula v Lilarn Props. Corp.,84 NY2d 519, 521 [1994] [internal quotation marks and citation omitted]).