Opinion
2007–4427/A
05-21-2018
In the MATTER OF the Application of Jonathan B. SPIRA, as Administrator of the Estate of Siegfried Franklin Spira, a/k/a S.F. Spira a/k/a S. Franklin Spira, a/k/a Siegfried Franz Spira, a/k/a Fred Spira, Deceased. To Discover Information and to Compel the Turnover of Property held by Sigma Corporation, and Sigma Corporation of America, to the Estate, Pursuant to Surrogate's Court Procedure Act Section 2103.
Joseph Milano, Esq., CAPELL BARNETT MATALON & SCHOENFELD, LLP, Attorneys for Petitioner Jeffrey I. Kohn, Esq., Daniel L. Cantor, Esq., Taylor S. Simeone, Esq., O'MELVENY & MYERS, LLP, Attorneys for Respondent Sigma Corporation & Sigma Corporation of America
Joseph Milano, Esq., CAPELL BARNETT MATALON & SCHOENFELD, LLP, Attorneys for Petitioner
Jeffrey I. Kohn, Esq., Daniel L. Cantor, Esq., Taylor S. Simeone, Esq., O'MELVENY & MYERS, LLP, Attorneys for Respondent Sigma Corporation & Sigma Corporation of America
Peter J. Kelly, J.
In this proceeding for discovery and turnover of property ( SCPA § 2103 ), the Respondent Sigma Corporation ("Sigma") and Sigma Corporation of America ("Sigma America") moves to dismiss the petition pursuant to SCPA § 102 and CPLR § 3211[a][5] and [8 ] on the grounds that "this court lacks personal jurisdiction over Sigma Corporation and this proceeding is time-barred."
This proceeding concerns the estate's alleged interest in the decedent's shares of stock of Sigma. Respondent, Sigma, is incorporated and maintains its principal place of business in Kanagawa, Japan. Respondent Sigma America is a wholly-owned subsidiary of Sigma with a principal executive office in Ronkonkoma, New York. Sigma is engaged in the business of manufacturing and selling photographic equipment.
Petitioner alleges that the decedent was a friend, confidant, and business associate of Sigma's founder, the late Mr. Michihiro Yamaka. On or around June 21, 1971, decedent allegedly acquired 600 shares of stock in Sigma, and allegedly acquired an additional 300 shares of Sigma in October 1971. Petitioner alleges that decedent, prior to his death, sought information from Sigma regarding his stock holdings, and avers that after decedent's death, petitioner personally made numerous requests for same but that Sigma repeatedly failed and refused to provide the requested information.
Decedent died on September 2, 2007 and letters of administration were issued to Petitioner on December 6, 2007. More than ten years after Letters of administration were issued, Petitioner commenced this proceeding pursuant to SCPA § 2103, seeking an order of this court, inter alia , directing an inquiry concerning the estate's purported holdings in Sigma Corporation and Sigma stock. Thereafter, the Petitioner served Sigma America in Ronkonkoma, New York with an order to attend and be examined. Petitioner, however, neither served a citation on Sigma Corporation in Japan nor obtained authorization for substituted service upon it.
Turning to the merits of the motion, the branch of the Respondent's motion to dismiss the discovery proceeding commenced pursuant to SCPA § 2103 as time-barred pursuant to CPLR § 3211[a][4] is denied. In the absence of fraud, a discovery proceeding commenced pursuant to SCPA § 2103, likened to a replevin action, has a statute of limitations of three years ( CPLR § 214[3] ; Matter of Dunbar , 49 AD2d 858 ). However, where a fiduciary does not seek the return of specific property but merely seeks information, the statute of limitations for replevin does not apply (See , In re Estate of Laflin , 128 Misc 2d 348, 349 ). Here, the Petitioner is seeking information regarding the Sigma stocks, not a return of such stocks. Accordingly, the discovery proceeding commenced pursuant to SCPA § 2103 is not time-barred.
The branch of the Respondent's motion to dismiss on the basis that this court lacks personal jurisdiction over Sigma is twofold. Respondent Sigma initially avers that it was not properly served, and secondly contends that this court lacks a jurisdictional basis over Sigma under CPLR § 302[a] and SCPA § 210.
Concerning the propriety of service of process in this case, service of an order to attend on a New York domiciliary, Sigma America, does not confer personal jurisdiction of this court over non-domiciliary, Sigma. An order to attend partakes the character of a subpoena and as such, there is no authorization for service of a subpoena ad testificandum outside the state (See , NY CLS Jud § 2–b; Matter of Mirsky , 145 Misc 2d 438, 546 ). While under the "long-arm" statute, a summons may be served outside the state, there is no such provision for a subpoena (See , Siemens & Halske, GmbH v. Gres , 37 AD2d 768 ). Additionally, as discussed below, service of the order to attend on Sigma America, in New York, does not confer personal jurisdiction of this court over Sigma, a foreign corporation. Accordingly, Sigma was not appropriately served.
As to Respondent's argument this court lacks jurisdiction over Sigma under CPLR § 302[a] and SCPA § 210, Sigma, avers that this court lacks personal jurisdiction because Sigma "does not have any New York ties." In support of this contention the Respondent submitted, inter alia , the affirmation of Mr. Shin Yasumoto, Chief Financial Officer of Sigma, stating that Sigma does not transact any business within the state of New York; that Sigma does not contract to supply goods or services in the State of New York; that Sigma has never had any physical presence in the State of New York; and that Sigma owns 100 percent of the common stock of Sigma America, a New York corporation, with its principal place of business and U.S. headquarters located at 15 Fleetwood Court, Ronkonkoma, New York.
Upon a motion to dismiss pursuant to CPLR § 3211[a][8], the Petitioner, as the party seeking to assert personal jurisdiction, bears the ultimate proof on this issue (See , Katz & Assoc. Corp. v. Midland Rushmore, LLC , 90 AD3d 977 ; Marist Coll. v. Brady , 84 AD3d 1322 ). However, in opposing a motion to dismiss, a petitioner is not required to make a prima facie showing of jurisdiction, rather, petitioner need only demonstrate that facts "may exist" to exercise personal jurisdiction over the defendant (See , Peterson v. Spartan Indus. , 33 NY2d 463, 466 ; Santiago v. Highway Frgt. Carriers, Inc. , 153 AD3d 750 ; Ying Jun Chen v. Lei Shi , 19 AD3d 407, 407–408 ). Such a showing does not require a demonstration that facts actually exist, because such facts may lie within the exclusive control of the moving party ( Shore Pharm. Providers, Inc. v. Oakwood Care Ctr., Inc., 65 AD3d 623, 624, quoting Peterson , supra, at 466). Rather it must "appear from affidavits submitted in opposition to [the] motion ... that facts essential to justify opposition may exist but cannot then be stated" ( CPLR § 3211[d] ). In such a circumstance, "a court may, in the exercise of its discretion, postpone resolution of the issue of personal jurisdiction" ( Goel v. Ramachandran , 111 AD3d 783, 788 ).
Generally, to establish that this court may exercise long-arm jurisdiction over a foreign corporation like Sigma, Petitioner must show that Sigma "regularly transacted or solicited business, engaged in any other persistent course of conduct, or otherwise "purposefully directed" its activities at the residents of the forum (See , Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472 ; World–Wide Volkswagen Corp. v. Woodson , 444 U.S. 286 ). A foreign corporation is amenable to suit in this state's courts if it is "engaged in such a continuous and systematic course of ‘doing business’ here as to warrant a finding of its ‘presence’ in this jurisdiction" (See , Simonson v. International Bank , 14 NY2d 281, 285 ; Bryant v. Finnish Nat. Airline , 15 NY2d 426, 430 ). The test for "doing business" to establish requisite minimum contacts with New York have been made out when it appears that the foreign corporation has, among other things, a New York office, employs several people, and helps generate business (Bryant , supra at 432).
In the present case, the Petitioner posits that Sigma is subject to this court's long-arm jurisdiction based upon the "mere department doctrine". "In its limited jurisprudence concerning [this doctrine], the primary focus of the Court of Appeals has been on the degree of control exercised by the domestic corporation over the foreign corporation" (Goel , supra at 787). Under that theory, the court may acquire personal jurisdiction over a foreign parent company that exercises complete control over a subsidiary present in New York such that "the subsidiary, is, in fact, a "mere department" of the parent ( Delagi v. Volkswagenwerk AG , 29 NY2d 426, 432 ; Taca Int'l Airlines, S.A. v. Rolls–Royce of Eng., Ltd. , 15 NY2d 97 ). In other words, where two defendants are one and the same corporation, there is realistically no basis for distinguishing them for jurisdictional purposes (See , Public Adm'r of County of NY v. Royal Bank of Can. , 19 NY2d 127, 132 ; Goel , supra). To determine whether a subsidiary is a "mere department" of the parent, courts consider four factors: (1) common ownership and the presence of an interlocking directorate and executive staff; (2) financial dependency of the subsidiary on the parent; (3) the degree to which the parent interferes in the selection and assignment of the subsidiary's executive personnel and fails to observe corporate formalities; and (4) the degree of the parent's control of the subsidiary's marketing and operational policies (See , Volkswagenwerk Aktiengesellschaft v. Beech Aircraft, 751 F.2d 117 ; see also , Porter v. LSB Indus. , 192 AD2d 205, 213 ). Ultimately, after weighing these factors, the "mere department" doctrine can only be satisfied where "the activities of the parent show a disregard for the separate corporate existence of the subsidiary" (Volkswagenwerk , supra at 120).
In support of its burden, Petitioner argues Sigma's acknowledgment that "Sigma America is a wholly owned subsidiary of Sigma Corporation, owning 100% of stock of Sigma America" in and of itself, establishes that Sigma America is "merely a department of its parent, Sigma Corporation." This broad assertion is plainly contrary to the well established law in this state.
Petitioner also relies on certain publically available information to support its argument, including a printout of the "News" section on Sigma America's internet page with a dateline of "January 27, 2012, Ronkonkoma, NY," which announces the passing of Sigma's founder and CEO, Michihiro Yamaki. In this article, Mark Amir–Hamzeh, CEO of Sigma Corporation of America, is quoted attributing the success and growth of "our company," Sigma, to the late Michiro Yamaki. Petitioner also submits a printout from Sigma's internet page that lists "Sigma Corporation of America" and its address in Ronkonkoma, New York as a "Buyer" and the internet page of Sigma America which states that Sigma "is headquartered in Japan, with offices strategically located throughout Europe, Asia, and North America."
Analyzing the first and third factors considered in determining whether an entity is a "mere department" of another, the words "our company" used by the CEO of Sigma America in reference to a eulogy of sorts for the founder of Sigma, does not provide a factual basis for common ownership and presence of an interlocking directorate and executive staff between the entities (Volkswagenwerk , supra). Likewise, the record does not contain proof that Sigma is involved in any way with Sigma America's selection of executive staff. Relating to the second factor, there is no indication in the record to indicate that Sigma America is financially dependent on Sigma in whole or in part for Sigma America's continued existence, nor that Sigma America generated any part of Sigma's revenue. There is also no factual basis or evidence presented upon which the court could find that Sigma had any control over Sigma America's marketing and operational policies.
The overlap of directors on a board is not highly probative of "mere department" status because some overlap between directors of a parent-subsidiary ownership in their capacity as controlling stockholder is expected (See Jazini by Jazini v. Nissan Motor Co. , 148 F.3d 181, 185 ).
Based upon the foregoing, it is plain the evidence of the relationship between Sigma and Sigma America submitted in this proceeding is purely speculative. Petitioner has not remotely proffered sufficient facts to establish, prima facie , that Sigma America is a "mere department" of Sigma (See , Goel , supra; Goldsmith v. Sotheby's, Inc. , Misc 3d, 2005 NY Slip Op. 51702[U] ).
Nevertheless, Petitioner's counsel also argues that because Sigma is a "family-owned organization," it is difficult, if not impossible, to obtain necessary information about the relationship between Sigma and Sigma America and that the paucity of information in Petitioner's possession does not automatically require dismissal.
As noted above, if the Petitioner proffered sufficient proof that facts "may exist" to satisfy the "mere department doctrine" this motion may be denied and discovery on this issue permitted (See , Goel , supra at 798). Nonetheless, simply invoking CPLR § 3211[d] is not sufficient to require denial of a motion to dismiss pursuant to CPLR § 3211[a][8]. In this particular context, it is still necessary for the Petitioner to make a "sufficient start" in demonstrating a basis for personal jurisdiction over the Respondent so as to "warrant further discovery" (Peterson , supra at 467). Such a showing may not be based upon "bare conclusory allegations" ( Sheldon v. Kimberly–Clark Corp. , 105 AD2d 273, 275 ). Instead, it must consist of "some tangible evidence ... thereby demonstrating that its assertion that a jurisdictional predicate exists is not frivolous" ( Mandel v. Busch Entertainment Corp. , 215 AD2d 455 ).
Again, even considering this more favorable standard, the information offered by the Petitioner constitutes nothing more than a hypothesis that the two Sigma corporations are, for all intents and purposes, one in the same company. Of the four "mere department" factors, the Petitioner has offered only a single fact supporting a portion of the first element, to wit: the existence of common ownership between Sigma and Sigma America. Contrary to the Petitioner's assertion this record is more aptly characterized as a non-starter as opposed to a "sufficient" start (See , Ins. Co. of N. Am. v. EMCOR Group, Inc. , 9 AD3d 319 ; Sheldon v. Kimberly–Clark Corp. , supra at 274; cf. , Deadco Petroleum v. Trafigura AG , Misc 3d, 2016 NY Slip Op. 31656[U] ; Finerty v. Abex Corp. , Misc 3d, 2013 NY Slip Op. 31077[U] ; Goldsmith v. Sotheby's, Inc. , supra).
Accordingly, the Respondent's motion to dismiss the petition pursuant to CPLR § 3211[a][8] is granted and the within proceeding is dismissed.
This is the decision and order of the court.