Opinion
600668/09
7-6-2009
SILVER LANE ADVISORS LLC, Plaintiff, v. BELLATORE LLC, BALDWIN ENTERPRISES INC., LEUCADIA NATIONAL CORPORATION, Defendants.
For Plaintiff: Jack Yoskowtiz, Seward and Kissel LLP, New York, NY. For Defendants: Constance M. Boland, Lisa Chapman, Nixon Peabody LLP, New York, NY.
In this action for breach of contract and declaratory judgment, plaintiff Silver Lane Advisors LLC (Silver Lane) claims that defendant Bellatore, LLC (Bellatore) has failed to pay it $440,000 in exchange for financial advisory services rendered under an agreement between the parties (the Agreement). A parallel action between Bellatore and Silver Lane involving the same issues is already pending in California state court.
Bellatore now moves for an order dismissing the complaint: (1) pursuant to 3211 (a) (4), on the ground of the pending California action; and (2) pursuant to CPLR 327 (a), on the ground of forum non conveniens. For the reasons set forth below, Bellatore's motion for dismissal on the ground of forum non conveniens is granted.
Bellatore, a Delaware limited liability company with it principal place of business in San Jose, California, is a financial services company which provides asset management programs to financial advisors and financial institutions. Silver Lane, a Delaware limited liability company with its principal place of business in New York, New York, is a mergers and acquisitions investment bank. On November 19, 2007, Bellatore signed a letter agreement with Silver Lane (the Letter Agreement), pursuant to which Silver Lane promised to work with Bellatore to identify prospective targets, create a Target List, and structure, negotiate and assist in the completion of proposed transactions.
During the summer of 2008, Bellatore identified a potential target: Capital Allocation & Management (CAM). At Bellatore's request, Silver Lane arranged a meeting in San Jose, California between Bellatore and CAM. Bellatore and CAM agreed that Bellatore would acquire CAM through a stock purchase for $3 million. CAM's executives negotiated the deal with Bellatore's executives in San Jose on September 30, 2008. After the transaction closed, Silver Lane sent Bellatore an invoice for a success fee totaling $ 440,000.
Shortly thereafter, Bellatore learned that Silver Lane lacked the licenses required to provide the broker services described in the Letter Agreement. Bellatore contends that Silver Lane was therefore unqualified to receive any transaction based compensation, and refused to pay the invoice. On October 13, 2008, Silver Lane terminated the Letter Agreement, but continued to demand payment of the success fee for the CAM transaction. Following the termination of the Letter Agreement, the parties entered into negotiations in an attempt to resolve the dispute, but such negotiations were unsuccessful.
Multiple actions have been filed by the parties arising out of the same payment dispute. On December 4, 2008, Bellatore filed the first action, in the Northern District of California. On January 2, 2009, Silver Lane commenced an action against Bellatore in the Southern District of New York. Upon learning that diversity jurisdiction did not exist, both Bellatore and Silver Lane dismissed the federal suits. On March 3, 2009, Silver Lane filed the instant action (the New York Action), and on March 4, 2009, one day later, Bellatore filed an action in the Superior Court for the State of California, County of Santa Clara (the California Action).
In the California Action, Silver Lane, as defendant, moved to dismiss for lack of personal jurisdiction, and moved to stay or dismiss the California Action in favor of the New York Action. The California court denied Silver Lane's motion to dismiss for lack of personal jurisdiction, finding that it had personal jurisdiction over Silver Lane. The California court also denied Silver Lane's motion to stay or dismiss the California Action, holding that Silver Lane failed to "demonstrate that California is an inconvenient forum," and failed to show that "in the interests of substantial justice," the California Action should be stayed pending completion of the New York Action.
Bellatore argues that dismissal is appropriate based upon the pending California Action. CPLR 3211 (a) (4) provides that a party may move to dismiss an action when "there is another action pending between the parties for the same cause of action in a court of any state or the United States." In determining whether to dismiss an action based on another action pending, New York courts are often guided by the "first to file" rule. However, that rule is not followed mechanically, particularly when the actions are filed close in time (L-3 Communications Corp. v SafeNet, Inc., 45 AD3d 1 [1st Dept 2007]).
Although this action was technically filed one day prior to the California action, Bellatore argues that, since both actions are at the early stages of litigation, the precise timing of the filing of the actions is of no consequence. Moreover, Bellatore argues, in filing the California federal action, it was the first to file a complaint in connection with the facts that give rise to this dispute. Conversely, Silver Lane argues that I should strictly follow the "first to file" rule.
It is not necessary, however, to reach this issue, because, as set forth below, I find that dismissal of this action is warranted pursuant to the doctrine of forum of non conveniens.
It is well settled that New York courts "need not entertain causes of action lacking a substantial nexus with New York" (Martin v Mieth, 35 NY2d 414, 418 [1974]). The doctrine of forum non conveniens, codified in CPLR 327 (a), "permits a court to stay or dismiss such actions where it is determined that the action, although jurisdictionally sound, would be better adjudicated elsewhere" (Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 478-479 [1984], cert denied 469 US 1108 [1985]). The central focus of the forum non conveniens inquiry is to ensure that trial will be convenient, and will best serve the ends of justice (see Piper Aircraft Co. v Reyno, 454 US 235 [1981]; Capitol Currency Exch., N.V. v National Westminster Bank PLC, 155 F3d 603 [2d Cir 1998], cert denied 526 US 1067 [1999]). If the balance of conveniences indicates that trial in the plaintiff's chosen forum would be unnecessarily burdensome for the defendant or the court, then dismissal is proper (see id.).
New York courts consider the availability of an adequate alternative forum and certain other private and public interest factors when evaluating New York's nexus to a particular action, and deciding whether to dismiss an action on the ground of forum non conveniens (Islamic Republic of Iran v Pahlavi, 62 NY2d 474, supra). The burden is on the defendant challenging the forum to demonstrate the relevant private or public interest factors which militate against accepting the litigation (id.; Highgate Pictures, Inc. v De Paul, 153 AD2d 126 [1st Dept 1990]). Although not every factor is necessarily articulated in every case, collectively, the courts consider and balance the following factors in determining an application for dismissal based on forum non conveniens: existence of an adequate alternative forum; situs of the underlying transaction; residency of the parties; the potential hardship to the defendant; location of documents; the location of a majority of the witnesses; and the burden on New York courts (see Islamic Republic of Iran v Pahlavi, 62 NY2d 474, supra; World Point Trading PTE, Ltd. v Credito Italiano, 225 AD2d 153 [1st Dept 1996]; Evdokias v Oppenheimer, 123 AD2d 598 [2d Dept 1986]). A motion to dismiss on the ground of forum non conveniens is subject to the discretion of the trial court, and no one factor is controlling (Islamic Republic of Iran v Pahlavi, 62 NY2d 474, supra; see also In re New York City Asbestos Litigation, 239 AD2d 303 [1st Dept 1997]).
The present action must be dismissed on the ground of forum non conveniens, because the number and weight of the relevant factors in this action center in California, and not in New York. Bellatore is a California corporation. An action between the parties is already pending in California. Bellatore negotiated and signed the contract at issue in California, and the damages sought arise out a transaction which was negotiated and closed in California. Many of the witnesses reside in California, and all of the relevant documents are located at Bellatore's offices in California. Where, as here, the action is almost entirely concerned with the events of another state, the action cannot be said to have a substantial nexus with New York, and must be dismissed (Tetra Finance (HK) Ltd. v Patry, 115 AD2d 408, 410 [1st Dept 1985], appeal withdrawn 67 NY2d 758 [1986] [quotation marks and citation omitted]; see also Chawafaty v Chase Manhattan Bank, N.A., 288 AD2d 58, 58 [1st Dept 2001], lv denied 98 NY2d 607 [2002] ["(t)his action lacks a substantial connection to New York and would be burdensome to its courts"]).
With respect to the convenience of the party and non-party witnesses, this factor clearly favors a forum non conveniens dismissal. Bellatore resides in San Jose, California, as do its principal witnesses, President and Chief Executive Officer Al Steele, Chief Investment Officer Jonathan Scheid, and Vice President and Chief Administrative Officer Tricia Doerksen. Non-party witnesses from CAM reside in Denver, Colorado, which is closer to California than New York. Although Silver Lane's witnesses reside in or near New York City, the principals of Silver Lane availed themselves of the benefits of doing business in California, and traveled to California in order to negotiate and perform under the Letter Agreement. As such, California would be a more convenient forum for the majority of the witnesses, which factor strongly militates in favor of dismissal (see Finance & Trading Ltd. v Rhodia S.A., 28 AD3d 346, 347 [1st Dept], lv denied 7 NY3d 706 [2006] [dismissal favored under CPLR 327 (a) because "(t)he majority of ... witnesses would be French"]; Phat Tan Nguyen v Banque Indosuez, 19 AD3d 292, 295 [1st Dept 2005], lv denied 6 NY3d 703 [2006] [dismissal granted where "the majority of the witnesses (were) in France or Vietnam"]; Shin-Etsu Chem. Co., Ltd. v 3033 ICICI Bank Ltd., 9 AD3d 171, 178 [1st Dept 2004 [upholding dismissal because "(a)ny witness with personal knowledge of the (transaction) is located overseas"]).
The location of documents is also an important consideration. Virtually all of the documents are located in Bellatore's office in California, where the Letter Agreement was negotiated, the Target Lists were drafted, and the CAM transaction closing occurred. There are no documents located in New York. This factor thus supports a forum non convenience dismissal (see Braspetro Oil Serv. Co. v UK Guaranty & Bonding Corp., Ltd., 18 AD3d 291, 291 [1st Dept 2005] [favoring dismissal where most documents were "located in Brazil and Singapore"]; Shin-Etsu Chem. Co., Ltd. v 3033 ICICI Bank Ltd., 9 AD3d at 178 [same holding where "(t)he complete written record of th(e) transaction (was) located in India, as (were) all documents and correspondence"]).
The location of the operative facts is another important factor to be considered in deciding where a case should be tried. The majority of events at issue took place in California, including the negotiation of and entry into the Letter Agreement, discussions between Bellatore and Silver Lane regarding performance under the Letter Agreement, and the closing of the CAM transaction. Indeed, the only face to face meeting between the parties occurred in California — on January 8 and January 9, 2008, Silver Lane's principals met with Bellatore's principals in San Jose, California to discuss the parties' relationship and performance under the Letter Agreement. The fact that the "transaction[s] out of which the cause of action arose occurred primarily in a foreign jurisdiction" weighs strongly in favor of dismissal on the ground of forum non conveniens (Islamic Republic of Iran v Pahlavi, 62 NY2d at 479; see also World Point Trading PTE, Ltd. v Credito Italiano, 225 AD2d 153, supra). Serano Ltd. v Canadian Imperial Bank of Commerce, 287 AD2d 309, 309 [1st Dept 2001] [forum non conveniens dismissal appropriate where "the action (was) virtually devoid of New York connections"]).
Finally, the Letter Agreement does not contain a venue clause or any language mandating that any dispute arising under the Letter Agreement be brought in a New York court. While the Letter Agreement does contain a choice of law provision requiring the application of New York law, a California court can just as easily apply New York law as California law. Moreover, the California court specifically found that Silver Lane failed to demonstrate that California was an inconvenient forum.
Upon balancing the appropriate factors, Bellatore has sustained its burden of showing that the end of justice and the convenience of the parties will be best served if this action is heard in California. Accordingly, Bellatore's motion for dismissal on the ground of forum non conveniens is granted. In light of this determination, Bellatore's motion for dismissal pursuant to CPLR 3211 (a) (4) is denied as moot.
Accordingly, it is
ORDERED that defendant Bellatore LLC's motion to dismiss is granted and the complaint is dismissed with costs and disbursements to defendant as taxed by the Clerk of the Court; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.