10 Civ (RMB) United States District Court for the Southern District of New York. January 6, 2011

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1 The Bank of New York Mellon, as Trustee for L.B. Peru Trust, The Bank of New York Mellon, as Trustee for L.B. Peru Trust II, and The Bank of New York Mellon, as Trustee for L.B. Peru Trust III v. SACE S.p.A., a/k/a The Italian Export Credit Agency 10 Civ (RMB) United States District Court for the Southern District of New York January 6, 2011 For The Bank of New York Mellon, as Trustee for L.B. Peru Trust, The Bank of New York Mellon, as Trustee for L.B. Peru Trust II, The Bank of New York Mellon, as Trustee for L.B. Trust III, Plaintiffs: Eric Andrew Schaffer, LEAD ATTORNEY, Reed Smith, LLP (Pittsburgh), Pittsburgh, PA; Mark Lee Weyman, LEAD ATTORNEY, Reed Smith (NYC), New York, NY; Evan K. Farber, Reed Smith (NYC), New York, NY. For SACE S.p.A., also known as The Italian Export Credit Agency, Defendant: William M. Hawkins, Daniel Bercu Besikof, Mark A. Douglas, Loeb & Loeb LLP, New York, NY. DECISION & ORDER I. Introduction On September 14, 2010, The Bank of New York Mellon ( Plaintiff or Bank ), as Trustee for L.B. Peru Trust, L.B. Peru Trust II and L.B. Peru Trust III (each a Trust and collectively, the Trusts ), filed an amended complaint ( Complaint ), in diversity, against SACE S.p.A a/k/a The Italian Export Credit Agency ( Defendant or SACE ) alleging, among other things, that SACE wrongfully interfered with... agreements [between Plaintiff and certain Italian companies] by retaining... unpaid portion[s] of money owed to Plaintiff. (Compl. 89, 93, 101.) Plaintiff asserts state law claims of tortious interference with contracts, promissory estoppel, unjust enrichment, and conversion. (Compl ) On October 12, 2010, Defendant filed a motion to dismiss the Complaint, arguing, among other things, that: (1) Plaintiff does not and cannot establish personal jurisdiction over Defendant in New York ; (2) Plaintiff ignores the applicable forum selection clause that designates Rome, Italy as the obligatory venue ; (3) even assuming arguendo that Plaintiff s Complaint is not dismissed on the jurisdictional and venue grounds..., the balance of convenience also strongly favors dismissal[] in favor of the Italian forum ; (4) Plaintiff has failed to state a claim upon which relief can be granted; and (5) Plaintiff has failed to join certain indispensable parties. (Mem. of Law in Supp, of Def. s Mot. to Dismiss the Am. Compl, dated Oct. 12, 2010 ( Def. Mem. ), at 1-3.) On November 2, 2010, Plaintiff filed an opposition arguing, among other things, that: (1) personal jurisdiction exists under New York Civil Practice Law & Rules ( CPLR )

2 302(a)(3)(ii); (2) the forum selection clauses relied upon by Defendant are contained in insurance policies to which Plaintiff is not a party ; (3) SACE fails to satisfy its heavy burden of demonstrating that the balance of convenience weighs in favor of Italy; (4) SACE s assertions that Plaintiff fails to state a claim is equally without merit ; and (5) contrary to SACE s assertions... none of the entities [Defendant refers to are] necessary parties. (PL s Mem. of Law in Opp n to Def. s Mot. to Dismiss the Am. Compl., dated Nov. 2, 2010 ( Pl. Mem. ), at 3-4.) On November 15, 2010, Defendant filed a reply. (See Reply Mem. of Law in Further Supp, of Def. s Mot. to Dismiss the Am. Compl, dated Nov. 15, 2010 ( Def. Reply ).) Oral argument was held before this Court on January 4, (See Tr. of Proceedings, dated Jan. 4, 2011.) For the reasons set forth below, Defendant s motion to dismiss is granted. II. Background For purposes of this motion, the allegations of the Complaint are taken as true. See Almonte v. City of Long Beach, 478 F.3d 100, 104 (2d Cir. 2007). Prior to 1997, Aermacchi S.p.A., Impregilo S.p.A., and Ansaldo Energia S.p.A., which are organized under the laws of Italy (collectively, the Italian Companies ), entered into various sales and construction contracts ( Sales Contracts ) with the Peruvian Government ( Peru ) to sell and construct, among other things, military planes and a hydroelectric power plant. (Compl. 9-10, 27-28, 45-46, ) Unpaid amounts due and owing to the Italian Companies under the Sales Contracts were secured by promissory notes ( Notes ) issued by Peru. (Compl. 10, 28, ) Peru s payment obligations to the Italian Companies under the Notes were also insured by SACE, an entity wholly owned by the Italian Ministry of Economy and Finance, pursuant to insurance contracts ( Insurance Contracts ) entered into between SACE and the Italian Companies. (Compl. 10, 28, 46, 65.) The Insurance Contracts, which were written in Italian, are expressly governed by Italian law. (Decl, of Rodolfo Mancini in Supp, of Def. s Mot. to Dismiss the Compl., dated Oct. 8, 2010 ( Mancini Decl. ), 5 & Exs. 1-7 (Insurance Contracts).) When Peru defaulted upon its obligations under the Notes, SACE indemnified the Italian Companies for amounts less than the total debt owed under the Notes and, among other things, assumed the Italian Companies rights under the Notes. (Compl. 11, 29, 47, 66.) Peru subsequently entered into a series of restructuring agreements ( Restructuring Agreements ) pursuant to which it, among other things, undertook to pay the debts... due to SACE. (Compl. 12, 30, 48, 67.) Pursuant to the Insurance Contracts, SACE is obligated to re-transfer... to [the Italian Companies] the amounts received [from Peru] in excess of the amount[s] SACE had paid to the Italian Companies under the Insurance Contracts ( Excess Amounts ). (Compl. 12, 19, 28, 37, 44, 55, 60, 74.) Between July 31, 1997 and June 23, 1998, Lehman Brothers International (Europe) and Lehman Brothers, Inc. (collectively, Lehman ) formed the Trusts to assist in receivables financing for [the] Italian Companies. (Compl. 1, 9, 27, 45, 64.) Lehman, acting on behalf of the Trusts, entered into certain assignment agreements ( Assignment Agreements ) with the Italian

3 Companies, pursuant to which, among other things, the Excess Amounts due and owing to the Italian Companies from SACE were assigned to the Trusts. (Compl. 14, 32, 50, 69.) SACE issued acknowledgements ( Acknowledgements ) of the assignments and, between October 1997 and about July 1, 2008, made regular payments [of the Excess Amounts] to the [Trusts]... totaling millions of dollars. (Compl , 39-40, 57-58, ) On or about September 15, 2008, certain Lehman affiliated entities (not the Trusts) sought protection under the bankruptcy laws of the United States in the Southern District of New York ( Lehman Bankruptcy ). (Compl. 23, 41, 59, 78, 82.) On November 2, 2009, SACE filed a proof of claim ( Claim ) in the Lehman Bankruptcy and ceased making payments to the Trusts arguing that, because the Excess Amounts are actually owed to Lehman, SACE has the right to set-off the Excess Amounts against the amount of SACE s Claim. (Compl. 23, 41, 59, 78, 82, 85.) On May 21, 2010, subsequent to the initial filing of [this] Complaint, SACE filed an action (substantially similar to the instant case) in the Civil Court of Rome, Italy against Bank of New York Mellon seeking, among other relief, a determination that SACE is not required to make any payments to [Plaintiff] or the Trusts. (Comp). 83; Mancini Decl. 13.) III. Legal Standard To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. S. Cherry St., LLC v. Hennessee Grp., LLC, 573 F.3d 98, 110 (2d Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1949). District courts resolving issues of personal jurisdiction must first determine whether there is jurisdiction over the defendant under the relevant forum state s laws and then determine whether an exercise of jurisdiction under these laws is consistent with federal due process requirements. Whitaker v. Fresno Telsat. Inc., 87 F. Supp. 2d 227, 229 (S.D.N.Y. 1999) (citing Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999)). The occurrence of financial consequences in New York due to the fortuitous location of plaintiffs in New York is not a sufficient basis for jurisdiction under 302(a)(3) where the underlying events took place outside New York. Whitaker v. Am. Telecasting. Inc., 261 F.3d 196, 209 (2d Cir. 2001) (internal citations omitted); see also Pocahontas Supreme Coal, Inc. v. Nat l Mines Corp., 90 F.R.D. 67, 73 (S.D.N.Y. 1981). There must be a more direct injury within the State than the indirect financial loss resulting from the fact that the injured person resides or is domiciled here. Cooperstein v. Pan-Oceanic Marine. Inc., 124 A.D.2d 632, 507 N.Y.S. 2d 893, 895 (N.Y. App. Div. 1986). IV. Analysis (1) Personal Jurisdiction

4 CPLR 301 Defendant argues, among other things, that Plaintiff s vague allegations about Defendant allegedly conducting business in New York and doing business in this district are insufficient to establish jurisdiction under CPLR 301. (Def. Mem. at 9 (citing Compl. 3-4).) Plaintiff fails to address this ground for jurisdiction (CPLR 301) in its memorandum of law, dated November 2, 2010, and the Court considers it waived by Plaintiff. See Abrahams v. Young & Rubicam Inc., 79 F.3d 234, 237 & n.2 (2d Cir. 1996); First Capital Asset Mgmt. v. Brickellbush, Inc., 218 F. Supp. 2d 369, 393 (S.D.N.Y. 2002); see also Hearst Corp. v. Goldberger, No. 96 Civ. 3602, 1997 U.S. Dist. LEXIS 2065, 1997 WL 97097, at *8 (S.D.N.Y. Feb. 26, 1997). CPLR 302(a)(1), (2), (3) Defendant argues that the Complaint is devoid of sufficient allegations to sustain jurisdiction under CPLR 302(a) because, among other reasons: (1) SACE does not engage in any business or course of conduct involving New York, nor [does SACE] derive[] substantial revenue from goods used or consumed or services rendered in New York ; (2) Plaintiff s naked assertion that SACE committed tortious actions within New York provides no factual basis from which to draw an inference in its favor ; and (3) Plaintiff does not allege, and cannot allege, that any act of SACE caused an injury in New York. (Def Mem. at ) Mere residence of a plaintiff in New York, coupled with financial loss in New York, is insufficient to establish jurisdiction over a nondomiciliary defendant under CPLR 302(a)(3)(ii). (Def. Mem. at 12.) Plaintiff, without responding to Defendant s arguments with respect to CPLR 302(a)(1) and (2), counters that the Complaint meets the requirements of CPLR 302(a)(3)(ii) because, among other reasons, although the alleged causes of action arose out of SACE s tortious conduct which occurred in Italy, the Trusts suffered injury in the form of loss of income in New York, and SACE knew that its tortious act would have direct consequences to the Trusts in New York. (Pl. Mem. at 7.) Plaintiff further argues that a New York plaintiff s financial loss in New York can establish personal jurisdiction in New York, particularly where... the financial loss was a direct and intended consequence of Defendant s actions. (Pl. Mem. at 8.) Plaintiff fails to support a claim of jurisdiction under CPLR 302(a)(1) and (2) in its memorandum of law, dated November 2, 2010, and the Court considers such claim(s) waived. See Norton v. Sam s Club, 145 F.3d 114, 117 (2d Cir. 1998) ( Issues not sufficiently argued in the briefs are considered waived... ); see also Am. Tissue. Inc. v. DLJ Merch. Banking Partners, No. 03 Civ. 6913, 2006 U.S. Dist. LEXIS 22391, 2006 WL at *6 (S.D.N.Y. Apr. 20, 2006). Under CPLR 302(a)(3)(ii), a court in New York may exercise jurisdiction over a nondomiciliary when the defendant (1) committed a tortious act outside New York, (2) that causes injury within New York State, (3) the defendant expects or should reasonably expect the act to have consequences in the state, and (4) derives substantial revenue from interstate or

5 international commerce. Energy Brands Inc. v. Spiritual Brands. Inc., 571 F. Supp. 2d 458, 468 (S.D.N.Y. 2008) (citing CPLR 302(a)(3)). Defendant does not dispute that the facts alleged in the Complaint are sufficient to satisfy the first and fourth aspects of this test, namely that the allegedly tortious act occurred outside New York (in Italy), and that Defendant derives substantial revenue from interstate or international commerce. (See Def. Mem ; Pl. Mem. at 7-8.) Defendant does dispute that any act of SACE caused an injury in New York and that SACE reasonably should have expected there would be such consequences in New York. (Def. Mem. at ) [C]ourts determining whether there is injury in New York sufficient to warrant [ ] 302(a)(3) jurisdiction must generally apply a situs-of-injury test, which asks them to locate the original event which caused the injury. Bank Brussels Lambert, 171 F.3d at 791 (internal citation and quotation marks omitted); see also Neewra, Inc. v. Manakh Al Khaleej Gen. Trading and Contracting Co., et al., No. 03 Civ. 2936, 2004 U.S. Dist. LEXIS 13556, 2004 WL , at *6 (S.D.N.Y. July 20, 2004). The situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are felt by the plaintiff. Whitaker, 261 F.3d at 209; sec also Credit Suisse First Bos. Corp. v. Cont l Sav. Bank, No. 99 Civ. 2792, 2000 U.S. Dist. LEXIS 793, 2000 WL , al *2 (S.D.N.Y. Jan. 31, 2000). The original event which caused the alleged injury in this case was the actual withholding [by SACE] of payment to [Plaintiff]. Whitaker, 261 F.3d at 209 (internal citation and quotation marks omitted). This, as Plaintiff s counsel conceded at oral argument, occurred in Italy and not in New York. (See Tr. of Proceedings, dated January 4, 2011 ( Hr g Tr. ), at 10:15-18 (Q: Where in your opinion did the original event which caused the injury take place? A: I believe that the event took place in Italy, which is where the decision was reached. ).) SACE is a stock company organized under the laws of Italy, wholly-owned by the Italian Ministry of Economy and Finance, with its headquarters in Rome, Italy, (Mancini Decl, 2), and the situs of Plaintiff s alleged injury was in Italy, where SACE allegedly failed to remit payments due and owing to Plaintiff. (See Compl. 25, 43, 61, 80 ( Despite due demand... SACE has refused to make the payments due and owing to [the Trusts]. )); see also Banker v. Esperanza Health Sys., Ltd., No. 05 Civ. 4115, 2005 U.S. Dist. LEXIS 28246, 2005 WL , at *8 (S.D.N.Y. Nov. 17, 2005). aff d Banker v. Esperanza Health Sys., Ltd., 201 F. App x 13, 16 (2d Cir. 2006) ( [T]he situs of the injury is where the... Defendants devised and carried out their alleged plan to deprive [Plaintiff] of payment for his services. ). Moreover, the situs of... a nonphysical commercial injury is the place where the critical events associated with the dispute took place and not where the resultant monetary loss occurred. Polansky v. Gelrod, 20 A.D.3d 663, 798 N.Y.S. 2d 762 (N.Y. App. Div. 2005) (quoting Am. Eutectic Welding Alloys Sales Co. v. Dytron Alloys Corp., 439 F.2d 428, (2d Cir. 1971)); see also Popper v. Podhragy, 48 F. Supp. 2d (S.D.N.Y. 1998). The critical events associated with this dispute (sec page 8 above), including, without limitation, the negotiation and execution of the Insurance Contracts, occurred in Italy and not New York. (Mancini Decl, l6, 10, 21); see Whitaker, 261 F.3d at 209 ( The occurrence of financial consequences in New York due to the fortuitous location of plaintiff in New York is not a sufficient basis for jurisdiction

6 under 302(a)(3) where the underlying events took place outside New York. ); Mareno y. Rowe, 910 F.2d 1043 (2d Cir. 1990). And, although it may be argued that Defendant should have reasonably foreseen consequences in New York thereby satisfying the third requirement, the Court need not decide this issue... because [P]laintiff has failed to allege the second required element, namely an injury in New York. Fresno Telsat. Inc., 87 F. Supp. 2d at 232; see also Kowalski-Schmidt v. CLS Mortgage. Inc., 981 F.Supp. 105, 110 (E.D.N.Y. 1997). 1 (2) Forum Selection Clauses Assuming arguendo that Plaintiff were able to establish personal jurisdiction over SACE, the Court would likely find that the forum selection clauses in the Insurance Contracts apply to the claims asserted in the Complaint and, for that reason, that the Complaint should be dismissed in favor of the Italian forum. Broadly worded forum selection clauses, such as those set forth in the Insurance Contracts which state that the Court of Rome shall have exclusive jurisdiction over any dispute and action related to the... Insurance [C]ontracts, (Mancini Decl., Exs. 1-7 (Insurance Contracts. Art. 23)), have been consistently interpreted to cover claims such as those alleged in the Complaint, see In re Refco inc. Secs. Litig., No. 07 MDL 1902, 2009 U.S. Dist. LEXIS , 2009 WL , at *6 (S.D.N.Y. Nov. 16, 2009); Roby v. Corp. of Lloyd s, 996 F.2d 1353, 1361 (2d Cir. 1993); see also Klotz v. Xerox Corp., 519 F. Supp. 2d 430, 434 & n.4 (S.D.N.Y. 2007). 2 Plaintiff, although a non-signatory, [could be] subject to the... presumption of the enforceability of [the] mandatory forum selection clause[s] as an assignee of the Insurance Contracts. (See Compl, 14, 32, 50, 69; Hr g Tr. at 2:19-23); see also Aguas Lenders Recovery Grp. LLC v. Suez. S.A., et al., 585 F.3d 696, 701 (2d Cir. 2009). Plaintiff fails to show that enforcement [of the forum selection clauses] would be unreasonable and unjust, or... [that] the clause was invalid for such reasons as fraud or overreaching. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S. Ct. 1907, 32 L. Ed. 2d 513 (1972); see also Phillips v. Audio Active Ltd., 494 F.3d 378, 386 (2d Cir. 2007). (3) Forum Non Conveniens And, assuming arguendo that Plaintiff s Complaint were able to survive the above jurisdictional challenges, the case might nevertheless more properly proceed in Italy on the basis of principles of forum non conveniens. See Overseas Media, Inc. v. Skvortsov, 441 F. Supp. 2d 610, 614 (S.D.N.Y. 2006). That is, weighing all the appropriate factors, including, among other things, 1 Contrary to Plaintiff s contentions, and [n]otwithstanding [SACE s] appearance in bankruptcy court, [SACE] has not waived its defense of personal jurisdiction in this action because the claims between two non-debtors (the Trusts and SACE) concern a dispute carved out and excluded from the debtor s bankruptcy proceeding. Gulf Ins. Co. v. Caldor Corp., No. 03 Civ. 2894, 2006 U.S. Dist. LEXIS 38136, at * (S.D.N.Y. June 7, 2006) (citing Capital Res. Funding, Inc. v. Tri-County Bank of Rovston, No. 96 Civ. 746, 1997 U.S. Dist. LEXIS (N.D.N.Y. Aug. 27, 1997)). 2 The legal characterizations Plaintiff[] assign[s] to [its tort] claims are not determinative [of the scope of these forum selection clauses] because the courts refuse to allow a party s solemn promise to be defeated by artful pleading. Roby, 996 F.2d at 1360.

7 Plaintiff s choice of forum, problems of applying foreign law, the convenience of the potential witnesses, and ease of access to evidence, see Gulf Oil Corp. v. Gilbert, 330 U.S. 501, , 67 S. Ct. 839, 91 L. Ed (1974), the Court could logically conclude that Italy is the appropriate forum because Defendant has shown that: (1) Italy has a greater interest in this litigation than the United States ; (2) this case would require the Court to interpret foreign law ; (3) an action has already been filed in an Italian court which substantively addresses the matters at issue in the Complaint ; (4) SACE and most witnesses and evidence are located in Italy ; (5) Plaintiff has at least one office in Italy, while SACE has no office in New York ; (6) the costs for witnesses to attend trial will be significantly reduced if trial is held in Italy because almost all the entities involved, including SACE and the Italian Companies, are based there ; and (7) compulsory process is available in Italy to secure the live testimony of any necessary witnesses. (Def. Mem. at 18-20); see also Alfadda v. Fenn, 159 F.3d 41, (2d Cir. 1998); Murray v. British Broad. Corp., 81 F.3d 287, 290 (2d Cir. 1996). 3 V. Conclusion and Order For the reasons stated herein, Defendant s motion to dismiss [#15] is granted. The Clerk of Court is respectfully requested to close this case. Dated: New York. New York January 6, 2011 /s/ Richard M. Berman RICHARD M. BERMAN, U.S.D.J. 3 Because the Court concludes that it does not have jurisdiction over Defendant, it need not, in fact, decide Defendant s alternative arguments in support of dismissal. See Navaera Scis. LLC v. Acuity Forensic Inc., 667 F. Supp. 2d 369, 378 & n.78 (S.D.N.Y. 2009); see also Bluefire Wireless, Inc. v. Cloud9 Mobile+ Comm n, No. 09 Civ. 7268, 2009 U.S. Dist. LEXIS , 2009 WL , at *4 & n.6 (S.D.N.Y. Dec. 21, 2009); Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30 (2d Cir. 2010); Best Van Lines. Inc. v. Walker, 490 F.3d 229, 242 (2d Cir. 2007).

Aleph Towers, LLC et al v. Ambit Texas, LLC et al Doc. 128

Aleph Towers, LLC et al v. Ambit Texas, LLC et al Doc. 128 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ---------------------------------------------------------------){ YURI (URI) KASPAROV,