FILED: NEW YORK COUNTY CLERK 12/31/2009 INDEX NO /2009 NYSCEF DOC. NO. 26 RECEIVED NYSCEF: 12/31/2009

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1 FILED NEW YORK COUNTY CLERK 12/31/2009 INDEX NO /2009 NYSCEF DOC. NO. 26 RECEIVED NYSCEF 12/31/2009 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X NORTH AMERICAN AIRLINES, INC., -against- Plaintiff, WILMINGTON TRUST COMPANY, as Owner Trustee, pursuant to the Trust Agreement [North American Airlines Inc Trust No ] dated as of December 1, 2006; ALE- ONE, LIMITED, LOCAT S.P.A., SAN PAOLO LEASINT S.P.A. and INTESA LEASING S.P.A., Defendants X Index No /09E (Hon. James A. Yates) MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO DISMISS OR STAY Troutman Sanders LLP Matthew J. Aaronson Adam S. Libove The Chrysler Building 405 Lexington Avenue New York, New York (212)

2 TABLE OF CONTENTS Page TABLE OF AUTHORITIES... ii PRELIMINARY STATEMENT... 1 FACTUAL BACKGROUND... 3 PROCEDURAL HISTORY ARGUMENT I. WTC WAIVED ANY OBJECTION TO THE COMMENCEMENT OF THIS ACTION IN THIS COURT, INCLUDING THE PRESENT MOTION II. CPLR 3211(a)(4) DOES NOT APPLY TO FOREIGN ACTIONS III. A DISCRETIONARY STAY PURSUANT TO CPLR 2201 IS NOT WARRANTED A. Complete Identity Of Parties, Causes Of Action And Judgment Sought Is Required To Justify A Stay The Parties Are Not Identical The Causes of Action Are Not Identical The Judgments Sought Are Not Identical B. Even If Complete Identity Of Parties And Claims Were Not Required, WTC Fails To Meet The Standard For A Discretionary Stay C. NAA Would Be Severely Prejudiced By The Imposition Of A Stay D. The Cases Cited By Defendant Are Inapposite IV. WTC IS NOT ENTITLED TO A STAY UNDER THE DOCTRINE OF INTERNATIONAL COMITY A. The Federal Authority Cited By Defendant Is Not Applicable Here CONCLUSION i-

3 TABLE OF AUTHORITIES CASES 952 Assoc., LLC v. Palmer, 52 A.D.3d 236 (1st Dept. 2008)...15 Abkco Industries, Inc. v. Lennon, 85 Misc. 2d 465 (Sup. Ct. N.Y. Co. 1975) aff'd and modified in part on other grounds, 52 A.D.2d 435 (1st Dept. 1976) Abrams v. Xenon Industries, Inc., 145 A.D.2d 362 (1st Dept. 1988)...15, 15 n.7 American Marine Insurance Group. v. Price Forbes, Ltd., 166 A.D.2d 263 (1st Dept. 1990)...18, 19 Asher v. Abbott Laboratories, 307 A.D.2d 211 (1st Dept. 2003)...17, 17 n.10 Belopolsky v. Renew Data Corp., 41 A.D.3d 322 (1st Dept. 2007)...17, 17 n.9 Boss v. Am. Express Fin. Advisors, Inc., 6 N.Y.3d 242 (2006)...13 Buzzell v. Mills, 32 A.D.2d 897 (1st Dept. 1969)...15 n.7 Canadian Overseas Ores, Ltd. v. Compania de Acero del Pacifico S.A., 528 F. Supp (S.D.N.Y. 1982), aff d, 727 F.2d 274 (1984)...21 n.13 Dragon Capital Partners L.P. v. Merrill Lynch Capital Services, 949 F. Supp (S.D.N.Y. 1997)...20, 21 El Greco, Inc. v. Cohn, 139 A.D.2d 615 (2d Dept. 1988)...17 Fewer v. GFI Group, 59 A.D.3d 271 (1st Dept. 2009)...16, 17 First City National Bank & Trust Co. v. Heaton, 165 A.D.2d 710, 563 N.Y.2d 783 (1st Dept. 1990)...17 Guilden v. Baldwin Sec. Corp., 189 A.D.2d 716 (1st Dept. 1993) ii-

4 Krantz v. Scholtz, 201 A.D.2d 784 (3d Dept. 1994)...18 L-3 Communications Corp. v. SafeNet, Inc., 45 A.D.3d 1 (1st Dept. 2007)...14 National Union Fire Insurance Co. v. Worley, 257 A.D.2d 228 (1st Dept. 1999)...13 Ronar, Inc. v. Wallace, 649 F. Supp. 310 (S.D.N.Y. 1986)...20 Sachs v. Adeli, 26 A.D.3d 52 (1st Dept. 2005)...20 Somoza v. Pechnik, 3 A.D.3d 394 (1st Dept. 2004)...15 TAG 380, LLC v. ComMet 380, Inc., 10 N.Y.3d 507 (2008)...12, 13 Wallace v. Merrill Lynch Capital Services, Inc., 12 Misc. 3d 1153A, 819 N.Y.S.2d 214 (Sup. Ct. N.Y. Co. 2006)...13 UNPUBLISHED DECISIONS Renaissance Technologies Corp. v. Millenium Partners, L.P., Index No /2003, N.Y. Co., Gammerman, J n.9 STATUTES, RULES and OTHER AUTHORITIES 49 U.S.C (a)...4 CPLR 317(b)...12 n.6, 19 n.12 CPLR , 2, 3, 13, 14, 15,18 CPLR , 2, 13, 14 N.Y. Gen. Oblig. Law (2009)...12 n.6, 19 n.12 -iii-

5 Anglim, Jennifer M., Crossroads in the Great Race Moving Beyond the International Race to Judgment in Disputes over Artwork and Other Chattels, 45 Harv. Int l L.J. 239 (2004)...18 n.11 Enriques, Luca (2003). Off the Books, but on the Record Evidence from Italy on the Relevance of Judges to the Quality of Corporate Law, in Curtis J. Milhaupt (ed.), Global Markets, Domestic Institutions Corporate Law and Governance in the New Era of Cross-Border Deals. New York Columbia University Press...18 n.11 Siegel, David, Practice Commentaries, McKinney s Cons. Laws of NY, Book 7B, CPLR C iv-

6 Plaintiff North American Airlines Inc. ( NAA ) respectfully submits this memorandum of law in opposition to the motion of Defendant Wilmington Trust Company, not in its individual capacity, but solely as Owner Trustee ( WTC ), for an order pursuant to CPLR 3211 and CPLR 2201 staying this action in favor of an action filed in Italy. PRELIMINARY STATEMENT NAA leased a Boeing 767 aircraft from WTC pursuant to a lease that commenced as of December 1, NAA commenced this action to recover over $2.6 million that WTC wrongfully refused to reimburse it for maintenance work performed on one of the aircraft s engines despite WTC s contractual obligation to do so. 1 After the action was commenced, on November 30, 2009, the last day of the term of the lease, WTC converted an additional $930,000 of NAA s funds by submitting a fraudulent certification to Wachovia Bank (the issuer of an irrevocable letter of credit established by NAA pursuant to the lease) falsely certifying that an Event of Default existed and that NAA owed WTC $930,000 as a result of such Event of Default. Contrary to WTC s certification, no Event of Default existed and NAA did not owe WTC $930,000. NAA thereafter filed a First Amended Complaint, which seeks, inter alia, damages in excess of $3.5 million from WTC for breaches of its lease obligations and for conversion. WTC s goal is to avoid repaying NAA the more than $3.5 million to which it is entitled. This is clear from WTC s refusal to reimburse NAA the $2.6 million for the maintenance work, WTC s conversion of the $930,000 by the issuance of a fraudulent draw certification, and WTC s plan to render itself judgment-proof by transferring title to the aircraft outside of the 1 The claims against the remaining defendants, who have not yet appeared, are based on those defendants guaranty of WTC s obligations under the lease.

7 United States. 2 In its latest effort to avoid its obligations to NAA or, at a minimum, to delay NAA s recovery of the $3.5 million that it owes NAA, WTC now moves to dismiss or stay this action pursuant to CPLR 3211(a)(4) and CPLR 2201 in favor of a declaratory judgment action against NAA in Gallarate, Italy, brought by Air Italy S.p.A. ( Air Italy ) - a non-party in this action. The Italian action is a ruse premised on the patently false assertion that Air Italy is the lessor of the aircraft instead of WTC. In actuality, Air Italy is merely an alleged future operator of the aircraft after the termination of WTC s lease with NAA. While the Italian action was commenced prior to the instant action, the action was only commenced in a patent attempt to wrongfully preempt NAA s filing of an action in New York pursuant to the forum selection clause of the lease. Moreover, no proceedings have taken place in the Italian action. NAA is not required to appear in the Italian action until January 31, NAA has retained Italian counsel to respond to the Italian action and seek dismissal on the grounds that the Italian court lacks jurisdiction over NAA, the claims asserted in the Italian action may not be heard before the Italian court, and that Air Italy lacks standing to assert such claims. For these reasons, NAA is confident that the Italian action will ultimately be dismissed. As set forth below, NAA respectfully requests that WTC s motion to dismiss or stay be denied because (i) WTC irrevocably waived the right to object to the commencement of the instant action in this Court in the lease, (ii) CPLR 3211(a)(4) does not permit dismissal based upon a prior foreign action, (iii) WTC has failed to meet the standards necessary for the grant of 2 To address this plan, NAA moved by Order to Show Cause for an attachment of the aircraft on December 8, The attachment application was resolved by a Stipulation and Order, dated December 18, 2009, whereby WTC s trustors indemnified WTC for any liability incurred as a result of a judgment entered in this action which arose from the facts as alleged in the First Amended Complaint as of the date thereof, and WTC stipulated and agreed that NAA could directly pursue WTC s indemnity rights against the trustors in the event that WTC failed to do so. -2-

8 a discretionary stay pursuant to CPLR 2201 as the instant action and the Italian action do not share a complete identity of parties, causes of action, and judgment sought, and the exceptions to this rule are not applicable, and (iv) the doctrine of international comity does not warrant a stay of this action. Finally, not only has WTC failed to establish its entitlement to a stay of this action, granting such relief would severely prejudice NAA. A stay of this action would leave NAA with no recourse against WTC for claims exceeding $3.5 million until such time as the Italian action is dismissed or adjudicated on the merits, which, given Italy s notoriously slow legal system, could take years. Granting a stay of this action would reward WTC for the chicanery of the Italian action and deny NAA the access to the agreed forum of the New York courts to settle a straightforward commercial dispute governed by New York law. FACTUAL BACKGROUND NAA is a United States air carrier headquartered at John F. Kennedy International Airport in Jamaica, New York. NAA operates passenger charter flights serving the U.S. military, tour operators, incentive groups, government agencies, sports teams, corporate groups, movie crews, and entertainment tours. (Am. Compl., 9). 3 In mid to late 2006, NAA began negotiations with defendant ALE-One ( ALE ), an Irish entity, to lease a Boeing ER aircraft. Those negotiations concerned a ER aircraft bearing manufacturer s serial number (the Aircraft ), and ALE and NAA ultimately succeeded in negotiating a lease of the Aircraft. (Am. Compl., 12). NAA is governed by the Federal Aviation Administration regulations, and as such, can only operate aircraft registered in the United States. Because United States registration of an 3 A copy of the First Amended Complaint, dated December 14, 2009, is attached as Exhibit A to the Affirmation of Matthew J. Aaronson, dated December 31, 2009 ( Aaronson Aff. ). -3-

9 aircraft requires that the aircraft be owned by a United States Citizen, as defined at 49 U.S.C (a), ALE created a trust meeting the United States Citizen definition and conveyed the Aircraft to that trust. Specifically, WTC agreed to act as Owner Trustee pursuant to a Trust Agreement dated as of December 1, 2006 between ALE and WTC (the Trust Agreement ). (Am. Compl., 10). A copy of the Trust Agreement is attached as Exhibit B to the Aaronson Affirmation. The Lease On or about December 1, 2006, NAA, as Lessee, entered into an aircraft lease agreement with WTC, as Lessor, (the Lease ) whereby WTC agreed to lease the Aircraft to NAA. The basic term of the Lease expired on November 30, (Am. Compl., 12). A copy of the Lease is attached as Exhibit C to the Aaronson Affirmation. The Lease is expressly governed by, and construed in accordance with, the laws of the state of New York, including all matters of construction, validity and performance. (Aaronson Aff., Exh. C, 22.4(a)). In addition, the parties irrevocably and unconditionally agreed that any disputes under the Lease could be brought in the state courts located in New York County and irrevocably waived any objection to the commencement of any action in the state courts located in New York County. Specifically, Section 22.4(b) of the Lease provides EACH PARTY TO THIS LEASE HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS LEASE OR ANY OF THE OTHER OPERATIVE DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN NEW YORK COUNTY, NEW YORK. LESSOR AND LESSEE EACH IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH -4-

10 JURISDICTION IN RESPECT OF THIS LEASE OR ANY OTHER OPERATIVE DOCUMENT. (emphasis added). The Lease terms required NAA to make a variety of payments to WTC, including monthly Basic Rent Payments and Maintenance Reserve Payments. (Am. Compl., 15). WTC was to hold the Maintenance Reserve Payments in discrete Maintenance Reserve sub-accounts, and the funds in those sub-accounts were to be available to NAA to reimburse it for any costs NAA incurred in performing various maintenance tasks on the Aircraft (defined in the Lease as Items of Heavy Maintenance ), including, as relevant here, off-wing engine maintenance consisting of a shop visit for full performance restoration to restore the performance of any of the Aircraft s engines ( Full Performance Restoration ). (Aaronson Aff., Exh. C, 4.3(b)(ii)(A)(2)). The Participation Agreement Contemporaneously with the execution of the Lease, NAA, as Lessee, and ALE, as Trustor, entered into an aircraft participation agreement (the Participation Agreement ). (Am. Compl., 19). A copy of the Participation Agreement is attached as Exhibit D to the Aaronson Affirmation. In the Participation Agreement, ALE guaranteed WTC s performance of its obligations regarding the repayment of NAA s security deposit and Maintenance Reserves. (Am. Compl., 20-21). ALE s Assignment Of Its Rights And Obligations Under The Trust Agreement Upon information and belief, on or about April 7, 2007, ALE assigned all of its rights and obligations under the Trust Agreement, including its interest in the Trust Estate 4 to Locat S.p.A. ( Locat ), San Paolo Leasint S.p.A. ( San Paolo ), and Intesa Leasing S.p.A. ( Intesa ), three 4 The Trust Agreement defines the Trust Estate as all estate, right, title and interest of the Owner Trustee in and to the Aircraft and the Lease, including without limitation, all amounts of Basic Rent and Supplemental Rent... (Aaronson Aff., Exh. B, 1.2) -5-

11 Italian leasing companies. (Am. Compl., 22). Upon information and belief, Leasint S.p.A. (as successor by merger to San Paolo and Intesa) ( Leasint ) and Unicredit Leasing S.p.A. (as successor by merger to Unicredit Global Leasing S.p.A. and Locat) ( Unicredit ) are the current Trustors under the Trust Agreement. (See December 18, 2009 letter from Leasint and Unicredit (collectively the New Trustors ) to WTC, at p.1, annexed as Exhibit E to the Aaronson Affirmation). Pursuant to Section 3 of the Participation Agreement, the New Trustors have assumed ALE s guaranty obligations under the Participation Agreement. WTC s Breach Of The Lease The Aircraft is equipped with two GE CF6-80C2B7F engines, including one bearing engine manufacturer s serial number (the 351 Engine ). (Am. Compl., 12). On or about November 8, 2008 NAA removed the 351 Engine from the Aircraft after a first stage HPT rotor blade failed (the Engine Failure ). (Am. Compl., 25). The 351 Engine was thereafter sent to GE Caledonian, Limited ( GECAL ), a repair facility in Scotland. GECAL is an affiliate of the General Electric Company, the manufacturer of the 351 Engine. (Am. Compl., 26). Based upon its inspection and the level of damage to the 351 Engine, GECAL concluded that a Full Performance Restoration was required in accordance with the GE Workscope Planning Guide. (Am. Compl., 27). GECAL performed a Full Performance Restoration on the 351 Engine and returned the 351 Engine to NAA on or about February 6, (Am. Compl., 28). GECAL issued NAA an invoice in the amount of $2,647, for the work performed on the 351 Engine, which NAA has paid in full. (Am. Compl., 28, 29). Despite the fact that no Potential Event of Default or Event of Default had occurred (Am. Compl., 32), shortly after GECAL completed the Full Performance Restoration on the -6-

12 351 Engine, NAA was advised that WTC would not reimburse NAA for the costs it incurred in connection therewith. (Am. Compl., 30). WTC has never provided NAA with a valid basis for its refusal to reimburse NAA for the costs it incurred in connection with the Full Performance Restoration of the 351 Engine due to the Engine Failure. (Am. Compl., 31). On September 3, 2009, NAA issued a written request (the Request ) for reimbursement from WTC in the amount of $2,647,501.72, representing the amount due to NAA pursuant to Section 4.3(b)(ii)(A) of the Lease in connection with the Full Performance Restoration by GECAL on the 351 Engine. 5 The Request was accompanied by the supporting documentation required pursuant to Section 4.3(b)(ii)(A) of the Lease. (Am. Compl., 34). (A copy of the Request (without the voluminous supporting documentation) is annexed as Exhibit H to the Aaronson Affirmation). Despite NAA s full compliance with the pertinent requirements of the Lease, WTC has refused to reimburse NAA for the cost of the Full Performance Restoration, as required under Section 4.3(b)(ii)(A). (Am. Compl., 35). WTC s Conversion Of Nearly $1,000,000 From NAA In addition to Basic Rent Payments, NAA was initially obligated to establish a security deposit under the Lease. (Am. Compl., 38). As allowed pursuant to Section 4.3(a)(vi) of the Lease, on or about May 4, 2007, NAA replaced the security deposit with an irrevocable standby letter of credit in the amount of $930,000.00, funded by NAA and issued by Wachovia Bank (the Letter of Credit ). (Am. Compl., 39). A copy of the Letter of Credit is attached as Exhibit I to the Aaronson Affirmation. 5 This was a revised request which replaced the original request, dated March 4, A copy of the original request was also sent by to Saturo Ohki, President of Sofia Aviation on March 5, A copy of the cover and the original request (Invoice No ) are attached to the Aaronson Affirmation as Exhibit F. WTC had previously advised NAA to send information required under the Lease to Sofia Aviation. A copy of WTC s March 14, 2008 direction letter is attached to the Aaronson Affirmation as Exhibit G. -7-

13 Pursuant to the Letter of Credit, WTC could only draw after certifying that an Event of Default had occurred and was continuing and could only draw the amount it was entitled to by virtue of the Event of Default. Thus, the Letter of Credit required any Lessor draw certification to certify as follows I, an authorized representative of Wilmington Trust Company, not in its Individual Capacity but solely as Owner Trustee of the North American Airlines Inc. Trust No , do hereby certify that an Event of Default (as defined in that certain aircraft Lease Agreement dated as of December 1, 2006 between the undersigned and North American Airlines, Inc.) has occurred and is continuing. We therefore demand payment in the amount of (insert amount) as same is due and owing. On or about November 30, 2009, the last day NAA was required to provide a Letter of Credit pursuant to the Lease, WTC submitted a draw certification under the Letter of Credit to Wachovia Bank (the Draw Certification ). (Am. Compl., 43). The Draw Certification, falsely, fraudulently, and in bad faith, certif[ied] that an Event of Default (as defined in that certain Aircraft Lease Agreement dated as of December 1, 2006 between the undersigned and North American Airlines, Inc.) has occurred and is continuing. We therefore demand payment in the amount of $930,000.00, as same is due and owing. (Am. Compl., 44). A copy of the Draw Certification is attached as Exhibit J to the Aaronson Affirmation. At no time prior to, on, or after November 30, 2009, did WTC give NAA notice of any alleged Event of Default, or otherwise suggest that an Event of Default had occurred or was occurring. (Am. Compl., 41). Moreover, no such Event of Default (as that term is defined in the Lease) had occurred or was occurring, and NAA did not owe $930, to WTC. (Am. Compl., 46). On the basis of WTC s false and fraudulent Draw Certification, Wachovia Bank delivered $930,000.00, the full amount available under the Letter of Credit, to WTC. (Am. Compl., 45). -8-

14 The Italian Action Pursuant to a Writ of Summons, dated July 8, 2009 (the Writ of Summons ), Air Italy S.p.A. ( Air Italy ), an Italian airline headquartered in Gallarate, Italy, commenced a declaratory judgment action in the Court of Busto Arsizio, Detached Court of Gallarate (the Italian Action ). A copy of a translation of the Writ of Summons and the transmittal document received by NAA at its headquarters at JFK Airport in Jamaica, New York, on or about August 17, 2009 is attached as Exhibit K to the Aaronson Affirmation. Air Italy has absolutely no contractual relationship with NAA. It is not the Lessor under the Lease, it is not the Trustor under the Trust Agreement and it is not a party to the Participation Agreement. WTC does not dispute these facts. As a general matter, the Writ of Summons commencing the Italian Action is internally inconsistent and rife with factual assertions that are plainly incorrect and contrary to the terms of the Lease, the Trust Agreement and the Participation Agreement. Critically, the Writ of Summons incorrectly claims that Air Italy is a party to the Lease. (See Aaronson Aff., Exh. K, Point 1, at p. 2). The entire Italian Action is premised upon this false assertion. While acknowledging that ownership of the plane has remained with WTC since December 1, 2006 and that the New Trustors are the beneficial owners of the Trust Estate (Id. at pp. 3-6), it claims that the substantial parts of the leasing of airplane [sic] are Air Italy and NAA. (Id. at p. 6). It appears that such assertion is based upon Air Italy s claim that the New Trustors acquired their interest in the Trust Estate for the purpose of leasing the Aircraft to Air Italy. (Id. at p. 4). In addition, the Writ of Summons falsely claims that the payments under the Lease were paid by NAA to Air Italy. (Id. at p. 5). As mandated by WTC, NAA made Lease payments to New Trustor Locat s bank account. A copy of WTC s June 20, 2007 letter directing that payments be made to Locat is attached as Exhibit L to the Aaronson Affirmation. Air Italy -9-

15 ultimately concedes this point at the end of the Writ of Summons (at p. 19), but, as with most facts that are inconvenient, Air Italy discounts this as unimportant, as it claims that Locat eventually forwarded such sums to Air Italy. Based upon the manifestly false premise that Air Italy is the Lessor under the Lease (which it clearly is not), Air Italy s Italian Action seeks declarations for the benefit of Air Italy that (i) the 351 Engine did not require a full performance restoration (as that term is used in the Lease), (ii) GECAL s work was not a full performance restoration (as that term is used in the Lease) and (iii) that Air Italy as Lessor, owes no sum at all to North American Airlines for the work performed by GECAL on the 351 Engine. (Id. at p. 21). The final declaration sought by Air Italy is telling. NAA has never demanded that Air Italy reimburse it for the work performed on the 351 Engine. NAA has not asserted any claim against Air Italy in this action, nor has NAA claimed that it has any right to reimbursement under the Lease from Air Italy. Under the Lease, it is clear that the obligation to reimburse NAA for the Full Performance Restoration lies with WTC, and that the New Trustors have guaranteed such obligation under the Participation Agreement. To date, no proceedings have taken place in connection with the Italian Action. The first hearing in the Italian Action has been scheduled for February 20, 2010, and NAA is not required to enter an appearance in the Italian Action until January 31, (Id. at 16). NAA has retained Italian counsel to respond to the Italian Action and seek dismissal on the grounds that the Italian court lacks jurisdiction over NAA, the claims asserted in the Italian Action may not be heard before the Italian court and that Air Italy lacks standing to assert such claims. (Id. at 12). NAA is confident that the Italian Action will ultimately be dismissed. -10-

16 PROCEDURAL HISTORY NAA commenced this action on September 29, 2009 (the New York Action ). Service of process was made upon WTC on September 30, (Aaronson Aff., 17 and Exh. M). Service of process on defendants Locat, San Paolo and Intesa is being effectuated in Italy pursuant to the Hague Convention On The Service Abroad Of Judicial And Extrajudicial Documents In Civil Or Commercial Matters. NAA has yet to receive confirmation of service on these defendants. (Aaronson Aff., 18). WTC filed the instant motion to dismiss or stay on November 30, Following its discovery of WTC s conversion of $930,000 through the fraudulent draw under the Letter of Credit (which occurred the same day that WTC filed the instant motion), NAA moved by Order to Show Cause on December 8, 2009 for an order of attachment with respect to the Aircraft which was then present in New York. In accord with the Court s December 8, 2009 Order to Show Cause, the Aircraft was returned to WTC on December 10, 2009 with the condition that WTC keep the Aircraft in New York pending the hearing of NAA s application for an attachment. The December 8, 2009 Order to Show Cause was withdrawn pursuant to a Stipulation and Order, dated December 18, 2009, whereby (i) the New Trustors indemnified WTC for any liability incurred as a result of a judgment entered in this action which arose from the facts as alleged in the First Amended Complaint as of the date thereof and (ii) WTC stipulated and agreed that NAA could directly pursue WTC s indemnity rights against the New Trustors in the event that WTC failed to do so. Copies of the December 18, 2009 Stipulation and Order and the Direction Letter referenced therein, are attached as Exhibit N to the Aaronson Affirmation. Upon execution of the Stipulation and Order, WTC was permitted to remove the Aircraft from New York and, upon information and belief, has done so. -11-

17 NAA filed the First Amended Complaint on December 14, (Aaronson Aff., Exh. A). ARGUMENT I. WTC WAIVED ANY OBJECTION TO THE COMMENCEMENT OF THIS ACTION IN THIS COURT, INCLUDING THE PRESENT MOTION Section 22.4(b) of the Lease provides in part Each party to this lease hereby irrevocably and unconditionally submits... to the non-exclusive general jurisdiction of any state or federal court of competent jurisdiction sitting in New York County, New York. Lessor and lessee each irrevocably waive any objection,...which it may now or hereafter have to the bringing of any action or proceeding in such jurisdiction in respect of this lease or any other operative document. (Aaronson Aff., Exh. C). Notably, this language is significantly broader than what is traditionally included in a forum selection clause, which typically provides that the parties waive any objection that each may now or hereafter have to the laying of venue of any such action or proceeding in any such court. 6 Here, WTC has expressly and irrevocably waived any objection to the bringing of this action in this Court. As the instant motion clearly constitutes an objection to the bringing of this action in this Court, WTC is contractually barred from seeking the relief sought and the instant motion should be denied. Under traditional principles of contract interpretation, sophisticated parties, negotiating at arms-length, are bound by the terms to which they agreed. See TAG 380, LLC v. ComMet 380, Inc., 10 N.Y.3d 507, (2008) ( [W]hen parties set down their agreement in a clear, 6 New York law specifically precludes a party from moving to dismiss or stay an action for inconvenient forum when the agreement out of which the action arises provides for New York choice of law and a New York forum in a transaction involving $1 million or more. See N.Y. CPLR 317(b) (2009); N.Y. Gen. Oblig. Law (2009). Accordingly, WTC could not base its motion on the doctrine of forum non conveniens and instead moves to dismiss or stay pursuant to CPLR 3211(a)(4) and CPLR 2201 in a transparent attempt to side-step the statutory constraints and its contractual obligations. -12-

18 complete document, their writing should... be enforced according to its terms. ) (internal citations and quotations omitted). These principles have been applied to forum selection clauses whereby a party signifies that he or she submits to the jurisdiction of the chosen forum. See Boss v. Am. Express Fin. Advisors, Inc., 6 N.Y.3d 242, 247 (2006); see also National Union Fire Ins. Co. v. Worley, 257 A.D.2d 228, 231 (1st Dept. 1999) (noting that forum selection clauses are enforceable according to their terms ). Accordingly, this Court should enforce this forum selection clause, wherein WTC waived any objection to the bringing of this action in this Court, including the present motion to dismiss or stay. II. CPLR 3211(a)(4) DOES NOT APPLY TO FOREIGN ACTIONS The statute upon which WTC relies, CPLR 3211(a)(4), to dismiss this action due to a prior action pending by its terms only applies where the other action is before a court of any state or the United States. Id. Not only does Wallace v. Merrill Lynch Capital Servs., Inc., 12 Misc. 3d 1153A, 819 N.Y.S.2d 214 (Sup. Ct. N.Y. Co. 2006), cited by WTC (Defs. Mem. at 6) not support dismissal, it directly contradicts the proposition for which WTC cites it. In Wallace, Justice Fried denied the defendant s motion to dismiss or stay on each ground it had advanced, including CPLR 3211(a)(4) and CPLR 2201, and reiterated the well-settled proposition that Section 3211(a)(4) by its express language applies only to other actions pending in a court of any state or the United States. Id. at *8 (citing, inter alia, CPLR 3211(a)(4)). Because the Italian Action is not pending in a court of any state or the United States, the motion to dismiss pursuant to CPLR 3211 must be denied as it was in Wallace. See id.; see also Abkco Industries, Inc. v. Lennon, 85 Misc. 2d 465, 471 (Sup. Ct. N.Y. Co. 1975) (denying defendant s motion to dismiss due to an earlier-filed action in England because [p]endency of suit in a foreign -13-

19 jurisdiction does not support a dismissal on grounds of prior action pending. ), aff d and modified in part on other grounds, 52 A.D.2d 435 (1st Dept. 1976). Even if CPLR 3211(a)(4) were to apply to foreign actions, the first-filed doctrine does not apply where the first-filed action has been filed preemptively. See L-3 Communications Corp. v. SafeNet, Inc., 45 A.D.3d 1, 8 (1st Dept. 2007) (noting courts have often deviated from the first-in-time rule where one party files the first action preemptively, after learning of the opposing party s intent to commence litigation ) (citing White Light Prods. v. On the Scene Prods., 231 A.D.2d 90, 100 (1st Dept. 1997)). Here, the Italian Action was filed after NAA demanded reimbursement for the Full Performance Restoration on the 351 Engine in March (Aaronson Aff., 8, Exh. F). WTC knew full well at the time it wrongfully denied NAA s claim for reimbursement that this would result in litigation in New York. Thus, it is clear that the filing of the Italian Action is a preemptive device intended to avoid the agreed-upon New York forum. Thus, in addition to the fact that CPLR 3211(a)(4) is inapplicable on its face, the firstfiled rule does not apply due to Air Italy s preemptive commencement of the Italian Action. III. A DISCRETIONARY STAY PURSUANT TO CPLR 2201 IS NOT WARRANTED The granting of a stay is addressed to this Court s sound discretion. See CPLR 2201 (2009). It should therefore be refused unless the proponent shows good cause for granting it. David Siegel, Practice Commentaries, McKinney s Cons. Laws of NY, Book 7B, CPLR C22017, at 11. A stay in this case, however, would be a drastic remedy, on the simple basis that justice delayed is justice denied. Id. A. Complete Identity Of Parties, Causes Of Action And Judgment Sought Is Required To Justify A Stay CPLR 2201 provides Except where otherwise prescribed by law, the court in which an -14-

20 action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just. Despite the broad language of this statute, it is generally only where the decision in one action will determine all the questions in the other action... that a case for a stay is presented.... What is required is complete identity of parties, causes of action and judgment sought. Abrams v. Xenon Industries, Inc., 145 A.D.2d 362, 363 (1st Dept. 1988) (emphasis added); see also 952 Assoc., LLC v. Palmer, 52 A.D.3d 236, 237 (1st Dept. 2008) (quoting Pierre Assoc. v Citizens Cas. Co. of N.Y., 32 A.D.2d 495, 497 (1st Dept. 1969)); Somoza v. Pechnik, 3 A.D.3d 394 (1st Dept. 2004) The Parties Are Not Identical This action and the Italian Action do not share a complete identity of parties necessary for this Court to impose a stay. See Abrams, 145 A.D.2d at 363. In this action, NAA asserts claims against WTC, ALE, Locat, San Paolo, and Intesa. In the Italian Action, Air Italy, a nonparty in this action, asserts claims against NAA. 8 Moreover, Locat, San Paolo, and Intesa are not parties to the Italian Action. 2. The Causes Of Action Are Not Identical There is not a complete identity of the causes of action between the two actions. See id. In this action, NAA asserts the following causes of action 1) Breach of the Lease against WTC; 7 Instead of supporting WTC s argument, Buzzell v. Mills, 32 A.D.2d 897 (1st Dept. 1969), cited by WTC (Defs. Mem. at 6), compels the denial of the instant motion. In Buzzell, the First Department cites the well-settled rule that a subsequent action may be stayed pending the trial of a prior action between the same parties where there are overlapping issues and the determination of the prior action may dispose of or limit issues which are involved in the subsequent action. Id. at (citations omitted) (emphasis added). As demonstrated more particularly below, the New York Action and the Italian Action do not involve the same parties. Thus, the rule enunciated in Buzzell does not support Defendant s statement that a substantial identity of the parties justify a stay (Defs. Mem. at 6) (emphasis added) and rather supports the proposition that complete identity of parties, claims and judgment sought is necessary for the court to order a stay pursuant to CPLR See Abrams, 145 A.D.2d at While WTC is also named as a defendant in the Italian Action, no claims are asserted against it and it appears WTC was named solely in an effort to make the Italian Action appear to involve the same parties as any action NAA would file in New York. -15-

21 2) Breach of the Covenant of Good Faith and Fair Dealing against WTC; 3) Unjust Enrichment against WTC; 4) Breach of Guaranty against Locat, San Paolo, and Intesa; 5) Unjust Enrichment against Locat, San Paolo, and Intesa; 6) Breach of Guaranty against ALE; 7) Unjust Enrichment against ALE; and 8) Conversion against WTC. In the Italian Action, Air Italy, a non-party here, seeks on its own behalf declarations that (i) the 351 Engine did not require a full performance restoration (as that term is used in the Lease), (ii) GECAL s work was not a full performance restoration (as that term is used in the Lease) and (iii) that Air Italy as Lessor, owes no sum at all to North American Airlines for the work performed by GECAL on the 351 Engine. (Aaronson Aff., Exh. K at p. 21). Thus, not a single cause of action asserted in the New York Action is identical to the claims in the Italian Action. Even were the Court persuaded that the two actions have issues in common (which is not sufficient to establish complete identity), NAA s claim for conversion against WTC is present only in the New York Action. 3. The Judgments Sought Are Not Identical The Italian Action seeks only declaratory relief, whereas the New York Action seeks money damages. Thus, there can be no dispute that the judgments sought are not identical. Thus, there is no complete identity of parties, causes of action and judgments sought between this action and the Italian Action. Accordingly, a judgment in the Italian Action in the form of the declarations sought in Air Italy s favor on all three counts will not determine all the questions in the New York Action, and consequently, WTC s motion for a stay should be denied. See Abrams, 145 A.D.2d at 363 (reversing trial court s order granting stay because although both actions involved the same alleged fraudulent scheme, one of the litigants was not a party to both action, and there was no identity of causes of action); Guilden v. Baldwin Sec. Corp., 189 A.D.2d 716, 716 (1st Dept. 1993) (same); see also Fewer v. GFI Group, 59 A.D.3d 271, 272 (1st -16-

22 Dept. 2009) (reversing trial court s order granting stay in part because the resolution of a related arbitration, to which the movant was not a party, would not resolve all material issues in the litigation); First City Nat l Bank & Trust Co. v. Heaton, 165 A.D.2d 710, 563 N.Y.2d 783, 784 (1st Dept. 1990) (affirming denial of stay of second-filed state court action even though the state court action involved the same series of business transactions as a previously-filed federal court action). B. Even If Complete Identity Of Parties And Claims Were Not Required, WTC Fails To Meet The Standard For A Discretionary Stay In the rare circumstances where New York courts have stayed one action pending the resolution of a related action with less than a complete identity of the parties and causes of action, the courts require a showing that the parties are substantially or virtually identical, that there is substantial overlap in the issues and that the claims will be more comprehensively adjudicated in the earlier-filed action. See, e.g., El Greco, Inc. v. Cohn, 139 A.D.2d 615 (2d Dept. 1988). However, such cases are limited to those involving extraordinary factors not present here. See Belopolsky v. Renew Data Corp., 41 A.D.3d 322, (1st Dept. 2007); 9 Asher v. Abbott Laboratories, 307 A.D.2d 211, (1st Dept. 2003). 10 Here, the parties are not substantially identical, the issues do not substantially overlap and the claims will be more comprehensively adjudicated in this action, which includes all necessary 9 The plaintiffs in Belopolsky were defendants in a related action styled Renaissance Technologies Corp. v. Millenium Partners, L.P., (Index No /2003, N.Y. Co.). The defendants in Belopolsky had been retained as experts in the Renaissance Technologies action. The plaintiffs in Belopolsky commenced the action to recover damages for the defendants alleged mishandling of the computer software they had been retained to review as experts in the Renaissance Technologies action. See Belopolsky, 41 A.D.3d at 322. The trial court stayed the laterfiled action because there was a very real possibility that the underlying action would resolve and obviate the need for the later-filed action. 10 In Asher the First Department reversed the trial court s denial of a stay of a state action in favor of an earlier-filed federal action due to, inter alia, the federal courts particular expertise in the area of antitrust law, the fact that the federal action was commenced first and discovery ha[d] been completed, the defendants in the actions... [were] the same, there [was] substantial overlap between the issues raised in the two proceedings...[and the fact that] the federal action... [would] result in a more complete disposition of the basic antitrust issues alleged. 307 A.D.2d at -17-

23 parties. C. NAA Would Be Severely Prejudiced By The Imposition Of A Stay Further, NAA would be significantly prejudiced by the imposition of a stay. The Italian legal system is reputed to be very slow and it could take a significant amount of time to resolve NAA s application to dismiss the Italian Action, 11 which is not even scheduled for an initial hearing until February 20, (Aaronson Aff., 14, Exh. K at p.20). In the interim, memories fade, witnesses could move, and documents could be lost, see Krantz v. Scholtz, 201 A.D.2d 784, 785 (3d Dept. 1994), all to the detriment of NAA s rights to investigate and try its claims. D. The Cases Cited By Defendant Are Inapposite WTC has cited no case in which a New York State court stayed or dismissed an action pending the resolution of another action in a foreign jurisdiction. Moreover, with the exception of American Marine Insurance Group. v. Price Forbes, Ltd., 166 A.D.2d 263 (1st Dept. 1990), discussed below, the cases cited by WTC in support of a discretionary stay pursuant to CPLR 2201 (Defs Mem. at 6), are only cited for general principles, which, as set forth above in Points III.A and B are not here applicable. WTC argues that the facts of this case are very close to those of American Marine Insurance Group. v. Price Forbes, Ltd., 166 A.D.2d 263 (1st Dept. 1990) ( American Marine ) (Def. Mem. at 7). Such an assertion is unsupported by an examination of the facts in American Marine. In that case, the plaintiff commenced an action against defendants and other parties in See Enriques, Luca (2003). Off the Books, but on the Record Evidence from Italy on the Relevance of Judges to the Quality of Corporate Law, in Curtis J. Milhaupt (ed.), Global Markets, Domestic Institutions Corporate Law and Governance in the New Era of Cross-Border Deals, New York Columbia University Press, (providing empirical data on the ineffectiveness and inefficiency of Italian courts); Jennifer M. Anglim, Crossroads in the Great Race Moving Beyond the International Race to Judgment in Disputes over Artwork and Other Chattels, 45 Harv. Int l L.J. 239, 282 (2004) (noting that Italian courts... frequently have slow-moving dockets... ). -18-

24 London in June 1987 for failure to effect insurance coverage for an entity in liquidation. See id. at 264. The New York action was commenced nearly a year later in April 1988 and was based on the same transaction that was the subject of the London litigation. See id. In addition, one of plaintiff s insured had previously commenced a related litigation arising out of the same purportedly wrongful conduct. See id. As such, there were three actions, including the liquidation proceeding, pending in Great Britain for close to a year before the New York action began. Moreover, the consolidated London actions had been scheduled for trial, the underlying events occurred primarily in London, and the great majority of the witnesses and documents pertaining to this case [were] located in London. See id. at Here, no proceedings have taken place in the Italian Action (Aaronson Aff., 16) and NAA s appearance is not necessary until January 31, 2010 (Id., Exh. K). Further, the Lease was not negotiated or executed in Italy, the work performed on the 351 Engine was not performed in Italy; and nearly all of NAA s documents and witnesses are located at NAA s headquarters at JFK Airport in New York. IV. WTC IS NOT ENTITLED TO A STAY UNDER THE DOCTRINE OF INTERNATIONAL COMITY The New York Court of Appeals has recognized that comity is not a rule of law, but one of practice, convenience and expediency. Ehrlich-Bober & Co. v. University of Houston, 49 N.Y.2d 574, 580 (1980) (citing Mast, Foos & Co. v. Stover Mfg. Co., 177 U.S. 485, 488 (1900)). Moreover, [i]f an action concerns a commercial transaction in New York, and it is a matter on which the New York courts would otherwise have proper jurisdiction, comity does not prevent 12 The First Department also noted that New York was not an appropriate forum for the action and that the plaintiff would not have survived a motion to dismiss or stay for forum non conveniens. See id. Here, no such motion has been made, nor is such a motion available to WTC. See N.Y. CPLR 317(b) (2009); N.Y. Gen. Oblig. Law (2009); (Aaronson Aff., Exh. C, 22.4(a)). -19-

25 the New York courts from exercising that jurisdiction. Sachs v. Adeli, 26 A.D.3d 52, 55 (1st Dept. 2005)(citing Ehrlich-Bober & Co., 49 N.Y.2d at 582). Because this action concerns a commercial transaction in New York and this Court has personal jurisdiction over WTC, comity does not compel it to stay this action pending the disposition of the Italian Action. Nor should the Court exercise its discretion to impose a stay based on international comity. The New York Action, although nominally filed subsequent to the Italian Action, is significantly farther along. This Court has entertained significant motion practice with respect to the issue of attachment. Under the Lease, New York law applies; the parties have agreed to New York as a permissible forum; and the parties have further waived any objections to the commencement of an action in New York. (Aaronson Aff., Exh. C, 22.4(a)). The majority of the witnesses and documents are located here, and this dispute should be adjudicated in New York. A. The Federal Authority Cited By Defendant Is Not Applicable Here Defendant s citation to Dragon Capital Partners L.P. v. Merrill Lynch Capital Servs., 949 F. Supp (S.D.N.Y. 1997) ( Dragon Capital ) for the proposition that [w]hen parallel non- U.S. and domestic proceedings are pending, domestic courts generally defer to the first suit filed (Defs. Mem. at 7) (emphasis added) is unavailing. Not only are the instant action and the Italian Action not parallel proceedings, WTC neglects to advise the Court that the decision in Ronar, Inc. v. Wallace, 649 F. Supp. 310 (S.D.N.Y. 1986), relied upon by the court in Dragon Capital for the foregoing general principle, also states that [w]here foreign litigation is in its incipiency, motions to stay the domestic action are properly denied. Id. at 319 (quoting I.J.A., Inc. v. Marine Holdings, Ltd., 524 F. Supp. 197, 199 (E.D. PA. 1981)). Because the Italian Action is indisputably in its incipiency (Aaronson Aff., at 16), Dragon Capital does not support a stay of the instant action. -20-

26 Moreover, Dragon Capital, is factually distinguishable. The plaintiff in Dragon Capital commenced both actions in Hong Kong and New York. See 949 F. Supp. at The Hong Kong action had been filed a year and half prior to the New York action, issue had been joined and pre-trial proceedings and substantial discovery had taken place. See id. at In dismissing the second-filed New York Action, the Court found it significant that Hong Kong is a sister common law jurisdiction with procedures akin to New York s, see id. at 1129, 13 the New York complaint made no reference to the United States or New York, see id. at 1131, most of the witnesses and documents were not located in the United State, see id., and that Hong Kong was the sight [sic] of most of the meetings about the transactions in question. Id. at Italy, on other hand, is a civil law jurisdiction. See Canadian Overseas Ores, Ltd. v. Compania de Acero del Pacifico S.A., 528 F. Supp. 1337, 1342 (S.D.N.Y. 1982), aff d, 727 F.2d 274 (1984). -21-

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