FILED NEW YORK COUNTY CLERK 08/26/2014 0525 PM INDEX NO. 652450/2014 NYSCEF DOC. NO. 10 RECEIVED NYSCEF 08/26/2014 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -------------------------------------------------------------------x NY ICE, LLC, Plaintiff, -against- CHARLES WANG, CBW/SK SPORTS VENTURES II, INC., CBW/SK SPORTS VENTURES, LP, and CBW/NL SPORTS VENTURES, LLC, Defendants. -------------------------------------------------------------------x Index No. 652450/2014 DEFENDANTS MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION TO TRANSFER VENUE PURSUANT TO CPLR SECTION 510(1) Vincent A. Sama James D. Herschlein Robert Grass Kaye Scholer LLP 425 Park Avenue New York, NY 10022 Tel 212-836-8000 Fax 212-836-8689 Attorneys for Defendants Charles Wang, CBW/SK Sports Ventures II, Inc., CBW/SK Sports Ventures, LP, and CBW/NL Sports Ventures, LLC
TABLE OF CONTENTS PRELIMINARY STATEMENT... 1 STATEMENT OF FACTS... 2 ARGUMENT... 3 Page I. NEW YORK COUNTY IS NOT A PROPER VENUE FOR THIS ACTION... 3 A. There Is No Written Agreement Fixing the Place of Trial in New York County... 3 1. CPLR 501 Does Not Authorize Venue Based on an Alleged Oral Agreement... 3 2. At a Minimum, There Is a Question of Fact as to the Existence of Any Binding Contract Between the Parties, Which Renders Its Venue Provision Unenforceable... 4 B. The Location of Events Giving Rise to Plaintiff s Causes of Action Is Irrelevant to the Venue Determination... 8 II. VENUE IS PROPER IN NASSAU COUNTY... 8 CONCLUSION... 9 62216268.docx i
TABLE OF AUTHORITIES Page(s) CASES Chiriqui Land Co. v. M/V Snow Flower, No. 90 Civ. 2729 (JFK), 1991 WL 156345 (S.D.N.Y. Aug. 6, 1991)...4 Ciaramella v. Reader s Digest Ass n, Inc., 131 F.3d 320 (2d Cir. 1997)...8 Kargo, Inc. v. Pegaso PCS, No. 05 Civ. 10528 (CSH) (DFE), 2008 WL 4579758 (S.D.N.Y. Oct. 14, 2008)...7 Kores Mfg. Corp. v. Standard Packaging Corp., 31 A.D.2d 622 (1st Dep t 1968)...5 Longo v. Shore & Reich, Ltd., 25 F.3d 94 (2d Cir. 1994)...8 MHR Capital Partners LP v. Presstek, Inc., No. 600490/2005, 2007 WL 4898299 (Sup. Ct. N.Y. Cty. Jan. 3, 2007)...4 Nat l Gear & Piston, Inc. v. Cummins Power Sys., LLC, 861 F. Supp. 2d 344 (S.D.N.Y. 2012)...7 R.G. Group, Inc. v. Horn & Hardart Co., 751 F.2d 69 (2d Cir. 1984)...7, 8 Scheck v. Francis, 26 N.Y.2d 466 (1970)...1, 5, 8 United States Fidelity and Guaranty Co. v. Ragusa, 195 A.D.2d 313 (1st Dep t 1993)...1, 4 Wells Fargo Bank Nat l Ass n v. Stargate Films, Inc., 18 A.D.3d 264 (1st Dep t 2005)...4 ZPC 2000, Inc. v. The SCA Group, Inc., 86 F. Supp. 2d 274 (S.D.N.Y. 2000)...2, 4 STATUTES CPLR 501...1, 3 CPLR 503...9 CPLR 503(a)...8 62216268.docx ii
Page(s) CPLR 503(c)...9 CPLR 503(d)...9 CPLR 510(1)...1, 3 CPLR 3031...5 62216268.docx iii
Defendants Charles Wang, CBW/SK Sports Ventures II, Inc. ( CBW Inc. ), CBW/SK Sports Ventures, LP ( CBW LP ) and CBW/NL Sports Ventures, LLC ( CBW LLC ) respectfully submit this memorandum of law in support of their motion to transfer venue of this action from New York County to Nassau County pursuant to CPLR 510(1). PRELIMINARY STATEMENT As demonstrated below, New York County is not a proper venue for this action. Plaintiff s allegation that venue is proper in New York County based on an alleged contractual provision fails at its inception because there is no signed, written agreement between the parties as required by CPLR 501. Rather, Plaintiff alleges that the purported agreement containing the consent-to-venue provision was formed by Mr. Wang s alleged oral confirmation of its terms and handshake with Plaintiff s representative. Even aside from that deficiency, a venue clause is unenforceable where defendant raise[s] a triable issue of fact whether the contract in which it is contained is binding and enforceable. United States Fidelity and Guaranty Co. v. Ragusa, 195 A.D.2d 313, 314 (1st Dep t 1993). In fact, the alleged agreement at issue in this action is not binding and enforceable because it was never signed. At a minimum, there is a question of fact as to whether that alleged unsigned agreement is binding and enforceable. It is well settled that, if the parties to an agreement do not intend it to be binding upon them until it is reduced to writing and signed by both of them, they are not bound and may not be held liable until it has been written out and signed. Scheck v. Francis, 26 N.Y.2d 466, 469-70 (1970). Several provisions in the unsigned agreement atissue,includingaclausespecificallystatingthatit shallbecomeeffectivewhen...signedby each of the Parties and delivered to the other Party, demonstrate the parties intent not to be bound unless and until it was signed. Absent a signed agreement and without a clear finding thatbothpartiesconsentedtothe...forumselectionprovision,itwouldbe premature fora 62216268.docx 1
court to find venue where it would not otherwise lie. ZPC 2000, Inc. v. The SCA Group, Inc., 86 F. Supp. 2d 274, 277 (S.D.N.Y. 2000) (citation omitted). By contrast, Nassau County is the only place where venue is proper under the CPLR because that is where each Defendant resides and Plaintiff resides outside the state. The Court should transfer venue to Nassau County where it indisputably is proper. STATEMENT OF FACTS This is an action based on an alleged contract by which Plaintiff, NY ICE, LLC, contends that it had the right, subject to certain conditions, to purchase the New York Islanders of the National Hockey League ( NHL ). The Stock Purchase Agreement ( SPA ), which Plaintiff alleges reflects the purported deal, is not signed by any of the parties, including Plaintiff. Complaint Ex. A at 69. 1 Instead, Plaintiff contends that the deal was consummated at a meeting on March 10, 2014 when Mr. Wang allegedly confirmed that he agreed to sell the team to NY ICE and shook hands with Plaintiff s representative. Complaint 23, 25. Thereafter, on August 1, 2014, Mr. Wang informed Plaintiff s representative that he decided to sell the Islanders to a different investment group. Id. 59. Based on its allegations, Plaintiff asserts causes of action for breach of contract, breach of the covenant of good faith and fair dealing, a permanent injunction, and promissory estoppel; and seeks relief in the form of specific performance, an injunction and damages. Plaintiff alleges that venue is proper in New York County based on a provision in the unsigned SPA, which provides that the parties consent to jurisdiction in New York, New York. Id. 13. Plaintiff further 1 A copy of the complaint is attached as Exhibit 1 to the Affirmation of James D. Herschlein, dated August 26, 2014 ( Herschlein Aff. ). 62216268.docx 2
alleges that venue is proper as a substantial portion of the events giving rise to the causes of action, including negotiations, occurred in New York, New York. Id. On August 19, 2014, Defendants served a Demand for Change of Place of Trial to Nassau County on Plaintiff. Herschlein Aff. Ex. 2. On August 25, 2014, Plaintiff served an Affidavit of Andrew Barroway ( Barroway Affidavit ) on Defendants. Herschlein Aff. Ex. 3. The Barroway Affidavit repeats the allegations of the complaint that venue is proper in New York County in light of the consent-to-jurisdiction clause in the unsigned SPA and that New York County was the place where the agreement was entered into. Barroway Affidavit 5-7. ARGUMENT CPLR 510(1) provides that the Court may change the place of trial of an action where...thecounty designated for that purpose is not a proper county... Neitherofthetwobases alleged in the complaint supports venue of this action in New York County under the CPLR. I. NEW YORK COUNTY IS NOT A PROPER VENUE FOR THIS ACTION A. There Is No Written Agreement Fixing the Place of Trial in New York County 1. CPLR 501 Does Not Authorize Venue Based on an Alleged Oral Agreement CPLR 501 provides that a written agreement fixing place of trial, made before an actioniscommenced,shallbeenforced... (Emphasisadded). Plaintiffhasnotidentifiedany written agreement fixing place of trial. As noted above, the parties did not execute the SPA that contains the provision on which Plaintiff relies as a basis for venue. Rather, the alleged agreement is based on purported oral confirmation and a hand shake. Any alleged oral understanding regarding venue for this action (even if contrary to fact one existed) would not be enforceable under the CPLR. 62216268.docx 3
2. At a Minimum, There Is a Question of Fact as to the Existence of Any Binding Contract Between the Parties, Which Renders Its Venue Provision Unenforceable Venue in New York County is not proper for the independent reason that, at a minimum, there is a question of fact as to whether the alleged agreement (whether written or oral), including the consent-to-venue provision, is a binding and enforceable contract. Courts have declined to enforce consent-to-venue provisions under such circumstances. For example, in United States Fidelity and Guaranty Co. v. Ragusa, 195 A.D.2d 313 (1st Dep t 1993), the First Department reversed the denial of a motion to transfer venue from New York County to Nassau County where the sole basis for venue was a provision in an alleged contract. As the Court explained, the defendant has raised a triable issue of fact whether his signature on the Agreement, which contains the consensual venue provision, was forged, which renders the venue clause... unenforceable... Id. at 314. Similarly, in ZPC 2000, Inc. v. The SCA Group, Inc., 86 F. Supp. 2d 274, 277 (S.D.N.Y. 2000), the court held that Plaintiff s failure to produce a signed copy of the NDA and SCA s refusal to acknowledge that they signed it raise grave doubts as to its applicability because without a clear finding that both parties consented to the NDA s forum selection provision, it would be premature for a court to find venue where it would not otherwise lie. (Citation omitted); see also MHR Capital Partners LP v. Presstek, Inc., No. 600490/2005, 2007 WL 4898299 (Sup. Ct. N.Y. Cty. Jan. 3, 2007) (consent-to-jurisdiction clause in unsigned contract is not enforceable); Chiriqui Land Co. v. M/V Snow Flower, No. 90 Civ. 2729 (JFK), 1991 WL 156345, at *2-3 (S.D.N.Y. Aug. 6, 1991) (same). 2 2 Even in other contexts, New York courts do not give effect to provisions of a contract while a dispute is pending as to its enforceability. See, e.g., Wells Fargo Bank Nat l Ass n v. Stargate Films, Inc., 18 A.D.3d 264, 265 (1st Dep t 2005) (contractual waiver of jury trial right does not (continued...) 62216268.docx 4
Defendants are not parties to any binding oral or written contract with Plaintiff and, therefore, are not bound by the consent-to-venue provision on which Plaintiff relies. Under New York law, [i]t is well settled that, if the parties to an agreement do not intend it to be binding upon them until it is reduced to writing and signed by both of them, they are not bound and may not be held liable until it has been written out and signed. Scheck v. Francis, 26 N.Y.2d 466, 469-70 (1970). In Scheck, the Court of Appeals held that a contract that was not signed by the defendant was not enforceable even though the defendant s attorney had sent copies to the plaintiff asking him to sign the contract and even though the plaintiff had provided services to the defendant under the unexecuted contract for four months. Id. at 471-72. The provisions of the unsigned SPA on which Plaintiff relies plainly indicate that the parties did not intend to be bound by its terms unless and until it was signed by each party. For example, Section 10.15 expressly states that the proposed agreement would become effective when it was signed by the parties 10.15 Counterparts; Facsimile. This Agreement may be executed in one or more counterparts, including by facsimile or email all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Party. Complaint Ex. A at 10.15 (emphasis added). The unsigned SPA also provides that any amendments must be in writing and signed by the parties 10.9. Amendments. No amendment to this Agreement shall be effective unless it shall be in writing and signed by the Parties hereto. apply to a sufficiently pleaded defense that amounts to a claim of fraudulent inducement challenging the validity of the agreement ); Kores Mfg. Corp. v. Standard Packaging Corp., 31 A.D.2d 622, 622-23 (1st Dep t 1968) (CPLR 3031 providing for simplified procedures for court determination upon contractual consent cannot be invoked where underlying contract is challenged...onthepremiseoffraudintheinducement because if the contract is vitiated, its terms are voidable ). 62216268.docx 5
Id. at 10.9. Moreover, the unsigned SPA contemplates that each party would specifically represent and warrant that it has the authority to execute and had executed it as of the Closing Date Buyer s execution, delivery and performance of each Transaction Document to which it is a party has been duly authorized by Buyer and no other company action on the part of Buyer is necessary to authorize the Transaction Documents and the Transactions, and Buyer has duly executed and delivered this Agreement and will have, as of the Closing Date, duly executed and delivered each other Transaction Document to which it is a party. Id. at 2.1 (emphasis added); see id. at 3.1 for corresponding representation and warranty of Sellers. 3 The unsigned SPA further contemplates a representation and warranty from each party that the contract would be a valid and binding obligation against that party when fully executed Each Transaction Document to which Buyer is a party constitutes, or when executed will constitute, a valid and binding obligation of Buyer enforceable (assuming the Transaction Document to which Buyer is a party will be duly authorized, executed and delivered by the other parties thereto) against Buyer in accordance with its terms... Id. at 2.2(a); see id. at 3.2(a) for corresponding representation and warranty of Sellers. language Furthermore, the unsigned SPA contains signature lines preceded by the following INTENDING TO BE LEGALLY BOUND, the undersigned Parties have executed this Securities Purchase Agreement as of the date first written above. Id. at 69. 4 In other words, the parties contemplated that their signatures would express their intent to be legally bound. It is undisputed that the parties never signed the SPA and, therefore, never expressed their intent to be legally bound by its terms. 3 Plaintiff is defined as the Buyer in the unsigned contract. Defendants CBW Inc., CBW LP and CBW LLC are defined as the Sellers. Complaint Ex. A at 1. 62216268.docx 6
Under similar circumstances, courts applying New York law have held that the parties did not intend to be bound unless and until a contract was signed by all the parties. See, e.g., R.G. Group, Inc. v. Horn & Hardart Co., 751 F.2d 69, 76 (2d Cir. 1984) (unsigned contract not binding under New York law where the agreement itself...declaredonitsfacethat when duly executed it would set forth the parties rights and obligations, that there were no other agreements between the parties, and that any modification in the agreement would also have to be in writing and signed ); Nat l Gear & Piston, Inc. v. Cummins Power Sys., LLC, 861 F. Supp. 2d 344, 356-59 (S.D.N.Y. 2012) (motion to dismiss breach of contract claim under New York law granted where unexecuted contract contained signature page, merger clause, and provisions stating that it would be effective when fully executed and that amendments must be signed and in writing); Kargo, Inc. v. Pegaso PCS, No. 05 Civ. 10528 (CSH) (DFE), 2008 WL 4579758, at *8 (S.D.N.Y. Oct. 14, 2008) (unsigned contract not binding under New York law where various provisions, including a merger clause and provisions stating that any amendments would be signed and in writing and warranting that the parties had been authorized to enter into the agreement demonstrate the parties intent and understanding that the document was not merely memorializing a prior oral agreement, but rather that the Agreement needed to be formally executed by both parties to take effect. ). In light of the provisions in the unsigned SPA, the unsigned SPA never became effective and none of its terms, including the consent-to-venue provision, are binding on Defendants. At a 4 That the unsigned writing is a draft without binding effect is further demonstrated by the fact that it contains blanks and a Note to draft. Complaint Ex. A at 61. 62216268.docx 7
minimum, there is a triable issue of fact as to the enforceability of the unsigned SPA and the Court should transfer venue to Nassau County where, as shown below, it indisputably is proper. 5 B. The Location of Events Giving Rise to Plaintiff s Causes of Action Is Irrelevant to the Venue Determination Plaintiff s other alleged basis for venue that venue is proper in New York County because a substantial portion of the events giving rise to the causes of action, including negotiations, occurred in New York, New York (Complaint 13; see Barroway Affidavit 7) is insufficient as a matter of law. Plaintiff s allegation as to the location of events giving rise to its causes of action has no bearing on the venue determination. Plaintiff does not cite any provision of the CPLR that makes the place where the events giving rise to the causes of action pertinent to the venue determination. Nor does any such provision of the CPLR exist. II. VENUE IS PROPER IN NASSAU COUNTY CPLR 503(a) provides Except where otherwise prescribed by law, the place of trial shall be in the county in which one of the parties resided when it was commenced... Asthe complaint alleges, each of the Defendants resides in Nassau County. Mr. Wang resides in Oyster 5 Plaintiff s allegation that Defendants stated, in writing, that the SPA was in final form and that they were signed off on it (Complaint 1) does not alter the analysis. Numerous courts, applying New York law, have found that parties did not intend to be bound absent a signed writing despite oral statements that agreements had been reached. See, e.g., Ciaramella v. Reader s Digest Ass n, Inc., 131 F.3d 320, 325 (2d Cir. 1997) (finding no intent to be bound absent signed agreement despite attorney s statement to his counterpart that We have a deal ); R.G. Group, Inc., 751 F.2d at 76 (finding no intent to be bound absent signed agreement despite attorney s statement to his counterpart that the parties had a handshake agreement ). Plaintiff s allegation that the agreement was partially performed (Complaint 1) also does not alter the analysis. Indeed, in Scheck, the Court of Appeals held that an unsigned contract was not binding even though one party had performed under it for four months. Scheck, 26 N.Y.2d at 469-70; see also Longo v. Shore & Reich, Ltd., 25 F.3d 94, 97 (2d Cir. 1994) (an unsigned employment contract not binding on the parties even though one of the parties worked for three months under the supposed contract because the facts that Longo began working at S & R and that S & R accepted her services [cannot] override the expressed intention to be bound by the contract only upon signing by both parties ). 62216268.docx 8
Bay, New York. Complaint 8. CBW Inc., CBW LP and CBW LLC all reside in Plainview, New York. Id. 9-11. 6 Plaintiff resides in Pennsylvania. Id. 7. Accordingly, under CPLR 503, venue is proper only in Nassau County. County. CONCLUSION For the foregoing reasons, this Court should transfer venue of this action to Nassau Dated New York, New York August 26, 2014 /s/ James D. Herschlein Vincent A. Sama James D. Herschlein Robert Grass Kaye Scholer LLP 425 Park Avenue New York, NY 10022 Tel 212-836-8000 Fax 212-836-8689 Attorneys for Defendants Charles Wang, CBW/SK Sports Ventures II, Inc., CBW/SK Sports Ventures, LP, and CBW/NL Sports Ventures, LLC 6 For purposes of the venue provisions, a corporation and a partnership reside in the county in which their principal places of business are located. CPLR 503(c), (d). 62216268.docx 9