Opinion
No. 2012–0031.
2013-05-29
James Joseph LUKEZIC and Walker Hall Winery, Ltd., Plaintiffs, v. ROYAL BANK OF CANADA, Defendant.
Mackenzie Hughes, LLP, by Richard C. Engel, Esq., W. Bradley Hunt, Esq., Syracuse, for Plaintiffs. Davidson & Grannum, LLP by Sandra D. Grannum, Esq., Orangeburg, for Defendant.
Mackenzie Hughes, LLP, by Richard C. Engel, Esq., W. Bradley Hunt, Esq., Syracuse, for Plaintiffs. Davidson & Grannum, LLP by Sandra D. Grannum, Esq., Orangeburg, for Defendant.
PHILLIP R. RUMSEY, J.
Plaintiff James Lukezic is the sole shareholder, director and officer of plaintiff Walker Hall Winery Ltd. (WHW), a corporation incorporated in Ontario, Canada which is authorized to conduct business in New York. WHW and defendant entered into a contract dated August 12, 2008, by which defendant agreed to extend financing to enable WHW to establish a winery business in Ontario. Plaintiffs commenced this action asserting causes of action for breach of contract, injurious falsehood and tortious interference with business relationships based on allegations that defendant breached the contract by failing to advance all of the agreed-upon funds, and, further, that it made misrepresentations to third parties which prevented plaintiffs from obtaining additional financing elsewhere. Plaintiffs contend that defendant's actions caused the winery business to fail. In December 2009, WHW was placed into receivership, pursuant to Ontario bankruptcy law, under the supervision of an Ontario court. Its assets were sold by the receiver, and the net proceeds were paid to defendant in December 2011. WHW remains in receivership in Ontario. This is the fourth action that plaintiffs have commenced against defendant. The first three actions were commenced in Ontario and were dismissed. It appears that Lukezic was a resident of Ontario when the loan was made and thereafter, until at least as late as April 4, 2011; when this action was commenced he resided in New York.
The loan was made and administered by a branch of defendant bank located in Ontario.
In Statements of Claim filed in two of the Ontario actions, Lukezic states that he resided in Ontario ( see Affidavit of Brendan Hughes, sworn to November 29, 2012, Exhibit B [Statement of Claim dated February 14, 2011], ¶ 3; Exhibit G [Statement of Claim dated April 4, 2011], ¶ 3). In the complaint filed in this action, he avers that he resides in Ithaca, New York ( see Affirmation of W. Bradley Hunt dated February 7, 2013 [Hunt Affirmation], Exhibit D [complaint verified January 10, 2012], ¶ 3; Exhibit A [amended complaint verified October 12, 2012], ¶ 4).
After this action was commenced, defendant removed it to the federal district court (NDNY). By order dated August 16, 2012, that court held that it lacked subject matter jurisdiction of the controversy and remanded the action to this court ( see Hunt Affirmation, Exhibit E). Defendant now moves to dismiss the action, contending that: (1) plaintiffs' claims are barred by the doctrine of res judicata; (2) the complaint fails to state a cause of action; and (3) the action should be dismissed on the basis of forum non conveniens.
Although the notice of motion does not specifically seek dismissal on the basis of forum non conveniens, plaintiff raised that argument in the memorandum of law filed with its motion papers and plaintiffs responded to the merits of that argument. It also bears noting that defendant did not waive the right to seek dismissal on the basis of forum non conveniens by choosing not to raise that issue in the federal court action ( see e.g. F G II, Inc. v. Saks Inc., 46 AD3d 305 [2007];Harp v. Malyn, 166 A.D.2d 848, 849 [1990] ).
Defendant's motion to dismiss for forum non conveniens must logically be considered first, because it would be improper for this court to decide any matter in controversy if it determines that the action should be dismissed on that basis. A court may dismiss an action based on the doctrine of forum non conveniens if it finds that “in the interest of substantial justice the action should be heard in another forum” (CPLR 327[a] ). In making that determination, a court is required to consider and balance a number of factors, including: (1) the burden on New York courts; (2) the potential hardship to the defendant; (3) the availability of an alternative forum; (4) the parties' residency; (5) the location of the events on which the action is based; (6) whether the law of a foreign jurisdiction is applicable; and (7) the location of potential witnesses ( see Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 478–480 [1984],cert. denied469 U.S. 1108 [1985];Gozzo v. First Am. Tit. Ins. Co., 75 AD3d 953, 954–955 [2010];Rosenberg v. Stikeman Elliott, LLP, 44 AD3d 840, 841 [2007] ). In this case, all of the factors weigh against adjudicating the dispute in this court.
As previously noted, plaintiffs' claims arise from acts undertaken entirely in Ontario. The fact that events giving rise to a plaintiff's claim occur entirely in another jurisdiction is an important factor supporting a determination that New York is not the proper forum ( see Alberta & Orient Glycol Co., Ltd. v. Factory Mut. Ins. Co., 49 AD3d 276 [2008],lv denied10 NY3d 713 [2008];cf. Banco Ambrosiano v. Artoc Bank & Trust, 62 N.Y.2d 65 [1984] [motion to dismiss based on forum non conveniens was properly denied where the action was based on quasi-rem jurisdiction over $8 million deposited in a New York bank]; cf. Waterways Ltd. v. Barclays Bank PLC, 174 A.D.2d 324 [1991] [action involving financing of a hotel located in Bermuda was properly maintained in New York where the transaction had numerous contacts with New York] ). Here, the sole connection between this state and the litigation is that Lukezic currently resides in New York; however, significantly, he was a resident of Ontario when WHW sought and obtained financing and when the events on which his claim is based occurred. Moreover, a party's New York residency does not preclude dismissal where there is no substantial nexus between this state and the cause of action (Gozzo; 75 AD3d 953, citing CPLR 327[a] [New York was not a proper forum for resolution of a dispute involving a transaction that occurred entirely in Massachusetts, notwithstanding plaintiffs' subsequent relocation to New York] ). It appears that all witnesses—with the exception of Lukezic—reside in Ontario. Plaintiffs' commencement of three prior actions against defendant in Ontario shows the availability of an alternative forum ( see Rosenberg, 44 AD3d 840 [2007] [action involving claims based on acts undertaken entirely in Canada was dismissed on the basis of forum non conveniens where the plaintiff, who may have possessed domiciles in both New York and Canada, had previously availed herself of Canadian courts in closely-related matters] ).
Resolution of this controversy in the courts of Ontario—the locus of the relevant events and the prior actions and proceeding—would cause no great hardship to either party ( see Fox v. Fusco, 4 AD3d 313 [2004] ).
Lukezic's argument that this court is the most convenient forum, and perhaps the only possible forum, because “his counsel live in Syracuse, and it is unclear whether [he] could retain Canadian counsel to prosecute this litigation there” (Plaintiffs' Memorandum of Law in Response to Defendant's Motion to Dismiss the Complaint, p. 12) is unavailing. He cannot unilaterally make New York a proper forum simply by choosing to retain New York counsel and, in any event, there is no showing of any attempts to retain Ontario counsel. Similarly, the mere fact that WHW sought and obtained authorization to conduct business in New York does not make this state a proper forum, especially with no proof that it conducted any business in New York related to plaintiffs' claims.
It bears noting that defendant made no showing that it would incur undue hardship if required to litigate plaintiffs' claims in New York. The only harm alleged is the cost of defense, an expense that defendant would incur regardless of forum; notably, it did not allege that the cost of defense would be appreciably greater in New York ( see Memorandum of Law in Support of Defendant Royal Bank of Canada's Motion to Dismiss the Complaint Pursuant to CPLR 3211[a][7], p. 23).
A significant factor in this case is the fact that Ontario law is applicable to resolution of the claims that plaintiffs raise in this action ( see Fox, 4 AD3d 313;IFS Intl. v. SLM Software, 224 A.D.2d 810 [1996];Blais v. Deyo, 92 A.D.2d 998, 999 [1983],affd60 N.Y.2d 679 [1983] ). The agreement between WHW and defendant provides that it shall be construed in accordance with Ontario law.
Moreover, Ontario law controls under New York's choice of law principles, because it has the most significant contacts with the dispute ( see Marder v. Levin, 244 A.D.2d 467 [1997] [New Jersey law applied to issues arising from loan made in New Jersey for development of property in that state]; Acorn Partners II v. Kiley, 193 A.D.2d 397 [1993] [Connecticut law applied to issues arising from loan made in Connecticut for development of property in that state]; see also Blais, 92 A.D.2d at 999–1000 [in tort cases, the law of the jurisdiction having the most significant interest in the litigation will be applied] ). As noted, all of the relevant conduct occurred in Ontario. A branch of defendant bank located in Ontario loaned funds—in Canadian currency—to an Ontario corporation to develop a winery business to be located in Ontario. The loan transaction closed in Ontario and was secured by a mortgage on real property located there. The acts constituting defendant's alleged breach of contract or tortious wrongdoing took place in Ontario, and WHW was placed in receivership under the jurisdiction of an Ontario court in accordance with Ontario bankruptcy law. Similarly, the issues of the extent of preclusive effect to be afforded the judgments rendered by Ontario courts in the three prior actions involving the parties, and whether Lukezic may commence an action on behalf of WHW while it remains in receivership in Ontario, should properly be resolved by Ontario courts ( see e.g. GATX Flightlease Aircraft Co. Ltd. v. Airbus S.A.S., 15 Misc.3d 1143[ A], 2007 N.Y. Slip Op 51124[U] [2007], affd40 AD3d 445 [2007] [foreign judgments must receive the same preclusive effect that they would receive in the rendering jurisdiction] ). Finally, in light of the fact that each of the other factors show that plaintiffs' claims have essentially no nexus with New York, there is no reason to burden the courts of this state with litigation of this dispute.
The first agreement, dated August 12, 2008, did not contain a choice of law provision ( see Affidavit of Rod Moran, sworn to December 6, 2012, Exhibit A); however, a subsequent agreement, dated April 13, 2009—which was accepted on WHW's behalf by Lukezic on April 12, 2009—supersedes and cancels the first agreement and provides that it shall be governed by the laws of Ontario and Canada ( id., Exhibit B, pp. 1 [supersedes and cancels prior agreement], 3 [Ontario identified as the governing law jurisdiction], 4 [accepted by WHW], 7 [agreement to be construed by the laws of the province identified as the governing law jurisdiction and Canada] ).
Based on the foregoing, defendant's motion is granted, to the extent of dismissing this action, without prejudice, solely on the basis of forum non conveniens. Inasmuch as the court has determined that the action must be dismissed on that basis, defendant's remaining arguments have not been considered, and its motion is otherwise denied, without prejudice.
This decision constitutes the order of the court. The transmittal of copies of this decision and order by the court shall not constitute notice of entry.
The following documents were filed with the Clerk of the County of Tompkins:
-Notice of motion dated December 7, 2012.
-Affidavit of Rod Moran, sworn to December 6, 2012, with Exhibits A–N.
-Affidavit of Brendan Hughes, sworn to November 29, 2012, with Exhibits A–J.
-Affirmation of W. Bradley Hunt dated February 7, 2013, with Exhibits A–F.
-Original Decision and Order dated May 29, 2013.