Opinion
600482/07.
Decided November 26, 2008.
Plaintiff was represented by Poles, Tublin, Stratakis, Gonzalez and Weichert, New York, New York.
Defendants were represented by Anderson Kill Olick, New York, New York.
Plaintiff George Peters commenced this action against defendant Stelios Coutsodontis, who operates defendants General Maritime Enterprises Corporation, Attika International Navigation SA, Iason Shipping Ltd., Pinto Shipping Ltd. and Karteria Shipping Ltd. (collectively, the "Shipping defendants"), for libel per se (first cause of action) and common law unfair competition (second cause of action).
The Complaint alleges that Coutsodontis is in direct competition with plaintiff, who controls Sea Trade Maritime Corporation ("Sea Trade") and its vessel "Athena," in the Greek shipping industry and has maliciously sought plaintiff's financial destruction by attempting to injure his business reputation.
Plaintiff's first cause of action for libel stems from allegedly defamatory statements made by Coutsodontis in an action captioned Coutsodontis v. Peters, et al., Index No. 600511/05 (the "Prior Action"). Specifically, in paragraph 30 of that Complaint, Coutsodontis alleged that Peters "did improperly, knowingly and fraudulently award himself an employment contract" appointing himself to manage the affairs of Sea Trade. Furthermore, Coutsodontis stated in an Affidavit dated June 13, 2005, filed in the Prior Action that, "I have reviewed different purported Powers of Attorney, each of which contains what I believe is an erroneous and forged signature of my sister." Plaintiff contends that the allegedly defamatory statements constitute libel per se because they accuse him of forgery, a criminal act, and were directed towards his business.
Plaintiff further claims that "Coutsodontis provided the [non-party] directors of Hellenic Mutual War Risk Association ("Hellenic"), which is the largest Greek war risk insurance company and is made up of the largest ship owners in Greece, with the litigation papers from the [Prior Action], including the [allegedly] defamatory statements," and that he improperly named Colonial Navigation Co. ("Colonial"), a management company with which Peters had a business relationship, as a defendant in that action solely to ensure that Colonial received said statements so as to motivate Colonial not to deal with Peters.
With respect to the second cause of action for unfair competition, plaintiff claims that Coutsodontis utilized the Prior Action to disparage him through the allegedly defamatory statements, in order to damage Peters' position in the shipping industry and benefit defendants.
Plaintiff seeks to recover damages in excess of $30 million for injury to his reputation and emotional distress, and an award of punitive damages.
Coutsodontis now moves for an order, pursuant to CPLR § 3211, dismissing plaintiff's Complaint, arguing, inter alia, that the alleged defamatory comments were all made in the context of a legal proceeding and were germane and necessary to that action, thereby making such speech absolutely protected under New York law. Moreover, Coutsodontis claims that he never published the alleged defamatory pleadings to Hellenic, and that Colonial, as the managing agent of the vessel "Athena," was a necessary party to the Prior Action.
Plaintiff, however, claims that Coutsodontis is not entitled to the privilege because he has violated it by improperly using the litigation as a subterfuge to defame plaintiff in his industry. Plaintiff further contends that whether or not defendants "published" the allegedly defamatory statements, as alleged in the Complaint, is a factual dispute to be explored during discovery.
In Lacher v. Engel , 33 AD3d 10 , 13-14 (1st Dept't 2006), the Court held that
[i]t is well established that a statement made in the course of legal proceedings is absolutely privileged if it is at all pertinent to the litigation. ( Youmans v Smith, 153 NY 214, 219.) In this seminal case, the Court made clear that the rule rests on the policy that counsel should be able to "speak with that free and open mind which the administration of justice demands" without the constant fear of libel suits. ( Id. at 223.)
It is true, as [plaintiff] asserts, that this absolute privilege may be "lost if abused." ( Halperin v Salvan, 117 AD2d 544, 548 [1st Dept 1986].) More specifically, this Court held that the privilege is limited to statements which are not only pertinent to the subject matter of the lawsuit but are made "in good faith and without malice." ( Id., additional citation omitted.)
* * *
The proper inquiry is whether the statements sustained as defamatory by the motion court "may possibly be pertinent" to the . . . litigation. (citation omitted.) As this court has noted, the privilege "embraces anything that may possibly be pertinent or which has enough appearance of connection with the case." (citation omitted.)
See also O'Brien v. Alexander, 898 F.Supp. 162 (S.D.NY 1995).
In February 2005, Coutsodontis commenced the Prior Action seeking "(1) a declaration that he is a lawful shareholder of Sea Trade, based on the inter vivos gift Athena [ i.e., Coutsodontis' sister] gave him in the August 2000 and September 2000 Writings; (2) an accounting of Sea Trade; (3) corporate waste; and (4) the appointment of a receiver for Sea Trade." Coutsondontis v. Peters, 11 Misc 3d 1066(A) (Sup.Ct., NY Co. 2006) (Cahn, J.), aff'd, 39 AD3d 274 (1st Dep't 2007).
Coutsondontis' sister, Athena Eliades, owned 500 shares of bearer stock of Sea Trade as the sole shareholder of that corporation. In the Prior Action, plaintiff contended that, in the early Nineties, Athena gave 150 of those shares to her sister Anna Peters and 50 to her nephew, plaintiff in this action, and executed a Power of Attorney appointing plaintiff an Attorney-in-Fact for Sea Trade. In September 2000, Athena wrote a signed document, apparently amending another document dated August 2000, stating that 50 of the remaining shares will belong after her death to Anna Peters and 250 to her brother Coutsodontis, defendant in this action. After Athena's death, Coutsodontis opened Athena's safe in the presence of Anna Peters and took possession of 250 shares. Thereafter, upon plaintiff's refusal to recognize Coutsodontis' alleged ownership rights, Coutsodontis sought enforcement of the 2000 Writings in New York, through the Prior Action, and through another action(s) filed in Greece.
Upon finding that the 2000 Writings did not qualify as an inter vivos gift under New York law, Judge Cahn dismissed the Prior Action indicating that the Greek courts were better suited to rule on the validity of the Writings, especially considering that a companion lawsuit was already pending there between the parties. Judge Cahn, however, declined to rule on the remaining causes of action, stating that "[t]he remaining arguments of both parties were considered by the court, and need not be addressed in light of the foregoing decision." Id.
Affirming Judge Cahn's decision, the First Department further stated, "[h]ere, the only determination made on the merits is that no inter vivos gift was made to plaintiff under New York law." Coutsondontis v. Peters, 39 AD3d 274, 275 (1st Dep't 2007).
The Complaint filed in the Prior Action, alleged, inter alia, that Peters, with the complicity of the defendants named therein, breached his duties as owner and operator of Sea Trade by wasting the corporation's monies and assets, improperly operating the vessel "Athena," and acting fraudulently in his own interest rather than in the best interest of Sea Trade and its shareholders.
In the Affidavit dated June 13, 2005, filed therein, Coutsodontis stated, in further support of his claims, that plaintiff sent the vessel "Athena" on three voyages to Sri Lanka, a designated war zone, without appropriate insurance. There, the vessel was hit by a bomb and suffered significant damage. As a result, Sea Trade was involved in extensive and costly disputes with the insurance underwriters.
Subsequent to that accident, Plaintiff, as operator of Sea Trade, brought an action against Hellenic and other insurer defendants in Supreme Court, New York County, seeking to recover under the war risk insurance policy. The Court granted defendants' motion to stay the action pending the resolution of an arbitration proceeding pending between the parties in London. See Sea Trade Maritime Corp. v. Hellenic Mut. War Risks, 2003 WL 25598903 (Sup.Ct., NY Co. 2003) (Moskowitz, J.), aff'd, 7 AD3d 289 (1st Dep't 2004), leave to appeal dims., 3 NY3d 766 (2004).
In an Affidavit dated October 26, 2007, filed herein, Coutsodontis states, "I understand that the arbitrators in London ruled against Sea Trade, awarding Hellenic fees and costs of the arbitrators in the amount of One Million English Pounds against Seatrade [ sic]."
Annexed to that Affidavit, Coutsodontis also filed a statistical study of the earnings of vessels similar to "Athena" from the time Sea Trade purchased it in 1992 to the date when the Prior Action was filed, showing that during those years the freight market was very lucrative and casting doubts on Peters' representations to Coutsodontis that the vessel was losing money.
In the Affidavit dated June 13, 2005, Coutsodontis stated that plaintiff repeatedly refused to show him the books and records and operating statements of Sea Trade.
When viewed in their original context, the allegedly defamatory statements were clearly pertinent to Coutsodontis' claims in the Prior Action, in that they bore directly upon the authority of plaintiff to operate Sea Trade. Plaintiff's conclusory allegations that the statements were made maliciously and were not pertinent to the action are contradicted by the facts alleged in the Prior Action's Complaint, essentially claiming that Peters was operating Sea Trade fraudulently. Because the Court finds the allegedly defamatory statements to be protected by privilege, they are not actionable by plaintiff in this action.
Even if the allegedly defamatory statements were not privileged, plaintiff's vague allegations "upon information and belief" that Coutsodontis published them to Hellenic fail to meet the legal requirements for a showing of publication since they fail to specify the time, place and manner of the communication. See Dillon v. City of New York, 261 AD2d 34 (1st Dep't 1999); Arsenault v. Forquer, 197 AD2d 554, 556 (2d Dep't 1993) (holding that "the specifics of all three component parts of the publication, i.e., its time, manner, and audience, must be alleged in order for a cause of action sounding in libel to succeed").
Moreover, service of the litigation papers on Colonial does not constitute publication for purposes of establishing a cause of action for libel since Colonial, the managing agent of the vessel "Athena," was a proper party with respect to Coutsodontis' claim for an accounting.
Defendants next argue that plaintiff's second cause of action must be dismissed because New York does not recognize defamation as a basis for a claim for unfair competition, and the Complaint does not specifically allege in what other ways defendant was in unfair competition with the plaintiff.
Plaintiff argues in opposition that New York law recognizes "disparagement" as a basis to bring a claim for unfair competition independent of defamation. Plaintiff relies on Ruder Finn v. Seaboard Sur. Co., 52 NY2d 663, 670-671 (1981), rearg. den., 54 NY2d 753 (1981), holding that although defamation and disparagement in the commercial context are allied in that the gravamen of both are falsehoods published to third parties, there is a distinction. Where a statement impugns the basic integrity or creditworthiness of a business, an action for defamation lies and injury is conclusively presumed. Where, however, the statement is confined to denigrating the quality of the business' goods or services, it could support an action for disparagement, but will do so only if malice and special damages are proven (citations omitted).
Id.
Here, plaintiff cannot succeed on a disparagement claim because he has failed to properly allege publication of the allegedly disparaging statements to a third party. Similarly, plaintiff's allegations of malice are merely conclusory.
Moreover, to establish a cause of action for unfair competition, a plaintiff must show that a competitor misappropriated plaintiff's business' "organization [or its] expenditure of labor, skill, and money." Ruder, supra, 52 NY2d at 671 ( quoting International News Serv. v. Associated Press, 248 US 215, 239 (1918)). Here, the Complaint falls short of alleging any of the required elements. Furthermore, plaintiff's allegations that Coutsodontis is a competitor of Sea Trade are at odds with Coutsodontis' claims that he is a shareholder of Sea Trade, and not a competitor.
The Court has considered plaintiff's remaining opposing arguments and has deemed them to be without merit.
Accordingly, defendants' motion to dismiss plaintiff George Peters' Complaint is granted in its entirety.
The Clerk may enter judgment dismissing plaintiff's Complaint with prejudice and without costs or disbursements.
This constitutes the decision and order of this Court.