ACOSTA, J.
In this appeal we consider whether New York courts may exercise personal jurisdiction over defendants based on the establishment of a foreign investment program, where the operative contracts establishing the program were negotiated and executed in New York. Plaintiff appeals from an order dismissing his claims against defendants Dantas, Opportunity Equity Partners, Ltd., and Opportunity Invest II, Inc. (collectively, the Opportunity defendants or defendants) for lack of personal jurisdiction.
The complaint alleges the following facts, which are relevant to this appeal and accepted as true for the purposes of a motion to dismiss.
At Citibank's direction, plaintiff moved to Brazil in or around August 1997 to assist with the management of the Fund as an employee and shareholder of OEP with a 1% ownership interest. Before departing from New York and joining OEP, plaintiff negotiated those terms and secured a promise from Dantas that he would receive 5% of the "carried interest" (i.e., the total profits owed to OEP).
In order to fully implement the investment plan, Citibank's New York lawyers drafted several contracts, which included an operating agreement (setting forth the terms of the investment program between the Fund and the co-investors and designating plaintiff and Dantas, among others, as principals of OEP), a limited partnership agreement (entered into between Citibank entities and the Fund), and a shareholders' agreement for OEP (between plaintiff, defendants, and others, setting forth the terms of compensation and the ownership interests of the shareholders). In December 1997, the parties met in New York and simultaneously executed all three agreements.
In 2005, Citibank commenced an action against the Opportunity defendants in the Southern District of New York in order to take control of the Fund and replace the original general partner, OEP, with a wholly owned subsidiary of Citibank (CVC Brasil LLC). Citibank claimed that Dantas and OEP breached fiduciary duties and contractual obligations under the operating agreement and limited partnership agreement. That litigation, to which plaintiff was not a party, ended in 2008 with a confidential settlement agreement. Plaintiff alleges that the settlement agreement resulted in the distribution of profits, including the portion of the carried interest to which he was entitled, and that Dantas and OEP had previously represented to him that he would receive his 5% stake in the carried interest as part of the settlement. To date, plaintiff has not received that compensation, and defendants have refused to disclose to him the terms of the settlement agreement,
In March 2011, plaintiff commenced a federal action against the Citibank defendants and the Opportunity defendants in the Southern District of New York (the 2011 SDNY litigation). The district court dismissed the action without prejudice for lack of subject matter jurisdiction, having determined that plaintiff was an American citizen domiciled in Brazil and therefore could not invoke diversity of citizenship under 28 USC § 1332.
In March 2012, plaintiff commenced the instant action in Supreme Court, seeking compensation allegedly owed to him for his role in the side-by-side investment program. He alleges that defendants earned billions of dollars in profits but never paid him the 5% of the carried interest promised to him by Dantas and mentioned in the shareholders' agreement. The Citibank defendants removed the action to the Southern District of New York and obtained a dismissal of the claims against them on the merits. The court declined to exercise supplemental jurisdiction over the Opportunity defendants and remanded plaintiff's remaining claims to Supreme Court, which granted defendants' motion to dismiss, finding that personal jurisdiction does not arise from the language of the agreements or under New York's long-arm statute (CPLR 302).
Plaintiff appeals, and we now modify the motion court's order.
Under New York's long-arm jurisdiction statute, "a court may exercise personal jurisdiction over any non-domiciliary... who ... transacts any business within the state" (CPLR 302 [a] [1]). "By this single act statute ... proof of one transaction in New York is sufficient to invoke jurisdiction ... so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted" (Deutsche Bank Sec., Inc. v Montana Bd. of Invs., 7 N.Y.3d 65, 71 [2006] [internal quotation marks omitted], cert denied 549 U.S. 1095 [2006]). Determining whether long-arm jurisdiction exists under the "transacts any business" provision of CPLR 302 (a) (1), therefore, is a two-pronged inquiry: "a court must decide (1) whether the defendant transacts any business in New York and, if so, (2) whether [the] cause of action aris[es] from such a business transaction" (Licci v Lebanese
The assertion of personal jurisdiction must also be predicated on a defendant's "minimal contacts" with New York to comport with due process (George Reiner & Co. v Schwartz, 41 N.Y.2d 648, 650 [1977]; International Shoe Co. v Washington, 326 U.S. 310, 316 [1945]). This requires an examination of the "quality and the nature of the defendant's activity" and a finding of "some act by which the defendant purposefully avails itself of the privilege of conducting activities within [New York], thus invoking the benefits and protection of its laws" (George Reiner & Co., 41 NY2d at 650-651 [internal quotation marks and emphasis omitted], quoting Hanson v Denckla, 357 U.S. 235, 253 [1958]; see also Licci, 20 NY3d at 338).
The first prong of the inquiry, whether the Opportunity defendants transacted any business in New York, is satisfied, based on the shareholders' agreement as well as the broader transaction establishing and implementing the side-by-side investment structure. First, contrary to the dissent's position, plaintiff alleges that the shareholders' agreement outlining his compensation was negotiated and executed in New York. The Opportunity defendants look only to plaintiff's elaboration of his personal jurisdiction argument in annex A of the complaint to support the contention that plaintiff failed to allege that the shareholders' agreement was negotiated in New York. The body of the complaint, however, contains allegations that the agreement was negotiated here. Paragraph 21 of the complaint alleges that "the New York lawyers for Citibank drafted a variety of contractual documents in New York." Paragraph 24 further states that "[a]mong the documents drafted by Citibank's lawyers was a Shareholder Agreement for the General Partner CVC/Opportunity Equity Partners Ltd."
Accepting as true the allegation that all three agreements were drafted in New York by Citibank's lawyers, and drawing inferences in the plaintiff's favor, as we must on a motion to dismiss under CPLR 3211 (a) (8) (see Whitcraft v Runyon, 123 A.D.3d 811 [2d Dept 2014]), we must infer that defendants engaged in negotiations with Citibank in New York so that
In any event, even if the shareholders' agreement had not been negotiated in New York, defendants do not dispute that plaintiff alleges that the other two contracts were negotiated and executed here. As discussed below, those contracts (in conjunction with the shareholders' agreement) comprise a broader transaction of business in New York from which plaintiff's causes of action arise for the purposes of personal jurisdiction. Moreover, "the statutory test may be satisfied by a showing of other purposeful acts performed by [defendants] in this State in relation to the contract, albeit preliminary or subsequent to its execution" (Longines-Wittnauer Watch Co. v Barnes & Reinecke, 15 N.Y.2d 443, 457 [1965], cert denied 382 U.S. 905 [1965]; see also George Reiner & Co., 41 NY2d at 651 [discussing Longines]). Defendants entered New York to negotiate and execute contracts with New York entities and others for the purpose of establishing a large investment plan. The transaction laid the foundation for a continuing relationship between the parties, including Citibank in New York, which lasted for nearly a decade (see George Reiner & Co., 41 NY2d
Next, we must determine whether plaintiff's causes of action "arise from" defendants' New York contacts. The standard does not require plaintiff to have been involved in the transaction (see generally Licci, 20 N.Y.3d 327); rather, plaintiff need only demonstrate that, "in light of all the circumstances, there [is] an articulable nexus or substantial relationship between the business transaction and the claim asserted" (Licci, 20 NY3d at 339 [citations and internal quotation marks omitted]). The Court of Appeals "ha[s] consistently held that causation is not required, and that the inquiry under the statute is relatively permissive" (id.).
Indeed, Licci illustrated just how permissive the standard is, when it found personal jurisdiction over a defendant bank that allegedly transferred money from a New York correspondent account to a foundation that used the money to finance rocket attacks in a foreign country (id. at 340-341). Although the plaintiffs' cause of action for breach of statutory duties arose indirectly from the defendant bank's New York contacts — because "the specific harms suffered by plaintiffs flowed not from [the bank's] alleged support of a terrorist organization,
Here, plaintiff's causes of action are even more closely related to defendants' New York contacts than was the case in Licci. To the extent his claims arise "solely" from the shareholders' agreement, as the motion court determined, there is an articulable nexus between that transaction and his claims, because the shareholders' agreement was formed in New York and his claims seeking compensation arise directly from it. Yet Licci dictates that we should not view the "arising from" prong so narrowly. That is, for the purposes of personal jurisdiction under CPLR 302 (a) (1), plaintiff's causes of action do not arise "solely" from the shareholders' agreement. Rather, his compensation was simply one component of a much broader business transaction, the establishment of the side-by-side investment program. The shareholders' agreement was drafted by Citibank's New York lawyers and simultaneously executed with the other two operative agreements; despite the contracts' different forum selection clauses and merger clauses,
Contrary to the dissent's conclusion, our decision is not "at odds" with the Second Circuit's decision in Wilson v Dantas
Finding that New York courts have personal jurisdiction over defendants in this case also comports with due process. "[S]o long as a party avails itself of the benefits of the forum, has sufficient minimum contacts with it, and should reasonably expect to defend its actions there, due process is not offended if that party is subjected to jurisdiction" (Deutsche Bank Sec., Inc., 7 NY3d at 71). Such is the case before us. Defendants had sufficient minimum contacts with New York by purposefully entering the state to negotiate and execute contracts with Citibank, a New York entity, and Wilson. Those contracts established an ongoing relationship between the parties that lasted nearly 10 years. Two of the contracts (the operating agreement and limited partnership agreement) included New York forum selection clauses, and, although the
Furthermore, we reject defendants' contention that the case should be dismissed on the ground of forum non conveniens, the application of which is "a matter of discretion to be exercised by the trial court and the Appellate Division" (Islamic Republic of Iran v Pahlavi, 62 N.Y.2d 474, 478 [1984], cert denied 469 U.S. 1108 [1985]). Here, defendants have "failed to meet the heavy burden of demonstrating that plaintiff's selection of New York is not in the interest of substantial justice" (Yoshida Print. Co. v Aiba, 213 A.D.2d 275, 275 [1st Dept 1995]). Although, as the dissent notes, the shareholder's agreement contains a Cayman Islands choice of law provision and the "applicability of foreign law is an important consideration ... and weighs in favor of dismissal" (Flame S.A. v Worldlink Intl. [Holding] Ltd., 107 A.D.3d 436, 438 [1st Dept 2013], lv denied 22 N.Y.3d 855 [2013]), this case involves only one foreign jurisdiction's law (that of the Cayman Islands), as opposed to the laws of three foreign jurisdictions that merited dismissal on forum non conveniens grounds in Flame S.A. The burden on New York courts, therefore, is diminished.
Therefore, the complaint should be reinstated, although not in its entirety. Dismissal of the third cause of action, which alleges tortious interference with contract, is warranted, because defendants are parties to the shareholder agreement and, thus, could not have tortiously interfered with plaintiff's right to payment thereunder (Koret, Inc. v Christian Dior, S.A., 161 A.D.2d 156 [1st Dept 1990], lv denied 76 N.Y.2d 714 [1990]). The fifth cause of action, which alleges civil conspiracy, should also be dismissed because "[w]hile a plaintiff may allege, in a claim of fraud or other tort, that parties conspired, the conspiracy to commit a fraud or tort is not, of itself, a cause of action" (Hoeffner v Orrick, Herrington & Sutcliffe LLP, 85 A.D.3d 457, 458 [1st Dept 2011]). Furthermore, the ninth cause of action, which seeks a declaratory judgment should be dismissed since "plaintiff has an adequate, alternative remedy in another form of action" (see Apple Records v Capitol Records, 137 A.D.2d 50, 54 [1st Dept 1988]).
Accordingly, the order of the Supreme Court, New York County (Charles E. Ramos, J.), entered August 27, 2013, which granted defendants Daniel Valente Dantas, Opportunity Equity Partners, Ltd. and Opportunity Invest II, Inc.'s motion to dismiss the complaint as against them for lack of personal jurisdiction, should be modified, on the law, to deny the motion as to the first, second, fourth and sixth through eighth causes of action, and otherwise affirmed, without costs.
DEGRASSE, J. (dissenting in part).
This appeal is from an order
Plaintiff, while employed by Citibank in the 1990s, devised a stratagem that enabled Citibank to make private equity investments in large Brazilian companies that were being privatized. At that time, the Office of the Comptroller of the Currency prohibited Citibank from managing any fund that would invest directly in Brazil. Therefore, plaintiff, acting with Dantas, a Brazilian citizen, created Opportunity Ltd., a Cayman Islands corporation. Opportunity Invest, a British Virgin Islands corporation, was the majority shareholder of Opportunity Ltd. Both entities are alleged to have been controlled and dominated by Dantas. The underlying Brazilian investment enterprise was carried out under three agreements that involved the Opportunity defendants and were executed on December 30, 1997: a shareholders' agreement, a limited partnership agreement and an operating agreement. Plaintiff, who owns shares of Opportunity Ltd., was a party to the shareholders' agreement but not the limited partnership agreement or the operating agreement.
The majority correctly cites Licci v Lebanese Can. Bank, SAL (20 N.Y.3d 327, 334 [2012]) for the proposition that the issue of jurisdiction under CPLR 302 (a) (1) requires a determination of (1) whether the Opportunity defendants transacted business in New York and, if so, (2) whether plaintiff's causes of action arise from such transaction. The majority speaks of "a broader transaction of business in New York from which plaintiff's causes of action arise." Although the shareholders' agreement is related to other contracts with Citibank, the complaint makes it clear that plaintiff's causes of action arise out of the shareholders' agreement only. The following excerpt from the declaratory judgment cause of action, which mirrors the contract cause of action, is illustrative:
With respect to contracts, "[u]nder New York law, the transacts-business standard can be satisfied where both the negotiations and execution of a contract took place within New York" (Grand Riv. Enters. Six Nations, Ltd. v Pryor, 425 F.3d 158, 166-167 [2d Cir 2005], citing George Reiner & Co. v Schwartz, 41 N.Y.2d 648, 652-653 [1977]). In his opening brief, plaintiff cites an exhibit to the complaint in which it is stated that "the Shareholder Agreement was simultaneously executed in New York" by the Opportunity defendants and plaintiffs. The mere execution of agreements in New York, however, does not constitute the transaction of business under CPLR 302 (a) (1) (see Standard Wine & Liq. Co. v Bombay Spirits Co., 20 N.Y.2d 13, 17 [1967]; Abbate v Abbate, 82 A.D.2d 368, 384 [2d Dept 1981]).
The complaint itself provides no basis for the majority's apparent inference that the agreement was negotiated here. Although
The majority also posits that even if the shareholders' agreement had not been negotiated in New York, plaintiff's cause of action would arise from an "integrated whole" that includes the limited partnership agreement and the operating agreement. This broad transaction theory is at odds with the Second Circuit's determination that plaintiff's right to seek compensation stemmed solely from the shareholders' agreement and an alleged oral agreement with Dantas (Wilson v Dantas, 746 F.3d 530, 537 [2d Cir 2014]). During colloquy before the district court, plaintiff's counsel conceded that his causes of action were based on nothing more than a put option set forth in the shareholders' agreement.
Grounds for dismissal of the complaint under the doctrine of forum non conveniens are even more compelling. Codified in CPLR 327 (a), the forum non conveniens doctrine permits a court to stay or dismiss an action where it is determined that the action would be better adjudicated in another forum (Islamic Republic of Iran v Pahlavi, 62 N.Y.2d 474, 478-479 [1984], cert denied 469 U.S. 1108 [1985]). Brazil, the place of residence of plaintiff and Dantas, where the underlying transactions took place, offers such a forum (see e.g. Patriot Exploration, LLC v Thompson & Knight LLP, 16 N.Y.3d 762 [2011]). As stated above, Opportunity Ltd. and Opportunity Invest are foreign entities. Therefore, no party to this action is a New York resident or entity. Moreover, the resolution of this case will require the application of Cayman Islands law, as required by the
MAZZARELLI, J.P., and CLARK, J., concur with ACOSTA, J.; DEGRASSE, J. dissents in part in a separate opinion.
Order, Supreme Court, New York County, entered August 27, 2013, modified, on the law, to deny the motion as to the first, second, fourth and sixth through eighth causes of action, and otherwise affirmed, without costs.