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IRANIAN SHIPPING LINES, S.A. v. MORAITES

June 14, 1974

Iranian Shipping Lines, S.A.
v.
Peter Moraites, Walter N. Jones, John Penseo, Midland Bank & Trust Co., Guaranty Bank & Trust Co., Robert DeCotiis, Nasser Afshar, Yvonne Afshar, Edward Swinburne, Milton Pilalas, James Katsouris, George L. Manta, Frank J. Manta (a/k/a Mark Frank Manta), Stephen A. Manta (a/k/a Steve Manta), Leo J. Manta and Frank J. Manta as Co-Executors of the Estate of John L. Manta, J. L. Manta, Inc., Manta Vin-Cor Steel Corp., Manta Investments, Inc., Christ Karafotias, Seymour F. Simon, Christ Avaliotis, Basil Vlavianos, Robert Kreis, Levin, Kreis, Ruskin & Gyory, South Shipping Co., S.A., Jan. C. Uiterwyk, Jan C. Uiterwyk Co., Inc., Arya Shipping Lines, S.A., Amber Maritime Corp;, Armet Chafik, Hask Babayan, and Norton Lilly & Co., Inc. (72 Civ. 1392 MIG); Rudolph V. Alosio v. Iranian Shipping Lines, S.A. et al. (67 Civ. 9)


Gurfein, District Judge.


The opinion of the court was delivered by: GURFEIN

GURFEIN, District Judge.

The defendant Guaranty Bank & Trust Company ("the Bank") has moved to dismiss the amended complaint *fn1" on the grounds that venue in the Southern District of New York is improper and that the Court lacks jurisdiction over Guaranty.

 On September 29, 1972 Judge Charles Brieant referred the motion to Hon. Samuel C. Coleman as Special Master "to hear and report as to whether jurisdiction exists pursuant to § 302(a) (1) (2) of the New York C.P.L.R. as applied by Rule 4(e), Fed. R. Civ. P., or otherwise, and whether venue is proper." Judge Coleman held an evidentiary hearing. On August 30, 1973, he issued his report recommending denial of Guaranty's motion. A Supplemental Report was filed on October 31, 1973. Objections to the Special Master's Report were filed on November 27, 1973.

 On January 2, 1974 the case was reassigned to the writer. A pre-trial conference was held on January 17, 1974 at which time it was agreed that all matters pending in this case would be held in abeyance until each party submitted a status report concerning the claims, the issues to be tried, discovery to date, and discovery still to be completed. (The last report was received on April 3, 1974 and this motion again became sub judice). It is now possible for me to dispose of the motion.

 The Complaint

 The plaintiffs are Iranian Shipping Lines ("ISL"), an Iranian corporation, and Nick C. Spanos, a 48% shareholder and former director. The Special Master found that during the period from January 1965 to August 1966, ISL maintained offices in New York and had employees here. During that period ISL owned and chartered three dry cargo vessels for purposes of import and export from New York (and Atlantic Gulf Ports) to the Persian Gulf. ISL was the first corporation with Iranian registered vessels to make that run. Between April 1965 and April 1966, ISL alleges gross freight earnings in the amount of $6,500,000.

 The defendants, numbering approximately thirty, consist of individuals, corporations and banks each purportedly involved in a conspiracy to bilk and destroy ISL. Some of the defendants were among the original shareholders and directors of ISL or were the controlling shareholders of companies which were shareholders; others were and are competitors, or financially related to competitors. At least eight of the defendants (mostly shareholders or directors of ISL) are collectively referred to as the Manta Group; and eight others (mostly competitors) are referred to as the Teheran Group.

 The amended complaint ("Complaint") alleges, as a first claim, violations of Section 4 of the Clayton Act (15 U.S.C.§ 15) and Sections 1, 2 of the Sherman Act, Section 73 of the Wilson Tariff Act of 1894 (15 U.S.C. §§ 1, 2, 8). The second claim seeks to prevent the defendants from dissolving ISL lest that oust the jurisdiction of the Court. The third claim alleges a conspiracy to defraud and damage ISL, its minority shareholders and creditors. The fourth claim is a derivative shareholders' claim which simply realleges the earlier counts and seeks an accounting and damages.

 The aims of the conspiracy are listed as follows:

 
"(a) the permanent elimination of ISL as a competitor in the commerce of the United States with foreign nations in the Persian Gulf; (b) the monopolization of that commerce by the Teheran Defendants; and (c) that said combination and conspiracy should remain and be concealed and undetected so that none of the conspirators should suffer any consequences of liability by reason of their participation therein."
 
The substantial terms of the said combination and conspiracy consisted of a continuing overall agreement to cause the financial and economic ruin of ISL and the takeover of ISL's business and assets (including its vessels or their value and its receivables) by the defendants without any payment to ISL or its creditors and to make any revival or restoration of ISL's liner service or competition in the aforesaid commerce practically impossible, by destroying ISL s credit, name and reputation with ISL suppliers, shippers and customers, including the Government of Iran, and thus, among other things, causing ISL to be dropped as one of the Iranian participant members in the RCD. *fn2" (Complaint para. 27).

 As a consequence of this alleged conspiracy ISL claims to have suffered damage to its business and property in excess of $5,650,000. ISL prays for damages, lost profits and injunctive relief.

 The Special Master conducted the evidentiary hearing within the framework of the allegations of the complaint that the Bank, to accomplish the objectives of the antitrust conspiracy participated in the conspiracy in various ways.

 The gist of the conspiracy alleged was that the Manta Group (in addition to defrauding Spanos) conspired to mulct ISL of its assets, including its three ships, and to drive it out of business for the benefit of the Teheran Group with which the Manta Group was associated. The conspiracy involved alleged concealment of loans and bank deposits from shareholders and creditors, putting one Nasser Afshar ("Nasser") falsely in a position to appear to be a man of influence with the Royal Family of Iran, and making it appear that he was such a large creditor that bona fide creditors would be discouraged from a contest with Nasser over ISL's assets. It is alleged ...


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