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February 14, 1979

Titu-Serban IONESCU, Plaintiff,
E. F. HUTTON & COMPANY (FRANCE) S. A., Bernard J. Mallet and Axel Thiel, Defendants

The opinion of the court was delivered by: POLLACK


This is an action for a share of a brokerage commission alleged to be due the plaintiff for participating with others in arranging a loan of money from Saudi Arabian interests to either the Government of France or French national corporations. The plaintiff is a citizen and resident of New York. The defendant E. F. Hutton & Company (France) S.A. ("Hutton (France)") was, at the time the complaint was filed, a French corporation having its principal place of business in Paris and engaged there in investment banking. It has since been dissolved. The defendant Bernard J. Mallet, a citizen and resident of France, was President of Hutton (France) during the time of the events complained of. The defendant Axel Thiel is alleged in the complaint to be a citizen of West Germany. Neither Mallet nor Thiel has been served with process in the two years since this complaint was filed, and their presence in the complaint may be disregarded. Hutton (France), therefore, will sometimes be referred to for convenience as "the defendant," since there is no other before the Court.

 Hutton (France) has moved to dismiss the complaint for forum non conveniens. For the reasons shown in detail below, the Court finds and concludes that a trial in this forum will unjustly be oppressive; that the filing of this suit in this Court was intended to and will vex and harass the defendant; that the suit constitutes an imposition on the Court's jurisdiction; and that its continuance in this Court will work material injustice. Accordingly, the defendant's motion will be granted and the complaint dismissed.


 Procedural History

 The complaint was filed in December 1976. Hutton (France) moved to dismiss the complaint for lack of jurisdiction over the subject matter, failure to join indispensable parties, improper venue, lack of personal jurisdiction, and Forum non conveniens, or to quash the purported service of process.

 After oral argument on March 4, 1977, the Court on March 10, 1977, denied those branches of the motion asserting lack of jurisdiction over the subject matter and improper venue; denied without prejudice to renewal those branches of the motion asserting failure to join indispensable parties and Forum non conveniens; and stayed all other proceedings pending discovery and an evidentiary hearing on the question of the Court's personal jurisdiction of Hutton (France).

 After substantial discovery by the plaintiff and further briefing, the parties again appeared before the Court on June 17, 1977, at which time the defendant renewed its motion to dismiss for Forum non conveniens. On June 21, 1977, the Court filed a memorandum expressing grave misgivings about the propriety and fairness of exercising jurisdiction over this controversy and over Hutton (France). The Court expressed a desire for briefs on the law applicable to Ionescu's claim and, if foreign law was to be applied, on whether the plaintiff's theory of liability was actionable in France. The Court requested as well a showing that a reasonable basis existed for the claim asserted herein. Pending receipt of these briefs, the Court held in abeyance its decision on the motion to dismiss.

 On July 25, 1977, the Court denied the motion to dismiss for lack of personal jurisdiction, 434 F. Supp. 80 (S.D.N.Y.1977). The Court's memorandum pointed out that the defendant was a French corporation, not qualified to do business in New York, but was a wholly-owned subsidiary of a Swiss corporation, which in turn was a wholly-owned subsidiary of a Delaware corporation, E. F. Hutton & Company, Inc., which was doing business in New York. Finding that Hutton (France) could be considered an incorporated branch or department of Hutton & Company, the Court sustained service of process on the defendant through its New York affiliate and denied the motion to dismiss for lack of personal jurisdiction over Hutton (France).

 The Court's memorandum confirmed that the motion to dismiss on the grounds of Forum non conveniens had been renewed by permission and was being held in abeyance pending further discovery to illumine questions of foreign law and jurisdiction as well as the question of whether a reasonable basis existed for this suit. Discovery was then undertaken by the parties, including depositions of the plaintiff and Malka, one of his Canadian associates (both of whom had submitted affidavits of merit) as well as of Mrs. de Rosset and Messrs. Grae and Corley (persons whose hearsay information had been recounted in the affidavits of Ionescu and Malka), and of Bernard Mallet in Paris.

 On the basis of the extensive matter thereby assembled, the parties supplied further briefs setting forth their arguments on the issue of Forum non conveniens. It appeared without contradiction that the law of France probably would govern the claim and that the theory of liability relied on by the plaintiff was actionable in the French courts. The Court then took the matter under advisement.


 Plaintiff's Version

 The plaintiff alleges that in 1974 either the Government of France or certain French national corporations ("the borrowers") were seeking loans of up to $ 4 billion. Hutton (France) agreed with the borrowers to act as their agent in obtaining the loans. Mallet, President of Hutton (France), turned in Paris for assistance in finding lenders to one Pinay, a Frenchman, who introduced Mallet to another Frenchman, one Lassagne. Mallet met with Lassagne in Paris, and the two agreed orally that Lassagne would help to raise the funds.

 Lassagne telephoned from Paris to one Charles Malka in Montreal, enlisted his assistance in the search for the loan, and promised him a 2.5% Commission. Lassagne confirmed this arrangement by telex to Malka, sent from Paris with the consent of Hutton (France). Malka brought in his Montreal associates, Bernard Blanchard and Virgil Pacuraru. The latter telephoned Ionescu in New York, where he was employed as a legal assistant by the law firm of Riposanu, Liebowitt & Grae, and solicited Ionescu's assistance in the search for funds.

 Ionescu then took the matter up with Joel Grae, one of his employers, and Axel Thiel, a West German then living in New York. Grae told Ionescu and Thiel that he knew one Hassan Enany, a well-placed Saudi Arabian who might be able to procure the loans. Ionescu, Grae and Thiel agreed that they would seek Enany's help.

 Ionescu then advised Malka and Blanchard in Montreal of the possibility that a loan could be arranged through Enany. Malka relayed the news of this possibility to Lassagne in Paris, who in turn informed Hutton (France).

 Lassagne then spoke again by telephone with Malka and Blanchard in Montreal. The three agreed that a loan of $ 4 billion for 20 years at 6.4% Interest should be sought from Enany. The commission to Malka and his Montreal colleagues was to be 2.5%. Ionescu alleges that the Montreal group promised him 20% Of their commission, or one-half of one percent of the loan. *fn1" These terms on which Lassagne, Malka and Blanchard agreed were to be confirmed by a telex from Hutton (France) to the Bank of the Rhone in Geneva, after which confirmation the borrowers and lenders would be put in touch with each other. Mallet then sent the following telex to the Bank of the Rhone:

attention: mm. pollack, director blanchard and malka code e f hutton paris
paris montreal Lassagne / 7
operation 100 800 1500
1 conditions of the proposed loan, accepted by the borrowers
amount 2.500.000.000 us dollars (two billion five hundred million us dollars)
term 20 years (twenty years)
interest 6.40% Compound fixed (six comma (point) forty percent)
net proceeds 100% (one hundred percent)
2 agreement of the borrowers on charges
engineering financing 2% (two percent)
commission code malka 2.50% (two comma (point) fifty percent)
commission code Lassagne 2.50% (two comma (point) fifty percent)
: ...

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