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MEDOIL CORP. v. CITICORP

February 7, 1990

MEDOIL CORP., PLAINTIFF,
v.
CITICORP A/K/A CITICORP INVESTMENT BANK SWITZERLAND, DEFENDANT.



The opinion of the court was delivered by: Stanton, District Judge.

OPINION AND ORDER

Defendant Citicorp moves to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b), asserting that a forum-selection clause in the parties' contract requires that plaintiff Medoil Corporation bring this action in Zurich, Switzerland.*fn1

BACKGROUND

Medoil is a Liberian corporation engaged in the shipping business. Its sole place of business is Medoil (USA) Inc. in Greenwich, Connecticut, and its only shareholders are Evangelos Karvounis and his wife Theodora Karvounis. Mr. Karvounis is Medoil's president and Mrs. Karvounis is its treasurer. Citicorp is a multinational financial institution that controls Citicorp Investment Bank (Switzerland) ("CIBS"), a Swiss corporation with an office in Zurich, Switzerland.*fn2

Mr. Karvounis met with CIBS representatives in Zurich in early 1986 to discuss opening an account for Medoil. Medoil opened the account in March 1986, and Mr. and Mrs. Karvounis signed CIBS's printed forms entitled Account Agreement, Agreement Governing Fiduciary Placements, Margin Agreement and Declaration of Pledge (collectively, the "agreements"). All of the agreements contained the following forum-selection clause in bold type:

  All relations between the Bank and the Account
  Holder(s) are governed by Swiss law. Place of
  performance, place of prosecution for debts and
  exclusive venue for all legal actions are at the
  location of the Bank's office appearing on this
  Agreement regardless of the Account Holder(s)'s
  residence or domicile. The Bank, however, may
  bring action against the Account Holder(s) before
  the courts or any other competent authority at
  the place of residence of the Account Holder(s)
  or elsewhere, in which case Swiss law will also
  govern and be applied.*fn3

The office location appearing on the agreements is Zurich.

The Account Agreement offers several services and investments for customers to select. One of the services is entitled "Safekeeping Accounts and Securities Transactions," and states that the customer is to initial a particular box if he or she wishes "to authorize the Bank to take custody of securities, valuables and documents and to execute securities transactions for the account." Mr. and Mrs. Karvounis did not initial this box, although they did select other services by initialing the appropriate boxes.

The complaint alleges that the funds Medoil had deposited in its Zurich account were used to make unauthorized trades. (Complaint ¶ 19). Medoil also contends that it purchased shares of Clark Copy International Corporation ("Clark") because of false statements and misleading omissions of CIBS employees. (Id. ¶¶ 24-25). Mr. Karvounis discussed a "special deal" when he first met with Pieter Danielsson and David Tye (vice presidents of CIBS, Zurich; see Ptf.'s Exs. 15, 17) in Zurich in early 1986. (Affidavit of Evangelos Karvounis sworn to August 9, 1989 ¶ 11). In the summer of 1986, Mr. Danielsson called Mr. Karvounis from New York and the two met to discuss a private placement of Clark shares at the Waldorf-Astoria in New York. (Id. ¶ 15). Mr. Karvounis again met with Mr. Danielsson to discuss the Clark transaction in Zurich in October 1986 (Id. at ¶ 16).

Mr. Karvounis purchased Clark shares in December 1986 and June 1987. (Id. at ¶¶ 18-19). Although Medoil asserts that these were over the counter transactions effected on NASDAQ between a New York-based broker-dealer, Mount Keen & Co., Inc., and Citicorp in New York (Plaintiff's Memorandum of Law in Opposition to Defendant's Motion to Dismiss at 20-21; see also Ptf.'s Exs. 11-13), Mr. Karvounis placed the purchase orders in telephone conversations with Mr. Danielsson's assistant, Ms. Graf. The stock was purchased through and credited to Medoil's CIBS account. (Ptf.'s Ex. 9; Defendant's Reply Memorandum of Law Exhibit B).

Medoil brings this action for compensatory and punitive damages under the Securities Exchange Act of 1934, 15 U.S.C. § 78a-78o (1988), the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961-68 (1988), and pendent state claims.

DISCUSSION

Citicorp asserts the complaint should be dismissed because the forum-selection clause requires Medoil to bring this suit in Zurich. Medoil asserts that the clause does not cover ...


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