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January 16, 1991


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


Defendants Travel Committee, Inc. ("TCI"), World Travel, Inc. ("WTI"), Travel Destinations, Inc. ("TDI"), Stanley L. Levin ("Levin") and Ira S. Weiner ("Weiner") have moved to dismiss the amended complaint ("the Complaint") of plaintiff Soviet Pan Am Travel Effort ("SPATE") for lack of personal jurisdiction, failure to state a claim upon which relief can be granted, failure to plead fraud with particularity and for vagueness. In the alternative, they seek an order transferring this action to the United States District Court for the District of Maryland pursuant to 28 U.S.C. § 1404. For the following reasons, the motion to dismiss is granted in part with leave to replead. The motion to transfer is denied.

The Parties

SPATE is a New York Partnership with its principal place of business at 200 Park Avenue in New York City. This same address serves as the principal place of business of SPATE partner Pan Am Commercial Services, Inc. The other partner, the General Department of International Air Services (Aeroflot Soviet Airlines), operates principally from Moscow. SPATE was formed as a partnership to obtain and distribute preplanned air and land package tours to Russia to wholesale tour operators in the United States.

TCI was a Maryland corporation which had its principal place of business in Maryland. WTI is a Maryland Corporation which had its principal place of business in Maryland. It is the parent and sole shareholder of TCI. TDI is a Maryland corporation with its principal place of business in Maryland. It is alleged to be a corporate successor to TCI and WTI.

Weiner and Levin are both residents of Maryland. Each owns 50% of the outstanding capital stock of WTI and TDI and each is one of the two officers and directors of each of the corporate defendants.

Prior Proceedings

In March 1989, SPATE commenced this action for breach of contract. TCI answered by denying all relevant allegations. On January 26, 1990 SPATE obtained leave to amend its complaint to add claims against TCI's parent, successor and principals. The amended Complaint was served on February 1, 1990. SPATE added five additional claims to its original contract claim as well as four new defendants.

The present motion was filed on April 13, 1990. On July 31, TCI and WTI filed petitions for bankruptcy in Maryland, but those petitions were dismissed by the bankruptcy court on August 8. Argument on the motion was finally heard on August 31, 1990.

The Facts

The following facts are derived principally from the Complaint. It should be noted that many of the allegations are based on information and belief, without elaboration on the grounds for most of the beliefs. Although the defendants have offered an affidavit from Weiner which contradicts a number of SPATE's assertions, such an affidavit cannot be considered in the context of a motion to dismiss. See Goldman v. Belden, 754 F.2d 1059, 1065-66 (2d Cir. 1985); Polycast Technology Corp. v. Uniroyal, Inc., 728 F. Supp. 926, 936 (S.D.N.Y. 1989).

On January 15, 1988, SPATE and TCI entered into an agreement under which TCI would promote and sell SPATE's tour packages to the Soviet Union. In the agreement, TCI guaranteed that it would sell at least 80% of the available tours ("the Guaranteed Tourist Volume"). The available tours totalled 10,440, for a Guaranteed Tourist Volume of 8,352. In the event that TCI failed to sell enough tours, it agreed to pay SPATE $104.10 per passenger for each tour it fell below the Guaranteed Tourist Volume ("the Penalty Payment"). In fact, TCI only sold tours to 1,055 passengers, 7,297 passengers fewer than the Guaranteed Tourist Volume, which would amount to a Penalty Payment of $756,617.70. TCI has refused to pay SPATE any part of this amount. In addition to its claim on the written agreement, SPATE also claims that the parties orally agreed to the same terms in January 1988.

SPATE's claim against WTI asserts that it operated TCI, its wholly-owned subsidiary, in such a fashion as to warrant piercing the corporate veil to reach WTI's assets to satisfy the claim against TCI. SPATE alleges that WTI and TCI were both operated and managed by Levin and Weiner as the sole officers and directors of both corporations and sole shareholders of the parent WTI, that the corporations shared the same office space and commingled their bank accounts, and that WTI "at least partially financed [TCI's] operations, salaries, and expenses." Complaint ¶ 32. SPATE further alleges that Levin and Weiner failed to act as TCI's officers and directors in TCI's best interests, and that both TCI and WTI disregarded corporate formalities by failing to issue stock or keep any kind of corporate records. WTI allegedly undercapitalized TCI, leaving it incapable of meeting normal business expenses. WTI is alleged to have held TCI out as a solvent and independent entity when it was in fact merely a corporate shell, dependent upon its parent for survival. However, the complaint does not specify exactly how WTI did so.

In 1988, allegedly as part of an attempt to frustrate creditors, TDI took over both WTI's and TCI's income, assets and operations, providing similar services to the same or similar clients, operating out of the same premises, employing the same personnel and retaining the same directors. TDI is alleged to be a continuation of World Travel and TCI, both of which ceased normal business operations upon transfer of substantially all of their assets to TDI. SPATE contends that this conveyance was made for inadequate compensation and that TDI implicitly agreed to assume the liabilities of WTI and TDI.

Finally, SPATE asserts that, not only did Levin and Weiner, acting as officers and directors of WTI, ignore TCI's corporate form, but they also personally ignored both WTI's and TCI's corporate forms, commingling their own funds with those of both corporations and using corporate funds to cover their own personal expenses. SPATE claims that Levin and Weiner controlled and dominated TCI and WTI to such an extent that the corporate entities were merely alter egos ...

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