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WILHELMSHAVEN ACQUISITION CORP. v. ASHER

January 15, 1993

WILHELMSHAVEN ACQUISITION CORPORATION, Plaintiff,
v.
JEREMY ASHER, MARK WOLOSHYN, BETA RAFFINERIEGESELLSCHAFT WILHELMSHAVEN mbH, BULK OIL A.G., HOLDING TUSCULUM B.V., and S.A. LOUIS DREYFUS et CIE, Defendants.



The opinion of the court was delivered by: MIRIAM GOLDMAN CEDARBAUM

 CEDARBAUM, J.

 Defendants Asher and Woloshyn, citizens of the United Kingdom who reside either in the United Kingdom or in Switzerland, Beta, a German corporation with its principal place of business in Germany, Bulk, a Swiss corporation with its principal place of business in Switzerland, and Holding Tusculum B.V. ("Tusculum") a Dutch corporation with its principal place of business in the Netherlands (collectively, the "moving defendants") have moved to dismiss the second amended complaint on the ground that the Court lacks personal jurisdiction over them. It is undisputed that none of the moving defendants does business in New York. The sixth defendant, Dreyfus, concedes that it does business in New York, and therefore has not joined in this motion.

 At the initial oral argument, I ruled that plaintiff had failed to make a prima facie showing of personal jurisdiction over Bulk *fn2" and Tusculum. Accordingly, those defendants were dismissed from the action. (12/20/91 Tr. at 45.) I also rejected plaintiff's contention that the other three moving defendants had consented to a New York forum, and directed the parties to present evidence on the issue of long-arm jurisdiction under § 302(a)(1) of the New York C.P.L.R. Wilhelmshaven Acquisition Corp. v. Asher, No. 91 Civ. 3657 (S.D.N.Y. July 2, 1992). After an evidentiary hearing, for the reasons discussed below, defendants' motion to dismiss the breach of contract claims is denied, and defendants' motion to dismiss the claims for fraud, unjust enrichment and tortious interference with contract by Asher and Woloshyn is granted.

 FACTS

 An evidentiary hearing was held at which plaintiff presented the testimony of three witnesses: Stephen Semlitz, a co-head of oil trading at J. Aron & Co. ("J. Aron"); Rex L. Rowell, a consultant retained to evaluate the capacity of the refinery; and Robert Semmens, an investment banker employed by J. Aron & Co.. Defendants presented the testimony of Jeremy Asher. After evaluating the credibility of all of the witnesses and weighing the evidence, including the affidavits and the deposition of Simon Rich, a representative of Dreyfus, I make the following findings.

 The July 13 Agreement

 In the spring of 1990, representatives of WAC and Goldman Sachs' commodities trading affiliate, J. Aron, held exploratory discussions with Asher and Woloshyn regarding WAC's participation in the purchase of a petroleum refinery in Wilhelmshaven, Germany. With the exception of one face-to-face meeting at Goldman Sachs' London offices, these preliminary conversations took place by telephone, with the WAC and J. Aron representatives in New York, and Asher and Woloshyn in London. It is not clear who initiated the discussions. According to plaintiff, they "terminated at a very preliminary stage in May 1990." (Hendel Aff. P 4.)

 Telephone discussions regarding the refinery resumed in early July 1990. A televideo conference was held after a WAC representative in New York expressed a desire "to see" Asher and Woloshyn. The video images of Asher and Woloshyn and the WAC representatives were transmitted to New York and London, respectively. (Tr. at 28.) *fn3" Negotiations intensified during the afternoon and evening of July 13 (New York time), because the sellers of the German refinery required a financial commitment from WAC by 7:00 p.m. (midnight German time) on that day, and WAC had to consummate a written contract with Asher and Woloshyn before making such a commitment. By midday, a contract had been drafted by WAC's New York law firm, Sullivan & Cromwell, and faxed to London for review by Asher and Woloshyn. The draft included a provision that the agreement would be governed by New York law and that Asher and Woloshyn agreed to submit to the jurisdiction of the appropriate federal and state courts in New York City. (Hardiman Aff. P 3.) However, this provision was not contained in the agreement Asher and Woloshyn signed. (Woloshyn Aff. P 17.) The agreement required WAC to make an initial payment to Mobil on July 13 and gave WAC an option to purchase a 50% interest in the Beta-Mobil agreement and a 50% interest in the entity which ultimately purchased the refinery. WAC could exercise this option by making three additional payments to Mobil on defendants' behalf. (Tr. at 32.)

 Subsequent Activities Relating to the July 13 Agreement

 Between July 13 and mid-September, there was substantial transatlantic telephone contact and mail correspondence between plaintiff and Asher and Woloshyn. It is uncontested that during this period, representatives from both the New York and London offices of Goldman Sachs and J. Aron attended roughly two dozen meetings in London to discuss the refinery deal with Asher and Woloshyn. On August 12, Asher drove into New York to have dinner with Stephen Semlitz and his wife at their apartment. (Tr. at 41.) Earlier that day, Asher had flown from London to New Jersey for a due diligence visit to Mobil in Princeton.

 In the following month, Asher flew to New York to attend a meeting of experts and refinery consultants hired by WAC. (Tr. at 130.) The purpose of this September 14 meeting was to resolve the engineers' disputes regarding the capacity of the refinery, and thus enable WAC to estimate the refinery's gross profit margin. The gross profit margin would be used by WAC to determine whether to proceed with the refinery deal. After the consultants' meeting, Asher met with Stephen Semlitz and Stephen Hendel, a co-head of oil trading at J. Aron, to discuss the qualifications of the person chosen to run the refinery and the title he should be given. (Tr. at 138-39.) Asher then met with Hendel and Robert Semmens to discuss the amount of financial participation that they would offer to El Paso Refining Co., a refinery operator proposed to serve as the operating partner, and to discuss WAC's desire to provide for El Paso's participation by reducing Asher and Woloshyn's equity in the transaction. (Id. at 139-42.) Finally, during this same trip to New York Asher met with Simon Rich, a representative of Dreyfus, to discuss the possibility of Dreyfus participating in the refinery transaction. (Tr. at 175-76.)

 DISCUSSION

 Personal jurisdiction in a diversity action is determined by the law of the state in which the court sits. Arrowsmith v. United Press International, 320 F.2d 219, 223 (2d Cir. 1963). Where an evidentiary hearing has been held, plaintiff bears the burden of establishing personal jurisdiction by a preponderance of the evidence. Cutco Industries v. Naughton, 806 F.2d 361 (2d Cir. 1986) (citations omitted).

 Plaintiff argues that this court has personal jurisdiction over the moving defendants under CPLR § 302(a)(1) which provides that:

 As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent . . . transacts any business within the state. . . .


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