The opinion of the court was delivered by: CONNER
This diversity action arises from a dispute as to the parties' relative ownership interests in an electrical generating power plant located in El Salvador. Presently before the Court is a motion to dismiss brought by defendant Coastal Power Production Company a/k/a Coastal Power Company ("Coastal"). Coastal seeks dismissal of the Amended Complaint (1) pursuant to Fed. R. Civ. P. 12(b)(3) on the ground of improper venue, (2) on the ground of forum non conveniens, and (3) pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief may be granted. For the reasons discussed below, Coastal's motion to dismiss is granted in part and denied in part.
Unless otherwise indicated, the following factual account is based on the allegations in plaintiff's Amended Complaint, including documents appended to, and documents incorporated by reference by, the Amended Complaint. See Fed. R. Civ. P. 10(c); Hertz Corp. v. City of New York, 1 F.3d 121, 125 (2nd Cir. 1993); Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2nd Cir. 1991). To the extent that this factual background refers to the supplementary affidavit and declarations submitted by the parties, such information will be considered only for purposes of deciding the venue and forum non conveniens issues. See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 70 L. Ed. 2d 419, 102 S. Ct. 252 (1981) (deciding forum non conveniens motion on the basis of affidavits); Cuizon v. Kedma, Ltd., 1997 U.S. Dist. LEXIS 894, No. 96-0229, 1997 WL 37938 (S.D.N.Y. Jan. 30, 1997) (deciding Rule 12(b)(3) motion to dismiss for improper venue on the basis of affidavits). Any references in the factual background to these supplemental materials will be disregarded for purposes of deciding whether the Amended Complaint states a cognizable claim.
See Cortec, 949 F.2d at 47 (in deciding Rule 12(b)(6) motion to dismiss, court may not consider any documents outside the pleadings).
In 1993, the government of El Salvador, through its nationally-owned utility, Comision Ejecutiva Hidroelectrica del Rio Lempa ("CEL"), solicited bids from developers for the construction, ownership, and operation of an electrical generating power plant to be built in Nejapa, El Salvador (the "Project"). The winning bidder would receive the exclusive right, for a fixed period, to negotiate and execute with CEL a "Power Purchase Agreement," which would establish the terms and conditions under which the bidder would agree to construct and operate the power plant and CEL would agree to purchase electricity from that facility.
In January 1994, IEC and UTDC submitted a joint bid on behalf of themselves, DELASA, and La Casa Castro. CEL accepted the bid the following month, granting IEC and UTDC the exclusive right, for a limited time, to enter a Power Purchase Agreement.
Around this time, UTC (including its subsidiary, UTDC) was acquired by Trigen Energy Corporation ("Trigen").
Trigen was substituted for UTDC on the bid and took its place as a Project developer.
At the end of April 1994, Trigen, DELASA and La Casa Castro entered a written agreement establishing their respective rights and obligations as joint venturers (the "Three-Party Agreement"). The Three-Party Agreement, which was negotiated and executed in New York, (Affidavit of Robert McVay, dated Mar. 19, 1997, PP 8-12), did not include IEC. The Three-Party Agreement established the proportionate ownership interests in the Project: Trigen, 75%; La Casa Castro, 15%; DELASA, 10%.
The Three-Party Agreement also stipulated that Trigen alone would enter into the Power Purchase Agreement with CEL. Because the bid had been awarded jointly to IEC and UTC (Trigen's predecessor), Trigen requested, and obtained, an assignment of IEC's interest in the Project.
Prior to this assignment, Robert McVay was a Vice President of IEC and served as Director of the Project. In January 1994, McVay left IEC and formed ESI, Inc. ("ESI"), the plaintiff in this action.
As head of ESI, McVay continued to serve as Project Director; as compensation for his services, in May 1994 DELASA assigned one-quarter of its 10% interest in the Project to ESI (the "DELASA-ESI Assignment"). The DELASA-ESI Assignment specifically referred to the Three-Party Agreement as the source of DELASA's interest in the Project. As required by Section 14 of the Three-Party Agreement, the DELASA-ESI Assignment received the written consent of both Trigen and La Casa Castro. Trigen signed the DELASA-ESI Assignment in its New York office. (McVay Aff. P 14.)
Before Trigen executed the Power Purchase Agreement, Trigen and Tenneco Gas International, Inc. ("Tenneco") agreed that Trigen would assign its entire interest in the Project to Tenneco after the Power Purchase Agreement had been executed. However, Tenneco would not accept the assignment from Trigen, and Trigen would not execute the Power Purchase Agreement, unless DELASA and La Casa Castro first released Trigen from any and all obligations under the Three-Party Agreement. On May 17, 1994, after several extensions of the deadline for the execution of the Power Purchase Agreement had passed, and as the deadline for forfeiting the $ 2 million bond approached, DELASA and La Casa Castro executed a Release Agreement. The Release Agreement made no mention of ESI or of the DELASA-ESI Assignment.
After obtaining the release, Trigen executed the Power Purchase Agreement with CEL and simultaneously assigned its interest in the Project to Tenneco (the "Trigen-Tenneco Assignment"). The Trigen-Tenneco Assignment was executed in Trigen's New York office. (McVay Aff. P 36.) Thereafter, Tenneco sold its interest in the Project to defendant Coastal, which guided the Project to completion.
ESI commenced this action on September 27, 1996, seeking a declaration as to the validity and enforceability of its 2.5% ownership interest in the power plant. The original complaint asserted only one cause of action (for a declaratory judgment) and named only Coastal as a defendant. On July 22, 1997, ESI filed an Amended Complaint adding DELASA and La Casa Castro as defendants and setting forth several new claims.
Unless otherwise stated, all claims in the Amended Complaint are against all three defendants.
The First Claim in the Amended Complaint seeks a declaratory judgment that, pursuant to the Three-Party Agreement and the DELASA-ESI Assignment, ESI has a valid and enforceable ownership interest in 2.5% of the Project and the power plant's income. The Second Claim, against Coastal and La Casa Castro, alleges damages related to ESI's status as an intended third-party beneficiary of the Power Purchase Agreement. The Third Claim seeks damages for breach of the Three-Party Agreement. The Fourth Claim, against Coastal only, alleges tortious interference with the Three-Party Agreement. The Fifth and Seventh Claims, respectively, allege conversion of ESI's interest in the Project and conspiracy to commit conversion. The Sixth and Eighth Claims, respectively, allege breach of fiduciary duty and conspiracy to commit such breach. The Ninth Claim, against DELASA only, seeks damages for breach of the DELASA-ESI Assignment. The Tenth and Eleventh Claims, against Coastal and La Casa Castro, allege, respectively, tortious interference and conspiracy to interfere with the DELASA-ESI Assignment. The Twelfth Claim seeks an accounting and the imposition of a constructive trust. The Thirteenth Claim alleges unjust enrichment. Finally, the Fourteenth Claim seeks damages for prima facie tort.
Coastal now moves to dismiss the Amended Complaint on three grounds. First, it contends that under 28 U.S.C. § 1391(a)(2), the Southern District of New York is an improper venue for this action. Second, even if venue is statutorily proper, Coastal asserts that the case should be dismissed based on the doctrine of forum non conveniens. Lastly, pursuant to Fed. R. Civ. P. 12(b)(6), Coastal seeks dismissal of each claim against it, with the exception of the Third Claim, for failure to state a claim upon which relief may be granted.
When venue is challenged, the plaintiff bears the burden of proving that venue is proper in the chosen forum. Central Sports Army Club v. Arena Assocs., Inc., 952 F. Supp. 181, 188 (S.D.N.Y. 1997). Here, ESI asserts (1) that this venue is proper based on the forum-selection clause in the Three-Party Agreement, to which it contends Coastal is a successor, and (2) that, in any event, venue is proper under 28 U.S.C. § 1391(a). The Court need not decide at this point whether Coastal is a successor to the Three-Party Agreement and its forum-selection clause because, in any event, the Southern District of New York is a proper forum under § 1391(a).
In order to establish venue in the instant case, ESI must demonstrate that a substantial part of the events giving rise to its claim occurred in the Southern District of New York. See 28 U.S.C. § 1391(a)(2).
The fact that substantial activities may have taken place in other districts is not dispositive; venue may lie in more than one district. Saferstein v. Paul, Mardinly, Durham, James, Flandreau & Rodger, P.C., 927 F. Supp. 731, 735-36 (S.D.N.Y. 1996) (Conner, J.). In the case of multiple claims, proper venue must be established with respect to each cause of action asserted. Id. at 736 (citing PI, Inc. v. Quality Prods., Inc., 907 F. Supp. 752, 757 (S.D.N.Y. 1995)).
Where, as here, a contract forms the basis of plaintiff's claims, "courts consider a number of factors, including where the contract was negotiated or executed, where it was to be performed, and where the alleged breach occurred." Id. (quoting PI, Inc., 907 F. Supp. at 757-58). Venue may be proper in the district where the contract was substantially negotiated, drafted, and/or executed, even if the contract was not to be performed in that district and the alleged breach occurred elsewhere. Id. Indeed, § 1391(a)(2) "may be satisfied by a communication transmitted to or from the district in which the cause of action was filed, given a sufficient relationship between the communication and the cause of action." Constitution Reins. Corp. v. Stonewall Ins. Co., 872 F. Supp. 1247, 1249 (S.D.N.Y. 1995) (quoting Sacody Technologies, Inc. v. Avant, Inc., 862 F. Supp. 1152, 1157 (S.D.N.Y. 1994)).
Here, the three agreements forming the basis of ESI's claimed interest in the Project were substantially negotiated, drafted, and/or executed in this district. To begin with, the Power Purchase Agreement, which created ownership interest in the Project, was drafted in New York by Trigen's attorneys. (McVay Aff. PP 25, 27.) Although the Power Purchase Agreement was executed and partially negotiated in El Salvador, (Declaration of Roberto Vilanova, dated Dec. 18, 1996, P 5), some negotiations among the developers took place in New York, and much of the negotiations between the developers and CEL involved communications between New York and El Salvador, (McVay Aff. PP 25-28). Moreover, negotiations between Trigen and Tenneco pertaining to the Power Purchase Agreement and Trigen's assignment to Tenneco of its interests under that agreement were conducted through correspondence between their respective New York and Texas offices, and Trigen executed the Trigen-Tenneco Assignment in its New York office. (Id. PP 29, 32-33, 36.)
In addition, the Three-Party Agreement (and a proposed predecessor agreement), which established the developers' proportionate interests in the Project, was substantially negotiated in New York. (Id. PP 11-12.) Trigen executed the Three-Party Agreement in its New York office. (Id. P 12.)
Finally, negotiation and execution of the DELASA-ESI Assignment, from which ESI's claimed interest in the Project most immediately derives, also occurred substantially in New York. Negotiations for the DELASA-ESI Assignment were initiated at the same New York meetings from which the Three-Party Agreement ultimately arose. (Id. P 12.) Moreover, negotiations to obtain Trigen's consent to the DELASA-ESI Assignment occurred in telephone conversations between ESI and Trigen's New York office; Trigen sent a written memorandum from New York to Tenneco in Texas advising Tenneco of the proposed assignment between DELASA and ESI; and Trigen ultimately signed the DELASA-ESI Assignment in its New York office. (Id. PP 13-14.)
The Court finds that venue is proper in the Southern District of New York as to all claims which survive the present motion, and therefore denies Coastal's motion to dismiss for improper venue.
Even when jurisdiction exists and venue is proper, the doctrine of forum non conveniens permits a court to dismiss an action if trial elsewhere would "best serve the convenience of the parties and the ends of justice." Murray v. British Broadcasting Corp., 81 F.3d 287, 290 (2nd Cir. 1996) (quoting Koster v. (American) Lumbermens Mut. Cas. Co., 330 U.S. 518, 527, 91 L. Ed. 1067, 67 S. Ct. 828 (1947)); see also Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241, 70 L. Ed. 2d 419, 102 S. Ct. 252 (1981) (plaintiff's choice of forum may be disturbed "when trial in the chosen forum would 'establish . . . oppressiveness and vexation to a defendant . . . out of all proportion to plaintiff's convenience'") (quoting Koster, 330 U.S. at 524). In applying the doctrine, the court starts with a strong presumption in favor of the plaintiff's choice of forum. Piper, 454 U.S. at 255; Murray, 81 F.3d at 290. To overcome this presumption, a defendant must demonstrate (1) that an adequate alternative forum exists, and (2) that, considering relevant private and public interest factors, the balance of convenience tilts strongly in favor of trial in the alternative forum. R. Maganlal & Co. v. M.G. Chemical Co., 942 F.2d 164, 167 (2nd Cir. 1991). Ultimately, the "decision to grant or deny a motion to dismiss a cause of action under the doctrine of forum non conveniens lies wholly within the broad discretion of the district court . . . ." Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 81 F.3d 1224, 1232 (2nd Cir. 1996).
A. Existence of Adequate Alternative Forum
An alternative forum ordinarily will be adequate if the defendant is subject to the jurisdiction of that forum. Maganlal, 942 F.2d at 167 (citing Piper, 454 U.S. at 254 n.22). Where the alternative forum is foreign, "some inconvenience or the unavailability of beneficial litigation procedures similar to those available in the federal district courts does not render [the foreign forum] inadequate." Borden, Inc. v. Meiji Milk Prods. Co., 919 F.2d 822, 829 (2nd Cir. 1990) (citation omitted); see also Piper, 454 U.S. at 249-55.
Based on the declaration of Dr. Saul Litvinoff submitted by Coastal, the laws of El Salvador provide substantive and procedural protections adequate to resolve the ownership issues in this case. (See Declaration of Dr. Saul Litvinoff, dated Dec. 18, 1996.) In addition, defendants Coastal and La Casa Castro appear to be amenable to process in El Salvador -- Coastal by consent, (see Declaration of James Gray, dated December 19, 1996, P 18), and La Casa Castro by virtue of its status as an El Salvador corporation.
However, the requirement that a defendant be subject to the jurisdiction of the alternative forum "refers to all defendants." Madanes v. Madanes, 981 F. Supp. 241, 265-66 (S.D.N.Y. 1997). Neither party has addressed whether DELASA would be subject to jurisdiction in El Salvador, nor has DELASA indicated whether it would consent to jurisdiction there. In any event, even if DELASA were subject to jurisdiction in El Salvador (by consent or otherwise), and even if El Salvador is an adequate alternative forum, dismissal would nevertheless be unwarranted because, as discussed below, the balance of private and public factors does not strongly favor the El Salvadoran forum. Cf. id. at 266 ("The Court concludes that it would be improper to dismiss the case absent a proffer by all of the Defendants that they would be willing to consent to the jurisdiction of the [foreign] court . . . . No such proffer has been made. Nor, we note, would one alter this Court's conclusion that dismissal is unwarranted because . . . the [factors set out in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 91 L. Ed. 1055, 67 S. Ct. 839 (1947)] do not strongly favor the [foreign] forum.").
In determining whether venue would be more appropriate in an available and adequate alternative forum, the Court must weigh a variety of private and public considerations, as set out in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 91 L. Ed. 1055, 67 S. Ct. 839 (1947) (the "Gilbert factors"). See Peregrine Myanmar Ltd. v. Segal, 89 F.3d 41, 46 (2nd Cir. 1996). Relevant private interests include (1) the relative ease of access to sources of proof; (2) the availability of compulsory process for attendance of unwilling witnesses; (3) the cost of obtaining attendance of willing witnesses; (4) the possibility of view of premises, if view would be appropriate to the action; (5) the enforceability of a judgment; and (6) all other practical problems that make trial of a case easy, expeditious, and inexpensive. See Gilbert, 330 U.S. at 508; Maganlal, 942 F.2d at 168. Relevant public factors include (7) the administrative difficulties flowing from court congestion; (8) local interest in having localized controversies decided at home; (9) the unfairness of burdening citizens in an unrelated forum with jury duty; and (10) the interest in having the trial of a diversity case in a forum that is at home with the law that must govern the action, and the avoidance of unnecessary problems in ...