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July 29, 1999


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


This is an action to recover a finder's fee to which plaintiff Brad M. Reiss ("Reiss") claims he is entitled for having successfully interested General Electric Capital Corporation ("GECC") in acquiring two French real estate companies, Union Pour le Financement D'Immeubles de Sociétés ("UIS") and Union Industrielle de Credit ("UIC"). Reiss claims that he entered into an oral contract with Alain Juliard ("Juliard"), the Chairperson of UIS, to find a buyer for UIS and UIC in exchange for a commission of 1% of the value of the transaction. The Amended Complaint ("Cmplt.") pleads causes of action in breach of contract and quantum meruit. Defendants UIS, UIC, Société Centrale du GAN, now known as Société de Gestion de Garanties et de Participations ("Société") and GAN S.A. ("GAN S.A.") bring motions to dismiss, arguing that any oral contract for a broker or finder's fee in this situation is barred by New York's Statute of Frauds. Additionally, UIC, Société and GAN S.A. assert that this Court lacks personal jurisdiction over them and that Reiss has failed to state a claim upon which relief can be granted.

I. Factual Background

A. Parties

Reiss is currently — and has been since at least 1990 — a licensed real estate broker who has been engaged in the commercial real estate business for more than fifteen years. See Cmplt. at ¶ 8; Certificate of State of New York, Department of State certifying Reiss' status as individual broker, attached as Exh. B to Plaintiff's Memorandum of Law in Opposition to Motion to Dismiss of Defendant UIS ("Pl's UIS Opp."). From 1989 to 1993, he was associated with the firm Sonnenblick-Goldman. See Cmplt. at ¶ 21.

All of the defendants are corporations organized under the laws of France.*fn1 UIS acquires commercial and industrial real estate for lease back to other companies, and it is an approved SICOMI (a company specializing in real estate investment for business and industry) pursuant to French law. See id. at ¶ 12. UIC, at the times relevant to this dispute, was a financial institution that held a substantial real estate portfolio. See id. at ¶ 14. Société is wholly owned by the government of France. See Memorandum of Law in Support of the Motion to Dismiss of Defendant Société ("Société Mem.") at 2. GAN S.A., a holding company, is currently the parent of a group of French companies involved in the insurance business. See Exhibit A to Memorandum of Law in Support of Motion to Dismiss GAN S.A. ("GAN S.A. Mem.").

In 1992, the year that the alleged oral contract was formed, GAN S.A. was a wholly owned subsidiary of Société. See Cmplt. at ¶ 4. GAN S.A., in turn, wholly owned UIC. See id. GAN S.A. also owned 94.47% of UIS — 4.47% directly, 47.30% through UIC and 47.17% through other affiliates. See id.*fn2 In 1997, prior to the sale of UIC and UIS to GECC, GAN S.A.'s shares of UIC were transferred to Société. See Plaintiff's Memorandum of Law in Opposition to Motion to Dismiss of GAN S.A. ("Pl's GAN S.A. Opp.") at 11 n. 8.

UIS, together with FINABAIL, another company owned by GAN S.A., and two other companies — all of which were involved in real estate — were collectively known as Groupe Percier. See Cmplt. at ¶ 4.

B. Reiss' Involvement in Sale of UIS and UIC

For purposes of this motion, the following facts, drawn from the Amended Complaint, are assumed to be true. Reiss has had an almost twenty-year personal and professional relationship with Alain Juliard, the Chairperson of UIS. See id. at ¶ 19. In or about April 1992, Reiss, on behalf of his firm's client United States Surgical Corporation ("USSC"), arranged for UIS to provide approximately 483,910,000 French francs in financing to USSC for its European headquarters and distribution and training facility near Paris. See id. at ¶¶ 26-28. During the transaction, Reiss told Juliard that his firm, Sonnenblick-Goldman, expected to receive from USSC a 1% fee — its customary arrangement — for its work in that kind of transaction. See id. at ¶ 27. At the close of the transaction, Reiss sent a copy of Sonnenblick-Goldman's bill to Juliard, who assisted him in collecting the fee from USSC. See id. at ¶¶ 28-29.

In or about July 28 or 29, 1992, Juliard visited New York in connection with the USSC transaction. As Juliard, Reiss, and UIS' Financial Director, Philippe Rosio ("Rosio"), rode back from a meeting, Juliard advised Reiss that "GAN"*fn3 had authorized Juliard to explore opportunities to reduce GAN's real estate holdings in France, including GAN's position in UIS and/or FINABAIL. See id. at ¶ 33. "Prior to this drive, Juliard had repeatedly told Reiss that, before he undertook any actions with respect to any important matters, GAN required him to obtain its approval." See id. During the drive, Juliard explained that defendants' goal was to have a United States corporation make a "substantial investment" in UIS and/or FINABAIL. The best way to accomplish this end, defendants believed, was to convince a U.S. company to enter into a joint venture with defendants or make an initial investment in UIS and/or FINABAIL, which would allow the U.S. company to become familiar with GAN's holdings and the French real estate market. See id. at ¶ 35. Juliard and Reiss then entered into an oral contract:

  Juliard told Reiss that defendants would like to
  retain Reiss to find one or more United States
  corporations to participate in transactions with
  defendants and/or to acquire an interest in GAN's
  holdings in UIS and/or FINABAIL.
  The proposed engagement was broad and not limited to
  any specific transaction or time period or type or
  source of capital.
  Reiss accepted the engagement upon defendants'
  commitment that, if he succeeded in introducing a
  company that resulted in any transaction with
  defendants, defendants would pay his fee of 1% on any
  large transaction, like the USSC deal, and 2%-3% on
  any smaller transaction.
  Juliard agreed that defendants would pay Reiss the
  foregoing fees for a successful transaction.

Id. at ¶¶ 36-39. This agreement was never reduced to writing.

According to Reiss, he subsequently began performing services that ultimately led to GECC's purchasing UIC and UIS. Initially, Reiss contacted Richard Grimaldi ("Grimaldi"), an executive in GECC's Real Estate Division with whom he had a relationship, in an attempt to interest GECC in reentering the French commercial real estate market by participating in transactions with, or acquiring an interest in, Groupe Percier. See id. at ¶ 43. Juliard and Rosio, in consultation with Reiss, decided to encourage GECC, as an initial matter, to acquire GAN's shares in FINABAIL, with the hope that such transaction would lead to other deals or a more substantial investment by GECC in Groupe Percier. See id. at ¶ 52.

In a subsequent conversation between Grimaldi and Reiss, Grimaldi suggested that Groupe Percier submit a written presentation for him to circulate within GECC. See id. at ¶¶ 47-48. Rosio, in consultation with Reiss — who provided multiple comments — prepared a written presentation relating to an investment in FINABAIL by GECC. See id. at ¶¶ 53-58. Reiss delivered the presentation to Grimaldi. See id. at ¶ 58. He also provided Grimaldi a copy of UIS' annual report he received from Rosio. In addition, around this time Reiss contacted approximately two hundred other U.S. companies that had invested or planned to invest in France in an attempt to interest them in Groupe Percier's activities. See id. at ¶¶ 61-62.

Around July 1993, Reiss joined Allied Partners, Inc., a company formed to manage and invest in real estate. See id. at ¶ 66. In September 1993, following Grimaldi's expression of GECC's interest in pursuing a transaction with defendants, Reiss arranged a meeting in New York among himself, Juliard, Rosio, Grimaldi and Richard H. Powers ("Powers"), Managing Director of Commercial Property Financing for GECC in Europe. See id. at ¶¶ 75-79. Prior to the meeting, while Juliard, Rosio and Reiss discussed strategy, Juliard informed Reiss that "he had spoken to GAN about UIC, and GAN had communicated to Juliard that GAN wanted Juliard, on behalf of GAN and UIC, to seek to interest GECC in the acquisition of part or all of UIC," either for its own business or as a means to acquiring UIS. Id. at ¶ 78. "Juliard then explained that GAN would be extremely pleased with any GECC interest in any part of UIC, and asked Reiss, pursuant to Reiss' engagement, to help UIC, GAN, and Juliard stimulate GECC's interest in an acquisition in UIC as well as UIS." Id. At the meeting, Rosio and Juliard pitched to GECC the prospect of acquiring an interest in UIS and FINABAIL, possibly through the acquisition of an interest in UIC. See id. at ¶ 80.

A few months later, Reiss and Juliard agreed that Reiss, in representing Groupe Percier's interests, would operate under the joint name "Groupe Percier-Allied Partners," which listed its address as Reiss' office in New York. Prior to agreeing to this arrangement, Juliard and Rosio had informed Reiss that they had obtained the required approval from GAN in order to proceed in this manner. See id. at ¶¶ 67-72. Shortly thereafter, Juliard informed Reiss that GAN had authorized Reiss to open a bank account in the name of Group Percier-Allied Partners in New York, which Reiss subsequently opened at Chase Manhattan Bank. See id. at ¶ 73.

Between October 1993 and March 1994, defendants and GECC had periodic discussions by telephone and at meetings in Europe regarding a potential GECC acquisition of UIC and/or UIS stock. See id. at ¶ 83. Juliard and Rosio kept Reiss apprised of these dealings, sending him copies of correspondence between Groupe Percier and GECC. See id. at ¶¶ 82-87. In April 1994, GECC executed confidentiality letters relating to information about UIS and UIC, which had been approved by GAN. See id. at ¶¶ 88-93. During this time, Juliard and Rosio also instructed Reiss to continue soliciting other potential investors and provided him with UIS dividend information. See id. at ¶ 94.

On June 1, 1994, at the request of Rosio, Reiss attended a meeting in New York among Michael Fraizer, a senior officer of GECC's Real Estate Division, Juliard and Rosio. See id. at ¶¶ 95-98. On September 13, 1994, Reiss attended a meeting at the Hotel Vernet in Paris (the "Hotel Vernet Meeting") among Fraizer, Powers, Juliard, Rosio and Guy de Chavanne, the Director General of GAN S.A. and Director General of Société. At this meeting, GECC's potential investment in UIS and UIC was discussed. See Cmplt. at ¶¶ 107-110. Juliard, Rosio and Arline Gaujal, a director of UIS, met with Reiss in New York in October 1994 to discuss, among other things, matters involving GECC. See id. at ¶¶ 112-13.

Juliard and Rosio also sought assistance from Reiss in other transactions with GECC. In contemplation of a potential joint GECC/Groupe Percier investment in Silic, a real estate investment company, Reiss accompanied GECC representatives to Paris in July 1994. Rosio encouraged Reiss to use this opportunity to "present to [GECC] the real estate assets of [UIC]." See id. at ¶¶ 101-104; Exh. 37*fn4 (letter from Rosio to Reiss dated June 30, 1994). Reiss also accompanied Grimaldi and Powers to Paris in September 1995, at defendants' request and as UIS' representative, to review documents related to a potential acquisition by GECC of a portfolio of property and loans owned by Barclays Bank. See id. at ¶ 117. In the fall of 1995, Reiss, in conjunction with Rosio, also aided GECC in the preparation of a study of the French real estate market. See id. at ¶ 118.

Reiss also continued to speak frequently with Grimaldi, attempting to maintain GECC's interest in the UIS and UIC transactions, and to speak regularly with Juliard and Rosio. See id. at ¶¶ 123, 129-30, 132. According to Reiss, from 1993 to February 1997, he "devoted a substantial portion of his time to promoting defendants' interests and represented no other clients." Id. at ¶ 131.

In mid-1996, as it appeared increasingly likely to Reiss and Juliard that GEEC would acquire an interest in UIS and/or UIC, Reiss arranged for Juliard and Rosio to meet with legal counsel in New York. See id. at ¶¶ 124-25. On or about July 25, 1996, while Juliard and Rosio were in New York, "Rosio acknowledged that Reiss would be entitled to his fee when the deal was accomplished." See id. at ¶ 126.

In February 1997, GAN publicly announced a restructuring plan that included selling its interest in UIS and UIC; this plan was approved in July 1997. See id. at ¶¶ 133-34. Pursuant to the requirements of French law, GAN retained Lazard Freres as a financial advisor to make information relating to UIS and UIC available for inspection and to solicit bids for the sale of the companies. See id.

Starting in July 1997, at Juliard's request, Reiss contacted other potential investors, and was successful in generating interest in the Blackstone Group, an investment firm. See id. at ¶ 136. Blackstone sought reassurance from Reiss that any fee arising from the transaction would be paid by defendants. Thus, on September 17, 1997, Reiss wrote to Juliard and Rosio to confirm that Reiss would be entitled to his fee of 1% if UIS entered into a deal with Blackstone. See id. "Although Rosio initially attempted to shift responsibility for payment of Reiss's 1% fee to Blackstone, at no time did Juliard or Rosio ever object to the amount of the fee or Reiss's entitlement thereto. Shortly thereafter, Rosio and Juliard agreed that because, as Reiss noted, he had `always represented UIS for the past 4 years,' defendants, not Blackstone, were responsible for Reiss's fee." Id. at ¶ 137.

In late 1997, Grimaldi informed Reiss that GECC had agreed to acquire UIS. "In an attempt to be paid expeditiously and without an adversarial process," Reiss sent an invoice, dated January 7, 1998, addressed to Juliard, Rosio, Powers, and Ronald Pressman, President of Commercial Real Estate at GECC, for $1 million, a "substantially discounted amount." At that time, Reiss was not aware of the amount of the UIS transaction or the fact that GECC was acquiring an interest in UIC in addition to UIS. See id. at ΒΆ 141. In response to the invoice, Juliard conceded that Reiss had introduced him and Rosio to Powers in 1993 and that out of courtesy, they had kept Reiss informed of their relationship with GECC. He asserted, however, that Reiss' involvement was "essentially ...

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