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ACCORDIA NORTHEAST v. THESSEUS INTERNATIONAL ASSET FUND

May 24, 2002

ACCORDIA NORTHEAST, INC. PLAINTIFF,
V.
THESSEUS INTERNATIONAL ASSET FUND, N.V., INCORPORATED, ADRIATIC INSURANCE GROUP, LTD., BARRY FEINER, AND DEREK GALANIS, DEFENDANTS.



The opinion of the court was delivered by: Robert L. Carter, United States District Judge.

OPINION

Defendants Thesseus International Fund, N.V., Inc., and Barry Feiner move to dismiss the amended complaint filed by plaintiff Accordia Northeast, Inc.. Specifically, defendants contend that the proper venue for this action is the territory of Kosovo, and that plaintiff's amended complaint fails to state a claim for relief. Plaintiff opposes moving the case overseas, and alleges that its amended pleadings are adequate to survive a motion to dismiss under Rule 12(b)(6), F.R.Civ.P.. For the reasons set forth below, defendants' motion is denied with the sole exception that plaintiff's claim for conversion is deemed insufficient as a matter of law and therefore dismissed.

BACKGROUND

This motion to dismiss arises out of a suit filed by plaintiff Accordia Northeast, Inc. ("Accordia") to recover some $750,000 in insurance premiums allegedly owed to plaintiff under its indemnification contract with defendants Thesseus International Fund N.V., Inc. ("Thesseus"), Adriatic Insurance Group, Ltd. ("Adriatic"), Barry Feiner ("Feiner"), and Derek Galanis ("Galanis"). This indemnification agreement was one of several arrangements in a broader enterprise to offer automobile insurance in the territory of Kosovo. (Am. Compl. ¶¶ 32, 33, 36, 39, 40.) Defendants were charged with the task of administering the insurance program in Kosovo, a responsibility that included accounting for and remitting to plaintiff, among others, any insurance premium moneys collected. (Id. ¶¶ 36-42.)

The indemnification agreement at issue here obligated Thesseus and Adriatic to reimburse plaintiff, on demand, for any premium moneys the latter became liable to pay under its related agreement with AIU North America, Inq. and the Insurance company of Pennsylvania (collectively, "AIU"). (Id. ¶¶ 4, 25, 59, 60.) In or about April 2001, representatives of Accordia allegedly discovered, during a trip to Kosovo, that defendants were not turning over all of the premiums they collected, and were instead commingling some of the money with their operating account, and using it to pay personal and day-to-day business expenses. (Id. ¶ 29.) These actions violated defendants' contractual duties to Accordia and AIU, thereby triggering Accordia's liability to AIU for the premiums withheld. (Id.)

On June 14, 2001, plaintiff filed suit against defendants seeking to recover the amount of these unremitted premium moneys. On September 25, 2001, plaintiff amended its complaint. On October 9, 2001, defendants Thesseus and Feiner moved for dismissal of the amended complaint. Plaintiff opposed, bringing events to where they now stand.

DISCUSSION

I.

Defendants' first main ground for dismissal is that a more appropriate venue for this action is the territory of Kosovo. At the outset, the court notes that defendants erroneously frame this claim as one for a change of venue, pursuant to 28 U.S.C. § 1404(a), rather than one of forum non conveniens. This error is significant because, as defendants themselves observe, "[t]he burden on the party seeking to change the venue is not as heavy as that imposed under a traditional forum non conveniens motion." (Defs.' Mem. in Supp. at 3.) However, 28 U.S.C. § 1404(a) applies only to transfers between courts in the federal system. E.g., Schertenleib v. Traum, 589 F.2d 1156, 1161 (2d Cir. 1978). That statute "does not apply in cases where the purportedly more convenient forum is not a United States district court. In such cases, almost always involving foreign countries, the common law doctrine of forum non conveniens still governs." Capital Currency Exch. v. Nat'l Westminster Bank PLC, 155 F.3d 603, 607 (2d Cir. 1998) (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 253 (1981)). Here, since the alternative forum is overseas, the common law doctrine of forum non conveniens, with its stricter standard, governs defendants' motion.

Pursuant to the United States Supreme Court's decisions in Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947) and Koster v. American Lumbermens Mut. Cas. Co., 330 U.S. 518 (1947), a court confronted with a claim of forum non conveniens applies a two-step inquiry. First, the court determines whether an adequate alternative forum exists. E.g., Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n. 22 (1981); Gilbert, 330 U.S. at 506-07. If one does, the court then balances a Series of public and private factors to decide which of the competing for a is more appropriate for resolution of the dispute. E.g., Gilbert, 330 U.S. at 508-09. The defendant bears the burden of establishing both that an adequate alternative forum exists and that the balance of pertinent factors "tilts strongly in favor of trial in the foreign forum." R. Maganlal & Co. v. M.G. Chem. Co., 942 F.2d 164, 167 (2d Cir. 1991).

In this case, defendants' forum non conveniens claim fails for several reasons. First, they fail to make the requisite showing that Kosovo constitutes an adequate forum. Usually, the inquiry into adequacy is confined to the determination that defendant is "amenable to process" in the other jurisdiction. Gilbert, 330 U.S. at 506-507. "In rare circumstances, however, where the remedy offered by the other forum is clearly unsatisfactory, the other forum may not be an adequate alternative, and the initial requirement may not be satisfied." Piper Aircraft Co., 454 U.S. at 255. Here, the court is concerned that, given the chaos that has characterized Kosovo until only recently, the territory may be lacking even the rudiments of the rule of law. E.g., David A. Moss & Bruce R. Scott, An Economy for Kosovo, One Building Block at a Time, N.Y. Times, July 4, 2001, Editorial, at A15 ("There is no meaningful rule of law [in Kosovo], and there are severe weaknesses in areas like banking and insurance."). In other words, this could well be the rare case where the alternative forum offers no meaningful remedy for Plaintiff's alleged harm.

Additionally, defendants' analysis fails to give proper deference to plaintiff's clear preference for litigating this dispute in New York. It is well settled that the "plaintiff's choice of forum should rarely be disturbed." Gilbert, 330 U.S. at 508. This remains true even where, as here, a United States plaintiff sues a foreign defendant in a U.S. court that is outside the plaintiff's home district.*fn1 See, e.g., Irragorri v. United Tech. Corp., 274 F.3d 65 (2d Cir. 2001) ("It is not a correct understanding of the rule to accord deference only when the suit is brought in the plaintiff's home district."); Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 103 (2d Cir. 2000) ("The district court weighed against the plaintiffs that none of them were residents of the Southern District of New York but did not count in favor of their choice of a U.S. forum that two of them were residents of the United States. This was error."); Guidi v. Inter-Continental Hotels Corp., 224 F.3d 142, 147 (2d Cir. 2000) ("[I]n a forum non conveniens case involving a foreign court, the `home forum' for the [U.S.] plaintiff is any federal district in the United States, not the particular district where the plaintiff lives.") (quotations omitted).

Finally, if the foregoing were insufficient, the public and private factors do not tilt decisively in favor of trial in Kosovo, as they must for defendants to prevail on their motion. See R. Maganlal & Co., 942 F.2d at 167. First, the private interest factors do not clearly favor defendants' choice of forum. These factors include "the relative case of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses . . ." and all other practical problems that make trial of a case easy, expeditious and inexpensive." Gilbert, 330 U.S. at 508. In this case, the court cannot say that there would be any net reduction in hardship if this litigation were pursued in a Kosovar court. Rather, moving the litigation overseas would simply shift to plaintiff the very costs that defendants seek to avoid.

In fact, those costs would, if anything, be raised. As in another case recently decided by this court, State Street Bank And Trust Company v. Inversiones Errazuriz, Limitada, No. 01 Civ. 3201 (RLC), 2002 U.S. Dist. LEXIS 1731 (S.D.N.Y. 2002) (Carter, J.), this dispute is primarily about defendants' obligation to make payments to a United States corporation, as required by an English language agreement, which was negotiated and executed in New York. (Am. Compl. ¶¶ 4, 37-38). Plaintiff and defendant Adriatic are U.S. corporations, and defendant Feiner is a U.S. citizen. (Id. at ¶¶ 5-9.) Defendant Thessus is a Netherland Antilles corporation with its principal place of operation in New York at Feiner's New York home. (Id. at ¶ 12.) Defendants Feiner and Galanis, who plaintiff portrays as "primary material witnesses," (Pl.'s Mem. in Opp'n at 12), are both New York residents. (Am. Compl. ¶¶ 8, 94 Finally, plaintiff purportedly plans to introduce "detailed and voluminous transaction summaries" that it claims are located at its New York offices and those of AIG. ...


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