Plaintiff appeals from an order of the Supreme Court, New York County (Melvin L. Schweitzer, J.), entered March 31, 2009, which dismissed all claims against VDI and Vargas, and claims sounding in fraud, breach of the implied covenant of good faith and fair dealing and unjust enrichment against Abaplus.
The opinion of the court was delivered by: Acosta, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Richard T. Andrias, J.P., David Friedman, Rolando T. Acosta, Leland G. DeGrasse, Nelson S. RomÁn, JJ.
In this appeal we are called on to revisit New York's long-arm jurisdiction statute and to determine whether a plaintiff can plead a cause of action for unjust enrichment when it has adequately pleaded that an alleged bribery induced a fraudulent agreement. For the foregoing reasons, we modify the order of Supreme Court to the extent of reinstating the claims against defendant Abaplus sounding in fraud and unjust enrichment.
Plaintiff, which provides television services to cable and satellite distributors primarily in Spain and Latin America, has its principal place of business in Argentina. Abaplus, which offers programming for television services such as those provided by plaintiff, is incorporated in the British Virgin Islands, and maintains offices and places of business in Miami, Buenos Aires, and Montevideo, Uruguay. Defendant Vargas Distribution (VDI), which was dissolved in August 2006, was a Panamanian corporation, also with offices and its principal place of business in Montevideo. Defendant Arturo Vargas, who owned VDI as well as Abaplus, is a citizen of Uruguay.
On January 29, 2001, plaintiff entered into an agreement with VDI whereby the latter would supply cable programming to plaintiff for the South American market for the years 2001 through 2003. That agreement is not presently litigated, although plaintiff argues that it was linked with a 2002 replacement contract with Abaplus in a manner that demonstrates an ongoing bribery scheme carried out by Abaplus's principal (Vargas) and plaintiff's former CEO, Claudio Bevilacqua.
On December 16, 2002, plaintiff and Abaplus entered into an agreement replacing the VDI agreement. This agreement is the basis of the Supreme Court ruling and the present appeal. Plaintiff alleged in its complaint that Abaplus was actually part of the Vargas programming sales group, so Vargas remained the party in interest. Plaintiff further alleged that VDI provided the programming until December 31, 2002, which Abaplus continued thereafter, so in plaintiff's view, the entities are obviously related.
The 2002 agreement is written in Spanish; there is no allegation that it was entered into in New York. The parties agreed, however, to submit to the jurisdiction of New York courts to resolve any disputes arising under the agreement, and that New York law would govern any litigation.
Plaintiff alleged that Vargas and the corporate defendants engaged in a fraudulent scheme involving plaintiff's CEO whereby defendants bribed Bevilacqua to commit plaintiff to paying inflated prices for "inferior programming," a scheme that was continued under the 2002 agreement. Additionally, Abaplus was alleged to have breached the 2002 agreement by failing to provide plaintiff with the promised programing per year, and also tried to supply plaintiff programming to which Abaplus did not own the distribution rights.
After it terminated Bevilacqua's employment on January 14, 2004, plaintiff continued an investigation that had been ongoing with respect to certain of Bevilacqua's activities during his employment. In 2006, plaintiff discovered that its contractual relationships with entities controlled by Vargas, including the present one, which had been negotiated by Bevilacqua and Vargas, had resulted from a kickback scheme.
Specifically, starting in January 2001 (i.e., during the term of the VDI contract), Bevilacqua committed plaintiff to pay for programming at highly inflated prices, and kickbacks were paid into personal bank accounts controlled by Bevilacqua. Bevilacqua utilized a Citibank account in New York, which he had opened in his niece's name but to which he retained signatory rights, to accept the kickbacks. The niece used that account while she resided in Bevilacqua's New York apartment, but stopped doing so when she left New York and returned to Argentina in early 2001.
According to plaintiff, it wired $300,000 to VDI's account at Dresdner Bank Lateinamerika AG, pursuant to the agreement, on July 25, 2001. Plaintiff's investigation uncovered that three weeks later, VDI wired $150,000 from that same account to Bevilacqua's niece's Citibank account in New York. On November 13, 2001, plaintiff wired $100,733.11 to VDI's account at Northern Trust International, which ...