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Hinrichsen v. The Hinrichsen Foundation

United States District Court, S.D. New York

January 9, 2018


          OPINION & ORDER

          PAUL A. ENGELMAYER, District Judge

         This case arises from the alleged breach of a 2009 contract, which contemplated the merger of four entities, one a New York corporation, into a larger corporation based overseas. Before the Court is a motion by defendant Hinrichsen Foundation (the "Foundation") to dismiss the complaint of plaintiff Christian Hinrichsen, on three separate grounds: (1) lack of personal jurisdiction, (2) forum non conveniens, and (3) failure to state a claim. For the reasons that follow, the Court dismisses the Complaint for lack of personal jurisdiction over the Foundation without addressing the Foundation's alternate grounds for dismissal.

         I. Background[1]

         The contract dispute here has its roots in a family tragedy. The forbearers of plaintiff Christian Hinrichsen ("Christian"), the Hinrichsen family, were subject to persecution in Nazi Germany in the 1930s. Compl. at 3. Two of Christian's ancestors were murdered at Auschwitz and a third died in an internment camp. Id.

         Relevant here, in 1939, C.F. Peters GmbH & Co., KG ("Peters Germany"), a corporate entity owned by the family, was subject to a forced sale as part of the Third Reich's "Aryanization" program. Id. In 1942, one of Christian's ancestors was able to "re-engage" with Peters Germany and apparently retook some or all ownership of the company. Id. at 4. Two other Hinrichsen entities were founded by family members who emigrated from Germany to New York and London: Peters Edition Ltd. ("Peters London"), and C.F. Peters Corporation ("Peters New York"). Id. at 3-4. The three above-identified "Peters" entities are central to the dispute here, along with a fourth, Edition Peters GmbH ("Peters GmbH"), whose provenance the pleadings leave unclear.

         Before November 17, 2009, the interests in the various Peters entities were held as follows. Peters Germany was jointly owned by (1) Henry Hinrichsen ("Henry"), Christian's father, (2) Martha Hinrichsen ("Martha"), Christian's aunt, (3) the Foundation, and (4) others. Compl. Ex. 1 ("2009 Agreement") at 1. Shares of Peters GmbH were also jointly held by Henry, Martha, and the Foundation. Id. The capital-issued shares of Peters New York were wholly owned by Henry and Martha. Id. Peters London was wholly owned by the Foundation. Id. As to residences of the owners, Henry was a resident of Vermont, id., Martha was a resident of Connecticut, id., and the Foundation is a British entity headquartered in London, see Compl. at 2; Berg Decl. at 1.

         On November 17, 2009, Henry, Martha, Peters London, and the Foundation entered into a written agreement that contemplated the creation, by means of a re-organization and merger, of yet a new Peters entity. Compl. at 4. The agreement ("2009 Agreement") referred to the new entity, for the purposes of the agreement only, as "Newco." The 2009 Agreement provided that Henry, Martha, and the Foundation would transfer all of their interest in the four Peters entities-two of which were Frankfurt-based, one of which was London-based, and one of which was New York-based-to Newco. The new entity would ultimately take the form either of Peters London or a "new group company to be formed (under whatever name) to implement this agreement." 2009 Agreement at 1.

         Under the 2009 Agreement, Henry and Martha would each receive 15% of the new entity's capital shares. 2009 Agreement at 2. The Foundation would receive 70%. Mat 3. In addition, under the 2009 Agreement, Henry and Martha agreed to enter into an arrangement in which each would receive annual compensation in return for providing consultancy services to Peters New York or any successor in interest. Id. at 2. Further, in the event of Henry's death within 10 years of the completion of the transaction, the 2009 Agreement further provided that Christian would either be appointed as a consultant by the newly formed entity or receive, from the Foundation, 5 percent of the new entity's then-issued equity. Id. at 3.

         On July 1, 2010, Peters New York and Henry entered into a written consulting agreement, as contemplated by the 2009 Agreement.[2] See Berg Decl. Ex. G ("2010 Consulting Agreement"). The 2010 Consulting Agreement provided that, if Henry died within 10 years of the agreement, Peters New York would retain Christian for a term of the lesser of "the period of three (3) years from the date of [Henry's] death or ... the period of time between the date of [Henry's] death and January 1, 2020." 2010 Consulting Agreement at 2. The 2010 Consulting Agreement, however, did not refer to the alternative option described in the 2009 Agreement in which Christian would receive, in lieu of a paid consultancy at Peters New York, a five percent interest in the new entity from the Foundation.

         In August 2010, consistent with the 2009 Agreement, Henry, Martha, Peters London, Peters GmbH, and the Foundation executed a partnership agreement ("2010 Agreement") and formed a new entity, C.F. Peters, Ltd & Co. KG ("Peters KG"). Compl. at 5; Berg Decl. Ex. F ("2010 Agreement") at 1, 12. The company had three limited partners (the Foundation, Henry, and Martha), and three personally liable partners. 2010 Agreement at 2. Relevant here, the 2010 Agreement did not mention Peters New York, or Henry and Martha's consulting agreement with Peters New York. The 2010 Agreement instead stated that:

This Agreement replaces all previous partnership agreements between the parties. The agreement between the Hinrichsen Foundation, Martha and Henry Hinrichsen and Peters Edition Ltd, London dated November 17, 2009 remains in principle in place unless this agreement deviates from it; in this case the provisions of this agreement shall prevail.

Id. at 10. The 2010 Agreement further provided that "German law shall apply to this agreement and its interpretation." Id. As to dispute resolution, it provided that "[i]f there is any dispute or controversy between the partners arising out of or relating to this agreement, the parties agree that such dispute or controversy shall be arbitrated in accordance with the Arbitration Rules of the German Institution of Arbitration ... [and that the] Venue of Arbitration shall be Berlin." Id.

         On September 7, 2011, Henry, Martha, and the Foundation amended the 2010 Agreement ("2011 Agreement"). The amended agreement did not change any terms relevant here. See Compl. Ex. 2 ("2011 Agreement").

         On February 25, 2016, Henry passed away. Compl. at 5. Pursuant to the 2009 Agreement, Christian made a timely request for the transfer to him, from the Foundation, of five percent of the equity of the new entity. Id. at 6. The Foundation declined to do so. It took the position that, in the 2010 Consulting Agreement, the parties had decided to eliminate the equity transfer option described in the 2009 Agreement. Id. This lawsuit, in which Christian seeks as relief the transfer of the five percent of the equity to himself, followed.

         II. Procedural Background

         On February 15, 2017, Christian filed a complaint, alleging that the Foundation had breached the 2009 Agreement by refusing to transfer five percent equity in the new entity to him. Dkt. 1.

         On June 16, 2017, the Foundation filed a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), for forum non conveniens under Rule 12(b)(3), and for failure to state a claim under Rule 12(b)(6), Dkt. 8, and a supporting memorandum, Dkt. 9 (collectively, "MTD"). On July 12, 2017, Christian filed a memorandum in opposition. Dkt. 13 ("Pi's ...

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