ABKCO Indus., Inc. V. Lennon, 52 Ad2d

52 A.D.2d 435 Page 1

52 A.D.2d 435 (Cite as: 52 A.D.2d 435, 384 N.Y.S.2d 781)

(1) In actions brought by plaintiff, a theatrical man- ABKCO Indus. v Lennon ager, against its former clients and their related 52 A.D.2d 435, 384 N.Y.S.2d 781 companies, jurisdiction over defendant Starkey, N.Y.A.D.,1976. who was served in England where he resides, was properly obtained. Starkey's composing activities, 52 A.D.2d 435, 384 N.Y.S.2d 781 which he exploited in the United States through attorneys and accountants whom he retained in New ABKCO Industries, Inc., Respondent, York, constitute doing business in New York. v. CPLR 301 has not preserved the provision con- John Lennon et al., Appellants, et al., Defendants. tained in section 229-b of the Civil Practice Act (Action No. 1.) limiting the exercise of jurisdiction over nonresid- ABKCO Industries, Inc., Respondent, ent individuals doing business in New York to v. claims arising from such business in the State. Nor Apple Corps Ltd. et al., Appellants. (Action No. 2.) does CPLR 302 (subd [a], par 1) limit CPLR 301 to Supreme Court, Appellate Division, First Depart- causes of action arising out of the business being ment, New York done in New York, and, where jurisdiction over an June 8, 1976 individual is obtained independent of CPLR 302 because the individual was “doing business” in CITE TITLE AS: ABKCO Indus. v Lennon New York, jurisdiction will also attach with respect to cause of action which did not arise in New York. HEADNOTES Courts (2) Jurisdiction over defendant Apple Corps Ltd., jurisdiction which does no business in New York, was properly forum non conveniens--sufficiency of pleading- acquired by service on its subsidiary in New York, -prior representation by counsel--in actions brought the alter ego of the parent through which it acted. by theatrical agent against its former clients and Furthermore, the test for doing business in New their related companies, jurisdiction over individual York under section 1314 (subd [b], par [5]) of the defendant who was served in England where he Business Corporation Law where both parties are resides, was properly obtained since his composing foreign corporations is the same as under CPLR activities, which he exploited in United States 301. through persons he retained in New York, constitute doing business in New York--jurisdiction over (3) The actions are not dismissed on the ground of corporate defendant, which does no business in forum non conveniens, since substantial nexus with New York, was properly acquired by service on its New York exists. Plaintiff was to perform most of subsidiary in New York--actions are not dismissed its managerial and promotional activities in New on ground of forum non conveniens since substan- York; its clients derive most of their income in New tial nexus with New York exists--action against two York; plaintiff would incur expenses so large in individual defendants dismissed for insufficiency- pursuing the action in England that it might be re- -motions to disqualify plaintiff's attorneys for hav- quired to abandon the action; and, plaintiff has ing previously represented defendants properly already effected substantial judicial effort in New denied--to permit plaintiff to file statement of readi- York. ness upon joinder of issue in each action was im- (4) The action against defendants McCartney and proper. Boreham is dismissed for insufficiency. The count

52 A.D.2d 435 (Cite as: 52 A.D.2d 435, 384 N.Y.S.2d 781)

sounding in conspiracy, the only count involving rejecting the report of the Referee; by defendant-ap- these defendants, pleads in conclusory terms with pellant Paul McCartney from said order insofar as it the result that the alleged acts of harm to plaintiff denied his motion to dismiss for forum non con- cannot be discerned, and there is no substantive tort veniens, insufficiency and, alternatively for a stay; of conspiracy. If the count is a claim of fraud, it is and by defendant-appellant Michael B. Boreham to deficient for failure to particularize. An additional the extent said order denied aspects of his motion basis for dismissal as to Boreham exists since his also raising the ground of forum non conveniens name and identity had been known to plaintiff well and seeking a severance and a stay. before the lawsuit was instituted, and CPLR 1024 allows use of the John Doe caption only where Appeal by defendants-appellants from an order of plaintiff is ignorant of the name or identity of a the Supreme Court at Special Term (Jacob proper party defendant. Markowitz, J.), entered December 4, 1975 in New York County, in Action No. 2, denying their motion (5) The motions to disqualify plaintiff's attorneys to dismiss that action for forum non conveniens and were properly denied. While plaintiff's counsel rep- for lack of subject matter jurisdiction over the for- resented some of the defendants herein in the past, eign corporate appellants, to dismiss for lack of in no confidential information was imparted to coun- personam jurisdiction over all defendants other than sel during the prior representation and there is no defendant Lennon, for a stay pending resolution of substantial relationship between the prior represent- London actions, and to the extent the order denied ation and these lawsuits. their motion to reject the Referee's recommendation that in personam jurisdiction existed over Apple (6) To permit plaintiff to file a statement of readi- Corps Ltd. and Harrisongs Ltd. but granted ness upon joinder of issue in each *437 action was plaintiff's motion to reject the recommendation of improper. No unusual factors exist to depart from lack of in personam jurisdiction over defendant subdivision (d) of section 660.4 of the Rules of Richard Starkey. New York and Bronx Counties Supreme Court (22 NYCRR 660.4 [d]). Appeal by defendants-appellants other than Paul McCartney and Michael B. Boreham, from orders SUMMARY of the Supreme Court at Special Term (Jacob Markowitz, J.), entered December 4, 1975 in New Appeal by defendant-appellant Michael B. Bore- York County, in Actions Nos. 1 and 2, denying ham from an order of the Supreme Court at Special their motions to require counsel for plaintiff to Term (Jacob Markowitz, J.), entered July 31, 1975 withdraw. in New York County, in Action No. 1, to the extent that it failed to dismiss for lack of in personam jur- Appeal by defendant-appellant Paul McCartney isdiction and insufficiency as to him. from an order of the Supreme Court at Special Term (Jacob Markowitz, J.), entered December 23, Appeal from an order of the Supreme Court at Spe- 1975 in New York County, in Action No. 1, insofar cial Term (Jacob Markowitz, J.), entered on as it denied his request for a severance and, along December 4, 1975 in New York County, in Action with the other defendants-appellants, insofar as it No. 1, by defendants-appellants other than Paul granted plaintiff's cross motion to permit filing of a McCartney and Michael B. Boreham to the extent statement of readiness immediately upon joinder of that the order denied their motion to dismiss for issue; and by defendants-appellants in Action No. 2 forum non conveniens, insufficiency, lack of in per- from said order insofar as it granted said cross mo- sonam jurisdiction as to certain of those defendants, tion. and, in that regard, granted plaintiff's application

52 A.D.2d 435 (Cite as: 52 A.D.2d 435, 384 N.Y.S.2d 781)

APPEARANCES OF COUNSEL On November 8, 1973, the 1973 action was commenced against six New York and three California Max Freund of counsel (Peter F. Nadel, Robert W. corporations affiliated with the Beatles and against Gottlieb and Stephen L. Ratner with him on the all of the individual Beatles, the wife of one of brief; Rosenman Colin Freund Lewis & Cohen, at- them and 10 John Does. For John Doe No. 1 the torneys), for respondent. plaintiff substituted Michael Boreham, an English Owen McGivern of counsel (Benjamin Vinar, solicitor, representing the Beatles other than Mc- Robert L. Magielnicki and John W. Wall with him Cartney, serving him in December, 1974, when he on the brief; Eastman & Eastman, attorneys, and came to New York to confer with the Beatles' New Donovan Leisure Newton & Irvine of counsel), for York attorneys in reference to the English litigation Paul McCartney, appellant. and the defense of the 1973 action. That action al- Peter K. Leisure of counsel (Robert S. Lipton and leges 42 counts. As to defendants other than Bore- George Kahale, III, with him on the brief; Curtis, ham, i.e., John Doe No. 1, and McCartney, the Mallet-Prevost, Colt & Mosle, attorneys), for Mi- plaintiff seeks judgment for commissions owing chael B. Boreham, appellant. and to accrue in the future, for repayment of loans Richard W. Hulbert of counsel (Cleary, Gottlieb, and for compensation in quantum meruit. Nearly 19 Steen & Hamilton, attorneys), for John Lennon and million dollars is thereby sought. Count 42 against others, appellants. all defendants sounds in conspiracy, with overtones Reavis & McGrath of counsel on the issue of in of the tort of inducing breach of contract and fraud personam jurisdiction for Richard Starkey, appel- and seeks an additional 34 million dollars including lant. 10 million dollars in punitive damages.

OPINION OF THE COURT In the 1974 action, plaintiff brought suit against the Beatles' English companies seeking four and one- Nunez, J. half million dollars. Quasi in rem jurisdiction over In two actions (hereinafter referred to as the 1973 six corporations in the two actions was obtained by action and the 1974 action) by ABKCO Industries, attachment of assets belonging to these corpora- Inc., a theatrical manager, against its former clients, tions. The defendants moved to dismiss the action the Beatles, and their related companies, appeals for forum non conveniens, insufficiency, lack of are taken from six orders. In 1969 plaintiff entered personal jurisdiction, and lack of subject matter jur- into a management contract in London, England isdiction over the English corporate defendants. with three of the Beatles (other than McCartney) The issue of personal jurisdiction was referred to and the Beatles group of companies. McCartney, Dean Joseph McLaughlin, Referee, who found that charging that the agreements with plaintiff wasted while defendant Apple Corps Ltd. does no business partnership assets, commenced proceedings in Eng- in New York, nonetheless, personal jurisdiction land to dissolve the Beatles partnership. After the was acquired because Apple Corps Ltd. acted termination of the management agreement, the through its alter egos, two subsidiary corporations plaintiff began a spate of actions in New York and which the Referee treated as mere departments of California to recover sums loaned to the Beatles Apple Corps Ltd. Dean McLaughlin found that jur- and their companies. On November 1, 1973, some isdiction over Starkey (better known as Ringo months following the last of plaintiff's suits, the Starr), who was served in England where he Beatles, except McCartney, and fourteen of their resides, could not be obtained under CPLR 302 companies sued plaintiff and its president, Alan B. since the cause of action does not arise out of the Klein, in England alleging the management contract business Starkey may be doing in New had been induced by misrepresentations and breach York.However, Justice Markowitz found that Star- of fiduciary duty. *439

52 A.D.2d 435 (Cite as: 52 A.D.2d 435, 384 N.Y.S.2d 781)

key does do business in New York “pervasively, Jurisdiction over Apple Corps Ltd., which does no unmistakably, undeniably, continuously and sub- business in New York, was acquired by service on stantially” and that jurisdiction was obtained pursu- its subsidiary in New York, the alter ego of the par- ant to CPLR 301. ent through which it acted (Public Administrator v Royal Bank of Canada, 19 NY2d 127). Further- With respect to Starkey, CPLR 301 provides: “A more, the test for doing business in New York un- court may exercise such jurisdiction over persons, der section 1314 (subd [b], par [5]) of the Business property or status as might have been exercised Corporation Law where both parties are foreign heretofore.” The Second Preliminary *440 Report corporations is the same as under CPLR 301 (see of the Advisory Committee on Practice and Proced- Fremay, Inc. v Modern Plastic Mach. Corp., 15 ure (NY Legis Doc, 1958, No. 13, p 38) states that AD2d 235 [1st Dept, 1961]). the proposed section is designed to make it clear that neither CPLR 302 nor any similar provision su- We now consider, and reject, the contention that the persedes or operates as a limitation upon acquisi- actions should be dismissed on the ground of forum tion of jurisdiction as previously permitted by law non conveniens. Substantial nexus with New York and judicial decision or as permitted by this article exists. Plaintiff was to *441 perform in New York or any future provision. The report (p 37) further most of its managerial and promotional activities on states that one of the objectives of the drafters of behalf of the Beatles and the Beatles derive most of the CPLR is to make it possible for a litigant in the their income from New York. The voluminous re- New York courts to take full advantage of the cords plaintiff requires to prove its claims are in State's constitutional power over persons and New York; plaintiff would incur expenses so large things. In Tauza v Susquehanna Coal Co. (220 NY including cessation of its business located in New 259 [1917]) jurisdiction over a foreign corporation York, in pursuing the action in England that it was sustained even though the cause of action did might be required to abandon the action; and the ju- not arise in the business transacted in New York, dicial effort in the New York actions already ex- because the corporation was “doing business” in ceeds that present in Mirabella v Banco Industrial, New York.Starkey's composing activities, which he 43 AD2d 489 [1st Dept, 1974]) where we held dis- has exploited in the United States through attorneys missal for forum non conveniens would not be justi- and accountants whom he has retained in New York fiable where substantial pretrial disclosure had been on a continuing basis, constitute doing business in effected here, despite the existence of other factors New York.We reject the assertion that CPLR 301 which support dismissal by application of the doc- has preserved the provision contained in section trine. Silver v Great Amer. Ins. Co. (29 NY2d 356) 229-b of the Civil Practice Act limiting the exercise does not require a contrary conclusion. In that case of jurisdiction over nonresident individuals doing it was held that the application of the doctrine business in New York to claims arising from such should turn on consideration of all pertinent factors, business in the State. We reject also the assertion including justice, fairness, and convenience, and that CPLR 302 (subd [a], par 1) limits CPLR 301 to not solely on the residence of one of the parties. causes of action arising out of the business being Applying those considerations to the facts herein, done in New York (thereby rendering CPLR 301 we conclude that the doctrine of forum non con- redundant when applied to individuals doing busi- veniens should not be invoked. ness), and hold that where jurisdiction over an individual is obtained independent of CPLR 302 be- Turning to the allegation of conspiracy, count 42 cause the individual was “doing business” in New pleads in conclusory terms that all the conspirators York, jurisdiction will also attach with respect to entered into a course of conduct and engaged in causes of action which did not arise in New York. acts to harm plaintiff. Exactly what those acts are

52 A.D.2d 435 (Cite as: 52 A.D.2d 435, 384 N.Y.S.2d 781)

cannot be discerned. There is no substantive tort of action was improper. No unusual factors exist to conspiracy. (Goldstein v Siegel, 19 AD2d 489, 493 depart from subdivision (d) of section 660.4 of the .) If plaintiff is claiming a conspiracy to induce Rules of New York and Bronx Counties Supreme breach of contract, the fact is that there was no Court (22 NYCRR 660.4 [d]). Discovery has not breach but merely an expiration of the contract. been completed. There is no reason to give this case Furthermore, the conspirators would be charged preference over other matters pending. with inducing the breach of their own contract, an impossibility. If count 42 is a claim of fraud, it is The order of the Supreme Court, New York County deficient for failing to particularize the wrong in (Markowitz, J.), entered December 4, 1975, insofar detail as required by CPLR 3016 (subd [b]) and for as appealed from, should be modified, on the law, failing to particularize all of the necessary elements to the extent of granting McCartney's motion to dis- of the fraud. It is the only count involving McCart- miss the complaint as insufficient against him, and ney and Boreham (called therein John Doe No. 1). otherwise affirmed; Accordingly, the action as against McCartney and The order of the Supreme Court, New York County Boreham should be dismissed for insufficiency. (Markowitz, J.), entered December 4, 1975 in the Additionally, for Boreham, another basis for dis- 1974 action, raising jurisdictional and other issues, missal exists. CPLR 1024 allows use of the John should be affirmed; Doe caption only where plaintiff is ignorant of the The orders of the Supreme Court, New York name or identity of a proper party defendant. Bore- County (Markowitz, J.), entered December 4, 1975 ham's name and identity had been known to the denying the motions to disqualify plaintiff's coun- plaintiff well before the lawsuit was instituted. If sel, should be affirmed; plaintiff wished to add Boreham as a party, plaintiff should have acted in accordance with CPLR 305. The order of the Supreme Court, New York County Plaintiff's failure to *442 do so by itself requires (Markowitz, J.), entered December 23, 1975, inso- dismissal of the action as against Boreham (see far as appealed from, should be modified, on the Matthews v Schusheim, 42 Misc 2d 176). law and in the exercise of discretion, to the extent of denying plaintiff's cross motion for leave to file a There remain for consideration the orders denying note of issue and statement of readiness immedi- disqualification of plaintiff's attorneys and the order ately upon joinder of issue in each action, and oth- under the caption of both actions allowing plaintiff erwise affirmed; and a premature right to file a note of issue and statement of readiness in each action. Requests to dis- The order of the Supreme Court, New York County qualify the law firm representing the other party are (Markowitz, J.), entered July 31, 1975, insofar as becoming common practice (see Kupferman, The appealed from, *443 should be modified, on the Unfortunate Lawyer, The Advocate, vol 22, No. 3, law, to the extent of granting Boreham's motion to May -- June, 1975, p 71). While plaintiff's counsel dismiss the action as against him, and otherwise af- represented the Beatles in the past, such prior rep- firmed, all without costs and without disburse- resentation does not impinge on the Beatles' in- ments. terests herein. No confidential information was imparted to counsel during the prior representation of Settle orders. the Beatles and there is no substantial relationship Silverman, J. between the prior representation and these lawsuits. (Dissenting in part).

Finally, we hold that to permit plaintiff to file a I would dismiss this action as to defendant Starkey statement of readiness upon joinder of issue in each on the ground of lack of jurisdiction of the person

52 A.D.2d 435 (Cite as: 52 A.D.2d 435, 384 N.Y.S.2d 781)

of said defendant. I think that CPLR 301 is not a plaintiff's cross motion for leave to file a note of is- grant of jurisdiction beyond the jurisdiction that the sue and statement of readiness immediately upon New York State courts exercised before the adop- joinder of issue in each action, and otherwise af- tion of the CPLR. As said defendant is a nonresid- firmed, without costs and without disbursements. ent individual, he would not have been subject under the former Civil Practice Act to the jurisdiction Settle orders on notice. of the New York courts by service outside the State in an in personam action not arising out of the Copr. (c) 2013, Secretary of State, State of New transaction of business within State even though York said defendant might have been doing business N.Y.A.D.,1976. within the State. (Cf. Tomaselli v Martens, 283 App ABKCO IND. V LENNON Div 742.) I do not think CPLR 301 changes this 52 A.D.2d 435, 384 N.Y.S.2d 781602 rule. END OF DOCUMENT Kupferman, J. P., Murphy and Lupiano, JJ., concur with Nunez, J.; Silverman, J., dissents in part in an opinion as to defendant Starkey for lack of in personam jurisdiction. Order, Supreme Court, New York County, entered July 31, 1975, in Action No. 1, insofar as appealed from, unanimously modified, on the law, to the extent of granting Boreham's motion to dismiss the action as against him, and otherwise affirmed, without costs and without disbursements.

Order, Supreme Court, New York County, entered December 4, 1975, in Action No. 1, insofar as appealed from, modified, on the law, to the extent of granting McCartney's motion to dismiss the complaint as insufficient against him, and otherwise affirmed, without costs and without disbursements.

Order, Supreme Court, New York County, entered December 4, 1975 in the 1974 action, raising jurisdictional and other issues, affirmed, without costs and without disbursements.

Orders, Supreme Court, New York County, entered December 4, 1975 denying the motions to disqualify plaintiff's counsel, unanimously affirmed, without costs and without disbursements.

Order, Supreme Court, New York County, entered December 23, 1975, insofar as appealed from, unanimously modified, on the law and in the exercise of discretion, to the extent of *444 denying