Reiss v. Societe Centrale Du Groupe, Docket No. 00-7103

• Decision Date: 01 August 2000
• Docket Number: Docket No. 00-7103
• Citation: 235 F.3d 738
• Parties: (2nd Cir. 2000) BRAD M. REISS, Plaintiff-Appellant, v. SOCIETE CENTRALE DU GROUPE DES ASSURANCES NATIONALES, a/k/a Societe Centrale du Gan, n/k/a Societe de Gestion de Garanties et de Participations, and GAN S.A., Defendants-Appellees, UNION POUR LE FINANCEMENT D'IMMEUBLES DE SOCIETES and UNION INDUSTRIELLE DE CREDIT, Defendants
• Court: U.S. Court of Appeals — Second Circuit

Page 738

235 F.3d 738 (2nd Cir. 2000)

BRAD M. REISS, Plaintiff-Appellant, v. SOCIETE CENTRALE DU GROUPE DES ASSURANCES NATIONALES, a/k/a Societe Centrale du Gan, n/k/a Societe de Gestion de Garanties et de Participations, and GAN S.A., Defendants-Appellees, UNION POUR LE FINANCEMENT D'IMMEUBLES DE SOCIETES and UNION INDUSTRIELLE DE CREDIT, Defendants.

Docket No. 00-7103

August Term, 2000

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued: September 22, 2000

Decided December 27, 2000

Appeal from judgment entered in the United States District Court for the Southern District of New York (Scheindlin, J.) dismissing action to recover finder's fee for lack of personal jurisdiction and for failure to state a claim, the district court having determined that appellant did not establish that appellees transacted business in the State of New York or that the alleged agent of appellees had actual or apparent authority to contract with appellant.

Vacated and remanded in part.

RICHARD E. HAFTEL, Modlin, Haftel & Nathan LLP, New York, New York, for plaintiff-appellant;

LAWRENCE W. NEWMAN, Baker & McKenzie, New York, New York, for defendant-appellee Societe Centrale du Groupe des Assurances Nationales, a/k/a Societe Centrale du GAN, n/k/a Societe de Gestion de Garanties et de Participations;

FREDERICK T. DAVIS, Shearman & Sterling, New York, New York, (Jeremey R. Kasha, on the brief), for defendant-appellee GAN S.A.

Before: CARDAMONE, MINER, and POOLER, Circuit Judges.

MINER, Circuit Judge:

I.

Plaintiff-appellant Brad M. Reiss appeals from a judgment entered against him in the United States District Court for the Southern District of New York (Scheindlin, J.) dismissing his action to recover a finder's fee against defendants-appellees. The action revolves around Reiss' claim that he is entitled to a fee for having successfully interested General Electric Capital Corporation ("GECC") in acquiring two French real estate companies, Union Pour le Financement d'Immeubles de Societes ("UIS") and Union Industrielle de Credit ("UIC"). Reiss claims that he entered into an oral contract with Alain 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 pleads causes of action in breach of contract and quantum meruit. The district court dismissed the action for lack of personal jurisdiction, see Fed. R. Civ. P. 12(b)(2), and failure to state a claim, see Fed R. Civ. P. 12(b)(6), holding that Reiss did not establish that either defendant-appellee transacted any business in the State of New York so as to be subject to personal jurisdiction there or that the alleged agent of defendants-appellees had actual or apparent authority to contract with him and that a claim therefore was not stated in the complaint.

II.

According to the Amended Complaint, Reiss is a licensed real estate broker who has been engaged in the commercial real estate business for more than fifteen years. UIC, at the times relevant to this dispute, was a financial institution that held a substantial real estate portfolio. Defendant-appellee Societe Centrale du Groupe des Assurances Nationales, also known as, Societe Centrale du GAN, and now known as, Societe de Gestion de Garanties et de Participations ("Societe"), is wholly owned by the government of France. Defendant-appellee GAN S.A. ("GAN S.A."), a holding company, is currently the parent of a group of French companies involved in the insurance business.

In 1992, the year that the alleged oral contract was formed, GAN S.A. was a wholly owned subsidiary of Societe. GAN S.A., in turn, wholly owned UIC. GAN S.A. also owned 94.47% of UIS. In 1997, prior to the sale of UIC and UIS to GECC, GAN S.A.'s shares of UIC were transferred to Societe. 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.

Reiss, a resident of New York, has had an almost twenty year personal and professional relationship with Alain Juliard, the Chairperson of UIS. In 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. During the transaction, Reiss told Juliard that his (Reiss') firm, Sonnenblick Goldman, expected to receive from USSC a 1% fee its customary arrangement for its work in that kind of transaction. 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.

On 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") drove back from a meeting, Juliard advised Reiss that "GAN"¹ had authorized Juliard to explore opportunities to reduce the real estate holdings of "GAN" in France, including the position of "GAN" in UIS and/or FINABAIL 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. During the drive, Juliard explained that defendants' objective was to have a United States corporation make a "substantial investment" in UIS and/or FINABAIL. Defendants believed that the best way to accomplish this end was to convince a United States corporation to enter into a joint venture with defendants or make an initial investment in UIS and/or FINABAIL, which would allow the United States corporation to become familiar with the holdings of "GAN" and the French real estate market.

Juliard and Reiss then allegedly entered into an oral contract. That agreement, which was never reduced to writing, was made when 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 the holdings of "GAN" in UIS and/or FINABAIL. Reiss accepted upon defendants' commitment that if he succeeded in introducing a company that ultimately entered into a transaction with defendants, defendants would pay his fee of 1% on any large transaction, a fee similar to that paid in the USSC transaction.

Reiss alleges that he subsequently began performing services that ultimately led to the purchase of UIC and UIS by GECC. Initially, Reiss contacted Richard Grimaldi ("Grimaldi"), an executive in GECC's Real Estate Division with whom he had a close professional 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. Juliard and Rosio, in consultation with Reiss, decided to encourage GECC, as an initial matter, to acquire the shares of "GAN" in FINABAIL, with the hope that such transaction would lead to other deals or a more substantial investment by GECC in Groupe Percier.

In a subsequent conversation between Grimaldi and Reiss, Grimaldi suggested that Groupe Percier submit a written presentation for him to circulate within GECC. Rosio, in consultation with Reiss, prepared a written presentation relating to an investment in FINABAIL by GECC. Reiss delivered the presentation to Grimaldi and later provided Grimaldi with a copy of UIS' annual report that he received from Rosio. In addition, around the same time, Reiss contacted approximately two hundred other American companies that had invested or planned to invest in France in an attempt to interest them in Groupe Percier's activities.

Sometime in July 1993, Reiss joined Allied Partners, Inc., a company formed to manage and invest in real estate. 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, Managing Director of Commercial Property Financing for GECC in Europe. 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. Juliard then allegedly explained that "GAN" would be extremely pleased with any interest GECC might take 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. At the meeting, Rosio and Juliard presented to GECC the prospect of acquiring an interest in UIS and FINABAIL, possibly through the acquisition of an interest in UIC.

A few months later, Reiss and Juliard purportedly 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 informed Reiss that they had obtained the required approval from "GAN" in order to proceed in this manner. 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.

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. Juliard and Rosio kept Reiss apprised of these dealings, sending him copies of correspondence between Groupe Percier and GECC. In April 1994, GECC executed confidentiality letters, which had been approved by "GAN," relating to information...