Gibbons v. Udaras na Gaeltachta
| Decision Date | 12 October 1982 |
| Docket Number | No. 82 Civ. 1360(RJW).,82 Civ. 1360(RJW). |
| Citation | 549 F. Supp. 1094 |
| Parties | Thomas GIBBONS and William R. Beiseigel, Plaintiffs, v. UDARAS na GAELTACHTA and The Industrial Development Authority of Ireland, Defendants. |
| Court | U.S. District Court — Southern District of New York |
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Freedman, Levy, Kroll & Simonds, Sheldon Z. Kaplan, Washington, D.C. and Kreindler & Kreindler, New York City, for plaintiffs; Joseph H. Sharlitt, Harvey A. Levin, Washington, D.C., Max W. Berger, New York City, of counsel.
Baker & McKenzie, New York City, for defendants; Robert B. Davidson, Brandon T. Davis, New York City, of counsel.
The complaint filed in this action sets forth claims for (1) breach of contract, (2) an accounting, (3) fraud, (4) tortious interference with contractual relations, and (5) a taking of property in violation of international law. Defendants are Udaras na Gaeltachta ("UG"), an instrumentality of the Republic of Ireland, and the Industrial Development Authority of Ireland ("IDA"), also an instrumentality of the Republic of Ireland. UG and IDA have moved to dismiss the complaint, arguing (1) that the Court lacks subject matter jurisdiction over this action, (2) that the Court lacks personal jurisdiction over both UG and IDA, (3) that the Court should invoke the doctrine of forum non conveniens, and (4) that plaintiffs have failed to plead fraud with the particularity required by Rule 9(b), Fed.R. Civ.P. For the reasons hereinafter stated, the Court finds that only the fourth of these arguments has merit. Accordingly, the Court denies the UG-IDA motion insofar as it seeks dismissal of the complaint in its entirety, and grants the UG-IDA motion insofar as it seeks dismissal of plaintiffs' fraud claim.
Analysis of the UG-IDA motion requires a fairly detailed recapitulation of the factual background to this action. To the extent the papers before the Court disclose a factual dispute with respect to an issue relevant to the UG-IDA motion, the Court has liberally construed plaintiffs' version of the facts and has deemed that version to be true for the purpose of deciding this motion. Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 303 n.6 (2d Cir.1981), cert. denied, 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301 (1982). Needless to say, by so doing the Court has not relieved plaintiffs of their trial burden of proving the necessary jurisdictional facts by a preponderance of the evidence. Gilson v. Republic of Ireland, 682 F.2d 1022, 1026 (D.C.Cir.1982); Bialek v. Racal-Milgo, Inc., 545 F.Supp. 25, 36 (S.D.N.Y.1982).
The series of events that led to the commencement of this action began in 1973. At that time, plaintiffs were both employed by the Standard T Chemical Company ("Standard"), a New York corporation that was engaged in manufacturing plastic containers used to package cosmetics for sale to the general public. Standard's most popular cosmetics containers were those made from "metallized" plastic. During his employ by Standard, plaintiff Gibbons had acquired a substantial expertise in the production techniques associated with the manufacture of metallized plastic cosmetics containers. Plaintiff Beiseigel, while employed by Standard, had become an expert in marketing such containers to cosmetics manufacturers.
Although metallized plastic cosmetics containers had, by 1974, become quite popular within the United States cosmetics industry, they had not theretofore been extensively manufactured or marketed in Europe. Plaintiffs accordingly perceived a lucrative foreign market for such containers and set about finding a means of exploiting that market through the use of their expertise in the area. Sometime in late 1973, plaintiffs learned of IDA. IDA was then and is today an instrumentality of the Republic of Ireland. It is a not-for-profit entity that exists to encourage foreign industrial development, particularly the creation of new manufacturing facilities, within the Republic of Ireland. To this end, it maintains offices in various countries around the world, including one here in New York City. Projects that qualify for the IDA program are eligible for various forms of governmental assistance, including capital grants from IDA itself and tax incentives made available by Irish law.
In the spring of 1974, plaintiffs informed IDA that they were considering the possibility of starting a manufacturing operation in Ireland for the production of metallized plastic cosmetics containers, and inquired whether such a project might qualify for the IDA program. At that time, no such manufacturing facility existed in Ireland. The initial discussions between plaintiffs and IDA relative to plaintiffs' proposed project took place either over the telephone or via letter. After IDA expressed interest in the project, plaintiffs traveled to New York and met with two representatives of IDA at IDA's office in New York City. At this meeting, plaintiffs were informed of the governmental assistance to which they would be entitled if their project qualified for the IDA program. Among other things, IDA offered to lease plaintiffs a plant in Ireland and to provide a capital grant equal to forty-five percent of the cost of the machinery needed to equip the plant. Shortly after the New York City meeting, plaintiffs traveled to Ireland, at IDA's request, to inspect possible plant sites. However, since both the plant sites and IDA's proposed capital grant proved inadequate for plaintiffs' purposes, the negotiations between plaintiffs and IDA were discontinued in the summer of 1974.
In the late summer or early fall of 1974, plaintiffs once again contacted IDA with regard to their proposed project. IDA informed plaintiffs that they might be able to obtain a larger capital grant and a satisfactory plant site from an entity known as Gaeltarra Eireann ("GE"). GE, the statutory predecessor to defendant UG, was a not-for-profit instrumentality of the Republic of Ireland, and was charged by law with encouraging and assisting the economic development of certain designated Gaelic-speaking areas of Ireland. In similar fashion to the IDA program, a project that qualified for the GE program was eligible for various forms of governmental assistance.
GE, since it was not primarily concerned with encouraging foreign investment in the areas for which it was responsible, did not maintain an office in the United States or employ any personnel in the United States. Instead, GE had developed a relationship with IDA (which was a completely separate legal entity under Irish law) pursuant to which United States investors having development projects that seemed likely candidates for the GE program were directed by IDA to contact GE. Under this arrangement, IDA also made its personnel and its New York City office available to GE in order to facilitate GE's negotiations with those investors who were referred to GE by IDA.
Upon being referred to GE by IDA pursuant to the GE-IDA arrangement just described, plaintiff Gibbons telephoned GE at its office in Ireland and outlined plaintiffs' proposed project. He followed this conversation up with a letter wherein he set forth additional details of the plan. GE responded by scheduling a meeting at IDA's New York City office. The meeting occurred in October 1974, and was attended by plaintiffs, two representatives of IDA, and two representatives of GE. At the meeting, both the general nature and the specific details of plaintiffs' proposal were discussed. The GE representatives informed plaintiffs of the governmental assistance to which they would be entitled in the event their project qualified for the GE program. GE informed plaintiffs that their project could be structured as an "export company," and thereby qualify for certain tax incentives made available by Irish law. Among other things, GE offered to lease plaintiffs a plant in Ireland and to provide a capital grant in the amount of sixty percent of the cost of the machinery necessary to equip the plant. Plaintiffs and GE agreed that the plant would be located in County Galway, Ireland. Plaintiffs and GE also developed a tentative financial structure for the project. IDA, noting that negotiations would henceforth be undertaken primarily between plaintiffs and GE, agreed nonetheless to continue to make itself, its personnel, and its New York City office available to plaintiffs and GE in order to facilitate their continued negotiations and the completion of the arrangements for the project.
After the meeting, plaintiffs set about the task of preparing a formal application seeking to qualify their project for the GE program. After communicating with GE on numerous occasions during the fall of 1974 and the winter of 1974-1975, plaintiffs submitted such an application on March 27, 1975. The spring of 1975 was chiefly occupied with communications between GE and plaintiffs wherein the parties sought to clarify the details of plaintiffs' application. Many of the communications just described were initiated by plaintiffs from IDA's New York City office either via telephone or telex. In June 1975, plaintiffs traveled to Ireland and provided further clarification of the details of their application.
On August 21, 1975, GE sent plaintiffs a formal proposal setting forth the terms under which it would accept plaintiffs' application. Plaintiffs executed this proposal, while in Ireland, on October 17, 1975. Nonetheless, significant financial details of the parties' agreement remained to be worked out. Further negotiations took place during the fall of 1975 and the winter of 1975-1976. During this time, plaintiffs had a second meeting with representatives of GE at IDA's New York City office; however, no substantial negotiations occurred at this meeting. Finally, on May 21, 1976, GE...
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