Exclaim Assoc. Ltd. v. Nygate, 2005 NY Slip Op 52106(U) (NY 9/12/2005)
| Decision Date | 12 September 2005 |
| Docket Number | 600510/05. |
| Citation | 2005 NY Slip Op 52106(U) |
| Court | New York Court of Appeals Court of Appeals |
| Parties | EXCLAIM ASSOCIATES LIMITED, and EUROPLAY CAPITAL ADVISORS, LLC, Plaintiffs, v. ANTHONY DAVID NYGATE and MALCOLM COHEN, Individually and as Joint Administrators for ACCLAIM ENTERTAINMENT LIMITED, ACCLAIM ENTERTAINMENT STUDIOS, and ACCLAIM STUDIOS LIMITED; BDO STOY HAYWARD LLP, Defendants. |
This action arises from a dispute concerning a contract between plaintiffs Exclaim Associates Limited (Exclaim) and Europlay Capital Advisors, LLC (Europlay), and defendants Acclaim Entertainment Limited (AEL), Acclaim Entertainment Studios Limited (AESL) and Acclaim Studios Limited (ASL) (collectively, Acclaim), involving plaintiffs' purchase of certain of Acclaim's assets.
Defendants now move, pursuant to CPLR 3211 (a) (8), for an order dismissing the complaint on the ground that there is lacking jurisdiction over them, or, alternatively, pursuant to CPLR 327, on the ground of forum non conveniens. Plaintiffs cross-move for an order, pursuant to CPLR 3211 (d), for leave to conduct discovery with respect to jurisdictional issues.
For the reasons set forth below, defendants' motion is denied, and plaintiffs' cross motion is granted.
Accepting the allegations of the complaint as true (Leon v. Martinez, 84 NY2d 83 [1994]), the following facts emerge: plaintiffs Exclaim and Europlay are foreign corporations. Europlay is organized under the laws of the state of Delaware, with a principal place of business in Encino, California (Complaint, ¶ 1). Exclaim is a corporation organized under the laws of the United Kingdom (id., ¶ 2). Defendants AEL, AESL and ASL are also United Kingdom corporations (id.). Defendants Antony David Nygate and Malcolm Cohen are citizens of the United Kingdom, and partners in defendant BDO Stoy Hayward LLP (BDO), which maintains its principal place of business in the United Kingdom (id., 4). BDO is alleged to be a subsidiary of BDO Seidman, a company with its principal place of business in New York (id., ¶ 3).
Acclaim is a worldwide developer and publisher of software for the video gaming industry (id., ¶ 2). Acclaim went into administration, the United Kingdom equivalent of bankruptcy, in September 2004 (id.). Nygate and Cohen are the Joint Administrators for Acclaim (id., ¶ 4).
In September 2004, BDO and its partner Cohen solicited Europlay in Los Angeles with respect to the purchase of Acclaim's assets (id., ¶ 7). Exclaim was formed as a corporate entity under the laws of the United Kingdom to effectuate this purchase (id., ¶ 2).
As a result of those negotiations, on September 9, 2004, Exclaim prepared a deal memorandum outlining the terms of the proposed asset acquisition (id., ¶ 8). On September 29, 2004, Acclaim, by and through the Joint Administrators, entered into a written agreement (the Agreement) with Exclaim and Europlay for the acquisition of certain of Acclaim's assets (the Transferred Assets), including all of Acclaim's interest in a video console game entitled "Juiced" (id., ¶¶ 10-13; Exh A).
Exclaim agreed to pay £55,000 to Acclaim as part of the consideration for the Transferred Assets (id., ¶ 14). Pursuant to the Agreement, the balance of the consideration in the amount of £250,000 was to be paid when the parties were prepared to complete the transaction (id., ¶15). The contract defines "Completion" as the performance of all obligations of the parties to the Agreement as set forth in Clause 5 (id., ¶ 21). Pursuant to Clause 5.1 of the Agreement, Completion of the sale and purchase of the Transferred Assets was to take place on October 5, 2004 (id., ¶ 19).
In addition, at the time of entering into the Agreement, an inter-company debt existed between Acclaim Entertainment, Inc., a company with its principal place of business in Glen Cove, New York (Acclaim New York), and Acclaim, in the approximate amount of $21,000,000 in favor of Acclaim (id., ¶ 16). Pursuant to the terms of the Agreement, plaintiffs agreed to collect the monies due Acclaim. In consideration thereof, plaintiffs were to be paid a fee in the amount of 25% of the monies collected from Acclaim New York. If the entire amount were collected, this would represent a fee to plaintiffs of $5,250,000 (id., ¶ 17).
On September 1, 2004, Acclaim New York began a Chapter 7 Bankruptcy proceeding in the United States Bankruptcy Court for the Eastern District of New York (the Bankruptcy Proceeding) (id., ¶ 18).
On September 29, 2004, the parties executed the Agreement, and Exclaim made the initial payment of £55,000 to Acclaim's Joint Administrators (id., ¶22). On October 4, 2004, at Acclaim's request, and in order to expedite Completion, Exclaim elected to "complete" the Agreement on that date (id., ¶ 21). Accordingly, Harbottle & Lewis (Harbottle), Exclaim's English counsel, notified Halliwells LLP (Halliwells), Acclaim's English counsel, that it was in possession of the balance of £250,000, and was prepared to make the deposit into an account at the Royal Bank of Scotland plc (RSB), as required by the terms of the Agreement (id., ¶ 23).
On October 4, 2004, there was nothing further that was required to be done by either Acclaim or Exclaim to effect Completion of the Agreement, other than transferring the balance of £250,00 into the RSB account, once Exclaim had been notified of the account number from Halliwells (id., ¶ 24). On October 4, 2004, Halliwells informed Harbottle that it did not know if Acclaim was in a position to complete the transaction, and that it was waiting to hear from GMAC Financial Services LLC (GMAC), in order to complete the transaction (id., ¶ 25). On October 5, 2004, Exclaim's solicitors were advised that, as things currently existed, Acclaim and the Joint Administrators could not comply with their obligations under the terms of the Agreement (id., ¶ 27).
Notwithstanding the obligations of Acclaim and the Joint Administrators as set forth in the Agreement, Exclaim agreed to proceed with Completion without requiring the Deed of Release at the closing, which was its right, and to proceed with the acquisition of the assets subject to a debenture in favor of GMAC (to the extent the debenture created a lien over such assets), pending compliance by Acclaim and the Joint Administrators with their obligations to provide the Deed of Release as set forth in the Agreement (id., ¶ 28).
On October 5, 2004, Harbottle notified Halliwells that Exclaim had fully performed under the Agreement, and that it expected to receive the Transferred Assets and the compliance by Acclaim and the Joint Administrators with their obligations under the terms of the Agreement (id., ¶ 29). However, on October 6, 2004, Halliwells informed Exclaim that Completion had not taken place under the terms of the Agreement, and that Acclaim and the Joint Administrators were not in a position to perform (id., ¶ 30). Exclaim's solicitors, however, informed Halliwells that "Completion had in fact taken place on October 5, 2004," and that Acclaim and the Joint Administrators were in breach of their obligations under the terms of the Agreement by having failed and refused to timely perform (id., ¶ 31).
Plaintiffs allege that, subsequent to October 5, 2004, Acclaim and/or Joint Administrators Nygate and Cohen, individually and as directed by BDO, and in complicity with GMAC and its New York counsel, fraudulently caused to be represented through their counsel in New York, and counsel for GMAC in the Bankruptcy Proceeding, that Completion under the Agreement had not taken place, and/or that there was no obligation to complete the transaction under the terms of the Agreement (id., ¶ 33 [a], [c]). Plaintiffs further allege that defendants made these false and misleading representations by e-mail and otherwise in New York for the express purpose of having GMAC's attorneys make these same representations to the Bankruptcy Court so as to preclude Exclaim from contesting the sale of certain assets of Acclaim that Exclaim had purchased from Acclaim under the terms of the Agreement (id., ¶ 33 [b]). As a direct consequence of these and other fraudulent statements made in New York, Exclaim was precluded from protecting its interests in the Agreement in the Bankruptcy Proceeding, which resulted in the sale of the assets of Acclaim New York to other creditors for $10,000,000, permitting GMAC to recoup over 70% of its debt due from Acclaim New York, and boxing plaintiffs out of monies they otherwise would have earned (id., ¶¶ 33 [d]-[e]).
On October 11, 2004, Exclaim's solicitors notified Acclaim and the Joint Administrators that, as a result of the repudiation of the Agreement by Acclaim and the Joint Administrators, the Agreement was terminated, and Exclaim was rescinding it (id., ¶ 34). Exclaim also demanded the immediate return of the £250,00 being held by Halliwells, together with the repayment of the £55,000 paid on September 29, 2004 (id.).
Notwithstanding the foregoing, just five days after the hearing before the Bankruptcy Court, Acclaim and the Joint Administrators, by and through their solicitors, sent a letter dated October 11, 2004, confirming Completion of the sale in accordance with the terms of the Agreement, in flat contradiction to the statements made in New York. Additionally, defendants refused to return to Exclaim the payments made pursuant to the Agreement, unless and until they received a release from Exclaim of any and all claims (id., ¶ 35).
Plaintiffs allege that, pursuant to CPLR 302 (a) (2), this Court has jurisdiction over defendants. CPLR 302 (a) (2) provides, in pertinent part, that "a court may exercise personal jurisdiction over any non-domiciliary, or his executor or administrator, who in person or through an agent ... commits a tortious act within the state." Plaintiffs allege that defendants committed a tortious act in this state when they, or their agents, made...
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