Life Assur. Co. of Pennsylvania v. Associated Investors Intern. Corp.

• Decision Date: 03 October 1973
• Citation: 312 A.2d 337
• Parties: LIFE ASSURANCE COMPANY OF PENNSYLVANIA, a Pennsylvania corporation, Plaintiff, v. ASSOCIATED INVESTORS INTERNATOINAL CORPORATION, a Delaware corporation, et al., Defendants.
• Court: Court of Chancery of Delaware

Page 337

312 A.2d 337

LIFE ASSURANCE COMPANY OF PENNSYLVANIA, a Pennsylvania corporation, Plaintiff, v. ASSOCIATED INVESTORS INTERNATOINAL CORPORATION, a Delaware corporation, et al., Defendants.

Court of Chancery of Delaware.

Oct. 3, 1973.

S. Samuel Arsht, David A. Drexler and Lewis S. Black, Jr., of Morris, Nichols, Arsht & Tunnell, Wilmington, for plaintiff.

Richard F. Corroon of Potter, Anderson & Corroon, Wilmington, for defendants.

OPINION ON DEFENDANTS' MOTION FOR DISMISSAL OR STAY AND

DEFENDANTS' MOTION TO VACATE SEQUESTRATION ORDER

QUILLEN, Chancellor:

This is the Court's opinion and order on defendants' motions seeking dismissal or stay of this action and vacation of a sequestration order.

The plaintiff in this action, Life Assurance Company of Pennsylvania (hereinafter 'LACOP') is a Pennsylvania corporation engaged in the business of the sale of insurance through agents in the United States and overseas. The corporate defendant, Associated Investors International Corporation ('AIIC'), is a Delaware corporation which maintains its principal place of business in London, England. It has never engaged in business in Delaware. The individual defendants, Leonard S. Polonsky and Jay B. Polonsky, are the principal owners of AIIC. They are both United States citizens. Leonard Polonsky resides in England, Jay in New York. They are also principal owners of defendant Associated Investors ('AI'), a New York partnership doing business in New York as a securities broker dealer.

Beginning in 1962, Leonard Polonsky, and later AIIC, served as LACOP's exclusive representative for the sale of plaintiff's insurance outside the United States and Puerto Rico. In December of 1967, LACOP, AIIC, and Leonard Polonsky entered into a series of written contracts (the 'December 1967 Agreements') whereby Leonard Polonsky was named general manager of LACOP's international division and AIIC was appointed LACOP's exclusive overseas sales representative. Discord and conflict with regard to the December 1967 Agreements have given rise to this and other litigation.

On August 27, 1971, AIIC brought suit against LACOP seeking damages and other relief for breach of its December 1967 contract. That action, entitled Associated Investors International Corporation v. Life Assurance Company of Pennsylvania, (hereinafter the 'English action'), is currently pending in the High Court of Justice, Queen's Bench Division, in London, England (1971--A--No. 3646). Although it has now been pending before that tribunal for more than two years, the English action has evidently yet to progress beyond the pleadings stage. And counsle here are unable to tell the Court when the English action can be expected to come to trial.

On February 26, 1973, LACOP brought this suit to rescind the December 1967 Agreements for fraud in the inducement, to obtain restitution of monies paid pursuant to those contracts, and for an accounting for breaches of fiduciary duties. On April 9, the defendants moved for dismissal of LACOP's action on the ground of Forum non conveniens, or, in the alternative, for a stay pending the final determination of the English action. At that time, defendant AI also moved to vacate this Court's Order of Sequestration, dated February 26, 1973, of AI's stock in various Delaware corporations. This is the Court's decision on those motions.

First, as regards defendants' alternate motions for dismissal for Forum non conveniens or stay pending the outcome of the English action '(t)he matter is one to be determined as a discretionary act in the light of all the facts and circumstances and in the interest of expeditious and economic administration of justice.' General Foods Corporation v. Cyro-Maid, Inc., 41 Del.Ch. 474, 481, 198 A.2d 681, 685 (Sup.Ct.1964). McWane Cast Iron P. Corp. v. McDowell-Wellman E. Co., Del.Supr., 263 A.2d 281 (1970).

Application of the doctrine of Forum non conveniens 'presupposes at least two forums in which the defendant is amenable to process; ¹ the doctrine furnishes criteria for choice between them.' Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 507, 508, 67 S.Ct. 839, 842, 91 L.Ed. 1055, 1061 (1947); Dietrich v. Texas National Petroleum Co., 6 Storey 435, 193 A.2d 579 (Super.Ct.1963). These criteria are similar to those applied in deciding a motion to stay pending the outcome of other litigation. General Foods Corporation v. Cyro-Maid, Inc., Supra, 41 Del.Ch. at 479, 198 A.2d at 683. But the burden on the movant differs according to the motion made. '(T)he burden on the moving party is a lesser one when a stay rather than a dismissal is sought.' Moore Golf, Inc. v. Ewing, Del.Supr., 269 A.2d 51 (1970); Fast Foodmakers, Inc. v. Greisler, Del.Super., 290 A.2d 1 (1972); McWane Cast Iron P. Corp. v. McDowell-Wellman E. Co., Supra.

Therefore, the Court must approach the defendants' dismissal motion here with special caution. This Court, like any other, 'should not lightly permit its clear jurisdiction in a matter to be rendered nugatory.' General Foods Corporation v. Cyro-Maid, Inc., 41 Del.Ch. 270, 274, 194 A.2d 43, 45 (Ch.1963); Fenix & Scisson, Inc. v. Underground Storage, Inc., Del.Super., 262 A.2d 260 (1970).

The various criteria essential to an invocation of the doctrine of Forum non conveniens have been set forth in earlier Delaware cases. They include:

(1) The applicability of Delaware law;

(2) The relative ease of access to proof;

(3) The availability of compulsory process for witnesses;

(4) The possibility of the view of premises;

(5) The pendency or nonpendency of a similar action or actions in another jurisdiction; and

(6) All other practical considerations which would make the trial easy, expeditious and inexpensive.

Parvin v. Kaufmann, 43 Del.Ch. 461, 463, 236 A.2d 425, 427 (Sup.Ct.1967); General Foods Corporation v. Cyro-Maid, Inc., 41 Del.Ch. 474, 198 A.2d 681 (Sup.Ct.1964).

Given these criteria, the peculiar circumstances of this case, and the necessary predilection against dismissal, the Court concludes that the defendants are not entitled to a dismissal.

Delaware law is, admittedly, inapplicable. And much of the evidence and many of the witnesses are, apparently, in England. But two of the defendants here, Jay Polonsky and AI, were not subject to English jurisdiction at the commencement of the English action. Therefore, they could not, at that time, be included in LACOP's counterclaim in England. Moreover, LACOP's suit here is for rescission of all the December 1967 Agreements for fraud. The English action is for breach of just one of the series of contracts that constitute the December 1967 Agreements (the one between AIIC and LACOP). Since Jay Polonsky and AI are now willing to submit to the jurisdiction of the English courts LACOP could amend its English counterclaim to include those parties and a claim for rescission for fraud. However, these actions have yet to take place. Moreover, an offer of voluntary submission to the foreign jurisdiction has not been considered significant in a Forum non conveniens context. Parvin v. Kaufmann, Supra; Dietrich v. Texas National Petroleum Co., Supra.

The Court is likewise concerned about the lack of progress in the English action, as well as the supposed discovery disadvantage LACOP would have under English procedures in contrast to Delaware law. Such discovery considerations were deemed important by the Supreme Court in United Engines, Inc. v. Sperry Rand Corporation, Del.Supr., 269 A.2d 221 (1970). This being so, it would be unwise for the Court to completely relinquish its hold on this case at this time. Defendants' motion to dismiss for Forum non conveniens is denied. Kolber v. Holyoke Shares, Inc., 9 Storey 66, 213 A.2d 444 (Sup.Ct. 1965); compare Winsor v. United Air Lines, 2 Storey 161, 154 A.2d 561 (Super.Ct. 1958).

On the other hand, since there is a prior action pending in England which should eventually resolve many, if not all, of the issues before this Court, the stay policy set forth by Justice Herrmann in the McWane case, Supra, is significant.

'. . . a Delaware action will not be stayed as a matter of right by reason of a prior action pending in another jurisdiction involving the same parties and the same issues; . . . such stay may be warranted, however, by facts and circumstances sufficient to move the discretion of the Court; . . . such discretion should be exercised freely in favor of the stay when there is a prior action pending elsewhere, in a court capable of doing prompt and complete justice, involving the same parties and the same issues; . . . as a general rule, litigation should be confined to the forum in which it is first commenced, and a defendant should not be permitted to defeat the plaintiff's choice of forum in pending suit by commencing litigation involving the same cause of action in another jurisdiction of its own choosing; . . . these concepts are impelled by considerations of comity and the necessities of an orderly and efficient administration of justice.' 263 A.2d at 283.

Moreover, an absolute identity of issues and participants are not always necessary prerequisites for a stay. Lanova Corporation v. Atlas Imperial Diesel Engine Co., 5 Del.Super. 593, 64 A.2d 419 (Super.Ct.1949); Western Saving Fund Society of Phil. v. A.V.C. Corp., Del.Super., 305 A.2d 632 (1973).

Although it is somewhat unseemly for a Delaware corporation to struggle against being sued in a Delaware court, the mere fact that AIIC is incorporated here does not automatically guarantee denial of its motion to stay this proceeding. The Court must weigh all the pertinent facts and circumstances before deciding whether a stay is justified. It must balance the potential disadvantages of English discovery procedure against the probable efficiency of allowing completion of the English action before further proceedings here. It must balance the present lack of complete identity of parties and issues in these two actions against the...