Schertenleib v. Traum
| Decision Date | 15 December 1978 |
| Docket Number | No. 7,D,7 |
| Citation | 589 F.2d 1156 |
| Parties | Francis SCHERTENLEIB, Plaintiff-Appellant, v. Jerome S. TRAUM, Defendant-Appellee. ocket 78-7049. Second Circuit |
| Court | U.S. Court of Appeals — Second Circuit |
Franz S. Leichter, New York City (Wachtell, Manheim & Grouf, New York City, of counsel), for plaintiff-appellant.
E. Roger Frisch, New York City (Walsh & Frisch, New York City, Richard M. Auerbach, New York City, of counsel), for defendant-appellee.
Before FEINBERG and MULLIGAN, Circuit Judges, and PRATT, District Judge. *
Plaintiff Francis Schertenleib, a Swiss attorney and former judge, appeals from an order of the United States District Court for the Southern District of New York, Charles M. Metzner, J., dismissing one count of appellant's diversity action against Jerome S. Traum, a New York attorney, for failure to state a claim, and the three others on the ground of forum non conveniens. In the latter ruling, the judge relied upon defendant's consent to jurisdiction in Geneva, Switzerland, a forum where, we are told, appellant could not otherwise sue defendant. Appellant claims that this was an impermissible use of the forum non conveniens doctrine. We do not agree, and for reasons set forth below, we affirm the order of the district court with a minor modification.
This litigation arises out of a bitter controversy over events that took place in Geneva, Switzerland. In brief summary, the complaint alleged as background that Traum and one Jean d'Hennery (apparently a resident of West Germany) jointly controlled several foreign mutual funds and their management company; 1 that investors in the funds retained Schertenleib as an attorney to press claims against the funds and the management company; that Schertenleib, on behalf of his clients, filed a criminal complaint in Geneva in 1972 or 1973 against executives of the funds and management company (but not Traum); that Traum and d'Hennery, by promising Schertenleib to redeem the shares of investors in the funds, persuaded him to induce the Attorney General of Geneva to halt the criminal proceeding; that the redemptions were not made; and that Traum and d'Hennery improperly transferred assets from some of the funds to another, wasted fund assets and otherwise harmed the funds. It also appears from the papers before us that these differences were temporarily settled in 1973, when, as mentioned, Schertenleib agreed to persuade the authorities to drop the criminal complaint that had been filed, and when Schertenleib was simultaneously retained by the Wall Street Fund as a lawyer in connection with the sale by the Fund of a Swiss bank, Banque Exel, as well as some other Swiss matters.
The complaint also alleged that later, in order to prevent Schertenleib from disclosing the alleged wrongdoing, Traum and d'Hennery conspired to, and did, file false criminal charges against Schertenleib in October 1976 with the Attorney General of Geneva; 2 that in early 1977, Traum falsely testified at a preliminary hearing in Geneva that Schertenleib was a swindler and a faithless attorney, that he had threatened d'Hennery in order to coerce the Wall Street Fund into the agreement in 1973, that Schertenleib extorted excessive legal fees by threatening to pursue the criminal complaint against the funds, which had been halted, and that he had acted with criminal intent. Still according to the complaint, this false testimony by Traum brought about Schertenleib's arrest and imprisonment in March 1977, which continued to the filing of the complaint in September 1977, while the Attorney General of Geneva investigated the charges. 3
Based upon these allegations, Schertenleib's complaint against Traum seeks damages upon the following theories: (1) violation of section 487 of the New York State Judiciary Law; 4 (2) abuse of the process of the court and the Attorney General in Geneva, Switzerland; (3) prima facie tort, arising out of Traum's allegedly false testimony in Geneva; and (4) defamation, based on the same testimony.
It hardly needs saying that Traum denies any wrongdoing and asserts that the testimony he gave in Geneva is true. According to Traum, after Schertenleib misappropriated about three million Swiss francs, generated by the sale of Banque Exel, belonging to Wall Street Fund and its affiliates, Traum consulted an eminent Geneva law firm which recommended that the Fund institute criminal proceedings against Schertenleib and an alleged co-conspirator, Claude Kohler, also a Swiss resident. Such charges were filed in October 1976, and under Swiss procedure, were followed by judicial inquiry. Geneva judges heard several witnesses, including Traum, who on January 31 and February 1, 1977 testified orally in English, while a court reporter simultaneously translated into French. A judge then dictated minutes of the testimony which were transcribed in French; Traum later signed the French minutes, the only written record of his testimony. This testimony is the basis of the lawsuit against Traum now before us. In March 1977, the Geneva court had Schertenleib arrested, and he and Kohler have since been charged ("inculpe") with four serious crimes. 5 During the continuing investigation, Traum was extensively cross-examined in Geneva by Schertenleib and Kohler and their attorneys through the judge, in accordance with Swiss procedure.
In September 1977, plaintiff Schertenleib brought this action against defendant Traum in the United States District Court for the Southern District of New York. Plaintiff has also been active in other forums. He has filed complaints for "calumny" against two of the Geneva lawyers who drafted the criminal complaint against him on behalf of Wall Street Fund and d'Hennery, has brought charges before the Geneva Bar Association against another prominent Swiss criminal lawyer, and has filed criminal complaints in Geneva against defendant, d'Hennery and Mme. Szwerbrot, principal accountant for the Wall Street Fund, who also testified against plaintiff. This last complaint against defendant was dismissed for insufficiency by a Swiss judge in January 1978, but plaintiff has appealed in the Swiss courts from that dismissal.
After plaintiff's complaint was filed in the Southern District, defendant moved to dismiss all four causes of action for failure to state a claim upon which relief can be granted and three of the four causes of action on the additional ground of forum non conveniens. After receiving numerous detailed affidavits from the parties, Judge Metzner granted the motion to dismiss in a brief memorandum opinion. In the exercise of his discretion, he invoked the doctrine of forum non conveniens to dismiss the causes of action based upon abuse of process, prima facie tort and defamation. 6 The judge noted that
The parties have hotly disputed whether the Geneva courts can or will agree to exercise jurisdiction over the defendant, since the general rule appears to be that suit is to be brought in the defendant's domicile. Defendant urges that trial can proceed in Geneva if he submits to jurisdiction. Forum non conveniens cannot be invoked, of course, where an alternative forum does not exist. . . . Accordingly, the action is dismissed on the condition that if plaintiff institutes suit in Geneva, Switzerland, defendant consent forthwith to jurisdiction in that court. Should the Swiss court refuse to exercise jurisdiction, or the defendant refuse to submit to jurisdiction, plaintiff may move in this court to restore this action.
The judge also dismissed the claim based upon section 487 of the New York Judiciary Law because that statute only applies "to actions by an attorney, acting as an attorney, in matters pending in the courts of New York." Since the basis of the claim was defendant's testimony in Switzerland, Judge Metzner held that section 487 did not apply to these alleged facts. This appeal followed.
The principal issues on appeal concern the district court's use of the forum non conveniens doctrine. Plaintiff-appellant argues that we must reverse because (1) defendant has failed to establish that there is an alternative forum where plaintiff may maintain the action, even if defendant consents to jurisdiction in Geneva; (2) even if an alternative forum now exists, there was none when the action was commenced, since defendant's present offer to submit to jurisdiction cannot retroactively constitute Geneva a convenient forum as of the time of suit; and (3) defendant has not shown that the Southern District of New York is so inappropriate a forum as to justify dismissal on forum non conveniens grounds. 7 Defendant-appellee takes issue with each of these contentions, and to them we now turn.
In discussing plaintiff's first argument, that defendant failed to demonstrate the existence of an alternative forum, a prerequisite for application of forum non conveniens, Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 506-07, 67 S.Ct. 839, 91 L.Ed. 1055 (1947), 8 we assume that defendant has the burden on this issue. It is clear that defendant has the overall burden of proving that the case should be dismissed when forum non conveniens is applicable, see Gulf Oil, Supra, 330 U.S. at 508, 67 S.Ct. at 843 (); see also Ford Motor Co. v. Ryan, 182 F.2d 329, 330 (2d Cir.), Cert. denied, 340 U.S. 851, 71 S.Ct. 79, 95 L.Ed. 624 (1950), and defendant did sufficiently show that an alternative forum now exists. The district court had before it expert views of Swiss jurisdictional law. While neither expert said that plaintiff could originally have forced defendant to defend the three tort claims in Geneva, 9 defendant's expert did explain that a party could consent to jurisdiction "of a court in the canton of Geneva" and, if he did, "the same court shall not be entitled to refuse the case." The...
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