TNS Holdings, Inc. v. MKI Securities Corp.

CourtNew York Court of Appeals
Writing for the CourtCIPARICK; KAYE
Citation703 N.E.2d 749,92 N.Y.2d 335,680 N.Y.S.2d 891
Decision Date22 October 1998
Parties, 703 N.E.2d 749, 1998 N.Y. Slip Op. 8978 TNS HOLDINGS, INC., Formerly Known as TradeNET, Inc., et al., Respondents, v. MKI SECURITIES CORP., Appellant, et al., Respondent.

Page 891

680 N.Y.S.2d 891
92 N.Y.2d 335, 703 N.E.2d 749, 1998
N.Y. Slip Op. 8978
TNS HOLDINGS, INC., Formerly Known as TradeNET, Inc., et
al., Respondents,
v.
MKI SECURITIES CORP., Appellant, et al., Respondent.
Court of Appeals of New York.
Oct. 22, 1998.

Page 892

Friedman Siegelbaum, L.L.P., New York City (Meryl E. Wiener, of counsel), for appellant.

Geiger & Geiger, New York City (Omar D. Lopera, of counsel), for respondents.

OPINION OF THE COURT

CIPARICK, Judge.

At issue on this appeal is whether a corporation that is related to, but not itself, a party to an agreement containing an arbitration clause can be compelled to arbitrate a dispute arising from an alleged breach of that agreement. We conclude that, absent a showing of abuse of the corporate form, the nonsignatory corporation cannot be compelled to arbitrate.

I.

Plaintiffs-respondents, TNS Holdings, Inc. and two of its officers and major shareholders, Richard Zachar and George Bloukos, have brought this action against MAI and two of its subsidiaries, MKI and Batchnotice, claiming breach of several agreements. During 1992 and 1993, plaintiffs had been in negotiations with MKI, a company engaged in bond trading, to sell TNS' primary asset--a software system for on-line bond trading called "TradeNET." Three main written agreements were executed: those for Hardware Purchase and Software Licensing were between MKI and TNS and the third, a Software Purchase Agreement, was between TNS and Batchnotice, who would take title to the software for internal tax purposes. The third agreement contained the arbitration clause at the center of this dispute. Although plaintiffs say they learned that Batchnotice would be the signatory only 24 hours before signing, they acknowledge that the main provisions of the Software Purchase Agreement were worked out in prior meetings with MKI, including a "sustained discussion" on whether to require arbitration as a means of dispute resolution, which MKI and TNS eventually agreed to make a part of their Software Purchase Agreement.

Claiming that they were in a fragile economic situation and that MKI offered the agreement to TNS on a "take it or leave it" basis, TNS signed the Software Purchase Agreement with Batchnotice. Because Batchnotice had no assets other than the software to be purchased from TNS, a letter from the parent MAI, dated September 2, 1993, ensured that it would cover any failure to perform under the agreement. Plaintiffs claim that the written agreements were accompanied by an oral agreement from MKI's President to employ several key TNS employees, including Zachar and Bloukos, for the five-year duration of the Software Purchase Agreement.

The current action was precipitated by MKI's firing of Zachar and Bloukos. Plaintiffs claimed a breach of the alleged oral employment agreement that accompanied the written agreements and sued defendants for rescission and damages for breach of contract. Defendants moved to stay the action and for an order compelling plaintiffs to arbitrate this dispute with "Batchnotice, Limited," as provided by the Software Purchase Agreement.

The IAS Court found that "plaintiffs' claims center on the provisions of the Software Purchase Agreement * * * and thus fall within the scope of the arbitration clause." The decretal paragraph ordered "the parties * * * to proceed promptly to arbitration as to the claims raised in this complaint" (emphasis added). Eighteen months later, plaintiffs sought arbitration as to all...

To continue reading

Request your trial
216 practice notes
  • Weinberg v. Picker, Index No.: 510746/2015
    • United States
    • United States State Supreme Court (New York)
    • 24 Abril 2017
    ...sufficient to justify piercing the corporate veil with respect to BARRY PICKER, MESHULEM AUERBACH. (see TNS Holdings v. MKI Sec. Corp., 92 N.Y.2d 335, 339, 680 N.Y.S.2d 891, 703 N.E.2d 749). The same applies to the defendant's allegations regarding SEYMOUR WEINBERG, individually. As such th......
  • Guinan v. A.I. Dupont Hosp. for Children, No. 08-0228.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • 6 Febrero 2009
    ...was the instrument of fraud or otherwise resulted in wrongful or inequitable consequences." TNS Holdings, Inc. v. MKI Sec. Corp., 92 N.Y.2d 335, 680 N.Y.S.2d 891, 703 N.E.2d 749, 751 (1998) (citations omitted); see also MAG Portfolio Consult, GMBH v. Merlin Biomed Group LLC, 268 F.3d 58, 64......
  • In re Digital Music Antitrust Litig., No. 06 MD 1780(LAP).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 18 Julio 2011
    ...and the proponent of disregarding a corporation's separate identity bears a heavy burden. TNS Holdings, Inc. v. MKI Sec. Corp., 92 N.Y.2d 335, 680 N.Y.S.2d 891, 703 N.E.2d 749, 751 (1998); see MicroStrategy Inc., 2010 WL 5550455, at *11. The TCAC fails to allege circumstances that would all......
  • Mbia Ins. Corp. v. Royal Bank Of Canada, Case No. 09-CV-5044 (KMK).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 30 Diciembre 2009
    ...595 N.Y.S.2d 678, 678 (1993))). While the law may be unfriendly to such alter ego claims, see e.g., TNS Holdings, Inc. v. MKI Sec. Corp., 92 N.Y.2d 335, 680 N.Y.S.2d 891, 703 N.E.2d 749, 751 (1998) (stating that parties wishing to assert the alter ego doctrine bear a “heavy burden”), such c......
  • Request a trial to view additional results
215 cases
  • Weinberg v. Picker, Index No.: 510746/2015
    • United States
    • United States State Supreme Court (New York)
    • 24 Abril 2017
    ...sufficient to justify piercing the corporate veil with respect to BARRY PICKER, MESHULEM AUERBACH. (see TNS Holdings v. MKI Sec. Corp., 92 N.Y.2d 335, 339, 680 N.Y.S.2d 891, 703 N.E.2d 749). The same applies to the defendant's allegations regarding SEYMOUR WEINBERG, individually. As such th......
  • Guinan v. A.I. Dupont Hosp. for Children, No. 08-0228.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • 6 Febrero 2009
    ...was the instrument of fraud or otherwise resulted in wrongful or inequitable consequences." TNS Holdings, Inc. v. MKI Sec. Corp., 92 N.Y.2d 335, 680 N.Y.S.2d 891, 703 N.E.2d 749, 751 (1998) (citations omitted); see also MAG Portfolio Consult, GMBH v. Merlin Biomed Group LLC, 268 F.3d 58, 64......
  • In re Digital Music Antitrust Litig., No. 06 MD 1780(LAP).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 18 Julio 2011
    ...and the proponent of disregarding a corporation's separate identity bears a heavy burden. TNS Holdings, Inc. v. MKI Sec. Corp., 92 N.Y.2d 335, 680 N.Y.S.2d 891, 703 N.E.2d 749, 751 (1998); see MicroStrategy Inc., 2010 WL 5550455, at *11. The TCAC fails to allege circumstances that would all......
  • Mbia Ins. Corp. v. Royal Bank Of Canada, Case No. 09-CV-5044 (KMK).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 30 Diciembre 2009
    ...595 N.Y.S.2d 678, 678 (1993))). While the law may be unfriendly to such alter ego claims, see e.g., TNS Holdings, Inc. v. MKI Sec. Corp., 92 N.Y.2d 335, 680 N.Y.S.2d 891, 703 N.E.2d 749, 751 (1998) (stating that parties wishing to assert the alter ego doctrine bear a “heavy burden”), such c......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT