Asia World Enter. Co., Ltd. v Schecter

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Asia World Enter. Co., Ltd. v Schecter 2013 NY Slip Op 31045(U) March 27, 2013 Sup Ct, New York County Docket Number: 651989/2012 Judge: Kathryn E. Freed Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [*FILED: NEW YORK COUNTY CLERK 04/01/2013 1] INDEX NO. 651989/2012 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 04/01/2013 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PART PRESENT: 10 Justice Index Number: 651989/2012 ASIA WORLD ENTERPRISE CO., INDEX NO. _ _ _ __ VS. MonON DATE _ _ __ SCHECHTER, JOAN SEQUENCE NUMBER: 001 MonON SEQ. NO. _ __ DISMISS ACTION The following papers, numbered 1 to _ _ , were read on this motion tolfor _ _ _ _ _ _ _ _ _ _ _ _ __ Notice of Motion/Order to Show Cause - Affidavits - Exhibits Answering Affidavits - Exhibits _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ Replying Affidavits _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ I No(s). _ _ _ _ __ I No(s). _ _ _ _ __ I No(s). _ _ _ _ __ Upon the foregoing papers, it is ordered that this motion is w o i= U) :::l .., o l- " e . w .\ .". " . , r' , Q:: Q:: W . ' u.. w Q:: J ¢ ¢ >-...J~ ...J Z :::l 0 u.. U) I- c( o w Q:: W 3; (!) U) 3: W Z Q:: - - 0 ...J U) ...J c( 0 W o Z o i= u.. W ::t: IQ:: o 0 ::E u.. Dated: ... 1. CHECK ONE: ..................................................................... 2. CHECK AS APPROPRIATE: ........................... MOTION IS: 3. CHECK IF APPROPRIATE: ................................................ D CASE DISPOSED D GRANTED D DENIED D SETILE ORDER DDO NOT POST .. ,..,,- .J r·-'· :' _ _ bN-FINAL DISPOSITION o GRANTED IN PART D OTHER D SUBMIT ORDER D FIDUCI ~RY APPOINTMENT 0 REFERENCE [* 2] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART lAS 10 ------------------------------------------------------------------)( ASIA WORLD ENTERPRISES CO., LTD., Plaintiff, DECISION/ORDER Index No.: 651989/2012 Seq. No.: 001 -againstPRESENT: Hon. Kathryn E. Freed 1.S.C. JOAN SCHECTER, Defendant. -----------------------------------------------------------------)( HON. KATHRYN E. FREED: Recitation, as required by CPLR §2219[a], of the papers considered in the review of this (these) motion(s): PAPERS NUMBERED NOTICE OF MOTION AND AFFIDAVITS ANNE)(ED ........................ .. ORDER TO SHOW CAUSE AND AFFIDAVITS ANNE)(ED ................ . ANSWERING AFFIDA VITS .................................................................... . REPLYING AFFIDAVITS ........................................................................ . E)(HIBITS .................................................................................................. . OTHER ...................... (memo of law)" ....................................................... . ........ 1-3 ........ ......... 4 ......... . .. ....... 5 ........ .. ......... 6-7 ...... . UPON THE FOREGOING CITED PAPERS, THIS DECISION/ORDER ON TillS MOTION IS AS FOLLOWS: Defendant moves for an Order pursuant to CPLR§3211 (a)(3) and Business Corporation Law § 1312, dismissing the complaint, without prejudice on the ground that plaintiff is an unauthorized corporation doing business in New York, and therefore lacks the legal capacity to sue. Plaintiff opposes. After a review ofthe papers presented, all relevant statutes and case law, the Court denies the motion. Factual and procedural background: This action arose out of a dispute between the parties pursuant to an agreement between [* 3] plaintiff Asia World Enterprises, Co., LTD, (hereinafter,"Asia World") and Destination Solutions, defendant Schecter's company. According to plaintiff, it is a Thailand company which is in the business of supplying services for travel to Thailand. Defendant Schecter provided services in the capacity of an independent contractor to plaintiff, and not as an employee. As part of her duties, defendant was required to promote plaintiffs travel services to travel agents in the United States. In order to avoid delays in processing checks drawn on United States banks located in Thailand, plaintiff agreed that defendant would receive and cash checks on plaintiff s behalf, and would then wire transfer the money to its bank account in Thailand. In July 2008, defendant received a number of checks totaling the amount of$28, 180.00 on behalf of plaintiff. However, she failed to transfer and pay the money to plaintiff despite repeated promises to do so, prompting the commencement of the instant suit for conversion. According to defendant, she is the "sole proprietor" of Destination Solutions, and both she and her business are located in New York, New York. Asia World is in the business of providing land services ie. hotels, guides, sightseeing, etc., in Asia, mostly Thailand. Its clients consist of mostly tour operators based in the United States, including New York. Two of its large accounts were with clients located in New York State, and she estimates that Asia World derived at least $100,000 or more per year from these clients. On May 1, 2007, Destination Solutions and Asia World entered into an agreement. Asia World, via defendant, would solicit and service clients, including obtaining payment from them. She would make the sales calls, personally visit with existing or prospective clients,. coordinate with airlines and represent Asia World at trade shows. Additionally, Stephen McEvoy, Asia World's Managing Director, would come to New York approximately twice a year, and she would 2 [* 4] accompany him to meetings with clients in New York and along the East Coast. The subject agreement between the parties entitled "AGREEMENT BETWEEN ASIA WORLD ENTERPRISE, CO., LTD and DESTINATION SOLUTIONS, is appended to defendant's moving papers as Exhibit "8." Defendant specifically refers to and relies on Section III in support of her position. This section provides in pertinent part that "The Agreement may be terminated by either party with three (3) months written notice." Defendant asserts that upon reviewing her records, she has not found any written notice of termination from either party. Thus, she asserts that the subject Agreement was not terminated in accordance with its terms, and remains in effect. Defendant also asserts that Asia World has failed to compensate her pursuant to their Agreement, since "sometime in 2008" (Oef.'s Aff. ~5). Therefore, she asserts that she has counterclaims against it well in excess of the claims asserted in their complaint. Positions of the parties: Defendant argues that plaintiff lacks the legal capacity to sue her, in that it has never been authorized to do business in the State of New York. Therefore, the complaint warrants dismissal until such time as plaintiff complies with the requirements promulgated by BCL§ 1312(a). In an affidavit appended to plaintiffs motion, Stephen McEvoy, managing director of Asia World, avers in pertinent part, that plaintiff is a travel services corporation located in Bangkok, Thailand. He also avers that since plaintiff does not employ anyone in New York, and does not maintain any bank accounts or offices here, it cannot be classified as "doing business," here, as contemplated by BCL§ 1312. Defendant asserts that plaintiff has failed to rebut her showing that it is an unauthorized corporation doing business in New York. She argues that Mr. McEvoy does not dispute her 3 [* 5] ,.. ¢ allegations that she acted in the capacity as sales agent and representative for plaintiff; that she is plaintiff s fiduciary; that the agreement between she and plaintiff was not terminated; that he came to New York at least twice a year and that at least two of plaintiff s larger accounts exist with clients located in New York. Defendant notes that Mr. McEvoy is "utterly silent" as to how frequently he travels to New York, what he does when he is here and how much revenue plaintiff derives from New York clients consulted with, and activities performed here. Conclusions of law: ',- Business Corporation Law§ 1312(a) is a bar to the maintenance of an action by a foreign "" corporation found to be doing business in- New York without the proper authorization ( see S&T Bank v. Spectrum Cabinet Sales. Inc., 247 A.D.2d 373 [2d Dept. 1998] ). In order for a foreign corporation doing business in New York to maintain any action or special proceeding here, it must obtain a certificate of authority to do so and pay all state fees and taxes ( see BCL§ 1301 & § 1312(a) ). The failure of a foreign corporation doing business in New York to so register precludes that entity from maintaining an action or special proceeding until such authority is obtained ( BCL §1312(a) ). In order for a court to determine that a foreign corporation is doing business in New York within the meaning ofBCL§ 1312(a), the corporation must be engaged in a regular and continuous course of conduct in the state (see Highfiil, Inc. v. Bruce and Iris. Inc., 50 A.D.3d 742, 743 (2d Dept. 2008] ). Indeed, the doing business standard under BCL§ 1312(a) requires a greater amount oflocal activity by a foreign corporation than the doing business standard applicable to New York's long-arm statute ( CPLR§ 302), which relates to personal jurisdiction ( Maro Leather Co. v. Aerolineas Argentinas, 161 Misc.2d 920, 924, 617N.Y.S.2d 617 (Sup. Ct. N.Y. County 1994),appeai dismissed 4 [* 6] ... 85 N.Y.2d 837 [1995] ). Under BCL§ 1312(a), there exists a presumption that the corporation in question does business in its state of incorporation rather than New York. Thus, defendant bears the burden of proving that the foreign corporation's activities in New York are not just casual or occasional, but so systematic and regular, as to manifest continuity of activity in the jurisdiction ( see Alicanto S.A v. Woolverton, 129 AD.2d 601, 602 [2d Dept. 1987]; see also Acno-Tec Ltd. v.Wall St. Suites, LLC, 24 AD.3d 392 [1 sl Dept. 2005]; Airtran New York, LLC v. Midwest Air Group, Inc., 46 AD.3d 208 [}'I Dept. 2007]; Highfill. Inc. v. Bruce and Iris, Inc., 50 A.D.3d 742 at 743-744 ). Defendant is required to show that plaintiff conducted continuous activities in New York, essential and vital to its corporate business (see S&T Bank v. Spectrum Cabinet Sales, Inc., 247 AD.2d 373 [2d Dept. 1998] ). Absent sufficient evidence that plaintiff is doing business in New York, the presumption is that plaintiff is doing business in its state of incorporation ( i.e. Thailand), and not in New York ( Highfill. Inc. v. Bruce and Iris, Inc., 50 AD.3d 742 at 743-744 ). In the case at bar, the Court finds that defendant has failed to establish that plaintiff is doing business in New York, in accordance with BCL§ 1312(a). Indeed, defendant has only established that plaintiff's connection to and activities ~ithin New York are limited to Mr. McEvoy's two annual visits, and to defendant herself and her indeterminate amount of sales calls, and personal visits with clients located here. It is well established that the solicitation of sales in New York or the placement of orders by an agent ofthe foreign corporation do not constitute doing business in this state within the meaning of BCL§ 1312(a), even if coupled with other activities ( see Maro Leather Co. v. Aerolineas Argentinas,161 Misc.2d 920 at 924; see also 15 N.Y. Jur 2d, Business Relationships § 1097; 20 5 [* 7] Carmody -Waite 2d § 121 :55). Moreover, it is undisputed that plaintiff does not have any corporate office(s) or employees here. It has also been held that an activity carried on in New York by an out of town company with no offices or employees in New York, is not sufficient to constitute doing business under section § 1312 (see Beltone Electronics Corp. v. Selbst, 58 A.D.2d 560 [lSI Dept. 1977];Landmark Capital Investments, Inc. v. Li-Shan Wang, 94 A.D.3d 418 [lSI Dept. 2012] ). Furthermore, whether or not the contract between the parties has been terminated or still exists is irrelevant to the issues of whether plaintiff is doing business here, and lacks the legal capacity to sue. The Court finds that plaintiff is not doing business pursuant to BCL§ 1312 and is entitled to bring suit. In accordance with the foregoing, it is hereby ORDERED that defendant's motion to dismiss the complaint without prejudice is denied and it is further ORDERED that plaintiffshall serve a copy of this Order on the opposing party and the Trial Support Office, 60 Centre Street, Room 158 and it is further ORDERED that this constitutes the decision and order of the Court DATED: March~l, 2013 ENTER: MAR 2 7 2013 Hon. Kathryn E. Freed J.S·C. BON. KATHRYN Y1DEED 1:1.''' JUSTICE OF SUPREhlE COURT 6

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