CLINGERMAN v. Eurasia Capital Ltd. et al., Defendants–Appellants. (2023)

Order, Supreme Court, New York County (Robert R. Reed, J.), entered on or about March 2, 2022, which, insofar appealed from, denied the motion of defendants-appellants Eurasia Capital Ltd., Eurasia Capital (Mongolia) LLC, Silk Road Management Limited, and Silk Road Finance Limited (collectively, defendants) to dismiss the complaint for lack of personal jurisdiction or, in the alternative, based on forum non conveniens, unanimously affirmed, with costs.

Supreme Court properly found jurisdiction over defendants based on an alter ego theory (see New Media Holding Co. LLC v. Kagalovsky, 97 A.D.3d 463, 464, 949 N.Y.S.2d 22 [1st Dept. 2012]).  The court found that individual defendant Alisher Ali was subject to personal jurisdiction, and because Ali has not appealed from Supreme Court's order, defendants cannot now be heard to dispute the issue of jurisdiction over Ali.

Further, the record supports plaintiff's contention that defendants and Ali were alter egos and that jurisdiction over Ali can be attributed to defendants on that basis.  Notably, Ali has not been an owner of defendants since January 25, 2013, the date that he purportedly sold those entities.  Nevertheless, not only did he found defendants and extensively involved himself with their operations, but he also allegedly dominated and controlled them to such an extent, even after January 2013, that he may be considered an equitable owner (see Roohan v. First Guar. Mtge., LLC, 97 A.D.3d 891, 892, 948 N.Y.S.2d 200 [3d Dept. 2012]).  According to the allegations in the complaint, Ali withdrew substantial sums of money from defendants after January 2013.  For example, Silk Road Finance paid more than $130,807 in rent for an apartment where his relatives lived, $23,915 in tuition for his children, and $25,000 to himself, under an alias, for credit card expenses (see Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135, 142, 603 N.Y.S.2d 807, 623 N.E.2d 1157 [1993]).

Subjecting the foreign defendants to New York jurisdiction under an alter ego theory does not offend due process (see Front, Inc. v. Khalil, 103 A.D.3d 481, 483, 960 N.Y.S.2d 79 [1st Dept. 2013], affd 24 N.Y.3d 713, 4 N.Y.S.3d 581, 28 N.E.3d 15 [2015]).  In addition, even apart from jurisdiction on an alter ego theory, New York has personal jurisdiction over Eurasia Capital Ltd., Silk Road Management Limited, and Silk Road Finance Limited based on their “intentional and repeated use of New York correspondent bank accounts” (Rushaid v. Pictet & Cie, 28 N.Y.3d 316, 319, 45 N.Y.S.3d 276, 68 N.E.3d 1 [2016]).

The court did not improvidently exercise its discretion by denying defendants’ forum non conveniens motion (see Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 478–479, 478 N.Y.S.2d 597, 467 N.E.2d 245 [1984], cert denied 469 U.S. 1108, 105 S.Ct. 783, 83 L.Ed.2d 778 [1985]).  As already noted, Ali has not appealed, and this action will proceed against him in New York;  keeping defendants in the case will therefore not burden the New York courts.  Although defendants’ current principal lives in Uzbekistan, it appears from the record that Ali, not the current principal, will be the main witness in this case.  In any event, assuming the principal's testimony is required, he can presumably appear by electronic means.