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Supreme Court, Appellate Division, First Department, New York.

STARR RUSSIA INVESTMENTS III B.V., Plaintiff–Respondent, v. DELOITTE TOUCHE TOHUMATSU LIMITED, et al., Defendants–Appellants.


Decided: February 07, 2019

Acosta, P.J., Gische, Kapnick, Gesmer, Singh, JJ. Hughes Hubbard & Reed LLP, New York (William R. Maguire of counsel), for Deloitte Touche Tohmatsu Limited, appellant. Kramer Levin Naftalis & Frankel LLP, New York (Michael J. Dell of counsel), for Deloitte LLP, Deloitte CIS Limited and Deloitte CIS Holdings Limited, appellants. Sidley Austin LLP, Chicago, IL (David A. Gordon of the bar of the State of Illinois, admitted pro hac vice, of counsel), for ZAO Deloitte & Touche CIS, appellant. Boies Schiller Flexner LLP, New York (Nicholas A. Gravante, Jr. of counsel), for respondent.

Plaintiff has standing to pursue its claims based on allegations that it was fraudulently induced to invest in and maintain its investment in the Russian Investment Trade Bank (ITB), as these claims allege direct rather than derivative harm, i.e., injuries to plaintiff, rather than to ITB (see Accredited Aides Plus, Inc. v. Program Risk Mgt., Inc., 147 A.D.3d 122, 135, 46 N.Y.S.3d 246 [3d Dept. 2017];  Anwar v. Fairfield Greenwich Ltd., 728 F.Supp.2d 372, 401 [S.D. N.Y.2010] ).

Defendants failed to meet their heavy burden of establishing, for purposes of obtaining dismissal on forum non conveniens grounds, that New York is an inconvenient forum and that a substantial nexus between New York and this action is lacking (see Kuwaiti Eng'g Group v. Consortium of Intl. Consultants, LLC, 50 A.D.3d 599, 600, 856 N.Y.S.2d 101 [1st Dept. 2008];  see also Bokara Rug Co., Inc. v. Kapoor, 93 A.D.3d 583, 941 N.Y.S.2d 81 [1st Dept. 2012] ).

The court has personal jurisdiction over defendant ZAO Deloitte & Touche CIS under CPLR 302(a)(2) with respect to all the claims.  It does not have jurisdiction over the UK Deloitte defendants with respect to the alleged fraudulent inducement of plaintiff's 2008 investment, because the complaint does not adequately allege that these defendants dominated ZAO as its alter egos in connection with that claim (see GEM Advisors, Inc. v. Corporacion Sidenor, S.A., 667 F.Supp.2d 308, 319 [S.D. N.Y.2009] ).  However, plaintiff has made a sufficient showing that there are facts that might give rise to alter ego jurisdiction (see Avilon Automotive Group v. Leontiev, 168 A.D.3d 78, ––– N.Y.S.3d –––– [1st Dept. 2019] ), and that its position is not frivolous (see Peterson v. Spartan Indus., 33 N.Y.2d 463, 354 N.Y.S.2d 905, 310 N.E.2d 513 [1974] ), such that jurisdictional discovery as to the UK Deloitte defendants with respect to the claim that plaintiff did not exercise its exit option after 2010 based on misrepresentations is warranted.

The court correctly declined to dismiss the claims asserted against defendant Deloitte Touche Tohumatsu Limited that are premised on allegations of its direct role in fraudulently inducing investment.  However, the claims that are premised on an agency theory are dismissed (McBride v. KPMG Intl., 135 A.D.3d 576, 24 N.Y.S.3d 257 [1st Dept. 2016] ).