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U.S.O. Corp. v. Mizuho Holding Co.

September 27, 2007

U.S.O. CORPORATION, A DELAWARE CORPORATION, PLAINTIFF,
v.
MIZUHO HOLDING COMPANY, MIZUHO CORPORATE BANK, MIZUHO BANK, MIZUHO PROJECT, MIZUHO SECURITIES COMPANY LTD., YASUSHI IKEDA, AN INDIVIDUAL, KOWA REALTY (AMERICA) LTD., AND DOES 1-20, DEFENDANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

MEMORANDUM OPINION AND ORDER

This is an action for conversion, breach of fiduciary duty, conspiracy, unjust enrichment, and money had and received. On November 11, 2006, defendants Mizuho Bank, Ltd., Mizuho Corporate Bank, Ltd., and Mizuho Financial Strategy Co., Ltd. (collectively, the "Mizuho Bank Defendants") filed a motion to dismiss plaintiff U.S.O. Corporation's ("USO") complaint under the doctrine of forum non conveniens, for lack of personal jurisdiction, because another action is pending, and for failure to state a claim. Dkt. No. 72. In lieu of a response to the Mizuho Bank Defendants' motion, on December 7, 2006, USO filed a "Motion for Leave to Take Targeted Discovery Relating to Jurisdictional Issues." On January 19, 2007, the court denied USO's motion without prejudice, directed USO to respond only to the Mizuho Bank Defendants' briefing on the issue of forum non conveniens,and stated that it would consider the Mizuho Bank Defendants' jurisdictional argument at a later date, if necessary. See Dkt. No. 90. USO filed its response to the Mizuho Bank Defendants' motion on March 6, 2007,*fn1 and the Mizuho Bank Defendants replied on March 23, 2007. For the reasons stated below, the Mizuho Bank Defendants' motion to dismiss plaintiff USO's complaint [#72] under the doctrine of forum non conveniens is granted.

BACKGROUND*fn2

Plaintiff USO is a Delaware corporation that was formed in 1990 as a wholly owned subsidiary of Asahi Kogyo Corp. ("Asahi Kogyo"), a now bankrupt Japanese company that had a banking relationship with Industrial Bank of Japan ("IBJ"), which was the predecessor in interest to the Mizuho Bank Defendants. In 1985, it was common business practice in Japan for companies to maintain a close relationship with a particular bank, known as the company's "main bank." The relationship between a main bank and its borrower was a fiduciary one, in which the main bank was given control over the borrower's business in exchange for assuming responsibility for the borrower's financial well-being. In or about 1985, IBJ became Asahi Kogyo's main bank. A few years later, in 1990, IBJ instructed Asahi Kogyo to form an American subsidiary to invest in a portion of the Paine Webber Tower in Chicago, Illinois. That year, Asahi Kogyo formed USO, capitalizing it with $10 million.

USO, however, was never a direct owner of the Paine Webber Tower. The Paine Webber Tower was owned by an Illinois partnership ("the PWT partnership") composed of three partners: Daido Properties Investment, Inc., Yasuda Realty Corp., and Madison Club 90, Ltd. Madison Club 90 was a limited partnership established under Delaware law that owned approximately a 25% interest in the Tower. USO, along with four other companies for which IBJ was the main bank, was a limited partner in Madison Club 90. Kowa Realty (America), Ltd. ("Kowa") was the managing general partner of the Madison Club 90 partnership.

The Madison Club 90 partnership operated from 1990 through September 2001, when the Paine Webber Tower was sold. During that time period, Kowa managed the partnership. USO alleges that Kowa skimmed money from USO's profits for the benefit of Kowa and IBJ (and subsequently the Mizuho Bank Defendants), using various means, including inflated management fees and expenses. According to USO, Kowa actively concealed this practice from USO and did not provide disclosures from which USO could have uncovered the wrongful conduct. For purposes of this motion to dismiss, these allegations will be referred to as "the profit-skimming claims."

USO also alleges that after the Paine Webber Tower was sold in 2001, the Mizuho Bank Defendants seized and converted USO's share of the sale proceeds, which amounted to $6.95 million. According to USO's complaint, prior to the sale of the Paine Webber Tower, Makoto Takahashi of IBJ sent the President of Asahi Kogyo, Yoshio Okamoto, an unsigned and undated "confirmation letter." This letter stated that Mr. Okamoto, as Representative Director of Asahi Kogyo, and USO, agreed to "repay" USO's proceeds from the sale of the Paine Webber Tower to IBJ, "as had been promised previously." Though Mr. Okamoto had made no such promise, he dutifully executed a "guarantee letter" and returned it to IBJ, according to IBJ's instructions. See 2d Am. Compl. at 6--7. Before USO received its share of the proceeds, IBJ required Okamoto to open a new account at IBJ for Sun Foods, another company owned by Mr. Okamoto. Following the sale of the tower, IBJ, acting through Kowa, placed USO's sale proceeds in an account for USO at IBJ. IBJ then created documentation purporting to transfer the money to the newly-created Sun Foods account. For more than one and a half years, the sale proceeds remained in the Sun Foods account. On March 31, 2003, however, the Mizuho Bank Defendants, acting as successor to IBJ, purported to "foreclose" on the money in the Sun Foods account by emptying that account. For purposes of this discussion, these allegations will be referred to as "the expropriation claims."

PROCEDURAL HISTORY

In March 2005, USO filed suit in an Illinois court against the Mizuho Bank Defendants and others. On January 25, 2006, following preliminary rulings in the Illinois court dismissing certain parties, the Mizuho Bank Defendants removed the case to federal court. USO's motion to remand was denied on July 28, 2006. See Dkt. No. 52.

On November 2, 2005, the Mizuho Bank Defendants filed suit in Tokyo District Court against USO and the bankruptcy trustee of Mr. Okamoto, seeking a declaratory judgment that claims similar to those claims alleged in USO's Second Amended Complaint in this case are meritless. Sometime thereafter, USO filed a motion to dismiss the Japanese proceeding, arguing that under Japan's "double litigation rule," courts do not have jurisdiction to consider after-filed declaratory relief claims that usurp the jurisdiction of another court. On March 20, 2007, the Tokyo District Court issued an interim judgment denying USO's motion to dismiss or stay the Japan action.

Finally, on or around November 17, 2006, the bankruptcy trustee of Asahi Kogyo and Mr. Okamoto commenced an avoidance action against the Mizuho Bank Defendants seeking the return of the approximately $7 million transferred from USO.

DISCUSSION

The court may dismiss a case under the doctrine of forum non conveniens when it "best serves the convenience of the parties and the ends of justice." Kamel v. Hill-Rom Co., Inc., 108 F.3d 799, 802 (7th Cir. 1997) (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507, 67 S.Ct. 839, 91 L.Ed. 1055 (1947)). The forum non conveniens inquiry is guided by several considerations. First, an adequate alternative forum must be available to hear the case. Id. at 802. If this threshold criterion is satisfied, the court must then balance the private interests of the litigants and the public interests of the forum to determine the superior venue. Id. at 803. Dismissal is proper if "the balance of conveniences suggests that trial in the chosen forum would be unnecessarily burdensome for the defendant or the court." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 256 & n.23, 102 S.Ct. 252, 70 L.Ed. 2d 419 (1981). The defendants bear the burden of persuading the court that a suit should be dismissed under the doctrine of forum non conveniens. In re Ford Motor Co., 344 F.3d 648, 652 (7th Cir. 2002). The forum non conveniens determination is "consigned to the trial court's sound discretion." Kamel, 108 F.3d at 802.

I. Availability and Adequacy of Japan as Alternative Forum

The first step in the forum non conveniens analysis is to determine whether an "adequate alternative forum is available." Id. at 802 (citing Piper, 454 U.S. at 254). The court must thus consider both (1) the availability and (2) the adequacy of the alternative forum. Id. at 802.An alternative forum is available when "all parties are amenable to process and are within the forum's jurisdiction." Id. at 803. An alternative forum is adequate if "the parties will not be deprived of all remedies or treated unfairly." Id. (citing Piper, 454 U.S. at 255).

Because the remaining*fn3 named defendants in this case are all citizens and residents of Japan, they are all amenable to service of process and within the jurisdiction of a Japanese court. Furthermore, doubts raised by USO as to whether a Japanese court could assert jurisdiction over the underlying claims at issue in this case are moot in light of the Tokyo District Court's March 20, 2007 interim judgment. In that case, which concerns "claims substantially identical" to the claims alleged by the plaintiff in this case, the Tokyo District Court found that it "was the proper forum" for this dispute and that "it is not unfair or against judicial propriety or expeditiousness to proceed in Tokyo." Shimada Reply Decl. ΒΆΒΆ 3, 4. In support of its decision, the court also found that "[t]he'place of alleged wrong' for the expropriation claim is in Tokyo," that "witnesses and ...


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