Giordano v. UBS AG
Filing
21
OPINION re: 10 MOTION to Dismiss . filed by UBS AG. Based on the conclusions set forth herein, the motion of UBS is granted, and the complaint is dismissed. In view of the enforcement of the forum selection clause leave to re plead is not granted. (As further set forth in this Order.) (Signed by Judge Robert W. Sweet on 9/25/2015) (kgo)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------x
SUSAN GIORDANO, as Executrix of the
ESTATE OF IDA GIORDANO,
Plaintiff,
-againstUBS, AG,
Defendant.
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A P P E A RA N C E S:
Attorneys for Plaintiff
ANCONA ASSOCIATES
220 Old Country Road
Mineola, New York 11501
By:
Dustin A. Levine, Esq.
Attorneys for Defendant
GIBSON, DUNN & CRUTCHER LLP
200 Park Avenue
New York, NY 10166
By:
Gabriel Herrmann, Esq.
14 Civ. 8252
OPINION
Sweet, D.J.
Defendant UBS, AG ("UBS-AG" or the "Defendant") has
moved pursuant to Rules 12(b)2, 12(b)6 of the Federal Rules of
Civil Procedure and the common law doctrine of forum non
conveniens to dismiss the complaint of plaintiff Susan Giordano,
executrix of the Estate of Ida Giordano ("Giordano" or the
"Plaintiff") alleging breach of fiduciary duty, malpractice,
breach of contract, disgorgement, and fraud. Based upon the
conclusions set forth below, the motion of UBS-AG is granted,
and the complaint is dismissed.
Prior Proceeding
Giordano filed her complaint on October 15, 2014
containing the following allegations.
Plaintiff Susan Giordano,
Executrix of the Estate of Ida Giordano, resides in Queens, New
York.
Compl.
~
6.
From July 2000 to May 2009, Plaintiff and
the now-deceased Ida Giordano maintained a joint account with
UBS in Geneva, Switzerland (the "Swiss Account").
Muller Aff.
~~
6-7.
Id. at
~
13;
UBS has a 152-year history as a Swiss
financial institution.
Muller Aff.
~
3.
The present-day UBS
was formed in 1998, when Union Bank of Switzerland and Swiss
Bank Corporation merged to form a new company.
Id.
UBS is
incorporated in and has its principal place of business in
Switzerland.
Id.
It operates under Swiss law as an
"Aktiengesellschaft," a corporation that has issued shares of
common stock to investors.
Id.
Between May and July 2000, both
Plaintiff and Ida Giordano personally executed several
contractual account documents with UBS that governed the account
relationship for the Swiss Account (collectively, the "Account
Agreements") .
The Account Agreements contain at least three
provisions designating Swiss law as the governing law for the
account relationship and designating Switzerland as the
exclusive place of jurisdiction" for "any disputes" arising out
of the account relationship.
MUller Aff. Exs. B, E-F.
For
example, the account opening document for the Swiss Account
contains the following forum-selection and choice-of-law
provisions:
The present Agreement and/or Declaration shall be
exclusively governed by and construed in accordance
with Swiss law. The place of performance of all
obligations of both parties, the place of debt
collection, the latter only for Customers domiciled
outside Switzerland, as well as the exclusive place of
jurisdiction for any disputes arising out of and in
connection with the present Agreement and/or
Declaration shall be Geneve.
Id. Ex. B at 2.
2
Plaintiff admits that, in years prior to 2009, she
"failed to disclose [the] Swiss Account on her U.S. tax returns
or pay tax on the income derived from the assets and
transactions in the UBS Swiss Account."
Compl.
~
52.
Then, in
October 2009, Plaintiff, as Executrix of the Estate of Ida
Giordano, participated in the IRS Offshore Voluntary Disclosure
Program ("VDP"), which afforded U.S. taxpayers who had hidden
foreign income from the IRS an opportunity to admit their
misconduct, pay fines and penalties, and receive amnesty from
criminal prosecution.
Compl.
~
15; see Declaration of Gabriel
Herrmann ("Herrmann Deel.") Ex. 7.
Plaintiff's allegation in
this case is that UBS should be held responsible for the
consequences of Plaintiff's concealment of the Swiss Account
from the IRS, and her eventual participation in the VDP, given
that she has since "been assessed and has paid back taxes,
penalties, and interest to the IRS as a result of her ownership
of the UBS Swiss Accounts."
Compl.
~~
15-18.
The Complaint
asserts that UBS "undertook a fiduciary duty" to advise the
Giordanos of their U.S. tax obligations by entering into a tax
treaty with the U.S. government (the Qualified Intermediary
("QI") Agreement).
Compl.
~
Plaintiff further alleges that
20.
UBS breached its alleged fiduciary duty by failing to inform her
of her U.S. tax obligations and failing to "prepare and deliver
to the Plaintiff the QI agreed IRS Forms W-9 which would have
3
identified [her] as someone who either needed to pay taxes on
offshore assets" or needed to "withhold" a portion of the
profits of the Swiss Account.
Compl.
~
23.
Each year, U.S. taxpayers are required to complete an
IRS Form 1040, which includes a Schedule B that must be
completed if the taxpayer has
from,
(1)
taxable interest or dividends
(2) any sort of financial interest in, or (3)
authority over, a foreign bank account.
2.
signature
See Herrmann Deel. Ex.
Schedule B directs these taxpayers to answer the following
straightforward question under penalty of perjury: "did you have
a financial interest in or signature authority over a financial
account
(such as a bank account,
brokerage account)
securities account, or
located in a foreign country?"
Id.
Taxpayers who have any such interest in or authority
over a foreign account typically must also identify the location
of the foreign account and complete Form TD F 90-22.1, a form
better known as the Report of Foreign Bank and Financial
Accounts, or "FBAR."
The FBAR's instructions provide that a
taxpayer must file an FBAR if, as Plaintiff alleges here, he or
she has more than $10,000 in foreign accounts.
Ex. 5 at 6.
See, e.g.,
The FBAR form also makes clear that failure to
disclose may lead to severe criminal penalties.
4
Id. at 1
id.
("Civil and criminal penalties, including in certain
circumstances a fine of not more than $500,000 and imprisonment
of not more than five years, are provided for failure to file a
report, supply information, and for filing a false or fraudulent
report.") .
Plaintiff also makes reference to a Deferred
Prosecution Agreement
("DPA") UBS entered into with the U.S.
government in 2009, which acknowledged that UBS had participated
in a scheme to "facilitate the evasion of US taxes" by certain
of its accountholders.
Compl.
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