Helix Inv. Mgmt., LP v. Privilege Direct Corp.
364 F. Supp. 3d 1343
M.D. Fla.2019Background
- Helix (a Luxembourg entity) alleges the Oliphants and Privilege Direct entered a financing arrangement: Privilege Direct would advance funds (partly sourced from Helix) to Oliphant Financial entities to buy debt portfolios, and Helix took security under the Oliphant Security Agreement (including five promissory notes and listed portfolios).
- Helix claims defaults under the Oliphant Security Agreement, breaches of four promissory notes, breach of a Term Sheet, and breach of a personal guarantee by Robert Morris; Helix seeks money damages and declaratory relief.
- Privilege Direct was described in the complaint as a Florida corporation with its principal place of business abroad; corporate records later showed administrative dissolution after Helix filed suit.
- Defendants moved to dismiss the Third Amended Complaint (or stay) arguing lack of diversity jurisdiction (because Privilege Direct is an alien), failure to join indispensable party Privilege Wealth PLC, and lack of standing to enforce the notes/Term Sheet; they also sought a stay based on Privilege Wealth PLC’s bankruptcy.
- The Court treated factual jurisdictional evidence permissibly, concluded Privilege Direct was inactive when suit was filed (so is a Florida citizen), found Helix had standing and had properly alleged entitlement to enforce collateral, rejected the indispensability argument as Privilege Wealth PLC had no implicated rights, and denied a bankruptcy stay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction (diversity) | Helix: Privilege Direct was inactive when suit filed, so is a Florida citizen; complete diversity exists | Oliphants: Privilege Direct is an alien (incorporated in FL but principal place abroad), destroying diversity under §1332 amendments | Court: Privilege Direct was inactive at filing and is a Florida citizen; diversity exists |
| Failure to join indispensable party (Rule 19) | Helix: Privilege Wealth PLC has no rights/obligations implicated by the claims; complete relief can be afforded without it | Oliphants: Privilege Wealth PLC is an obligor/owner of notes and must be joined; absence risks inconsistent obligations | Court: Privilege Wealth PLC is not a required/indispensable party under Rule 19(a); dismissal not warranted |
| Standing to enforce promissory notes and Term Sheet | Helix: Security agreement assigned Privilege Direct’s interest to Helix; Helix (same entity despite registration form change) can enforce upon default | Oliphants: Helix is not original payee nor shown to be holder/endorsed transferee; Term Sheet is non-binding | Court: Complaint adequately alleges default and Helix’s rights; Helix has standing to sue |
| Stay under bankruptcy automatic stay | Helix: Bankruptcy trustee has not asserted an interest; trustee is aware and declined to participate; stay would prejudice Helix | Oliphants: Privilege Wealth PLC’s bankruptcy covers the contested instruments and any enforcement would affect estate rights, so stay is warranted | Court: No stay; defendants failed to identify an estate interest implicated here and trustee has not claimed an interest |
Key Cases Cited
- Jackson v. BellSouth Telecommunications, 372 F.3d 1250 (11th Cir. 2004) (12(b)(6) standard; accept complaint allegations as true)
- Stephens v. Department of Health & Human Services, 901 F.2d 1571 (11th Cir. 1990) (favor plaintiff with reasonable inferences on motion to dismiss)
- La Grasta v. First Union Sec., Inc., 358 F.3d 840 (11th Cir. 2004) (limit consideration on dismissal to well-pleaded facts and documents central to complaint)
- Morrison v. Amway Corp., 323 F.3d 920 (11th Cir. 2003) (Rule 12(b)(1) jurisdictional attacks may be facial or factual)
- Lawrence v. Dunbar, 919 F.2d 1525 (11th Cir. 1990) (on factual jurisdictional attacks, court may weigh evidence)
- Hertz Corp. v. Friend, 559 U.S. 77 (Sup. Ct.) (principal place of business test for corporate citizenship)
- Cabalceta v. Standard Fruit Co., 883 F.2d 1553 (11th Cir. 1989) (foreign corporation’s dual citizenship and alienage diversity context)
- Caron v. NCL (Bahamas), Ltd., 910 F.3d 1359 (11th Cir. 2018) (not resolving whether 2012 amendments altered alienage-diversity rules in certain contexts)
- Holston Investments, Inc. v. LanLogistics, Corp., 677 F.3d 1068 (11th Cir. 2012) (inactive/dissolved corporation has citizenship only of state of incorporation)