291 F. Supp. 3d 509
S.D. Ill.2018Background
- Jeffrey W. Miller, a former Mercuria employee, received 3,200 Class A preferred shares in Upstream Latinoamérica, S.L. (ULA) as a carried interest tied to Glacco; ULA is a Spanish company and its Articles of Association provide a preferred liquidation/redemption right on certain dissolution/reorganization events.
- Miller and several Mercuria entities executed a Separation (Mutual Release and Settlement) Agreement when Miller resigned in 2012; that Agreement describes valuation/redemption mechanics tied to an anticipated Mercuria–Roch merger (defining Redemption Events) and repeatedly references that Miller’s rights remain subject to ULA’s Articles of Association.
- In 2017 Mercuria consummated the Phoenix Transaction (a consolidation with Andes Energia) that resulted in Phoenix Global Resources plc owning the former Mercuria ULA subsidiaries; Miller demanded payment; Mercuria refused and Miller sued in S.D.N.Y. asserting breach of ULA Articles (Count I) and breach of the Separation Agreement and the implied covenant against Mercuria entities and Phoenix Global (Counts II–V).
- Defendants moved to dismiss: Mercuria parties under Rule 12(b)(6) arguing the Separation Agreement only creates redemption/valuation obligations if the Roch merger occurred (which it did not); ULA and Phoenix Global moved to dismiss for lack of personal jurisdiction (12(b)(2)); Phoenix also moved to dismiss on the merits.
- The court held (1) the Separation Agreement expressly references the ULA Articles but incorporates them only for the limited purpose of defining when Miller’s redemption/right-triggering events occur (tied to the Roch Merger); (2) the Agreement’s plain terms make Mercuria’s valuation/redemption obligations contingent on the Roch Merger’s Redemption Events, which never happened; (3) therefore Counts II and III against the Mercuria parties were dismissed for failure to state a claim; and (4) the forum-selection clause in the Separation Agreement did not bind ULA (the clause expressly applies only to the Settlement Agreement) and did not bind Phoenix Global (not sufficiently "closely related" or a successor in interest), so Counts I, IV, and V were dismissed for lack of personal jurisdiction (and IV–V also would fail on the merits for the same reasons as II–III).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Separation Agreement incorporated ULA Articles to obligate Mercuria on redemption beyond the Roch Merger | Miller: Agreement incorporates ULA Articles and the Roch Merger language was illustrative — rights arise on Phoenix Transaction too | Mercuria: Agreement limits redemption/valuation rights to specified Redemption Events tied to the Roch Merger; no obligation arose here | Held: ULA Articles are referenced but incorporated only for the limited purpose of identifying redemption triggers tied to the Roch Merger; no obligation arose because Roch Merger did not occur |
| Breach of contract (Separation Agreement) against Mercuria parties | Miller: Phoenix Transaction triggered redemption/payment under Agreement/Articles, so Mercuria breached | Mercuria: No contract obligation was triggered; the Agreement ties valuation/redemption to Roch Merger Redemption Events | Held: Dismissed — failure to state a claim because contractual trigger never occurred |
| Breach of implied covenant of good faith and fair dealing against Mercuria parties | Miller: Mercuria acted in bad faith by denying payment and thereby breached implied covenant under Agreement/Articles | Mercuria: Covenant claim duplicates breach-of-contract claim or fails because no contractual obligation was triggered | Held: Dismissed — claim duplicates contract claim or fails as it relies on nonexistent contractual duty |
| Personal jurisdiction / enforceability of forum-selection clause against ULA and Phoenix Global | Miller: Forum-selection clause in Separation Agreement should bind related non-signatories (ULA, Phoenix) so S.D.N.Y. has jurisdiction | Defendants: Clause applies only to Settlement Agreement signatories; ULA and Phoenix are foreign with insufficient New York contacts and Phoenix is not a sufficiently "closely related" non-signatory or successor | Held: Dismissed for lack of personal jurisdiction — clause does not cover ULA; Phoenix not "closely related" or a successor-in-interest, so forum clause unenforceable against it |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard — plausibility required)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard — no mere conclusory allegations)
- Ronan Assocs., Inc. v. Local 94-94A-94B, 24 F.3d 447 (contracts may incorporate other documents by reference)
- Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42 (tests for incorporation by reference)
- Daimler AG v. Bauman, 571 U.S. 117 (general jurisdiction limited to place of incorporation or principal place of business)
- Aguas Lenders Recovery Grp. v. Suez, S.A., 585 F.3d 696 (non-signatories may be bound by forum clauses if "closely related")
- Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41 (successor liability principles and corporate separateness)