589 F.Supp.3d 401
S.D.N.Y.2022Background
- Plaintiffs Snowbridge Advisors LLC and Snowbridge Securities LLC (Delaware entities with principal place of business in New York) served as exclusive placement/marketing agents under a written October 1, 2018 agreement with ESO Capital Partners UK LLP (ESO Partners) to raise capital for a European fund; the agreement contained a New York choice-of-law and venue clause and a €3 million minimum placement fee.
- Soho Square Capital LLP (UK) was previously Core Capital/ESO Advisors and is alleged to be part of the ESO Capital Group; individual defendants Walid Fakhry and Stephen Edwards are alleged founders/directors/partners involved in the Group and participated in meetings in New York.
- Snowbridge alleges ESO Partners failed to pay fees; plaintiffs further allege ESO Partners shifted business/assets to Soho Square (leaving ESO Partners with minimal assets) to avoid liability to Snowbridge.
- Plaintiffs sued for breach of contract (as to successor Soho Square), tortious interference, unjust enrichment, and declaratory relief; defendants moved to dismiss under Rules 12(b)(2) and 12(b)(6).
- The Court dismissed Fakhry and Edwards for lack of personal jurisdiction; denied dismissal of Soho Square on successor liability (breach) at the pleading stage; dismissed tortious interference and unjust enrichment (Counts Three and Five) as to all three defendants for failure to state claims; denied jurisdictional discovery and leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over Fakhry and Edwards under N.Y. C.P.L.R. §302(a)(1) and (a)(3) | Their in-person participation in New York meetings (negotiating/implementing the Agreement and investor meetings) and role in the ESO Group establish transacting business and purposeful availment; New York is situs of injury. | They are UK domiciliaries; meetings were insufficiently connected to the tort claims; plaintiffs fail to plead loss of New York business, persistent New York activities, or substantial revenue from NY. | No jurisdiction: complaint fails to show an articulable nexus between defendants' NY contacts and the tort claims; §302(a)(3) situs and revenue/prong allegations also inadequate. |
| Personal jurisdiction over Soho Square via successor liability to ESO Partners | Soho Square is successor to ESO Partners (assumed management/roles, same offices/management) so ESO Partners' NY contacts (contract negotiated/executed in NY) confer jurisdiction. | Soho Square is a separate UK entity; choice-of-law clause cannot bind nonparty; challenge successor allegations. | Yes at pleading stage: because complaint plausibly alleges "mere continuation" successor theory, court exercises specific jurisdiction over Soho Square. |
| Successor liability / breach of contract (Count Two) — applicable law and sufficiency | New York law governs (Agreement choice-of-law); Soho Square is a mere continuation of ESO Partners, so successor liability attaches and breach claim survives. | English law (novations requirement) and lack of allegation of dissolution or other successor factors defeat claim. | New York law applied (Agreement clause); complaint plausibly pleads "mere continuation" exception, so Count Two survives dismissal. Fraudulent-transfer theory insufficiently pleaded. |
| Tortious interference and unjust enrichment (Counts Three and Five) | Defendants induced or benefited from ESO Partners' failure to pay Snowbridge; transfer of assets insulated defendants, making them liable. | Complaint lacks specific acts tying Soho Square/Fakhry/Edwards to but‑for causation of ESO Partners' breach or to a direct, specific benefit; claims are conclusory. | Dismissed: both claims fail Rule 12(b)(6) — plaintiffs did not plead specific acts showing but‑for causation for interference or a direct, specific benefit for unjust enrichment. |
Key Cases Cited
- MacDermid, Inc. v. Deiter, 702 F.3d 725 (2d Cir. 2012) (plaintiff bears burden to establish personal jurisdiction; pleadings construed favorably but controverted facts can be considered)
- Dorchester Financial Securities, Inc. v. Banco BRJ, S.A., 722 F.3d 81 (2d Cir. 2013) (standard for prima facie personal jurisdiction at pleading stage)
- Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50 (2d Cir. 2012) (tests for specific jurisdiction under N.Y. C.P.L.R. §302)
- Jazini v. Nissan Motor Co., 148 F.3d 181 (2d Cir. 1998) (jurisdictional discovery and pleadings standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for Rule 12(b)(6) pleadings)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (complaint must plead sufficient factual matter to be plausible)
- Aguas Lenders Recovery Group v. Suez, S.A., 585 F.3d 696 (2d Cir. 2009) (successor liability exceptions under New York law)
- Schumacher v. Richards Shear Co., 59 N.Y.2d 239 (N.Y. 1983) (limitations on mere-continuation successor exception)
- Cargo Partner AG v. Albatrans Inc., 352 F.3d 41 (2d Cir. 2003) (discussion of continuing-business successor theories)
- Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413 (N.Y. 1996) (elements of tortious interference with contract)