DECISION AND ORDER
I. BACKGROUND
Plaintiff DIRECTV Latin America, LLC (“DIRECTV”) brought this action alleging, among other claims, breach of fiduciary duty and fraud against defendants Park 610, LLC (“Park 610”), Carlos Vicente Avila, (“Avila”), Roberto Timistit (“Timistit”), Carlos Pratola (“Pratola”) and Diego Clemente (“Clemente”). The complaint arises from a joint venture between DIRECTV and Avila that contained a New York forum selection clause. The claims against Park 610, Avila and Timistit were dismissed pursuant to a settlement agreement. Now before the Court is the motion of Pratola and Clemente to dismiss the complaint on the grounds of lack of personal jurisdiction over them and forum non conveniens.
By Order dated November 23, 2009, Magistrate Judge Gabriel Gorenstein, to whom this matter had been referred for supervision of pretrial proceedings, issued a Report and Recommendation the (“Report”), a copy of which is attached and incorporated herein, recommending that the claims against Pratola and Clemente be dismissed for lack of personal jurisdiction. The Report further noted that even if personal jurisdiction existed, the action could properly be dismissed by application of the forum non conveniens doctrine. DIRECTV filed timely objections to the Report challenging its findings and conclu
II. STANDARD OF REVIEW
A district court evaluating a Magistrate Judge’s report may adopt those portions of the report to which no “specific, written objection” is made, as long as the factual and legal bases supporting the findings and conclusions set forth in those sections are not clearly erroneous or contrary to law. Fed.R.Civ.P. 72(b);
see also Thomas v. Arn,
III. DISCUSSION
Having conducted a de novo review of the full factual record in this litigation, including the pleadings, and the parties’ respective papers submitted in connection with the underlying motion and in this proceeding, as well as the Report and applicable legal authorities, the Court concludes that the findings, reasoning, and legal support for the recommendations made in the Report are warranted. Accordingly, for substantially the reasons set forth in the Report the Court adopts the Report’s factual and legal analyses and determinations, as well as its substantive recommendations, in their entirety as the Court’s ruling on the motion of Pratola and Clemente to dismiss DIRECTV’S complaint in this action for lack of personal jurisdiction, or, in the alternative, by application of the doctrine of forum non conveniens.
IV. ORDER
For the reasons discussed above, it is hereby
ORDERED that the Report and Recommendation of Magistrate Judge Gabriel Gorenstein dated November 23, 2009 Docket No. 164 is adopted in its entirety, and the objection of plaintiff (Docket No. 168), is DENIED.
The Clerk of Court is directed to withdraw any pending motions and to close this case.
SO ORDERED.
REPORT AND RECOMMENDATION
Plaintiff DirecTV Latin America, LLC (“DirecTV”) has sued Park 610, LLC (“Park 610”), Carlos Vicente Avila, Roberto Timistit, Carlos Pratola, and Diego Clemente. DirecTV alleges the individual defendants — who include an employee of DirecTV — secretly conspired to illegally share in the profit of a joint venture between DirecTV and Park 610.
See
Second Amended Complaint, filed June 20, 2009 (Docket # 138) ¶¶ 1-2 (“2d Am. Compl.”). DirecTV’s second amended complaint al
Park 610, Avila, and Timistit (“Park 610 defendants”) now move for a judgment dismissing the second amended complaint as to them pursuant to Fed.R.Civ.P. 12(b)(6); Pratola and Clemente move for a judgment dismissing the second amended complaint as to them pursuant to Fed. R.Civ.P. 12(b)(1), (2), (3), and (6) and the doctrine of forum, non conveniens, or — in the alternative — for a stay pending the completion of proceedings in Argentina.
I. BACKGROUND
A. Facts
The following facts are alleged in DirecTV’s second amended complaint and are assumed to be true for purposes of these motions.
1. The Venture
DirecTV provides pay television services in Latin America and, through its subsidiaries, has approximately five million subscribers. 2d Am. Compl. ¶ 7. Before his termination, Pratola was the general manager and chief executive officer of DirecTV Argentina, S.A., which is a subsidiary of DirecTV. Id. ¶¶ 1, 15. In April 2006, Pratola recommended to his superiors at DirecTV that adding a golf programming channel would improve the company’s subscriber base. Id. ¶¶ 1, 20. At Pratola’s urging, DirecTV entered into negotiations with Avila, an individual with a long history of developing sports programming in Argentina, to create a joint venture that would develop and distribute such a channel in Latin America. Id. ¶¶21, 29. Pratola took a lead role in negotiating a memorandum of understanding and the subsequent Joint Venture Agreement between DirecTV and Avila. Id. ¶ 23. Under the agreement, the parties’ joint venture was to be called Latin American Sports, LLC (“LAS”), in which Park 610 would have a 55% membership interest and DirecTV would have a 45% membership interest. Id. ¶¶ 1, 25.
Under the agreement, DirecTV was obligated to provide up to $7 million in funding to LAS. Id. ¶ 26. Between 2006 and 2008, DirecTV provided LAS with capital contributions of $5,700,000 and loans of an additional $2,000,000. Id. ¶¶ 26-27. Avila was to act as the chairman of LAS. Id. ¶ 28. Because of Avila’s experience in developing sports programming, DirecTV made it clear that it was “critical” that Avila not transfer any of his ownership interest in LAS without DirecTV’s prior written agreement. Id. ¶29. Indeed, a provision in the joint venture agreement made a change in control a default under the contract. Id. ¶ 30. Upon default, the agreement had a “call option” which provided that a defaulting member could be forced to sell its membership interest to the non-defaulting member for book value. Id. ¶ 35.
2. Park 610
Park 610 is a limited liability corporation that was formed for the purpose of being the entity through which Avila controlled his interest in LAS.
Id.
¶ 40. Park 610’s two members are Tumely S.A. (“Tumely”) and Loraine S.A. (“Loraine”).
Id.
¶ 41. In due diligence meetings during the summer of 2006, Avila represented that he was the sole owner of Tumely and Loraine, and falsely stated that he chose to own Park 610 in this manner so that he could more easily conduct intra-family transfers in the
On or about September 18, 2006, Avila and DirecTV closed their transaction by executing the Joint Venture Agreement that formed LAS. Id. ¶ 49; see Limited Liability Company Agreement of Latin American Sports, LLC Among Latin American Sports, LLC, DirecTV Latin America, LLC, and Park 610, LLC (annexed as Ex. A to Declaration of Carlos V. Avila in Support of Defendants Park 610, LLC, Carlos V. Avila and Roberto Timistit’s Motion to Dismiss the Second Amended Complaint, filed June 8, 2009 (Docket # 140)) (“Joint Venture Agreement”).
3. The Side Deal
Before the closing, in April 2006, Pratola had foimed Leraman, which would eventually become the owner of the Park 610 shares belonging to Tumely. 2d Am. Compl. ¶ 52. Around this time, a law firm in Uruguay prepared two transactional documents: first, a Tumely share purchase agreement between Avila as seller and Leramar 1 as buyer, see id. ¶ 52; see also Share Purchase Agreement By and Between Carlos Vicente Avila and Leramar S.A. (annexed as Ex. 7 to Declaration of Michael Hartman in Support of Application for a Pre-judgment Attachment Pursuant to FRCP Rule 64, filed June 12, 2008 (Docket # 16) (“Hartman Decl.”)) (“Share Purchase Agreement”); and, second, a Tumely shareholders’ agreement between Avila and Leramar, see 2d Am. Compl. ¶ 53; see also Agreement By and Between Carlos Vicente Avila and Leramar S.A. (annexed as Ex. 8 to Hartman Decl.) (“Draft Shareholders’ Agreement”). In a blacklined draft, Avila’s attorney warned Timistit, the chief executive officer of LAS and the brother-in-law of Avila, that this meant a change in control in violation of “the LAS Shareholders Agreement.” 2d Am. Compl. ¶¶ 14, 54. In an attempt to avoid the transfer rules in the agreements with DirecTV, counsel for Pratola and/or Avila included a stipulation in the agreement stating that the Tumely shares would continue to be nominally held by Avila, though they would actually be held for the benefit of Leraman — that is, Pratola and Zunda. Id. ¶ 56.
On or about November 8, 2006, all of Avila’s shares in Tumely were conveyed to Leraman without providing notice to DirecTV. Id. ¶¶ 57-58. Avila also allowed his shares of Loraine either to be pledged to Leraman or to be deposited with a third party as security for his obligations under the Tumely shareholders’ agreement. Id. ¶ 60.
4. The Management Service Agreement
As part of the joint venture, LAS entered into a “Management Service Agreement” with Park 610.
Id.
¶ 62. Pratola and Zunda headed the negotiation with Avila for determining the structure of the fee and its computation.
Id.
¶ 63. The
The second amended complaint provides details of several transfers of $30,000, id. ¶ 69-70, though the only specific date it provides relates to a transfer on May 11, 2007, thus rendering it unclear whether these transfers are the same as those described as beginning after “late summer or the early fall of 2007,” see id. ¶ 64. As for the May 11, 2007 transfer, Clemente “sent wire instructions to Zunda on that date for payment to Banco UBS Financial Services” in New York. Id. ¶ 69. That same day, Timistit arranged a transfer of $30,000 to the Clemente Account. Id. ¶ 70. Subsequently, Timistit arranged three additional transfers, and on each occasion, $20,000 was sent to Avila’s JP Morgan account and $10,000 was sent to the Clemente Account. Id. Pratola pushed for DirecTV to continue these advances for an additional six months, but DirecTV refused. Id. ¶ 71.
In the fall of 2007, Zunda and Pratola exchanged emails suggesting great interest in and excitement about a possible sale of part of Park 610’s interest in LAS, even though Zunda’s compensation from DirecTV Argentina was not linked to LAS. Id. ¶ 72.
5. Dismissal and Use of Call Option
After DirecTV learned of the above transactions, DirecTV confronted Pratola and Zunda. Id. ¶ 73. When Pratola and Zunda provided insufficient explanations for these events, they were fired. Id. On March 25, 2008, DirecTV notified Avila that it had learned of the above transactions and attempted to exercise the call option in section 13 of the LAS agreement. Id. ¶ 74. Avila refused to honor this request on the ground that no breach had occurred. Id. ¶ 75.
B. Procedural Background
The procedural history of this case was discussed in a prior opinion.
See DirecTV Latin America, LLC v. Park 610, LLC,
1. Argentinian Employment Action
On December 20, 2007, Pratola commenced a mandatory mediation proceeding in Argentina against DirecTV Argentina and DirecTV for wrongful dismissal. See Affidavit of Lisandro Allende, filed June 9, 2009 (Docket # 146) (“Allende Aff.”) ¶ 5. The mediation was unsuccessful. Id. Subsequently, on September 15, 2008, Pratola brought a lawsuit in the courts of Argentina. Id. ¶ 6; Complaint (annexed as Ex. B to Allende Aff.) (“Argentinian Complaint”). In 2009, DirecTV filed an answer in that lawsuit. Allende Aff. ¶ 7; Answer to Complaint (annexed as Ex. C to Allende Aff.) (“Argentinian Answer”).
On April 29, 2008, DirecTV commenced this action by filing a complaint against Park 610, Avila, Timistit, Pratola, and Zunda. See Verified Complaint, filed Apr. 29, 2008 (Docket # 1). On June 12, 2008, DirecTV filed an amended complaint, which added Clemente as a defendant. See Amended Complaint, filed June 12, 2008 (Docket # 36). 2
The various defendants filed motions to dismiss on a number of different theories. The Court raised,
sua sponte,
the issue of diversity jurisdiction.
See DirecTV I,
DirecTV’s second amended complaint omits LAS and Zunda as parties and asserts five grounds for relief: (1) declaratory judgment against Park 610; (2) breach of contract against Park 610; (3) breach of fiduciary duties against Park 610 and Avila; (4) aiding and abetting a breach of fiduciary duty against Avila, Timistit, Pratola, and Clemente; and (5) fraud against Avila, Pratola, and Timistit, and aiding and abetting fraud, as against Clemente and Timistit. See 2d Am. Compl. ¶¶ 77-109.
3. Current Motions to Dismiss
On June 8, 2009, Park 610, Avila, and Timistit filed a motion to dismiss for failure to state a claim. Pratola and Clemente followed with their own motion to dismiss raising various issues including (1)
forum non conveniens,
(2) lack of personal and quasi in rem jurisdiction, (3) failure to plead fraud with particularity, (4) an argument that the forum selection clause in Pratola’s employment agreement required
II. PERSONAL JURISDICTION MOTION
A. Standard of Review
Upon motion, the Court is required to dismiss an action against any defendant over whom it lacks personal jurisdiction.
See
Fed.R.Civ.P. 12(b)(2). On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff “bears the burden of showing that the court has jurisdiction over the defendant.”
In re Magnetic Audiotape Antitrust Litig.,
To make this showing, a plaintiff may demonstrate “ ‘through [its] own affidavits and supporting materials, containing [a] [good faith] averment of facts that, if credited ..., would suffice to establish jurisdiction over the defendant.’ ”
In re Methyl Tertiary Butyl Ether Prods. Liab. Litig.,
Personal jurisdiction over a non-domiciliary defendant is determined by reference to the law of the state in which the court sits.
See Bensusan Rest. Corp. v. King,
B. Personal Jurisdiction Pursuant to the New York Long-Arm Statute
DirecTV argues that there is long-arm jurisdiction over Clemente and Pratola under both New York Civil Practice Law and Rules (“C.P.L.R.”) section 302(a)(1) and section 302(a)(2). See Opp’n to Pratola at 14. We consider each in turn.
1. C.P.L.R. § 302(a)(1)
C. P.L.R. § 302(a)(1) provides that “a court may exercise personal jurisdiction over any non-domiciliary ... who in person or through an agent ... transacts any business within the state.” This section extends personal jurisdiction over a non-domiciliary defendant provided two requirements are met.
First, the defendant must “ ‘transact business’ within the state.”
See, e.g., CutCo Indus.,
A non-domiciliary “transacts business” under C.P.L.R. 302(a)(1) when he purposefully avails [himself] of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws.
No single event or contact connecting defendant to the forum state need be demonstrated; rather, the totality of all defendant’s contacts with the forum state must indicate that the exercise of jurisdiction would be proper.
CutCo Indus.,
Second, the claim against the non-domiciliary must arise out of that business activity.
Id.
at 787;
accord Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp.,
“Although the New York Court of Appeals has held that ‘[§ 302(a)(1) ] is not limited to actions in contract,’ § 302(a)(2) and § 302(a)(3) are considered the more appropriate provisions for tort actions.”
Barricade Books, Inc. v. Langberg,
2. C.P.L.R. § 302(a)(2)
C.P.L.R. § 302(a)(2) states that jurisdiction may be exercised over a non-domiciliary who in person or through an agent “commits a tortious act” within New York. “To satisfy New York’s long-arm statute, the complaint must ‘adequately frame[] a cause of action in tort arising from those acts.’ ”
PI, Inc. v. Quality Prods., Inc.,
New York courts and the Second Circuit have “consistently interpreted § 302(a)(2) jurisdiction narrowly,”
Carlson v. Cuevas,
C. Analysis
1. Factual Allegations Regarding Pratola and Clemente’s Contacts with New York
a. Pratola
At the time this action was commenced, Pratola was a citizen of Argentina and a
b. Clemente
At the time this action was commenced, Clemente was a citizen of Argentina and lived in Buenos Aires, Argentina.2d Am. Compl. ¶ 16. At no time relevant to “this action was Clemente employed by LAS or otherwise engaged to provide goods or services to LAS.” Id. ¶ 17. Clemente’s only role in this case is that he gave instructions to Zunda for payment to the Clemente Account in New York, id. ¶ 69, and four transfers totaling $60,000 were made by Timistit into the Clemente Account, see id. ¶¶ 66, 70.
However, neither the second amended complaint nor DirecTV’s opposition papers explains with any specificity how the account was involved in the challenged actions, other than as a repository of the management fees payable to Avila. The second amended complaint states only that these funds were paid “for the benefit of Pratola and Zunda as part of the cash kickbacks from Park 610.” Id. ¶ 107. In its opposition papers, DirecTV refers the Court to its papers seeking an order of attachment for further explanation. See Opp’n to Pratola at 14-15. But those documents merely state that “DIRECTV also has evidence of highly suspicious wire transfers that were supposedly paid as part of Avila’s management fee.” McCormick Decl. Ex. 2 at 6.
2. Application of C.P.L.R. § 302(a)(1) to Pratola and Clemente
a. Pratola
To show that Pratola fits within section 302(a)(1), DirecTV points to the “numerous telephone conference calls between Pratola and DIRECTV’S management in New York.”
See
Opp’n to Pratola at 17 & n. 9 (citing 2d Am. Compl. ¶ 20; Nerod Decl. ¶ 4). But section 302(a)(1) permits jurisdiction over Pratola only if these “numerous telephone conference calls” show that Pratola transacted business within New York and that the claim against him arose out of his business contacts with New York.
See Johnson, 4
N.Y.3d at 519,
First, it is doubtful that the phone calls, with nothing more, would be of the quality or depth that would constitute the transaction of business. When contacts with New York have been found sufficient to support personal jurisdiction, a defendant “on his own initiative ... projected] himself’ into New York to engage in a “sustained and substantial transaction of business.”
See, e.g., Parke-Bernet Galleries, Inc. v. Franklyn,
Certainly, “ [i]f the purpose of the calls is for the defendant to actively participate in business in New York, then they alone may support a finding of New York long arm jurisdiction under C.P.L.R. § 302(a)(1).’ ”
Digital Lab Solutions,
Moreover, nothing in the facts alleged by DirecTV shows that Pratola was purposefully availing himself of the “privileges of and benefits of New York’s laws.”
Ehrenfeld v. Bin Mahfouz,
The cases cited by DirecTV,
see
Opp’n to Pratola at 17, are consistent with this analysis, as in each of those cases, the defendant gained identifiable benefits from a “sustained and substantial transaction of business” within New York.
See Fischbarg,
Far more on point is the unpublished decision in
Berkshire,
in which the defendants “negotiated the agreement — a letter of intent to purchase a Chicago hotel— through telephone calls and e-mails from Illinois to New York, and ultimately returned the signed contract from Illinois to New York.”
The fact that DirecTV Latin America’s principal place of business is in New York and that it wired funds from New York bank accounts to fund the venture does not change the analysis. These facts do not locate the “center of gravity” of the transaction inside New York. Indeed, to the extent that these facts reflect contacts with New York, they are the contacts of DirecTV, and not Pratola. Moreover, since DirecTV argues and we accept, that this dispute does not arise out of Pratola’s employment agreement, there is no reason to impute DirecTV’s New York contacts to Pratola.
See Societe Generale,
In sum, there is no personal jurisdiction over Pratola under § 302(a)(1) because he has not transacted business in New York. In light of this conclusion, we need not reach the “articulable nexus” prong of the section 302(a)(1) inquiry.
b. Clemente
As previously discussed, the second amended complaint alleges that in 2007, Timistit wired $30,000 to an account in Clemente’s name, at the instruction of Clemente, which is alleged to have been for the benefit of Pratola and/or Zunda. 2d Am. Compl. ¶¶ 66, 69-71. DirecTV argues that the court has personal jurisdiction over Clemente because the Clemente Account was “an instrumentality of the conspiracy to funnel a part of the kickback to Pratola and Zunda.” Opp’n to Pratola at 14.
While the maintenance of a bank account in New York “is usually insufficient to confer personal jurisdiction over a nondomieiliary defendant,”
Societe Generale,
Here, Clemente’s only contact with the state of New York is through a UBS bank account in New York that received DirecTV funds wired there by Timistit. There is no claim that Clemente gave any directions while located in New York or even that he has ever been to New York. It is not necessary to determine in the abstract whether the use of a single bank account can support jurisdiction under section 302(a)(1),
see, e.g., Keramchemie GmbH v. Keramchemie (Canada) Ltd., 771
F.Supp. 618, 623 n. 6 (S.D.N.Y.1991) (“The passage of funds through the two bank accounts in New York held by ... [defendant’s agent or alter ego] may not suffice to show that this Court had personal jurisdiction over that ... [agent] under C.P.L.R. § 302(a)(1).”), because we are bound to examine the “the totality of circumstances surrounding defendants’ activities in New York in connection with the matter giving rise to the lawsuit,”
Andy Stroud, Inc.,
Here, Clemente’s mere use of one New York bank account lacks the articulable nexus necessary to establish jurisdiction,
see Societe Generale,
DirecTV cites
Correspondent,
Accordingly, there is no personal jurisdiction over Clemente under section 302(a)(1).
3. Application of C.P.L.R. § 302(a)(2) to Pratola and Clemente
As noted, to qualify for jurisdiction under section 302(a)(2), “a defendant’s physical presence in New York is a prerequisite to jurisdiction.”
Yellow Page Solutions,
DirectTV, however, points to case law that allows acts committed in New York “by the co-conspirator of an out-of-state defendant pursuant to a conspiracy” to subject the out-of-state defendant to jurisdiction under C.P.L.R. § 302(a)(2).
See
Opp’n to Pratola at 15-16 (citing
Chrysler Capital Corp. v. Century Power Corp.,
Allege[ ] facts sufficient (1) to establish a prima facie case of conspiracy, (2) to warrant the inference that the ... [non-domiciliary] defendants were members of that conspiracy, (3) to demonstrate that a putative co-conspirator committed a tort or transacted business within New York within the meaning of C.P.L.R. 302(a)(1) or (a)(2), and (4) to justify the finding of an agency relationship between the putative co-conspirator acting in New York and the ... [non-domiciliary] defendants.
Daventree Ltd. v. Republic of Azer.,
To establish a prima facie case for conspiracy under New York law, a plaintiff must assert an underlying tort, as well as “(a) a corrupt agreement between two or more persons, (b) an overt act in furtherance of the agreement, (c) the parties’ intentional participation in furtherance of a plan or purpose, and (d) the resulting damage or injury.”
Chrysler Capital Corp.,
Here, DirecTV has not asserted a claim for civil conspiracy in its second amended complaint but instead makes claims only for aiding and abetting the Park 610 breach of fiduciary duty and fraud.
See
2d Am. Compl. ¶¶ 94-109. It does not even argue how each of the elements of a civil conspiracy have been met in this case.
See
Opp’n to Pratola at 16. In any case, even if the facts in the second amended complaint were to be construed as stating a conspiracy claim, DirecTV similarly makes no argument as to precisely
zuho
it contends was acting as an agent for Pratola and Clemente and what acts this person or persons undertook in New York.
See id.
at 16-17. DirecTV makes mention only of the same acts of Pratola and Clemente already discussed: specifically, (1) Pratola’s telephone calls to Nerod and (2) the same Clemente Account transaction.
Id.
at 17-18. DirecTV identifies no other actions in New York by any other defendant as forming a basis for jurisdiction.
See generally Drake v. Lab. Corp. of Am. Holdings,
As for the telephone calls, there is no claim that Pratola was “physically” present in New York when they occurred and thus they do not form a basis for jurisdiction under section 302(a)(2).
See, e.g., Ahava Food Corp. v. Donnelly,
D. Request for Additional Discovery
In a brief footnote, DirecTV requests that, should it be unsuccessful on this motion, it be given an opportunity to conduct discovery to assist it in acquiring additional facts to prove jurisdiction.
See
Opp’n to Pratola at 18 n. 10. “A district court has wide latitude to determine the scope of discovery, and is typically within its discretion to deny jurisdictional discovery when the plaintiff has not made out a prima facie case for jurisdiction.”
Frontera Res. Azer. Corp. v. State Oil Co. of Azer. Republic,
E. Conclusion
For reasons stated above, the claims against Pratola and Clemente should be dismissed for lack of personal jurisdiction. 6
A. Standard of Review
A party may move to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) where the opposing party’s complaint “fail[s] to state a claim upon which relief can be granted.” While a court must accept as true all of the allegations contained in a complaint, that principle does not apply to legal conclusions.
See Ashcroft v. Iqbal
— U.S. -,
Next, a court must determine if the complaint contains “sufficient factual matter” which, if accepted as true, states a claim that is “plausible on its face.”
Id.
at 1949 (citation and internal quotation marks omitted);
accord Port Dock & Stone Corp. v. Oldcastle Ne., Inc.,
A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.
Ashcroft,
If the allegations of a complaint show that the complained-of conduct was “not only compatible with, but indeed was more likely explained by, lawful” conduct, no claim for relief is stated. Id. at 1950; see also id. at 1951 (allegations in a complaint are rejected where there is an “obvious alternative explanation” for the conduct alleged that is more “likely”).
While a court typically examines only the allegations of a pleading on a motion to dismiss, “[djocuments that are attached to the complaint or incorporated in it by reference are deemed part of the pleading and may be considered.”
Roth v. Jennings,
B. Breach of Contract Claim
The Joint Venture Agreement directs that New York law applies to the agreement,
see
Joint Venture Agreement § 20.11, and the parties do not dispute that New York law governs this case. Un
“[I]f a contract is unambiguous on its face, the parties’ rights under such a contract should be determined solely by the terms expressed in the instrument itself rather than from extrinsic evidence as to terms that were not expressed or judicial views as to what terms might be preferable.”
Waldman ex rel. Elliott Waldman Pension Trust v. Riedinger,
DirecTV’s second amended complaint relies on three portions of the Joint Venture Agreement in making its contract claim: (1) the change in control provision, (2) the transfer of interests provision, and (3) the ethics provision. We examine each of these provisions in turn.
1. Change of Control Provision
The Park 610 defendants argue that DirecTV fails to plausibly allege that Park 610 breached the Joint Venture Agreement by causing a “change of control.” Park 610 Mem. at 8-10. Under the Joint Venture Agreement, a change in control occurs where “any Person (other than the Person who controls a Member on the Date hereof) become[s] the beneficial owner, directly, or indirectly, of more than 50% of the then outstanding voting shares or other equity rights of a Member.” 2d Am. Compl. ¶ 31; Joint Venture Agreement at 2. The second amended complaint alleges that Tumley and Loraine each owned 50% of the shares in Park 610. Thus, the allegations that the shares of Tumley were transferred to Leraman, 2d Am. Compl. ¶¶ 52-59, are insufficient to show a change of control inasmuch as that transfer did not result in an outside person acquiring “more than 50%” of the outstanding shares or other equity rights in Park 610. The Park 610 defendants, however, also allege that there was also a change in control at Loraine because Avila “agreed with Leraman to restrictions upon the transfer of [Avila’s] shares in Loraine” and agreed “either to pledge his shares of Loraine to Leraman and/or to deposit them with a third party as security for the performance of his obligations under the Shareholders Agreement.” Id. ¶ 60. The issue thus becomes whether these allegations are sufficient to show that someone other than Avila became the “beneficial owner” of the shares of Loraine.
DirecTV argues that the term “beneficial owner,” which is undefined in the Joint Venture Agreement, should be interpreted to accord with the definition of this term under section 13(d) of the Securities Exchange Act of 1934,
see
Opp’n to Park 610 at 13-15, which requires that “any entity (or group of entities) which is the beneficial owner of more than five percent of particular types of individual equity securities to disclose that fact to the [Securities Exchange Commission].”
Egghead.Com, Inc. v. Brookhaven Capital Mgmt. Co.,
(a) For the purposes of sections 13(d) and 13(g) of the Act a beneficial ownerof a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares:
(1) Voting power which includes the power to vote, or to direct the voting of, such security; and/or,
(2) Investment power which includes the power to dispose, or to direct the disposition of, such security.
17 C.F.R. § 240.13d-3 (a). Further, “[w]hen two or more persons agree to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer, the group formed thereby shall be deemed to have acquired beneficial ownership ... of all equity securities of that issuer beneficially owned by any such persons.” Id. § 240.13d — 5(b)(1).
This definition also applies, with some exceptions, to cases under section 16 of the Securities Exchange Act, including section 16(b), which requires disgorgement of profits for “short-swing trading” by “insiders.”
See id.
§ 240.16a-l(a)(l) (“the term ‘beneficial owner’ shall mean any person who is deemed a beneficial owner pursuant to section 13(d) of the Act”);
Morales v. Quintel Entm’t, Inc.,
The Park 610 defendants argue that this is an improper definition of a “beneficial owner,” though they do not offer an alternative definition.
See
Park 610 Reply at 5. Specifically they argue that the regulation’s definition was intended to be confined to particular violations of the Securities Exchange Act.
Id.
(quoting
Morales,
The Park 610 defendants also contend that DirecTV has not sufficiently alleged facts to show a change in control even under the broad definition of a “beneficial owner.” See Park 610 Reply at 5-6. But, as noted, the second amended complaint alleges that Avila agreed “either to pledge his shares of Loraine to Leraman and/or to deposit them with a third party as security for the performance of his obligations under the Shareholders Agreement.” 2d Am. Compl. ¶ 60. Such an agreement — in particular the pledging of shares to Leraman — would suggest at a minimum that Leraman shares power with Park 610 to dispose of or vote the shares of Loraine. Thus, the Park 610 defendants’ motion to dismiss on this basis should be denied. 7
2. Transfer of Interests Provision
The Park 610 defendants next argue that DirecTV failed to plausibly allege that Park 610 breached the Joint Venture Agreement by transferring its membership interest. Park 610 Mem. at 10-12.
Under section 13.1(c) of the Joint Venture Agreement, the “attempt by a Member to Transfer any of its Membership Interests other than in accordance with
The second amended complaint, however, contains no allegation that Park 610’s ownership of shares in LAS has ever changed hands. DirecTV argues that the economic interest in LAS changed hands because Leraman acquired an interest in Park 610, and thus acquired an interest in Park 610’s interest in LAS. See Opp’n to Park 610 at 16-19. In support of this argument, DirecTV cites the definition of “Transfer” in the Joint Venture Agreement. Id. The definition states:
Transfer means (i) any sale, assignment or transfer of securities, (ii) a sale, assignment or transfer of any economic interest and/or voting interest {“Interest”) in an entity that, directly or indirectly, holds any securities, (iii) a pledge or hypothecation of securities or Interest or any interest therein, (iv) sale, assignment or a transfer of securities convertible into or exchangeable for or other options or rights to acquire securities or Interest or (v) any other direct or indirect, voluntary or involuntary, sale, assignment or transfer of securities or Interest or any interest therein, whether pursuant to a Change of Control or otherwise.
Joint Venture Agreement at 7.
None of these provisions appear to be triggered. Ownership of a parent company of Park 610 was transferred to Leraman, but the language of the Joint Venture Agreement only prohibits attempts by a Member — that is, Park 610 or DirecTV— to transfer an interest in
LAS.
It does not prevent Park 610 or DirecTV from transferring interests in itself. The cases of
Eureka VIII LLC v. Niagara Falls Holdings LLC,
3. The Ethics Provision
The Park 610 defendants argue that DirecTV failed to plausibly allege that Park 610 breached the Joint Venture Agreement by breaching its ethics provision. Park 610 Mem. at 12. Section 12.5 of the Joint Venture Agreement states:
Ethics. No Member, the Company nor any of their respective officers, directors, members, employees or agents shall offer, pay or give anything of value in respect of the Business, either directly or indirectly, to a government official, political party or candidate for political office to influence such person or entity in the discharge of his, her, or its official duties, unless such kind of conduct complies with all applicable written laws. The Members will not do business with any joint venture partner, distributor, agent, customer, or other person where a Member knows or suspects that payoffs or similar practices are involved in doing business and will not have a relationship with a customer or any other person that results in a conflict of interest or embarrassment to the Company or any of the Members.
Joint Venture Agreement § 12.5. It is the second sentence of this section — in particular, the clause relating to “conflict of interest” — that DirecTV alleges has been breached. See 2d Am. Compl. ¶ 35.
DirecTV does not argue that the ethical duty to avoid conflicts of interest that is described in this section extends beyond the two members, Park 610 and DirecTV, or that Park 610 itself behaved in a way that violated the provision. Rather, DirecTV argues that the transaction involving Tumely, Loraine, Avila, and Leraman “is attributable” directly to Park 610 and cites to a case involving the doctrine of piercing the corporate veil.
See
Opp’n to Park 610 at 19 (citing
Thomson-CSF, S.A. v. Am. Arbitration Ass’n,
As
Thomson-CSF, S.A.
notes, “[i]n some instances, the corporate relationship between a parent and its subsidiary are sufficiently close as to justify piercing the corporate veil and holding one corporation legally accountable for the actions of the other.”
Importantly, “[a] party seeking application of the alter ego doctrine must come forward with factual allegations as to both elements.”
Bravado Int’l Group Merch. Servs., Inc. v. Ninna, Inc.,
Here, DirecTV has not made factual allegations sufficient to pierce the corporate veil. The second amended complaint simply alleges that Park 610 was owned by Tumely and Loraine, 2d Am. Compl. ¶ 41; that Tumely and Loraine were in turn wholly owned by Avila,
id.
¶ 42; and that Tumely and Loraine were the instruments of Avila, Pratola, and Zunda’s fraudulent conduct,
id.
¶¶ 52-57, 100. These facts, standing alone, do not show alter ego status.
See Island Seafood Co. v. Golub Corp.,
In sum, the breach of contract claim should be dismissed insofar as it is based on an alleged violation of section 12.5 of the Joint Venture Agreement. 9
C. Declaratory Judgment
The Park 610 defendants next allege that DirecTV has failed to state a cause of action for a declaratory judgment.
See
Park 610 Mem. at 13. Declaratory judgment actions will be dismissed where they are duplicative of other relief sought in a complaint because they “will, of necessity, be resolved in the course of the litigation of the other causes of action.”
Sofi Classic S.A. de C.V. v. Hurowitz,
D. Fraud
The Park 610 defendants seek dismissal of DirecTV’s claim for fraud on the ground that the second amended complaint’s allegations are insufficient both under Fed. R.Civ.P. 12(b)(6) and under Fed.R.Civ.P. 9(b) for failure to plead fraud with particularity. See Park 610 Mem. at 14-20.
1. Legal Standards
To prove fraud under New York law, a plaintiff must prove by clear and convincing evidence: “(1) a material misrepresentation or omission of fact (2) made by defendant with knowledge of its falsity (3) and intent to defraud; (4) reasonable reliance on the part of the plaintiff; and (5) resulting damage to the plaintiff.”
Crigger v. Fahnestock & Co.,
Additionally, Fed.R.Civ.P. 9(b) provides: “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” The purpose of Rule 9(b) is “(1) to provide a defendant with fair notice of the plaintiffs claim, (2) to protect a defendant from harm to his or her reputation or goodwill, and (3) to reduce the number of strike suits.”
Cosmas v. Hassett,
2. Pleading with Particularity
a. Alleged Affirmative Misstatements
The Park 610 defendants’ main argument with regard to fraud based on misstatements is that DirecTV has failed to plead with particularity any material
DirecTV, however, has alleged two false statements by Avila with particularity. First, during due diligence meetings in the summer of 2006, Avila represented to DirecTV’s attorney that the “sole purpose” of Park 610’s ownership structure of two additional entities was to create flexibility for future intra-family transfers of ownership. See 2d Am. Compl. ¶¶ 42-43. According to DirecTV, this statement was false when made. See id. ¶ 44. 10
Second, DirecTV cites' an email dated August 24, 2006 from Avila’s counsel to DirecTV on behalf of Avila stating that Avila owned all of Tumely and Loraine, that the shares Of those companies were in bearer form, but that “a subsequent change to the by-laws of the respective companies would change the form of stock ownership to registered form.” Id. ¶ 45. Avila was then actively planning to transfer the Tumely stocks to Pratola and Zunda, id. ¶¶ 44, 48, which Avila allegedly did shortly thereafter on November 8, 2006, id. ¶ 57.
Avila’s assurances as to the purpose of the structure of ownership and the future shift to registered shares were material to DirecTV’s decision to enter into the Joint Venture Agreement.
Id.
¶ 46. Such false assurances can constitute misrepresentations. “[I]f a promise was actually made with a preconceived and undisclosed intention of not performing it, it constitutes a misrepresentation of material existing fact upon which an action for rescission [based on fraud] may be predicated.”
Sabo v. Delman,
Because DirecTV specifies the statements that it contends were fraudulent, identifies the relevant content, specifically states where and when the statements were made, and explains why the statements were fraudulent, DirecTV has pled fraud with particularity as to Avila.
While the Park 610 defendants note that DirecTV never alleges that Avila directly stated he would “always own all the equity of Park 610,” see Park 610 Mem. at 15, such a direct statement is not necessary to prove fraud. A fact finder may reasonably infer that Avila’s allegedly false representations were sufficiently material to induce the transaction, inasmuch as the fact finder may reasonably conclude that the statements inhibited any investigation by DirecTV into why Avila was structuring his ownership in such an unusual fashion.
No specific fraudulent statements made by Timistit are pled with particularity in the second amended complaint, however. Thus, DirecTV’s claims of fraud based on affirmative statements by Timistit fail.
See Sofi Classic S.A. de C.V.,
b. Aiding and Abetting Fraud
DirecTV argues that Timistit can be held liable for aiding and abetting fraud. Opp’n to Park 610 at 21. To establish liability for aiding and abetting fraud, the plaintiffs must show “(1) the existence of a fraud; (2)[the] defendant’s knowledge of the fraud; and (3) that the defendant provided substantial assistance to advance the fraud’s commission.”
Lerner v. Fleet Bank, N.A.,
Here, because the second amended complaint adequately alleges that Avila committed fraud, the first element is met. The second two elements are also met. In addition to alleging generally that the parties knew of the fraudulent plan and entered into a “joint scheme” to effectuate it, see 2d Am. Compl. ¶¶ 103-04, DirecTV alleges that Timistit actively negotiated the agreements that structured the transfer of a portion of Park 610 to Pratola and Zunda, including drafts of the agreements emailed on a specific date, see id. ¶¶ 54-55. From this, a fact finder could reasonably conclude that Timistit knew of the fraud and provided substantial assistance to advance it.
Fezzani v. Bear, Steams & Co.,
However, no specific fraudulent statements made by Zunda or Pratola have been identified with particularity. Thus, the claim of aiding and abetting fraud must be dismissed against Timistit as to the statements made by Zunda or Pratola.
c. Fraudulent Concealment
The Park 610 defendants seek to dismiss DirecTV’s claim of fraudulent concealment — that is to say, the claims that are based on omissions. Opp’n to Park 610 at 22. “Under New York law, fraudulent concealment requires proof of: (1) failure to discharge a duty to disclose; (2) an intention to defraud, or scienter; (3) reliance; and (4) damages.”
TVT Records v. Island Def Jam Music Group,
In the context of a business transaction, the duty to disclose arises where a party, with a duty to be complete, has made only a partial or ambiguous statement, or “where one party possesses superior knowledge, not readily available to the other, and knows that the other is acting on the basis of mistaken knowledge.”
TVT Records,
Here, the second amended complaint alleges that Avila failed to disclose his intent to provide Pratola and Zunda with equity of Park 610 and that the defendants obtained DirecTV’s assent to the Joint Venture Agreement through this fraud. See 2d Am. Compl. ¶¶ 101-06. The context of the omissions and the manner in which they misled the plaintiff are also described in the second amended complaint, see id. ¶¶ 42-45, 48, 57, and are identical to what has previously been described with respect to Avila’s affirmative misrepresentations, see section III.D.2(a) above. Thus, the claim as to Avila is sufficient.
However, as to Timistit, DirecTV has only alleged that “Avila and Timistit, through their participation in the negotiation of the [Memorandum of Understanding], the LLC Agreement and the other closing documents, and through Avila’s counsel, reinforced Pratola’s and Zunda’s affirmative misrepresentations and omissions.” 2d Am. Compl. ¶ 102. This provides insufficient context for the alleged fraud by omission and provides no suggestion of what Timistit gained through the fraud. Thus, this claim as to Timistit must fail.
3. Separate Fraud and Contract Claims
The Park 610 defendants suggest the fraud claim should be dismissed to the extent that DirecTV seeks to claim that Park 610 entered the contract knowing it would later break it.
See
Park 610 Mem. at 17 n. 5 (citing
Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc.,
The Park 610 defendants also argue that the fraud claim must fail because of an inadequate pleading of reliance.
See
Park 610 Mem. at 18-20;
Gordon & Co. v. Ross,
5. Damages
The Park 610 defendants argue that the fraud claim must fail also because of an inadequate pleading of damages. See Park 610 Mem. at 18-20. They claim that the resulting joint venture has “yielded spectacular returns.” Id. at 18. However, the second amended complaint alleges that “[a]s a consequence of the Defendants’ fraud, DIRECTV expended approximately $5,700,000 in capital contributions and $2,000,000 in loans,” and that DirecTV would have received a greater percentage of LAS (and thus its income) in return for this money absent the fraud.2d Am. Compl. ¶ 108. This is sufficient to allege damages.
E. Fiduciary Duties
The Park 610 defendants next argue that DirecTV failed to plausibly allege that the Park 610 defendants breached any fiduciary duties or aided and abetted such breach. See Park 610 Mem. at 20-23; Park 610 Reply at 15-17.
1. Fiduciary Duty Law
Neither side explains which jurisdiction’s law should apply to the fiduciary duty claims, though each cites a mix of both New York and Delaware cases. See id.; Opp’n to Park 610 at 24-26. As the outcome would be the same under either state’s law, we do not address the choice of law issue.
“[Elements of breach of fiduciary duty that must be proven by a preponderance of evidence by the plaintiff are: (i) that a fiduciary duty exists; and (ii) that a fiduciary breached that duty.”
Legatski v. Bethany Forest Assoc., Inc.,
To show aiding and abetting liability, a plaintiff must show “(1) the existence of a fiduciary relationship; (2) a breach of an associated fiduciary duty; (3) knowing participating in the breach by a defendant who is not a fiduciary; and (4) damages proximately caused by the breach.”
Carlson v. Hallinan,
Absent provisions in an LLC agreement “explicitly” disclaiming the applicability of a fiduciary duty, LLC members owe each other “the traditional fiduciary duties that directors owe a corporation.”
Bay Ctr. Apartments Owner, LLC v. Emery Bay PKI, LLC,
2. Analysis
DirecTV has sufficiently alleged that Park 610 breached its fiduciary duties owed directly to DirecTV as co-member of an LLC, and that Avila breached his fiduciary duty owed directly to DirecTV as the manager of the LLC. For the reasons already stated, see section III.D.2 above, the second amended complaint alleges that these defendants failed to disclose material facts — specifically the transfer of a significant ownership stake in Park 610. See 2d Am. Compl. ¶¶ 1-3, 42-45, 48, 57. Similarly, Timistit’s acts done to advance the indirect transfer of ownership of Park 610 to Pratola and Zunda are sufficient to show aiding and abetting liability. See id. ¶¶ 54-55.
The Park 610 defendants argue that the fiduciary duty claim against Park 610 is duplicative of the contract claims and cite
Solow v. Aspect Res., LLC,
While the Park 610 defendants can point to no provision in the Joint Venture Agreement explicitly or implicitly limiting the parties’ fiduciary obligations, they argue that there is such a limitation based on an ethics provision. See Park 610 Mem. at 21 (citing Joint Venture Agreement § 12.5). But this provision simply prohibits members from activities that would constitute a conflict of interest. The provision thus does not limit any fiduciary obligation but rather states affirmative obligations required of all parties to the agreement.
The Park 610 defendants argue that, even if a duty was owed, there were no damages and thus no liability could result.
See
Park 610 Mem. at 22. As with the fraud claim, DirecTV has sufficiently pled that it was harmed by defendants’ actions
Thus, the Park 610 defendants’ motion to dismiss on this ground should be denied.
IV. ATTACHMENTS
An attachment is allowed in federal court in accordance with “the law of the state where the court is located.” Fed. R.Civ.P. 64. New York law provides that “[a]n order of attachment may be granted in any action ... where the plaintiff has demanded and would be entitled ... to a money judgment against one or more defendants, when ... the defendant is a non-domiciliary residing without the state, or is a foreign corporation not qualified to do business in the state.” N.Y. C.P.L.R. § 6201(1). The party seeking attachment must show “that there is a cause of action, that it is probable that the plaintiff will succeed on the merits, that one or more grounds for attachment provided in section 6201 exist, and that the amount demanded from the defendant exceeds all counterclaims known to the plaintiff.”
Id.
§ 6212(a). “Where a plaintiff obtains an order of attachment, the defendant can move to vacate or modify the order, and its motion will be granted unless the plaintiff can establish also ‘the need for continuing the levy.’ ”
Capital Ventures Int’l v. Republic of Arg.,
“Probability of success on the merits for purposes of an order of attachment requires that the moving party demonstrate that it is more likely than not that it will succeed on its claims and must show proof stronger than that required to make a prima facie case.”
Musket Corp. v. PDVSA Petroleo, S.A.,
Avila’s sole defense to the attachment is that there is no probability of success against him. See Avila Opp’n to Attachment at 5-16. In addition, while Avila has submitted a declaration in opposition to the motion to confirm the attachment, see Avila Decl., he does not in this affidavit contest the key facts underlying DirecTV’s allegations: specifically, the kickback scheme and the plan to transfer indirect ownership of Park 610 from Avila to Zunda and Pratola. Id.; see generally Share Purchase Agreement; Draft Shareholders’ Agreement. Inasmuch as the only evidence put forth in the motion papers relating to the attachment supports DirectTV’s allegations, and given that, for the reasons stated previously, those allegations support claims of fraud and breach of fiduciary duty against Avila, the only conclusion supported by the present record is that “it is more likely than not” that DirecTV will succeed on its claims.
Thus, the motion to confirm the attachment against Avila’s property should be granted. However, due to the dismissal of Pratola on jurisdictional grounds, the motion to confirm the attachment against Pratola should be denied. Similarly, the existing attachment against Clemente’s property should be vacated.
V. CONCLUSION
Pratola’s and Clemente’s motion to dismiss (Docket # 143) should be granted, and the claims against Pratola and Clemente should be dismissed on the ground of lack of personal jurisdiction.
The motion to confirm attachments (Docket # 15) should be granted as to Avila but denied as to Pratola. The attachment of Clemente’s property (Docket # 65) should be vacated.
PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have ten (10) days from service of this Report and Recommendation to serve and file any objections.
See also
Fed.R.Civ.P. 6(a), (b), (d). Such objections (and any responses to objections) shall be filed with the Clerk of the Court, with copies sent to the Hon. Victor Marrero, and to the undersigned, at 500 Pearl Street, New York, New York 10007. Any request for an extension of time to file objections must be directed to Judge Marrero. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal.
See Thomas v. Arn,
Notes
. "Leramar” in these agreements was later changed to "Leraman.” Id. ¶ 59.
. Beginning with the filing of the original complaint, DirecTV obtained orders of attachment against property of Clemente, Zunda, Avila, and Pratola.
See
Orders of Attachment, filed Apr. 29, 2008 (Docket ##3-5, 10-12); Order of Attachment, filed June 5, 2008 (Docket # 25). On May 12, 2008, DirecTV made a motion to confirm the orders of attachment against Zunda, Avila, and Pratola.
See
Notice of Motion to Confirm Orders of Attachment, filed May 12, 2008 (Docket # 15); Hartman Deck; Declaration of Terence W. McCormick, Esq. in Support of Motion to Confirm Orders of Attachment, filed June 12, 2008 (Docket # 17); Memorandum of Law in Support of Plaintiff's Motion to Confirm the Orders of Attachment, filed June 12, 2008 (Docket # 18). On June 18, 2008, Avila filed an opposition to the motion to confirm the attachment against him.
See
Memorandum of Law in Opposition to Plaintiff’s Motion to Confirm an Order of Attachment Obtained Ex Parte, filed June 18, 2008 (Docket # 46) ("Avila Opp’n to Attachment”); Declaration of V. David Rivkin in Opposition to Plaintiff’s Motion to Confirm an Order of Attachment Obtained by Plaintiff Ex Parte, filed June 18, 2008 (Docket #47); Declaration of Carlos V. Avila in Opposition to Plain- ' tiff's Motion to Confirm a Prejudgment Order of Attachment Obtained Ex Parte by Plaintiff, filed June 18, 2008 (Docket #48) ("Avila Deck”). On July 9, 2008, DirecTV filed a reply to the Avila opposition.
See
Memorandum of Law in Reply to Defendant Avila's Opposition to the Motion to Confirm the Order of Attachment, filed July 9, 2008 (Docket # 50). DirecTV's motion to confirm the order of attachment as to Clemente was granted as unopposed.
See
Order, filed Aug. 8, 2008 (Docket # 65). Following the Court’s prior Report and Recommendation,
see DirecTV I,
. See Notice of Motion to Dismiss the Second Amended Complaint, filed June 8, 2009 (Docket # 139); Declaration of Carlos V. Avila in Support of Defendants Park 610, LLC, Carlos V. Avila and Roberto Timistit’s Motion to Dismiss the Second Amended Complaint, filed June 8, 2009 (Docket # 140); Declaration of V. David Rivkin in Support of Defendants Park 610, LLC, Carlos V. Avila and Roberto Timistit's Motion to Dismiss the Second Amended Complaint, filed June 8, 2009 (Docket # 141); Memorandum of Law in Support of Defendants Park 610 LLC, Carlos Vicente Avila and Roberto Timistit's Motion to Dismiss the Second Amended Complaint, filed June 8, 2009 (Docket # 142) (“Park 610 Mem.”); DirecTV's Memorandum of Law in Opposition to the Motion of Defendants Park 610, LLC, Carlos Vicente Avila and Roberto Timistit to Dismiss the Second Amended Complaint, filed June 30, 2009 (Docket #151) ("Opp’n to Park 610”); Reply Memorandum of Law in Further Support of Defendants Park 610 LLC, Carlos Vicente Avila and Roberto Timistit's Motion to Dismiss the Second Amended Complaint, filed July 14, 2009 (Docket # 153) (“Park 610 Reply”); Notice of Motion of Defendants Carlos Pratola and Diego Clemente to Dismiss the Second Amended Complaint or for a Stay of this Action Pending Completion of Legal Proceedings in Argentina, filed June 9, 2009 (Docket # 143); Memorandum of Law in Support of Motion to Dismiss this Action as Against Defendants Carlos Pratola and Diego Clemente or for a Stay of this Action Pending Completion of Legal Proceedings in Argentina, filed June 9, 2009 (Docket # 144) ("Pratola Mem.”); Memorandum of Law in Opposition to Motion by Defendants Pratola and Clemente to Dismiss or for a Stay, filed June 23, 2009 (Docket # 150) ("Opp'n to Pratola”); Reply Memorandum of Law in Further Support of Motion to Dismiss this Action as Against Defendants Carlos Pratola and Diego Clemente or for a Stay of this Action Pending Completion of Legal Proceedings in Argentina, filed June 30, 2009 (Docket# 152).
. The second amended complaint does not specify the location of the JPMorgan bank account. For the purposes of this motion, we will assume that it was in New York inasmuch as this assumption does not affect the outcome.
. Some of the cases listed by DirecTV,
see
Opp'n to Pratola at 16, are contrary to New York Court of Appeals' precedent requiring that defendants be physically present in New York to come within section 302(a)(2),
see Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc.,
. The Court notes that even if there were personal jurisdiction over Pratola and Clemente, the suit against them would properly be dismissed on
forum non conveniens
grounds anyway. In considering the applicability of this doctrine, a court "determines the degree of deference properly accorded the plaintiff’s choice of forum[,] ... considers whether the alternative forum proposed by the defendants is adequate to adjudicate the parties' dispute!, and] balances the private and public interests implicated in the choice of forum.”
Norex Petroleum v. Access Indus., Inc.,
To compare the public and private interests, a court compares "the hardships defendant would suffer through the retention of jurisdiction and the hardships the plaintiff would suffer as the result of dismissal and the obligation to bring suit in another country.”
Iragorri v. United Techs. Corp.,
Finally, a
forum non conveniens
dismissal of Pratola and Clement is appropriate despite the fact that suit would continue as against other defendants. The Court recognizes that "[t]here is a strong policy favoring the litigation of related claims in the same tribunal in order that pretrial discovery can be conducted more efficiently, duplicitous litigation can be avoided, thereby saving time and expense for both parties and witnesses, and inconsistent results can be avoided.”
Wyndham Assocs. v. Bintliff,
. We do not address DirecTV's argument that there was an effective change in control under subdivision (c)(iii), see Opp’n to Park 610 at 15, since that provision was not raised as a basis for liability in DirecTV's second amended complaint.
. Typically, courts apply the law of the state of incorporation to piercing the corporate veil claims.
See Fletcher v. Atex, Inc.,
. Additionally, DirecTV alleges in its second amended complaint that Park 610 violated section 12.1(c) of the Joint Venture Agreement, which requires the members to "cause the Business to be conducted in accordance with . .. the highest ethical standards.” 2d Am. Compl. ¶ 79 n. 8. Because DirecTV’s papers do not discuss this provision, this argument is deemed waived.
. The Park 610 defendants suggest there is nothing that plausibly supports the contention that Avila knew this statement was false when made in the summer of 2006. See Park 610 Mem. at 16. However, there is more than enough information alleged to make this claim plausible, including the fact that the entity created by Pratola to effectuate the transfer of Tumely to Leraman was formed before the diligence meeting, that drafts for the allegedly improper exchange were planned in October 2006, and that the transfer occurred in November 2006. See 2d Am. Compl. ¶¶ 52, 55-57. Further, given that the second amended complaint as a whole describes a kickback scheme, see 2d Am. Compl. ¶¶ 1-3, it is plausible that Avila would have known the future structure of the kickback scheme when the agreement to create CAS was negotiated.
. Nor is the Park 610 defendants' reference to the Join Venture Agreement’s general merger clause,
see
Park 610 Mem. at 17 n. 6 (citing Joint Venture Agreement § 20.13), sufficient to prevent evidence of Avila’s oral statements given that such clauses do not typically block parol evidence of fraud in the inducement of a contract.
See Fierro v. Gallucci,