MVP Asset Management (USA) LLC v. Vestbirk, et al

Filing 105

ORDER signed by Judge Garland E. Burrell, Jr. on 1/6/2012 ORDERING that Defendants' 12(b)(1) motion to dismiss each of Plaintiffs claims for lack of subject matter jurisdiction is GRANTED. Since all claims against Defendants are dismissed, Defen dants' 12(b)(6) and 12(b)(2) motion to dismiss is DENIED as moot. Plaintiff is granted ten (10) days from the date on which this order is filed to file a Third Amended Complaint addressing the issues raised in this order. Further, Plaintiff is notified that this action may be dismissed with prejudice under Federal Rule of Civil Procedure 41(b) if Plaintiff fails to file an amended complaint within the prescribed time period. (Zignago, K.)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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MVP ASSET MANAGEMENT (USA) LLC,
a Delaware Limited Liability
Company,
Plaintiff,

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v.
STEVEN VESTBIRK, JEFF BALLIET,
ALLISON HANSLIK, JIM GRANT, ARK
ROYAL ASSET MANAGEMENT, LTD., a
Bermuda Limited Company,
VESTBIRK CAPITAL MANAGEMENT,
LTD., a Bermuda Limited Company,
ARK ROYAL ASSET MANAGEMENT, LLC,
a Nevada Limited-Liability
Company, ARK DISCOVERY, LLC, a
Business Entity of Unknown Form,
ARK ROYAL HOLDINGS, LLC, a
Nevada Limited-Liability
Company, ARK ROYAL SERVICES,
LLC, a Nevada Limited-Liability
Company, ARK ROYAL CAPITAL, LLC,
a Nevada Limited-Liability
Company, ARK ROYAL CAPITAL
FUNDING, LLC, a Nevada LimitedLiability Company, ARK ROYAL
CAPITAL, INC., a Nevada
Corporation, ARK ROYAL
RESOURCES, LLC, a Nevada
Limited-Liability Company, ARK
ROYAL ASSURANCE LLC, a Nevada
Limited-Liability Company, and
ARK ROYAL INVESTMENTS, LLC, a
Nevada Limited-Liability
Company,
Defendants.
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2:10-cv-02483-GEB-CMK
ORDER

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Defendants move for dismissal of Plaintiff’s Second Amended

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Complaint

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12(b)(1), arguing Plaintiff “did not have Article III standing at the

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time this action was filed.” (Defs.’ Mot. to Dismiss Under Rule 12(b)(1)

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(“Defs.’ Mot.”) 1:5-6; ECF No. 82.) Defendants also seek dismissal of

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Plaintiff’s

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Plaintiff opposes the motions.

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(“SAC”)

SAC

under

under

Federal

Rules

I.

Rule

12(b)(2)

of

and

Civil

Procedure

12(b)(6).

(ECF

(“Rule”)

No.

83.)

LEGAL STANDARD

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“A suit brought by a plaintiff without Article III standing is

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not a ‘case or controversy,’ and an Article III federal court therefore

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lacks subject matter jurisdiction over the suit. In that event, the suit

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should be dismissed under Rule 12(b)(1).” Cetacean Cmty. v. Bush, 386

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F.3d 1169, 1174 (9th Cir. 2004) (citation omitted).

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[T]o satisfy Article III’s standing requirements, a
plaintiff must show that (1) it has suffered an
“injury in fact” that is (a) concrete and
particularized and (b) actual or imminent, not
conjectural or hypothetical; (2) the injury is
fairly traceable to the challenged action of the
defendant; and (3) it is likely, as opposed to
merely speculative, that the injury will be
redressed by a favorable decision.

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Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528

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U.S. 167, 180-81 (2000). Plaintiff has the burden of establishing

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jurisdiction. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377

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(1994).

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“A Rule 12(b)(1) jurisdictional attack may be facial or

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factual.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.

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2004). Defendants argue their 12(b)(1) motion is a facial attack on

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subject matter jurisdiction. (Defs.’ Mot. 7:11.) “In a facial attack,

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the challenger asserts that the allegations contained in a complaint are

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insufficient on their face to invoke federal jurisdiction.” Safe Air for
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Everyone, 373 F.3d at 1039. Therefore, the factual allegations in

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Plaintiff’s SAC are assumed to be true, and all reasonable inferences

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capable of being drawn therefrom are drawn in Plaintiff’s favor. Wolfe

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v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). However, “the tenet

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that a court must accept as true all of the allegations contained in a

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complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 129

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S. Ct. 1937, 1949 (2009).

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II. ALLEGATIONS IN SAC

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Plaintiff MVP Asset Management (USA) LLC (“MVPAM”) alleges it

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is “the investment manager to the MVP Fund of Funds Ltd. (‘MVP’), an

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Investment Company organized and existing under the laws of the British

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Virgin Islands,” and it “brings this action as assignee pursuant to an

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assignment by MVP for collection[.]” (SAC ¶ 3.) Plaintiff further

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alleges:

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On or about March 23, 2004, MVP and MVPAM entered
into an Investment Management Agreement (“IMA”).
Under the IMA, MVP, pursuant to MVP’s Memorandum
and Articles of Association (“M&A”) . . . ,
delegated to MVPAM a general power of attorney
including all powers and discretions to manage the
business and affairs of MVP. Under the IMA MVPAM,
as attorney in fact for MVP, was and is entitled
generally to exercise such powers and discretions
as may be necessary in order to perform the duties
delegated to it by MVP’s directors including, among
other things:

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(a) [to] manage the investment and reinvestment of
the assets of [MVP] with power on behalf of and in
the name of [MVP] to purchase, subscribe or
otherwise acquire investments and to sell, redeem,
exchange, vary or transpose the same;

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(b) to . . . purchase (or otherwise acquire), sell
(or otherwise dispose of) and invest money and
other assets for the account of the Company and
effect foreign exchange transactions in connection
with any such purchase, acquisition, sale or other
disposal;
(c) [to] enter into, make and perform such
contracts, agreements and other undertakings as may
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in the opinion of [MVPAM] be necessary or advisable
or incidental to the carrying out of the functions,
duties, powers and discretions conferred on it
pursuant to [the IMA] and its role as Investment
Manager of [MVP.]

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In making each of the investments, investment
decisions and decisions relating to the investments
alleged herein, MVPAM was acting pursuant to its
authority to manage the business and affairs of
MVP.

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Id. (internal quotations omitted). Plaintiff also alleges:

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In February 2009, MVPAM, pursuant to authority
under the IMA . . . , including its power and
discretion to manage MVP’s business and affairs,
its power and discretion to manage the investment
and reinvestment of . . . MVP’s assets with power
on behalf of and in the name of MVP to sell,
redeem,
exchange,
vary
or
transpose
MVP’s
investments, its power and discretion to sell (or
otherwise dispose of) and invest money and other
assets for the account of the Company, and, its
power and discretion to enter into, make and
perform such contracts, agreements, and other
undertakings it deemed necessary or advisable or
incidental to the carrying out of the functions,
duties, powers and discretions conferred on it
pursuant to the IMA to its role as the manager of
MVP’s business and affairs, and pursuant to its
general power of attorney for MVP, caused MVP to
enter into an agreement with MVPAM under which MVP
assigned its claims arising out of and relating to
the Ark Discovery Fund (“MVP Claims”) to MVPAM for
collection in return for MVPAM’s agreement to
account to MVP for any recovery obtained, net of
the cost of prosecuting the MVP Claims. Stratford,
as the sole voting shareholder of MVP, with the
authority under the M&A to delegate the management
powers of MVP’s Board of Directors, confirmed and
approved on behalf of MVP the assignment of the MVP
Claims for collection to MVPAM. By resolution dated
May 27, 2011, . . . MVP’s Board of Directors
unanimously ratified, confirmed, approved and
adopted in all respects the assignment of the MVP
Claims for collection to MVPAM. As a result of the
assignment, MVPAM holds legal title and MVP holds
beneficial title to the assigned MVP Claims.

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Id. ¶ 87.
III.

DISCUSSION

Defendants seek dismissal of Plaintiff’s SAC, arguing “the
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facts that are alleged establish only that there was, at most, a

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specific power of attorney that was insufficient to provide MVPAM with

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the authority to assign MVP’s claims to itself.” (Defs.’ Mot. 1:15-17.)

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Specifically, Defendants argue “the only authority granted was that

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relevant to management of MVP’s investments, and nothing more.” Id. 9:4-

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5. Further, Defendants argue the description of Investment Manager in

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MVP’s Articles of Association, “[t]he person from time to time appointed

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by the Company to be responsible for the management of the Company’s

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investments[,]” is “consistent with a construction of MVPAM’s powers as

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limited to investment management, and not extending to the assignment of

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claims[.]” Id. (internal citations omitted).

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Plaintiff counters, arguing it alleges that under the IMA,

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“MVP granted MVPAM the power to act, in MVP’s name, to sell or dispose

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of MVP’s assets, including MVP’s causes of action, and to enter into

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contracts, such as assignments, that MVPAM believed are necessary,

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advisable or incidental to its management of MVP’s assets, including

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MVP’s causes of action.” (Pl.’s Opp’n 7:17-21.) Specifically, Plaintiff

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argues MVP “delegated to MVPAM the general powers and discretions

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necessary to manage the business affairs of MVP and the specific powers

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necessary to manage MVP’s assets and investments.” Id. 6:2-4.

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The British Virgin Islands Business Companies Act of 2004
(“Business Companies Act”) provides:
(1) Subject to its memorandum and articles, a
company may, by an instrument in writing appoint a
person as its attorney either generally or in
relation to a specific matter.

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(2) An act of an attorney appointed under
subsection (1) in accordance with the instrument
under which he was appointed binds the company.

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Business Companies Act § 106(1)-(2) (emphasis added).1 Here, MVPAM’s

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alleged power of attorney is specific to managing MVP’s money and assets

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and entering into and performing contracts and agreements. Under the

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Business Companies Act, the term “‘asset’ includes money, goods, [and]

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things

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contingent, arising out of, or incidental to, property.” Id. § 2.

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Therefore, since claims are considered assets under British Virgin

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Islands law, Plaintiff has sufficiently alleged the specific power of

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attorney for MVPAM to manage MVP’s assets, including causes of action.

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in

action,

Defendants

.

.

.

whether

further

argue

present

“the

or

future

assignment

or

as

vested

alleged

or

by

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[Plaintiff] is invalid and unlawful” under British Virgin Island law.

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(Defs.’

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governs MVP’s assignment to pursue claims in California because the

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assignment was made and is being performed in California.” (Pl.’s Opp’n

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8:11-12.) Plaintiff also argues, “[u]nder California law, there is no

Mot.

9:11-12.)

Plaintiff

rejoins,

arguing

“California

law

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Defendants request that the Court take judicial notice of the
law of the British Virgin Islands as set forth in certain sections of
the Business Companies Act and as set forth in the Declaration of James
Corbett QC. (Defs.’ Amended Request for Judicial Notice (“RJN”) 3:7-14;
ECF No. 86.) Plaintiff requests that the Court take “judicial notice of
the law of the British Virgin Islands as set forth in the . . .
Declaration of Arabella di Iorio.” (Pl.’s RJN 2:2-3; ECF No. 90.) While
the Court can take judicial notice of the laws of a foreign country, the
Court will not take judicial notice of those laws as interpreted by the
declarant. See MCA, Inc. v. U.S., 685 F.2d 1099, 1104 n.12 (9th Cir.
1982) (“Under [Rule] 44.1, when the parties have given written notice of
intent to raise an issue of foreign law, a federal court may take
judicial notice of the laws of a foreign country.”). Since MVP is
“organized and existing under the laws of the British Virgin Islands,”
the Court takes judicial notice of the Business Companies Act, “[a]n Act
to provide for the incorporation, management and operation of different
types of companies, [and] for the relationships between companies and
their directors[.]” (SAC ¶ 3; British Virgin Islands Business Companies
A
c
t
o
f
2
0
0
4
,
http://www.bvifsc.vg/LegislationLibrary/tabid/211/DMXModule/626/Defaul
t.aspx?EntryId=55 (follow “BVI Business Companies Act, 2004 (with 2005
Amendments)” and view page 13 of pdf document).)
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requirement that an assignment be in writing.” Id. 9:2 n.5.

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“[A]t this stage of the pleading, [Plaintiff] need only show

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that the facts alleged, if proved, would confer standing upon [it].”

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Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1140 (9th Cir.

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2003). However, as argued by Defendants in their reply brief, the SAC

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“fails to include any allegation demonstrating that California law

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should apply to the construction of the purported assignment”; rather,

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it is only offered as an argument in Plaintiff’s opposition brief.

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(Defs.’ Reply 14:3-4.) Therefore, the Court cannot assume as true that

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the assignment was made and is being performed in California.

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Further, “[i]n an action involving an assignment, a court must

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ensure that the plaintiff-assignee is the real party in interest with

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regard to the particular claim involved by determining: (1) what has

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been assigned; and (2) whether a valid assignment has been made.” In re

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Brooms, 447 B.R. 258, 265 (9th Cir. 2011). However, Plaintiff’s bare

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allegation that “[i]n February 2009, MVPAM . . . caused MVP to enter

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into an agreement with MVPAM under which MVP assigned its claims arising

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out of and relating to the Ark Discovery Fund . . . to MVPAM for

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collection” is insufficient to determine whether a valid assignment has

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been made. (SAC ¶ 87; Cf. In re Brooms, 447 B.R. at 264 (stating the

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court

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reflecting the terms of the assignment between Carter and Jorgenson.”).)

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“did

not

err

when

it

IV.

ordered

Carter

to

produce

documents

CONCLUSION

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Therefore, Defendants’ 12(b)(1) motion to dismiss each of

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Plaintiff’s claims for lack of subject matter jurisdiction is GRANTED.

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Since all claims against Defendants are dismissed, Defendants’ 12(b)(6)

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and 12(b)(2) motion to dismiss is DENIED as moot.

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Plaintiff is granted ten (10) days from the date on which this
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order is filed to file a Third Amended Complaint addressing the issues

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raised in this order. Further, Plaintiff is notified that this action

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may be dismissed with prejudice under Federal Rule of Civil Procedure

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41(b) if Plaintiff fails to file an amended complaint within the

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prescribed time period.

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Dated:

January 6, 2012

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GARLAND E. BURRELL, JR.
United States District Judge

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