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

Filing 78

ORDER signed by Judge Garland E. Burrell, Jr. on 9/21/2011. MVPAM is granted 10 days from date this Order to file a Second Amended Complaint addressing issues raised. Further, MVPAM is notified that action may be dismissed with prejudice under Federal Rule of Civil Procedure 41(b) if they fail to file an Amended Complaint w/in prescribed time period. (Marciel, M)

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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,

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Plaintiff,
v.
STEVEN VESTBIRK, JEFFREY BALLIET
aka JEFF BALLIET, ALLISON
HANSLIK, JAMES GRANAT aka JIM
GRANAT, 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 Texas 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, and DOES 1 through 10,
inclusive,
Defendants.
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2:10-cv-02483-GEB-CMK
ORDER

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Certain Defendants move for dismissal of Plaintiff’s First

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Amended Complaint (“FAC”) under Federal Rule of Civil Procedure (“Rule”)

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12(b)(1). (ECF No. 56.) Defendants argue, inter alia, that Plaintiff MVP

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Asset Management (USA) LLC (“MVPAM”) lacks Article III standing to

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pursue this securities fraud action since MVPAM “has failed to properly

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allege its putative standing as an assignee to assert claims purportedly

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held by MVP.” (Mot. to Dismiss under 12(b)(1) (“Mot.”) 1:13-14.) MVPAM

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opposes the motion. (ECF No. 64.)

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I. 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.

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ordinarily depends on the facts as they exist when the complaint is

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filed.” Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830 (1989).

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Plaintiff has the burden of establishing jurisdiction. See Kokkonen v.

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Guardian Life Ins. Co., 511 U.S. 375, 377 (1994).

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167,

180-81

(2000).

“The

existence

of

federal

jurisdiction

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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). “In a facial attack, the challenger asserts that the allegations
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contained in a complaint are insufficient on their face to invoke

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federal jurisdiction. By contrast, in a factual attack, the challenger

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disputes

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otherwise invoke federal jurisdiction.” Id.

the

truth

of

the

allegations

that,

by

themselves,

would

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Defendants argue their motion is both a facial and a factual

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attack on subject matter jurisdiction. (Mot. 5:11-13, 20-22.) Since

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Defendants prevail on their facial attack arguments, only this portion

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of

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Plaintiff’s FAC 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).

the

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motion

is

reached.

Therefore,

the

factual

allegations

in

II. ALLEGATIONS IN FAC

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MVPAM alleges it is “the investment manager to the MVP Fund of

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Funds Ltd. (“MVP”), an Investment Company organized and existing under

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the laws of the British Virgin Islands, with unrestricted decision

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making authority to control, and act as MVP’s attorney-in-fact with

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respect to, all investments and litigation relating thereto.” (FAC ¶ 3

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(emphasis added).) MVPAM alleges it “brings this action as assignee

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pursuant to an assignment by MVP for collection[.]” Id. MVPAM further

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alleges:

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In February 2009, pursuant to its power of attorney
for MVP . . . , MVPAM 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 to bind MVP, confirmed and approved on
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behalf of MVP 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.

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III. REQUEST FOR JUDICIAL NOTICE

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Since MVP is “organized and existing under the laws of the

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British Virgin Islands,” the law of the Brith Virgin Islands applies

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when interpreting MVP’s Articles of Association and corporate actions.

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(FAC ¶ 3.) Defendants request that the Court take judicial notice of

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“the law of the British Virgin Islands as set forth in the Declaration

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of Michael Fay[.]” (Request for Judicial Notice (“RJN”) 5:14-17, ECF No.

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58; Mot. 26:9-18.) While the Court can take judicial notice of the laws

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of a foreign country, the Court will not take judicial notice of those

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laws as interpreted by the declarant. See MCA, Inc. v. U.S., 685 F.2d

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1099, 1104 n.12 (9th Cir. 1982) (“Under Federal Rule of Civil Procedure

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44.1, when the parties have given written notice of intent to raise an

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issue of foreign law, a federal court may take judicial notice of the

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laws of a foreign country.”). Therefore, the Court takes judicial notice

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of the British Virgin Islands Business Companies Act of 2004 (“british

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Virgin

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management and operation of different types of companies, [and] for the

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relationships between companies and their directors[.]” British Virgin

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Islands Business Companies Act of 2004, http://www.bvifsc.vg/Legislation

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Library/tabid/211/DMXModule/626/Default.aspx?EntryId=55

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Business Companies Act, 2004 (with 2005 Amendments)” and view page 13 of

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pdf document).

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Island

law”),

“[a]n

Act

to

provide

for

the

incorporation,

(follow

“BVI

IV. DISCUSSION

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Defendants argue, inter alia, that “the power of attorney,

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even as alleged . . . , does not grant MVPAM the authority to transfer
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MVP’s property, or specifically a chose in action, from MVP to MVPAM[

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since] . . . [t]he alleged power of attorney speaks only to control over

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investments and litigation, not rights to transfer property[.]” (Mot.

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9:3-5, 7-8.) MVPAM counters: “[as MVP’s] attorney-in-fact, [it] has the

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power

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litigation[,]” and “the assignment of [MVP’s] Ark Discovery claims for

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collection is a contract relating to the Ark Discovery investments and

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the related litigation.” (Opp’n 4:5-8.) Defendants reply that “such

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arguments are mere legal conclusions that contradict case law and are

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inconsistent with the scope of the power of attorney as actually

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alleged.” (Reply 3:22-23.)

to

bind

[MVP]

to

contracts

governing

investments

and

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MVPAM alleges it has power of attorney “with respect to[] all

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investments and litigation relating thereto.” (FAC ¶ 3.) British Virgin

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Islands law provides that:

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(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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British Virgin Islands Business Companies Act of 2004, page 70, §

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106(1)-(2) (emphasis added). MVPAM’s alleged power of attorney is not a

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general power of attorney, it is specific to investments and litigation

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related to those investments. As alleged, MVPAM’s specific power of

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attorney does not establish that MVPAM has the power to assign MVP’s

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claims.

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Defendants

further

argue

the

sole

voting

shareholder’s

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purported

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purported shareholder ratification is not premised upon allegations of

ratification

does

not

save

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the

assignment

since

“this

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fact, but instead on conclusions of law that need not be accepted as

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true.” Id. 11:22, 12:10-11. Defendants also argue “this allegation runs

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contrary to MVP’s governing documents as well as the law of the British

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Virgin Islands[ since] MVP’s Articles of Association provide that its

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business is to be conducted through its Directors, not its shareholders”

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and “the law of the British Virgin Islands requires a company’s business

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to be conducted through its directors, not its shareholders.” Id. 12:13-

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18.

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MVPAM alleges that “Stratford, as the sole voting shareholder

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of MVP with the authority to bind MVP, confirmed and approved on behalf

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of MVP the assignment of the MVP Claims for collection to MVPAM.” (FAC

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¶ 87.) However, this allegation contains factual allegations and a legal

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conclusion that the sole voting shareholder of MVP has the authority to

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bind MVP. Only the factual allegations are assumed to be true.

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British Virgin Island law provides that:

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(1) The business and affairs of a company shall be
managed by, or under the direction or supervision
of, the directors of the company.

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(2) The directors of a company have all the powers
necessary for managing, and for directing and
supervising, the business and affairs of the
company.

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(3) Subsections (1) and (2) are subject to any
modifications or limitations in the memorandum or
articles.

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British Virgin Islands Business Companies Act of 2004, page 70-71, §
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109(1)-(3) (emphasis added). Therefore, under British Virgin Islands
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law, the directors of

MVP have the power to manage, direct, and

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supervise the business and affairs of MVP, unless MVP has modified this
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general rule in its Articles of Association. MVPAM has not alleged that
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MVP’s Articles of Association modified the general rule as set forth in
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the Act. Therefore, MVP’s directors have the power to confirm MVPAM’s
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assignment of MVP’s claims, and the shareholder’s confirmation does not

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bind MVP and make MVPAM’s assignment valid. Since MVPAM’s allegations

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are insufficient to allege a valid assignment, MVPAM has not established

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Article III standing. Therefore, Defendants’ motion under Rule 12(b)(1)

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is GRANTED.

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V. CONCLUSION

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MVPAM is granted ten (10) days from the date on which this

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order is filed to file a Second Amended Complaint addressing the issues

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raised in this order. Further, MVPAM is notified that this action may be

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dismissed with prejudice under Federal Rule of Civil Procedure 41(b) if

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MVPAM fails to file an amended Complaint within the prescribed time

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period.

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Dated:

September 21, 2011

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GARLAND E. BURRELL, JR.
United States District Judge

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