Atlanta Fiberglass USA, LLC v. KPI, Co., Ltd.

Filing 36

ORDER granting 35 Motion for Leave to File Short Surreply in Opposition to Plaintiffs Motion for Leave to Amend the Complaint and to AddParties. Granting in part and denying in part 15 Motion to Dismiss. It is GRANTED with respect to AFGs cl aims for tortious interference with business relations (Count III); tortious interference with contractual relations (Count IV); and violation of the Sherman Antitrust Act and Clayton Act (Count VIII). It is DENIED with respect to AFGs claim for brea ch of contract (Count I), but only as to the theory that KPI failed to give AFG reasonable notice of its intent to terminate the alleged agreement; defamation (Count II); misappropriation of trade secrets (Count VI) and injunctive relief (Count VII) ; and, finally, for violation of the Georgia law prohibition against contracts in restraint of trade (Count IX). Finally, it is GRANTED with respect to AFGs claim for fraud based on the Harmonized Systems Code (Count III) but denied with respect to AFGs claim for fraud based on KPIs alleged failure to ship promised goods (Count III). Denying as moot 17 Motion for Discovery. Granting in Part and Denied in Part 26 Motion for Leave to File a Second Amended Complaint is GRANTED as to KPI, but AFGs Motion to Add Parties, S.K. Hwang and Hyo Kyung Cho 26 is DENIED. Signed by Judge Richard W. Story on 11/28/2012. (bdb)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
ATLANTA FIBERGLASS USA,
LLC, a Georgia Limited Liability
Company,
Plaintiff,
v.
KPI, CO., LTD., a Korean
Company,
Defendant.

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CIVIL ACTION NO.
1:11-CV-04367-RWS

ORDER
This case comes before the Court on Defendant KPI, Co., LTD’s (“KPI”)
Motion to Dismiss [15]; KPI’s Motion for Discovery [17]; Plaintiff Atlanta
Fiberglass USA, LLC’s (“AFG”) Motion for Leave to File Second Amended
Complaint and to Add Parties, S.K. Hwang and Hyo Kyung Cho [26]; and
KPI’s Motion for Leave to File Short Sur-Reply in Opposition to Plaintiff’s
Motion for Leave to Amend the Complaint and to Add Parties [35]. After
reviewing the record, the Court enters the following Order.
Background1
1

As the case is before the Court on a Motion to Dismiss, the Court accepts as
true the facts alleged in the complaint. Cooper v. Pate, 378 U.S. 546, 546 (1964).

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This case arises out of KPI’s alleged breach of an exclusive business
agreement with AFG governing the manufacture and sale of fiberglass fabric.
Plaintiff AFG is a Georgia Limited Liability Company (“LLC”) with its
principal place of business in the state of Georgia. (Compl., Dkt. [1] ¶ 1.)
Defendant KPI is a Korean company that manufactures fiberglass fabric. (Id. ¶
6.) Prior to events giving rise to this litigation, the principal of AFG, Mr.
Mandanjit Oberoi, had successfully built state of the art fiberglass
manufacturing facilities in India, Israel, and Thailand, thereby acquiring a
substantial marketing and sales platform. (Id. ¶ 11.)
In 1995, following its unsuccessful attempts to enter the United States
commercial market for fiberglass fabric, KPI approached AFG and requested
that AFG enter into an exclusive sales and product development arrangement
with KPI, the purpose of which was to enable KPI to penetrate the United States
market. (Id. ¶¶ 7-10.) Thus, in 1996, KPI and AFG entered into an exclusive
business agreement, whereby:
(a)

KPI agreed to manufacture all of the products required by
AFG for sale in the United States,

(b)

KPI agreed to sell exclusively to AFG in the United States,

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(c)

AFG agreed to sell KPI goods to both end-users and
distributors or resellers known to or developed by AFG, and

(d)

AFG agreed to assist end-users and re-sellers in developing
new technologies and specific fiberglass fabric products for
exclusive manufacture by KPI.

(Id. ¶ 13.) In 2004, AFG was formally organized for business tax purposes and
the agreement between Mr. Oberoi and KPI was assigned to AFG with the full
consent of KPI.2 (Id. ¶ 14.) At all times since the formal organization of AFG,
the parties have continued to perform the agreement in the same manner as they
have done since 1996. (Id. ¶ 15.)
At the time the agreement was entered into, KPI manufactured only one
type of fiberglass fabric for the United States market. (Id. ¶ 16.) At all times
during which the parties completely performed the agreement, the parties
understood:
(a)

that KPI would retain no intellectual property ownership in
the technology and products developed by AFG and its end
users,

2

Based on this allegation, it appears that the exclusive business agreement
entered into in 1996 was originally between Mr. Oberoi and KPI, rather than AFG and
KPI. (Compare Compl. ¶ 13 (alleging that AFG and KPI entered into exclusive
business agreement in 1996) with Compl. ¶ 14 (alleging that AFG formally was
organized in 2004 and agreement entered into by Mr. Oberoi and KPI assigned to
AFG).)
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(b)

that KPI would not sell products manufactured utilizing the
technology and products developed by AFG and its end
users to any person or entity other than AFG, and

(c)

that KPI was granted only a limited license to use the
technology to manufacture the materials ordered by AFG for
its end-users.

(Id. ¶ 16.) Since 1996, AFG and its customers in the United States jointly have
developed more than forty-six (46) different styles and types of fiberglass
fabric. (Id. ¶ 17.) In each instance, the intellectual property and technical
knowledge of the end-user were licensed to KPI, on a limited basis, so KPI
could manufacture the newly developed product for the exclusive use of AFG
and the end-user. (Id.) During the fifteen years in which the parties fully
performed their agreement, AFG purchased millions of yards of fiberglass
fabric from KPI and was KPI’s only United States customer. (Id. ¶¶ 19-20, 22.)
In March 2011, KPI suggested to AFG that the two circumvent AFG’s
network of distributors and re-sellers in order to gain the economic benefit of
“cutting out the middle man.” (Id. ¶ 21.) AFG refused. (Id.) On November
18, 2011, knowing that Mr. Oberoi would be unavailable for two weeks due to
his travel schedule, KPI sent AFG an email, informing AFG of its intention to
materially breach the agreement in a number of ways. (Id. ¶ 23.) In particular,
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KPI informed AFG that it would no longer sell any products to AFG, including
those that had been developed by AFG and its customers, and that it
immediately would inform all of AFG’s customers known to KPI that it would
no longer sell to AFG but would sell to them directly instead. (Id. ¶ 23.)
Immediately thereafter, KPI began contacting AFG’s customers,
including but not limited to Alpha Associates, Inc. (“Alpha”) of Lakewood,
New Jersey, which company had historically purchased millions of dollars of
products per year from AFG. (Id. ¶ 24.) KPI informed Alpha that it was no
longer selling goods to AFG; that it would now sell directly to Alpha; and that it
was no longer selling to AFG because AFG had failed to pay its invoices in a
timely manner—which assertion AFG alleges was false. (Id.) KPI also
revealed to Alpha and others proprietary pricing information of AFG. (Id.) As
a result of KPI’s breach of its agreement with AFG, AFG has suffered both
monetary and non-monetary damages, including, but not limited to, loss of
customer goodwill. (Id. ¶ 25.)
As a result of the foregoing, AFG filed a Complaint in this Court, raising
claims for breach of contract (Count I); defamation (Count II); tortious
interference with business relations (Count III); tortious interference with
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contractual relations (Count IV); fraud (Count V); misappropriation of trade
secrets (Count VI); and for injunctive relief (Count VII). (See generally Dkt.
[1].) AFG also filed an Amended Complaint, which incorporates by reference
the claims raised in the original Complaint and raises new claims for violation
of the Sherman Antitrust Act, 15 U.S.C. § 1, et seq., and Clayton Act, 15 U.S.C.
§ 14 (Count VIII) and the Georgia law prohibition against contracts in restraint
of trade, codified at O.C.G.A. § 13-8-2 (Count IX). (See generally Dkt. [10].)3
KPI now moves to dismiss the Amended Complaint for failure to state a
claim upon which relief may be granted, pursuant to Federal Rule of Civil
Procedure (“Rule”) 12(b)(6). (See generally Dkt. [15].) AFG moves for leave
of Court to file a Second Amended Complaint to add as party Defendants S.K.
Hwang and Hyo Kyung Cho, the owners of KPI, and to add a claim for
fraudulent transfer, based on the new allegation that KPI is actively involved in
a fraudulent scheme to transfer its assets to other entities and render itself
judgment-proof.4 (See generally Dkt. [26].) The Court considers these
3

The Court refers to the original Complaint [1] and Amended Complaint [10]
collectively as the “Amended Complaint.”
4

Also before the Court are KPI’s Motion for Discovery [17] and Motion for
Leave to File Short Sur-Reply in Opposition to Plaintiff’s Motion for Leave to Amend
the Complaint and to Add Parties [35].
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motions, in turn.
Discussion
I.

KPI’s Motion to Dismiss [15]
As stated above, KPI moves to dismiss AFG’s Amended Complaint for

failure to state a claim, pursuant to Rule 12(b)(6). The Court sets out the legal
standard governing a Rule 12(b)(6) motion to dismiss before considering KPI’s
motion on the merits.
A.

Legal Standard

Federal Rule of Civil Procedure 8(a)(2) requires that a pleading contain a
“short and plain statement of the claim showing that the pleader is entitled to
relief.” While this pleading standard does not require “detailed factual
allegations,” “labels and conclusions” or “a formulaic recitation of the elements
of a cause of action will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In order to
withstand a motion to dismiss, “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Id. (quoting Twombly, 550 U.S. at 570). A complaint is plausible on its face

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when the plaintiff pleads factual content necessary for the court to draw the
reasonable inference that the defendant is liable for the conduct alleged. Id.
At the motion to dismiss stage, “all-well pleaded facts are accepted as
true, and the reasonable inferences therefrom are construed in the light most
favorable to the plaintiff.” Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273
n.1 (11th Cir. 1999). However, the same does not apply to legal conclusions set
forth in the complaint. Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260
(11th Cir. 2009) (citing Iqbal, 556 U.S. at 678). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678. Furthermore, the court does not “accept as
true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at
555.
B.

Discussion

In the Amended Complaint, AFG raises the following claims: breach of
contract (Count I); defamation (Count II); tortious interference with business
relations (Count III); tortious interference with contractual relations (Count IV);
fraud (Count V); misappropriation of trade secrets (Count VI); a claim for
injunctive relief (Count VII); for violation of the Sherman Antitrust Act and
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Clayton Act (Count VIII); and for violation of the Georgia law prohibition
against contracts in restraint of trade (Count IX). The Court considers KPI’s
Motion to Dismiss as to each claim, in turn.
1.

Breach of Contract (Count I)

The allegations of AFG’s claim for breach of contract are as follows: In
1996, AFG and KPI (or Mr. Oberoi and KPI) entered into an exclusive business
agreement whereby the parties agreed to the following:
(a)

KPI agreed to manufacture all of the products required by
AFG for sale in the United States,

(b)

KPI agreed to sell excusively to AFG and to no other
persons or entities in the United States,

(c)

AFG agreed to sell KPI goods to both end-users and
distributors or resellers known to or developed by AFG, and

(d)

AFG agreed to assist end-users and re-sellers in developing
new technologies and specific fiberglass fabric products for
exclusive manufacture by KPI under license.

(Am. Compl., Dkt. [1] ¶ 27.) The parties fully performed this agreement for
fifteen years, until KPI’s breach on November 18, 2011. (Id. ¶¶ 28-29.) On
that date, KPI notified AFG of its intention to materially breach the agreement
by refusing to sell any products to AFG, including those that had been

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developed by AFG and its customers, and by notifying known customers of
AFG that KPI would not longer sell to AFG but, rather, would sell to them
directly. (Id. ¶ 29.) KPI thus began contacting AFG customers, including, but
not limited to, Alpha. (Id. ¶ 30.) KPI informed Alpha that it would no longer
sell to AFG but, instead, would sell to Alpha directly. (Id. ¶ 30.) KPI also
disclosed to Alpha proprietary pricing information of AFG. (Id. ¶ 31.) KPI
falsely represented to Alpha that the reason it would not sell to AFG was that
AFG failed to pay its invoices in a timely manner. (Id. ¶¶ 24, 30.) As a result
of KPI’s breach, AFG has suffered damages, including lost customer goodwill.
(Id. ¶ 25, 32.)
KPI moves to dismiss AFG’s claim for breach of contract on several
grounds, including on grounds that the alleged agreement was of indefinite
duration and therefore terminable at will by either party. (KPI’s Br. in Supp. of
Mot. to Dismiss (“KPI’s Br.”), Dkt. [15-1] at 13-14.) The Court agrees. Under
Article 2 of the Uniform Commercial Code,5 “Where the contract provides for
successive performances but is indefinite in duration it is valid for a reasonable

5

The UCC applies to “transactions in goods” and therefore governs the parties’
dispute in this case. O.C.G.A. § 11-2-102.
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time but unless otherwise agreed may be terminated at any time by either
party.” O.C.G.A. § 11-2-309(2). This provision is qualified only by the
following: “Termination of a contract by one party except on the happening of
an agreed event requires that reasonable notification be received by the other
party . . . .” O.C.G.A. § 11-2-309(3).
The allegations of the Amended Complaint demonstrate that the alleged
“exclusive business agreement” was for an indefinite duration. Accordingly,
under the provisions cited above, the agreement was terminable at will by either
party, subject only to reasonable notice being given to the other. Because the
agreement was terminable at will, KPI’s alleged termination of the agreement
cannot, by itself, give rise to a claim for breach of contract. At this stage in the
litigation, however, the Court cannot determine whether KPI gave AFG
“reasonable” notice of its intent to terminate. While AFG alleges that KPI
notified it on November 18, 2011 of its intention to terminate the agreement, the
Court is unable to determine whether this notice was “reasonable.”
Accordingly, KPI’s Motion to Dismiss is DENIED with respect to the breach
of contract claim, to the extent the claim is based on this issue of reasonable
notice.
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2.

Defamation (Count II)

AFG’s claim for defamation is based on the allegation that KPI falsely
represented to customers of AFG that AFG failed to pay its invoices in a timely
manner. (Am. Compl., Dkt. [1] ¶ 34.) AFG alleges that this representation was
false, as AFG at all times has paid its invoices in a timely fashion. (Id. ¶ 35.)
AFG further alleges that KPI made this representation intentionally and
maliciously, with the intent of damaging AFG’s reputation and customer
goodwill, as the representation impugns the trustworthiness of AFG. (Id. ¶ 36.)
Finally, AFG alleges that it has suffered damages as a result of KPI’s
misrepresentations. (Id. ¶ 37.)
KPI moves to dismiss this claim, first on grounds that AFG has failed to
plead sufficient facts to make a plausible showing–under Twombly and
Iqbal–of defamation. (KPI’s Br., Dkt. [15-1] at 18-20.) In this regard, KPI
contends that AFG has failed to allege “who at KPI made the statement, to
whom the statement was made, when the statement was made, or whether the
statement was oral or written.” (Id. at 18.) KPI further argues that under
Georgia law, a corporation cannot be held liable for defamation perpetrated by
an agent unless it is shown that the corporation expressly directed the agent to
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speak. (Id. at 19 (citing cases).) KPI contends that because AFG has not
alleged that “KPI expressly directed the making of the alleged statement,”
AFG’s claim for defamation fails. (Id.)
Under Georgia law, “[t]o establish a cause of action for defamation, a
plaintiff must submit evidence of (1) a false and defamatory statement about
himself; (2) an unprivileged communication to a third party; (3) fault by the
defendant amounting at least to negligence; and (4) special damages or
defamatory words injurious on their face.” Lewis v. Meredith Corp., 667
S.E.2d 716, 748 (Ga. Ct. App. 2008) (internal quotations and citation omitted).
“To establish a cause of action, the defamatory statement must be published.”
Id. (citation omitted). KPI argues that a corporation cannot be held liable for
defamation under Georgia law absent the added allegation that the corporation
expressly directed the corporate agent to speak the defamatory words. (KPI’s
Br., Dkt. [15-1] at 18-19.) In support of this argument, KPI cites Word Ins. Co.
v. Peavy, where the Georgia Court of Appeals held as follows:
A corporation is not liable for damages resulting from the speaking
of false, malicious, or defamatory words by one of its agents, even
where, in uttering such words, the speaker was acting for the
benefit of the corporation, and within the scope of the duties of the
agency, unless it affirmatively appears that the agent was expressly
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directed or authorized by the corporation to speak the words in
question. There is authority for the proposition that a corporation
may be held liable for the publication of a libel; but it cannot be
held responsible for a slander perpetrated by an agent, unless it be
affirmatively shown that the corporation, as such, expressly
directed the agent to speak the identical words used by him. As the
petition did not contain any allegation that the defendant
corporation expressly ordered and directed the officer to use the
very words which he did use, no cause of action was set forth.
139 S.E.2d 155, 156 (Ga. Ct. App. 1964).
The Court finds that at the motion to dismiss stage of the litigation, AFG
has alleged sufficient facts to state a plausible claim for defamation. AFG has
alleged a false and defamatory statement, i.e., that AFG failed to pay its
invoices in a timely fashion. (Am. Compl., Dkt. [1] ¶ 34.) AFG further has
alleged that this statement was made to customers of AFG, including but not
limited to Alpha, intentionally and with malice and with the intent to damage
AFG’s reputation and goodwill. (Id. ¶ 36.) Finally, AFG has alleged that the
words were injurious on their face as they “impugn[ed] the trustworthiness of
AFG to conduct business and to pay its obligations in a timely manner.” (Id. ¶
36.) Moreover, viewing the allegations in the light most favorable to AFG, and
drawing all reasonable inferences therefrom, AFG has alleged that KPI itself,
not simply an agent, directed the making of the defamatory statement. (See id.
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¶ 34 (“In its communication with the customers of AFG, KPI has told the
customers that one of the reasons for the purported ‘termination’ of AFG and of
KPI’s refusal to sell any more products to AFG was an allegation by KPI that
AFG failed to pay its invoices to KPI in a timely manner.” (emphasis added)).)
In sum, at this stage in the litigation, AFG has alleged sufficient facts to make a
plausible showing of defamation. KPI’s Motion to Dismiss therefore is
DENIED as to this claim.
3.

Tortious Interference with Business Relations (Count III)
and Tortious Interference with Contractual Relations (Count
IV)

AFG’s claims for tortious interference with business and contractual
relations are based on the following allegations:
In its efforts to unlawfully interfere with the long-existing
relationships among AFG and its customers, KPI acted improperly
without privilege or permission . . . [and] refused to honor its
agreement to sell products to AFG, thus preventing AFG from
fulfilling the contracts it currently has in place with its customers
....
(Am. Compl., Dkt. [1] ¶ 39.)
KPI intentionally, maliciously, and without privilege or permission
took actions by breaching its agreement with AFG so that AFG
would not be able to fulfill its obligations to its end users under
existing supply contracts.
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(Id. ¶ 45.) (See also id. ¶¶ 40, 46 (“The intent of KPI was to remove AFG from
the economic equation . . . .”); ¶¶ 41, 47 (“The effort of KPI was specifically
intended to induce AFG’s customers to cease their existing business
relationships with AFG and to instead enter into a business relationship with
KPI.”).) KPI moves to dismiss these claims on two grounds: first, on grounds
that AFG has failed to identify with which business relations or contracts KPI is
alleged to have tortiously interfered and, second, on grounds that AFG has
failed to show that KPI acted “without privilege.” (KPI’s Br., Dkt. [15-1] at 2022.)
Under Georgia law, “[t]ortious interference claims, whether asserting
interference with contractual relations, business relations, or potential business
relations, share certain common essential elements[:]”
(1) improper action or wrongful conduct by the defendant without
privilege; (2) the defendant acted purposely and with malice with
the intent to injure; (3) the defendant induced a breach of
contractual obligations or caused a party or third parties to
discontinue or fail to enter into an anticipated business relationship
with the plaintiff; and (4) the defendant’s tortious conduct
proximately caused damage to the plaintiff.
Fortson v. Brown, 690 S.E.2d 239, 241 (Ga. Ct. App. 2010) (citation omitted).
“The first element’s requirement that the tortfeasor acted ‘without privilege’
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requires proof that the defendant was an intermeddler or ‘stranger’ to the
business relationship at issue.” ASC Constr. Equip. USA, Inc. v. City
Commercial Real Estate, Inc., 693 S.E.2d 559, 564 (Ga. Ct. App. 2010)
(citation omitted). “An entity that is a party to an interwoven contractual
arrangement is not a stranger to any of the contracts or business relationships
that are part of the contractual arrangement and cannot be held liable for
tortious interference with any of those contracts or business relationships.” Id.
(internal quotations and citations omitted). See also Disaster Servs., Inc. v.
ERC Partnership, et al., 492 S.E.2d 526, 529 (Ga. Ct. App. 1997) (“Where . . . a
defendant had a legitimate interest in either the contract or a party to the
contract, the defendant is not a stranger to the contract, although the defendant
is a non-signor of a particular contract, it is not a stranger to the contract itself
or to the business relationship giving rise thereto and underpinning the
contract.”).
The Court finds that AFG’s claims for tortious interference fail as a
matter of law. As KPI correctly argues, it is clear from the allegations of the
Amended Complaint that KPI was not a stranger to the contracts between AFG
and the latter’s customers, with which KPI allegedly interfered. On the
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contrary, AFG has alleged an “interwoven contractual relationship,” according
to which (1) AFG agreed to assist its customers in developing technologies and
products for exclusive manufacture by KPI; (2) KPI agreed to manufacture
those products exclusively for AFG; and (3) AFG agreed to sell those products
to its customers. (Am. Compl., Dkt. [1] ¶¶ 16, 27.) The interwovenness of
these contractual relationships is further demonstrated by AFG’s allegation that
KPI’s breach of its agreement with AFG “prevent[ed] AFG from fulfilling the
contracts it currently has in place with its customers . . . .” (Id. ¶ 39.) Because
it appears from the allegations of the Amended Complaint that KPI was not a
stranger to AFG’s contracts with its customers, AFG’s claims for tortious
interference fail as a matter of law. KPI’s Motion to Dismiss therefore is
GRANTED as to these claims.

4.

Fraud (Count V)

In Count V, AFG raises two claims for fraud, the first predicated on the
“Harmonized Systems Code” used by the United States Customs Department
and KPI’s alleged misclassification of goods on commercial invoices, and the
second based on KPI’s alleged misrepresentation that goods had been or would
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be shipped to AFG. (See generally Am. Compl., Dkt. [1] ¶¶ 50-64.) The
allegations of the first fraud claim are as follows: For more than fifteen years,
KPI represented to AFG that it was experienced in the exporting of fiberglass
fabric. (Id. ¶ 51.) KPI further represented that as the manufacturer, it possessed
special knowledge regarding the classification of its fiberglass products
according to the Harmonized Systems Code, used by the United States Customs
Department to insure proper classification and subsequent payment of customs
duties on goods sold to AFG. (Id. ¶¶ 51, 53.) AFG relied on KPI to prepare
documentation for and ship the goods to AFG. (Id. ¶ 54.)
Thus, for more than fifteen years, KPI produced the commercial invoices
for delivery to AFG, which invoices included the Harmonized Code number for
entry of the goods and payment by AFG of duties imposed by the Department
of Customs. (Id. ¶ 52.) AFG set its prices, in part, based on the duties owed to
the Department of Customs. (Id. ¶ 55.) In 2009, the Department of Customs
conducted an audit of KPI’s shipments to AFG and determined that KPI had
misclassified the goods shipped, such that AFG became responsible for
$400,000.00 in additional customs duties and penalties. (Id. ¶ 56.)

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In support of its second fraud theory, AFG alleges that “in September and
October 2011, while planning to tortiously interfere with AFG’s business
relationships and contracts and to unlawfully terminate the agreement between
AFG and KPI, KPI made affirmative statements to AFG that certain materials
had been or would be shipped to AFG during the months of November and
December.” (Id. ¶ 57.) As part of its fraudulent scheme, KPI issued pro forma
invoices and advised AFG of purportedly planned shipping details. (Id. ¶ 58.)
AFG relied on KPI’s representations and therefore did not seek alternative
sources of materials needed to fulfill its agreements with its customers. (Id. ¶
60.) In November 2011, however, AFG learned that KPI, in fact, had not
shipped the previously promised goods, “thus deceiving . . . AFG while KPI
bypassed AFG and solicited AFG’s customers.” (Id. ¶ 61.)
Under Georgia law, “[t]he tort of fraud has five elements: (1) a false
representation or omission of a material fact; (2) scienter; (3) intent to induce
the party claiming fraud to act or refrain from acting; (4) justifiable reliance;
and (5) damages.” Home Depot U.S.A., Inc. v. Wabash Nat. Corp., 724 S.E.2d
53, 60 (Ga. Ct. App. 2012) (internal quotation marks and citation omitted). The
Court finds that AFG has failed to state a claim for fraud based on the
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Harmonized Systems Code but has stated a plausible claim for fraud based on
the allegation that KPI failed to ship promised goods.
AFG’s claim for fraud based on the Harmonized Systems Code fails
because AFG has not alleged two essential elements of the claim—scienter or
intent on the part of KPI to induce AFG to act or refrain from acting. In
particular, AFG has not alleged that KPI knew the Harmonized Codes were
incorrect or that KPI intended to induce AFG to act or refrain from acting based
on the Codes it provided. Accordingly, AFG has not alleged the requisite
scienter or intent to state a claim for fraud based on the Harmonized Systems
Code.
With respect to AFG’s second fraud theory, however, AFG has alleged
each of the essential elements of a fraud claim. As stated above, AFG alleges
that KPI, “while planning to tortiously interfere with AFG’s business
relationships and contracts and to unlawfully terminate the agreement between
AFG and KPI,” represented to AFG that certain goods had been or would be
shipped, when such goods, in fact, never were shipped. These allegations
satisfy the first two elements of AFG’s fraud claim—a false representation and
scienter, i.e., that KPI knew at the time it made the representation that the
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representation was false. AFG also alleges that KPI made the false
representation to “deceiv[e] and defraud[ ] AFG while KPI bypassed AFG and
solicitied AFG’s customers.” Relatedly, AFG alleges that it relied on KPI’s
false representation to its detriment by failing to seek alternative sources of
materials necessary to fulfill its contracts with customers. These allegations
satisfy the remaining elements of AFG’s claim—i.e., that KPI acted with the
intent to induce AFG to rely on its false representation, that AFG so relied, and
that AFG suffered damages as a result.
In sum, KPI’s Motion to Dismiss is due to be GRANTED as to AFG’s
claim for fraud based on the Harmonized Systems Code but DENIED as to
AFG’s claim for fraud based on KPI’s alleged failure to ship promised goods.
5.

Misappropriation of Trade Secrets (Count VI)

The allegations of AFG’s claim for misappropriation of trade secrets, set
out in Count VI, are as follows:
•

AFG has developed trade secret technical data, methodologies,
product plans, and other trade secret information for the purpose of
providing special order fiberglass fabric products to end users.

•

For many years, AFG has licensed the use of certain trade secret
information to KPI on a limited basis, the understanding of the
parties being that (a) the trade secret information is the property of
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AFG and not KPI and that (b) the products manufactured by KPI
utilizing the trade secret information provided by AFG were for the
manufacture and sale to no customer other than to AFG for re-sale
to its end-users.
•

KPI knows that the trade secret information is the property of AFG
and not of KPI.

•

KPI, through misrepresentation and breach of its duty to maintain
the secrecy of the information and in derogation of its limited right
to use of that trade secret information, has misappropriated the
trade secret information of AFG.

(Am. Compl., Dkt. [1] ¶¶ 66-69.) AFG further alleges that the
“misappropriation” was willfull and malicious and caused AFG to suffer
damages. (Id. ¶¶ 70-72.) KPI moves to dismiss this claim on several grounds,
including on grounds that AFG has failed to allege what trade secrets allegedly
were misappropriated or how they were misappropriated.6 (KPI’s Br., Dkt. [151] at 27-28.)
Georgia law permits the recovery of injunctive relief and/or damages for
misappropriation of trade secrets. See O.C.G.A. § 10-1-762 (providing for
injunctive relief); O.C.G.A. § 10-1-763 (providing for damages). “Trade

6

In addition, KPI argues that this claim must be dismissed because AFG has
failed to show that it took reasonable efforts to protect its trade secrets and because
AFG “cannot assert any trade secret claim for information learned by KPI during the
scope of its engagements.” (KPI’s Br., Dkt. [15-1] at 27-29.)
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secret” is defined as “information, without regard to form7 . . . which is not
commonly known by or available to the public and which information:”
(A)

[d]erives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic
value from its disclosure or use; and

(B)

[i]s the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.

O.C.G.A. § 10-1-761(4). “Misappropriation” is defined to include the
“[d]isclosure or use of a trade secret of another without express or implied
consent by a person who . . . [a]t the time of the disclosure or use, knew or had
reason to know that knowledge of the trade secret was . . . [a]cquired under
circumstances giving rise to a duty to maintain its secrecy or limit its use . . . .”
O.C.G.A. § 10-1-761(2)(B)(ii)(II).
The Court finds that AFG has stated a plausible claim for
misappropriation of trade secrets. AFG has alleged that it developed trade
secrets in the form of “technical data, methodologies, product plans, and other

7

The statute goes on to enumerate the following forms of information as
included under the definition of “trade secret”: “technical or nontechnical data, a
formula, a pattern, a compilation, a program, a device, a method, a technique, a
drawing, a process, financial data, financial plans, product plans, or a list of actual or
potential customers or suppliers[.]” O.C.G.A. § 10-1-761(4).
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trade secret information” related to its “special order fiberglass product.” (Am.
Compl., Dkt. [1] ¶ 66.) AFG further has alleged that it licensed its trade secrets
to KPI on a limited basis, the understanding of both parties being that the trade
secrets were the property of AFG and not KPI. (Id. ¶ 67.) Finally, AFG alleges
that KPI misappropriated these trade secrets by failing to protect their secrecy
and by violating KPI’s limited right of use. (Id. ¶ 69.) Finally, AFG has
alleged that the misappropriation was willful and malicious. (Id. ¶ 71.)
Contrary to KPI’s argument, nothing more is required under Twombly or Iqbal
to state a plausible claim.8 KPI’s Motion to Dimiss therefore is DENIED as to
Count VI of the Amended Complaint.
6.

Injunctive Relief (Count VII)

In Count VII, AFG requests injunctive relief related to its claim for
misappropriation of trade secrets, set out in Count VI, in the form of an order

8

KPI’s remaining arguments are premature. As stated in footnote 6, supra, KPI
argues that AFG failed to take reasonable efforts to protect its trade secrets, thus
forfeiting any claim it may have had to trade secret status. (KPI’s Br., Dkt. [15-1] at
27.) At the motion to dismiss stage of the litigation, however, AFG need only allege
that it possessed trade secrets, which it has done. Additionally, KPI argues that
information learned by KPI during the scope of its engagement is not a trade secret
and therefore cannot give rise to a claim for misappropriation. (Id. at 28-29.) Again,
however, at this stage in the proceeding, AFG need only allege that it possessed trade
secrets, which were misappropriated by KPI, to state a plausible claim.
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preventing KPI from, among other things, contacting customers of AFG in the
United States. (Am. Compl., Dkt. [1] ¶ 79.) KPI moves to dismiss this claim,
arguing that “AFG’s claim for injunctive relief is an attempt to receive a
restrictive covenant it never bargained for with KPI.” (KPI’s Br., Dkt. [15-1] at
30.) In light of the fact that AFG’s claim for misappropriation of trade secrets
has survived KPI’s Motion to Dismiss, see discussion at Part I.B.6, supra, the
Court declines to dismiss AFG’s claim for injunctive relief at this time. KPI’s
Motion to Dismiss is DENIED as to Count VII.
7.

Violation of Sherman Act and Clayton Act (Count VIII)

In Count VIII, AFG alleges that KPI violated Section 1 of the Sherman
Antitrust Act, 15 U.S.C. § 1, and Section 3 of the Clayton Act, 15 U.S.C. § 14,
“by imposing or attempting to impose a condition of an exclusive dealing
arrangement upon former customers of AFG.” (Am. Compl., Dkt. [1] ¶ 83.) In
particular, AFG alleges as follows:
•

AFG has learned that KPI has imposed a condition of
exclusive dealing upon [Alpha] (which company has
historically purchased millions of dollars of products per
year from AFG) to the effect that KPI will only sell some of
its proprietary and special order goods (which goods were
developed by AFG for Alpha and then manufactured by KPI
prior to KPI’s breach), including, but not limited to certain
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PBC coated materials, on the condition that Alpha agrees to
purchase all of its materials from KPI and that it purchase
nothing from AFG.
•

The unlawful tying and exclusive dealing arrangement is
intended to and does substantially lessen competition, is
inherently anticompetitive, and tends to create a monopoly
in favor of KPI.

•

Further, the imposition of this unlawful condition has the
effect of intentionally creating an impossible barrier to the
re-entry of AFG to the market in that AFG cannot
immediately produce or source all of the custom fabricated
and special order products needed by Alpha in order for the
unlawful barrier to be circumvented.

•

Upon information and belief, KPI has placed similar
conditions on other former customers of AFG.

•

As a result of the unlawful actions of KPI, AFG has been
damaged and has suffered financial harm in an amount to be
determined at trial.

(Id. ¶¶ 84-88.)
Section 1 of the Sherman Act makes unlawful “[e]very contract,
combination in the form of trust or otherwise, or conspiracy, in restraint of trade
or commerce among the several States . . . .” 15 U.S.C. § 1. Similarly, Section
3 of the Clayton Act declares it unlawful:
for any person engaged in commerce, in the course of such
commerce, to . . . make a sale or contract for sale of goods . . . for
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use, consumption, or resale within the United States . . . on the
condition, agreement, or understanding that the lessee or purchaser
thereof shall not use or deal in the goods . . . of a competitor or
competitors of the . . . seller, where the effect of such lease, sale, or
contract for sale or such condition, agreement, or understanding
may be to substantially lessen competition or tend to create a
monopoly in any line of commerce.
15 U.S.C. § 14. To state a claim under either provision, a claimant must allege
a relevant geographic market and product market in which harm to competition
is occurring or will occur. See Jacobs v. Tempur-pedic Int’l, Inc., 626 F.3d
1327, 1336 (11th Cir. 2010) (“Section 1 plaintiffs must define both (1) a
geographic market and (2) a product market.”); Tampa Elec. Co. v. Nashville
Coal Co., 365 U.S. 320, 328-29 (1961) (holding that to prevail on Section 3
claim, plaintiff must define a geographic market and “line of commerce, i.e., the
types of goods, wares, or merchandise, etc.” (i.e., product market)).
KPI moves to dismiss AFG’s Sherman Act and Clayton Act claims,
arguing, among other things, that “AFG has not alleged either a geographic
market or a line of commerce . . . .” (KPI’s Br., Dkt. [15-1] at 33.) The Court
need not consider whether AFG sufficiently has alleged a relevant product
market, as it agrees with KPI that AFG has failed to allege a relevant
geographic market in which harm to competition is alleged to occur. This
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failing is fatal to AFG’s claims. KPI’s Motion to Dismiss accordingly is
GRANTED with respect to AFG’s federal antitrust claims, set out in Count
VIII.
7.

Georgia Law Antitrust Claim (Count IX)

Based on the same allegations set forth in support of its Sherman Act and
Clayton Act claims, AFG also alleges violations of article III, § VI, ¶ 5 of the
Georgia constitution and O.C.G.A. § 13-8-2(a)(2), which declare contracts in
restraint of trade void as against public policy. KPI moves to dismiss this claim
on two grounds. First, KPI contends that AFG’s state law claim is parallel to its
Sherman Act and Clayton Act claims and thus subject to dismissal for the same
reasons that the federal law claims are subject to dismissal. (KPI’s Br., Dkt.
[15-1] at 35.) Second, KPI argues that “AFG has no standing to assert a claim
for illegal contracts in restraint of trade arising from contracts [between KPI and
former customers of AFG] in which it is not a party.” (Id. at 35 (citing Palmer
v. Atlantic Ice & Coal Co., 173 S.E.2d 424, 429 (Ga. 1934)).)
The Court finds that KPI has failed to show that AFG’s state law antitrust
claim is due to be dismissed. KPI’s first argument is unavailing: KPI has not
come forward with any authority for the proposition that the elements of AFG’s
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state law antitrust claim are parallel to the elements of its federal law claims.
Absent such authority, the Court declines to dismiss AFG’s state law claim for
the reasons it has dismissed AFG’s federal law claims. KPI’s second argument,
though more compelling than the first, is likewise of no avail. As stated above,
KPI contends that unless a claimant is a party to the contract, the claimant lacks
standing to challenge that contract as an illegal restraint on trade. Under certain
circumstances, this appears to be correct. See Palmer v. Atlantic Ice & Coal
Co., 173 S.E. 424, 428-30 (Ga. 1934) (holding plaintiff lacked standing to
challenge contract as one in restraint of trade, where plaintiff was not a party to
the contract and where no facts were alleged to show conspiracy to injure
plaintiff). Under other circumstances, however, the proposition urged by KPI
does not appear to hold true. See Brown v. Jacobs Pharmacy, Co., 41 S.E. 553,
556-57 (Ga. 1902) (holding that plaintiff may challenge contract, to which it is
a stranger, as one in restraint of trade, where it is shown that parties to the
contract conspired to injure plaintiff, such as by destroying plaintiff’s business).
While the Court makes no specific finding that AFG has alleged
sufficient facts to bring this case under the authority of Jacobs Pharmacy, the
Court does not accept the general principle argued by KPI—that a third party
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may not, under any circumstances, challenge a contract to which it is stranger as
an illegal restraint on trade. This being the only remaining ground offered in
support of KPI’s motion, the Motion to Dismiss is due to be DENIED as to
Count (IX).
II.

KPI’s Motion for Discovery Before Any Hearing on AFG’s Motion
[for Preliminary Injunction] [17]
In light of the Court’s denial of AFG’s Motion for Preliminary Injunction

[3] (Order, Dkt. [29]), the Court DENIES as moot KPI’s Motion for Discovery
Before Any Hearing on AFG’s Motion [for Preliminary Injunction] [17].
III.

AFG’s Motion for Leave to File Second Amended Complaint and to
Add Parties, S.K. Hwang and Hyo Kyung Cho (“Motion for Leave to
Amend and Add Parties”) [26]
A.

Preliminary Matters

As a preliminary matter, KPI moves the Court for leave to file a surreply
in opposition to AFG’s Motion for Leave to Amend and Add Parties. (KPI’s
Motion for Leave to File Short Sur-Reply in Opposition to Plaintiff’s Motion
for Leave to Amend the Complaint and to Add Parties (“Motion to File A
Surreply”), Dkt. [35].) “Neither the Federal Rules of Civil Procedure nor this
Court’s Local Rules authorize the filing of surreplies.” Fedrick v. Mercedes-

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Benz USA, LLC, 366 F. Supp. 2d 1190, 1197 (N.D. Ga. 2005) (citing Byrom v.
Delta Family Care-Disability & Survivorship Plan, 343 F. Supp. 2d 1163, 1188
(N.D. Ga. 2004)). “To allow such surreplies as a regular practice would put the
court in the position of refereeing an endless volley of briefs.” Garrison v. N.E.
Ga. Med. Ctr., Inc., 66 F. Supp. 2d 1336, 1340 (N.D. Ga. 1999). Rather,
surreplies typically will be permitted only in unusual circumstances, such as
where a movant raises new arguments or facts in a reply brief, or where a party
wishes to inform the Court of a new decision or rule implicating the motion
under review. Cf., e.g., Fedrick, 366 F. Supp. 2d at 1197 (stating “valid reason
for . . . additional briefing exists . . . where the movant raises new arguments in
its reply brief”).
In this case, AFG presented new facts and evidence to the Court in its
Reply Brief in support of its Motion for Leave to Amend and Add Parties. (See
generally Reply to Def.’s Objection to Pl.’s Mot. to Amend and Add Parties
(“AFG’s Reply”), Dkt. [34] (attaching Affidavit of Madanjit Oberoi, President
Atlanta Fiberglass LLC (Dkt. [34-1]) and other evidentiary materials (Dkt. [352])).) In light of this presentation of new facts, the Court finds KPI’s Motion
for Leave to File Surreply [35] due to be GRANTED.
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B.

Analysis

AFG seeks leave of Court to file a Second Amended Complaint and to
add as Defendants the owners of KPI, Mr. S.K. Hwang and his wife, Ms. Hyo
Kyung Cho (hereinafter “Hwang” and “Cho”). (See generally Dkt. [26].) In
the proposed Second Amended Complaint, AFG seeks to add a claim for
fraudulent transfer under Georgia law against KPI and the two proposed
individual Defendants. In support of its proposed claim for fraudulent transfer,
AFG alleges as follows:
The original Complaint in this case was filed on December 15, 2011.
(AFG’s Mot. for Leave to Amend & Add Parties, Dkt. [26] at 1 ¶ 1.) On or
about September 10, 2012, while on a business trip in Korea, Mr. Oberoi (the
owner and President of AFG) learned that “Defendant [KPI] is aggressively and
intentionally transferring its assets to other companies owned either by KPI, or
by the owner[s] of KPI, namely, S.K. Hwang and his wife, Hyo Kyung Cho.”
(Id. at 2 ¶ 3.) The transfers have been made to companies located in Thailand
and China and other countries in southeast Asia and have been made for little to
no consideration. (Id. at 2 ¶ 3, 3 ¶ 4.) This information was confirmed by a
phone call from a customer, who had inquired into purchasing materials from
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KPI, only to be told that KPI was considering bankruptcy. (Id.) Mr. Oberoi
learned through his own investigation that the “express intent of the transfers is
to render KPI essentially judgment-proof in the event that AFG prevails in this
litigation.” (Id.)
AFG further alleges the following: To date, pursuant to KPI’s ongoing
scheme to cease operations in Korea prior to the end of 2012 and protect its
assets from this litigation, KPI has transferred more than $10 million worth of
manufacturing equipment to a company located in Thailand, Asia Kangnam,
which is 50% owned by KPI, and to a manufacturing facility in China, Kunshan
KPI. (Id. at 2 ¶ 4.) This equipment includes, but is not limited to, four
fiberglass weaving looms and two coating towers used to coat and finish
various fiberglass products. (Id.) “Information provided to Mr. Oberoi
indicates that the transfers are being made specifically during the course of the
litigation to protect the assets of KPI from any potential judgment against KPI,
and for little or no consideration.” (Id.)
KPI contends that AFG should not be permitted to add Hwang or Cho as
Defendants or to assert a claim for fraudulent transfer against any Defendant.
(See generally KPI’s Resp. in Opp’n to Pl.’s Mot. for Leave to Amend the
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Complaint and to Add Parties (“KPI’s Opp’n Br.”), Dkt. [30].) KPI argues that
AFG should not be permitted to add Hwang or Cho as Defendants because the
Court lacks personal jurisdiction over them and because adding them would be
procedurally superfluous, given that “the corporate entity through whom the
alleged wrongdoing occurred, KPI, is already a party to this action.” (Id. at 13.) In other words, KPI contends that “[t]o the extent a claim for fraudulent
transfer exists, KPI is the entity allegedly performing the transfers and it is
already a party to this case[.]” (Id. at 3.) KPI also argues that AFG should not
be permitted to amend the Amended Complaint to assert a claim for fraudulent
transfer because the claim would be futile. (Id. at 15-18.)
The Federal Rules of Civil Procedure provide that leave to amend a
pleading should be given “freely” “when justice so requires.” Fed. R. Civ. P.
15(a)(2). In deciding whether to give a party leave to amend, the Court should
consider factors such as whether there has been “undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure deficiencies
by amendments previously allowed, undue prejudice to the opposing party by
virtue of allowance of the amendment, [and] futility of the amendment . . . .”
Foman v. Davis, 371 U.S. 178, 182 (1962). The decision of whether to give
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leave to amend is within the discretion of the trial court. Saewitz v. Lexington
Ins. Co., 133 F. App’x 695, 699 (11th Cir. 2005). Bearing these principles in
mind, the Court considers AFG’s request to add as Defendants the owners of
KPI, Hwang and Cho, before turning to its request to raise a new claim for
fraudulent transfer.
1.

AFG’s Motion to Add Parties, S.K. Hwang and Hyo Kyung
Cho

The Court agrees with KPI that AFG should not be permitted to add as
Defendants the individual owners of KPI, Hwang and Cho. As KPI correctly
argues, AFG’s claim for fraudulent transfer is against KPI, not KPI’s owners.
As explained in subsection 2, infra, Georgia’s Uniform Fraudulent Transfer Act
gives a creditor a cause of action against a “debtor” who has made a fraudulent
transfer. O.C.G.A. §§ 18-2-74 to -75. The alleged “debtor” in this case is KPI.
Because KPI’s individual owners are not alleged “debtors” of AFG, or
transferees of the property that allegedly was fraudulently conveyed, there is no
basis on which AFG possibly could assert its claim for fraudulent transfer
against them. Moreover, as KPI correctly argues, AFG has failed to allege any
facts that would support piercing the corporate veil and holding KPI’s owners

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liable for the alleged acts of KPI. See, e.g., EnduraCare Therapy Mgmt., Inc v.
Drake, 681 S.E.2d 168, 171 (Ga. Ct. App. 2009) (“It is well settled that owners .
. . of a corporation are not personally liable for corporate acts until such time as
the corporate veil has been successfully pierced. Even in a case of alleged
fraud, the corporation’s shareholders cannot be held accountable for the
fraudulent acts of the underlying corporation, absent some alleged reason to
disregard the corporate form.” (internal quotations and citations omitted)). In
sum, the Court finds that KPI’s owners, Hwang and Cho, are not proper parties
to AFG’s proposed claim for fraudulent transfer. AFG’s Motion to Add Parties
therefore is DENIED.
2.

AFG’s Motion For Leave to File Second Amended
Complaint to Add a Claim for Fraudulent Transfer

Despite the foregoing, the Court finds that AFG should be permitted to
amend the Amended Complaint to assert a claim for fraudulent transfer against
KPI. Contrary to KPI’s argument, the Court at this stage in the litigation cannot
conclude that the proposed amendment would be futile but finds, rather, that
AFG has alleged the essential elements of its claim. AFG’s proposed claim
arises under Georgia’s Uniform Fraudulent Transfer Act (“UFTA”), O.C.G.A. §

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18-2-70, et seq. (AFG’s Reply, Dkt. [34] at 8, 9.) Under O.C.G.A. § 18-274(a):
A transfer made or obligation incurred by a debtor is fraudulent as
to a creditor, whether the creditor’s claim arose before or after the
transfer was made or the obligation was incurred, if the debtor
made the transfer or incurred the obligation:
(1)

With actual intent to hinder, delay, or defraud any
creditor of the debtor; or

(2)

Without receiving a reasonably equivalent value in
exchange for the transfer or obligation, and the debtor:
(A)

Was engaged or was about to engage in a
business or a transaction for which the
remaining assets of the debtor were
unreasonably small in relation to the business
or transaction; or

(B)

Intended to incur, or believed or reasonably
should have believed that he or she would
incur, debts beyond his or her ability to pay as
they became due.

Under O.C.G.A. § 18-2-75(a):
A transfer made or obligation incurred by a debtor is fraudulent as
to a creditor whose claim arose before the transfer was made or the
obligation was incurred if the debtor made the transfer or incurred
the obligation without receiving a reasonably equivalent value in
exchange for the transfer or obligation and the debtor was
insolvent at that time or the debtor became insolvent as a result of
the transfer or obligation.
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To prevail on a claim under either provision, a plaintiff ultimately must prove:
“(1) there was a claim against Defendant by Plaintiff; (2) the Defendant did not
receive relatively equivalent value in consideration of the transfer; and (3)
Defendant was insolvent or likely to become insolvent.” CSX Transp., Inc. v.
Leggett, No. 1:07-cv-1152-WSD, 2010 WL 3210841, at *4 (N.D. Ga. Aug. 12,
2010) (citations omitted). A “claim” is defined by the UFTA as “a right to
payment, whether or not the right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured.” O.C.G.A. § 18-2-71.
AFG has alleged each of these essential elements, and while KPI argues
that AFG cannot prove them, that is not AFG’s burden at this stage in the
litigation. AFG has alleged that it had a claim against KPI—i.e., those asserted
in this litigation—at the time KPI made the challenged transfers, thus satisfying
the first element of its claim. The second element of its fraudulent transfer
claim is also satisfied, as AFG has alleged that KPI transferred to other entities
millions of dollars of manufacturing equipment for little to no consideration.
Finally, AFG has satisfied the third element of its claim by alleging that KPI
made the transfers while contemplating bankruptcy and with the express intent
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to render KPI judgment-proof. Given that AFG plausibly has alleged the
essential elements of its claim, and considering the policy of the Federal Rules
of Civil Procedure that leave to amend should be granted “freely,” the Court
GRANTS AFG’s Motion for Leave to File a Second Amended Complaint to
assert a claim for fraudulent transfer against KPI.
Conclusion
In accordance with the foregoing, KPI’s Motion to Dismiss [15] is
GRANTED in part and DENIED in part. It is GRANTED with respect to
AFG’s claims for tortious interference with business relations (Count III);
tortious interference with contractual relations (Count IV); and violation of the
Sherman Antitrust Act and Clayton Act (Count VIII). It is DENIED with
respect to AFG’s claim for breach of contract (Count I), but only as to the
theory that KPI failed to give AFG reasonable notice of its intent to terminate
the alleged agreement; defamation (Count II); misappropriation of trade secrets
(Count VI) and injunctive relief (Count VII); and, finally, for violation of the
Georgia law prohibition against contracts in restraint of trade (Count IX).
Finally, it is GRANTED with respect to AFG’s claim for fraud based on the

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Harmonized Systems Code (Count III) but denied with respect to AFG’s claim
for fraud based on KPI’s alleged failure to ship promised goods (Count III).
KPI’s Motion for Discovery [17] is DENIED as moot. AFG’s Motion
For Leave to File Second Amended Complaint and to Add Parties, S.K. Hwang
and Hyo Kyung Cho [26] is GRANTED in part and DENIED in part. AFG’s
Motion for Leave to File a Second Amended Complaint [26] is GRANTED as
to KPI, but AFG’s Motion to Add Parties, S.K. Hwang and Hyo Kyung Cho
[26] is DENIED. Finally, KPI’s Motion For Leave to File Short Surreply in
Opposition to Plaintiff’s Motion for Leave to Amend the Complaint and to Add
Parties [35] is GRANTED.
SO ORDERED, this 28th day of November, 2012.

_______________________________
RICHARD W. STORY
UNITED STATES DISTRICT JUDGE

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