SWIFT v. PANDEY et al
Filing
165
OPINION. Signed by Judge Jose L. Linares on 8/10/16. (dc, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ROBERT SWIFT,
Civil Action No. 13-650 (JLL)
Plaintiff,
OPINION
v.
RAMESH PANDEY, et al.,
Defendants.
LINARES, District Judge.
This matter comes before the Court by way of Plaintiff Robert Swift ("Swift")'s Motion to
Dismiss the Counterclaims of Defendants Ramesh Pandey ("Ramesh") and Bhuwan Pandey
("Bhuwan") (collectively "Pandey" or "Defendants"). (ECF No. 159). The Court has considered
the submissions made in support of and in opposition to the instant motion. No oral argument was
heard pursuant to Federal Rule of Civil Procedure 78. For the reasons that follow, Swift's Motion
to Dismiss is granted.
BACKGROUND 1
In this action Swift alleges that, as a result of the Pandeys' actions to cover up the true
ownership of Xechem (India) Pvt. Ltd., Xechem lent money to Xechem (India) Pvt. Ltd. that it
otherwise would not have, and that the Pandeys used the money for their own personal gain. 2
1 Because
the facts of this matter are well known to the parties, and set forth at length in this Court's prior opinionssee ECF No. 15 ("7/1/1 3 Op."), ECF No. 26 ("1 1113/ 13 Op."), ECF No. 46 ("4/30/1 4 Op."), ECF No. 54 ("7/8/14
Op."), ECF No. 93 ("9/8/ 15 Op."), ECF No. 136 ("3/2211 6 Op.")-the Court provides them in summary fashion as
necessary to provide context for this Court's instant review.
2 Swift's operative pleading is presently his Third Amended Complaint. (See ECF No. 85 ("3d Am. Compl."); see
also ECF No. 94, 9/8/15 Order denying motion to dismiss 3d Am. Compl.)
1
The Pandeys counterclaim that Swift, as a member of the board of directors, caused
Xechem to go into bankruptcy in order to purchase Xechem's assets at a liquidation price.
Specifically, on October 28, 2015, the Pandeys filed an Answer to Swift's Third Amended
Complaint, which includes three counterclaims against Swift: fraud, breach of fiduciary duty, and
unjust enrichment. (ECF No. 107.)3 Presently before the Court is Swift's Motion to Dismiss the
Counterclaims. (ECF No. 159 ("Mov. Br.").) The Pandeys filed opposition (ECF No. 163 ("Opp.
Br.")) and Swift replied (ECF No. 164 ("Reply Br.")).
LEGAL STANDARD
To withstand a motion to dismiss for failure to state a claim, "a complaint must contain
sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."'
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). "The plausibility standard is not akin to
a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted
unlawfully." Id.
To determine the sufficiency of a complaint under Twombly and Iqbal in the Third Circuit,
the court must take three steps: first, the court must take note of the elements the plaintiff must
plead to state a claim; second, the court should identify allegations that, because they are no more
than conclusions, are not entitled to the assumption of truth; finally, where there are well-pleaded
factual allegations, a court should assume their veracity and then determine whether they plausibly
3
On October 30, 2015, United States Magistrate Judge Joseph A. Dickson struck the Answer and Counterclaims from
the record due to the Pandeys' failure to comply with discovery obligations (ECF Nos. 109, 110), but ultimately
reinstated the Answer and Counterclaim on June 14, 2016. (ECF No. 148.)
2
give rise to an entitlement for relief. See Connelly v. Lane Const. Corp., 809 F.3d 780, 787 (3d
Cir. 2016) (citations and internal quotations omitted). Stated differently, the Court must "accept
all factual allegations as true, construe the complaint in the light most favorable to the plaintiff,
and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled
to relief." Grp. Against Smog & Pollution, Inc. v. Shenango Inc., 810 F.3d 116, 127 (3d Cir. 2016)
(quoting Eid v. Thompson, 740 F.3d 118, 122 (3d Cir. 2014)) (internal quotations omitted).
The Court's role is not to determine whether the non-moving party "will ultimately prevail"
but whether that party is "entitled to offer evidence to support the claims." United States ex rel.
Wilkins v. United Health Grp., Inc., 659 F.3d 295, 302 (3d Cir. 2011). The Court's analysis is a
context-specific task requiring the court "to draw on its judicial experience and common sense."
Iqbal, 556 U.S. at 679. "In deciding a Rule 12(b)(6) motion, a court must consider only the
complaint, exhibits attached to the complaint, matters of the public record, as well as undisputedly
authentic documents if the complainant's claims are based upon these documents." Mayer v.
Belichick, 605 F.3d 223, 230 (3d Cir. 2010).
DISCUSSION
Swift moves for dismissal of the counterclaims on various grounds. (See Mov. Br. at 5-6.)
First, Swift argues that the Pandeys lack standing to assert the claims, since the claims belong to
Xechem. Second, Swift argues that the counterclaims are a shareholder derivative suit that fail for
lack of damages. According to Swift, any recovery would ultimately inure to the benefit of Swift,
since he purchased all of Xechem's assets at a bankruptcy auction. Third, Swift contends that the
counterclaims are barred by resjudicata or claim preclusion as a result of the Bankruptcy Court's
confirmation order. Finally, Swift argues that the counterclaims for fraud and breach of fiduciary
3
duty are time-barred, based on application of the Delaware statute of limitations, which this Court
previously found applicable to Swift's same claims. (See 4/30/14 Op.)
In opposition, the Pandeys first argue that the motion should be denied due to Swift's
failure to abide by Local Civil Rule 7.2. 4 (Opp. Br. at 1-2.) More fundamentally, they next argue
that the Counterclaims are against Swift as an individual for the losses the Pandeys suffered as
individuals; in other words, the Pandeys argue that the Counterclaims are not derivative of any
claim by or against Xechem. (Id. at 2-5.) On that basis, the Pandeys further argue that the
Counterclaims are not barred by res judicata. (Id. at 5.) Finally, the Pandeys contend that the
Counterclaims are not time-barred, arguing that New Jersey's six-year statute applies instead. (Id.
at 5-7.)
A. Counterclaims One (Fraud) and Two (Breach of Fiduciary Duty) are Time-Barred
This Court previously determined, after detailed analysis, that Delaware's three-year
statute oflimitations applies to breach of fiduciary duty and fraud claims arising from actions taken
on behalf of, or in relation to, the internal affairs ofXechem. (See 4130114 Op. at 5-13.) 5
Under the law of the case doctrine, courts should refrain from re-deciding issues that were
resolved earlier in litigation. See Pub. Interest Research Grp. of New Jersey, Inc. v. Magnesium
Elektron, 123 F.3d 111, 116 (3d Cir. 1997). Here, the Pandeys do not address this Court's prior
statute oflimitations finding, nor do they suggest that the finding was in error. Rather, the Pandeys
mistakenly presume that New Jersey's six-year limitations period applies. (See Opp. Br. at 5-7.)
4
The Pandeys correctly note that Swift "failed to provide a brief that contains a table of contents and table of
authorities, failed to follow the double-spaced text requirement, failed to file a proposed order, and failed to file a
certificate of service." (Opp. Br. at 2.) The Court declines to deny the motion on these grounds, but once again
advises Plaintiff that he is subject to the Local Civil Rules.
5 Although the April 30, 2014 Opinion discussed only a breach of fiduciary duty claim, the same analysis applies to
fraud claims. See In re Am. Int'/ Grp., Inc., 965 A.2d 763, 812 (Del. Ch. 2009), ajf'd sub nom. Teachers' Ret. Sys. of
Louisiana v. PricewaterhouseCoopers LLP, 11A.3d228 (Del. 2011) ("For a breach of fiduciary duty or fraud claim,
the statute oflimitation is three years.") (citing 10 Del. C. ยง 8106(a)).
4
For the same reasons set forth in this Court's April 30, 2014 Opinion, the Court holds that
Delaware's three-year statute of limitations applies to the fraud and breach of fiduciary duty
Counterclaims. Accordingly, they shall be dismissed with prejudice as untimely since the Pandeys
acknowledge that the limitations period began to run on November 9, 2008, meaning that they
were untimely by the time Swift commenced this action in January 2013. (See Opp. Br. at 7; see
also 4130114 Op. at 14-16 (dismissing Swift's breach of fiduciary duty claim as untimely).)
B. Counterclaim Three (Unjust Enrichment) Fails to State a Claim
Assuming for purposes of this opinion only that the Pandeys' Counterclaims are not
derivative and that they have standing to assert this claim, 6 it must be dismissed for failure to meet
the pleading requirements of Rule 8.
As previously noted by this Court, to state a claim for unjust enrichment under New Jersey
law,7 a Plaintiff must establish that the "defendant received a benefit and that retention of that
benefit without payment would be unjust" and that Plaintiff "expected remuneration from the
defendant at the time it performed or conferred a benefit on defendant and that the failure of
remuneration enriched defendant beyond its contractual rights." VRG Corp. v. GKN Realty Corp.,
135 N.J. 539, 554 (1994).
Here, the Counterclaim is entirely formulaic and conclusory and must be dismissed. For
example, the Pandeys allege in connection with the fraud count that "[Swift] knowingly made false
assertions to the Defendants to secure trust" and that he "subsequently drove a successful
corporation (Xechem) to bankruptcy so that he may buy the corporation at a liquidation price and
6
The parties both briefed this issue in conclusory fashion. As such, the Court declines to substantively analyze it at
this time since this Counterclaim must nevertheless be dismissed for failure to state a claim.
7
The parties agree that New Jersey law applies to this claim. (See Mov. Br. at 6, Opp. Br. at 5; see also 413011 4 Op.
at 19-21 (applying New Jersey law and denying Defendants' motion to dismiss Swift's unjust enrichment claim).)
Again, under the law of the case doctrine, the Court applies the same statute of limitations to the Counterclaims as it
did to Swift's claims.
5
take ownership of all the property."
(iii! 4, 5.)
"Swift acquired license for 5-HMF pharmaceutical
drug, the intellectual property and product of Xechem and managed to transfer them to another
pharmaceutical company where [Swift] had vested interest." (if 6.) The same allegations are
repeated in connection with the breach of fiduciary duty claim. (See
iii! 9-11.)
For the unjust
enrichment claim itself, the Pandeys incorporate the preceding allegations and then simply state in
conclusory fashion that "[Swift's] self-dealing of Xechem assets and property caused him to make
significant profits at a company where he had vested interest with 5-HMF pharmaceutical drug."
(if 15.)
Such vague and conclusory allegations do not pass muster. As noted, "[a] claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing
Twombly, 550 U.S. at 556) (emphasis added).
"The plausibility standard is not akin to a
'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted
unlawfully." Id. The Court cannot infer from the Pandeys' conclusory allegations that Swift is
liable for unjust enrichment. Accordingly, this Count shall be dismissed without prejudice.
CONCLUSION
For the foregoing reasons, Swift's Motion to Dismiss the Counterclaims is granted.
Counterclaims One and Two (Fraud and Breach of Fiduciary Duty) are dismissed with prejudice
as time-barred. Counterclaim Three (Unjust Enrichment) is dismissed without prejudice with
right to replead in accordance with this Court's Opinion.
DATED: August~, 2016
L. LINARES
ITED STATES DISTRICT JUDGE
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