Marino et al v. Grupo Mundial Tenedora, S.A. et al

Filing 38

OPINION denying in part, granting in part 11 MOTION to Dismiss Complaint with Prejudice filed by GPIM Holdings, Inc., Global Plus + Investment Management LLC, granting 21 MOTION to Amend/Correct 2 Amended Complaint, filed by Luis Marino, Gustav o Serpa. Based on the conclusions set forth above, the motion to leave to file the SAC is granted. The motion to dismiss is denied as to the breach of contract and aiding and abetting claims and granted as to the civil conspiracy and unjust enrichment claims. (Signed by Judge Robert W. Sweet on 3/17/2011) (mro)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

------ --------- -------LUIS MARINO and GUSTAVO SERPA, Plaintiffs, against GRUPO MUNDIAL TENEDORA, S.A., BELNOVO, S.A., GLOBAL PLUS+ INVESTMENT MANAGEMENT LLC, and GPIM HOLDINGS, INC., Defendants.

-x

10 civ. 4126 OPINION

----x
A P PEA AN C E S: R Attorneys for Plaintiffs REED SMITH LLP 599 Lexington Avenue
New York, NY 10022
By: Andrea J. Pincus,
Kristina M. Mentone, Esq. At for Defendants

YESKOO HOGAN & TAMLYN, LLP 909 Third Avenue, 28 th Floor New York, NY 10022 By: Stephen Hogan, Esq.

Sweet, D. J.

Defendants GPIM Holdings, Inc.

("GPIM Holdings") and (collectively!

Global Plus+ Investment Management LLC ("GPIM")

the "Defendants!!) have moved pursuant to Rule 12 (b) (6) of the Federal Rules of Civil Procedure to dismiss the Complaint of aintiffs Luis Marino ("Marino") and Gustavo Serpa ("Serpa (collectively, the "PIa iffs").
ll )

Plaintiffs have moved for Based

leave to file their Second Amended Complaint ("SAC").

upon the conclusions set forth below, leave to file the SAC is granted, and the motion to dismiss the SAC is denied in part and granted part.

Prior Proceedings

Plaintiffs' filed their Complaint on May 19, 2010 and, on June 2, 2010, filed an Amended Complaint, pursuant to Civ. P. 15 (a) (1) (B) . . R.

Defendants Grupo Mundial Tenedora, S.A. Belnovo, S.A.

("GM") and

("Belnovo") are Panamanian companies, upon which Neither GM nor Belnovo has appeared.

service is not complete.

1

On September 28, 2010 and Plaintiffs moved leave to file a SAC.

October 2, 2010, The SAC is identical

to the Amended Complaint, but for the First Claim for Reli (Breach of Contract) which adds the lowing averment: "At

1

times relevant plaintiffs fulfilled all their contractual duties, including performance of Section 3.6(b)
1 their duties specified in

the GPIM LLC Agreement. (SAC

All conditions The SAC so adds

precedent have been performed."

~ 44.)

that Plaintiffs' employment was terminated "without cause." (Id.
~ 47.)

SAC contains five against GPIM;

aims:

(1) breach of contract, (3)

(2) breach of fiduciary duty, against Belnovo; (4) aiding and abetting Belnovo's breach of

civil conspiracy;

fiduciary duty, against GM and GPIM Holdings; and (5) unjust enrichment, aga GPIM Holdings.

The SAC contains the following facts, upon which claims are based:

Plaintiffs and

i Capital formed GPIM.

(SAC

~

13.)

Grupo Mundial, represented by

s wholly-owned subsidiary, (Id.

Belnovo, provided the financial commitment to start GPIM.
~~ 15,

17.)

Plaintiffs were charged with the responsibility of
2

managing GPIM. Director.

Marino was the CEO and Serpa was the Managing

(Id. ~ 14).

Pursuant to the GPIM LLC Agreement, Pla

iffs'

entitlement to compensation was set forth as follows: Section 3.6. Managing Directors, etc. (ii) Compensation, etc. Other than with respect to the Participants, whose sole compensation for duties performed for the Company shall be stributions in re of the Economic Interest held by each as provided in this Agreement, expenses associated with having such Managing Directors (including, without limitation, the compensat of such Managing Directors) shall be expenses of and paid by Company. With respect to each of Marino and Serpa, so long as he is employed by the Company as a Managing Director he shall receive a monthly advance draw from the Company in the amount of US $10,000 as set forth Section 6.4(a). Managing rectors of the Company shall be at-will employees.

* * *
Section 6.4. Distributions (a) Advance Draws. So long as he is employed by the Company as a Managing Director, on the 24th day of each month, each Marino and Serpa shall receive a cash distribution of $10,000 out of, and solely to the extent of, Available Cash from Operations ( finition of which shall include, solely for purposes of this Section 6.4(a), Belnovo's initial Capital Contribution). Such distributions shall be treated as advance draws and be offset any other distributions due to Marino and Serpa under the terms of this Agreement. To the extent there are no subsequent distributions to Marino and Serpa against which to offset these advance draws, neither Marino nor Serpa shall have any obligation to such unrecouped amounts to either Company or Pali.

3

* * *
Section 6.6. Adjustments to Allocations, Distributions and Economic Interests the MOU (b) Notwithstanding any other provision this Agreement to the contrary, in the event the termination of employment of either Marino or Serpa by the Company or any Pali Entity without "Cause" (as such term is defined in the MOU) or by such Participant for "Good Reason" (as such term is def in the MOU) (i) , such Participant shall continue to receive distributions of Available Cash from Operations for a period of five (5) years from the of termination, and (ii) effective immediately upon the end of such five (5) year period, such Participant shall forfeit his right to any and all distributions Available Cash from Operations (other than distributions attributable to Available Cash from Operations that had been accrued but not yet stributed as of such date), and the amounts that otherwise would have been distributed to the Participant but for such termination 1 instead distributed to PRAM for the life of this Agreement. In addition, upon the end of such five (5) year period, the Economic Interests of PRAM and the terminated Participant with respect to such distributions of Available Cash from Operations, and the allocations ated thereto, shall be adjusted accordingly.

On January 16, 2009, the Board of GPIM met with Plaintiffs to inform them that Pali Capit had decided to t the bus and Grupo Mundial

s and divest their ownership of aintiffs all if pIa that iffs took (SAC

GPIM and to discuss the sale of GPIM. were told that GPIM could only be

over, and accordingly asked Plaintiffs to make an offer.
~ 33.)

4

Ultimately/

aintiffs offered only $1.00 and the (Id.

assumption of all liabilities to take ownership of GPIM.
~ 35.)

Following the offer/ Plaintiffs were fired and GPIM was Id. , 37.)

sold to a holding company/ GPIM Holdings.

Plaintiffs have alleged in their claims that they were "entitled to receive a monthly advance in the amount of $10/000 (Section 3.6(a) (ii) of the Agreement) / reimbursement of business expenses/ and payments of Available Cash from Operations if their employment was terminated without Cause/II and that "GPIM breached the GPIM LLC Agreement by not paying plaintiffs such amounts. II (rd.
,~

41-42.)

Plaintiffs seek damages of "not less

than $140/000 for uncollected payments due for the period January 2008 through February 2009/ $30/000 in unreimbursed business expenses/ and not less than $500/000 for unpaid distributions." Id. ~ 49.)

With regard to GPIM Holdings/ Plaintiffs have alleged in the Third Claim for Relief that/ "[u]pon Information and belief/ defendant Belnovo/ defendant Grupo Mundial/ defendant GPIM Holdings/ Pali Capital and Pali Holdings AM entered into a conspiracy whereby they agreed to trans at an unfair price." (Id. ~ 55.) 5
r GPIM to GPIM Holdings

They conclude that

"Defendants Pali Capital's and Pali Holdings AM's conspiracy damaged plaintiffs to the extent of $2,000,000 by depriving them of a r price for their holdings in GPIM." Id. ~~ 56-57.)

Plaintiffs have alleged in the Fourth Claim

Relief

that "Defendant GPIM holdings, the beneficiary of the unfair transaction, knew that the transfer was a violation of the fiduciary duties that the cont ling members of GPIM owed

members Marino and Serpa / " that "GPIM Holdings knowingly participated GPIM's assets at the scheme to defraud plaintiffs by acquiring ss than fair value,
If

and that "GPIM Holdings

provided substantial assistance to Belnovo in connection with the scheme alleged [in the Complaint], and aided and abetted Belnovo/s breach of its fiduciary duties to plaintiffs."
~

Id.

62.)

Plaintiffs allege in the Fifth Claim for Relief that "Defendant GPIM Holdings acquired GPIM from Pali Holdings AMI defendants Belnovo and plainti substanti Holdings but result, expense.
I

s for $1 / 000 1 a price

ly below

fair market value of GPIM / " that "GPIM
I

purchase was not a bona fide arms
I

length transaction , as a

l

product of defendants

unlawful schemel" and

"GPIM Holdings has been unjustly enriched at plaintif
II

(Id. ~~ 65-66.)
6

The Rule 12 (b) (6) Standard

On a motion to dismiss pursuant to Rule 121 all factual allegations in the complaint are accepted as true all inferences are drawn in favor
--------------------~~
1
l

and

the pleader.
1

Mills v. The

12 F.3d 1170

1174 (2d Cir. 1993).

issue "is not whether a plaintiff will ultimately prevail but whether the the claims."
375 / 378

aimant is entitled to offer evidence to support ViI Inc. v. Town of Darien (quoting Scheuer v. Rhodes
1
l

56 F.3d 416 U.S.

(2d Cir. 1995)

232

1

235-36 (1974)).

To survive a motion to dismiss pursuant to Rule 12 (b) (6)
1

"a complaint must contain
l

ficient factual matter, f that is plausible 129 S. Ct. 1937,

accepted as true on its 1949 (2009) 570 (2007)). "nudge [] plausible."

to 'state a claim to reI
1

,"

Ashcroft v. Iqbal

U.S.

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, PIa iffs must lege sufficient facts to from conceivable to Though court must as true, it is

ir claims across the I Twombly, 550 U.S. at 570.

accept the factual allegations of a compl

"not bound to accept as true a legal conclusion couched as a

7

factual

legation."

Iqbal, 129 S. Ct. at 1949 (quoting

Twombly, 550 U.S. at 555).

A Valid Breach of Contract Claim Against GPIM has Been Pleaded

Plaintiffs had a number of duties as members of GPIM, including "the overall direction and overall supervision of the Company." GPIM LLC Agreement
§

3.6(b) & (c).

It is alleged that

from January 2008 through their termination by GPIM, Plaintiffs fulfilled their obligations. (SAC
~

44.)

Plaintiffs have

further alleged that by the terms of the GPIM LLC Agreement, Plaintiffs were each entitled to receive a monthly advance draw in the amount of $10,000. GPIM LLC Agreement
§

3.6(a) (ii).

Defendants have contended that Section 6.4(a) of the GPIM LLC Agreement limits Plaintiffs' rights to their monthly advances "out of, and solely to the extent of, Available Cash from Operations." However, Section 6.4(a) explicitly defines

"Available Cash from Operations," for the purposes of paying Marino and Serpa pursuant to the "Advance Draws" provision of Section 6.4(a), to include "Belnovo's Capital Contribution." Section 5.2 lists Belnovo's Capital Contribution as $1.5 million.

8

In addition to the 14 monthly draws, each

aintiff

reimbursement for unreimbursed business expenses, pursuant to Section 3.7 of 1 GPIM LLC Agreement, which PI iffs

to have advanced in cash.

Plaintiffs have further alleged that Section 6.6(b) of the GPIM LLC Agreement entitled them to distributions of "Available Cash from Operations" in the event they were terminated without "Cause." There is, however, no allegation

that there were funds that constituted "Available Cash from Operations." Instead, Plaintiffs have simply paid. leged that five

year distributions have not

Defendants have submitted an affidavit which establishes that there were no funds constituting "Available Cash from Operations." That factual issue does not, in

context of this motion, establish that no contract claim been alleged.

allegations that GPIM has breached its contract are adequate, with respect to the monthly draws and bus expense reimbursement.

9

The Civil Conspiracy Allegations Are Inadequate

Defendants have contended that the Plaintiffs have failed to allege the requisite tort that is the subject of the civil conspiracy in the Third aim of the SAC. Mem. 11.)

However, Plaintiffs contend that the alleged breach of fiduciary duty by Belnovo the Second Claim satisfies the requirement (SAC " 50-53.)

that there be an underlying tort.

New York recognizes a breach of fiduciary duty to be a tort. See e.

.,

s Benevolent Ass'n Annui

Fund v.

Renck, 19 A.D.3d 107,110 (N.Y. App. Div. 2005) "breach

(holding that

fiduciary duty is a tort"); Batas v. Prudential Ins. (same);

Co. of Am., 281 A.D.2d 260, 264 (N.Y. App. Div. 2001) Restatement (Second) of Torts
§

874 ("One standing in a ility to the

fiduciary relation with another is subject to Ii

other for harm resulting from a breach of duty imposed by the relation.") .

However,

"[i]n order to sustain an allegation of civil

conspiracy that involves a conspiracy to breach a fiduciary duty, all members of the alleged conspiracy must independently owe a fiduciary duty to the plaintifL"
----~~------~~------

Bri

Ltd.

L.P.

_v_.__ G_e_l_·________~____~~__~., No. 99 Civ. 9623, 2007 WL 1040809, 10

at *26 (S.D.N.Y. April 4(2007)

(quoting Pope v. Rice, No. 04 (S.D.N.Y. Mar. 14, 2005))
i

Civ. 4171, 2005 WL 613085, at *13 Off

see

ial Comm. of Unsecured Creditors v. Donaldson, Lufkin &

Jenrette Sees. Corp., No. 00 Civ. 8688 (WHP) , 2002 WL 362794, at

*13-14 (S.D.N.Y. Mar. 6, 2002).

Here, Plaintiffs have not

leged that any Defendants to PI iffs,

other than Belnovo owed any fiduciary dut

particularly as Plaintiffs had no relationship with GPIM Holdings. Plaintif have not countered Defendants' contention

on this point.

Accordingly, the civil conspiracy claim is dismissed.

Plaintiffs Have Adequately Alleged Aiding and Abetting by GPIM Holdings

Defendants have contended that PI

iffs' Fourth

Claim for Relief against GPIM Holdings should be dismissed because Plaintiffs have not sufficiently alleged "knowing participation" on the part of GPIM Holdings. dismissal, Plaintiffs must allege "some facts, terms, showing that in . . [the] breach." [defendant] Donaldson To avoid in non-conclusory

. knowingly participated Lufkin &

, 2002 WL

11

362794, at *10

(citing Hecht v. Commerce Inc., ----------------------------~...~.------~-----(2d Cir. 1990)).

897 F.2d 21, 26 n.4

Knowing participation in a breach of fiduciary duty requires "actual knowledge" and "substantial assistance." Lerner v. Fleet Bank, N.A., 459 F.3d 273, 294 See

(2d Cir. 2006)

Thus, to "participate knowingly means to have' [a]ctual knowledge, as opposed to merely construct knowledge,

and a plaintiff may not merely rely on conclusory and sparse allegations that about Grunberg t aider or abettor knew or should Meisel v. (quoting known

primary breach of fiduciary duty." 651 F. Supp. 2d 98 t

115 (S.D.N.Y. 2009)

_G_l_o~b~a~l~M~l_·n~e_r_a_l_s_&._M~e_t~a_l_s ____~~.___.__ v H_o~l_me, __

35 A.D.3d 93, 101-02

(N.Y. App. Div. 2006)).

Plaintiffs have not alleged that GPIM Holdings had actual knowledge of the larger purported scheme, nor do Plaintiffs attribute any Holdings. ific fraudulent statements to GPIM

See Goldin Associates, L.L.C. v. Donaldson, Lufkin & No. 00 Civ. 8688, 2003 WL 22218643, (holding that where a complaint

_J~e~n~r~e~t~t~e~~S~e~c~u~r~i~t~l~·e~s~__~.,

at *10 (S.D.N.Y. Sep. 25, 2003) did not al

that the employee present at board meetings "knew

that there was anything wrong with pursuing" the conduct

12

eventually described as a breach, actual knowledge was not sufficiently alleged) .

Furthermore, a defendant may only aiding and abetting a breach

held liable for

fiduciary duty if it

participated in the breach by providing "substantial assistance to the primary violator." quotations omitted). Lerner, 459 F.3d at 294 (citation and

Substant

assistance exists only where

the alleged aider and abettor "affirmatively assists, helps conceal or fails to act when required to do so, thereby enabling the breach to occur." (2d Cir. 2005). In re Sh.:irp Int'l Corp., 403 F.3d 43, 50

" [I]naction constitutes substantial assistance

only when an 'independent duty to act was a duty owed to the defrauded [party],
,II

such as when a third party owed a fiduciary Kolbeck v. LIT America, Inc., 939 F.

duty to the injured party.

Supp. 240, 247 (S.D.N.Y. 1996)

(quoting" Dillon v. Militano,

731 F. Supp. 634,639 (S.D.N.Y. 1990)).

GPIM Holdings' alleged actions do not amount to substantial assistance by Belnovo. the purported breach of fiduciary duty

Plaintiffs allege that "Belnovo owed [P]laintiffs a

fiduciary duty to not sell GPIM [LLC] at less than market value," and that the sale of GPIM was a breach of this fiduciary

13

duty.

(SAC ~ 60.)

Defendants have contended that GPIM GPIM.

dings

was a non-actor in the sale

Plaintiffs argue in their opposition papers that the corporate veil of GPIM Holdings should be pierced, a theory absent from the SAC. Defendants contend that a subsidiary

corporation "is not liable for the acts of the parent or sharehol 1 omitt merely on the basis of alter ego. Inc., 889 F. Supp. 983, 992 .)
N

McCabe v. (citation

(E.D. Tex. 1995)

Furthermore, according to Defendants, although

Plaintiffs claim other parties are behind the veil of GPIM Holdings, they have fail to provide the acts of GPIM Holdings

constituting aiding and abetting with the particularity required under the ightened pleading standard.

However, it is all

that GPIM Holdings was a

wholly-owned and controlled shell subsidiary of GM set up for the sole purpose of receiving the proceeds of the below market sale GPIM to disguise the self-dealing r

transaction and to make it appear that GPIM had been sold to an independent third party. Under this theory, GM's knowledge of Thus,

the transaction should be attributed to GPIM Holdings.

according to the SAC, GPIM Holdings participated in the breach

14

fiduciary duty by aiding and abetting the sale through its acquisition of GPIM assets. (SAC ~ 52.)

These abetting claim.

legations adequately allege an aiding and

The Allegations of Unjust Enrichment Are Inadequate

\\[A] plaintiff seeking recovery on an unjust enrichment theory must allege that \ (1) defendant was enriched; (2) the enrichment was at plaintiff's expense; and (3) the

circumstances were such that equity and good conscience require defendants to make restitut
, II

Carmona v. Spanish Broad.

Sys., Inc., No. 08 Civ. 4475, 2009 WL 890054, at *6 (S.D.N.Y. Mar. 30, 2009) (quoting CBS Broad. Inc. v. Jones, 460 F. Supp. (citation omitted).

2d500, 506 (S.D.N.Y. 2006))

Plaintiffs have not alleged that GPIM Holdings was unjustly enriched, nor have they articulat any facts to

support a value for GPIM beyond the $1,000 that Pali Capi accepted in exchange for GPIM's liabilit Plaintiffs have

not alleged any profit or benefit that GPIM Holdings received as
a re

t of the sale of GPIM in January 2009.

Indeed, (SAC
~

Plaintiffs themselves bid only $1.00 for GPIM. 15

35.)

Stated simply, there can be no unjust enrichment where there is no enrichment at all.
*6.
--~--~=-

See

., Carmona, 2009 WL 890054, at

As there is no allegation that Defendant has rece anything of value, the claim for unjust enrichment is dismi

Conclusion

Based on the conclusions set forth above, the motion to leave to file the SAC is granted. The motion to dismiss is

denied as to the breach of contract and aiding and abetting claims and granted as to the civil conspiracy and unjust enrichment claims.

It is so ordered.

New York, NY March (~2011 U.S.D.J.

16