Goldstein v. Puda Coal, Inc. et al

Filing 639

MEMORANDUM OPINION AND ORDER.....The plaintiffs motion to appoint Seiden as Receiver of Puda is denied. The plaintiffs shall provide, by December 19, a proposal for the allocation of the $125,000 in MSPC settlement funds. (Signed by Judge Denise L. Cote on 12/16/2016) (gr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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IN RE PUDA COAL SECURITIES INC.,
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et al. LITIGATION
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This document relates to: ALL
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ACTIONS.
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SECURITIES AND EXCHANGE
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COMMISSION,
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Plaintiff,
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-v:
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MAQUARIE CAPITAL (USA) INC., ET
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AL.,
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Defendants.
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APPEARANCES:
Counsel for Plaintiffs and the Class:
Laurence M. Rosen
Phillip Kim
Sara E. Fuks
Yu Shi
The Rosen Law Firm, P.A.
275 Madison Avenue, 34th Floor
New York, New York 10016
Lionel Z. Glancy
Robin B. Howald
Robert V. Prongay
Coby M. Turner
Casey E. Sadler
Glancy Binkow & Goldberg LLP
1925 Century Park East, Suite 2100
Los Angeles, California 90067

11cv2598 (DLC)
and all member
and related cases
MEMORANDUM
OPINION AND ORDER

15cv2304 (DLC)

Marc I. Gross
Jeremy A. Lieberman
Fei-Lu Qian
Pomerantz Haudek Grossman & Gross LLP
100 Park Avenue, 26th Floor
New York, New York 10017
Patrick V. Dahlstrom
Leigh Handelman Smollar
Pomerantz Haudek Grossman & Gross LLP
10 South LaSalle Street, Suite 3505
Chicago, Illinois 60603
Frederic S. Fox
Jeffrey P. Campisi
Pamela A. Mayer
Kaplan Fox & Kilsheimer LLP
850 Third Avenue
New York, New York 10022
Daniel Hume
David E. Kovel
Kirby McInerney LLP
825 Third Avenue
New York, New York 10022
DENISE COTE, District Judge:
On December 2, 2016, the plaintiffs in the above-captioned
class action submitted a proposed Notice of Settlement
(“Notice”) for approval.

The Notice outlines a plan of

distribution for $125,000 in settlement funds from a pending
settlement with defendant Moore Stephens, P.C (“MSPC”).

The

Notice designates $50,000 “to fund the initial costs of hiring a
receiver to take control over Puda [Coal, Inc.]’s assets and to
pursue claims against Puda and [its former Chairman] in China.”
In conjunction with said Notice, the plaintiffs filed a
motion to appoint Robert Seiden (“Seiden”) as Receiver of Puda,
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a Delaware corporation.

On December 12, the Court issued an

order directing the plaintiffs to explain why they should not be
required to apply to a Delaware court for receivership over
Puda.
14.

The plaintiffs filed their responsive letter on December

For the reasons set forth below, the plaintiffs’ motion to

appoint Seiden as Receiver for Puda is denied.
DISCUSSION
Puda is a foreign corporation incorporated in the State of
Delaware.

The plaintiffs have not identified any Puda assets

located in the Southern District of New York.

Accordingly,

equity does not favor the exercise of jurisdiction over Puda by
this Court.

See, e.g., Rogers v. Guaranty Trust Co. of N.Y.,

288 U.S. 123, 130 (1933) (“It has long been settled doctrine
that a court -- state or federal -- sitting in one State will as
a general rule decline to interfere with or control by
injunction or otherwise the management of the internal affairs
of a corporation organized under the laws of another state but
will leave controversies as to such matters to the courts of the
state of the domicile.”); Maguire v. Mortgage Co. of Am., 203 F.
858, 859 (2d Cir. 1913) (“[I]t is alone for the state which
creates a corporation to provide for its dissolution and winding
up.”); Frankland v. Remington Phonograph Corp., 119 A. 127, 128
(Del. Ch. 1922) (“That such other courts can administer the
assets of a foreign corporation found in their jurisdiction is
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beyond doubt.

That they can, however, go so far as to appoint a

general receiver for such corporation, would on principle appear
equally beyond doubt as not tenable.”); 17A Fletcher Cyc. Corp.
§ 8554 (“[J]urisdiction can be exercised only by courts of the
state in which the corporation was created. . . . Courts will
not . . . appoint a receiver for a foreign corporation where to
do so would amount to interference with its internal affairs.”);
36 Am. Jur. 2d Foreign Corps. § 384 (“A receiver of the assets
of a foreign corporation, as distinguished from a receiver of
the corporation, may be appointed if the circumstances justify
such an appointment.”); cf. Burnrite Coal Briquette Co. v.
Riggs, 274 U.S. 208, 212 (1927) (noting that a federal court
may, under its general equity powers, appoint a temporary
receiver over a foreign corporation “to prevent threatened
diversion or loss of assets through gross fraud and
mismanagement of its officers”).

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CONCLUSION
The plaintiffs’ motion to appoint Seiden as Receiver of
Puda is denied.

The plaintiffs shall provide, by December 19, a

proposal for the allocation of the $125,000 in MSPC settlement
funds.
Dated:

New York, New York
December 16, 2016
____________________________
DENISE COTE
United States District Judge

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