Cornwall Management Ltd. et al v. Thor United Corp. et al
OPINION & ORDER re: 30 MOTION to Dismiss the Amended Complaint dated 4/26/13 filed by Atlant Capital Holdings, LLC, Peter Kambolin, 22 MOTION to Authorize Alternative Service on Defendant, Oleg Batratchenko filed by Oleg Soloviev, Cornwall Management Ltd., 9 MOTION to Dismiss the Amended Complaint filed by Abraham Bennun, North 3rd Development, LLC, 44 MOTION for Leave to File A Supplemental Pleading to the Amended Complaint and Demand for Jury Trial filed by Oleg Soloviev, Cornwall Management Ltd., 48 MOTION for Discovery (jurisdictional as to Defendant Oleg Batratchenko) filed by Oleg Soloviev, Cornwall Management Ltd.: Defendants Atlant Captial Holdings and Kambolin's motion (Dkt. No. 30) is granted, a nd the amended complaint is dismissed for lack of subject matter jurisdiction. The pending related motions (Dkt. Nos. 9, 22, 30, 44, and 48) are also dismissed. The clerk is directed to enter judgment accordingly. (Signed by Judge Louis L. Stanton on 10/8/2013) (tn)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
E l E("1 R0 \ !C \ L;' FI L[ D
DOC #: _ _ _~Iv-rl',:-;:--
DAT[ FllED:..-.:...ID=-+1 111,.....'1=-\3_
CORNWALL MANAGEMENT LTD and OLEG
SOLOVIEV a/k/a OLEG VALENTINOVICH
12 Civ. 8551
OPINION & ORDER
THOR UNITED CORP. a/k/a THOR UNITED
CORPORATION, JOHN DOE THOR ENTITIES,
ATLANT CAPITAL HOLDINGS, LLC, OLEG
BATRACHENKO a/k/a OLEG BATRATCHENKO,
a/k/a O.V. BATRACHENKOV, PETER KAMBOLIN,
NORTH 3RD DEVELOPMENT, LLC and ABRAHAM
Plaintiffs Cornwall Management Ltd.
ev ("Soloviev u
("Cornwall U) and Oleg
bring this diversi
defendants Thor United Corp., John Doe Thor Entities
"Thor U), Atlant Capit
Holdings, LLC ("AtlantU),
Oleg Batrachenko ("Batrachenko U), Peter Kambolin ("Kambolin"),
North 3rd Development, LLC ("North 3rd Development
Abraham Bennun ("Bennun
common law fraud related to
the sale of a real estate investment property in Williamsburg,
Brooklyn ("the Williamsburg propertyll) .
Atlant and Kambolin move to dismiss the amended complaint
pursuant to Fed. R. Civ. P. 12 (b) (1)
jurisdiction, and pursuant to Fed. R. C
12 (b) (6)
failure to state a cl
upon which relief can be granted.
Bennun and North 3rd Development also move to dismiss the
insufficiency under Rule 12 (b) (6)
Cornwall and Soloviev move for leave to amend the complaint, for
alternative service on Batrachenko, and for jurisdictional
discovery concerning Batrachenko.
For the reasons that follow,
the requisite diversity of
citizenship among the parties is lacking, the court has no
subject matter jurisdiction over this action, and therefore the
(represented by Soloviev)
entered into two contracts wi
Thor (represented by
Batrachenko), pursuant to whi
Cornwall lent Thor a total of
$2.2 million for the development of the Williamsburg, Brooklyn
See Am. Compl. ~~ 37-41.
Thor and its affiliate
company Atlant (represented by defendants Batrachenko and
subsequently promised in a July 2010
("the 2010 Arrangement") to repay the 2007 contract
loans from the sale proceeds of the Williamsburg property if
1 This section refers to the Amended Complaint
("Am. Compl."), dated
26, 2013, as well as to the parties' affidavits in support of their
defendant Batratchenko's domicile.
udicating a 12(b) (I) motion "may resolve disputed factual issues by
reference to evidence outside the pleadings, including affidavits."
_ A_ _ _ ~ _ _ _ ~L-_ _ _ _ "~-d .. ~~~ ...~C.o~~a.: _ _v~.~~R~o.w
. .~l~a~nc.d=, 494 F.3d 71, 77 n.4 (2d Cir.
Cornwall and Soloviev agreed to extend the loans and re
from taking legal action.
Cornwall and Soloviev
sed Kambolin and Batrachenko to make
this proposal" and draft
the 2010 Arrangement.
The gravamen of the Amended Complaint is that the
defendants engaged in fraud by entering into the 2010
Arrangement, a contract which they had no intent to perform.
Cornwall and Soloviev allege that Kambolin and
Batrachenko concurrently negotiated a "short" sale (i.e., for
less than its value) of the Williamsburg property to Bennun and
the defendants now refuse to repay the loans although they have
sufficient funds to do so.
sclosed their plans to short sell the Williamsburg
property, plaintiffs would have commenced earlier legal actions
to recover their monies."
Cornwall and Soloviev are both foreign
is a Nevis corporation with its princ
place of business in
Charlestown, Nevis, while Soloviev is a Russian citizen who
In the Amended Complaint, Cornwall and Soloviev allege that
Batrachenko is a United States citizen who resides in New Jersey
and is the co-founder and principal of Thor USA, a New York
corporation, and other affiliated companies.
Atlant is a Delaware limited liability company with its
business in New York, New York, and North 3rd
liability company with its
Development LLC ig a New York limit
ss in New York, New York.
principal place of bus
Kambolin and Bennun are Uni
in New York, New York.
States citizens who reside
1 jurisdiction pursuant to 7 U.S.C.
25(c), 28 U.S.C.
1331, 1332(a), and 1367(a).
25(c) grants district courts juri
concerns and regulates dealings in commodities.
real estate is a commodity.2
mention or argument
ction for private rights of
action under the Commodities Exchange Act ("CEA
The parties make no
question or supplemental
jurisdiction in their papersi no support for any such concept is
giveni and those recitals in the amended complaint are
The sole issue is whether there is
Atlant and Kambolin contend that dismissal is appropriate
because Batrachenko is a U.S. citizen domiciled abroad in
Russia, and there
the court does not
In response, Cornwall and Soloviev argue that
Commodities are defined in 7 U.S.C.
la(9): they are primarily agricultural
Batrachenko is domiciled in New York, so
"A case is properly dismissed for lack of subject matter
under Rule 12(b) (1) when
strict court lacks
power to adjudicate it."
the statutory or constituti
Makarova v. U.S., 201 F.3d 110, 113 (2d Cir. 2000).
1332 grants the
strict courts jurisdiction
over cases between "citizens of a State" and"c
subjects of a foreign State."
United States citizens domiciled
abroad are not "citizens of a State.
subjects of a foreign State. U
are not "citizens or
Thus, a suit naming such persons
as parties cannot be based on diversity.
See Creswell v.
Sullivan & Cromwell, 922 F.2d 60, 68-69 (2d
United States citizens who are domiciled
abroad are neither citizens of any state of
the United States nor citizens or subjects
of a foreign state, and § 1332 (a) does not
provide that the courts have jurisdiction
to which such persons are
Though we are unclear as to
Congress's rationale for not granting United
parallel to those it accords to foreign
the language of § 1332(a)
specific and requires the conclusion that a
suit by or against Unit
domiciled abroad may not be premised on
See §mith v. _g_~rterl 545 F.2d
909 (5th Cir.), s:..ert: ____denied/ 431 U.S. 955,
97 S.Ct. 2677 (1977) i see also 1 Moore's
Federal - Practice
Miller & E.
Practice and Procedure, § 3621, at 577 78
complaint, though most of
therefore, since not all of the pI
are entitled to sue in
I court based
on the diversity statute, plaintiffs may not
fendant challenges a
aintiff's grounds for
diversity, the plaintiff must prove "by a preponderance of the
evidence that it exists."
Makarova, 201 F.3d at 113.
action in which jurisdiction is premised on diversi
ity must exist at the t
S . . A., 293 F.3d 579, 581
the action is
v. Paola del
For purposes of diversity jurisdiction, it is domicile that
Domicile is the
ace where one has
"his true fixed home and principal establishment, and to which
whenever he is absent, he has the intention of returning."
v. Fortuna, 157 F.3d 945, 948
(2d Cir. 1998)
13B Charles A. Wright, Arthur R. Miller & Edward H. Cooper,
Federal Practice and Procedure,
3612 at 526
(2d ed. 1984).
(1) the party's presence in the state;
the intent to remain in that state indef
. Co. v. Weavi
, 769 F. Supp. 1224, 1227 (S.D.N.Y. 1991)
To determine domicile, consider the "totality of the
or is conclusive, although the
of a married person's spouse and children (if the
couple has not
National Artists, 769 F. Supp. at 1228.
The parties' views are at odds about Batrachenko's
domicile, and ordi
ly we do not reso
motions, but reserve them for t a l .
issues of fact on
In this case, however, no
genuine issues of fact are raised, because it is apparent that
their submissions refer to different time periods.
Cornwall and Soloviev assert that Batrachenko is domiciled
in New York.
They allege that Batrachenko has four current
s in the United States (two in New Jersey and two in
New York), and claim
current driver's license.
in New Jersey, where he has a
considerable documentary evidence
he had dealings in New
York from 2005 through 2009/ did some business t
and has some lit
Plaintiffs also contend that
Batrachenko is domiciled in New York because that is where his
second wife/ Tatiana Smirnoff Zayes Batrachenko, and his
daughter, Jane Batrachenko/ reside.
Plaintiff Soloviev states:
I have known the Defendant, aleg Batrachenko
represented to me that he was a permanent
resident of New York, New York in the United
States; that he lived in New York with his
wife, Tatiana Smirnoff, and daughter Jane
Batratchenko; and that his wife,
Smirnoff sat on the board of
Thor Uni ted Corp. ("Thor USA") .
Like much of
aintiff's factual submissions, that one is
It disregards (probably through ignorance) the
unequivocal evidence that the Batrachenkos were divorced in
1999, and he understandably no longer is domiciled with her.
now lives in Moscow.
Peter Kambolin declares:
2. I personal
knew aleg Batrachenko' s ex
wife Tatiana Smirnoff when Batrachenko lived
in the United States and the two were
married, and am aware that he divorced her
in December 1999.
3. In addition, based on my conversations
with aleg Batrachenko over the years, I know
that he current
resides in Russia, in an
s late father owned at 24/1
Frunzenskaya Naberezhnaya, Apt. 60, Moscow,
Russia, which is located in the Khamnoviki
neighborhood in Moscow.
4. I also know that he lives with two of his
children[,] Maxim, age 5, and Karina, age 7.
5. Karina at tends private school in Moscow,
"Solnyshko" in the Kuntsevskiy district of
6. I also
that Batrachenko's current
of business 1S 18 Malaya
declare under penalty of perjury that the
foregoing statements are true and correct.
Kambolin Reply Decl. ~~ 2-6.
On August 30, 2012 the Moscow Ci
Court upheld the
ct court of Moscow,
"the individual O.V. Batrachenko, who
resides in the jurisdiction of Khamovniki district court of
See Ex. 6 to Am. Compl. at 4.
Batrachenko is a U.S. citizen domicil
in Moscow, Russia,
and this court has no more jurisdiction over the subject matter
of this case than it does over a multitude of business
ions in New York between
ted States citizens who do
not reside in separate states.
There being no subject matter j
action, plaintiffs' related motions
complaint (Dkt. No. 44), to
sdiction over this
leave to further amend
insufficiency (Dkt. Nos. 9 and 30), perform alternat
on Batrachenko (Dkt. No. 22), and for expanded jurisdictional
discovery (Dkt. No. 48) are deni
s Atlant Capital HoI
(Dkt. No. 30) is grant
and Kambolin's motion
,and the amended complaint is dismissed
for lack of subject matter jurisdiction.
The pending related
9, 22, 30, 44, and 48) are also dismissed.
clerk is di
to enter judgment accordingly.
New York, New York
October S, 2013
LOUIS L. STANTON
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