CBF Industria De Gusa S/A et al v. Amci Holdings,Inc., et al

Filing 91

OPINION re: 59 MOTION to Dismiss . filed by Fritz Kundrun, K-M Investment Corporation,, Hans Mende, Prime Carbon GMBH,, Primetrade,Inc.,, American Metals&Coal International,Inc.,, Amci Holdings,Inc.,, 50 MOTION to Sta y . filed by CBF Industria De Gusa S/A, Gusa Nordeste S/A., Fergumar-Ferro Gusa Do Maranhao Ltda, DA Terra Siderurgica LTDA, Siderurgica Uniao S/A., Ferguminas Siderurgica Ltda, Sidepar-Siderurgica Do Para S/A. Based on the con clusions set forth above, the Defendants' motion to dismiss the Complaint is granted. Plaintiffs have leave to renew this case against the non-SBT Defendants following successful confirmation against SBT. It is so ordered. (See Opinion.) (Signed by Judge Robert W. Sweet on 3/12/2015) (ajs) Modified on 3/16/2015 (ajs).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------------x
CBF INDUSTRIA DE GUSA S/A/, DA TERRA
SIDERURGICA LTDA, FERGUMAR - FERRO GUSA
DO MARANHAO LTD, FERGUMINAS SIDERURGICA
LTDA, GUSA NORDESTE S/A, SIDEPAR SIDERURGICA DO PARA SA, and SIDERURGICA
UNIAO S/A,

17.-=====---=:.:.:::::::::::::..:..::::::.::=::-.:::-___

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1

13 Civ. 258l(RWS)
- against OPINION

Defendants.
----------------------------------------x
A P P E A R A N C E S:
Attorneys for the Plaintiffs
NORTON ROSE FULBRIGHT
666 Fifth Avenue
New York, NY 10103
By:
David L. Barrack, Esq.
James Nespole, Esq.
Jami Mills Vibbert, Esq.
David B. Schwartz, Esq.

Attorneys for the Defendants
BUCHANAN INGERSOLL & ROONEY, P.C.
1290 Avenue of the Americas, 30th Floor
New York, NY 10104
By:
Stuart P. Slotnick, Esq.

j
I

I

,.-.,LJ 11
,.,
.:·..
'
I

G

i

-!:I~~ -~-:.~.--:Jj

Plaintiffs,

AMCI HOLDINGS, INC., AMERICAN METALS
& COAL INTERNATIONAL, INC., K-M
INVESTMENT CORPORATION, PRIME CARBON
GMBH, PRIMETRADE, INC., HANS MENDE, and
FRITZ KUNDRUN,

:

-1
1

BUCHANAN INGERSOLL & ROONEY, P.C.
One Oxford Centre, 30th Floor
301 Grant Street
Pittsburg, PA 15219
By:
Kevin P. Lucas, Esq.
Bruce A. Americus, Esq.
Alexandra P. West, Esq.

ll

Sweet, D.J.

Defendants
American Metals
K-M

Investment

Carbon"),

Corporation

Corporate

Kundrun

Inc.

Holdings,

Coal International,

&

("AMCI

Inc.

( "K-M") ,

Inc.

Primetrade,

"Non-SBT
Fritz

AMCI

("American Metals"),

Prime

Carbon

("Kundrun")

and

GMBH

("Prime

(collectively,

("Primetrade")

Defendants"),

Holdings"),

Hans

Mende

(collectively,

the

("Mende")

the

and

"Individual

Defendants," and together with the Non-SBT Corporate Defendants,
"Defendants")
12 (b) ( 3)
well

have moved pursuant to Rules

and 12 (b) ( 6)

as

under

the

12 (b) ( 1) ,

12 (b) ( 2) ,

of the Federal Rules of Civil Procedure as
doctrines

of

forum

non

conveniens

and

international comity abstention to dismiss the Amended Complaint
("AC") of Plaintiffs CBF Ind6stria de Gusa S/A ("CBF"),
Siderurgica
Ferguminas

Ltda,

Fergumar

Siderurgica

Siderurgica

Do

(collectively,

ParA

Ferro

Ltda,

S/A

Gusa

("Gusa")

"Plaintiffs").

Gusa

Do

Nordeste
and

Maranhao
S/A,

Siderurgica

Plaintiffs

have

Da Terra
Ltda,

Sidepar
Uniao

moved

to

S/A
stay

this case.

For the reasons set forth below,
granted and Plaintiffs' motion is denied.

1

Defendants' motion is

I.

Prior Proceedings

Plaintiffs
(the

Defendants'

an

initial

Action"

"Enforcement

filed

or

"EA")

on

the

EA

motion

to

dismiss,

with leave to replead on April
S/A/ v. AMCI Holdings,

On

April

complaint

("AC")

Plaintiffs

also

Inc.,

Industria De Gusa S/A v.
"Confirmation

a

2014.

The

Upon

was

dismissed

(S.D.N.Y. 2014).

filed
On

action

Steel Base Trade AG,

Action").

action

2013.

18,

this

CBF Industria de Gusa

Action.

separate

in

complaint

Plaintiffs

Enforcement

initiated

April

14 F.Supp.3d 463

2014,

2 9,

in

9,

complaint

Confirmation

an

the

under

amended

same

date,

caption

CBF

14 Ci v.

3034

(the

Action

has

been

recently dismissed.

Plaintiffs
Action on May 9,

2014

the EAAC on July 22,
of

those

motions

was

made

a

motion

and Defendants
2014.
heard,

to

stay

the

Enforcement

filed a motion to dismiss

Oral argument with respect to both
and

the

motion

was

marked

fully

submitted, on October 8, 2014.

II.

Allegations of the Complaint

The

EAAC's

allegations

2

largely

track

those

of

the

original
dated

complaint

April

18,

in

the

2013

following facts,

Enforcement

with

AC

Action.

dated

April

Compare
29,

Compl.

2014.

The

assumed to be true, are taken from the AC:

Plaintiffs seek to enforce a foreign arbitration under
the

Convention

on

the

Recognition

and

Enforcement

Arbi tr al Awards

(the "New York Convention")

alter

successor-in-interest

The

egos
foreign

Chamber
which

and

of

arbitration
Commerce

issued

million

in

Complaint

an

of

alleges
the

that

the

Non-SBT

in sol vent

of

and

SBT

unable

the

award

by

the

award

Plaintiffs

transferred the business,
liabilities

to

("Ar bi tr al

arbitration

favor

controlled

Paris

Tribunal"

("Award")

against

Individual

Corporate

to

Prime

Carbon,

to

satisfy the Award.

"Tribunal")

excess
(AC

of

$48
The

1.)

<JI

dominated

and

and

fraudulently

but not all,

thereby

SBT.

International

Defendants

Defendants

debtor

or

in

SBT.

assets and most,

Foreign

against the alleged

conducted

was

of

of the

rendering

(Id.)

SBT

Plaintiffs

allege this is not the first time the Individual Defendants had
undergone a scheme to defraud creditors.

P1ainti££s' Contracts With SBT

Plaintiffs are companies organized under the
and with their offices located in,

3

Brazil,

laws of,

and they produce and

supply pig iron, an intermediate metal made by smelting iron ore
with a

high-carbon fuel.

further

refined

through

steel or wrought iron.

(AC 'JI 10-16,
melting

and

27.)

Pig iron can be

blending

processes

into

(Id. 'JI 27.)

Plaintiffs began selling pig iron to Primetrade AG,
Swiss
(Id.

company and predecessor to SBT,
'JI 28.)

over

fifteen

years

a

ago.

Primetrade AG supplied a portion of this pig iron

to its U.S. subsidiary, Primetrade.

Primetrade

AG

became

(Id. 'JI 30.)

SBT

in

2004

explosion on a bulk carrier carrying cargo for
Primetrade AG.

On or about February 28,

2004,

following

an

the benefit of

off the coast of

Colombia, a bulk carrier, the YTHAN, exploded, causing the death
of the master and five crew members of the vessel.

(Id.

'JI 31.)

The YTHAN cargo was being supplied for the benefit of Primetrade
AG.

(Id.)

Following the loss of life and cargo on the YTHAN,

Primetrade AG transferred its business to SBT on or about April
6, 2005 and began operating with the same officers and directors
as and at the same offices as Primetrade AG.
that

time,

Moreira

Primetrade

("Moreira")

AG's

representative

informed a

(Id.
in

representative

'JI 32.)

Brazil,
of

At

Silvio

CBF and Gusa

that Primetrade AG had to change its name due to its inability
to

obtain

financing

and

otherwise

4

continue

its

business

following litigation arising out of the vessel explosion.

(Id.)

Moreira assured Plaintiffs that the business would be the same,
just under a different name,

and for

some time

Plaintiffs and

SBT continued to contract for the sale of pig iron in the same
manner as before.

(Id.)

On or about October 5,
("AMCI International"),
and Kundrun,
(Id.

USA.

AMCI

2007,

a company owned and controlled by Mende

purchased SBT and its U.S.
Moreira,

33.)

<[

International GmbH

then

subsidiary,

an

SBT

employee,

representative of CBF and Gusa of the purchase.
January 1,

2008 and September 17,

owned by the "AMC! Family")

2008,

Primetrade

(Id.)

told

a

Between

Plaintiffs and SBT

(now

entered into ten separate contracts

for the sale and purchase of 103,500 metric tons of pig iron to
SBT

for

total

consideration to

(the "Contracts") .
signatories

of

signatories.

(Id.

the
(Id.

<[

Plaintiffs

36.)

$7 6 million

Only Plaintiffs and SBT are the

34.)

Contracts,
<[

of over

none

of

the

Defendants

are

Plaintiffs allege that four of the

ten Contracts provide for delivery of the pig iron in the United
States.

(Id.

<[

The scheduled time of shipment of the pig

37.)

iron was from April 2008 through December 1, 2008.

Each

of

the

contracts

arbitration provision:

5

contained

(Id.<[ 38.)

the

following

All disputes arising in connection with the present
contract shall be finally settled under the rules of
Conciliation and Arbitration of the
International
Chamber of Commerce, Paris, by one or more arbiter,
appointed in accordance with said rules.
(Id. 'TI 39.)

SBT initially purchased 33,056 metric tons of pig iron
under

the

Contracts.

this amount,

(Id.

'TI

However,

41.)

SBT stopped its purchases.

SBT was in default of the Contracts.

When

contacted

by

(Id.)

after

purchasing

By October 2008,

(Id.)

Plaintiffs

regarding

the

default,

Defendants stated in an e-mail dated November 20, 2008:

You know our group and it is not our style to walk
away from obligations. . . . We will need a long time
to work this out together.
My message to your group
is:
we are not walking away!!!

(Id. 'TI 42.)

But after delivery of this e-mail,

SBT continued to

be in default and did not purchase any further pig iron.
4 3)

Instead,

at this time.

(Id. 'TI

SBT was purchasing pig iron from other suppliers
(Id.)

6

P1ainti££s Initiate The ICC Arbitration

On September 11,

2 0 0 9,

Plaintiffs sent notice to SBT

regarding the outstanding amounts due and proposed a negotiation
prior to submitting the dispute to the ICC Paris.

(Id.

SBT

Plaintiffs'

requested

notice,

an

extension

purportedly

to

related issues.

(Id.

time

to

<JI

to

time

assess
<JI

and

respond

evaluate

to

the

Contracts

and

Plaintiff agreed to extend SBT's

45.)

the

to

44.)

notice

until

October

2009.

5,

(Id.

Unbeknownst to Plaintiffs, SBT was at the time unloading

4 6.)

its

respond

of

<JI

assets,

including

its

asset

Primetrade.

proceed

under

Prime

Carbon,

The

unloading

operations

continued

Mende-

and

Kundrun-controlled

assets

caused SBT

to

to

main

become

default of the Contracts.

company.
unable

(Id.

After the October 5,

<JI

to pay

Business

Plaintiffs

another
of

SBT

for

its

45.)

2 0 0 9 deadline passed,

Plaintiffs

filed a Request for Arbitration with the ICC Paris on November
16, 2009.
by

(Id.

requesting

<JI

an

4 7.)

SBT sought to delay the ICC Arbitration

extension

of

time

to

answer

the

Request

for

Arbitration, which caused the ICC Paris to extend SBT's deadline
to

answer

to

January

2 7,

2010.

(Id.

<JI

48.)

SBT

initially

participated in and indicated its intent to defend on the merits
the

liability

and

damages

claims

7

asserted

in

the

ICC

Arbitration,

and

in

January

2010,

SBT

filed

an

Answer

Plaintiffs' Request for Arbitration

("Arbitration Answer").

Arbitration

Plaintiffs

to

Answer

asserted

that

had

The

temporarily

stopped production of pig iron and accordingly "were not able to
deliver
[SBT]

[SBT]

for

with pig iron" and that they "ha[d]

one

year

as

they

knew

their contractual obligation to
pig iron to

[SBT]

that

[]

due to a (n)

they

its

first

the

ICC

of

pig

2010.

(Id.

'II

January 11,

not

(at least temporary)

Arbitration

purchase

could

fulfill

deliver the agreed amount of

shortage in the production of pig iron."

As

not contacted

(Award 'II 13.)

continued,

iron

in

the

Prime

Carbon made

Brazilian

Concerned that

49.)

stop of or

market

this

on

purchase

represented an attempt by SBT to evade its obligations under the
Contracts,
attention
sent

a

Plaintiffs
of

the

letter

to

ICC

brought

the

Paris.

On

the

ICC

Paris

information
January

15,

informing

it

it

had

to

the

2010,

Plaintiffs

that

SBT may be

transferring its business operations and assets to Prime Carbon
and requested SBT provide a guarantee in the amount being sought
in

the

advised

arbitration.
that:

International
owners of SBT)
Prime Carbon;

( i)

(Id.
Prime

(SBT' s

50.)

Carbon

parent);

was the
(iii)

'II

had

(ii)

In

the

letter,

the

same

Mende

(one

Plaintiffs

address

as

of

ultimate

the

AMCI

President of the Board of Directors of

former directors of SBT were now directors

8

of

Prime

Carbon;

and

(iv)

SBT

had

discontinued

its

web

site.

(Id.)

On

January

25,

2010,

SBT

responded

to

Plaintiffs'

letter to ICC Paris:

It is true that the website www.steelbasetrade.com was
shut down at the beginning of January 2010 [.]
The
reason is that the Respondent first has to analyze his
position regarding pending or imminent claims for
damages from purchasers as well as against suppliers
as well as his financial situation [.]
Therefore, the
Respondent has at least temporarily suspended his
business
activities.
Please
note,
however,
the
Respondent is still existing and has not resolved to
be dissolved and liquidated.

(Id. 'lI 51.)

But

despite

its

representation

Plaintiffs in January 2010,

to

the

ICC

Paris

and

SBT had earlier signed an agreement

transferring its business assets to Prime Carbon on December 27,
2009

(the

"Transfer Agreement").

(Id.

'lI

52.)

SBT

also

sent

letters to various of its pig iron suppliers on January 18, 2010
(the "January 18, 2010 Letters")
November

30,

2009,

transferred

and

the

Carbon;

(ii)

Prime

Carbon was

"the new and sole owner of the

Goods";

(iii)

Prime

to

transferred

rights

with
9

to

Goods

Prime

all

Goods"

"all

as of

title

"assumes

the

had

(i)

respective

Carbon

of

SBT

informing them that:

respect

the

Goods";

and

(iv)

Prime

contracts between your
the

the

"is

willing

company and

same conditions."

advised

Carbon

(Id.

suppliers

'JI

"to

[ SBT]

enter

from

into

all

and to perform under

Additionally,

53.)

act

to

the

time

the

letters

being

only

on

instruction of Prime Carbon" and that representatives of Prime
Carbon would be
days."

(Id.

contacting the

suppliers

"within the

next

few

The letters were signed by Stephan Herzig

'JI 54.)

("Herzig"), the only remaining director of SBT on behalf of SBT;
(Id.

Herzig would later become a director of Prime Carbon.

Plaintiffs did not receive the January 18, 2010 Letters or

55.)

any other communication from Prime Carbon.

(Id. 'JI 57.)

The Transfer Agreement was signed by Herzig,
and

'II

Thomas

("Buerger") ,

Buerger

a

former

for SBT,

director

of

SBT,

director of Prime Carbon and the Chief Financial Officer of AMCI
Capital at the time, who signed on behalf of Prime Carbon.

SBT and Prime Carbon designated the Transfer Agreement

'JI 58.)

as

a

(Id.

"single

million

in

entity

assets

succession."
to

Prime

million of liabilities.
Primetrade,

SBT's

transferred

through

(Id.)

Carbon

(Id. 'JI 59.)

U.S.
a

for

transferred
along

$1,

$126
$130

with

SBT's most valuable asset,

subsidiary,
transfer

It

was
of

the

one

of

1,000

the

shares

Primetrade's Common Capital Stock to Prime Carbon.

(Id.)

Carbon

in

also

assumed

SBT' s

bank

10

lines,

presumably

assets
of

Prime

order

to

continue
assets,

its

business;

including

its

cars

and

insurance
computers,

policies
were

and

also

physical

transferred.

(Id. '!I'll 61-62.)

Five
Carbon.

directors
'II

(Id.

employment

of

SBT

became

directors

of

Prime

Prime Carbon also assumed ten of SBT' s

66.)

contracts.

(Id.)

Mende

was

the

President

of

the

Board of Directors of Prime Carbon and controlled Prime Carbon
during

the

transfer

period;

Prime

Carbon

was

(Id.

ultimately owned by Mende and Kundrun.

at

all

times

Defendants

'II 67.)

later caused Prime Carbon to transfer the shares of Primetrade
to AMCI Holdings,

another U.S.

control of Mende and Kundrun.

SBT
Cantonal
filing

filed

Court
for

of

for
the

company under the ownership and
(Id. '!I'll 69-70.)

bankruptcy
Canton

bankruptcy,

of

April

Zug.

April

28,

(Id.

15,000 to Prime Carbon.

on

'II 78.)

One

2010,

SBT

2 9'

2010

in

the

day

prior

to

the

transferred

CHF

Neither SBT's minutes nor

Prime Carbon's minutes nor any transfer agreement explained this
transfer of money.
director

Herzig,

deposit

its

Switzerland.

(Id.)
passed a

balance

That same day,

SBT,

through its sole

resolution providing that

sheet

to

(Id. 'II 77.)

11

the

bankruptcy

SBT would
judge

in

Subsequently,
administrator,

sought

through

SBT,
a

stay

of

the

the

bankruptcy

arbitration

pending before the ICC Paris on June 10, 2010.

proceedings

(Id.

80.)
(Id.)

ICC Paris did not rule on this request at that time.
bankruptcy

administrator

December 15,

its

request

The

for

a

stay

2010 to the tribunal in the ICC Arbitration

Tribunal").

(Id.

informed

ICC

the

creditors

renewed

The

<JI

did

SBT's

81.)

<JI

Tribunal

not

wish

that

to

bankruptcy

the

defend

("ICC

administrator

bankruptcy
the

on

claims

estate
in

and

the

ICC

Arbitration, as the bankruptcy administrator had determined that
the

estate

did

not

potential award.

The
SBT's

have

(Id.

<JI

the

if

to

defend

SBT

or

they

pursuant

Swiss

law

then

would

like

to
to

proceed

Arbitration on SBT' s behalf on February 23,
None

of

SBT's

Arbitration
(Id.

<JI

as

85.)

creditors
no

pay

any

83.)

administrator

creditors

funds

assets

As a result,

in

sought

to

defend

SBT

existed

to

distribute

in
to

the

ICC

'J[

84.)

the

(Id.

2011.

asked

ICC

creditors.

the bankruptcy administrator admitted

the claims against SBT by Plaintiffs in the ICC Arbitration,
well as the damages
51,756,269.75.

sought by Plaintiffs

as

in the amount of CHF

(Id. 'J[ 87.)

Plaintiffs made

several

12

requests

to

the

ICC Tribunal

to take action with regards to SBT and its assets transferred to
Prime Carbon throughout the arbitration.

Plaintiffs submitted a

June

Conservatory

23,

2010

petition

for

Interim

or

Measures

under Article 23 of the International Chamber of Commerce Rules
("ICC

Rules")

alleging

wrongful

asset

transfers

and

requested

the ICC Tribunal grant them relief allowing them to seize assets
held
<JI

either

22.)

by

SBT

or

in

the

name

of

Prime

Carbon.

In follow-up correspondences and memorandums,

specifically

requested

that

the

ICC

Tribunal

(Award

Plaintiffs

"recognize

the

existence of fraudulent acts" as a basis upon which Plaintiffs
might reach the assets of third parties
as illegal the fraud perpetrated by
held liable,
[SBT's]

shareholders

course

[SBT],

<JI

25),

"recognize

which shall then be

permitting Claimants to pursue its credits against

disregard doctrine"
the

(id.

of

the

and

(id.

managers,

<JI

application

of

the

"recognize these acts taken in

26),

procedure

by

as

frauds"

(id.

<JI

and

35) ,

"to

decide upon the interim measures which are necessary to make an
upcoming award effective"
that

it

was

"pursuing

a

(id.

[SBT]

make

[SBT's]

3 6) .

reasonable

their credit duly recognized,
by

<JI

Plaintiffs

also

relief by means

of

argued
having

as well as the fraud carried out

so that they can pierce the corporate veil and
shareholders,

directors

and

affiliated

liable for the losses caused to [Plaintiffs]."
ICC Tribunal considered Plaintiffs'

13

allegations

(Id.

<JI

companies
33.)

(see id.

CJ!

The
28),

and deferred resolution of these issues until the merits phase
of the proceedings.

Following notice that SBT admitted the claims against
it,

on November 9,

2011 the ICC Tribunal rendered the Award in

favor of Plaintiffs for $48,053,462.16 plus interest.

The Award

also granted Plaintiffs' arbitration costs and legal fees in the
amount

of

$360, 000.

grant Plaintiffs'
of

SBT's

relating

other
to

the

(AC

'II

However,

90.)

the Award did not

requested relief vis-a-vis Prime Carbon or any
affiliates,
alleged

transfer

held that Plaintiffs " [did]

or

shareholders
of

SBT' s

directors,

assets.

not introduce []

or

The Award

sufficient evidence

in the present proceedings to demonstrate the existence of fraud
(Award 'II 4 7) .

in the bankruptcy proceedings."

dismissed those claims made by Plaintiffs.

Plaintiffs

were

unable

to

The Award then

(Id. 'II 49.)

collect

any money

awarded

under the Award against SBT due to the transfer of SBT's assets
to Prime Carbon.

(AC 'II 91.)

Defendants' Al.1eged Pattern And Practice Of
Defrauding Contractua1 Partners

According

to

the

Complaint,

14

the

business

model

of

Mende

and

Kundrun

is

breach unfavorable
avoid

creditors

a

number

mining

engage

by moving

of

in

beneficial

transactions,

contracts when the market price

into new companies.
form

to

assets

corporate
part

entities

of

from

indebted

To do this,

'II 93.)

(Id.

industry as

away

the

and

"AMCI

changes

and

companies

Mende and Kundrun

promote

Group"

them

or "AMCI

to

the

Family."

(Id. 'II 94.)

The AMCI Family holds itself out as and operates as

one

several

family;

share

the

same

of

the

office

companies

space.

in

U.S.

Mende

(Id.)

the

and

and/or control all of the companies

in the AMCI

in

through

their

they

individual

dominate

companies

and

capacities
control.

in the U.S.

AMCI

or

'II

(Id.

AMCI

Kundrun

Family,

corporate
Several

96.)

Family
own

either

entities
of

the

Family share office space in either

(Id. 'II 107.)

Delaware or Connecticut.

Defendants Mende and Kundrun have carried out similar
schemes
AMCI

against

(Export)

plaintiff,

other
Corp·,

Adani

companies.

In Adani

05-cv-0304

No.

Exports

Limited

Exports

(W.D.

("Adani")

Pa.

AMCI

Export

obligations.

allegedly

(AC 'II 121.)

did

not

2006)'

entered

contract with defendant AMCI Export Corporation
and

Limited v.

fulfill

into

the
a

("AMCI Export"),
its

contract

Plaintiffs in Adani alleged that the

defendants engaged in a scheme that transferred the coal-trading
business

and assets

of AMCI

Export

15

to a

different

entity that

had been formed by Mende,
<JI

The

122.)

District
dismiss
count

of

Kundrun and a third individual.

Honorable

Pennsylvania

pursuant
against

to

one

Terrence

F.

denied all

Rule

12 (b) ( 6),

of

of

the

defendants'

aside

and

defendant,

McVerry

all

from

(Id.

Western

motions

dismissing

one

for

summary

See Adani Exports,

judgment to dismiss the complaint.

motions

to

2006 WL

1785707; 2006 WL 2924786; 2006 WL 2924783; 2007 WL 4298525.

The

case did not reach the merits of the allegations: the action was
settled on the eve of trial.

Plaintiffs' Swiss Action

Defendants
Plaintiffs

also

have

noted

commenced

an

that

action

their direct claims for the damages

on

in

June

12,

Switzerland

2012,

pursuing

Plaintiffs asserted in the

ICC Arbitration and the SBT bankruptcy against various parties,
including SBT directors, auditors and Defendants Mende and Prime
Carbon

(the "Swiss Action").

One of the

claims

in the

(Def.

MTD Mem.

Pe ti ti on for

in Supp't at 19.)

Reconciliation was that

Defendants Mende and Prime Carbon acted wrongfully by assisting
in the transactions transferring certain assets and liabilities
from

SBT

to

Prime

Carbon.

Plaintiffs pursued their
assigned

to

them

by

the

own direct
Zug

In

(Id.)

claims

Bankruptcy

16

the

Swiss

and not

Off ice.

Action,

SBT
(Id.)

claims
The

reconciliation hearing
in Zug.

(Id.)

magistrate

for

Plaintiffs'

Swiss Action took place

The parties did not reach a settlement,

granted leave

to

Plaintiffs

to

the Cantonal Court of the Canton of Zug,

file

the

and the

claim with

which Plaintiffs have

not yet done.

III. The Applicable Standards

Chapter
U.S. C.

201-08,

§§

awards,

2 of

the

Federal Arbitration Act

empowers

such as this one,

federal

2009).

Storm LLC,

award

enforce

arbi tr al

584 F. 3d 396,

404

When a party seeks confirmation of an arbitral

award under the New York Convention,
the

to

9

governed by the New York Convention.

See Telenor Mobile Commc' ns AS v.
(2d Cir.

courts

("FAA") ,

unless

it

finds

one

of

"[t]he court shall confirm
the

grounds

for

refusal

or

deferral of recognition or enforcement of the award specified in
the

said

Convention."

9

u.s.c.

§

207;

Universalis S.A. v. Encyclopaedia Britannica,
90

(2d Cir. 2005).

see

Encyclopaedia

Inc.,

403 F.3d 85,

"Article V of the Convention specifies seven

exclusive grounds upon which courts may refuse to recognize an
award."

Encyclopaedia Universalis, 403 F.3d at 90.

"Given
international

the

strong

arbitration,

public

policy

review of arbi tr al

17

in
awards

favor

of

under the

New York Convention
undermining
disputes

the

twin

(quoting

126

limited

goals

of

15,

23

omitted));

&

(2d

accord

Standard Microsystems

arbitration,

Sons,

Cir.

long

1997)

Corp. ,

103

to

403
v.

avoid

settling

and

W.L.L.

Willemijn

order

namely,

Universalis,

Ahmed Alghanim

F.3d

in

avoiding

and

Encyclo.E_aedia

Yusuf

citations
v.

'very

efficiently

litigation.'"

Inc.,

is

expensive

F. 3d

(additional

90

"R"

Toys

at

Us,

internal

Houdstermaatschappij,

F. 3d

9,

12

( 2d Cir.

BV

19 97)

("The court's function in confirming or vacating an arbitration
award is severely limited.")
However,

(citation and alteration omitted) .

a petition to confirm an arbitral award is "treated as

akin to a motion for summary judgment."
v. Gottdiener,

A
dismissed
12 (b) (1)

lack

when

constitutional
States,

201

sufficient

of

the
power

is

subject

district

F.3d 110,

jurisdiction

Blair & Co.,

to

complaint

matter
court

lacks
it."

(2d Cir.

2000).

challenged,

the

be

jurisdiction

adjudicate

113

may

the

"properly
under

statutory

Makarova

v.

omitted)

v.

Gaskill,

315

The party asserting

the burden of proving,

442,

U.S.

or

Once subject matter

burden

446

subject matter

of

establishing

(1942)

See

(citations

jurisdiction has

by a preponderance of the evidence,

18

Rule

United

jurisdiction rests with the party asserting that it exists.
Thomson

Inc.

462 F.3d 95, 109 (2d Cir. 2006).

facially

for

D.H.

that

the

court

has

subject

matter

jurisdiction.

See Makarova,

201

F.3d at 113.

In

addition,

Rule

12 (b) (2)

requires

that

a

court

dismiss a claim if the court does not have personal jurisdiction
over

the

establish

personal

[the

defendant]

was

properly

Container

raised

dismiss,

Am.

R.

Ltd.,
1,

[a

2010)

e.

08-4892,

(citations

WL

show

forum

and

Euro-America

Once

Rule

that

state

2194827,

omitted).
a

must

v.

Kfr.

on

"To

12 (b) (2).

the

2010

jurisdictional defense

jurisdiction over a

Inc., 286 F.3d 81,

showing

is

favorable
v.

not
to

made

the

Drakos,

140

As such,

pleadings,

including

and

Makarova,

the
201

by

party

omitted).

motion

with

Salmassi
No.

P.

plaintiff]

contacts

84

defendant.

a

at

*4

defendant

12 (b)

motion

to

Carozzi

shown affirmatively,
from

asserting
129,

the

it."

131

(2d

pleadings
Shipping
Cir.

1998)

and that
inferences

Fin.

Servs.

(citations

a court may rely on evidence outside of the
declarations

records

F.3d

drawing

F.3d

Distefano v.

(2d Cir. 2001).

" [ J] urisdiction must be

Corp.

Civ.

the plaintiff bears the burden of establishing that the

court has
N.

a

minimum

served."

June

Fed.

jurisdiction,

has

Line

(S.D.N.Y.
has

See

defendant.

at

attached
113

("In

19

submitted
to

these

resolving

in

support

of

declarations.
a

motion

to

the
See

dismiss

under Rule 12(b) (1),

a district court

. may refer to

evidence outside the pleadings.").

Rule

12 (b) ( 3)

provides

that

a

defendant may move

dismiss a complaint on the grounds of improper venue.
R. Civ. P. 12 (b) (3).

Port Auth.

(S.D.N.Y.

2001).

plaintiff

need

Gulf Ins.

Co.

of N.Y.

However,
only make

v.

(quoting CutCo

See Fed.

"[T]he burden of showing that venue in the

forum district is proper falls on the plaintiff."
McKeown v.

to

162 F.

Supp.

2d 173,

absent an evidentiary hearing,
a

prima

Glasbrenner,

Indus.,

N.J.,

&

E.P.A ex rel.

Inc.

facie

417
v.

showing

F.3d 353,

Naughton,

355

806

of

183

"'the

[venue].'"

(2d Cir.

F.2d 361,

2005)
364-65

(2dCir. 1986)).

To
12 (b) (6),

survive

a

motion

"a complaint must

accepted as true,
on its face.'"

to

(2007)) .

This

plaintiffs
"nudge[]

need
their

plausible."

544,

is

pursuant

contain sufficient

Iqbal,

1937, 1940, 173 L. Ed. 2d 868
550 U.S.

dismiss

to

Rule

factual matter,

'state a claim to relief that is plausible

Ashcroft v.

Twombly,

to

not

only
claims

570,

556 U.S.

(2009)

127 S.

intended
allege
across

663, 129 S. Ct.

(quoting Bell Atl. Corp. v.
Ct.

to

facts
the

Twombly, 550 U.S. at 570.

20

662,

1955,

be

an

167 L.
onerous

sufficient
line

from

Ed.

2d 929

burden,

as

order

to

conceivable

to

in

Plaintiffs' Claim Is Dismissed

As

discussed

above,

Plaintiffs'

initial

this Enforcement Action was dismissed,

in part,

first

prior

confirm

the

award

against

SBT

enforce it against its alter egos.

complaint

for

to

in

failure to

attempting

CBF Industria,

14 F.

to

Supp.

3d at 479

(dismissing Plaintiffs' earlier complaint because "the

Award

unconfirmed,

is

and

Plaintiffs'

enforcement

claim

and

First Cause of Action is dismissed absent confirmation").

Plaintiffs,
dismiss

the

Amended

exception

to

award

a

is

respondent's

the

in

opposition

Complaint,

principle

prerequisite
alter egos.

Eastern

States

1963) .

Plaintiffs

urge

that

to

to

the

the

instant
Court

confirmation

enforcement

Petroleum

Corp.,

contend

that

312
the

F.2d

&

an

arbitral

the

arbitral

301

confirmation

intentional

wrongdoing,

the award."

(2d

v.

Cir.

prerequisite

through their own

Pls.' MTD Mem. in Opp'n 22.

Plaintiffs
justifying

an

have

exception

not
to

any

an

Trading Co.

299,

should not apply where "alter ego defendants,
foreclosed

of

to

create

to

against

See Orion Shipping

motion

opportunity

marshalled
the

21

persuasive

confirmation

to

confirm

authority

requirement

for

enforcement.
than

call

See,

e.g.,

Cape

Several cases cited by Plaintiffs reinforce rather
into

question

the

Constellation

Ltd.,

En'gy Cmdt'ies

Supp.

2d

confirmation

of

801

(establishing
enforcement

confirmation-first

F.

against

alter

211,

v.

221-222

award

egos) ;

Grp.

Transfiled ER

(S. D.N. Y.

prior

Overseas

requirement.

determining

to

Pri v.

2011)

Inv.

Corp.

v.

Marine Shp'g Corp., No. 02 Civ. 475, 2002 WL 31106349, at * 1, 3
(S.D.N. Y. Sept. 19, 2002)

Moreover,

(same).

Plaintiffs'

undermine

"the

twin

disputes

efficiently

litigation."

See

Plaintiffs have
"wrongdoing"
Tribunal.
480

of

arbitration,

avoiding

and

Encyclopaedia

respect

See generally,

(noting Plaintiffs'

proceedings.")

namely,

long

4 03

would
settling

and

Uni versalis,

Defendants

to

CBF Industria,

expensive
F. 3d

at

90.

the

to

14 F.

the

Supp.

Arbitral
3d at 4 7 9-

allegations and the Arbitral Tribunal's

"Plaintiffs did not

demonstrate

carve-out

fully presented their allegations of fraud and

with

holding that
to

goals

proposed

existence

(internal

introduce

of

quotations

a

fraud

sufficient
in

and ellipses

the

evidence

bankruptcy

omitted) .

As

was explained in the earlier motion to dismiss Opinion in this
action,
modify

"this
the

Court

Award,"

sits
which

in

secondary

includes

refusal to credit Plaintiffs'

the

jurisdiction and
Arbitration

cannot

Tribunal's

allegations of wrongdoing against

22

Defendants.

See

CBF Industria, 14 F. Supp. 3d at 480.

In keeping with Orion and this Court's earlier Opinion
in

this

case,

Plaintiffs

cannot

seek

to

enforce

the

Award

against SBT's purported alter egos prior to confirming the Award
against SBT.
3034,

As was decided in the Confirmation Action, 14 Civ.

SBT lacks capacity to be sued under Rule 17 and the Award

cannot, therefore, be confirmed against it in this Court.

The

above

consequently,

warrants

dismissal

denial of Plaintiffs'

of

this

action

motion to stay.

and,

Plaintiffs

requested a stay of this Enforcement Action on the theory that
the

instant

decision

in

motion
the

to

dismiss

Confirmation

was

best

Action

addressed

in

14

Civ.

parallel proceedings in France and Switzerland.
in Supp' t

3-4.

the

efficacy

3034

and

of

their

Switzerland altogether.

Moreover,

in

as

Plaintiffs have doubts as

confirmation

See Pls.'

a

See Pls.' Mem.

The Confirmation Action has been dismissed,

is the Enforcement Action.
to

following

Mem.

efforts

in

in Supp' t

France

2-3.

and

A stay

under these circumstances will not further the goal of judicial
economy,

since

no

outstanding

claims

remain

in

either

the

Enforcement or Confirmation Actions before this Court and since
the probability of confirmation in other
unclear.

jurisdictions appears

Plaintiffs' motion to stay is therefore denied.

23

Conclusion

Based
Defendants'
Plaintiffs

on

motion
have

the
to

leave

conclusions
dismiss

to

renew

the
this

set

forth

Complaint
case

against

above,
is
the

the

granted.
non-SBT

Defendants following successful confirmation against SBT.

It is so ordered.
~')

j--CA/'f .

New York, NY
March
201s

/r

ROBERT W. SWEET
U.S.D.J.

24