CBF Industria De Gusa SA et al v. Steel Base Trade AG et al

Filing 47

OPINION re: 27 MOTION to Dismiss . filed by K-M Investment Corporation, Fritz Kundrun, AMCI Holdings Inc, American Metals & Coal International Inc., Hans Mende, Prime Carbon GMBH,, Primetrade Inc. Based on the conclusions set forth above, the Defendants' motion to dismiss the Complaint is granted and the Complaint is dismissed. It is so ordered. (See Opinion.) (Signed by Judge Robert W. Sweet on 3/12/2015) (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,
~

rr
g~~~~~~i - -

-=,,

!I ELECTRONICALLY

rrLED 11

I DOC#:
I
DATE FILED: 3:10:;[2 .JI

l

Plaintiffs,
14 Civ. 3034
- against OPINION
STEEL BASE TRADE AG, AMCI HOLDINGS,
INC., AMERICAN METALS & COAL
INTERNATIONAL, INC., K-M INVESTMENT
CORPORATION, PRIME CARBON GMBH,
PRIMETRADE, INC., HANS MENDE, and FRITZ
KUNDRUN,

Defendants.
----------------------------------------x
A P P E A RA 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

(RWS)

By:

Stuart P. Slotnick, Esq.

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"),

AMCI

Holdings,

Coal International,

&

Corporation

Primetrade,

("K-M"),

Inc.

("Kundrun")

Corporate

Defendants

12 (b) ( 6)
under
comity

of

the

Fergumar -

to

doctrines

de

Gusa

of

to

GMBH

("Prime
the

(collectively,
("Mende")

Rules

dismiss

Defendants,

12 (b) ( 1) ,
of

forum non

S/A

Ferro Gusa

Carbon

and Fritz

the "Individual Defendants");

Individual

Rules

Federal

abstention

Industria

Ltda,

the

Prime

("SBT" and collectively with the Non-SBT

and

have moved pursuant

Holdings"),

("American Metals") ,

Hans Mende

(collectively,

and Steel Base Trade AG

Inc.

("Primetrade")

"Non-SBT Corporate Defendants");
Kundrun

("AMCI

Inc.

the

( "CBF")

I

12 (b) ( 2) ,

Civil

Sidepar -

12 (b) ( 3)

Procedure

conveniens

and

as

as

international

of

Da

Siderurgica

Terra

and

well

Complaint

Do Maranhao Ltda,

Gusa Nordeste S/A,

"Defendants")

Plaintiffs

CBF

Ltda,

Ferguminas Siderurgica

Siderurgica Do Para S/A,

and

Siderurgica Uniao S/A (collectively, "Plaintiffs") .

For the reasons set forth below,
dismiss is granted.

Prior Proceedings

1

Defendants' motion to

Plaintiffs
Action"

or

"CA")

Plaintiffs'

S/A

2014)

v.

of

April

AMCI

in

in

this

29,

a

action

2014,

related

Holdings,
have

French

Motion

to

Confirmation Action

Inc.,

also

and

action

Stay

2

complaint

14

(the

of

"Enforcement

463

(S.D.N.Y.

parallel

confirmation

See

Mem.

Enforcement

contains

dismissal

See CBF Industria de

courts.

filed

"Confirmation

F.Supp.3d

initiated

Swiss

(the

following

filed under 13 Civ. 2581.

Plaintiffs

proceedings
Supp't

on

complaint

Action" or "EA")
Gusa

initiated

one

Pls.'
Action.

claim,

in
This

confirmation

of Plaintiffs' Arbitral Award against SBT pursuant to 9 U.S.C.
207.

Compl.

~~

135-42.

§

The instant motion to dismiss was heard

and marked fully submitted on October 8, 2014.

Allegations of the Complaint

The

factual

allegations

contained

in

the

Complaint,

assumed true for the purposes of the instant motion, are largely
identical to those in the EA action's amended complaint. 1
Amended Complaint in the Enforcement Action.

Cf.

Familiarity with

those allegations is assumed.

The sole divergence between the two complaints is that this Complaint adds
substantive factual allegations regarding alter ego jurisdiction over SBT its
corporate alter egos.
See Compl. ~~ 26-36.
These allegations, also presumed
true for the purposes of the instant motion, are not germane to the
discussion below.
1

2

The Applicable Standards

Chapter
U.S.C.

such as

the

Federal

Arbitration

empowers

201-08,

§§

awards,

2

of

federal

courts

this

one,

2009).

Storm LLC,

award

confirm

9

arbitral

584

F.3d 396,

404

When a party seeks confirmation of an arbitral

award under the New York Convention,
the

("FAA"),

governed by the New York Convention.

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

to

Act

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

Universalis S.A.
90

(2d Cir.

v.

2005).

exclusive grounds
award."

international

207;

§

Encyclopaedia Britannica,

see

Encyclopaedia

Inc.,

403 F.3d 85,

"Article V of the Convention specifies seven
upon which courts may refuse to

the

undermining
disputes

the

is

twin

Yusuf

126

F.3d

public

review

'very
goals

efficiently

litigation.'"
(quoting

strong

arbitration,

York Convention

Inc.,

u.s.c.

recognize an

Id. at 90.

"Given

New

9

Convention."

15,

of

and

Alghanim
23

(2d

arbi tral

limited

Encyclopaedia
Ahmed

of

policy

long

avoiding

Universalis,
&

Sons,

Cir.

3

awards
in

arbitration,

W.L.L.

1997)

favor

in

of

under

the

order

to

namely,
and
403
v.

settling
expensive

F. 3d

Toys

(additional

avoid

at

90

"R"

Us,

internal

citations
v.

omitted));

accord

Willemijn

Standard Microsystems Corp. ,

103

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."

D.H.

Blair

&

Co.,

Inc.

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

A

facially

dismissed

for

lack

12 (b) (1)

when

constitutional

sufficient

of

the

district

power

States, 201 F.3d 110,
jurisdiction

is

subject

to

complaint

matter
court

lacks
it."

(2d Cir.

2000).

challenged,

the

be

jurisdiction

adjudicate

113

may

the

"properly
under

Rule

statutory

Makarova

v.

United

Once subject matter

burden

of

establishing

jurisdiction rests with the party asserting that it exists.
Thomson

v.

Gaskill,

omitted).

court

U.S.

442,

446

(1942)

See

(citations

The party asserting subject matter jurisdiction has

the burden of proving,
the

315

or

has

by a preponderance of the evidence,

subject matter

jurisdiction.

that

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

defendant.

See

Fed.

4

R.

Civ.

P.

12 (b) (2).

"To

establish

personal

[the

defendant]

was

properly

has

Line

(S.D.N.Y.

June

raised

dismiss,

Ltd.,
1,

[a

contacts

08

2010)

Civ.

e.

4892,

(citations

jurisdictional

the

2010

on

WL

a

must

show

forum

v.

Kfr.

Rule

that

state

and

Euro-America

2194827,
Once a

omitted).

defense

jurisdiction over a

Inc., 286 F.3d 81, 84

showing

is

favorable
v.

not
to

made

the

Drakos,

140

As such,

pleadings,

including

and

Makarova,

the
201

by

party

omitted).

motion

with

Salmassi

at

*4

defendant

12 (b)

motion

to

shown affirmatively,
from

asserting
129,

the

it."

131

pleadings
Shipping

(2d

Cir.

and that
inferences

Fin.

1998)

Servs.

(citations

a court may rely on evidence outside of the
declarations

records

F. 3d

Carozzi

(2d Cir. 2001).

drawing

F.3d

Distefano v.

defendant.

"[J] urisdiction must be

Corp.

plaintiff]

the plaintiff bears the burden of establishing that the

court has
N. Am.

a

minimum

served."

Container

has

jurisdiction,

at

attached
113

under Rule 12 (b) ( 1) ,

("In

submitted
to

these

resolving

a district court

in

support

of

declarations.
a

motion
.

to

the
See

dismiss

may refer to

evidence outside the pleadings.").

Rule

12 (b) ( 3)

provides

that

a

defendant

may

dismiss a complaint on the grounds of improper venue.
R.

Civ.

P.

12 (b) (3).

move

to

See Fed.

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

5

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

Port Auth.

(S.D.N.Y.

2001).

plaintiff

need

Gulf Ins.

Co.

(quoting

CutCo

of N.Y.

However,
only

v.

make

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,

of

355

806

"'the

[venue].'"

(2d Cir.

F.2d

183

2005)

361,

364-65

(2dCir. 1986)).

To
"a

12 (b) ( 6) ,

survive

complaint must

accepted as true,
on its face.'"
1937,

1940,

to

Twombly,
(2007)) .

This
need
their

plausible."

dismiss

contain

570,

not

only
claims

Twombly,

Iqbal,

2d 868

544,

is

to

pursuant

sufficient

to

factual

Rule

matter,

'state a claim to relief that is plausible

Ed.

550 U.S.

"nudge[]

motion

Ashcroft v.

173 L.

plaintiffs

a

556 U.S.

(2009)

127 S.

intended
allege
across

662,

663,

129 S. Ct.

(quoting Bell Atl. Corp. v.
Ct.

to

be

facts
the

1955,
an

167 L.
onerous

from

2d 929

burden,

as

order

to

conceivable

to

sufficient
line

Ed.

in

550 U.S. at 570.

SBT Lacks Capacity to Be Sued

Defendants
controvert,
the

Federal

contend,

and

Plaintiffs

do

not

appear

to

that SBT lacks capacity to be sued under Rule 17 of
Rules

of

Civil

Procedure.

6

See

Fed.

R.

Civ.

Pro.

17 (b);

Defs.'

(attacking

Mem.

in

Supp' t

Defendants'

6-7;

capacity

Pls.'

Mem.

argument

in

on

Opp' n

the

14-20

basis

of

judicial estoppel rather than on the basis of federal or Swiss
law).

Rule
which

the

17 (b)

directs

corporation

was

courts

to

organized

examine

in

order

corporation's capacity to sue and be sued.
17(b)(2); see also Marsh v. Rosenbloom,
Cir.

2007);

App.

Div. 1990)

a

dissolved

Mock v.

Spivey Co.,

Pennsylvania

corporation

Swiss

law determines

Under

Swiss

law,

a

Commercial
Forstmoser

et

al.,

(attached as Ex.

SBT' s

corporation,

Register,

30,

to

law

under

determine

Fed.

R.

Civ.

Pro.

499 F.3d 165, 176-77
A.D.2d

230,

a

230-31

(2d

(N.Y.

(applying Pennsylvania law as to the capacity of

case,

Rud) .

167

the

loses
Swiss

its

to

be

sued).

capacity.
once

removed

capacity

Company

See

Law,

to
§

In

Compl.

from
be

56,

the

sued.
<[

153

SBT' s
<[

16.

Swiss
See
(1996)

1 to Third Supplemental Declaration of Andreas

SBT was removed from the Commercial Register on September

2013.

See Compl.

<[

16;

see also

Pls.'

Consequently, SBT lacks capacity to be sued.

7

Mem.

in Opp'n 17.

Defendants Are Not Judicially Estopped From Asserting SBT's Lack
of Capacity

Plaintiffs
support

of

contend

Defendants'

forum

non

made

representations

that

conveniens

arguments

in

in
the

Enforcement Action precludes them from raising SBT's incapacity
as

a

defense

Plaintiffs,
France

Mem.

According to

in Opp' n 14-20.

"Defendants asserted repeatedly that Switzerland and

provided

indeed,

Pls.'

here.

were

adequate

the

forums

proper

for

forums

Plaintiffs'

for

this

claims

action"

in

and,
their

memorandum in support of their motion to dismiss the Enforcement
Id.

Action.
As

a

at 14-15

result,

(citing EA Defs.'

Plaintiffs

seek

to

Mem.

have

in Supp't 39-47).

Defendants

judicially

estopped from asserting that "SBT lacks the capacity to be sued
in any forum."

Under

Pls.' Mem. in Opp'n 15.

Second

Circuit

a

precedent,

party

may

be

judicially estopped from asserting a position if: "(l) the party
took an inconsistent position in a prior proceeding and (2)

that

position was adopted by the first tribunal in some manner,

such

as by rendering a
Co.,

258

F.3d

citations

and

Washingtonville

favorable

62,

(2d

80

ellipses
Cent.

Sch.

Holtz v.

judgment."
Cir.

Dist.,

8

(internal

2001)

omitted) ;

see
190

Rockefeller

also

F.3d

1,

&

quotations,
Mitchell

6-8

(2d

v.
Cir.

1999) .

"The

sanctity

of

purposes
the

the

and

oath

of

doctrine

to

protect

are

(quoting Simon v.

Cir. 1997)

preserve

judicial

avoiding the risk of inconsistent results
Id.

to

the

integrity

by

in two proceedings."

Safelite Glass Corp.,

128 F.3d 68,

71

(2d

(internal quotations omitted)).

Judicial

estoppel

does

not

assertions regarding SBT's capacity.

apply

to

Defendants'

Even assuming Defendants'

representations in the EA can be construed as stating that SBT
could be sued in Switzerland, the EA complaint was not dismissed
on the basis of those representations.
stated
forum

that
non

"dismissal
conveniens

therefore

did not

forum non

conveniens.

Holdings,

Inc.,

rely

14

obviates
and
on

the

Award

was

need

international
Defendants'

to

F.Supp.3d at

480.

the EA Opinion

determine

comity

arguments

See CBF Industria de

Opinion that "Plaintiffs'
if

the

Indeed,

issues,"

and

pertaining to

Gusa

S/A v.

AMCI

The statement in the EA

enforcement action may be permissible

confirmed

in

Switzerland

or

other

court

of

competent jurisdiction" was not a finding that SBT can be sued
elsewhere.

Id. at 479.

Rather, it underscored the fact that no

determination as to Plaintiffs'

ability to confirm the award in

Switzerland or another court was made.

Therefore,

Defendants are not judicially estopped from

9

making the SBT incapacity argument.

Defendants

Are

Not

Judicially

and

Equitably

Estopped

from

0pposing Confirmation

Plaintiffs

further

contend that

Defendants

should be

estopped from opposing confirmation because they "made numerous
misrepresentations regarding SBT's commitment to its obligations
and

wiliness

to

participate

in

the

arbitration"

Plaintiffs relied to their detriment.
23.

Plaintiffs

further

contend that

Pls.'

Mem.

Defendants

upon

which

in Opp'n 21looted SBT by

transferring its assets to Prime Carbon in December 2009, taking
advantage of an extension of time granted them by the Arbi tr al
Tribunal to
Plaintiffs
not

respond to
contend

evading

its

Plaintiff's complaint.

that

Defendants

obligations

and

misrepresented
had

not

dissolve and liquidate.

Id.

waited until April

after the asset

Prime Carbon,
arbitration.

at 22-23.

decided

at

21,

that

23.

SBT

is

whether

to

Defendants purportedly
transfer

from SBT to

to place SBT into bankruptcy and then oppose the
Id. at 22.

Judicial
tribunal's

2010,

Id.

reliance

estoppel,
on

a

See Holtz, 258 F.3d at 80.

as

party's

discussed
prior

above,

requires

inconsistent

a

position.

Equitable estoppel can be invoked to

10

stop

a

party

from

pursuing

a

claim

or

defense

where:

party to be estopped makes

a misrepresentation of

other

believe

party with

rely upon it;
3)

to

its

Associates,

2)

reason

to

that

the

1)

fact

other

the

to the

party will

and the other party reasonably relies upon it;

detriment.
P.C.,

274

Kosakow
F. 3d

706,

v.
725

New
(2d

Rochelle

Cir.

Radiology

2001).

Neither

variety of estoppel is applicable here.

With

respect

to

apparently contend that
as a

judicial

Defendants

estoppel,

cannot

now

Plaintiffs

raise bankruptcy

defense to confirmation since they voluntarily placed SBT

into bankruptcy.
refute

Pls.'

Plaintiffs'

Mem.

in Opp' n

contention.

23.

Two

First,

placing

bankruptcy is not inconsistent with Defendants'
that the SBT lacks capacity to be sued.

considerations
SBT

into

current position

To be sure,

bankruptcy

presents a confirmation challenge for Plaintiffs, but Plaintiffs
did not plead that Defendants represented that placing SBT into
bankruptcy
Second,

would

even

cognizable

assuming

under

prior tribunal's
into bankruptcy.
of both

STB' s

enable

this

Plaintiffs
these

to

doctrine,

to
be

collect

the

inconsistent

Plaintiffs

reliance on Defendants'

on

have

not

Award.

positions
pled

the

decision to place SBT

The Arbitral Tribunal rendered its Award aware

bankruptcy and

SBT's looting and Defendants'

Plaintiffs'

allegations

misrepresentations.

11

regarding

See Award

<Jl<Jl

26-30, 35.

The Award was made against, rather than in favor,

Defendants

and

allegations.
by this

the
Id.

Court

Tribunal

'TI 4 7.

sitting,

did

not

credit

Plaintiffs'

of

fraud

That judgment cannot be second-guessed
as

it

does,

in

secondary

jurisdiction.

See CBF Industria,

14 F.Supp.3d at 479.

Because Plaintiffs have

not pled reliance

on the part of the Arbi tral Tribunal,

their

judicial estoppel argument cannot stand.

Plaintiffs'
fails.
April

Plaintiffs'
2010,

and

equitable

estoppel

argument

likewise

harm is SBT' s placement into bankruptcy in

the

resulting

difficulties

associated

with

confirming

the

Defendants'

allegedly misrepresented that they were committed to

their
had

Award.

obligations,
not

decided,

bankruptcy.

to

of

could

have

in

in

2009,

to

Opp' n

21-22.

arbitration,
place

SBT

and
into

Plaintiffs have not pled that the

rendered
still

Mem.

participate

December

Compl. 'TI'TI 57-61.

misrepresentations
Defendants

willing
as

Pls.'

See

confirmation
placed

SBT

impossible;

indeed,

into bankruptcy absent

these misrepresentations as discussed below.

Moreover,
misrepresentations
they

have

Defendants'

not

pled

Plaintiffs
rendered
that

purported

have

not

confirmation

Plaintiffs

pled

that

Defendants'

impossible:

detrimentally

misrepresentations.

that

relied

is,
upon

Plaintiffs

12

--------

--------

discovered
before

the

the

purported

Award

was

falsity

filed

of

since

Defendants
their

representations

prior

allegations

fraud and looting are discussed in the Award itself.
26.

According to the

sued

between

conclusion

the

of

Plaintiffs'

November

SBT's

9,

expert,

2011

bankruptcy

in

of

Award 'JI

SBT could have been

ICC

Award

January

date

the

2012,

27,

and
or

also

possibly during the almost two-year period until SBT's September
30,

2013

Sept.

Commercial

13,

Register

deletion.

See

2013 and filed in the EA Action;

Jorg

Aff.

dated

see also Pls.'

Mem.

in Opp'n to Motion to Dismiss Amended Complaint in EA Action 22.
If

this

period was

procedural

tools

insufficient,

available,

Plaintiffs may have

including

timely

appeal

bankruptcy closing and seeking to have it reopened.
Supp.

Rud Deel.

'JI 3.

also had
of

the

See Fourth

Equitable estoppel is inappropriate under

these circumstances.

Remaining Personal Jurisdiction, Service of Process,
International Comity and Forum Non Conveniens Arguments Are Moot

As
case

is

concluded

dismissed

as

above,
SBT

Plaintiffs'

lacks

capacity

sole
to

claim
be

sued.

in

this
That

dismissal obviates the need to determine the remaining personal
jurisdiction, service of process,

international comity and forum

non conveiens arguments put forth by Defendants.

13

Conclusion

Based
Defendants'

on

the

conclusions

set

forth

above,

the

motion to dismiss the Complaint is granted and the

Complaint is dismissed.

It is so ordered.

~JT

New York, NY
March
2015

jy·

U.S.D.J.

14