Jobanputra v. Kim et al

Filing 82

OPINION AND ORDER re: 75 MOTION to Dismiss Second Amended Counterclaims. filed by Jalak Jobanputra. For the foregoing reasons, the motion to dismiss is GRANTED with prejudice. The Clerk of Court is respectfully directed to terminate the motion, Doc. 75. It is SO ORDERED. (Signed by Judge Edgardo Ramos on 5/8/2024) (jca)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
JALAK JOBANPUTRA,
Plaintiff,
OPINION & ORDER

– against –
YOON KIM and MOCHI CAPITAL,
LLC,

21-cv-7071 (ER)

Defendants.
RAMOS, D.J.:
Jalak Jobanputra brought claims against Yoon Kim and Mochi Capital, LLC for
allegedly withholding her share of profit resulting from the parties’ cryptocurrency
investment venture. Doc. 1. Kim and Mochi answered, and Kim counterclaimed for
breach of fiduciary duty, unjust enrichment, and quantum meruit resulting from the
subsequent attempt to expand the work of the alleged joint venture by creating a new
joint venture, an investment fund that included outside investors. Doc. 32. Soon
thereafter, Kim amended his answer and counterclaim. Doc. 37. �e Court dismissed the
amended counterclaims, Doc. 71, and Kim amended them again, claiming only breach of
fiduciary duty related to the subsequent investment fund, Doc. 74.
Before the Court is Jobanputra’s motion to dismiss the Second Amended
Counterclaims (“SACC”) for failure to state a claim under Rule 12(b)(6) of the Federal
Rules of Civil Procedure. Doc. 75. For the reasons set forth below, the motion is
GRANTED with prejudice.
I.

BACKGROUND
A. Statement of Facts
The Parties
Jobanputra is an investment expert in financial technology (“fintech”) markets.

Doc. 1 (Compl.) ¶ 2. She has over 20 years of experience in venture capital and founded

the venture capital fund Future\Perfect Ventures (“FPV”) in 2014, which invests in
decentralized fintech that uses cryptocurrencies and blockchain technology. Id. ¶¶ 16, 18.
Kim is the head of research at a digital asset fund, id. ¶ 21, and has less
experience in the fintech market than Jobanputra. Id. ¶ 22. Digital asset funds facilitate
investments in a wide range of assets such as blockchain technology and
cryptocurrencies. Doc. 74 (Second Am. Answer & Countercl.) ¶ 7. 1 Mochi Capital is a
limited liability company organized under Delaware law that is completely controlled and
operated by Kim. Doc. 1 ¶¶ 10–11.
Initial Business Venture
Jobanputra and Kim first met through mutual acquaintances in 2005 or 2006 and
became friends. Id. ¶ 3. Kim later approached her in August 2017 to propose a potential
joint business venture, whereby they would pool their respective expertise and resources
to make cryptocurrency investments. Id. ¶¶ 3–4. Jobanputra considered Kim’s offer
because her venture capital fund FPV—in which Kim was an investor—was at the time
not able to invest in cryptocurrency assets. Id. ¶ 23. Ultimately, Jobanputra agreed and
the parties orally entered a joint business venture (“the Agreement”) that month for Kim
to invest on basis of Jobanputra’s analysis. Id.
According to the terms of the Agreement, Jobanputra would contribute her
experience, credentials, business network, and proprietary investment analysis to identify
viable cryptocurrency investments while Kim would provide capital to fund the
investments. Id. ¶ 24. Pursuant to the Agreement, every investment required Jobanputra
and Kim’s joint approval. Id. ¶ 26. Profits were to be split, with Jobanputra receiving
20% and Kim 80% of each investment. Id. ¶ 24. Profits would be distributed once the
relevant cryptocurrency was transferrable, as some investments were in currencies in the
process of development. Id. ¶ 25.
Unless otherwise noted, citations to paragraphs in Doc. 74 refer to paragraphs in the SACC, rather than in
the Answer.
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Under this arrangement, the two invested together in various cryptocurrencies
over the next two and a half years. Id. ¶ 6. However, when the tokens became
transferrable and saleable and Jobanputra became entitled to her share of 20% of the
cryptocurrencies, Kim did not transfer the share to her. Id. ¶¶ 33, 37–39. Jobanputra
alleges this failure to transfer is a breach of the Agreement. Id. ¶ 41.
Subsequent Business Venture
After the success of these initial investments, in 2019, Jobanputra and Kim
allegedly agreed 2 to expand their venture to outside investors and start a cryptocurrency
assets venture fund through a new joint venture, FP Capital. Doc. 1 ¶ 34; Doc. 74 ¶ 8. R
According to Kim, the parties “negotiated and knowing and willingly entered into a joint
business venture” in which each, as partners, would “contribute experience, credentials,
and business networks to identify viable cryptocurrency investments” and “seek outside
investors.” Doc. 74 ¶ 8.
Pursuant to the alleged agreement, Jobanputra would focus on seeking outside
investors while Kim would handle the day-to-day management of the fund. Id. ¶ 9. Kim
added, however, that decision-making remained a joint responsibility; he alleges that both
parties jointly controlled and managed the venture, from making hiring decisions to
consulting one another before any investments were made. Id. ¶¶ 9–10. Generally, FP
Capital sought a total of $25 million in outside investments with a 2% annual fee and
20% carried interest. Id. ¶ 15. Based on the fees, Jobanputra and Kim expected to share
revenue of $2 million over FP Capital’s initial four-year initial term. Id.
Jobanputra and Kim worked together to create promotional and administrative
materials for the fund, including preparing an investor presentation and a Private

Jobanputra disputes that the parties agreed to launch FP Capital, and instead alleges that they merely
explored the idea, ultimately never launching it due to the COVID-19 pandemic. Doc. 1 ¶¶ 34–36.
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Placement Memorandum (“PPM”) for third-party investors. Id. ¶ 11. 3 �e PPM referred
to FP Capital as “[t]he Partnership” and outlined Jobanputra and Kim’s joint “proprietary
investment process.” Id. In these investment presentations to potential investors, they
referred to themselves as joint venturers, referencing their prior joint investments. Doc. 1
¶ 34.
Kim alleged that he and Jobanputra agreed to equally split profits and losses from
FP Capital. Doc. 74 ¶ 12. He claimed this agreement is “consistent with their written
agreements governing entities that would perform certain functions for the FP Capital
joint venture[,]” id., referencing formation documents governing two independent entities
related to the venture: FP Capital GP, LLC (“FP Capital GP”), FP Capital’s general
partner; and FP Cap Management, LLC (“FP Manager”), FP Capital’s investment
manager, id. ¶¶ 13–14. In each entity, Jobanputra and Kim were its sole members, each
with 50% shares in its profits and losses. Id.
Kim alleged that he worked with fund counsel, administrators, and auditors;
developed the fund investment strategy; and met with potential investors, fulfilling his
individual and shared responsibilities to the partnership. Id. ¶ 16. Kim alleged that
Jobanputra also helped with the fund investment strategy and presentations and prepared
fund documents, but failed to obtain investors, and in January 2020 she told Kim she did
not have the money to pay her obligations and suggested shutting down FC Capital. Id.
At this time, Kim paid her portion of the fund expenses. Id. Kim proposed alternative
arrangements to try to salvage the fund and their profits, but he alleged that Jobanputra
rejected these ideas and “effectively abandoned FP Capital at that point.” Id. ¶ 17.
Kim claimed that simultaneously to the failure of FP Capital, Jobanputra was,
unbeknownst to him, raising a third investment fund through FPV to invest in

�e PPM, which Kim alleges sets forth the elements of the joint venture agreement, Doc. 74 ¶¶ 7, 12, was
not attached to the SACC, nor does Kim allege in the SACC any specifics about who drafted or signed it.
Doc. 75 at 7–8.
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cryptocurrencies and initial coin offerings. Id. ¶ 18. Kim alleged that Jobanputra
abandoned FP Capital in order to pursue other arrangements through her own venture
capital fund FPV and cut Kim out of his share of the profits. Id. ¶¶ 18–19.
B. Procedural History
Jobanputra commenced her action against Kim and Mochi on August 20, 2021,
asserting claims of breach of contract, unjust enrichment, quantum meruit, and breach of
fiduciary duty arising from Kim’s alleged failure to transfer Jobanputra’s share of the
investment proceeds. Doc. 1. Kim and Mochi moved to dismiss all of Jobanputra’s
claims on December 3, 2021. Doc. 19.
On September 28, 2022, the Court dismissed the fiduciary duty claim, as well as
the breach of contract claim to the extent it was based on the breach of a joint venture
agreement, but it otherwise denied Defendants’ motion. Doc. 29 (Opinion & Order). �e
Court held that Jobanputra had adequately alleged an enforceable contract, but not a joint
venture. Id. at 16–18. Although the Court granted Jobanputra’s request for leave to
amend her complaint, id. at 18–19, she did not so amend.
Kim and Mochi answered the complaint on October 28, 2022 and Kim also
counterclaimed for breach of fiduciary duty. Doc. 32. He amended the counterclaims on
January 26, 2023, adding additional counterclaims for unjust enrichment and quantum
meruit. Doc. 37. Jobanputra moved to dismiss the amended counterclaims on March 23,
2023. Doc. 60.
�e Court granted Jobanputra’s motion to dismiss each of Kim’s counterclaims on
August 21, 2023. Doc. 71 (Opinion & Order). �e Court held that Kim had not
sufficiently pleaded the existence of a joint venture, because while the counterclaim
established the parties’ intent to be joint venturers, Kim failed to allege that each party
had joint management control or that they agreed to share losses from FP Capital. Id. at
6–12. As to the former, the Court found that the counterclaims did not allege that the
parties had to agree before making any investments for FP Capital; in fact, the mismatch
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between Kim and Jobanputra’s roles in and work for the fund described in the pleadings
was insufficient to establish joint management control. Id. at 11. Kim’s allegations also
failed to allege that the parties agreed to share losses for the joint venture itself, only
alleging shared profits and losses for FP Capital GP and FP Manager as individual entities
without further detail as to the roles each would play in FP Capital investments. Id. at 12.
�e Court also dismissed the unjust enrichment and quantum meruit claims, as Kim failed
to allege that Jobanputra benefitted from Kim’s work on FP Capital. Id. at 13–14. �e
Court granted Kim’s request for leave to amend his counterclaims, as it was the Court’s
first opportunity to highlight the precise defects of Kim’s pleading, and it was not yet
apparent that another opportunity to amend would be futile. Id. at 14–15.
On September 8, 2023, Kim amended his counterclaims a second time, asserting
only breach of fiduciary duty. Doc. 74. To address the element of joint management
control, he added an allegation that “[the parties] jointly controlled and managed the joint
venture[,]” that both “were required to—and did—consult with each other before making
important decisions regarding the venture[,]” including hiring management, and that both
were “required to agree on any investments actually made by FP Capital. . . . consistent
with written representations they both made to potential investors.” Id. ¶¶ 9–10. He has
also now included an allegation that he and Jobanputra agreed to equally share profits and
losses from FP Capital:
Kim and Jobanputra agreed to split profits and losses from FP Capital equally. �is agreement is consistent with their written agreements governing entities that would perform certain functions for
the FP Capital joint venture. For example, “[t]he General Partner
[of FP Capital] is controlled by Yoon Kim and Jalak Jobanputra (the
‘Principals’)” and that “Yoon Kim and Jalak Jobanputra are also the
Principals of [FP Capital’s] Investment Manager.” . . . [J]ust as they
did for FP Capital itself, Kim and Jobanputra agreed to share equally
the profits and losses of FC Capital GP.
Id. ¶¶ 12–13. Kim further added allegations that the responsibilities he fulfilled with
respect to setting up the partnership, including preparing documents and strategy and

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paying fund expenses, were in fact joint obligations to the venture. Id. ¶ 16. In the
instant motion, Jobanputra argues that this new addition is not sufficient to cure the
aforementioned pleading deficiencies, and that Kim still fails to sufficiently allege breach
and damages. Doc. 75.
II.

LEGAL STANDARD
“�e applicable standard for a motion to dismiss a claim pursuant to Rule 12(b)(6)

also applies to a motion to dismiss a counterclaim pursuant to Rule 12(b)(6).” Stardust
Monte-Carlo, S.A.R.L. v. Diamond Quasar Jewelry, Inc., No. 16 Civ. 9918 (ER), 2018
WL 1027754, at *2 (S.D.N.Y. Feb. 20, 2018) (citing Revonate Mfg., LLC v. Acer Am.
Corp., No. 12 Civ. 6017 (KBF), 2013 WL 342922, at *2 (S.D.N.Y. Jan. 18, 2013); Aspex
Eyewear, Inc. v. Clariti Eyewear, Inc., 531 F. Supp. 2d 620, 622 (S.D.N.Y. 2008)).
To survive a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at
556). �e plaintiff must allege sufficient facts to show “more than a sheer possibility that
a defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556). However, this
“flexible plausibility standard” is not a heightened pleading standard, In re Elevator
Antitrust Litig., 502 F.3d 47, 50 n.3 (2d Cir. 2007) (internal quotation marks and citation
omitted), and “a complaint . . . does not need detailed factual allegations” to survive a
motion to dismiss, Twombly, 550 U.S. at 555. �e question on a motion to dismiss “is not
whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer
evidence to support the claims.” Sikhs for Justice v. Nath, 893 F. Supp. 2d 598, 615
(S.D.N.Y 2012) (quoting Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir.
1995)). Indeed, “the purpose of Federal Rule of Civil Procedure 12(b)(6) is to test, in a
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streamlined fashion, the formal sufficiency of the plaintiff’s statement of a claim for relief
without resolving a contest regarding its substantive merits” or “weigh[ing] the evidence
that might be offered to support it.” Halebian v. Berv, 644 F.3d 122, 130 (2d Cir. 2011)
(internal quotation marks and citation omitted). �us, when ruling on a motion to dismiss
pursuant to Rule 12(b)(6), the Court accepts all factual allegations in the complaint as
true and draws all reasonable inferences in the plaintiff’s favor. Nielsen v. Rabin, 746
F.3d 58, 62 (2d Cir. 2014). In considering a Rule 12(b)(6) motion, a district court may
also consider “documents attached to the complaint as exhibits[] and documents
incorporated by reference in the complaint.” Doe v. N.Y. Univ., No. 20 Civ. 1343 (GHW),
2021 WL 1226384, at *10 (S.D.N.Y. Mar. 31, 2021) (quoting DiFolco v. MSNBC Cable
LLC, 622 F.3d 104, 111 (2d Cir. 2010)).
III.

DISCUSSION
Jobanputra moves to dismiss Kim’s single cause of action for breach of fiduciary

duty. Doc. 75. She argues that the SACC fails to cure the flaws identified by this Court
in its August 21, 2023 Opinion, Doc. 71, regarding the existence of a joint venture. Doc.
75 at 6. Further, Jobanputra argues that Kim cannot allege a knowing and intentional
breach of duty or that he suffered any damages because the fund never launched. Id. She
argues that no leave to amend should be granted as Kim has already amended his
counterclaims twice, once with the benefit of the Court’s ruling. Id. at 7.
Kim argues that he has now sufficiently pleaded the existence of a joint venture
through added allegations of joint management control and shared losses between the two
parties. Doc. 78 at 2–4. He claims that both parties were required to agree on any
investments made, reflecting joint decision-making, and that Jobanputra does not contest
this. Id. at 3. He also argues that the SACC does now sufficiently allege an agreement to
share losses by directly including an allegation that they agreed to share profits and
losses. Id. at 4. He argues that, even though the Court did not address the question of

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breach and damages in its prior Opinion, the SACC sufficiently alleges both. Id. at 12–
15.
A. �e Breach of Fiduciary Duty Claim is Dismissed
To establish a claim for breach of fiduciary duty under New York law, a plaintiff
must prove: (1) the existence of a fiduciary duty, (2) a knowing breach of that duty, and
(3) damages resulting therefrom. Johnson v. Nextel Commc’ns, Inc., 660 F.3d 131, 138
(2d Cir. 2011) (citations omitted). Jobanputra argues that Kim has still failed to establish
any of the required elements: she argues that Kim fails to cure the deficiencies previously
identified as to sharing of losses and thus fails to alleged the existence of a fiduciary duty;
she contends that even if the parties entered into a fiduciary relationship, Kim fails to
allege that Jobanputra knowingly breached that duty; and lastly, she maintains that Kim
has not sufficiently pleaded that he suffered damages that were contemplated by the
parties at the time of contracting. Doc. 75 at 12–18.
As to the first element, Kim alleges Jobanputra owed him a fiduciary duty by
virtue of the joint venture they entered into to launch FP Capital. Doc. 74 ¶ 21.
Jobanputra argues that FP Capital was not an agreement to enter into a joint venture, so
“no fiduciary relationship existed,” and she disputes that FP Capital was ever launched.
Doc. 75 at 6. As this Court outlined in its prior opinion, a fiduciary duty may be found if
there is a joint venture, or in other circumstances where there is a relationship of trust or
influence. Doc. 71 at 7–8 (citing Kidz Cloz, Inc. v. Officially For Kids, Inc., 320 F. Supp.
2d 164, 171 (S.D.N.Y. 2004); Teachers Ins. & Annuity Assoc. of Am. v. Wometco Ent.,
Inc., 833 F. Supp. 344, 349–50 (S.D.N.Y. 1993)). To establish a joint venture under New
York Law, a party must plead the following elements:
(1) two or more parties entered an agreement to create an enterprise
for profit, (2) the agreement evidences the parties’ mutual intent to
be joint venturers, (3) each party contributed property, financing,
skill, knowledge, or effort to the venture, (4) each party had some
degree of joint management control over the venture, and (5) there
was a provision for the sharing of both losses and profits.

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Kidz Cloz, Inc, 320 F. Supp. 2d at 171 (citing Itel Containers Int’l Corp. v. Atlanttrafik
Exp. Service Ltd., 909 F.2d 698, 701 (2d Cir. 1990)). Jobanputra argues that, even after
amending his counterclaims, Kim failed to plead the fifth element of a fiduciary duty and
thus fails to plead the existence of a joint venture and therefore a fiduciary duty. Doc. 75
at 12–14.
�e Court’s August 21, 2023 Opinion held that the claim was deficient in part
because it failed to allege that the parties would share losses from FP Capital. Doc. 71 at
11–12. Jobanputra argues that Kim’s amendments do not cure this, as he adds only what
she describes as conclusory allegations relating to the sharing of losses. Doc. 75 at 13.
She specifies that aside from the new sentences he added, there is not enough to establish
a profit and loss sharing agreement in FP Capital itself. Id. at 14. Kim responds that the
problem is cured because the SACC now contains a direct allegation about profit and loss
sharing from FP Capital. Doc. 78 at 11.
Without an agreement to share losses, no joint venture can exist, even if the
parties agreed to share profits. Turner v. Temptu Inc., No. 11 Civ. 4144 (JMF), 2013 WL
4083234, at *6 (S.D.N.Y. Aug. 13, 2013) (citing Goureau v. Goureau, No. 12 Civ. 6443
(PAE), 2013 WL 417353, at *5 (S.D.N.Y. Feb. 4, 2013); Fetter v. Schink, 902 F. Supp. 2d
399, 404 (S.D.N.Y. 2012)); see also Artco, Inc. v. Kidde, Inc., No. 88 Civ. 5734 (MJL),
1993 WL 962596, at *10 (S.D.N.Y. Dec. 28, 1993) (If “simply expending efforts to set up
a venture were sufficient to satisfy the essential element of sharing of losses, the
requirement could nearly always be satisfied.”). Further, “[i]f there was no agreement as
to the manner in which the parties were to share in the profits and the losses, the
agreement did not create a joint venture.” Zeising v. Kelly, 152 F. Supp. 2d 335, 348–49
(S.D.N.Y. 2001) (emphasis added). Moreover, the agreement to share losses must be
with respect to the joint venture itself, not individual agreements arising therefrom. See
USAirways Grp. v. British Airways Plc, 989 F. Supp. 482, 493 (S.D.N.Y. 1997).

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Here, the SACC generally alleges that the parties had an agreement to share
profits and losses as part of the FP Capital joint venture itself, not merely the two
aforementioned independent entities. Doc. 74 ¶ 12. However, this additional statement is
conclusory and lacks the requisite specificity to satisfy the elements of a joint venture.
See Selective Beauty SAS v. Liz Claiborne, Inc., No. 9 Civ. 9764 (RMB) (HBP), 2010 WL
11685041, at *7 (S.D.N.Y. May 27, 2010) (dismissing plaintiff’s claim for breach of
fiduciary duty as “too conclusory to support a joint venture” where plaintiff merely
alleged that “[t]he joint venture contained provisions for sharing profits and losses”).
Kim’s additional contention that Jobanputra’s refusal to pay her share of FP
Capital’s expenses—an alleged obligation to the joint venture—is evidence of an
agreement to share losses, Doc. 78 at 11, does not help. Allegations of sharing
expenditures in setting up a venture are not sufficient to satisfy the loss sharing element
of a joint venture. Artco, Inc., 1993 WL 962596, at *10–11 (finding that one party’s
efforts to set up the venture were insufficient to establish loss sharing, especially since
there was no written agreement setting out the terms of the joint venture, and no
documents showing that efforts to set up the proposed venture were sufficient to establish
loss sharing.).
Similarly, the alleged consistency of the agreement to share profits and losses in
FP Capital with agreements to share profits and losses in FP Capital GP and FP Manager,
merely stating without specificity that those entities perform “certain functions” for the
principal joint venture, does not address the need to sufficiently allege the loss sharing
element of a joint venture. See Doc. 71 at 12 (finding that sharing profits and losses in
those independent entities does not support an allegation of shared profits and losses in
FP Capital if there are no allegations regarding “what roles FP Capital GP or FP Manager
would play in anticipated FP Capital investment opportunities, nor how money would
flow and be allocated amongst entities”).

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Due to its lack of any support beyond a conclusory statement, Kim has again
failed to establish the elements of a joint venture and the Court need not reach the parties’
remaining arguments as to breach and damages.
B. Leave to Amend is Denied
Jobanputra argues that no leave to amend should be given, as Kim has failed to fix
deficiencies even after the benefit of this Court’s August 21 Opinion articulating the
problems with the claim. Doc. 75 at 18–20. Kim requests a one-week period to re-plead
“[i]f the Court dismisses the fiduciary duty claim for any new reason not previously
identified in the Order.” Doc. 78 at 15 n.2.
Courts are instructed to “freely give leave [to amend a pleading] when justice so
requires.” Fed. R. Civ. P. 15(a)(2). �e Second Circuit has counseled strongly against the
dismissal of claims with prejudice prior to “the benefit of a ruling” that highlights “the
precise defects” of those claims. Lorely Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC,
797 F.3d 160, 190–91 (2d Cir. 2015).
Here, Kim has now had the “the benefit of a ruling” and still failed to cure the
deficiencies pointed out by the Court, so the standard is less permissive. See Ruotolo v.
City of N.Y., 514 F.3d 184, 191 (2d Cir. 2008) (“Leave to amend, though liberally granted,
may properly be denied for . . . ‘repeated failure to cure deficiencies by amendments
previously allowed[.]’” (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). �e SACC
still fails to sufficiently allege the existence of a joint venture. Accordingly, the Court
will not grant Kim leave to amend his claim.

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IV.

CONCLUSION
For the foregoing reasons, the motion to dismiss is GRANTED with prejudice.

�e Clerk of Court is respectfully directed to terminate the motion, Doc. 75.
It is SO ORDERED.
Dated:

May 8, 2024
New York, New York
EDGARDO RAMOS, U.S.D.J.

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