542 F.3d 354 (2nd Cir. 2008), 07-2871, Sokol Holdings, Inc. v. BMB Munai, Inc.

Docket Nº:07-2871-cv.
Citation:542 F.3d 354
Party Name:SOKOL HOLDINGS, INC., Brian Savage, and Thomas Sinclair, Plaintiffs-Appellees, v. BMB MUNAI, INC., Boris Cherdabayev, Alexandre Agaian, Bakhytbek Baiseitov, Mirgali Kunayev, Georges Benarroch, Credifinance Capital, Inc., and Credifinance Securities, Ltd., Defendants-Appellants.
Case Date:September 18, 2008
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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542 F.3d 354 (2nd Cir. 2008)

SOKOL HOLDINGS, INC., Brian Savage, and Thomas Sinclair, Plaintiffs-Appellees,

v.

BMB MUNAI, INC., Boris Cherdabayev, Alexandre Agaian, Bakhytbek Baiseitov, Mirgali Kunayev, Georges Benarroch, Credifinance Capital, Inc., and Credifinance Securities, Ltd., Defendants-Appellants.

No. 07-2871-cv.

United States Court of Appeals, Second Circuit.

September 18, 2008

Argued: Oct. 26, 2007.

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[Copyrighted Material Omitted]

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Thomas E.L. Dewey, Dewey Pegno & Kramarsky LLP, (Jerome M. Marcus, Jonathan Auerbach, Marcus Auerbach & Zylstra, LLC, Wyncote, PA; Jacob A. Goldberg, Jamie Mogil, Faruqi & Faruqi, New York, NY; on the brief), New York, NY, for Plaintiffs-Appellees.

Kenneth A. Caruso, Bracewell & Giuliani LLP (Daniel S. Meyers, David A. Shargel, on the brief), New York, NY, for Defendants-Appellants.

Before: LEVAL, SOTOMAYOR, and B.D. PARKER, Circuit Judges.

LEVAL, Circuit Judge:

Defendants appeal from an order of the United States District Court for the Southern District of New York (Wood, Chief Judge ) denying their motion under § 3 of the Federal Arbitration Act (“FAA" ), 9 U.S.C. § 3, to stay or dismiss plaintiffs' action pending arbitration in Kazakhstan. Defendants assert that they are entitled to arbitrate plaintiffs' claims, although they are not parties to the contract by which plaintiffs agreed to arbitrate. In support of their claim, they contend (1) plaintiffs are estopped from refusing to arbitrate because plaintiffs' claims are “intertwined" with the underlying contract, and because the factual allegations supporting those claims “touch matters" covered by the contract; and (2) if some, but not all, of the claims are deemed arbitrable, then the nonarbitrable claims should be stayed pending the arbitration.

As to all but one claim, we reject defendants' arguments and affirm the rulings of the district court. As to one claim, which seeks specific performance of the contract containing the arbitration clause, we conclude defendants are entitled to arbitrate. We reject defendants' contention that the nonarbitrable claims should be stayed pending resolution of the one arbitrable claim.

Background

Plaintiff Sokol Holdings, Inc. (“Sokol" ) is a Delaware corporation with its principal place of business in Colorado. Plaintiffs Brian Savage and Thomas Sinclair are Sokol's directors and principal officers. They formed Sokol in March 2003 for the

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purpose of exploring and developing oil and gas fields in the Republic of Kazakhstan. Sokol entered into a contract (the “Emir Contract" ) with Tolmakov Toleush Kalmukanovitch (“Tolmakov" ), a citizen of Kazakhstan, to buy 70% of Tolmakov's 90% interest in Emir Oil LLP (“Emir" ). Emir held a license to explore and develop the Aksaz-Dolinnaya-Emir oil and gas fields in Kazakhstan. The Emir Contract provides for the arbitration of all disputes arising from it in Kazakhstan.1

Defendant BMB Munai, Inc. (“BMB" ) is a publicly traded Nevada corporation with its principal place of business in Kazakhstan and an office in Salt Lake City, Utah. Defendants Boris Cherdabayev, Alexandre Agaian, Bakhytbek Baiseitov, Mirgali Kunayev, and Georges Benarroch are, or have been, directors and officers of BMB. (BMB and the individual defendants are collectively referred to as the “BMB defendants." ) In this action, the BMB defendants are charged, inter alia, with tortious interference with Sokol's contract with Tolmakov.

Plaintiffs allege in their complaint that the BMB defendants tortiously interfered with Sokol's contract rights with Tolmakov under the Emir Contract and induced Tolmakov to sell his interest in Emir to BMB instead of Sokol. By reason of the BMB defendants' interference, plaintiffs allege they did not make payments to Tolmakov and Emir, which were required under the Emir Contract. Tolmakov then sold the Emir interest to BMB. BMB now employs Tolmakov as general manager of Emir.

The complaint asserts claims for: (1) tortious interference with contract, (2) specific performance, (3) breach of contract, (4) unjust enrichment, (5) two counts of breach of fiduciary duty, (6) unfair competition, (7) tortious interference with fiduciary duty, and (8) aiding and abetting breach of fiduciary duty.

Defendants moved to stay or dismiss the action pursuant to § 3 of the Federal Arbitration Act (“FAA" ), 9 U.S.C. § 3, pending arbitration in Kazakhstan as provided in the Emir Contract. Recognizing that they had no contract with Sokol providing for arbitration, the BMB defendants nevertheless contended that given the circumstances of Sokol's suit against them, Sokol was estopped from refusing to arbitrate. In an opinion and order dated June 14, 2007, the district court denied defendants' motion. Citing authorities to the effect that a close relationship between the parties and intertwinement of the dispute with the underlying arbitration contract are essential elements for such an estoppel, the district court found that both elements were lacking. Defendants brought this appeal, pursuant to § 16(a)(1)(A) of the FAA.

Discussion

Defendants rely principally on two arguments: (1) that Sokol is estopped from refusing to arbitrate its claims because the claims are “intertwined" with the Emir Contract, and because Sokol's factual allegations supporting those claims “touch matters" covered by the Emir Contract; and (2) that if this Court finds that some, but not all, of Sokol's claims should be sent to arbitration, then it should issue a stay of the remaining claims pending arbitration.

Except as to Sokol's specific performance claim, we affirm the rulings of the district court. As regards the claim for

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specific performance, we find that defendants are entitled to arbitrate that claim as currently pled, and thus vacate and remand that portion of the district court's judgment. We do not, however, require a stay of the nonarbitrable claims to await the resolution by...

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