DirecTV Latin America, LLC v. PARK 610, LLC
| Decision Date | 26 January 2010 |
| Docket Number | No. 08 Civ. 3987(VM).,08 Civ. 3987(VM). |
| Citation | 691 F. Supp.2d 405 |
| Parties | DIRECTV LATIN AMERICA, LLC, Plaintiff, v. PARK 610, LLC, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Steven Glen Mintz, Terence William McCormick, Mintz & Gold LLP, Nyc, NY, for Plaintiff.
Vitaly David Rivkin, Jooyun Kim, Fox Horan & Camerini LLP, David Clifford Burger, Robinson Brog Leinwand Greene Genovese & Gluck PC, New York, NY, for Defendants.
DECISION AND ORDER
Plaintiff DIRECTV Latin America, LLC ("DIRECTV") brought this action alleging, among other claims, breach of fiduciary duty and fraud against defendants Park 610, LLC ("Park 610"), Carlos Vicente Avila, ("Avila"), Roberto Timistit ("Timistit"), Carlos Pratola ("Pratola") and Diego Clemente ("Clemente"). The complaint arises from a joint venture between DIRECTV and Avila that contained a New York forum selection clause. The claims against Park 610, Avila and Timistit were dismissed pursuant to a settlement agreement. Now before the Court is the motion of Pratola and Clemente to dismiss the complaint on the grounds of lack of personal jurisdiction over them and forum non conveniens.
By Order dated November 23, 2009, Magistrate Judge Gabriel Gorenstein, to whom this matter had been referred for supervision of pretrial proceedings, issued a Report and Recommendation the ("Report"), a copy of which is attached and incorporated herein, recommending that the claims against Pratola and Clemente be dismissed for lack of personal jurisdiction. The Report further noted that even if personal jurisdiction existed, the action could properly be dismissed by application of the forum non conveniens doctrine. DIRECTV filed timely objections to the Report challenging its findings and conclusions. Pratola and Clemente filed papers supporting the Report's recommendation. For the reasons stated below, the Court adopts the recommendations of the Report in their entirety.
A district court evaluating a Magistrate Judge's report may adopt those portions of the report to which no "specific, written objection" is made, as long as the factual and legal bases supporting the findings and conclusions set forth in those sections are not clearly erroneous or contrary to law. Fed.R.Civ.P. 72(b); see also Thomas v. Arn, 474 U.S. 140, 149, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Greene v. WCI Holdings Corp., 956 F.Supp. 509, 513 (S.D.N.Y. 1997). "Where a party makes a `specific written objection ... after being served with a copy of the magistrate judge's recommended disposition,' however, the district court is required to make a de novo determination regarding those parts of the report." Cespedes v. Coughlin, 956 F.Supp. 454, 463 (S.D.N.Y.1997) (citing United States v. Raddatz, 447 U.S. 667, 676, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980)); Fed.R.Civ.P. 72(b). The Court is not required to review any portion of a Magistrate Judge's report that is not the subject of an objection. See Thomas, 474 U.S. at 149, 106 S.Ct. 466. A district judge may accept, set aside, or modify, in whole or in part, the findings and recommendations of the Magistrate Judge as to such matters. See Fed.R.Civ.P. 72(b); DeLuca v. Lord, 858 F.Supp. 1330, 1345 (S.D.N.Y.1994).
Having conducted a de novo review of the full factual record in this litigation, including the pleadings, and the parties' respective papers submitted in connection with the underlying motion and in this proceeding, as well as the Report and applicable legal authorities, the Court concludes that the findings, reasoning, and legal support for the recommendations made in the Report are warranted. Accordingly, for substantially the reasons set forth in the Report the Court adopts the Report's factual and legal analyses and determinations, as well as its substantive recommendations, in their entirety as the Court's ruling on the motion of Pratola and Clemente to dismiss DIRECTV'S complaint in this action for lack of personal jurisdiction, or, in the alternative, by application of the doctrine of forum non conveniens.
For the reasons discussed above, it is hereby
ORDERED that the Report and Recommendation of Magistrate Judge Gabriel Gorenstein dated November 23, 2009 Docket No. 164 is adopted in its entirety, and the objection of plaintiff (Docket No. 168), is DENIED.
The Clerk of Court is directed to withdraw any pending motions and to close this case.
SO ORDERED.
REPORT AND RECOMMENDATION
Plaintiff DirecTV Latin America, LLC ("DirecTV") has sued Park 610, LLC ("Park 610"), Carlos Vicente Avila, Roberto Timistit, Carlos Pratola, and Diego Clemente. DirecTV alleges the individual defendants—who include an employee of DirecTV—secretly conspired to illegally share in the profit of a joint venture between DirecTV and Park 610. See Second Amended Complaint, filed June 20, 2009 (Docket # 138) ¶¶ 1-2 ("2d Am. Compl."). DirecTV's second amended complaint alleges five grounds for relief: (1) declaratory judgment against Park 610; (2) breach of contract against Park 610; (3) breach of fiduciary duties against Park 610 and Avila; (4) aiding and abetting a breach of fiduciary duty against Avila, Timistit, Pratola, and Clemente; (5) fraud against Avila, Pratola, and Timistit, and aiding and abetting fraud as against Clemente and Timistit. Id. ¶¶ 77-108.
Park 610, Avila, and Timistit ("Park 610 defendants") now move for a judgment dismissing the second amended complaint as to them pursuant to Fed.R.Civ.P. 12(b)(6); Pratola and Clemente move for a judgment dismissing the second amended complaint as to them pursuant to Fed. R.Civ.P. 12(b)(1), (2), (3), and (6) and the doctrine of forum non conveniens, or—in the alternative—for a stay pending the completion of proceedings in Argentina.
The following facts are alleged in DirecTV's second amended complaint and are assumed to be true for purposes of these motions.
DirecTV provides pay television services in Latin America and, through its subsidiaries, has approximately five million subscribers. 2d Am. Compl. ¶ 7. Before his termination, Pratola was the general manager and chief executive officer of DirecTV Argentina, S.A., which is a subsidiary of DirecTV. Id. ¶¶ 1, 15. In April 2006, Pratola recommended to his superiors at DirecTV that adding a golf programming channel would improve the company's subscriber base. Id. ¶¶ 1, 20. At Pratola's urging, DirecTV entered into negotiations with Avila, an individual with a long history of developing sports programming in Argentina, to create a joint venture that would develop and distribute such a channel in Latin America. Id. ¶¶ 21, 29. Pratola took a lead role in negotiating a memorandum of understanding and the subsequent Joint Venture Agreement between DirecTV and Avila. Id. ¶ 23. Under the agreement, the parties' joint venture was to be called Latin American Sports, LLC ("LAS"), in which Park 610 would have a 55% membership interest and DirecTV would have a 45% membership interest. Id. ¶¶ 1, 25.
Under the agreement, DirecTV was obligated to provide up to $7 million in funding to LAS. Id. ¶ 26. Between 2006 and 2008, DirecTV provided LAS with capital contributions of $5,700,000 and loans of an additional $2,000,000. Id. ¶¶ 26-27. Avila was to act as the chairman of LAS. Id. ¶ 28. Because of Avila's experience in developing sports programming, DirecTV made it clear that it was "critical" that Avila not transfer any of his ownership interest in LAS without DirecTV's prior written agreement. Id. ¶ 29. Indeed, a provision in the joint venture agreement made a change in control a default under the contract. Id. ¶ 30. Upon default, the agreement had a "call option" which provided that a defaulting member could be forced to sell its membership interest to the non-defaulting member for book value. Id. ¶ 35.
Park 610 is a limited liability corporation that was formed for the purpose of being the entity through which Avila controlled his interest in LAS. Id. ¶ 40. Park 610's two members are Tumely S.A. ("Tumely") and Loraine S.A. ("Loraine"). Id. ¶ 41. In due diligence meetings during the summer of 2006, Avila represented that he was the sole owner of Tumely and Loraine, and falsely stated that he chose to own Park 610 in this manner so that he could more easily conduct intra-family transfers in the future. Id. ¶¶ 42-44. Additionally, in an e-mail dated August 24, 2006, Avila's counsel represented to DirecTV that Avila owned all of the equity in Tumely and Loraine. Id. ¶ 45. Avila's counsel also represented that, although currently in bearer form, the by-laws of the two companies would change the shares to a registered form in the future. Id. However, simultaneously and unbeknownst to DirecTV, Avila and Pratola were arranging a transfer of ownership of Tumely to an entity controlled by Pratola and non-party Alejandro Zunda Cornell ("Zunda"), the Vice President of Marketing and Sales of DirecTV Argentina. Id. ¶¶ 2 n. 1, 48. Delivery of bearer shares would be an easier way to conceal the transfer inasmuch as the shares would not have to be re-registered. Id. ¶ 48.
On or about September 18, 2006, Avila and DirecTV closed their transaction by executing the Joint Venture Agreement that formed LAS. Id. ¶ 49; see Limited Liability Company Agreement of Latin American Sports, LLC Among Latin American Sports, LLC, DirecTV Latin America, LLC, and Park 610, LLC ("Joint Venture Agreement").
Before the closing, in April 2006, Pratola had formed Leraman, which would eventually become the owner of the Park 610 shares belonging to Tumely. 2d Am. Compl. ¶ 52....
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