Fernie v. Wincrest Capital Ltd.

• Decision Date: 28 February 2019
• Docket Number: INDEX NO. 653282/2018
• Citation: 2019 NY Slip Op 30510 (U)
• Parties: REBECCA FERNIE, Plaintiff, v. WINCREST CAPITAL LTD., BARBARA BERNARD, JOANNE BERNARD, FRANCIS CROTHERS, PRESS MANAGEMENT LLC, and HEDGEPORT ASSOCIATES, LLC Defendants.
• Court: New York Supreme Court

2019 NY Slip Op 30510(U)

REBECCA FERNIE, Plaintiff, v. WINCREST CAPITAL LTD., BARBARA BERNARD,JOANNE BERNARD, FRANCIS CROTHERS,PRESS MANAGEMENT LLC, and HEDGEPORT ASSOCIATES, LLC Defendants.

INDEX NO. 653282/2018

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 61 IAS MOTION

February 28, 2019

NYSCEF DOC. NO. 98

MOTION DATE 02/21/19

MOTION SEQ. NO. 001 & 002

DECISION AND ORDER

The following e-filed documents, listed by NYSCEF document number (Motion 001) 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 41, 43, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 81, 84, 85, 86, 87, 88, 89, 90, 91, 93 were read on this motion to/for DISMISSAL.

The following e-filed documents, listed by NYSCEF document number (Motion 002) 35, 36, 37, 38, 39, 40, 44, 71, 82, 92 were read on this motion to/for DISMISSAL.

HON. BARRY R. OSTRAGER:

Currently pending before the Court is Defendants' Wincrest Capital Ltd. ("Wincrest"), Barbara Ann Bernard ("BAB"), Joanne Marie Bernard ("JMB"), and Francis Joseph Crothers ("FCJ") (together, the "Wincrest Defendants") motion to dismiss Plaintiff Rebecca Fernie's ("Fernie") complaint for lack of personal jurisdiction and for forum non conveniens. Defendant HedgePort Associates, LLC ("HedgePort") moves separately to dismiss the complaint on the same grounds. Defendant Press Management LLC ("Press Management") joined the motions only on the basis of forum non conveniens. For the reasons stated below, the motions to dismiss for forum non conveniens are granted.

Background

The complaint alleges that Plaintiff Fernie and Defendant BAB worked together for several years in the Bahamas at non-party Holowesko Partners Ltd. ("Holowesko"), a wealth management firm. Fernie alleges that BAB solicited her to leave Holowesko and partner with BAB in a new company intending to manage the wealth of high net worth families, beginning with BAB's own family (the "Crothers Family").¹ BAB allegedly represented and agreed that in return for Fernie leaving Holowesko and joining BAB in the new company, Fernie and BAB would be equal equity partners and would co-manage the company equally. BAB further represented to Fernie that the Crothers Family would provide $60 million in investment funds for the new company on day one and that those monies would be co-managed by Fernie and BAB and equally share the profits from managing the new fund.

On May 1, 2015, Fernie, purportedly in reliance on BAB's representations, left Holowesko and joined BAB in forming the new company. On May 20, 2015, Fernie and BAB formed Defendant Wincrest under the laws of the Bahamas as an investment and asset management firm. Wincrest was incorporated with Fernie and BAB as two equal 50% shareholders of the company. Fernie was employed as the COO and BAB as the CEO. Each received an annual salary of $250,000.

Despite BAB's alleged representations to Fernie regarding an initial $60 million investment, the Crothers Family failed to make such an investment in Wincrest when the company incorporated. Nevertheless, Fernie and BAB purportedly used their own personal funds to develop networking arrangements and engage with other potential investors.

By January 2016, the Crothers Family and their controlled entities allegedly invested $20 million. During 2016, BAB purportedly continued to assure Fernie that the promised $60 million investment would be made in full by the Crothers Family and that Fernie and BAB would continue to equally share in managing and profiting from that investment.

In September 2016, BAB allegedly demanded that Fernie agree to diminish her 50% stake in Wincrest to 19%, such that BAB would hold a 51% stake and the Crothers Family would gain a 30% stake, in exchange for the Crothers Family providing the full $60 million investment to Wincrest. Fernie refused to agree to BAB's demand but did apparently agree to a resolution appointing JMB and FJC as directors of Wincrest.

Throughout late 2016 and early 2017, BAB allegedly pressed Fernie to agree to reduce her ownership interest in Wincrest. Fernie declined each such request.

In March 2017, purportedly without consultation with Fernie, BAB, JMB, and FJC signed a Strategic Agreement whereby the Crothers Family would have a 10% revenue share in Wincrest. On April 28, 2017, BAB, JMB, and FJC allegedly signed a resolution, passed without notice to Fernie, removing Fernie as director of Wincrest. On the same day, BAB, as Wincrest's CEO, allegedly removed Fernie as COO and terminated her employment.

Fernie also alleges that the Defendants Press Management and HedgePort substantially assisted the Wincrest Defendants in improperly removing Fernie from the company.

On December 20, 2016, BAB, without Fernie's notice or approval, allegedly engaged Press Management to revise Wincrest's management and business structure. Press Management purportedly agreed with the Wincrest Defendants to exclude Fernie from Wincrest and acted infurtherance of that agreement by providing advice and consultant services to the Wincrest Defendants.

On March 15, 2017, BAB, without Fernie's notice or approval, allegedly engaged HedgePort to provide executive level outsourced services for Wincrest, and effectively act as CFO and COO of Wincrest, by providing ongoing accounting and operations services to the company. HedgePort also purportedly agreed with the Wincrest Defendants to exclude Fernie from Wincrest and acted in furtherance of that agreement by providing advice and consultant services to the Wincrest Defendants.

Thus, the thrust of Plaintiff's complaint is that BAB, after inducing Fernie to work for Wincrest by misrepresenting the opportunity to co-manage 60 million in assets, eventually conspired with the Wincrest Defendants, Press Management, and HedgePort to improperly exclude Fernie from the company BAB induced Fernie to join.

Defendants all move to dismiss the action for forum non conveniens.² The Wincrest Defendants and HedgePort also move to dismiss for lack of personal jurisdiction. Press Management does not dispute that it is subject to the general jurisdiction of this Court.

Forum Non Conveniens

"Ordinarily, nonresidents are permitted to enter New York courts to litigate their disputes as a matter of comity." Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 478 (1984). However, "[t]he common-law doctrine of forum non conveniens ... permits a court to stay or dismiss such actions where it is determined that the action, although jurisdictionally sound, would be better adjudicated elsewhere." Id. at 478-79. "The burden rests upon the defendant challenging the forum to demonstrate relevant private or public interest factors which militate against accepting the litigation and the court, after considering and balancing the various competing factors, must determine in the exercise of its sound discretion whether to retain jurisdiction or not." Id. at 479. "Among the factors to be considered are the burden on the New York courts, the potential hardship to the defendant, and the unavailability of an alternative forum in which plaintiff may bring suit. The court may also consider that both parties to the action are nonresidents and that the transaction out of which the cause of action arose occurred primarily in a foreign jurisdiction."

First, the potential hardship on the various Defendants weighs in favor of dismissal. The Directors are all long-time permanent residents of the Bahamas. FJC affirmed in a written affirmation accompanying the motion that travel to New York to defend this lawsuit would impose a personal hardship on him due to a serious medical condition for which he is currently being treated. (Francis Joseph Crothers Aff. [NYSCEF Doc. No. 34]). Thus, there is potential hardship on the Wincrest Defendants in forcing them to litigate this action in New York.

Second, the Bahamas is an available alternative forum in which Plaintiff may bring suit. Plaintiff and the Directors are all domiciled in the Bahamas. Defendant Wincrest is a Bahamiancorporation with its principal place of business in the Bahamas. The nexus of the alleged tortious conduct occurred in the Bahamas. Further, Defendants Press Management and HedgePort have expressly consented to be sued in the Bahamas. Thus, the availability of the Bahamas as an alternative forum favors dismissal.³

Third, both Plaintiff and the main Defendants in this action are residents of the Bahamas. Five of the seven parties in the action are domiciled in the Bahamas. The claims against the Wincrest Defendants are undoubtedly at the center of this lawsuit, as opposed to the more nominal conspiracy and aiding and abetting causes of action levied against Press Management and HedgePort. Thus, the Bahamian residency of the majority of the parties weighs in favor of dismissal on forum non conveniens grounds.

Fourth, litigation in New York would impose at least a minor burden on the Court due to the applicability of Bahamian law. "The applicability of foreign law is an important consideration in determining a forum non conveniens motion and weighs in favor of dismissal." Shin-Etsu Chem. Co., Ltd. v. ICICI Bank Ltd., 9 A.D.3d 171, 178 (1st Dep't 2004).

Finally, this is a case primarily between Bahamian parties involving a dispute over the internal affairs of a Bahamian corporation. This Court, in the interest of comity, defers to the Bahamian interest in resolving that country's own corporate governance issues.

For these reasons, the Court grants Defendants' motions to dismiss for forum non conveniens.

General Jurisdiction

Even if this Court were to determine that New York is an appropriate forum to litigate this Bahamian dispute, the Court lacks jurisdiction over the Wincrest Defendants and HedgePort regarding the claims asserted herein.

First, it does not appear—and Plaintiff does not otherwise contend in opposition—that there is a basis for...