Goel v. Ramachandran

• Decision Date: 20 November 2013
• Citation: 111 A.D.3d 783,975 N.Y.S.2d 428,2013 N.Y. Slip Op. 07708
• Parties: Vikas GOEL, et al., respondents, v. Anush RAMACHANDRAN, defendant, Bunge Ltd., et al., appellants.
• Court: New York Supreme Court — Appellate Division

111 A.D.3d 783

975 N.Y.S.2d 428

2013 N.Y. Slip Op. 07708

Vikas GOEL, et al., respondents,

v. Anush RAMACHANDRAN, defendant,Bunge Ltd., et al., appellants.

Supreme Court, Appellate Division, Second Department, New York.

Nov. 20, 2013.

Reed Smith, LLP, New York, N.Y. (Wendy H. Schwartz and Jennifer L. Achilles of counsel), for appellants.

Nixon Peabody, LLP, New York, N.Y. (Robert C. Sentner, Nicole F. Mastropieri, and Cassandra R. Hamar of counsel), for respondents.

PETER B. SKELOS, J.P., RUTH C. BALKIN, JEFFREY A. COHEN, and ROBERT J. MILLER, JJ.

In an action, inter alia, to recover damages for unjust enrichment, aiding and abetting a fraud, and money had and received, the defendants Bunge Ltd. and Bunge S.A. appeal, as limited by their brief, from so much of an order of the Supreme Court, Westchester County (Scheinkman, J.), dated April 4, 2012, as denied those branches of their motion pursuant to CPLR 3211(a) which were to dismiss the first, second, and fifth causes of action insofar as asserted against them.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and those branches of the motion of the defendants Bunge Ltd. and Bunge S.A. pursuant to CPLR 3211(a) which were to dismiss the first, second, and fifth causes of action insofar as asserted against them are granted.

The plaintiffs, Vikas Goel and Rainforest Trading, Ltd. (hereinafter Rainforest), commenced this action against the defendants, Anush Ramachandran, Bunge Ltd., and Bunge S.A. The plaintiffs alleged that they lost approximately $100 million as a result of a fraudulent scheme orchestrated by the defendants.

The amended complaint (hereinafter the complaint) alleged that Goel, a resident of Dubai, owned 99.99% of eSys Technologies Pte Ltd. (hereinafter eSys), a company incorporated under the laws of Singapore. In 2006, Goel was contacted by a representative of Teledata Informatics (hereinafter Teledata), a company organized under the laws of the British Virgin Islands. The representative informed Goel that Teledata was interested in acquiring shares of eSys.

By agreement dated November 29, 2006 (hereinafter the Share Subscription Agreement), Teledata agreed to purchase 51% of the shares of eSys. The complaint alleged that the purchase price was originally $105 million, then subsequently increased to $120 million. The transaction was to be accomplished through the creation of Rainforest, which was to serve as a holding company. Pursuant to the Share Subscription Agreement, Goel transferred all of his shares of eSys to Rainforest. The complaint alleged that in return, Rainforest issued 65 million shares to Goel and 55 million shares to Teledata. Goel then transferred 6.5 million of his shares in Rainforest to Teledata, which, in turn, pledged those shares to the State Bank of India as collateral for an $80 million loan.

The complaint alleged that Teledata was to invest $25 million of its own funds along with the $80 million loan from the State Bank of India. A bank account was established for Rainforest to enable Teledata to transfer the purchase funds pursuant to the Share Subscription Agreement. The complaint alleged that, since Teledata obtained the controlling interest in Rainforest after the distribution of the Rainforest shares, it “assumed the managerial role[ ] of the majority shareholder” and had “control over disbursements from [Rainforest's] bank account.”

The complaint alleged that “Teledata did not intend to, and did not, invest the $25 million into Rainforest that it had agreed to.” The complaint alleged that Teledata “ultimately transferred only a small fraction of the money, a substantial part of which was re-routed back to Teledata.” The complaint specified that instead of transferring the $25 million into Rainforest's account, Teledata transferred “much smaller sums” into the Rainforest account, then caused those sums to be transferred out of Rainforest's account to the defendant Bunge S.A. and to separate, unidentified entities that were allegedly controlled by Ramachandran. The complaint further alleged that Bunge S.A. claimed that it was entitled to the money it received from the Rainforest account pursuant to contracts it had with Teledata, pursuant to which Teledata owed it money.

The complaint alleged that “all of the funds that were transferred out of the Rainforest Account were transferred either directly or indirectly through Ramachandran-controlled companies, into Bunge accounts” and that these funds were, in turn, “transferred to Teledata, or Teledata-controlled companies to be ‘re-invested’ into Rainforest.” The plaintiffs asserted that “ [b]y doing this, Teledata, ultimately had records showing that it had invested $25 million into Rainforest, while in truth, it had not done so. Rather, it had wired much smaller amounts into Rainforest, but by the circular pattern described above, wired such amounts over and over again, so that it appeared it had invested much more.”

The complaint asserted five causes of action against the defendants. As relevant here, four causes of action were asserted against Bunge Ltd. and Bunge S.A. (hereinafter together the Bunge defendants): the first cause of action was for money had and received, the second cause of action alleged unjust enrichment, the third cause of action alleged tortious interference with contract, and the fifth cause of action alleged aiding and abetting fraud. These four causes of action were asserted directly against Bunge S.A. for its allegedly tortious conduct. With respect to Bunge Ltd., the complaint alleged that Bunge S.A. was its alter ego, and the four causes of action described above were asserted against Bunge Ltd. under a theory of piercing the corporate veil.

The Bunge defendants thereafter moved to dismiss the complaint insofar as asserted against them pursuant to CPLR 3211(a)(7) and insofar as asserted against Bunge S.A. pursuant to CPLR 3211(a)(8). The Bunge defendants contended, inter alia, that the Supreme Court lacked personal jurisdiction over Bunge S.A., a corporation located and incorporated in Switzerland. The Bunge defendants further contended that the complaint failed to state a cause of action for money had and received, unjust enrichment, or aiding and abetting fraud, and that the complaint was insufficient to state a cause of action against Bunge Ltd. under a theory of piercing the corporate veil. The Bunge defendants also argued that the complaint failed to state a cause of action to recover damages for tortious interference with contract and that, in any event, any such cause of action was time-barred.

The plaintiffs opposed the motion of the Bunge defendants. The plaintiffs contended, among other things, that the Supreme Court had personal jurisdiction over Bunge S.A. under the “mere department” and agency tests for personal jurisdiction by virtue of its relationship with Bunge Ltd., a corporation with its principal place of business in New York. The plaintiffs further contended that they had made a “sufficient start” in demonstrating that facts “may exist” which would establish personal jurisdiction over Bunge S.A. such that they should be granted jurisdictional discovery pursuant to CPLR 3211(d). The plaintiffs also opposed those branches of the motion of the Bunge defendants which were pursuant to CPLR 3211(a)(7).

The Supreme Court denied that branch of the motion of the Bunge defendants which was to dismiss the complaint insofar as asserted against Bunge S.A. pursuant to CPLR 3211(a)(8) for lack of personal jurisdiction. The Supreme Court concluded that the plaintiffs had made a sufficient start in demonstrating that facts may exist so as to support the exercise of jurisdiction pursuant to CPLR 301. In this regard, the court concluded that, “because the evidence [was] sufficient to support the exercise of jurisdiction on the mere department theory, the Court will deny the Bunge Defendants' motion to dismiss on jurisdictional grounds, without prejudice to the assertion of such a jurisdictional defense at trial, should these Defendants be so advised.”

The Supreme Court also denied those branches of the Bunge defendants' motion which were to dismiss the first, second, and fifth causes of action insofar as asserted against them pursuant to CPLR 3211(a)(7). However, the court granted that branch of their motion which was to dismiss as time-barred the third cause of action, which alleged tortious interference with contract.

On appeal, the Bunge defendants contend that the Supreme Court erred in denying that branch of their motion which was to dismiss the complaint insofar as asserted against Bunge S.A. pursuant to CPLR 3211(a)(8) for lack of personal jurisdiction. They further contend that the Supreme Court erred in denying those branches of their motion which were to dismiss the first, second, and fifth causes of action pursuant to CPLR 3211(a)(7).

We first address the Bunge defendants' contention regarding personal jurisdiction over Bunge S.A. However, we note that, in light of our determination granting those branches of the Bunge defendants' motion which were to dismiss the only remaining causes of action asserted against these defendants for failure to state a cause of action, it will not be necessary for the Supreme Court to resolve the issue of whether it has personal jurisdiction over Bunge S.A.

“A foreign corporation is amenable to suit in New York courts under CPLR 301 if it has engaged in such a continuous and systematic course of ‘doing business' here that a finding of its ‘presence’ in this jurisdiction is warranted” (Landoil Resources Corp. v. Alexander & Alexander Servs., 77 N.Y.2d 28, 33, 563 N.Y.S.2d 739, 565 N.E.2d 488, quoting Laufer v. Ostrow, 55 N.Y.2d 305, 309–310, 449 N.Y.S.2d 456, 434 N.E.2d 692, and Frummer v. Hilton Hotels Intl., 19 N.Y.2d 533, 536, 281 N.Y.S.2d 41, 227 N.E.2d 851, and Simonson v. International Bank, 14 N.Y.2d 281, 285, 251 N.Y.S.2d 433, 200...