Goel v. Ramachandran

• Decision Date: 26 September 2011
• Docket Number: Case No. 10–CV–8916 (KMK).
• Citation: 823 F.Supp.2d 206
• Parties: Vikas GOEL and Rainforest Trading Ltd., Plaintiffs, v. Anush RAMACHANDRAN, Bunge Ltd., and Bunge S.A., Defendants.
• Court: U.S. District Court — Southern District of New York

823 F.Supp.2d 206

Vikas GOEL and Rainforest Trading Ltd., Plaintiffs,

v.Anush RAMACHANDRAN, Bunge Ltd., and Bunge S.A., Defendants.

Case No. 10–CV–8916 (KMK).

United States District Court, S.D. New York.

Sept. 26, 2011.

Robert C. Sentner, Esq., Nicole F. Mastropieri, Esq., Nixon Peabody LLP, New York, NY, for Plaintiffs.

Phillip C. Landrigan, Esq., Elizaveta Korotkova, Esq., McCarthy Finger LLP, White Plains, NY, for Defendant Anush Ramachandran.

Rachel Postman, Esq., Reed Smith LLP, New York, NY, for Defendants Bunge Ltd. and Bunge S.A.

OPINION AND ORDER

KENNETH M. KARAS, District Judge:

Plaintiffs Vikas Goel (“Goel”) and Rainforest Trading Ltd. (“Rainforest”) (collectively, “Plaintiffs”) sued Defendants Bunge Ltd., Bunge S.A. (collectively, “Bunge”), and Anush Ramachandran (“Ramachandran”) (collectively, “Defendants”), in Supreme Court of the State of New York, County of Westchester, alleging various state law claims. Ramachandran removed the case to this Court pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention” or “Convention”), 9 U.S.C. § 205 (“ § 205”). Plaintiffs have moved to remand the case to state court and for attorneys' fees, arguing that removal was improper and that this Court lacks subject matter jurisdiction over the case. For the reasons stated herein, Plaintiffs' motion to remand is granted; Plaintiffs' motion for attorneys' fees is denied.

I. Background

A. Factual Background

Goel, who is a resident of Dubai (Am. Compl. ¶ 4), founded and owned eSys Technologies Pte Ltd. (“eSys”), a computer equipment distribution company incorporated under the laws of, and headquartered in, Singapore, ( id. ¶¶ 4–5). In 2006, eSys needed to quickly raise approximately $100 million to pay its creditors and stay in business following a dispute with a manufacturer that resulted in the termination of eSys's distribution agreements. ( Id. ¶ 35.) In November 2006, Teledata Informatics (“Teledata”) contacted Goel to express interest in investing in and acquiring shares of eSys. ( Id. ¶ 37.) On November 29, 2006, Goel and eSys entered into a Share Subscription Agreement (the “Agreement”) with Teledata in which Teledata agreed to purchase 51% of the shares of eSys in exchange for $105 million. ( Id. ¶ 42.) None of the Defendants in the instant action signed the Agreement. (Notice of Removal Ex. K, Annex 1.) The Agreement contains a dispute resolution clause, which provides that: “[a]ny dispute, whether contractual or not, arising out of or in connection with this Agreement (including any question regarding its existence, validity, or termination) shall be referred to and finally resolved by arbitration in Singapore ....” ( Id. § 5.12(a).)

Rainforest was set up as a holding company, organized under the laws of the British Virgin Islands, to own all shares of eSys. (Am. Compl. ¶¶ 8, 43–44.) Teledata and Goel would own Rainforest, and Teledata was given shares of Rainforest in accordance with the Agreement. ( Id. ¶ 45.) However, Plaintiffs allege that instead of paying funds to Goel and eSys, Teledata repeatedly diverted small amounts of money that it had deposited into the Rainforest bank account to Bunge and to Ramachandran-controlled companies through a scheme that also allowed Teledata to access an $80 million line of credit from the State Bank of India. ( Id. ¶¶ 54–66.) ¹ Bunge, which Plaintiffs allege had no relationship with Rainforest, has refused to return the funds to Rainforest. ( Id. ¶ 65.)

Ramachandran, a Teledata officer and resident of New York, who Plaintiffs claim “uses Teledata as a vehicle to further his fraudulent and wrongful ends” ( id. ¶ 3 8), is alleged to have “orchestrated this scheme,” ( id. ¶ 58.) Plaintiffs allege that they agreed to enter into the Agreement based on intentional misrepresentations made by Ramachandran and other Teledata employees that Teledata was a very large company with high levels of sales and sufficient cash reserves to pay for its eSys investment. ( Id. ¶¶ 39–40.) However, according to Plaintiffs, Teledata was actually a sham company with fake financial results based on “fictitious sales to shell companies controlled by Ramachandran.” ( Id. ¶ 52.)

B. Procedural Background

On September 24, 2010, Plaintiffs filed a Complaint in the Supreme Court for the State of New York, County of Westchester, against Ramachandran and Bunge. (Decl. of Robert C. Sentner in Supp. Of Pls.' Mot Remand to State Ct. And for Att'y's Fees ¶ 3; Notice of Removal Ex. A.) On October 28, 2010, Bunge filed a motion to dismiss. (Notice of Removal ¶ 2.) On November 18, 2010, Plaintiffs filed an Amended Complaint with the permission of the state court and, on November 19, 2010, the state court judge denied Bunge's motion to dismiss as moot and set a scheduling order for motions in response to the Amended Complaint. ( Id.) The Amended Complaint contains causes of action for: (1) money had and received on behalf of Rainforest against Bunge (Am. Compl. ¶¶ 71–76); (2) unjust enrichment on behalf of Rainforest against Bunge ( id. ¶¶ 77–82); (3) tortious interference with contract on behalf of Goel and Rainforest against Bunge ( id. ¶¶ 83–89); (4) fraud on behalf of Goel against Ramachandran ( id. ¶¶ 90–98); and (5) aiding and abetting fraud on behalf of Goel against Bunge, ( id. ¶¶ 99–105).

On November 12, 2010, Plaintiffs also initiated an arbitration proceeding in Singapore (the “Singapore Arbitration”) against Teledata and two of its subsidiaries pursuant to the Agreement's arbitration clause requiring arbitration in Singapore of any disputes related to the Agreement. (Notice of Removal ¶ 4; id. Ex. K, Annex 1 § 5.12(a).) Ramachandran and Bunge, who are not signatories of the Agreement, are not parties to the Singapore Arbitration.

On November 29, 2010, Ramachandran removed the instant case from state court to this Court. (Dkt. No. 1.) Ramachandran removed the case pursuant to § 205 of the New York Convention (Notice of Removal ¶ 1), arguing that: (1) the allegations against Ramachandran in the Amended Complaint arise out of and in connection with the Agreement ( id. ¶ 7); (2) the parties and claims are intertwined with the matters subject to the arbitration clause and will be affected by the outcome of the pending Singapore Arbitration ( id. ¶ 9); and (3) the proceedings in this action should be stayed pending a final award and determination of the Singapore Arbitration, ( id. ¶ 11). Bunge consented to the removal. (Notice of Removal 1.)

On January 21, 2011, Plaintiffs filed a motion to remand this case to state court and for attorneys' fees. (Dkt. No. 9.) Ramachandran has opposed Plaintiffs' motion to remand; Bunge has not. The Court held oral argument on Plaintiffs' motion on May 24, 2011. (Dkt. No. 19.)

II. Discussion

A. Standard of Review

Federal courts are courts of limited jurisdiction. See Keene Corp. v. United States, 508 U.S. 200, 207, 113 S.Ct. 2035, 124 L.Ed.2d 118 (1993). Accordingly, “removal jurisdiction exists in a given case only when that jurisdiction is expressly conferred on the courts by Congress.” Fed. Ins. Co. v. Tyco Int'l Ltd., 422 F.Supp.2d 357, 367 (S.D.N.Y.2006) (internal quotation marks omitted); see also Irving Trust Co. v. Century Exp. & Imp., S.A., 464 F.Supp. 1232, 1234 (S.D.N.Y.1979) (noting that the right of removal is “a matter of legislative grace” (citing Great N. Ry. Co. v. Alexander, 246 U.S. 276, 38 S.Ct. 237, 62 L.Ed. 713 (1918))). Judicial scrutiny is especially important “in the context of removal, where considerations of comity play an important role.” Johnston v. St. Paul Fire & Marine Ins. Co., 134 F.Supp.2d 879, 880 (E.D.Mich.2001).

Normally, “[o]ut of respect for the independence of state courts, and in order to control the federal docket, federal courts construe the removal statute narrowly, resolving any doubts against removability.” Stan Winston Creatures, Inc. v. Toys “R” Us, Inc., 314 F.Supp.2d 177, 179 (S.D.N.Y.2003) (internal quotation marks omitted); see also Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108–09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941) (noting that federalism concerns call for “the strict construction” of the removal statute). However, § 205, the removal provision at issue in the instant case, is not subject to this same restriction because Congress intended § 205 to provide for “easy removal” and to “confer jurisdiction liberally.” See Beiser v. Weyler, 284 F.3d 665, 674 (5th Cir.2002); see also Acosta v. Master Maint. & Constr. Inc., 452 F.3d 373, 377 (5th Cir.2006) (describing § 205 as “one of the broadest removal provisions” and “emphasiz[ing] that the general rule of construing removal statutes strictly against removal cannot apply to [New York Convention] cases because in these instances, Congress created special removal rights to channel cases into federal court” (internal quotation marks omitted)); Banco De Santander Cent. Hispano v. Consalvi Int'l Inc., 425 F.Supp.2d 421, 432 (S.D.N.Y.2006) ( “ ‘[C]oncerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for predictability in the resolution of disputes' underlie accession to the Convention.” (quoting Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 629, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985))).

The party asserting federal jurisdiction generally bears the burden of proving that the case is properly in federal court. See McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936). “Where, as here, jurisdiction is asserted by a defendant in a removal petition, it follows that the defendant has the burden of establishing that removal is proper.” United Food & Commercial Workers Union, Local 919 v. CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir.1994).

B. The Convention on the Recognition and Enforcement of...