Madison Capital Markets, LLC v. Starneth Europe B.V., Starneth Holding B.V., Challenger Acquisitions Ltd.
| Decision Date | 23 August 2016 |
| Docket Number | 15 Civ. 7213 |
| Parties | MADISON CAPITAL MARKETS, LLC, Plaintiff, v. STARNETH EUROPE B.V., STARNETH HOLDING B.V., CHALLENGER ACQUISITIONS LIMITED, and WIL ARMSTRONG, an individual, Defendants. |
| Court | U.S. District Court — Southern District of New York |
APPEARANCES:
Attorneys for Plaintiff
MORITT HOCK & HAMROFF, LLP
New York, NY 10123
By: David A. Schrader, Esq.
Attorneys for Defendant
Starneth Europe B.V.
Starneth Holding B.V.
SICHENZIA ROSS FRIEDMAN FERENCE, LLP
61 Broadway
New York, NY 10006
By: Christopher P. Milazzo, Esq.
Mendy Menachem Piekarski, Esq.
Attorneys for Defendant
DLA PIPER US LLP
1251 Avenue of the Americas
New York, NY 10020
By: John J. Clarke, Jr., Esq.
Neal F. Kronley, Esq.
Sweet, D.J.
Defendants Wil Armstrong ("Armstrong") and Machiel Smits ("Smits") have moved to dismiss the complaint of plaintiff Madison Capital Markets, LLC ("Madison" or the "Plaintiff") pursuant to Federal Rules of Civil Procedure 12(b)2 and 12(b)6 for lack of jurisdiction. Defendants Starneth Europe B.V. ("Starneth Europe"), Starneth Holding B.V. ("Starneth Holding"), Challenger Acquisitions Limited ("Challenger"), and Mark Gustafson ("Gustafson") (collectively, the "Corporate Defendants") have moved for the same relief under the same rule. The Plaintiff has cross-moved pursuant to Federal Rule of Civil Procedure 15(a)(2) to amend its complaint. Plaintiff has consented to drop Gustafson and Smits as defendants. Pl.'s Opp. at 2. Based on the conclusions set forth below, the motion of Armstrong and Starneth Europe, Starneth Holding and Challenger to dismiss for lack of jurisdiction is granted, and the motion of Plaintiff to amend its complaint is denied.
Madison filed its complaint on September 11, 2015. The instant motions were heard and marked fully submitted on April 7, 2016.
Plaintiff Madison is a Delaware limited liability company with offices in Florida and New York. See Compl. ¶ 1; Compl., Ex. 9. Nonparty Stefan Spath ("Spath") is Plaintiff's employee who represented Plaintiff in the events underlying this dispute. See Compl. ¶¶ 19, 25-29. Spath works in Plaintiff's Orlando, Florida office. See Compl., Exs. 1, 9.
Defendant Challenger is a Guernsey company with its principal place of business located in Zurich, Switzerland. Compl. ¶ 4; See Declaration of Mark Gustafson ("Gustafson Decl.") ¶ 3. Challenger was formed to undertake acquisitions of companies in the entertainment and leisure sectors. Compl. ¶ 13. Challenger's shares are listed on the London Stock Exchange. Gustafson Decl. ¶ 3. Challenger does not maintain any offices in New York. See id.
Gustafson is the Executive Chairman of Challenger and a Canadian citizen and resident. Id. ¶¶ 1-2. He does not maintain a residence or office in New York. Id. ¶ 2.
Defendants Starneth Europe and Starneth Holding are companies formed in the Netherlands and engaged in the businessof designing and engineering observation wheels. Compl. ¶ 12 Gustafson Decl. ¶ 4. Starneth Europe and Starneth Holding's offices are located in the Netherlands. Gustafson Decl. ¶ 4. They do not maintain New York offices. Id. ¶ 7.1
In July of 2015, Challenger acquired Starneth Europe and Starneth Holding. See Compl. ¶ 21. Starneth was not a party to the acquisition. Gustafson Decl. ¶ 11.
The parties to the Starneth Acquisition first met to discuss the transaction on February 23, 2015 in Zurich, Switzerland. Gustafson Decl. ¶ 10. Subsequently, Gustafson, on behalf of Challenger, and Smits, on behalf of Starneth Europe and Starneth Holding, negotiated the terms of the Starneth Acquisition through telephone calls--neither party was located in New York during those telephone calls. Id. Ultimately, in July 2015, the parties finalized the Starneth Acquisition and executed the related documents in Enschede, Netherlands. Id. No part of the Starneth Acquisition occurred in New York.
In May 2015, prior and unrelated to the Starneth Acquisition, Challenger invested $3 million for a 3% stake in New York Wheel Investor LLC (the "Wheel Investment"). Gustafson Decl. ¶ 12. In March 2015, Gustafson, on behalf of Challenger, began discussing the Wheel Investment with New York Wheel's representative over the telephone from Gustafson office in Canada. Id. Challenger negotiated the terms of its investment through telephone calls and correspondence from various locations, all of which were outside the United States. Id. Finally, Gustafson received and executed the deal documents in his Canada office. Id.
Neither Starneth nor Plaintiff, the parties to the Agreement, participated in the Wheel Investment and, conversely, the parties to the Wheel Investment had no relationship to the Agreement.
Armstrong is a resident of Florida and is the president of Starneth. Compl. ¶ 5. Armstrong does not maintain an office in the State of New York and does not own real property there. Declaration of Wil Armstrong dated November 16, 2016 ("Armstrong Decl.") ¶¶ 2, 3. He did not attend any meetings in New York, or, to the best of his knowledge, participate in any telephone calls with any person who was then present in New York in connectionwith the negotiation of the non-disclosure agreement between Starneth and Madison Capital or the acquisition of shares of Starneth Holding and Starneth Europe. Armstrong Decl. ¶ 7. His interactions with Madison were limited to contacts with its employee Spath, who resides near Armstrong's home in Florida, both in Florida and in meeting in Europe. Id.
According to the Complaint, on June 16, 2014, Starneth and Plaintiff entered into a confidentiality and non-circumvention Agreement. Compl. ¶ 17. The Agreement was executed by Plaintiff's Orlando, Florida office and Starneth's Winter Park, Florida office. See Compl. Ex. 1.
In its recitals, the Agreement stated that the parties were entering into it because they "wish to provide and to receive relevant information, which the Parties agree and regard as proprietary and confidential, with respect to the Projects [a defined term]." Compl. Ex. 1. The agreement defined the meaning of "confidential Information" and set forth restrictions on its use and further dissemination.
The Agreement included a "non-circumvention" provision, which stated that "Starneth agrees that ... it shall not ... accept any business whatsoever from Madison's contact, EnexGroup of Zurich, Switzerland, or any of its principals or affiliates, without the express prior written consent of Madison." Id. § 6. The Agreement also provided that "[n]either Party shall have any legal obligation or liability with respect to any transaction nor other arrangement by virtue of this Agreement, except as expressly agreed herein." Id. § 5.
Plaintiff alleges that it provided financial advisory services to "Defendants" in two separate transactions. Compl. ¶ 14.
According to the Complaint, on July 16, 2015, Challenger announced that it had acquired all the shares of Starneth Holding and Starneth Europe. Compl. ¶¶ 21-22. Plaintiff alleges that several months earlier, in February 2015, Arthur Davis ("Davis"), who was Madison's contact at Enex Group, acquired Challenger. Compl. ¶ 20. Plaintiff also alleges that Challenger invested $3,000,000 in the "New York Wheel" in May 2015, id. ¶ 41, which the Complaint reflects is an unrelated third-party, id. ¶ 32. Plaintiff claims that non-party Davis learned of the opportunity during a meeting in Switzerland that was attended by plaintiff's employee Spath and that Spath later askedArmstrong to send contact information for the principals of the New York Wheel to Davis. Id., ¶ 32.
On July 20, 2015, Spath wrote in an email to Armstrong reciting that four days prior, his firm's "management" and "legal advisors" had informed him that the public announcement of the Challenger transaction breached the non-circumvention clause in the non-disclosure agreement between Madison and Starneth. Compl., Ex. 10. In later letters, counsel for all defendants denied that any consequences were due to Madison Capital Markets, LLC. See Compl., Exs. 11, 13.
Rule 12(b)(2) requires that a court dismiss a claim if the court does not have personal jurisdiction over the defendant. See Fed.R.Civ.P. 12(b)(2). A plaintiff in federal court bears the burden of making a prima facie showing that jurisdiction exists. Troma Entm't, Inc. v. Centennial Pictures Inc., 729 F.3d 215, 217 (2d Cir. 2013). In evaluating a motion to dismiss for lack of personal jurisdiction, the Court is not required to "accept as true a legal conclusion couched as a factual allegation." Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 185(2d Cir. 1998) (citation and internal quotation marks omitted). "[A] plaintiff may not rely on 'conclusory non-fact-specific jurisdictional allegations' to overcome a motion to dismiss." Doe v. Delaware State Police, 939 F. Supp. 2d 313, 321 (S.D.N.Y 2013) (citing Jazini, 148 F. 3d at 185). Courts "will not draw argumentative inferences in the plaintiff's favor." Mazloum v. Int'l Commerce Corp., 829 F. Supp. 2d 223, 227 (S.D.N.Y. 2011); see Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994) (same).
"Personal jurisdiction over a defendant in a diversity action in the United States District Court for the Southern District of New York is determined by reference to the relevant jurisdictional statutes of the State of New York." Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 762 (2d Cir. 1983) (citations omitted). However, Plaintiff must establish that jurisdiction is proper both under the law of the state in which the Court sits and that assertion of jurisdiction comports with the requirements of the Due Process Clause of the Fourteenth Amendment. See Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014); Daimler AG v. Bauman, 134 S. Ct. 746, 753 (2014). The Due Process Clause "constrains a State's authority...
To continue reading
Request your trial