Newmont Mining Corp. v. Anglogold Ashanti Ltd.

• Decision Date: 30 September 2018
• Docket Number: No. 17-CV-8065 (RA),17-CV-8065 (RA)
• Citation: 344 F.Supp.3d 724
• Parties: NEWMONT MINING CORPORATION, Plaintiff, v. ANGLOGOLD ASHANTI LIMITED, AngloGold Ashanti North America, Inc., AngloGold Ashanti USA Incorporated and Wayne M. Chancellor, Defendants.
• Court: U.S. District Court — Southern District of New York

344 F.Supp.3d 724

NEWMONT MINING CORPORATION, Plaintiff,

v.ANGLOGOLD ASHANTI LIMITED, AngloGold Ashanti North America, Inc., AngloGold Ashanti USA Incorporated and Wayne M. Chancellor, Defendants.

No. 17-CV-8065 (RA)

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

Signed September 30, 2018

Andrew J. Petrie, Ballard Spahr LLP, Denver, CO, Sarah Block Wallace, Pro Hac Vice, Ballard Spahr LLP, Gregory Paul Szewczyk, Simpson Thacher & Bartlett LLP, New York, NY, for Plaintiff.

Lauren Ann Moskowitz, Cravath, Swaine & Moore LLP, Benjamin Andrew Fleming, Hogan Lovells US LLP, New York, NY, Andrew C. Lillie, Elizabeth Titus, Lacy G. Brown, Hogan Lovells US LLP, Elizabeth Austin, Thomas Drew Leland, Holland & Knight LLP, Denver, CO, for Defendants.

OPINION AND ORDER

RONNIE ABRAMS, United States District Judge:

Newmont Mining Corporation brings this action against three related corporate entities—collectively, "AngloGold"¹ —and one individual, Wayne Chancellor, for various claims arising from Newmont's purchase of a gold mine in Colorado. There are currently three motions pending in this case. For the reasons explained below, Chancellor's motion to dismiss for lack of personal jurisdiction is denied and the other two motions—AngloGold's motion to compel arbitration as to one part of the case and Defendants' shared motion to dismiss another aspect of it—are granted.

BACKGROUND

This case is about the ownership, operations, and sale of an open-pit gold mining operation in Colorado. Because each of the pending motions relies on a different set facts, the Court discusses here only the background necessary to understand the case's general context.

Originally, the mine at issue was owned by the Cripple Creek & Victor Mining Company ("Victor Mining"), a 100% subsidiary of AngloGold. See Compl. ¶ 19 (Dkt. 7). In 2012, Victor Mining began planning for and building a new high grade mill. See id. ¶¶ 4, 24–26. Since then, however, the mill has suffered from various structural issues and production problems and has not operated at capacity as a result. See id. ¶¶ 37–40, 96, 140. At some point prior to November 2014, a third party allegedly acquired the mineral interests on a plot of land on Victor Mining's property adjacent to the mill, referred to by the parties as MS 9282 ("the Plot"). See id. ¶¶ 146–148, 171,

In early 2015, AngloGold began marketing Victor Mining for sale and sent Newmont an offer to sell the company. See id. ¶¶ 41–46. Wayne Chancellor, who was the Vice President and General Counsel to one of the AngloGold entities during the relevant time period, actively participated in the marketing and sale process on behalf of AngloGold. See id. ¶¶ 44–45. Negotiations proceeded over the next few months. In May 2015, executives from Newmont and AngloGold, including Chancellor, met for two days in New York City, at the offices of AngloGold's outside counsel, Cravath, Swaine & Moore LLP, to discuss the transaction, negotiate certain terms of the deal, and finalize the agreement. See Compl. ¶ 58; Chancellor Decl. ¶¶ 35–37 (Dkt. 20).

On June 8, 2015, Newmont and AngloGold entered into a Stock Purchase Agreement ("SPA") in which Newmont agreed to purchase 100% of Victor Mining's stock for approximately $820 million. See Compl. ¶ 2; SPA § 2.01 (Dkt. 7-1). That price was approximate because the contract permitted the parties to adjust the price after closing through a "Purchase Price Adjustment" procedure. See SPA § 2.04. The SPA also included a promise by AngloGold to keep Newmont updated on all material business matters and events prior to the deal's closing date. See Compl. ¶¶ 3, 67, 69; SPA § 6.01(b). The SPA further provided that any lawsuit arising therefrom would be governed by New York law and that the parties consented to the jurisdiction of and to bring lawsuits in the U.S. District Court for the Southern District of New York. See Compl. ¶ 77; SPA §§ 10.09, 10.10.

Over the next two months, the AngloGold Entities allegedly began experiencing increasingly severe problems with the mill—the result of purported "design defects." See Compl. ¶¶ 5, 78–79. Instead of clearly communicating these problems with Newmont, AngloGold allegedly took various "steps to hide ... the existence of the increasingly severe problems." See id.¶ 81; see also, e.g. , id. ¶¶ 61, 82–86. Chancellor allegedly participated in this fraud in a variety of ways, including by failing to disclose the problems with the mill that had been identified in an internal Victor Mining memorandum. See id. ¶¶ 82–86, 88, 99, 105, 109, 113.

The deal closed in New York City on August 3, 2015, without any adjustment in price. See id. ¶¶ 134–136. Chancellor attended the closing. See id. ; Chancellor Decl. ¶ 35. According to the Complaint, neither at nor prior to closing did Chancellor or others at AngloGold inform Newmont about the problems that the mill had been having or about any third party's ownership of the mineral interests in the Plot. See Compl. ¶¶ 136, 138, 145. After closing, AngloGold and Newmont disputed the proper amount of the pertinent Purchase Price Adjustment under the SPA. See id. ¶¶ 156–60, 172.

Newmont filed this action on October 19,2017, seeking damages from Defendants relating to the mill's deficiencies, various purported misrepresentations and fraudulent omissions, and the disagreement with respect to the Purchase Price Adjustment. Defendants filed three motions to dismiss or stay this action: (1) a motion to compel arbitration and stay the Purchase Price Adjustment claim; (2) a motion to dismiss Chancellor for lack of personal jurisdiction; and (3) a motion to dismiss Plaintiff's claims regarding the third-party mineral interest in the Plot on the merits. Newmont responded in opposition to all three motions, and Defendants replied.

DISCUSSION

I. Motion to Compel Arbitration

As an initial matter, the Court will address AngloGold's partial motion to compel arbitration for Newmont's claim that, after the closing, AngloGold failed to properly "adjust" the purchase price for Victor Mining under the SPA. "In deciding motions to compel, courts apply a ‘standard similar to that applicable for a motion for summary judgment.’ " Nicosia v. Amazon.com, Inc. , 834 F.3d 220, 229 (2d Cir. 2016) (quoting Bensadoun v. Jobe-Riat , 316 F.3d 171, 175 (2d Cir. 2003) ). A court must therefore "consider all relevant, admissible evidence submitted by the parties" and "draw all reasonable inferences in favor of the non-moving party." Id. (citations omitted).

The SPA stated that the sale price of Victor Mining would be approximately $820 million, but § 2.04 of the SPA permitted a post-closing "Purchase Price Adjustment" to that price. Such adjustments had to be submitted according to the following procedure:

(a) Within 60 days after the Closing Date, Seller shall prepare and deliver to Purchaser a statement (the "Statement") ... setting forth the Adjustment Amount and a certificate of Seller that the Statement has been prepared in compliance with the requirements of this Section....

(b) The Statement shall become final and binding upon the parties on the 30^th day following delivery thereof, unless Purchaser gives written notice of its disagreement with the Statement (a "Notice of Disagreement") to Seller prior to such date. Any Notice of Disagreement shall ... only include disagreements based on mathematical errors or based on the Adjustment Amount not being calculated in accordance with this Section 2.04.... During the 30-day period following the delivery of a Notice of Disagreement, Seller and Purchaser shall seek in good faith to resolve any differences that they may have with respect to the matters specified by Purchaser in the Notice of Disagreement. At the end of such 30-day period, Seller and Purchaser shall submit to an independent accounting firm (the "Accounting Firm") for resolution any and all matters that were included by Purchaser in the Notice of Disagreement and that remain in dispute.

SPA § 2.04(a), (b). The "Adjustment Amount" calculated by AngloGold in its Statement was based in part on a "Net Cash Amount," which in turn was calculated by taking "the aggregate amount of cash and cash equivalents ... minus ... the aggregate principal amount of Indebtedness" of certain entities as of a particular time. See id. § 2.04(i). Section 2.04 further defined "Indebtedness" to include various types of payment obligations, including those "under any commodity derivative, hedge, future, forward purchase or sale or other transaction similar in nature or effect." Id. The SPA specified that "[t]he dispute resolution by the Accounting Firm under this Section 2.04 shall constitute an arbitration under the Federal Arbitration Act, and the Accounting Firm shall be an arbitrator." Id. § 2.04(f).

Pursuant to the procedure set out in § 2.04, AngloGold provided Newmont with a Statement on October 1, 2015, detailing the Purchase Price Adjustment it had calculated. See Compl. ¶ 156. Newmont responded with its Notice of Disagreement on October 29, 2015, stating that AngloGold had miscalculated the Purchase Price Adjustment by nearly $4.5 million by not counting "a payment obligation related to a certain ‘Sinclair Oil Agreement’ " as an "Indebtedness" that impacted Victor Mining's value. See id. ¶¶ 157–159. AngloGold responded on November 18, 2015, stating its view that the Sinclair Oil Agreement did not qualify as an "Indebtedness" under the SPA. See id. ¶ 160. The parties never submitted this dispute to an "independent accounting firm" under the terms of the SPA. Newmont instead filed this action, seeking determinations from the Court that the Sinclair Oil Agreement should have been counted as an "Indebtedness" under the SPA and that the Adjustment Amount should have been altered accordingly.

In the motion to compel arbitration, AngloGold argues that the dispute over whether the Sinclair Oil Agreement qualifies as an "Indebtedness" must be resolved by the "Accounting Firm" identified in SPA § 2.04(b). To...