Rigroup LLC v. Trefonisco Mgmt. Ltd.

• Citation: 949 F.Supp.2d 546
• Decision Date: 07 June 2013
• Docket Number: No. 12 Civ. 3721(JMF).,12 Civ. 3721(JMF).
• Parties: RIGROUP LLC et al., Plaintiffs, v. TREFONISCO MANAGEMENT LIMITED et al., Defendants.
• Court: U.S. District Court — Southern District of New York

949 F.Supp.2d 546

RIGROUP LLC et al., Plaintiffs,

v.TREFONISCO MANAGEMENT LIMITED et al., Defendants.

No. 12 Civ. 3721(JMF).

United States District Court,

S.D. New York.

June 7, 2013.

Joel E. Abramson, Stuart A. Smith, Law Offices of Stuart A. Smith, New York, NY, for Plaintiffs.

Thomas John Quigley, Nicholas Ryan Alioto, Winston & Strawn LLP, New York, NY, William Gordon Dobie, Winston & Strawn LLP, Chicago, IL, Daniel Joseph Rothstein, Law Office of Daniel J. Rothstein, P.C. and Bertrand Charles Sellier, Rottenberg Lipman Rich, P.C., New York, NY, for Defendants.

OPINION AND ORDER

JESSE M. FURMAN, District Judge.

Plaintiffs Janna Bullock, a Russian national now living in New York, and RIGroup LLC (“RIGroup USA”) bring this action for misappropriation and conversion, fraud, conspiracy to defraud, and breach of fiduciary duty, against Defendants, a group of Russian and Cypriot nationals and entities. At bottom, Plaintiffs allege that Defendants, virtually all of whom are Russian citizens living in Russia, conspired to loot a Russian corporation owned and controlled by Plaintiffs. Three Defendants—Alexander Esin, Vitaly Sirotkin, and Gorsoan Limited—now move to dismiss the complaint on the grounds of forum non conveniens, asserting that Russia is a more appropriate forum for litigation of Plaintiffs' claims. (Docket Nos. 22, 47). For the reasons discussed below, Defendants' motions are granted and the Complaint is dismissed.

BACKGROUND

On a motion to dismiss for forum non conveniens that is decided without a factual hearing, a court must accept the facts alleged in the complaint as true. See, e.g., Aguas Lenders Recovery Grp. LLC v. Suez, S.A., 585 F.3d 696, 697 (2d Cir.2009). The court may, however, consider certain evidence outside the pleadings, including affidavits. See id. at 697–98 n. 1. Accordingly, the following facts are drawn from the Complaint and assumed to be true or, where noted, from affidavits submitted by the parties.¹

Bullock is a Russian national who previously lived or spent significant time in Moscow, but is now a naturalized United States citizen living in New York City. (Bullock Decl. ¶¶ 9, 11 (Docket No. 32); Rothstein Affirm. Ex. D ¶ 11 (Certified Translation to English of Esin Affidavit)).² Bullock's ex-husband, Alexei Kuznetsov, was formerly the Minister of Finance of the Moscow Region. (Bullock Decl. ¶ 11). RIGroup USA is a Delaware limited liability company, which was reactivated in 2009 after having become defunct. (Compl. ¶ 32; Rothstein Affirm. Ex. G). Its sole member is Bullock. (Compl. ¶ 32). Through RIGroup USA and other companies she owns, Bullock “engages in real property development and investment in various locations throughout the world.” ( Id.). Most relevant here, until the events giving rise to this lawsuit, RIGroup USA owned a controlling interest in OOO RIGroup (“RIGroup Russia”), a Russian real estate company. ( Id. ¶¶ 20–21, 33–34). RIGroup Russia, in turn, had “significant assets, including thousands of hectares of land real property [sic] assets valued at the close of 2007 at over 3 billion Russian Rubles,” and “held significant real estate assets and development rights in and around Moscow.” ( Id. ¶¶ 33–34). Bullock was also the “lawful and legitimate owner and shareholder of a number of additional corporate entities (and corporate assets) located in Russia,” and RIGroup Russia “held a significant shareholder interest in a valuable subsidiary company.” ( Id.).

Plaintiffs allege that, in 2008 and at all relevant times, Defendants Esin and A.V. Belov were both the “Director General (or Chief Executive Officer) of RIGroup Russia” and therefore owed fiduciary duties to Plaintiffs. ( Id. ¶¶ 35–36). Plaintiffs further allege that in August 2008, Esin and Belov, with their coconspirators, “fabricated a company-initiated ‘buyout’ in which Bullock (or the companies she controlled, including RIGroup USA) purportedly agreed to accept shares of an affiliated company Rosweb in exchange for her shares of RIGroup Russia.” ( Id. ¶ 37). As a result of the “buyout,” Esin, Belov, and their co-conspirators “wrested control of RIGroup Russia[ ] and looted its assets.”( Id. ¶ 44). To formalize the takeover, the Complaint alleges, Esin and Belov filed false corporate disclosures with the Russian authorities indicating that a newly formed Cypriot entity, Amytal Holdings Ltd., was the owner of 98% of RIGroup Russia. ( Id.). Plaintiffs contend that this was an example of “corporate raiding,” an activity that has allegedly become prevalent in Russia and that generally involves the falsification of corporate records, the theft of companies and assets, and the use of the criminal justice system to bring false charges against target companies and controlling owners. (Bullock Decl. ¶¶ 2–5); see also id. Exs. 12–17 (articles describing the practice of corporate raiding in Russia).

According to the Complaint, Esin, Belov, and their co-conspirators further “created and falsified a number of purported loans, due and owing to RIGroup Russia, from Ms. Bullock and certain of her additional companies located outside of Russia.” (Compl. ¶ 46). Esin, Belov, and their co-conspirators—through their companies, Defendants Trefonisco Management Limited, Conflict.net, and Gorsoan—“purported to buy these fraudulent loans ... from RIGroup Russia for little or no consideration.” ( Id. ¶ 47). On a number of occasions, Esin then attempted to extort Plaintiff to pay off a portion of the fraudulent loans on threat of enforcement of the loans. ( Id. ¶¶ 9–12, 49). The Defendants and their coconspirators allegedly also “stole and converted the assets of a number of Plaintiff's other companies, including Rosweb, a venture capital fund established in 2007 and worth hundreds of millions of Euros.” ( Id. ¶ 50). The raiders illegally transferred control of Rosweb to the ORSI Group through false corporate documents, including “powers of attorney,” and the ORSI Group then divested Rosweb of its assets. ( Id. ¶¶ 53–54).

On or about July 29, 2009, Esin, Belov, and their partners caused RIGroup Russia to initiate a civil action in the courts of Cyprus against RIGroup USA and others, seeking to enforce a purported loan agreement between RIGroup Russia and Laziar Holding Ltd., a Cypriot company. ( Id. ¶ 4). As Laziar Holding is controlled by Bullock, Plaintiffs contend that this lawsuit was in effect an effort to extend Defendants' corporate raiding to Cyprus and to illegally take possession of additional assets owned by Plaintiffs, including three French hotels. ( Id. ¶ 5). Plaintiffs were ultimately able to get this action dismissed with prejudice. ( Id. ¶ 7).

By summons with notice, Plaintiffs initiated this action in New York Supreme Court, New York County, on or about March 15, 2012. (Compl. ¶ 13). On or about March 21, 2012, they served Esin, who was visiting New York. ( Id. ¶ 14). And Plaintiffs filed their original complaint on or about April 17, 2012. ( Id. ¶ 15). After Esin was served, he “had further contacts with New York in connection with improper attempts and threats to convince Plaintiffs to withdraw their complaints against him” and “threatened” Plaintiffs, via a New York businessman, “that unless Plaintiffs withdrew their claims in this action, [Esin] and his coconspirators would retaliate against Bullock and attempt to ruin her.” ( Id. ¶¶ 16, 18). In particular, Esin wrote an e-mail to the New York businessman stating that Bullock was “continu[ing her] litigation against me.... I don't know why she does it. There will be a big scandal that will bring nothing but harm to her.” ( Id. ¶ 17). Shortly thereafter, Bullock “received anonymous death threats via the Internet” and Gorsoan commenced a second action against Plaintiffs in Cyprus supported by false testimony. ( Id. ¶ 19). That action has now resulted in an interim freeze of at least some assets controlled by Bullock, RIGroup USA, and other entities allegedly controlled by Bullock. (Dracos Decl. ¶¶ 40, 54, 70–73).

Although Plaintiffs fail to mention it in their Complaint, they too have litigated related claims in the Cypriot courts. RIGroup USA, along with other corporate entities controlled by Bullock, filed an action in Cyprus on May 31, 2010, almost two years before the present case commenced, alleging that the assets of RIGroup Russia had been looted and that damages totaled hundreds of millions of dollars. ( Id. ¶¶ 105–07). Several of the defendants in that action are individuals or entities that Plaintiffs allege profited from the corporate raiding alleged in this action or were otherwise involved in the events giving rise to this case. ( Id. ¶ 110). Plaintiffs' Cypriot case was dismissed for “want of prosecution” on July 24, 2012. ( Id. ¶ 115).

DISCUSSION

“The doctrine of forum non conveniens is a discretionary device permitting a court in rare instances to dismiss a claim even if the court is a permissible venue with proper jurisdiction over the claim.” Carey v. Bayerische Hypo–Und Vereinsbank AG, 370 F.3d 234, 237 (2d Cir.2004) (citations and internal quotation marks omitted). The Court of Appeals for the Second Circuit has established a three-part test for motions to dismiss on forum non conveniens grounds:

At step one, a court determines the degree of deference properly accorded the plaintiff's choice of forum. At step two, it considers whether the alternative forum proposed by the defendants is adequate to adjudicate the parties' dispute. Finally, at step three, a court balances the private and public interests implicated in the choice of forum.

Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146, 153 (2d Cir.2005) (citations omitted) (citing Iragorri v. United Techs. Corp., 274 F.3d 65, 73–74 (2d Cir.2001) (en banc)). “The defendant bears the burden of establishing that a presently available and adequate alternative forum exists, and that the balance of private and public interest factors tilts heavily in favor of the...