USHA Holdings, LLC v. Franchise India Holdings Ltd.

Decision Date27 March 2014
Docket NumberNo. 12–CV–3492 KAM.,12–CV–3492 KAM.
Citation11 F.Supp.3d 244
PartiesUSHA HOLDINGS, LLC, and Atul Bhatara, Plaintiffs, v. FRANCHISE INDIA HOLDINGS LIMITED, Francorp Advisors Private Limited, and Gaurav Marya, Defendants.
CourtU.S. District Court — Eastern District of New York

Richard L. Yellen, Frank Jonathan Hutton, Richard L. Yellen & Assoc. LLP, New York, NY, for Plaintiffs.

Karl F. Milde, Jr., Richard J. Pelliccio, Eckert Seamans Cherin & Mellbott, LLC, White Plains, NY, for Defendants.

MEMORANDUM & ORDER

MATSUMOTO, District Judge:

Plaintiffs USHA Holdings, LLC (USHA) and Atul Bhatara (Bhatara) brought suit against defendants Franchise India Holdings, Limited (Franchise India), Francorp Advisors Private Limited (FAPL), and Gaurav Marya (Marya) in the Supreme Court of New York, Queens County, by filing a Summons and Complaint dated June 14, 2012.1 On July 13, 2012, defendants removed this case to the United States District Court for the Eastern District of New York. (ECF No. 1, Notice of Removal, 7/13/12.) Defendants subsequently moved to dismiss this case, arguing (i) that service was defective, (ii) that the court lacked personal jurisdiction, (iii) that dismissal was warranted under the doctrine of forum non conveniens, (iv) that plaintiffs did not enter into any contract with defendants and could not satisfy the statute of frauds, and (v) that plaintiffs' conversion claim was duplicative of the breach of contract claim and barred by the relevant statute of limitations. Defendants' motion was fully briefed on March 4, 2013. For the reasons provided below, defendants' motion to dismiss plaintiffs' conversion claim is granted, but defendants' motion to dismiss plaintiffs' breach of contract claim is denied, and defendants' motion to dismiss the case for improper service, lack of personal jurisdiction, and under the doctrine of forum non conveniens is denied.

BACKGROUND

Many of the facts giving rise to this lawsuit are vigorously contested by the parties. In determining the facts relevant to defendants' motion to dismiss for lack of personal jurisdiction, the court has considered the Complaint and the various declarations and other evidence submitted by the parties.2 Additionally, the court has construed the evidence in the light most favorable to plaintiffs, resolving all doubts in plaintiffs' favor. CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986) ; see also Realuyo v. Abrille, 93 Fed.Appx. 297, 298 (2d Cir.2004) (summary order) (“The court must construe the pleadings and affidavits in [plaintiff's] favor.”); DiStefano, 286 F.3d at 84.

I. The License Agreement and the Parties

Francorp International, Inc. (Francorp), which is not a party to this case, is a company that provides services and plans for operating and managing franchises. (Declaration of Atul Bhatara (“Bhatara Dec.”) ¶¶ 2–3.) Francorp represents many large companies such as Bridgestone Tires, Buffalo Wild Wings, and Popeye's Chicken. (Id. ¶ 3.) Donald Boroian is the president of Francorp, which is based in Illinois. (Declaration of Donald Boroian (“Boroian Dec.”) ¶ 1.)

Bhatara was born and raised in Queens, New York, graduated from high school in Queens, then graduated from St. John's University in Queens, and resides in Queens. (Bhatara Dec. ¶¶ 92–94.) Bhatara has cerebral palsy, needs the assistance of companions to travel within India, and had experimental surgery performed on his legs, which cannot support the weight of his torso. (Id. ¶¶ 97–98, 103.) USHA is a New York LLC based in Queens, New York, and is the business entity used by Bhatara to conduct his investments. (Id. ¶ 91.)

Marya is domiciled in New Delhi, India. (Declaration of Gaurav Marya (“Marya Dec.”) ¶ 44.) Marya is the principal and managing director of Franchise India and the managing director of FAPL. (Id. ¶¶ 1, 45–46.)

Franchise India is a private, closely-held corporation organized under the laws of the Republic of India with its principal place of business in New Delhi, India. (Id. ¶ 46.) All of the shareholders of Franchise India are relatives of Marya who reside in India. (Id. ¶ 45.) Franchise India assists investors who seek franchise opportunities by holding trade exhibitions and helping to broker business transactions. (Id. ¶ 47.) The company markets itself as the “World's # 1 Franchise Site” and boasts partnerships with at least 6,930 global franchising opportunities, including the “Sesame Street Preschool” program and the Kenny Rogers Roasters franchise. (Bhatara Dec. ¶¶ 61–63.)

FAPL is a closely held, private corporation organized under the laws of the Republic of India on October 7, 2008, with its sole place of business in New Delhi, India. (Marya Dec. ¶¶ 19, 49–50.) Marya claims he and his brother own all of the shares of FAPL. (Id. ¶ 49.) But other evidence in the record, including an agreement signed by Marya on behalf of FAPL and Boroian on behalf of Francorp, shows that Marya owns 50 percent of the shares of FAPL and Bhatara owns 50 percent of the shares of FAPL. (Bhatara Dec., Ex. B.) Marya claims FAPL has 18 employees, all of whom are based in New Delhi. (Marya Dec. ¶ 70.)

II. Negotiations Between Marya and Bhatara

Francorp was offering to sell a license that granted the purchaser the exclusive territorial right to implement Francorp's franchise consulting and development services within the Republic of India (the License). (Bhatara Dec. ¶ 2.) Bhatara claims that he and USHA purchased the License from Francorp on or about September 12, 2008, in exchange for a payment of $400,000. (Id. ¶ 15 & Ex. A; Boroian Dec. ¶¶ 5, 15.) A March 11, 2011 letter from Boroian to Bhatara states that Bhatara initially paid a $50,000 fee as an option for the License and $400,000 to purchase the License. (Bhatara Dec., Ex. A.)

After purchasing the License, Bhatara contacted Marya to discuss the use of the License. (Id. ¶ 19.) Marya claims, and plaintiffs do not dispute, that he and Bhatara had an initial meeting to discuss the license in New Delhi in “August or September of 2008,” that they met the following day at Marya's office in New Delhi to discuss the License, and that Bhatara informed Marya that he had retained Amarchand & Mangaldas, a prominent law firm in India, in connection with a possible transaction involving the License. (Marya Dec. ¶ 8.) During these discussions in India, Marya informed Bhatara that he was not interested in purchasing the License from him, but Marya and Bhatara also discussing creating a joint venture based in India that would hold the License and use the License in India. (Id. ¶¶ 10–11.) The parties envisioned that this joint venture would be created under Indian law, maintain its sole office in New Delhi, and enter into any licensing agreement with Francorp for the License. (Id. ¶ 11.)

A. Draft Memorandum of Understanding

On September 17, 2008, Marya sent an e-mail to Bhatara that included a one-page document entitled “Terms of MOU” (the “MOU”) as an attachment. (Id. ¶ 14 & Ex. A.) The MOU, which neither Marya nor Bhatara signed, provided that Atul Bhatara & Gaurav Marya will structure India JV to represent & Operate Francrop [sic] license in India,” that [b]oth parties will hold 50% is [sic] the India JV,” and that [b]oth Parties will sign MOU which will be binding for JV structure and License Agreement.” (Id., Ex. A.) The MOU sent by Marya also stated that the joint venture would transfer $30,000 to Bhatara immediately upon the signing of the license agreement and $270,000 to Bhatara within one year of the signing. (Id. ) Marya now claims that he “was not willing to invest such a sum in order to purchase the License.” (Id. ¶ 12.)

The draft MOU called for the new Indian joint venture to be incorporated under the name “Usha Management consultants.” (Id., Ex. A.) But Marya stated that he and Bhatara subsequently discussed forming the joint venture under the name “Francorp Advisors Private Limited.” (Id. ¶ 17.) FAPL was formed in India on October 7, 2008. (Id. ¶ 19.)

B. Meetings between Bhatara and Marya

On November 1, 2008, Marya flew from New Delhi, India to New York, landing on November 2, 2008. (Id. ¶ 22.) Marya claims he traveled to New York to meet with executives at the Famous Famiglia Pizza Corp. on November 3, 2008, at the request of Bhatara, although he had “no interest in a relationship” with Famous Famiglia. (Id. )

On November 1, 2008, Eugenie Wilson, an assistant manager at Franchise India e-mailed Bhatara to inform him that Deepika Handa, a legal advisor at Franchise India, would be e-mailing him a draft “Commercial Agreement,” which Handa did e-mail to Bhatara later that same day. (Id. ¶ 23 & Ex. C.) Wilson also wrote in her e-mail to Bhatara that Marya “requests you to please carry a copy of the Agreement when you meet with him on the 2nd Nov [sic] for dinner.” (Id. )3

Bhatara and Marya met for dinner on November 2, 2008, at the BLT Steakhouse in White Plains, New York. (Bhatara Dec. ¶ 27.) Bhatara states that he brought a copy of the draft Commercial Agreement to dinner and “discussed its terms in detail” with Marya. (Id. ¶ 28.) At the end of the dinner, Bhatara stated that he and Marya “reached a resolution that while there were still a great deal of outstanding ministerial terms to finalize, the core of our agreement should move forward.” (Id. )

Specifically, Bhatara claims that he and Marya confirmed that they would each own 50 percent of the joint venture in India, that Marya's interest would be established by actively operating the joint venture in India, and that Bhatara's interest would be secured by his existing equity in the License, for which he paid the full purchase price of $400,000, in addition to compensation from Marya in consideration for placing the ownership of the License in the joint venture. (Id. ) Bhatara also claims that he and Marya resolved to “proceed by way of an agreement in principle until all remaining terms were resolved” because they were scheduled to fly to Illinois to meet with Francorp on November 4,...

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