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International Equity Investments, Inc. v. Opportunity Equity Partners Ltd.

February 26, 2007


The opinion of the court was delivered by: Lewis A. Kaplan, District Judge


This action is part of a dispute between affiliates of Citigroup, on the one hand, and its former Brazilian partner, Daniel Valente Dantas, and affiliates, on the other. The factual background is complex, and I assume familiarity with my previous opinions in the case*fn1 rather than again tread heavily plowed ground. The matter now is before me on the motion of defendants Banco Opportunity S.A. ("Banco") and Dorio Ferman to dismiss the third amended complaint as against them for lack of personal jurisdiction or, in the alternative, for legal insufficiency to the extent it purports to state a claim against Banco on a theory of alter ego liability.


Very little need be added to what has been said already to focus on the facts pertinent to the present motion.

I. Background

As has been noted previously, in the late 1990s, Citigroup decided to increase its Brazilian investments through a fund managed by a local partner who would invest a relatively small amount of its own money as well. It chose defendant Daniel Valente Dantas as its local partner. Dantas's entity, Opportunity Equity Partners, Ltd. ("Opportunity"), became the sole general partner of the Citigroup fund, then known as CVC/Opportunity Equity Partners, L.P. (the "CVC Fund"), pursuant to a limited partnership agreement.*fn2 Although Dantas was the dominant figure in Opportunity, Ferman also was a shareholder.

At about the same time, the Brazilian government began privatizing certain telecommunications assets. Citigroup was anxious to participate. Its subsidiary, Citibank, N.A. ("Citibank"), joined forces with a group of Brazilian pension funds (the "Pension Funds") to that end. The Pension Funds formed an investment vehicle (the "Onshore Fund") and appointed Opportunity as its manager.

II. The Operating Agreement

At the same time, Citibank, Opportunity, an entity called CVC/Opportunity Equity Partners Administradora de Recursos that served as the administrator of the Onshore Fund, Banco, Ferman, and others entered into the so-called Operating Agreement ("OA").*fn3 Broadly speaking, the OA contemplated that the CVC Fund, the Onshore Fund, and a fund and other entities controlled by Dantas, as well as Ferman and other Dantas colleagues, would invest in various opportunities on what they referred to as a side-by-side basis. Section 3.02 of the OA further provided that management of the vehicles through which the investments would be made would "be vested exclusively in or assigned exclusively to the General Partner [i.e., Opportunity], or an Affiliate Under Common Control With the General Partner," which "shall have full control over the affairs of each" vehicle through which an investment was made.*fn4

The OA had a further provision central to this motion. The parties agreed that any suit, action, or proceeding "arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any state or federal court in the Borough of Manhattan." They irrevocably appointed an agent in Manhattan for service of process in any such suit.*fn5

In time, there was a falling out between Dantas and both Citibank and the Pension Funds. First, the Pension Funds removed or procured the removal of Dantas and his group from control of the Onshore Fund. Later, Citibank removed Opportunity as general partner of the CVC Fund. This lawsuit followed.

III. The Allegations Against Banco and Ferman

During the course of this case, most of the attention has been focused on a battle over Brasil Telecom that centered on efforts to remove Dantas from positions of control or influence over that company following his discharge by the Onshore Funds and the ouster of Opportunity as general partner of the CVC Fund. At this point, however, the allegations of the third amended complaint (the "TAC") are considerably broader.

The TAC contains three causes of action pertinent here. Claim VII charges Banco with breach of the OA. Claim VIII charges both Banco and Ferman with conversion in that both allegedly looted or participated in looting the CVC Fund by, among other things, causing it to make various payments to or for the benefit of Dantas or his affiliates. Claim X accuses them and others of aiding ...

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