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Sokol Holdings, Inc. v. BMB Munai

August 14, 2009

SOKOL HOLDINGS, INC., ET AL., PLAINTIFFS,
v.
BMB MUNAI, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Debra Freeman, United States Magistrate Judge

MEMORANDUM AND OPINION

INTRODUCTION

The plaintiffs, Sokol Holdings, Inc. ("Sokol"), Brian Savage ("Savage"), and Thomas Sinclair ("Sinclair") (collectively, "Plaintiffs"), bring this action against Alexandre Agaian ("Agaian"), Bakhytbek Baiseitov ("Baiseitov"), Georges Benarroch ("Benarroch"), Boris Cherdabayev ("Cherdabayev"), Mirgali Kunayev ("Kunayev") (collectively, the "Individual Defendants"), as well as BMB Munai, Inc. ("BMB"), Credifinance Capital, Inc., ("CCI"), and Credifinance Securities, Ltd. ("CSL") (all defendants collectively referred to as "Defendants"). Plaintiffs filed their initial Complaint in this matter on April 12, 2005 (Dkt. 1), and have since amended it twice; once on October 12, 2005 (Dkt. 13), and again on November 15, 2005 (Dkt. 18). Presently before the Court is Plaintiffs' motion to amend their pleading once again. (Dkt. 75.) The proposed Third Amended Complaint adds certain factual allegations, excises Plaintiffs' claim for specific performance, recasts various other claims that were previously alleged, and adds claims for fraud and promissory estoppel. (See generally Proposed Third Amended Complaint, dated Dec. 12, 2008 ("3d Am. Compl.").) For the reasons discussed below, Plaintiffs' motion for leave to file the Third Amended Complaint is granted in part and denied in part.

BACKGROUND

A. Factual Background

1. The Formation of Sokol

According to the Second Amended Complaint, Plaintiffs' operative pleading in this matter, in early 2003, Savage and Sinclair drafted a business plan (hereinafter, the "Sokol Business Plan"), outlining, in detail, a proposed business venture. (Second Amended Complaint, dated Nov. 14, 2005 ("2d Am. Compl."), at ¶¶ 1, 26.) The plan was to develop an oil and gas exploration and production company in the Republic of Kazakhstan. (Id., at ¶ 26.) Pursuant to the Sokol Business Plan, Savage and Sinclair would first acquire the right to search for and produce oil and gas in a specified location in Kazakstan, known as the Aksaz-Dolinnaya-Emir oil and gas field (the "ADE Fields"). (Id., ¶¶ 4, 26.) They would then place the exploration and production rights in Sokol, an American corporation they intended to form. (Id., at ¶¶ 1, 26.) Thereafter, Savage and Sinclair would capitalize the project by reverse-merging Sokol into a publicly-traded shell corporation. (Id.)

In February of 2003, Savage and Sinclair took the first step in implementing the Sokol Business Plan by enlisting the aid and participation of defendants Baiseitov, Cherdabayev, and Kunayev. (See id., at ¶¶ 1, 25, 26.) These three defendants were Kazakh nationals, and they had had experience in oil and gas exploration and development, as well as in banking. (Id., at ¶¶ 1, 25.) Baiseitov, Cherdabayev, and Kunayev agreed to serve as members of Sokol's board of directors in exchange for an equity interest in the project. (Id., at ¶¶ at 26, 32.)

At roughly the same time, Savage and Sinclair solicited the services of defendants Agaian, Benarroch, CSL, and CCI. (Id., at ¶ 26.) Savage and Sinclair planned for these defendants to serve as advisors and consultants with regard to finance and capitalization. (Id., at ¶¶ 26, 33.) Agaian owned a company called ANBI (id., at ¶ 25), which is not a named defendant in this action. Benarroch was a director and officer of CSL, a Canadian consulting firm.*fn1 (Id., at ¶ 24, 25.) CSL was a wholly owned subsidiary of CCI (hereinafter, CSL and CCI are collectively referred to as "Credifinance"). (Id., at ¶ 24.) Savage and Sinclair first approached Agaian and Benarroch in early February, 2003, and discussed with them the feasability of the Sokol business plan and the likelihood of obtaining financing. (See id., at ¶ 26.) On March 11, 2003, Benarroch apparently confirmed that the Sokol business plan was workable, and he agreed that Credifinance would serve as Sokol's investment banker. (See id., at ¶ 27.) Agaian also agreed to participate in the project, and he was promised an ownership interest in Sokol. (Id., at ¶ 45.) Sokol was formally incorporated in Delaware on March 31, 2003. (Id., at ¶ 28.)

In March or April of 2003,*fn2 Savage and Sinclair provided copies of the Sokol Business Plan to each of the Individual Defendants. (Id., at ¶ 30.) The particular version that was delivered on that date was dated March 31, 2003, and the first page of each copy contained a "Confidentiality Statement," warning the recipient that the Sokol Business Plan was highly confidential, that it belonged to Sokol and its subsidiaries, and that Sokol could suffer irreparable harm if the details of the plan were disclosed to a third party. (Id.)

2. The Sokol-Emir Contract

In early 2003, an entity called Emir Oil, LLP ("Emir") owned the ADE Fields (id., at ¶¶ 4, 56), and it possessed the legal right to extract gas and oil from the land (id., at ¶ 4). In March, 2003, ANBI, through Sinclair (who had previously been appointed ANBI's "legal representative"), began negotiating with Tolmakov Toleush Kalmukanovitch ("Tolmakov"), an individual who owned a significant portion of Emir, for the purchase of Emir's interest in the ADE Fields. (Id., at ¶¶ 4, 39.) On March 17, 2003, ANBI and Emir executed a letter of intent (the "Letter of Intent"), which contemplated the purchase and sale of 70% of Emir. (Id., at ¶ 39.) ANBI, rather than Sokol, executed the Letter of Intent because, at that time, Sokol had not yet been incorporated. (Id.) Sinclair, however, had been authorized to conduct negotiations with Emir, and to enter into the agreement discussed above, on ANBI's behalf, on the understanding that, upon Sokol's incorporation, Sokol would assume all of ANBI's rights and obligations set forth in the Letter of Intent. (Id.)

Pursuant to the Letter of Intent, ANBI acquired the exclusive right, for one month, "to undertake financial legal and technical due diligence on Emir and the ADE licenses and assets." (Id., at ¶ 41.) Further, upon satisfactory due diligence, the Letter of Intent obligated ANBI to purchase 70% of Emir, at a price of $1.5 million. (Id., at ¶ 43.) Thereafter, Baiseitov, Cherdabayev, and Kunayev, together with another individual who is not a party in this action, agreed to contribute the funds necessary to consummate the transaction. (Id., at ¶ 42.)

On April 26, 2003, after due diligence had apparently been completed, Sokol and Emir entered into a formal contract, pursuant to which Sokol would purchase 70% of Emir for $1.5 million (hereinafter, the "Sokol-Emir Contract").*fn3 (Id., at ¶¶ 43, 46.) Under the Sokol-Emir Contract, Sokol was obligated to tender an initial installment of $700,000, on or before April 30, 2003. (Id., at ¶ 48.) Cherdabayev and Baiseitov agreed to contribute the $700,000 necessary to make this initial payment. (Id.)

3. The Individual Defendants' Alleged Plan To Develop the ADE Fields Themselves and To Exclude Plaintiffs From the Project

Despite the Confidentiality Statement in the Sokol Business Plan, the Individual Defendants allegedly concocted a scheme to use the information in the plan to develop and exploit the ADE fields themselves, but to exclude Savage and Sinclair from the project. (See id., at ¶ 35.) Toward this end, in May or early June of 2003, the Individual Defendants formed and incorporated BMB Holdings, Inc. -- BMB's predecessor -- for the purpose of purchasing Emir's interest in the ADE Fields. (Id.) To achieve this objective, sometime in May, 2003, the Individual Defendants allegedly caused Tolmakov and Emir to breach the Sokol-Emir Contract. (Id., at ¶¶ 57-59.) Thereafter, BMB,*fn4 acting through the Individual Defendants, executed an agreement with Tolmakov for the purchase of 70% of Emir. (Id., at ¶ 59.) Thus, according to Plaintiffs, BMB entered into a transaction with Emir that was "precisely identical to the transaction that Sokol and Emir [had previously] agreed to." (Id., at ¶¶ 59-60.)

Cherdabayev, Baiseitov, Kunayev, and Agaian each became officers and/or directors of BMB, and Benarroch and Credifinance both received an equity interest therein. (Id., at ¶ 57.) Consequently, Plaintiff's contend, Defendants received the benefit of the Sokol Business Plan, which Savage and Sinclair had conceived, as well as the benefit of the deal with Emir, which Sinclair had negotiated. (See id., at 59-60.) Savage and Sinclair, on the other hand, were excluded from the project altogether. (Id.)

4. Plaintiffs' Alleged Theories of Recovery

The Second Amended Complaint asserts nine separate causes of action: tortious interference with contract (Count I) (id., at ¶¶ 63-67); specific performance (Count II) (id., at ¶¶ 68-73); breach of contract (Count III) (id., at ¶¶ 74-78); unjust enrichment (Count IV) (id., at ¶¶ 79-82); breach of fiduciary duty, by Sokol, against Agaian, Benarroch, and Credifinance (Count V) (id., at ¶¶ 83-86); unfair competition -- misappropriation of labors and expenditures (Count VI) (id., at ¶¶ 87-90); breach of fiduciary duty, by Sokol, against Cherdabayev, Kunayev, and Baiseitov (Count VII) (id., at ¶¶ 91-95); tortious interference with fiduciary duty, by Sokol, against Agaian, Benarroch, and ...


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