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Sokol Holdings, Inc. v. BMB Munai

October 29, 2009

SOKOL HOLDINGS, INC., BRIAN SAVAGE, AND THOMAS SINCLAIR, PLAINTIFFS,
v.
BMB MUNAI, INC., ALEXANDRE AGAIAN, BAKHYTBEK BAISEITOV, GEORGES BENARROCH, BORIS CHERDABAYEV, MIRGALI KUNAYEV, CREDIFINANCE, CAPITAL, INC., AND CREDIFINANCE SECURITIES, LTD DEFENDANTS.



The opinion of the court was delivered by: Kimba M. Wood, U.S.D.J.

OPINION AND ORDER ON PLAINTIFFS' LIMITED OBJECTIONS TO MAGISTRATE'S ORDER ON MOTION FOR LEAVE TO AMEND PLEADINGS

I. Introduction

Plaintiffs Sokol Holdings, Inc., Brian Savage, and Thomas Sinclair (collectively "Plaintiffs") submit objections to the Memorandum and Opinion of Magistrate Judge Freeman, dated August 14, 2009, which granted in part and denied in part their motion for leave to amend their Second Amended Complaint. The Magistrate Judge granted Plaintiffs' motion insofar as Plaintiffs were permitted to file a Third Amended Complaint with amendments that (1) excise the specific performance claim (in light of the 2008 decision of the Court of Appeals for the Second Circuit); and (2) revise Counts I, III, and IV, and paragraphs 46, 60, and 61. The parties do not object to this aspect of the Magistrate Judge's order.

Plaintiffs also seek to reformulate three Counts and add two new Counts in the proposed Third Amended Complaint. The Magistrate Judge denied leave to make these amendments. (D.E. 104.) The Magistrate Judge found that Plaintiffs filed their motion for leave to amend well beyond the deadline set by the Court's scheduling order, dated November 3, 2005, a delay not excused by a showing of "good cause" pursuant to Rule 16(b) of the Federal Rules of Civil Procedure.

For the reasons stated below, the Court AFFIRMS the Magistrate Judge's Memorandum and Opinion and DENIES Plaintiffs' Objections.

II. Relevant Procedural Background

Plaintiffs' causes of action are based principally on allegations that Defendants violated an agreement with Plaintiffs to execute a business plan (hereinafter, the "Sokol Business Plan"), created by Plaintiffs, to extract and sell gas and oil resources from specific fields located in Kazakhstan. Plaintiffs had allegedly negotiated a contract with Emir Oil, LLP, who owned the fields and possessed the legal right to extract gas and oil from the land, to execute the Sokol Business Plan. Defendants allegedly utilized and benefited from the Sokol Business Plan and Plaintiffs' efforts by entering into a separate transaction with Emir Oil, LLP that excluded Plaintiffs from the gas and oil extraction project.*fn1

Plaintiff Sokol filed the original Complaint in this action on April 12, 2005. (D.E. 1.) On October 12, 2005, Plaintiffs filed an Amended Complaint, adding Savage and Sinclair as plaintiffs, naming Credifinance as a defendant, and asserting a number of additional claims. (D.E. 13.)

In a scheduling order, dated November 3, 2005, the Magistrate Judge stated that "[e]xcept for good cause shown . . . [n]o additional claims . . . may be asserted after 90 days from the date Defendants file their answer(s) to the operative complaint." (D.E. 15.) On November 15, 2005, Plaintiffs filed a Second Amended Complaint. (D.E. 18.)

On June 15, 2007, the Court denied Defendants' motion to dismiss and also denied their motion for a stay pending arbitration. (D.E. 47.) On July 2, 2007, Defendants appealed the Court's Opinion and Order and sought a stay of the litigation until the Court of Appeals issued a decision on Defendants' appeal. (D.E. 48.) On July 19, 2007, the Court denied the motion for a stay of the proceedings. (D.E. 57.) The Magistrate Judge continued to oversee discovery while the matter was pending before the appellate court. (D.E. 58, 60, 61, 67.)

Meanwhile, Defendants filed an Answer to Plaintiffs' Second Amended Complaint on July 16, 2007. (D.E. 56.) Pursuant to the scheduling order requiring that all new claims be asserted within 90 days of Defendants' filing of an Answer to the operative complaint, the deadline for adding claims to the Complaint was therefore October 14, 2007.

The appellate court issued its decision on September 18, 2008. It provided that, in light of its decision, Plaintiffs were "free to discontinue [their] claim for specific performance if [they] so choose[], and may seek the district court's leave to replead." Sokol Holdings, Inc. v. BMB Munai, Inc., 542 F.3d 354, 362 (2d Cir. 2008). On October 14, 2008, this Court set a deadline of October 24, 2008, for any motion to replead or to stay or dismiss the specific performance claim pending arbitration. (D.E. 68.)

On October 24, 2008, more than one year after the Magistrate Judge's deadline for adding claims pursuant to the November 3, 2005 scheduling order, Plaintiffs filed a motion for leave to file a Third Amended Complaint, which included new and revised proposed Counts. (D.E. 70.) On November 7, 2008, the parties entered into a joint stipulation, whereby the motion for leave to amend was withdrawn without prejudice to allow the parties to engage in mediation. (D.E. 73.) The parties agreed that "if the mediation [did] not result in a settlement of the dispute underlying this action, plaintiffs may refile the Motion." (Id.) On December 12, 2008, Plaintiffs notified the Court that mediation had been unsuccessful and refiled their motion for leave to amend the pleadings. (D.E. 75.)

On August 14, 2009, the Magistrate Judge issued the decision on the motion for leave to amend, precluding those proposed amendments that recast Counts VI, VII, and VII and that add causes of action for Fraud ...


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