The opinion of the court was delivered by: John F. Keenan, United States District Judge
In these consolidated actions, plaintiffs TradeWinds Airlines, Inc. ("TradeWinds"), Coreolis Holdings, Inc. ("Coreolis"), and TradeWinds Holdings, Inc. ("TW Holdings") (collectively, "Plaintiffs") seek to pierce the corporate veil of C-S Aviation, Inc. ("C-S Aviation") and hold defendants George Soros ("Soros") and Dr. Purnendu Chatterjee ("Chatterjee") (collectively, "Defendants") liable on a default judgment entered against C-S Aviation by the Superior Court Division of the North Carolina General Court of Justice, Guilford County, on July 26, 2010.
Before the Court are two motions: (1) Defendants' motion pursuant to Rule 12 of the Federal Rules of Civil Procedure to dismiss both TradeWinds' Second Amended Complaint (the "TradeWinds Complaint") and Coreolis and TW Holdings' Complaint (the "Coreolis Complaint"); and (2) Plaintiffs' motion to strike portions of Defendants' reply memorandum submitted in support of their motion to dismiss. For the reasons stated below, Defendants' motion to dismiss is denied, and Plaintiffs' motion to strike is denied as moot.
In addition to these two motions, this Opinion and Order also administratively closes a motion rendered moot by the filing of the operative complaints.
The facts set forth below are taken from the Plaintiffs' pleadings, exhibits to those pleadings, and documents incorporated into those pleadings by reference. In considering Defendants' motion to dismiss, the Court accepts as true all factual allegations in the TradeWinds Complaint and the Coreolis Complaint, and construes all reasonable inferences in favor of Plaintiffs. See Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 424 (2d Cir. 2008). The Court considers the judgment entered by the North Carolina Superior Court on July 26, 2010 (the "2010 NC Judgment"), which is attached as an exhibit to the operative complaints. The documents incorporated into the operative complaints by reference include the answer and third-party complaint Plaintiffs filed in the North Carolina Superior Court (the "NC Third-Party Complaint"), the Opinion and Order entered by the Southern District of New York (Baer, U.S.D.J.) in Jet Star Enterprises Ltd. v. Soros, No. 05 Civ. 6585 (HB), 2006 WL 2270375 (S.D.N.Y. Aug. 9, 2006), and the aircraft leases TradeWinds negotiated with C-S Aviation. See DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010).
A. TradeWinds' Lease of Planes from C-S Aviation
In the late 1990s, TradeWinds was operating an air-freight business out of Guilford County, North Carolina. A Delaware corporation with its principal place of business in North Carolina, TradeWinds was a wholly owned subsidiary of TW Holdings, a Delaware corporation with its principal place of business in California. (TradeWinds Compl. ¶ 2, Coreolis Compl. ¶¶ 2--3, NC Third-Party Compl. ¶¶ 5--7). In 1999, TradeWinds sought to expand its air-freight business and began efforts to purchase a fleet of Airbus A300 aircraft. (NC Third-Party Compl. ¶¶ 15--17.)
Acting on behalf of Wells Fargo, which held a number of A300s in trust for various limited liability companies controlled by Defendants (the "Trust Beneficiaries"), C-S Aviation negotiated leases of seven A300s between November 1999 and November 2000. (NC Third-Party Compl. ¶ 20.) TradeWinds alleges that in negotiating the leases, C-S Aviation made certain representations about maintenance performed on the leased aircraft and the number of flights these aircraft would be able to complete. (Coreolis Compl. Ex. 1, Final Judgment of the North Carolina Business Court ("2010 NC Judgment") ¶ 7.) The Trust Beneficiaries raised the capital to purchase the aircraft through a loan from a syndicate of lenders organized by Deutsche Bank (the "Deutsche Bank Loan"). (NC Third-Party Compl. ¶ 12.)
Coreolis later purchased TW Holdings, and in connection with this purchase, TradeWinds renegotiated the aircraft leases with C-S Aviation in December 2001. These renegotiated leases (the "Modified A300 Leases") lowered the prior rental price for the planes and guaranteed TradeWinds further price reductions, to be based on rates offered to C-S Aviation's other customers. Coreolis and TW Holdings guaranteed TradeWinds' obligations under the Modified A300 Leases. (NC Third-Party Compl. ¶¶ 27-- 32.)
After the December 2001 loan modification, TradeWinds entered into additional leases with C-S Aviation. Specifically, TradeWinds leased three A300s that had previously been leased to a failing Canadian airline. (NC Third-Party Compl. ¶ 46.) In total, as of March 2002, TradeWinds was leasing ten aircraft from C-S Aviation. Legal title to these aircraft was vested neither in C-S Aviation, nor in any of the Trust Beneficiaries. Rather, legal title was vested in Wells Fargo, which acted as the United States trustee and acted for the benefit of the Trust Beneficiaries. The Trust Beneficiaries were all organized in foreign countries and were controlled by Defendants.
As time passed, the aircraft began to break down and a number of disputes arose between TradeWinds and C-S Aviation. TradeWinds contended that, of fourteen A300 engines it had originally leased from C-S Aviation, twelve had failed prior to the 1700-cycle life promised by C-S Aviation. (NC Third-Party Compl. ¶ 34.) TradeWinds alleged that C-S Aviation was in breach of the Modified A300 Leases because C-S Aviation had failed properly to manage maintenance reserve funds as required in the Modified A300 Leases, and because it had misrepresented the quality of repair work performed on the leased aircraft. (NC Third-Party Compl. ¶¶ 33--45.)
In August 2003, after the Trust Beneficiaries defaulted on the Deutsche Bank Loan, Deutsche Bank assumed the Trust Beneficiaries' rights under the Modified A300 Leases. Over the next few months, Deutsche Bank claimed that TradeWinds had failed to make adequate rental payments, and warned that it may seek to foreclose on its interest in the aircraft and take possession of them. (NC Third-Party Compl. ¶ 103.)
B. Litigation Before the North Carolina Superior Court and the United States Bankruptcy Court for the Southern District of Florida
In the fall of 2003, Deutsche Bank commenced an action for breach of contract against TradeWinds, TW Holdings, and Coreolis in the North Carolina Superior Court. On February 4, 2004, TradeWinds and its parent companies, Coreolis and TW Holdings, filed its Amended Answer, Counterclaim and Third-Party complaint ("NC Third-Party Complaint") against C-S Aviation, P-G Newco LLC, S-C Newco LLC, and Wells Fargo Bank Northwest, N.A. (the "NC Third-Party Defendants"). (Df.'s Decl. Supp. Mot. to Dismiss Ex. 3.) The NC Third-Party Complaint alleged that C-S Aviation fraudulently induced TradeWinds to enter into the A300 Leases, and also included claims for breach of contract and deceptive trade practices in violation of North Carolina General Statutes § 75-1.1(a). Despite being served with the NC ...