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Clarex Limited and Betax Limited v. Natixis Securities America LLC et al

October 12, 2012

CLAREX LIMITED AND BETAX LIMITED, PLAINTIFFS,
v.
NATIXIS SECURITIES AMERICA LLC ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Paul A. Engelmayer, District Judge:

OPINION & ORDER

Plaintiffs Clarex Limited ("Clarex") and Betax Limited ("Betax") (collectively, "plaintiffs"), companies operating in Nassau, Bahamas, bring this action, alleging that defendants Natixis Securities America LLC and its predecessors (collectively, "Natixis"), Delaware corporations operating in New York, New York, violated their contractual and fiduciary duties. Defendants move to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, the motion to dismiss based on Rule 12(b)(1) is granted.

I.Background*fn1

A.Pre-Lawsuit Events

Sometime prior to November 1, 2002, plaintiffs purchased $46 million in Nigerian bonds from Natixis. First Amended Complaint ("Compl.") ¶ 13. Pursuant to industry practice at the time, one "warrant" was supposed to accompany each $1,000 worth of issued bonds. Id. ¶ 6.

These warrants were guaranteed by the Government of Nigeria and provided the holder with the prospect of semi-annual payments. Id. ¶ 7. To date, Nigeria has paid out, to the holders, a total of $10,080,996.46 in payment rights on the warrants. Id. ¶ 24. As of January 2012, the bonds had a market value of $8,924,000. Id.

In August 2007, plaintiffs assigned all claims in connection with the purchase of the warrants to an affiliated company, Landsdowne Investments Inc. ("Landsdowne"). Id. ¶ 19; Declaration of Eric. R. Levine ("Levine Decl.") Ex. B. On August 21, 2007, Landsdowne filed a complaint against Natixis in the United States District Court for the Southern District of New York, alleging breach of contract and negligence in connection with Natixis's alleged failure to deliver the warrants. Levine Decl. Ex. D. On January 15, 2008, Landsdowne voluntarily dismissed that case. Levine Decl. Ex. E.

B.Plaintiff's Initial Complaint and Landsdowne's Subsequent Reassignment of the Bonds to Them

On January 30, 2012, plaintiffs filed their original Complaint in this case. Dkt. 1.*fn2

Plaintiffs alleged that Natixis's failure to deliver the warrants constituted a breach of contract, a breach of the duty of good faith and fair dealing, and negligence. Id. ¶¶ 20--35.

On April 2, 2012, defendants filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). Dkt. 12. In that motion, Natixis argued, inter alia, that plaintiffs did not have standing, because Landsdowne (not plaintiffs) had filed the prior suit seeking similar relief, and because the Complaint here did not "allege that Plaintiffs are the current owners of the claim." Dkt. 14 at 6.

Ten days later, on April 12, 2012, Landsdowne executed a contract that assigned the bonds back to Clarex and Betax. That assignment, however, purported to be effective, retroactively, as of December 15, 2011. Levine Decl. Ex. F.

C.Amended Complaint and Motion to Dismiss

On April 23, 2012, plaintiffs exercised their option, available under this Court's individual rules, to file an Amended Complaint in response to defendant's motion to dismiss. Dkt. 15. The causes of action in the Amended Complaint are unchanged from the original Complaint, Compl. ¶¶ 25--44; however, plaintiffs added several paragraphs chronicling the history of the assignments and reassignments of the claims, id. ¶¶ 19--23, including the April 12, 2012 assignment back to plaintiffs.

On May 30, 2012, Natixis filed a motion to dismiss the First Amended Complaint, again pursuant to Rules 12(b)(1) and 12(b)(6). Dkt. 18--20. On June 29, 2012, plaintiffs filed an opposition brief. Dkt. 21--24. On July 18, 2012, Natixis filed a reply. Dkt. 26.

Natixis moves to dismiss the First Amended Complaint on four grounds, namely that: (1) plaintiffs did not have standing at the time they filed the initial complaint, and therefore this Court lacks subject matter jurisdiction, Def. Br. 7--12; (2) Natixis's relationship with plaintiffs was that of a broker and it did not breach any duties of a broker, id. at 12--17; (3) plaintiffs' claims for breach of contract and breach of good faith are duplicative, id. at 17--19; and (4) plaintiffs' claims for breach of contract and negligence are duplicative. Id. at 19--21. Natixis also moves to strike plaintiffs' demand for damages to the extent they exceed the market value of the warrants at the time of the alleged breach. Id. at 21--24.

II.Legal Standards

Once subject matter jurisdiction is challenged, "[a] plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that jurisdiction exists." Giammatteo v. Newton, 452 F. App'x 24, 27 (2d Cir. 2011) (citing Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)). In resolving a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), "the court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff," Natural Res. Def. Council v. Johnson, 461 F.3d 164, 171 (2d Cir. 2006), but "jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." APWU v. Potter, 343 F.3d 619, 623 (2d Cir. 2003); see also Amidax Trading Group v. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011); Morrison v. Nat'l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008), aff'd on other grounds, 130 S. Ct. 2869 (2010). In addition, a district court may consider evidence outside the pleadings, such as affidavits and exhibits. See Makarova, 201 F.3d at 113.

When standing is at issue, "[e]ach element [of standing] must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation." Carver v. City of New York, 621 F.3d 221, 225 (2d Cir. 2010) (alterations in original) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)). "Because standing is challenged [here] on the basis of the pleadings, we [therefore] accept as true all material allegations of the complaint, and must construe the complaint in favor of the ...


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