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Faunus Group International, Inc. v. Ramsoondar

United States District Court, S.D. New York

May 16, 2014

FAUNUS GROUP INTERNATIONAL, INC., Plaintiff/Counter-Defendant,
v.
FREDY
v.
RAMSOONDAR, Defendant/Counter-Claimant.

OPINION & ORDER

HAROLD BAER, Jr., District Judge. [1]

Before the Court is Plaintiff/Counter-Defendant Faunus Group International, Inc.'s ("Plaintiff") motion to dismiss Defendant/Counter-Claimant Fredy Ramsoondar's ("Defendant") rescission counterclaim, which he brings in his individual capacity, and breach of contract counterclaims, which Defendant brings for a not yet joined Counter-Claimant United Protection Services, Inc. ("United Protection"). For the following reasons, Plaintiff's motion is STAYED with respect to United Protection's breach of contract counterclaims and DENIED with respect to Defendant's rescission counterclaim.

BACKGROUND

Plaintiff is a commercial firm that offers accounts receivable financing, through which it purchases accounts receivable from a business in exchange for a right of payment from that business's customers. (Compl. ¶ 10.) Defendant is the former CEO of United Protection, a now bankrupt provider of private security services. ( Id. ¶ 11.) On October 5, 2011, Plaintiff entered into an accounts receivable finance agreement (the "Accounts Agreement") with United Protection. ( Id. ¶ 12.) On October 13, 2011, Defendant executed a personal guaranty ("Guaranty"), and provided a "broad, unconditional guarantee of United Protection's obligations under [the Accounts Agreement]." ( Id. )

Plaintiff alleges that Defendant breached the terms of the Guaranty by providing false information on which Plaintiff relied, and by failing to provide required financial reports or notifications of material changes in United Protection's financial condition. ( Id. ¶¶ 25, 27, 28, 29.) Defendant counterclaims for rescission of the Guaranty based on failure of consideration, alleging that Plaintiff's conduct severely restricted United Protection's cash flow and defeated the promised consideration of "immediate financing." (Am. Ans. ¶¶ 107, 112.) Defendant also seeks to add United Protection as a counter-claimant, making claims for breach of the Accounts Agreement and an addendum to the Accounts Agreement ("Side Letter"), through which Plaintiff allegedly agreed to purchase accounts that were at least 120 days overdue. ( See id. ¶¶ 105, 108-124.) In the alternative, Defendant seeks to bring United Protection's counterclaims in his individual capacity as a creditor.

DISCUSSION

On a Rule 12(b)(6) motion to dismiss, I must "accept all factual allegations in the complaint as true." State Univs. Retirement Sys. of Ill. v. Astrazeneca PLC, 334 F.Appx. 404, 406 (2d Cir. 2009) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)), see Fed.R.Civ.P. 12(b)(6). But while a "complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, " the level of detail "must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, Plaintiffs must "plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Turkmen v. Ashcroft, 589 F.3d 542, 546 (2d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

A. Stay of Plaintiff's Motion Regarding United Protection's Counterclaims

Plaintiff argues that Defendant does not have the authority to assert a claim on behalf of the now bankrupt United Protection. However, Defendant is seeking permission from the Canadian court overseeing the bankruptcy proceedings ("Canadian Court") to bring a claim as creditor of United Protection, either on behalf of United Protection or in his own name. See Fed.R.Civ.P. 17(b) ("Capacity to sue or be sued is determined...for a corporation, by the law under which it was organized."), and Canada Bankruptcy and Insolvency Act, §71 (providing that bankrupt corporations lack capacity to "dispose of or otherwise deal with their property"). Defendant requests a temporary adjournment of Plaintiff's motion pending the Canadian Court's decision on Defendant's authority to bring those claims.

The discretion to stay an action is inherent to a district court's power to control its docket. See TradeWinds Airlines, Inc. v. Soros, 2011 WL 309636, at *3 (S.D.N.Y. Feb. 1, 2011), citing Landis v. North American Co., 299 U.S. 248, 254 (1936). In deciding whether to stay an action, a court will consider:

(1) the private interests of the plaintiffs in proceeding expeditiously with the civil litigation as balanced against the prejudice to the plaintiffs if delayed; (2) the private interests of and burden on the defendants; (3) the interests of the courts; (4) the interests of persons not parties to the civil litigation; and (5) the public interest.
Balancing these factors is a case-by-case determination, with the basic goal being to avoid prejudice.

Id., quoting Kappel v. Comfort, 914 F.Supp. 1056, 1058 (S.D.N.Y. 1996). Considering these factors, I will grant the requested stay. There is no prejudice as a result of a temporary stay, while to move forward without a decision from the Canadian Court may require dismissal of Defendant's claims made on behalf of United Protection. Conversely, judicial economy is furthered if the ...


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