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BMR & Associates, LLP v. SFW Capital Partners, LLC

United States District Court, S.D. New York

March 10, 2015

BMR & ASSOCIATES, LLP and BMR ADVISORS, Plaintiffs,
v.
SFW CAPITAL PARTNERS, LLC, Defendant

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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For BMR & Associates, LLP, BMR Advisors, Plaintiffs: Michael C. Rakower, Rakower Lupkin PLLC, New York, NY.

For SFW Capital Partners, LLC, Defendant: Anna Conlon Aguilar, Lisa Dennis Bentley, LEAD ATTORNEYS, Berger Legal, LLC, New York, NY.

OPINION

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NELSON S. ROMÁ N, United States District Judge.

BMR & Associates, LLP, and BMR Advisors (collectively, " BMR" or " Plaintiffs" ), initiated this action against SFW Capital Partners, LLC (" SFW" or " Defendant" ) for various breach of contract and other related claims based on SFW's alleged non-payment for work undertaken by BMR relating to a potential investment by SFW in a group of Indian companies. Before the Court is Defendant's motion to dismiss the First Amended Complaint. For the reasons that follow, Defendant's motion is GRANTED, with conditions.

I. BACKGROUND

The following facts are taken from Plaintiff's First Amended Complaint except where noted and are accepted as true for the purposes of this motion.

Plaintiffs BMR & Associates, LLP, and BMR Advisors are professional services firms based in India. BMR offers services to facilitate strategic investments, with a

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focus in the tax and regulatory domains. (Pl.'s First Am. Compl. [hereinafter, " FAC" ], ECF No. 17, at 1¶ 9.) BMR & Associates and BMR Advisors are affiliated firms providing complementary services; they share common facilities and common " BMR" branding. In executing engagements for clients, the firms may draw upon resources from each other. (FAC ¶ 10.) Defendant SFW is a specialized mid-market private equity fund focused on analytical tools and related service companies.

From August 2012 to February 2013, SFW engaged BMR in connection with a potential investment (" the Transaction" ) in a group of companies (" the Target" ). ( Id. ¶ 3.) The Target was a leading provider of analytics services headquartered in India with a complex structure--a multinational enterprise with four entities in its corporate structure, two delivery centers in India, and sales offices in the United States, the United Kingdom, Asia, and the Middle East. To facilitate SFW's investment in the Target, a proposal was made to restructure the Target. BMR was engaged to facilitate such a transaction. ( Id. ¶ ¶ 3-9.) Throughout the engagement, BMR provided advice and assistance in identifying and analyzing structure options for implementing the Transaction, discussed these options with other Indian and U.S. advisors engaged by SFW and the Target, undertook a due diligence review of the Target's operations, provided valuation inputs, reviewed transaction documents, and provided project management and implementation support. The negotiations between SFW and the Target ultimately fell apart and the deal was not consummated. ( Id. ¶ 14.)

In total, BMR alleges that Plaintiffs provided SFW with over 1,800 hours and $400,000 worth of services, all rendered either pursuant to a written contract or at the direction of SFW. ( Id. ¶ 2.) To date, SFW has not paid BMR for this work. The work that BMR conducted for SFW appears to fall into three different categories, which are described here in further detail.

a. Initial Review Work and the Email Agreement

In early August 2012, SFW requested that BMR review various structure options for the Transaction that had been prepared by Ernst & Young at the behest of SFW and the Target (the " Initial Review Work" ). The Initial Review Work's scope is set out in an August 3, 2012 email from Vishal Agarwal of BMR to Paresh Vaish of SFW (the " Email Agreement" ). The Email Agreement contemplated a 7-10 day engagement at an initial rate of $150 per hour, with total estimated fees falling between $6,000 and $7,500. (FAC ¶ 52.) Payment of fees was not contingent upon success of the Transaction. ( Id. ¶ 53.) On August 4, 2012, SFW agreed to the Email Agreement's terms. ( Id. ¶ 57.)

b. Due Diligence Work and the August 30 Agreement

SFW also engaged BMR to perform a " financial and tax due diligence" of the Target's financial statements (the " Due Diligence Work" ). (FAC ¶ 83.) The scope of work, timeline, fees, and other details for the Due Diligence Work are set out in a letter from Sanjay Mehta of BMR to Paresh Vaish of SFW dated August 30, 2012 and emailed to SFW on August 31, 2012 (the " August 30 Agreement" ); SFW accepted the terms of the contract on August 31, 2014. ( Id. at ¶ ¶ 84-86.) Nothing in the August 30 Agreement suggests that payment of fees would be contingent upon the Transaction's successful consummation.

The August 30 Agreement also contained a document labeled Appendix B, which sets out BMR's " Standard Terms of

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Business." ( See Decl. of Michael C. Rakower [hereinafter, Rakower Decl.] Ex. 2 at 8-13; Decl. of Paresh Vaish [hereinafter, Vaish Decl.] Ex. C at 8-13; FAC ¶ 89.) This document contains a provision setting the governing law and forum for disputes. Under this provision, the terms of business are to be governed by Indian law and any disputes arising out of the engagement or terms of business are subject to the exclusive jurisdiction of the Indian courts. ( See Rakower Decl. Ex. 2 at 13; Vaish Decl. Ex. C at 13.)

c. Tax Structuring and Deal Implementation Work

BMR performed a third body of work related to tax restructuring advising and deal implementation support. Throughout the time that it was engaged in this body of work, BMR was involved in telephone discussions and email exchanges with the Target's personal and other advisors on the Transaction. Plaintiffs also provided SFW with regular update calls, including near daily update calls at the height of negotiations between SFW and the Target. (FAC ¶ ¶ 70, 72.) In addition, BMR undertook a review of the " workings associated with computing the value of the Target under a business transfer agreement." ( Id. ¶ ¶ 77-78.)

BMR asserts that this third body of work was not done pursuant to a contract, but that is disputed by SFW and this dispute is relevant to the analysis of whether the forum selection clause contained in Appendix B of the August 30 Agreement applies to the claims regarding payment for this body of work.

d. Procedural History

BMR filed the instant action against SFW on February 10, 2014, and filed an amended complaint on June 16, 2014. ( See ECF Nos. 1, 17.) Plaintiffs allege ten causes of action in their First Amended Complaint: breach of contract, account stated, quantum meruit, and unjust enrichment claims as to the due diligence contract and related work; an account stated claim as to the initial review, tax structuring and deal implementation work; quantum meruit and unjust enrichment claims as to the initial review, tax structuring, deal implementation and limited review work; a breach of contract claim as to the initial review work; and two fraudulent inducement ...


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