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Slinin v. Shnaider

United States District Court, S.D. New York

February 2, 2017




         Plaintiff Eduard Slinin brings this diversity action against Defendant Alex Shnaider asserting claims under New York law for breach of fiduciary duty, unjust enrichment, and dissolution and an accounting arising out of an alleged partnership between the two parties. Now before the Court is Defendant's motion to dismiss Plaintiff's amended complaint in its entirety and for an award of attorneys' fees. (Doc. No. 51.) For the reasons set forth below, the Court grants Defendant's motion to dismiss in part and denies it in part; the Court also denies Defendant's motion for attorneys' fees.

         I. Background

         A. Facts[1]

         Plaintiff and Defendant, who developed a friendly relationship in 2004 due to their shared background as Jewish emigrants from the former Soviet Union, met “at least eight times” in Manhattan between 2006 and 2007 to discuss a potential business partnership. (Compl. ¶¶ 2, 26- 27.) Specifically, the two men planned to use Defendant's business connections to buy private jets on favorable terms from Bombardier, Inc. and then flip them for profit to Plaintiff's “various contacts, many of whom were successful business people in Ukraine and Russia.” (Id. ¶¶ 24-26.) The two men agreed that Plaintiff would be responsible for sales and Defendant would be primarily responsible for paperwork. (Id. ¶ 6.) Defendant, who had experience in complex commercial transactions, recommended that, for each plane, a prospective buyer should form a foreign-based limited liability company to take ownership of the plane, and that Slinin and Shnaider should also form separate companies - to be operated for the benefit of the partnership - that would contract with Bombardier for the purchase of the aircraft. (Id. ¶¶ 29-31.) Profits would derive from the difference in both the final and down payments made by the purchasers and the prices Plaintiff and Defendant paid to Bombardier, and would be split evenly between Plaintiff and Defendant. (Id. ¶ 32.) These terms were set orally because Plaintiff felt that no written agreement was necessary “in light of the parties' preexisting relationship.” (Id. ¶¶ 34-35.)

         Over the next several months, Plaintiff purportedly arranged for the sale of eight Bombardier aircraft (id. ¶ 44), though the amended complaint describes only seven transactions (id. ¶¶ 46-59).[2] On five of these contracts with prospective buyers, Plaintiff and Defendant collected down payments and paid a portion to Bombardier, splitting the remaining profit evenly between them. (Id. ¶¶ 48, 52.) On the sixth contract (the “Blue Skies Contract”), the buyer defaulted on its payments, requiring Plaintiff to pay $2.1 million out of his personal funds to avoid the partnership's default on its contract with Bombardier. (Id. ¶ 53-54.) Defendant assured Plaintiff that he would be reimbursed, consistent with their partnership agreement. (Id. ¶ 54.) In December 2007, under the seventh contract, Plaintiff himself agreed to purchase an aircraft, and he paid Bombardier a down payment of approximately $1 million out of his personal funds. (Id. ¶ 57.)

         The partnership ran into trouble in the wake of the 2008 financial crisis. One buyer defaulted on two contracts, requiring the partnership to refund the $5.2 million it had collected in down payments out of fear that the buyer would create legal trouble in Russia. (Id. ¶ 61.) That trouble came to pass anyway when the Russian government began a criminal investigation into the partnership, requiring Plaintiff to pay $800, 000 of his own funds for legal fees on behalf of the partnership. (Id. ¶ 62.) Facing default by buyers on the partnership's remaining contracts, Defendant negotiated with Bombardier to allow the partnership to combine the down payments made thus far, including Plaintiff's personal payment, and put them toward the purchase of two of the seven aircraft. (Id. ¶¶ 64-67.) One of these aircraft was sold for a profit in excess of $3 million. (Id. ¶ 68.) And while Defendant told Plaintiff that the second aircraft, a Learjet, was sold for a loss, Plaintiff alleges upon information and belief that the Learjet was in fact traded for another aircraft, which was in turn sold for a profit. (Id. ¶ 69.) Finally, the plane acquired pursuant to the Blue Skies Contract, on which Plaintiff had paid the down payment after stepping in for the defaulting buyer, was sold for a profit of $4.3 million. (Id. ¶ 70.)

         According to Plaintiff, Defendant has refused to provide a complete accounting or distribution of the partnership's profits. (Id. ¶ 73.) Plaintiff alleges that Defendant promised that his holding company would settle Plaintiff's claims for $500, 000, but only if the criminal investigation in Russia closed by June 24, 2012. (Id. ¶ 74.) Plaintiff refused and continued to demand a full accounting. (Id.) In September 2012, Plaintiff learned that the Russian investigation had been dropped and again reached out to Defendant for his share of the profits. Defendant refused, claiming the investigation had not been closed and that he owed Plaintiff nothing. (Id. ¶¶ 75-76.) Plaintiff believes he is owed “in excess of $11 million.” (Id. ¶ 77.)

         B. Procedural History

         Plaintiff filed this action on December 10, 2015, seeking damages for breach of fiduciary duty, various breaches of contract, and unjust enrichment, as well as an accounting. (Doc. No. 1.) On March 16, 2016, the Court held a conference on Defendant's anticipated motion to dismiss the initial complaint, at which time the Court expressed its concerns with the sufficiency of that pleading. (Doc. No. 37.) Plaintiff did not indicate a desire to amend at the conference or at any point over the next six weeks, and Defendant filed his first motion to dismiss on April 29, 2016. (Doc. No. 41.) However, on May 13, 2016, Plaintiff filed a letter motion seeking leave to amend his complaint along with a proposed amended complaint, which dropped certain claims, leaving causes of action for breach of contract, unjust enrichment, and a dissolution and accounting. (Doc. Nos. 45, 46.) On May 18, 2016, Defendant filed a response, requesting that the Court deny leave to amend because Plaintiff had been on notice of the initial complaint's deficiencies for weeks yet waited to amend until after Defendant had incurred the expense of briefing a motion to dismiss. (Doc. No. 47.) On May 27, 2016, the Court granted Plaintiff's motion for leave to file an amended complaint, but permitted Defendant to include in his renewed motion a request for attorneys' fees incurred in connection with the initial briefing. (Doc. No. 48.) On June 13, 2016, Defendant filed the instant motion to dismiss the amended complaint, arguing that each of Plaintiff's three claims should be dismissed as time-barred, and that dismissal is also warranted under Rule 19 for nonjoinder of necessary parties and under the forum non conveniens doctrine. Defendant also moves for attorneys' fees pursuant to Rule 11.

         Having reviewed the amended complaint and the parties' submissions, the Court finds that Plaintiff's breach of fiduciary duty and unjust enrichment claims are time-barred, that his accounting claim is not time-barred, and that Rule 19 and the forum non conveniens doctrine do not justify dismissal. Accordingly the Court grants Defendant's motion to dismiss in part and denies it in part. The Court also denies Defendant's motion for attorneys' fees.

         II. Failure to State a Claim Due to Time Bar

         To survive a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a complaint must “provide the grounds upon which [the] claim rests.” ATSI Commc'ns, 493 F.3d at 98; see also Fed. R. Civ. P. 8(a)(2) (“A pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief . . . .”). To meet this standard, a plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In reviewing a Rule 12(b)(6) motion to dismiss, a court must accept as true all factual allegations in the complaint and draw all reasonable inferences in favor of the plaintiff. ATSI Commc'ns, 493 F.3d at 98. However, that tenet “is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. Thus, a pleading that offers only “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. If the plaintiff “ha[s] not nudged [its] claims across the line from conceivable to plausible, [its] complaint must be dismissed.” Id. at 570.

         Here, Defendant asserts that Plaintiff's claims are time-barred under the applicable statute of limitations. Ordinarily, “[t]he lapse of a limitations period is an affirmative defense that a defendant must plead and prove. However, a defendant may raise an affirmative defense in a pre-answer Rule 12(b)(6) motion if the defense appears on the face of the complaint.” Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 425 (2d Cir. 2008) (citation omitted). Defendant argues that all three of ...

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