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Soros Fund Management LLC v. Tradewinds Holdings, Inc.

United States District Court, S.D. New York

May 16, 2017

SOROS FUND MANAGEMENT LLC, Plaintiff,
v.
TRADEWINDS HOLDINGS, INC., and COREOLIS HOLDINGS, INC. Defendants.

          OPINION & ORDER

          JOHN F. KEENAN, United States District Judge

         On May 1, 2017, Soros Fund Management LLC (“SFM LLC” or the “Plaintiff”) filed a complaint seeking a preliminary and permanent injunction to enjoin TradeWinds Holdings, Inc. (“TW Holdings”) and Coreolis Holdings, Inc. (“Corelois, ” and, collectively, the “Defendants”) from pursuing an action pending in North Carolina state court. Plaintiff also requested declaratory relief. The Court held a hearing on May 8, 2017, and issued an order denying Plaintiff's request for injunctive relief on May 9, 2017. This Opinion reflects the Court's reasons for that denial.

         I. Background

         The parties (and related entities) have a complex litigation history, with which familiarity is presumed. For the sake of context, the Court provides a short summary of the relevant proceedings. The facts below are drawn from the complaint and the Court's previous decision in TradeWinds Airlines, Inc. v. Soros, 101 F.Supp.3d 270 (S.D.N.Y. 2015).

         A. The Parties

         Plaintiff is an investment advisory firm organized as a limited liability company under Delaware law. (Compl. ¶ 3.) All of Plaintiff's members-George Soros, Robert Soros, and Jonathan Soros-are citizens of the state of New York. (Id.) TW Holdings is a Delaware corporation with its former principal place of business in North Carolina. (Id. ¶ 4.) Coreolis is a Delaware corporation with its principal place of business in California. (Id. ¶ 5.) Coreolis owns TW Holdings, which, in turn, owns TradeWinds Airlines, Inc. (“TW Airlines”). (Id.) According to the parties, TW Airlines is a Chapter 7 debtor in bankruptcy proceedings pending before the Bankruptcy Court for the Southern District of Florida. (Tr. of Hr'g at 11, 29.)

         Although not a party to the instant action, C-S Aviation Services, Inc. (“C-S”) is a key player in the history of this litigation. Incorporated under Delaware law in 1994, C-S was a management company for an aircraft leasing business from which Defendants and TW Airlines leased aircraft. See TradeWinds Airlines, Inc. v. Soros, 101 F.Supp.3d 270, 273, 277 (S.D.N.Y. 2015). Its sole shareholder until at least July 2003 was Purnendu Chatterjee, Mr. Soros' frequent business partner. Id. at 273.

         B. Procedural History

         1. The North Carolina Action

         In 2003, Deutsche Bank, as successor in interest to the owners of a fleet of commercial aircraft, sued TW Airlines and Defendants in North Carolina state court (the “North Carolina Action”). (Compl. ¶ 10.) TW Airlines and Defendants counterclaimed, asserting that C-S had fraudulently induced TW Airlines to sign the leases. (Id. ¶ 11.) Deutsche Bank, Defendants, and TW Airlines ultimately settled the claims at issue in the North Carolina Action, but C-S failed to appear, since having gone out of business. (Id. ¶¶ 12-13.) A default was entered against C-S in 2004. (Id. ¶ 13.)

         In 2008, TW Airlines obtained a default judgment against C-S and sued Mr. Soros and Mr. Chatterjee in a veil-piercing action in the Southern District of New York. (Id. ¶¶ 14-15.) In 2010, a North Carolina state court entered default judgments against C-S in favor of (1) Coreolis and TW Holdings, and (2) TW Airlines.[1] (Id. ¶ 16.) Coreolis and TW Holdings subsequently commenced a veil-piercing action in the Southern District of New York against Mr. Soros and Mr. Chatterjee, alleging that they were C-S' alter egos and responsible for its debts. (Id. ¶ 17.)

         2. The SDNY Action

         In TradeWinds Airlines, Inc. v. Soros, 101 F.Supp.3d 270 (S.D.N.Y. 2015) (the “SDNY Action”), the Court granted summary judgment for Mr. Soros and Mr. Chatterjee, whom Defendants and TW Airlines alleged were C-S' alter egos and should be held liable for the unsatisfied default judgment they held against C-S in the wake of the North Carolina Action. The Court rejected Defendants and TW Airlines' arguments that the corporate veil of C-S should be pierced as to Mr. Soros and Mr. Chatterjee, finding that “the absence of evidence suggesting a ‘mingling of the operations' of C-S Aviation and Soros and Chatterjee is fatal to Plaintiffs' claims.” TradeWinds, 101 F.Supp.3d at 279. As relevant here, the Court explained:

Consideration of the evidence Plaintiffs [i.e., Defendants in the instant action] set forth could not lead a rational trier of fact to conclude that there was a ‘mingling of the operations' of C-S Aviation and Soros and Chatterjee. At most, the evidence suggests that C-S Aviation may have been intertwined with SFM LLC, the Holding Companies, the Investors, and the SPVs. But given Plaintiffs' theory of this case-that Soros and Chatterjee are C-S Aviation's alter egos- Plaintiffs have advanced no argument and offer no evidence that the corporate forms of SFM LLC, the Holding ...

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