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Centauro Liquid Opportunities Master Fund, L.P. v. Bazzoni

United States District Court, S.D. New York

August 28, 2017

CENTAURO LIQUID OPPORTUNITIES MASTER FUND, L.P., Plaintiff,
v.
ALESSANDRO BAZZONI,, Defendants.

MEMORANDUM OPINION AND ORDER

          LAURA TAYLOR SWAIN, United States District Judge

         Plaintiff Centauro Liquid Opportunities Master Fund, L.P. (“Centauro”) brought this action against an individual, Alessandro Bazzoni, and a number of corporations Bazzoni allegedly controls, asserting breach of contract and fraud claims based principally on a Promissory Note executed by two of the named corporate defendants: Cinque Terre Financial Group Ltd. (“CTFG”) and CT Energia Ltd. (together with CTFG, the “Signatory Defendants”). This action is stayed as against CTFG because of an active bankruptcy proceeding, and nothing in this Memorandum Opinion and Order constitutes an adjudication of CTFG's rights or defenses. This Court has subject matter jurisdiction of this matter pursuant to 28 U.S.C. § 1332.

         On September 30, 2016, this Court granted in part and denied in part motions to dismiss by all of the named Defendants. Specifically, the Court (1) dismissed the Complaint as against Bazzoni; CT Energia Holding, Ltd. (“CT Energia Holding”); CT Energy Holding SRL; and CTVEN Investments SRL (“CTVEN”) because the Complaint did not establish that the Court had personal jurisdiction over those defendants; and (2) dismissed all counts in the Complaint except for Count One, which asserted breach of the Promissory Note, as to CT Energia Ltd. (See docket entry no. 107, Memorandum Opinion and Order (the “September Opinion”), p. 13.) The Court also granted Centauro permission to file a motion for leave to amend its complaint in light of the dismissals. (Id., p. 13.)

         Centauro now moves for leave to file an Amended Complaint (docket entry no. 111, Ex. 1 (Proposed Amended Complaint (“AC”)), which does not name CTVEN or CT Energy Holding SRL as defendants and adds as named defendants CT Energia Ltd. d/b/a Elemento Ltd. (“CT Energia Malta”) and CT Energia Oil and Gas Ltd. d/b/a Elemento Oil and Gas Ltd. (“CTOG” and, together with CT Energia Holding, CT Energia Malta, and Bazzoni, the “Non-Signatory Defendants”). The AC asserts three claims against all Defendants: (1) breach of the Promissory Note by failure to pay as required; (2) breach of the Promissory Note by failure to distribute revenue as required; and (3) fraudulent inducement in connection with the negotiation of the Promissory Note. (AC ¶¶ 53-75.) Defendants argue that granting leave to amend would be futile because (1) the AC fails to allege plausibly facts sufficient to establish personal jurisdiction over the Non-Signatory Defendants on an alter ego theory, and (2) the AC otherwise fails to state a claim for which relief may be granted, and leave to amend would therefore be futile.

         The Court has reviewed the parties' submissions in connection with the instant motion for leave to amend carefully and, for the following reasons, grants Centauro leave to file the AC as against CT Energia Ltd., Bazzoni, and CT Energia Malta, and otherwise denies Centauro's motion for leave to amend.

         Background

         The Court assumes the parties' familiarity with the background of this case, which is laid out in detail in the September Opinion. (September Opinion, pp. 3-5.) Specifically, the allegations of fact underlying Counts One and Two of the AC, which assert claims for breach of contract, are materially unchanged from the original Complaint, and the Court adopts the factual recitation from the September Opinion relating to those claims. The following supplemental recitation of facts is drawn from the AC, which is taken as true for purposes of this motion practice.

         Alter Ego Allegations

         Plaintiff alleges that this Court has personal jurisdiction over the Non-Signatory Defendants because they are alter egos of the Signatory Defendants, which consented to the jurisdiction of New York courts in the Promissory Note. (AC ¶¶ 5-6.) Specifically, the AC alleges that CT Energia Ltd. is wholly owned and controlled by Bazzoni, and that Bazzoni created CT Energia Malta, an entity that originally operated under the same name as CT Energia Ltd., and CTOG in order to divert resources from CT Energia Ltd. and shield that entity from liability to Centauro. (AC ¶¶ 45-49.) The AC also alleges that Bazzoni has used the corporate assets of CT Energia Ltd. in order to pay for Bazzoni's personal expenses and personal property. (AC ¶ 51.) The AC alleges that CT Energia Malta and CTOG “were created by [CT Energia Ltd.] through Bazzoni in October and December of 2015.” (AC ¶ 47.) The AC then alleges that, in December 2015, Bazzoni transferred control of CT Energia Malta to CT Energia Holding in order to shield CT Energia Ltd. from liability to Centauro. (AC ¶ 48.) The AC also alleges that CT Energia Ltd., CT Energia Malta, and CTOG all “share offices, email accounts, personnel, financial accounts, and revenue streams from oil transactions, among other things.” (AC ¶ 49.)

         Fraudulent Inducement Allegations

         Plaintiff alleges that, prior to the execution of the Promissory Note, it engaged in due diligence negotiations with CT Energia Ltd., during the course of which CT Energia Ltd. made false statements and representations. Specifically, Plaintiff alleges that CT Energia Ltd. represented that it had made an investment in Harvest Natural Resources (“HNR”), but that amended filings with the Securities and Exchange Commission (“SEC”) have made clear that CT Energia Ltd. did not, in fact, have any such investment. (AC ¶ 68.) Plaintiff also alleges that CT Energia Ltd. provided Plaintiff with false information about its international business revenues as a means of demonstrating to Plaintiff that CT Energia Ltd. had access to funds sufficient to make payments on the Promissory Note. (AC ¶ 68.) Plaintiff alleges that these representations were known to be false when made, and were made with the intent to induce Plaintiff into signing the Promissory Note rather than commence litigation. (AC ¶¶ 70-71.)

         Discussion

         Federal Rule of Civil Procedure 15 provides that the court may “permit a party to serve a supplemental pleading setting out any transaction, occurrence, or event that happened after the date of the pleading to be supplemented.” Fed.R.Civ.P. 15(d). It also provides that “leave to amend shall be freely given when justice so requires.” Fed.R.Civ.P. 15(a); see also Foman v. Davis, 371 U.S. 178, 182 (1962). If the plaintiff has “at least colorable grounds for relief, ” justice requires granting leave to amend. Ryder Energy Distribution Corp. v. Merrill Lynch Commodities Inc., 748 F.2d 774, 783 (2d Cir. 1984) (citation omitted).

         The Second Circuit has held that “absent evidence of undue delay, bad faith or dilatory motive on the part of the movant, undue prejudice to the opposing party, or futility, Rule 15's mandate must be obeyed.” Monahan v. N.Y.C. Dep't of Corrections, 214 F.3d 275, 283 (2d Cir. 2000). “The party opposing a motion to amend bears the burden of establishing that an amendment would be futile. . . . A proposed amendment to a pleading would be futile if it could not withstand a motion to dismiss.” Ballard v. Parkstone Energy, LLC, No. 06 CV 13099, 2008 WL 4298572, at *3 (S.D.N.Y. Sept. 19, 2008) (internal quotation marks and citations omitted). Thus, “[l]eave to amend may be denied on grounds of futility if the proposed ...


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