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Luxepress 2016 Corp v. Government of Ukraine

United States District Court, S.D. New York

March 30, 2018

LUXEXPRESS 2016 CORP., ALAMO GROUP INC., LUXEXPRESS-II LTD., MYKOLA IVANENKO, and LARYSA IVANENKO, Plaintiffs,
v.
GOVERNMENT OF UKRAINE, VIKTOR YANUKOVICH, ALEXANDER YANUKOVICH, MYKOLA AZAROV, ALEXEY AZAROV, YURY ANISTRATENKO, VALERIY KHOROSHKOVSKIY, ANDREW KLYUYEV, SERGEY KLYUYEV, SERGEY KLYUYEV, VITALIY ZAKHARCHENKO, VIKTOR PSHONKA, ARTEM PSHONKA, RENAT KUZMIN, ANATOLIY MELNIK, VLADIMIR GOGOL, OLENA LUKASH, VICTOR TATKOV, ARTUR YEMELYANOV, BORIS KOLESNIKOV, VLADIMIR KOZAK, ALEXEY KRYVOPISHIN, ALEXSANDER RYBAK, ALEXANDER POPOV, ANATOLIY GOLUBCHENKO, GALINA GEREGA, LEONIC CHERNOVETSKIY, SERGEY KURCHENKO, ARSENY YATSENYK, VIKTOR SHOKIN, BORIS OSTAPYUK, and JOHN DOES 1 through 20, Defendants.

          Kenneth Foard McCallion McCallion & Associates, LLP New York, Counsel for Plaintiffs

          David G. Hetzel Ralph T. Lepore, III Robert Michael Shaw Holland & Knight, LLP Boston, Massachusetts Counsel for Defendant the Government of Ukraine.

          OPINION & ORDER

          VERNON S. BRODERICK, United States District Judge.

         Plaintiffs Luxexpress 2016 Corp. (“Luxexpress 2016”), Alamo Group, Inc. (“Alamo Group”), Luxexpress-II Ltd. (“Luxexpress-II”), Mykola Ivanenko, and Larysa Ivanenko (collectively, “Plaintiffs”), bring this action against the Government of Ukraine (“Ukraine”), thirty Ukrainian individuals, and twenty John Doe Defendants (collectively, “Defendants”). Plaintiffs bring claims pursuant to the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962, as well as claims for fraud, abuse of process, civil theft, conversion, unjust enrichment, and unlawful takings and wrongful expropriation in violation of international law.

         Before me is Ukraine's motion to dismiss the claims asserted against it for lack of subject matter jurisdiction, improper venue, and failure to state a claim. Because I find that 28 U.S.C. § 1391(f) requires Plaintiffs to bring their claims against Ukraine in the United States District Court for the District of Columbia and venue in the Southern District of New York is improper, Ukraine's motion to dismiss is GRANTED pursuant to Federal Rule of Civil Procedure 12(b)(3). Because I find it to be in the interest of justice, the case is transferred to the United States District Court for the District of Columbia.

         I. Background[1]

         Mykola and Larysa Ivanenko founded Luxexpress-II in 1993. (SAC ¶ 73.)[2] Until 2012 Luxexpress-II operated as an automobile import business in Kiev, Ukraine, and primarily imported American cars through various U.S. suppliers, including Alamo Group. (Id. ¶ 4.) Through various ordinances, written approvals, and lease agreements, (id. ¶¶ 73-75, 78, 79), Ukraine permitted and leased to Luxexpress-II a plot of land located in a “prime” commercial district in the city of Kiev, Ukraine upon which Plaintiffs constructed various buildings related to their business, (id. ¶¶ 4, 73).

         Starting in 2002, Alamo Group invested substantial capital in Ukraine through its business dealings with Luxexpress-II and Mykola and Larysa Ivanenko. (Id. ¶¶ 24, 83, 92.) Alamo Group maintains its principal place of business in the United States, specifically in the state of Georgia, and is incorporated under the laws of Georgia. (Id. ¶ 19.) In January 2002, Alamo Group loaned approximately $300, 000 to Luxexpress-II to fund the expansion of Alamo Group's business operations in Ukraine. (Id.) In addition, Alamo Group's records from August 2004 until February 2009 reflect transactions between Luxexpress-II and Alamo Group totaling over $2.5 million, and certain of the transactions in this time period involved shipment of automobiles from the United States to Ukraine. (Id.)

         In or around December 2003, Defendants and certain agencies within the Government of Ukraine issued an order granting authority and responsibility for the construction of a road and railway bridge across the Dnieper River, which flows through Kiev. (Id. ¶ 95.) Defendants used the construction of the road and bridge as a pretext to expropriate and seize Plaintiffs' property. (Id. ¶ 96.) In February 2004, Defendants sent Luxexpress-II a notice stating that Plaintiffs' rights with respect to their use of the plot of land in Kiev could be terminated, and the land could instead be utilized for the construction project. (Id. ¶ 98.) In April 2004, Defendants requested that Luxexpress-II inform them what monetary compensation they would demand for the taking of a portion of the plot of land in Kiev upon which Plaintiffs' business operated. (Id. ¶ 100.)

         Luxexpress-II submitted the requested paperwork setting forth its estimation of the fair market value of the portion of the land that would be affected by the planned construction. (Id. ¶ 103.) However, Defendants ignored Plaintiffs' submission. (Id. ¶ 105.) Defendants seized the entirety of the Plaintiffs' land, demolished the buildings and business equipment located on the land, and refused to compensate Plaintiffs whatsoever. (Id. ¶¶ 106-09, 134-35.)[3] Ukraine's seizure of the land and demolition of Plaintiffs' business equipment and property “had a direct adverse impact on rights and interests of Plaintiffs and their business relations in the United States” because the taking interfered with Plaintiffs' business relationships with U.S. corporations such as Alamo Group. (Id. ¶ 12.) As a result of Defendants' conduct, Plaintiffs and their business partners in the United States suffered millions of dollars in damages from, among other things, the property seizures, destruction of the property, and cancellation of their rights in the property. (Id. ¶ 15.)

         II. Procedural History

         Luxexpress-II, Mykola Ivanenko, and Larysa Ivanenko filed this action on June 23, 2015, (Doc. 1), and filed their amended complaint, which added Ukraine as a Defendant, on July 2, 2015, (the “Amended Complaint”) (Doc. 5). Plaintiffs sought and I granted extensions of time for Plaintiffs to effect service of process on Ukraine, (Docs. 18-25), and Plaintiffs served Ukraine “pursuant to the provisions of the Foreign Services Immunities Act” under 28 U.S.C. § 1608(a)(3). (Doc. 18). On August 24, 2016, Ukraine submitted a pre-motion letter regarding its anticipated motion to dismiss the Amended Complaint, (Doc. 27), and Plaintiffs submitted their response letter on August 29, 2016, (Doc. 30). I held a pre-motion conference regarding the anticipated motion on October 21, 2016. On October 24, 2016, I issued an order granting Plaintiffs leave to file the Second Amended Complaint, granting Ukraine leave to file its anticipated motion to dismiss, and setting a briefing schedule with respect to Ukraine's motion. (Doc. 35.)

         Plaintiffs filed the Second Amended Complaint on December 7, 2016. (Doc. 41.) On January 31, 2017, Ukraine filed its motion to dismiss and supporting papers. (Docs. 44-45.) On April 19, 2017, Plaintiffs filed their memorandum of law in opposition and supporting papers, (Docs. 48-49), and on June 19, 2017, Ukraine filed its reply in support of the motion and supporting papers, (Doc. 56).

         With respect to the Ukrainian individuals named as Defendants (the “Individual Defendants”), although an electronic amended summons was issued in connection with the Amended Complaint for each of the Individual Defendants on July 14, 2015, (Doc. 12), there is no indication that Plaintiffs served them. Further, there is no indication that Plaintiffs obtained summons for the Individual Defendants with regard to the Second Amended Complaint and/or that Plaintiffs served the Individual Defendants with the Second Amended Complaint. No attorneys have filed appearances on the docket as of the date of issuance of this ...


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