Gordian Group, LLC v. Syringa Exploration, Inc.

168 F. Supp. 3d 575, 2016 WL 1047392, 2016 U.S. Dist. LEXIS 31080
CourtDistrict Court, S.D. New York
DecidedMarch 10, 2016
DocketNo. 15-CV-1312 (RA)
StatusPublished
Cited by20 cases

This text of 168 F. Supp. 3d 575 (Gordian Group, LLC v. Syringa Exploration, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gordian Group, LLC v. Syringa Exploration, Inc., 168 F. Supp. 3d 575, 2016 WL 1047392, 2016 U.S. Dist. LEXIS 31080 (S.D.N.Y. 2016).

Opinion

OPINION & ORDER

Ronnie Abrams, United States District Judge

Plaintiff Gordian Group, LLC brings this diversity action against Defendant Sy-ringa Exploration, Inc. alleging breach of an investment banking services contract. Syringa moved to dismiss pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure for lack of personal jurisdiction and pursuant to Rule 12(b)(7) for failure to join an indispensable party. For the reasons that follow, the Court concludes it lacks personal jurisdiction over Defendant. Defendant’s motion to dismiss is therefore granted without prejudice to Plaintiff to refile this lawsuit in another forum, and the Court thus need not determine whether Plaintiff failed to join an indispensable party.

BACKGROUND

I. Factual Background1

A. The Parties

Plaintiff, a Delaware limited liability company with its principal place of business in New York, is an investment bank “specializing in financial and advisory services in complex and distressed situations.” Compl. ¶¶ 16, 18. Defendant is an Idaho corporation with its principal place of business in Idaho. Id. ¶ 17. Its “only business consists of the ownership and management of an 80 percent membership interest” in nonparty Crescent Mine, LLC (“Crescent Mine”). Gross Aff. ¶ 3. Crescent Mine, a Delaware limited liability company with its [578]*578principal place of business in Idaho, is “engaged in the business of owning, acquiring, selling, exploring and operating mineral and metal mines.” Id. ¶¶ 6-7.

B. The Letter Agreement

On October 7, 2013, Plaintiff entered into a letter agreement (the “Agreement”) with nonparty United Silver Corp. (“USC”) to “be [USC’s] exclusive investment banker as [USC] sought to emerge from its financial distress and either restructure or repay its secured debt.” Compl. ¶ 19 & Ex. 1 (“Agreement”). At that time, USC owed approximately $9 million to an affiliate of Hale Capital Partners, LLC (“Hale”), and the debt was secured by “substantially all of [USC’s] assets.” Compl. ¶ 5. USC’s “primary asset of value” was Crescent Mine by virtue of USC’s complete ownership of a subsidiary called United Mine Services, Inc. (“UMS”), which in turn wholly owned Defendant and its 80 percent interest in Crescent Mine. Id ¶ 27; Gross Aff. ¶ 3. Two Hale subsidiaries held the remaining 20 percent interest in Crescent Mine. Klein Aff. ¶ 3.

In the Agreement, Gordian agreed to assist “the Company” — a term defined to mean USC “together with its subsidiaries” — reduce its debt burden by providing advice and services. Agreement at 1. USC’s interim chief executive officer, Greg Stewart, executed the Agrpement on behalf of USC. Id at 8. No other individual signed the Agreement on behalf of USC or any of its subsidiaries, though Plaintiff alleges that at that time Mr. Stewart was also Defendant’s president and therefore “had actual authority to bind Syringa to the - terms of the [A]greement.” Compl. ¶ 28. Plaintiffs president, Peter S. Kaufman, executed the Agreement on behalf of Gordian. Agreement at 8.

As is relevant here, the Agreement provides that Plaintiff would be paid a “Transaction Fee” in the amount of five percent of “the principal amounts of any existing debt ... directly or indirectly amended, assumed, repaid, satisfied, compromised, exchanged, refinanced, restructured, credit bid or retired” by “the Company” as a result of a “Financial Transaction.” Id at 2-3. The term “Financial Transaction” is defined to include, among other events, “a restructuring, amendment, exchange, repayment, satisfaction, assumption, refinancing, extension, compromise or other modification of some or all of the Company’s debt.” Id at 1. Plaintiff alleges that the Agreement entitles Gordian to a Transaction Fee “solely on the occurrence of a Financial Transaction” because the Agreement “does not include any ’causation’ or ’origination’ requirement, or state that Gordian was obligated to have any minimum specified level of involvement in the Financial Transaction giving rise to the obligation to pay a Transaction Fee.” Compl. ¶ 23. ■

The Agreement also provides that:

The Company’s obligations hereunder shall be joint and several obligations of [USC] and any subsidiaries, it being understood and agreed that the Company will cause the subsidiaries of the Company, if any, to perform the Company’s obligations hereunder; provided, however, that no such subsidiary shall be required to pay any amount that would cause it to become insolvent and any such amount not so paid shall be reallocated among the remaining such subsidiaries.

Agreement at 7. In addition, the Agreement contains a mandatory arbitration • clause, a New York choice of law clause, and two forum selection clauses. See id at 6-7. Specifically, the Agreement provides that “the parties ... consent to the nonexclusive jurisdiction of the federal and state courts sitting in New York City for the .purpose of entering judgment upon [579]*579and enforcing [an arbitration award]” and that “[t]he Company ... consents to venue and jurisdiction in any court in which Gordian ... is sued or otherwise found or brought.” Id.

Plaintiff and USC negotiated the executed the Agreement by telephone and email from their respective offices in New York and Idaho. Gross Aff. ¶ 14; Kaufman Aff. ¶¶ 4-5.

C. The Parties’ Performance

Plaintiff alleges that after executing the Agreement, it “commenced a series of discussions with Hale” to propose ways that USC could retire some or all of its debt obligations, including “(i) extensions of time that could allow a real third-party exploration process, (ii) conversion of Hale’s defaulted debt into more permanent capital, and (in) a spinoff of certain assets away from Hale and to ... other stockholders.” Compl. ¶ 30. These discussions occurred between October 2013 and January 2014, and Plaintiff performed substantially all of its work pursuant to the Agreement in New York. Id. ¶¶ 31-36; Kaufman Aff. ¶6.

Plaintiff also alleges that on November 25, 2013, Mr. Stewart, traveled to New York on behalf of USC and — accompanied by Plaintiff’s chief executive officer — “personally met with representatives from Hale” at Hale’s offices in New York City. Kaufman Aff. ¶ 7 & Ex. 1. According to Plaintiff, after the meeting “Mr. Stewart returned to Gordian’s offices and met with” various Gordian employees. Id. Although Defendant acknowledges that “a USC representative traveled into New York at one point to negotiate with Hale,” it contends that “Gordian was not present at that meeting,” “those negotiations were not undertaken pursuant to the [Agreement],” and “nobody acting on behalf of Syringa has ever entered New York.” Gross Aff. ¶¶ 15-16.

On January 4, 2014, Hale sought an order from the Ontario Superior Court of Justice, in Canada, appointing a receiver for USC. Compl. ¶ 36. On March 4, 2014, UMS — the USC subsidiary that wholly owned Defendant — entered into a consensual foreclosure agreement with a Hale affiliate whereby the affiliate acquired all of UMS’ assets, including Defendant, in exchange for relieving $7.5 million of USC’s debt. Id. ¶ 37.

D. Plaintiffs Attempts to Obtain a Transaction Fee

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Bluebook (online)
168 F. Supp. 3d 575, 2016 WL 1047392, 2016 U.S. Dist. LEXIS 31080, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gordian-group-llc-v-syringa-exploration-inc-nysd-2016.