Hecklerco, LLC v. YuuZoo Corp.

252 F. Supp. 3d 369, 2017 U.S. Dist. LEXIS 75933
CourtDistrict Court, S.D. New York
DecidedMay 11, 2017
Docket15-CV-5779 (VM)
StatusPublished
Cited by2 cases

This text of 252 F. Supp. 3d 369 (Hecklerco, LLC v. YuuZoo Corp.) 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
Hecklerco, LLC v. YuuZoo Corp., 252 F. Supp. 3d 369, 2017 U.S. Dist. LEXIS 75933 (S.D.N.Y. 2017).

Opinion

DECISION AND ORDER

VICTOR MARRERO, United States District Judge:

Plaintiffs Hecklerco LLC (“Hecklerco”), James Heckler and Andrew Heckler (collectively, “Plaintiffs”) brought this action against defendants Wells Fargo Advisors, LLC (‘Wells Fargo”), John Hoekman (“Hoekman”), YuuZoo Corporation Limited (‘YuuZoo”), YuuZoo Corporation, Thomas Zilliacus (“Zilliacus”), Yuuu Pty Ltd. (‘Yuuu”), YZ International, Iiic. (‘YZ”), Ronald Creevey (“Creevey”), Danielle Creevey, Marc Cramer-Roberts (“Cramer-Roberts”), Moment Media Pty Ltd (Australia), and Moment Media Pty Ltd (UK).1 The First Amended Complaint(“FAC”)asserts causes of action for federal securities fraud, common law fraud, negligent misrepresentation and breach of contract.2 (Dkt. No. 76.) Plaintiffs’ claims arise out of their purchase of shares of YuuZoo and ’a loan by Hecklerco to defendant Yuuu secured by shares of YuuZoo.

By letter dated December 16, 2016, the YuuZoo Defendants seek leave to file a motion to dismiss all claims against them for lack of personal jurisdiction. (“Motion,” Dkt. No. 146.) The Court now construes the ■ YuuZoo Defendants’ correspondence as a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure; For the reasons stated below, the YuuZoo Defendants’ Motion is denied.

I.BACKGROUND

A. FACTUAL ALLEGATIONS3

The FAC alleges 'that the WF Defendants, acting as agents for the Yuuu Defendants and the YuuZoo Defendants, undertook the following acts in New York:

1. Juné' 2013: Solicited and advised Hecklerco to purchase 80,000 shares in YuuZoo for $100,000.
2. July 2013: Solicited and advised Andrew Heckler to purchase 80,000 shares of YuuZoo for $100,000.
3. November 2013: Solicited and advised Hecklerco to purchase an additional 50,000 YuuZoo. shares and make a $245,000 loan to Yuuu secured by YuuZoo shares.

On November 19, 2013, Hecklerco entered into agreements with Yuuu and Ronald Creevey pursuant to which Hecklerco loaned $245,000 to Yuuu (the “Loan”) and purchased an additional 50,000 YuuZoo shares. The Loan required repayment on [372]*372the earlier of March 15, 2014 or seven days after an initial public offering of YuuZoo on the Singapore Stock Exchange (“SGX”). Creevey traveled to New York to negotiate the November 2013 Loan and share purchase.

The FAC alleges not only that Yuuu and Creevey failed to honor their obligations, but that Creevey and the WF Defendants, acting as agents for Yuuu and YuuZoo, made material misrepresentations in connection with these transactions, and that YuuZoo and Zilliacus made additional misrepresentations in connection with Yuu-Zoo’s reverse merger with YuuZoo Corporation and related listing on SGX.

The causes of action against the YuuZoo Defendants are based on the allegation that Creevey and Hoekman acted as agents for the other Defendants. The FAC alleges that the Yuuu Defendants and YuuZoo Defendants transacted business in New York in connection with the above transactions in the following three ways:

1. “[B]y using their agents, the WF Defendants!!,] to sell their Yuuzoo shares from the WF New York office to numerous US and New York residents, including Plaintiffs.” (FAC ¶ 44.)
2. When the WF Defendants in New York, “as agents for the Yuuzoo Defendants[,] made material false statements of fact and failed to disclose materials facts to Plaintiffs to induce Plaintiffs to purchase Yuuzoo Shares ... and make the Loan .... ”(FAC ¶ 45.)
3. “[W]hen their agent [Ronald] Cree-vey traveled to New York in November 2013 to borrower [sic.] money from a New York lender (Hecklerco) and sell shares to a New York resident (Hecklerco) for the benefit of the Yuuu Defendants and Yuuzoo Defendants.” (FAC ¶ 47.)

By memo endorsement dated May 13, 2016, the Court directed the parties to set a schedule for jurisdictional discovery regarding whether an agency relationship existed between YuuZoo and the WF Defendants. (See Dkt. No. 87.) On November 30,2016, pursuant to a directive from Magistrate Judge Freeman, Plaintiffs provided the YuuZoo Defendants with a ten-page letter outlining proof of Plaintiffs’ allegation that the Court has jurisdiction over the YuuZoo Defendants. (See Motion at Ex. F.)

By letter dated December 8, 2016, the YuuZoo Defendants informed the Court that, after reviewing Plaintiffs’ offer of proof, it intends to move to dismiss the FAC on jurisdictional grounds. (Dkt. No. 132.) The Court’s endorsement instructed the parties to submit letter briefs on the issue. (See id.)

B. THE YUUZOO DEFENDANTS’ PROPOSED MOTION TO DISMISS

By letter dated December 16, 2016, Yuu-Zoo set forth the bases for its contemplated motion to dismiss. (See Motion.) Yuu-Zoo argues that its only connection to the transaction at issue stems from defendant Ronald Creevey’s decision, following his resignation from YuuZoo in August 2012, to raise funds for his new business venture by selling his shares in YuuZoo to Plaintiffs and using YuuZoo shares as collateral for the Loan. The YuuZoo Defendants point to affidavits in which defendants Creevey, Cramer-Roberts and Hoekman affirm that YuuZoo had no involvement in the transactions at issue and that no agency relationship existed between them and YuuZoo. (See Motion at 1; id., Exs. B-D.)

The YuuZoo Defendants also argue that nothing produced in jurisdictional discovery establishes that the YuuZoo Defendants knew about, authorized or exercised control over any aspect of Plaintiffs’ trans[373]*373actions with Yuuu, creevey and the WF Defendants. Specifically, the YuuZoo Defendants argue that (1) although Hoekman previously solicited capital for YuuZoo in 2007 and 2008, that earlier solicitation has no bearing on whether he was an agent for YuuZoo in 2013; (2) there is no evidence of Plaintiffs’ statement that Zilliacus received a portion of the proceeds of transactions with Plaintiffs; (3) the evidence relating to a New York entity that Plaintiffs allege was used to sell YuuZoo stock in New York merely refers to the entity being formed and does not identify any control persons or refer to any stock transactions; (4) any statements regarding YuuZoo’s valuation were to existing shareholders and related to a reverse takeover transaction, not to solicit new investors, and therefore cannot give rise to jurisdiction in New York; and (5) there is no evidence that YuuZoo’s general counsel made any misstatements to the plaintiffs.

Lastly, the YuuZoo Defendants argue that the three YuuZoo subsidiaries that Plaintiffs claim to have discovered either have no relationship to YuuZoo, or were incorporated after the Complaint was filed and therefore cannot give rise to jurisdiction.

By letter dated December 27, 2016, Plaintiffs opposed the YuuZoo Defendants’ Motion and set forth its argument for asserting personal jurisdiction over the Yuu-Zoo Defendants. (“December 27 Letter,” Dkt. No. 145.) As an initial matter, Plaintiffs argue that the YuuZoo Defendants are subject to general jurisdiction in New York.

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Related

Hecklerco, LLC v. YuuZoo Corp.
258 F. Supp. 3d 350 (S.D. New York, 2017)

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Bluebook (online)
252 F. Supp. 3d 369, 2017 U.S. Dist. LEXIS 75933, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hecklerco-llc-v-yuuzoo-corp-nysd-2017.