Innovative Sec. Ltd. v OBEX Sec. LLC 2024 NY Slip Op 31060(U) March 29, 2024 Supreme Court, New York County Docket Number: Index No. 650685/2023 Judge: Andrew Borrok Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 650685/2023 NYSCEF DOC. NO. 89 RECEIVED NYSCEF: 03/29/2024
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 53 ----------------------------------------------------------------------------------- X
INNOVATIVE SECURITIES LTD, INDEX NO. 650685/2023
Plaintiff, 05/18/2023, 05/22/2023, - V - 06/29/2023, MOTION DATE 12/19/2023 OBEX SECURITIES LLC,PRIME CAPITAL LTD, COWEN INC.,COWEN INTERNATIONAL, RANDY KATZENSTEIN 001 002 004 MOTION SEQ. NO. 005 Defendant.
DECISION+ ORDER ON MOTION ----------------------------------------------------------------------------------- X
HON. ANDREW BORROK:
The following e-filed documents, listed by NYSCEF document number (Motion 001) 7, 8, 9, 10, 11, 12, 33, 34, 35, 36, 37, 38, 39,40,41,42,43,45,46,58 were read on this motion to/for DISMISS
The following e-filed documents, listed by NYSCEF document number (Motion 002) 14, 15, 16, 17, 18, 22,23,24,25,26,27,28,29,30,31,32,47,48,59 were read on this motion to/for DISMISS
The following e-filed documents, listed by NYSCEF document number (Motion 004) 49, 50, 51, 52, 53, 54, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70 were read on this motion to/for DISMISS
The following e-filed documents, listed by NYSCEF document number (Motion 005) 72, 73, 74, 75, 76, 77, 79, 80, 81, 82, 83, 84, 85 were read on this motion to/for STAY
Upon the foregoing documents,
Cowen Inc. and Cowen International (collectively, Cowen)'s motion to dismiss (Mtn. Seq. No.
002) is granted. At bottom, this lawsuit is predicated on Innovative' s allegation that Cowen
made an improper margin call pursuant to a relationship established by an Acceptance Letter
(NYSCEF Doc. No. 17) and its incorporated Cowen International Prime Brokerage Terms
650685/2023 INNOVATIVE SECURITIES LTD vs. OBEX SECURITIES LLC ET AL Page 1 of 7 Motion No. 001 002 004 005
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(NYSCEF Doc. No. 18) which contains a mandatory forum selection clause designating that all
claims must be brought in England:
This Letter of Acceptance and the Customer Documents and Customer Agreement and any non-contractual matters arising out of or in connection with any of them, shall be governed by the laws of England and subject to the exclusive jurisdiction of the courts of England unless otherwise provided in any individual Customer Document
(NYSCEF Doc. No. 17, § 10 [emphasis added]).
Innovative, as successor to Innovative Securities New Zealand (Innovative NZ) the party that
signed the Acceptance Letter (NYSCEF Doc. No. 4 at ,i 11) appointing Cowen International as
prime broker, is bound by that agreement.
This is the beginning and end oflnnovative's claims against Cowen arising out the Acceptance
Letter in this Court, as no fraud is alleged as it relates to the parties' agreement in the Acceptance
Letter to litigate disputes in England. As successor to the New Zealand company, the Belize
company of the same name (i.e., the Plaintiff) is bound by the terms of the Acceptance Letter,
including the forum selection clause (Aguas Lenders Recovery Group v Suez, S.A., 585 F3d 696,
701 [2d Cir 2009] [holding successors in interest are subject to the presumptive enforceability of
forum selection clauses]).
While Innovative contends that the Acceptance Letter and Terms were "no longer in force" and
"no longer operative" after it entered the agreement with Prime and at the time of the margin
calls (NYSCEF Doc. Nos. 4, ,i,i 41, 56; 32, at 31 ), Innovative does not allege that these
agreements were terminated. Section 16.2 of the Terms requires 30 days' notice in writing to
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effect a termination (NYSCEF Doc. No. 18, § 16.2). Furthermore, both the Terms and the
Acceptance Letter (via incorporation of the Terms) expressly provide that their respective forum
selection clauses survive termination (NYSCEF Doc. Nos. 17, § 9; 18, § 16.2). Thus, the forum
selection clauses contained in the Acceptance Letter and Terms are valid and enforceable ( Getty
Props. Corp. v Getty Petroleum Marketing Inc., 106 AD3d 429,430 [1st Dept 2013] [holding
termination oflease does not prevent enforcement of its forum selection clause]). Accordingly,
Innovative's claims against Cowen are dismissed with prejudice.
Additionally, the Complaint must be dismissed against Cowen International because this Court
does not have personal jurisdiction over Cowen International. Being an affiliate of a company
that is subject to personal jurisdiction does not establish general jurisdiction. The allegations in
the Complaint are insufficient to establish specific jurisdiction over Cowen International under
New York's long-arm statute (CPLR 302; Starr Russia Investments III B. V v Deloitte Touche
Tohumatsu Ltd., 169 AD3d 421,422 [1st Dept 2019]).
OBEX Securities LLC (OBEX) and Randy Katzenstein's motion to dismiss (Mtn. Seq. No. 001)
is also granted. There simply is no actionable claim against these Defendants set forth in the
Complaint. Whatever actionable harm there may be, the harm was occasioned by Cowen' s
allegedly inappropriate margin call. Thus, these allegations must be addressed, as discussed
above, in the Courts of England.
Cowen's motion to dismiss Prime Capital Ltd (Prime)'s cross-claims (Mtn. Seq. No. 004) must
also be granted. Prime appointed Cowen International as its prime broker pursuant to a
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December 18, 2019 Acceptance Letter and its incorporated Terms (NYSCEF Doc. Nos. 52, 53;
collectively, the Prime-Cowen Agreements). In relation to the margin calls, OBEX and Prime
previously brought suit against Cowen International in England (the UK Litigation), alleging
breaches of the Prime-Cowen Agreements (NYSCEF Doc. No. 28), which litigation was settled
according to the terms of the December 15, 2022 settlement agreement (the Settlement
Agreement; NYSCEF Doc. No. 54). The Settlement Agreement provided for the release of any
claims between Prime and Cowen International and their related entities "arising out of or in
connection with, the Prime Dispute [i.e., the UK Litigation] or the CIL/Prime Capital Agreement
[i.e., the Prime-Cowen Agreements]" (NYSCEF Doc. No. 54, §§ 5.1, 5.2).
The Prime-Cowen Agreements and the Settlement Agreement all contain forum selection clauses
providing all disputes arising out of these agreements are subject to the exclusive jurisdiction of
the Courts of England. Section 10 of Prime's Acceptance Letter with Cowen International
contains a mandatory forum selection clause identical to that contained in Innovative' s
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Innovative Sec. Ltd. v OBEX Sec. LLC 2024 NY Slip Op 31060(U) March 29, 2024 Supreme Court, New York County Docket Number: Index No. 650685/2023 Judge: Andrew Borrok Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 650685/2023 NYSCEF DOC. NO. 89 RECEIVED NYSCEF: 03/29/2024
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 53 ----------------------------------------------------------------------------------- X
INNOVATIVE SECURITIES LTD, INDEX NO. 650685/2023
Plaintiff, 05/18/2023, 05/22/2023, - V - 06/29/2023, MOTION DATE 12/19/2023 OBEX SECURITIES LLC,PRIME CAPITAL LTD, COWEN INC.,COWEN INTERNATIONAL, RANDY KATZENSTEIN 001 002 004 MOTION SEQ. NO. 005 Defendant.
DECISION+ ORDER ON MOTION ----------------------------------------------------------------------------------- X
HON. ANDREW BORROK:
The following e-filed documents, listed by NYSCEF document number (Motion 001) 7, 8, 9, 10, 11, 12, 33, 34, 35, 36, 37, 38, 39,40,41,42,43,45,46,58 were read on this motion to/for DISMISS
The following e-filed documents, listed by NYSCEF document number (Motion 002) 14, 15, 16, 17, 18, 22,23,24,25,26,27,28,29,30,31,32,47,48,59 were read on this motion to/for DISMISS
The following e-filed documents, listed by NYSCEF document number (Motion 004) 49, 50, 51, 52, 53, 54, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70 were read on this motion to/for DISMISS
The following e-filed documents, listed by NYSCEF document number (Motion 005) 72, 73, 74, 75, 76, 77, 79, 80, 81, 82, 83, 84, 85 were read on this motion to/for STAY
Upon the foregoing documents,
Cowen Inc. and Cowen International (collectively, Cowen)'s motion to dismiss (Mtn. Seq. No.
002) is granted. At bottom, this lawsuit is predicated on Innovative' s allegation that Cowen
made an improper margin call pursuant to a relationship established by an Acceptance Letter
(NYSCEF Doc. No. 17) and its incorporated Cowen International Prime Brokerage Terms
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(NYSCEF Doc. No. 18) which contains a mandatory forum selection clause designating that all
claims must be brought in England:
This Letter of Acceptance and the Customer Documents and Customer Agreement and any non-contractual matters arising out of or in connection with any of them, shall be governed by the laws of England and subject to the exclusive jurisdiction of the courts of England unless otherwise provided in any individual Customer Document
(NYSCEF Doc. No. 17, § 10 [emphasis added]).
Innovative, as successor to Innovative Securities New Zealand (Innovative NZ) the party that
signed the Acceptance Letter (NYSCEF Doc. No. 4 at ,i 11) appointing Cowen International as
prime broker, is bound by that agreement.
This is the beginning and end oflnnovative's claims against Cowen arising out the Acceptance
Letter in this Court, as no fraud is alleged as it relates to the parties' agreement in the Acceptance
Letter to litigate disputes in England. As successor to the New Zealand company, the Belize
company of the same name (i.e., the Plaintiff) is bound by the terms of the Acceptance Letter,
including the forum selection clause (Aguas Lenders Recovery Group v Suez, S.A., 585 F3d 696,
701 [2d Cir 2009] [holding successors in interest are subject to the presumptive enforceability of
forum selection clauses]).
While Innovative contends that the Acceptance Letter and Terms were "no longer in force" and
"no longer operative" after it entered the agreement with Prime and at the time of the margin
calls (NYSCEF Doc. Nos. 4, ,i,i 41, 56; 32, at 31 ), Innovative does not allege that these
agreements were terminated. Section 16.2 of the Terms requires 30 days' notice in writing to
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effect a termination (NYSCEF Doc. No. 18, § 16.2). Furthermore, both the Terms and the
Acceptance Letter (via incorporation of the Terms) expressly provide that their respective forum
selection clauses survive termination (NYSCEF Doc. Nos. 17, § 9; 18, § 16.2). Thus, the forum
selection clauses contained in the Acceptance Letter and Terms are valid and enforceable ( Getty
Props. Corp. v Getty Petroleum Marketing Inc., 106 AD3d 429,430 [1st Dept 2013] [holding
termination oflease does not prevent enforcement of its forum selection clause]). Accordingly,
Innovative's claims against Cowen are dismissed with prejudice.
Additionally, the Complaint must be dismissed against Cowen International because this Court
does not have personal jurisdiction over Cowen International. Being an affiliate of a company
that is subject to personal jurisdiction does not establish general jurisdiction. The allegations in
the Complaint are insufficient to establish specific jurisdiction over Cowen International under
New York's long-arm statute (CPLR 302; Starr Russia Investments III B. V v Deloitte Touche
Tohumatsu Ltd., 169 AD3d 421,422 [1st Dept 2019]).
OBEX Securities LLC (OBEX) and Randy Katzenstein's motion to dismiss (Mtn. Seq. No. 001)
is also granted. There simply is no actionable claim against these Defendants set forth in the
Complaint. Whatever actionable harm there may be, the harm was occasioned by Cowen' s
allegedly inappropriate margin call. Thus, these allegations must be addressed, as discussed
above, in the Courts of England.
Cowen's motion to dismiss Prime Capital Ltd (Prime)'s cross-claims (Mtn. Seq. No. 004) must
also be granted. Prime appointed Cowen International as its prime broker pursuant to a
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December 18, 2019 Acceptance Letter and its incorporated Terms (NYSCEF Doc. Nos. 52, 53;
collectively, the Prime-Cowen Agreements). In relation to the margin calls, OBEX and Prime
previously brought suit against Cowen International in England (the UK Litigation), alleging
breaches of the Prime-Cowen Agreements (NYSCEF Doc. No. 28), which litigation was settled
according to the terms of the December 15, 2022 settlement agreement (the Settlement
Agreement; NYSCEF Doc. No. 54). The Settlement Agreement provided for the release of any
claims between Prime and Cowen International and their related entities "arising out of or in
connection with, the Prime Dispute [i.e., the UK Litigation] or the CIL/Prime Capital Agreement
[i.e., the Prime-Cowen Agreements]" (NYSCEF Doc. No. 54, §§ 5.1, 5.2).
The Prime-Cowen Agreements and the Settlement Agreement all contain forum selection clauses
providing all disputes arising out of these agreements are subject to the exclusive jurisdiction of
the Courts of England. Section 10 of Prime's Acceptance Letter with Cowen International
contains a mandatory forum selection clause identical to that contained in Innovative' s
Acceptance Letter with Cowen International, designating that all claims must be brought in
England:
This Letter of Acceptance and the Customer Documents and Customer Agreement and any non-contractual matters arising out of or in connection with any of them, shall be governed by the laws of England and subject to the exclusive jurisdiction of the courts of England unless otherwise provided in any individual Customer Document
(NYSCEF Doc. No. 52, § 10 [emphasis added]).
Section 13 of the Settlement Agreement similarly designates that all claims arising from it must
be brought in England:
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13.1 Any dispute arising out of or in connection with, or concerning the carrying into effect of, this Settlement Agreement, including non-contractual disputes, will be subject to the exclusive jurisdiction of the courts of England and Wales, and the Parties irrevocably submit to the exclusive jurisdiction of the courts of England and Wales for these purposes
(NYSCEF Doc. No. 54, § 13.1 [emphasis added]).
However, Prime here asserts five cross-claims against Cowen, relying on Section 5.3 of the
Settlement Agreement, which contemplates the potential of a suit brought by Innovative and
allows for the assertion of cross-claims in such "Innovative Proceedings:"
5.3 The Parties acknowledge that Innovative Securities Limited ("Innovative") has threated to commence proceedings against OBEX Securities LLC, Prime Capital, Cowen Inc, CIL and Randy Katzenstein in connection with the facts which are the subject of the Prime Dispute (the "Innovative Proceedings").
5.3.1 Nothing in this Settlement Agreement shall prevent, preclude or in any way restrict (a) any Party from asserting any defence in the Innovative Proceedings (or in response to any other claims asserted by Innovative) or (b) any Party from asserting any claim or cross-claim against another Party or its Related Parties in the Innovative Proceedings (or in response to any other claims asserted by Innovative). For avoidance of doubt, any claim or cross-claim that any Party can assert against any other Party in, in connection with or arising out of the Innovative Proceedings is expressly reserved and preserved, without limitation.
(NYSCEF Doc. No. 54, § 5.3 [emphasis added]).
Prime also relies on the merger clause of the Settlement Agreement, which provides:
11.1 This Settlement Agreement constitutes the whole agreement between the Parties and supersedes any previous arrangement, understanding or agreement between them relating to this Settlement Agreement's subject matter, which for the avoidance of doubt includes the Prime Dispute
(id., § 11.1 [ emphasis added]).
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Prime argues that§ 5.3 provides a carveout from the Settlement Agreement's forum selection
clause, and further that this provision in combination with § 11.1 supersedes the forum selection
clauses in the Prime-Cowen Agreements such that Prime may bring its cross-claims against
Cowen in this action. The argument fails. If the Settlement Agreement supersedes the Prime-
Cowen Agreements, then Prime cannot sue on the provisions of the Prime-Cowen Agreements
and must sue only on the Settlement Agreement, which it does not purport to do and which
claims must be brought in England (Kefalas v Valiotis, 197 AD3d 698 [2d Dept 2021] ["where
the parties have clearly expressed or manifested their intention that a subsequent agreement
supersede or substitute for an old agreement, the subsequent agreement extinguishes the old one
and the remedy for any breach thereof is to sue on the superseding agreement."]). If the
Settlement Agreement does not supersede the Prime-Cowen Agreements, then Prime is bound by
the mandatory forum selection clauses provided in the Prime-Cowen Agreements, and must
bring any unreleased claims in England. Prime does not otherwise contest the validity of these
forum selection clauses. As such, Prime's cross-claims must be dismissed, with prejudice.
Cowen' s motion for a stay pending resolution of its motions to dismiss (Mtn. Seq. No. 005) is
denied as moot.
The Court has considered the parties' remaining arguments and finds them unavailing.
Accordingly, it is hereby
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ORDERED that Defendants OBEX and Katzenstein motion to dismiss (Mtn. Seq. No. 001) is
granted with prejudice; and it is further
ORDERED that the Cowen Defendants' motion to dismiss Innovative's claims (Mtn. Seq. No.
002) is granted with prejudice; and it is further
ORDERED that the Cowen Defendants' motion to dismiss Prime's cross-claims (Mtn. Seq. No.
004) is granted with prejudice; and it is further
ORDERED that the Cowen Defendants' motion to staying discovery (Mtn. Seq. No. 005) is
3/29/2024 DATE ANDREW BORROK, J.S.C.
~ CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION
GRANTED □ DENIED GRANTED IN PART □ OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER
CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE
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