Natura Development N.V. v. HEH Advisors LLC

CourtDistrict Court, S.D. New York
DecidedFebruary 4, 2020
Docket1:19-cv-01797-PKC
StatusUnknown

This text of Natura Development N.V. v. HEH Advisors LLC (Natura Development N.V. v. HEH Advisors LLC) 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
Natura Development N.V. v. HEH Advisors LLC, (S.D.N.Y. 2020).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------------------------x NATURA DEVELOPMENT N.V.,

Plaintiff, 19-cv-1797 (PKC)

-against- OPINION AND ORDER

HEH ADVISORS LLC and ANDREW J. HERZBERG,

Defendants. -----------------------------------------------------------x

CASTEL, U.S.D.J. Natura Development N.V. (“Natura”) has filed a Second Amended Complaint (“SAC”) in this diversity action against HEH Advisors LLC (“HEH”) and Andrew J. Herzberg. Its first claim for relief is for breach of a November 30, 2018 agreement to act as an equity advisor tasked with finding potential financing for a real estate development project (the “Agreement”). In its motion for judgment on the pleadings, HEH does not seek any relief with regard to this claim. HEH does, however, seek dismissal of an assortment of New York common law claims—breach of the implied covenant of good faith and fair dealing, fraud, unjust enrichment, money had and received, and breach of fiduciary duty. Herzberg joins in seeking dismissal of these claims, as well as the breach of the Agreement claim. Natura seeks judgment on the pleadings to dismiss HEH’s counterclaim for breach of the Agreement. For reasons that will be explained, the motions of HEH and Herzberg will be granted in part and denied in part, and the motion of Natura will be denied as to the breach of contract claim. BACKGROUND The following facts are taken from the SAC and are accepted as true for the purposes of HEH and Herzberg’s motion. The facts taken from the counterclaim are accepted as true for the purposes of Natura’s motion.

Natura is a real estate development company organized and headquartered in Aruba. (SAC ¶ 2.) Natura retained HEH to be its debt/equity or capital advisor for the purpose of obtaining financing in the amount of $57 million for the construction of a hotel in Aruba. (Id. ¶ 17.) Natura paid HEH an upfront retainer fee of $150,000, which was to be credited against any fee owed to HEH for successfully producing a funding source. (Id. ¶¶ 2; 18.) If HEH obtained for Natura an approved funding source “secured and documented by agreement, then in consideration for the services,” Natura would pay HEH a placement fee of 2% of the amount of the loan. (Agreement (Doc 38, Ex. C) ¶ 6.) The Agreement, which is quoted extensively in the SAC and may be considered on this motion, is a four-page single-spaced letter agreement with a New York choice of law provision and a merger and integration clause. (Id. ¶ 14.) A point of

importance to Natura was the non-exclusive retention of HEH, meaning that Natura could retain and deal with other advisors and funding sources without owing HEH a further fee. (Id. ¶ 8; SAC ¶ 20.) HEH is a New York limited liability company, with Herzberg and his wife, both New York citizens, as members. (SAC ¶ 7.) HEH executed the Agreement and is named therein as a party. Herzberg, the “Managing Partner of HEH,” is not named in the Agreement as either a party or signatory. (Id. ¶ 6.) In December 2018, HEH facilitated a meeting between a Natura representative, Mr. Joan Fereira, and a representative of Oz Real Estate (“Oz”), a potential financing source. (Id. ¶ 31.) At the meeting in New York, “Mr. Herzberg wrongfully and fraudulently advised Mr. Fereira (whose native language is not English to sign a term sheet with Oz, falsely representing that such term sheet was non-exclusive.” (Id. ¶ 32.) Natura paid a $250,000 retainer fee to Oz, but when “Natura discovered the wrongful exclusivity restriction . . . [it] terminated its

negotiations with Oz” and Oz returned the $250,000 fee to Natura “minus nominal expenses . . . .” (Id. ¶¶ 35-36.) Natura has repeatedly requested that HEH and Herzberg return the $150,000 retainer fee. (Id. ¶¶ 38-39.) Natura sued HEH and Herzberg for $150,000 for breach of the Agreement, alleging that HEH did not fulfill its obligations under the Agreement and Herzberg is the alter ego of HEH. Natura has also asserted state law claims for breach of the implied covenant of good faith and fair dealing, fraud, breach of fiduciary duty, conversion, unjust enrichment, and money had and received. (Id. ¶¶ 41-98.) HEH has counterclaimed against Natura alleging that it breached the letter of intent with Oz, thereby depriving HEH the opportunity to earn 2% of the financing.1

DISCUSSION I. RULE 12(c) STANDARD The same standard applies to a motion for judgment on the pleadings pursuant to Rule 12(c), Fed. R. Civ. P. as applies to a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), Fed. R. Civ. P. Ad-Hoc Comm. of Baruch Black & Hispanic Alumni Ass’n v. Bernard M. Baruch College, 835 F.2d 980, 982 (2d Cir. 1987). Therefore, the Court accepts the allegations in the complaint as true, and draws all inferences in the non-moving party’s favor. Id.; Patel v. Searles, 305 F.3d 130, 135 (2d Cir. 2002). “To survive a Rule 12(c) motion, [the]

1 HEH has withdrawn its Second Counterclaim. (Defs.’ Reply Mem. (Doc 40) at 7.) complaint must contain sufficient factual mater, accepted as true, to state a claim to relief that is plausible on its face.” Hayden v. Paterson, 594 F.3d 150, 160 (2d Cir. 2010) (internal quotation marks and citation omitted). II. NATURA’S CLAIMS AGAINST HEH AND HERZBERG

A. Breach of Contract against Herzberg. Natura’s breach of contract claim against HEH is not a subject of defendants’ motion for judgment on the pleadings. (Doc 40 at 1; 5.) However, the breach of contract claim against Herzberg will be dismissed. Under New York law, a corporate officer cannot be held personally liable on a contract of the corporation. Gold v. Royal Cigar Co., 105 A.D.2d 831, 832 (2d Dep’t 1984) (citing Cavalla v. Ernest F. Elliot, Inc., 86 A.D.2d 884 (2d Dep’t 1982)). With exceptions not relevant here, the same is true of members of an LLC. N.Y. Limited Liability Company Law § 609(a); Georgia Malone & Co. v. Rieder, 86 A.D.3d 406, 408 (1st Dep’t 2011), aff’d, 973 N.E.2d 743 (N.Y. 2012) (contract claim against member of LLC dismissed where the contract

was with the LLC). Natura’s allegation that Herzberg is an alter ego of HEH is entirely conclusory—it merely recites that Herzberg is an alter ego of HEH (SAC ¶ 47)—and therefore does not plausibly allege a basis for alter ego status or veil piercing. Fillmore E. BS Fin. Subsidiary LLC v. Capmark Bank, 552 F. App’x 13, 15 (2d Cir. 2014) (summary order); Arctic Ocean Int’l, Ltd. v. High Seas Shipping Ltd., 622 F. Supp. 2d 46, 55 (S.D.N.Y. 2009) (collecting cases); see also Cusumano v. Iota Indus., Inc., 100 A.D.2d 892, 893 (2d Dep’t 1984). Natura relies upon CBF Industria de Gusa S/A v. AMCI Holdings, Inc., 316 F. Supp. 3d 635, 647 (S.D.N.Y. 2018) (Sweet, J.) for the proposition that a plaintiff “need only detail the factual allegations to the degree required by Federal Rule of Civil Procedure 8(a)’s liberal pleading standard to show the domination or control necessary to pierce the corporate veil.” But one need only look at the facts plausibly alleged in detail in CBF Industria to see the stark difference between that case and the conclusory allegation in this case, which merely uses the term “alter ego.” Compare Am.

Compl. ¶¶ 93-120, CBF Industria de Gusa S/A v. AMCI Holdings, Inc., 316 F. Supp. 3d 635 (S.D.N.Y. 2018) (No. 13-cv-2581), with SAC ¶ 47.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Johnson v. Nextel Communications, Inc.
660 F.3d 131 (Second Circuit, 2011)
Jatin Patel v. Kevin Searles and Debra Swanson
305 F.3d 130 (Second Circuit, 2002)
Hayden v. Paterson
594 F.3d 150 (Second Circuit, 2010)
R.H. Damon & Co. v. Softkey Software Products, Inc.
811 F. Supp. 986 (S.D. New York, 1993)
Arctic Ocean International, Ltd. v. High Seas Shipping Ltd.
622 F. Supp. 2d 46 (S.D. New York, 2009)
Bullmore v. Banc of America Securities LLC
485 F. Supp. 2d 464 (S.D. New York, 2007)
International Design Concepts, LLC v. Saks Inc.
486 F. Supp. 2d 229 (S.D. New York, 2007)
Fillmore East BS Finance Subsidiary LLC v. Capmark Bank
552 F. App'x 13 (Second Circuit, 2014)
Mandarin Trading Ltd. v. Wildenstein
944 N.E.2d 1104 (New York Court of Appeals, 2011)
Georgia Malone & Co. v. Rieder
973 N.E.2d 743 (New York Court of Appeals, 2012)
Bradkin v. Leverton
257 N.E.2d 643 (New York Court of Appeals, 1970)
Clark-Fitzpatrick, Inc. v. Long Island Rail Road
516 N.E.2d 190 (New York Court of Appeals, 1987)
Ross v. DeLorenzo
28 A.D.3d 631 (Appellate Division of the Supreme Court of New York, 2006)
Mendelovitz v. Cohen
37 A.D.3d 670 (Appellate Division of the Supreme Court of New York, 2007)
Barrett v. Freifeld
64 A.D.3d 736 (Appellate Division of the Supreme Court of New York, 2009)
Schultz v. Gershman
68 A.D.3d 426 (Appellate Division of the Supreme Court of New York, 2009)
Georgia Malone & Co. v. Rieder
86 A.D.3d 406 (Appellate Division of the Supreme Court of New York, 2011)
Brown v. Lockwood
76 A.D.2d 721 (Appellate Division of the Supreme Court of New York, 1980)

Cite This Page — Counsel Stack

Bluebook (online)
Natura Development N.V. v. HEH Advisors LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/natura-development-nv-v-heh-advisors-llc-nysd-2020.