City of Almaty, Kazahkstan v. Mukhtar Ablyazov

Background

The City of Almaty and BTA Bank JSC alleged that funds were taken from them in Kazakhstan and laundered through shell companies, transactions, and investments in New York real estate. They alleged that Mukhtar Ablyazov, Viktor Khrapunov, and Ilyas Khrapunov participated in the alleged scheme and that Triadou SPV S.A. invested alleged proceeds in real-estate projects, including the Flatotel and Cabrini Medical Center.

The plaintiffs asserted claims including conversion, unjust enrichment, constructive trust, and recognition of a foreign judgment. In an earlier ruling, the court had dismissed the conversion, unjust-enrichment, and constructive-trust claims against individual defendants as time-barred. It had later granted Triadou’s motion for judgment on the pleadings in part and denied it in part, holding that the claims against Triadou were time-barred to the extent they relied on an alter-ego theory, but could proceed on a theory that Triadou was individually liable.

The plaintiffs also sought recognition under New York Civil Practice Law and Rules § 5303 of a June 21, 2018, United Kingdom judgment against Ilyas Khrapunov for $424,110,000 plus $76,000,000 in prejudgment interest. A magistrate judge permitted the plaintiffs to add that claim. Khrapunov objected and moved to dismiss, arguing that the court lacked subject-matter and personal jurisdiction.

Triadou’s Motion

The court treated Triadou’s filing as a motion for reconsideration. It concluded that its earlier ruling had addressed whether the plaintiffs could plead individual and alter-ego theories in the alternative. Under the Federal Rules of Civil Procedure and Second Circuit precedent, a party may plead alternative or inconsistent theories without labeling them in a specific technical form.

The court found that the amended crossclaims alleged that Triadou itself was unjustly enriched, exercised unauthorized control over the plaintiffs’ property, and participated in fraudulent transfers. Those allegations were separate from the allegations describing an alter-ego relationship and supported an alternative theory of individual liability. The court therefore rejected Triadou’s argument that the amended crossclaims did not support that theory and denied Triadou’s motion for reconsideration.

Khrapunov’s Motion

The court granted Khrapunov’s motion to dismiss the § 5303 foreign-judgment recognition claim. The court explained that supplemental jurisdiction requires a claim to be part of the same constitutional “case or controversy” as a claim supporting original federal jurisdiction. The claims generally must arise from a common nucleus of operative fact.

The court held that the foreign-judgment recognition claim against Khrapunov did not meet that requirement. The claim depended on whether the 2018 United Kingdom judgment was procedurally valid and enforceable. Those facts were not legally relevant to the interpleader claim that originally brought the case into federal court. The court rejected the plaintiffs’ argument that both claims were sufficiently connected because they arose from the same broader alleged criminal conspiracy.

The court dismissed the foreign-judgment recognition claim against Khrapunov without prejudice for lack of subject-matter jurisdiction. Because the court dismissed the claim, it denied Khrapunov’s objections to adding it as moot. The opinion also notes that the portion of Khrapunov’s motion directed at a fraudulent-conveyance claim had already become moot when that claim was dismissed in an earlier order.

Order Concerning Ablyazov

The court stated that the foreign-judgment recognition claim against Mukhtar Ablyazov was “virtually identical” to the claim against Khrapunov. It ordered the plaintiffs to show cause within three weeks why the claim against Ablyazov should not also be dismissed for lack of subject-matter jurisdiction. Ablyazov could respond within three weeks after the plaintiffs’ response. The court separately ordered the plaintiffs’ counsel to serve Ablyazov with the opinion and order within two weeks and file an affidavit of service.