Lisa Cooley, LLC v. The Native, S.A.

Background

Lisa Cooley, LLC sued The Native, S.A. to enforce a guaranty connected to a sublease between Lisa Cooley and P8H, Inc., doing business as Paddle 8. The Native was Paddle 8’s corporate parent and was headquartered in Switzerland. Under the guaranty, The Native guaranteed payment of rent and other amounts owed under the sublease.

Paddle 8 filed for bankruptcy on March 16, 2020, and allegedly defaulted on its rent payments. Lisa Cooley alleged that The Native therefore owed $679,646.98 under the guaranty. The Native moved to dismiss under Federal Rule of Civil Procedure 12(b)(2), arguing that the court lacked personal jurisdiction, and Rule 12(b)(5), arguing that service of process was improper.

Choice of Law

The court first considered whether New York or Swiss law governed the guaranty’s validity and enforceability. The guaranty stated that it would be interpreted under New York law and that The Native consented to the jurisdiction of federal and state courts in New York for disputes related to the guaranty. The court held that New York law governed because the parties had selected it and because New York had a substantial relationship to the agreement, which concerned real property in New York City.

The court therefore rejected The Native’s argument that the guaranty was invalid under Swiss law because it lacked signatures from two authorized representatives.

Validity and Authority to Sign

The Native alternatively argued that the guaranty was unenforceable under New York law because Sergey Skaterschikov lacked actual authority to sign it. The court held that Lisa Cooley had adequately alleged that Skaterschikov had apparent authority. Apparent authority exists when a principal’s conduct reasonably causes a third party to believe that an agent is authorized to act for the principal.

The court relied in part on Skaterschikov’s undisputed position as The Native’s Chairman. It also considered the involvement of The Native’s attorney, who was introduced to Lisa Cooley as the company’s attorney, approved the final guaranty, and notarized Skaterschikov’s signature. The court held that The Native was legally bound by the guaranty, while noting that Lisa Cooley would still have to prove at trial that Skaterschikov acted with actual or apparent authority.

Jurisdiction and Service

The court held that The Native consented to personal jurisdiction through the guaranty’s provision submitting it to the jurisdiction of federal courts in New York for disputes related to the guaranty. The court also held that The Native waived personal service of the summons and complaint and agreed to service on its attorneys. Because Lisa Cooley served the summons and complaint on the identified attorney, the court rejected The Native’s service-of-process argument.

Disposition

The court denied The Native’s motion to dismiss. It directed defense counsel to file a notice of appearance by March 19, 2021, and directed the parties to submit a proposed case-management plan by April 2, 2021. The Clerk of Court was directed to close the motion at docket entry 26.