Remcoda, LLC v. Ridge Hill Trading LTD

Background

Remcoda, LLC alleged that the defendants jointly arranged a fraudulent scheme involving the sale of nitrile gloves. Remcoda entered an agreement with Ridge Hill Trading (PTY) LTD on July 16, 2020, to buy approximately 1.3 million boxes of gloves for $9,261,748. It paid a 50% deposit of $4,630,874, but the gloves were never delivered. Remcoda alleged that the defendants repeatedly represented that the gloves were available, inspected, or about to be delivered, and that it later received only $2.2 million in partial refunds.

The amended complaint asserted claims for fraudulent inducement, aiding and abetting fraud, breach of contract, money had and received, and unjust enrichment. The defendants filed separate motions to dismiss. The Petrichor Defendants were Petrichor Capital Sdn-Bhd, Petrichor Capital Trading Limited, Vaidyanathan Mulandram Nateshan, and Gayathri Vaidyanathan. The Ridge Hill Defendants were Ridge Hill, Ataraxia Capital Partners PTY LTD, Menusha Gunawardhana, and Vincent Fletcher. Russell Gross filed a separate motion. De Raj Group AG did not appear.

Petrichor Defendants

The Petrichor Defendants moved under Rule 12(b)(2), which permits dismissal when a court lacks personal jurisdiction, and under Rule 12(b)(6), which permits dismissal for failure to state a legally sufficient claim. The court held that it did not have general jurisdiction over these defendants because they were not at home in New York.

The court also rejected Remcoda’s argument that New York’s long-arm statute supplied jurisdiction. Remcoda had not alleged specific facts showing that its injury occurred in New York for purposes of that statute. The court further held that Remcoda’s bare allegation that Gross worked with all defendants did not establish jurisdiction based on an alleged conspiracy. The court therefore granted the Petrichor Defendants’ motion to dismiss for lack of personal jurisdiction and did not reach their failure-to-state-a-claim arguments.

Ridge Hill Defendants

The Ridge Hill Defendants argued that service of process was invalid because it did not follow the Hague Convention. The court had previously authorized alternative service and concluded that Remcoda’s service complied with that order. The court therefore denied the motion to dismiss for improper service.

The court dismissed the claims against Ataraxia based on the complaint’s insufficient allegations that Ataraxia dominated Ridge Hill and used that domination to injure Remcoda. Although the complaint alleged overlapping ownership and personnel, shared offices and email addresses, commingled funds and property, and mutual payment or guarantees of debts, the court found the allegations of domination and causation conclusory. The court therefore granted the motion to dismiss Ataraxia.

The court also dismissed Remcoda’s fraudulent-inducement claim against the Ridge Hill Defendants. It held that the alleged statements about Ridge Hill’s access to gloves were not separate from the contract because the contract itself concerned the provision of gloves. The alleged fraud claim therefore duplicated the breach-of-contract claim.

Finally, the court dismissed the claims for money had and received and unjust enrichment against Gunawardhana and Fletcher. The complaint alleged that Remcoda paid the deposit to Ridge Hill, not to either individual, and did not provide sufficient facts showing that either individual received or benefited from the money.

Russell Gross

The court considered Gross’s procurement agreement with Remcoda because the complaint substantially referred to it. The agreement provided for a 5% fee for transactions resulting from Gross’s procurement services, but the court stated that the agreement did not resolve the full scope of Gross’s alleged relationship with Ridge Hill.

The court denied Gross’s motion to dismiss the fraudulent-inducement claim. Although Gross was not a party to the glove-purchase agreement, the court held that Remcoda sufficiently alleged that he acted as Ridge Hill’s agent. Remcoda also alleged that Gross represented before the contract was formed that Ridge Hill could immediately provide the gloves, knew those statements were false, urged Remcoda to proceed, and expected to receive a 5% fee. The court held that these allegations adequately pleaded fraudulent intent and satisfied the heightened pleading requirement for fraud claims.

The court likewise denied Gross’s motion to dismiss the aiding-and-abetting-fraud claim. It held that the allegations supporting the fraudulent-inducement claim also sufficiently alleged that Gross knew about and substantially assisted the alleged fraud.

The court granted Gross’s motion to dismiss the claims for money had and received and unjust enrichment. Remcoda alleged that the defendants paid Gross a 5% fee, but it provided no factual basis supporting the allegation that Gross actually received money or was enriched at Remcoda’s expense.

Disposition

The court granted the Petrichor Defendants’ motion to dismiss. It denied the Ridge Hill Defendants’ motion as to improper service and granted it in part as to the claims against Ataraxia, fraudulent inducement, and the money-had-and-received and unjust-enrichment claims against Gunawardhana and Fletcher. It granted in part and denied in part Gross’s motion: the money-had-and-received and unjust-enrichment claims were dismissed, while the fraudulent-inducement and aiding-and-abetting-fraud claims remained. The court stated that Ataraxia, Petrichor Malaysia, Petrichor UK, Nateshan, Vaidyanathan, Gunawardhana, and Fletcher were dismissed from the case, while Ridge Hill and Gross remained.