Global Gaming Philippines, LLC v. Razon, Jr.

Background

Global Gaming Philippines, LLC brought this action primarily to enforce an arbitration award under federal law. The award arose from agreements concerning Global Gaming’s management and investment relationship with a casino project in the Philippines. The agreements gave Global Gaming an option to purchase shares and rights to participate in competing casino projects. After the management agreement was terminated, an arbitration tribunal found that the Debtor Defendants had materially breached the agreement, awarded Global Gaming and its affiliate approximately $296,562,709 in damages, and authorized the sale of the shares under specified circumstances.

Global Gaming alleged that Bloomberry Resorts and Hotels Inc. and Sureste Properties, Inc. were responsible for the award and that Enrique K. Razon, Jr. controlled those companies. It sought to enforce the award against Razon by piercing the corporate veil, meaning treating a controlling individual as responsible for a company’s obligations. Global Gaming also sought enforcement against the Energy Entities, the Real Estate Entities, and Asia Arrow by claiming they were Razon’s alter egos. Finally, it asserted a conversion claim under Philippine law against Razon personally.

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(2), which concerns personal jurisdiction, and Rule 12(b)(6), which concerns whether a complaint states a legally sufficient claim. They also moved to dismiss under the forum non conveniens doctrine, which allows a court to decline a case when another forum is substantially more appropriate.

Personal Jurisdiction

The court held that the complaint adequately alleged personal jurisdiction over the Debtor Defendants. It relied on allegations that the defendants negotiated the agreements for more than two years by email and telephone with a New York-based investment firm, that Razon negotiated partly from his New York residence, and that he conducted negotiations in New York. The court also found that the complaint adequately alleged that the Debtor Defendants were Razon’s alter egos for jurisdictional purposes. Razon had been served while physically present in New York, and the defendants did not dispute that service.

Claims Against Razon and the Debtor Defendants

The court held that the complaint sufficiently pleaded claims to enforce the arbitration award against Razon and the Debtor Defendants through corporate veil piercing. The court applied Philippine law because the Debtor Defendants were incorporated in the Philippines, while using New York law where Philippine law was not provided. It found sufficient allegations of Razon’s control, including his ownership interests, relationships with company officers, and alleged use of corporate funds for personal purposes. The court also found sufficient allegations that Razon’s control was used to block Global Gaming’s rights under the agreements and to obstruct enforcement of the arbitration award.

Claims Against the Non-Bloomberry Entities

The court granted the motion to dismiss all claims against the Non-Bloomberry Entities. Global Gaming’s theory was reverse veil piercing, which seeks to hold a company responsible for the actions of its shareholder. The court found that the complaint alleged Razon may have controlled those entities but did not adequately allege that he or the entities used the corporate form for a wrongful or fraudulent purpose. The court reached the same conclusion for the entity incorporated in Delaware under Delaware law.

Conversion Claim Against Razon

The court dismissed the conversion claim against Razon because the statute of limitations barred it. Under New York law, which the parties agreed governed the limitations issue, conversion claims have a three-year limitations period. The complaint alleged that the conversion occurred in January 2014, when trading in the shares was suspended and court orders were obtained to prevent their sale. The court held that the claim accrued at that time and was therefore untimely.

The court rejected the argument that later efforts to obstruct enforcement extended the limitations period under a continuing-wrong theory. It noted that the complaint did not assert a trespass-to-chattel claim, which concerns continuing interference with personal property. The court allowed Global Gaming to file a Second Amended Complaint within seven days, but only to substitute a trespass-to-chattel claim for the conversion claim. Any further amendment would require court permission.

Forum Non Conveniens

The court denied dismissal based on forum non conveniens. It recognized the Philippines as an adequate alternative forum because the defendants could be served there and the dispute could be litigated there. However, the court gave weight to Global Gaming’s choice of New York because the arbitration award was enforceable in all jurisdictions. It found the private and public interest factors neutral: evidence and witnesses appeared to be located in both the United States and the Philippines, and both U.S. and Philippine law would be relevant. Those considerations did not overcome the deference given to Global Gaming’s choice of forum, particularly because the case sought enforcement of an arbitration award.

Disposition

Judge Lorna G. Schofield granted in part and denied in part the defendants’ motion to dismiss. The claims against the Non-Bloomberry Entities and the conversion claim against Razon were dismissed. The claims against the Debtor Defendants and Razon based on corporate veil piercing survived. The forum non conveniens request was denied. The remaining claims were enforcement of the arbitration award, a declaration that Razon was an alter ego of the Debtor Defendants, and injunctive relief concerning transfers of assets by the Debtor Defendants and Razon.