Farsura v. QC Terme US Corp

Background

Stefano Farsura and SF Capital Partners LLC sued QC Terme US Corp., MAP s.r.l., Whitebridge Investments S.p.A., and Giuturna Investments S.p.A. Plaintiffs alleged that they formed a venture to bring the QC Terme spa concept to North America, with SF Capital Partners holding a 22% interest in QC Terme US Holding LLC and QC Terme US Corp. holding a 78% interest. They alleged that Farsura helped develop the project, including the Governors Island facility, but that defendants later forced him out and transferred the venture’s assets.

Plaintiffs asserted claims for breach of contract, breach of the implied promise of good faith and fair dealing, breach of a joint-venture agreement, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, promissory estoppel, unjust enrichment, and tortious interference with contract. They also sought a constructive trust and a declaratory judgment stating that they owned 22% of the North American QC Terme spa business.

Defendants moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing that the court lacked personal jurisdiction over MAP, Whitebridge, and Giuturna and that plaintiffs had not adequately pleaded their claims. Plaintiffs also moved for permission to file a sur-reply.

Personal Jurisdiction

The court held that it lacked personal jurisdiction over MAP, Whitebridge, and Giuturna. MAP was incorporated and had its principal place of business in Italy, so it was not generally subject to suit in New York. The complaint also did not allege specific facts showing that MAP transacted business in New York or entered into a contract with plaintiffs to provide goods or services there. The court rejected plaintiffs’ reliance on group allegations concerning “QC Terme” and actions by individuals who were not parties to the case.

The court found similar deficiencies in the allegations concerning Whitebridge and Giuturna. Plaintiffs did not provide specific facts supporting jurisdiction under New York’s long-arm statute, and their allegations about the defendants’ New York business activities, agency relationships, and revenue were conclusory. The court therefore granted defendants’ motion to dismiss the claims against MAP, Whitebridge, and Giuturna for lack of personal jurisdiction.

Claims Against QC Terme US Corp.

The court applied New York choice-of-law rules. It applied Delaware law to the breach-of-contract claim because the Operating Agreement selected Delaware law, and it applied Delaware law to the fiduciary-duty claims because QC Terme US Holding LLC was a Delaware limited liability company.

Breach of contract. The court held that plaintiffs sufficiently alleged an enforceable contract between QC Terme US Corp. and SF Capital Partners. The fact that the Operating Agreement was not signed did not require dismissal because, under Delaware law, a member of a limited liability company may be bound by the company agreement even without signing it. Whether the parties intended to be bound was a factual issue that could not be resolved on a motion to dismiss. The court therefore denied defendants’ motion to dismiss the breach-of-contract claim against QC Terme US Corp.

Implied covenant of good faith and fair dealing. The court granted the motion to dismiss this claim. Plaintiffs alleged that QC Terme US Corp. deprived SF Capital Partners of its 22% interest, but the court held that this interest was governed by express provisions of the Operating Agreement. The implied covenant could not be used to replace or override those express contractual terms.

Fiduciary duty. The court granted the motion to dismiss the breach-of-fiduciary-duty claims against QC Terme US Corp. The Operating Agreement waived traditional fiduciary duties of the members, including the duties that QC Terme US Corp. would otherwise owe as the controlling member to SF Capital Partners as a minority member. The court held that plaintiffs therefore had not shown that QC Terme US Corp. owed the asserted fiduciary duty and did not reach whether plaintiffs adequately alleged a breach.

Constructive trust and declaratory judgment. The court granted the motion to dismiss both demands. The constructive-trust request arose from the same facts as the contract claim and was duplicative. The request for a declaration that plaintiffs owned 22% of the North American spa business was also duplicative of the breach-of-contract claim.

Other Claims and Final Disposition

The conclusion states that the motion to dismiss was granted as to Count II, the implied-covenant claim; Count III, the joint-venture-agreement claim; Count IV, the breach-of-contract claim against MAP; Counts V and VI, the fiduciary-duty claims; Counts VII and XI, the aiding-and-abetting fiduciary-duty claims; Count VIII, the promissory-estoppel claim; Count IX, the unjust-enrichment claim; Count XII, the tortious-interference claim; and Counts X and XIII, the constructive-trust and declaratory-judgment demands. The motion was otherwise denied.

The court also denied plaintiffs’ motion for leave to file a sur-reply and stated that it would not consider the allegedly new material in defendants’ reply brief. The order was signed by Judge Analisa Torres on September 13, 2022.