Gramercy Distressed Opportunity Fund III LP v. Bakhmatyuk

Full title: GRAMERCY DISTRESSED OPPORTUNITY FUND II, L.P., et al., Plaintiffs, v. Oleg…

Court: United States District Court, D. Wyoming

Date published: Sep 15, 2022

628 F. Supp. 3d 1125 (D. Wyo. 2022)

Opinion

Case No. 21-CV-223-F

2022-09-15

GRAMERCY DISTRESSED OPPORTUNITY FUND II, L.P., et al., Plaintiffs, v. Oleg BAKHMATYUK, et al., Defendants.

Billie L.M. Addleman, Erin Elizabeth Berry, Robert Carl Jarosh, Hirst Applegate LLP, Cheyenne, WY, Ryan M. Philp, Pro Hac Vice, Alan Mendelsohn, Pro Hac Vice, Daniel Joseph Petrokas, Pro Hac Vice, David R. Michaeli, Pro Hac Vice, Maura C. Allen, Pro Hac Vice, Hogan Lovells US LLP, New York, NY, Mark D. Gibson, Holland & Hart LLP, Denver, CO, for Plaintiffs Gramercy Distressed Opportunity Fund II LP, Gramercy Distressed Opportunity Fund III LP, Gramercy Distressed Opportunity Fund III-A LP, Gramercy Funds Management LLC, Gramercy EM Credit Total Return Fund. Billie L.M. Addleman, Erin Elizabeth Berry, Robert Carl Jarosh, Hirst Applegate LLP, Cheyenne, WY, Ryan M. Philp, Pro Hac Vice, Alan Mendelsohn, Pro Hac Vice, Daniel Joseph Petrokas, Pro Hac Vice, David R. Michaeli, Pro Hac Vice, Maura C. Allen, Pro Hac Vice, Hogan Lovells US LLP, New York, NY, for Plaintiff Roehampton Partners LLC. Bryson Campbell Smith, Paula Ann Fleck, Holland & Hart LLP, Jackson, WY, Jeffrey Scott Pope, Holland & Hart, Cheyenne, WY, W. Gordon Dobie, Pro Hac Vice, Emily N. Kath, Pro Hac Vice, Winston & Strawn LLP, Chicago, IL, Jeanifer E. Parsigian, Pro Hac Vice, Winston & Strawn, San Francisco, CA, for Defendants.

NANCY D. FREUDENTHAL, UNITED STATES SENIOR DISTRICT JUDGE

Billie L.M. Addleman, Erin Elizabeth Berry, Robert Carl Jarosh, Hirst Applegate LLP, Cheyenne, WY, Ryan M. Philp, Pro Hac Vice, Alan Mendelsohn, Pro Hac Vice, Daniel Joseph Petrokas, Pro Hac Vice, David R. Michaeli, Pro Hac Vice, Maura C. Allen, Pro Hac Vice, Hogan Lovells US LLP, New York, NY, Mark D. Gibson, Holland & Hart LLP, Denver, CO, for Plaintiffs Gramercy Distressed Opportunity Fund II LP, Gramercy Distressed Opportunity Fund III LP, Gramercy Distressed Opportunity Fund III-A LP, Gramercy Funds Management LLC, Gramercy EM Credit Total Return Fund.

Billie L.M. Addleman, Erin Elizabeth Berry, Robert Carl Jarosh, Hirst Applegate LLP, Cheyenne, WY, Ryan M. Philp, Pro Hac Vice, Alan Mendelsohn, Pro Hac Vice, Daniel Joseph Petrokas, Pro Hac Vice, David R. Michaeli, Pro Hac Vice, Maura C. Allen, Pro Hac Vice, Hogan Lovells US LLP, New York, NY, for Plaintiff Roehampton Partners LLC.

Bryson Campbell Smith, Paula Ann Fleck, Holland & Hart LLP, Jackson, WY, Jeffrey Scott Pope, Holland & Hart, Cheyenne, WY, W. Gordon Dobie, Pro Hac Vice, Emily N. Kath, Pro Hac Vice, Winston & Strawn LLP, Chicago, IL, Jeanifer E. Parsigian, Pro Hac Vice, Winston & Strawn, San Francisco, CA, for Defendants.

ORDER ON DEFENDANT OLEG BAKHMATYUK'S MOTION TO DISMISS

NANCY D. FREUDENTHAL, UNITED STATES SENIOR DISTRICT JUDGE

Defendant Oleg Bakhmatyuk ("Bakhmatyuk") moves to dismiss the complaint on several theories. ECF No. 75 (Motion), 76 (Memorandum and Exhibits). Plaintiffs¹ oppose the motion (ECF No. 94), and Bakhmatyuk has replied. ECF No. 96.² For the reasons that follow, the Court denies the motion.

1 Gramercy Distressed Opportunity Fund II, L.P., Gramercy Distressed Opportunity Fund III, L.P., Gramercy Distressed Opportunity Fund III-A, L.P., Gramercy EM Credit Total Return Fund, Roehampton Partners LLC, and Gramercy Funds Management LLC (collectively, "Gramercy" or Plaintiffs).

2 The reply is five pages over the limit in Local Rule 7.1(b)(2), and Bakhmatyuk did not request leave to exceed. The Court considers only the first ten pages of the reply.

I. Jurisdiction to Hear the Motion

As a preliminary issue, all other Defendants — Nicholas Piazza, SP Capital Management, LLC ("SP Capital"), TNA Corporate Solutions, LLC ("TNA") and

Oleksander Yaremenko, collectively the "Piazza Defendants" — have filed an interlocutory appeal pursuant to 9 U.S.C. § 16 of the Federal Arbitration Act ("FAA"). ECF 85 (Piazza Defendants' Notice of Appeal). Specifically, they appeal from the portion of the Court's July 7, 2022 order (ECF 67) denying their motion to dismiss or stay in favor of arbitration.

"The filing of a notice of appeal ... confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal." Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58, 103 S.Ct. 400, 74 L.Ed.2d 225 (1982). Plaintiffs argue the appeal is frivolous (and thus the Court should disregard it) because the Piazza Defendants are not parties to the arbitration agreement. Regardless that the Court has found the Piazza Defendants are not parties to that agreement, they have the right to an interlocutory appeal from the Court's denial of the portion of their motion relating to arbitration. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 628-29, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009). "The jurisdictional statute here unambiguously makes the underlying merits irrelevant, for even utter frivolousness of the underlying request for a § 3 stay cannot turn a denial into something other than '[a]n order ... refusing a stay of any action under section 3.'" Id. Plaintiffs also note the Piazza Defendants did not label their motion to stay or dismiss as one under the FAA, but the title is not important. The Piazza Defendants expressly argued for a stay under section 3 of the FAA. ECF 44 at 14. The Court accordingly cannot conclude that the appeal is frivolous.

Nonetheless, the Court has jurisdiction to hear Bakhmatyuk's motion because the order on appeal does not decide any claims or issues as to him.³ The claims against him are therefore not involved in the appeal. In the alternative, if the Tenth Circuit later concludes that Bakhmatyuk's motion is "involved in the appeal" because the issues overlap, the Court is authorized to deny a motion "for relief that the court lacks authority to grant because of an appeal that has been docketed and is pending." Fed. R. Civ. P. 62.1. Thus, the Court proceeds to rule on Bakhmatyuk's motion.

3 Service to Bakhmatyuk was delayed. Although he now shares counsel with the Piazza Defendants, his counsel did not appear on his behalf until July 7, 2022.

II. Background

The Court summarized the fact allegations in the July 7 order. ECF 67. The Court assumes familiarity with that order. Capitalized terms and acronyms have the same meaning here as in that order.

In a nutshell, Gramercy alleges that Bakhmatyuk and the Piazza Defendants together engaged in a multi-year pattern of racketeering activity to defraud Gramercy of the value of Notes it holds from non-parties UkrLandFarming PLC ("ULF") and its subsidiary Avangardco IPL ("AVG," together with ULF, the "Company"), which are Ukrainian agricultural companies that Bakhmatyuk controls. The Notes were issued under Trust Deeds. ECF 44-20 through 44-23 (AVG); ECF 44-25 and 44-26 (ULF).⁴

4 Plaintiffs' expert Ben Valentin, Q.C., notes there are also supplemental trust deeds, and nothing therein changes his opinions regarding the Trust Deeds. ECF 50-2 at 9, n.10. Plaintiffs filed supplemental trust deeds (ECF 50-3 through 50-6), but they are not referenced in any briefs. As neither side argues those documents on the present motion, the Court does not consider them.

"Bakhmatyuk acts as CEO and Chairman of the Board and owns and controls

ULF. Since 2011, ULF has been the parent company of AVG." ECF 1 ¶ 21. "In or around September 2011, AVG announced an agreement with Bakhmatyuk, to transfer his approximately 77.5% shareholding in AVG to ULF, which was 100% controlled by Bakhmatyuk. Since 2011, AVG has been a partially owned subsidiary of ULF. ULF and AVG, both of which are owned and controlled by Bakhmatyuk, are referred to herein as the Company." Id. ¶ 22.

Gramercy brings three claims for civil liability under the federal Racketeer Influenced and Corrupt Organizations ("RICO") laws, 18 U.S.C. § 1961 et al. The RICO claims are the basis of the Court's subject-matter jurisdiction. Gramercy also brings state law claims for fraud, tortious interference with contract (i.e., the ULF and AVG Notes), civil conspiracy and aiding and abetting.

III. Analysis

A. Personal Jurisdiction

1. Standard of Review for Rule 12(b)(2) Motions

As stated in the July 7 order, in a motion to dismiss for lack of personal jurisdiction, the "[p]laintiff bears the burden of establishing personal jurisdiction over the defendant." OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998) (citation omitted). For the plaintiff to defeat a Rule 12(b)(2) motion to dismiss, the plaintiff need only make a "prima facie showing by demonstrating, via affidavit or other written materials, facts that if true would support jurisdiction over the defendant." Id.

"The allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits. ... If conflicting affidavits of the parties collide, the Court will resolve all factual disputes in the plaintiff's favor." Eleutian Tech., LLC v. Global Educ. Techs., LLC, Civ. 07-181-J, 2009 WL 10672360, *3 (D. Wyo. Jan. 23, 2009) (quoting Behagen v. Amateur Basketball Ass'n of the U.S., 744 F.2d 731, 733 (10th Cir. 1984)). In this case, Bakhmatyuk does not supply an affidavit. The Court accordingly takes as true the Complaint's allegations regarding his involvement in the alleged scheme.

"The law of the forum state and constitutional due process limitations govern personal jurisdiction in federal court." Old Republic Ins. Co. v. Cont'l Motors, Inc., 877 F.3d 895, 903 (10th Cir. 2017). Wyoming's long-arm statute extends the jurisdictional reach of Wyoming courts as far as constitutionally permissible. Wyo. Stat. § 5-1-107. Therefore, the exercise of jurisdiction is permitted so long as it does not offend the Due Process Clause of the Fourteenth Amendment to the United States Constitution.

"The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful 'contacts, ties, or relations.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (citation omitted). Thus, for a court to have personal jurisdiction over a nonresident defendant, there must exist "'minimum contacts' between the defendant and the forum state." OMI Holdings, 149 F.3d at 1090 (citations omitted). To satisfy the minimum contacts standard, a court may assert either specific or general jurisdiction over the defendant. See id. at 1091. "In what we have called the 'paradigm' case, an individual is subject to general jurisdiction in her place of domicile." Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., — U.S. —, 141 S. Ct. 1017, 1024, 209 L. Ed. 2d 225 (2021) (citing Daimler

AG v. Bauman, 571 U.S. 117, 137, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014)).

In this case, Plaintiffs assert only specific jurisdiction. Specific jurisdiction "depends on an affiliation between the forum and the underlying controversy, principally, activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation." Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) (internal quotation marks omitted). When a court has specific jurisdiction, it is "confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction." Id.

"Specific jurisdiction calls for a two-step inquiry: (a) whether the plaintiff has shown that the defendant has minimum contacts with the forum state; and, if so, (b) whether the defendant has presented a 'compelling case that the presence of some other considerations would render jurisdiction unreasonable.'" Old Republic, 877 F.3d at 904 (citing Burger King, 471 U.S. at 476-77, 105 S.Ct. 2174). "The minimum contacts test for specific jurisdiction encompasses two distinct requirements: (i) that the defendant must have purposefully directed its activities at residents of the forum state, and (ii) that the plaintiff's injuries must arise out of the defendant's forum-related activities." Old Republic, 877 F.3d at 904 (citation and quotation marks omitted).

The minimum contacts for specific jurisdiction "must show that the defendant deliberately 'reached out beyond' its home—by, for example, 'exploi[ting] a market' in the forum State or entering a contractual relationship centered there." Ford Motor, — U.S. —, 141 S. Ct. 1017 at 1025, 209 L.Ed.2d 225 (quoting Walden v. Fiore, 571 U.S. 277, 285, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014)). "[A] strict causal relationship" is not required, but the suit must "arise out of or relate to the defendant's contacts with the forum." Id. at 1026.

"The purposeful direction requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, ... or of the unilateral activity of another party or a third person." Old Republic, 877 F.3d at 904 (citations and quotation marks omitted). "Mere foreseeability of causing injury in another state is insufficient to establish purposeful direction." Id. (citation omitted). But "where the defendant deliberately has engaged in significant activities within a State, ... he manifestly has availed himself of the privilege of conducting business there." Id. (citations and quotation marks omitted).

"Once the 'purposefully directed' and 'arising out of' requirements are met, the court must then 'inquire whether the exercise of personal jurisdiction would offend traditional notions of fair play and substantial justice.'" Gas Sensing Tech. Corp. v. Ashton, 16-cv-272-F, 2017 WL 2955353 at *4 (D. Wyo. Jun. 12, 2017).

2. The Court Has Specific Jurisdiction Over Bakhmatyuk

Plaintiffs allege that Bakhmatyuk made several, purposeful contacts with the State of Wyoming and the claims arise from those contacts. Gramercy alleges among other things that Bakhmatyuk has had a business relationship with Piazza since 2008. ECF 1 ¶¶ 27, 29. During that entire time period, Piazza has been a resident of Wyoming and also based his relevant businesses (SP Capital, d/b/a SP Advisors and TNA) in the state. Bakhmatyuk caused ULF to enter a "cooperation agreement" with SP Advisors in 2014, which was announced as appointing SP Advisors as ULF's investment relations advisor and corporate broker. SP Advisors was involved

in Bakhmatyuk's sale of five per cent of ULF to Cargill in 2014. Id. ¶ 31. Bakhmatyuk directed Piazza to use his connections with a purportedly independent analyst, Concorde, to spread false information (Id. ¶ 72); he also directed Piazza and Yaremenko to form TNA in Wyoming, as a backup plan if Plaintiffs did not agree to his proposal for restructuring the Company's debt. Id. ¶ 84.

Bakhmatyuk had Piazza and SP Advisors act (either directly or through a company partly owned by SP Capital) as straw purchasers to acquire the Company's debt from Noteholders other than Plaintiffs and attempt to acquire the Notes from Plaintiffs as well. Id. ¶¶ 93, 102, 109, 112. When it was clear Plaintiffs would not accept Bakhmatyuk's restructuring or straw purchases, he directed Piazza and SP Advisors (and Yaremenko, but he is not directly pertinent here because he was not located in Wyoming) to "plan and orchestrate a complex set of transactions through which the Company's assets could be isolated from creditors — at this point, ostensibly Gramercy — by transferring them to a number of newly-formed shell companies." Id. ¶ 123. The shell companies included those "organized under the umbrella of TNA, which is nominally owned by Piazza, but, upon information and belief, is actually under Bakhmatyuk's control." Id. Plaintiffs allege Bakhmatyuk had Piazza and SP Advisors (and Yaremenko) proceed with transfers of at least 100 subsidiaries of ULF to TNA in Wyoming, so that he could continue to maintain his control of those businesses away from ULF's creditors, such as Plaintiffs. Id. ¶¶ 138-144. Plaintiffs' claims regard those very asset transfers.

While the Court has not comprehensively cataloged all of Bakhmatyuk's contacts with Wyoming alleged in the complaint, the foregoing contacts with Wyoming residents (Piazza, SP Advisors and TNA) satisfy the purposeful direction to the forum, and the claims against Bakhmatyuk arise out of them.

Moreover, exercising jurisdiction over Bakhmatyuk does not offend traditional notions of fair play and substantial justice. He has maintained significant business contact with Wyoming since at least 2016, when he allegedly began to plan the asset transfers. Again, the claims against him arise from those contacts with the state. It is not unfair for him to defend the claims here. Accordingly, Bakhmatyuk's motion to dismiss for lack of personal jurisdiction is denied.

B. Motion to Stay or Dismiss Based on Arbitration Clauses

Bakhmatyuk repeats many of the Piazza Defendants' arguments for staying or dismissing the action in favor of arbitration, with a few significant twists. Plaintiffs argue the motion is one for reconsideration. However, the July 7 order regarded only the claims against the Piazza Defendants. Although Bakhmatyuk raises many of the same issues as the earlier motion, the Court will not treat his motion as a request for reconsideration under Servants of Paraclete v. Does, 204 F.3d 1005 (10th Cir. 2000).

However, to the extent Bakhmatyuk makes the same arguments as the Piazza Defendants, nothing has changed. Except as noted below, the analysis of the July 7 order (ECF 67 at 11-18) remains the same and is incorporated here. And as follows, Bakhmatyuk's additional arguments do not change the outcome: Bakhmatyuk is not a party to the arbitration clauses and cannot enforce them against Plaintiffs.

As the July 7 order held, although the arbitration clauses agree to arbitrate arbitrability, when there is a nonsignatory involved (here, Bakhmatyuk), the Court independently determines arbitrability itself and does not defer to the contract's agreement to arbitrate arbitrability. See,

e.g., Belnap v. Iasis Healthcare, 844 F.3d 1272, 1293 (10th Cir. 2017) (finding under Utah law the signatory plaintiff was not required to arbitrate his claims against a nonsignatory defendant, regardless that he agreed to arbitrate arbitrability as to the signatory defendant). See also Mars, Inc. v. Szarzynski, No. CV 20-01344 (RJL), 2021 WL 2809539, at *5 (D.D.C. July 6, 2021).

1. The Arbitration Clauses in the Notes

Bakhmatyuk argues that Plaintiffs are parties to the terms and conditions of the Notes and the Trust Deeds. He points out:

[T]he ULF and AVG Trust Deeds contain Schedules showing the form language for the Notes, including their terms and conditions. Ex. 5A; Ex. 6A. These terms and conditions state unequivocally that Noteholders are bound by the Trust Deeds' and Notes' terms. See Ex. 6A at Schedule 5, pg. 58; Ex. 5A at Part 2, pg. 42. Each Trust Deed also contains two arbitration clauses: one in the Trust Deed portion, and one in the Schedules showing the form of the Notes.

ECF 76 at 11. The Piazza Defendants focused exclusively on the Trust Deeds. Bakhmatyuk focuses on both the Trust Deeds and the Notes. As to the Trust Deeds, Bakhmatyuk's argument fails for the reasons stated in the July 7 order.

As to the Notes, however, Bakhmatyuk is correct that Plaintiffs are parties, and the Notes contain arbitration clauses. He points to three facts:

(1) Plaintiffs' allegation that they "formed binding contracts with the Company, the terms of which are contained in the ULF Trust Deed and the AVG Trust Deed" (ECF 1 ¶ 215).

(2) The opinion of Plaintiffs' expert, Mr. Ben Valentin, Q.C., that "the parties to the Notes are: (i) the Issuer, (ii) the Trustee, and (iii) any Noteholder of the Notes," (ECF 50-2 ¶¶ 10-11).

(3) The Schedules in the Trust Deeds that set forth the form terms and conditions of the Notes. ULF Trust Deed, Schedule 5 at 58; AVG Trust Deed, Schedule 2, Part 2 at 42. Those conditions state that the Notes are subject to the terms of the Trust Deeds, and they contain arbitration clauses. AVG Trust Deed, Schedule 2, Part 2 at 68 § 20.2; ULF Trust Deed, Schedule 5 at 90 § 19.2.

Plaintiffs do not directly respond to the argument that they are parties to the Notes. Their "binding contracts" allegation is part of the tortious interference with contract claim. The cause of action does not expressly allege whether the interfered-with contracts are the Trust Deeds, the Notes, or both. ECF 1 ¶¶ 214-18 (Fifth Cause of Action). The form Notes⁵ incorporate the Trust Deeds by reference: "This Note forms one of a series of Notes constituted by a Trust Deed (the Trust Deed) dated 29 October, 2010 ... made between the Issuer, the Original Surety Providers and [the] Trustee." AVG Trust Deed, Schedule 2 at 39 (emphasis added). See also id. at 42 (Conditions of the Notes, stating the same). "The statements in these Conditions include summaries of, and are subject to, the detailed provisions of and definitions in the Trust Deed." Id. The form Notes provide that "[t]he Noteholders

5 Neither side filed copies of actual Notes. However, the Trust Deeds define the Notes as "substantially in the form set out in [the] Schedule[s]." ULF Trust Deed at 3; AVG Trust Deed at 11 § 3.4. See also ECF 76-5 (legal memorandum of Bakhmatyuk's English law expert, Dr. Marcos Dracos) at 7 ¶ 28. Plaintiffs did not object to considering the conditions in the form Notes as equivalent to the conditions in the Notes they hold. The Court accordingly considers them as such.

... are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed." Id. (emphasis added). See also ULF Trust Deed at Schedule 5 (form ULF Note).

It thus appears Plaintiffs allege the Notes are the contracts to which they are parties, regardless that the form Notes do not have a signature blank for the Noteholder. This is consistent with the rest of the complaint, in which Plaintiffs' allegations of "contractual rights" consistently refer to rights under the Notes.⁶ It is also consistent with the opinions of both sides' experts on English law, noted above. Thus, Plaintiffs are parties to the Notes and are subject to the arbitration clauses therein — both those stated directly and incorporated from the Trust Deeds.

6 See, e.g., ECF 1 ¶ 168 ("by employing all means necessary to prevent Gramercy, one of the largest creditors with significant contractual rights, from exercising its contractual rights under the Notes and to prevent Gramercy from achieving a meaningful recovery on its Notes"), ¶ 200 ("to depress the value of Gramercy's Notes"), ¶ 211 ("deterred from enforcing its contractual rights under the Notes"), ¶ 212 ("would have sought to enforce its contractual rights under the Notes"), ¶¶ 218 ("right to pursue an enforcement action under the Notes").

However, Bakhmatyuk's further arguments — that Plaintiffs are parties to the Trust Deeds, and that he himself is a party to the Trust Deeds — are incorrect. He points to the Eleventh Circuit's opinion on remand from GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, — U.S. —, 140 S. Ct. 1637, 207 L.Ed.2d 1 (2020), Outokumpu Stainless USA, LLC v. Coverteam SAS, No. 17-10944, 2022 WL 2643936 (11th Cir. July 8, 2022) ("GE Energy II"). The remand opinion issued the day after the July 7 order; Bakhmatyuk contends it shows the June 7 order is inconsistent with GE Energy because this Court found Plaintiffs were not parties to the Trust Deeds simply because they did not sign them. ECF 76 at 8. He further argues that his status as a corporate insider (and related facts) make it appropriate to consider him a party to the Trust Deeds as well.

In GE Energy, the Supreme Court held that the "[New York] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, ... [does not] conflict[] with domestic equitable estoppel doctrines that permit the enforcement of arbitration agreements by nonsignatories." GE Energy, 140 S. Ct. at 1642 (emphasis added).⁷ The Court remanded for the Eleventh Circuit to determine which body of law applied to this issue and whether equitable estoppel was available to the defendant.

7 The New York Convention applies here. It is "a multilateral treaty that addresses international arbitration." GE Energy, 140 S. Ct. at 1644 (citing 21 U.S.T. 2517, T.I.A.S. No. 6997). The United States adopted it as to commercial relationships. 1970 WL 104417 (U.S. Treaty Dec. 29, 1970).

On remand, the majority of the panel held that since the New York Convention does not bar application of an arbitration clause by a nonsignatory, the plain language of the contract made GE Energy a contract party, regardless that it was a nonsignatory. The contract expressly defined "Seller" as including an attached list of potential subcontractors, and GE Energy was in that list. Thus, GE Energy was a party and could enforce the arbitration clause against the signatory plaintiff without the need for equitable estoppel. GE Energy II, 2022 WL 2643936, at *3.

The only aspect of this case that bears similarity to GE Energy II is that Plaintiffs are contract parties to the Notes despite being nonsignatories. Nothing in GE Energy or GE Energy II suggests that Plaintiffs are parties to the Trust Deeds

which expressly define the parties entering into them as the Issuers, the Trustee, and the Surety Providers. ECF 44-20 at 2, 4 (AVG); ECF 44-25 at 2, 5 (ULF). Nor do those opinions suggest any reason to find that Bakhmatyuk is a party to the Trust Deeds or Notes. Unlike GE Energy — whose name in the list expressly made it a contract party under the contract's definition of "Seller" — Bakhmatyuk is mentioned in the Trust Deeds only in defining "Permitted Holders" and "Related Parties." ULF Trust Deed at 104; AVG Trust Deed at 77, 80. "Permitted Holders" are pertinent only to "Redemption at the Option of the Holders upon a Change of Control." ULF Trust Deed at 81 (Schedule 5, form Note) § 7.2; AVG Trust Deed at 80 (Schedule 2, form Note) § 8.2. As for "Related Parties," it is not plain to the Court what Trust Deed or form Note provisions, if any, rely on that definition. Plaintiffs' English law expert, Ben Valentin Q.C., confirms that mentioning a nonsignatory in a contract does not make the person a contract party. ECF 94-1 at 7 ¶ 16. The Trust Deeds or Notes would have to expressly define Bakhmatyuk as a party, and they do not do so. They also do not otherwise give him a right to enforce the arbitration clauses.

Nor does Bakhmatyuk's status as a corporate insider of the Issuers — CEO, Chairman of the Board, and controlling shareholder — make him a party to the Trust Deeds or Notes. He asserts that he signed the Directors' Certificates to the Trust Deeds. The present record includes only the unsigned forms for those documents. AVG Trust Deed at 95 (form of directors' certificate); ULF Trust Deed at 123 (form of officers' certificate). But even assuming in his favor that he signed those certificates, by definition Bakhmatyuk signed them in his capacity as a director or officer, not as an individual.

Bakhmatyuk does not cite any law — foreign or domestic — that treats a nonsignatory owner, director or officer as though he or she is a party to a company's contracts, absent some inequity to a third person that would result from continuing to recognize the company's separate existence. It is black-letter American law that corporate entities are legally distinct from their individual owners, officers and directors. See, e.g., 1 Fletcher Cyc. Corp. § 25 (Sep. 2021 update); Ridgerunner LLC v. Meisinger, 297 P.3d 110, 115 (Wyo. 2013); ARW Expl. Corp. v. Aguirre, 45 F.3d 1455, 1460-61 (10th Cir. 1995). Even when an individual defendant is the sole shareholder of a corporate defendant, that "is generally insufficient in itself to warrant disregarding separate corporate existence. Courts do not lightly pierce the corporate veil, even in deference to the strong policy favoring arbitration." Id. at 1460-61 (internal quotation marks and citations omitted). Rather, corporate veil piercing requires showing the corporate form has been abused and continuing to recognize it would result in fraud or inequity to another person. See, e.g., 1 Fletcher Cyc. Corp. § 41; Ridgerunner, 297 P.3d at 115-16. Unsurprisingly, Bakhmatyuk does not argue such facts here. In short, Bakhmatyuk has not shown that being a corporate insider makes him a party to the Company's contracts, unless the contract expressly includes him as an individual as a party — and the Trust Deeds and Notes do not.

Thus, while it is clear that Plaintiffs, are subject to the arbitration clauses in the Notes — including those incorporated therein from the Trust Deeds — it is equally clear that Bakhmatyuk is not a party to the Notes or the Trust Deeds. As the July 7 order held, English law does not give nonparties the right to enforce the arbitration clauses. ECF 67 at 14-15.⁸ Thus, Bakhmatyuk

8 As with the Piazza Defendants, Bakhmatyuk does not appear to dispute that English law governs the interpretation of the arbitration clauses.

cannot contractually require Plaintiffs to arbitrate their claims against him.

2. Additional Issuance Documents and Bakhmatyuk's Relationship Agreement

Bakhmatyuk also argues Plaintiffs' claims are based on all "issuance documents," which in his view includes not only the Trust Deeds, Notes, prospectuses and subscription agreements but also his April 2010 "Relationship Agreement" with AVG. The Relationship Agreement predates the issuances, but it is the only one of these documents that Bakhmatyuk signed. He asserts that it governs his transactions with AVG and has an arbitration clause which the Court should apply against Plaintiffs. Of course, Plaintiffs are not parties to the Relationship Agreement. Bakhmatyuk also does not appear to cite where the Notes or Trust Deeds even mention the Relationship Agreement, if at all. His argument instead hinges on the notion that all of these separate documents must not only be construed together but in effect form one contract, so that he can enforce his arbitration clause with AVG against Plaintiffs.

Bakhmatyuk does not dispute that Rule 12(d) applies here, but he urges the Court to consider the Relationship Agreement (and also the prospectuses and subscription agreements) because these documents are central to Plaintiffs' allegations. This is not persuasive. The Tenth Circuit recognizes only limited exceptions from Rule 12(d):

(1) documents that the complaint incorporates by reference; (2) documents referred to in the complaint if the documents are central to the plaintiff's claim and the parties do not dispute the documents' authenticity; and (3) matters of which a court may take judicial notice.

Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010) (quotation marks and citations omitted, citing inter alia Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007)). See also Hartleib v. Weiser Law Firm, P.C., 861 F. App'x 714, 719 (10th Cir. 2021) (following Gee).

The complaint does not refer to the prospectuses, subscription agreements, or Relationship Agreement. Bakhmatyuk appears to assume that it would suffice to show these unreferenced documents are nonetheless central to the allegations and their authenticity is not disputed. But the exception to Rule 12(d) requires all three elements: reference to the document in the complaint, centrality to the plaintiff's claims, and undisputed authenticity.

Bakhmatyuk also has not shown any of these documents are central to Plaintiffs' claims. He argues these documents incorporate each other, and that both American and English law interpret documents of the same transaction together to determine their meaning. ECF 76 at 10 (citing ADR Tr. Corp. v. Fed. Sav. and Loan Ins. Corp., 25 F.3d 1493, 1497 (10th Cir. 1994); Restatement (2d) of Contracts § 202 (1981); and Lord Justice Kim Lewison, The Interpretation of Contracts § 3.06 (7th Ed. 2020), the latter provided at ECF 76-3, at 4). The Court does not take issue with this principle of contract law as far as it goes, but none of the cited authorities address it in the context of Rule 12(d) and a motion to stay or dismiss in favor of arbitration. Mr. Valentin is also persuasive that this principle has no application when there are no disputed terms between the contracts, i.e., when the contracts are unambiguous and do not need construction. ECF 94-1 at 8 ¶ 26. More importantly, Bakhmatyuk does not cite any authority

(foreign or domestic) for interpreting related contracts as though a party to one is a party to all.

Bakhmatyuk does not otherwise explain how or why the prospectuses, subscription agreements, or Relationship Agreement are central to Plaintiffs' claims. Plaintiffs state they are "not suing to enforce the terms of any of the documents submitted by Bakhmatyuk." ECF 94 at 12, n.8. The prospectuses, subscription agreements, and Relationship Agreement may be pertinent to Bakhmatyuk's defenses, but this does not make them central to Plaintiffs' claims for purposes of the exceptions to Rule 12(d).

Also, the facts matter here. Bakhmatyuk cites where the prospectuses and subscription agreements allegedly incorporate the Trust Deeds — the only "issuance documents" that are referenced in the complaint — but not vice versa. He cites only one instance where the ULF form Note refers to itself as "this Prospectus." ULF Trust Deed at 77. Specifically, this occurs in Section 5.10 regarding reports:

As long as any Notes are outstanding, the Issuer will furnish to the Noteholders and the Trustee: (a) within 120 days after the end of the Issuer's fiscal year ... (ii) information with a level and type of detail that is substantially comparable in all material respects to the sections in this Prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business."

Id. (emphasis added).

It makes no sense for the form Note to refer to itself as "this Prospectus." The document is electronically searchable, and this is the only occurrence of the word "prospectus" located in the entire ULF Trust Deed. There is also no section in the ULF Trust Deed (including the form Note) entitled "Management's Discussion and Analysis...." The reference appears to be a drafting error, an unintentional holdover from copying the provision from a prospectus.

Bakhmatyuk also argues the Court can take judicial notice of the prospectuses because "when issued, [they] were governed by the EU Prospectus Directive (2003/71/EC), which imposes a uniform obligation to file and publish the prospectus." ECF 76 at 4. The EU directive requires approved prospectuses to be filed with "the competent authority of the home Member State," and that authority "shall publish [the approved prospectuses or a list of them] on its website over a period of 12 months." https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32003 L0071, at Chapter III, Art. 14, §§ 1, 4 (emphasis added). The prospectuses identify the authorities that approved them (respectively, the Central Bank of Ireland and the UK Financial Services Authority), but Bakhmatyuk does not point to any public office where the prospectuses remain available now. Although the Court is not required to search the Internet on this issue, in this instance the Court exercised its discretion to do so. Neither the Central Bank of Ireland nor the UK Financial Conduct Authority list any prospectuses from UKL or AVG. https://www.centralbank.ie/regulation/industry-market-sectors/securities-markets/prospectus-regulation/prospectuses; https://marketsecurities.fca.org.uk/.

In the case Bakhmatyuk cites, Slater v. A.G. Edwards & Sons, Inc., 719 F.3d 1190 (10th Cir. 2013), the documents judicially noticed were filed with the U.S. Securities and Exchange Commission. Id. at 1196, 1198-1206. Once a document is filed with the SEC, it remains publicly available, absent special circumstances. Merely pointing to a document's statement that it was published when issued several years ago — without also showing it remains available

at a public office today — is insufficient for judicial notice. In short, Bakhmatyuk has not shown that the subscription agreements, prospectuses, or Relationship Agreement fall within any exception from Rule 12(d).

Neither side requests converting the motion to summary judgment, and the Court concludes doing so would be inappropriate for several reasons. Chief among them is that Bakhmatyuk does not assert he is a signatory or expressly defined as a party in any of the prospectuses or subscription agreements. And as to the Relationship Agreement, again, he cites no authority that his being a party to that contract makes him a party to any of the other "issuance documents." Thus, converting to summary judgment is unlikely to change the outcome on his motion to stay or dismiss for arbitration.

In sum, the subscription agreements, prospectuses, and Relationship Agreement do not make Bakhmatyuk a party to the Notes or the Trust Deeds. Nor do any of those documents make it appropriate to treat him as though he were a party to the Notes or Trust Deeds for purposes of the arbitration clauses. Thus, his only possible way of enforcing the arbitration clauses is through equitable estoppel — if it applies to him.

3. Equitable Estoppel?

The July 7 order reasoned that neither American nor English law extended equitable estoppel to allow a nonsignatory defendant (there, the Piazza Defendants) to enforce an arbitration clause against nonsignatory plaintiffs. The analysis is now different: Bakhmatyuk is still a nonsignatory requesting equitable estoppel, but Plaintiffs are contract parties. As will be seen, with this posture the Court must now decide the choice of law for equitable estoppel.

a. The English and American Laws of Equitable Estoppel Differ When a Contract Party Brings Tort Claims Against a Nonsignatory.

Bakhmatyuk argues two bodies of equitable estoppel give him the right to require Plaintiffs to arbitrate their claims: English law and federal common law. As to English law, Bakhmatyuk presents the opinions of an expert, Dr. Marcos Gregorios Dracos. ECF 76-5 (Dracos First Legal Memorandum), ECF 96-2 (Dracos Second Legal Memorandum). See Fed. R. Civ. P. 44.1 ("Determining Foreign Law"). Dr. Dracos is a barrister practicing law in England and Wales.⁹ He was called to the English Bar in 2005 and has been a member of the Chambers of Lord Grabiner Q.C., One Essex Court, since 2006. Id. ¶ 3. His "practice focuses on international commercial dispute resolution, with particular emphasis on arbitration and private international law." Id. ¶ 4. He has a Ph.D. in law from Cambridge University in English contract law. Id. ¶ 5. Dr. Dracos is qualified to opine on English contract law and its application to arbitration clauses.

9 Appendix A to the first memorandum, containing his curriculum vitae, was not filed. The Court has reviewed Dr. Dracos' cited practice webpage instead. Both of his memoranda are unsworn. In light of his credentials, the Court will consider the unsworn memoranda. See Rule 44.1 (courts may consider "any relevant material or source ... whether or not admissible under the Federal Rules of Evidence").

In Dr. Dracos' opinion, "English courts have allowed third parties to invoke arbitration or jurisdiction agreements, even though they were not parties to them, where those agreements covered the claims asserted by a claimant, which was party to those agreements." ECF 76-5 ¶ 33. "The underlying basis was that the claimant's attempt to act contrary to the arbitration or jurisdiction clause to which

it had agreed was inequitable, unconscionable, vexatious and/or oppressive." Id. In summary, he opines that English law permits a nonparty to an arbitration clause to request a "stay [of] the proceedings against it on the ground that A's suit, being contrary to the expressed intention of A [to arbitrate "any disputes with B and/or C (a non-party)"], is inequitable, vexatious and/or oppressive and/or on the ground of forum non conveniens." Id. ¶ 59.¹⁰ See also ECF 96-2 (Second Memorandum), ¶¶ 53, 54. The stay would be discretionary and determined "in light of all the circumstances." ECF 76-5, ¶ 59. He bases this opinion on the authorities he discusses therein. Id. ¶ 60.

10 See also Dracos First Memorandum ¶ 52 ("A promises B that all disputes connected with a contract, including disputes against C, a non-party, will be resolved in a particular way ... This is exactly the question my colleague [Mr. Valentin] and I are addressing and on which we disagree.").

Dr. Dracos' opinion is not persuasive first and foremost because it rests upon the inaccurate assumption that Plaintiffs expressed an intention to arbitrate disputes with Bakhmatyuk. As the Court concludes above, the arbitration clauses do not state that they extend to disputes with non-parties at all, let alone to Bakhmatyuk specifically. The Trust Deeds (as incorporated into the Notes) also expressly state that third-parties have no rights thereunder. See, e.g., ULF Trust Deed § 1.6. Thus, the Trust Deeds also cannot be construed to imply that the arbitration clauses extend to Bakhmatyuk.¹¹ Thus, the Court finds Dr. Dracos' opinion on English law is unpersuasive due to the inaccurate assumption that the arbitration clauses extend to disputes against Bakhmatyuk.

11 In his first memorandum, Dr. Dracos opines that the "clause which excludes the application of the Contracts (Rights of Third Parties) Act 1999" is irrelevant because the issue here regards the "general power of the court to prevent inequitable conduct," not a contract right. ECF 76-5, ¶ 58. In his second memorandum, Dr. Dracos appears to agree that the provision prohibits Bakhmatyuk from claiming the benefit of the arbitration clauses. ECF 96-2, ¶¶ 30-31.

The second reason Dr. Dracos' opinion is not persuasive is that the authorities he discusses do not address equitable estoppel as to tort claims (whether statutory or common law) brought against a non-contract party. Specifically, he discusses two English cases: Sea Premium Shipping Ltd. v. Sea Consortium Pte Ltd. (Unreported, High Court of Justice of England and Wales, David Steel J, 11 April 2001); Dell Emerging Markets (EMEA) Ltd. v. IB Maroc.com SA [2017] EWHC 2397 (Comm). ECF 76-5 ¶¶ 34-51. Dr. Dracos further cites for the same proposition a treatise by Dicey, Morris & Collins, The Conflict of Laws, 15th ed. (to which he refers as "Dicey & Morris"), an Australian case cited therein involving a jurisdiction clause governed by English law, Global Partners Fund Ltd. v. Babcock & Brown Ltd. (In Liquidation) [2010] NSWCA 196, and VTB Capital v. Nutritek [2013] UKSC 5, at [106], for citing Global Partners Fund with approval. Id. ¶¶ 52-57.

In response, Plaintiffs provide a reply declaration from their English law expert, Mr. Valentin. He distinguishes Sea Premium and Dell because they regard contractual claims. ECF 94-1 (Expert Opinion in Reply of Ben Valentin, Q.C.) at 5, ¶ 9(2). He notes that none of Plaintiffs' claims in this case are contractual — i.e., Plaintiffs do not bring a breach of contract claim. Id. at 12, ¶¶ 32, 33. Mr. Valentin also distinguishes Global Partners Fund and the U.K. Supreme Court citation to it in VTB Capital because the latter "merely [pointed to it] as an example ... in which the inclusion of a jurisdiction clause might be a factor pointing to the jurisdiction of the

English Court over a claim against non-parties," distinguished Global Partners Fund on its facts, and "did not suggest that the ... Australian case represented English law." ECF 94-1 at 12, n.13.

Bakhmatyuk did not provide copies of Dr. Dracos' authorities,¹² but his discussion reflects these cases involved claims to enforce contracts and promises. See, e.g., ECF 76-5 at 12 ¶ 45 (quoting Dell, "it would be inequitable or oppressive and vexatious for a party to a contract ... to seek to enforce a contractual claim arising out of that contract without respecting the jurisdiction clause within that contract," emphasis added). The same is true of the English law treatise. Id. ¶ 53 (quoting Dicey & Morris's discussion of claims "seek[ing] to enforce the promise," and "a clear statement on which reliance has been placed"). He attempts to extend his cited authorities beyond contractual and quasi-contractual¹³ claims by opining that while the claims in Sea Premium and Dell "were characterized as contractual in nature, the legal bases of the claims were statutes or legal rules dehors [i.e., outside of] the contract." ECF 76-5, ¶ 48. What Dr. Dracos means by this is left opaque. If he means "legal bases" in the sense of statutes or rules providing a vehicle for bringing the claim (the underlying case in Dell was brought in Dubai, for example), this would not change the subject of the claims.

12 The additional authorities to which the second memorandum refers as being attached (ECF 96-2 at Appx. A) were not filed.

13 In Sea Premium, the claim was "quasi-contractual" because the new owner of a vessel sought to enforce the contract (a charter entered into by the vessel's prior owner) against the claimant, and the new owner was not a party by novation or assignment. ECF 76-5 at 10 ¶ 36 (quoting the opinion).

Dr. Dracos also does not address the difference between non-contractual claims that regard the same subject as a contract at issue versus claims that do not. He refers to "non-contractual claims" in three cases, the first of which is Fiona Trust v. Privalov [2007] UKHL 40, but does not explain what the claims were. ECF 76-5 ¶ 49, nn. 22, 23. In the Court's research, the claims included alleged invalidity of the contract due to bribery and fraud in its inducement. Fiona Trust [2007] UKHL 40, 2007 WL 2944855 (a case summary; the opinion itself was not available to the Court in Westlaw or Lexis).¹⁴ However, that case involved only contract parties. It is not on point for a non-contract party requesting equitable estoppel.

14 In this instance, the Court exercised its discretion to locate the cases that Dr. Dracos characterizes as having "non-contractual" claims. Going forward, all parties must attach the foreign law cases that they cite.

Dr. Dracos also refers to claims for "tort[ious duty] and ... breach of fiduciary duty" in Global Partners Fund. ECF 96-2, ¶ 25. He is persuasive that this Australian case interpreting English law is a valid source for English law, given that the English law treatise discusses it. But in that case, one of the four respondents was a party to the contract, a limited partnership agreement (the "LPA"). [2010] NSWCA 196 (2010), 79 ACSR 383, 2010 WL 3213034, [2010] ALMD 8000. The other two respondents who are pertinent here — a third was in liquidation, and the court did not permit suit against it — had "rights conferred upon them as Indemnified Persons under the LPA." Id. ¶ 73. The court held the choice of law and forum selection clause bound them because the proceeding was one "in which such an indemnity may arise." Id. ¶ 79. The opposite is true here — the Trust Deeds expressly note that third-parties have no rights thereunder.¹⁵ Last, Dr. Dracos discusses Times Trading Corp v. National Bank of Fujairah (Dubai Branch) [2020] 1 CLC 790, a case Mr. Valentin discusses in his reply declaration for the proposition that English law only allows nonparties to enforce a jurisdiction clause when the claims are contractual. Dr. Dracos notes the claims in that case were actually "for breach of contract and in the alternative 'tort and bailment.'" ECF 96-2, ¶ 45. Dr. Dracos posits that the claims all arose from the contractual relationship, and the case shows the label of claims is not important but only the scope of the arbitration clauses and whether "the party to the clause is acting unconscionably/vexatiously/oppressively." Id. ¶¶ 45, 46.

15 Global Partner Funds also held the Indemnified Persons were bound under the principle of assuming reasonable businessmen would not want litigation relating to the LPA pending in two places, because they were "so closely connected with the implementation of the" LPA. Id. ¶ 79. However, this reasoning does not actually appear to be a separate basis for the holding. Presumably these nonparties were indemnified in the LPA because of their close involvement in implementing it.

Times Trading regarded coal that was misdelivered without its original bills of lading. National Bank held bills of lading on the coal and first sued the vessel's owner, Rosalind. Rosalind later asserted the vessel was "bareboat chartered" to Times, and it was Times that had issued the bills of lading (thus, if anyone was liable, it was Times). National Bank then sued Times in Singapore on the bills of lading. Times sought to enjoin that action in favor of the arbitration clause incorporated in the bills of lading from the charterparty. National Bank asserted to the contrary that the charterparty was a sham, and thus there was no arbitration clause between them. The court held that "[h]ere (although the pleaded case encompasses bailment and tort) it has never been said that the real nature of the claim is noncontractual; the dispute is all about the contract — the issue is whether the contract Times asserts is real, or a sham." Times Trading, 1 C.L.C. at 808. I.e., the bailment and tort claims regarded only the same subject as the contract. In that context, the court treated the case as contractual and quasi-contractual. Id.

But here, Plaintiffs' claims cannot be construed as quasi-contractual. The claims do not regard only the same subject as the Notes (or through them, the Trust Deeds). While the tortious interference claim relies on the incorporated Trust Deed provisions that restrict the Company's ability to transfer assets, that claim is against nonparties to the Notes and Trust Deeds. It also requires Plaintiffs to show not only that the Company breached the incorporated Trust Deed terms but also that the Defendants engaged in tortious conduct that caused or induced those breaches. The other claims (civil conspiracy, aiding and abetting, and RICO) have even less direct connection to the Notes and incorporated provisions of the Trust Deeds. Each of those claims require proof of an underlying tort (for the RICO claims, more specifically a RICO predicate act), not just a breach of the Trust Deed terms. Thus none of Plaintiffs' claims regard only the same subject as a contractual or quasi-contractual claim.

And finally, Dr. Dracos relies on Dicey & Morris's statement that a non-contract party can seek to enforce an arbitration clause based on the judicial proceeding being "vexatious or oppressive" or a forum non conveniens. ECF 76-5, ¶ 53 (quoting the treatise); ECF 96-2, ¶¶ 37-41. But as the Court notes above, Dicey & Morris' entire discussion of this issue assumes "A promises B that all disputes connected with a contract, including disputes against C, a non-party, will be resolved in a particular way." ECF 76-5 ¶ 52 (emphasis added, citing Dicey & Morris ¶ 12-111). This assumption carries through all of the treatise's

conclusions on which Dr. Dracos relies:

[I]t has been suggested that where A has promised B not to sue C in the forum court, C, though having no contractual right to relief, may still contend that the bringing of proceedings against him in that court is vexatious or oppressive, or otherwise unconscionable, presumably on the ground that if A has made a clear statement on which reliance has been placed, it should not be open to A to proceed as if that statement had never been made, and the court's inherent power to stay proceedings, for example, on the footing that they are oppressive or vexatious, or that the court is, in the light of the promise made, a forum non conveniens, may still [be] available to justify jurisdictional relief.

Id. ¶ 53 (emphasis added).¹⁶ In short, Bakhmatyuk does not show that English law allows nonsignatories to enforce arbitration clauses when a contract party brings tort claims that do not regard the same subject as the contract.

16 Elektrim SA v. Vivendi Holdings 1 Corp., [2008] EWCA Civ 1178, ¶ 101 (ECF 44-46) involved tort claims, but the case held only that they came within a "No Action" clause. It did not regard arbitration or equitable estoppel. A case cited therein, on which the Piazza Defendants relied in their reply, The Angelic Grace [1995] 1 Lloyd's Rep 87, p. 91, cols. 1 and 2 (ECF 53-5), held that tort claims (specifically, negligence and collision claims) came within an arbitration clause, but did not involve a nonparty and the tort claims covered the same subject as the contract.

This is an area in which English law appears to significantly differ from American law. For purposes of equitable estoppel on arbitration clauses, American law does not draw a distinction between contractual claims and torts. See, e.g., Brophy v. Ament, CV 07-0751 JB/KBM, 2008 WL 11363888, at *14 (D.N.M. July 9, 2008) (citing cases holding nonsignatories could compel arbitration against signatories on tort claims). Thus, the Court must decide whether English or American law governs equitable estoppel.

b. The Choice of Law for Equitable Estoppel

Bakhmatyuk argues American law governs this issue, particularly Wyoming law. Since Wyoming has not addressed this issue, he argues the Court should make an Erie prediction by following the general weight and trend of the federal law. ECF 76 at 12-16. He cites Judge Tjoflat's concurrence in the judgment in GE Energy II, 2022 WL 2643936, at *5-6, and Reeves v. Enterprise Products Partners, LP, 17 F.4th 1008 (10th Cir. 2021).

However, Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009) made plain that federal courts should not apply federal common law to this issue. The Court held that Sections 2 and 3 of the FAA do not "purport[] to alter background principles of state contract law regarding the scope of agreements (including the question of who is bound by them) ... if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally." Id. at 630-31, 129 S.Ct. 1896 (internal quotation marks omitted). States cannot enact anti-arbitration laws, but they otherwise provide the underlying law of contract that applies to domestic arbitration clauses. Arthur Andersen involved a domestic arbitration agreement. There was no issue of whether a foreign jurisdiction's law governed. In that context, the Court's reference to "state law" as controlling is reasonably understood to mean that the "relevant law of contract" that governs the contract — whether it be foreign or domestic-also governs the question of who is bound by

arbitration clauses. Thus, in the Tenth Circuit, Arthur Andersen made clear that federal common law does not govern who may be bound by an arbitration clause. Lenox MacLaren Surgical Corp. v. Medtronic, 449 F. App'x 704, n.2 (10th Cir. 2011).¹⁷

17 Bakhmatyuk cites Lenox in support of applying federal common law to determine whether equitable estoppel allowed a nonsignatory to invoke an arbitration clause. The opinion discusses federal case law but does so because it was the same as the governing state law of Colorado. Lenox, 449 F. App'x at 709.

GE Energy does not change Arthur Andersen's reasoning. It cites Arthur Andersen for that proposition, determines the New York Convention does not bar its application, and does not reach whether the governing law was that chosen in the contract or otherwise. Nor is Reeves contrary. The contract in that case was domestic, and the Tenth Circuit expressly recognized that the question was governed by state contract law. Reeves, 17 F.4th at 1011. It refers to the "general weight and trend of authority" only as a factor for making an Erie guess, which again was appropriate because the contract was not international. Id. at 1012.

Thus, Arthur Andersen and GE Energy point the way: the parties' choice of law governs equitable estoppel. This is consistent with the Tenth Circuit's application of a foreign choice of law provision in interpreting a forum-selection clause. Yavuz v. 61MM, Ltd., 465 F.3d 418, 428 (10th Cir. 2006) ("Yavuz I"). "We see no particular reason, at least in the international context, why a forum-selection clause, among the multitude of provisions in a contract, should be singled out as a provision not to be interpreted in accordance with the law chosen by the contracting parties." Id. (citing the Restatement (2d) of Conflict of Laws § 204 (1971)).¹⁸

18 Plaintiffs also cite for this point another case interpreting a forum-selection clause, Kelvion, Inc. v. PetroChina Canada Ltd., 918 F.3d 1088, 1092 n.2 (10th Cir. 2019). But it adds nothing significant to Yavuz I. The cited footnote explains the parties chose the law of the Province of Alberta, Canada and did not dispute it was similar to Tenth Circuit law.

Yavuz I discusses several U.S. Supreme Court cases "emphasiz[ing] the primacy of the parties' agreement regarding the proper forum," and notes "when the contract contains a choice of law clause, a court can effectuate the parties' agreement concerning the forum only if it interprets the forum clause under the chosen law." Id. at 428-430.

[R]espect for the parties' autonomy and the demands of predictability in international transactions require courts to give effect to the meaning of the forum-selection clause under the chosen law, at least absent special circumstances (such as, perhaps, the chosen jurisdiction's refusal to hear a case that has no ties to the jurisdiction).

Yavuz I, 465 F.3d at 430. This reasoning applies equally well to the interpretation of international arbitration clauses, including equitable estoppel.

Bakhmatyuk argues to the contrary Yavuz I is inapposite because it does not regard an arbitration clause, has only a "limited" discussion thereof, and predates GE Energy I. ECF 96 at 6. Yet Yavuz I spends over a page discussing Supreme Court cases on arbitration clauses. It quotes Scherk v. Alberto-Culver Co., 417 U.S. 506, 519, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974) as treating "[a]n agreement to arbitrate before a specified tribunal [as], in effect, a specialized kind of forum-selection clause." Yavuz I, 465 F.3d at 429. It quotes at some length from Scherk and Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 629, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), another case regarding

an international arbitration clause. The Tenth Circuit recognized that "[t]o be sure, [those] opinions did not address the choice of law issue presented here ... [b]ut the same reasoning applies." Yavuz I, 465 F.3d at 430 (emphasis added). Indeed, Bakhmatyuk himself points to Scherk for support. ECF 96 at 6, n.7.¹⁹ GE Energy I did not change the law with regard to honoring contractual choices of law, so the fact that Yavuz I and citations therein predate GE Energy I is irrelevant. They remain good law on this point.

19 Bakhmatyuk also argues that Kelvion, 918 F.3d at 1093, supports applying the federal common law here because the Tenth Circuit found equitable claims were "inextricably linked" to the parties' contract. ECF 96 at 6, n.7. But the parties in Kelvion were contract parties, and the equitable claims were for unjust enrichment and quantum meruit on the same subject as the contract. The same is not true here.

The Court also finds the Second Circuit's reasoning in Motorola Credit Corp. v. Uzan, 388 F.3d 39, 51 (2d Cir. 2004) persuasive.

[W]here the parties have chosen the governing body of law, honoring their choice is necessary to ensure uniform interpretation and enforcement of that agreement and to avoid forum shopping. This is especially true of contracts between transnational parties, where applying the parties' choice of law is the only way to ensure uniform application of arbitration clauses within the numerous countries that have signed the New York Convention.

Id. "Furthermore, respecting the parties' choice of law is fully consistent with the purposes of the FAA." Id. The point of the FAA is to honor the parties' intentions regarding arbitration. See, e.g., Arthur Andersen, 556 U.S. at 630-31, 129 S.Ct. 1896 ("to place such agreements upon the same footing as other contracts").

The concurring opinion in GE Energy II on which Bakhmatyuk relies does not discuss Arthur Andersen, and all but one of the cases cited therein on this issue predate that opinion. The one case it cites post-dating Arthur Andersen is from the Ninth Circuit and therefore is not binding here. Setty v. Shrinivas Sugandhalaya LLP, 3 F.4th 1166 (9th Cir. 2021).²⁰

20 Setty also includes a dissent disagreeing with the majority's application of federal common law. Id. at 1169 (Bea, J.). Judge Bea relied primarily on Arthur Andersen, reasoning that GE Energy did not change its framework. Id. at 1171-73.

In sum, based on Arthur Andersen, Yavuz I and Motorola Credit, the Court applies English law to the equitable estoppel issue. As the Court concludes above, Bakhmatyuk has not shown that equitable estoppel applies under English law. Accordingly, the Court denies Bakhmatyuk's motion to stay or dismiss in favor of arbitration.

C. The "No-Action" Clauses

Bakhmatyuk repeats the Piazza Defendants' arguments on the "No-Action" clauses of the Trust Deeds. In support, Bakhmatyuk contends that Plaintiffs' claims are really "about a breach of the contract" and have only been masked as RICO and tort claims to get around these clauses. He does not, however, challenge the common law tort claims under Rule 12(b)(6), and his argument against the RICO claims fails as will be seen below. Bakhmatyuk also argues that Plaintiffs have no allegations of actual, unique targeting of Plaintiffs, as necessary to defeat the No-Action clauses. He argues the alleged targeting amounts only to a lack of good faith in negotiating with Plaintiffs. ECF 76 at 16. But he does not explain why, if true, that would not constitute conduct uniquely directed to and injuring

Plaintiffs, given their unique position among Noteholders alleged in the complaint.

Thus, for the same reasons the Court rejected the Piazza Defendants' arguments regarding the "No-Action" clause in the July 7 order, the Court likewise denies this part of Bakhmatyuk's motion.

D. Forum Non Conveniens

Bakhmatyuk next argues the case must be dismissed under the doctrine of forum non conveniens in favor of the London Court of International Arbitration ("LCIA") or a judicial court in London. As the July 7 order notes, there are two threshold requirements. First, there must be an "adequate alternative forum where the defendant is amenable to process." Archangel Diamond Corp. Liquidating Trust v. Lukoil, 812 F.3d 799, 804 (10th Cir. 2016). "Second, 'the court must confirm that foreign law is applicable.'" Id. "[I]f both threshold requirements are met, the court weighs the private and public interests to determine whether to dismiss" the case. Id. More specifically, the Court must confirm whether foreign law applies to a majority of the issues. Id. at 805-806. Bakhmatyuk bears the burden of showing forum non conveniens dismissal is appropriate. Rivendell Forest Prods., Ltd. v. Canadian Pac. Ltd., 2 F.3d 990, 993 (10th Cir. 1993).

"[T]here is ordinarily a strong presumption in favor of the plaintiff's choice of forum, which may be overcome only when the private and public interest factors clearly point towards dismissal and trial in the alternative forum." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). Bakhmatyuk argues that when a plaintiff is foreign, this presumption has less weight, citing. Yavuz v. 61 MM, Ltd., 576 F.3d 1166, 1172 (10th Cir. 2009) ("Yavuz II"). Plaintiffs in this case are not foreign. Gramercy Management is based in Connecticut. ECF 1 ¶ 13. The Gramercy Funds are organized in the Cayman Islands, but Gramercy Management manages them from Connecticut. Id. ¶¶ 13, 14. Roehampton Partners is a Delaware LLC based in Connecticut. Id. ¶ 15. Thus, the presumption in favor of Plaintiffs' choice of forum applies here.

In the end, however, the Court does not reach the weight to give Plaintiffs' choice of forum because the threshold requirements are not met.

1. Is the LCIA or a Judicial Court in London an Adequate Alternative Forum?

Bakhmatyuk largely repeats the Piazza Defendants' arguments, which remain unpersuasive. He also argues that by purchasing the Notes containing arbitration clauses specifying LCIA, Plaintiffs agreed the LCIA is an "adequate alternative forum" because it is the forum chosen in the arbitration clauses. This argument ignores that the Notes expressly provide that third-parties do not have rights thereunder. Plaintiffs' purchase of the Notes therefore did not constitute acceptance of LCIA as an adequate forum for claims against third-parties such as Bakhmatyuk.

Nor does Bakhmatyuk otherwise show that he and the Piazza Defendants are subject to the jurisdiction of LCIA or a judicial court in London. Plaintiffs allege that he had or was invited to meetings in London, but they do not allege he lives there. Rather, they allege he has for some years now lived in Vienna, Austria. He was served by alternative means there. He does not appear to dispute that he currently resides in Vienna. He argues that his Relationship Agreement specifies the LCIA and thus he "can be compelled" to litigate Plaintiffs' claims there. ECF 76 at 18. But like the Piazza Defendants, he does

not provide a declaration or affidavit in support. And because Plaintiffs are third-parties to the Relationship Agreement, they cannot compel him to arbitrate thereunder.

Bakhmatyuk further argues the Court can and should condition dismissal on the Defendants agreeing to jurisdiction in LCIA. He cites Yavuz II, 576 F.3d at 1182. On remand from Yavuz I, the district court conditioned dismissal on two things: (1) that the American defendants — who the plaintiff believed were not amenable to service in the forum chosen by the plaintiff and an international defendant — enter a written agreement to jurisdiction there, and (2) that the forum's courts accept jurisdiction. Otherwise, the action in the district court could be reinstated. Id. at 1182. The Tenth Circuit found this was not an abuse of discretion and therefore affirmed.

The Court declines to exercise its discretion to order a conditional dismissal. The forum non conveniens facts in Yavuz II differ significantly from this case. First, the plaintiff and one of the defendants had a contract with each other that was directly at issue. The contract chose a forum (Switzerland) where that defendant "appear[ed] to be amenable to service." It was therefore plain that a significant part of the case belonged in Switzerland. The same is not true here. Second, the defendants informed the Yavuz court that they "agreed to enter into a written stipulation that they would submit to the jurisdiction of the court in Fribourg, Switzerland." Id. at 1182. None of the Defendants have done so here. They only state in their briefs (through counsel) that they agree to the LCIA, and they do not explain how or if the LCIA (or a judicial court in London) would enforce those statements.

Third and relatedly, Yavuz II applied forum non conveniens in favor of judicial courts in the alternative forum. Bakhmatyuk instead wraps his unsuccessful request for arbitration into his forum non conveniens argument. He gives very little attention to the suggestion of judicial courts in London. Fourth, the Yavuz parties agreed that those two conditions were the only issues standing in the way of a forum non conveniens dismissal. Id. at 1182. Here, Plaintiffs oppose forum non conveniens dismissal on every factor, and they are persuasive that the other threshold factor is not met because foreign law does not apply to the majority of issues.

2. Does Foreign Law Apply?

Bakhmatyuk argues English law governs Plaintiffs' RICO and tort claims because it is the governing law in the Trust Deeds, Notes, and the other "issuance documents" on which Bakhmatyuk relies.²¹ He points in particular to the Trust Deeds' broad provisions (as incorporated in the Notes) that English law governs "[t]hese presents and any non-contractual obligations arising out of or in connection with them." ECF 76 at 19 (citing AVG Trust Deed at 31 § 27; ULF Trust Deed at 29 § 23.1). He relies on the Piazza Defendants' argument that The Angelic Grace [1995] 1 Lloyd's Rep 87, p. 91, cols. 1 and 2, finds "under English law that tort claims 'arose out of the contract, since the same facts founded the [] claim in tort as founded the claims [] in contract.'" ECF 53 at 10.

21 Motions to dismiss under the forum non conveniens doctrine are not brought under Rule 12(b)(6). Cf., Atl. Marine Const. Co., Inc. v. U.S. Dist. Ct., 571 U.S. 49, 61, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013). Accordingly, Rule 12(d)'s restrictions do not apply to this part of Bakhmatyuk's motion.

The Notes' choice of law provisions are broad, but again Plaintiffs are suing nonparties to those contracts. The Angelic Grace involved only parties to the contract

at issue. Bakhmatyuk does not cite any authority — foreign or domestic — extending a contractual choice of law provision to non-contract parties, particularly when the claims are torts. Accordingly, he does not show that the Notes' choice of law clauses (or those of the other "issuance documents") govern any issues other than the interpretation of those contracts.

As to the RICO claims, the question is not so much a choice of law as whether Plaintiffs could bring those claims at all in LCIA or a judicial court in London (or whether English law has an analogue). The briefing leaves this issue unclear. The unavailability of RICO claims abroad is not sufficient, standing alone, to make forum non conveniens inappropriate. Archangel Diamond, 812 F.3d at 805-06; Yavuz II, 576 F.3d at 1177 n.6 (collecting cases). For present purposes, it suffices to say that the RICO claims are governed by American law.

As to Plaintiffs' common law tort claims, both sides agree the Court applies Wyoming's choice of law analysis. ECF 50 at 39 (Plaintiffs' response to Piazza Defendants, citing BancOklahoma Mortg. Corp. v. Capital Title Co., 194 F.3d 1089, 1103 (10th Cir. 1999)); ECF 76 at 19. "In analyzing choice of law questions, th[e Wyoming Supreme] Court uses the approach defined by the Restatement (Second) of Conflict of Laws." Elworthy v. First Tenn. Bank, 391 P.3d 1113, 1120 (Wyo. 2017).

The Second Restatement enumerates specific factors that identify the state with the most significant contacts to an issue, and the relevant factors differ according to the area of substantive law governing the issue and ... the nature of the issue itself. See, e.g., Restatement (Second) at §§ 6, 145, 188. To properly apply the Second Restatement method, a court must begin its choice of law analysis with a characterization of the issue at hand in terms of substantive law. Id. at § 7.

Id. Thus, although both sides brief the choice of law as one-size fits all, the Court must determine choice of law claim by claim or issue by issue.

Bakhmatyuk argues the choice is between English and Ukrainian law because (a) the Notes were issued on England and Irish market exchanges; (b) the negotiations (in which he and his agents allegedly made fraudulent misrepresentations and omissions) to restructure the Notes were held in London; and (c) the Company's physical assets were and still are in Ukraine — regardless that Defendants allegedly transferred legal ownership to shell companies in Wyoming (SP Capital and/or TNA), where Bakhmatyuk continues to have beneficial ownership. Thus, Bakhmatyuk focuses on the international locations where Defendants' conduct occurred before the alleged unlawful transfers, and the location of the physical assets as opposed to the ownership of those assets. He does not appear to address where he and his agents initiated the allegedly fraudulent telephone calls and emails, where Plaintiffs received them, or where their injury is felt.

Plaintiffs argue to the contrary that the choice is between Wyoming and Connecticut law. Connecticut is where Plaintiffs are located, and thus where Defendants directed their allegedly false and misleading telephone calls and emails to Plaintiffs, and the location where the injury is felt. Wyoming is where the Defendants engaged in the scheme (or in Bakhmatyuk's case, he directed the others to engage in the scheme) to create the shell companies and unlawfully transfer the Company's subsidiaries to them. Bakhmatyuk continues to have beneficial ownership of the Company through the Wyoming entities. Plaintiffs further argue there is no need to actually choose between Connecticut and

Wyoming law because there is no conflict. ECF 94 at 14 (relying on ECF 50, opposition to the Piazza Defendants' motion, at 28-29). Thus the Court would apply the law of the forum state, Wyoming. Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1170 (10th Cir. 2010); Act I, LLC v. Davis, 60 P.3d 145, 149 (Wyo. 2002). Plaintiffs do not directly respond why English or Ukrainian law would not apply.

a. Fraud (Fourth Cause of Action).

For choice of law on a fraud claim, [w]hen a defendant's representations and a plaintiff's reliance take place in different states, the Second Restatement prescribes the following factors to consider in making a choice of law determination on a fraud or misrepresentation claim:

(a) the place, or places, where the plaintiff acted in reliance upon the defendant's representations,

(b) the place where the plaintiff received the representations,

(c) the place where the defendant made the representations, [and]

(d) the domicile, residence, nationality, place of incorporation and place of business of the parties,

Elworthy, 391 P.3d at 1121-22 (in relevant part, quoting Restatement (Second) of Conflict of Laws § 148 (1971)). "The[se factors'] relative importance in a given case should be determined ... with emphasis upon the purpose sought to be achieved by the relevant tort rules." Restatement (2d) of Conflict of Laws § 148 cmt. e.

Plaintiffs' fraud claim against Bakhmatyuk alleges that he misrepresented his intent to restructure the Notes since 2016 and fraudulently omitted to inform Gramercy of numerous material facts, including the asset transfers he was orchestrating with Piazza and others. ECF 1, Fourth Cause of Action. Plaintiffs allege damages in this claim arising before, during and after the unlawful transfers. They allege for instance that absent the fraud, they would have

pursued other avenues. Specifically, if not for the misrepresentations and omissions of material facts, Gramercy would have sought to enforce its rights under the Notes, more aggressively pursued collective restructuring negotiations, sold its Notes at fair value and reinvested the money, and/or taken other remedial measures such as litigation.

ECF 1 ¶ 211. See also Id. ¶¶ 212-213.

The places where Plaintiffs received the fraudulent statements are Connecticut and London. They acted in reliance in at least Connecticut by not seeking to sell the Notes at fair market value. London is the place where Bakhmatyuk made some of the misrepresentations and omissions. It appears that he or his agents (at his direction) made other misrepresentations and omissions from Ukraine. "The place where the defendant made his false representations ... is as important a contact in the selection of the law governing actions for fraud and misrepresentation as is the place of the defendant's conduct in the case of injuries to persons or to tangible things." Restatement § 148, cmt. c.

As for the domiciles, residences, nationalities, places of incorporation and places of business of the parties, these do not weigh in favor of London. Plaintiffs are Connecticut-based and organized in the Cayman Islands and Delaware. ECF 1, ¶¶ 13-15. Bakhmatyuk lives in Vienna and has dual citizenship in Ukraine and Cyprus. He apparently runs the Company (whose tangible assets are located in Ukraine) from Vienna, and he has beneficial ownership of the Company's assets or subsidiaries in Wyoming shell companies.

Finally, there is no tangible thing that is the subject of a transaction between the

parties. The closest this case comes to such a tangible thing is the Notes that Plaintiffs hold, which originally issued in Ireland and London. Plaintiffs allege their holdings grew over time, but neither side briefs whether they purchased all of those holdings on the Ireland and/or London exchanges, or through private transactions. And as the Court held above that Bakhmatyuk cannot enforce the Notes' choice of law clauses, that does not factor into this analysis. The "tangible thing" factor carries no weight in this instance.

Overall, the choice between Connecticut and English law is a close one on the fraud claim. Plaintiffs allege Bakhmatyuk and the Piazza Defendants singled out Plaintiffs in the alleged fraudulent scheme. The parties met in London, but Defendants knew that Plaintiffs' representatives traveled there from Connecticut, where Plaintiffs were headquartered. Bakhmatyuk does not assert that Plaintiffs have an office in London. In the end, the Court finds the Restatement Section 148 factors weigh in favor of Connecticut having the most significant relationship to the fraud claim.

b. Tortious Interference With Contract (Fifth Cause of Action).

The Wyoming Supreme Court has not addressed choice of law for tortious interference, but Elworthy's broad language arguably adopts the Restatement's approach beyond just the fraud and breach of contract claims at issue in that case. 391 P.3d at 1120. In any case, the Court predicts under Erie that the Wyoming Supreme Court would follow the Restatement for choice of law on this tort as well.

The Restatement does not treat tortious interference specifically. Therefore, it is subject to the general principles stated in Section 145:

(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.²²

(2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:

(a) the place where the injury occurred,

(b) the place where the conduct causing the injury occurred,

(c) the domicil[e], residence, nationality, place of incorporation and place of business of the parties, and

(d) the place where the relationship, if any, between the parties is centered. These contacts are to be evaluated according to their relative importance with respect to the particular issue.

22 Section 6 in turn identifies several broad policy considerations including "the needs of the interstate and international systems." Restatement (2d) of Conflict of Laws § 6.

Restatement (Second) of Conflict of Laws § 145. These factors are quite similar to those analyzed above on the fraud claim.

In this case, the tortious interference claim is against all Defendants and appears to focus on the unlawful transfers as wrongful interference with the Notes. The claim appears to refer to Bakhmatyuk's direct involvement in the restructuring negotiations only to allege that he was aware of Plaintiffs' contracts with the Company (i.e., the Notes), not that his false statements in the negotiations constituted interference. ECF 1 ¶ 216. The claim refers to section V(d) of the complaint for the acts of interference (id. ¶ 217); that section alleges unauthorized asset transfers. ECF 1 at 50-58.²³ The transfers that are the

23 Section V(d) of the complaint alleges transfers in Cyprus and Wyoming, but Plaintiffs do not seek relief for the Cyprus transfers in this case.

subject of this case allegedly occurred in Wyoming. Bakhmatyuk directed Piazza regarding those transfers from apparently Vienna. From there, he also directed Yaremenko and other agents in Ukraine regarding the transfers to be accomplished in Wyoming.

Bakhmatyuk nonetheless argues that Wyoming has very little connection to this case. This ignores that the complaint alleges he specifically enlisted a Wyoming resident (Defendant Piazza) along with Yaremenko to form shell Wyoming companies (Defendants SP Capital and TNA) to hide the Company's assets (i.e., subsidiaries) from Plaintiffs. The complaint further alleges that Piazza and Yaremenko tout themselves as having expertise in using Wyoming's corporate law specifically to shelter assets from creditors. Wyoming has a significant interest in this claim.

Turning to the Restatement Section 145 factors, the place where the injury occurred is Connecticut — the place where Plaintiffs hold the Notes and feel the damages from Defendants causing the Company to breach its obligations thereunder. The place where the injury-causing conduct occurred is primarily Wyoming, with less occurring in Vienna and Ukraine. The domiciles, residences, and places of business are the same as noted above, plus Defendants Piazza, TNA, and SP Advisors are all in Wyoming. As for the place where the parties' relationship is centered, Plaintiffs do not have a contractual relationship with Bakhmatyuk or the Piazza Defendants. They met with Bakhmatyuk in London for the negotiations to restructure the Notes, but again, this claim does not focus on those negotiations other than to show Bakhmatyuk was aware of the Notes.

Overall, the Court finds the forum with the most significant relationship to the tortious interference claim is either Wyoming or Connecticut. Wyoming is the place where the allegedly wrongful acts of interference occurred. Defendants allegedly chose Wyoming for sheltering assets from Plaintiffs because Wyoming's corporate law is particularly friendly to owners seeking privacy. Connecticut is the forum where the injury is felt. Either way, foreign law does not govern the tortious interference claim.

c. Conspiracy and Aiding and Abetting

As for Plaintiffs' conspiracy and aiding and abetting claims, the Restatement provides:

(1) The law selected by application of the rule of § 145 determines the circumstances in which two or more persons are liable to a third person for the acts of each other.

(2) The applicable law will usually be the local law of the state where the injury occurred.

Restatement (2d) of Conflict of Laws § 172 (joint torts). Thus, the choice of law for these claims is likewise between Wyoming and Connecticut.

Thus, in addition to not showing the LCIA or judicial courts in London are adequate alternative fora, Bakhmatyuk has also not shown that foreign law applies to the majority of issues. The Court therefore does not reach the weighing of public and private interests. Bakhmatyuk's forum non conveniens motion is denied.

E. Rule 12(b)(6) Motion on RICO Claims

Finally, Bakhmatyuk raises one of the Piazza Defendants' several unsuccessful theories on the RICO claims. Specifically, he argues that the claims are subject to the Private Securities Litigation Reform Act of 1995 ("PSLRA") bar for conduct that would constitute securities fraud. The PSLRA amended the RICO statute by adding the following exception:

Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor ..., except that no person may rely upon any conduct that would have been actionable as fraud in the purchase or sale of securities to establish a violation of section 1962.

18 U.S.C. § 1964(c) (in relevant part, emphasis added). By the express language of § 1964, only claims alleging conduct that would be actionable as fraud in the purchase or sale of a security are subject to this bar.

Conduct that would be actionable as securities fraud would need to meet the elements of securities fraud.

For a private plaintiff (as distinct from the SEC) to prevail on a claim for violation of Exchange Act § 10(b) and Rule 10b-5, the plaintiff must prove six elements: "(1) a material misrepresentation or omission by the defendant; (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation."

Detroit St. Partners, Inc. v. Lustig, 403 F. Supp. 3d 934, 944 (D. Colo. 2019) (quoting Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 37-38, 131 S.Ct. 1309, 179 L.Ed.2d 398 (2011)). Thus, the PSLRA amendment bars "a RICO claim alleging fraud in connection with the sale [or purchase] of securities." Bixler v. Foster, 596 F.3d 751, 759 (10th Cir. 2010).

While the Piazza Defendants' motion focused on Plaintiffs' allegations of fraud in the negotiations to restructure the Company's debts (i.e., the Notes), Bakhmatyuk focuses instead on Plaintiffs' purchases of part of its holdings in 2016 and 2017. ECF 1 ¶¶ 46, 48 (alleging as to AVG that Gramercy purchased Notes between 2011 and 2017, and the same as to ULF between 2013 and 2017). While Plaintiffs purchased some of the Notes in the Company's issuances completed by 2013 — well before the first phase of Bakhmatyuk's alleged scheme began — they also purchased more of the Notes during the first phase of that scheme in 2016-17.

The complaint alleges that during 2016-17, Bakhmatyuk was among other things disseminating false information regarding the Company's financial performance "to allow Bakhmatyuk to purchase other debt at a steep discount and put pressure on Gramercy to accept a restructuring or otherwise sell its Notes ... at a steep haircut on their value." ECF 1 ¶¶ 10(a), 71-96. Plaintiffs do not allege that Bakhmatyuk's dissemination of false information in 2016-17 caused them losses in their purchases of that time period. They do not allege Defendants defrauded them in the purchase or sale of any of the Notes, but rather that his fraud caused them to not attempt selling or taking other action to protect their rights under the Trust Deeds incorporated in the Notes.

Bakhmatyuk relies in part like the Piazza Defendants on Bixler, 596 F.3d at 760, which applied the PSLRA bar against a RICO claim brought by shareholders of Mineral Energy and Technology Corp. (METCO). But the July 7 order already distinguishes that case because the alleged fraud occurred in the transaction in which the plaintiffs were supposed to receive stock, i.e., in the purchase of a security. Bixler does not involve purchases of securities allegedly independent of the fraud but occurring concurrently with it, such as Plaintiffs allege here. Bixler does not support Bakhmatyuk's argument.

However, Bakhmatyuk also raises Sensoria, LLC v. Kaweske, 581 F. Supp. 3d 1243, 1268 (D. Colo. 2022). Sensoria notes: "'It is enough that the scheme to defraud and the sale of securities coincide.'" Id.

(citing S.E.C. v. Zandford, 535 U.S. 813, 822, 122 S.Ct. 1899, 153 L.Ed.2d 1 (2002)). To "coincide" in Zandford meant a stockbroker "selling his customer's securities and using the proceeds for his own benefit without the customer's knowledge or consent." 535 U.S. at 815, 122 S.Ct. 1899. The stockbroker wrote "a check to himself from [the customer's] account knowing that redeeming the check would require the sale of securities." Id. at 821, 122 S.Ct. 1899. His undisclosed intent to take the proceeds "coincided" with the sales of the securities because that was the reason he executed the sales. Thus, the SEC stated a securities fraud claim on behalf of the customers, not just a simple theft claim, and did not have to plead any misrepresentations or omissions regarding the value of the securities. Id. at 820-22, 122 S.Ct. 1899.

In Sensoria, the RICO claims involved the loss of the plaintiffs' equity interest in one of the defendants. The defendants argued

the grievance underlying the [complaint] is in substance securities fraud. In their characterization, the solicitation (which began in late 2015), stock purchases (which ran simultaneously with the solicitations through 2016 and into early 2017), and actions contrary to the investment entity's interests (which began around the same time) are one unified fraud scheme.

581 F. Supp. 3d at 1268. The plaintiffs attempted to distinguish their RICO claims by

differentiat[ing] between Defendants' act of (1) inducing them to buy the shares and later (2) converting the investment entity's assets, thereby depriving them of their investment principal, profits from the business had it been managed properly, and assets by which to protect their equity interest.

Id. The plaintiffs were not persuasive in that case because

[t]he [complaint] portrays a unified fraud scheme. The sequence of events makes it difficult to separate Defendants' alleged actions regarding the sale of Clover Top Holdings, Inc. stock from their alleged actions that harmed the value of the business. That degree of interrelatedness and the PSLRA bar's broad scope warrant applying the bar to Plaintiffs' RICO claims. Because Plaintiffs could—and actually do—allege violations of the securities laws on the same facts, the PSLRA bar prevents them from framing them as RICO violations as well.

Id. at 1269 (emphasis added).

Here, unlike Sensoria, Plaintiffs could not state a claim for securities fraud. They bought many of their Notes years before the scheme began. As to the Notes they purchased in 2016-17, they could not show loss causation, i.e., fraud in connection with the purchase of those Notes. They allege Bakhmatyuk depressed the price of Notes in 2016-17; therefore, the inference is that the Notes Plaintiffs bought during that time frame were a bargain at the time. Plaintiffs do not allege a loss on those purchases until the 2019-20 asset transfers three years later. And unlike Sensoria, Plaintiffs do not allege a "unified scheme" of fraud, such that the 2019-2020 asset transfers could serve as fraud in connection with those purchases three years earlier. Plaintiffs here allege two fraudulent schemes: the first (and earliest) was to create pressure for Plaintiffs to sell or restructure at steep discounts in value while also stringing them along with representations of negotiating in good faith. The asset transfers were a second scheme that Bakhmatyuk did not conceive until January 2017 as a "backup plan" in case the first scheme did not work. ECF 1 ¶ 84. The asset transfers remained a "backup plan" until early 2019. Id. ¶¶ 122-123. This

was approximately two years after Plaintiffs stopped purchasing Notes.

In Sensoria's terms, the asset transfers here are not so interrelated with Plaintiffs' 2016 to 2017 purchases of the Notes to constitute fraud in connection with those purchases. In the Supreme Court's terms in Zandford, the asset transfers did not "coincide" with Plaintiffs' 2016 and 2017 purchases because Bakhmatyuk had not yet formed an intent to pursue that course. Although he was preparing asset transfers as a backup, he was continuing to pursue the first fraudulent scheme at the time, and that scheme did not result in Plaintiffs purchasing or selling Notes or suffering an economic loss to support an actionable securities fraud claim. In short, Bakhmatyuk does not cite any cases that would find Plaintiffs allege fraudulent conduct in connection with their 2016 and 2017 purchases of Notes.

There remains one last issue for Bakhmatyuk's motion, by way of the Piazza Defendants' arguments that he incorporates. In their reply, the Piazza Defendants argued the PSLRA bar extends to RICO claims that would be actionable as securities fraud by anyone, regardless that the plaintiff in the case could not state such a claim. ECF 53 at 16. This is an aspect of a case they cited in their motion, MLSMK Inv. Co. v. JP Morgan Chase & Co., 651 F.3d 268 (2d Cir. 2011), but which they did not brief until replying to a footnote (ECF 50 at 37, n.17) where Plaintiffs anticipated the issue. Plaintiffs argued they do not allege "any other creditors bought or sold their debt positions in reliance on the misrepresentations or omissions directed at Gramercy," citing Johnson v. KB Home, 720 F. Supp. 2d 1109, 1117 (D. Ariz. 2010).

Even in their reply, the Piazza Defendants did not explain how they believed the "actionable-by-anyone" theory applied on Plaintiffs' allegations, and they do not cite a Tenth Circuit or Supreme Court case addressing this issue. Rather, they cite Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 85, 126 S.Ct. 1503, 164 L.Ed.2d 179 (2006), which held that for purposes of securities fraud claims, fraud "coincides" with a securities transaction regardless of whether the plaintiff himself made the transaction, or someone else did (with fraudulent intent), citing inter alia Zandford. Dabit does not add anything significant here to Zandford regarding the meaning of "coincide" or "in connection with" a purchase or sale of a security.

In any case, since the issue was briefed by Plaintiffs in only a footnote and by the Piazza Defendants only in reply, the Court did not consider the so-called "actionable-by-anyone" argument framed sufficiently to address it in the July 7 order. The briefing on Bakhmatyuk's motion does not flesh out this issue either. However, Plaintiffs themselves point out that they allege other Noteholders sold their Notes during the time period that Bakhmatyuk caused the false information to be disseminated. For the sake of completeness, therefore, the Court addresses this issue now.

Plaintiffs argue that their RICO claims are not barred because they do not allege any other investor relied on the misrepresentations and omissions directed to Plaintiffs, i.e., in their negotiations with Bakhmatyuk and his agents to restructure the debts. That is accurate as far as it goes, but it does not address the First Concorde Report, which they allege Concorde sent "to investors, including Gramercy, via electronic mail." ECF 1 at ¶ 72. Concorde's email sending that report to Plaintiffs is among the communications that Plaintiffs allege as wire fraud in the RICO claims. The inference from their allegations is that the First Concorde Report is fraud in connection with other investors'

sales of their Notes. Thus, if the PSLRA bar extends as far as the Defendants argue, the email sending the First Concorde Report would be barred.

However, the "actionable-by-anyone" issue presents a circuit split that the Tenth Circuit has not yet addressed. Three circuits are — to somewhat varying extents—on the same side of the divide as MLSMK: Howard v. Am. Online Inc., 208 F.3d 741, 749-50 (9th Cir. 2000) (although the plaintiffs lacked standing to bring securities fraud claim, the bar nonetheless applied because they "do not dispute that their securities fraud claims could be brought by a plaintiff with proper standing"); Affco Investments 2001, L.L.C. v. Proskauer Rose, L.L.P., 625 F.3d 185, 189-90 (5th Cir. 2010) (not addressing this question but affirming dismissal of RICO claims as barred and dismissal of securities fraud claims for failure to plead reliance and scienter); Lerner v. Colman, 26 F.4th 71, 82 (1st Cir. 2022) (agreeing with MLSMK arguably in dicta; there was no security involved, so there was no need to reach whether the scope was "actionable-by-anyone" or not).

The Seventh Circuit appears to disagree with MLSMK. Menzies v. Seyfarth Shaw LLP, 943 F.3d 328, 333-35 (7th Cir. 2019) analyzed only whether the plaintiff could bring securities fraud, not whether the allegations would be "actionable-by-anyone," a theory the defendant raised at least in the case below. This holding is arguably dicta because although the RICO claim was not barred, the plaintiff also failed to state a claim based on the elements. The district court in Menzies concluded, persuasively, that the PSLRA bar cannot be broader than § 1964(c)'s general rule to which it is an exception, thus the bar extends only to RICO claims for which the plaintiff could have brought a securities fraud claim. Menzies v. Seyfarth Shaw LLP, 197 F. Supp. 3d 1076, 1105-07 (N.D. Ill. 2016), aff'd in part, vacated in part. "Securities fraud conduct that merely injured some third-party (rather than the RICO plaintiff himself) cannot be 'actionable' conduct under a plain reading of the RICO exception, because it does not relate to the 'conduct' being relied upon by the 'person' bringing suit to address 'his' injury to business or property." Id. at 1107.

Several courts notes that Congress intended the PSLRA bar to "eliminate securities fraud as a predicate offense in a civil RICO action." Bald Eagle Area School Dist. v. Keystone Financial, 189 F.3d 321, 327 (3rd Cir. 1999) (citing H.R. Conf. Rep. No. 104-369, at 47 (1995)). This, however, does not answer whether Congress intended to bar a RICO claim even when there was no actual possibility of a securities fraud action on the facts. Doing so would conflict with Section 1964(c)'s own reference to the PSLRA bar as an "exception;" as a matter of logic, exceptions are not broader than the general rule. It also would not be consonant with other statements in the legislative history that "[t]he 'focus' of the Amendment was on 'completely eliminating the so-called 'treble damage blunderbuss of RICO' in securities fraud cases.'" Bald Eagle, 189 F.3d at 327-28 (quoting 141 Cong. Rec. H2771, daily ed. Mar. 7, 1995) (statement of Rep. Cox). If the plaintiff cannot bring a securities fraud claim, there is no securities fraud action from which to remove treble damages.

In short, the Court finds the interpretation that stays closest to the statutory text of § 1964(c) and the legislative history is that the PSLRA bar regards only RICO claims for which the plaintiff could have brought a securities fraud claim. If Congress intended to also bar RICO claims if a third-party could have sued for securities fraud, they could have said "conduct that would have been actionable

by anyone as fraud in the purchase or sale of securities." They did not do so, and the MLSMK approach interprets the statute as though they had. The Supreme Court has consistently interpreted civil RICO by its express terms and will not read in limitations that are not expressed in the statute. See, e.g., Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008) (affirming Seventh Circuit's holding that reliance was not required in a civil RICO claim, abrogating Sixth and Eleventh Circuit precedents); cf., Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 121 S.Ct. 2087, 150 L.Ed.2d 198 (2001) (reversing Second Circuit's interpretation of civil RICO "person" that added a distinction not expressed in the statute).

In short, Bakhmatyuk has not shown the PSLRA bars the RICO claims, and his motion to dismiss those claims is therefore denied.

IV. Conclusion

Consistent with the foregoing, Bakhmatyuk's motion to stay or dismiss (ECF 75) is DENIED. The time for Bakhmatyuk to answer the complaint is tolled while Piazza Defendants' interlocutory appeal is pending, and if he also files an interlocutory appeal, then until both appeals are concluded.

IT IS SO ORDERED this 15th day of September, 2022.