Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-02294/USCOURTS-cand-3_15-cv-02294-8/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CHASSIN HOLDINGS CORPORATION,

Plaintiff,

v.

FORMULA VC LTD., et al.,

Defendants.

Case No. 15-cv-02294-MEJ 

ORDER VACATING HEARING AND 

REQUESTING CLERK REASSIGN 

CASE; 

REPORT AND RECOMMENDATION

ON JOINT MOTION FOR GOOD 

FAITH DETERMINATION OF 

SETTLEMENT

Re: Dkt. No. 71

INTRODUCTION

Plaintiff Chassin Holdings Corporation (“Plaintiff”) brings this action against Defendants 

Formula VC Fund I GP, L.P.; Formula VC Ltd.; Renata Akhunova (together, the “Participating 

Defendants”); and Andrey Kessel. Plaintiff and the Participating Defendants (together, the 

“Settling Parties”) have filed a Joint Motion for Determination of Good Faith Settlement 

(“Motion”) pursuant to California Code of Civil Procedure sections 877 and 877.6. Mot., Dkt. No. 

71. Roberto Kampfner, counsel for Plaintiffs, and Ms. Akhunova each submitted a declaration in 

support of the Motion. See Dkt. Nos. 72 (Akhunova Decl.), 73 (Kampfner Decl.). Mr. Kessel 

neither joins nor opposes the Motion. Pursuant to Federal Rule of Civil Procedure 78(b) and Civil 

Local Rule 7-1(b), the Court finds this matter suitable for disposition without oral argument and 

VACATES the August 18, 2016 hearing. 

Although the Settling Parties have consented to this Court’s jurisdiction pursuant to 28 

U.S.C. § 636(c) (see Dkt. Nos. 8, 19 at 7), Mr. Kessel has not done so. Accordingly, the Court 

ORDERS the Clerk of Court to reassign this case to a District Judge and RECOMMENDS that 

the Motion be granted in full as described herein. 

Case 3:15-cv-02294-EMC Document 80 Filed 08/15/16 Page 1 of 7
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BACKGROUND

Plaintiff initiated this action on May 21, 2015 (Dkt. No. 1) and filed its First Amended 

Complaint (“FAC”) on December 9, 2015 (Dkt. No. 34). Plaintiff alleges violations of the 

Securities Exchange Act of 1934, 15 U.S.C. § 78(j)(b), as well as claims under state law. See

FAC.

Plaintiff alleges Defendants solicited it to invest in Formula VC Fund I, L.P. (the “Fund”), 

and that Defendants made material misrepresentations regarding their expertise in investing in 

technology companies and their ability to bring additional investors into the Fund. Plaintiff 

alleges, for example, that Defendants falsely represented that the Fund would invest in dozens of 

start-up companies; that Defendants would use their extensive connections to raise approximately 

$60 million in additional investment for the Fund from third parties; and that Defendants had the 

skill and experience to deliver on these commitments. Plaintiff contends these misrepresentations 

caused it to invest in the Fund. See Mot. at 3; see also FAC ¶¶ 71-76, 95-99, 105-111.

Plaintiff contends it contributed $3.25 million to the Fund and that at least $750,000 of this 

investment was used to pay management fees. See Mot. at 3; see also FAC ¶¶ 3, 40-41, 84-85.

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Plaintiff contends Defendants took hundreds of thousands of dollars in management fees to which 

they were not entitled. 

Plaintiff further alleges Defendants breached their fiduciary duties to Plaintiff by failing to 

act with skill, care, and diligence in the conduct of the Fund and by disregarding clear conflicts of 

interests. Plaintiff alleges Ms. Akhunova failed to properly administer the Fund’s cash; 

Defendants made inappropriate investments that were not consistent with the Fund’s objectives; 

Defendants paid themselves unearned management fees; and Defendants failed to properly report 

on the Fund’s activities. See Mot. at 3; see also FAC ¶¶ 31-42, 113-124.

The Participating Defendants believe Plaintiff’s contentions have no merit as to them. See

Mot. at 4. Ms. Akhunova contends any misrepresentations were made by Mr. Kessel, not the 

other Defendants. Akhunova Decl. ¶ 14. Participating Defendants assert Mr. Kessel is the party 

 

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The Motion and the FAC list different figures for the investment fees at issue in the action. The 

figures in the Background Section are taken from the FAC. 

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who materially misrepresented his ability to raise funds and seek out investments. Indeed, the 

Participating Defendants claim Mr. Kessel was brought on to provide expertise in such areas, but 

failed to deliver. Further, the Participating Defendants deny they took inappropriate management 

fees or breached their fiduciary duties to Plaintiff. Finally, the Participating Defendants assert 

only Mr. Kessel handled the Squirro investment, and that Ms. Akhunova questioned Mr. Kessel’s 

lack of due diligence when making the investment. Mot. at 4.

The Participating Defendants also assert counterclaims against Plaintiff. See Counterclaim 

¶¶ 161-174, Dkt. No. 37. They contend Plaintiff continues to owe them $125,000 in management 

fees and that they will be entitled to future distributions from the Fund based on a $250,000 capital 

account. Plaintiff denies these allegations. Mot. at 4.

On April 19, 2016, the Court denied Mr. Kessel’s motion to dismiss for lack of personal 

jurisdiction over him. Dkt. No. 50. Mr. Kessel subsequently informed his attorney he no longer 

intended to participate in the proceedings and would take no further steps to defend the action. 

Taran Mot., Dkt. No. 53. The Court allowed Mr. Kessel’s attorney to withdraw as counsel on the 

condition she continue to accept documents for service and forward them to Mr. Kessel until a 

substitution of counsel was filed (Dkt. No. 66); Mr. Kessel has not made any additional filings 

since then.

Plaintiff and Mr. Kessel could not reach a settlement despite efforts to resolve the matter. 

However, Plaintiff and the Participating Defendants were able to resolve this matter pursuant to 

the terms of the Settlement Agreement. See Akhunova Decl., Ex. A. The Settling Parties 

represent they reached the Agreement in good faith and after arm’s-length negotiations. 

Akhunova Decl. ¶ 8, Kampfner Decl. ¶ 3. 

LEGAL STANDARD

California Code of Civil Procedure section 877.6 permits a court to approve a settlement if 

it determines the settlement was made in good faith. Cal. Civ. Proc. Code § 877.6; see also Fed. 

Sav. & Loan Ins. Corp. v. Butler, 904 F.2d 505, 511 (9th Cir. 1990) (“section 877.6 procedures do 

not govern a federal action . . . [but] the substantive provisions . . . are applicable”). A finding of 

good faith settlement between a plaintiff and “one or more of a number of tortfeasors claimed to 

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be liable for the same tort, or to one or more other co-obligors mutually subject to contribution 

rights,” releases the settling defendant “from all liability for any contribution to any other parties.” 

Cal. Civ. Proc. Code § 877(b). In other words, a court’s determination of a good faith settlement 

“bar[s] any other joint tortfeasor or co-obligor from any further claims against the settling 

tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative 

indemnity, based on comparative negligence or comparative fault.” Cal. Civ. Proc. Code § 

877.6(c). While the settlement does not discharge any other party from liability, unless its terms 

so provide, “it shall reduce the claims against the others in the amount stipulated by the release, 

the dismissal or the covenant, or in the amount of the consideration paid for it, whichever is the 

greater.” Id. § 877(a). 

Section 877.6 reflects “two major goals”: “the equitable sharing of costs among the parties 

at fault and the encouragement of settlements.” Abbott Ford, Inc. v. Superior Ct., 43 Cal. 3d 858, 

872 (1987). A good faith settlement is one within “the reasonable range of the settling tortfeasor’s 

proportional share of comparative liability for the plaintiff’s injuries.” Tech-Bilt, Inc. v. 

Woodward-Clyde & Assocs., 38 Cal. 3d 488, 499 (1985). When determining whether a settlement 

was made in good faith under section 877.6(a)(1), the intent and policies underlying section 877.6 

generally require courts to take into account a number of factors: (1) a rough approximation of the 

plaintiff’s total recovery and the settlor’s proportional liability in view of the settlement amount; 

(2) the amount paid in settlement; (3) the allocation of settlement proceeds among plaintiffs; (4) 

the recognition that a settlor should pay less in settlement than he would if he were found liable 

after trial; (5) the financial conditions and insurance policy limits of the settling tortfeasor; and (6) 

the existence of collusion, fraud or tortious conduct intended to injure the interests of the nonsettling parties. Id. at 499-500. 

But “[o]nly when the good faith nature of a settlement is disputed, [is it] incumbent upon 

the trial court to consider and weigh the Tech-Bilt factors.” City of Grand Terrace v. Superior Ct., 

192 Cal. App. 3d 1251, 1261 (1987). In other words, when no party opposes a good faith 

settlement application, “the barebones motion which sets forth the ground of good faith, 

accompanied by a declaration which sets forth a brief background of the case is sufficient[,]” and 

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the court need not consider the Tech-Bilt factors. Id. 

DISCUSSION

The Motion, together with the Kampfner and Akhunova declarations, set forth the basis for 

the good faith settlement and the background of the case. Because Mr. Kessel has not opposed the 

Motion2, consideration of the Tech-Bilt factors is unnecessary. See PAG-Daly City, LLC v. 

Quality Auto Locators, Inc., 2014 WL 807415, at *2 (N.D. Cal. Feb. 27, 2014) (“Because no party 

contests the motion, it is unnecessary to weigh the Tech-Bilt factors.”); Schaeffer v. Gregory Vill. 

Partners, L.P., 2015 WL 5316357, at *2 (N.D. Cal. Sept. 11, 2015) (same).

In an abundance of caution, the Court nonetheless reviews the applicable Tech-Bilt

factors.3 Ultimately, the Court finds nothing about the consideration of these factors weighs 

against making a good faith settlement determination. First, Ms. Akhunova contends Mr. Kessel 

is primarily responsible for the wrongful conduct pleaded in the Amended Complaint. See

Akhunova Decl. ¶ 14. Mr. Kessel has elected not to keep participating in the action, and 

accordingly has not provided any evidence contradicting Ms. Akhunova’s contentions. Plaintiff 

anticipates requesting a default judgment against Mr. Kessel in excess of $1 million. Mot. at 7. 

The $100,000 payment from Ms. Akhunova to Plaintiff represents a rough approximation of her 

proportional liability, with Mr. Kessel bearing the greater share of the total liability. Second, the 

payment represents the extent of Ms. Akhunova’s ability to pay—it constitutes more than her life 

savings and she will need to borrow from friends to raise the full amount. Akhunova Decl. ¶ 11. 

Third, the settlement amount is less than what Plaintiff demanded, and less than what they would 

seek at trial. Fourth, the other Participating Defendants, Formula VC Ltd and Formula VC GP, 

L.P., are defunct entities; Ms. Akhunova is the only Participating Defendant with assets. Id. ¶ 9. 

Finally, the Settling Parties declare the Settlement was reached after arm’s-length bargaining that 

lasted several months; that there was no collusion among the Settling Parties; and that several 

offers were made involving all defendants. Id. ¶ 8; see also Kampfner Decl. ¶ 3. They represent 

 

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The Motion was served on Mr. Kessel’s attorney of record by the Court’s ECF system, and she 

forwarded the documents to Mr. Kessel on July 12, 2016. See Dkt. No. 79 (proof of service). 

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There is only one plaintiff in the action.

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there are no agreements of any kind among the Settling Parties, other than those described in the 

Settlement Agreement. Akhunova Decl., ¶ 13, Kampfner Decl., ¶ 4. 

The Court accordingly finds the Settlement is adequate and reasonable under the 

circumstances and is made in good faith pursuant to section 877.6. Based on these findings, and 

having received no opposition, the Court recommends granting the Motion.4

CONCLUSION

For the foregoing reasons, the Court recommends the District Judge:

(1) GRANT the Motion for Good Faith Determination of Settlement pursuant to 

California Code of Civil Procedure sections 877 and 877.6;

(2) APPROVE the Settlement, which is attached as Exhibit A to the Akhunova 

Declaration;

(3) ORDER barred all claims against the Participating Defendants for contribution 

and/or indemnity by any other party to this action, or any other joint tortfeasor or 

co-obligor, related to the claims that were presented or could have been presented 

in this action; and

(4) DISMISS with prejudice all claims, cross-claims, and counterclaims asserted 

between Plaintiff and the Participating Defendants.

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The Court is satisfied that due process requirements prevent misuse of the good faith settlement 

statute in the absence of nonsettling defendants. The determination of a good faith settlement is 

not limitless: “[A]n unnamed joint tortfeasor whose potential liability is known, or reasonably 

should be known, to the settling parties but who is given no opportunity to be heard . . . is not 

bound by a good faith determination[.]” City of Emeryville v. Robinson, 621 F.3d 1251, 1266 (9th 

Cir. 2010) (quotation omitted). Mr. Kessel’s prior counsel sent him a copy of the Motion, and he 

was given the opportunity to oppose it; he did not do so. 

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Pursuant to Federal Rule of Civil Procedure 72, any party may serve and file objections to 

this report and recommendation within 14 days after being served with a copy.

IT IS SO ORDERED AND RECOMMENDED.

Dated: August 15, 2016

______________________________________

MARIA-ELENA JAMES

United States Magistrate Judge

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