Court Opinion

ID: 9958757
Source: CourtListenerOpinion
Date Created: 2024-04-09 20:11:01.680435+00
Date Added: 2024-06-11T08:15:49.376955
License: Public Domain

Innovative Sec. Ltd. v OBEX Sec. LLC
               2024 NY Slip Op 31060(U)
                      March 29, 2024
           Supreme Court, New York County
        Docket Number: Index No. 650685/2023
                  Judge: Andrew Borrok
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
 Op 30001(U), are republished from various New York
 State and local government sources, including the New
  York State Unified Court System's eCourts Service.
 This opinion is uncorrected and not selected for official
                       publication.
                                                                                                                        INDEX NO. 650685/2023
  NYSCEF DOC. NO. 89                                                                                              RECEIVED NYSCEF: 03/29/2024

            SUPREME COURT OF THE STATE OF NEW YORK
            COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 53
            ----------------------------------------------------------------------------------- X

             INNOVATIVE SECURITIES LTD,                                                             INDEX NO.         650685/2023

                                                          Plaintiff,                                                   05/18/2023,
                                                                                                                       05/22/2023,
                                                - V -                                                                  06/29/2023,
                                                                                                    MOTION DATE        12/19/2023
             OBEX SECURITIES LLC,PRIME CAPITAL LTD, COWEN
             INC.,COWEN INTERNATIONAL, RANDY KATZENSTEIN
                                                                                                                       001 002 004
                                                                                                    MOTION SEQ. NO.        005
                                                          Defendant.

                                                                                                      DECISION+ ORDER ON
                                                                                                            MOTION
            ----------------------------------------------------------------------------------- X

            HON. ANDREW BORROK:

            The following e-filed documents, listed by NYSCEF document number (Motion 001) 7, 8, 9, 10, 11, 12,
            33, 34, 35, 36, 37, 38, 39,40,41,42,43,45,46,58
            were read on this motion to/for                                                         DISMISS

            The following e-filed documents, listed by NYSCEF document number (Motion 002) 14, 15, 16, 17, 18,
            22,23,24,25,26,27,28,29,30,31,32,47,48,59
            were read on this motion to/for                                                         DISMISS

            The following e-filed documents, listed by NYSCEF document number (Motion 004) 49, 50, 51, 52, 53,
            54, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70
            were read on this motion to/for                                                         DISMISS

            The following e-filed documents, listed by NYSCEF document number (Motion 005) 72, 73, 74, 75, 76,
            77, 79, 80, 81, 82, 83, 84, 85
            were read on this motion to/for                                                          STAY

            Upon the foregoing documents,

            Cowen Inc. and Cowen International (collectively, Cowen)'s motion to dismiss (Mtn. Seq. No.

            002) is granted. At bottom, this lawsuit is predicated on Innovative' s allegation that Cowen

            made an improper margin call pursuant to a relationship established by an Acceptance Letter

            (NYSCEF Doc. No. 17) and its incorporated Cowen International Prime Brokerage Terms

             650685/2023 INNOVATIVE SECURITIES LTD vs. OBEX SECURITIES LLC ET AL                                        Page 1 of 7
             Motion No. 001 002 004 005

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                                                                                                    INDEX NO. 650685/2023
  NYSCEF DOC. NO. 89                                                                       RECEIVED NYSCEF: 03/29/2024

            (NYSCEF Doc. No. 18) which contains a mandatory forum selection clause designating that all

            claims must be brought in England:

                   This Letter of Acceptance and the Customer Documents and Customer
                   Agreement and any non-contractual matters arising out of or in connection with
                   any of them, shall be governed by the laws of England and subject to the
                   exclusive jurisdiction of the courts of England unless otherwise provided in any
                   individual Customer Document

            (NYSCEF Doc. No. 17, § 10 [emphasis added]).

            Innovative, as successor to Innovative Securities New Zealand (Innovative NZ) the party that

            signed the Acceptance Letter (NYSCEF Doc. No. 4 at ,i 11) appointing Cowen International as

            prime broker, is bound by that agreement.

            This is the beginning and end oflnnovative's claims against Cowen arising out the Acceptance

            Letter in this Court, as no fraud is alleged as it relates to the parties' agreement in the Acceptance

            Letter to litigate disputes in England. As successor to the New Zealand company, the Belize

            company of the same name (i.e., the Plaintiff) is bound by the terms of the Acceptance Letter,

            including the forum selection clause (Aguas Lenders Recovery Group v Suez, S.A., 585 F3d 696,

            701 [2d Cir 2009] [holding successors in interest are subject to the presumptive enforceability of

            forum selection clauses]).

            While Innovative contends that the Acceptance Letter and Terms were "no longer in force" and

            "no longer operative" after it entered the agreement with Prime and at the time of the margin

            calls (NYSCEF Doc. Nos. 4, ,i,i 41, 56; 32, at 31 ), Innovative does not allege that these

            agreements were terminated. Section 16.2 of the Terms requires 30 days' notice in writing to

             650685/2023 INNOVATIVE SECURITIES LTD vs. OBEX SECURITIES LLC ET AL                    Page 2 of 7
             Motion No. 001 002 004 005

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                                                                                                   INDEX NO. 650685/2023
  NYSCEF DOC. NO. 89                                                                       RECEIVED NYSCEF: 03/29/2024

            effect a termination (NYSCEF Doc. No. 18, § 16.2). Furthermore, both the Terms and the

            Acceptance Letter (via incorporation of the Terms) expressly provide that their respective forum

            selection clauses survive termination (NYSCEF Doc. Nos. 17, § 9; 18, § 16.2). Thus, the forum

            selection clauses contained in the Acceptance Letter and Terms are valid and enforceable ( Getty

            Props. Corp. v Getty Petroleum Marketing Inc., 106 AD3d 429,430 [1st Dept 2013] [holding

            termination oflease does not prevent enforcement of its forum selection clause]). Accordingly,

            Innovative's claims against Cowen are dismissed with prejudice.

            Additionally, the Complaint must be dismissed against Cowen International because this Court

            does not have personal jurisdiction over Cowen International. Being an affiliate of a company

            that is subject to personal jurisdiction does not establish general jurisdiction. The allegations in

            the Complaint are insufficient to establish specific jurisdiction over Cowen International under

            New York's long-arm statute (CPLR 302; Starr Russia Investments III B. V v Deloitte Touche

            Tohumatsu Ltd., 169 AD3d 421,422 [1st Dept 2019]).

            OBEX Securities LLC (OBEX) and Randy Katzenstein's motion to dismiss (Mtn. Seq. No. 001)

            is also granted. There simply is no actionable claim against these Defendants set forth in the

            Complaint. Whatever actionable harm there may be, the harm was occasioned by Cowen' s

            allegedly inappropriate margin call. Thus, these allegations must be addressed, as discussed

            above, in the Courts of England.

            Cowen's motion to dismiss Prime Capital Ltd (Prime)'s cross-claims (Mtn. Seq. No. 004) must

            also be granted. Prime appointed Cowen International as its prime broker pursuant to a

             650685/2023 INNOVATIVE SECURITIES LTD vs. OBEX SECURITIES LLC ET AL                    Page 3 of 7
             Motion No. 001 002 004 005

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                                                                                                  INDEX NO. 650685/2023
  NYSCEF DOC. NO. 89                                                                      RECEIVED NYSCEF: 03/29/2024

            December 18, 2019 Acceptance Letter and its incorporated Terms (NYSCEF Doc. Nos. 52, 53;

            collectively, the Prime-Cowen Agreements). In relation to the margin calls, OBEX and Prime

            previously brought suit against Cowen International in England (the UK Litigation), alleging

            breaches of the Prime-Cowen Agreements (NYSCEF Doc. No. 28), which litigation was settled

            according to the terms of the December 15, 2022 settlement agreement (the Settlement

            Agreement; NYSCEF Doc. No. 54). The Settlement Agreement provided for the release of any

            claims between Prime and Cowen International and their related entities "arising out of or in

            connection with, the Prime Dispute [i.e., the UK Litigation] or the CIL/Prime Capital Agreement

            [i.e., the Prime-Cowen Agreements]" (NYSCEF Doc. No. 54, §§ 5.1, 5.2).

            The Prime-Cowen Agreements and the Settlement Agreement all contain forum selection clauses

            providing all disputes arising out of these agreements are subject to the exclusive jurisdiction of

            the Courts of England. Section 10 of Prime's Acceptance Letter with Cowen International

            contains a mandatory forum selection clause identical to that contained in Innovative' s

            Acceptance Letter with Cowen International, designating that all claims must be brought in

            England:

                   This Letter of Acceptance and the Customer Documents and Customer
                   Agreement and any non-contractual matters arising out of or in connection with
                   any of them, shall be governed by the laws of England and subject to the
                   exclusive jurisdiction of the courts of England unless otherwise provided in any
                   individual Customer Document

            (NYSCEF Doc. No. 52, § 10 [emphasis added]).

            Section 13 of the Settlement Agreement similarly designates that all claims arising from it must

            be brought in England:

             650685/2023 INNOVATIVE SECURITIES LTD vs. OBEX SECURITIES LLC ET AL                  Page 4 of 7
             Motion No. 001 002 004 005

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                                                                                                  INDEX NO. 650685/2023
  NYSCEF DOC. NO. 89                                                                      RECEIVED NYSCEF: 03/29/2024

                    13.1   Any dispute arising out of or in connection with, or concerning the carrying into
                           effect of, this Settlement Agreement, including non-contractual disputes, will be
                           subject to the exclusive jurisdiction of the courts of England and Wales, and the
                           Parties irrevocably submit to the exclusive jurisdiction of the courts of England
                           and Wales for these purposes

            (NYSCEF Doc. No. 54, § 13.1 [emphasis added]).

            However, Prime here asserts five cross-claims against Cowen, relying on Section 5.3 of the

            Settlement Agreement, which contemplates the potential of a suit brought by Innovative and

            allows for the assertion of cross-claims in such "Innovative Proceedings:"

                   5.3     The Parties acknowledge that Innovative Securities Limited ("Innovative") has
                           threated to commence proceedings against OBEX Securities LLC, Prime Capital,
                           Cowen Inc, CIL and Randy Katzenstein in connection with the facts which are the
                           subject of the Prime Dispute (the "Innovative Proceedings").

                           5.3.1   Nothing in this Settlement Agreement shall prevent, preclude or in any
                                   way restrict (a) any Party from asserting any defence in the Innovative
                                   Proceedings (or in response to any other claims asserted by Innovative) or
                                   (b) any Party from asserting any claim or cross-claim against another
                                   Party or its Related Parties in the Innovative Proceedings (or in response
                                   to any other claims asserted by Innovative). For avoidance of doubt, any
                                   claim or cross-claim that any Party can assert against any other Party in, in
                                   connection with or arising out of the Innovative Proceedings is expressly
                                   reserved and preserved, without limitation.

            (NYSCEF Doc. No. 54, § 5.3 [emphasis added]).

            Prime also relies on the merger clause of the Settlement Agreement, which provides:

                    11.1   This Settlement Agreement constitutes the whole agreement between the Parties
                           and supersedes any previous arrangement, understanding or agreement
                           between them relating to this Settlement Agreement's subject matter, which for
                           the avoidance of doubt includes the Prime Dispute

            (id., § 11.1 [ emphasis added]).

             650685/2023 INNOVATIVE SECURITIES LTD vs. OBEX SECURITIES LLC ET AL                  Page 5 of 7
             Motion No. 001 002 004 005

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                                                                                                INDEX NO. 650685/2023
  NYSCEF DOC. NO. 89                                                                    RECEIVED NYSCEF: 03/29/2024

            Prime argues that§ 5.3 provides a carveout from the Settlement Agreement's forum selection

            clause, and further that this provision in combination with § 11.1 supersedes the forum selection

            clauses in the Prime-Cowen Agreements such that Prime may bring its cross-claims against

            Cowen in this action. The argument fails. If the Settlement Agreement supersedes the Prime-

            Cowen Agreements, then Prime cannot sue on the provisions of the Prime-Cowen Agreements

            and must sue only on the Settlement Agreement, which it does not purport to do and which

            claims must be brought in England (Kefalas v Valiotis, 197 AD3d 698 [2d Dept 2021] ["where

            the parties have clearly expressed or manifested their intention that a subsequent agreement

            supersede or substitute for an old agreement, the subsequent agreement extinguishes the old one

            and the remedy for any breach thereof is to sue on the superseding agreement."]). If the

            Settlement Agreement does not supersede the Prime-Cowen Agreements, then Prime is bound by

            the mandatory forum selection clauses provided in the Prime-Cowen Agreements, and must

            bring any unreleased claims in England. Prime does not otherwise contest the validity of these

            forum selection clauses. As such, Prime's cross-claims must be dismissed, with prejudice.

            Cowen' s motion for a stay pending resolution of its motions to dismiss (Mtn. Seq. No. 005) is

            denied as moot.

            The Court has considered the parties' remaining arguments and finds them unavailing.

            Accordingly, it is hereby

             650685/2023 INNOVATIVE SECURITIES LTD vs. OBEX SECURITIES LLC ET AL                Page 6 of 7
             Motion No. 001 002 004 005

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                                                                                                    INDEX NO. 650685/2023
  NYSCEF DOC. NO. 89                                                                          RECEIVED NYSCEF: 03/29/2024

            ORDERED that Defendants OBEX and Katzenstein motion to dismiss (Mtn. Seq. No. 001) is

            granted with prejudice; and it is further

            ORDERED that the Cowen Defendants' motion to dismiss Innovative's claims (Mtn. Seq. No.

            002) is granted with prejudice; and it is further

            ORDERED that the Cowen Defendants' motion to dismiss Prime's cross-claims (Mtn. Seq. No.

            004) is granted with prejudice; and it is further

            ORDERED that the Cowen Defendants' motion to staying discovery (Mtn. Seq. No. 005) is

            denied as moot.

                    3/29/2024
                      DATE                                                         ANDREW BORROK, J.S.C.

                                     ~
             CHECK ONE:                  CASE DISPOSED                    NON-FINAL DISPOSITION

                                         GRANTED         □ DENIED         GRANTED IN PART          □ OTHER
             APPLICATION:                SETTLE ORDER                     SUBMIT ORDER

             CHECK IF APPROPRIATE:       INCLUDES TRANSFER/REASSIGN       FIDUCIARY APPOINTMENT    □ REFERENCE

             650685/2023 INNOVATIVE SECURITIES LTD vs. OBEX SECURITIES LLC ET AL                    Page 7 of 7
             Motion No. 001 002 004 005

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