Court Opinion

ID: 4453067
Source: CourtListenerOpinion
Date Created: 2019-11-05 16:00:24.744669+00
Date Added: 2024-06-11T09:37:09.666496
License: Public Domain

19-662-cv
EMA Garp Fund, et al. v. Banro Corporation, et al.

                                  UNITED STATES COURT OF APPEALS
                                     FOR THE SECOND CIRCUIT

                                          SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.

       At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 5th day of November, two thousand nineteen.

PRESENT:           JOSÉ A. CABRANES,
                   REENA RAGGI,
                                Circuit Judges,
                   EDWARD R. KORMAN,
                                District Judge.*

EMA GARP FUND, L.P., LAWRENCE LEPARD,

                             Plaintiffs-Appellants,                 19-662-cv

                             v.

BANRO CORPORATION, JOHN A. CLARKE,

                             Defendants-Appellees.

FOR PLAINTIFFS-APPELLANTS:                                KURT T. KALBERER, II, Kalberer LLP,
                                                          New York, NY.

    *
    Judge Edward R. Korman, of the United States District Court for the Eastern District of New
York, sitting by designation.

                                                      1
FOR DEFENDANTS-APPELLEES:                                     JOSEPH GALLAGHER, Andrew M. St.
                                                              Laurent, Harris, St. Laurent & Chaudhry
                                                              LLP, New York, NY.

       Appeal from a February 22, 2019 judgment of the United States District Court for the
Southern District of New York (Katherine Polk Failla, Judge).

       UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the February 22, 2019 judgment of the District Court be
and hereby is AFFIRMED.

         Plaintiffs-Appellants EMA Garp Fund, L.P. (“Ema Garp”) and Lawrence Lepard (jointly,
“Appellants”) appeal from a February 22, 2019 judgment of the District Court dismissing their
claims1 against Banro Corporation (“Banro”) and Banro’s former CEO, John A. Clarke (“Clarke”)
(jointly, “Appellees”) pursuant to Fed. R. Civ. P. 12(b)(1). We assume the parties’ familiarity with the
underlying facts, the procedural history of the case, and the issues on appeal.

         Appellants claim that the District Court erred in dismissing their suit on grounds of
international comity because it both incorrectly concluded that Banro’s bankruptcy proceeding in
Canada constituted a parallel proceeding and failed to require “exceptional circumstances” to justify
its decision to abstain from exercising jurisdiction. Appellants argue further that the dismissal of this
case would cause them extreme prejudice, as they would be deprived of any avenue for judicial relief,
in the United States or otherwise. Finally, Appellants contend that, even if the District Court’s
dismissal of their claims against Banro is legally sound, their claims against Clarke should survive.
Appellants argue that international comity cannot extend to Clarke, as he is not “intertwined” with
or a party to Banro’s bankruptcy reorganization, and because Clarke’s alleged fraud occurred in the
United States.

        We review a district court’s decision to decline jurisdiction over a case on international
comity grounds for abuse of discretion. See Leopard Marine & Trading, Ltd. v. Easy St. Ltd., 896 F.3d
174, 189 (2d Cir. 2018). “A district court has abused its discretion if it based its ruling on an
erroneous view of the law or on a clearly erroneous assessment of the evidence, or rendered a
decision that cannot be located within the range of permissible decisions.” In re Sims, 534 F.3d 117,
132 (2d Cir. 2008) (internal quotation marks, alteration, and citation omitted); see also In re City of New
York, 607 F.3d 923, 943 n.21 (2d Cir. 2010) (explaining that “abuse of discretion” is a nonpejorative
“term of art”).

    1
     Appellants’ Amended Complaint alleges that Appellees violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78(a), and Rule 10b-5 promulgated thereunder,
17 C.F.R. § 240.10b-5. See SPA-1.

                                                     2
         International comity permits a court of one nation to acknowledge a legislative, executive, or
judicial act of another nation, recognizing twin duties the court must balance: due respect for foreign
proceedings, as well as safeguarding the rights and obligations of persons owed the protection of
law. See Leopard Marine & Trading, 896 F.3d at 189; see also JP Morgan Chase Bank v. Altos Hornos de
Mexico, S.A. de C.V., 412 F.3d 418, 423 (2d Cir. 2005) (“We have stated that the doctrine [of
international comity] is not an imperative obligation of courts but rather is a discretionary rule of
practice, convenience, and expediency.” (internal citation and quotation marks omitted)). We have
held that foreign bankruptcy proceedings are a “discrete category of foreign litigation,” Royal & Sun
All. Ins. Co. of Can. v. Century Int’l Arms, Inc., 466 F.3d 88, 92–93 (2d Cir. 2006), for which “comity is
particularly appropriate.” Allstate Life Ins. Co. v. Linter Grp., Ltd., 994 F.2d 996, 999 (2d Cir. 1993).

        We agree with Appellees that the District Court was within its discretion in declining, based
on the principles of international comity, to exercise its jurisdiction in this case. Banro’s
reorganization proceeding is before the Ontario Superior Court of Justice, pursuant to Canada’s
Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the “Banro CCAA Proceeding”). See
SPA-2. The Banro CCAA Proceeding plainly constitutes a foreign bankruptcy proceeding deserving
of the District Court’s recognition. And as explained by the District Court, the Banro CCAA
Proceeding satisfied the fundamental standards of procedural fairness for a foreign bankruptcy
proceeding under the factors this Court delineated in Allstate, 994 F.2d at 999. See SPA-10–12.

        We are not persuaded by Appellants’ argument that the District Court ignored our precedent
in declining to apply the standard of “exceptional circumstances” to the instant case. As stated in
Royal & Sun Alliance, that standard is relevant when the District Court is considering whether to
extend comity to a foreign proceeding other than a foreign bankruptcy proceeding, which we have
expressly excepted as a “discrete category” generally requiring dismissal. 466 F.3d at 92–93.
Appellants do not cite to any persuasive authority from this Circuit that would counsel departure
from our established jurisprudence.

        Nor are we persuaded by Appellants’ insistence that the District Court erred because the
foreign bankruptcy proceeding is not parallel to this one. That misses the point. We have explained
that granting comity to foreign bankruptcy proceedings “mean[s] . . . that creditors of an insolvent
foreign corporation may be required to assert their claims against a foreign bankrupt before a duly
convened foreign bankruptcy tribunal.” Cunard S.S. Co. v. Salen Reefer Servs. AB, 773 F.2d 452, 459
(2d Cir. 1985). Thus, the pertinent question is not whether creditors actually appear in foreign
bankruptcy proceedings, but whether they “have the right to submit claims which, if denied, can be
submitted to [foreign] bankruptcy court for adjudication.” Allstate Life Ins. Co., 994 F.2d at 999.
Here, Appellants had sufficient notice of, and the opportunity to participate in, the Banro CCAA
Proceeding, and declined to do so.

        For this reason, we also cannot conclude that Appellants would be “extremely prejudiced”
by the dismissal of their claims. Because the District Court correctly ruled that the Banro CCAA

                                                    3
Proceeding satisfied the fundamental standards of procedural fairness, we cannot agree that
Appellants would suffer prejudice (let alone “extreme prejudice”) because they are now unable to
pursue their claims against Appellees in United States federal court.

         Finally, we affirm the District Court’s dismissal of the claims against Clarke. As noted by
Appellees, the claims against Clarke are entirely based on his performance of his duties as CEO of
Banro during the relevant period. As in Allstate, it “would defeat the purpose of granting comity in
the first place” if the District Court permitted the claims against Clarke to proceed while dismissing
Banro from the suit. Id. at 1000.

                                          CONCLUSION

        We have reviewed all of the arguments raised by Appellants on appeal and find them to be
without merit. For the foregoing reasons, we AFFIRM the February 22, 2019 judgment of the
District Court.

                                                       FOR THE COURT:
                                                       Catherine O’Hagan Wolfe, Clerk

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