Armada (Singapore) Pte Ltd. v. Amcol Int'l Corp.

414 F.Supp.3d 1115

ARMADA (SINGAPORE) PTE LIMITED, Plaintiff,

v.AMCOL INTERNATIONAL CORPORATION, American Colloid Company, Volclay International Corporation, n/k/a Volclay International LLC, Ashapura Minechem Limited, Defendants.

No. 13 C 3455

United States District Court, N.D. Illinois, Eastern Division.

Signed October 10, 2019

Alan Van Praag, Pro Hac Vice, Chalos & Co., P.C., Oyster Bay, NY, Edward W. Floyd, Pro Hac Vice, Edward John Carlson, Pro Hac Vice, Luke Francis Zadkovich, Pro Hac Vice, Floyd Zadkovich (US) LLP, New York, NY, Emily Jean Fitzgerald, Timothy S. McGovern, Swanson, Martin & Bell, LLP, Chicago, IL, for Plaintiff.

Julian Solotorovsky, Constantine Koutsoubas, Janine Nicole Fletcher-Thomas, Michael Ryan Dover, Kelley Drye & Warren LLP, Chicago, IL, Ronald W. Zdrojeski, Pro Hac Vice, Travis J. Mock, Pro Hac Vice, Sutherland Asbill & Brennan LLP, New York, NY, Brittany Michelle Cambre, Pro Hac Vice, Sutherland Asbill & Brennan LLP, Atlanta, GA, David Andrew Baay, Pro Hac Vice, Sutherland Asbill & Brennan LLP, Houston, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

Elaine E. Bucklo, United States District Judge

Since 2008, the shipping company Armada (Singapore) PTE Limited has been pursuing recovery for losses it suffered when the Indian company Ashapura Minechem Limited failed to perform under a contract of affreightment requiring Ashapura to provide cargos of bauxite for Armada to carry in its vessels. In early 2010, Armada obtained arbitral awards totaling about $70 million against Ashapura in proceedings conducted in London. See Mem. Op. and Order of 03/21/17 at 3; Def.'s Summary Judgment Appendix, Tab 1 (arbitral awards). Later that year, Armada sought to enforce those awards in this court, filing a maritime action for attachment and garnishment pursuant to Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. See Armada (Singapore) PTE Limited v. Ashapura Minechem Limited , et al., 10-CV-5509 (N.D. Ill.) (the "Rule B Proceedings").

Rule B proceedings allow plaintiffs to obtain jurisdiction over, and to enforce a judgment against, a party not found within the district but whose property is present in the district. See Western Bulk Carriers (Australia), Pty. Ltd. v. P.S. Intern., Ltd. , 762 F. Supp. 1302, 1306 (S.D. Ohio 1991) (citing cases). Armada named defendants Amcol International Corp. ("Amcol"), American Colloid Company ("ACC"), and Volclay International Corp. ("Volclay") (collectively, the "Amcol Defendants") as garnishees in the Rule B Proceedings and sought the turnover of assets that Armada claimed belonged to Ashapura and were held by the Amcol Defendants in this district. Armada largely prevailed in the Rule B Proceedings, which culminated in an order directing the Amcol Defendants to pay to Armada the $687,356.52 that I concluded they owed to Ashapura in unpaid stock proceeds and open invoices. See Rule B Proceedings, Mem. Op. and Order of 08/29/2011 at 8-9.

In the present action, Armada alleges that the Amcol Defendants engaged in fraud in the Rule B Proceedings by orchestrating a complex series of corporate transactions among related entities, the purpose of which was to shield additional assets belonging to Ashapura from turnover. I dismissed Armada's claims pursuant to the Racketeer Influenced and Corrupt Organizations Act ("RICO") and the Illinois Uniform Fraudulent Transfer Act on the pleadings, see 244 F. Supp. 3d 750 (N.D. Ill. 2017), aff'd 885 F.3d 1090 (7th Cir. 2018), but I allowed its claim for maritime fraudulent transfer to proceed. The Amcol Defendants now seek summary judgment of that claim, arguing that Armada has not come forward with sufficient evidence to establish: 1) that the assets it faults the Amcol Defendants for failing to disclose and turn over belonged to Ashapura; 2) that the Amcol Defendants controlled those assets; or 3) that the assets were within this district. For the reasons that follow, the motion is granted with respect plaintiff's claim against ACC and Volclay but denied with respect to its claim against Amcol.

At all relevant times, Amcol was the parent company in a global group of related entities, several of which were involved in the constellation of transactions that Armada calls the "2011 Restructuring Transaction." Distilled to its essence, Armada's fraudulent transfer theory is that the corporate operations involved in the 2011 Restructuring Transaction created an intangible asset belonging to Ashapura and controlled by Amcol, which Amcol camouflaged in a multitude of transactions it puppeteered among its controlled entities. Specifically, Armada claims that through its UK affiliate, AME,¹ Amcol extended a loan to Ashapura to fund a Belgian joint-venture called AANV; and that rather than call in the loan (which it knew the insolvent Ashapura was unable to repay), Amcol converted the debt into a credit by forgiving repayment and using the debt relief as consideration for the transfer of certain assets from AVL (an entity Ashapura co-owned with defendant Volclay) to Cetco India, an entity Amcol would then control. Armada argues that by choreographing these transactions from its corporate headquarters in Hoffman Estates, Illinois, Amcol created and controlled an intangible asset—the credit used to purchase AVL's assets—in this district. And because that asset belonged to Ashapura, Armada contends, it was subject to attachment and turnover in the Rule B Proceedings.

There is evidence to support Armada's theory. All agree that AME and Ashapura were fifty-fifty co-venturers in AANV, and that through an undocumented loan transaction, an Amcol entity (the parties dispute which) funded "the entire amount" of both sides' initial investment in AANV. Def.'s 30(b)(6) Dep., Pl.'s Exh. A at 140:20-21. The Amcol Defendants insist that it was AME, acting independently from its UK headquarters, that extended the loan, and that AANV, not Ashapura, was the loan recipient. But a jury could conclude that Amcol itself was the source of the loan, with AME acting only as an "intermediary." Pearson Dep., Pl.'s Exh. D, at 93:16-18 ("The loan was made essentially from AMCOL via an intermediary, AME, and to fund AANV, for both parties"). Moreover, while the loan proceeds were undisputedly disbursed to AANV, a fact-finder could also conclude that it was Ashapura who owed the obligation to repay the loan. See , e.g., Def.'s 30(b)(6) Dep., Pl.'s Exh. A at 139:15-17, 140:16-19 (invoices sent to Ashapura for interest on the loan "to establish that Ashapura ultimately needed to pay out for the money ultimately that they were supposed to be putting into the entity"); Kodosky Dep., Pl.'s Exh. E at 77-78.

The Amcol Defendants deride Armada's theory as "contrived," Reply at 3, and insist that it "ignore[s] corporate form." Br. at 14. But having failed to document the € 7 million loan transaction to fund AANV at any point prior to AME's divestment from that entity in the 2011 Restructuring Transaction, Amcol is ill-placed to rely upon corporate formalities to establish which entities were the real parties in interest with respect to the...