Chugh v. Kalra

Rakshitt CHUGH et al. v. Aashish KALRA et al.

ARC Capital, LLC v. Asia Pacific Limited et al.

No. X03HHDCV146047993S

Superior Court of Connecticut, Judicial District of Hartford, Hartford, Complex Litigation Docket

December 7, 2018

UNPUBLISHED OPINION

OPINION

Carl J. Schuman, Judge, Supreme Court

The defendants in Rakshitt Chugh v. Aashish Kalra (the primary case)-Aashish Kalra (Kalra) and Trikona Advisers Ltd. (TAL)-have moved for dismissal against two of the plaintiffs-ARC Capital, LLC (ARC) and Peak XV Capital, LLC (Peak)-in counts two, three, and five of the six count operative July 27, 2018 Second Amended Complaint (complaint). These defendants have also moved to strike the entire complaint. The plaintiffs in the primary action-Rakshitt Chugh (Chugh), ARC, and Peak-have applied for a prejudgment remedy against the defendants in that case. The plaintiff in ARC Capital, LLC v. Asia Pacific, Ltd. (the domestication action) has applied for a prejudgment remedy in that case against defendants Asia Pacific Limited (Asia Pacific) and Kalra. The court heard evidence and argument on all of these matters on November 29, 2018. The following opinion constitutes the ruling of the court on these pending matters.

I

These cases involve what is commonly known as a corporate divorce. The primary parties here-Chugh and Kalra-have been embroiled in wasteful litigation for almost seven years. Three years ago our Supreme Court noted that "[t]hese parties have filed several actions in multiple domestic and international courts. For example, other than the present [interpleader] action, the parties have filed actions in the United States District Court for the District of Connecticut, the New York Supreme Court, the Grand Court of the Cayman Islands, India and Mauritius." Trikona Advisers Ltd. v. Haida Investments Ltd., 318 Conn. 476, 480 n.5, 122 A.3d 242 (2015).

Earlier this year, in an interlocutory appeal by the plaintiff in the present domestication action, the Appellate Court, quoting from a decision of the Second Circuit in yet another related case, provided the following factual summary. "[TAL] is an investment advisory company. Its two beneficial owners [Rakshitt] Chugh and Aashish Kalra, formed the company in 2006 as a vehicle for helping foreign investors invest in Indian real estate and infrastructure. Each man held a [50] percent equity stake in TAL through entities controlled by them. Chugh’s shares were owned by ARC Capital LLC ... and Haida Investments ... and Kalra’s shares were owned by Asia Pacific Investments, Ltd. ... By 2009, the relationship between Chugh and Kalra had deteriorated to the point where they could no longer work together ... Eventually, TAL’s board of directors voted to remove Chugh as a director leaving Kalra to treat TAL and its assets as his own ...

"On February 13, 2012, ARC [Capital, LLC] and Haida [Investments], which held Chugh’s TAL shares and were controlled by Chugh, filed a petition in the [Cayman court]^[1] seeking to wind up TAL, a Cayman corporation. The [petition] sought to liquidate the business and divide its assets between Chugh and Kalra. Asia Pacific, which held Kaha’s TAL shares and was controlled by Kalra, opposed Chugh’s petition ... The Cayman court tried the wind-up proceeding over seven days in January of 2013. At the trial’s conclusion, the court granted Chugh’s petition. It found that each of Chugh’s allegations was supported by evidence, and that these allegations taken together supported a finding that it was just and equitable to wind up TAL. It also rejected each of KaIra’s affirmative defenses, concluding that there was no merit whatsoever in the allegations made against Mr. Chugh. Kalra appealed from this judgment, first to the Court of Appeal of the Cayman Islands, and then to the Judicial Committee of the Privy Council in London. Both tribunals affirmed the judgment." (Citations omitted; internal quotation marks omitted.) ARC Capital, LLC v. Asia Pacific Ltd., 180 Conn.App. 38, 39-40, 182 A.3d 95, cert. denied, 328 Conn. 929, 182 A.3d 638 (2018) (quoting Trikona Advisers Ltd. v. Chugh, 846 F.3d 22, 26-28 (2d Cir. 2017)).

In the primary case here, Chugh and his business entities sue Kalra and TAL for breach of an agreement designed-very unsuccessfully-to settle grievances between them, for breach of various duties Kalra allegedly owed Chugh in their business relationships, and for libel as a result of a letter and press release authorized or issued by Kalra. In the domestication action, the Appellate Court has already heard an interlocutory appeal and, in its decision, provided the following factual summary: "The plaintiff brought the present action against Asia Pacific and Kalra, seeking to domesticate and enforce a subsequent costs order of the Cayman court. According to the complaint and accompanying exhibits, on February 7, 2013, the plaintiff and Haida applied to the Cayman court for attorneys fees and litigation expenses incurred as petitioners in the winding up proceedings of TAL. On February 14, 2013, the Cayman court issued a costs order requiring that Asia Pacific reimburse the plaintiff and Haida for their litigation expenses. On May 15, 2013, the Cayman court issued a ‘default costs certificate’ setting the final amount payable to the plaintiff and Haida at $760, 067.65. In this action, the plaintiff sought to domesticate and enforce this order.

"On August 24, 2015, the court, Hon. Richard P. Gilardi, judge trial referee, granted the plaintiff’s application for a prejudgment remedy and ordered a disclosure of assets within two weeks of the date of the order. On August 27, 2015, the defendants filed an application to refer this case to the Complex Litigation Docket. The plaintiff consented to this referral and, on September 3, 2015, the court transferred the case to the Complex Litigation Docket.

"On September 10, 2015, the defendants filed a motion to dissolve and/or modify the ex parte prejudgment remedy entered by Judge Gilardi and to dismiss the action in its entirety for lack of subject matter jurisdiction. On September 24, 2015, the court, Miller, J., dissolved the prejudgment remedy. On May 31, 2016, the court, Miller, J., granted the defendants’ motion to dismiss the action in its entirety for lack of subject matter jurisdiction, concluding that [t]he foreign "judgment" which the plaintiff seeks to enforce can only be enforced through chapter 15 of the United States Bankruptcy Act. Moreover, the Cayman "Winding-Up" proceeding could never qualify, under chapter 15, as a type of proceeding (main or nonmain) subject to judicial review.’ The plaintiff then filed the present appeal, in which it argues that the court erred in dismissing this action for lack of subject matter jurisdiction." (Footnotes omitted.) ARC Capital, LLC v. Asia Pacific Ltd., supra, 180 Conn.App. 40-42. The Appellate Court agreed with the plaintiff, reversed the dismissal, and remanded the matter to this court for further proceedings on the plaintiff’s application for a prejudgment remedy.

I. THE DEFENDANTS’ MOTION TO DISMISS IN THE PRIMARY CASE

The defendants in the primary case move for dismissal from allegations by ARC and Peak in count two (breach of partnership agreement), count three (breach of implied contract or joint venture), and count five (breach of the implied covenant of good faith and fair dealing) for lack of standing. The defendants contend that ARC and Peak fail to allege that they are parties to the claimed oral partnership agreement concerning business operations that the defendants purportedly breached.

The court applies the well-accepted standards for resolving motions to dismiss and reviews the allegations in the complaint in a light most favorable to the pleader. See Conboy v. State, 292 Conn. 642, 650-54, 974 A.2d 669 (2009). The plaintiffs argue that ARC and Peak have standing to establish violations of the purported partnership agreement between Chugh and Kalra as third party beneficiaries of that agreement. However, it is "well settled that [i]t is the burden of the party who seeks the exercise of jurisdiction in his favor ... clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute." (Internal quotation marks omitted.) Financial Consulting, LLC v. Commissioner of Insurance, 315 Conn. 196, 226, 105 A.3d 210 (2014) "A plaintiff must allege and prove that he has the requisite standing in order for the trial court to have subject matter jurisdiction over his claims." (Emphasis in original.) Emerick v. Glastonbury, 145 Conn.App. 122, 131 n.8, 74 A.3d 512 (2013), cert. denied, 311 Conn. 901, 83 A.3d 348 (2014). In this case, the plaintiffs nowhere allege that ARC and Peak are third party beneficiaries of the purported agreement. In fact, the substantive counts of the complaint mention ARC and Peak only in passing. Accordingly, the plaintiffs have failed to allege standing. The court grants the motion to dismiss the defendants from liability to plaintiff’s ARC and Peak in counts two, three, and five.^[2]

II. THE DEFENDANTS’ MOTION TO STRIKE IN THE PRIMARY CASE

The defendants move to strike the complaint in the primary case on various legal grounds. The court applies the well-settled standards for deciding a motion to strike and reviews the pleadings in a light most favorable to the plaintiff. See Faulkner v. United Technologies Corp., 240 Conn 576, 580, 693 A.2d 293 (1997).

The defendants’ brief relies heavily on a 2015 affidavit filed by Chugh in this case along with various other exhibits from outside the pleadings. The brief does not analyze the allegations of the complaint. It follows that the defendants’ motion constitutes a speaking motion to strike, which our state does not allow. See ...