Paushok v. Ganbold

SERGEY VIKTOROVICH PAUSHOK, Plaintiff, v. TORDAI GANBOLD et al., Defendants.

20 Civ. 4769 (JPC)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

March 18, 2021

OPINION AND ORDER

JOHN P. CRONAN, United States District Judge:

This action is Plaintiff Sergey Viktorovich Paushok's latest attempt to disrupt a December 2011 judgment entered by a Russian court against him and in favor of Defendant Gazprombank JSC ("GPB"), a privately-owned Russian bank, in the amount of $25 million (the "Russian Judgment"). Paushok unsuccessfully appealed that judgment in Russia. Then, when GPB brought an action in the New York Supreme Court to enforce the Russian Judgment, Paushok opposed enforcement and responded with a host of counterclaims challenging the prosecution of that action. The New York court granted summary judgment to enforce the judgment, and dismissed Paushok's counterclaims. The Appellate Division affirmed those decisions on appeal. Paushok now turns to federal court.

Paushok brings this action against Defendants Tordai Ganbold, Batzorig Baatar, GPB, and GPB employees Oleg Titarenko, Vladimir Protasov, and Alexander Muranov¹ alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and New York General Business Law ("N.Y. G.B.L.") § 349. While Defendants have previewed a number of defenses in this case—including lack of personal jurisdiction, the Rooker-Feldman doctrine, statute of limitations, collateral estoppel, and the inapplicability of N.Y. G.B.L. § 349 to a private contract dispute—the issues currently before the Court are relatively narrow: whether the Court has subject matter jurisdiction over Paushok's FDCPA claim and, if so, whether the Complaint has stated a cause of action under the FDCPA. For reasons that follow, the Court concludes that Paushok's allegations are sufficient to establish subject matter jurisdiction, but he has failed to plausibly plead a claim upon which relief can be granted because he has not alleged a consumer debt that falls within the scope of the FDCPA.

Accordingly, the Court dismisses with prejudice Paushok's FDCPA claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Further, the Court declines to exercise supplemental jurisdiction over Paushok's remaining state law claim under N.Y. G.B.L. § 349. This action therefore is dismissed.

I. Background

A. Factual Allegations

The following facts are taken from the Complaint, exhibits attached to the Complaint, documents incorporated by reference in the Complaint, and certain filings in the underlying state-court litigation of which the Court takes judicial notice. For purposes of resolving the instant motion only, the Court assumes the truth of the facts alleged in the Complaint and draws all reasonable inferences in Paushok's favor.

1. The Loan Agreement and the 2006 Surety

Paushok was the CEO of Golden East Mongolia ("GEM"), a Mongolian gold-mining company. Dkt. 1 ("Complaint" or "Compl.") ¶ 17. On February 9, 2006, GEM entered into an agreement with GPB, pursuant to which GPB loaned $30 million to GEM with a repayment date of September 30, 2008 (the "Loan Agreement"). Id. ¶ 18. To secure repayment of this loan, GEM pledged assets as collateral (the "Pledged Assets"), id., and Paushok signed a personal guarantee (the "2006 Surety"), id. ¶ 19. The 2006 Surety is central to this dispute and made Paushok personally and secondarily liable for the Loan Agreement in the event that GEM failed to repay the loan on time and the Pledged Assets did not to satisfy GEM's obligations to GPB. Id.

The Complaint alleges that, shortly after the signing of the Loan Agreement, the Government of Mongolia enacted laws which adversely impacted GEM's mining operations and profits. Id. ¶¶ 21-22. As a result, GEM was no longer able to fulfill its repayment obligations under the Loan Agreement. Id. ¶ 23. Paushok alleges that he initiated arbitration under the United Nations Commission on International Trade over these laws, and the Mongolian government responded by seizing GEM's assets and issuing "a baseless arrest warrant" against Paushok, causing him to flee to Russia. Id. ¶¶ 26-27.

2. Paushok's 2011 Share Purchase Agreement with Ganbold

In April 2011, an agent of the Mongolian Prosecutor-General named "Mr. Byamba" contacted Paushok to discuss the sale of GEM. Id. ¶ 28. Paushok met with Byamba and the brother of the Mongolian Prosecutor-General, "Mr. Bator," in Moscow. Id. At this meeting, Byamba told Paushok that Paushok "was finished in Mongolia" and that he would need to sell his assets to Bator at a reduced price to make his problems "go[ ] away." Id. Facing pressure from Byamba and Bator, Paushok signed an agreement with Bator to sell GEM for $20 million—well below the company's purported worth of over $2 billion. Id. ¶¶ 25, 29. Pursuant to this agreement, a payment of $2 million was made to Paushok with the remaining $18 million to be transferred later. Id. ¶ 29. Shortly after this agreement was executed, Byamba advised Paushok that the criminal proceedings in Mongolia were dismissed. Id. ¶ 30.

In August 2011, Defendant Ganbold contacted Paushok and offered to pay the remaining $18 million to purchase GEM himself. Id. ¶ 31. On August 4, 2011, Paushok and Ganbold executed a new agreement between GEM and Ganbold's wholly owned corporation, Phoenix Sino Limited ("Phoenix Sino"), listing GEM's assets and liabilities, including the Loan Agreement and the 2006 Surety. Id. The Complaint asserts that Paushok and Ganbold signed this agreement intending that the liabilities in both the Loan Agreement and the 2006 Surety would be covered in any transfer of the assets and shares of GEM to Phoenix Sino. Id. Ganbold also reimbursed Byamba for the $2 million previously paid to Paushok. Id. On September 9, 2011, Paushok and Ganbold executed an agreement to transfer the shares and assets of GEM to Phoenix Sino (the "2011 Share Purchase Agreement"), with Ganbold signing the agreement in his capacity as the Managing Director of Phoenix Sino. Id. ¶ 32, Dkt. 1, Exh. 2. The Complaint alleges that both Paushok and Ganbold understood that the 2011 Share Purchase Agreement "would resolve any residual obligation [Paushok] had under the [2006] Surety." Id.

3. The Alleged Scheme Orchestrated by GPB Employees and Ganbold

Around the time when Paushok and Ganbold were negotiating the 2011 Share Purchase Agreement, Paushok introduced Ganbold to certain GPB employees, namely Defendants Titarenko and Protasov, to facilitate the transition of GEM to Ganbold. Id. ¶ 33. The Complaint alleges that Ganbold, Titarenko, and Protasov then devised a scheme to evade taxes, shield GEM's assets from being seized in separate litigation in Mongolia, and collect a nonexistent debt from Paushok. Id. ¶ 34. According to Paushok, this scheme entailed Ganbold, who inherited GEM's liabilities through the August 4, 2011 agreement with Phoenix Sino and the 2011 Share Purchase Agreement, defaulting on these obligations to GPB, and GPB then suing Paushok under the 2006 Surety in Russia. Id. In addition, Ganbold would use a shell company to purchase the debt from GPB, at a reduced price, and sue to enforce that debt in other jurisdictions. Id.

According to Paushok, the scheme also entailed GPB influencing the Russian courts and prosecutors to force Paushok into paying the 2006 Surety, despite GPB "being fully aware that [Paushok] was no longer liable under the [2006] Surety." Id. ¶¶ 34, 39. The GPB Defendants in turn would receive a portion of the revenues derived from the sale and transfer of the Pledged Assets, which would make up for the discount at which they sold the debt to Ganbold. Id. ¶¶ 34, 47. Thus, as alleged, the scheme entailed Defendants seeking to collect twice on the Loan Agreement—by satisfying GEM's liability through the transfer of the Pledged Assets and simultaneously collecting on the 2006 Surety. Id. ¶¶ 47-48, 54-55.

4. The Russian Judgment

In September 2011, GPB filed an action in Cheremushki District Court in Moscow to collect the debt under the Loan Agreement, seeking payment of $16.5 million in principal, over $8.5 million in interest, and 60,000 Russian rubles in costs. Id. ¶ 39. Paushok asserts that he had no notice of the action, and that the Russian court entered a default judgment, i.e., the Russian Judgment, on December 12, 2011. Id. ¶ 40. Paushok alleges that he filed an appeal to the cassation court in Moscow, which affirmed the judgment. Id. GPB filed the Russian Judgment with the Russian Federal Bailiff's Service in Moscow and began collecting from Paushok through the Bailiff's Service. Id. ¶ 41.

5. The New York Action

On January 6, 2015, GPB filed an action in New York State Supreme Court, New York County, seeking to enforce the Russian Judgment (the "New York Action"). Id. ¶ 42; Batbrothers LLC v. Paushok, No. 150122/2015 (Sup. Ct. N.Y. Cnty.). On June 18, 2015, GPB assigned its rights in the Russian Judgment to BatBrothers LLC. Compl. ¶ 50, Exh. 5. On December 21, 2015, BatBrothers was officially substituted for GPB as plaintiff in the New York Action. Id. ¶ 58.

In his Complaint here, Paushok makes numerous allegations concerning the New York Action. For instance, he alleges that BatBrothers—whose nominal CEO is Defendant Baatar—is the aforementioned shell company that Ganbold used to execute his scheme. Id. ¶¶ 6, 45; see id. ¶ 34. He also asserts that GEM, through Ganbold, and BatBrothers, through Baatar, reached an agreement in June 2015 to transfer certain equipment and mining licenses from GEM to BatBrothers, which would have fulfilled GEM's debt obligation under the Loan Agreement and thus extinguished any obligation under the 2006 Surety. Id. ¶¶ 53-55, Exh. 6.² Accordingly, the Complaint asserts that "[c]ontinued prosecution of the New York Action was nothing more than a fraud on the New York Supreme Court and on [Paushok]." Id. ¶ 55.

Paushok also identifies several affidavits and documents...