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Case 1:12-cv-08551-LLS Document 55 Filed 10/08/13 Page 1 of 10

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

-
CORNWALL MANAGEMENT LTD and OLEG
SOLOVIEV a/k/a OLEG VALENTINOVICH
SOLOVIEV,

-

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Pla

iffs,

against ­

12 Civ. 8551

(LLS)

OPINION & ORDER

THOR UNITED CORP. a/k/a THOR UNITED
CORPORATION, JOHN DOE THOR ENTITIES,
ATLANT CAPITAL HOLDINGS, LLC, OLEG
BATRACHENKO a/k/a OLEG BATRATCHENKO,
a/k/a O.V. BATRACHENKOV, PETER KAMBOLIN,
NORTH 3RD DEVELOPMENT, LLC and ABRAHAM
BENNUN,

Defendants.

x

Plaintiffs Cornwall Management Ltd. ("Cornwall U) and Oleg

ev ("Soloviev u

) bring this diversi

action against

defendants Thor United Corp., John Doe Thor Entities

(collectively, "ThorU), Atlant Capit Holdings, LLC ("AtlantU),

Oleg Batrachenko ("Batrachenko U), Peter Kambolin ("Kambolin"),

North 3rd Development, LLC ("North 3rd Development ll

) , and

Abraham Bennun ("Bennun ll

) , alleg

common law fraud related to

the sale of a real estate investment property in Williamsburg,

Brooklyn ("the Williamsburg propertyll) .

Atlant and Kambolin move to dismiss the amended complaint

pursuant to Fed. R. Civ. P. 12 (b) (1)

lack of

ect matter

jurisdiction, and pursuant to Fed. R. C

. P. 12 (b) (6) for

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Case 1:12-cv-08551-LLS Document 55 Filed 10/08/13 Page 2 of 10

failure to state a cl

upon which relief can be granted.

Bennun and North 3rd Development also move to dismiss the

amended compl

for I

insufficiency under Rule 12 (b) (6)

Cornwall and Soloviev move for leave to amend the complaint, for

alternative service on Batrachenko, and for jurisdictional

discovery concerning Batrachenko.

For the reasons that follow, the requisite diversity of

citizenship among the parties is lacking, the court has no

subject matter jurisdiction over this action, and therefore the

complaint is

smissed.

BACKGROUND 1

In S

2007, Cornwall (represented by Soloviev) 1

entered into two contracts wi

Thor (represented by

Batrachenko), pursuant to whi

Cornwall lent Thor a total of

$2.2 million for the development of the Williamsburg, Brooklyn

property. See Am. Compl. ~~ 37-41. Thor and its affiliate

company Atlant (represented by defendants Batrachenko and

Kambolin respectively) subsequently promised in a July 2010

arrangement ("the 2010 Arrangement") to repay the 2007 contract

loans from the sale proceeds of the Williamsburg property if

This section refers to the Amended Complaint ("Am. Compl."), dated
1
26, 2013, as well as to the parties' affidavits in support of their

arguments

defendant Batratchenko's domicile. A court

udicating a 12(b) (I) motion "may resolve disputed factual issues by

reference to evidence outside the pleadings, including affidavits."
_A_ _ _ ~ _ __ ~L-____"~-d..~~~...~C.o~~a.: _

...~l~a~nc.d=, 494 F.3d 71, 77 n.4 (2d Cir.

.. .._v~.~~R~o.w

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Case 1:12-cv-08551-LLS Document 55 Filed 10/08/13 Page 3 of 10

Cornwall and Soloviev agreed to extend the loans and re

from taking legal action.

Id. ~~ 52, 58. Cornwall and Soloviev

all

that "Bennun

sed Kambolin and Batrachenko to make

this proposal" and draft

the 2010 Arrangement.

Id. ~ 53.

The gravamen of the Amended Complaint is that the

defendants engaged in fraud by entering into the 2010

Arrangement, a contract which they had no intent to perform.

ld. ~ 61. Cornwall and Soloviev allege that Kambolin and

Batrachenko concurrently negotiated a "short" sale (i.e., for

less than its value) of the Williamsburg property to Bennun and

the defendants now refuse to repay the loans although they have

sufficient funds to do so. See id. ~~ 62-71.

"If the

defendants

sclosed their plans to short sell the Williamsburg

property, plaintiffs would have commenced earlier legal actions

to recover their monies."

ld. ~ 128.

Cornwall and Soloviev are both foreign

ies. Cornwall

is a Nevis corporation with its princ

place of business in

Charlestown, Nevis, while Soloviev is a Russian citizen who

currently resides

Moscow, Russia.

Id. ~~ 9-10.

In the Amended Complaint, Cornwall and Soloviev allege that

Batrachenko is a United States citizen who resides in New Jersey

and is the co-founder and principal of Thor USA, a New York

corporation, and other affiliated companies.

Id. ~~ 11, 14.

Atlant is a Delaware limited liability company with its

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Case 1:12-cv-08551-LLS Document 55 Filed 10/08/13 Page 4 of 10

principal place

business in New York, New York, and North 3rd

Development LLC ig a New York limit

liability company with its

principal place of bus

ss in New York, New York.

rd. ~~ 13,

16. Kambolin and Bennun are Uni

States citizens who reside

in New York, New York.

Id~~_ ~~ 15, 17.

DISCUSSION

Plaintiffs assert

1 jurisdiction pursuant to 7 U.S.C.

§ 25(c), 28 U.S.C. §§ 1331, 1332(a), and 1367(a).

7 U.S.C. §

25(c) grants district courts juri

ction for private rights of

action under the Commodities Exchange Act ("CEA ff

) which

I

concerns and regulates dealings in commodities. Neither the

loans nor

real estate is a commodity.2 The parties make no

mention or argument

question or supplemental

jurisdiction in their papersi no support for any such concept is

giveni and those recitals in the amended complaint are

considered abandoned. The sole issue is whether there is

diversity jurisdiction.

Atlant and Kambolin contend that dismissal is appropriate

because Batrachenko is a U.S. citizen domiciled abroad in

Russia, and there

the court does not

juri

ct

under

28 U.S.C. § 1332.

In response, Cornwall and Soloviev argue that

2 Commodities are defined in 7 U.S.C. § la(9): they are primarily agricultural
products.

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Case 1:12-cv-08551-LLS Document 55 Filed 10/08/13 Page 5 of 10

Batrachenko is domiciled in New York, so

is

ity

jurisdiction.

1.

"A case is properly dismissed for lack of subject matter

J

ct

under Rule 12(b) (1) when

strict court lacks

the statutory or constituti

power to adjudicate it."

Makarova v. U.S., 201 F.3d 110, 113 (2d Cir. 2000).

28 U.S.C. § 1332 grants the

strict courts jurisdiction

over cases between "citizens of a State" and"c

izens or

subjects of a foreign State." United States citizens domiciled

abroad are not "citizens of a State. U

are not "citizens or

subjects of a foreign State. U

Thus, a suit naming such persons

as parties cannot be based on diversity. See Creswell v.

Sullivan & Cromwell, 922 F.2d 60, 68-69 (2d

r. 1990):

the courts have
to which

that
t
Though we are unclear as

United States citizens who are domiciled
abroad are neither citizens of any state of
the United States nor citizens or subjects
of a foreign state, and § 1332 (a) does not
provide
jurisdiction
such persons are
over
a
parties.
to
Congress's rationale for not granting United
States
rights
foreign
parallel
nationals,
is
specific and requires the conclusion that a
suit by or against Unit
States citizens
domiciled abroad may not be premised on
diversity.
See §mith v. _g_~rterl 545 F.2d
909 (5th Cir.), s:..ert:____denied/ 431 U.S. 955,
97 S.Ct. 2677
see also 1 Moore's

abroad
to
1332(a)

citizens domiciled

to

those it accords
§

language of

the

(1977) i

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Case 1:12-cv-08551-LLS Document 55 Filed 10/08/13 Page 6 of 10

Practice
Federal
-~..- - -..- -..-----.--~-------.
Wright, A. Miller
Practice and Procedure,
(1984) .

§ 3621, at 577 78

~O.74[4]1990i
& E. Cooper,

13B

C.

three

complaint,

pI
citizens who

though most of
According to
foreign
the plaintiffs are citizens
are United
iffs
countries,
reside
States
principles,
abroad.
if fs
therefore, since not all of the pI
are entitled to sue in
I court based
on the diversity statute, plaintiffs may not
maintain
of
jurisdiction.

permanent

basis

this

suit

on

the

Under

the

above

When a

fendant challenges a

aintiff's grounds for

diversity, the plaintiff must prove "by a preponderance of the

evidence that it exists." Makarova, 201 F.3d at 113.

"In an

action in which jurisdiction is premised on diversi

citizenship,

ity must exist at the t

the action is

commenced." Universal Licens

v. Paola del

S . . A., 293 F.3d 579, 581 (2d

r. 2002).

For purposes of diversity jurisdiction, it is domicile that

det

c

izenship. Domicile is the

ace where one has

"his true fixed home and principal establishment, and to which

whenever he is absent, he has the intention of returning."

v. Fortuna, 157 F.3d 945, 948

(2d Cir. 1998)

ing

13B Charles A. Wright, Arthur R. Miller & Edward H. Cooper,

Federal Practice and Procedure, § 3612 at 526 (2d ed. 1984).

"Domicile

res (1) the party's presence in the state; (2)

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Case 1:12-cv-08551-LLS Document 55 Filed 10/08/13 Page 7 of 10

the intent to remain in that state indef

te

u Nat'l Artists

. Co. v. Weavi

, 769 F. Supp. 1224, 1227 (S.D.N.Y. 1991)

-~=~------~---------------.--~.

To determine domicile, consider the "totality of the

evidence."

Id.

"No single

or is conclusive, although the

resi

of a married person's spouse and children (if the

couple has not

ed) is

considerable weight."

National Artists, 769 F. Supp. at 1228.

2 •

The parties' views are at odds about Batrachenko's

domicile, and ordi

ly we do not reso

issues of fact on

motions, but reserve them for t a l . In this case, however, no

genuine issues of fact are raised, because it is apparent that

their submissions refer to different time periods.

Cornwall and Soloviev assert that Batrachenko is domiciled

in New York. They allege that Batrachenko has four current

res

s in the United States (two in New Jersey and two in

New York), and claim

resi

in New Jersey, where he has a

current driver's license. Thompson Decl. ~~ 2 4. They submit

considerable documentary evidence

he had dealings in New

York from 2005 through 2009/ did some business t

In 2010/

and has some lit

ion there. Plaintiffs also contend that

Batrachenko is domiciled in New York because that is where his

second wife/ Tatiana Smirnoff Zayes Batrachenko, and his

daughter, Jane Batrachenko/ reside. Plaintiff Soloviev states:

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Case 1:12-cv-08551-LLS Document 55 Filed 10/08/13 Page 8 of 10

Batratchenko

1 material

("Batratchenko")
times,

I have known the Defendant, aleg Batrachenko
a.v.
a/k/a
aleg
a/k/a
s
Batrachenkov
2007.
At
Batratchenko
represented to me
that he was a permanent
resident of New York, New York in the United
States; that he lived in New York with his
wife, Tatiana Smirnoff,
and daughter Jane
that his wife, Tatiana
Batratchenko;
Smirnoff sat on
rectors of
Thor Uni ted Corp.

the board of
("Thor USA") .

and

Soloviev Decl. ~ 4.

Like much of

aintiff's factual submissions, that one is

out-of-date.

It disregards (probably through ignorance) the

unequivocal evidence that the Batrachenkos were divorced in

1999, and he understandably no longer is domiciled with her. He

now lives in Moscow. Def

Peter Kambolin declares:

I personal

knew aleg Batrachenko' s ex­

2.
wife Tatiana Smirnoff when Batrachenko lived
in
two were
married, and am aware that he divorced her
in December 1999.

the United States

and

the

3.
with aleg Batrachenko over the years,
that he current
resides in Russia,

In addition, based on my conversations
I know
in an
father owned at 24/1
Frunzenskaya Naberezhnaya, Apt. 60, Moscow,
Russia, which is located in the Khamnoviki
neighborhood in Moscow.

late

s

4. I also know that he lives with two of his
children[,] Maxim, age 5, and Karina, age 7.

5. Karina at tends private school in Moscow,
and
kindergarten
"Solnyshko"
in the Kuntsevskiy district of
Moscow.

attends

Maxim

the

I also know

6.
primary

that Batrachenko's current
18 Malaya

of business

1S

-8­

Case 1:12-cv-08551-LLS Document 55 Filed 10/08/13 Page 9 of 10

Priogovskaya Street, building I,
in Moscow.


fice 206

I declare under penalty of perjury that the

foregoing statements are true and correct.


Kambolin Reply Decl. ~~ 2-6.

On August 30, 2012 the Moscow Ci

Court upheld the

decision

the Khamnovniki

st ct court of Moscow, including

its identification

"the individual O.V. Batrachenko, who

resides in the jurisdiction of Khamovniki district court of

Moscow." See Ex. 6 to Am. Compl. at 4.

Batrachenko is a U.S. citizen domicil

in Moscow, Russia,

and this court has no more jurisdiction over the subject matter

of this case than it does over a multitude of business

lit

ions in New York between

ted States citizens who do

not reside in separate states.

3 .

There being no subject matter j

sdiction over this

action, plaintiffs' related motions

leave to further amend

complaint (Dkt. No. 44), to

smiss it

legal

insufficiency (Dkt. Nos. 9 and 30), perform alternat

service

on Batrachenko (Dkt. No. 22), and for expanded jurisdictional

discovery (Dkt. No. 48) are deni

CONCLUSION

De

s Atlant Capital HoI

and Kambolin's motion

(Dkt. No. 30) is grant

,and the amended complaint is dismissed

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Case 1:12-cv-08551-LLS Document 55 Filed 10/08/13 Page 10 of 10

for lack of subject matter jurisdiction. The pending related

motions (Dkt. Nos. 9, 22, 30, 44, and 48) are also dismissed.

clerk is di

to enter judgment accordingly.

So ordered.

Dated: New York, New York

October S, 2013

LOUIS L. STANTON

U.S.D.J.

10­