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JSC Transmashholding v. Miller

United States District Court, D. Columbia.

October 6, 2014


Page 517

For Jsc Transmashholding, Plaintiff: Michael Robert Lazerwitz, CLEARY, GOTTLIEB, STEEN & HAMILTON, LLP, New York, N.Y. USA.

Page 518


REGGIE B. WALTON, United States District Judge.

JSC Transmashholding (" Transmashholding" ), the plaintiff in this civil matter, has alleged that the defendants, James F. Miller (" Miller" ) and Chris Taylor (" Taylor" ), are liable for conversion and unjust enrichment under District of Columbia law. See Complaint (the " Compl." ) ¶ 1. Currently before the Court is Miller's motion to dismiss the Complaint pursuant to Federal Rule of Civil Procedure (" Rule" ) 12(b)(6), for failure to state a claim upon which relief can be granted, and Rule 12(b)(7), for failure to join an indispensable party under Rule 19.[1] After carefully considering Transmashholding's Complaint, Miller's motion to dismiss, and the memoranda of law submitted by the parties, the

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Court concludes for the reasons that follow that it must deny Miller's motion to dismiss.[2]


The Complaint asserts the following: Transmashholding " is Russia's largest manufacturer of railroad locomotives and cars." Compl. ¶ 2. In 2011, " a rogue [Transmashholding] employee," " without [the] knowledge and approval of" the company, entered into a " sham joint venture agreement[]" (the " Sham Agreement" )[3] with Richcom International Asia Ltd. (" Richcom" ). Id. ¶ ¶ 12-13. The Sham Agreement authorized the transfer of € 20 million from Transmashholding's bank account in Zurich, Switzerland, to Richcom's bank account at HSBC Holdings, plc (" HSBC" ) in Hong Kong. Id. ¶ 12. The purpose of the Sham Agreement was to facilitate Richcom's " purchase of [Medium-Term Notes]," an investment that would purportedly result in a " yield of € 200 million" for Transmashholding. Id. ¶ 14.

Following execution of the Sham Agreement, Taylor, a Richcom Director, " request[ed] that Richcom lend Miller $600,000 . . . from the funds received from [Transmashholding]" based on " Taylor[s] indicat[ion] that . . . Miller, in his capacity as a partner [at] DLA-Piper Washington DC, will play a crucial role in the buy/sell transactions of medium-Term Notes with institutional clients." Id. ¶ ¶ 16, 19 (citations and internal quotation marks omitted). On June 6, 2011, Miller executed a promissory note in the amount of $600,000, naming Taylor as the " [l]ender." Id. ¶ 17; Compl., Exhibit (" Ex." ) 1 (Promissory Note) at 1. According to the terms of the note, Miller would repay the principal and accrued interest to Taylor " on a date mutually agreeable between [Miller] and [Taylor]," but " [i]n the event of [Miller]'s death, the unpaid indebtedness remaining on the note shall be canceled." Compl., Ex. 1 (Promissory Note) at 1.

Richcom held a Board of Directors meeting on June 7, 2011, to discuss whether the company should " [l]oan $600,000 USD to [Miller] from [Transmashholding's] 20M Euro." Compl., Ex. 2 (Minutes of the Meeting of the Board of Directors held June 7, 2011 (" June 2011 Board Minutes" or " Minutes" )) at 1. The Minutes of the Board meeting state that " Taylor requested [that] [Richcom] . . . advance the loan to [Miller] from the funds received from Transmashholding." Compl. ¶ 19; Compl., Ex. 2 (June 2011 Board Minutes) at 1. The Minutes further noted that Taylor " has secured a personal promissory note from [Miller] for the loan of $600,000 USD" and " will transfer funds from his corporate account at Securicore Hong

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Kong in the event the [€ 20 million] must be repaid to Transmashholding." Compl., Ex. 2 (June 2011 Board Minutes) at 1. During the meeting, the Board of Directors " [r]esolved" to " advance the loan" to Miller. Id. Richcom subsequently transferred $600,000 from its HSBC bank account to Miller's account at SunTrust Bank in Washington, D.C. Compl. ¶ 20; Compl., Ex. 3 (HSBC Telegraphic Transfer/Interbank Fund Transfer (" Interbank Transfer Form" )) at 1. Miller then used the funds to pay personal tax obligations and " repay debts to SunTrust Bank and other creditors." Compl. ¶ 20.

Transmashholding filed a Statement of Claim against Richcom and to affiliated entities in Hong Kong " before the High Court of Hong Kong" on November 14, 2011, alleging " knowing receipt and dishonest assistance, conspiracy, and unjust enrichment." Id. ¶ ¶ 26-27. On June 4, 2012, Transmashholding and Richcom executed a settlement agreement that, in addition to the return of any Transmashholding funds still in Richcom's possession, required " Richcom and certain of its principals and affiliates '[to] use their best efforts to procure the assignment to [Transmashholding] of the Promissory Note, dated June 6, 2011, in the amount of U.S. $600,000, from [Miller] in favor of [Taylor].'" Id. ΒΆ 28. However, the parties to the settlement, " ...

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