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YP Recovery Inc. v. YellowParts Europe, SL

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

September 1, 2016

YP RECOVERY INC., an Illinois Company, Plaintiff,
v.
YELLOWPARTS EUROPE, SL, a Spanish Company; YELLOWPARTS SL, a Spanish Company; YELLOW RENT SL, a Spanish Company; PINTURA Y REPARACIONES WORK SL, a Spanish Company; JUAN JOSE JORGE SEBASTIA, an individual; JOSE MARIA CHILET, an individual; and MARK DREXLER, an individual, Defendants.

          MEMORANDUM OPINION AND ORDER

          AMY J. ST. EVE UNITED STATES DISTRICT COURT JUDGE

         Defendants YellowParts Europe SL, YellowParts SL, Yellow Rent SL, Pintura Y Reparaciones Work SL, Juan Jose Jorge Sebastia, Jose Maria Chilet, and Mark Drexler (collectively, “Defendants”) have moved the Court to dismiss the Amended Complaint of Plaintiff YP Recovery, Inc. (R.30). Defendants move to dismiss on four grounds: (1) insufficient service of process under Federal Rule of Civil Procedure 12(b)(5); (2) lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1); (3) lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2); and (4) failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). The Court now considers Defendants' Rule 12(b)(1) challenge. For the following reasons, the Court grants Defendants' motion and dismisses this case without prejudice to Plaintiff's ability to pursue its claims in the proper court.

         BACKGROUND

         This case concerns a business dispute between several foreign companies regarding the procurement and shipment of heavy construction equipment from Europe to Africa. According to Plaintiff YP Recovery, Inc. (“YP Recovery”), Defendants induced it and its agents to transfer $700, 000 to Defendant YellowParts Europe SL (“YP Europe”) and Defendant YellowParts SL (“YPSL”) (together, “Yellow Parts”) based on promises to deliver heavy machinery to Cameroon and Ghana and to create a joint venture entity called “Locam Yellow Parts” (the “JVCo”). (R.6, Compl. ¶¶ 37, 41, 52-53, 57, 60, 63). Plaintiff brings claims for (i) fraudulent inducement, (ii) fraud, (iii) unjust enrichment, and (iv) conspiracy to commit fraud arising out of Defendants' alleged misstatements. (See id.).

         I. The Parties

         Plaintiff YP Recovery purports to bring this action as assignee of two companies, (i) Diamond International, Inc. (“Diamond”), and (ii) Locam Global, Inc. (“Locam”). (R.6-2, Assignment of Rights). YP Recovery is an Illinois corporation with its principal place of business in Illinois. (R.6, Compl. ¶ 1). Diamond is an Illinois corporation with its principal place of business in Illinois. (Id. ¶ 17). Locam is a Cameroonian company with its registered office in Yaoundé, Cameroon. (Id. ¶ 18). Diamond, Caterpillar International, and the United States Trade and Development Agency (“USTDA”) sponsored Locam in its corporate formation. (Id.). Ms. Beatrice Tayui (“Tayui”) signed the assignment instrument as “President” of Diamond, “Agent & Representative” of Locam, and “Director” of YP Recovery. (R.6-2, Assignment).

         Defendants YP Europe, YPSL, Yellow Rent SL (“Yellow Rent”), and Pintura Y Reparaciones Work SL (“Pintura SL”) are Spanish companies with registered offices in Valencia, Spain. (R.6, Compl. ¶¶ 5-8, 10). Defendants Juan Jose Jorge Sebastia (“Sebastia”) and Jose Maria Chilet (“Chilet”) are citizens of Spain and residents of Valencia, Spain. (Id. ¶¶ 2-3, 11). Sebastia is the Managing Director of YP Europe, sole proprietor of YPSL, sole administrator of Yellow Rent, and joint administrator and manager of Pintura SL. (Id. ¶¶ 5-8). Chilet is the Management Assistant of YP Europe. (Id. ¶ 5). Defendant Mark Drexler (“Drexler”) is a United States citizen purportedly “domiciled in the state of Florida [who] currently resides in Spain.” (Id. ¶¶ 4, 12). Drexler is an International Sales Consultant for YP Europe. (Id. ¶ 5).

         II. The Joint Venture Negotiations

         The following facts guide the Court's determination on Defendants' Rule 12(b)(1) motion. The Court may consider evidence outside of the pleadings in analyzing this factual challenge. See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009).

         A. Meeting In Spain (September 2012)

         During a July 2012 business trip to Africa on behalf of Yellow Parts, Sebastia met Mr. Joe Biney (“Biney”) of MJ Limited (“MJL”).[1] (R.31-1, Sebastia Decl. ¶¶ 9-10). Biney, in turn, introduced Sebastia to Mr. Christian Ibeagha (“Ibeagha”), who informed Sebastia that he worked for a “Cameroonian company called Locam” which was “looking to acquire heavy equipment for shipment to Cameroon.” (Id. ¶ 11). Sebastia suggested that Yellow Parts “might be able to help” and offered to continue business discussions once he returned to Spain. (Id. ¶¶ 12-13). Sebastia then asked Drexler to conduct the negotiations on Yellow Parts' behalf because he was its International Sales Consultant and he spoke fluent English. (Id. ¶ 14; R.6, Compl. ¶ 37).

         The parties continued discussions throughout August 2012. In particular, they discussed equipment orders, potential deal structures (including equity participation, agency establishment, and direct sales), and a potential meeting in Valencia, Spain. (R.6-3, Aug. 2012 E-mail Correspondence between Drexler and Ibeagha, attached as Exhibit B to the Compl.). Ultimately, the parties agreed to meet in Valencia in September. Ibeagha sent Drexler travel itineraries reflecting that he would arrive from Madrid with Biney, while Locam representative Zacharie Mbajon (“Mbajon”) and Tayui would arrive from Paris. (R.35-1, Ibeagha Decl. Ex. 1C-1D, Aug. and Sept. 2012 E-mail Correspondence). Tayui's itinerary, in particular, reflected her initial departure city as Chicago, Illinois. (Id.).

         From September 12-16, 2012, Ibeagha, Tayui, Mbajon, Biney, Drexler, and Sebastia met “to discuss Yellow Part's role in providing machinery to Locam.” (R.35-1, Ibeagha Decl. ¶ 9). At the beginning of this meeting, the attendees exchanged business cards. (R.38-1, Supp. Drexler Decl. ¶ 6). Tayui's card-provided to Drexler- identified her as “Locam Global President/CEO, 980 North Michigan Avenue, Chicago, Illinois 60611.” (R.38-1, Supp. Drexler Decl. Ex. A). According to Tayui, in “all stages of the discussions and negotiations between Locam and Yellow Parts regarding the creation of the [JVCo.], ” she “notified all parties that [she] was acting both in [her] capacity as agent and director of Locam and in [her] capacity as agent, director, and president of Diamond International.” (R.35-2, Tayui Decl. ¶¶ 7-8). Sebastia and Drexler deny this, each averring, “I do not know who or what Diamond International is. Yellow Parts did not conduct any negotiations with, or receive any correspondence from, Diamond International during the negotiations of the deal to supply heavy machinery to Africa.” (R.31-1, Sebastia Decl. ¶ 21; R.31-2, Drexler Decl. ¶ 35; R.38-1, Supp. Drexler. ¶¶ 5-7).

         Ultimately, the September 2012 meeting attendees decided to structure the deal between Locam, MJL, and Yellow Parts as an equity partnership. (R.35-1, Ibeagha Decl. ¶ 10). Pursuant to that understanding, Drexler agreed to send “a list of machines and prices” that Yellow Parts would “be able to source for the first phase of Locam Global.” (R.35-1, Ibeagha Decl. Ex. 1E, Sept. 19, 2012 E-mail from Drexler to Ibeagha, Tayui, Mbajon, and Biney).

         B. Meeting In Ghana (January 2013)

         In January 2013, the parties again met-this time in Ghana-to discuss forming a new company called “Locam Yellow Parts.” (R.35-1, Ibeagha Decl. ¶ 12). Ibeagha, Sebastia, Drexler, Chilet, and Biney attended this meeting. (Id.; R.31-3, Chilet Decl. ¶ 10). According to the meeting minutes, the attendees discussed business opportunities, timelines, funding, equipment, and capital structure for the contemplated JVCo. (R.6-6, Jan. 22, 2013 Meeting Minutes). The parties deferred, however, any questions related to “ownership (costs and profit sharing included)” or “final structure” to Tayui. (Id.; R.35-1, Ibeagha Decl. ¶ 13). According to Tayui, she was “predominantly responsible for answering, discussing, and negotiating issues related to the financing of the new JVCo., and for the structure of the JVCo.” (R.35-2, Tayui Decl. ¶ 9).

         In February 2013, Locam prepared and circulated a draft Memorandum of Agreement for a Joint Venture Company (“JV Agreement”). (R.31-2, Drexler Decl. ¶ 27; R.35-1, Ibeagha Decl. ¶ 14). Drexler subsequently provided “feedback and suggestions to the draft agreement from Locam.” (R.31-2, Drexler Decl. ¶ 27; R.35-1, Ibeagha Decl. ¶¶ 15-16). In the course of these dealings, Locam changed the total proposed capital investment from $3 million to $2 million, with Locam contributing $1 million and MJL and Yellow Parts each contributing $500, 000. (R.31-2, Drexler Decl. ¶ 28 and Ex. B thereto).

         On May 17, 2013, Ibeagha e-mailed the parties a final version of the JV Agreement, informing them of the plan “to sign these at the HQ of Locam in Chicago [the first] week of July - July 1st to 5th inclusive.” (R.35-1, Ibeagha Decl. Ex. 1I, May 17, 2013 E-mail). On May 30, Drexler sent Ibeagha an e-mail advising that he was “ready to go with the Project . . . All we need is funding” and inquiring, “What do we need to do to get the money so we can close the deals we have and get these machines on a ship? I would love to be sitting with all of you in Chicago on July 5th drinking mojitos knowing that the ship is on its way to [Cameroon] with $2, 000, 000 worth of machines.” (R.6-8, May 30, 2013 E-mail).

         On June 5, 2013, Ibeagha asked Biney to “please arrange to transfer the [available] funds to Mark and Yellow [P]arts to the address below. [Advise] what [is] transferred and Madam [Tayui] will make the rest transfer from Chicago.” (R.6-9, June 5, 2013 E-mail). Biney subsequently advised Drexler that “the funds are lodged in an off shore account.” (R.31-2, Drexler Decl. Ex. C). On June 17, Biney sent Drexler a transfer message indicating that he had wired $700, 000 from his account at Ecobank, the Pan African Bank. (Id. Ex. D).

         According to Tayui, however, the $700, 000 did not originate from Locam. (R.35-2, Tayui Decl. ¶ 13). Rather, she transferred the funding-which “came predominantly from a USTDA grant and from Diamond International”-in order “to fund the JVCo.” (Id. ¶¶ 13-14). Diamond, therefore, was “ultimately the company that suffered the loss of the $700, 000.” (Id. ¶ 15). The Complaint allegations, too, reflect that the $700, 000 originated from Diamond and passed through Locam, ultimately reaching Defendants. (R.6, Compl. ¶¶ 46-47, 52, 53, 56, 60).

         Upon receipt of the $700, 000 wire from Ecobank via Biney, Yellow Parts “contributed capital of its own in excess of its $500, 000 commitment and began acquiring and preparing the machinery that Locam had requested.” (R.31-2, Drexler Decl. ¶ 32).

         C. Meeting In Illinois (July 2013)

         According to Sebastia and Drexler, the “first time” they heard the name “Diamond International” in the course of business dealings was in June 2013 - when “Locam told [them] that the Chicago meeting would be held at Diamond International Headquarters on July 3, 2013.” (R.31-1, Sebastia Decl. ¶¶ 20-23; R.31-2, Drexler Decl. ¶¶ 33-35). Drexler and Sebastia nonetheless traveled to Chicago to attend the July 3, 2013 meeting. (Id.). During the course of that meeting, Ibeagha, Mbajon, Tayui, Biney, Sebastia, and Drexler discussed business opportunities, shipment and port details, and JVCo. details, including establishing a board of directors and formulating a mission statement. (R.35-1, Ibeagha Decl. ¶¶ 20-24).[2] They also “reviewed, amended, and signed” the JV Agreement. (Id.). The JV Agreement was “intended to set up a framework for article of association / shareholders agreement and to be valid to commence operations until articles of operations are reflective of [the] new JVCo. and finalization of the shareholders agreement.” (R.38-1, Supp. Drexler Decl. Ex. B, Final JV Agreement at Art. VII). Only YP Europe, Locam, and MJL are parties to the JV Agreement. (Id.). The JV Agreement makes no mention of Diamond International. (Id.). Despite the intention of the JV Agreement, the signatories neither created the JVCo. nor signed any articles of association or shareholders agreement. (R.35-1, Ibeagha Decl. ¶ 27). According to Ibeagha, Yellow Parts has failed to deliver any machinery to Africa, and has failed to return the $700, 000. (Id. at ¶¶ 28-29). Yellow Parts, meanwhile, has $1.2 million worth of equipment sitting in its yard. (R.31-1, Sebastia Decl. ¶ 19).

         LEGAL ...


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