Opinion
X03HHDCV146047993S
10-08-2019
Rakshitt CHUGH et al. v. Aashish KALRA et al.
UNPUBLISHED OPINION
OPINION
Carl J. Schuman Judge, Superior Court
Defendants Aashish Kalra (Kalra) and Trikona Advisors, Ltd. (TAL) have moved for summary judgment against plaintiffs Rakshitt Chugh (Chugh) and Peak XV Capital, LLC (Peak) on the operative second amended complaint (Complaint, Entry #194.00). The plaintiffs have moved for summary judgment on the defendants’ special defenses. The court applies the well-settled standards for deciding a motion for summary judgment and construes the evidence in a light most favorable to the nonmovant. See DiPietro v. Farmington Sports Arena, LLC, 306 Conn. 107, 115-16, 49 A.3d 951 (2012); Morrissey-Manter v. Saint Francis Hospital & Medical Center, 166 Conn.App. 510, 517-18, 142 A.3d 363, cert. denied, 323 Conn. 924, 149 A.3d 962 (2016). The court assumes the reader’s familiarity with the facts of this case and with the long and unfortunate history of litigation between Chugh and Kalra. See Ruling on Pending Motions and Applications for Prejudgment Remedies (Entry #229.00, pp. 3-5).
The court dismissed plaintiff Arc Capital, LLC on December 7, 2018 (Entry #229.00, p. 6, n.2).
I
In count two of the complaint, Chugh claims that, between 2010 and 2012, Kalra breached a partnership agreement between the two parties. (Complaint, ¶¶21-42.) Chugh makes related claims against Kalra in counts three, four, and five.
Kalra initially argues that the federal compulsory counterclaim rule required Chugh to assert the claims that he now raises in counts two through five against Kalra as counterclaims in the federal action filed by TAL against Chugh and others. See Trikona Advisers Ltd. v. Chugh, 846 F.3d 22 (2d Cir. 2017). Kalra, however, was not a party to the federal case and there is no authority squarely holding that a party must cite in a nonparty to assert compulsory counterclaims against the nonparty. Instead, the federal rule provides that, in order for a counterclaim to be compulsory, the potential counterclaim must be "against an opposing party ..." (Emphasis added.) Fed.R.Civ.P. 13(a)(1). See First African Trust Bank, Ltd. v. Bankers Trust Co., No. 94 CIV. 4995 (RPP), 1995 WL 422269, at *2 (S.D.N.Y. July 14, 1995) ("it cannot be said that FATB itself appeared in that action. Accordingly, Bankers Trust did not waive any claim against FATB for reimbursement of legal expenses by failing to file a counterclaim for attorney fees against the unlawful management of FATB during the previous litigation before this Court"). The authority cited by the defendants does not require the assertion of counterclaims against a nonparty in a federal suit but rather merely discusses the circumstances in which the plaintiff in a subsequent suit could have asserted a counterclaim against an opposing party who was already present in the federal suit. See National Research Bureau, Inc. v. Bartholomew, 482 F.2d 386, 388 (3d Cir. 1973); Loschiavo v. Miranda, No. CV 950325575, 1997 WL 446217, at *1 (Conn.Super.Ct. Aug. 1, 1997) . Thus, the compulsory counterclaim rule does not bar Chugh’s action against Kalra.
For this reason, there is no occasion to reach Chugh’s argument that the alleged counterclaims do not arise out of the same transaction as the federal complaint. (Pls. Br., pp. 25-26.)
On the merits, the defendants initially argue that any partnership between Chugh and Kalra ended when the parties incorporated TAL in the Cayman Islands in 2006. (Def’s. Ex. 7.) The defendants rely on the rule that Chugh and Kalra "cannot be partners inter sese and a corporation as to the rest of the world." (Internal quotation marks omitted.) Karanian v. Maulucci, 185 Conn. 320, 324, 440 A.2d 959 (1981).
The Appellate Court, however, has apparently distinguished or limited this line of cases. In Bartomeli v. Bartomeli, 65 Conn.App. 408, 783 A.2d 1050 (2001), the Appellate Court stated the following: "In its memorandum of decision, the [trial] court found that the company was a corporation ... The court found that Raymond and Thomas were de facto partners in the company, and it concluded that Raymond had breached the partnership contract by denying Thomas his interest in the company.
"Although we agree with the defendants’ assertion that the company could not have been both a corporation and a partnership; Karanian v. Maulucci, 185 Conn. 320, 323-24, 440 A.2d 959 (1981); we disagree with their assertion that because the company was not a partnership, there could not have been a partnership contract." Id., 413-14.
The court is bound by this ruling. Application of it here means that Kalra could have breached a partnership contract with Chugh even though TAL was a corporation. The plaintiffs also posit that TAL is not congruent with the partnership in question. They allege instead that Chugh and Kalra had an oral partnership that included but apparently was not limited to TAL. (Complaint, ¶80 ("The Partnership Agreement was based [on] Chugh and Kalra’s mutual understanding of how the Trikona Group, including TAL, would be run ...")) In doing so, the plaintiffs rely on the law that partnerships can exist based on oral agreements and that the existence of such an agreement is a "question of fact." See Jacobs v. Thomas, 26 Conn.App. 305, 306, 600 A.2d 1378 (1991), cert. denied, 221 A.2d 914, 603 A.2d 404 (2012); Jacobs v. Thomas, 18 Conn.App. 218, 222, 557 A.2d 145 (1989), cert. denied, 212 Conn. 806, 563 A.2d 1355 (1989). "The terms of such an agreement are ascertained by determining the intent of the parties, which is a question of fact." Jacobs v. Thomas, supra, 18 Conn.App. 222.
Both sides present some evidence on the fact question of whether a partnership existed. To show that there was no partnership, Kalra cites the apparently undisputed fact that Chugh was not a co-owner of TAL. While that fact is certainly relevant; see Davies v. General Tours, Inc., 63 Conn.App. 17, 29, 774 A.2d 1063 (2001); it is not dispositive and does not address whether Chugh may have had an ownership interest in any of the other partnership entities. Kalra also notes that, in a 2006 securities filing he and Chugh prepared, Chugh did not disclose, as requested, that he was a partner in TAL or any related company and instead stated that "[p]rior to the formation of ... [TAL], Kalra and Chugh had operated as a partnership ..." thus suggesting that any partnership predated the incorporation of TAL. (Def’s. Ex. 3, ¶¶3-5; Ex. 11, pp. 76, 106-7.) Based on this showing, the defendants have discharged their summary judgment burden of presenting facts that, if credited, could form the basis for judgment as a matter of law that there was no partnership. See DiPietro v. Farmington Sports Arena, LLC, supra, 306 Conn. 116.
The defendants’ brief includes the quotation that "co-ownership of the business is held to be ‘an essential element of a partnership.’" There is no immediate citation. The defendants add the quotation "[c]o-ownership ‘has been described as the most important characteristic of a partnership.’" The defendants then provide "Id." as the citation, apparently for both propositions. (Def’s. Br., p. 27.) The immediately preceding citation is Davies v. General Tours, Inc., 63 Conn.App. 17, 28, 774 A.2d 1063 (2001). The court cannot find the quoted language on page 28 or on any other page in Davies. The defendants’ inaccurate citations make the court question whether the defendants have correctly stated the law.
The burden then shifts to the plaintiffs to provide an "evidentiary foundation to demonstrate the existence of a genuine issue of material fact ..." (Internal quotation marks omitted.) Id. The plaintiffs present Chugh’s testimony under oath that, in 2004 or 2005, he and Kalra "verbally agreed to have a partnership, a 50/50 partnership between the two of us and go forward with this." (Pl’s. Ex. J, p. 15.) In the same testimony, Chugh stated that the "Trikona Group" was not just TAL but comprised "a number of companies in various jurisdictions." (Pl’s. Ex. J, pp. 73-74.) In corroboration, the plaintiffs also cite the same securities filing, which defines the "Trikona Capital Group" as "Rak Chugh, Aashish Kulra and their families or companies under their common ownership." (Def’s. Ex. K, p. 120.) This testimony minimally suffices to create a genuine factual issue as to whether there was a partnership after 2006. Kalra’s final argument for summary judgment on count two relies on the fact, as stated in his affidavit, that he gave notice of his intent to dissolve all business relationships with Chugh on several occasions beginning in December 2008. (Def’s. Ex. 3, pp. 4-5.) Kalra asserts that no liability for breach of a partnership agreement can arise after that point. However, under Connecticut law, subject to certain exceptions that do not apply here, "a partnership continues after dissolution only for the purpose of winding up its business. The partnership is terminated when the winding up of its business is completed." General Statutes § 34-373(a). In this case, two of Chugh’s companies, ARC Capital, LLC and Haida Investments, Ltd., which were owners of TAL, brought a petition in the Cayman Islands in February 2012 to wind up TAL. (Pl’s. Ex. A, p. 1.) Much of the wrongdoing alleged in the present case took place after the filing of this petition. (Complaint, ¶¶25-49.) The court cannot say at this point whether or not these allegations involve winding up activity that might be subject to partnership duties, as the parties do not address this issue in sufficient detail. At this point, the issue must remain one for trial. Accordingly, the court denies the summary judgment motion on count two.
The court does not rely on the following 2013 finding of the Grand Court of the Cayman Islands in the wind-up proceeding between ARC Capital, LLC and Haida Investments, Limited, as petitioners, and Asia Pacific Limited, as respondent: "Trikona should be characterized as a quasi partnership between Chugh and Kalra. They founded the company jointly. They managed it jointly. Although Trikona group companies employed as many as 50 people at one time, its business was dependent upon the personal involvement of Messrs Chugh and Kalra. Whilst Trikona’s board of directors included two so-called ‘independent directors, ’ there is no evidence that they played any real role at all in the management of the company’s business ..." (Pl’s. Ex. A, p. 3, ¶5.) First, it is not clear whether a "quasi partnership" amounts to a legal partnership under Connecticut law. Second, it is not clear whether collateral estoppel applies, both because the finding may not have been "necessarily determined" and because Kalra was not a party to the Cayman litigation. See Trikona Advisers Ltd. v. Chugh, supra, 846 F.3d 31-34 (discussing collateral estoppel effect of the Cayman ruling in view of the "necessarily determined" requirement and the "in privity" rule).
In count three, the plaintiff alleges breach of a joint venture. "The distinction between a partnership and a joint venture is often slight, the former commonly entered into to carry on a general business, while the latter is generally limited to a single transaction." Travis v. St. John, 176 Conn. 69, 72, 404 A.2d 885 (1978). An earlier recitation of Connecticut law phrased it similarly: "[I]t is commonly considered that, as respects the character of the enterprise, a partnership is formed for the purpose of carrying on a general business of one sort or another, and a joint adventure is more commonly limited to a single transaction or course of transactions." Dolan v. Dolan, 107 Conn. 342, 349, 140 A. 745 (1928), quoted in Veilleux v. Central Rigging & Transfer, LLC, No. HHDCV 085022642S, 2015 WL 670979, at *3 (Conn.Super.Ct. Jan. 26, 2015) . Both definitions embody the concept that a joint venture is limited in time and purpose. In this case, as stated, Chugh has supplied evidence that the partnership came into being in 2004 or 2005, lasted at least until 2012, and comprised "a number of companies in various jurisdictions." Chugh’s affidavit states his expectation that his participation in TAL’s management "would continue throughout TAL’s existence." (Def’s. Ex. 4, p. 3, ¶9.) Chugh alleges that the goal of the company was to "[raise] billions of dollars from investors in the United States, the United Kingdom, and elsewhere to invest in Indian real estate." (Complaint, ¶10.) These allegations and evidence, all coming from Chugh, show an intent to carry on a worldwide general business rather than to engage in single transaction or a limited course of transactions. The plaintiff cites no contrary evidence that would suggest that the business constituted only a joint venture. Accordingly, the court grants summary judgment on count three.
In counts four and five, the plaintiff alleges, respectively, a breach of fiduciary duty and a breach of the implied covenant of good faith and fair dealing based on the defendants’ alleged breaches of the partnership and joint venture agreements. The only defense briefed by the defendants is that there was no valid underlying partnership or joint venture agreement. The court agrees with this defense only as to the allegation of a joint venture agreement. As to the alleged partnership agreement, the court has found sufficient evidence to present to the fact-finder. Therefore, in theory, the plaintiff has a viable claim of breach of fiduciary duty and breach of the implied covenant within that time span. See Oakhill Associates v. D’Amato, 228 Conn. 723, 727, 638 A.2d 31 (1994) (partners are "bound in a fiduciary relationship" and "act as trustees toward each other and toward the partnership" [internal quotation marks omitted]). Kalra, in fact, has admitted that Chugh owed a fiduciary duty at least to TAL. (Def’s. Ex. 2, p. 66, ¶176 ("As an executive officer and member of the board of directors of TAL, Chugh owed a heightened and/or ordinary fiduciary duty of good faith, integrity, fair dealing, trust, loyalty, and care to TAL")); (Pl’s. Ex. G, p. 4, ¶16 (Chugh "acted as if he did not owe any fiduciary to the Company whatsoever ...")). Logically, this duty would extend to Chugh’s co-partner, Kalra.
However, it is not immediately clear what the plaintiffs gain by realleging their breach of partnership agreement as a breach of fiduciary duty or breach of the implied covenant. While the court denies the summary judgment motion on counts four and five with respect to the alleged partnership, the court will not let repetitious counts go to the jury.
II
In count six, Chugh and Peak allege libel against Kalra and TAL on the basis of two publications: a May 30, 2012 letter and a March 13, 2013 press release. The plaintiffs initially claim that the defamation special defenses raised by the defendants are untimely. However, the defendants’ opposition to the plaintiffs’ motion for summary judgment demonstrates convincingly that the defendants have given the plaintiffs ample notice of their defenses. (Defs. Mem. in Opp. to Pl’s. Cross Motion for Summary Judgment, Entry #289.00, pp. 1-4.) Further, the court has granted the plaintiffs leave to file this cross motion for summary judgment challenging the special defenses outside of the scheduling order. (Entry #272.86; Entry #285.00, pp. 34-36.) Finally, although the plaintiffs claim prejudice from the late pleading, the plaintiffs do not properly establish the need for additional time to conduct discovery by filing an affidavit as provided in Practice Book § 17-47. Therefore, the court rejects the procedural arguments in the plaintiffs’ motion for summary judgment.
Section 17-47 provides: "Should it appear from the affidavits of a party opposing the motion that such party cannot, for reasons stated, present facts essential to justify opposition, the judicial authority may deny the motion for judgment or may order a continuance to permit affidavits to be obtained or discovery to be had or may make such other order as is just."
The court turns to the merits of the special defenses. The most important special defense is the two-year statute of limitations for libel or slander. General Statutes § 52-597 provides: "No action for libel or slander shall be brought but within two years from the date of the act complained of." There is no dispute that Chugh’s claim regarding the 2013 press release, first alleged in the original complaint filed in 2014, is timely. The first disputed issue is whether Peak’s claim concerning the 2013 press release, which originated with the filing of a second amended complaint in 2018, relates back to Chugh’s original complaint. (Entries #161.00, 161.86, 194.00.) The rule on this issue is that "a motion to intervene may relate back to an original complaint when ... the identity of the cause of action remains substantially the same and arises out of a single group of facts, and when the prospective intervenor is the real party in interest." Austin-Casares v. Safeco Ins. Co. of America, 310 Conn. 640, 660, 81 A.3d 200 (2013). Here, the cause of action arises out of the identical set of facts but there is a question as to whether Peak is "the real party in interest." None of the parties present evidence on this point in the respective briefs and exhibits. Accordingly, the court will have to defer ruling on this issue until trial.
The next issue is whether Chugh’s and Peak’s claims regarding the 2012 letter, which they first asserted in the 2018 amended complaint, relate back to Chugh’s allegations in the original complaint about the 2013 press release. "To relate back to an earlier complaint, the amendment must arise from a single group of facts ..." (Internal quotation marks omitted.) Grenier v. Commissioner of Transportation, 306 Conn. 523, 560, 51 A.3d 367 (2012). Although there is an overlap in the topics in the two publications, they remain separate publications distributed to different audiences. The plaintiffs present no authority for the seemingly novel proposition that one publication can relate back to a different one for statute of limitations purposes. Accordingly, the court grants summary judgment on count six with regard to the 2012 letter.
The court therefore has no occasion to address the defendants’ alternate argument that publication of the 2012 letter was absolutely privileged under the litigation privilege. See Mozzochi v. Beck, 204 Conn. 490, 494-95, 529 A.2d 171 (1987).
With regard to the press release, the defendants advance the alternative argument that the first amendment provides absolute protection because the letter addresses a matter of public concern. The defendants also assert that truth is a complete defense and that the press release was an "essentially true" recitation of the federal complaint. (Def’s. Br., p. 10.) Contrary to the defendants’ argument, the first amendment does not absolutely bar defamation claims against public figures or claims involving matters of public concern, but rather merely affects the standard of proof. See Gleason v. Smolinski, 319 Conn. 394, 431, 125 A.3d 920 (2015) ("We previously have noted that, under New York Times Co. v. Sullivan, supra, 376 U.S. at 254, 84 S.Ct. 710 if ‘the plaintiff is a public figure ... the plaintiff also must prove that the defamatory statement was made with actual malice, such that the statement, when made, [was] made with actual knowledge that it was false or with reckless disregard of whether it was false ...’). Whether the defendant has met the applicable burden of proof is a fact question. See Gambardella v. Apple Health Care, Inc., 291 Conn. 620, 638, 969 A.2d 736 (2009) ("[w]hether a defendant has knowledge of the falsity of a defamatory statement is a question within the province of the trier of fact"). The same is the case with regard to the defendants’ claim that the press release was "essentially true." Wholly aside from the defendants’ reluctance to state that the press release was true without qualification, the press release is a highly charged document that generates numerous factual disputes. Therefore, the court denies the motion for summary judgment concerning the 2013 press release.
III
The court grants the defendants’ summary judgment on count three and on count six with regard to the 2012 letter. The court denies the defendants’ summary judgment motion with regard to counts two, four, and five, and count six with regard to the 2013 press release. The court denies the plaintiffs’ motion for summary judgment.
It is so ordered.