Feiliks International Logistics Hong Kong Ltd. v. Feiliks Global Logistics Corp.

16-1159
Feiliks v. Feiliks
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
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At a stated term of the United States Court of Appeals for
the Second Circuit, held at the Thurgood Marshall United States
Courthouse, 40 Foley Square, in the City of New York, on the
3rd day of April, two thousand seventeen.
PRESENT: DENNIS JACOBS,
DEBRA ANN LIVINGSTON,
Circuit Judges,
LEWIS A. KAPLAN,
District Judge.
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FEILIKS INTERNATIONAL LOGISTICS HONG
KONG LTD., FEILIKS LOGISTIC PTE. LTD.,
Plaintiffs-Counter-Defendants
-Appellants,
TAY KIM LENG, aka Regina Tay, YAO QIN,
aka Gavin Yao, SKYLIFT CONSOLIDATOR
(PTE) LTD., JIANGSU FEILIKS
INTERNATIONAL LOGISTICS INC.,
Counter-Defendants,
-v.- 16-1159

Judge Lewis A. Kaplan, of the United States District Court for
the Southern District of New York, sitting by designation.
1
FEILIKS GLOBAL LOGISTICS CORP.,
Defendant-Appellee,
AMI KWAN CHI WEY, aka Ami Wey,
individually and derivatively on
behalf of Feiliks Global Logistics
Corp.,
Defendant-Counter-Claimant-
Appellee.
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FOR APPELLANTS: PAUL D. SARKOZI, Tannenbaum
Helpern Syracuse &
Hirschtritt LLP, New York, NY
(Frank Xu, Law Office of Frank
Xu, PLLC, on the brief).
FOR APPELLEES: VINCENT CHIRICO, Chirico Law
PLLC, Brooklyn, NY.
Appeal from a judgment of the United States District Court
for the Eastern District of New York (Cogan, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND
DECREED that the judgment of the district court be AFFIRMED.
Feiliks International Logistics Hong Kong Ltd. (“Feiliks
HK”) and Feiliks Logistic Pte. Ltd. (“Feiliks Singapore”)
appeal from the entry of judgment against them following a bench
trial in the United States District Court for the Eastern
District of New York (Cogan, J.). On appeal following a bench
trial, we review the district court’s findings of fact for clear
error and its conclusions of law de novo. Diesel Props S.R.L.
v. Greystone Bus. Credit II LLC, 631 F.3d 42, 51-52 (2d Cir.
2011). We assume the parties’ familiarity with the underlying
facts, the procedural history, and the issues presented for
review.
2
In March 2013, Feiliks Singapore, an international freight
forwarding company, and Ami Wey, an American who had been in
the freight forwarding business for many years, formed a new
company, incorporated in New York, called Feiliks Global
Logistics Corp. (“Feiliks US”). Eighty percent of Feiliks US
was owned by Feiliks Singapore. Wey owned the other twenty
percent and served as the company’s controller. In addition
to the combined $200,000 in startup capital contributed by
Feiliks Singapore and Wey, Feiliks US received a $300,000 loan
from Feiliks HK (the majority owner of Feiliks Singapore) in
April 2013.
In September 2014, following a breakdown in the
relationship between Wey and Feiliks US officers affiliated
with Feiliks Singapore and Feiliks HK, appellants filed the
present action asserting: (1) breach of contract against
Feiliks US and Wey for failing to repay the $300,000 loan; and
(2) breach of fiduciary duty against Wey for allegedly
exploiting corporate opportunities for personal gain,
exceeding her power and authority as a corporate officer,
failing to repay the $300,000 loan, and initiating a state court
action that allegedly harmed Feiliks US. The district court
dismissed these claims.1
With respect to breach of contract, the district court
found that: (1) appellants’ decision to withdraw business from
Feiliks US undermined their breach of contract claim; and (2)
Wey could not be held personally liable because she did not sign
the loan agreement in her individual capacity. With respect
to breach of fiduciary duty, the district court held that
appellants improperly asserted a direct, rather than
derivative, claim.
1
The district court also dismissed Wey’s counterclaims. With
respect to Wey’s breach of fiduciary duty counterclaim against
Feiliks Singapore, the court ruled that although Feiliks
Singapore breached its fiduciary duty, Wey failed to prove
damages. Appellants devote half of the argument section in
their opening brief contesting the district court’s finding
regarding Feiliks Singapore’s fiduciary breach. Because this
counterclaim was dismissed, the issue is moot.
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1. Federal jurisdiction was premised on diversity of
citizenship pursuant to 28 U.S.C. § 1332(a). Appellants
(Feiliks HK and Feiliks Singapore) are foreign entities;
appellees (Feiliks US and Wey) are United States citizens.
After the district court sua sponte inquired about Wey’s
citizenship, Wey testified by affidavit that she was
naturalized as a United States citizen in approximately 1990,
and appellants offered no reason to doubt that testimony.
Although appellants brought this case in federal court under
diversity jurisdiction, and at no time sought to dismiss or
remove it, they now argue that diversity is lacking because Wey
is allegedly a Taiwanese citizen, and because Wey did not
produce records of her United States naturalization.
Neither Wey’s alleged foreign citizenship nor her failure
to produce original naturalization records precludes diversity
jurisdiction in this case. First, even if Wey is a dual
citizen, it is her United States citizenship that determines
diversity. Action S.A. v. Marc Rich & Co., 951 F.2d 504, 507
(2d Cir. 1991). Second, subject matter jurisdiction need only
be proved by a preponderance of the evidence, Tandon v.
Captain’s Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243
(2d Cir. 2014), and that proof need not take any specific form.
With zero evidence to the contrary -- in a diversity case brought
by her adversaries -- Wey’s sworn affidavit stating that she
is a United States citizen is sufficient to establish diversity
jurisdiction.
2. Appellants argue that the district court erred by
dismissing their breach of contract claim against Feiliks US
and Wey. This argument is meritless. With respect to Wey, the
district court’s finding that she did not sign the loan
agreement in an individual capacity is supported by the evidence
and is not clearly erroneous.
With respect to Feiliks US, the district court’s finding,
perhaps more accurately phrased as a determination that
appellants had breached their implied duty of good faith and
fair dealing under the loan agreement by undermining the
company’s business -- including by diverting customers to
Feiliks US’s competitors -- is amply supported by the record.
This frustration of performance excused Feiliks US’s failure
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to repay the loan. See Lowell v. Twin Disc, Inc., 527 F.2d 767,
770 (2d Cir. 1975) (“[W]henever the cooperation of the promisee
is necessary for the performance of the promise, there is a
condition implied that the cooperation will be given.”
(internal quotation marks and alterations omitted)); Grad v.
Roberts, 14 N.Y.2d 70, 75 (1964) (“Persons invoking the aid of
contracts are under implied obligation to exercise good faith
not to frustrate the contracts into which they have entered.”).2
3. Appellants challenge the dismissal of the breach of
fiduciary duty claim against Wey. This argument is raised for
the first time in their reply brief; it is therefore waived.3
See JP Morgan Chase Bank v. Altos Hornos de Mexico, S.A. de C.V.,
412 F.3d 418, 428 (2d Cir. 2005) (“[A]rguments not made in an
appellant’s opening brief are waived even if the appellant .
. . raised them in a reply brief.”). In any event, the argument
would fail. The alleged harm caused by Wey’s purported breach
of fiduciary duty befell Feiliks US, and was not sustained by
appellants except derivatively as shareholders. See Excimer
Assocs. v. LCA Vision, Inc., 292 F.3d 134, 139-40 (2d Cir. 2002)
(“[T]he critical question posed by the direct injury test is
whether the damages a plaintiff sustains are derivative of an
injury to a third party. If so, then the injury is indirect;
if not, it is direct.” (internal quotation marks omitted));
Abrams v. Donati, 66 N.Y.2d 951, 953 (1985) (“But allegations
of mismanagement or diversion of assets by officers or directors
to their own enrichment, without more, plead a wrong to the
corporation only, for which a shareholder may sue derivatively
but not individually.”); Barbaro v Spinelli, 121 A.D.3d 727,
728 (2d Dep’t 2014) (“A shareholder, even in a closely-held
corporation, may not recover in his or her individual capacity
2
Contrary to appellants’ contention, Feiliks US and Wey
asserted this position as an affirmative defense below. See,
e.g., App’x at 86, 159, 218.
3
Appellants make references to Wey’s allegedly improper
conduct in their opening brief. However, they do not contest
the district court’s ruling that their fiduciary breach claim
should have been brought derivatively. The arguments in their
opening brief are directed solely at their breach of contract
claim and Wey’s dismissed breach of fiduciary duty
counterclaim.
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for wrongs against the corporation.”). Therefore, appellants’
breach of fiduciary duty claim, which was asserted directly
rather than derivatively on behalf of Feiliks US, was properly
dismissed.
4. Finally, appellants contend in their reply brief that
the joint representation of Feiliks US and Wey by defense
counsel created a conflict of interest that tainted the trial.
Because this argument was not advanced in appellants’ opening
brief, it is waived. See JP Morgan Chase Bank, 412 F.3d at 428.
Regardless, it is meritless. “A failure to disqualify counsel
will be overturned only upon a showing that the district court
abused its discretion.” Bobal v. Rensselaer Polytechnic
Inst., 916 F.2d 759, 764 (2d Cir. 1990). Appellants’ motion
to disqualify counsel, which was erroneously styled as a “Motion
for Temporary Restraining Order” (ECF 29), was unintelligible,
failed to identify a conflict of interest, cited no case law,
and was filed three days before trial in an apparent bid for
delay. The district court did not abuse its discretion by
denying the motion.
Accordingly, we hereby AFFIRM the judgment of the district
court.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, CLERK
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