Submitted: January 31, 2017
Defendants' Motion to Dismiss DENIED.
Gregory E. Stuhlman, Esquire, and Brittany M. Giusini,
Esquire, Greenberg Traurig, LLP, Wilmington, Delaware.
Attorneys for SRL Mondani, LLC.
S.C. Stover, Esquire, and Regina S.E. Murphy, Esquire, Barnes
& Thornburg LLP, Wilmington, Delaware. Attorneys for
Modani Spa Resort, Ltd., Neil Kaye, and Judy Kaye.
M. Davis, Judge
breach of contract action is assigned to the Complex
Commercial Litigation Division of the Court. Plaintiff SRL
Mondani LLC's ("SRL") filed its Complaint on
April 1, 2016. Through the Complaint, SRL seek repayment of a
loan and interest from Defendants Modani Spa Resort, Ltd.,
Neil Kaye, and Judy Kaye (collectively,
13, 2016, Defendants moved to dismiss the Complaint, and
filed their Opening Brief in Support of Defendants'
Motion to Dismiss (the "Motion"). Defendants allege
that the parties' various contracts mandate Israeli
jurisdiction and application of Orthodox Jewish law and this
mandate overrides all other forum selection clauses.
Alternatively, Defendants argue for dismissal on forum
non conveniens grounds-e.g., litigating in
Delaware is an extreme hardship, as the parties' sole
collective tie to Delaware is SRL's incorporation here.
SRL opposes the Motion, submitting its Plaintiff's
Answering Brief in Opposition to Defendants' Motion to
Dismiss (the "Answer"). Defendants responded to the
Answer on September 26, 2016 with their Defendants' Reply
in Support of Their Motion to Dismiss filed on October 31,
2016 (the "Reply").
Court held a hearing and heard oral argument on the Motion,
Answer, and Reply on January 31, 2017. At the conclusion of
the hearing, the Court took the Motion under advisement. This
is the Court's decision on the Motion. For the reasons
set forth below, the Court DENIES the Motion.
a Delaware limited liability company. Modani Spa Resort Ltd.
("Modani") is a company organized under the State
of Israel. Mr. Kaye and Ms. Kaye are Israeli
residents.Defendants wanted to build a resort in
Israel. SRL lent Defendants $1.5 million to assist
in the building of that resort.
September 4, 2015, the parties executed three agreements in
conjunction with the loan. First, the parties executed a
Bridge Financing Agreement
("Agreement"). Under the Agreement, Modani agreed to
repay the full principal plus interest by January 2,
2016. Second, Modani executed a $1.5 million
promissory note (the "Note"). In connection
with the financing, Mr. Kaye and Ms. Kaye also signed a
personal guarantee (the "Guarantee"), promising to
repay the loan in the event Modani did not.
parties also signed two related agreements. First, the
parties signed the Iska Contract. The Iska Contract
provides, among other things, that (i) Defendants received
$1.5 million from SRL to be used for business
purposes; (ii) Defendants were obligated to use
the funds in a manner they believed would generate
profits; and (iii) any profits realized or losses
sustained shall be shared equally between SRL and
Defendants. Second, the parties entered a Share
Issuance Agreement, whereby Defendants issued 44, 859, 130
ordinary shares of Modani stock to SRL in exchange for
SRL's lending Modani shareholder loans and capital
did not repay the loan by January 2, 2016. On January 4,
2016, SRL notified Modani that it was in default, and
demanded full payment of principal and interest within
fourteen days. SRL also notified Mr. Kaye and Ms. Kaye,
as Guarantors. Modani did not repay the loan within the
fourteen day mandate. On January 13, 2016, SRL demanded
payment from Mr. Kaye and Ms. Kaye. Mr. Kaye and Ms. Kaye did
not pay under the Guarantee.
Court Civil Rule 12(b)(3) ("Civil Rule 12(b)(3)")
governs a motion to dismiss or stay on the basis of improper
venue. Under Civil Rule 12(b)(3), the Court should give
effect to private agreements' terms to resolve disputes
in a contractually-designated judicial forum, out of respect
for the parties' contractual designation. The Court can
grant dismissal prior to discovery, on the basis of
affidavits and documentary evidence, if the plaintiff cannot
make out a prima facie case in support of its
position. The Court generally will allow discovery
in connection with Civil Rule 12(b)(3) motion when the
plaintiff advances a non-frivolous legal argument that would
defeat the motion if the facts turn out to be as
purposes of the Motion, the Court finds that the relevant
agreements are the Agreement and the Guarantee. The Agreement
contains a forum selection clause, which states:
This Agreement shall be governed by and construed according
to the laws of the State of Delaware, without regard to the
conflict of laws provisions thereof. Any dispute arising
under or in relation to this Agreement shall be resolved in
the competent courts situated in Delaware, and each of the
parties hereby submits irrevocably to the exclusive
jurisdiction of such court.
the Guarantee also contains a mandatory Delaware forum
selection clause, which states:
[T]he law applicable to this Guarantee and to any matter in
connection with and relating to it shall be law of the state
of Delaware without regard to provisions regarding choice of
laws. Exclusive jurisdiction on any matter relating to this
Guarantee shall be vested in the competent court situated in
contend the Iska Contract supersedes the Agreement's and
Guarantee's forum selection clauses. The Iska
contract's forum selection clause states: "[A]ny
dispute which may arise in connection with this agreement
shall be submitted before the courts of
Israel." Even if Iska Contract were applicable,
Defendants have not cited, and the Court cannot locate, any
case law showing an Iska or any contract comporting with
Jewish law supersedes other, concurrent contracts. The Court
has found, however, ...