United States District Court, D. Delaware
before this Court is a joint motion to dismiss filed by
Defendants Starwood Capital Group Global I LLC
("Starwood Capital Group") and Starman Hotel Holdings
LLC ("Starman"). (D.I. 15). The motion to dismiss
is based on Federal Rule of Civil Procedure 12(b)(6). The
matter is fully briefed. (D.I. 16, 23, 27).
reasons set forth herein, Defendants' motion is granted
in part and denied in part.
April 30, 2018, Plaintiff Compagnie des Grands Hotels
d'Afrique S.A. filed this action to enforce against
Starwood Capital Group and Starman a foreign arbitration
award finding Woodman Maroc S.a.r.l. ("Woodman")
liable for breach of contract. (D.I. 1). Plaintiff is the
owner of the Royal Mansour Hotel ("Hotel"), a
luxury hotel in Casablanca, Morocco. (Id. ¶ 2).
In 1989, Plaintiff entered into a thirty-five year Management
Agreement with the Trusthouse Forte Group.
(Id.) The Management Agreement provided
that the manager would always maintain the Hotel as an
international five-star hotel and would make quarterly fee
payments to Plaintiff as owner of the hotel. (Id.)
2005, Le Meridien Group ("Meridien") "had
become the owner of the manager of the Hotel."
(Id. ¶ 3). That same year, Defendant Starwood
Capital Group and Lehman Brothers formed Starman to purchase
the owned and leased properties of the Meridien Group.
(Id. ¶¶ 3-4). Thus, Starman became
"owner of the manager of the Hotel."
(/d). As part of the acquisition by Starman,
Starman entered into a management agreement with Starwood
Hotels & Resorts Worldwide, Inc. ("Starwood
Hotels"). (Id. ¶¶ 5, 35-36).
Additionally, the acquisition required Woodman to enter into
a separate operating agreement with Starwood Hotels.
(Id. ¶¶ 6, 38). Therefore, after the
acquisition organized by Starwood Capital Group, Starman
owned and leased the properties of the Meridien Group and
those properties entered management agreements with Starwood
Hotels. (Id. ¶¶ 4-6). Under the operating
agreement between Starwood Hotels and Woodman, Starwood
Hotels became the agent of Woodman and agreed to
"supervise, direct and control, the [o]peration of all
aspects of the [Hotel] for and on behalf of Woodman. (M¶
2006, Plaintiff, unaware of the acquisition, attempted to
communicate with Meridien in regard to the Management
Agreement. (Id. ¶ 43). In response, Starwood
Hotels contacted the Hotel and informed it of the change in
management, i.e., that Starwood Hotels had acquired the
Meridien brand and that the Management Agreement for the
Hotel had been "transferred to Starman."
(Id. ¶¶ 43-44). In the following months,
Plaintiff received correspondence from Starman regarding the
Hotel. (Id. ¶¶ 44-46).
2006 to 2011, Plaintiff received and addressed letters to
Starman and a Starman subsidiary, Starman UK. (Id.
¶¶ 46-47). By 2010, Woodman failed to make the
minimum payments due to Plaintiff under the Management
Agreement. (Id. ¶ 49). As a result, Plaintiffs
counsel intervened and began corresponding with Woodman and
Starman. (Id.) Shortly after Plaintiffs counsel
accused Woodman of default, Woodman began to communicate
directly with Plaintiff. (Id. ¶
2011 and 2013, there was continued correspondence between
Woodman and Plaintiff regarding the Management Agreement.
(Id. ¶ 52). On February 28, 2012, Woodman's
shares were sold to a Starman subsidiary called Starman
(Maroc) S.a.r.l. (Id. ¶ 54). On January 7,
2013, Woodman contacted Plaintiff to acknowledge
Woodman's failure to pay the December 31, 2012 minimum
payment under the contract and to inform Plaintiff that
Woodman did not intend to make any more payments and planned
to file for insolvency soon. (Id. ¶ 55). The
next day, Plaintiff gave Woodman formal notice of default and
informed Woodman that it was in breach of the Management
Agreement. (Id. ¶ 56). Woodman did not file for
insolvency, but through continued correspondence, claimed
multiple times to be insolvent. (Id. ¶¶
57, 66, 80, 90, 100).
August 6, 2013, Plaintiff commenced arbitration against
Woodman for breach of the Management Agreement. (Id.
¶ 58). On June 19, 2014, Defendant Starman sold its
subsidiary, Starman (Maroc) S.a.r.L, to a newly created
entity called Maquay Investments Ltd. ("Maquay")
for €100. (Id. ¶ 59). In July 2014,
Plaintiff received news of this sale and Maquay placed
Starman (Maroc) S.a.r.L into liquidation. (Id.
¶ 61). On August 13, 2014, Woodman informed Plaintiff
that Woodman would no longer take part in the arbitration due
to its insolvency and would "not be in a position to
satisfy any judgment or award for costs." (Id.
arbitration, Plaintiff requested interim relief, which was
granted on September 19, 2014. (Id. ¶
69). The arbitrators reasoned that Plaintiff had
"shown sufficient evidence that, despite its failure to
pay the fees owed under the Management Agreement, [Woodman]
may have made and still is about to make, payments to the
profit of [Starman] under an operating agreement which it
allegedly entered into with [Starwood Hotels]," and that
"there is a serious threat that [Woodman's] assets
[will] be diverted to the profit of [Starman] and to the
detriment of Plaintiff. (Id.) The arbitrators
(a) to "hand back the possession, operation and business
of the Hotel to [Plaintiff]" within 31 days, including
taking all practical measures needed to effect an orderly
handover of the business with respect to the transition of
Hotel guest and reservation data; (b) within 14 days of
handing over the Hotel, to provide a full financial statement
as of the handover date and [to] account to CGHA for all
payments made by Woodman since December 31, 2012; and (c) to
cease making any payments to any third party, including under
the Operating Agreement, until the [arbitrators issued their
final award on liability.
(Id. ¶ 70). The financial statements revealed
that Woodman made payments totaling approximately $1 million
to Starwood Hotels' entities during 2013 and 2014.
(Id. ¶ 71). Woodman made none of its required
payments to Plaintiff during this time. (Id. ¶
55). The arbitration award was issued on May 6, 2015 and
found Woodman breached its obligations under the Management
Agreement. (Id. ¶¶ 73, 76).
has failed to make any payments on the arbitration award.
(Id. ¶ 81).
complaint alleges that the arbitration award against Woodman
should be enforced under Delaware law (D.I. 23 at
against Starman on alter ego and agency liability theories,
and against Starwood Capital Group on agency liability
theory. Plaintiff seeks to recover damages accordingly.
(Id. at 46).
reviewing a motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6), the Court must accept the
complaint's factual allegations as true.See Bell Ail.
Corp. v. Twombly,550 U.S. 544, 555-56 (2007). Rule 8(a)
requires "a short and plain statement of the claim
showing that the pleader is entitled to relief."
Id. at 555. The factual allegations do not have to
be detailed, but they must provide more than labels,
conclusions, or a "formulaic recitation" of the
claim elements. Id. ("Factual allegations must
be enough to raise a right to relief above the speculative
level... on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).").
Moreover, there must be sufficient factual matter to state a
facially plausible claim to relief. Ashcroft v.
Iqbal,556 U.S. 662, 678 (2009). The facial plausibility
standard is satisfied when the complaint's factual
content "allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged." Id ...