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Wei v. Rocky Point International LLC

United States District Court, E.D. Wisconsin

September 6, 2017

SEAH CHEE WEI, Plaintiff,


          J. P. Stadtmueller, U.S. District Judge.

         This case is animated by both a Wisconsin lake house and an oil rig located in the Indian Ocean. The purchase of the rig went awry, and Plaintiff Seah Chee Wei (“Seah”), [1] liquidator of the rig's prospective buyer, Traxiar Drilling Partners II Pte., Ltd. (“Traxair”), alleges that several million dollars of Traxair's funds were stolen. Those funds were transferred to several Texas entities before ending up in the possession of Defendant Rocky Point International, LLC (“Rocky Point”). Rocky Point used the money to renovate a lake house in Pewaukee, Wisconsin.

         Seah asks the Court to undo the allegedly fraudulent transfers, while Rocky Point counters that all of the transactions at issue were legitimate. Before the Court is Seah's motion for partial summary judgment on his claims of constructive fraudulent transfer and constructive trust. (Docket #53). The motion is fully briefed and, for the reasons stated below, it must be denied.

         1. LEGAL STANDARD

         Federal Rule of Civil Procedure 56 provides that the court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Boss v. Castro, 816 F.3d 910, 916 (7th Cir. 2016). A fact is “material” if it “might affect the outcome of the suit” under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute of fact is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. The court construes all facts and reasonable inferences in the light most favorable to the non-movant. Bridge v. New Holland Logansport, Inc., 815 F.3d 356, 360 (7th Cir. 2016). The court must not weigh the evidence presented or determine credibility of witnesses; the Seventh Circuit instructs that “we leave those tasks to factfinders.” Berry v. Chicago Transit Auth., 618 F.3d 688, 691 (7th Cir. 2010). The party opposing summary judgment “need not match the movant witness for witness, nor persuade the court that [his] case is convincing, [he] need only come forward with appropriate evidence demonstrating that there is a pending dispute of material fact.” Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 921 (7th Cir. 1994).

         2. RELEVANT FACTS

         The Court has several times reviewed the complex series of events giving rise to this litigation. See Seah v. Rocky Point Int'l, LLC, Case No. 16-CV-1282-JPS, 2016 WL 7046802, at *1-2 (E.D. Wis. Dec. 2, 2016); Seah v. Rocky Point Int'l LLC, Case No. 16-CV-1282-JPS, 2017 WL 74263, at *1-2 (E.D. Wis. Jan. 6, 2017). In this Order, the Court will confine itself to the facts necessary to disposition of the present motion. The interested reader may consult the prior opinions for additional background information.

         2.1 The Somnath and the Symphony-Traxair Loan Agreement

         Traxiar is a foreign corporation located in the Republic of Singapore. Pursuant to an order dated June 3, 2015, the High Court of Singapore appointed Seah and Tan Suah Pin as the liquidators of Traxiar.[2]The order provided for winding down the business affairs of Traxiar and vested in the liquidators authority to exercise any of the powers and entitlements of liquidators conferred by Section 272(1) of the Singapore Companies Act.

         Dag Oivind Dvergsten (“Dvergsten”) is a Norwegian businessman. From the time of Traxiar's inception until at least April 23, 2015, Dvergsten was a director of Traxiar. He is also the sole director of Rocky Point and has authority to act on its behalf.

         On or about December 23, 2013, Symphony Ventures Pte. Ltd. (“Symphony”) entered into a loan agreement for $15 million with Traxiar in order to finance the down payment on the Somnath, an oil rig located in Qatar. The agreement provided for the $15 million to be made available to Traxiar in two parts. The first tranche of $6 million was to be made available on or before December 31, 2013. The second tranche of $9 million was to be made available after there was confirmation that adequate security for the Somnath had been created. Symphony was to send the two payments to a bank account owned by Dag Dvergsten Pte., Ltd. (“DDPTE”) (which is owned by Dvergsten) because Traxiar did not maintain a bank account at the time. Once it did have an account, DDPTE was to transfer the funds to Traxiar.

         2.2 The Transfers

         On December 26, 2013, Symphony advanced the first tranche to Traxiar by transferring $6 million to a bank account owned by DDPTE. However, DDPTE never paid the money to Traxair as promised. On December 27, 2013, DDPTE wired $3.25 million to TY Global, LLC (“TY Global”), a company located in Houston, Texas. On December 27, 2013, TY Global received $3, 249, 975 from DDPTE in its account ending in ‘5357 at Bank of America.[3] On December 30, 2013, TY Global wired $2.25 million to AT Offshore, LLC (“AT Offshore”), another Houston company. On December 31, 2013, AT Offshore received the $2, 250, 000 in its bank account at Wells Fargo Bank ending in ‘8565. On January 3, 2014, AT Offshore wired $2 million to Rocky Point. All of these transactions were completed by electronic wire transfer.

         2.3 The Brokerage and Cash Pooling Agreements

         Seah says that all of these transfers were without justification and were done to defraud the creditor, Symphony. He notes that prior to June 22, 2017, AT Offshore had no transactions involving Traxiar other than receiving the $2.25 million from TY Global. Seah asserts that, similarly, TY Global's only transaction involving Traxair was its receipt of the initial $3.25 million from DDPTE. (Docket #65 at 4-5).

         Rocky Point disputes this assertion, claiming that the transfers were predicated on a brokerage agreement dated October 7, 2013-prior to the transfers-through which Dvergsten hired brokers to negotiate Traxiar's purchase of the Somnath. Id.; (Docket #56-6 at 5); (Docket #63-13). Rocky Point contends that there were three brokers hired pursuant to the agreement: Abraham Thomas (“Thomas”), owner of TY Global and AT Offshore, Siddhartha Roy (“Roy”), and Raman Mullick (“Mullick”). (Docket #65 at 4-5); (Docket #65-15 at 6-9). According to Rocky Point, “[t]hey did significant work and the money transferred was in payment for these services[.]” (Docket #65 at 4-5); (Docket #56-6 at 5). Dvergsten testified regarding their work, see (Docket #65-15 at 8-26), and Rocky Point submitted several emails involving Dvergsten, Thomas, Roy, and Mullick on the topic of the Somnath purchase, see, e.g., (Docket #63-19, #63-20, #63-21, #63-22, #63-23, #63-24, #63-25, #63-26, #63-27, #63-28).

         Rocky Point explains that under a verbal agreement, the brokers' fees were paid up front in exchange for their promise to immediately reinvest their commissions into the purchase of the Somnath to provide equity for the transaction. (Docket #63-15 at 6-9). The reinvestment was to occur by transferring the funds to Rocky Point, an entity designated and controlled by Dvergsten. Id. at 2, 8. Their commissions and fees totaled $3.25 million and are reflected in two contemporaneous invoices prepared by TY Global before the transfers were made. See (Docket #63-14). Rocky Point maintains that the $2 million it ultimately received is owed to Roy and Mullick for their brokerage services. (Docket #65 at 6-7); (Docket #73 at 3).[4]

         Rocky Point contends that it was designated to receive the transfer from AT Offshore because it was party to a cash pooling agreement between several of Dvergsten's controlled companies. See (Docket #63-10 at 13). Rocky Point further states that although the relationship between AT Offshore and TY Global is “unclear, ” the transfer between those two entities was also part of the reinvestment agreement. See (Docket #65 at 6- 7). The parties do not dispute that whatever its role may have been, AT Offshore “never owned the money it deposited.” (Docket #73 at 3). It seems that Thomas chose AT Offshore as a conduit through which to send the funds from TY Global to Rocky Point for reinvestment, but the reasons for his choice are not apparent.

         In contrast to Rocky Point's version of events, Thomas averred that in exchange for the $2.25 million transfer from TY Global to AT Offshore and the $2 million transfer from AT Offshore to Rocky Point, the transferors-TY Global and AT Offshore-received nothing of any monetary value from anyone. Rocky Point's books show the AT Offshore $2 million transfer as a debt that Rocky Point owes to AT Offshore. Rocky Point explains that while this is what the ledger says on its face, it is only because AT Offshore is the entity that transferred the money. (Docket #65 at 6). Again, Rocky Point believes that the $2 million is owed to Roy and Mullick. Id. at 6-7; (Docket #73 at 3); (Docket #63-16 at 5-6).

         Seah calls the brokerage agreement a “sham, ” claiming that there is no evidence that Traxair, Dvergsten, or Rocky Point ever retained Roy or Mullick. (Docket #73 at 1). Thomas himself averred that TY Global's invoices were prepared at Dvergsten's direction and that no brokerage services were ever rendered. (Docket #5-1 at 1-2). Further, he stated that there was “no legitimate business reason” for AT Offshore to pay $2 million to Rocky Point, as they have no business dealings. Id. The transfer was again done solely at Dvergsten's request. Id.

         Seah also points to Dvergsten's deposition testimony, in which he admits that Roy and Mullick were not mentioned in the brokerage contract with TY Global. (Docket #73-2 at 6). Dvergsten nevertheless claims that these men performed valuable work and that they were mentioned in emails he had with Thomas. Id.; (Docket #65-15 at 6). Essentially, Dvergsten understood that Roy and Mullick worked for TY Global, not himself or Traxair directly. See (Docket #73-2 at 6). Again, Seah views Dvergsten's belief that the $2 million was owed to Roy and Mullick as a phony reason to make the transfer appear legitimate. Dvergsten had no reason to care about payments to brokers who did not contract directly with him and his gratuitous concern for their fee is, to Seah's mind, disingenuous. See Id. at 7-9. Also of note to Seah is the fact that neither Roy nor Mullick have ever asked for their commissions. Id. at 8.

         2.4 The Financial Circumstances

         Seah states that, based on a review of Traxair's financial records, as of December 27, 2013, when Traxiar through DDPTE transferred $3.25 million to TY Global, Traxiar's debts exceeded its assets at a fair valuation by at least $18, 128. Rocky Point denies this, pointing out that the balance sheet ...

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