January 23, 2022

2nd Circ. waves off Cayman Islands related case until other ruling

Pin It

By William Gorta From Law360

Law360, New York (January 10, 2017, 10:19 PM EST) — The appeal of a summary judgment in favor of a woman accused of stealing her former employer’s customer database was ordered held in abeyance by the Second Circuit Tuesday until a related appeal of a case that has roots in the Cayman Islands is decided.

A Connecticut federal judge had ruled in March that investment management firm Trikona Advisers Limited was estopped from prosecuting claims against Kai-Lin Chuang, who was accused of helping steal Trikona’s customer database to benefit companies belonging to her boss, then-Trikona partner Rakshitt Chugh.

For more on this story go to: https://www.law360.com/assetmanagement/articles/879637/2nd-circ-waves-off-cayman-related-case-until-other-ruling



This case arose out of a corporate divorce between Aashish Kalra and Rakshitt Chugh, the former partners in the plaintiff, Trikona Advisers, Ltd. (“TAL”). Chugh is a named defendant alongside two entities related to him, Peak XV Capital Advisers, LLC (“Peak XV”) and ARC Capital, LLC (“ARC”).1 TAL’s claims center on allegations that while he was a member of TAL’s board of directors, Chugh started Peak XV to compete with TAL and stole TAL’s assets and customer database to assist Peak XV, and that Chugh deliberately thwarted TAL’s business opportunities and blocked TAL’s recovery of compensation in various litigations around the world. The defendants moved for summary judgment,


In 2006 Kalra and Chugh created TAL, an investment advisory company specializing in Indian real estate and infrastructure. TAL was wholly owned by Chugh’s and Kalra’s families, with each family owning a fifty percent interest in the company. The Chugh family’s shares were placed in two companies, ARC and Haida Investments (“Haida”). The Kalra family’s shares were held byAsia Pacific Investments, Ltd. (“Asia Pacific”). The 2008 economic crisis put financial pressure on the business venture, and the relationship between Kalra and Chugh deteriorated. Kalra and Chugh negotiated unsuccessfully to divide TAL’s assets. During this period, Chugh formed Peak XV, which Kalra claims competed with TAL. Kalra also accused Chugh of misappropriating TAL’s valuable customer database for use in his new ventures. Chugh was eventually expelled from TAL’s board of directors and Kalra took control of TAL and its assets. Asia Pacific, controlled by Kalra, filed this lawsuit derivatively on behalf of TAL in late 2011. TAL ultimately adopted the litigation in its own name, though the suit is still controlled by Kalra. TAL claims that Chugh, individually and through his control of ARC, Haida, and Peak XV, committed willful, material, severe and ongoing breaches of fiduciary duty. TAL’s third amended complaint alleges a total of eleven causes of action against Chugh, ARC and Peak XV, including breach of fiduciary duty, unfair competition, misappropriation of trade secrets, civil conspiracy, conversion, statutory theft, aiding and abetting breach of fiduciary duty, unjust enrichment, abuse of process, veil piercing, and replevin. There have been multiple proceedings around the world related to this case, but for purposes of TAL’s motion for reconsideration, the only relevant action is the winding up proceeding held in the Grand Court of the Cayman Islands (“Grand Court”). That proceeding was brought by ARC and Haida (Chugh) against Asia Pacific (Kalra) on February 13, 2012, about six weeks after TAL filed its original complaint against Chugh in the District of Connecticut. From the outset, both parties and this court were aware that the Cayman proceeding was going to complicate the proceedings in this court. TAL moved (unsuccessfully) for an anti-suit injunction to enjoin the Cayman proceeding pending the resolution of this case, arguing that theclaims brought in the Cayman proceeding were essentially compulsory counterclaims and that the proceeding was brought merely to frustrate this court’s handling of the case. See Mot. to Enjoin (doc. # 220). The defendants opposed that motion, arguing in relevant part that the Cayman proceeding involved different parties and different claims, and the relief available in that proceeding differed from the relief available to the plaintiff here. See Defs.’ Opp’n to Mot to Enjoin 13, 19-20, 23-25 (doc. # 240); Pl.’s Opp’n to Mot. Summ. J. 28-29 (doc. # 320). During the Cayman trial, however, Asia Pacific (Kalra) attempted to defend against the winding up of TAL on the ground of unclean hands, arguing that the petitioners, ARC and Haida, were barred from invoking the court’s equitable jurisdiction because of Chugh’s breaches of fiduciary duty, which were attributable to the petitioners. As evidence of Chugh’s misconduct, Asia Pacific put on evidence relating to each of TAL’s claims in this litigation. On January 31, 2013, the Grand Court issued its judgment and granted the petition to wind up TAL. Justice Jones concluded that, taken together, a “series of related grounds” – primarily loss of substratum, but also Chugh’s exclusion from the board of directors and Kalra’s subsequent misuse of the company’s money, among other things – produced an “overwhelming” case for making a winding up order. Winding Up Order and Judgment 14. Justice Jones thoroughly rejected Asia Pacific’s unclean hands defense, remarking that “there is no merit whatsoever to the allegations made against Chugh in . . . the Connecticut proceedings.” Id. at 15. Justice Jones further stated that, “[h]aving listened to [Kalra’s] explanation for pursuing this claim in the Connecticut proceedings, I can conclude that it is a thoroughly dishonest abuse of process.” Id. at 9. After the Grand Court issued its ruling, the defendants filed a motion for summary judgment (doc. # 308), arguing that res judicata and collateral estoppel precluded relitigation of TAL’s claims. The defendants asserted that TAL’s claims were barred because Asia Pacific litigated and lost on all of the claims and issues in this case in the Cayman proceeding.2 TAL opposed that motion, arguing that its claims could not have been brought in the Cayman proceeding and that no issue or fact decided in the Grand Court was binding in this court. TAL also asserted that even if res judicata or collateral estoppel applied, Chapter 15 of the U.S. Bankruptcy Code bars recognition of the Grand Court’s Winding Up Order and Judgment.3 During the March 6, 2014 hearing on the defendants’ motion for summary judgment, I issued an oral ruling holding that res judicata did not bar the plaintiff’s claims, but that the facts found in the Cayman proceeding were binding on the basis of collateral estoppel. Accordingly, I granted the defendants’ motion for summary judgment. On April 3, 2014, TAL filed this motion for reconsideration.

For more: https://ecf.ctd.uscourts.gov/cgi-bin/show_public_doc?2011cv2015-378

Print Friendly, PDF & Email
About ieyenews

Speak Your Mind