FILED: NEW YORK COUNTY CLERK 09/25/2019 04:36 PM
`NYSCEF DOC. NO. 18
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`INDEX NO. 654229/2019
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`RECEIVED NYSCEF: 09/25/2019
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`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF NEW YORK
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`ZHENG WU a/k/a BRUNO WU and
`SUN SEVEN STARS INVESTMENT GROUP,
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`Plaintiffs,
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`v.
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`Index No. 654229/2019
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`Mot. Seq. #001
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`BRETT MCGONEGAL,
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`Defendant.
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`MEMORANDUM OF LAW IN SUPPORT OF
`DEFENDANT’S MOTION TO DISMISS THE COMPLAINT AND
`FOR ATTORNEYS’ FEES PURSUANT TO 22 NYCRR § 130
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`S A C K & S A C K , L L P
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`A t t o r n e y s f o r D e f e n d a n t , B r e t t M c G o n e g a l
`7 0 E a s t 5 5 t h S t r e e t , 1 0 t h F l o o r
`N e w Y o r k , N e w Y o r k 1 0 0 2 2 - 2 0 5 0
`( 2 1 2 ) 7 0 2 - 9 0 0 0
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`INDEX NO. 654229/2019
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`TABLE OF CONTENTS
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`TABLE OF AUTHORITIES ......................................................................................................... III
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`PRELIMINARY STATEMENT ..................................................................................................... 1
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`FACTUAL BACKGROUND .......................................................................................................... 4
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`STANDARDS OF REVIEW ........................................................................................................... 8
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`LEGAL ARGUMENT .................................................................................................................... 9
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`I. WU DOES NOT HAVE STANDING TO BRING THIS ACTION ................................... 9
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`II. THE COMPLAINT MUST BE DISMISSED UNDER CPLR 3211(A)(5) BECAUSE
`SSSIG RELEASED ANY AND ALL CLAIMS AGAINST MCGONEGAL AND
`COVENANTED NOT TO SUE HIM ............................................................................... 10
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`III. WU FAILS TO STATE A CLAIM FOR FRAUD, FRADULENT INDUCEMENT,
`AND/OR NEGLIGENT MISREPRESENTATION ......................................................... 12
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`A. Plaintiffs’ Fraud Claim Fails to Meet The Particularity Requirements of CPLR §
`3016(b) ............................................................................................................................ 12
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`B. Plaintiffs’ Negligent Misrepresentation Must Be Dismissed ......................................... 14
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`IV. COUNTS II, III, AND IV MUST BE DISMISSED AS DUPLICATIVE TO
`PLAINTIFFS’ BREACH OF CONTRACT CLAIM ........................................................ 14
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`V. PLAINTIFFS’ MONEY HAD AND RECEIVED CLAIM IS UNREFUTED BY
`DOCUMENTARY EVIDENCE ....................................................................................... 16
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`VI. THIS COURT SHOULD GRANT MCGONEGAL ATTORNEY’S FEES BECAUSE OF
`PLAINTIFFS BAD FAITH FILING OF THIS COMPLAINT AND PURSUIT OF THIS
`ACTION ............................................................................................................................ 16
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`CONCLUSION ............................................................................................................................. 20
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`II
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`TABLE OF AUTHORITIES
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`CASES
`Aaron Ferer & Sons Ltd. v. Chase Manhattan Bank, 731 F.2d 112 (2d Cir.1984). ...................... 16
`
`Amaro v. Gani Realty Corp., 60 A.D.3d 491 (1st Dep’t 2009) ....................................................... 8
`
`Amsterdam Hosp. Group, LLC v. Marshall-Alan Assoc., Inc.,
`120 A.D.3d 431 (1st Dep’t 2014) .................................................................................................... 8
`
`Booth v. 3669 Delaware, Inc., 92 N.Y.2d 934 (1998) .................................................................. 10
`
`Canstar v. J.A. Jones Constr. Co., 212 A.D.2d 452 (1st Dep't 1995) ........................................... 15
`
`Caprer v. Nussbaum, 36 A.D.3d 176 (2d Dep’t 2006) .................................................................... 9
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`Cattani v. Marfugi, 902 N.Y.S.2d 539 (1st Dep’t 2010) ............................................................... 17
`
`Centro Empresarial Cempresa S.A. v. América Móvil, S.A.B. de C.V.,
`17 N.Y.3d 269 (2011) .................................................................................................................... 11
`
`Clark–Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382 (1987) ............................................. 15
`
`Cusack v. Greenberg Traurig, LLP, 109 A.D.3d 747 (1st Dep’t 2013) ........................................ 13
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`Edelman v. Starwood Cap. Group, LLC, 70 A.D.3d 246 (1st Dep't 2009) ..................................... 8
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`Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553 (2009) .................................... 13
`
`Global Mins. & Metals Corp. v. Holme, 824 N.Y.S.2d 210 (1st Dep’t 2006) .............................. 10
`
`Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314 (2002) .................................................... 8
`
`Gosmile, Inc. v. Levine, 81 A.D.3d 77 (2010) ............................................................................... 13
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`Gottlieb v. Gottlieb, 28 N.Y.S.3d 37 (1st Dep’t 2016) .................................................................. 17
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`Greenman–Pedersen, Inc. v. Levine, 37 A.D.3d 250 (2007) ........................................................ 15
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`Hirsch v. Stellar Mgmt., 50 N.Y.S.3d 68 (N.Y. App. Div. 2017) ................................................. 13
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`Jacobus v. Battery Park Hotel Mgmt., LLC, 81 A.D.3d 572 (2011) ............................................. 11
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`Kamhi v. Tay, 244 A.D.2d 266 (1st Dep’t 1997) ............................................................................. 8
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`Leon v. Martinez, 84 N.Y.2d 83 (1994) ........................................................................................... 8
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`Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173 (2011) .................................................... 14
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`MatlinPatterson ATA Holdings LLC v. Fed. Express Corp.,
`87 A.D.3d 836 (1st Dep't 2011) ..................................................................................................... 14
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`Matter of Empire State Bldg. Assoc., L.L.C. Participant Litig.,
`21 N.Y.S.3d 31 (1st Dep’t 2015) ................................................................................................... 11
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`McMahan & Co. v. Bass, 673 N.Y.S.2d 19 (1st Dep’t 1998). ...................................................... 11
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`Mirbabayeva v Metrotech LLC 1, No. 162825/2015, 2017 WL 106652
`(N.Y. Sup. Ct. Jan. 06, 2017) ........................................................................................................ 10
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`Mirbabayeva v. Metrotech LLC 1, No. 162825/2015, 2017 WL 106652
`(N.Y. Sup. Ct. Jan. 06, 2017) .......................................................................................................... 9
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`Morgan v. NYP Holdings, Inc., 93 N.Y.S.3d 627 (N.Y. Sup. Ct. 2017) ....................................... 17
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`National Union Fire Ins. Co. of Pittsburgh, Pa. v. Robert Christopher Assoc.,
`257 A.D2d (1st Dep’t 1999) .......................................................................................................... 13
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`New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308 (1995) ................................................... 15
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`OP Sols., Inc. v. Crowell & Moring, LLP, 900 N.Y.S.2d 48 (2010) ....................................... 14, 15
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`Parsons & Whittemore Enterprises Corp. v. Schwartz, 387 F. Supp. 2d 368
`(S.D.N.Y. 2005) ............................................................................................................................. 16
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`Pickens v. Castro, 867 N.Y.S.2d 47 (1st Dep’t 2008). ................................................................. 16
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`Prins v. Itkowitz & Gottlieb, P.C., 719 N.Y.S.2d 228, (1st Dep’t 2001) ...................................... 17
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`Rachel’s Trousseau, Inc. v. Warshaw Woolen Assocs.,
`671 N.Y.S.2d 244 (1st Dep’t 1998) ............................................................................................... 17
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`Salem v. Fischman, 60 Misc. 3d 1214(A) (N.Y. Sup. Ct. 2018) ................................................... 10
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`Sebastian Holdings, Inc. v. Deutsche Bank, AG., 108 A.D.3d 433 (2013) ................................... 15
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`Sheila C. v. Povich, 781 N.Y.S.2d 342 (1st Dep’t 2004) ................................................................ 4
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`Thompson v. Andy Warhol Found. for the Visual Arts, Inc.,
`959 N.Y.S.2d 436(1st Dep’t 2013) ................................................................................................ 11
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`IV
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`Toledo v. West Farms Neighborhood Hous. Dev. Fund Co., Inc., 34 A.D.3d 228
`(1st Dep’t 2006) ............................................................................................................................. 11
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`Torain v. AG-Metro. 711 Stewart Ave., LLC, 64 N.Y.S.3d 495 (N.Y. Sup. Ct. 2017) ................. 17
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`Ullmann v. Norma Karnali, Inc., 207 A.D.2d 691(1st Dep’t 1994) ................................................ 8
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`Village on Canon v. Bankers Trust Co., 920 F.Supp. 520 (S.D.N.Y.1996) .................................. 15
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`FILED: NEW YORK COUNTY CLERK 09/25/2019 04:36 PM
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`PRELIMINARY STATEMENT
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`On behalf of the Defendant, Brett McGonegal (“McGonegal”), we respectfully submit this
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`Memorandum of Law in Support of his Motion to Dismiss Plaintiffs’, Zheng Wu a/k/a Bruno Wu’s
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`(“Wu”) and Sun Seven Stars Investment Group’s (“SSSIG”) Complaint pursuant to CPLR
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`3211(a)(1), (a)(3), (a)(5) and (a)(7), and for attorney’s fees and sanctions pursuant to 22 NYCRR
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`130.
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`This is the second frivolous lawsuit brought in bad faith by Wu (and for the first time,
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`SSSIG) to recover the payment of a $1,000,000 performance bonus that Ideanomics, Inc. (f/k/a
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`Seven Stars Cloud Group, Inc. or Cloud Group) paid to McGonegal in connection with his then-
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`employment as co-Chief Executive Officer of Ideanomics.1
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`As alleged in the prior bad faith action filed by Wu against McGonegal – Zheng Wu a/k/a
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`Bruno Wu v. Brett McGonegal, Index No. 651555/2019 (Sup. Ct. N.Y. Cty. Nov. 21, 2018) – the
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`Complaint in this action alleges that, on October 17, 2018, Wu and McGonegal entered into an
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`oral agreement pursuant to which Wu purportedly agreed to pay McGonegal $1,000,000 in the
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`form of a loan that was to be made and repaid by McGonegal on or before December 17, 2018.
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`(Sack Aff. Ex. “B”; Compl. ¶ 13, 14).
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`The Complaint must be dismissed for two principle reasons: (1) Wu has no standing to
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`bring this action, as the purported McGonegal payment, recast as a “loan,” was paid to McGonegal
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`from Ideanomics (Cloud Group); and (2) SSSIG (an affiliate entity of Ideanomics) released any
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`1 See, Sack Aff. Ex. B for the prior frivolous lawsuit brought by Wu.
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`claim against McGonegal under the Release Agreement, to wit the filing of this claim by SSSIG
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`represents a breach of that Release agreement. (Sack Aff. Ex. “C”.)2
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`First, Wu admits in the Complaint (as he must), and the plain irrefutable documentary
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`evidence confirms, that the payment was not made by Wu, but rather by Ideanomics. (Compl. ¶
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`19.) Indeed, the wire transfer demonstrates that Ideanomics (at the time, Seven Stars Cloud Group,
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`Inc.) remitted the $1,000,000 to McGonegal from Ideanomics’ Vectra Bank account. Thus,
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`pursuant to CPLR 3211(a)(1) and (a)(3), neither SSSIG, nor Wu has standing to sue here. Neither
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`are proper parties to bring this action against McGonegal.
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`Thus, the Complaint must be dismissed as to both plaintiffs SSSIG and Wu – even before
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`the Court considers the reasons under which this Complaint fails under CPLR 3211(a)(7).
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`Second, if the Court finds that Plaintiffs have standing to sue (which they do not),Wu, a
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`shareholder and former director of Ideanomics, and SSIG – an affiliate entity of Ideanomics – is
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`strictly prohibited from filing this lawsuit against McGonegal.
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`The Release Agreement entered into between Ideanomics and McGonegal contains a
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`release running in favor of McGonegal as well as a covenant not to sue, running from Ideanomics’
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`current and former Directors (which includes Plaintiff Wu) and Ideanomics affiliates (which
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`includes Plaintiff SSSIG)3. Accordingly, Ideanomics, its former Director Wu, and its affiliate,
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`SSSIG are in material breach of the Release Agreement for filing this action.
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`It was for precisely these reasons that McGonegal filed a Motion to Dismiss the Complaint
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`in Action #1. (See, Dkt. No. 10., Sack Aff. Ex. D.)
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`2 Aside from these grounds, which are alone sufficient for this Court to dismiss this Complaint, the Complaint asserts
`various claims that are (1) duplicative to the breach of contract claim (Count I); and (2) are insufficiently pled as a
`matter of law, even assuming the truth of these allegations, making them ripe for dismissal under CPLR 3211(a)(7).
`3 By way of documentary evidence, a Form 8-K filed by Ideanomics with the Securities and Exchange Commission
`demonstrates that SSIG is an affiliate of Ideanomics. (See, Sack Aff. Ex. K.)
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`Indeed, Plaintiff Wu did not have any substantive response to the Motion in Action #1 and
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`thus decided to discontinue the lawsuit. (See, Dkt No. 15, Court’s Decision and Order on Mot.
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`#001) (Sack Aff. Ex. “D”.)
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`In this instant lawsuit, Wu repackaged these failed claims by adding SSSIG as a party to
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`baselessly avoid the terms of the Release Agreement. By letter dated September 5, 2019, we
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`informed Plaintiffs and their counsel that this instant lawsuit was frivolous (for substantially the
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`same reasons as Action #1), and that McGonegal would seek attorney’s fees and sanctions pursuant
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`to 2 NYCRR § 130 should Plaintiffs continue to pursue these claims (Sack Aff. Ex. “F”.)
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`On September 9, 2019, without meaningfully addressing the issues raised in our letter,
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`Plaintiffs responded, by stating, in relevant part:
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`Suffice to say, it is obvious that you have read neither the complaint nor the
`release you cite in any detail. Regardless, we are not inclined to litigate this
`case by letter. If you want to save your client attorneys' fees as you suggest, the
`best way to do so is to reach out to us with a repayment proposal that includes
`a confession of judgment.
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`(Sack Aff. Ex. “G”.)
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`Plaintiffs, by doubling down on their frivolous claims, have left McGonegal no other
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`choice but to file this motion and incur costs and expenses in the process.
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`This is the prototype case for frivolous litigation and justifies awarding McGonegal fees
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`and costs in bringing the instant motion, as well as sanctions against Plaintiffs’ counsel under 22
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`NYCRR § 130.
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`For these reasons, as more fully set forth below, this Complaint should be dismissed with
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`prejudice.
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`FACTUAL BACKGROUND4
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`Brett McGonegal was the former co-Chief Executive Officer of Ideanomics, Inc.
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`(NASDAQ: IDEX) f/k/a Seven Stars Cloud Group, Inc. or Cloud Group (NASDAQ: SSC)
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`(together, “Ideanomics”). Ideanomics is a global technology company focused on digital asset
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`production and distribution, of which Bruno Wu is the Chairman.5 Wu is a self-proclaimed, mutli-
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`billionaire, experienced investor, technology and media entrepreneur, and philanthropist. (Id.)
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`On or about September 21, 2018, McGonegal entered into an Employment Agreement
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`with Ideanomics for a term of (2) years. (Sack Aff. Ex. “H”.) The terms and conditions of
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`McGonegal’s employment were also memorialized in a binding Memorandum of Understanding
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`(the “MOU”), which were publicly disclosed as part of Ideanomics’ SEC Form 8-K filing, dated
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`September 14, 20186. (Sack Aff. Ex. “I”.)
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`As part of his compensation, McGongenal was entitled to receive a base salary in the
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`amount of $500,000, and was eligible to receive an annual performance bonus.
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`In or around October 2018, McGonegal received $1,000,000 as a sign-on, incentive and
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`performance bonus. There was never any agreement or understanding that such payment was a
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`two-month “loan” and indeed, the Complaint is bare of any facts asserting the existence of any
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`written confirmation that the $1,000,000 payment was for anything other than compensation. The
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`assertion that Wu caused some other publicly traded entity to make a “loan” for which Wu was
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`4 The Complaint’s allegations are assumed to be true only for purposes of Defendants’ motion to dismiss. See, Sheila
`C. v. Povich, 781 N.Y.S.2d 342, 345 (1st Dep’t 2004). The Defendant reserves the right to contest all such allegations,
`if necessary.
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`5 https://www.sevenstarscloud.com
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` https://www.sec.gov/Archives/edgar/data/837852/000114420418049556/tv502924_8k.htm
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`the maker of the loan and McGonegal was the borrower is absurd on its face and if true, such loan
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`violates securities laws and rules.
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`Wu and McGonegal never agreed that the $1,000,000 would be considered a “loan,” nor
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`structured as one, much less a loan made by Wu personally.
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`On or about October 17, 2019, McGonegal’s then-employer Ideanomics, not Wu, wired
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`McGonegal the sum of $1,000,000 from Ideanomics’ Vectra Bank account. (Sack Aff. Ex. “J”.)
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`On or about February 15, 2019, for reasons unrelated to this dispute, McGonegal separated
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`from Ideanomics. In connection with his separation, McGonegal and Ideanomics entered into an
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`agreement entitled, General Release and Covenant Not To Sue, which governed the terms and
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`conditions of McGonegal’s separation from Ideanomics (the “Release Agreement”). The Release
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`Agreement superseded and governed the Employment Agreement and MOU.
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`On April 22, 2019, Wu, (by and through Plaintiff’s counsel – who represented Ideanomics
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`in connection with the Release Agreement), knowing full well that Ideanomics previously released
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`the very claims it again asserts in this baseless action under the Release Agreement, filed a previous
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`action under the clever, but flawed theory that Wu remitted a payment to McGonegal on October
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`17, 2018 in the form of a “personal loan” (“Action I”)7.
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`The Release Agreement contains a “General Release” provision, which states the
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`following, in relevant part:
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`In consideration of the benefits described above in Section I, the Company agrees
`that, to the extent such release and discharge are permitted by law, it and any of its
`current of former directors, officers, owners, employees, agents, affiliates, assigns,
`predecessors and successors (collectively referred to in this paragraph and
`Paragraph 4(b) as the "Company Releasors") hereby knowingly and voluntarily
`waive, release and forever discharge, and will not file or cause to be filed against
`McGonegal, any claim, lawsuit, complaint or charge, whether known or unknown,
`asserted or unasserted, suspected or unsuspected, that the Company may have as a
`result of any incident, act, event or omission, whether or not related to McGonegal's
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`7 Zheng Wu a/k/a Bruno Wu v. Brett McGonegal, Index No. 651555/2019 (Sup. Ct. N.Y. Cty. Nov. 21, 2018).
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`employment or separation from employment with the Company, that has occurred
`at any time from the beginning of world up to and including the date of his signing
`of this Agreement.
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`(Sack Aff. Ex. “C” § 3(b).)
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`The Release Agreement also contains a “Covenant Not To Sue” provision, which states the
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`following, in relevant part:
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`Except to enforce the Agreement, the Company hereby promises never to file or
`make, or permit to be filed or made on his behalf, a lawsuit, charge, complaint, or other
`claim asserting any claim or demand against the Company Releasors which is within
`the scope of the claims released in Paragraph 3 above. This Agreement may and
`shall be pleaded by the Company Releasors as a full and complete defense to, and may
`be used as a basis for the immediate dismissal of or an injunction against any action,
`suit or other proceeding which may be instituted, prosecuted or maintained in breach
`thereof.
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`(Sack Aff. Ex. “C” § 4(b).)
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`On May 22, 2019, McGonegal filed a motion to dismiss the Complaint in Action I.
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`Recognizing that he could not advance a plausible legal argument in opposition to overcome
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`McGonegal’s documentary evidence, and the clear and unambiguous terms of the Release
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`Agreement (cited above) – and prior to filing responsive papers in opposition to the Motion, despite
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`counsel’s request for additional time to respond – Wu discontinued Action I on June 25, 2019.
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`(Sack Aff. Ex. “E”.)
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`By this instant action, Plaintiffs have now attempted to reformulate the frivolous
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`allegations pled in Action I to circumvent the arguments set forth in McGonegal’s prior motion to
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`dismiss (“Action II”). Specifically, the new Complaint spuriously alleges that the Cloud Group
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`(or Ideanomics), entered into a promissory note with SSSIG to borrow the funds for the $1,000,000
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`“loan,” and that the Cloud Group (or Ideanomics) made the payment to McGonegal8. (Compl. ¶
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`17.)
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`But these new allegations are ultimately irrelevant and similarly frivolous. As
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`demonstrated herein, Wu still does not have standing to bring this Action. Similarly, SSIG – an
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`affiliate of the Cloud Group or Ideanomics – released any and all claims against McGonengal
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`under the Release Agreement to recover the $1,000,000 “loan.” Plaintiffs cannot overcome the
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`terms of the Release by disingenuously alleging that “…for the avoidance of doubt Cloud Group
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`had no interest in the funds paid to McGonegal.” (Compl. ¶ 20.) Rather, such spurious and
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`nonsensical drafting shines a light on the frivolity of this Action.
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`For exactly these reasons, McGonegal put Plaintiff and his counsel on notice that any
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`continuance of this lawsuit would be patently frivolous, and that he would seek attorney’s fees and
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`sanctions for having to incur costs in bring a motion to dismiss for a second time. (Sack Aff. Ex.
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`“F”.) By Plaintiffs’ response to McGonegal’s letter, Plaintiffs have evidently failed to diligently
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`re-evaluate their claims and made clear to McGonegal of their intent to pursue this baseless Action.
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`(Sack Aff. Ex. “G”.) Indeed, Plaintiffs are doubling down on their efforts to frivolously assert
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`these claims, and by doing so, are disrespecting the rule of law and this Court’s resources.
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`This Court must see this case for what it is, a sham, and summarily dismiss it with
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`prejudice, and award legal fees, costs and sanctions in favor of McGonegal.
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`8 Curiously, Plaintiffs Complaint neglects to provide the Court with the Promissory Note Pre-Payment and
`Cancellation Agreement (the “Note Cancellation”) on which it relies to support the allegations that SSSIG funded
`Cloud Group for the purported McGonengal loan.
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`NYSCEF DOC. NO. 18
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`INDEX NO. 654229/2019
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`RECEIVED NYSCEF: 09/25/2019
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`STANDARDS OF REVIEW
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`On a motion to dismiss pursuant to CPLR 3211(a)(7), a party may seek dismissal if the
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`complaint fails to state a cause of action. Edelman v. Starwood Cap. Group, LLC, 70 A.D.3d 246,
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`247 (1st Dep't 2009). In general, on a CPLR 3211 motion to dismiss, the pleading should be
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`construed liberally and the facts in the complaint are afforded the benefit of all favorable
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`inferences. Amaro v. Gani Realty Corp., 60 A.D.3d 491, 492 (1st Dep’t 2009) (citing, Leon v.
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`Martinez, 84 N.Y.2d 83, 87-88 (1994)). However, where the allegations in a complaint “consist of
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`bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted
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`by documentary evidence, they are not entitled to such consideration.” Ullmann v. Norma Karnali,
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`Inc., 207 A.D.2d 691, 692 (1st Dep’t 1994); Kamhi v. Tay, 244 A.D.2d 266, 266 (1st Dep’t 1997)
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`(“[A] complaint, replete with legal conclusions and devoid of any factual allegation[s] of the
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`underlying wrongful conduct for which plaintiff seeks to hold defendant[s] . . . liable . . . is not
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`entitled to the benefit of the favorable inferences usually accorded on a pre- answer motion to
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`dismiss”).
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`On a motion to dismiss pursuant to CPLR 3211(a)(1), while the court accepts the
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`Complaint’s factual allegations as true, dismissal is warranted when the documentary evidence
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`submitted “utterly refutes plaintiff's factual allegations” and “conclusively establishes a defense as
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`a matter of law.” Amsterdam Hosp. Group, LLC v. Marshall-Alan Assoc., Inc., 120 A.D.3d 431,
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`433 (1st Dep’t 2014); Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d
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`858, 774 N.E.2d 1190 (2002).
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`FILED: NEW YORK COUNTY CLERK 09/25/2019 04:36 PM
`NYSCEF DOC. NO. 18
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`INDEX NO. 654229/2019
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`RECEIVED NYSCEF: 09/25/2019
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`LEGAL ARGUMENT
`I. WU DOES NOT HAVE STANDING TO BRING THIS ACTION
`As previously alleged in Action I, the very premise that, by verbal agreement, Wu,
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`individually, made a $1,000,000 loan to McGongenal, which McGonegal failed to later repay, is
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`patently false and irrefutable by documentary evidence: Wu never made any payment to
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`McGonegal, Ideanomics did.
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`Wu therefore does not have standing to bring this Action.
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`Standing is a threshold determination, resting in part on policy considerations, that a person
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`should be allowed access to the courts to adjudicate the merits of a particular dispute that satisfies
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`the other justiciability criteria.” Mirbabayeva v. Metrotech LLC 1, No. 162825/2015, 2017 WL
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`106652, at *3 (N.Y. Sup. Ct. Jan. 06, 2017) (citing Caprer v. Nussbaum, 36 A.D.3d 176, 182 (2d
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`Dep’t 2006).
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`In a motion to dismiss under CPLR 3211(a)(3) for lack of standing, the burden is on the
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`moving defendant to establish, prima facie, the plaintiff's lack of standing as a matter of law. U.S.
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`Bank Nat. Ass’n v. Guy, 125 A.D.3d 845, 847, 5 N.Y.S.3d 116, 118 (N.Y. App. Div. 2015). To
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`defeat the motion, a plaintiff must submit evidence which raises a question of fact as to its standing.
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`Id; Deutsche Bank Nat. Tr. Co. v. Haller, 100 A.D.3d 680, 682, 954 N.Y.S.2d 551, 553 (2012).
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`The irrefutable documentary evidence demonstrates that Ideanomics, not Wu, made the
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`payment that Wu intentionally mischaracterizes as a “loan” to McGonegal on October 17, 2018.
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`Indeed, if this were a personal loan, Wu – a sophisticated and experienced investor – would have
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`made clear that the “loan” payment to McGonegal was from Wu, not Ideanomics, which did not
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`happen, as demonstrated by the undisputed documentary evidence. In fact, Wu admits that
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`Ideanomics (Cloud Group) made the “loan” payment to McGonegal, which confirms Wu’s lack of
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`standing – as he is not a party to the “loan” transaction. (Compl. ¶ 15-19.)
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`FILED: NEW YORK COUNTY CLERK 09/25/2019 04:36 PM
`NYSCEF DOC. NO. 18
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`INDEX NO. 654229/2019
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`RECEIVED NYSCEF: 09/25/2019
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`Wu, individually, cannot defeat this motion because he admittedly cannot point to any
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`evidence that can raise an issue of fact as to whether the “loan” payment was made by Wu, not
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`Ideanomics – which is acknowledged by the Complaint and clearly demonstrated by a document
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`evidencing the wire transfer (Sack Aff. Ex. “J”.)
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`Accordingly, the Court should find that Plaintiff Wu lacks standing to sue pursuant to
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`CPLR 3211(a)(3) and grant Defendant’s Motion to Dismiss in its entirety. Salem v. Fischman, 60
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`Misc. 3d 1214(A) (N.Y. Sup. Ct. 2018) (granting motion to dismiss the complaint for lack of
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`standing); Mirbabayeva v Metrotech LLC 1, No. 162825/2015, 2017 WL 106652, at *3 (N.Y. Sup.
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`Ct. Jan. 06, 2017) (same).
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`II. THE COMPLAINT MUST BE DISMISSED UNDER CPLR 3211(A)(5) BECAUSE
`SSSIG RELEASED ANY AND ALL CLAIMS AGAINST MCGONEGAL AND
`COVENANTED NOT TO SUE HIM
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`CPLR 3211(a)(5) mandates dismissal of a complaint if it asserts causes of action that “may
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`not be maintained because of . . . [a] release.” CPLR 3211(a)(5). The Complaint must be dismissed
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`as to SSSIG because SSSIG, an affiliate entity of Ideanomics, is bound by the terms of both (i)
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`the general release and (ii) the covenant not to sue in Ideanomics’ Release Agreement with
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`McGonegal.
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`It is well established that “a valid release constitutes a complete bar to an action on a claim
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`which is the subject of the release.” Global Mins. & Metals Corp. v. Holme, 824 N.Y.S.2d 210,
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`214 (1st Dep’t 2006). “Where . . . the language of a release is clear and unambiguous, the signing
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`of a release is a jural act binding on the parties.” Booth v. 3669 Delaware, Inc., 92 N.Y.2d 934,
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`935 (1998) (quotation marks omitted).
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`For these reasons, New York courts, including those in the First Department, regularly
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`dismiss claims at the pleading stage under CPLR 3211(a)(5) based on clear and unambiguous
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`FILED: NEW YORK COUNTY CLERK 09/25/2019 04:36 PM
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`releases. Jacobus v. Battery Park Hotel Mgmt., LLC, 81 A.D.3d 572, 918 N.Y.S.2d 874 (2011);
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`Toledo v. West Farms Neighborhood Hous. Dev. Fund Co., Inc., 34 A.D.3d 228, 229 (1st Dep’t
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`2006) (observing that a release is “a jural act of high significance without which the settlement of
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`disputes would be rendered all but impossible”).
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`Whereas a release “constitutes a complete bar to an action on a claim which is the subject
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`of the release,” Centro Empresarial Cempresa S.A. v. América Móvil, S.A.B. de C.V., 17 N.Y.3d
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`269, 276 (2011), “a covenant not to sue also applies to future claims and constitutes an agreement
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`to exercise forbearance from asserting any claim which either exists or which may accrue.”
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`McMahan & Co. v. Bass, 673 N.Y.S.2d 19, 21 (1st Dep’t 1998). Similar to claims that are barred
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`by valid and unambiguous releases, New York courts regularly dismiss claims based on covenants
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`not to sue. See, e.g., Matter of Empire State Bldg. Assoc., L.L.C. Participant Litig., 21 N.Y.S.3d
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`31, 32 (1st Dep’t 2015) (affirming trial court decision dismissing claims based on release and
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`covenant not to sue in prior settlement agreement); Thompson v. Andy Warhol Found. for the
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`Visual Arts, Inc., 959 N.Y.S.2d 436, 436 (1st Dep’t 2013) (“The covenants not to sue in the letter
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`agreements that plaintiff signed bar his claim[] for breach of contract…”).
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`Here, SSSIG claims that it is entitled to recover the $1,000,000 loan payment from
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`McGonegal, which Wu agreed to loan McGonegal, and which SSSIG then loaned to Ideanomics
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`pursuant to a “Note Cancellation Agreement” to make the payment. (Compl. ¶ 13, 15-19). Both
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`the general release and covenant not to sue contained in the Release Agreement conclusively
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`forecloses SSSIG – undoubtedly an affiliate entity of Ideanomics – from bringing these claims.
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`In the Release Agreement, SSSIG , a “Company Releasor” agreed to “voluntarily waive,
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`release and forever discharge, and will not file or cause to be filed against McGonegal, any claim,
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`lawsuit, complaint…whether known or unknown, asserted or unasserted, suspected or
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`FILED: NEW YORK COUNTY CLERK 09/25/2019 04:36 PM
`NYSCEF DOC. NO. 18
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`INDEX NO. 654229/2019
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`RECEIVED NYSCEF: 09/25/2019
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`unsuspected, tha