SEAN H. LANE UNITED STATES BANKRUPTCY JUDGE

Chapter 7 MEMORANDUM OF DECISION

APPEARANCES:

WINSTON & STRAWN LLP
Counsel for MyPlace Development SP. Z O.O.,
MyPlace Development SP. Z O.O. S.K.A.,
Sebastian Tomasz Kulczyk, Kulczyk
Real Estate Holding S.A.R.L., Kulczyk
Investments S.A., and Kulczyk Holding S.A.
200 Park Avenue
New York, New York 10166-4193
By: Michael Elkin, Esq.

David Neier, Esq.

Carrie V. Hardman, Esq.

Joel Wertheimer, Esq. LAMONICA HERBST & MANISCALCO, LLP
Counsel for Marianne T. O'Toole, Chapter 7 Trustee of
the Estates of Roman Sledziejowski and Innovest Holdings, LLC
3305 Jerusalem Avenue
Wantagh, New York 11793
By: Joseph S. Maniscalco, Esq.

Holly R. Holecek, Esq.

Nicholas C. Rigano, Esq.

SEAN H. LANE UNITED STATES BANKRUPTCY JUDGE

Before the Court are the motions of defendants MyPlace Development SP. Z O.O., MyPlace Development SP. Z O.O. S.K.A., Sebastian Tomasz Kulczyk, Kulczyk Real Estate Holding S.A.R.L., Kulczyk Investments S.A., and Kulczyk Holding S.A. (collectively, the "Movants") to dismiss the above-captioned adversary proceedings. These adversary proceedings were brought by Marianne O'Toole, the trustee appointed in the above-captioned Chapter 7 cases (the "Trustee"). The Trustee seeks, among other things, to avoid and recover certain alleged fraudulent transfers made to the Movants by Roman Sledziejowsi, one of the above-captioned debtors, and non-debtor TWS Investment Partners LLC ("TWSIP"). The transfers relate to the winding up of both Mr. Sledziejowski's equity investment in certain of the Movants and TWSIP's loan to several of the Movants. The Movants make several arguments for dismissal including, but not limited to, that the Court lacks personal jurisdiction over them given the significant ties that these Movants and transactions have to Poland and their lack of contacts with the United States. For the reasons set forth below, the Court concludes that the Trustee has failed to establish personal jurisdiction over the Movants at this time but that jurisdictional discovery is appropriate.

BACKGROUND

Mr. Sledziejowski is a United States citizen and resident of New York. (Amended Compl. ¶¶ 9, 61). In 2006, he formed Innovest Holdings LLC ("Innovest"), one of the above-captioned debtors, as a Delaware limited liability company with an office in New York. (Amended Compl. ¶¶ 12, 13). Innovest is the sole member and 100% owner of defendant TWSIP, which was also formed as a Delaware limited liability company with an office in New York. (Amended Compl. ¶¶ 14, 15, 17). At all relevant times, Mr. Sledziejowski was both the sole member of Innovest and the sole manager of TWSIP. (Amended Compl. ¶¶ 16, 18).

Mr. Sledziejowski held a 25% equity interest in defendants MyPlace Development SP. Z O.O. ("MyPlace Z O.O.") and My Place Development SP. Z O.O. S.K.A. ("MyPlace S.K.A., and together with MyPlace Z O.O., "MyPlace"). (Amended Compl. ¶¶ 11, 194). Both of the MyPlace entities are Polish limited liability companies located in Poznan, Poland. (Amended Compl. ¶¶ 22-23). Mr. Sledziejowski's business partner in MyPlace was defendant Sebastian Tomasz Kulczyk, and the two men also maintained a personal friendship. (Amended Compl. ¶¶ 28-33). Mr. Kulczyk, a Polish resident, held a 40% equity interest in MyPlace, and was the Chairman of the MyPlace Board of Directors. (Amended Compl. ¶¶ 24-26, 196). Mr. Kulczyk also owned and controlled several of the defendants, including (1) a real estate holding and development company named Kulczyk Real Estate Holding S.A.R.L. ("KREH"); (2) an investment company named Kulczyk Investments SA ("KI"); and (3) an investment company named Kulczyk Holding SA ("KH"). (Amended Compl. ¶¶ 41, 42, 46, 47, 50, 51). All three of these entities conduct business in Poland. (Amended Compl. ¶¶ 41, 46, 50).

In addition to Mr. Sledziejowski's personal equity investment in MyPlace, his entity TWSIP provided several loans to Mr. Kulczyk and the two MyPlace entities. (Amended Compl. ¶¶ 59-60). The agreements were executed by Mr. Sledziejowski on behalf of Innovest, as sole member of TWSIP and by Mr. Kulczyk, among others, on behalf of himself and MyPlace. (Amended Compl. ¶¶ 60, 64). In the first such transaction, TWSIP entered into a loan agreement with Mr. Kulczyk, pursuant to which TWSIP advanced 370,000 Polish Zlotys to Mr. Kulczyk (the "Kulczyk Loan Agreement"). (Amended Compl. ¶¶ 65, 66). Mr. Kulczyk ultimately failed to repay the amounts due under the Kulczyk Loan Agreement upon maturity. (Amended Compl. ¶ 68). Several months later, TWSIP entered into an investment agreement with MyPlace Z O.O., under which TWSIP committed to lend MyPlace up to US$20,000,000.00 (the "Investment Agreement"). (Amended Compl. ¶¶ 70, 72, 73). The Investment Agreement required MyPlace Z O.O. to send notifications relating to the Investment Agreement to TWSIP's address in the United States. (Amended Compl. ¶ 77). In accordance with the Investment Agreement, TWSIP subsequently provided several loans to the MyPlace entities in the aggregate total amount of US$12,580,000.00 (the "MyPlace Loan Agreements"). (Amended Compl. ¶¶ 78, 79). All loan amounts were advanced to MyPlace in United States dollars from a bank account located in the United States. (Amended Compl. ¶¶ 96, 97). Soon thereafter, MyPlace Z O.O. transferred all of its rights under the Investment Agreement and the MyPlace Loan Agreements to MyPlace S.K.A. (the "MyPlace Transfer Agreement"). (Amended Compl. ¶¶ 80, 81). The MyPlace Transfer Agreement attached a form of notice to be sent to TWSIP. (Amended Compl. ¶¶ 83-85). This notice was sent by MyPlace Z O.O. to TWSIP in the United States. (Amended Compl. ¶ 86).

MyPlace engaged in multiple real estate development projects in Poland. (Amended Compl. ¶¶ 199-259). Both the equity and lending relationship between Sledziejowski, Innovest and TWSIP on the one hand and MyPlace on the other was related to these projects, with the land purchased by MyPlace serving as security for the loans provided by TWSIP to MyPlace. (Amended Compl. ¶¶ 199-259). The agreements in question were governed by Polish law. (See Decl. of Michael S. Elkin in Support of Motion of Certain Defendants' to Dismiss Amended Complaints) (the "Elkin Decl.") [Adv. Pro. No. 15-08207, ECF No. 23; Adv. Pro. No. 15-08208, ECF No. 23] (Exh. A-C) (MyPlace Loan Agreements providing Polish choice of law with disputes settled in Poland).

In December 2009, Mr. Sledziejowski disposed of his MyPlace equity investment. He sold his equity interest in MyPlace to one of the companies owned by Mr. Kulczyk—KREH—for the amount of 12,500 Polish Zlotys (the "Equity Transfer"). (Amended Compl. ¶¶117-119). The Equity Transfer was accomplished through an agreement entitled Shares Sale Agreement Relating to Shares in MyPlace Development Spolka Z Ograniczona Odpowiedzialnoscia Spolka Komandytowa, which was entered into between KREH and Sledziejowski on December 3, 2009 (the "Share Transfer Agreement") (Amended Compl. ¶ 117). The Share Transfer Agreement was governed by Polish law. (See Elkin Decl.) (Exh. G-H) (Share Sale Agreements providing Polish choice of law and disputes settled in Luxembourg). KREH failed to pay the amount due to Mr. Sledziejowski in the Equity Transfer. (Amended Compl. ¶ 120).

On the same day, TWSIP assigned its rights under the Investment Agreement and the MyPlace Loan Agreements to KREH in return for an amount equal to only 50% of the outstanding balances due under the MyPlace Loan Agreements, including interest (the "Receivable Transfer"). (Amended Compl. ¶¶ 98-100). The Receivable Transfer was accomplished through three separate assignment agreements between TWSIP and KREH on December 3, 2009 (collectively, the "Assignment Agreements"). (Amended Compl. ¶ 98). The Assignment Agreements were governed by Polish law. (See Elkin Decl.) (Exh. D-F) (Assignment Agreements providing for Polish choice of law). Another entity owned by Mr. Kulczyk—KH—subsequently wire transferred US$7,332,380.82 to TWSIP on behalf of KREH. (Amended Compl. ¶¶ 107-08). The wire transfer was made by KH directly to a U.S. bank account maintained by Innovest at Bank of America. (Amended Compl. ¶ 108).

The Amended Complaint portrays Mr. Kulczyk as playing a central role in all the agreements among the parties. Mr. Kulczyk sent emails regarding the Receivable Transfer prior to its consummation, signed the contracts on behalf of the various entities and discussed the MyPlace investments with Mr. Sledziejowski during trips to the United States. (Amended Compl. ¶¶ 60, 71, 110, 132). The email exchange in question allegedly took place between Mr. Sledziejowski and Mr. Kulczyk the day before TWSIP and KREH entered into the Assignment Agreements. (Amended Compl. ¶¶ 109-110).

In January 2013, Mr. Sledziejowski filed a petition for relief under Chapter 11 of the Bankruptcy Code. (Amended Compl. ¶ 143). The Court subsequently entered an order directing the appointment of a Chapter 11 trustee in Mr. Sledziejowski's bankruptcy case, and the Trustee was appointed as Chapter 11 trustee of Mr. Sledziejowski's bankruptcy estate. (Amended Compl. ¶¶ 145-47). Soon thereafter, a stipulation and order was entered converting Mr. Sledziejowski's case to Chapter 7 of the Bankruptcy Code and the Trustee was appointed as the Chapter 7 trustee. (Amended Compl. ¶¶ 148-49, 151). In May 2013, Innovest filed for Chapter 7 protection in this Court and the Trustee was also appointed as the Chapter 7 trustee of the Innovest estate. (Amended Compl. ¶¶ 152-53).

The Trustee brought these adversary proceedings against the Movants, among others, alleging inter alia that the Receivable Transfer and the Equity Transfer were made for less than fair value and seeking to recover them as fraudulent conveyances. The Movants argue that this Court lacks personal jurisdiction over them because they reside outside of the United States, the transactions involved investments outside of the United States and the governing documents contain foreign choice of law provisions.

DISCUSSION

A. The Doctrine of Personal Jurisdiction

Fed. R. Civ. P. 12(b)(2), incorporated herein by Bankruptcy Rule 7012(b), provides for dismissal of a case for lack of personal jurisdiction. See Fed. R. Bankr. P. 7012(b). To survive a Rule 12(b)(2) motion, the plaintiff must make a prima facie showing that jurisdiction exists over the defendant. See O'Neill v. Asat Trust Reg. (In re Terrorist Attacks on September 11, 2001), 714 F.3d 659, 673 (2d Cir. 2013) (citing Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30, 34 (2d Cir. 2010)). This "must include an averment of facts that, if credited by the ultimate trier of fact, would suffice to establish jurisdiction over the defendant." In re Terrorist Attacks, 714 F.3d at 673 (quoting Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010)). "[A] court may consider materials outside the pleadings, but must credit plaintiffs' averments of jurisdictional facts as true." In re Stillwater Capital Partners Inc. Litig., 851 F. Supp. 2d 556, 566-67 (S.D.N.Y. 2012).

In a Rule 12(b)(2) motion, all pleadings and affidavits are to be construed in a light most favorable to the plaintiff and all doubts resolved in the plaintiff's favor. See In re Terrorist Attacks, 714 F.3d at 673 (citing Penguin Grp., 609 F.3d at 34). This is "notwithstanding a controverting presentation by the moving party." In re Stillwater Capital, 851 F. Supp. 2d at 567 (quoting A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993)). But where a "defendant rebuts plaintiffs' unsupported allegations with direct, highly specific, testimonial evidence regarding a fact essential to jurisdiction—and plaintiffs do not counter that evidence—the allegation may be deemed refuted." In re Stillwater Capital, 851 F. Supp. 2d at 567 (quoting Schenker v. Assicurazioni Generali S.p.A., Consol., 2002 U.S. Dist. LEXIS 12845, at *12 (S.D.N.Y. July 15, 2002)). Furthermore, "[i]n determining whether a plaintiff has met [its] burden, [a court] will not draw argumentative inferences in the plaintiff's favor . . . nor must [it] accept as true a legal conclusion couched as a factual allegation." In re Terrorist Attacks, 714 F.3d at 673 (internal citations and quotations omitted).

Federal Rule of Bankruptcy Procedure 7004(f) provides that a bankruptcy court may exercise personal jurisdiction over a defendant properly served under Rule 7004, "[i]f the exercise of jurisdiction is consistent with the Constitution and laws of the United States." Fed. R. Bankr. P. 7004(f). "Because valid service of process pursuant to Rule 7004(d) is sufficient to establish personal jurisdiction, state long-arm statutes are inapplicable, and the only remaining inquiry for a bankruptcy court is whether exercising personal jurisdiction over the defendant would be consistent with the Due Process Clause of the Fifth Amendment." Bickerton v. Bozel S.A. (In re Bozel S.A.), 434 B.R. 86, 97 (Bankr. S.D.N.Y. 2010) (citing Enron Corp. v. Arora (In re Enron Corp.), 316 B.R. 434, 440, 444-45 (Bankr. S.D.N.Y. 2004)).

A court must conduct a two-part inquiry to determine whether personal jurisdiction exists over a defendant. First, the court needs to examine if the defendant has "'the requisite minimum contacts with the United States at large.'" Picard v. Chais (In re Bernard L. Madoff Inv. Sec. LLC), 440 B.R. 274, 278 (Bankr. S.D.N.Y. 2010) (quoting Cruisephone, Inc. v. Cruise Ships Catering & Servs., N.V. (In re Cruisephone, Inc.), 278 B.R. 325, 331 (Bankr. E.D.N.Y. 2002)); see also In re Amaranth Nat. Gas Commodities Litig., 587 F. Supp. 2d 513, 527 (S.D.N.Y. 2008) ("In determining whether personal jurisdiction exists over a foreign defendant who . . . has been served under a federal service of process provision, a court should consider the defendant's contacts through the United States and not just those contacts with the forum."). Second, if such contacts are found to exist, the court must then determine the reasonableness of exercising personal jurisdiction over the defendant under the circumstances and whether doing so would "offend 'traditional notions of fair play and substantial justice.'" Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec., LLC, 460 B.R. 106, 117 (Bankr. S.D.N.Y. 2011) (quoting Asahi Metal Indus. Co. v. Super. Ct. Cal., 480 U.S. 102, 113 (1987) (internal quotations omitted); Metro. Life Ins. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996)); see also Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 129 (2d Cir. 2002) ("Where a plaintiff makes the threshold showing of the minimum contacts required for the first test, a defendant must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.") (internal quotations omitted).

When examining the first question of "minimum contacts," courts differentiate between "specific" and "general" personal jurisdiction. See In re Terrorist Attacks, 714 F.3d at 673. Either is adequate to satisfy the minimum contacts requirement of the Due Process Clause. See id. at 674 (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984)). Specific jurisdiction is established when a foreign defendant "'purposefully direct[s] his activities at residents of the forum' and . . . the underlying cause of action 'arise[s] out of or relate[s] to those activities.'" Madoff, 460 B.R. at 117 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)); see also Bank Brussels Lambert, 305 F.3d at 127 ("Where the claim arises out of, or relates to, the defendant's contacts with the forum—i.e., specific jurisdiction—minimum contacts exist where the defendant 'purposefully availed' itself of the privilege of doing business in the forum and could foresee being 'haled into court' there.") (internal citations and quotations omitted). The question of whether minimum contacts are present to justify the assertion of specific jurisdiction over a nonresident defendant "focuses on 'the relationship among the defendant, the forum, and the litigation.'" Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014) (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984)). "First, the relationship must arise out of contacts that the 'defendant himself' creates with the forum State.'" Walden, 134 S.Ct. at 1122 (emphasis in original). Second, the "'minimum contacts' analysis looks to the defendant's contacts with the forum State itself, not the defendant's contacts with persons who reside there." Id. Third, "the plaintiff cannot be the only link between the defendant and the forum. Rather, it is the defendant's conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him." Id.

In contrast, general jurisdiction "is based on the defendant's general business contacts with the forum . . . and permits a court to exercise its power in a case where the subject matter of the suit is unrelated to those contacts." In re Terrorist Attacks, 714 F.3d at 674 (quoting Metro. Life Ins., 84 F.3d at 568); see also Helicopteros, 466 U.S. at 414-16 & nn.8-9. Since "general jurisdiction is not related to the events giving rise to the suit, . . . courts impose a more stringent minimum contacts test, requiring the plaintiff to demonstrate the defendant's 'continuous and systematic general business contacts. . . .'" In re Terrorist Attacks, 714 F.3d at 674 (quoting Helicopteros, 466 U.S. at 416 & n.9).

If minimum contacts are present, a court must then turn to the second question of whether the exercise of jurisdiction will "offend 'traditional notions of fair play and substantial justice.'" Madoff Inv. Sec., 460 B.R. at 117 (quoting Asahi Metal Indus., 480 U.S. at 113; Metro. Life Ins., 84 F.3d at 567). In determining whether the assertion of jurisdiction is reasonable in a given case, courts will consider the following factors: "(1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies." Bank Brussels Lambert, 305 F.3d at 129 (internal citations and quotations omitted).

B. The Complaint Fails to Establish Specific Jurisdiction

In opposing these motions, the Trustee asserts specific jurisdiction over the Movants. But the Amended Complaint currently fails to make a prima facie showing of specific personal jurisdiction over the Movants. As a threshold matter, the Court notes the overwhelmingly foreign nature of the transactions at issue here. Investments were made by Mr. Sledziejowski and his entities in Polish real estate with Polish entities under Polish law. When Mr. Sledziejowski made the decision to dispose of those investments, he and his entities liquidated the Polish investments by selling them to non-U.S. entities. It is undisputed that each of the Movants is located outside of the United States and that the transactions at issue involved investments outside of the United States. (Amended Compl. ¶ 58 (stating that the Movants are "individuals and entities located and based abroad"); ¶¶ 199-228, 244, 247, 252-53, 257-59 (discussing purchase and development of real property in Poland through MyPlace, that the lending relationship between Sledziejowski and/or Innovest and MyPlace was with respect to these projects, and that the land purchased through these projects was used as security for the loans provided by TWSIP to MyPlace)); cf. Lehman Bros. Special Fin. Inc. v. Bank of Am., Nat'l Ass'n (In re Lehman Bros. Holdings Inc.), 535 B.R. 608, 622 (Bankr. S.D.N.Y. 2015) (in ruling that there was lack of personal jurisdiction over defendant, noting that defendant's connection with the United States was limited to knowledge that plaintiff was domiciled in the United States and ability to foresee harm would be felt in the United States and that defendant "was organized and headquartered outside of the United States; had no offices, employees, or property in the United States; was not registered to, and did not, conduct business in the United States; and did not advertise or otherwise solicit business in the United States.").

Moreover, the agreements at issue are governed by Polish law. (See Elkin Decl.) (Exh. A-H). Cf. Madoff, 460 B.R. at 117 ("The Second Circuit has indicated that entering into a contract with a New York choice of law clause is 'a significant factor in a personal jurisdiction analysis because the parties . . . invoke the benefits and protections of New York law.") (quoting Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22-23 (2d Cir. 2004)); AIG Fin. Prods. Corp. v. Public Util. Dist. No. 1 of Snohomish Cnty., Wash., 675 F. Supp. 2d 354, 364 (S.D.N.Y. 2009)); see also Budget Blinds, Inc. v. White, 536 F.3d 244, 261 (3d Cir. 2008) ("[A] choice-of-law provision 'standing alone would be insufficient to confer jurisdiction,' but combined with other factors, it may reinforce a party's 'deliberate affiliation with the forum State and the reasonable foreseeability of possible litigation there.'") (quoting Burger King, 471 U.S. at 482). While not determinative, the choice of law is relevant to the question of whether the Movants could foresee any dispute regarding the transactions in question would be litigated in the United States. See Picard v. Estate (Succession) of Doris Igoin (In re Bernard L. Madoff Inv. Sec. LLC), 525 B.R. 871, 885 (Bankr. S.D.N.Y. 2015) (noting that the absence of a New York choice of law provision was relevant, though not determinative to foreseeability, but ultimately finding that the establishment of New York trading accounts for purpose of investing in the U.S. stock markets made it foreseeable that disputes regarding those accounts would be litigated in the United States).

Against this backdrop of Polish contacts, the Court must evaluate the contacts in the Amended Complaint on a defendant by defendant basis. See Calder v. Jones, 465 U.S. 783, 790 (1984) ("Each defendant's contacts with the forum State must be assessed individually."). When the Amended Complaint is parsed in that fashion, there are only one or two contacts alleged against most of the Movants that are relevant to specific jurisdiction. But the alleged contacts do not provide enough detail to establish personal jurisdiction against the individual Movants.

1. MyPlace Entities

Significantly, there are no allegations connecting the two MyPlace entities to the transfer of the debt and equity from TWSIP to KREH, the actions upon which the alleged fraudulent transfer is based. The Amended Complaint only alleges that the two MyPlace entities entered into the Investment Agreement and the MyPlace Loan Agreements, and received the proceeds from those transactions. But merely entering into a contract with a U.S. based entity is not—by itself—sufficient to establish specific jurisdiction. See Walden, 134 S. Ct. at 1122 ("'[M]inimum contacts' analysis looks to the defendant's contacts with the forum State itself, not the defendant's contacts with persons who reside there."); Burger King, 471 U.S. at 478 ("If the question is whether an individual's contract with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party's home forum, we believe the answer clearly is that it cannot.") (emphasis in original). Rather, courts have required a defendant to have "purposefully 'reach[ed] out beyond' their State and into another by, for example, entering a contractual relationship that 'envisioned continuing and wide-reaching contacts' in the forum State. . . ." Walden, 134 S. Ct. at 1122 (emphasis added) (quoting Burger King, 471 U.S. at 479-80).

The Amended Complaint does not allege continuing and wide-reaching contacts between MyPlace and the United States that are related to the contractual relationships at issue. The Court disagrees with the Trustee's claim that the four loan tranches of debt under the MyPlace Loan Agreements, the accruing of interest on those loans, and the obligation of MyPlace to repay the loans are sufficient. Rather, these contacts arose solely based on the location of TWSIP in the United States and did not involve activities through which MyPlace purposely availed itself of the privilege of conducting its activities in the United States. "[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Burger King, 471 U.S. at 475 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). It is not evident to the Court that any of MyPlace's rights with respect to the MyPlace Loan Agreements "was affected, much less enhanced," by TWSIP's "status as a United States domiciliary." Lehman Bros., 535 B.R. at 622.

The Trustee cites Deutsche Bank Sec., Inc. v. Mont. Bd. of Invs., 7 N.Y. 3d 65 (2006), to support its argument that negotiation and formation of a contractual relationship with a U.S. entity constitutes necessary contacts for purposes of personal jurisdiction. But the facts of that case are distinguishable. In that case, the New York Court of Appeals concluded that "[w]e have in the past recognized CPLR 302(a)(1) long-arm jurisdiction over commercial actors and investors using electronic and telephonic means to project themselves into New York to conduct business transactions . . . and we do so again here." Id. at 71. As to whether that defendant could have reasonably expected to defend its actions in New York, the court focused heavily on the number of contacts with New York and the business model of the defendant. See id. at 71-72. Notably, the court observed that over the course of 13 months, the defendant "had engaged in approximately eight other bond transactions with DBSI's employee in New York, availing itself of the benefits of conducting business here, and thus had sufficient contacts with New York to authorize our courts to exercise jurisdiction over its person." Id. at 72. It also found that the defendant was "a sophisticated institutional trader" and negotiating the type of financial transactions in question was "a major aspect of [its] mission." Id. No such facts have been alleged in this case.

The Trustee also argues that the transfer of funds made by TWSIP out of the United States to MyPlace in Poland in connection with the MyPlace Loan Agreements constitutes a contact between MyPlace and the United States for purposes of the specific jurisdiction analysis. But that transfer was made by TWSIP, not the MyPlace entities. In questions of specific jurisdiction, "the relationship must arise out of contacts that the 'defendant himself' creates with the forum State." Walden, 134 S. Ct. at 1122 (quoting Burger King, 471 U.S. at 475); see also Helicopteros, 466 U.S. at 417 ("[The] unilateral activity of another party or a third person is not an appropriate consideration when determining whether a defendant has sufficient contacts with a forum State to justify an assertion of jurisdiction."). Indeed, courts have held that the mere knowing receipt of funds in a bank account is insufficient to establish jurisdiction. See, e.g., Rushaid v. Pictet & Cie, 2014 N.Y. Misc. LEXIS 3888, at *8 (N.Y. Sup. Ct. Aug. 26, 2014) ("While plaintiffs submitted documents showing that defendants knew of the third-party monetary transfers from a New York correspondent account for the benefit of the Pictet accounts, this alone does not constitute purposeful conduct. This passive receipt of funds do not constitute 'volitional acts' by defendants and, as such, defendants did not avail themselves of the privilege of conducting activities within the forum State, and thereby neglect to invoke the benefits and protections of its laws.") (internal citations and quotations omitted).

The Amended Complaint also makes an allegation regarding a notice sent by MyPlace Z O.O. to TWSIP in connection with the MyPlace Transfer Agreement. (Amended Compl. ¶ 86). But the mailing of one notice to TWSIP in the United States is not necessarily meaningful enough contact to establish specific jurisdiction. As noted by the Supreme Court, "[d]ue process requires that a defendant be haled into court in a forum State based on his own affiliation with the State, not based on 'random, fortuitous, or attenuated' contacts he makes by interacting with other persons affiliated with the State." Walden, 134 S. Ct. at 1123 (quoting Burger King, 471 U.S. at 475); see also Burger King, 471 U.S. at 475 ("[T]he purposeful availment requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts.") (emphasis added) (internal citations and quotations omitted).

2. Kulczyk Entities

The three Kulczyk entities have no connection to the entry into the MyPlace Loan Agreements or the initial equity investment by Mr. Sledziejowski in MyPlace. Rather, two of these entities are allegedly involved in the winding up of the transactions which occurred with an entity domiciled in the United States. (See, e.g., Amended Complaint ¶¶ 98-100, 117-119) (KREH signed the Share Transfer Agreement and the Assignment Agreements); (see id. ¶¶ 107-108) (KH made payment on behalf of KREH). But once again, the allegations are thin when analyzed as to the individual defendants. Moreover, the Amended Complaint lists no contacts between KI and the United States. The only references to KI in the Amended Complaint, aside from in the introductory paragraph, are allegations that KI did business in Poland, was owned by Mr. Kulczyk, that it was an insider of the Sledziejowski and Innovest estates, and was referred to in an email that Mr. Sledziejowski sent to Mr. Kulczyk. (See Amended Compl. ¶¶ 46-49, 109). The only one of these allegations that relates to the United States is the Trustee's allegation of insider status. But such a legal conclusion cannot form the basis for jurisdiction. See In re Terrorist Attacks, 714 F.3d at 673 ("[I]n determining whether a plaintiff has met [its] burden, [a court] will not draw argumentative inferences in the plaintiff's favor . . . nor must [it] accept as true a legal conclusion couched as a factual allegation."); Cortland St. Recovery Corp. v. Deutsche Bank AG, 2015 U.S. Dist. LEXIS 114533, at *5-*6 (S.D.N.Y. Aug. 28, 2015) (when determining prima facie case of personal jurisdiction, "the Court need not 'accept as true a legal conclusion couched as a factual allegation. . . .'") (quoting Jazini v. Nissan Motor Co., 148 F.3d 181, 185 (2d Cir. 1998); cf. Bell Atl. Corp. v Twombly, 550 U.S. 544, 555 (2007) ("While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. . . .") (internal citations and quotations omitted).

While the Trustee concedes that KI was not a named party to the agreements in question, the Trustee contends that the actions of certain defendants should be considered together for purposes of jurisdiction. The Trustee's Amended Complaint does not allege that each of the Movants were alter egos of one another or articulate a clear theory upon which all of the Movants' activities should be attributed to each of the other Movants. But in her brief opposing these motions, the Trustee invokes the "mere department" doctrine as to Movants KREH, KH and KI. That doctrine allows a court to exercise jurisdiction over a defendant not otherwise subject to jurisdiction where the defendant is a "mere department" of an entity over which the court has jurisdiction. See Lehman Bros., 535 B.R. at 625. The doctrine considers four factors:

(1) Whether there exists common ownership and the presence of an interlocking directorate and executive staff,
(2) The degree of financial dependency of the subsidiary on the parent,
(3) The degree to which the parent interferes in the selection and assignment of the subsidiary's executive personnel and fails to observe corporate formalities, and
(4) The degree of the parent's control of the subsidiary's marketing and operational policies.

C. Jurisdictional Discovery Is Appropriate

In addition to requesting discovery on the "mere department" doctrine, the Trustee seeks broader jurisdictional discovery. More specifically, the Trustee requests jurisdictional discovery relating to four categories of information: (i) the extent of the Movants' contacts with the United States (which the Court takes to mean contacts necessary to satisfy general jurisdiction), (ii) the extent of the Movants' contacts with the United States relating to the transactions set forth in the Amended Complaint (which the Court takes to mean contacts necessary to satisfy specific jurisdiction); (iii) whether the interplay among the Movants could give rise to the "mere department" doctrine, and (iv) the extent to which the actions of Mr. Kulczyk may be attributed to each of the named corporate Movants under an agent-principal relationship. (See Adv. Pro. No. 15-08207, ECF No. 29; Adv. Pro. No. 15-08208, ECF No. 29).

"At the jurisdictional stage, '. . . courts enjoy broad discretion in deciding whether to order discovery.'" Tymoshenko v. Firtash, 2013 WL 1234943, at *7 (S.D.N.Y. Mar. 27, 2013) (quoting In re Terrorist Attacks on September 11, 2001, 349 F. Supp. 2d 765, 811 (S.D.N.Y. 2005), aff'd, 538 F.3d 71 (2d Cir. 2008)). In this circuit, courts "have allowed jurisdictional discovery where a plaintiff has made 'a sufficient start toward establishing personal jurisdiction.'" Hollenbeck v. Comeq, Inc., 2007 U.S. Dist. LEXIS 63547, at *8 (N.D.N.Y. Aug. 28, 2007) (quoting Uebler v. Boss Media, 363 F. Supp. 2d 499, 506 (E.D.N.Y. 2005)); see also Smit v. Isiklar Holding A.S., 354 F. Supp. 2d 260, 263 (S.D.N.Y. 2005) ("[A] court may order limited discovery targeted at the missing jurisdictional elements, if plaintiff has shown that such an exercise would serve to fill any holes in its showing.") (internal citations and quotations omitted). Moreover, jurisdictional discovery "is typically permitted where the facts necessary to establish personal jurisdiction . . . lie exclusively within the defendant's knowledge." Picard v. Magnify Inc. (In re Bernard L. Madoff Inv. Sec. LLC), 2012 Bankr. LEXIS 2748, at *21 (Bankr. S.D.N.Y. June 15, 2012) (internal citations and quotations omitted).

The facts supports jurisdictional discovery here. These include that the Trustee's lacks knowledge about the relevant facts (as compared with the counterparties to these transactions), and that the facts about the Movants' contacts relevant to personal jurisdiction lie within the Movants' knowledge. That the Movants did not provide declarations of any witnesses in support of their motions to dismiss also supports jurisdictional discovery. Given the wide latitude afforded the Court on jurisdictional discovery, moreover, the Court finds that the Trustee has made a "sufficient start toward establishing personal jurisdiction." The Amended Complaint includes allegations of visits by Mr. Kulczyk to the United States related to the MyPlace transactions and notices sent by some Movants to the United States; all these support discovery regarding the contacts relevant to specific jurisdiction. Furthermore, the Trustee's allegations relating to common ownership of many of these entities and Mr. Kulczyk's central role in the transactions support discovery regarding the mere department doctrine and related theories. And while the Trustee's Opposition asserted only specific jurisdiction, the Amended Complaint makes numerous allegations that may lend themselves to establishing general jurisdiction in these cases, including Mr. Kulczyk's visits to the United States generally. While the lack of details as to all these allegations render them currently insufficient to provide personal jurisdiction, they are sufficient to satisfy the requirements for jurisdictional discovery.

Accordingly, the Court finds that the Trustee's requested jurisdictional discovery is appropriate. Such discovery will include: (i) the production of documents by Mr. Sledziejowski and the Movants; (ii) a deposition of Mr. Sledziejowski, and (iii) a deposition of Mr. Kulczyk in both his individual capacity and in his capacity as principal of the corporate Movants. (See Adv. Pro. No. 15-08207, ECF No. 29; Adv. Pro. No. 15-08208, ECF No. 29). Movants' counsel raised a concern about Mr. Kulczyk appearing in the United States for a deposition. (See Hr'g Tr. 79:1-81:20, Nov. 20, 2015). The Trustee subsequently proposed to depose Mr. Kulczyk in person in either Luxembourg, London, or Warsaw, which are the locations in which KI operates. (See Adv. Pro. No. 15-08207, ECF No. 29; Adv. Pro. No. 15-08208, ECF No. 29). The Court concludes that such an overseas deposition is an appropriate and efficient way to proceed.

Given the Court's ruling on personal jurisdiction, it is inappropriate for it to reach the other grounds for dismissal raised by the Movants. See Arrowsmith v. United Press Int'l, 320 F.2d 219, 221 (2d Cir. 1963) ("Not only does logic compel initial consideration of the issue of jurisdiction over the defendant—a court without such jurisdiction lacks power to dismiss a complaint for failure to state a claim—but the functional difference that flows from the ground selected for dismissal likewise compels considering jurisdiction and venue questions first. A dismissal for lack of jurisdiction or improper venue does not preclude a subsequent action in an appropriate forum, whereas a dismissal for failure to state a claim upon which relief can be granted is with prejudice."); Gustin v. Hoffman, 2008 U.S. Dist. LEXIS 60046, at *2 (M.D. Fla. July 29, 2008) ("A court must address a challenge to its exercise of personal jurisdiction before looking at the other claims in a motion to dismiss.") (internal citations and quotations omitted); Clark v. Meijer, Inc., 376 F. Supp. 2d 1077, 1083 (D. N.M. 2004) ("If a court determines that personal jurisdiction is lacking as to some or all of the defendants, all other claims and issues related to those claims brought against those defendants are rendered moot.") (internal citation omitted); see also Darden v. DaimlerChrysler N. Am. Holding Corp., 191 F. Supp. 2d 382, 386 (S.D.N.Y. 2002) ("The Court considers the jurisdictional issues first, because a dismissal for lack of jurisdiction renders all other claims moot.") (citing Ruhrgas A.G. v. Marathon Oil Co., 526 U.S. 574, 583 (1999) ("Article III generally requires a federal court to satisfy itself of its jurisdiction over the subject matter before it considers the merits of a case."); Calero v. Immigration and Naturalization Serv., 957 F.2d 50 (2d Cir. 1992); Da Silva v. Kinsho Int'l Corp., 229 F.3d 358 (2d Cir. 2000)).

CONCLUSION

For the reasons stated above, the Court finds that it lacks personal jurisdiction over the Movants but grants jurisdictional discovery to the Trustee. Accordingly, the motions to dismiss are denied without prejudice. The Movants should settle an order on three days' notice. The proposed order must be submitted by filing a notice of the proposed order on the Case Management/Electronic Case Filing docket, with a copy of the proposed order attached as an exhibit to the notice. A copy of the notice and proposed order shall also be served upon counsel for the Trustee. Dated: New York, New York

October 21, 2016

/s/ Sean H . Lane

UNITED STATES BANKRUPTCY JUDGE