Palm Avocet Holdings LLC et al v. RT Signal Corporation et al, No. 1:2022cv04619 - Document 58 (S.D.N.Y. 2024)
Court Description: ORDER DENYING DEFENDANT'S MOTION TO DISMISS: Defendant Kanen Flowers's motion to dismiss is denied. First, it fails to givenotice to Plaintiffs' counsel. Second, it has not been filed on ECF. In order for the Court to consider any filings, they must be docketed on ECF. Parties wishing to file a motion should consult SDNY resources on how to do so, such as, but not limited to, the District Court's webpage. Third, jurisdiction has already been found. See ECF No. 53 (Order Denying Defendant's Motion to Dismiss). Fourth, issues of fact have been raised that cannot be decided on a motion to dismiss. SO ORDERED. (Signed by Judge Alvin K. Hellerstein on 5/1/2024) (vfr)
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Palm Avocet Holdings LLC et al v. RT Signal Corporation et al Doc. 58 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------ X PALM AVOCET HOLDINGS LLC et al., ORDER DENYING DEFENDANT'S MOTION TO DISMISS Plaintiff, -against- 22 Civ. 4619 (AKII) RT SIGNAL CORPORATION et al., Defendant. X ALVIN K. HELLERSTEIN, U.S.D.J.: Defendant Kanen Flowers's motion to dismiss is denied. First, it fails to give notice to Plaintiffs' counsel. Second, it has not been filed on ECF. In order for the Comito consider any filings, they must be docketed on ECF. Parties wishing to file a motion should consult SDNY resources on how to do so, such as, but not limited to, the District Comi's webpage. Third, jurisdiction has already been found. See ECF No. 53 (Order Denying Defendant's Motion to Dismiss). Fourth, issues of fact have been raised that cannot be decided on a motion to dismiss. SO ORDERED. Dated: May I, 2024 New York, New York /s/ Alvin K. Hellerstein AL VINK. HELLERSTEIN United States District Judge Dockets.Justia.com From: To: Subject: Date: Attachments: kanendosel Hellerstein NYSD Chambers Request for Cancellation of Upcoming Pretrial Conference and Submission of Motion to Dismiss Monday, April 29, 2024 3:20:24 PM 20240429 Flowers 22-CV-04619-AKH.pdf Termination of l,Rqal Representation Letter Palm Avocet. et. al. vs. Kanen Flowers Aryst Flowers et. a!..pdf Settlement Agreement Wetherell.pdf CAUTION - EXTERNAL: Dear Judge Hellerstein, I hope this message finds you in good health. I am writing to respectfully request the cancellation of the scheduled initial pretrial conference on May 3, 2024, at 10 a.m. In lieu of the conference, I am submitting my motion to dismiss the complaint filed by Palm Avocet Holdings, LLC, and the David Wetherell parties. I must bring to your attention that the Wetherell parties have, regrettably, disseminated the phone number and details of the court dealings to several ofmy business associates. This breach of confidentiality threatens to seriously impair my current and potential future business relationships. Holding this preliminary dial-in conference could further expose sensitive information, thus compounding the potential damage. Attached to this email, you will find my motion for dismissal along with all pertinent suppo1ting documents. As I am representing myself pro se in these proceedings, I will be the sole counsel appearing on record for the defense. Please find my contact information below for any fu1ther communications: Name: Kanen Flowers Email: kanendosei@gmail com Phone:415-935-4830 Given these circumstances, I believe that the motion addresses the core issues of the case comprehensively and suggests that scheduling a pretrial conference may not only be unnecessary but could potentially exacerbate the current issues regarding confidentiality and professional harm. I trust the Court will find the arguments presented sufficient for consideration without the need for fmther oral argument at this stage. Thank you very much for considering my request. I look forward to your decision. Wann regards, Kanen Flowers Pro Se CAUTION - EXTERNAL EMAIL: This email originated outside the Judiciary. Exercise caution when opening attachments or clicking on links. Kanen Flowers 2 3 4 UNITED STATES DISTRICT COURT 5 SOUTHERN DISTRICT OF NEW YORK 6 7 PALM AVOCET HOLDINGS, LLC, DA YID WETHERELL, AND ELIZABETH WETHERELL, Case No.: 22-CV-04619-AKH 8 Plaintiff, 9 vs. MOTION TO DISMISS I FLOWERS I CASE NO. 22CV-04619-AKI-I 10 11 12 13 NEXT ALPHA CAPITAL MANAGEMENT, LP (A/KJA REAL GENUS, LLC), NEXT ALPHA US FUND, LLC, KA TSU FUND LTD, JOHN FLOWERS (A/KJA KANEN FLOWERS), AND ARYST WILLIAMS Defendant 14 15 DEFENDANT KANEN FLOWERS' MOTION TO DISMISS 16 17 Kanen Flowers) appearing pro sc, respectfully requests that this Court dismiss the complaint 18 lodged by Palm Avocet Holdings, LLC, and the David Wetherell parties. Pursuant to Ruic 12(b) of the Federal 19 Rules of Civil Procedure, the Defendant argues for dismissal on the grounds detailed herein. lt is crucial to 20 recognize that this litigation marks Mr. Flowers' first and only foray into legal disputes, in stark contrast to the 21 Plaintitrs extensive history of both initiating and defending numerous lawsuits, indicating a pattern of engaging in 22 litigious actions. This suit appears to be yet another frivolous claim, adding unnecessarily to the Court's vmrkload. 23 Additionally, Mr. Flowers faces severe financial distress due to the payout to David Wetherell, substantial legal fees 24 incurred from representation by Kevin A. Landau and the Landau Group, and the broader economic impact from the 25 collapse of major financial entities like FTX, Alameda, BlockFi, and Genesis. These adverse circumstances have 26 compelled him to file for bankruptcy and appear in these proceedings without legal representation. Therefore, the 27 Defendant urges the Court to acknowledge the frivolous nature ofthis claim and dismiss the complaint accordingly. 28 MOTION TO DISMISS I FLOWERS/ CASE NO. 22-CV-04619-AKH - 1 I. INTRODUCTION 2 1, This response contests the allegations made by Plaintiff, Palm Avocent Holdings, LLC and 3 then David Wetherell parties, which assert that Defendant, Kancn Flowers, improperly 4 retained a holdback amount from a settlement agreement. 1t is crucial to highlight that all 5 parties involved, including the Plaintiff and the Defendant, executed a Mutual Release, 6 Settlement Agreement, and Hold Harmless Agreement that conclusively settled all accounts 7 and released the parties from further claims. 8 See "EXHIBIT l '' from Plaintiff's own declaration. 9 2. Under the terms of the detailed and comprehensive Confidential Settlement Agreement signed 10 on April 15, 2020, between the Wetherell Parties and the Next Alpha Parties, it is evident that 11 Kanen Flowers and Next Alpha, along with related entities, cannot possibly owe any money 12 to David Wetherell and related entities. This conclusion is derived from several critical 13 components of the agreement, specifically the clauses pertaining to mutual releases, 14 redemption of interests, and the final settlement of accounts. 15 3. Firstly, the agreement explicitly provides for the redemption of various equity interests and 16 the termination of ongoing obligations. Notably, all of Palm Avocet's interests in RT Signal 17 and Next Alpha Capital Management, LP were redeemed for specified sums, paid in 18 immediately available funds, effectively severing Palm Avocet's equity ties and membership 19 status within these entities. Upon the execution of these redemptions, all rights or claims tied 20 to the previously held interests were conclusively settled, as outlined in sections detailing the 21 redemption processes for both Series A Preferred Stock and membership units. 22 4. Secondly, the mutual release clauses (section 12 of the agreement) are particularly definitive. 23 These releases arc broad and encompassing, whereby each party, on behalf of themselves and 24 their affiliates, fully and forever discharges the opposing patties from any and all liabilities, 25 claims, demands, or causes of action of every kind, whether knov-m or unknown. This 26 comprehensive release covers any claims that could arise from any transactions or interaction 27 prior to the agreement, including those specified in the extensive recitals of the agreement 28 which discuss prior engagements and contributions between the parties, MOTION TO DISMISS/ FLOWERS/ CASE NO. 22-CV-04619-AKH - 2 5. Furthermore, the agreement includes specific non-disparagement clauses and a detailed 2 outline of the procedures for any potential grievances post-agreement, which are limited 3 strictly to issues regarding the execution of the agreement itself rather than any past dealings. 4 The fact that both parties agreed to handle any disputes through arbitration, with a clear 5 waiver of the right to seek punitive damages, underscores the finality and comprehensiveness 6 of the settlement. 7 6. Given these terms, particularly the unequivocal mutual releases and the specific settlement of 8 accounts, there is no legal basis for any further financial claims between David Wetherell and 9 related entities against Kanen Flowers, Next Alpha, and related entities. The agreement was 10 meticulously structured to ensure all previous interactions were settled fully, leaving no room ll for outstanding liabilities or obligations beyond the strictures of the settlement itself. 12 7. In addition to the claims already addressed, it is pertinent to highlight that David Wetherell l3 has engaged in behavior aimed at destabilizing the financial foundation of the company, with 14 the apparent intent of acquiring its technology. This tactic, which he has employed on 15 multiple occasions in the past, manifests a clear pattern of attempting to manipulate corporate 16 outcomes to his advantage. Furthermore, Mr. Wetherell introduced a convicted felon of 17 financial fraud into the company's operations. This irresponsible action necessitated his 18 removal from any position ofresponsibility within the company to safeguard its integrity and 19 operational stability. This pattern of behavior underscores the frivolous nature of his claims 20 and further justifies the dismissal of his complaint. 21 22 II. FACTUAL BACKGROUND 23 1. Kanen Flowers served as the CEO of Next Alpha, Inc., from November I, 2019, until his 24 dismissal on April 26, 2023. This termination was executed by Kevin A. Landau, an attorney 25 who represented all related entities, signaling a significant shift in leadership and operational 26 control. 27 28 2. Following this termination, Kevin A. Landau, along with Chris John, took over the management of the company. This transition stripped Kan en Flowers of any responsibility MOTION TO DISMISS/ FLOWERS I CASE NO. 22-CV-04619-AKH - 3 and the ability to influence or access any funds, documentation, or other assets associated 2 3 with the entities. 3. On the date of his dismissal, Kevin A Landau communicated to Kan en Flowers: "As such, 4 and from the direction of Mr. John and in the best interests of Next Alpha and ifs members, 5 you are hereby relieved of all further matters as CEO. Since you are no longer CEO or 6 occupy any other position with Next Alpha, this shall be the final attorney-client 7 communicalion as ii relates to you in eve,y regard. Please be adt1ised that you are welcome to 8 seek independent counsel, and this communication will remain confidential, unless othe1wise 9 required by Court Order. Notwithstanding, Next Alpha shall retain all rights to prosecuting 10 11 claims and will notify its members accordingly as lo your disposition. " 4. Prior to these events, a comprehensive Mutual Release, Settlement Agreement, and Hold 12 Harmless Agreement were signed by all parties involved, including the Plaintiff and the 13 Defendants. Under these agreements, the Plaintiff was fully compensated, receiving more 14 than $20,000,000 through a structured redemption process and an additional $400,000 as a 15 settlement payment. 16 5. Despite these clear and conclusive agreements, the Plaintiff now claims entitlement to 17 additional funds allegedly withheld in enDr. Such claims are unequivocally barred by the 18 explicit terms of the previously executed agreements and by the fact that Kancn Flowers had 19 been completely divested of any operational control or access to the resources of the company 20 at the time these claims could have arisen. 21 22 III, LEGAL STANDARD 23 1. A motion to dismiss under FRCP 12(b)(6) tests the sufficiency of the complaint. To survive a 24 motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state 25 a claim to relief that is plausible on its face. 26 27 28 MOTION TO DISMISS/ FLOWERS/ CASE NO. 22-CV-04619-AKH - 4 JV, ARGUMENT 2 1. Release of Claims: The signed agreements among all parties, including the Plaintiff, 3 explicitly release Kancn Flowers, Next Alpha, Inc., and all associated entities from any 4 further claims related to the Plaintiff1s investment, his departure from Next Alpha, Inc., and all 5 related matters. These agreements serve as a comprehensive discharge, precluding any 6 subsequent claims linked to the outlined transactions and agreements. 7 2. Jurisdictional Challenges: The complaint fails to establish the requisite residency or 8 citizenship details for Palm Avocct, LLC, necessary for asserting federal jurisdiction. In our 9 motion to dismiss, it is highlighted that Palm Avocet, LLC is organized in Delaware, similar 10 to all entities involved in this case. As the burden of proving federal jurisdiction lies with the 11 party asserting it, in this case, Palm Avocet, LLC, their failure to provide such essential 12 information undermines the jurisdictional basis of their claim. 13 3. Indemnification Provisions: The LLC Agreement contains robust indemnification 14 provisions, specifically Section 4,6, which underscores the intent that patties, including the 15 Manager, arc not to be held personally liable for acts performed in their managerial capacity, 16 except in cases of gross negligence, recklessness, or willful misconduct. This clause further 17 suppotts the defense that any actions taken were within the scope of managerial duties and 18 insulated from personal liability. 19 4. Lack of Control and Authority: At the time the disputed claims arose, financial oversight at 20 Next Alpha, Inc., and its associated entities was under the exclusive control of Craig Peretz, 21 appointed by David Wetherell. Kanen Flowers had already been stripped of any authoritative 22 or operational capacity, and all financial matters were being managed by SS&C, a recognized 23 fund administrator, under the direct supervision of Peretz and Wetherell. This complete 24 removal of Flowers from any financial or operational roles renders any allegations of his 25 involvement in financial discrepancies entirely unfounded. 26 5. Post-Tel'mination Access and Control: Subsequent to his termination, Kanen Flowers was 27 denied access to any documentation or assets related to RT Signal Corporation, Next Alpha 28 Capital Management, and all related entities, Control over these entities was fully transferred MOTION TO DISMISS/ FLOWERS/ CASE NO. 22-CV-04619-AKII - 5 to Kevin A. Landau of the Landau Group and Chris John, marking a total cessation of any 2 access or influence for Flowers over the company's affairs, including all forms of 3 documentation and communication. 4 6. No Basis for Additional Claims: The Mutual Release, executed with full and binding effect, 5 resolved all disputes among the parties. The Plaintiff1s complaint lacks any allegations that 6 could potentially invalidate or render these agreements non-binding, affirming their 7 enforceability and the finality of the resolutions agreed upon therein. 8 7, Bar on Plaintifrs Claims: The executed agreements, specifically the inclusion ofa Hold Harmless clause, legally prohibit the Plaintiff from pursuing additional compensation or 9 10 asserting any claims against the Defendant concerning the resolved matters. This legal barrier 11 further invalidates the current claims, affirming their dismissal under the terms agreed upon 12 by all parties. 13 14 V. CONCLUSION 15 For the foregoing reasons, Defendant Kanen Flowers respectfully requests that the Court grant this 16 motion to dismiss the Complaint in its entirety, with prejudice. 17 18 VI. CERTIFICATE OF SERVICE 19 I hereby certify that on this day I have e-mailed by the document to all parties or their counsel of 20 record in this action. 21 22 23 Dated the 29'" day of April 2024. 24 25 26 27 28 MOTION TO DISMISS/ FLOWERS/ CASE NO. 22-CV-04619-AKH - 6
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