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Armouth Int'l Inc. v. Fallas

Fraud Claim Is Plaintiff's Personal Property Not Related to Bankruptcy Proceeding

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OPINION & ORDER Plaintiff Armouth International, Inc. brings this action for common law fraud, unjust enrichment, and conversion against Defendant Michael Fallas, seeking damages that stem from Armouth’s sale on credit of millions of dollars of clothing to Fallas’s company, National Stores, Inc. (“National”). National is a debtor in an ongoing bankruptcy proceeding before the United States Bankruptcy Court for the District of Delaware, to which Armouth has filed proofs of claim as a creditor. Now before the Court is Fallas’s motion to dismiss, transfer venue, or stay this litigation. For the reasons that follow, that motion is denied in its entirety. BACKGROUND Except where otherwise noted, the following facts are drawn from Armouth’s complaint, Dkt. 2-1, and are assumed to be true for purposes of resolving the motion. See, e.g., Stadnick v. Vivint Solar, Inc., 861 F.3d 31, 35 (2d Cir. 2017). The Court also considers “matters of which judicial notice may be taken,” namely documents filed in the ongoing bankruptcy proceeding involving Armouth and National. Leonard F. v. Israel Disc. Bank of New York, 199 F.3d 99, 107 (2d Cir. 1999) (internal quotation marks omitted); see Int’l Star Class Yacht Racing Ass’n v. Tommy Hilfiger U.S.A., Inc., 146 F.3d 66, 70 (2d Cir. 1998). (“A court may take judicial notice of a document filed in another court not for the truth of the matters asserted in the other litigation, but rather to establish the fact of such litigation and related filings.”). I. Factual Background Plaintiff Armouth International, Inc. is a clothing wholesaler incorporated in the state of New York, with its principal place of business in New York. Compl.

9-10. Defendant Michael Fallas, a resident of California, was the “98 percent owner, Chairman of the Board and Vice President of National Stores, Inc., a discount retailer of clothing, toys, and household goods.” Id.

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