Kaye Scholer Secures Complete Motion to Dismiss for Redwood Capital
The firm successfully obtained dismissal of all claims brought against an investment bank client, Redwood Capital, by CeltixConnect Equity Investors.
In a lawsuit filed in New York Supreme Court, Celtix alleged that it lost its investment in Sea Fibre Networks, an Irish company that planned on constructing, owning, and operating a sub-sea telecommunications cable that traverses the ocean between Ireland and Wales. Celtix claimed that Sea Fibre stole that plan, along with attendant intellectual property, from a competitor, and that the discovery of such theft then resulted in the failure of Sea Fibre's business. Celtix claimed that Sea Fibre and its CEO fraudulently induced Celtix to invest in Sea Fibre. Celtix also asserted claims for fraud, negligent misrepresentation, and negligence against Redwood, which acted as a placement agent for Sea Fibre.
On December 6, 2015, Redwood moved to dismiss Celtix's amended complaint for failure to state claim. On July 19, 2016, Justice Shirley Werner Kornreich of the Commercial Division issued a decision granting Redwood's motion and dismissing Celtix's claims against Redwood in their entirety. The court agreed with Redwood that Celtix had failed to allege facts demonstrating scienter, or that Celtix had reasonably relied upon any statements made by Redwood.