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Eden Rock v. Cedar Lane

Eden Rock v. Cedar Lane

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Published by Mikhail Iliev

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Published by: Mikhail Iliev on Jun 08, 2011
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FILED: NEW YORK COUNTY CLERK 06/03/2011

NYSCEF DOC. NO. 1

INDEX NO. 651548/2011 RECEIVED NYSCEF: 06/03/2011

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X EDEN ROCK CAPITAL MANAGEMENT : Index No.: LLP, : : Plaintiff, : COMPLAINT : v. JURY TRIAL DEMANDED : : CEDAR LANE ASSET MANAGEMENT, LLC, : : Defendant. : X

Plaintiff EDEN ROCK CAPITAL MANAGEMENT LLP (“Eden Rock”), by its undersigned counsel, as and for its Complaint against Defendant CEDAR LANE ASSET MANAGEMENT, LLC (“Cedar Lane”), hereby alleges: NATURE OF THE CASE 1. In this action, Eden Rock seeks to recover $183,187.85 in fee rebates due and

owing to Eden Rock under a Letter Agreement and Supplement between the parties, which amount Cedar Lake has failed and refused to pay for over two years since it was due. PARTIES 2. Plaintiff Eden Rock is a limited liability partnership organized and existing under

the laws of England and Wales, with its principal place of business in London, England. 3. Defendant Cedar Lane is a limited liability company organized and existing under

the laws of the State of Delaware, with its principal place of business in New York, New York.

JURISDICTION AND VENUE 4. This Court has jurisdiction over Cedar Lane because Cedar Lane conducts

business within the State of New York and because Cedar Lane entered into the Letter Agreement and Supplement at issue, as alleged below, within the State of New York. 5. Venue is proper in New York County pursuant to CPLR 503(c). BACKGROUND 6. Eden Rock is an investment advisor. Eden Rock provides investment advice to

clients that include investment funds of various kinds and individual investors. 7. Cedar Lane also is an investment advisor. Among other things, Cedar Lane acted

as the manager and investment advisor of a hedge fund known as Cedar Lane Entertainment Fund, Ltd. (the “Fund”). 8. Pursuant to one or more agreements between the Fund and Cedar Lane, the Fund

regularly paid management fees and performance fees to Cedar Lane on approximately a monthly basis through at least the end of 2008. 9. In or around March 2010, Defendant Cedar Lane caused the Fund to enter into

liquidation under the law of the Cayman Islands, where the Fund was organized. 10. From time to time, various funds and investors advised by Eden Rock made

investments into the Fund. 11. On or about March 29, 2007, Eden Rock and Cedar Lane entered into a letter

agreement (the “Letter Agreement”) providing for Cedar Lane to pay a rebate to Eden Rock of management fees and performance fees received by Cedar Lane from the Fund for investments into the Fund by clients of Eden Rock. On or about August 1, 2008, Eden Rock and Cedar Lane

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entered into a supplement to the Letter Agreement (the “Supplement”). True and correct copies of the Letter Agreement and the Supplement are attached as Exhibit A hereto. 12. On information and belief, Cedar Lane received management fees and

performance fees from the Fund totaling approximately $2.3 million in 2007 and $4.2 million in 2008. 13. According to a calculation prepared by Cedar Lane’s Director of Finance and

Administration as of July 1, 2009 (a copy of which is attached as Exhibit B hereto), Cedar Lane owed Eden Rock at least $183,187.85 in fee rebates under the terms of the Letter Agreement and Supplement on account of the fees received by Cedar Lane in 2007 and 2008. 14. Cedar Lane and the liquidator of the Fund have represented to Eden Rock that the

Fund did not pay management fees or performance fees to Cedar Lane in 2009 or 2010. Eden Rock reserves the right to investigate the accuracy of this representation and to pursue claims and legal remedies, if any and as may be appropriate, for any rebates that may be due and owing to Eden Rock for 2009 and/or 2010. 15. Pursuant to the Letter Agreement and Supplement, Cedar Lane owes Eden Rock

at least $183,187.85 in rebates for management fees and performance fees that Cedar Lane received from the Fund in 2007 and 2008. 16. Eden Rock owes a fiduciary duty to its clients, to whom the rebates ultimately are

owed, and has made repeated attempts to resolve this dispute with Cedar Lane without the need to resort to litigation. 17. Despite repeated demand by Eden Rock, Cedar Lane willfully and repeatedly has

failed and refused to pay the rebates that it owes to Eden Rock. Since approximately October

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2010, Cedar Lane has stopped even responding to Eden Rock’s correspondence and other inquiries. 18. Eden Rock has fully performed all of its obligations under the Letter Agreement

and Supplement. FIRST CAUSE OF ACTION (Breach of Contract) 19. Eden Rock repeats and reiterates the allegations of paragraphs 1 through 18

hereof as if the same were set forth fully herein. 20. By entering into the Letter Agreement and Supplement, Eden Rock and Cedar

Lane entered into a valid, enforceable, and binding contract. 21. Supplement. 22. Cedar Lane did not fully perform all of its obligations under the Letter Agreement Eden Rock fully performed all of its obligations under the Letter Agreement and

and Supplement. 23. By failing to pay rebates for management fees and performance fees to Eden

Rock in the amount of at least $183,187.85, despite due demand therefor, Cedar Lane materially breached the Letter Agreement and Supplement. 24. As a result, Eden Rock has been damaged in the amount of at least $183,187.85,

plus prejudgment interest as permitted by law.

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