Motion to Dismiss in Steven Nerayoff, Maple Ventures, Llc v. Stormx Global Sezc, Inc. f/k/a CakeCodes Global SEZC, Inc., Stormx Inc.| Trellis.Law

On November 14, 2023 a Judgment was filed involving a dispute between Maple Ventures, Llc, Steven Nerayoff, and Stormx Global Sezc, Inc. F K A Cakecodes Global Sezc, Inc., Stormx Inc., for Commercial Division - Contract in the District Court of Nassau County.

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FILED: NASSAU COUNTY CLERK 01/26/2024 10:29 PM INDEX NO. 618611/2023
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
-------------------------------------------------------------- x
:
STEVEN NERAYOFF and MAPLE :
VENTURES, LLC, : Index No. 618611/2023
Plaintiffs, :
: IAS Part 4
-against- :
Hon. Timothy S. Driscoll
:
STORMX GLOBAL SEZC, INC. f/k/a CakeCodes :
Global SEZC, Inc. and STORMX, INC., Mot. Seq. No. 3
:
: Oral Argument Requested
Defendants. :
_________________________________________

DEFENDANTS’ MEMORANDUM OF LAW IN SUPPORT OF THEIR
PARTIAL MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT .................................................................................................... 1

FACTUAL BACKGROUND ......................................................................................................... 5

LEGAL STANDARD ..................................................................................................................... 6

ARGUMENT .................................................................................................................................. 7

I. This Court lacks personal jurisdiction over StormX (Counts III, V, and VI) and
most of Plaintiffs’ claims against CakeCodes (Counts II and IV). ......................... 7

II. Plaintiffs fail to state their "Bonus Tokens" claim against CakeCodes for breach
of contract (Count II). ........................................................................................... 11

III. Plaintiffs’ tortious interference claim against StormX is untimely, and in any
event, meritless (Count V). ................................................................................... 15

IV. Plaintiffs cannot pierce the corporate veil to hold StormX liable for alleged
breaches of contracts entered into with CakeCodes (Count VI). .......................... 17

CONCLUSION ............................................................................................................................. 19

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TABLE OF AUTHORITIES
Page(s)
Cases
34-06 73, LLC v. Seneca Ins. Co.,
39 N.Y.3d 44 (2022) ................................................................................................................. 11

Albstein v. Elany Contracting Corp.,
30 A.D.3d 210 (1st Dep’t 2006) ............................................................................................... 19

Ashby v. ALM Media, LLC,
110 A.D.3d 459 (1st Dep’t 2013) ............................................................................................. 17

Bandler v. DeYonker,
174 A.D.3d 461 (1st Dep’t 2019) ............................................................................................. 15

Bloomgarden v. Lanza,
143 A.D.3d 850 (2d Dep’t 2016) .......................................................................................... 9, 10

Bonacasa Realty Co. v. Salvatore,
109 A.D.3d 946 (2d Dep’t 2013) .............................................................................................. 18

Canzona v. Atanasio,
118 A.D.3d 837 N.Y.S.2d 44 (2d Dep’t 2014) ......................................................................... 12

Chung v. Wang,
79 A.D.3d 693 (2d Dep’t 2010) ................................................................................................ 15

Express Indus. & Terminal Corp. v. New York State Dep't of Transp.,
93 N.Y.2d 584 (1999) ......................................................................................................... 11, 12

G & Y Maint. Corp. v. Core Cont’l Constr. LLC,
215 A.D.3d 553 N.Y.S.3d 27 (1st Dep’t 2023) ........................................................................ 19

Guggenheimer v. Ginzburg,
43 N.Y.2d 268 (1977) ................................................................................................................. 5

Hermann v. Sharon Hosp., Inc.,
135 A.D.2d 682 (2d Dep’t 1987) ............................................................................................ 8, 9

Hymowitz v. Nguyen,
209 A.D.3d 997 (2d Dep’t 2022) .............................................................................................. 12

Koret, Inc. v. Christian Dior, S.A.,
161 A.D.2d 156 (1st Dep’t 1990) ............................................................................................. 16

Lama Holding Co. v. Smith Barney Inc. et. al.,
88 N.Y.2d 413 (N.Y. 1996) ...................................................................................................... 16

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Marinelli v. New York Methodist Hosp.,
205 A.D.3d 710 ........................................................................................................................... 5

Martin, Jr., Delicatessen, Inc. v. Schumacher,
52 N.Y.2d 105 (1981) ............................................................................................................... 11

MTI/The Image Group, Inc. v. Fox Studios East, Inc.,
262 A.D.2d 20 (1st Dep’t 1999) ............................................................................................... 16

Multi-Juice, S.A. v. Snapple Beverage Corp.,
2003 WL 1961636 (S.D.N.Y. Apr. 25, 2003) .......................................................................... 16

N.Y.C. Waterfront Devel. Fund II, LLC v. Pier A Battery Park Assoc., LLC,
206 A.D.3d 565 (1st Dep’t 2022) ............................................................................................. 19

New Media Holding Co., LLC v. Kagalovsky,
118 A.D.3d 68 (1st Dep’t 2014) ............................................................................................... 17

Paradigm Mktg. Consortium, Inc. v. Yale New Haven Hosp., Inc.,
124 A.D.3d 736 (2d Dep’t 2015) ................................................................................................ 9

Phillips v. Trommel Const.,
101 A.D.3d 1097 (2d Dep’t 2012) .............................................................................................. 6

Rabos v. R & R Bagels & Bakery, Inc.,
100 A.D.3d 849 (2d Dep’t 2012) ...................................................................................... 5, 6, 14

Serota v. Cooper,
216 A.D.3d 1019 (2d Dep’t 2023) ............................................................................................ 10

Skanska USA Bldg. Inc. v. Atlantic Yards B2 Owner, LLC,
146 A.D.3d 1 (1st Dep’t 2016) ................................................................................................. 18

Spinap Corp. v. Cafagno,
302 A.D.2d 588 (2d Dep’t 2003) .............................................................................................. 16

Starr Russia Invs. III B.V. v. Deloitte Touche Tohumatsu Ltd.,
169 A.D.3d 421 (1st Dep’t 2019) ............................................................................................... 8

Treeline Mineola, LLC v. Berg,
21 A.D.3d 1028 (2d Dep’t 2005) .............................................................................................. 18

U.S. Immigration Fund LLC v. Litowitz,
182 A.D.3d 505 (1st Dep’t 2020) ............................................................................................. 10

V. Groppa Pools, Inc. v. Massello,
106 A.D.3d 722 (2d Dep’t 2013) ................................................................................................ 6

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Vista Food Exch., Inc. v. BenefitMall,
138 A.D.3d 535 (1st Dep’t 2016) ............................................................................................. 14

Weiner v. McGraw–Hill, Inc.,
57 N.Y.2d 458 (1982) ............................................................................................................... 13

Rules
CPLR 214(4) ................................................................................................................................. 15

CPLR 302(2) ................................................................................................................................... 9

CPLR 302(3) ................................................................................................................................... 9

CPLR 302(3)(i) ............................................................................................................................. 10

CPLR 302(3)(ii) ............................................................................................................................ 10

CPLR 320(b) ................................................................................................................................... 1

CPLR 3026...................................................................................................................................... 5

CPLR 3211(e) ................................................................................................................................. 1

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Defendants StormX Global SEZC, Inc. f/k/a CakeCodes Global SEZC, Inc. (“CakeCodes”)

and StormX, Inc. (“StormX”) 1 respectfully submit this memorandum of law in support of their

Partial Motion to Dismiss Plaintiffs’ Complaint under New York Civil Practice Law and Rules

(“CPLR”) 3211(a)(7) for failure to state a claim, 3211(a)(5) as time-barred, and 3211(a)(8) for

lack of personal jurisdiction.

PRELIMINARY STATEMENT 2

Plaintiff Steven Nerayoff is a predator, not a victim. He used threats and extortion to rob

Defendants CakeCodes and StormX of much of the proceeds of their cryptocurrency token sale

and to extort payments worth millions of dollars. In January 2020, Nerayoff and his co-

conspirator, Michael Hlady, were indicted for their crimes against CakeCodes and StormX. (See

Teleanu Aff. Ex. 1.) Although Hlady pled guilty to the charges, (see Teleanu Aff. Ex. 2), the Court

ultimately granted the Department of Justice’s motion to dismiss Nerayoff’s indictment (see

Teleanu Aff. Ex. 3). Now, Nerayoff hopes to use the legal system to double down on those ill-

gotten gains, asking this Court to enforce contracts that never existed, that were nullified by

Nerayoff’s theft, or that are not enforceable because Nerayoff forced Defendants into them through

coercion.

When Defendants first agreed to work with Nerayoff in 2017, they did so because he held

himself out as an expert on cryptocurrency and token sales—someone who could make

Defendants’ new token a success. Defendants were new to the crypto industry, and they naively

1
StormX does not submit to the jurisdiction of this Court and, through the instant motion, seeks
dismissal of StormX based on lack of personal jurisdiction and reserves all objections and defenses
based on lack of personal jurisdiction. See CPLR 3211(e); CPLR 320(b).
2
This brief refers to the accompanying Affirmation of Natasha W. Teleanu, Esq. as the “Teleanu
Aff.” Unless otherwise indicated, all emphasis is added and all quotations and internal citations
are omitted.

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believed the stories Nerayoff told about his role in successfully launching other tokens. But the

stories proved too good to be true. Not long after Defendants agreed to work with Nerayoff and

his company, Plaintiff Maple Ventures, they realized that Nerayoff saw them not as clients or

partners but as targets. That realization came too late. By the time Defendants understood that

Nerayoff intended to fleece them, Nerayoff had already taken control of the cryptocurrency wallets

that held the proceeds of Defendants’ token sale—allowing him to take those proceeds hostage.

(See Teleanu Aff. Ex. 4 at ¶ 17 (alleging that “STEVEN NERAYOFF and a co-conspirator (“Co-

Conspirator 1”) contacted John Doe and Jane Doe and demanded that Company 1 agree to let

[Maple Ventures] keep 30,000 ETH (worth approximately $8.75 million on November 7, 2017)

that it had been holding from the pre-sales”).) Armed with that immense leverage, Nerayoff

demanded one-sided contracts, immense payments, and other benefits he never would have

received otherwise. These are the contracts at issue in this case.

In November 2017, Nerayoff coerced and threatened CakeCodes into signing a Services

Payment Agreement (“SPA”) (Teleanu Aff. Ex. 5), refusing to release any of Defendants’ funds

unless CakeCodes agreed to the terms of that agreement—which favored Nerayoff. (See Compl.

¶¶ 15, 16; Teleanu Aff. Ex. 4 at ¶ 17 (“NERAYOFF stated, in sum and substance, that if John Doe

and Jane Doe did not agree, then NERAYOFF would, among other things, sabotage the crowdsale,

generate negative press for Company 1 and use his contacts with influential people to “destroy”

Company 1. NERAYOFF told John Doe, in sum and substance, that John Doe had a choice:

NERAYOFF could keep all the pre-sale funds raised and destroy Company 1, or Company 1 could

sign [the SPA and related Nominee Agreement].”); id. ¶ 21 (the “additional approximately 13,000

ETH that NERAYOFF kept as a result of the Services Payment Agreement was valued at

approximately $3.78 million on November 7, 2017”).)

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In or around April 2018, Nerayoff still had not released to Defendants any of the proceeds

raised in their token sale and had refused Defendants information about those proceeds, like where

payments were made, to what addresses, and in what currency. (See, e.g., Teleanu Aff. Ex. 4 at

¶ 17.) Knowing that Defendants had no leverage and dwindling resources, Nerayoff coerced

Defendants into paying him yet more money. (See id. ¶ 25 (describing explicit threats).) This

time, Nerayoff demanded a payment of 10,000 ETH—valued at the time at more than $3.5

million—describing it as a “loan” and telling Defendants he would reduce the amount they owed

to him (under the invalid SPA procured through duress) in exchange. (See id. ¶¶ 25–

28.) Defendants saw no choice but to pay Nerayoff the 10,000 ETH in the hopes they would

eventually see the proceeds of their token sale and avoid the further consequences Nerayoff

threatened. (Compl. ¶ 29; Teleanu Aff. Ex. 4 at ¶¶ 25, 28.) Ultimately, after withstanding more

than a year of extortion, threats, intimidation, and theft from Plaintiffs, certain employees of

Defendants went to the Federal Bureau of Investigation for help and reported Nerayoff’s crimes.

(Compl. ¶ 36.)

Discovery and subsequent litigation will make clear the extent of Nerayoff’s theft and

coercion, and will ultimately doom his case. But most of Plaintiffs’ claims fail as a matter of law

and should be dismissed now because this Court lacks jurisdiction, because they are insufficiently

pleaded, or because they are time-barred. First, this Court does not have personal jurisdiction over

StormX at all and has personal jurisdiction over CakeCodes only for claims arising from the

November 3, 2017 SPA. Though Plaintiffs attempt to assert an array of bases for personal

jurisdiction, they all fail because: (i) neither Defendant is domiciled in New York; (ii) Plaintiffs

failed to demonstrate that CakeCodes is a mere alter-ego of StormX to thereby impute jurisdiction;

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and (iii) Plaintiffs failed to plead sufficient purposeful activities by Defendants in New York

bearing a substantial relationship to the subject matter of this action.

Second, Plaintiffs fail to state their Bonus Token-related breach-of-contract claim against

defendant CakeCodes (Count II). At the outset, Plaintiffs fail to even show that a valid contract

existed because they have not sufficiently alleged the material terms of the purported oral

agreement. And by Nerayoff’s own admission, the alleged contract amounted to him receiving

something for nothing—and thus could not be valid even if it had existed.

Third, Plaintiffs’ tortious interference with contract claim against StormX is time-barred.

New York law sets a three-year statute of limitations for tortious-interference claims, and the clock

begins to run upon injury. Here, Plaintiffs allege their most recent injury occurred in December

2019, so they had until December 2022 to bring a claim. But they did not file until nearly a year

after that deadline, so the claim is untimely. This claim also fails for the independent reason that

StormX is not a third party but is instead CakeCode’s parent corporation, and a corporate parent

cannot tortiously interfere with the contract of its own subsidiary.

Fourth, Plaintiffs seek to hold StormX liable under their contracts with CakeCodes, based

on a veil piercing/alter ego theory. But veil piercing is a narrow remedy used only to prevent

fraud, illegality, or to achieve equity. The theory is unavailable here because Plaintiffs’ claims are

all contractual in nature.

For all of these reasons, this Court should dismiss StormX from this action and dismiss

Counts II and IV against CakeCodes.

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FACTUAL BACKGROUND 3

Defendants CakeCodes and StormX are software application developers that, in 2017,

decided to enter the cryptocurrency space by launching their own cryptocurrency token. (Compl.

¶ 9.) With no experience or expertise in this burgeoning industry, Defendants set out to secure

assistance from an expert consultant and were soon connected with Nerayoff and his company,

Maple Ventures. (Id. ¶ 11.) Plaintiffs presented themselves to Defendants as experts in launching

and promoting token sales. (Id. ¶ 12.)

The first agreement Defendants entered into with Plaintiffs, in July 2017, established goals

for the launch of Defendants’ cryptocurrency token, Storm Token, and established responsibilities

for Plaintiffs in connection with the planned token sale that would launch Storm Token. (Id. ¶ 14;

Teleanu Aff. Ex. 6.) 4 Around this same time, Maple Ventures and StormX entered into a written

investment agreement. (Compl. ¶ 43; Teleanu Aff. Ex. 7.) In October 2017, Nerayoff entered into

a separate investment agreement with StormX in his individual capacity (Compl. ¶ 44; Teleanu

Aff. Ex. 8), and a Strategic Advisory Board Agreement with CakeCodes (Compl. ¶ 47; Teleanu

3
The following facts are taken from the well-pleaded allegations in the Complaint and documents
incorporated therein. For purposes of this motion only, as required by CPLR 3211 and CPLR
3026, the Court must accept the Complaint’s factual allegations unless they are clearly
contradicted by evidence submitted in connection with the motion. See, e.g., Rabos v. R & R
Bagels & Bakery, Inc., 100 A.D.3d 849, 851–52 (2d Dep’t 2012), as amended (Apr. 15, 2013)
(considering evidentiary material submitted on a motion to dismiss under CPLR 3211(a)(7)).
4
The written contracts underlying Plaintiffs’ claims, the terms of the Storm Token crowdsale, and
the terms of the Storm Token loyalty program are attached as exhibits to the Teleanu Aff. Each
of these exhibits may be considered on the present motion to dismiss because they conclusively
demonstrate “that a material fact as claimed by the pleader to be one is not a fact at all.”
Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275 (1977). See, e.g., Marinelli v. New York
Methodist Hosp., 205 A.D.3d 710, 713, 168 N.Y.S.3d 494 (2d Dep’t 2022) (affirming dismissal
under CPLR 3211(a)(7) where “allegations in the complaint that the defendant ‘failed to obtain
informed consent’ were also ‘flatly contradicted’ by” exhibits submitted with motion to dismiss).
By citing and submitting these contracts as exhibits in support of their motion Defendants do not
concede their validity. Rather, each of these agreements was procured through coercion, extortion,
and/or duress, and Defendants will submit evidence to support these affirmative defenses at an
appropriate time.
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Aff. Ex. 9). In November 2017, Nerayoff coerced CakeCodes into signing a Services Payment

Agreement (“SPA”). (Compl. ¶¶ 15, 16; Teleanu Aff. Ex. 5.)

In or around April 2018, Nerayoff demanded a payment of 10,000 ETH—valued at the

time at more than $3.5 million—describing it as a “loan” and telling Defendants he would reduce

the amount they owed to him (under the invalid SPA procured through duress) in exchange.

(Compl. ¶¶ 26–28.) Defendants paid Nerayoff the 10,000 ETH. (Compl. ¶ 29.) Ultimately, after

withstanding more than a year of extortion, threats, intimidation, and theft from Plaintiffs, certain

employees of Defendants went to the Federal Bureau of Investigation for help and reported

Nerayoff’s crimes. (Id. ¶ 36.)

Nerayoff and his co-conspirator were indicted. (Teleanu Aff. Ex. 1). After his co-

conspirator pled guilty, Nerayoff’s indictment was eventually dismissed. (Teleanu Aff. Exs. 2, 3).

Now, Nerayoff has filed the instant Complaint, alleging multiple breaches of contract, tortious

interference with contract, and veil piercing.

LEGAL STANDARD

In considering a motion to dismiss pursuant to CPLR 3211(a)(7), while the facts pleaded

are presumed to be true, the allegations in the pleading cannot be vague or conclusory. Phillips v.

Trommel Const., 101 A.D.3d 1097, 1098 (2d Dep’t 2012). Instead, the pleadings must contain

sufficiently particular allegations from which a cognizable cause of action can reasonably be

found. V. Groppa Pools, Inc. v. Massello, 106 A.D.3d 722, 723 (2d Dep’t 2013).

Further, the Court may consider “evidentiary material . . . submitted and considered on a

motion to dismiss a complaint pursuant to CPLR 3211 (a) (7),” and if said materials show “that a

material fact as claimed by the plaintiff to be one is not a fact at all,” and “that no significant

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dispute exists regarding it,” the claim must be dismissed. Rabos v. R & R Bagels & Bakery, Inc.,

100 A.D.3d 849, 851–52 (2d Dep’t 2012), as amended (Apr. 15, 2013).

ARGUMENT

I. THIS COURT LACKS PERSONAL JURISDICTION OVER STORMX (COUNTS
III, V, AND VI) AND MOST OF PLAINTIFFS’ CLAIMS AGAINST
CAKECODES (COUNTS II AND IV).

While Plaintiffs assert many bases for this Court to assert personal jurisdiction over

Defendants, all but one of these fails. Neither Defendant is incorporated in New York, both have

their primary place of business in Washington state, and Plaintiffs point to no actions taken by

either Defendant within the state of New York. Instead, Plaintiffs rely on conclusory allegations

and unsustainable claims in an effort to bring StormX and CakeCodes before this Court.

Plaintiffs claim this Court has personal jurisdiction over both parties because, they allege:

(1) CakeCodes agreed to submit to this Court’s jurisdiction when signing the SPA; (2) that consent

should be imputed to StormX via veil piercing; (3) Defendants conduct business within, and avail

themselves of the laws of, New York; and (4) they have asserted a tort claim either committed

within the state or causing injury within the state. (Compl. ¶¶ 6, 7.) But the Complaint merely

cobbles together conclusory language from New York’s long-arm statute without establishing any

valid basis for personal jurisdiction over Defendants.

CPLR 302(a) provides four means by which a New York court may obtain jurisdiction

over a defendant with respect to certain kinds of claims, all premised on conduct within New York:

(1) claims arising from an in-state business transaction; (2) claims over a tortious act committed

within the state; (3) claims over a tortious act committed outside of the state, which caused injury

to a person or property within the state—provided that the defendant also (a) regularly solicits

business within the state or derives substantial revenue from within the state, or (b) reasonably

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expects the tortious act to have consequences within the state and derives substantial revenue from

interstate commerce—and (4) claims relating to real property the defendant owns or uses within

the state. CPLR 302(a). Rather than alleging concrete facts to establish any one of these bases for

jurisdiction, Plaintiffs allege, for example, that “StormX regularly does business in New York, has

generated substantial revenues from goods sold within the State of New York, and has availed

itself of New York law”—none of which would suffice on its own to establish personal jurisdiction

over StormX (or CakeCodes) even if Plaintiffs had alleged any supporting facts. (Compl. ¶ 7.)

Rather, accepting Plaintiffs’ allegations as true, only Nerayoff’s claims against CakeCodes

arising under the SPA would be subject to this Court’s jurisdiction. The SPA is the only contract

referenced in the complaint that identifies the jurisdiction of any particular court, and provides that

claims be brought in New York. (Compare Teleanu Aff. Ex. 5 at ¶ 10 with Ex. 9 (containing a

Washington choice-of-law provision but no consent to jurisdiction of courts) and Exs. 7, 8 (same)

and Ex. 6 (silent).) But as Defendants demonstrate in Section IV, infra, Plaintiffs’ attempts to

hold StormX liable under Plaintiffs’ contract with CakeCodes based on a veil piercing and alter

ego theory is unavailing. Therefore any agreement by CakeCodes (however invalid it may be) to

submit to this Court’s jurisdiction cannot be imputed to StormX. See, e.g., Starr Russia Invs. III

B.V. v. Deloitte Touche Tohumatsu Ltd., 169 A.D.3d 421, 422 (1st Dep’t 2019) (no personal

jurisdiction over subsidiary where alter-ego is not demonstrated).

All of the other bases Plaintiffs assert for personal jurisdiction are tied to StormX’s alleged

commission of tortious acts, which Plaintiffs claim were either committed within New York or

caused injury to persons or property within New York. New York law is clear that, for purposes

of personal jurisdiction under CPLR 302(a)(3), “[t]he situs of the injury is the location of the

original event which caused the injury, not the location where the resultant damages are

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subsequently felt by the plaintiff.” Hermann v. Sharon Hosp., Inc., 135 A.D.2d 682, 683 (2d Dep’t

1987). But the tortious acts alleged in the Complaint were all either statements made by

Defendants’ officers (in Washington state) to FBI agents in Washington state (Compl. ¶ 36), or

actions that StormX allegedly caused or directed CakeCodes to take (e.g., id. ¶¶ 22, 39).

Statements that Defendants’ officers made wholly within Washington state are clearly not torts

committed “within the state” (CPLR 302(2)), and as Defendants demonstrate in Section III, infra,

StormX cannot have tortiously interfered with contracts between its subsidiary, CakeCodes, and

Plaintiffs because StormX, CakesCodes’ parent corporation, is not a stranger to those contracts.

Nor did these allegedly tortious acts “without the state caus[e] injury to person or property within

the state.” CPLR 302(3). That Nerayoff felt his alleged injury in New York, where he resides,

does not change the location of the tortious injury alleged. See, e.g., Hermann, 135 A.D. 2d at

683.

Finally, Plaintiffs’ conclusory statements that Defendants “regularly do[ ] business in New

York, ha[ve] generated substantial revenues from goods sold within the State of New York, and

ha[ve] availed [themselves] of New York law” (Compl. ¶¶ 6, 7), are both misplaced and

insufficient to support the exercise of personal jurisdiction. 5 In order to establish personal

jurisdiction on the basis of regular or substantial business activities, Plaintiffs must allege facts

showing that Defendants “actively projected themselves into New York to engage in a sustained

and substantial transaction of business within New York,” Bloomgarden v. Lanza, 143 A.D.3d

850, 852 (2d Dep’t 2016), and that “there is a substantial relationship between the transaction and

the claim asserted,” Paradigm Mktg. Consortium, Inc. v. Yale New Haven Hosp., Inc., 124 A.D.3d

5
Plaintiffs also assert that the commission of a “tortious act within the State of New York” subjects
CakeCodes to this Court’s jurisdiction (Compl. ¶ 6), but bring no tort claims against Cake Codes
(id. ¶¶ 50-100).
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736, 737 (2d Dep’t 2015). Plaintiffs’ conclusory statements about Defendants’ alleged business

activities within New York are formulaic recitations of the additional requirements for the exercise

of personal jurisdiction over an entity that has committed tortious acts within the state (or causing

injury within the state) (see CPLR 302(3)(i), (ii)), and are not independent bases of personal

jurisdiction as Plaintiffs appear to suggest. And none of Plaintiffs’ allegations support the exercise

of personal jurisdiction in any event, because Plaintiffs’ claims sound in contract, and any business

conducted or revenue generated by Defendants within New York is entirely unrelated to those

claims—all of which arise from contracts for services rendered outside of New York or payments

with no connection to New York.

Courts in this Department regularly decline personal jurisdiction where, as here,

“defendants communicated from [Washington] with the plaintiffs in New York via mail,

telephone, and email because the plaintiffs were New York domiciliaries, not because the

defendants were actively participating in transactions in New York,” and those communications

with New York domiciliaries do not concern services performed within New York. Bloomgarden

v. Lanza, 143 A.D.3d 850, 852 (2d Dep’t 2016). In short, Plaintiffs have failed to plead that

Defendants conducted “sufficient purposeful activities in New York which bore a substantial

relationship to the subject matter of this action so as to avail [themselves] of the benefits and

protections of New York’s laws.” Serota v. Cooper, 216 A.D.3d 1019, 1022 (2d Dep’t 2023); U.S.

Immigration Fund LLC v. Litowitz, 182 A.D.3d 505, 506 (1st Dep’t 2020) (finding no personal

jurisdiction where “Defendants have no New York office, no New York mailing address, no New

York bank accounts, and no employees working in New York, and they have virtually no other

contacts with New York”). For all of these reasons, the Court should decline to exercise personal

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jurisdiction over StormX with respect to all claims and over CakeCodes with respect to all claims

that do not arise from the SPA.

II. PLAINTIFFS FAIL TO STATE THEIR “BONUS TOKENS” CLAIM AGAINST
CAKECODES FOR BREACH OF CONTRACT (COUNT II).

Plaintiffs’ claim for breach of contract with respect to bonus tokens (Count II) is premised

upon two material facts: (1) the existence of a “loan agreement,” about which Plaintiffs plead

sparse details, and (2) a “right to” 700 million Bonus Tokens that Nerayoff supposedly had as a

result of his “rightful ownership” of a certain amount of Compensation Tokens. Each of these

provides an independent basis to dismiss Count II.

To plead a cause of action for breach of contract, Plaintiffs must allege that: (1) a contract

exists; (2) plaintiff performed in accordance with the contract; (3) defendant breached its

contractual obligations; and (4) defendant’s breach resulted in damages. 34-06 73, LLC v. Seneca

Ins. Co., 39 N.Y.3d 44, 52 (2022). To adequately allege the existence of a valid and binding

contract, Plaintiffs must plead facts showing “a manifestation of mutual assent sufficiently definite

to assure that the parties are truly in agreement with respect to all material terms.” Express Indus.

& Terminal Corp. v. New York State Dep't of Transp., 93 N.Y.2d 584, 589 (1999). Plaintiffs must

demonstrate that “there is a sufficiently definite offer such that its unequivocal acceptance will

give rise to an enforceable contract” (id. at 589–90), because, as the Court of Appeals has

emphasized, “definiteness as to material matters is of the very essence of contract law.

Impenetrable vagueness and uncertainty will not do,” Martin, Jr., Delicatessen, Inc. v.

Schumacher, 52 N.Y.2d 105, 109 (1981).

First, Plaintiffs failed to sufficiently plead the material terms of the loan agreement with

concrete definiteness sufficient to demonstrate the existence of a valid and binding contract.

Plaintiffs allege that Defendants agreed to pay Nerayoff a 10,000 ETH “loan” in exchange for the

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forfeit of his supposed “rights” to certain bonus tokens. (Compl. ¶¶ 26–30, 57.) But a plaintiff

fails to plead the existence of a valid contract where there is “no way to tell from the face of the

document” the substance of material terms. Express Indus., 93 N.Y.2d at 590 (contract not alleged

where document omits material terms including “how the parties intended to establish the date by

which DOT could exercise the redemption option, and the amount of the rent reduction in the event

that it did.”). This is even more critical with respect to oral agreements such as the loan agreement

alleged here. As the Second Department has made clear, “[w]here the terms of an alleged oral

agreement are vague or indefinite, they will not support a cause of action alleging breach of

contract.” Hymowitz v. Nguyen, 209 A.D.3d 997, 1000 (2d Dep’t 2022). In Hymowitz, the court

instructed dismissal of breach of contract claims where the complaint “failed to plead the material

terms of the alleged oral compensation agreement . . . including how much they were to be paid,

the type of compensation (e.g., hourly, by the day, or by the task he was assigned, etc.), and how

frequently Hymowitz worked in a per diem capacity.” Id.

Here, Plaintiffs have left too many gaps when pleading the existence of the loan agreement:

for example, there is no mention of interest on the loan, when it would need to be repaid, or even

when the agreement was formed. Without pleading these material terms, Plaintiffs cannot

demonstrate that CakeCodes ever entered into a loan agreement, let alone that CakeCodes

breached any such agreement. See, e.g., Canzona v. Atanasio, 118 A.D.3d 837, 839, 989 N.Y.S.2d

44, 47 (2d Dep’t 2014) (“plaintiff’s allegations regarding the alleged oral agreement were too

vague and indefinite to plead a breach of contract cause of action” where “plaintiff failed to plead

the material terms of the alleged oral loan agreement by which the defendants agreed to repay or

reimburse him.”).

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Second, Count II should be dismissed because the Complaint does not sufficiently allege

that there was consideration to support the alleged oral contract. Consideration sufficient to create

a contract “consists of either a benefit to the promisor or a detriment to the promise.” Weiner v.

McGraw–Hill, Inc., 57 N.Y.2d 458, 464 (1982). Nerayoff claims that “he was entitled to” Bonus

Tokens through the loyalty program that StormX launched after the crowdsale. (Compl. ¶ 23.)

Thereafter, Nerayoff claims that CakeCodes agreed to loan him 10,000 ETH “in exchange for his

forfeiture of his right to 350 million (of 700 million total) Bonus Tokens.” (Id. ¶ 57.) But Nerayoff

does not allege sufficient details to convince the Court that this alleged consideration—the

forfeiture of his “right” to Bonus Tokens “he was entitled to”—actually existed. And he cannot

do so, because Nerayoff does not allege he purchased any tokens, and thus was never entitled to

any Bonus Tokens (let alone 700 million of them), and therefore could not have forfeited Bonus

Tokens as consideration for the “loan.”

Nerayoff’s lack of entitlement to any Bonus Tokens is clear from a cursory review of the

terms of both the Storm Token crowdsale and the loyalty program. According to Exhibit B

(Crowdsale Pricing, Terms, and Conditions) of the crowdsale terms, “Bonus-Eligible Tokens sold

during the Community Appreciation Period will receive a 15% bonus, i.e. for every Bonus-Eligible

Token purchased at the Per Token Price, the purchaser will receive an additional .15 Tokens. . .

The bonus is available exclusively during the Community Appreciation Period until all Bonus-

Eligible Tokens have been purchased.” (Teleanu Aff. Ex. 10 at Ex. B, ¶ 2(a) (emphasis added).)

The “Community Appreciation Period” is defined as “either 24 hours from the start of the

Crowdsale, or until 945,000,000 Tokens are sold.” (Id.) Nerayoff alleges nowhere in the

Complaint that he purchased any Storm Tokens during the crowdsale, let alone during the

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Community Appreciation Period. Thus, he has no right to any Bonus Tokens under the terms of

the crowdsale.

Nor do Nerayoff’s allegations establish that he obtained Bonus Tokens through the loyalty

program. According to the blog post in which StormX announced its post-sale loyalty program,

only (a) “Storm Players” who downloaded the Storm Play app and “signed up with a STORM

Wallet Address by December 7th, 2017, and (b) “STORM Token Crowdsale participants” are

eligible to receive Bonus Tokens through the loyalty program, provided that eligible tokens remain

in “the same wallet address that was used to collect the STORM Tokens either from Storm Play

or from the STORM Token Crowdsale.” (Teleanu Aff. Ex. 11.) Nerayoff has not alleged that he

qualified for the loyalty program—he has not alleged that he was a Storm Player, nor that he

purchased any tokens during the crowdsale—only that based on “certain requirements” he was

“entitled to” Bonus Tokens he did not receive. (Compl. ¶ 23.) In fact, Nerayoff explicitly pleads

that he was entitled to Bonus Tokens “based on his rightful ownership of 2.25 billion

Compensation Tokens” to wh

Case Info

Judge

Timothy Driscoll Track Judge’s New Case

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Document Filed Date

January 26, 2024

Case Filing Date

November 14, 2023

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Judgment: Steven Nerayoff, Maple Ventures, Llc v. Stormx Global Sezc, Inc. f/k/a CakeCodes Global SEZC, Inc., Stormx Inc.

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