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SCOTTISH AIR INTL., INC. v. BRITISH CALEDONIAN GRO

November 10, 1994

SCOTTISH AIR INTERNATIONAL, INC. and MURRAY VIDOCKLER, Plaintiffs,
v.
BRITISH CALEDONIAN GROUP, PLC., ADAM THOMSON, DENNIS H. WALTER, and R. MARSHALL GIBSON, Defendants.



The opinion of the court was delivered by: SHIRLEY WOHL KRAM

 SHIRLEY WOHL KRAM, U.S.D.J.

 In this diversity action for breach of contract and contempt of this Court's May 25, 1966 Order (the "May 25 Order"), in the case of Scottish Air Int'l. Inc. v. Thomson, 65 Civ. 1782 (S.D.N.Y. 1965), defendants now move, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for an order granting them summary judgment dismissing plaintiffs' civil contempt claim. Plaintiffs oppose defendants' motion and cross-move, pursuant to Rule 56(f) of the Federal Rules of Civil Procedure, for an order permitting additional discovery before ruling on defendants' summary judgment motion. For the reasons set forth below, defendants' motion is granted and plaintiffs' motion is denied.

 BACKGROUND

 The factual background of this litigation has been fully set forth by this Court in Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 152 F.R.D. 18 (S.D.N.Y. 1993) and Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 751 F. Supp. 1129 (S.D.N.Y. 1990) and by the Second Circuit in Scottish Air Int'l. Inc. v. British Caledonian Group, PLC, 860 F.2d 57 (2d Cir. 1988) and Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 945 F.2d 53 (2d Cir. 1991). For the purposes of this Memorandum Opinion and Order, only the relevant facts will be summarized herein.

 I. The Settlement Agreement

 Plaintiff Scottish Air International, Inc. ("SAI") is a dissolved corporation formerly existing under the laws of New York State. Previously, SAI was a holding company which owned shares in defendant British Caledonian Group, PLC ("BCG") . Plaintiff Murray Vidockler ("Vidockler") was the president and majority shareholder of SAI.

 In 1961, SAI provided investment capital to BCG's operating company, Caledonian Airways (Prestwick) Ltd. ("CAP"), and thus, became the sole United States shareholder of CAP. In July 1965, SAI commenced a shareholder's derivative suit against CAP and several members of its board of directors alleging improper use of corporate funds and improper issuance of shares. See Scottish Air Int'l, Inc. v. Thomson, 65 Civ. 1782 (S.D.N.Y. 1965). In January 1966, the parties entered into a settlement agreement (the "1966 Settlement Agreement") which was approved and "So Ordered" by Judge Dudley Bonsal ("Judge Bonsal"). The 1966 Settlement Agreement provided, inter alia, that an individual nominated by SAI would be appointed to CAP's board of directors. Specifically, paragraph three of the 1966 Settlement Agreement stated, in pertinent part:

 
So long as SAI shall own stock in Caledonian, Caledonian agrees to appoint an individual nominated by SAI and acceptable to Caledonian to serve as one of its Executive Directors.

 See the 1966 Settlement Agreement, annexed to the Affidavit of Murray Vidockler, sworn to on Jan. 19, 1994, as Exh. "1," at P 3.

 Plaintiffs state that the 1966 Settlement Agreement erroneously omitted a similar provision granting SAI the right to nominate a representative to the board of directors of Airways Interests (Thomson) Ltd. ("AIT"), BCG's predecessor corporate entity. *fn1" Consequently, after the 1966 Settlement Agreement was "So Ordered" by Judge Bonsal, the parties amended the 1966 Settlement Agreement by a series of telexes to include a provision guaranteeing SAI's right to nominate a director to the board of AIT. Thereafter, SAI designated Vidockler to serve on the boards of both CAP and AIT. From 1966 until 1985, Vidockler was consistently elected to the boards of directors of both CAP and AIT, and, after the 1970 corporate reorganization, of defendant BCG, CAP's majority shareholder.

 II. The 1985 Action and Subsequent Procedural History

 In 1985, Vidockler was removed from BCG's board of directors, and advised that no further SAI representatives would be nominated to sit on the board. In response, SAI and Vidockler brought the present suit, alleging that SAI had a right to place Vidockler or another SAI representative on the BCG board. According to plaintiffs, this right stemmed from several agreements between the parties, including the 1966 Settlement Agreement. Plaintiffs sought (1) an injunction directing the defendants to comply with the 1966 Settlement Agreement; (2) a declaration that the defendants were in contempt of the 1966 Settlement Agreement; and (3) money damages for breach of contract.

 In May 1986, defendants moved to dismiss the complaint on the grounds that (1) the Court lacked personal jurisdiction over the defendants; (2) the plaintiffs failed to join all shareholders of BCG who were necessary to effect the election of Vidockler to the board of directors; (3) ordering the election of Vidockler to the board would constitute interference with the internal operations of a foreign ...


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