The opinion of the court was delivered by: Sweet, D.J.,
Defendant J. Virgil Waggoner ("Waggoner") has moved, pursuant to Rule
56(b), Fed.R.Civ.P., for summary judgment on two cross-claims brought by
defendant Donal Kelleher ("Kelleher"). Kelleher, in opposing this
motion, has cross-moved to compel further discovery and allow letters
rogatory. For the reasons set forth below, Waggoner's motion is denied as
to the first cross-claim and granted as to the second. Kelleher's
cross-motion is granted in part and denied in part.
Interpleader-plaintiff Correspondent Services Corporation ("CSC") is a
Delaware corporation with its principal place of business in New York,
Defendant J.V.W. Investment Ltd. ("JVW") is a corporation formed under
the laws of the Commonwealth of Dominica ("Dominica") with its principal
place of business in Dominica.
Defendant Kelleher is a foreign national and a resident of Surrey,
Defendant Waggoner is a United States citizen domiciled in Texas.
Third-Party defendant Suisse Security Bank and Trust, Ltd. ("SSBT"), is
a Bahamian corporation with its principal place of business in the
On August 18, 2000, this Court issued an opinion dismissing three of
four counterclaims filed by Kelleher against Waggoner. Correspondent
Services Corp. v. J.V.W. Investment, Ltd., 120 F. Supp.2d 401 (S.D.N.Y.
2000). Kelleher's Fourth Counterclaim for breach of fiduciary duty was
not dismissed, nor were Waggoner's cross-claims against Kelleher for
contract, breach of fiduciary duty, conversion, and interference. Id.
In September 2000, Waggoner and JVW sought and obtained leave to amend
their pleadings to add SSBT as a third-party defendant and to assert
cross-claims against Kelleher and SSBT.
Kelleher answered the amended pleadings on November 27, 2000, and
alleged two cross-claims against Waggoner, one for breach of contract and
the other for breach of fiduciary duty.
On March 30, 2001, Waggoner filed the instant motion for summary
judgment to dismiss Kelleher's two cross-claims. Kelleher cross-moved for
discovery and the issuance of letters rogatory. The motions were argued
on July 25, 2001, and deemed submitted at that time.
The factual background of this action has been set forth in the prior
opinions of this Court, familiarity with which is assumed, and will only
partly be repeated here. See Correspondent Services Corp. v. J.V.W.
Investment Ltd., No. 99 Civ. 8934, 2001 WL 427337 (S.D.N.Y. Apr. 25,
2001) ("JVW III"); Correspondent Services Corp. v. J.V.W. Investment,
Ltd., 120 F. Supp.2d 401 (S.D.N.Y. 2000) ("JVW II"); Correspondent
Services Corp. v. J.V.W. Investment, Ltd., No. 99 Civ. 8934, 2000 WL
1174980 (S.D.N.Y. Aug. 18, 2000) ("JVW I"). Unless it is explicitly
noted, the following facts are not explicitly controverted by the
The relationship between Kelleher and Waggoner dates back to at least
November 1997, when the two entered into an arrangement in which Kelleher
was to introduce Waggoner to certain contacts of his who were involved in
international high-yield investment programs. Waggoner agreed to pay a
percentage of the profits he earned by investing his funds in such
programs in return for Kelleher's help in locating, arranging, and helping
to manage those investments.
In the months following November 1997, Kelleher introduced Waggoner to
a variety of investment opportunities. One such deal involved Ufinco,
Ltd. ("Ufinco"). On December 1, 1997, Waggoner signed a Joint
Participation Agreement ("Ufinco JPA") that appointed Ufinco as his
investment manager to invest the sum of $10 million. By its specific
terms, the contract could not be orally modified. Later, on December 5,
1997, Ufinco notified Waggoner that Kelleher was appointed trustee for
the funds under that agreement. Waggoner agreed to this arrangement.
However, an investment was never made through Ufinco, as Waggoner decided
not pursue this arrangement.
In December 1997, Kelleher introduced Waggoner to Bower Cotton, a firm
of London solicitors, who in turn introduced Waggoner to Nikea, N.V.
("Nikea"), an investment firm operating out of Bower Cotton's offices.
Waggoner thereafter wired $10 million to Bower Cotton to be held in
escrow for use in investment programs to be arranged through Nikea. The
correspondence between Waggoner and ...