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STAHLEX-INTERHANDEL TRUSTEE v. W. UNION FINANCIAL SERV.

August 19, 2003

STAHLEX-INTERHANDEL TRUSTEE, REG., PLAINTIFF, — AGAINST — WESTERN UNION FINANCIAL SERVICES; EASTERN EUROPE LIMITED, FORMERLY KNOWN AS WESTERN UNION FINANCIAL SERVICES USSR LIMITED, AND WESTERN UNION FINANCIAL SERVICES, INC., DEFENDANTS


The opinion of the court was delivered by: Robert Sweet, Senior District Judge [ Page 1]

OPINION

Defendant Western Union Financial Services Eastern Europe Ltd. (WU-EE), formerly known as Western Union Financial Services USSR Ltd. ("WU-USSR"), has moved for partial judgment, pursuant to Fed.R.Civ.P. 56, to dismiss 1) plaintiff's claim for judgment declaring that a Consulting Agreement with WU-USSR is still in effect, and 2) plaintiff's breach of contract claim insofar as it seeks damages since December 14, 1999. Plaintiff Stahlex-Inter-handel Trustee, Reg. ("Stahlex") has cross-moved against defendants for partial summary judgment pursuant to Fed.R. Civ. P. 56.

For the reasons set forth below, WU-EE's motion is granted, and Stahlex' motion is denied.

Prior Proceedings

This action was commenced on March 25, 1999. These motions were heard and marked fully submitted on June 25, 2003. Discovery was commenced and completed, and various motions have been disposed of, familiarity with which is assumed. See Stahlex-Interhandel Tr. v. W. Union Fin. Servs. E. Europe Ltd., No. 99 Civ. 2246, 2002 U.S. Dist. LEXIS 19854 (S.D.N.Y. Oct. 21, 2002) ("Stahlex I"); Stahlex-Interhandel Tr. v. W. Union Fin. Servs. E. Europe Ltd., No. 99 Civ. 2246, 2003 U.S. Dist. LEXIS 2606 (S.D.N.Y. Feb. 20, 2003) ("Stahlex II"). [ Page 2]

The Facts

The facts are set forth based upon the Local Rule 56.1 statements of the parties and supporting declarations.

On July 26, 1991, Stahlex and WU-USSR entered into a Consulting Agreement providing that in consideration for identifying a partner in the Soviet Union, and in consideration for the promise to perform consulting services, WU-USSR agreed to pay Stahlex $100,000 and 10% of WU-USSR's annual net income generated from the former Soviet Union. The term of the Consulting Agreement was coterminous with the Joint Venture which was entered into by WU-USSR on the same day (the "Joint Venture").

By signing the Consulting Agreement, Stahlex acknowledged that it accurately "set forth the entire and final agreement and understanding of the parties" and that any prior agreement or understanding, whether written or oral, was "terminated." (Consulting Agreement ¶ 6.2.) The Consulting Agreement provided for unrestricted assignment, without consent, to any WU-USSR affiliates. The Consulting Agreement, by its terms, is governed by New York law.

On the day that it entered into the Consulting Agreement, WU-USSR entered into the Joint Venture Agreement with Sberbank, the [ Page 3]

Soviet bank that Stahlex had identified as a partner for WU-USSR ("the Joint Venture Agreement").

The WU-USSR/ Sberbank Joint Venture operated only through early 1992, when Sberbank went into insolvency. Mezheconomsberbank replaced Sberbank in the Joint Venture, and in October 1993, the Joint Venture Agreement was amended and restated, under the Amended and Restated Foundation Agreement ("Foundation Agreement"), to add a third entity, KOIN, and to bring the organizational and legal form of the Joint Venture into accordance with the Russian Federation legislation. WU-USSR held a 60% ownership interest in the new Joint Venture, with Mezheconomsberbank holding a 35% interest, and KOIN a 5% interest. The name of the new entity was Western Union MT East ("WU-MT East")*fn1.

On April 23, 1999, WU-MT East purchased Mezheconomsber-bank's interest in the Joint Venture, leaving KOIN as WU-USSR's only joint venture partner. On December 14, 1999, WU MT East ...


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