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FONTANA v. REPUBLIC OF ARGENTINA

May 21, 2004.

HERNAN LOPEZ FONTANA and MARIANA MORI DE LOPEZ, Plaintiff's, — against — THE REPUBLIC OF ARGENTINA, Defendant


The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge

OPINION

Introduction

Plaintiff's Hernan Lopez Fontana and Mariana Mori de Lopez have acquired certain bonds issued by the defendant, The Republic of Argentina ("The Republic"). The Republic has defaulted on the bonds. Plaintiff's are suing to recover amounts due to them by virtue of the default and have moved for summary judgment.

  The Republic opposes the motion asserting various defenses. In addition the Republic moves to dismiss for failure to state a claim.

  Plaintiff's' motion for summary judgment on their bond obligations is granted. The Republic's motion is denied. Facts

  The Bonds

  Plaintiff's are citizens of the Republic of Argentina and resident in the City of Ushuaia, Tierra del Fuego Province, Republic of Argentina. They have acquired certain bonds issued by The Republic of Argentina with principal amounts, as follows:

  (1) $300,000 in face value in bonds due in April 7, 2009, identified by ISIN US040114BE93 and Common Code 9639713;

  (2) $160,000 in face value in bonds due January 30, 2017, identified by ISIN US040114AR16 and Common Code 7321473, bearing an interest rate of 11 3/8% to be paid semi-annually on January 30 and June 30.

  As proof of ownership plaintiffs have provided:

  (1) an affidavit stating that they purchased the bonds listed above in the aggregate principal value of $460,000. Plaintiff's state that the 2009 Bond pays interest at a rate of 11.375% semi-annually on October 7 and April 7. Plaintiff's further state that the bonds were purchased from, and are held in the name of, Merrill Lynch PFS/SEGREGATE, N.Y. ("Merrill Lynch"), which has allocated them on its books to plaintiffs;

  (2) a December 2003 account statement of plaintiffs' brokerage account with Merrill Lynch, listing the above listed bonds, in the above listed amounts and stating that the bonds were purchased on November 18, 2002 (for the 2009 Bond) and July 6, 2001 (for the 2017 Bond), respectively. The brokerage statement, however, contradicts the affidavit, assigning the 2009 Bond an interest rate of 11 3/4%;

  (3) a copy of a notarized letter sent to plaintiffs by Merrill Lynch, confirming that plaintiffs are the beneficial owners of the above listed bonds, in the above given amounts, which are held in plaintiffs' account with Merrill Lynch. The letter states that Merrill Lynch holds the bonds with Euroclear Bank S.A./N.V. for plaintiffs;

  (4) notarized statements from the depositary or nominee Euroclear, stating that the above listed bonds, in the above stated amounts, are being held on account for Merrill Lynch in Euroclear Securities Clearance Account 93999, and that the bonds are blocked for the purpose of filing a claim. The statements also indicate, but do not verify, that Merrill Lynch ...


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