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Henderson v. Metropolitan Bank & Trust Co.

November 21, 2006


The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.



On February 9, 2006, Carl W. Henderson, Jr., of Tennessee, Administrator of the Estate of David M. Henderson; Francisco Solis, of California, Trustee of Messenger Trust One ("the Trust"); and Michael S. Henderson, of New Mexico, Successor Trustee of the Trust (collectively "Plaintiffs"), filed suit against Metropolitan Bank and Trust Co. ("Metrobank"), a corporation headquartered in Makati City, Philippines,*fn1 seeking to enforce a "Manager's Check" allegedly issued by Metrobank, with a face value of twelve billion pesos.*fn2 Plaintiffs also seek damages of $75 million, representing interest accrued since the instrument was issued.*fn3 Metrobank has moved to dismiss the Complaint on the ground of forum non conveniens, arguing that this action should be heard in the Philippines.*fn4


A. The Manager's Check*fn5

A manager's check is a negotiable instrument akin to a cashier's check, which is "drawn by the cashier of a bank upon the bank itself."*fn6 The Manager's Check in dispute here was issued as interest payments on accounts at Metrobank "established by confidential benefactors for humanitarian and socio-political purposes in the Philippines."*fn7 Although the accounts in question were held at Metrobank, the "assets which gave rise to the Manager's Check" originated as cash transfers from Citibank in New York.*fn8 Jocelyn C. Duran was an "arranged signatory" on the Metrobank accounts, one of which was Account No. 00701- 5500691-8.*fn9 The Manager's Check was issued on this account to Duran as payee, on March 21, 2000.*fn10

At some point subsequent to the check's issuance, Duran "attempted to convert the instrument into cash funds" at Metrobank, and it was dishonored.*fn11 Duran "sought the assistance of a high-placed government official," and "[t]hereafter, [Metrobank], through its President and Director, Antonio S. Abacon, Jr., offered to convert the instrument into cash equivalent to one-half its [face] value . . . if [Duran] would execute a release of any and all claims against accounts held in her name, at that time, in Metrobank."*fn12 Duran refused this offer.*fn13 Plaintiffs allege that as a result, Duran "experienced threats to the physical safety of herself and her family."*fn14 Duran thereupon "transferred her authority to negotiate the Manager's Check . . . via a Special Power of Attorney . . . to Janito C. Perez."*fn15 The Complaint does not state whether Duran ever endorsed or negotiated the check to Perez.

Perez met with Metrobank representatives in October, 2002, and Metrobank once again refused to honor the check.*fn16 In order to safeguard the instrument, and to facilitate "further efforts to resolve any issues that were preventing the check from being honored," Perez arranged for another transfer of the instrument.*fn17 Perez delivered the check to David M. Henderson, and executed "a formal assignment [of the check] and Special Power of Attorney, individually and as Trustee of Messenger Trust One."*fn18 The Trust was formed "under the laws of Nevada" on August 7, 2002, shortly before Perez' meeting with Metrobank representatives.*fn19 Plaintiffs allege that the check was endorsed to the Trust sometime thereafter, but do not state who endorsed it or when.*fn20

On April 2, 2003, David Henderson brought the Manager's Check into the United States.*fn21 He died on September 11, 2003.*fn22 David Henderson's "interest in the check is now an asset of his estate, administered by his brother .. . Carl W. Henderson."*fn23 Henderson's son, Michael Henderson, is identified as successor trustee to the Trust.*fn24

B. The Parties' Evidentiary Submissions

In support of its motion, Metrobank has provided an Affidavit by Regis V. Puno, an attorney admitted to the Philippine Bar and former Undersecretary of the Philippine Department of Justice.*fn25 This affidavit is submitted as an expert opinion on the law of the Philippines and on the adequacy of the Philippines as a forum for this case.*fn26 Puno states that the Complaint is "properly cognizable by Philippine Courts as a Civil Case," and that Metrobank is subject to the Phillippine courts' jurisdiction.*fn27 Puno also states that the Revised Rules of the Court of the Philippines provide for compulsory process to compel witness testimony and discovery, including interrogatories, depositions, and production of documents, and that he believes, based on his personal experience, that the case "will most likely be decided in a period of two (2) years."*fn28 Finally, it is Puno's opinion that "there is no reason to believe that the Philippine courts would be biased in favor of or against any of the parties to the case."*fn29

Puno identifies several Philippine laws that he believes will be applicable to this case, including: Republic Act No. 386 (the Civil Code of the Philippines), Republic Act No. 1405 (the Secrecy of Bank Deposits Law), Republic Act No. 8791 (the General Banking Law), Republic Act No. 9160, Act No. 2031 (the Negotiable Instruments Law), and the Revised Penal Code of the Philippines.*fn30

Metrobank has also submitted all of the initial disclosures pursuant to Rule 26(a)(1) of the Federal Rules of Civil Procedure?*fn31 Plaintiffs' disclosures identify fourteen named individuals in addition to Plaintiffs, who are likely to have information supportive of their allegations. Eleven of these live (or are presumed to be living) in the Philippines.*fn32 The remaining three live in Canada, India, and New Jersey (an expert witness who has examined the check to determine its authenticity).*fn33 In addition, Plaintiffs identify unnamed Citibank managers from its offices at 111 Wall Street in New York, and from Makati City, Philippines, as persons who have relevant information.*fn34 Plaintiffs also list documents or categories of documents currently in their possession. These include documents relating to the accounts and transactions in the Philippines which gave rise to the issuance of the Manager's Check.*fn35

Metrobank's initial disclosures name eleven individuals or entities with discoverable information that Metrobank may use for its defenses, one of whom is also listed by Plaintiffs. All but one of these are residents of the Philippines, and the residence of the eleventh is unknown.*fn36 These individuals are alleged to have information concerning the instrument and accounts at issue, Metrobank business and record-keeping practices, the Citibank transactions, or the October, 2002 meeting between Perez and Metrobank representatives.*fn37 Metrobank also identifies several categories of documents located in its Makati City headquarters.*fn38

Plaintiffs submit excerpts from The Judicial Reform Index for the Philippines, a 2006 report of the Asia Law Initiative of the American Bar Association ("ALI") as evidence that corruption and inefficiency render the Philippines an inadequate forum in which to litigate this dispute. Metrobank has provided further excerpts of the report in rebuttal.*fn39 The report describes itself as "an attempt to identify specific conditions . . . in a country's judicial system and assess how well these correlate to specific reform criteria."*fn40 Several of the thirty criteria assessed in the report relate to the efficiency and integrity of the Philippine judiciary.*fn41 The report combines objective and subjective information, much of it gathered "by limited questioning of a cross-section of judges, lawyers, journalists, and outside observers with detailed knowledge of the judicial system."*fn42 The report provides discussion and analysis for each of the criteria measured, and an executive summary of critical findings.*fn43

One excerpt of the report provided by Plaintiffs concludes that judicial decisions in the court system of the Philippines are not "based solely on the facts and law without any undue influence from senior judges (e.g., court presidents), private interests, or other branches of government."*fn44 The report's discussion of these findings begins by stating that corruption is "difficult to document and measure."*fn45 The investigators' negative conclusion is based in large part on reports published by other non-governmental organizations.*fn46 One of these is a report by Freedom House, which concluded that the Philippine judiciary "seems to `favor[] individuals with political connections or wealth."*fn47 Freedom House, in turn, based its findings on the results of a 2004 opinion poll.'*fn48 The ALI report quotes only a single result from the poll: "only 40% of those surveyed in the Philippines agreed with the statement: 'Whether rich or poor, people who have cases in court generally receive equal treatment. "'*fn49 The ALI report states: "[t]his perception may be corroborated" by the results of another poll, conducted by the Social Weather Station, which surveyed judges and lawyers in the Philippines and found that twenty five percent of lawyers believed that "many/very many judges are corrupt."*fn50 The same poll found that only seven percent of judges believed this.*fn51 The ALI report also refers to a third opinion poll by an unnamed organization, which measured public perception of the "sincerity of public agencies in fighting corruption," and which assigned these agencies "Net Sincerity Ratings."*fn52 The ALI report states that the Supreme Court of the Philippines received a "moderate" Net Sincerity Rating, while the Regional Trial Courts received a "mediocre" rating.*fn53 Apart from describing these surveys, the ALI report summarizes its own investigations in a few short paragraphs, which lack any detailed fact-finding.*fn54

The ALI report also cites positive findings, such as the finding that there is "[v]igorous oversight and investigation of conduct complaints against judges and court staff."*fn55 The investigators also concluded that "[j]udges are appointed based on objective criteria, such as passage of an exam, performance in law school . . . experience . . . and reputation in the legal community. While political elements may be involved, the overall system should foster the selection of independent, impartial judges."*fn56

The ALI report states that the Philippine court system is to some degree troubled by inefficiency. The filing-to-completion time for a typical case may exceed five years, and at the end of 2005 there was a backlog of approximately 800,000 cases.*fn57 However, the report also indicates that a large number of these cases are probably inactive, having been settled by the parties or abandoned but never formally removed from the docket.*fn58 The report does not state what proportion of the backlog consists of active cases that will require further judicial attention. Portions of the report provided by Metrobank show that the Regional Trial Courts closed 190,503 cases in 2005, compared with 191,703 new cases filed.*fn59


A. Forum Non Conveniens

"Forum non conveniens is a discretionary device permitting a court in rare instances to dismiss a claim even if the court is a permissible venue with proper jurisdiction over the claim."*fn60 Courts may decline to exercise jurisdiction under this doctrine when it is determined that, weighing "relative advantages and obstacles to fair trial" in the alternative fora, and practical considerations of which forum will "make trial of a case [more] easy, expeditious and inexpensive," "the balance is strongly in favor" of the defendant's request for dismissal in favor of a more convenient forum.*fn61

In deciding whether to dismiss on this ground, courts in this Circuit undertake a three-step analysis. First, courts determine the degree of deference due the plaintiff's choice of forum.*fn62 Next, courts examine whether there is an adequate alternative forum for the dispute.*fn63 Finally, courts engage in a balanced assessment of the competing private interests of the parties in the choice of forum, and the public interests of the alternative fora under consideration.*fn64 Throughout, the defendant bears the burden of showing that each stage of the analysis "tilt[s] strongly in favor of trial in the foreign forum."*fn65 The action should be dismissed only if the chosen forum is shown to be genuinely inconvenient and the selected forum significantly preferable."*fn66

1. The Degree of Deference Accorded a Plaintiff's Choice of Forum

"Any review of a forum non conveniens motion starts with 'a strong presumption in favor of the plaintiff's choice of forum.'"*fn67 However, the strength of this presumption, and the degree of deference due the plaintiff's selection, "varies with the circumstances."*fn68 The degree of deference to be accorded the plaintiiff s choice of forum is not determinative of the final outcome; rather, it merely re-calibrates the scales for the remaining two steps of the analysis.*fn69 "[T]he greater the degree of deference to which the plaintiff's choice of forum is entitled, the stronger a showing of inconvenience the defendant must make to prevail in securing forum non conveniens dismissal."*fn70 Conversely, the less deference is granted the plaintiff's ...

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