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Sea Trade Company Ltd. v. FleetBoston Financial Corp.

December 9, 2009


The opinion of the court was delivered by: John F. Keenan, United States District Judge


Plaintiffs Nani Shipping Corp., Ltd. ("Nani") and Adrogue Chico, S.A. ("Adrogue Chico") (collectively "Plaintiffs") sued Defendant FleetBoston Financial Corp. ("the Bank") for breach of an oral contract. By prior decision dated September 4, 2008, the Court granted summary judgment on Plaintiffs' breach of contract claim. See Sea Trade Co. Ltd. v. FleetBoston Fin. Corp., No. 03 Civ. 10254, 2008 WL 4129620 (S.D.N.Y. Sept. 4, 2008). Plaintiffs now move for reconsideration of the September 4, 2008 Order pursuant to Fed. R. Civ. P. 54(b) and 60(b). For the reasons that follow, the Plaintiffs' motion for reconsideration is denied.


The Court will briefly discuss the facts most relevant to the present motion.*fn1 In 1991, a rogue loan officer at the predecessor of Defendant Bank allegedly entered into an oral agreement with the principals of Nani whereby the Bank agreed to extend up to $1.5 million in overdraft privileges to Nani to finance the development of Adrogue Chico, a gated residential community outside of Buenos Aires. After the rogue employee absconded with over $60 million, the Bank froze Nani's account. At the time the account was frozen, Nani had borrowed approximately $780,000 which has not been repaid. The Bank's freezing of overdraft privileges prevented Adrogue Chico from completing certain projects necessary to obtain approval for building the gated community. As a result, the Adrogue Chico development was never built, and in November 2001, Adrogue Chico filed for bankruptcy protection in Argentina. In December 2003, Plaintiffs filed the present lawsuit, asserting a claim against the Bank for breach of the oral contract.

In a September 4, 2008 Opinion and Order, the Court granted the Bank's motion for summary judgment on Plaintiffs' breach of contract claim, but denied its motion for summary judgment in favor of Defendant's counterclaim. The Court's ruling primarily rested on principles of international comity and judicial estoppel. Under Section 11.3 of the Argentine Bankruptcy Law ("ABL"), a debtor must file a detailed statement of assets and liabilities, including the valuation thereof adjusted as the date of filing, together with an accurate description of the composition of such assets and liabilities, the standards used for valuation, the location and condition of the debtor's property and any liens existing thereon, and all other information that may be required to properly identify the debtor's estate.

The Court found that Adrogue Chico's failure to list the accrued but unfiled breach of contract cause of action against the Bank as a contingent asset pursuant to Section 11.3 barred Adrogue Chico from later asserting the claim against the Bank in the United States.

After entry of summary judgment, Plaintiffs retained new counsel and filed a motion pursuant to Fed. R. Civ. P. 60(b)(1), (2), and (6) for relief from the Court's September 4, 2008 Opinion and Order granting the Bank's motion for summary judgment on Plaintiffs' breach of contract claim. Plaintiffs challenge what they say are two factual determinations made by the Court, namely that: (1) Adrogue Chico concealed its claim against the Bank from its creditors in the Argentine bankruptcy proceeding; and (2) Adrogue Chico's failure to disclose its accrued but unfiled action against the Bank was not a good faith mistake or unintentional error. Plaintiffs seek to introduce "newly discovered" evidence that Adrogue Chico did not conceal information -- namely, affidavits from creditors attesting that they were orally informed of the contingent claim against the Bank prior to their voting to confirm the company's plan of reorganization. Plaintiffs argue that the failure to disclose the contingent claim against the Bank in Adrogue Chico's bankruptcy proceeding was merely a technical error that did not prejudice its creditors. Although they acknowledge that Adrogue Chico has always known about these oral disclosures, Plaintiffs state that they believed the legal issue in the case to be whether any disclosures were required under the ABL, not whether Adrogue Chico concealed assets from its creditors; consequently, Plaintiffs did not believe that evidence of Adrogue Chico's oral disclosures was relevant and did not introduce it prior to the summary judgment motion. Plaintiffs also suggest that the Bank's moving papers did not clearly raise the issue of concealment, and as such, Plaintiffs were not afforded a chance to be heard on the arguments they now raise. Furthermore, Plaintiffs submitted the declaration of their Argentine bankruptcy counsel in which he states that he continues to believe that disclosure of unfiled claims is not required under the ABL. Finally, Plaintiffs argue in a footnote that reconsideration is warranted because the Court incorrectly interpreted ABL Section 11.5. Plaintiffs offer a new certified translation of Section 11.5 in support of their argument that it requires disclosure of all pending actions, regardless of whether the debtor is a plaintiff or defendant; therefore, under the doctrine of inclusio unius est exclusio alterius, Plaintiffs believe the Argentine legislature must have intentionally omitted a requirement that debtors disclose accrued but unfiled claims.


I. Rule 54(b)

Plaintiffs initially moved for reconsideration under Rule 60(b). By its terms, Rule 60(b) only affords relief from final judgments. Fed. R. Civ. P. 60(b) ("On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding . . . ."); see Transaero, Inc. v. La Fuerza Aerea Boliviana, 99 F.3d 538, 541 (2d Cir. 1996). "The standard test for whether a judgment is 'final' for Rule 60(b) purposes is . . . whether the judgment is sufficiently 'final' to be appealed." Alvarez v. Am. Airlines, Inc., No. 98 Civ. 1027, 2000 WL 145746, at *1 (S.D.N.Y. Feb. 8, 2000) (quoting 12 James Wm. Moore et al., Moore's Federal Practice § 60.23 (3d ed. 1999)).

The parties agree that although the September 4, 2008 Order resolved Plaintiffs' breach of contract claim, Defendant's counterclaim is still outstanding, and as such the summary judgment order cannot be considered final. Therefore, Plaintiffs cannot presently avail themselves of Rule 60(b). See id. (denying Rule 60(b) motion where summary judgment had been denied on some claims and "no judgment can be executed until the parties reach a settlement or a trial is completed"); see also Citizens Accord, Inc. v. Town of Rochester, N.Y., 235 F.3d 126, 128 (2d Cir. 2000) (dismissing appeal for lack of jurisdiction because "[a] judgment that disposes only of the complaint, while leaving a counterclaim pending, is not a final judgment").

Instead, Plaintiffs belatedly*fn2 suggest that the Court apply Fed. R. Civ. P. 54(b) and either: (1) direct entry of a final judgment as to the breach of contract claim so that Rule 60(b) may then apply; or (2) reconsider the September 4, 2008 decision as an interlocutory order.

A. Entry of Final Judgment

Under Rule 54(b), the Court may certify a final judgment where: (1) there are multiple claims or parties; (2) at least one claim or the rights and liabilities of at least one party has been determined; and (3) the court expressly determines that there is no just reason for delay. Fed. R. Civ. P. 54(b); see Transp. Workers Union of Am., Local 100 v. N.Y. City Transit Auth., 505 F.3d 226, 230 (2d Cir. 2007). However, "[t]he power should be used only in the infrequent harsh case where there exists some danger of hardship or injustice through delay which would be alleviated by immediate appeal." Citizens Accord, 235 F.3d at 129 (internal quotations and citations omitted). Although the summary judgment motion fully adjudicated Plaintiffs' breach of contract claim, the Court finds no reason why delaying entry of a final judgment until the Bank's counterclaim has been resolved would work a hardship or injustice on the Plaintiffs. As an initial matter, Adrogue Chico's plan of reorganization includes a nine year grace period before any creditors will receive payment; that grace period continues in full effect for several more years. It is also important to note that Plaintiffs seek entry of a final judgment not so that they can file a quick appeal, but as a back door method of having the summary judgment decision ...

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