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Themis Capital, LLC and Des Moines Investments Ltd v. Democratic Republic of Congo and Central Bank of the Democratic Republic of the Congo

April 18, 2013

THEMIS CAPITAL, LLC AND DES MOINES INVESTMENTS LTD.,
PLAINTIFFS,
v.
DEMOCRATIC REPUBLIC OF CONGO AND CENTRAL BANK OF THE DEMOCRATIC REPUBLIC OF THE CONGO,
DEFENDANTS.



The opinion of the court was delivered by: Paul A. Engelmayer, District Judge:

OPINION & ORDER

Plaintiffs Themis Capital, LLC ("Themis") and Des Moines Investments, Ltd. ("Des Moines") (collectively, "plaintiffs") bring this claim for breach of contract under New York law against the Democratic Republic of the Congo and the Central Bank of the Democratic Republic of the Congo (collectively, "defendants"). Defendants have moved for leave to amend their Answer. In an Order issued March 27, 2013, the Court denied that motion. Dkt. 141. This Opinion and Order sets forth the bases for that ruling.

I.Factual Background*fn1

On March 31, 1980, the Republic of Zaire, a sovereign state in Central Africa, and the Bank of Zaire, Zaire's national bank, entered into a Refinancing Credit Agreement with various creditors and agents (the "Credit Agreement" or "Agreement"). The Credit Agreement restructured various debts that Zaire owed to its creditors. The creditors were listed in a "Credit Information Schedule" attached to the Credit Agreement.

The plaintiffs acquired the debt from original creditors in the secondary market, as reflected in final deeds of assignment, dated August 5, 2008, as to plaintiff Themis, and February 2, 2009, as to plaintiff Des Moines. Sherman Decl. Exs. A--B. These deeds identify the former owners of the debt and trace the various transfers from those owners, through other banks, and ultimately, to Themis and Des Moines. The deeds reflect that Red Barn Capital, LLC, assigned its interest to Themis, and that Main Street Capital, LLC, assigned its interest to Des Moines.

Plaintiffs allege that defendants failed to pay any outstanding principal or corresponding interest due under the 1980 Credit Agreement either to plaintiffs' predecessors-in-interest, or to plaintiffs themselves. Am. Compl. ¶¶ 20, 23. Defendants do not dispute that no such payment has ever been made. See Dkt. 69 ("Def. 56.1") ¶ 7. Defendants also do not dispute that this is the first lawsuit to seek payment of the sums due under the Credit Agreement. In other words, the original or intervening creditors, before transferring their rights to Themis and Des Moines, never pursued a claim that defendants breached the Credit Agreement.

II.Procedural Background

On February 23, 2009, plaintiffs brought this lawsuit. Dkt. 1. They allege that defendants breached the Credit Agreement by failing to pay the outstanding principal and interest owed to plaintiffs as assignees. On May 22, 2009, plaintiffs filed an Amended Complaint. Dkt. 5. On May 20, 2009, and again on November 19, 2009, service of the Amended Complaint on the defendants was executed. Dkt. 3--4, 7--8. Defendants did not appear after such service.

On February 1, 2010, plaintiffs moved for summary judgment or, in the alternative, a default judgment. Dkt. 9--12. On April 28, 2010, Hon. George B. Daniels, to whom this case was then assigned, entered an order granting default judgment. Dkt. 13. On June 17, 2010, Judge Daniels referred this case to Hon. Kevin N. Fox, the assigned Magistrate Judge, for a calculation of the amounts of interest owed to plaintiffs. Dkt. 15. On November 1, 2010, Judge Fox issued a Report and Recommendation ("Report") that the Court adopt plaintiffs' interest calculations. Dkt. 16. It recommended that plaintiffs be awarded $18,003,558.32 in principal, $61,316,391.16 in interest, and $228,405.24 in "out-of-pocket" expenses. See Report 6.

On November 29, 2010, defendants made their first appearance in this case, in the form of a letter to the Court requesting additional time to object to the Report. Plaintiffs consented to the request. On January 21, 2011, defendants filed objections to the Report. Dkt. 23--24. On March 4, 2011, plaintiffs responded to those objections. Dkt. 28--29.

On April 28, 2011, defendants moved to set aside the default judgment, with the consent of plaintiffs. Dkt. 30--32. On June 3, 2011, the Court granted the unopposed motion and entered an order setting aside the default. Dkt. 38.

On June 28, 2011, Judge Daniels referred the case to Magistrate Judge Fox for the purpose of settlement. Dkt. 44. Settlement negotiations were unsuccessful. On December 6, 2011, following reassignment of the case, the Court held a pre-motion conference and set a schedule for the briefing of plaintiffs' pre-discovery summary judgment motion.

On January 28, 2012, along with their opposition to plaintiffs' summary judgment motion, defendants submitted their Answer to the Amended Complaint. Dkt. 70. The Answer admits that plaintiffs are assignees of the claimed "rights, title, interests, benefit, and obligations under the Credit Agreement." Answer ¶¶ 15 (Des Moines), 18 (Themis). It is this Answer that the defendants now propose to amend. Defendants seek (1) to assert instead that they lack sufficient knowledge and information to form a belief as to the truth of plaintiffs' interests in the debt, and (2) to add an affirmative defense that plaintiffs lack standing and/or are not the real parties in interest.

On July 26, 2012, the Court issued a lengthy Opinion & Order (the "Opinion" or "Op."), denying plaintiffs' motion for summary judgment, without prejudice to their renewing it after a period of limited discovery. Dkt. 84. The Opinion expressly relied on the fact that the validity of the assignment to plaintiffs was undisputed. On the basis of these undisputed facts, the Court found that "Themis Capital ('Themis') and Des Moines Investments, LLC ('Des Moines') are the assignees of all rights, title, interest, benefits, and obligations in ...


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