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Dorchester Financial Securities, Inc. v. Banco BRJ, S.A.

United States District Court, S.D. New York

February 21, 2014

DORCHESTER FINANCIAL SECURITIES, INC. Plaintiff,
v.
BANCO BRJ, S.A., Defendant.

OPINION & ORDER

KIMBA M. WOOD, District Judge.

On March 7, 2011, Plaintiff Dorchester Financial Securities, Inc. ("Plaintiff") brought this diversity action against Defendant Banco BRJ, S.A. ("Defendant") for breach of contract and fraud in connection with a letter of credit that it alleges was extended to it by Defendant. Defendant moved to dismiss Plaintiff's claims, arguing that: (1) the Court lacked personal jurisdiction over Defendant; (2) the action was improperly brought by the wrong entity; and (3) even if Plaintiff were the proper entity to bring suit, the action was nonetheless time barred. This Court agreed with Defendant's first argument and dismissed Plaintiff's claims for lack of personal jurisdiction, without addressing Defendant's second or third arguments. Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 11 Civ. 1529, 2012 WL 231567 (S.D.N.Y. Jan. 24, 2012) (Wood, J.) [Dkt. No. 34]. Plaintiff appealed, and the Second Circuit Court of Appeals vacated the dismissal and remanded the case for further proceedings consistent with its opinion. Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81 (2d Cir. 2013). The Court now addresses Defendant's second and third arguments for dismissal; for the reasons stated below, they are DENIED.

I. BACKGROUND

A. Relevant Facts[1]

Defendant is a foreign financial institution located in Brazil. (First Amended Complaint ("FAC") ¶ 2 [Dkt. No. 24]). Plaintiff is a Florida corporation that was incorporated on September 21, 2001. (FAC ¶ 3). On March 25, 2005, Plaintiff changed its corporate name from Dorchester Financial Services, Inc. to Dorchester Financial Holdings Corporation. ( Id. ). It is currently an inactive corporation. ( Id. ).

This case's factual background is detailed in the Court's January 24, 2012, Opinion and Order, familiarity with which is assumed. See Dorchester, 2012 WL 231567, at *1-3. Briefly stated, Plaintiff alleges that, in October 2001, it entered into an agreement with Defendant and a third party, providing for Plaintiff to be the beneficiary of a letter of credit issued by Defendant. (FAC, Prelim. Stmt., ¶ 4). According to the FAC, the letter of credit was for $250 million, even though the agreement stated that Defendant would provide a letter of credit for $100 million. (FAC, Prelim. Stmt., ¶¶ 4, 15). Plaintiff asserts that it initially paid a $500, 000 fee for the letter of credit and that Defendant later demanded an additional $250, 000, of which Plaintiff paid $100, 000. (FAC, Prelim. Stmt.). Defendant, however, purportedly refused to honor the letter of credit and ultimately told Plaintiff, in July 2002, that it had canceled the letter of credit. (FAC, Prelim. Stmt., ¶¶ 12, 25).

B. Procedural History

As the Second Circuit noted on appeal, "this suit has a long and somewhat tortured history." Dorchester, 722 F.3d at 82.

1. The Prior Action

In 2002, Plaintiff sued Defendant over the failed letter of credit transaction, alleging breach of contract and fraud. See Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 02 Civ. 7504 (S.D.N.Y. 2002) (Wood, J.) (the "Prior Action"). Defendant failed to appear, and Plaintiff obtained a default judgment. See Default Judgment, 02 Civ. 7504 (S.D.N.Y. Nov. 11, 2002) [Dkt. No. 10]. Following an inquest, a final judgment was entered against Defendant in the amount of $112, 279, 452.05. See Order, 02 Civ. 7504 (S.D.N.Y. Nov. 25, 2003) [Dkt. No. 24].

In 2010, however, Plaintiff moved to vacate the judgment it had obtained. See Pet. to Vacate, 02 Civ. 7504 (S.D.N.Y. Dec. 2, 2010) [Dkt. No. 70]. Plaintiff had found that the judgment was unenforceable against Defendant in Brazil because Plaintiff had not served process by letters rogatory, as required by Brazilian law. And Plaintiff was unable to simply re-serve Defendant within the same action, as doing so "might be perceived as tainted" by the Brazilian legal system. Aff. in Support of Pet. to Vacate ¶ 10, 02 Civ. 7504 (S.D.N.Y. Dec. 2, 2010) [Dkt. No. 71]. Plaintiff explained to the Court that, in order to recover from Defendant, it instead needed to serve Defendant by letters rogatory in a new action. Id. On February 23, 2011, this Court granted Plaintiff's motion to vacate the default judgment and explicitly permitted Plaintiff to file a new action. See Order, 02 Civ. 7504 (S.D.N.Y. Feb. 23, 2011) [Dkt. No. 73] (dismissing the suit "without prejudice to re-commence").

2. The Current Action

On March 7, 2011, Plaintiff filed this action against Defendant (the "Current Action"), also alleging breach of contract and fraud. On January 24, 2012, the Court granted Defendant's motion to dismiss for lack of personal jurisdiction, finding that Defendant had "offered an overwhelming amount of direct, highly specific testimonial evidence'" that it "was never involved in the events giving rise to this cause of action" and that the documents upon which Plaintiff relied were forgeries, "none of which [Plaintiff] ha[d] sufficiently refuted." Dorchester, 2012 WL 231567, at *5 (quoting Merck & Co., Inc. v. Mediplan Health Consulting, Inc., 425 F.Supp.2d 402, 420 (S.D.N.Y. 2006) (Chin, J.)).

On appeal, the Second Circuit vacated and remanded, holding that this Court should not have resolved the parties' factual dispute over the authenticity of Plaintiff's evidence, "in the absence of an evidentiary hearing." Dorchester, 722 F.3d at 86 (rejecting a contrary principle derived from a line of cases from the Southern District of New York). The Second Circuit explained that, unless or until an evidentiary hearing is held, "a prima facie showing of personal ...


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