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Funnekotter v. Agricultural Development Bank of Zimbabwe

United States District Court, S.D. New York

September 11, 2014

BERNARDUS HENRICUS FUNNEKOTTER, et al., Plaintiffs,
v.
AGRICULTURAL DEVELOPMENT BANK OF ZIMBABWE, et al., Defendants.

OPINION AND ORDER

RONALD L. ELLIS, Magistrate Judge.

Plaintiffs are judgment creditors of Defendant Republic of Zimbabwe. Funnekotter, et al. v. Republic of Zimbabwe, No. 09 Civ. 8168 (CM)(RLE). Plaintiffs bring this action against Defendants ZB Bank Limited ("ZB Bank"), Agricultural Development Bank of Zimbabwe, Minerals Marketing Corporation of Zimbabwe, Zimbabwe Mining Development Corporation, Zimre Holdings Limited (together, the "Non-ZB Bank Defendants"); and Republic of Zimbabwe ("Zimbabwe"), seeking a declaratory judgment that 1) ZB Bank and the Non-ZB Bank Defendants are the alter egos of Zimbabwe, and 2) the assets of ZB Bank and the Non-ZB Bank Defendants located in the United States should be treated as "the property of Zimbabwe used for commercial purposes against which the [j]udgment may be enforced as and when permitted by law." (Compl. at 11-12.) This action was referred to the undersigned on September 25, 2013, for a specific discovery dispute, (Docket No. 44), and on October 8, 2013, for the current motion to preclude. (Docket No. 53.) In this latter motion, Plaintiffs seek to preclude Defendants from denying that they are the alter egos of Zimbabwe, or, in the alternative, to compel Defendants to produce all outstanding discovery within fourteen days or be precluded from denying they are alter egos. For the following reasons, Plaintiffs' motion to preclude and subsequent renewed motions are DENIED. Plaintiffs' motion to compel is GRANTED with respect to the Non-ZB Bank Defendants' minutes and Resolutions of their Board of Directors and DENIED with respect to all other relief sought.

I. BACKGROUND

A. Prior to the Filing of the Motion to Preclude

Plaintiffs filed their Complaint on March 21, 2013. On June 3, ZB Bank filed apreanswer motion to dismiss the Complaint pursuant to Federal Rules of Civil Procedure 12(b)(l), 12(b)(2), and 12(b)(6), for lack of subject matter and personal jurisdiction and for failure to state a claim upon which relief can be granted. (Docket No. 23.) At a pretrial conference on June 20, District Judge Colleen McMahon ordered the Parties to complete discovery within 120 days. (Minute Entry, 6/20/13.) On June 21, Judge McMahon denied ZB Bank's pre-answer motion to dismiss without prejudice to renew at the close of discovery, and ordered Defendants to answer the Complaint by July 5, and complete discovery "on the merits of all issues raised by the Complaint" within 120 days. (Docket No. 29.)

On June 26, Plaintiffs served Defendants with their First Request for Production of Documents ("Document Requests"). (Declaration of Charles R. Jacob, III, In Support of Motion to Preclude Or, in the Alternative, to Extend Discovery Cutoff and Compel Defendants to Respond (Jacob Deel.), at 5.) On July 5, the Non-ZB Bank Defendants filed their Answer. On July 8, ZB Bank filed its Answer. On July 25, the Non-ZB Bank Defendants filed a motion to dismiss the Complaint for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted pursuant to Rules 12(b)(l) and 12(b)(6).

On July 26, Plaintiffs received ZB Bank's objections and responses to the Document Requests. ( Id. at 6) On July 31, Plaintiffs received Non-ZB Bank Defendants' objections and responses to the Document Requests. ( Id. ) In August, the Parties discussed a confidentiality order. ( Id. ) On August 28, Plaintiffs sent Defendants a draft of a confidentiality order and letters outlining their positions on open discovery issues. ( Id. ) ZB Bank did not respond to Plaintiffs' proposed order or Plaintiffs' attempts to communicate with it until September 12, when counsel for ZB Bank informed Plaintiffs that he would have more information after he spoke to his co-counsel in Zimbabwe the following day. ( Id. at 6-7.) On September 17, Plaintiffs requested a conference with the Court to discuss Defendants' allegedly inadequate responses to their Document Requests, and requested an extension of the discovery deadline from October 21 to December 20.[1](Docket No. 42.) In an October 3 letter, ZB Bank disputed Plaintiffs' allegations. (Docket No. 46.) On October 4, the Non-ZB Bank Defendants wrote to the Court stating that "it is the [Non-ZB Bank] Defendants' contention that Plaintiffs are not entitled to discovery, until they establish subject matter jurisdiction in accordance with the Foreign Sovereign Immunities Act." (Docket No. 52.) Plaintiffs filed the current motion on October 7, 2013.

B. After the Filing of the Motion to Preclude

On October 16, the Parties appeared before the Court for a telephone conference. At the conference, Plaintiffs informed the Court that ZB Bank had produced 400 pages of documents earlier that day. The Non-ZB Bank Defendants informed the Court that, despite their earlier letter indicating otherwise, they intended to comply with discovery. The Court orally extended the discovery deadline from October 21 to December 20, and ordered the Parties to proceed with discovery, including by serving any objections to discovery. On October 17, the Court issued a written order confirming all oral orders issued during the telephone conference and the discovery extension to December 20, and ordering Plaintiffs to submit their objections to any inadequacies in ZB Bank's October 16 document production within one week and any objections to any future document productions within seventy-two hours of receipt. (Docket No. 55.) On October 18, Judge McMahon signed the Parties' confidentiality order. (Docket No. 56.)

On October 23, Plaintiffs wrote to the Court regarding alleged inadequacies in ZB Bank's October 16 document production, specifically with respect to Document Production Requests Numbers 6, 7, 8, 9, 10, 11, 14, and 16. (Docket No. 57.) Plaintiffs wrote to the Court the same day to notify the Court of the Non-ZB Bank Defendants' failure to respond to attempts to contact them regarding outstanding discovery issues and failure to produce any discovery. (Docket No. 58.) Plaintiffs also renewed their motion to preclude. On November 6, Plaintiffs requested a conference with the Court to address the issues raised in the October 23 letters. (Docket No. 66.) ZB Bank opposed Plaintiffs' request for a conference. (Docket No. 67.)

On November 15, Judge McMahon denied the Non-ZB Bank Defendants' motion to dismiss without prejudice. (Docket No. 68.) On November 18, Plaintiffs renewed their motion to preclude based on their October 23 letters and Judge McMahon's decision. (Docket No. 69)

On December 3, the Parties appeared before the Court for a telephone conference. (Minute Entry, 12/3/13.) Plaintiffs informed the Court that the Non-ZB Bank Defendants had produced documents for the first time earlier that morning. The Non-ZB Bank Defendants did not dispute this fact and were unable to provide an explanation for the delay in their production. Also at the conference, ZB Bank informed the Court that it would provide an affidavit attesting that it had no documents responsive to Document Requests Number 6, 7, 8, 14, and 16, and renewed its objections to Document Requests Number 9, 10, and 11.

On December 5, the Non-ZB Bank Defendants wrote a letter to the Court seeking an order clarifying whether the Court was aware that they had made objections to the Document Requests. (Docket No. 72.) That same day, Plaintiffs submitted a letter objecting to the Non-ZB Bank Defendants' letter and to their December 5, 2013 document production as insufficient, and renewing their motion to preclude. (Docket No. 73.)

On December 10, the Court denied the Non-ZB Bank Defendant's request for an order of clarification. (Docket No. 74.) The Court found that the Non-ZB Bank Defendants had been on notice since October 16, that "discovery issues are time sensitive, " and "[a]ny objections could and should have been raised as soon after October 16, 2013 as possible, " and "are hereby stricken." ( Id. at 3.) The Court ordered the Non-ZB Bank Defendants to comply with all outstanding discovery requests by December 12, 2013. ( Id. )

On December 16, Plaintiffs informed the Court that the Non-ZB Bank Defendants had made no further production since December 5, 2013, and renewed their motion to preclude. (Docket No. 75.) On December 17, counsel for ZB Bank, Morrison Cohen, LLP, moved to withdraw as counsel. (Docket No. 76.) On December 19, Judge McMahon granted Morrison Cohen's motion to withdraw and ordered ZB Bank to enter the appearance of successor counsel by February 7, 2014, or be deemed in default. (Docket No. 78.)

On December 20, Plaintiffs wrote a letter to Judge McMahon requesting an order that the withdrawal of counsel had no effect on the timing of discovery or a decision on the pending motion to preclude. (Docket No. 79.) On January 8, 2014, Judge McMahon ordered that the motion to withdraw not stay discovery and ordered that "Judge Ellis has a free hand with respect to the motion to preclude, but should not reward ZB Bank for dilatory behavior." (Docket Nos. 82-83.) Judge McMahon's Supplemental Order, Docket Number 83, also ordered ZB Bank to appear by counsel by January 24, 2014, or be deemed in default.

Plaintiffs renewed their motion to preclude again on December 23, 2013. (Docket Nos. 80, 81.) In their letter concerning the Non-ZB Bank Defendants, Plaintiffs indicated that the Non-ZB Bank Defendants had made further productions of discovery on December 19 and 20, which Plaintiffs objected to as contravening this Court's December 10, 2013 Order and as inadequate. (Docket No. 81.) In their letter concerning ZB Bank, Plaintiffs asserted that the withdrawal of Morrison Cohen as counsel indicated ZB Bank's intent to "shoot the messenger" rather than comply with the Court's orders. (Docket No. 80)

On January 27, 2014, Plaintiffs renewed their motion to preclude, noting that ZB Bank had not met the January 24 deadline for entering an appearance of successor counsel. (Docket No. 84.) On January 28, Morrison Cohen responded to Plaintiffs' letter, indicating that it was in the process of entering an appearance as counsel for ZB Bank, and asserting that it was under no obligation to provide any further documentation. (Docket No. 85.)

On January 28, Plaintiffs filed a Request for Entry of Default against ZB Bank with the Clerk of the Court. (Docket No. 86.) A certificate of default was entered the same day. (Docket No. 88.) On January 29, Plaintiffs wrote a letter to the Court objecting to ZB Bank's January 28 response to their letter, and again renewing the motion to preclude. (Docket No. 90.)

On February 4, Mark Samuel Jarashow and Edward Paul Gilbert of Morrison Cohen, LLP entered notices of appearance on behalf of ZB Bank. (Docket Nos. 91-92.) That same day, ZB Bank wrote a letter to the Court stating that it had provided an affidavit to Plaintiffs concerning the steps it took to gather documents responsive to Plaintiffs' Document Production Requests and the fact that it had no responsive documents to certain requests. (Docket No. 93.) ZB Bank also indicated that it would make an additional production of documents by February 14, 2014, related to Plaintiffs' requests for documents concerning the sanctions imposed on ZB Bank by the United States Department of Treasury and documents concerning Defendants Minerals Marketing Corporation of Zimbabwe and Zimre Holdings Limited. ( Id. ) ZB Bank also reiterated its objections to Document Requests Numbers 9, 10, and 11, and its arguments against Plaintiffs' motion to preclude. Also on February 4, ZB Bank moved to set aside the certificate of default, (Docket No. 94), and Plaintiffs moved for default judgment. (Docket No. 97.)

On February 12, Plaintiffs responded to ZB Bank's February 4 letter, (Docket No. 103), asserting that ZB Bank's affidavit was untimely and challenging its truthfulness. ( Id. at 2) Plaintiffs further asserted that any additional production by ZB Bank would be untimely and asked the Court to strike ZB Bank's latest filings and grant the motion to preclude. ( Id. ) On February 19, ZB Bank responded to Plaintiffs, disputing Plaintiffs' characterizations of its affidavit, and defending its February 14 production of documents.

On February 21, Judge McMahon denied Plaintiffs' motion for default judgment and granted ZB Bank's motion to set aside the certificate of default. (Docket No. 110.) On February 28, Plaintiffs wrote a letter to the Court, in which they objected to ZB Bank's February 14 production as untimely and insufficient, and asserted that they accepted the production without prejudice to the motion to preclude.

On March 24, ZB Bank moved for summary judgment. Plaintiffs asked Judge McMahon to hold the motion for summary judgment in abeyance until the instant motion has been decided, (Docket No. 114.) and ZB Bank objected. (Docket No. 115.) On April 4, Judge McMahon set a briefing schedule ordering Plaintiffs to respond to ZB Bank's motion for summary judgment twenty-one days after the undersigned renders a decision on the instant motion to preclude. (Docket No. 118.)

On August 5, 2014, the Parties appeared before the Court for a telephone conference. The Court ordered the Parties to submit the declarations provided to Plaintiffs by the Non-ZB Bank Defendants as part of their December 19 and 20 discovery productions, and the declaration provided by ZB Bank on February 4, 2014. Plaintiffs provided these declarations on August 6. (Docket No. 120.) Plaintiffs restated their objections to the declarations, and further objected to ZB Bank's February 4, 2014 certification as vague and based on hearsay. ( Id. ) On August 6, ZB ...


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