DRFP L.L.C. v. Venezuela

151 F.Supp.3d 809

DRFP L.L.C., d/b/a Skye Ventures, Plaintiff,

v.República Bolivariana de Venezuela, et al., Defendants.

Case No. 2:04-cv-0793

United States District Court, S.D. Ohio, Eastern Division.

Signed December 18, 2015

Rex H. Elliott, Charles Benjamin Cooper, Charles Horne Cooper, Jr., Adam Paul Richards Cooper & Elliott, LLC, Andrew G. Douglas, John Patrick Kennedy, Steven Beryl Ayers, Crabbe, Brown & James, LLP, Columbus, OH, for Plaintiff.

Albert J. Lucas, Jason J. Blake, Calfee Halter & Griswold, Columbus, OH, Andrew Z. Schwartz, Christopher Escobedo Hart, Madeleine K. Rodriguez, Matthew C. Baltay, Richard G. Baldwin, Thomas R. Ayres, II, Foley Hoag LLP, Boston, MA, Jonathan L. Greenblatt, Shearman & Sterling LLP, Lawrence H. Martin, Ronald E.M. Goodman, Foley Hoag LLP, Washington, DC, for Defendants.

OPINION AND ORDER

EDMUND A. SARGUS, JR., UNITED STATES DISTRICT CHIEF JUDGE

This matter is before the Court for consideration of the parties' cross-motions for summary judgment. This is an action for payment on a pair of promissory notes. For the reasons stated below, Defendants the Republic of Venezuela and the Venezuelan Ministry of Finance's (collectively, “Venezuela”) Motion for Summary Judgment Based on the Statute of Limitations (ECF No. 359) is DENIED . Plaintiff's Motion for Summary Judgment (ECF No. 409) is also DENIED . Defendants' Motion for Summary Judgment that Plaintiff is Not a Holder in Due Course (ECF No. 413) is DENIED . Additionally, Plaintiff's Motion to File Sur-Reply in Opposition to Defendants' Motion for Summary Judgment that Plaintiff is Not a Holder in Due Course (ECF No. 459) is DENIED without prejudice .

I. LEGAL STANDARD

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The movant has the burden of establishing that there are no genuine issues of material fact, which may be accomplished by demonstrating that the nonmoving party lacks evidence to support an essential element of its case. Celotex Corp. v. Catrett , 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Barnhart v. Pickrel, Schaeffer & Ebeling Co. , 12 F.3d 1382, 1388–89 (6th Cir.1993). To avoid summary judgment, the nonmovant “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; accord Moore v. Philip Morris Cos. , 8 F.3d 335, 340 (6th Cir.1993). “[S]ummary judgment will not He if the dispute about a material fact is ‘genuine,’ that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In evaluating a motion for summary judgment, the evidence must be viewed in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co. , 398 U.S. 144, 158–59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) ; see Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) (stating that the court must draw all reasonable inferences in favor of the nonmoving party and must refrain from making credibility determinations or weighing evidence). Furthermore, the existence of a mere scintilla of evidence in support of the nonmoving party's position will not be sufficient; there must be evidence on which the jury reasonably could find for the nonmoving party. Anderson , 477 U.S. at 251, 106 S.Ct. 2505 ; see Copeland v. Machulis , 57 F.3d 476, 479 (6th Cir.1995) ; see also Matsushita , 475 U.S. at 587–88, 106 S.Ct. 1348 (finding reliance upon mere allegations, conjecture, or implausible inferences to be insufficient to survive summary judgment).

Here, the parties have filed cross-motions for summary judgment. Each party, as a movant for summary judgment, bears the burden of establishing that no genuine issue of material fact exists and that it is entitled to a judgment as a matter of law. The fact that one party fails to satisfy that burden on its own Rule 56 motion does not automatically indicate that the opposing party or parties has satisfied the burden and should be granted summary judgment on the other motion. In reviewing cross-motions for summary judgment, courts should “evaluate each motion on its own merits and view all facts and inferences in the light most favorable to the non-moving party.” Wiley v. United States , 20 F.3d 222, 224 (6th Cir.1994). “The filing of cross-motions for summary judgment does not necessarily mean that the parties consent to resolution of the case on the existing record or that the district court is free to treat the case as if it was submitted for final resolution on a stipulated record.” Taft Broad. Co. v. United States , 929 F.2d 240, 248 (6th Cir.1991) (quoting John v. State of La. (Bd. of Trs. for State Colls. & Univs.) , 757 F.2d 698, 705 (5th Cir.1985) ). The standard of review for cross-motions for summary judgment does not differ from the standard applied when a motion is filed by one party to the litigation. Taft Broad. , 929 F.2d at 248.

II. BACKGROUND

The facts of this case are copious and complex. A summary of the relevant background information is as follows. As required, the Court has construed the facts in the light most favorable to the nonmoving party and makes a finding in the absence of resolving any factual disputes.

A. The parties and the Promissory Notes

Plaintiff DRFP L.L.C., d/b/a Skye Ventures (“Skye”), an Ohio corporation, entered into an agreement (the “Purchase Agreement”), dated April 8, 2004, with Panamanian entity Gruppo Triad-FCC SPA (“Gruppo Triad”). (ECF No. 358-1.) Skye is a special purpose entity that was formed in August 2003. (ECF No. 258-2 ¶¶ 12-13.) Gruppo Triad is a collection of companies controlled and managed by President and CEO, Mr. James Paolo Pavanelli (“Pavanelli”). (ECF No. 358-1.)

Pursuant to the Purchase Agreement, Skye obtained two Promissory Notes (the “Notes”) with face values of $50 million each to the bearer. (ECF Nos. 360-1, 360-2.) The Notes were purportedly issued¹ by a Venezuelan Bank, entitled Banco de Desarollo Agropecuario (“Bandagro”), to Gruppo Triad on December 7, 1981, with a 10-year maturation date, coming due on December 8, 1991. (Id. ) Each note is identified as part of the series ICC-322. The first Note is identified as Note No. 7/12. (ECF No. 360-1.) The second Note is identified as Note No. 8/12. (ECF No. 360-2.) The Notes contain signatories on behalf of the borrower and represent that “all engagement of BANDAGRO have the explicit backing of the National Government of the Republic of Venezuela according to” a November 5, 1981 letter from the Minister of Finance. (ECF Nos. 360-1, 360-2.) Before the Notes matured, Defendant Venezuela took over the bank.

Gruppo Triad Efforts to Collect on the Notes

In 1987, Gruppo Triad retained Venezuelan businessman Jose Nicolas Tovar (“Tovar”) to serve as its representative for the purposes of collecting payment on the Notes. (See ECF No. 415-22 14.) Tovar continued to serve as Gruppo Triad's representative at various times between 1987 and 2010. (Id. ) Tovar informed Pavanelli that he was “capable of investigating the origin of the Gruppo Triad Bandagro Notes, and that if they were legitimate instruments, [he] would seek payment from the Government of Venezuela ....” (Id. at ¶ 5.) Tovar proceeded to take various steps to confirm the authenticity of the Notes at issue in this case and others held by Gruppo Triad (collectively, the “Gruppo Triad Bandagro Notes”). To that end, Tovar wrote to Venezuela Ministry of Finance² officials in 1991 requesting, among other things, verification that Bandagro had issued ICC-322 promissory notes. (Id. at ¶ 12, Ex. D.) Tovar received a letter in response confirming that the Ministry of Finance's files contained records of Badagro's issuance of promissory notes in the ICC-322 series, including specific records of other Gruppo Triad Bandagro Notes. Tovar did not specifically request or receive verification of Notes 7/12 and 8/12 at that time. (Id. at ¶¶ 13-14, Ex. F.) Tovar subsequently requested a judicial inspection of the files and records of the Ministry of Finance to confirm the existence of his correspondence. The result of the inspection confirmed records of his correspondence. (Id. at ¶ 15.) Tovar also met in person with Venezuela's then-Minister of Finance, Bobby Pocaterra (“Pocaterra”) who confirmed the issuance of Bandagro promissory notes in the ICC-322 series. (Id. at ¶ 16.) Pocaterra told Tovar that he was concerned about Venezuela's ability to pay the ICC-322 promissory notes issued by Bandragro, and that the debts would likely have to be extended. (Id. at ¶ 17.)

Political turmoil following an attempted cou d'etat in Venezuela on February 4, 1992 complicated Tovar's efforts to seek payment of the Notes. (Id. at ¶ 18.) Tovar states that he “was informed that the Republic of Venezuela would be able to pay the Gruppo Triad Bandagro Notes in approximately five years.” (Id. at ¶ 19.) He further states that Pavanelli, on behalf of Gruppo Triad, “did not oppose, but rather assented to, the Republic of Venezuela's extension.” (Id. )

At that point, Pavanelli requested that Tovar attempt to sell some of the Gruppo Triad Bandagro Notes. In furtherance of this goal, Tovar traveled to Lugano, Switzerland to meet with a bank named Credito Subalpino regarding the sale of one or all of the Gruppo Triad Bandagro Notes. (Id. at ¶ 20-21.) In conducting diligence towards verification of the Gruppo Triad Bandagro Notes, the then-manager of Credito Subalpino, Luigi Plinio Piffaretti (“Piffaretti”), inquired to and received correspondence from Bandagro and Venezuela. (ECF No. 415-36 ¶¶ 10-16.) Specifically, in July 2013, Piffaretti received a letter confirming the existence of ICC-322 promissory...