Asarco LLC v. Americas Mining Corp., Civil No. 1:07-CV-00018.
| Court | United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas |
| Writing for the Court | Andrew S. Hanen |
| Citation | 396 B.R. 278 |
| Parties | ASARCO LLC, Southern Peru Holdings, LLC, Plaintiffs, v. AMERICAS MINING CORPORATION, Defendant. |
| Docket Number | Civil No. 1:07-CV-00018. |
| Decision Date | 30 August 2008 |
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AMERICAS MINING CORPORATION, Defendant.
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George Irvin Terrell, Michael C. Massengale, Rebeca Aizpuru Huddle, Samuel Wollin Cooper, Baker Botts LLP, Houston, TX, James R. Prince, Eric A. Soderlund, Fernando Rodriguez, Jr., Jack L. Kinzie, Thomas Edward O'Brien, Baker Botts LLP, Dallas, TX, Kevin M. Sadler, Baker Botts LLP, Austin, TX, Michael J. Urbis, Jordan Hyden, Brownsville, TX, Shelby A. Jordan, Jordan Hyden, Corpus Christi, TX, Garland Doty Murphy, IV, Smyser, Kaplan & Veselka, LLP, Houston, TX, for Plaintiffs.
Charles A. Beckham, Jr., Brian F. Antweil, Elizabeth Brooks Hamilton, Kirk L. Worley, Mark Ryan Trachtenberg, Haynes and Boone, LLP, Houston, TX, David R. Gelfand, Luc A. Despins, Stacey J. Rappaport, Alan J. Stone, Melanie Westover, Milbank, Tweed, Hadley & McCloy, LLP, New York, NY, David S. Cohen, Milbank Tweed, Hadley & McCloy, LLP, Washington, DC, for Defendant.
J.A. Tony Canales, Canales & Simonson, PC, Corpus Christi, TX, for Daniel Tellechea.
Evelyn H. Biery, Zach A. Clement, Mark Allan Worden, Sharon Marie Beausoleil-Mayer, Fulbright Jaworski LLP, Houston, TX, Louis Raymond Strubeck, Jr., John N. Schwartz, Fulbright & Jaworski, Dallas, TX, for Intervenor Official Committee of Unsecured Creditors of ASARCO LLC.
Jacob Lee Newton, Robert T. Brousseau, Sander L. Esserman, Steven A. Felsenthal, Jo E. Hartwick, Stutzman Bromberg, Dallas, TX, for Intervenor Official Committee of Unsecured Creditors of Subsidiary Debtors.
Debra L. Innocenti, John H. Tate, II, Raymond W. Battaglia, Oppenheimer, Blend, Harrison & Tate, San Antonio, TX, for Robert C. Pate.
ANDREW S. HANEN, District Judge.
The plaintiffs, ASARCO LLC and Southern Peru Holdings LLC (both of which are currently in bankruptcy), filed this action in their capacities as debtors in possession and on behalf of ASARCO's creditors to recover from Defendant Americas Mining Corporation ("AMC") the stock representing 54.18% of the outstanding shares of Southern Peru Copper Company ("SPCC") and damages resulting from having been wrongfully deprived of
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this stock ownership.1 Alternatively, they request damages due to the actions of the defendant. They also seek punitive damages. Plaintiffs assert five causes of action: (1) actual fraudulent transfer; (2) constructive fraudulent transfer; (3) breach of fiduciary duty; (4) aiding and abetting a breach of fiduciary duty; and (5) conspiracy.
The defendant has denied these allegations and has pursued a counterclaim for recoupment against ASARCO based on: (1) breach of representation; (2) breach of good faith and fair dealing; and (3) breach of warranty. The Court and the parties have agreed that the Court has jurisdiction over all claims and counterclaims under 28 U.S.C. § 1334 and that venue is proper in this Division and District.
The Court held a four-week bench trial and hereby issues this opinion to partially resolve this matter. The Court prefers to address these issues in a narrative form. Nevertheless, the factual statements made hereinafter (except where the Court specifically notes a factual dispute) should be considered as findings of fact regardless of any heading or lack thereof. Moreover, for virtually every finding, the record is replete with testimony and exhibits that support the finding. Similarly, the legal conclusions, except where the Court discusses the various competing legal theories and positions, should be taken as conclusions of law regardless of any label or lack thereof.
Pending before the Court as the trial began were: (1) Americas Mining Corporation's Motion for Summary Judgment on Plaintiffs' Claims (Doc. No. 251); (2) Americas Mining Corporation's Motion for Summary Judgment on Plaintiffs' Standing to Bring Counts I and II (Doc. No. 253); and (3) Plaintiffs' Motion for Public Trial. (Doc. No. 301). Also pending were various Daubert motions filed by both sides. (Doc. Nos. 302, 304, 305, 306, and 307). Prior to beginning the presentation of the evidence, the Court granted the Motion for Public Trial. It deferred ruling on either of the motions for summary judgment. Since the trial was to the bench, and no harm could result, the Court also deferred ruling on the Daubert motions as they were very fact intensive, and the Court preferred to resolve the objections in the context of the evidence as it was being presented and to allow both the direct-examination and cross-examination to fully develop each matter. The rulings expressed herein resolve the Daubert motions and also resolve the issues raised by the motions for summary judgment.
During the trial, the parties presented various motions. The defendant made a motion for judgment or directed verdict which the Court, in effect, overruled from the bench preferring to rule on all of the issues raised with a full record. (Doc. No. 392). Also, Plaintiffs filed a motion to enforce trial subpoenas for Daniel Tellechea, German Larrea, and Genaro Larrea. All three witnesses had previously testified in the trial by video deposition. During the arguments on this motion, counsel for Plaintiffs conceded that, despite the fact that hours of these videos had been played, the witness Plaintiffs really needed to testify live was German Larrea. After hearing arguments from both sides, the Court decided it needed to hear from Mr. Larrea for a number of reasons and ordered his appearance. Further, in entering its order on this motion, the Court took into consideration
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the many representations made by defense counsel that Mr. Larrea would appear live.2 Counsel for Plaintiffs relied upon these representations. The Court found that it would result in "unfair gamesmanship" to allow the defendant to shield its CEO, German Larrea, from testifying after having represented to counsel that he would appear live. The Court hereby notes that it found his testimony to be quite valuable, particularly on the history of the relationship between Grupo and ASARCO and on the copper mining industry. He provided information not offered by any other witness for either side and not contained in his previously played video deposition. In formulating this Memorandum Opinion and Order, this Court has not utilized his live testimony, with one exception, as support for any ruling on any contested issues.3 While the Court did not, in fact, grant the plaintiffs' motion, the practical consequence of the Court's ruling was the granting of Plaintiffs' motion with regard to German Larrea. Plaintiffs' counsel's statement with regard to the necessity, or lack thereof, to hear from Genaro Larrea and Daniel Tellechea live had the practical effect of withdrawing the remaining portion of their motion. (Doc. No. 384). The Court's ruling also had the effect of overruling Defendant's Motion for Reconsideration. (Doc. No. 395).
I. BACKGROUND OF THE DISPUTE
A. The Players
As of 2003, ASARCO Incorporated (hereinafter "ASARCO") had been involved in the mining industry, both domestically and internationally, for over a century. During the pertinent time-period involved in this dispute, ASARCO was incorporated in New Jersey and headquartered in Phoenix, Arizona. In February of 2005, ASARCO Incorporated was merged into ASARCO LLC, a Delaware limited liability company.4 One of the primary products from its mining operations was, and is, copper. In 1999, when this saga began, ASARCO also owned two non-mining subsidiaries, Enthone-OMI, Inc., a specialty chemicals maker, and American Limestone Company, which produces construction aggregates, ready-mixed concrete, and limestone.
Grupo Mexico, S.A.B. de C.V. (hereinafter "Grupo") is a Mexican corporation that has been involved in the mining industry since the 1960's. Grupo is essentially a holding company involved primarily in two different industries: mining and railroads. Its railroad operations are concentrated in a subsidiary called Infraestructura y Transportes Mexico, S.A. de C.V. (hereinafter "ITM"), while its mining interests are vested in another subsidiary called Grupo Minera Mexico (hereinafter "Minera Mexico"). Grupo's Chairman of the Board and Chief Executive Officer is German Larrea. He has worked for Grupo for decades. He succeeded his father, who had founded Grupo and headed it for a number of years. The Larrea family and their company, Empresarios Industriales de Mexico, S.A. de C.V. (of which German Larrea is also the Chairman of the Board and Chief Executive Officer), own the controlling
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interest in Grupo. The record establishes without a doubt that German Larrea rules Grupo and all of its affiliates and no major decision is made without his approval.
For many years prior to 1999, Grupo and ASARCO had various business relationships. In Grupo's early ventures in the mining arena, it actually partnered with ASARCO. In fact, at one point in time, ASARCO had an ownership position in Grupo and had a representative on Grupo's Board of Directors. ASARCO even had a subsidiary named ASARCO Mexicana, which over time became a Grupo entity. As Grupo's mining operations grew, it became a more integrated operation, one that took the...
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In Re Yellowstone Mountain Club Llc., Bankruptcy No. 08-61570-11.
...needs. In 2003, ASARCO might accurately have been described as insolvent and “doomed to failure.” ASARCO LLC, v. Americas Mining Corp., 396 B.R. 278, 398-99 (S.D.Tex.2008). For the reasons discussed above, the Court finds that Blixseth's transfer of funds from the Debtors to BGI, and ultima......
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In re the Heritage Organization, L.L.C., Bankruptcy No. 04-35574-BJH-11.
...that a legitimate business purpose existed for each Transfer, that Transfer is not avoidable. See, e.g., ASARCO LLC v. Ams. Mining Corp., 396 B.R. 278, 391 (S.D.Tex.2008) (where the plaintiff demonstrates several badges of fraud, the burden is on the defendants to demonstrate a legitimate p......
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Think3 Litig. Trust v. Zuccarello (In re Think3, Inc.), Bankruptcy No. 11-11252-HCM,
...debtor. See, e.g., Texas Rangers Baseball Partners, 498 B.R. at 712 (supporting citations omitted); ASARCO LLC v. Americas Mining Corp., 396 B.R. 278, 370 (S.D.Tex.2008) (supporting citations omitted). Applying these standards to the facts of this particular case, the Court concludes that P......
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Think3 Litig. Trust v. Zuccarello (In re Think3, Inc.), Bankruptcy No. 11–11252–HCM.
...debtor. See, e.g., Texas Rangers Baseball Partners, 498 B.R. at 712 (supporting citations omitted); ASARCO LLC v. Americas Mining Corp., 396 B.R. 278, 370 (S.D.Tex.2008) (supporting citations omitted). Applying these standards to the facts of this particular case, the Court concludes that P......
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In Re Yellowstone Mountain Club Llc., Bankruptcy No. 08-61570-11.
...needs. In 2003, ASARCO might accurately have been described as insolvent and “doomed to failure.” ASARCO LLC, v. Americas Mining Corp., 396 B.R. 278, 398-99 (S.D.Tex.2008). For the reasons discussed above, the Court finds that Blixseth's transfer of funds from the Debtors to BGI, and ultima......
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In re the Heritage Organization, L.L.C., Bankruptcy No. 04-35574-BJH-11.
...that a legitimate business purpose existed for each Transfer, that Transfer is not avoidable. See, e.g., ASARCO LLC v. Ams. Mining Corp., 396 B.R. 278, 391 (S.D.Tex.2008) (where the plaintiff demonstrates several badges of fraud, the burden is on the defendants to demonstrate a legitimate p......
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Think3 Litig. Trust v. Zuccarello (In re Think3, Inc.), Bankruptcy No. 11-11252-HCM,
...debtor. See, e.g., Texas Rangers Baseball Partners, 498 B.R. at 712 (supporting citations omitted); ASARCO LLC v. Americas Mining Corp., 396 B.R. 278, 370 (S.D.Tex.2008) (supporting citations omitted). Applying these standards to the facts of this particular case, the Court concludes that P......
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Think3 Litig. Trust v. Zuccarello (In re Think3, Inc.), Bankruptcy No. 11–11252–HCM.
...debtor. See, e.g., Texas Rangers Baseball Partners, 498 B.R. at 712 (supporting citations omitted); ASARCO LLC v. Americas Mining Corp., 396 B.R. 278, 370 (S.D.Tex.2008) (supporting citations omitted). Applying these standards to the facts of this particular case, the Court concludes that P......