Banco De Desarrollo Agropecuario, SA v. Gibbs

• Decision Date: 06 April 1989
• Docket Number: No. 86 CIV. 8547(PKL).,86 CIV. 8547(PKL).
• Citation: 709 F. Supp. 1302
• Parties: BANCO DE DESARROLLO AGROPECUARIO, S.A., Plaintiff, v. Robert V. GIBBS, the First Venezuela Company, Ltd., the Bank of International Credit Ltd., Devinco of Florida, Inc. and International Capital & Development Corp., Defendants. The BANK OF INTERNATIONAL CREDIT LTD. (in compulsory liquidation) by its Joint Official Liquidators, Sydney Morris and Graham C. Garner, Plaintiff on Cross-Claim, and Third Party Claims, v. Robert V. GIBBS, Devinco of Florida Inc., and International Capital & Development Corporation, Cross-Defendants, and Christine Gibbs, Peter Newman, J.J. Boland, Gennaro D'Amore, Seagate Development Corp., Seagate Land Development Corp., International Consolidated Industries, Inc., ICD Financial & Computer Service, Inc., and 240 Venture Associates, Inc., Additional Defendants on Cross-Claims and Third Party Defendants.
• Court: U.S. District Court — Southern District of New York

709 F. Supp. 1302

BANCO DE DESARROLLO AGROPECUARIO, S.A., Plaintiff, v. Robert V. GIBBS, the First Venezuela Company, Ltd., the Bank of International Credit Ltd., Devinco of Florida, Inc. and International Capital & Development Corp., Defendants.

The BANK OF INTERNATIONAL CREDIT LTD. (in compulsory liquidation) by its Joint Official Liquidators, Sydney Morris and Graham C. Garner, Plaintiff on Cross-Claim, and Third Party Claims, v. Robert V. GIBBS, Devinco of Florida Inc., and International Capital & Development Corporation, Cross-Defendants, and Christine Gibbs, Peter Newman, J.J. Boland, Gennaro D'Amore, Seagate Development Corp., Seagate Land Development Corp., International Consolidated Industries, Inc., ICD Financial & Computer Service, Inc., and 240 Venture Associates, Inc., Additional Defendants on Cross-Claims and Third Party Defendants.

No. 86 CIV. 8547(PKL).

United States District Court, S.D. New York.

April 6, 1989.

Davis, Markel & Edwards, New York City (George F. Hritz, William F. Haigner, of counsel), Sheldon Evans, P.A., Miami, Fla., for plaintiff.

Kronish, Lieb, Weiner & Hellman, New York City (Brian S. Gallagher, Deborah Fanning, of counsel), for plaintiff on cross-claims and third party claims.

Steele, Hector & Davis, Miami, Fla. (Gerald J. Houlihan, Cheryl A. Bell, of counsel) Stern, Fixler & Weinger, New York City (Joel S. Stern, of counsel), for defendants and cross-defendants.

OPINION AND ORDER

LEISURE, District Judge:

Cross defendants, Devinco of Florida, Inc. ("Devinco") and International Capital & Development Corporation ("ICD"), and third party defendants, Christine Gibbs ("C. Gibbs"), Peter Newman ("Newman"), Seagate Development Corp. ("Seagate"), Seagate Land Development Corp. ("Seagate Land"), International Consolidated Industries, Inc. ("ICI"), ICD Financial & Computer Service, Inc. ("ICD Financial") and 240 Venture Associates, Inc. ("240 Venture") (hereinafter collectively referred to as "Defendants")¹, move pursuant to Rule 12 of the Federal Rules of Civil Procedure to dismiss the cross-claims and third party claims (collectively the "Cross-Claims") asserted against each of them. For the following reasons the motion is denied.

BACKGROUND

This case involves the transactions among several interrelated corporations. A brief summary of the facts is sufficient for the purposes of this motion. For a more complete background, see Banco De Desarrollo Agropecuario v. Gibbs, 640 F.Supp. 1168 (S.D.Fla.1986).²

The Bank of International Credit Ltd. ("BICL") is a Bahamian bank currently in liquidation pursuant to the Bahamas Companies Act.³ BICL, along with Robert V. Gibbs ("R. Gibbs"), TFV, Devinco and ICD, is a defendant, in principal action, by its major depositor, Banco De Desarrollo Agropecuario, S.A. ("Bandagro") before this Court. The Cross-Claims at issue in this motion were brought by the liquidators of BICL (the "Liquidators") who allege that due to the looting of BICL by Defendants BICL is unable to repay Bandagro or any other depositor. Cross-Claims ¶¶ 29-40, 58-60.

BICL is a part of what can only be described as a corporate maze. BICL is a wholly owned subsidiary of TFV. TFV, in turn, is controlled by ICI. ICI also controls ICD (collectively the "ICD/TFV Complex"). The remaining corporate third party defendants, Seagate, Seagate Land, ICD Financial, and 240 Venture (collectively the "Transferee Corporations") are wholly owned subsidiaries of the ICD/TFV Complex. R. Gibbs is alleged to be the "mastermind" behind the ICD/TFV Complex, owning or controlling, either personally or through ICI, the majority of stock in all the corporations. See Memorandum Opposing Motion to Dismiss the Cross-Claims ("Memorandum in Opposition"), p. 4.

On September 2, 1983, Alfredo Beracasa ("Beracasa"), Luis Henriquez ("Henriquez") and Jose Loperenia ("Loperenia"), sued R. Gibbs, C. Gibbs, ICD, Gerald Klein ("Klein") and various corporations and partnerships located in the State of Maryland (the "Maryland Entities"). The action was brought on behalf of BICL, TFV and the three individual plaintiffs. See Beracasa et al. v. Robert Gibbs et al., 83 Civ. 6559 (S.D.N.Y.) (CES). The complaint in that action charged R. Gibbs, C. Gibbs and ICD with looting BICL and TFV in order to place funds in ICD, and with Klein, in the Maryland entities. Cross-Claims ¶¶ 47-48. On November 21, 1983, a stipulation was filed discontinuing the action with prejudice and sealing the record (the "Beracasa Settlement Agreement"). Cross-Claims ¶¶ 47-50. The stipulation stated that the proposed settlement was "fair, reasonable, and in the best interest of TFV and its subsidiaries," including the plaintiff BICL. Cross-Claims ¶ 51(i).

BICL's Liquidators now dispute that the settlement was fair and reasonable to BICL. The Liquidators claim that all of the consideration paid to BICL under the Beracasa Settlement Agreement actually went to Beracasa, Henriquez and Loperenia; none of the money was received by BICL. Cross-Claims ¶¶ 51-52. The Liquidators further allege that the agreement enabled R. Gibbs to maintain his complete control over the ICD/TFV Complex by causing all the stock in the ICD/TFV Complex to be contributed to the newly formed ICI, of which R. Gibbs was a controlling shareholder. Cross-Claims ¶¶ 51(g), 51(h), 52(c), 52(h). The Liquidators also allege that the withdrawal of the suit allowed Defendants to continue the looting of BICL's assets. Cross-Claims ¶ 52(h).

Defendants bring this motion claiming the Liquidators do not have the proper standing to bring this action. Defendants further allege that the Cross-Claims fail to state claims on which relief may be granted. Moreover, Defendants claim that the Cross-Claims are barred by the various statutes of limitations.

DISCUSSION

I. Standing

As a threshold matter, the Court must determine whether the Liquidators of BICL have the proper standing to bring this action. Generally, a receiver stands in the shoes of a corporation and can assert only those claims which the corporation itself could have asserted. Lank v. New York Stock Exchange, 548 F.2d 61, 67 (2d Cir.1977).⁴ A bankrupt corporation does not have a cause of action against its officers and fiduciaries for unauthorized acts such as conversion, self-dealing or waste when the shareholders of the corporation have unanimously consented to those acts. McDonnell v. American Leduc Petroleums, Ltd., 456 F.2d 1170, 1177 (2d Cir. 1972); cf. Field v. Lew, 184 F.Supp. 23, 27 (E.D.N.Y.1960). However, even unanimous shareholder ratification of corporate looting cannot bar the corporate liquidator from suing the corporate control persons for that looting where the interests of the corporation's creditors have been injured or there has been public harm. See, e.g., Continental Securities Co. v. Belmont, 206 N.Y. 7, 17-18, 99 N.E. 138 (1912); Ward v. City Trust Co., 192 N.Y. 61, 74-75, 84 N.E. 585 (1908); Capitol Wine & Spirit Corp. v. Pokrass, 277 A.D. 184, 98 N.Y.S.2d 291, 295 (2d Dep't 1950), aff'd, 302 N.Y. 734, 98 N.E.2d 704 (1951). A liquidator may sue for the "protection of the entire community of interests in the corporation—creditors as well as stockholders." Pepper v. Litton, 308 U.S. 295, 307, 60 S.Ct. 238, 245, 84 L.Ed. 281 (1939). See also Superintendent of Insurance v. Bankers Life and Casualty Co., 404 U.S. 6, 12-14, 92 S.Ct. 165, 168-170, 30 L.Ed.2d 128 (1971); In re O.P. M. Leasing Services Inc., 28 B.R. 740, 759-60 (S.D.N.Y.1983). "Creditors, of course, are not prejudiced by the corporation's acts of ratification." Field v. Lew, supra, 184 F.Supp. at 27. BICL alleges that the Liquidators, representing the creditors as well as the shareholders, may assert certain claims that the corporation itself may not assert. Lank v. New York Stock Exchange, supra, 548 F.2d at 67; Dirks v. Clayton Brokerage Co. of St. Louis, Inc., 105 F.R.D. 125, 135 (D.Minn.1985).

BICL does not dispute that the actions complained of were ratified by all shareholders. See, e.g., Cross-Claims at ¶¶ 21, 25, 28 & 45. However, BICL's Liquidators are empowered and required, by the liquidation provisions of the Bahamas Companies Act, to take control of, and reduce to cash, all of BICL's assets, claims and property for distribution to BICL's creditors. Cross-Claims ¶ 4. In this action, the Liquidators are attempting to recover the money allegedly improperly taken and used by Defendants in order to distribute the resulting funds to all of BICL's creditors, after deducting the expenses of administration. Id. The Cross-Claims concern the rights of creditors; therefore, the Liquidators have standing to bring this action, ratification of the acts not withstanding.⁵

II. Sufficiency of Allegations in Cross-Claims

Defendants allege that each count contains insufficient allegations to state a claim for relief and move to dismiss the Cross-Claims pursuant to Fed.R.Civ.P. 12(b)(6). A motion to dismiss under Rule 12 must be denied "unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957)); Morales v. New York State Department of Corrections, 842 F.2d 27, 30 (2d Cir.1988). The Court must accept the pleader's allegations of facts as true together with such reasonable inferences as may be drawn in its favor. Murray v. City of Milford, Connecticut, 380 F.2d 468, 470 (2d Cir.1967). See also Scheuer, supra 416 U.S. at 236, 94 S.Ct. at 1686. Rule 8 requires only a "short and plain statement of the claim that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Fed.R.Civ. P. 8(a)(2); Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957) (cited in Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984))....