Banco Nominees Ltd. v. Iroquois Brands, Ltd., Civ. A. No. 89-650 LON.

• Decision Date: 17 October 1990
• Docket Number: Civ. A. No. 89-650 LON.
• Citation: 748 F. Supp. 1070
• Court: U.S. District Court — District of Delaware
• Parties: BANCO NOMINEES LIMITED and Bank of Bermuda Limited, Plaintiffs, v. IROQUOIS BRANDS, LTD., Defendant.

748 F. Supp. 1070

BANCO NOMINEES LIMITED and Bank of Bermuda Limited, Plaintiffs, v. IROQUOIS BRANDS, LTD., Defendant.

Civ. A. No. 89-650 LON.

United States District Court, D. Delaware.

October 17, 1990.

Jeffrey B. Bove, of Connolly, Bove, Lodge & Hutz, Wilmington, Del. (Jacobs Persinger & Parker, New York City, of counsel), for plaintiffs.

William Prickett, of Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del. (Vincent Lipari, of Carro, Spanbock, Kaster & Cuiffo, New York City, of counsel), for defendant.

OPINION

LONGOBARDI, Chief Judge.

SUMMARY

This is a breach of contract claim involving the sale of stock in an English corporation. The Plaintiffs allege that the Defendant is liable for the contract price of the stock. The Defendant denies liability and alleges fraud and breach of warranties by the Plaintiffs or the Plaintiffs' agent. The Defendant asserts that most of the evidence necessary for the defense is in England and has moved to dismiss this action on the ground of forum non conveniens.

FACTS

The Plaintiffs Banco Nominees Limited and Bank of Bermuda Limited are corporations organized under the laws of the Islands of Bermuda with their principal places of business in Bermuda. The Plaintiffs are the sellers in this dispute.

The Defendant Iroquois Brands, Ltd. is a corporation organized under the laws of Delaware and maintains its principal place of business in Texas.

The dispute in this case involves a contract for the sale of stock in Eagle Trust PLC (Eagle Trust), a corporation organized under the laws of the United Kingdom.

In April of 1989, the Defendant became interested in purchasing a substantial portion of stock in Eagle Trust. On May 5, 1989, Mr. Malcolm Stockdale, the Defendant's chief executive officer, wrote to Mr. John Ferriday, the chief executive officer of Eagle Trust. Mr. Stockdale indicated that the Defendant was willing to purchase 20% of the share capital of Eagle Trust for 22 pence per share.

In May of 1989, Mr. Stockdale and Mr. Robert Garrison, the Defendant's president, flew to London to discuss with Mr. Ferriday the purchase of Eagle Trust stock. It appears that Mr. Stockdale was in England at least from May 19, 1989, through May 26, 1989.

During this period, Mr. Stockdale directed Mr. Marshall Lester, one of the Defendant's New York attorneys, to prepare ten letters offering to purchase Eagle Trust shares. On May 22, 1989, these offers were sent by various means to ten shareholders, including Mr. Ferriday and the Plaintiffs.¹ On the same day, Mr. Ferriday signed a letter of warranty regarding the shares of Eagle Trust that he owned. Mr. Ferriday signed another letter of warranty, purportedly as the agent for the nine other shareholders, two days later on May 24, 1989. The offer letters required the shareholders to place the stock in escrow before June 5, 1989, and that the Defendant would pay for the stock on or before August 22, 1989.

Eight of the offers, including the offer made to the Plaintiffs, were accepted.² The offer letter to the Plaintiffs was sent to London by Mr. Lester. From there it was forwarded to Ms. Carol Michael-Green, an assistant manager of investments for the Bank of Bermuda. The original offer provided that the Defendant would purchase 24,000,000 shares of Eagle Trust stock at a price of 17 3/8 pence per share. Ms. Michael-Green called Mr. Ferriday in London with regard to modifying the price and the number of shares. Apparently Mr. Ferriday told Ms. Michael-Green to amend the price to 22 pence per share and to increase the number of shares from 24,000,000 to 25,898,214. With these amendments, the offer was sent back to Mr. Lester in New York. The number of phone calls and telecopies that passed between New York and London, Bermuda and New York, and Bermuda and London is in dispute. Furthermore, the legal significance of each communication is also disputed. However, the parties agree that the final contract reflected the higher price of 22 pence per share but maintained the original number of shares, 24,000,000.

On May 24, 1989, Mr. Stockdale and Mr. Garrison were appointed to the board of Eagle Trust and subsequently learned that Eagle Trust was insolvent. The Defendant notified the Plaintiffs that it would not pay for the Eagle Trust stock on August 18, 1989. At some point on or prior to August 18, 1989, the London Stock Exchange suspended trading in the stock of Eagle Trust. British governmental agencies are now conducting criminal investigations relating to the loss of Eagle Trust funds and a warrant was issued for the arrest of Mr. Ferriday on September 16, 1989. Mr. Ferriday is currently a fugitive. Both parties agree that the Eagle Trust stock is worthless.

On September 18, 1989, one of the other sellers commenced an action against the Defendant in the chancery division of the High Court of Justice in London.³ On October 13, 1989, three more sellers filed a second action against the Defendant in the same court.⁴ On November 17, 1989, the Plaintiffs commenced this action for the contract price of the Eagle Trust stock in the United States Federal District Court in Delaware.

The Plaintiffs contend that they have no relationship with Mr. Ferriday. The Plaintiffs deny that Mr. Ferriday had any authority to act as agent or make representations on behalf of the Plaintiffs. The Plaintiffs' position is that the meetings between Mr. Stockdale and Mr. Ferriday produced only a list of shareholders and that each sales contract is an independent, self-contained transaction. The Plaintiffs argue that the only relevant negotiations in this action took place between Mr. Lester in New York and Ms. Michael-Green in Bermuda.

To the Plaintiffs, this is a simple breach of contract case requiring very little proof because the Defendant admits that it entered into the sales contract with the Plaintiffs. The Plaintiffs contemplate that determining damages will be the biggest issue in this controversy.

On the other hand, the Defendant characterizes each sales agreement as merely a part of an overall single transaction by which the Defendant purchased roughly 13% of Eagle Trust stock. The Defendant alleges that Mr. Ferriday fraudulently misrepresented the financial condition of Eagle Trust to the Defendant's officers. The Defendant alleges that the connection between Mr. Ferriday and the Plaintiffs is at least as significant as that of agent and principal. The Defendant has introduced financial data from another English corporation, Paramount Airlines, which lists Banco Nominees Limited and Mr. Ferriday as two of Paramount Airline's five shareholders. Certainly this fact is of minimal value in showing a connection between the Plaintiffs and Mr. Ferriday but it may serve as a starting point for further investigation regarding the contacts between the Plaintiffs and Mr. Ferriday.

The Defendant contends that this is an exceedingly complex fraud case and that all of the witnesses and evidence necessary to prove the fraud and to prove the relationship between the Plaintiffs and Mr. Ferriday are in England. The Defendant has moved this Court to dismiss this action on the ground of forum non conveniens.

ANALYSIS

The doctrine of forum non conveniens allows a court to decline to hear a case even when jurisdiction is authorized "by the letter of a general venue statute" if a more convenient alternative forum exists for deciding the case. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507, 67 S.Ct. 839, 842, 91 L.Ed. 1055 (1947). Granting a motion to dismiss on the ground of forum non conveniens is within the sound discretion of the trial court. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257, 102 S.Ct. 252, 266, 70 L.Ed.2d 419 (1981); Lony v. E.I. Du Pont de Nemours & Co., 886 F.2d 628 (3rd Cir.1989).

The analysis to determine whether the application of this exceptional doctrine is warranted involves several steps. Initially, the trial court must determine whether there is a suitable alternative forum. Lony, 886 F.2d at 633. When the plaintiff is foreign, the court must determine what degree of deference to afford the plaintiff's choice of forum. The burden of persuasion will always remain with the defendant. However, the magnitude of the defendant's burden increases as the deference given to the plaintiff's choice of forum increases. Id. at 634-35. Finally, in determining whether the defendant has met the burden of showing that the case should be dismissed, the court must examine a variety of private and public interest factors. Gulf Oil Corp., 330 U.S. at 508-09, 67 S.Ct. at 843; Lony, 886 F.2d at 634-35.

1. Availability of Alternative Forum

A suitable alternative forum is one which has jurisdiction over the defendant and offers the plaintiff a satisfactory remedy. See Piper Aircraft Co., 454 U.S. at 254 & n. 22, 102 S.Ct. at 265 & n. 22; Lony, 886 F.2d at 633. The Defendant has consented to submit to jurisdiction in England. The High Court of Justice is capable of hearing this case; it already has two actions before it arising from four of the other contracts involved in this transaction. Furthermore, the Plaintiffs have not argued that English law would deny them an appropriate remedy. Therefore, the first step in the analysis is satisfied.

2. Degree of Deference Due Plaintiffs' Choice and Defendant's Burden

Ordinarily the Plaintiff's choice of forum is entitled to great deference and should not be disturbed unless there is "`oppressiveness and vexation to a defendant ... out of all proportion to plaintiff's convenience,' or when the `chosen forum is inappropriate because of considerations affecting the court's own administrative and legal problems.'" Piper Aircraft Co., 454 U.S. at 241, 102 S.Ct. at 258 (quoting Koster v. Lumbermens Mutual Co., 330 U.S. 518, 524, 67 S.Ct. 828, 831, 91 L.Ed. 1067 (1947)). However, the presumption that the forum chosen by the plaintiff is convenient has less force when the plaintiff is foreign. Piper...