DRFP, LLC v. Republica Bolivariana De Venezuela

• Citation: 945 F.Supp.2d 890
• Decision Date: 14 May 2013
• Docket Number: Case No. 2:04–CV–00793.
• Parties: DRFP, LLC, Plaintiff, v. The REPUBLICA BOLIVARIANA DE VENEZUELA, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

945 F.Supp.2d 890

DRFP, LLC, Plaintiff,

v.The REPUBLICA BOLIVARIANA DE VENEZUELA, et al., Defendants.

Case No. 2:04–CV–00793.

United States District Court,

S.D. Ohio,

Eastern Division.

May 14, 2013.

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

Drew H. Campbell, Bricker & Eckler, Columbus, OH, Heather Lamberg Kafele, Jonathan L. Greenblatt, Thomas B. Wilner, Shearman & Sterling LLP, Jose Pertierra, Pertierra & Toro, PC, Washington, DC, for Defendants.

OPINION AND ORDER

EDMUND A. SARGUS, JR., District Judge.

Plaintiff DRFP, LLC dba Syke Ventures (“Plaintiff”), brings this action under the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq., asserting counts against Defendants the Bolivarian Republic of Venezuela and the Venezuelan Ministry of Finance's (“Defendants”) for default on promissory notes; estoppel/detrimental reliance; breach of contract; promissory estoppel; and negligence. This matter comes before the Court for consideration of Defendants' Motion to Transfer Under 28 U.S.C. §§ 1404(a), 1406(a) (ECF No. 274); Defendants' Motion to Dismiss Under Federal Rule of Civil Procedure 12(b) (ECF No. 275); and Defendants' Motion for Certification of this Court's October 23, 2012 Forum Non Conveniens Decision Pursuant to 28 U.S.C. § 1292(B) (ECF No. 276). For the reasons that follow, Defendants' Motion to Transfer is DENIED; Defendants' Motion to Dismiss is GRANTED in part and DENIED in part subject to the conditions within this Opinion and Order; and Defendants' Motion for Certification is DENIED. Plaintiff is DIRECTED to file a Second Amended Complaint within SEVEN (7) DAYS of this Opinion and Order withdrawing its claims for promissory estoppel and negligence. The Court will schedule a status conference with the parties, through separate order, to discuss resolution of the statute of limitations issue.

I. BACKGROUND

A. Factual History

This action centers around two promissory notes, the legitimacy of which are in dispute. Plaintiff maintains that in December 1981 Banco Desarrollo Agropecuario SA (“Bandagro”), a Venezuelan financial institution established pursuant to the laws of the Republic, issued a series of bearer promissory notes (hereinafter “the Bandagro notes”), including the two notes at issue in this case (hereinafter “the Notes”). (Am. Compl. ¶¶ 6–7, ECF No. 147.) According to Plaintiff, Bandagro issued the Bandagro notes for the purpose funding economic development programs in Venezuela and traded the Bandagro notes on the international financial market. ( Id. at ¶¶ 9–10.)

The Notes at issue here, which Plaintiff attached to the Amended Complaint, state that they are guaranteed by the Venezuelan government. (Am. Compl. Exs. 1A, 1B, ECF No. 147–1.) The Notes have a face value of $50,000,000.00 (US) each. ( Id.) The Notes include a provision stating that the laws of Switzerland will govern their terms and conditions. ( Id.) The Notes further provide that they are governed by the regulations of the International Chamber of Commerce as well as the United States Council of the International Chamber of Commerce Brochure 322. ( Id.)

The language of the Notes reflects that they were set to mature in December 1991. ( Id.) Plaintiff asserts, however, that in December 1991, the Minister of Hacienda (precursor to the current Minister of Finance), “unilaterally extended the Notes' maturity until December, 1999 ....” ¹ (Am. Compl. ¶ 11.) Plaintiff further contends that “[p]rior to the maturity of the Notes, Bandagro ceased operations and is currently defunct.” ( Id. at ¶ 15.)

Plaintiff asserts that during, and before, April 2002 certain holders of the Bandagro notes requested payment. ( Id. at ¶ 18.) Such requests prompted the Venezuelan Minister of Finance to investigate the legitimacy of the Bandagro notes. ( Id. at ¶¶ 18–21.) According to Plaintiff, the investigation included an inspection of the Notes at issue in this case, which occurred in the United States. ( Id. at ¶ 21.) Plaintiff maintains that following a four-month investigation, the Ministry of Finance's Office of Legal Counsel issued a report concluding that the holders of the Notes had legitimate rights to payment. ( Id. at ¶ 22.) Plaintiff asserts that based on these findings, Venezuelan Attorney General Marisol Plaza issued an opinion on October 3, 2003, stating that the Notes were valid and that Venezuela was obligated to make payments on them. (Am. Compl. at ¶ 25.) Plaintiff contends that on approximately October 17, 2003, the Minister of Finance distributed copies of the Attorney General's opinion to the holder of the Notes. ( Id. at ¶ 26.)

Plaintiff is a Columbus, Ohio based limited liability company. ( Id. at ¶ 3.) It states that it is the holder and bearer of the two Notes in question. ( Id. at ¶ 14.) Plaintiff asserts that it acquired the Notes from Gruppo Triad–FCC SPA (“Gruppo”), a Panamanian corporation. ( Id.) Plaintiff maintains that, prior to purchasing the Notes, it received a copy of the October 3, 2003 opinion of the Attorney General. ( Id. at ¶ 26.) Within the Amended Complaint, Plaintiff contends that, in purchasing the Notes, it relied on the Attorney General's October 3, 2003 opinion. (Am. Compl. ¶ 29.) Plaintiff further contends that on August 11, 2004, it demanded—from Columbus, Ohio—that Defendants make payment on the Notes by depositing funds in a Columbus, Ohio financial institution. ( Id. at ¶ 32.) Defendants have refused to make payment on the Notes. ( See id. at ¶ 33.)

Defendants maintain that the Notes in question are part of a series of well-known forgeries. They specifically question the conduct of James Paolo Pavanelli (“Pavanelli”), the CEO and President of Gruppo. Defendants submit that even before Plaintiff acquired the Notes, Pavenelli had already been convicted twice—in England and Italy—for trading in false Bandagro notes. Moreover, Defendants stress that, since 1981, Venezuelan government officials have conducted numerous investigations into the validity of Bandagro notes. According to Defendants, these investigations have revealed that the Bandagro notes are forgeries. Additionally, Defendantsprovide that Venezuela has issued several alerts warning the public that such notes are invalid. Defendants submit that the individuals who purportedly signed the Notes have testified that they never signed such documents. Finally, Defendants posit that multiple investigations independent from Venezuela have also determined that the Bandagro notes are forgeries.

Defendants further challenge Plaintiff's reliance on the October 2003 opinion of the Attorney General. Defendants characterize the Attorney General's opinion as a “non-public, inter-agency letter ....” (Defs.' Mot. Dismiss 7, ECF No. 275.) Defendants emphasize that the Attorney General withdrew this opinion shortly after finding that government officials had overlooked evidence. Defendants also contend that in December 2003, following further investigation by both the Attorney General and Ministry of Finance, the Attorney General issued a new opinion finding the Notes invalid. ( See Flores Decl. Ex. Q, ECF No. 120–24.) Moreover, Defendants stress that in July 2007, the Venezuelan Supreme Court issued an interpretative opinion finding that the Attorney General's October 2003 opinion was consultive in nature, as opposed to binding, and did not create private individual rights. ( See Evseev Decl. Ex. B. at 23, ECF No. 118–3.)

B. Procedural History

Plaintiff originally filed this cause of action on August 23, 2004, bringing a single cause of action for default on the two Notes. ( See Compl., ECF No. 1.) On January 31, 2005, Defendants moved for dismissal based on a lack of subject matter jurisdiction in light of sovereign immunity under FSIA; lack of personal jurisdiction; preclusion under the act of state doctrine; forum non conveniens; and failure to state a claim. ( See ECF Nos. 13, 14.) On June 7, 2007, Defendants filed a supplement to their original Motion to Dismiss urging that the Court to first consider the issues of sovereign immunity and forum non conveniens. (ECF No. 106.)

On February 13, 2009, 2009 WL 414581, the Court, through United States District Judge John D. Holschuh, now deceased, issued an Opinion and Order denying Defendants' Motion to Dismiss on the grounds of subject matter jurisdiction and forum non conveniens.² The Court held that it possessed subject matter jurisdiction pursuant to FSIA's commercial activity exception. Additionally, the Court concluded that Venezuela was not an available forum because the Venezuelan Supreme Court's 2007 decision “would not permit litigation of one of the essential issues of Plaintiff's complaint.” ( Opinion & Order 20, ECF No. 144.)

Plaintiff filed an Amended Complaint on March 2, 2009. Within the Amended Complaint, Plaintiff reasserted a cause of action for default on the Notes. Plaintiff also pled four additional counts for estoppel/detrimental reliance; breach of contract; promissory estoppel; and negligence.

Defendants appealed the Court's February 13, 2009 Opinion and Order.³ The United States Court of Appeals for the Sixth Circuit issued its Opinion on September 23, 2010. DRFP L.L.C. v. Republica Bolivariana de Venezuela, 622 F.3d 513 (2010). The Sixth Circuit affirmed this Court's holding as to subject matter jurisdiction, concluding that the Notes gave Plaintiff a right to designate the United States as a place of payment, thus creating a direct effect in the United States within the meaning of FSIA. Id. at 518. The Sixth Circuit, however, reversed the Court's decision as to forum non conveniens. Id. at 520. The Sixth Circuit held that the Venezuela Supreme Court decision did not render Venezuela “unavailable and inadequate as a matter of law” and remanded for a “full consideration of the question whether the...