Gannon Int'l, Ltd. v. Blocker

• Decision Date: 17 July 2012
• Docket Number: No. 11–3307.,11–3307.
• Citation: 684 F.3d 785
• Parties: GANNON INTERNATIONAL, LTD.; The Gannon Pacific Company; The Gannon Company (Hong Kong), Limited; Gannon Vietnam Co., Ltd., Plaintiffs/Appellants, v. Walter BLOCKER, Defendant/Appellee, Ignition Capital Partners; Sandalwood Investments, Limited; Gannon Brewery Joint Stock Company, Defendants, Connell Bros. Company, Ltd., Movant.
• Court: U.S. Court of Appeals — Eighth Circuit

684 F.3d 785

GANNON INTERNATIONAL, LTD.; The Gannon Pacific Company; The Gannon Company (Hong Kong), Limited; Gannon Vietnam Co., Ltd., Plaintiffs/Appellants,

v.Walter BLOCKER, Defendant/Appellee,Ignition Capital Partners; Sandalwood Investments, Limited; Gannon Brewery Joint Stock Company, Defendants,Connell Bros. Company, Ltd., Movant.

No. 11–3307.

United States Court of Appeals,

Eighth Circuit.

Submitted: April 19, 2012.

Filed: July 17, 2012.

John D. Comerford, argued, Edward L. Dowd, Jr., on the brief, St. Louis, MO, for appellant.

James V. O'Brien, argued, Barry Arnold Short, I, Andrew S. Buchanan, on the brief, St. Louis, MO, for appellee.

Before LOKEN and SHEPHERD, Circuit Judges, and GERRARD,¹ District Judge.

GERRARD, District Judge.

This case involves a wire transfer from the plaintiff's bank account to the defendant's wife. The plaintiff claimed that the defendant, a former employee of the plaintiff, initiated the transfer unlawfully. But the defendant moved for summary judgment, offering evidence of another explanation for the transfer. The plaintiff did not offer any evidence in response, and the district court ² entered summary judgment for the defendant.

The issue presented in this appeal is whether the defendant made the initial showing required by Fed.R.Civ.P. 56 that there was no genuine issue of material fact and that he was entitled to judgment as a matter of law, thereby shifting the burden to the plaintiff to present affirmative evidence showing that a genuine issue of material fact existed. We find that the defendant made the required showing, and affirm the judgment of the district court.

I

This litigation began when Gannon International, Ltd. (“Gannon”), filed a complaint in district court against Walter Blocker and several corporate defendants. Blocker is a former employee of Gannon who managed some of Gannon's Asian subsidiaries. Gannon's operative complaint alleged that in May 2007, Blocker had secretly caused a wire transfer of $415,000 from the bank account of Gannon Hong Kong into his wife's personal bank account. This transfer, Gannon alleged, was not for a legitimate business purpose. Gannon further alleged that in February 2009, Blocker caused a wire transfer of $40,000 from a Gannon Hong Kong bank account to the personal bank account of Gannon's former Chief Financial Officer, Bob Greene, again for no legitimate business purpose.

Gannon also alleged that Blocker was part of a scheme to divest Gannon of its investment in a joint venture to build a brewery in Vietnam. Gannon claimed that Blocker had refused to provide Gannon with access to records of Gannon subsidiaries, particularly relating to Gannon Vietnam's license to distribute Anheuser Busch products in Vietnam. And Gannon alleged that, against its orders, Blocker had diverted Gannon funds to a Vietnamese joint stock company formed to operate the planned brewery.

These acts, according to Gannon, gave rise to several claims for relief, against Blocker and the three other defendants (the Vietnamese joint stock company and two Washington private equity firms). Gannon alleged that Blocker had breached his fiduciary duties to Gannon. Gannon claimed that Blocker had committed fraud by causing the wire transfers to personal bank accounts. Gannon alleged that the wire transfer to Blocker's wife's personal account constituted unjust enrichment and conversion. Another fraud claim, against Blocker and the equity firms, was based on a call for capital contribution to the joint stock company. The alleged scheme to divest Gannon of its interest in the joint stock company also formed the basis for claims of tortious interference with business relationships, inducing a breach of fiduciary duty, violating Section 10(b) of the Securities Exchange Act of 1934, ³ and civil conspiracy. And Gannon pled separate claims for declaratory judgment and a constructive trust.

Blocker moved to dismiss under Fed.R.Civ.P. 12(b)(4), (5), and (6), and the equity firms moved to dismiss under Fed.R.Civ.P. 12(b)(1) and (2), contesting personal and subject-matter jurisdiction. Blocker also moved for partial summary judgment on the claims arising out of the alleged $415,000 transfer.

The district court disposed of the Rule 12 motions first. It dismissed the equity firms for lack of personal jurisdiction. The court dismissed the fraud claim based on the wire transfers, as well as the tortious interference and Section 10(b) claims, for failing to state claims for relief. It dismissed the constructive trust claim because a constructive trust is a remedy, not a separate cause of action. And finally, the court found that any remaining claims relating to the investment agreement between Gannon and the equity firms were subject to the arbitration clause of the agreement, and dismissed those claims on that basis. Left standing, to the extent they were based on the wire transfers, were the claims for breach of fiduciary duty, unjust enrichment, conversion, and civil conspiracy.

Before the court ruled on Blocker's motion for partial summary judgment, Gannon filed a motion to voluntarily dismiss the entire action without prejudice, pursuant to Fed.R.Civ.P. 41(a)(2). Gannon explained that Blocker and Greene had sued it in a Missouri state court, and it wanted to dismiss its claims in federal court and refile them in the state court action. Blocker opposed voluntary dismissal. But before the court addressed Gannon's motion to voluntarily dismiss, it granted Blocker's motion for partial summary judgment.

In support of his motion for partial summary judgment, Blocker presented several exhibits. Tran Quoc Hung, the former chief financial officer of the Gannon subsidiaries at issue, provided a statement regarding the $415,000 transaction. Hung explained that in the course of his duties for the Gannon subsidiaries, he had been involved in handling a transaction between two other companies: Diageo Finance PLC and Linh Gia Co. Ltd. Diageo Finance is a subsidiary of Diageo, a large worldwide producer of alcoholic beverages. Linh Gia is in the business of importing and distributing foreign alcoholic beverages in Vietnam. Linh Gia is partly owned by Doan Phuong Ly, Blocker's wife.

According to Hung, Linh Gia contracted with Gannon for support services regarding the import and distribution of alcoholic beverages produced by Diageo. Linh Gia needed money for expenses such as taxes, operating costs, and advertising; Diageo agreed to provide it. Diageo wired approximately $470,000 to Gannon Hong Kong—money that was, according to Hung, intended for Linh Gia. So, Gannon Hong Kong transferred $415,000 of that money to Ly, who was expected to transfer that amount to Linh Gia for expenses. And, according to Hung, those expenses were paid as agreed by Ly and Linh Gia. Hung said that he had verified Ly's transfer of the money to a Linh Gia account, and he attached an exhibit (written in a foreign language which is presumably Vietnamese) that he proffers as evidence of that transfer. Blocker's own statement explains that the funds were transferred through Ly so they would be seen as a “capital contribution” from a shareholder instead of being deemed income to Linh Gia.⁴

Hung also explained that Blocker was not immediately aware of these transfers—they were Hung's responsibility as chief financial officer. Hung declared that Diageo had no debt to Gannon which would have entitled Gannon to the money. Ly provided a declaration consistent with Hung's account of the transactions, to which she attached several exhibits (again, primarily in a foreign language we presume is Vietnamese) as evidence of Linh Gia's use of the funds on legitimate business expenses associated with importing and distributing Diageo products. Blocker's own statement was consistent with Hung's and Ly's.

Gannon did not submit evidence in response to Blocker's motion. Instead, it argued that Blocker had not made a prima facie case for summary judgment. It asserted that two of the exhibits attached to Ly's statement referred not to Linh Gia, but to a different company, Nhan Viet. It contended that Hung's statement was inadmissible hearsay with respect to Diageo's intent to fund Linh Gia. And it complained that the receipt for the transfer from Ly to Linh Gia was handwritten.

The district court granted Blocker's motion. The court found that Blocker had proven the absence of a genuine issue of material fact with respect to the conversion claim because Gannon had not identified any debt owed by Diageo to Gannon that would explain the $470,000 transfer. And Blocker had presented unrebutted evidence explaining the transfer. Therefore, the court reasoned, the uncontested evidence established that Gannon had no right to possession of the funds, defeating its conversion claim. Whether Linh Gia had spent the money properly—i.e., as required by Linh Gia's agreement with Diageo—was, the court found, irrelevant to Gannon's claim against Blocker. For similar reasons, the court found that the claim for breach of fiduciary duty failed, because Blocker could not have breached a fiduciary duty to Gannon by transferring funds for a legitimate business purpose. And the unjust enrichment claim failed because Gannon never had a claim to the funds, and neither Blocker nor Ly retained the benefit of the funds.

The court specifically rejected the evidentiary complaints Gannon had made. The court rejected Gannon's hearsay objections, reasoning that the disputed statements were based on the first-hand knowledge of those responsible for the transfer of funds. And the court found no merit to Gannon's complaint about the handwritten receipt Blocker offered as evidence of Ly's transfer of the funds to Linh Gia. Gannon, the court noted, did not show how the handwritten receipt was inadequate evidence of a deposit, and did not come forward with any countervailing evidence that the deposit did not occur.

Based on that reasoning, the court...