Hercaire Intern., Inc. v. Argentina

• Decision Date: 14 July 1987
• Docket Number: 86-5317,Nos. 86-5264,s. 86-5264
• Citation: 821 F.2d 559
• Parties: HERCAIRE INTERNATIONAL, INC., a Florida corporation, Plaintiff-Appellee, Cross-Appellant, v. ARGENTINA, a foreign nation, Defendant-Appellant, Cross-Appellee. HERCAIRE INTERNATIONAL, INC., a Florida corporation, Plaintiff-Appellee, v. AEROLINEAS ARGENTINAS, Appellant, Argentina, a foreign nation, Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 559

821 F.2d 559

HERCAIRE INTERNATIONAL, INC., a Florida corporation, Plaintiff-Appellee, Cross-Appellant, v. ARGENTINA, a foreign nation, Defendant-Appellant, Cross-Appellee.

HERCAIRE INTERNATIONAL, INC., a Florida corporation, Plaintiff-Appellee, v. AEROLINEAS ARGENTINAS, Appellant, Argentina, a foreign nation, Defendant.

Nos. 86-5264, 86-5317.

United States Court of Appeals, Eleventh Circuit.

July 14, 1987.

Dwight Sullivan, Steven M. Kamp, Hornsby & Whisenand, Alvin D. Lodish, Miami, Fla., for defendant-appellant.

Bruno A. Ristau, Kaplan, Russin & Vecchi, Joel E. Leising, Washington, D.C., for appellant.

Gregory G. Olsen, Morgan, Olsen & Olsen, Ft. Lauderdale, Fla., Ted R. Manry, III, MacFarlane, Ferguson, Allison & Kelly, Tampa, Fla., for plaintiff-appellee.

Appeals from the United States District Court for the Southern District of Florida.

Before RONEY, Chief Judge, VANCE, Circuit Judge, and PITTMAN ^*, Senior District Judge.

PITTMAN, Senior District Judge:

These consolidated appeals arise from a contract dispute between Hercaire International Inc., the plaintiff below, and the Republic of Argentina, a foreign state. In case No. 86-5264, we are asked to review the propriety of several rulings of the trial court which bear on Argentina's liability to Hercaire. In case No. 86-5317, we face the question of whether the property of Argentina's wholly-owned national airline, Aerolineas Argentinas, is subject to execution in satisfaction of the judgment against Argentina. For the reasons expressed below, we affirm the judgment in No. 86-5264 (liability) and reverse the judgment in No. 86-5317 (execution), and remand the case to the district court for further proceedings.

Factual Background

In 1981, Hercaire International became a qualified supplier to the Air Attache of the Argentine Embassy in Washington, D.C. During late 1981, and early 1982, Hercaire successfully transacted thousands of dollars of business with Argentina.

In April, 1982, Argentina asserted control over the Falkland/Malvinas Islands. This brought an armed response from the United Kingdom, and a short war broke out. Argentina sought to increase the range of some of its aircraft in order to enable them to make the flight from their bases on the mainland to the fighting at sea and return without refueling. The political climate required that Argentina make these purchases in a clandestine manner.

Argentina engaged Hercaire to assist in procuring these tanks. The parties disagree as to Hercaire's role in this transaction. Argentina insists that Hercaire was to be the supplier. Hercaire contends that it was to be a mere conduit for Argentine funds. In any event, two facts are undisputed: Argentina deposited $1.25 million into Hercaire's bank account; and Argentina obtained no wing tanks from Hercaire.

After the conclusion of the war, several meetings between Hercaire and Argentina's representative resulted in a settlement between the parties. Hercaire issued a credit invoice to Argentina in the amount of $1.25 million as "credit against future purchases." The parties' differing contentions as to the scope and meaning of this settlement give rise to the present litigation.

Procedural History

On June 9, 1983, Hercaire filed suit against Argentina for breach of contract, alleging that Argentina owed Hercaire $253,322.62, plus interest and costs, for Argentina's failure to pay for parts it bought from Hercaire. Argentina denied receiving the parts, and raised a counterclaim seeking $1.25 million for Hercaire's failure to supply the wing tanks to be used on Argentina's A-4 Skyhawk jets. Argentina later amended its counterclaim to allege that the wing tank dispute had been settled and that Hercaire was in breach of that settlement agreement by demanding a letter of credit in connection with the sale of an aircraft engine.

Argentina included the following language in its answer and counterclaim:

Defendant, The Argentine Republic, hereby waives its sovereign immunity and that of its agencies exclusively to that in the above-entitled matter. This waiver relating to this action shall not be considered as a precedent for any other matters in this or any other Court in the United States in which The Argentine Republic or any of its agencies are involved and any of which it may invoke sovereign immunity in accordance with International Law.

At trial, the district court directed a verdict in Hercaire's favor on a portion of its claim, represented by Plaintiff's Exhibit 1 (PX-1), and submitted the remaining issues to the jury. The jury, by special interrogatories, found that Argentina owed nothing on the remainder of Hercaire's claim, that the wing tank transaction had been settled by agreement, and that Hercaire had not breached that agreement. The trial court entered judgment on the directed verdict, and denied Argentina's new trial motion. Argentina appeals from the directed verdict on the PX-1 invoices, the final judgment, and the denial of its new trial motion. Hercaire cross-appeals the district court's denial of a directed verdict on a portion of its claim represented by Plaintiff's Exhibit 2 (PX-2).

In No. 86-5317, Aerolineas Argentinas (Aerolineas) appeals the orders of the district court which permitted Hercaire to seize a Boeing 727 owned by Aerolineas to satisfy the judgment against Argentina. On May 3, 1986, that aircraft was seized by U.S. Marshals as it landed at Miami International Airport. Aerolineas regained possession by posting a cash bond equal to twice the amount of the judgment. After a hearing, the court directed the Clerk to release $293,761.27 to the plaintiff in satisfaction of the judgment.

The Directed Verdict on PX-1

The evidence before the court showed that the invoices included in PX-1 were for parts shipped to Argentina prior to June 30, 1982, the date of the credit memo. The credit memo clearly states that the credit is "against future purchases."

Argentina argues that a letter written two weeks after the credit was issued, Defendant's Exhibit-14 (DX-14), shows how the parties interpreted the agreement. The letter states that Argentina was applying the June 30 credit to all unpaid invoices. Argentina asserts that Hercaire's failure to object, protest or otherwise dispute the letter shows that the letter was a correct statement of the parties' agreement. Argentine argues that DX-14 created a jury question on its liability on the PX-1 invoices.

Hercaire argues that the DX-14 letter is irrelevant and could only be used to modify the settlement agreement. Modification was not raised as an issue, and Argentina expressly stated at trial that it was not contending modification. Further, even under Argentina's contention as to when a contract for purchase is formed, these transactions were clearly past purchases.

We find no error in the district court's direction of the verdict on PX-1. The undisputed evidence before the trial court shows that the settlement agreement provided for "credit against future purchases." The settlement date was June 30, 1982. All PX-1 invoices were issued prior to that date. The invoices were issued on the date that the parts were shipped. When the invoices were issued, the only thing remaining outstanding is payment. Argentina does not contend that it paid, only that it did not have to do so because of the credit memo.

Denial of Directed Verdict on PX-2

Hercaire contends that it was entitled to a directed verdict on the invoices represented by PX-2. The evidence shows that these invoices represent parts ordered by Argentina prior to June 30, 1982, but which were shipped after that date. Again propriety of this ruling depends upon construction of the term "future purchases" used in the credit invoice.

Hercaire argues that under the parties' course of dealing, a contract and hence a "purchase" was formed when Argentina issued a purchase order that reflected the terms of its quotation. The quotation was an offer which Argentina could accept by issuing a purchase order.

Argentina concedes that sequence of events, but argues that the purchase order is the offer which could only be accepted by Hercaire's act of shipping the parts.

There is evidence to support both positions, and under these circumstances, it was not error to submit the issue to the jury for its resolution.

Denial of the Motion for New Trial

Argentina argues that the jury's verdict on the counterclaim is against the great weight of the evidence, making the district court's ruling on its new trial motion an abuse of discretion. It also asserts that Hercaire's insistence on a letter of credit in connection with the sale of an aircraft engine was a breach of contract as a matter of law.

Hercaire contends that the settlement agreement did not obligate it to bid on, much less supply, any part that Argentina wanted. The settlement did not change the parties' relationship with each other, i.e., it did not create any new obligation to supply parts. The agreement and resultant credit merely provided an account against which future purchases would be applied. As a result, the letter of credit condition was not a breach of the settlement. On the contrary, it was the only means by which Hercaire could obtain the engine.

A timely motion for new trial is addressed to the sound judicial discretion of the trial court. E.g., Sulmeyer v. Coca Cola Co., 515 F.2d 835 (5th Cir.1975) cert. denied, 424 U.S. 934, 96 S.Ct. 1148, 47 L.Ed.2d 341 (1976). A decision denying a new trial motion is reviewable only for an abuse of that discretion. Id. The law of this circuit holds that the trial court should grant a new trial only where the verdict is against the great weight of the evidence. Spurlin v. General Motors Corp., 528 F.2d 612 (5th Cir.1976). And normally, this court will reverse a decision denying a motion for new trial only where there is an absolute absence of evidence to support the verdict. Litherland v. Petrolane Offshore...