Hester Intern. Corp. v. Federal Republic of Nigeria, WC85-49-NB-D.
Decision Date | 22 February 1988 |
Docket Number | No. WC85-49-NB-D.,WC85-49-NB-D. |
Citation | 681 F. Supp. 371 |
Parties | HESTER INTERNATIONAL CORPORATION, Plaintiff, v. The FEDERAL REPUBLIC OF NIGERIA, National Grains Production Company, Limited, A Company Incorporated in Nigeria, and the Government of Cross River State of Nigeria, Defendants. |
Court | U.S. District Court — Northern District of Mississippi |
COPYRIGHT MATERIAL OMITTED
Thomas W. Prewitt, Jackson, Miss., for plaintiff.
Walker W. Jones, III, Jackson, Miss., for defendants.
This bench trial was conducted during June, 1987. Having duly considered the post-trial memoranda filed by the parties, the court is now in a position to make its findings of fact and conclusions of law as required by Rule 52 of the Federal Rules of Civil Procedure. The court is also ready to rule on the pending motions:
Hester International Corporation Hester, a Mississippi corporation, brought this action pursuant to the Foreign Sovereign Immunities Act FSIA, 28 U.S.C. § 1602, et seq., against the Federal Republic of Nigeria Nigeria, National Grains Production Company, Limited NGPC, and the Government of Cross River State of Nigeria Cross River. NGPC is a corporation created by the government of Nigeria under the Nigerian Companies Act of 1968 to support the development of agricultural projects in Nigeria, specifically large-scale mechanized commercial farming operations in each of the nineteen states of Nigeria. See Exhibits P-261 and D-975. Hester alleges breaches on the part of all the defendants of an agreement executed on April 9, 1981 to develop and implement the Bansara Rice Farms project in Cross River State. See Exhibit P-1. The agreement contemplates a profit-making rice farm of approximately 10,000 acres (4,000 hectares) managed by Bansara Rice Farms, Ltd. as a joint venture partnership. Signatories executed the agreement on behalf of NGPC, Cross River, and Hester, in association with Bajo Sosanya of Rice Exporters and Producers, Ltd. REP, one of Hester's directors. Interests in Bansara Rice Farms, Ltd. were distributed among named parties to the agreement:
(1) forty percent to Hester; (2) thirty percent to NGPC; and (3) thirty percent to Cross River.
The agreement identifies Hester, in association with Bajo Sosanya of REP, as the technical partner whose duties included the following:
The agreement assigns financing obligations to both Hester and NGPC:
In addition, NGPC agreed to incorporate a limited liability company Bansara Rice Farms, Ltd., to procure the necessary expatriate quota for Bansara Rice Farms, Ltd., and to pay compensation for crops on 2,400 hectares. Cross River agreed to surrender the 2,400 hectares that had been surveyed, to furnish NGPC details of the compensation paid for 2,400 hectares, to obtain a perimeter survey of the entire 4,000 hectares, and to assist in providing accommodations for a team of ten expatriates for two months.
Hester alleges that Nigeria was obligated under the agreement to guarantee the on-shore and off-shore financing and that it breached the agreement by refusing to issue a letter of intent to guarantee an offshore loan in the sum of $50,000,000.00 to be procured by Hester. Hester further alleges that both NGPC and Cross River, acting as alter egos or agents of Nigeria, breached the agreement by failing to provide the requested letter of intent from Nigeria. In addition, NGPC allegedly breached its duty to provide additional interim on-shore financing in excess of $10,000,000.00 (10,000,000 naira). The defendants deny the allegations and claim that Hester breached the agreement in failing to pay its equity share in Bansara Rice Farms, Ltd. and to provide firm offers of external financing. The defendants further allege that Hester did not have sufficient expertise, experience, and resources and, thus, misrepresented its ability to meet the requirements of the agreement.
The plan for an irrigated, mechanized and fully integrated rice farm, as proposed in Hester's feasibility study, was not implemented. In January, 1983, the Board of Directors of Bansara Rice Farms, Ltd. voted to terminate Hester as the technical partner under the 1981 agreement. Hester seeks damages in the sum of $206,608,000.00 for loss of future profits or, in the alternative, the value of Hester's 40% interest in Bansara Rice Farms, Ltd. Hester alleges that the defendants wrongfully disposed of its interest. The defendants argue that there is no evidence of the value of Hester's shares in Bansara Rice Farms, Ltd. before or after the alleged breaches.
After Hester rested, the defendants moved to exclude any evidence of loss of future profits and good will. Upon hearing oral argument, the court granted the motion to exclude. Hester moved to reconsider and the parties have submitted post-trial memoranda on the issue of damages and whether Nigerian law applies.
In their post-trial memoranda, proposed findings of fact, and conclusions of law, the parties addressed the following issues:
This cause was originally tried on April 2, 1986, at which time the defendants appeared but presented no evidence. Thus, the only evidence before the court was presented by Hester. After hearing testimony and argument on behalf of Hester and considering Hester's trial brief, the court entered a judgment for Hester in the sum of $206,608,000.00 against defendants Nigeria, NGPC, and Cross River. The defendants moved to set aside the judgment on the grounds of inadequate and improperly served notice of trial and lack of an opportunity to present their meritorious defenses at trial. The court granted the defendants' motion on July 24, 1986 and set a new trial on June 15, 1987. On October 21, 1986, the court granted the defendants' motion to amend the pretrial order and reopen discovery.
On October 15, 1986, the defendants moved to dismiss for lack of subject matter jurisdiction, lack of in personam jurisdiction, and failure to state a claim upon which relief can be granted. By order of the court on June 1, 1987, the motions to dismiss were carried over to trial. The defendants renewed their motions after Hester rested and the court reserved ruling.
Hester originally opposed the defendants' motions to dismiss in a previous trial brief submitted after the April 2, 1986 trial. At that time, the defendants objected on the ground that the brief refers to documents introduced at the first trial and incorporates the court's original findings in support of the vacated judgment. Hester resubmitted the brief as a supplement to its recent post-trial memorandum on the jurisdictional issues. Renewing their objections, the defendants argue that the brief in dispute is precluded by the court's order vacating the previous judgment and setting a new trial and, therefore, is not properly before the court. Upon due consideration, the court finds that the motion to strike is not well taken and should be denied.
Nigeria moved to dismiss for lack of subject matter jurisdiction, lack of in personam jurisdiction, and failure to state a claim. The threshold issue of subject matter jurisdiction over Nigeria is whether defendants NGPC and Cross River executed the 1981 agreement and engaged in the joint venture of Bansara Rice Farms, Ltd. as agents or alter egos of Nigeria. In its initial post-trial memorandum on the jurisdictional issues, Hester asserted that the law of Nigeria governs the issue of agency. However, in a subsequent memorandum, Hester agrees that American law governs the agency issue in an action under the FSIA. The United States Supreme Court rejected the proposition that foreign law could in any circumstances govern the issue of attribution of liability among entities of a foreign state in actions under the FSIA. First National City Bank v. Banco Para el...
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