HSBC Bank (Uruguay) v. Seaboard Corp.

• Decision Date: 23 September 2022
• Docket Number: 21-cv-2435-DDC-TJJ
• Parties: HSBC BANK (URUGUAY) S.A., Plaintiff, v. SEABOARD CORPORATION, Defendant.
• Court: U.S. District Court — District of Kansas

HSBC BANK (URUGUAY) S.A., Plaintiff,
v.
SEABOARD CORPORATION, Defendant.

No. 21-cv-2435-DDC-TJJ

United States District Court, D. Kansas

September 23, 2022

MEMORANDUM AND ORDER

Daniel D. Crabtree, United States District Judge.

This case arises from an international commercial dispute that's turned into a civil procedure battle royale.

A Kansas corporation, defendant Seaboard Corporation, purchased a minority ownership interest in Cereoil Uruguay S.A., a Uruguayan company. Cereoil's bank, plaintiff HSBC Bank (Uruguay) S.A., wanted assurances from defendant before it granted Cereoil a new credit facility. Defendant complied, providing plaintiff with a “comfort letter” to encourage plaintiff to grant Cereoil the credit facility. A few months later, defendant allegedly persuaded plaintiff to restructure Cereoil's debt and accept-as guarantee for the debt-an assignment of a soybean sale agreement between Cereoil and defendant. But Cereoil ran out of soybeans. Instead of shipping Cereoil's remaining soybeans under the contract assigned to plaintiff, defendant allegedly caused Cereoil to ship the soybeans to defendant itself. Then, defendant forced Cereoil to file for bankruptcy protection in Uruguay. In that bankruptcy proceeding, Cereoil's bankruptcy Trustee has asserted two actions against defendant. They seek to force return of

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property from defendant to the Cereoil bankruptcy estate and make defendant liable to Cereoil's creditors.

Plaintiff then commenced this action against defendant. In it, plaintiff asserts seven claims: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) promissory estoppel, (4) unjust enrichment, (5) fraud, (6) negligent misrepresentation, and (7) fraud by concealment. Defendant has moved to dismiss, invoking two independent doctrines and two parts of Rule 12: forum non conveniens, abstention, Fed.R.Civ.P. 12(b)(7), and Fed.R.Civ.P. 12(b)(6). Doc. 13. This Order decides the Motion to Dismiss. In summary form, the court dismisses plaintiff's claims for breach of contract and breach of the covenant of good faith and fair dealing. Each claim fails to state a claim. The court also concludes that plaintiff's unjust enrichment claim is untimely and dismisses it as well. Separately, the court dismisses plaintiff's tort claims under the forum non conveniens doctrine. But plaintiff's promissory estoppel claim survives.

The court explains the reasoning for these decisions, below. But first, it addresses defendant's separate Motion to Take Judicial Notice (Doc. 15).

I. Motion to Take Judicial Notice (Doc. 15)

The court begins with a threshold matter-defendant's request for judicial notice of various documents.

A federal court may take judicial notice of “a fact that is not subject to reasonable dispute” if it: (1) “is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). The court must take judicial notice if a party requests it and supplies the court with the requisite information. Fed.R.Evid. 201(c)(2). When ruling a motion

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to dismiss, a court may consider facts subject to judicial notice without converting the motion to dismiss into a motion for summary judgment. Tal v. Hogan, 453 F.3d 1244, 1264 n.24 (10th Cir. 2006).

Invoking Fed.R.Evid. 201(b)(2), defendant asks that the court take judicial notice of documents from Cereoil's bankruptcy proceeding in Uruguay and English translations of those documents. Specifically, defendant asks the court to take judicial notice of:

• Exhibit B-1 (Doc. 14-3): Uruguayan Bankruptcy Trustee's March 20, 2018, Action (Claw-Back Action) in Spanish

• Exhibit B-2 (Doc. 14-4): Bankruptcy Trustee's Claw-Back Action, English Translation of Doc. 14-3

• Exhibit B-3 (Doc. 14-5): Defendant's Response to Trustee's March 20, 2018, Action (Claw-Back Action) in Spanish,

• Exhibit B-4 (Doc. 14-6): Defendant's Response to Claw-Back Action, English Translation of Doc. 14-5,

• Exhibit B-5 (Doc. 14-7): Bankruptcy Trustee's April 27, 2018, Action (Culpability Action) in Spanish,

• Exhibit B-6 (Doc. 14-8): Bankruptcy Trustee's Culpability Action, English Translation of Doc. 14-7,

• Exhibit B-7 (Doc. 14-9): Defendant's Response to April 27, 2018, Action (Culpability Action) in Spanish,

• Exhibit B-8 (Doc. 14-10): Defendant's Response to Culpability Action, English Translation of Doc. 14-9.

Doc. 15 at 2. Plaintiff does not oppose defendant's motion. Doc. 20 at 1.

Defendant asserts that Exhibits B-1, B-3, B-5, and B-7 are copies of files made in related court proceedings in Uruguay. Each one is written in Spanish. Defendant “only seeks judicial notice of these pleadings in order to show the claims and defenses that have been raised in the Uruguayan bankruptcy proceedings.” Doc. 15 at 4-5. The court agrees that it properly may take

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judicial notice of these filings. St. Louis Baptist Temple, Inc. v. FDIC, 605 F.2d 1169, 1172 (10th Cir. 1979) (holding that federal courts may take notice of proceedings from other courts if those proceedings have a direct relation to matters at issue in the current case). And the court notes that the “documents may only be considered to show their contents, not to prove the truth of matters asserted therein.” Tal, 453 F.3d at 1264 n.24 (quotation cleaned up).

Defendant also asserts that Exhibits B-2, B-4, B-6, and B-8 are English language translations of the filings from the Uruguayan bankruptcy proceeding. Defendant submitted an Affidavit from Sandra Gonzalez-an attorney fluent in Spanish and English who regularly supervises translation of Uruguayan court documents from Spanish to English. See Doc. 14-2 (Gonzalez Aff.). This Affidavit confirmed that the English language translations of the Spanish documents are true and accurate. Id. at 2-3 (Gonzalez Aff ¶¶ 5-14). The parties do not dispute the authenticity of the original documents or the accuracy of the translations. The court agrees that it may take judicial notice of the translations. See Strobel v. Rusch, 431 F.Supp.3d 1315, 1324, 1324 n.2 (D.N.M. 2020) (taking judicial notice of English translation of Partnership Agreement written in German where parties did not dispute authenticity of Partnership Agreement or accuracy of translation).

The court thus grants defendant's Motion to Take Judicial Notice (Doc. 15).

II. Factual and Procedural Background

As it must at the motion to dismiss stage, the court accepts plaintiff's “well-pleaded facts as true, view[s] them in the light most favorable to [plaintiff], and draw[s] all reasonable inferences from the facts” in plaintiff's favor. Brooks v. Mentor Worldwide LLC, 985 F.3d 1272, 1281 (10th Cir. 2021).

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Plaintiff here is a Uruguayan bank. Doc. 2 at 2, 3 (Compl. ¶¶ 5, 9). Cereoil purchases and exports Uruguayan grain. Id. at 3 (Compl. ¶ 10). Before defendant purchased its stake in Cereoil, plaintiff provided financing to Cereoil. These arrangements included: a credit facility backed by the personal guarantees of Lucia Viana, William Johnson, and Nolston S.A.; other personal guarantees; and warrants, third-party documents, and export contracts. Id. (Compl. ¶ 13). Viana and Johnson previously owned Cereoil. Id. (Compl. ¶ 11).

In May 2015, defendant Seaboard acquired a 45% ownership interest in Cereoil from Viana. Id. (Compl. ¶ 12). The terms of defendant's purchase gave it the right to elect two directors of Cereoil and the right to appoint Cereoil's Chief Financial Officer (CFO). Id. at 3-4 (Compl. ¶ 14). Defendant employed these two Cereoil directors and the CFO and they served at defendant's behest. Id. at 4, 8 (Compl. ¶ 15, 42). Also, defendant appointed two Cereoil directors: David Dannov and Gail Cummings. Id. at 8 (Compl. ¶ 41). In April 2016, defendant installed Alejandro Guzman Bernal as CFO of Cereoil in Uruguay. Id. at 6 (Compl. ¶ 26, 28).

The Comfort Letter

When defendant acquired its interest in Cereoil, plaintiff sought to change its banking relationship with Cereoil. Id. at 4 (Compl. ¶ 16). Previously, former Cereoil owner Viana personally had guaranteed Cereoil's debts to plaintiff. Id. But defendant, a new Cereoil owner, gave plaintiff no such guarantee. Id. So, before plaintiff extended credit to Cereoil under its new ownership structure, plaintiff and defendant negotiated. Id. (Compl. ¶ 17). And, ultimately, defendant provided plaintiff with a Comfort Letter.^[1] Id. (Compl. ¶ 18).

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Defendant voluntarily signed the Comfort Letter on July 13, 2015. Id. Steven J. Bresky, defendant's President and CEO, signed the letter. Id. at 5 (Compl. ¶ 21). Defendant sent the Comfort Letter from its Kansas address to plaintiff in Montevideo, Uruguay. Id. (Compl. ¶ 20).

And the Comfort Letter specifically defines Cereoil as defendant's subsidiary. Id. (Compl. ¶ 22).

Defendant signed the letter for the agreed and recognized purpose of inducing plaintiff to grant a credit facility to Cereoil and Nolston S.A. as much as $13 million.^[2] Id. at 4 (Compl. ¶ 18). The Comfort Letter explicitly represents the following:

[Defendant] intends to maintain its present interest in [Cereoil and Nolston] as well as its financial, operational and trade relationships with them.

[Defendant] confirms to [plaintiff] that it has been and currently is our time honoured and continuing policy to have our affiliates, partly or wholly owned, meet all of their financial and contractual obligations, as approved by such affiliates' boards of directors. Nonetheless by accepting this letter, you acknowledge that this letter is not a guarantee, but rather merely states our intention to monitor [Cereoil and Nolston's] financial condition in a timely manner.

[Defendant] appreciates this letter will be considered a further inducement towards

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