International Minerals and Resources, S.A. v. Pappas
| Decision Date | 06 September 1996 |
| Docket Number | D,Nos. 931,1053,s. 931 |
| Citation | 96 F.3d 586 |
| Parties | INTERNATIONAL MINERALS AND RESOURCES, S.A. and International Shipping Company, S.A., Plaintiffs-Counterdefendants-Appellants- Cross Appellees, and Lygren Maritime Services, S.A., Plaintiff-Counterdefendant, v. T. Peter PAPPAS, American General Resources, Inc. and A.L. Burbank Shipbrokers, Ltd., Defendants-Appellees, and Richard Jaross, Defendant-Counterclaimant-Appellee, and BOMAR RESOURCES, INC., Defendant-Appellee-Cross Appellant, v. Atle LYGREN, Additional Defendant on Counterclaim. ockets 95-7328, 95-7732. |
| Court | U.S. Court of Appeals — Second Circuit |
Elliot Silverman, Gold & Wachtel, L.L.P., New York City (Robert Gold, of counsel) for Plaintiffs-Counterdefendants-Appellants-Cross Appellees.
Howard B. Sirota, Sirota & Sirota, New York City, for Defendant-Appellee-Cross Appellant.
John H. Doyle, III, Anderson Kill Olick & Oshinsky, P.C., New York City (Lisa M. Anastos, of counsel) for Defendant-Appellee Pappas.
Joseph D. Pizzurro, Curtis, Mallet-Prevost, Colt & Mosle, New York City, for Defendant-Appellee A.L. Burbank Shipbrokers.
Barry Golomb, Rivelis, Pawa & Blum, New York City, for Defendant-Counterclaimant-Appellee.
Robert E. Juceam, Fried, Frank, Harris, Shriver & Jacobson, New York City (Jack B. Gordon, of counsel) for amicus curiae The Baltic Exchange Limited.
Before: OAKES, WINTER, and WALKER, Circuit Judges.
This is an appeal by plaintiffs from certain orders and a grant of summary judgment in favor of defendants by the United States District Court for the Southern District of New York (Peter K. Leisure, District Judge ) (orders) and (Harold Baer, Jr. District Judge ) (summary judgment). Disappointed when the Brazilian Friendship, a vessel they believed they had contracted to buy, was sold to defendant T. Peter Pappas, plaintiffs sued Pappas and others for tortious interference with contract. Plaintiffs allege that the district court erred when it (1) applied New York, rather than English, contract formation law; (2) concluded that under New York law, summary judgment was appropriate; (3) instructed the jury that defendants' post-May 28, 1987 conduct was not actionable under a tortious interference with contract theory; (4) instructed the jury that defendant Pappas was not obligated to obey an injunction issued by an English court; (5) excluded certain evidence as to damages; and (6) misinstructed the jury with respect to the damages issue.
Defendant Bomar Resources, Inc. ("Bomar") cross-appeals on the grounds that the evidence was insufficient to support a verdict against it and that the district court gave an erroneous jury instruction on the issue of the vicarious liability of Bomar for the acts of defendant Richard Jaross. Bomar claims that Jaross did not act as Bomar's agent with respect to the Brazilian Friendship and that Bomar cannot therefore be found vicariously liable for Jaross's conduct.
For the reasons that follow, we affirm the judgment of the district court in part, vacate in part, and remand the case for a new trial.
The circumstances of this case center around the attempts by various parties, their brokers, and others to purchase a vessel, the Brazilian Friendship, which was in a distressed condition after running aground in the Orinoco River in Venezuela in November 1985. The facts are set forth in detail in the opinion of the district court, reported at International Minerals & Resources, Inc. v. Pappas, 761 F.Supp. 1068 (S.D.N.Y.1991), familiarity with which is presumed. We summarize the principal facts pertinent to this appeal.
Plaintiff International Minerals Resources, Inc. ("IMR") is a Liberian corporation formed at the request of an individual named Atle Lygren. Plaintiff International Shipping Company, S.A. ("ISC") is a Panamanian company that is wholly owned by IMR and was acquired for the purpose of taking title to the Brazilian Friendship. Plaintiff Lygren Maritime Services, S.A. ("LMS") is a shipbrokerage firm of which Lygren owns seventy percent and Nicholas Reisini owns thirty percent.
Defendant Bomar, a New York corporation based in New Jersey, trades in distressed vessels. Defendant American General Resources, Inc. ("AGR") is a Texas corporation engaged in the business of buying, selling, salvaging, repairing, and scrapping vessels. Defendant Jaross, a United States citizen and Connecticut resident, is the vice president and treasurer of AGR. Defendant A.L. Burbank Shipbrokers, Ltd. ("Burbank") is a Delaware shipbrokerage firm with its principal place of business in New Jersey. Terry Chance is one of Burbank's brokers. Burbank frequently has acted as broker for AGR and Bomar in ship acquisitions. Defendant Pappas, a United States citizen and Connecticut resident, is a substantial shipowner and, at least prior to this action, was a close friend of Lygren.
In November 1985, the Brazilian Friendship ran aground in the Orinoco River with a cargo of approximately 64,000 tons of iron ore. The vessel was severely damaged but was the subject of considerable international interest by those involved in the purchase and sale of distressed vessels. Title to the vessel was not clear until April 1987 when it passed to a local salvage company in Venezuela, which nominated Hydra Offshore, Ltd. ("Hydra") to take title to the vessel. Hydra's principal is Carla de Calderan, its brokerage firm is English White Shipping ("EWS"), and its law firm is Holman Fenwick & Willan ("HFW"). Paul Messenger is an EWS broker.
In May 1986, Lygren asked Pappas if he was interested in buying the Brazilian Friendship. Pappas told Lygren that he was not. Later in 1986, Lygren spoke with Jaross about a possible purchase of the vessel. Lygren suggested that Bomar, AGR, and Lygren enter into a joint venture to purchase the Brazilian Friendship, but Jaross rejected the proposal. By this time, AGR had entered into a written agreement with Bomar under which AGR would act as Bomar's agent in finding scrap vessels or distressed vessels suitable for scrapping.
By early 1987, Lygren decided that his company IMR, acting alone, would purchase the Brazilian Friendship. For several months, Lygren and Messenger of EWS, acting on behalf of Hydra, engaged in negotiations for the sale of the vessel to Lygren. On April 23, 1987, Messenger sent Lygren a telex, captioned "summary of agreement," that purported to set forth the result of the negotiations up to that time. The telex set forth a purchase price of $2.65 million and provided that the agreement was subject to the approval of the buyer's board of directors by close of business on May 11, 1987, and to the signing of a formal Memorandum of Agreement ("MOA"). This deadline was subsequently extended to May 15, 1987. On May 15, the condition of board approval was lifted. On May 19, IMR appointed ISC as its nominee to purchase the vessel.
On May 17, having learned of ISC's plan to purchase the vessel, Jaross contacted Lygren by telex to express that he was "shocked to learn" about the plan. Lygren's reply telex denied that Lygren and Reisini had purchased the vessel. The telex stated: On May 18, Jaross instructed Burbank's Chance to bid $2.8 million for the Brazilian Friendship; Burbank telexed this offer to EWS, Hydra's representative. EWS replied with a telex stating: "tks tlx but would confirm vsl now def sold." On May 22, Burbank telexed EWS again, offering to pay $2.8 million if the vessel were, or were to become, free. On May 24, Burbank boosted its offer. Chance sent a bid to EWS, with a copy directly to Hydra's Calderan in Venezuela, offering to buy the Brazilian Friendship for $2.925 million.
On May 25, 1987, ISC and Hydra signed a formal MOA, as contemplated by the April 23 telex, covering ISC's purchase of the Brazilian Friendship from Hydra for $2.65 million. The MOA was dated May 15, 1987.
On May 26, EWS responded to Chance's May 22 bid by telex, stating: "vessel still not workable but will advise immy any opportunity to cut in." Chance then sent a bid for $2.95 million, and draft MOA, to Calderan only. On May 27, Calderan, via telex, attempted to void the contract with ISC. On May 28, 1987, Hydra cancelled the MOA--just three days after it was signed.
ISC immediately commenced an arbitration proceeding in London, seeking specific performance of the contract. On June 1, the High Court of Justice, Queen's Bench Division, issued an injunction barring Hydra from selling the Brazilian Friendship to anyone other than plaintiffs.
On June 2, 1987, at a closing in Florida, Pappas purchased the Brazilian Friendship from Hydra at a price of $2.95 million. According to the allegations in the complaint, the closing documents were backdated to May 29 to avoid the reach of the injunction.
On June 9, 1987, ISC and LMS sued Hydra, Pappas, Jaross, AGR, and several other defendants in the Southern District of New York on a variety of theories. Judge Leisure dismissed the action for lack of diversity jurisdiction because both plaintiffs were aliens and Hydra was an alien defendant, and awarded Rule 11 sanctions against plaintiffs' then-counsel. International Shipping Co., S.A. v. Hydra Offshore, Inc., 675 F.Supp. 146 (S.D.N.Y.1987). We affirmed. International Shipping Co., S.A. v. Hydra Offshore, Inc., 875 F.2d 388 (2d Cir.), cert. denied, 493 U.S. 1003, 110 S.Ct. 563, 107 L.Ed.2d 558 (1989). Plaintiffs, via new counsel, then moved for leave to amend their complaint. Judge Leisure granted the motion. The amended complaint asserted a single cause of action by IMR, ISC, and LMS against Bomar, Pappas, AGR, Burbank, and Jaross for tortious interference with p...
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