Peabody Holding Co., Inc. v. Costain Group PLC
| Decision Date | 11 December 1992 |
| Docket Number | No. 4:92CV 002292 SNL.,4:92CV 002292 SNL. |
| Citation | 808 F. Supp. 1425 |
| Parties | PEABODY HOLDING CO., INC., et al., Plaintiffs, v. COSTAIN GROUP PLC, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
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Michael J. Morris, Michael D. O'Keefe and W. Stanley Walch, Partners, Thompson and Mitchell, St. Louis, MO, for plaintiffs.
Glenn E. Davis, Frank N. Gundlach, Mary C. Kickham, Armstrong and Teasdale, St. Louis, MO, Michael Rowe Feagley, Priscilla Peterson Weaver, Michele Louise Odorizzi, Mayer and Brown, Chicago, IL, for defendants Costain Group PLC, Richard Costain (Holdings) Ltd., Costain America Inc. and Peter Costain.
Alan E. Popkin, Partner, David W. Sobelman, Husch and Eppenberger, St. Louis, MO, for defendant Altus Finance S.A.
This matter is before the Court upon the various defendants' Motions to Dismiss for Lack of Personal Jurisdiction and on the basis of Forum Non Conveniens. Defendant Costain Group PLC's Motion to Dismiss for Lack of Personal Jurisdiction based upon insufficient service of process has been ruled upon by this Court prior to the Court's addressing of these motions. The Court held that plaintiffs improperly served defendant Costain Group PLC, but allowed service to be remedied pursuant to 28 U.S.C. § 1448. In the above-styled action, plaintiffs filed a six-Count Complaint alleging that defendants: (1) breached a contract between plaintiffs and defendants; (2) tortiously interfered with the contract; (3) tortiously interfered with plaintiffs' prospective economic advantage; and (4) defrauded plaintiffs under the common law. Additionally, plaintiffs seek application of the doctrines of specific performance of contract and promissory estoppel.
There are two plaintiffs and five defendants in this action. Plaintiffs are Peabody Holding Company, Inc. (hereinafter "Peabody USA") and Peabody Resources, Limited (hereinafter "Peabody UK"). Peabody USA is a New York corporation with its principle place of business in St. Louis, Missouri. Peabody UK is incorporated under the laws of England and Wales with its principal place of business in London, England. Defendants are Costain America, Inc. (hereinafter "CAI"); Costain Group PLC (hereinafter "Costain Group"); Richard Costain (Holdings) Limited (hereinafter "Holdings"); Peter Costain (hereinafter "Mr. Costain"); and Altus Finance S.A. (hereinafter "Altus"). CAI is a Delaware corporation with its principal place of business in Chicago, Illinois. CAI is an indirect subsidiary of Costain Group, which is an English corporation with its principal place of business in London, England. Holdings is also an indirect subsidiary of Costain Group and is an English corporation whose principal place of business is in London, England. Mr. Costain, the Group Chief Executive of Costain Group, is an Australian subject who resides in London, England. Altus is a corporation organized and existing under the laws of France.
Plaintiff alleges that on or about July, 1992, Peabody USA commenced negotiations with Costain Group for the purchase of both Costain's Australian and United States coal operations. Peabody USA insisted on good-faith bargaining, and insisted upon and was granted the exclusive right to negotiate for the acquisition of such properties. Initially, such right was granted until September 21, 1992, pursuant to a letter agreement dated September 3, 1992. The parties ultimately discontinued the negotiations for a possible transaction involving Costain Group's United States coal operations, but continued negotiations and Peabody USA conducted a "due diligence" investigation concerning the Australian coal operations. Costain Resources Limited (hereinafter "CRL") directly or indirectly owns and operates all of the Australian coal businesses of Costain Group. Costain Group and Holdings, directly or indirectly through subsidiaries and affiliates, own 100 percent of the outstanding common stock of CRL. Costain Group reserved the right to terminate negotiations if an agreement regarding the Australian coal assets was not reached by September 21, 1992.
Plaintiff further alleges that in or about mid-September, 1992, and pursuant to a request by Irl Englehardt, President and Chief Executive Officer of Peabody USA, Mr. Costain orally agreed to extend the exclusivity period for so long as the parties were engaged in good faith negotiations for the purchase of the Australian coal operations. Peabody USA continued to examine CRL during the alleged extended exclusivity period. All parties agree that some of the face-to-face negotiating sessions between Peabody USA and Costain Group were held in the United States, in St. Louis and Chicago. Plaintiff contends that during such period, representatives of Costain Group failed to disclose to Peabody USA that other companies, including Altus, were being spoken to by Costain Group about the Australian properties.
On or about October 16, 1992, Costain's financial advisor, Goldman Sachs & Co. (hereinafter "Goldman") allegedly contacted Peabody USA to inform it that Costain was negotiating the sale of its Australian coal operations to a third party, later identified to be Altus, and such third party had offered $210 million for the coal operations. Representatives of Peabody USA allegedly informed Goldman that it had an exclusivity agreement with Costain Group and that Peabody USA would not increase its $200 million offer.
Plaintiff avers that on or about October 19, 1992, Goldman once again contacted Peabody USA to inform it that this third-party bidder, Altus, had increased its bid to $220 million. Representatives of Peabody USA responded by stating that Costain Group, by negotiating with another bidder, was violating the exclusivity agreement contained in the September 3, 1992 letter, and would be sued for breach of such agreement if it continued its conduct. Shortly thereafter, Goldman informed Peabody USA that the Board of Directors of Costain Group had taken the above-referenced statements by Peabody USA under advisement, and had accepted the Peabody USA and Peabody UK offer.
On or about October 20, 1992, Costain Group and Peabody UK entered into a written Share Purchase Agreement (hereinafter "the Agreement"), pursuant to which Costain Group agreed to sell and Peabody UK agreed to buy all of the shares of Holdings (and thereby acquire all of CRL and its assets) for $200 million plus certain other additional consideration. The sale was made subject to, among other things, the approval of Costain Group's shareholders and lenders. The closing was scheduled to take place on December 15, 1992. Plaintiff alleges that Costain Group, although previously stating the difficulties associated with obtaining approval of its shareholders, never forwarded the necessary proxies to its shareholders in connection with the sale of its Australian coal operations to Peabody UK.
When the agreement was executed, it was publicly announced. In such announcement, Peabody UK stated that it had been agreed upon that Peabody USA would operate and manage the Australian coal properties which were being acquired by Peabody UK. Plaintiff alleges that Section 4.1(d) of the Agreement provided that "neither Costain Group nor any of its affiliates, nor any of their respective employees, officers, directors, agents or other representatives, directly or indirectly shall" solicit any proposals to purchase the shares of Holdings or the CRL coal business, provide non-public information to such prospective purchasers, negotiate with respect to any proposal to purchase such business, or enter into any agreement or understanding for the sale of such business. Plaintiff further contends that the only exception was provided in the event of an "unsolicited proposal," and even then the right to negotiate was subject to Costain Group's "good faith judgment (after taking legal advice from its external solicitors) that such action is required by applicable law, by the fiduciary duties of Costain Group's directors, or by the City Code on Takeovers and Mergers." Plaintiffs also allege that such section further provided that in the event a third-party transaction was entered into pursuant to this "fiduciary out" clause, Costain should "pay to Peabody UK on demand, ... an amount in cash equal to $5 million." Plaintiffs contend that notwithstanding the foregoing exclusivity agreement and the Agreement and Costain Group's oral and written representations, Costain Group, CRL and/or their employees, officers and representatives were negotiating with Altus or its representatives and deliberately concealing such facts from Peabody USA and Peabody UK. Plaintiffs further contend that Altus engaged in such negotiations and ultimately entered into an agreement with Costain Group despite knowing of Costain's contractual and other obligations. On November 9, 1992, Costain Group announced that it had entered into an agreement with a subsidiary of Altus for the acquisition of the Australian coal business which Peabody UK had contracted to purchase, as well as certain additional assets which were not the subject of the agreement between Peabody UK and Costain Group.
Defendants allege that on October 7, 1992, Costain Group wrote a letter to Peabody USA confirming that Peabody USA had ceased pursuing an acquisition of the US coal assets and that the promise of exclusivity was no longer in force. Costain Group stated that it would continue working toward an agreement on the Australian coal assets, but without any promise of exclusive negotiating rights. In a response dated October 8, 1992, Peabody USA confirmed that it was no longer interested in the US coal assets, but disagreed with Costain Group's statement that the exclusivity arrangement had expired. Peabody USA asserted that Mr. Costain had orally agreed during a telephone conversation to extend its exclusive...
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