Promerica Fin. Corp. v. Inmoholdings, Inc.
| Decision Date | 13 August 2012 |
| Docket Number | Motion Sequence No. 003,Index No.: 650082/12,Motion Sequence No. 002 |
| Parties | PROMERICA FINANCIAL CORPORATION, Plaintiff, v. INMOHOLDINGS, INC., ABELARDO PACHANO BERTERO, individually, ABELARDO PACHANO BERTERO, as representative and authorized signatory of other shareholders of Banco de la Produccion S.A., BANCO DE LA PODUCCION S.A., and RODRIGO PAZ DELGADO, Defendants. |
| Court | New York Supreme Court |
DECISION AND ORDER
This matter arises out of a Letter of Intent (LOI) and a Draft Stock Purchase Agreement (Draft SPA) (collectively, the Agreements) concerning the purchase and sale of a controlling interest in shares of an Ecuadorian bank known as Banco de La Production S.A. (Produbanco). It involves claims for breach of contract, breach of the duty of good faith, tortious interference with contract, and tortious interference with prospective economic advantage.
In Motion Sequence No. 002, defendants Produbanco and Rodrigo Paz Delgado (Paz)1 move pursuant to Civil Practice Law and Rules (CPLR) Section 3211 (a) (8), dismissing the Complaint insofar as it is pled against them on the grounds that since neither of these foreign defendants have minimum contacts with New York, nor consented to its jurisdiction, this court lacks personal jurisdiction over them.
In Motion Sequence No. 003, defendants Inmoholdings, Inc. (Inmoholdings) and Abelardo Pachano Bertero (Pachano)2 move (a) pursuant to CPLR 3211 (a) (7), dismissing the Complaint as pled against them for the failure to state a claim; (b) to strike Promerica's demand for punitive damages, attorneys' fees, and specific performance because none of these remedies are available in the LOI; and ( c) to quash the potential service of the Complaint upon the unidentified shareholders of Produbanco
The motions are consolidated for disposition.
Accepting the allegations in the Complaint as true, the following facts emerge: Promerica is a Panamanian corporation with its principal place of business in Panama City, Panama. Complaint, ¶ 9. Promerica owns Ecuador's eighth largest bank and, as part of its business expansion, desired to obtain a controlling interest in Produbanco, an Ecuadorean banking corporation with its principal place of business in Quito, Ecuador. Id., ¶ 19. This acquisition would provide a unique opportunity for Promerica's banking business in Ecuador, creating additional product lines, economies of scale, and strategic locations in Ecuador's key business districts. Id., ¶ 19
Promercia sought to acquire this interest from Inmoholdings, a Panamanian corporation with its principal place of business in Panama City, Panama that owns 42% of Produbanco's stock, and a group of Produbanco's shareholders who collectively own approximately 16% of thestock (the Shareholders). Id., ¶¶ 10, 18. The Shareholders are represented by Pachano, Produbanco's President and CEO, who resides in Quito, Ecuador. Id., ¶¶ 2, 11. Paz is Chairman of the Board of Produbanco, an Inmoholdings shareholder, and resides in Quito, Ecuador. Id., ¶¶ 14, 28.3
On July 22, 2011, Promerica, Inmoholdings, and Pachano4 executed the LOI for Promerica to purchase 58% of Produbanco's outstanding shares from Inmoholdings and the Shareholders. Id., ¶ 21. The LOI, attached as Exhibit A to the Complaint, provides in relevant part:
Due Diligence. Following the date hereof, [Promerica] shall promptly begin conducting diligence on the Company. . . .
Good Faith: Cooperation. Each of the parties hereto agrees to proceed in good faith to negotiate, and, if agreed to, execute and deliver the Purchase Agreement, and consummate the transactions contemplated herein. . . .
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Agreement in Favor of Transaction: [Inmoholdings and Pachano, individually and as a representative of the Shareholders] hereby agree to execute the Purchase Agreement and sell the [Produbanco] Shares to Promerica on the terms and conditions set forth herein. Promerica hereby agrees to execute the Purchase Agreement and purchase the Shares . . . on the terms and conditions set forth herein subject to satisfactory completion of [Promerica's] due diligence review of [Produbanco].
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Jurisdiction: Service of Process: Waiver of Jury: Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, the Binding Provisions may be brought against any of the parties hereto in the courts of the State of New York, County of New York . . . and each of the parties hereto consents to the jurisdiction of such courts. . . .
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Intention of the Parties. Except for Sections 6-15, which shall be binding (the "BindingProvisions"), this Letter of Intent is not intended to be a binding agreement, and shall not give rise to any obligations between the parties. . . .
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Promerica avers that it performed due diligence on Produbanco, at substantial expense, after the parties executed the LOI. Complaint, ¶ 24.
At some unspecified point, Promerica began to negotiate the terms of the Purchase Agreement with Produbanco, Inmoholdings, and Pachano. Id., ¶ 25. By November 7, 2011, these parties reached an agreement on all of the customary terms for a transaction such as this and reduced their understanding to writing. Id., ¶ 26. A copy of the unsigned Draft SPA, which bears the header "H&W Draft 11/07/11," is attached as Exhibit B to the Complaint. Id., Ex. B.
The Draft SPA is missing several terms, including the execution date, Id., at 1; the number of shares that Inmoholdings and the Shareholders own, Id., at 8; the purchase price of the shares, Id., at 14-15; appointments as power of attorney, Id., at 16; specifics about meeting dates prior to the closing, Id., at 41; and limitations on indemnity, Id., at 50. Moreover, the Draft SPAincludes remarks and comments, including the need for further discussions with counsel, Id., at 10-11, 15; and reference to a forthcoming expert opinion, Id., at 15. There are also blank signature pages for Produbanco, Inmoholdings, and five individual Shareholders. Id., p. 64.
On or about November 13, 2011, Promerica became aware that Paz coerced Inmoholdings and Pachano into refusing to execute the Draft SPA and from performing their other contractual obligations. Complaint, ¶ 28. This was not premised on Paz's disagreement with any of the material terms of the LOI or the Draft SPA, but rather on his quest to obtain unjustifiable and improper personal gain from the transaction. Id., ¶ 29. Specifically, Paz allegedly demanded that (a) his fellow Inmoholdings shareholders pay him a larger percentage of the sale proceeds than his ownership interest entitled him to or that Produbanco pay him an undeserved bonus, in violation of Ecuadorean law; (b) he be exempt from the representations and warranties in the Draft SAP; and (c) Produbanco make a loan, on below market terms, to a soccer team of which Paz is president. Id., ¶ 30. In a further attempt to frustrate the transaction and avoid its obligations under the LOI, Inmoholdings, at the behest of Paz, took action to divest its only asset, the Produbanco shares, to four other entities. Id., ¶ 36.
Promerica commenced this action on or about January 10, 2012. It avers that the Defendants, all of whom are domiciled in either Panama or Ecuador, consented to this court's jurisdiction through the LOI and Draft SPA. Id., ¶ 15.5
In Count I, Promerica alleges that Inmoholdings, Pachano, and Produbanco breached the Draft SPA by refusing to sell their shares in Produbanco to Promerica. Id., ¶42. Promerica further alleges that Inmoholdings and Pachano refused to perform their other obligations under the LOI, thereby resulting in a breach of that agreement. Id.
In Count II, Promercia contends that Inmoholdings and Pachano breached the LOI by refusing to agree to the material terms of the transaction and not executing the Draft SPA. Id., ¶ 47.
Promerica alleges in Count III that Inmoholdings and Pachano breached the obligation to negotiate in good faith pursuant to LOI ¶ 6 by refusing to finalize the Draft SPA. It further alleges that Inmoholdings, Pachano, and Produbanco breached the duty of good faith by failing to perform their obligations under the Draft SPA. Id., ¶ 52.
In Count IV, Promerica contends that Paz tortiously interfered with the Agreements by orchestrating the scheme to prevent Produbanco, Inmoholdings, and Pachano from executing the transaction. Id., ¶ 58.
Similarly, in Count V, Promerica alleges that Paz tortiously interfered with the LOI by coercing Inmoholdings and Pachano into refusing to sell their shares to Promerica. Id., ¶ 66.
Finally, Promerica avers in Count VI that Paz tortiously interfered with Promercia's prospective economic advantage by frustrating performance under the Agreements. Id., ¶ 70.
Additionally, Promerica seeks punitive damages, reasonable attorneys' fees and costs, and specific performance of both the LOI and Draft SPA. Id., at 24.
On or about March 13, 2012, Defendants moved to dismiss the Complaint. In Motion Sequence No. 002, Produbanco and Paz move pursuant to CPLR 3211 (a) (8), alleging that this court does not have personal jurisdiction over them because (a) they are not signatories to the LOI, and therefore not bound to its forum selection clause; (b) the Draft SAP was never executed, thereby rendering it, and its forum selection clause, unenforceable; and ( c) neither have minimum contacts in New York.6
In opposition, Promerica contends that (a) Produbanco and Paz are bound by the LOI, and, consequently, its forum selection clause because they are "closely related" to this dispute as their interests are predicated upon those of the LOI's signatories; (b) the Draft SPA is a binding preliminary agreement, of which Produbanco is a party...
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