SCOTTISH AIR INTERN. v. British Caledonian Group

• Decision Date: 10 November 1994
• Docket Number: No. 85 Civ. 0341 (SWK).,85 Civ. 0341 (SWK).
• Citation: 867 F. Supp. 262
• Parties: SCOTTISH AIR INTERNATIONAL, INC. and Murray Vidockler, Plaintiffs, v. BRITISH CALEDONIAN GROUP, PLC., Adam Thomson, Dennis H. Walter, and R. Marshall Gibson, Defendants.
• Court: U.S. District Court — Southern District of New York

867 F. Supp. 262

SCOTTISH AIR INTERNATIONAL, INC. and Murray Vidockler, Plaintiffs, v. BRITISH CALEDONIAN GROUP, PLC., Adam Thomson, Dennis H. Walter, and R. Marshall Gibson, Defendants.

No. 85 Civ. 0341 (SWK).

United States District Court, S.D. New York.

November 10, 1994.

Beckman, Kirstein & Murphy by Robert M. Beckman, David M. Kirstein, Washington, DC, Stillman, Friedman & Shaw, P.C. by Charles A. Stillman, for plaintiffs.

Laventhall & Zicklin by Robert Zicklin, New York City, for defendants.

MEMORANDUM OPINION AND ORDER

KRAM, District Judge.

In this diversity action for breach of contract and contempt of this Court's May 25, 1966 Order (the "May 25 Order"), in the case of Scottish Air Int'l, Inc. v. Thomson, 65 Civ. 1782 (S.D.N.Y.1965), defendants now move, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for an order granting them summary judgment dismissing plaintiffs' civil contempt claim. Plaintiffs oppose defendants' motion and cross-move, pursuant to Rule 56(f) of the Federal Rules of Civil Procedure, for an order permitting additional discovery before ruling on defendants' summary judgment motion. For the reasons set forth below, defendants' motion is granted and plaintiffs' motion is denied.

BACKGROUND

The factual background of this litigation has been fully set forth by this Court in Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 152 F.R.D. 18 (S.D.N.Y.1993) and Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 751 F.Supp. 1129 (S.D.N.Y.1990) and by the Second Circuit in Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 860 F.2d 57 (2d Cir.1988) and Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 945 F.2d 53 (2d Cir.1991). For the purposes of this Memorandum Opinion and Order, only the relevant facts will be summarized herein.

I. The Settlement Agreement

Plaintiff Scottish Air International, Inc. ("SAI") is a dissolved corporation formerly existing under the laws of New York State. Previously, SAI was a holding company which owned shares in defendant British Caledonian Group, PLC ("BCG"). Plaintiff Murray Vidockler ("Vidockler") was the president and majority shareholder of SAI.

In 1961, SAI provided investment capital to BCG's operating company, Caledonian Airways (Prestwick) Ltd. ("CAP"), and thus, became the sole United States shareholder of CAP. In July 1965, SAI commenced a shareholder's derivative suit against CAP and several members of its board of directors alleging improper use of corporate funds and improper issuance of shares. See Scottish Air Int'l, Inc. v. Thomson, 65 Civ. 1782 (S.D.N.Y.1965). In January 1966, the parties entered into a settlement agreement (the "1966 Settlement Agreement") which was approved and "So Ordered" by Judge Dudley Bonsal ("Judge Bonsal"). The 1966 Settlement Agreement provided, inter alia, that an individual nominated by SAI would be appointed to CAP's board of directors. Specifically, paragraph three of the 1966 Settlement Agreement stated, in pertinent part:

So long as SAI shall own stock in Caledonian, Caledonian agrees to appoint an individual nominated by SAI and acceptable to Caledonian to serve as one of its Executive Directors.

See the 1966 Settlement Agreement, annexed to the Affidavit of Murray Vidockler, sworn to on Jan. 19, 1994, as Exh. "1," at ¶ 3.

Plaintiffs state that the 1966 Settlement Agreement erroneously omitted a similar provision granting SAI the right to nominate a representative to the board of directors of Airways Interests (Thomson) Ltd. ("AIT"), BCG's predecessor corporate entity.¹ Consequently, after the 1966 Settlement Agreement was "So Ordered" by Judge Bonsal, the parties amended the 1966 Settlement Agreement by a series of telexes to include a provision guaranteeing SAI's right to nominate a director to the board of AIT. Thereafter, SAI designated Vidockler to serve on the boards of both CAP and AIT. From 1966 until 1985, Vidockler was consistently elected to the boards of directors of both CAP and AIT, and, after the 1970 corporate reorganization, of defendant BCG, CAP's majority shareholder.

II. The 1985 Action and Subsequent Procedural History

In 1985, Vidockler was removed from BCG's board of directors, and advised that no further SAI representatives would be nominated to sit on the board. In response, SAI and Vidockler brought the present suit, alleging that SAI had a right to place Vidockler or another SAI representative on the BCG board. According to plaintiffs, this right stemmed from several agreements between the parties, including the 1966 Settlement Agreement. Plaintiffs sought (1) an injunction directing the defendants to comply with the 1966 Settlement Agreement; (2) a declaration that the defendants were in contempt of the 1966 Settlement Agreement; and (3) money damages for breach of contract.

In May 1986, defendants moved to dismiss the complaint on the grounds that (1) the Court lacked personal jurisdiction over the defendants; (2) the plaintiffs failed to join all shareholders of BCG who were necessary to effect the election of Vidockler to the board of directors; (3) ordering the election of Vidockler to the board would constitute interference with the internal operations of a foreign corporation; and (4) the Court should decline jurisdiction under the doctrine of forum non conveniens.

Before the Court rendered a decision regarding the defendants' motion, British Airways made a successful tender offer for the shares of BCG. Plaintiffs then informed the Court that, as a result of the tender offer, BCG essentially had ceased to exist, rendering moot plaintiffs' request for injunctive relief reinstating Vidockler to BCG's board of directors.

Thereafter, on April 15, 1988, the Court dismissed this action on the grounds of forum non conveniens, subject to the defendants' agreement to continue the litigation in the United Kingdom (the "April 15 Order"). On October 31, 1988, the Second Circuit reversed and remanded the Court's April 15 Order, holding that the Court had failed to consider SAI and Vidockler's contempt and damages claims. See Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 860 F.2d 57 (2d Cir.1988) ("Scottish Air I"). Noting that "in dismissing plaintiffs' complaint on the basis of forum non conveniens, the district court focused exclusively on plaintiffs' prayer for an injunction reinstating Vidockler to BCG's board of directors," the Second Circuit found that the prayer for injunctive relief was moot, id. at 59, and that "the district court erroneously failed to consider the plaintiffs' remaining claims for breach of contract and for a finding of contempt of the 1966 order." Id.

Following remand, plaintiffs then moved, pursuant to Rule 19(a)(1) of the Federal Rules of Civil Procedure, for an order adding British Airways as an indispensable party. Plaintiffs also moved, pursuant to Rules 15(a) and (d) of the Federal Rules of Civil Procedure, to amend and supplement the complaint in order to add claims that they wrongfully were precluded from trading their shares of BCG for shares of British Airways during British Airway's tender offer for shares of BCG.

In an amended Memorandum Opinion and Order dated December 4, 1990, the Court denied plaintiffs' motion and dismissed the contempt claim pursuant to a sua sponte determination in favor of defendants. See Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 751 F.Supp. 1129 (S.D.N.Y. 1990) ("Scottish Air II"). The remaining claims were once again dismissed under the doctrine of forum non conveniens, subject to defendants' agreement to continue the litigation in the United Kingdom. The plaintiffs appealed on the grounds that (1) the district court erred in granting sua sponte summary judgment on the contempt claim; (2) the court abused its discretion by dismissing the case on the basis of forum non conveniens; and (3) the motion to add British Airways as a necessary party should be granted.

On September 23, 1991, the Second Circuit again reversed and remanded on the ground that the district court had failed to provide plaintiffs with notice and an opportunity to oppose the entry of summary judgment. See Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 945 F.2d 53 (2d Cir.1991) ("Scottish Air III"). Specifically, the Second Circuit determined that:

The defendants did not move for summary judgment and the plaintiffs were not provided with notice and an opportunity to oppose the entry of summary judgment.... Thus, in light of the district court's disposition, herein via its summary judgment analysis, the failure to provide notice to the plaintiffs, and there being no suggestion in the record on appeal that the plaintiffs had adequate notice of the possibility of the entry of summary judgment, we reverse the judgment of the district court and remand for further proceedings.

Id. at 55 (citations omitted). The Second Circuit declined to address either the district court's application of the forum non conveniens factors or its determination that British Airways was not a necessary party. Id.

On October 28, 1992, this case was reassigned from Judge Edelstein to Judge Kram. Subsequently, defendants moved: (1) to dismiss the complaint for lack of personal jurisdiction; (2) for an order dismissing plaintiffs' contempt claim, pursuant to Rule 56 of the Federal Rules of Civil Procedure; and (3) for reaffirmation of Scottish Air II, dismissing the balance of this action on the ground of forum non conveniens and denying plaintiffs leave to file a Second Amended Complaint and to add British Airways as a party. In response, plaintiffs moved: (1) for leave to file a Third Amended and Supplemental Complaint, pursuant to Rules 19 and 25(c) of the Federal Rules of Civil Procedure; (2) for leave to add British Airways as a necessary and indispensable party, pursuant to Federal Rules of Civil Procedure 15(a) and (d); (3) for an order rescinding Judge Edelstein's ...