Trumpet Vine Investments, N.V. v. Union Capital Partners I, Inc.

Citation92 F.3d 1110
Decision Date28 August 1996
Docket NumberNo. 95-4520,95-4520
PartiesTRUMPET VINE INVESTMENTS, N.V., Nacional Financiera, S.N.C., Plaintiffs-Counter Defendants-Appellees, Polly Peck International P.L.C., P.P.I. (Holdings) B.V., P.P.I. Delmonte Fresh Produce B.V., Counter-Defendants, Jorge Aguilar, Enrique Portilla, Alejandro Portilla, William Van Diepen and William Levin, Counter-Defendants-Appellees, v. UNION CAPITAL PARTNERS I, INC., Defendant-Counterclaimant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Gary A. Magnarini, Hicks, Anderson & Blum, Mark Hicks, Miami, FL, for Appellant.

Mark P. Schnapp, Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., Miami, FL, Robert A. Atkins, Paul, Weiss, Rifkind, Wharton and Garrison, Daniel J. Beller, Sidney S. Rosdeitcher, New York City, for Appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before COX and BARKETT, Circuit Judges, and BRIGHT *, Senior Circuit Judge.

BRIGHT, Senior Circuit Judge.

This case arises from the 1992 sale of P.P.I. Del Monte Fresh Produce B.V. (Del Monte) to Trumpet Vine Investments, N.V. (Trumpet Vine). Trumpet Vine is a Netherlands Antilles corporation organized by Mexican investors for the purpose of acquiring Del Monte. Trumpet Vine's bid was supported by financing from Nacional Financiera, S.N.C. (NAFINSA), a state-owned economic development bank in Mexico. After the takeover bid was announced, Trumpet Vine filed a declaratory judgment action against Union Capital Partners I, Inc. (UCP) seeking adjudication that UCP was not entitled to monetary damages or injunctive relief arising out of the Del Monte acquisition. UCP filed counterclaims alleging breach of fiduciary duty, fraud, conspiracy to commit fraud and breach of an implied contract. The district court determined that New York law governed each issue and, applying that law, granted summary judgment in favor of Trumpet Vine, dismissing all the counterclaims. This judgment disposed of the litigation. We affirm.

I. BACKGROUND

UCP, a Delaware corporation with its principal place of business in Florida, is a private investment corporation formed for the purpose of acquiring or investing in companies. Gregory Aziz founded and served as president of UCP. In late 1990 and early 1991, UCP began discussions to organize a deal to acquire Del Monte from its parent company, P.P.I. Holdings B.V. (PPI). PPI, in turn, is wholly owned by Polly Peck International P.L.C. (Polly Peck). Polly Peck entered bankruptcy in England in 1990. UCP characterized its role as that of a "deal sponsor," an individual who assembles a group of investors to purchase a company and takes all steps necessary to facilitate the transaction. UCP anticipated a role in the ownership and management of the newly acquired company as compensation for its efforts.

In August 1991, UCP, on behalf of its investor group, unsuccessfully submitted an unsolicited bid for Del Monte. UCP then attempted to aggregate another group of investors to acquire Del Monte. UCP's efforts intensified when the bankruptcy administrator announced in June of 1992 that Del Monte would be sold at a private auction conducted by Goldman Sachs.

UCP claims that in July of 1992, representatives of Trumpet Vine and NAFINSA approached its president, Aziz, regarding their possible participation as equity partners in UCP's bid to acquire Del Monte. On July 8, 1992, Aziz met with agents of Trumpet Vine and NAFINSA at the New York offices of Kidder Peabody, which was serving as Aziz' financial advisor. According to Aziz, the NAFINSA representatives informed him that NAFINSA had attempted to independently enter the bidding process, but that Goldman Sachs had refused to provide them with financial information or allow them to enter the bidding.

According to UCP, the NAFINSA agents indicated that they wished to "join forces" with UCP in submitting a bid for Del Monte. 1 The agents requested that UCP share its confidential information regarding Del Monte and that they be invited to attend a due diligence presentation. 2 Aziz informed Polly Peck's bankruptcy administrator of the discussions with NAFINSA and subsequently scheduled a due diligence meeting at Del Monte's headquarters in Coral Gables, Florida on July 20, 1992. On July 17, UCP, NAFINSA and Del Monte entered into a nondisclosure agreement encompassing the disclosure to NAFINSA of confidential and proprietary information about Del Monte. In the agreement NAFINSA promised to hold all "proprietary information" in confidence and to only disclose it to others "who need to know such Propriety Information for providing services to UCP." The agreement stated "UCP and [NAFINSA] intend to enter into discussions slating to possible acquisitions, equity investments, partnerships or joint venture operations involving [Del Monte]." However, the agreement also provided "[NAFINSA] makes no express or implied representation or warranty concerning the future acquisition, partnership or joint venture involving [Del Monte]." The agreement expressly provided for application of New York law.

After the due diligence meeting, UCP's potential financial backers, First Chicago and Kidder Peabody, decided to discontinue their involvement in the project. NAFINSA and the other Mexican investors then announced that they would go their own way and attempt an independent bid. UCP was unable to move forward and submit a bid by the bidding deadline. Trumpet Vine subsequently acquired Del Monte for approximately $500,000,000. NAFINSA supported the bid by Trumpet Vine and became an equity investor in Trumpet Vine for the Del Monte acquisition. UCP was not included in the acquisition of Del Monte and received no remuneration as a result of the transaction.

Trumpet Vine and NAFINSA initiated a declaratory judgment action stating they had a bona fide dispute with UCP and seeking an adjudication that UCP was not entitled to monetary damages or injunctive relief arising out of the acquisition of Del Monte. UCP asserted counterclaims of breach of implied contract, breach of fiduciary duty, fraud and conspiracy to commit fraud. Trumpet Vine moved for summary judgment and dismissal of the counterclaims.

The matter was referred to a magistrate judge 3 who, on August 5, 1993, submitted a report recommending that New York law be applied to all the claims. The magistrate judge recommended granting summary judgment on the breach of fiduciary duty claim because of a lack of any showing that "this relationship was anything other than a conventional business or arm's length transaction." The report recommended granting summary judgment on the implied contract claims, determining the claims were barred by the statute of frauds. The magistrate judge, however, recommended denying the motion to dismiss the fraud claims because the pleadings were sufficient and alleged justifiable reliance. The district court adopted the report and recommendation in its entirety.

Trumpet Vine later moved for summary judgment on the remaining two fraud claims. In a report submitted on November 21, 1994, the magistrate judge recommended granting summary judgment against UCP on the fraud claims. The magistrate judge concluded that under New York law, UCP must show a specific injury other than loss of compensation. The magistrate judge determined that UCP had not established that but for NAFINSA's successful bid, UCP would have assembled a group of investors and acquired the company. Accordingly, UCP could not establish injury. The district court adopted the report and recommendation in its entirety.

II. DISCUSSION

As a threshold issue, this court must decide whether the district court correctly applied New York law to UCP's substantive claims. We review conflict of laws issues de novo. Fioretti v. Massachusetts Gen. Life Ins. Co., 53 F.3d 1228, 1234 (11th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 708, 133 L.Ed.2d 663 (1996). In determining which law applies, a federal district court sitting in diversity must apply the choice of law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941). Under Florida law, a court makes a separate choice of law determination with respect to each particular issue under consideration. See Department of Corrections v. McGhee, 653 So.2d 1091, 1092-93 (Fla.Dist.Ct.App.1995), aff'd, 666 So.2d 140 (Fla.1996); Colhoun v. Greyhound Lines, Inc., 265 So.2d 18, 21 (Fla.1972).

Once we have reviewed the determination of which state's law applies, we turn our attention to the district court's decision to grant summary judgment in favor of Trumpet Vine.

Under Rule 56(c) of the Federal Rules of Civil Procedure, a party is entitled to summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." On appeal, a district court's grant of summary judgment is entitled to de novo review, and "[w]e resolve all reasonable doubts about the facts in favor of the non-movant."

Browning v. Peyton, 918 F.2d 1516, 1519-20 (11th Cir.1990) (quoting Tackitt v. Prudential Ins. Co. of Am., 758 F.2d 1572, 1574 (11th Cir.1985)).

A. Breach of Fiduciary Duty

UCP argues that Trumpet Vine established a fiduciary relationship with UCP through their mutual participation in pursuing the acquisition of Del Monte and the execution of a nondisclosure agreement. UCP claims that Trumpet Vine breached this fiduciary duty by acquiring Del Monte without any form of compensation to UCP.

1. Choice of Law

At least as to tort claims, the Florida Supreme Court has abandoned the traditional lex loci delicti 4 rule in favor of the "most significant relationship" test set forth in the Restatement (Second) of Conflict of Laws § 145. Bishop v. Florida...

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