Twohy v. First Nat. Bank of Chicago
| Citation | 758 F.2d 1185 |
| Decision Date | 29 March 1985 |
| Docket Number | No. 83-2800,83-2800 |
| Parties | Philip Joseph TWOHY, Jr., Plaintiff-Appellant, v. The FIRST NATIONAL BANK OF CHICAGO, Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Lawrence M. Karlin, Tatel & Howlett, Chicago, Ill., for plaintiff-appellant.
Joseph B. Lederleitner, Robert Marc Chemers, Pretzel & Stouffer, William B. Davenport, Terry J. Malik, First Chicago, Law Dept., Chicago, Ill., for defendant-appellee.
Before CUMMINGS, Chief Judge, BAUER, Circuit Judge, and DUMBAULD, Senior District Judge. *
Plaintiff Philip Joseph Twohy, Jr. appeals from the district court's grant of defendant's motion for judgment on the pleadings, Fed.R.Civ.P. 12(c), and from the court's denial of plaintiff's motion to amend the court's July 1, 1983, judgment order to allow the filing of an amended complaint. Fed.R.Civ.P. 59(e). Twohy argues that the district court erroneously based its decision to dismiss upon conflicting affidavits of expert witnesses regarding foreign law and that it abused its discretion by refusing to amend the judgment and allow the filing of an amended complaint without a finding that undue prejudice would result to the defendant. For the reasons set forth below, we affirm.
Philip Twohy, the majority shareholder and principal of Bevco Baleares, S.A. (hereinafter "Bevco"), a Spanish corporation, brought suit on August 14, 1981, against the defendant, First National Bank of Chicago (hereinafter "First Chicago" or "the Bank"), a national banking association with its principal place of business in Chicago, Illinois. Plaintiff's claims arise out of a series of events involving an alleged loan transaction with the defendant that was to facilitate an expansion of Bevco's business in Spain to Mallorca and the Canary Islands. Bevco had been engaged solely in its business of purchasing and installing beverage-dispensing machines in resorts on the Island of Ibiza, Spain. The gravamen of the complaint is that defendant 1) failed to provide agreed-upon financing (arranged by plaintiff acting as principal) to Bevco, 2) provided "aggressively negative" reports concerning Bevco to another potential lender, and 3) injured plaintiff's business relationship with suppliers and banks by seeking to attach certain Bevco property and by warning hotel owners and managers of liens held on Bevco equipment and supplies (complaint, paragraphs 6-17). Twohy charged breach of contract and counts of fraud, misrepresentation and libel. The suit originally was filed in the United States District Court for the Northern District of California, but by stipulation of the parties was transferred to the Northern District of Illinois. Jurisdiction rested upon diversity of citizenship; plaintiff ultimately claimed to be a citizen and domicile of Oregon .
Defendant filed an answer denying all material allegations of the complaint and setting forth the following defenses: 1) plaintiff as a private person and shareholder lacked "standing" to assert a claim for the recovery of damages in contract or tort arising from an alleged transaction of a corporation of which plaintiff was a shareholder, 2) plaintiff did not plead actionable fraud, libel or a corporate contract on which a private plaintiff could rely, or facts supporting a punitive damages claim, and 3) the fraud, misrepresentation and libel claims were time-barred.
First Chicago filed a "Motion for Judgment on the Pleaded Defenses" on April 2, 1982, reiterating the defenses raised in its answer. In support of the motion, the Bank attached the affidavits of Rolf K. Zion, an Assistant Vice-President of First Chicago stationed in Spain, and of James A. Baker, an attorney licensed to practice law in Illinois and Spain and an expert in Spanish law. The Zion affidavit stated that neither Twohy nor Bevco had engaged in any loan transaction with the Bank in Spain . The Baker affidavit opined that under Spanish conflict of law rules, Spanish law would govern the action and that under Spanish law "based upon affiant's background and his knowledge of and experience with the law of Spain * * *, a shareholder, such as the plaintiff, has no right to proceed in contract, tort or libel on the alleged contract and alleged transaction of the corporation of which he is a shareholder", or in other words Twohy "has no standing to bring this complaint for the remedies alleged as a matter of law" . The Baker affidavit contains no citations to authority of any kind to support the opinions contained therein.
Plaintiff filed his answer to the motion for judgment on August 20, 1982, and asserted that there was a genuine issue of material fact which precluded the entry of judgment on the pleadings. Two counter-affidavits of Twohy, asserting personal loss from the defendant's actions, were attached in support of the answer along with copies of various letters between the parties relating to loan transactions. Defendant then filed a reply memorandum and a motion to strike plaintiff's affidavits for failure to respond to issues of law raised by defendant.
The district court initially denied defendant's Fed.R.Civ.P. 12(c) motion by an order dated November 23, 1982, but submitted a motion for a more particularized statement of the fraud and libel allegations. The court concluded that "there remain unresolved issues of fact" in the case. The order offered an example of such a factual question: "[P]laintiff can conceivably prove * * * that he contracted with defendant in his personal capacity to enter into a loan agreement with the company Bevco Baleares." (R. Item 39.)
On December 15, 1982, First Chicago filed a motion for reconsideration of the November 23 denial order pursuant to Fed.R.Civ.P. 59(e). The motion raised no new arguments but took issue with Judge Leighton's claim that unresolved questions of fact remained in the case. As to the court's assertion that plaintiff could prove he personally contracted with defendant, First Chicago responded that plaintiff in his individual capacity only could assert an action for recovery of a broker's or finder's fee (but had not done so) and that plaintiff as a shareholder simply could not recover under Spanish law for injury and damages asserted in the complaint--injury to and harm suffered by the shareholder's corporation (R. Item 42). In support of the motion for reconsideration, defendant filed a supplemental affidavit of Mr. Baker which stated that under Spanish law, Twohy, acting in his individual capacity, could not enter into a contract on behalf of Bevco and that even if Twohy had established an agency relationship with Bevco, any action arising out of the contract would belong solely to the corporation.
Plaintiff responded to the motion for reconsideration by filing the joint counter-affidavits of Antonio de Fortuny y Maynes and Valentin Molins Altarriba, licensed Spanish attorneys. The affidavits discussed issues of jurisdiction, venue, nationality, and citizenship of the parties and asserted that plaintiff Twohy had in fact stated a valid "personal action" ("accion personal") under Spanish law. The affidavits conceded that "between Mr. Twohy and the First National Bank of Chicago there was no contract" and asserted that plaintiff's claims were based on Spanish civil law, Article 1902 of Chapter 2cd, which states: "The person that by action or omission causes damages to another party with fault or negligence, is obliged to repair the damage * * * " . The affidavits also pointed out that under Spanish Civil Law, Article 1903 of the same Chapter, the acts of representatives of a person, such as directors and employees, may give rise to liability for that person under Article 1902. No authority apart from the statutes was cited in the affidavits to serve as a basis for Twohy's suit.
Defendant filed further supplemental affidavits of Mr. Baker and of Mr. Francisco J. Iglesias, another Spanish law expert, with its reply memorandum in support of the motion to reconsider. The memorandum and affidavits pointed out that the plaintiff's affidavits of Fortuny y Maynes and Molins focused solely on the liability of defendant and failed to address the so-called "standing" issue of whether Twohy was a proper plaintiff to bring the suit. First Chicago also contested the Fortuny y Maynes and Molins discussion of venue, jurisdiction and other matters. (R. Item 55 B.) Finally, plaintiff filed further counter-affidavits of Fortuny y Maynes and Molins and reasserted that Twohy had commenced a valid personal claim under Article 1902 of Spanish civil law (R. Item 60).
The trial court reconsidered its order of November 23, 1982, and on June 3, 1983, granted defendant's motion for judgment on the pleaded defenses. A judgment order was entered on July 1, 1983, in favor of defendant and against plaintiff in which the district court found:
[t]hat the Pleaded Defenses raise only questions of law on this record; that considering those questions of law in light of the applicable law, the Complaint does not state any claim which the Plaintiff has a right to bring in his personal capacity, nor is he personally entitled to any relief; and that while no questions of fact exist, the result would be no different if the Motion were considered to be one for Summary Judgment.
The court stated that since the "insufficiency of the Complaint [was] one of law, and not of fact," and since Twohy had not tendered an amended complaint, judgment would be entered. (R. Item 67.)
Plaintiff filed a timely motion to amend the judgment to allow the filing of an amended complaint pursuant to Rule 59(e), Fed.R.Civ.P., but did not proffer an amended complaint with the motion. Neither did the plaintiff indicate the exact nature of the amendments proposed (other than that they would be offered ...
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