Uihi v. Wharf (Holdings) Ltd., Civil Action No. 94-K-2560.

• Decision Date: 25 November 1996
• Docket Number: Civil Action No. 94-K-2560.
• Citation: 946 F.Supp. 861
• Parties: UNITED INTERNATIONAL HOLDINGS, INC., et al., Plaintiffs, v. The WHARF (HOLDINGS) LIMITED, et al., Defendants.
• Court: U.S. District Court — District of Colorado

946 F.Supp. 861

UNITED INTERNATIONAL HOLDINGS, INC., et al., Plaintiffs, v. The WHARF (HOLDINGS) LIMITED, et al., Defendants.

Civil Action No. 94-K-2560.

United States District Court, D. Colorado.

November 25, 1996.

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Jeffery A. Chase, Jacobs Chase Frick Kleinkopf & Kelley LLC, Denver, CO, David B. Wilson, Daniel P. Maguire, Holme, Roberts & Owen LLP, Denver, CO, for Plaintiffs.

William R. Jentees, James C. Munson, Martin T. Tully, Kirkland & Ellis, Chicago, IL, Scott R. Bauers, Petrie, Bauer & Vriesman, LLP, Denver, CO, for Defendants.

MEMORANDUM OPINION AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

KANE, Senior District Judge.

This action arose when Defendants refused to allow Plaintiffs to invest in a Hong Kong cable television franchise they had been awarded with Plaintiffs' help. Plaintiffs seek damages for breach of contract, promissory estoppel, unjust enrichment, and fraud under federal and state securities law and common law. The matter is set for a one month jury trial commencing Tuesday, February 18, 1997. Before me now are four motions for summary judgment. The motions are denied.

I. BACKGROUND.

Plaintiffs United International Holdings, Inc. (UIHI) and UIH Asia, a Colorado partnership of which UIHI is the managing general partner (collectively, "UIH"), are Colorado entities in the business of investing in cable television systems internationally. Defendants are The Wharf (Holdings) Limited ("Holdings"), Wharf Communications Investments Limited (WCIL), Holdings' wholly-owned subsidiary, and Stephen Ng, Holdings' vice-chairman and former managing director of Holdings, as well as the president and a director of WCIL (collectively, "Wharf"). Also a Defendant, but to Plaintiffs' claim for unjust enrichment only,¹ is Wharf Cable Limited ("Cable"), a wholly-owned subsidiary of WCIL's wholly-owned subsidiary, CNCL.

Denver-based UIH claims it was lured to Hong Kong in the early 1990s to lend its expertise and help Wharf develop, obtain a license for and implement a cable television franchise in Hong Kong (the "Franchise"), potentially one of the largest in the world. In exchange, UIH claims it was promised an option to purchase a 10% equity interest in Cable, the Wharf subsidiary that would control the Franchise.

According to UIH, the parties entered into a binding oral option agreement regarding the Cable investment on October 8, 1992. At the time, UIH had already committed significant resources to the Franchise bid, and had been asked by Wharf to commit substantially more. Before agreeing to proceed any further, UIH Chief Executive Officer William Elsner called a meeting with Ng. Ng travelled to Denver, meeting with Elsner and UIHI President Mark Schneider on October 8.

At the meeting, Elsner states he presented Ng with an ultimatum: without Wharf's "firm agreement" regarding UIH's right to invest, UIH was "not willing to continue to provide its services." Elsner Aff. (Pls.' Submission of Evid. Cited in Combined Mem. in Opposition to Defs.' Four Mots.Summ.J., Tab 22) ¶ 2. According to Elsner and Schneider, Ng agreed. Elsner Aff.; Elsner Dep. (Tab 6, pp. 96-98); Schneider Affs. (Tabs 24, 25). The intent, they assert, was for the agreement to become effective immediately; not that it be conditioned upon any subsequent writing, board approvals or investment by other entities. Elsner Aff. at ¶ 3.²

UIH asserts that after Wharf obtained its Franchise license in June 1993, it began efforts to "get out" of its agreement with UIH. As evidence, UIH offers internal Wharf documents with comments such as "how do we get out?" (Tab 71); "start to backpeddle" (Tab 73); and "[e]ncouraged [UIH] to activate TCA³ (but they were careful not to take the bait)" (Tab 75). When UIH attempted in 1994 to exercise the option, Wharf refused to allow it to invest. This lawsuit followed.

UIH asserts eleven claims against Wharf.⁴ UIH alleges Wharf's refusal to allow it to invest breached the October 8, 1992 oral option agreement. Further, UIH claims it spent thousands of man-hours and approximately $1 million to provide expertise and services to Wharf in reliance on Wharf's promises, and maintains Wharf is prohibited, under the equitable theories of promissory estoppel and unjust enrichment, from denying the option's existence and from retaining the benefit of UIH's expertise and services.

UIH also asserts statutory and common fraud claims against Wharf, asserting Wharf induced UIH to lend its expertise and services to the bidding process based on deliberate and negligent misrepresentations regarding its ultimate right to invest. Because UIH is in the business of investing, not consulting, UIH states it would never have provided such services were it not for Wharf's promises. According to UIH, Wharf made the promises knowing it had no intention of following through on them.

Wharf initially attempted to compel international arbitration of the dispute pursuant to a clause in the TCA. Judge Nottingham, to whom this case was originally assigned, summarily denied Wharf's motion, and the Tenth Circuit affirmed. See Order and Judgment, No. 95-1184 (Feb. 9, 1996). In additional summary orders and bench rulings, Judge Nottingham denied motions filed by Wharf to dismiss various UIH claims and to transfer venue to Hong Kong. The case was transferred to me on October 9, 1996.

II. THE MOTIONS FOR SUMMARY JUDGMENT.

A. Summary Judgment Standard.

Rule 56(c) of the Federal Rules of Civil Procedure permits entry of summary judgment where the pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits, show there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). The facts presented, and appropriate inferences that may be drawn from them, must be construed in the light most favorable to the nonmoving party. Id. Summary judgment is proper only if a reasonable trier of fact could not return a verdict for the nonmoving party. Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986).

B. Defendants' First Motion for Summary Judgment on Foreign Law and Forum Issues (All Counts).

In its first motion for summary judgment, Wharf revisits issues raised in its motion to dismiss for forum non conveniens, arguing that Hong Kong should supply both the law and the forum for the dispute between the parties. I reject both contentions.

1. Choice of Law.

Wharf looks to the TCA and the series of draft agreements between itself and UIH to argue the parties' "manifest" intent was that Hong Kong supply the governing law in any dispute between them. Alternatively, Wharf invokes the "most significant relationship" test of the Restatement (Second) of Conflict of Laws §§ 6, 145, to argue that Hong Kong, rather than Colorado, law should govern.

Wharf avers generally that Hong Kong bears the "most significant relationship" to the dispute and to the parties in this case,⁵ and, more significantly, describes only in the vaguest terms how Hong Kong and American state or federal law differ with regard to the specific claims and issues raised. See Defs.' Reply at 5 (stating UIH's promissory estoppel and statutory securities fraud claims are not cognizable under Hong Kong law and asserting, without citation or explication, that there are "significant differences" in the law with respect to the statute of frauds, punitive damages, and fee shifting).

As an initial matter, Wharf has demonstrated no outcome-determinative conflict between U.S. and Hong Kong law. Unless such a conflict exists, courts do not make choice of law decisions. See Eli Lilly & Co. v. Home Ins. Co., 764 F.2d 876, 882 (D.C.Cir. 1985).⁶

Further, the choice of law in a given case is not made once for all issues; each issue is to receive separate consideration if it is one that would be resolved differently under the local law rule of two or more of the potentially interested states. Restatement § 145, comm. (d). Wharf's reliance on Johnson v. Continental Airlines Corp., 964 F.2d 1059, 1063-64 (10th Cir.1992) to urge rejection of this "`smorgasbord'" approach is unpersuasive. In Johnson, the Tenth Circuit refused to allow plaintiff to invoke Idaho law for compensatory damage issues and Colorado law for issues related to prejudgment interest. Id. at 1064. No such effort to "pick and choose" the law to apply to specific claims is manifest in this case.

On this record, the choice of law declaration Wharf seeks would be nothing more than an advisory opinion. As Wharf concedes at page 5 of its Reply, the principal purpose in seeking such a declaration is to buttress Wharf's motion to transfer venue to Hong Kong for forum non conveniens. Because I deny the motion to transfer (see Section II(A)(2), infra), I see no need, on this record, to rule on the conflict of laws issue.

2. Choice of Forum.

In its First Motion for Summary Judgment, Wharf renews its request for a transfer of this case to Hong Kong. As grounds, Wharf asserts Colorado is an inappropriate forum because "Hong Kong is where the bulk of the parties and proof are, where many key nonparty witnesses can be compelled to appear, and where any judgment could be easily enforced." (Defs.' Br. Supp.First Mot. for Summ.J. at 18.) Wharf fails to identify any of the witnesses for whom trial in Colorado would be "inconvenient," and makes no attempt to show why these witnesses would be unwilling to come to Colorado, why the use of deposition testimony would be unsatisfactory, or why the use of compulsory process would be necessary. See Scheidt v. Klein, 956 F.2d 963, 965-66 (10th Cir.1992) (absent such a showing, defendant failed to demonstrate the requisite inconvenience to its witnesses), applied in Knapp et al. v. Romer et al., 909 F.Supp. 810, 813 (D.Colo.1995).

Further, J...