World Holdings Llc v. Fed. Republic of Germany

• Decision Date: 22 August 2011
• Docket Number: Case No. 08–20198–CIV.
• Parties: WORLD HOLDINGS, LLC, Plaintiff,v.FEDERAL REPUBLIC OF GERMANY, Defendant.
• Court: U.S. District Court — Southern District of Florida

794 F.Supp.2d 1341

WORLD HOLDINGS, LLC, Plaintiff,

v.FEDERAL REPUBLIC OF GERMANY, Defendant.

Case No. 08–20198–CIV.

United States District Court, S.D. Florida,Miami Division.

Aug. 22, 2011.

Michael E. Elsner, Brian T. Frutig, John M. Eubanks, Vincent I. Parrett, Motley Rice LLC, Mt. Pleasant, SC, Samuel Johnathan Dubbin, Dubbin & Kravetz LLP, Coral Gables, FL, Ingrid L. Moll, Motley Rice LLC, Hartford, CT, William F. Pepper, New York, NY, for Plaintiff.Gerald J. Houlihan, Houlihan & Partners PA, Miami, FL, Jeffrey Harris, Max Riederer Von Paar, Rubin Winston Diercks Harris & Cooke LLP, Washington, DC, for Defendant.

ORDER

CECILIA M. ALTONAGA, District Judge.

THIS CAUSE came before the Court for a hearing on February 15, 2011 [ECF No. 255] on Defendant, Federal Republic of Germany's (“Germany['s]”) Motion for Summary Judgment ... [ECF No. 208], filed on July 15, 2011. The Court has carefully considered the parties' written submissions, arguments, and the applicable law.

I. BACKGROUND

Following World War I (“WWI”) and in need of capital, Germany issued various bearer bonds. See World Holdings, LLC v. Fed. Rep. of Ger., 794 F.Supp.2d 1305, 1308–09, No. 08–20198–CIV, 2011 WL 2217495, at *1 (S.D.Fla. June 5, 2011). In 1924, Germany “offered for subscription in the United States $110 million worth of bearer bonds known as Dawes Bonds....” Id. Six years later, in 1930, “Germany offered for subscription in the United States $98.25 million of a second bearer bond, the Young Bonds....” Id.

World Holdings “owns or controls” ¹ 136 validated ² Dawes and Young Bonds (the “Bonds”). (Def.'s Statement of Undisputed Material Facts (“SMF”) ¶¶ 1–3 [ECF No. 208–1] ). Of World Holdings's Bonds, 92 are Dawes, and 44 are Young. ( See id. ¶ 4). The Dawes Bonds matured on October 15, 1949. ³ ( See id. ¶ 13). World Holdings (or its predecessors in interest) validated these 92 Dawes Bonds by July 15, 1964. ( See id. ¶ 14). The Young Bonds matured on June 1, 1965. ( See id. ¶ 17). World Holdings (or its predecessors in interest) validated these 44 Young Bonds by June 14, 1960. ( See id. ¶ 16). Despite having validated the bonds, neither World Holdings nor its predecessors in interest accepted the settlement offer negotiated in 1953 in the London Debt Agreement. ( See id. ¶ 7); Agreement on German External Debts, Feb. 27, 1953, 4 U.S.T. 443, T.I.A.S. No. 2792, 1953 WL 44333 (1953) (hereinafter “London Debt Agreement” or “LDA”). And Germany never paid on World Holdings's bonds. ( See SMFO ¶¶ 34–35).

The Court presumes the parties' familiarity with the remaining facts, which are addressed in the earlier summary judgment order. See World Holdings, 794 F.Supp.2d at 1308–12, 2011 WL 2217495, at *1–4.

II. LEGAL STANDARD

Summary judgment shall be rendered “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.” Fed.R.Civ.P. 56(c). In making this assessment, the Court “must view all the evidence and all factual inferences reasonably drawn from the evidence in the light most favorable to the nonmoving party,” Stewart v. Happy Herman's Cheshire Bridge, Inc., 117 F.3d 1278, 1285 (11th Cir.1997), and “must resolve all reasonable doubts about the facts in favor of the non-movant.” United of Omaha Life Ins. Co. v. Sun Life Ins. Co. of Am., 894 F.2d 1555, 1558 (11th Cir.1990).

III. ANALYSIS

A. The Statute of Limitations Began to Run on All Bonds by June 1, 1965.

“The general rule in New York ⁴ is that the Statute of Limitations commences to run when the cause of action accrues, even though the plaintiff is unaware that he or she has a cause of action.” Gower v. Weinberg, 184 A.D.2d 844, 845, 584 N.Y.S.2d 496 (3d Dep't 1992) (citations omitted); see also N.Y. C.P.L.R. § 203(a) (McKinney 2011) (“The time within which an action must be commenced, except as otherwise expressly prescribed, shall be computed from the time the cause of action accrued to the time the claim is interposed.”). “An action accrues, then, when all of the facts necessary to sustain the cause of action have occurred, so that a party could obtain relief in court.” Vigilant Ins. Co. of Am. v. Hous. Auth. of El Paso, Tex., 87 N.Y.2d 36, 637 N.Y.S.2d 342, 660 N.E.2d 1121, 1125 (1995). Normally, the statute of limitations “will only begin to run on the day after maturity of the bonds....” Id. Here, the Dawes and Young Bonds provided specific dates on which payment—interest or principal—would be paid. ( See Dawes Bond 1 [ECF No. 221] (“The German Reich ... hereby promises to pay on the 15th day of October 1949 ... the principal sum ..., and to pay semi-annually on the 15th day of April and the 15th day of October ... interest thereon ..., in accordance with the coupons for such interest hereto attached....”); Young Bond ¶¶ V, X [ECF No. 221] (“All the bonds shall bear interest ... payable by equal half-yearly payments on the first day of June and first day of December each year.... Any portion of the Loan then outstanding shall be redeemed (with accrued interest) on the first day of June One thousand nine hundred and sixty-five.”)). Because the Bonds provided specific dates on which payment was due, when Germany failed to pay on those dates, a cause of action accrued. See Vigilant Ins. Co. of Am., 637 N.Y.S.2d 342, 660 N.E.2d at 1125.

While normally the statute of limitations on a suit for payment on a bond will begin to run the day after the bond's maturity, in this case it is not so easy. Here, the Bonds' terms were interrupted by the rise of the Nazis, World War II (“WWII”), the fall of the Nazis, post-WWII treaties,⁵ the Cold War, and Germany's subsequent reunification.

Germany contends the statute of limitations began to run in this case on the later date of either when the Bonds matured or when the Bonds were validated. ( See Mot. 8). World Holdings's Dawes Bonds were validated after maturity (which occurred on October 15, 1949), by July 15, 1964. ( See id.; 2d Jaeger Decl. ¶ 2 [ECF No. 208–3]; SMF ¶¶ 13–14). Germany thus asserts the statute of limitations for the Dawes Bonds began to run on July 15, 1964. ( See Mot. 8). With World Holdings's Young Bonds, these bonds were validated by June 14, 1960, before their maturity date of June 1, 1965. ( See SMF ¶¶ 16–17). Germany thus contends that the Young Bonds' statute of limitations began to run on June 1, 1965. ( See Mot. 8). According to Germany, then, claims for Dawes Bonds expired on July 15,1970, and claims for Young Bonds expired on June 1,1971.⁶ ( See id.).

Despite these dates, World Holdings asserts that the LDA, by law, delayed payment on non–assenters' bonds. ( See Mot. Opp'n 5 [ECF No. 215] ). It asserts the LDA thus delayed the time whereby the non-assenting bonds “matured,” and the right to sue did not accrue until the last assenting bond under the LDA was paid. ( See id.). According to World Holdings, this occurred on October 3, 2010.⁷ In support, World Holdings cites various materials.

The starting point is, of course, the text of the LDA itself. All of the materials cited by World Holdings either explicitly or implicitly refer to LDA Article 10.⁸ LDA Article 10 reads:

The Federal Republic of Germany will, until the discharge or extinction of all obligations under the present Agreement and the Annexes thereto, ensure that payments will not be made in respect of obligations which, while covered by paragraphs (1) and (2) of Article 4, are owed to a Government other than that of a creditor country or to any person not residing in or a national of a creditor country and which are or were payable in a non-German currency. This provision does not apply to debts arising from marketable securities payable in a creditor country.LDA Art. 10, at 450–51. The last line of Article 10, that “[t]his provision does not apply to debts arising from marketable securities payable in a creditor country,” prevents application of Article 10 to creditors such as World Holdings—which owns Dawes and Young Bonds (marketable securities) payable in the United States (a creditor country). Therefore, LDA Article 10 cannot be World Holdings's basis of authority for extending the payments' due date.

World Holdings also highlights a New York Times article from 1958 which, in discussing the LDA, stated that

such legislation stipulated that no payments could be made to non–assentees until settlements arrived at under the London agreement had been completed. In some circles, this commitment of Germany has been taken to mean that non-assentees must wait for payment at the original contractual debt rate until all bonds extended under the London settlement formula had been paid off.... The non-assenting bondholder must therefore decide ... whether the bird in the hand is worth two in the bush.

(Paul Heffernan, N.Y. TIMES, Old German Bonds Offer Financial Dilemma, Oct. 27, 1958, at 41, Mot. Opp'n Ex. D [ECF No. 215–3] ); ( see also Mot. Opp'n 5–6). Contrary to Mr. Heffernan's remarks, there is no such legislation that applies to World Holdings's bonds.

In addition, World Holdings cites Meeting Minutes of the Agreement on German Foreign Debts dated February 27, 1953. ( See Informelle Bespruchengen zum Abkommen über deutsche Auslandsschulden vom 27. Februar 1953 (hereinafter “Meeting Minutes I”), Notice of Supp. Auth. Ex. B [ECF No. 190–2] ).⁹ World Holdings, however, highlights Minutes referring to LDA Article 10. ( See Mot. Opp'n 6–7) (quoting Meeting Minutes I, at 17–19; Protokolle zum Abkommen über deutsche Auslandsschulden vom 27. Februar 1953 (hereinafter “Meeting Minutes II”), Mot. Opp'n Ex. E, at 86–87 [ECF Nos. 215–3—215–13] ). As discussed, however, Article 10 as adopted does not apply to World Holdings. See LDA Art. 10, at 450–51 (stating Article 10 “does not apply to debts arising from marketable securities payable in a creditor country”).

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