Fresh Del Monte Produce N.V. v Eastbrook Caribe A.V.V.
Annotate this CaseDecided on September 22, 2004
Supreme Court, New York County
FRESH DEL MONTE PRODUCE N.., FRESH DEL MONTE PRODUCE INC., and IAT GROUP INC., Plaintiffs,
against
EASTBROOK CARIBE A..., EASTBROOK, INC., And EASTBROOK LIMITED, , Defendants.
600860/03
Charles Edward Ramos, J.
Plaintiffs Fresh Del Monte Produce N.V. (FDMP N.V.), Fresh Del Monte Produce Inc. (FDMP Inc.), and IAT Group, Inc. (IAT) (collectively referred to as Fresh Del Monte) move for an order granting the issuance of requests for International Judicial Assistance (Letters Rogatory): (1) to the appropriate authority having jurisdiction of civil causes in Mexico City, Distrito Federal, United Mexican States, to take the deposition of and request production of documents from Carlos Cabal Efrain de Jesus Peniche (Cabal), as a witness, upon the ground that he is a resident of the United Mexican States and cannot be examined in the State of New York; (2) to the appropriate authority having jurisdiction of civil causes in the City of Jeddah, Kingdom of Saudi Arabia, to take the deposition of and request production of documents from Khalid bin Salim bin Mahfouz (Mahfouz), as a witness, upon the ground that he is a resident of the Kingdom of Saudi Arabia and cannot be examined in the State of New York; and (3) to the appropriate authority having jurisdiction of civil causes in the City of Dublin, Republic of Ireland, to take the deposition of and request production of documents from Mahfouz, as a witness, upon the ground that he is a citizen of the Republic of Ireland and can be found therein, and cannot be examined in the State of New York.
Plaintiffs request that the court approve and sign the attached Letters Rogatory, and that the Clerk of the Court authenticate the court's signature under the seal of the court, and return the Letters Rogatory to counsel for plaintiffs. Plaintiffs, through their counsel, stand ready to reimburse the court and/or the judicial authorities of the United Mexican States, the Kingdom of Saudi Arabia, and the Republic of Ireland for reasonable expenses incurred in connection with the execution of these Letters of Request.
BACKGROUND
Plaintiffs commenced this action in March 2003, alleging that defendants engaged in a conspiracy with non-party entities to injure plaintiffs by: (1) filing baseless lawsuits in contravention of releases and indemnities previously signed by all defendants; (2) instituting inflammatory campaigns in the press which challenged the validity of the 1996 acquisition of FDMP N.V. by IAT; and (3) providing misleading information to stock analysts and journalists.
Plaintiff FDMP N.V., a Netherlands Antilles corporation, is a holding company for various subsidiaries engaged in the business of production, transportation, and marketing of fresh produce on a worldwide basis. In December 1996, FDMP N.V. was acquired by IAT, from Grupo Empresarial Agricola Mexicano, S.A. de C.V. (GEAM). FDMP Inc., an affiliate and one of the parent companies of FDMP N.V., was incorporated as an affiliate of IAT in order to acquire FDMP N.V. Prior to 1996, defendant Eastbrook Caribe A.V.V. (Eastbrook) held an interest in FDMP N.V.
Plaintiffs claim that in 1992, a trust was formed by an agreement among Cabal and [*2]others, which indirectly invested in FDMP N.V. prior to its sale to IAT in December 1996. Plaintiffs maintain that FDMP N.V. was controlled by Cabal until September 1994, when he fled Mexico to avoid charges brought against him by the Mexican government. Cabal had earlier served as chairman and CEO of FDMP N.V. and GEAM. After Cabal left, Eduardo Bours (Bours) became the new chairman and CEO.
In 1996, Eastbrook, which owned shares in Trumpet Vine Investments, N.V. (Trumpet Vine),[FN1] a minority shareholder of FDMP N.V., caused Trumpet Vine to commence an action in the
Netherlands Antilles against FDMP N.V. and IAT, among others, in an attempt to block the sale of FDMP N.V. to IAT. Thereafter, Eastbrook and plaintiffs entered into a Settlement Agreement and Release, dated November 18, 1996, pursuant to which they resolved all of the claims that Eastbrook had asserted against the plaintiffs based upon Eastbrook's interests in Fresh Del Monte. In addition, Eastbrook agreed to release certain claims and indemnify each of the plaintiffs for any damages which arose from, or as a result of, the assertion by Eastbrook of any of the released claims (the Eastbrook Release). Cabal also entered into a similar release in connection with the settlement (the Cabal Release). Pursuant to the Settlement Agreement, Eastbrook received $14.1 million.[FN2] The sale of FDMP N.V. to IAT closed on December 20, 1996.
In September 2002, it was reported in a local Mexican newspaper that Cabal had stated that he intended to challenge the validity of the sale of FDMP N.V. to IAT. Around the same time, Eastbrook filed a summons with notice in the Supreme Court of New York County, entitled Eastbrook Caribe, A.V.V. v Fresh Del Monte Produce, Inc., et al., Index No. 124404/02 (the 2002 Action), seeking damages and equitable relief arising from the December 1996 purchase by IAT of FDMP N.V.'s stock.
The summons with notice alleged, inter alia, fraud, breach of fiduciary duty, unjust enrichment, securities fraud, and the unauthorized sale of the stock of FDMP N.V. to IAT. Eastbrook sought damages and equitable relief, including rescission of the Settlement Agreement and Release. By decision and order dated January 13, 2004, this court dismissed Eastbrook's 2002 Action as barred by the Settlement Agreement and Release entered into by Eastbrook in 1996.
Plaintiffs claim in the instant action that, prior to serving FDMP Inc. in the 2002 Action, Eastbrook provided a copy of the summons with notice to an analyst for BB&T Capital Markets, and that the ensuing analyst report on FDMP Inc. resulted in a significant decline in the market value of FDMP Inc.'s stock. They claim that Eastbrook, together with others, engaged in a campaign to scare investors, lower the market value of FDMP Inc's stock, and ruin its reputation in an effort to extort a settlement from FDMP Inc.[FN3]
Plaintiffs allege in their first of action that defendants breached the Eastbrook Release by their assertion of meritless claims against plaintiffs, and by their attempting to re-litigate released claims, thereby triggering an obligation to indemnify Fresh Del Monte for any damages that they [*3]suffered. This cause of action appears to be based upon defendants' commencement of the 2002 Action.
Plaintiffs allege in the third cause of action that the indemnification clause in the Settlement Agreement, and Eastbrook's obligations thereunder, has been triggered by the commencement of a lawsuit against IAT and GEAM in Florida (the Florida Action), on December 18, 2002, by the trust beneficiaries, which held the stock of FDMP N.V. and other companies. Plaintiffs contend that the claims asserted by the trust beneficiaries fall within the released claims prohibited by the Settlement Agreement. It is claimed that Cabal controls the trust, consequently, the trust beneficiaries are barred under the Settlement Agreement and the Cabal Release from pursuing any claims relating to any interest held in FDMP N.V.
Plaintiffs seek recovery of up to $9.5 million under the indemnity provision provided in the Eastbrook Release, and recovery up to $14.1 million under the indemnity provision in the Settlement Agreement, triggered by the breach of the Cabal Release.
THE INSTANT MOTION
Plaintiffs argue that it is necessary that this court grant their request for International Judicial Assistance, because the witnesses sought cannot be compelled to appear for examination in New York State, and cannot be compelled to testify in their respective countries unless the Letters Rogatory are issued. They claim that the information they seek from Cabal and Mahfouz is material and necessary to establishing the breach of the Settlement Agreement and the Releases. Plaintiffs contend that, although they have requested documents from Eastbrook evidencing the corporate structure, ownership, and relationship between the Eastbrook entities, they have received insufficient and incomplete documentation.
Defendants argue that plaintiffs' motion should be denied because the information and documents sought are neither material nor necessary within the meaning of CPLR 3101. They contend that the information and documents sought from Mahfouz and Cabal are irrelevant to the issue of what, if any, damages plaintiffs sustained.
CPLR 3101 (a) (4) provides that there "shall be full disclosure of all matter material and necessary in the prosecution or defense of an action" by a non-party, "upon notice stating the circumstances or reasons such disclosure is sought or required." A nonparty witness who is not a resident of the State of New York cannot be served with a subpoena (see Wiseman v American Motors Sales Corp., 103 AD2d 230 [2d Dept 1984]). However, CPLR 3108 makes available, upon application to the court, letters rogatory which is one of the procedural devices available by which a court in one country may request authorities in a foreign country to assist the requesting court in taking the deposition of a person found in that foreign jurisdiction, under the laws of that particular jurisdiction (Laino v Cuprum S.A. de C.V., 235 AD2d 25 [2d Dept 1997]). Pursuant to CPLR 3108, "[a] commission or letters rogatory may be issued where necessary or convenient for the taking of a deposition outside of the state." With regard to Cabal, who currently resides in Mexico, it is argued that because of his connections to Eastbrook, including as purported assignor of Eastbrook's former interest in FDMP N.V., and because of his reported intentions to commence litigation in connection with the 1996 sale of FDMP N.V., his testimony and his production of certain documents under his control are material and necessary to the prosecution of the instant action to
determine the extent and nature of Eastbrook's violation of the Settlement Agreement and Release, and other damages.
Specifically, plaintiffs argue that if Cabal is involved in Eastbrook, and Eastbrook is thus involved in both the Florida Action and the New York Action, Eastbrook may be liable for damages sustained by plaintiffs as a result of both the 2002 Action and the Florida Action. In addition, plaintiffs claim that Cabal's testimony and document production are necessary in connection with Cabal's own involvement in the activities alleged in the complaint.
Plaintiffs' questions seek information relating to Eastbrook's suit against Cabal in 1993; his assignment of his interest relating to his ownership and control of Fresh Del Monte; his [*4]formation of a trust to hold interests in Fresh Del Monte which he purchased in 1992; his investment in that trust; and his contact with individuals who brought lawsuits against Fresh Del Monte in New York and Florida.
The plaintiffs have met their burden of showing that the information they seek through Letters Rogatory from Cabal is relevant evidence, and is reasonably calculated to lead to the discovery of information related to plaintiffs' claims (CPLR 3101 [a]; see BAII Banking Corp. v Northville Industries Corp., 204 AD2d 223 [1st Dept 1994]). Cabal's relationship to the trust beneficiaries, his signing of the Cabal Release, and his close relationship with Eastbrook during the relevant times makes the requested discovery material and necessary to the plaintiffs' case. Accordingly, plaintiffs' motion for issuance of requests of International Judicial Assistance as regards Cabal is granted.
Mahfouz resides in the City of Jeddah, Kingdom of Saudi Arabia, and allegedly can also be found in the City of Dublin, Republic of Ireland. Plaintiffs claim that his testimony is material and necessary because of his continued control and involvement in Eastbrook. They contend that he can testify as to Eastbrook's violation of the Settlement Agreement and Release and causing other damage, Eastbrook's motivations for bringing the 2002 Action, as well as his own and Cabal's involvement in Eastbrook's breach of the Settlement Agreement and Release.
Defendants contend that Mahfouz has no present ownership or other involvement with them, and that his past involvement with Eastbrook was merely as a passive investor, which interest terminated years before the events which gave rise to the instant action. They argue that the questions put forth to Mahfouz, which ask about: (1) his involvement with Eastbrook entities since 1990; (2) the stock or shares or other investments which he owns in Eastbrook; (3) the identity of the stockholders or other investors in Eastbrook entities; (4) his involvement in a 1993 lawsuit commenced by Eastbrook against Cabal; and (5) his communications, if any, with Cabal, are irrelevant to any issues in the instant action.
Plaintiffs have failed to meet their burden of establishing relevancy with regard to the information they seek from Mahfouz. They have made no factual showing that Mahfouz was involved with any of the events in the complaint, or that he possesses information that is material and necessary to plaintiffs' claims. Accordingly, plaintiffs' motion for issuance of requests for Letters Rogatory as regards Mahfouz is denied.
Accordingly, plaintiffs' motion for Letters Rogatory as regards Carlos Cabal Efrain de Jesus Peniche is granted. Plaintiffs' motion as regards Khalid bin Salim bin Mahfouz is denied.
Settle Order.
Dated: September 22, 2004
_________________________
J.S.C.
Counsel are hereby directed to obtain an accurate copy of this Court's opinion from the record room and not to rely on decisions obtained from the internet which have been altered in the scanning process.
Footnotes
Footnote 1:Eastbrook claims that the shares it owned in Trumpet Vine were assigned to it by Cabal in settlement of a lawsuit which Eastbrook brought against Cabal in 1993.
Footnote 2:Cabal allegedly received $5 million of the settlement amount as part of a separate understanding between Eastbrook and Cabal.
Footnote 3:By decision and order dated January 13, 2004, this court granted defendants' motion for summary judgment dismissing the second and fourth causes of action of the complaint. These claims alleged that Eastbrook, together with its co-conspirators, acted in concert to reduce the market value of FDMP Inc.'s stock by asserting and publicizing meritless claims, solely for the purpose of inflicting harm on plaintiffs.
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