GARY ALLEN FEESS, District Judge.
The present motion involves a financial transaction that, in execution, was quite complex, but can otherwise be described in relatively simple terms.
Orient Fisheries, Inc. ("OFI"), a United States company engaged in the business of importing shrimp from Mexico, sought to insure itself of a reliable supply of product by financing the operation of Mexican shrimp boat operators. To accomplish this objective, it arranged to have its Mexican agent, Habaire S.A. de C.V. ("Habaire"), enter into a financing agreement with two Mexican commercial banks, Banco Invex, S.A. ("Invex") and Ixe Banco, S.A. ("Ixe"), who would supply a trust vehicle (the "SPV") with funds that Habaire would use to make working capital loans to shrimp boat operators (the "Habaire Servicing Agreement"). (Second Am. Compl. ("SAC"), Ex. B.)
Habaire would oversee the preparation of the boat operators' loan documentation, arrange for the transfer of funds from the SPV to the boat operators, and would repay the loans out of revenues generated by the sale of shrimp received from the shrimp boat operators. If all worked as planned, the catch would generate enough money to repay the loans, provide the boat operators with a profit, and provide OFI with a supply of Mexican shrimp. Despite the inherent uncertainty associated with the shrimp harvest, Invex and Ixe were willing to make these somewhat risky loans because (1) OFI agreed to indemnify the SPV in the event of Habaire's default, and (2) the loans were insured by a Mexican government guarantee program.
While this program was successful for approximately two years, Habaire began experiencing cash flow problems in 2006 and ultimately defaulted on its repayment obligation in December 2006. Invex and Ixe declared Habaire in default and called the loans. (Bañuelos Decl. ¶5, Ex. 1 [January 4, 2007 letter]; Moreno Decl. 116, Ex. 3 [January 2, 2007 letter].) When Habaire failed to respond to the demand for payment, and J.P. Morgan was therefore unable to extend the sums owed, Invex and Ixe made a demand on Banco de Mexico, the trustee for the government guarantee program, and were paid a total of approximately $5.5 million. (See Pedraza Decl. ¶19; Babcock Decl., Ex. 5 [Soto Decl. ¶36]; Bañuelos Decl. ¶6, Moreno Decl. ¶7.) Upon obtaining all relevant rights under the Habaire Servicing Agreement, Banco de Mexico then filed this lawsuit seeking reimbursement from OFI under the agreement's indemnification provision.
In an attempt to conclude all matters remaining in this case, Banco de México now moves for summary judgment on its claims for indemnification and illegitimate enrichment. Considering the evidence as a whole, and OFI's failure to produce sufficient evidence creating a genuine issue of material fact for trial, the Court
Summary judgment is proper where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c). Thus, when addressing a motion for summary judgment, the Court must decide whether there exist "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party has the burden of demonstrating the absence of a genuine issue of fact for trial. See id. at 256, 106 S.Ct. 2505.
In deciding a motion for summary judgment, the evidence is viewed in the light most favorable to the non-moving party, and all "justifiable inferences" are drawn in that party's favor. Id. at 255, 106 S.Ct. 2505. Where there is no evidence demonstrating the existence of a genuine issue of material fact, the moving party may prevail simply by "pointing out to the district court ... that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). As the Supreme Court has emphasized, "[w]here the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).
In Mexico, the statute of limitations for actions to enforce a commercial or mercantile agreement is ten years. See Código Civil Federal [C.C.F.] [Federal Civil Code], art. 1047 (Mex.).
Under Mexican law, there are two requirements for the existence of a contract: (1) consent; and (2) an object which can be the subject matter of the contract. C.C.F., art. 1794.
In Mexico, consent may be manifested in writing. C.C.F., art. 1803. In this case, to further its business interests in Mexico, OFI assigned its Vice President, Raul Gutierrez ("Gutierrez"), to be in charge of its Mexican operations. (Statement of Genuine Issues ("SGI") ¶1; Babcock Decl., Ex. 1 [at 241, 251, 358, 621, 627].) OFI issued Gutierrez a general power of attorney authorizing him to initiate lawsuits and collections, conduct other administrative acts, and sign any type of contract on OFI's behalf.
However, seeking to avoid summary judgment, OFI once again challenges the validity of Gutierrez's power of attorney. Although the power of attorney was (1) issued by OFI's president, Brent Church ("Church"), (2) notarized by OFI's parent company's in-house notary, (3) apostilled by the California Secretary of State for use in Mexico, and (4) ultimately delivered by OFI to a Mexican notary (see Reply at 5.), OFI argues—as it has in prior motion practice in this Court—that Gutierrez did not possess valid authority to execute the Habaire Servicing Agreement. In fact, OFI defends its position despite language in the Habaire Servicing Agreement which specifically references Gutierrez's authority to enter into the contract on OFI's behalf pursuant to the power of attorney at issue. (SAC, Ex. B, at 76.) Nevertheless, while the Court has addressed OFI's contentions, at length, in two prior orders, it shall address them briefly here.
OFI first argues that "full compliance" with the Washington Protocol is required in order for a power of attorney to be valid under Mexico law, (Opp. at 9; Rudin Decl., Ex. 26 [at 7-9]; Ex. 27 [at 4-8].), and cites language in the Washington Protocol which provides that the power of attorney "shall conform to the following rules ...." See Protocol on Uniformity of Powers of Attorney Which Are to be Utilized Abroad ("Washington Protocol"), Feb. 17, 1940, 56 Stat. 1376, O.A.S. T.S. 27. However, the Court previously addressed whether Gutierrez's power of attorney complied with the Washington Protocol, and concluded that any defects—to the extent there existed any—did not extinguish Gutierrez's authority to enter into contracts on OFI's behalf. (See 4/16/10 Order, Docket No. 240, at 3 (to the extent the power of attorney failed to include certain "technical details regarding the organization of OFI," those requirements appeared to have been designed to protect third parties dealing with the agent, and not the agent's principal).) "The information purportedly not included [in the power of attorney] was information that was readily known to OFI, which can hardly claim that the power's failure to include details regarding its own organization and operation somehow caused it any prejudice." (Id.) Moreover, the Court noted that OFI intentionally led third parties to believe that Gutierrez possessed authority to negotiate contracts on OFI's behalf, and could not avoid liability where the third party reasonably relied on the agent's ostensible authority. (Id.)
In a prior order, the Court also determined that OFI was estopped from arguing that the power of attorney was invalid, in part, because of several articles of the Mexican Commercial Code. (Id.) OFI now contends that the Jurisprudencia specifically provides that the Court shall look only to the Washington Protocol, and not to the Civil or Commercial Codes of Mexico, to determine the validity of the power of attorney. (Opp. at 9.) OFI's argument is flawed. The Court did not rely on the
OFI further claims that its indemnity obligation under the Habaire Servicing Agreement is governed solely by Mexico's Civil Code, and therefore any arguments pertaining to the Commercial Code are inapplicable. (Opp. at 9; Rudin Decl., Ex. 28 [Fourth Maldonado Decl. at 3-4].) In the Court's order denying OFI's motion for reconsideration, the Court specifically relied on articles 321 (authority of agents), 2583 (ratification), and 2597 (continued liability until notice of revocation of authority) of the Mexican Commercial Code to conclude that principals are liable when a third party relies on the agent's ostensible authority. (4/9/10 Order, Docket No. 240, at 3.) OFI does not dispute the Court's conclusion, but instead attempts to preclude use of the Commercial Code when analyzing the Habaire Servicing Agreement.
In support of this argument, OFI relies on its expert, Antonio Maldonado, who contends that the indemnification clause of the Habaire Servicing Agreement is governed only by the Mexico Civil Code. How-ever, during his deposition, Maldonado indicated that other portions of the Habaire Servicing Agreement were commercial in nature, and that he could not cite any provision of Mexican law that provided for some portions of a contract to be interpreted under the Civil Code and some portions under the Commercial Code. (Babcock Decl., Ex. 3 [Maldonado Depo. at 78-79].) Furthermore, Banco de Mexico's expert, Carlos Loperena, testified that the "indemnification section of the contract is an ancillary contract to the commercial contract. And we say in Mexican law that the ancillary issues follow the same nature than [sic] the main issues of the contract."
In sum, OFI's present contentions fail to raise a genuine issue of fact regarding the validity of Gutierrez's power of attorney.
In further support of the power of attorney's validity, there is substantial evidence in the record to persuade the Court that OFI ratified and approved Gutierrez's execution of the Habaire Servicing Agreement.
According to a October 28, 2004 unanimous resolution of OFI's Board of Directors, all actions of the company's officers—which included Gutierrez as Vice President—were "confirmed, ratified and
There is also no doubt that OFI knew of the present transaction. First, on July 16, 2004, Gutierrez emailed Church regarding an update of the financing program which involved J.P. Morgan as a fiduciary and Invex as a participating bank. (Babcock Decl., Ex. 16 [July 16, 2004 email chain]; SGI 1146.) There can be no question that this refers to the transaction at issue in this case.
Second, in an October 6, 2004 email, Federico Nunez, FIRA's attorney, explained various transaction details to Fred Vincent (an OFI consultant whose title was executive vice president for special projects). (Babcock Decl., Ex. 17 [Nunez Decl. 1123, Ex. 8].) Specifically, Nunez wrote:
(Babcock Decl., Ex. 17 [Nunez Decl. ¶23, Ex. 8] (emphasis added).) OFI has submitted no evidence that it contested this description of the agreement because no such evidence exists. This conclusion is confirmed by a December 23, 2003, letter from David Prince, acting as OFI's "general counsel," to Enrique Soto verifying certain information regarding OFI. (Babcock Decl., Ex. 15 [December 23, 2003 letter]; Babcock Decl., Ex. 9 [Prince Depo. at 260]; Rudin Decl., Ex. 2 [Prince Depo. at 258-59].) The letter demonstrates that Prince was providing this information specifically because he was aware of the FIRA financing arrangement.
Having resolved the issue of consent, the Court proceeds to address the subject matter of the Habaire Servicing Agreement. The object of a contract is either (1) the "subject-matter that an obligor is required to give," or (2) "the act that the obligor must or must not do." C.C.F., art. 1824. In Mexico, "[a] guarantee is a contract by which one person obligates himself to pay a creditor on behalf of a debtor if the latter fails to pay." C.C.F., art. 2794. "A guarantor may also obligate himself to pay money if the principal debtor does not perform a specific thing or act." C.C.F., art. 2800. "A guarantee may be made by operation of law, judicially created, or by agreement, gratuitous or for valuable consideration." C.C.F., art. 2795 (emphasis added).
Here, OFI's promise to indemnify the Habaire Trust upon Habaire's breach of its obligations under the Habaire Servicing Agreement clearly constitutes a guarantee. Under Mexican law, the guarantee constitutes the object of a valid contract.
It is undisputed that Banco de Mexico is not a party to the Habaire Servicing Agreement, and therefore must demonstrate it maintains standing to sue. Under Mexico law, an assignee of a contract stands in the shoes of the assignor and has
Here, Clause Twelve (2)
OFI contends there is no admissible evidence establishing that: "1) J.P. Morgan validly assigned its rights to [The Bank of New York] Mellon or Plaintiff under the terms of the Habaire Servicing Agreement in 2008; 2) notice of J.P. Morgan's assignment or transfer of rights was provided to Habaire in 2008; 3) Plaintiff received a valid transfer of rights from Mellon in May 2009; or 4) Plaintiff gave proper notice of the purported assignment by Mellon." (Opp. at 4.) The Court discusses each of these claims in turn.
In 2006, J.P. Morgan and The Bank of New York conducted a swap of banking divisions: J.P. Morgan acquired the retail division of The Bank of New York, while The Bank of New York acquired the corporate trust division of J.P. Morgan. (Reus Decl. ¶2.) As a result of the swap, which became effective in 2008, all of J.P. Morgan's assets and rights held by the corporate trust division, including the rights under the Habaire Servicing Agreement, were transferred to The Bank of New York. (Id. ¶¶2-3.) In November 2008, pursuant to a merger (with Mellon Bank), The Bank of New York became The Bank of New York Mellon. (Id. 118.) As a result of this corporate restructuring, The Bank of New York Mellon "became the entity holding the rights under the [Habaire] Servicing Agreement." (Id.)
OFI has submitted evidence, including admissions on Banco de Mexico's website, that J.P. Morgan continues to exist as a universal bank in Mexico authorized by Mexico's Ministry of Finance.
The Court then considers OFI's second attack, where it contends there is no evidence
OFI further challenges whether Banco de Mexico received a transfer of rights from the Bank of New York Mellon. (Opp. at 4.) Here, the Bank of New York Mellon assigned its rights under the Habaire Servicing Agreement to Banco de Mexico as trustee for FOPESCA and FEGA on May 13, 2009. (Pedraza Decl. ¶22, Ex. 7; Babcock Decl., Ex. 23 [Paredes Depo. at 102-105] (authenticating signatures).) The Assignment of Rights clearly transfers rights from The Bank of New York Mellon to Banco de Mexico. There is no genuine issue of fact regarding this assignment in the chain.
Finally, the Court addresses whether Banco de Mexico properly provided notice of The Bank of New York Mellon's assignment. (Opp. at 4.)
In Mexico, "[a]n assignment of a mercantile credit shall be legally binding on the debtor from the time that he is notified of the assignment in the presence of two (2) witnesses." COD.COM., art. 390 (emphasis added). Here, Banco de Mexico's representative, accompanied by two witnesses, attempted to provide notice of the assignment of rights to Habaire in Mazatlan, but discovered that Habaire had vacated its premises without leaving a forwarding address. (Pedraza Decl. ¶ 24.) Habaire never notified FIRA of a new address. (Id. ¶25; Reus Decl. ¶7.) Habaire's departure to parts unknown without notice to the SPV or the trustee violates the terms of the Habaire Servicing Agreement. (Id.) Clause Twelve (1) of the Servicing Agreement expressly states:
(SAC, Ex. B, at 84 (emphasis added).) Habaire having abandoned its premises without notice to the other parties to the agreement, Banco de Mexico's notification at Habaire's last registered address constitutes sufficient notice under the terms of the agreement.
Moreover, as Banco de Mexico notes, its failure to locate Habaire is of "no legal consequence" because "the debtor" in this action is OFI, not Habaire. (Mem. at 16.) On May 15, 2009, OFI was served by mail with a copy of the assignment of rights from J.P. Morgan to Banco de Mexico. (Babcock Decl. 112.) OFI does not dispute that it was served with a copy of the assignment. Thus, both Habaire and OFI received notice as required under the agreement, and that notice was in compliance with Mexican law.
In Clause Eight of the Habaire Servicing Agreement, OFI promised "to indemnify [J.P. Morgan] regarding damages that may be suffered by the latter arising from
As part of the transaction, Habaire issued shrimp producers certain working capital loans—each loan is termed a "Credit Right." (SAC, Ex. B, at 74 [Recital (e) ].) According to the agreement, Habaire was required to transfer ownership "of the Credit Right and the Promissory Notes documenting the same" to J.P. Morgan pursuant to transfer agreements ("Transfer Agreements") that Habaire would list in accordance with Exhibit 1 of that agreement. (Id. [Recital (g) ].) The Credit Rights and Promissory Notes are referred to collectively as the Credit Rights in Trust. (Id.) Habaire was to "assume the role of manager and commission agent ... and perform collections and manage said Credit Rights on account of the Trust." (Id. [Recital (h) ].) With respect to those duties, Clause Three of the Habaire Servicing Agreement provides, in its entirety:
(SAC, Ex. B, at 78 (emphasis added).)
In sum, the arrangement was to function as follows: Habaire would extend loan proceeds to shrimp producers; the loan would create a credit right in favor of Habaire; Habaire would manage and collect on the loan. Habaire would transfer the credit right to J.P. Morgan, as trustee for the SPV. The Habaire Servicing Agreement then indicates that Habaire would be required to update Exhibit 1 with information each time a Credit Right was created, and that J.P. Morgan would document each "transfer" in accordance with Exhibit 2 of the agreement.
Clause Four then provides that "[i]n order for [Habaire] to carry out on behalf of [J.P. Morgan] the custody, management and collection of the Credit Rights in Trust, and also the Promissory Notes documenting said Credit Rights in Trust covered by the [Habaire Servicing Agreement], [J.P. Morgan] shall, each time it executes Transfer Agreements, provide in deposit to [Habaire] ... the Promissory Notes documenting the Credit Rights in Trust together with a list of said Promissory Notes under the terms of the model that is included as Exhibit 2." (SAC, Ex. B, at 78.) Thus, Banco de Mexico was required to deposit with Habaire the promissory notes documenting the credit rights, and therefore enable Habaire to
In Clause Six, Habaire agreed, inter alia, to collect funds due on the working capital loans and to make the funds available to J.P. Morgan at 11:00 a.m. on the next business day following the date of collection. (Id., at 79.) "As long as any liquid amount or cash in the power of [Habaire] has not been duly credited ... [it] shall be liable for any loss, theft, forfeiture or any other deficiency of said amount or cash." (Id., at 80-81.)
Habaire received structured financing through the FIRA program for the 2004-05 and 2005-06 shrimp harvesting seasons. (Banuelos Decl. ¶3; Pedraza Decl. ¶4; Moreno Decl. ¶4.) During this period, Habaire participated in the program without default. (Banuelos Decl. ¶3; Pedraza Decl. ¶4.) However, in December 2006, Habaire defaulted on its repayment obligation to the SPV. (Banuelos Decl. ¶4; Pedraza Decl. ¶10; Moreno Decl. ¶6; Babcock Decl., Ex. 19 [Banuelos Depo. at 165-66], Ex. 22 [Moreno Depo. at 17-20].)
OFI claims that Banco de Mexico did not produce evidence that Habaire failed to collect on the Credit Right in Trust on specific amortization dates, that Habaire collected cash and shrimp but failed to credit J.P. Morgan for such amounts, or that the credit rights in trust existed in the first instance. (Opp. at 14.) According to OFI, Banco de Mexico's witnesses cannot establish "1) what specific loan amounts were disbursed by J.P. Morgan to Habaire pursuant to the Habaire Servicing Agreement; 2) whether Habaire failed to repay J.P. Morgan amounts it received under the Habaire Servicing Agreement; 3) whether Habaire breached any of its obligations to J.P. Morgan under the Habaire Servicing Agreement; and 4) the cause of any purported breach by Habaire." (Opp. at 18.)
However, OFI's effort to poke holes in Banco de Mexico's case fail to create a genuine issue of material fact for trial. Banco de Mexico could have produced such evidence in support of its present motion, but such evidence is not required. If "a moving party carries its burden of production, the nonmoving party must produce evidence to support its claim or defense." Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1103 (9th Cir. 2000) (citations omitted). "If the nonmoving party fails to produce enough evidence to create a genuine issue of material fact, the moving party wins the motion for summary judgment." Id. (citing Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548).
Thus, to meet its burden of production in this case, Banco de Mexico was obligated to produce admissible evidence establishing that Habaire breached its obligation to repay the SPV. Viewing the record in its totality, the Court concludes that Banco de Mexico has satisfied this burden. There is sufficient evidence in the record to conclude that Ixe and Invex transferred funds directly to J.P. Morgan, (see Moreno Decl., Ex. 2 [promissory notes showing disbursements from Invex to J.P. Morgan].), and that Habaire did not repay those funds pursuant to Clause Six of the agreement.
The evidence produced is summarized here:
First the Court notes that even OFI tacitly concedes that Habaire was not repaying the loans and attempts to explain
(SGI ¶81.) As to that fact, OFI offers an unauthenticated letter from Gutierrez that refers to a single loan, worth approximately $315,000, for which repayment was delayed due to Hurricane Lane. (Rudin Decl., Ex. 18.) But the OFI's argument is beside the point—the issue is not why Habaire defaulted but whether it defaulted on its obligations. On that, there appears little question. That conclusion is further supported by correspondence between Habaire and Banco de Mexico (Gutierrez to Enrique Soto) acknowledging serious cash flow problems in 2006.
Gutierrez's first letter, dated January 20, 2006, informed Banco de Mexico that farmed shrimp production—financed through Habaire—"has been displaced," and explains how, even though the value of product sent to OFI had a value of $6 million, only 10% was recovered. (Soto Decl., Ex 1.) Gutierrez then proposes a modification of the structure of the credit lines "in a flexible way" to prevent similar problems in the future. (Id.) Gutierrez's second letter, written in October 2006, relates to the payment of credits that were coming due that week. (Id., Ex. 2.) He explains that Habaire's cash flows had been altered due to payments made to shrimp boat operators who had delivered a large volume of product, indicated that Habaire maintained insufficient "lines" of credit or funds to "pledg[e]" more product, and therefore must "request an extension of the period by three months for the payment of said credits." (Id.) Based on these documents, the Court can easily and reasonably infer that Habaire faced liquidity-related issues and that it was not making timely payments.
This evidence is bolstered by declarations from representatives of both Invex and Ixe who indicated that Habaire defaulted on its obligations under the Habaire Servicing Agreement in December 2006. (Banuelos Decl. ¶4; Moreno Decl. ¶6.) Moreover, Pedraza received reports from J.P. Morgan and FIRA personnel that Habaire had defaulted on its structured financing loans. (Pedraza Decl. ¶10.) This evidence demonstrates that Habaire failed to perform under the operative agreement.
Evidence in the record also establishes that Habaire's default was the direct cause for J.P. Morgan's failure to repay Invex and IXE. (Reus Decl. 114 ("As a direct result of Habaire's default, the Habaire Trust [SPV] was unable to repay the commercial banks, Ixe and Invex.").) Indeed, "[n]o one has repaid Habaire's debt to the Habaire Trust [SPV]." (Id. ¶ 5.) Furthermore, Banco de Mexico has submitted letters from both Invex and Ixe to J.P. Morgan giving notice that the SPV had defaulted on its loan obligations. (Moreno Decl. 116, Ex. 3 [January 2, 2007 letter]; Bañuelos Decl. ¶ 5, Ex. 1 [January 4, 2007 letter to J.P. Morgan declaring the Habaire Trust [SPV] to be in default].); (Babcock Decl., Ex. 5 [Soto Decl. ¶ 32].) The letters informed J.P. Morgan that
The record further contains clear evidence of FEGA's wire transfers—the guarantee payments—to Invex and Ixe. After J.P. Morgan's default on the underlying financing loans, Ixe and Invex accelerated the loans' maturity dates. As a result, Ixe and Invex demanded payment of the guarantees from Banco de Mexico. (Banuelos Decl. ¶5; Moreno Decl. ¶6, Ex. 3; Pedraza Decl. ¶19; Babcock Decl., Ex. 5 [Soto Decl. ¶36].) Banco de Mexico, as trustee for FEGA, paid Ixe guarantee payments totaling $3,314,492.98 (Bañuelos Decl. ¶6, Ex. 2; Pedraza Decl. ¶19.), and paid Invex guarantees totaling $2,218.883.76.
As Banco de Mexico explains: "the FEGA guarantees reimburse the commercial banks for monies that the J.P. Morgan trust has found itself unable to repay due to a default by the borrower, in this case, Habaire. FEGA pays its guarantees precisely because there is a loss by the trust." (Reply at 7.) In sum, the guarantee payments were made because J.P. Morgan could not make its repayments to Invex and Ixe. Based on the evidence presented, the Court can infer that J.P. Morgan could not repay its obligations because Habaire, in breach of Clause Six of the agreement, failed to make certain loan repayments to J.P. Morgan.
Banco de Mexico also suggests that Habaire breached Clause Nine of the Agreement. Under Clause Nine of the Servicing Agreement, J.P. Morgan had the right to examine and review Habaire's accounts and financial information at any time. (SAC, Ex. B, at 82.) Habaire was required to prepare reports regarding the Credit Rights in Trust and collection activity and provide them to J.P. Morgan. (Id.)
That Gutierrez failed to produce Habaire's financial reports is not in dispute: On December 21, 2006, Pedraza, FIRA's Legal Director, and a representative from J.P. Morgan, among others, met with Gutierrez in Mexico. (Pedraza Decl. ¶10.) During this meeting, Gutierrez promised to provide a written report regarding Habaire's administration of the portfolio relating to the assets of the Habaire Trust and Habaire's compliance with its payment obligations under the Habaire Servicing Agreement. (Id. ¶11.) Gutierrez also claimed that he had all the necessary documentation, but would require time to compile the materials. (Id. ¶12.) Another meeting with Gutierrez was scheduled for December 27, 2006, but Gutierrez again indicated that he required more time to produce the report. (Id. ¶¶13-14.) Gutierrez never provided FIRA or J.P. Morgan
OFI contends that even if Habaire's failure to provide reports constituted a breach of Clause Nine, the indemnity obligations did not include indemnification for Clause Nine and would not give rise to an indemnity obligation. While Clause Nine does not itself give rise to any form of indemnity obligation, evidence of Habaire's failure to prepare these reports further demonstrates its inability to comply with its obligations under the Habaire Servicing Agreement.
Viewing the evidence in its entirety, the Court concludes that Banco de Mexico has met its burden of production in establishing Habaire's breach of the Habaire Servicing Agreement. Habaire's failure to make repayments directly caused J.P. Morgan, as trustee of the SPV, to be unable to repay Invex and Ixe. Because OFI was required to indemnify the SPV in the event of Habaire's default, Banco de Mexico, standing in the shoes of the SPV, has established its claim for indemnity.
Finally, OFI argues that there is evidence that guarantee payments were made before the loans were actually declared in default. (Opp. at 18.)
OFI claims that Banco de Mexico made guarantee payments totaling roughly $2.2 million to Invex on December 13, 2006 and December 22, 2006,
However, OFI's argument is foreclosed by the fact that Banco de Mexico has provided wire transfer receipts for both Stage One financing and Stage Two financing. (Ray Decl., Exs. 1, 2; see also evidence for motion for entry of judgment regarding put option contract.) Therefore, there is no genuine dispute that the guarantee payments were made specifically with respect to the Habaire Servicing Agreement. Moreover, the fact that the guarantee payment to Invex was made approximately twenty (20) days before Invex officially declared Habaire in default does not create a genuine issue of material fact. OFI has not presented any evidence that the wire transfers were made for some other purpose or that the default somehow did not occur. See Nissan, 210 F.3d at 1103.
Banco de Mexico's motion for summary judgment on its indemnity claim is
Banco de Mexico is
