Dorchester Financial Securities, Inc. v. Banco BRJ, S.A.

Filing 175

ORDER for 123 Report and Recommendations, 105 Motion to Vacate, filed by Dorchester Financial Holdings Corporation: For the foregoing reasons, Dorchester's objections to the Memorandum and Order and Report and Recommendation are OVERRULED. The Court finds that the Memorandum and Order is not clearly erroneous or contrary to law, and it adopts the Report and Recommendation with one modification: the Court docs not decide whether Dorchester's meritless Rule 60(b)(6) motion was timely. (Signed by Judge Kimba M. Wood on 12/2/2014) (tn)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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DORCHESTER FfNANCIAL HOLDINGS CORP.
f/k/a DORCHESTER FINANCIAL SECURITIES,
INC.,
Plaintiff,

USDSSDNY
DOCUMENT
ELECTRONICALLY FILED
DOC#:------·- - r - DATE FILED: 1~_11

. 2,,,,/ ...L.J

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11-CV -1529 (KMW)
ORDER

-againstBANCO BRJ S.A ..
Defendant.

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KIMBA M. WOOD, District Judge:
Throughout this case, Defendant Banco BRJ S.A. ("BRJ") has maintained that it never
discussed or issued a letter of credit in favor of Plaintiff Dorchester Financial Holdings
Corporation ("Dorchester"). Dorchester has submitted several documents that, on their face,
suggest otherwise. One of those documents is an unauthenticated message sent through the
Society of Worldwide Interbank Telecommumcation ("SWIFT'') to Chase Manhattan Bank.
ostensibly by BRJ, which confirms the issuance of a letter of credit in Dorchester"s favor. (See
SWIFT Message [ECF No. 14, Ex. 11]). BRJ claims that the SWIFT message is counterfeit. and
has stated in response to Dorchester's discovery requests that it has no documents related to the
message. (See BR.J's Mot. to Dismiss Mem. at 2 [ECF No. 11 ]; BRJ's Mot. in Opp. Mem. at 2
[ECF No. 87]). That statement has given rise, directly or indirectly, to several discovery
disputes, which this Order resolves.
I.

The Discovery Disputes
A

Motion to Compel Filed Against BRJ

On May 28, 2014, Dorchester filed a motion to compel that accused BRJ of lying about
the authenticity of the SWIFT message and withholding related evidence. (See Dorchester's

Mot. to Compel Mem. at 1-2 [ECF No. 76 ]). Dorchester premised its accusation on a single
document: an October 2003 letter to the Court from counsel for SWIFT (then a party to a related
suit by Dorchester), which Dorchester described as ''admitting'' BR.J's authorship of the SWIFT
message. (See zd. at 2; see id. Ex. 5 (2003 letter)). In a subsequent reply brief, Dorchester
submitted a second document in support of its claim: the declaration of Sheila Baker, which
states that she retrieved the SWIFT message on behalf of Dorchester while working at Chase
Manhattan Bank. (See Baker Deel. [ECF No. 96, Ex. B-1 ]). In light of those documents,
Dorchester claimed that BRJ had committed "fraud on the Court" by denying that it sent the
SWIFT message. (Dorchester's Mot. to Compel Mem. at 1).
B. Motion to Vacate or Compel Filed Against SWIFT
On April 14, 2014, Dorchester served a third-party subpoena on SWIFT requesting,
among other things, all documents related to the SWIFT message ostensibly sent by BRJ. (See
SWIFT Subpoena at 2 [ECF No. 76, Ex. D-1]). In response, SWIFT stated that any nonprivileged documents related to that message had been "deleted or [had] otherwise become
unavailable during the intervening decade since SWIFT's dismissal" from Dorchester's prior
action. (SWIFT's Subpoena

Resp.~

2 [ECF No. 76, Ex. E]).

On June 18, 2014, Dorchester filed a motion to vacate the dismissal of its prior action
against SWIFT, under Federal Ruic of Civil Procedure 60(b)(6), or alternatively to compel
SWIFT to produce additional evidence in response to its subpoena. (Dorchester's Mot. to Vacate
at 1--2 [ECF No. 105]). Dorchester claimed that SWIFT had joined BRJ's "fraud on the Court"
and was withholding evidence that the SWIF r message was authentic (See Dorchester's Mot. to
Vacate Mcm. at 1 [ECF No. 106 ]). According to Dorchester, SWlFT"s misconduct constituted
the "exceptional circumstances" required for relief under Rule 60(b)(6), as well as grounds for
compelling an additional document production. (See id. at 7--9).
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II.

Magistrate Judge Fox's Decisions
Both of Dorchester's motions were referred to Magistrate Judge Fox. On July 3, 2014,

Judge Fox issued a Memorandum and Order denying Dorchester's motion to compel BRJ to
produce additional evidence. (Mem. & Order [ECF No. 11 O]). Judge Fox held that Dorchester's
motion was procedurally deficient and, in any event, meritless, as neither the 2003 letter from
SWIFT's counsel nor Baker's declaration affirmatively asserted that BRJ, and not an imposter,
sent the SWIFT message. (See id. at 7-12).
A few weeks later, Judge Fox issued a Report and Recommendation denying
Dorchester's motion to vacate SWIFT's dismissal or compel further discovery. (See Rep. &
Rec. [ECF No. 123]). Judge Fox treated Dorchester's Rule 60(b)(6) motion as timely but found
it meritless, as it was based on the same unpersuasive allegations of fraud as Dorchester's failed
motion to compel. (See id. at 6-8 fECF No. 123 ]). Judge Fox also concluded that SWIFT's
objections to Dorchester's subpoena were valid, and that Dorchester's request for a court order
compelling a further response from SWIFT was procedurally unsound. (See id. at 8-9).
Dorchester has objected to the Memorandum and Order and the Report and
Recommendation. (See Objection to Mem. & Order [ECF No. 118]; Objection to Rep. & Rec.
[ECF No. 137)). Both objections essentially reiterate Dorchester's allegations of "fraud on the
Court" based on the 2003 letter from SWIFT's counsel and Baker's declaration.
II I.

Discussion
After reviewing the Memorandum and Order and the Report and Recommendation (the

latter de nova), the Court agrees with Judge Fox that Dorchester's motions are meritless. As
Judge Fox has explained, neither the 2003 letter nor Baker's declaration affirmatively states that
BRJ, and not an imposter, sent the SWIFT message. If anything, the letter casts doubt on the
SWIFT message's provenance by suggesting that "the letter of credit in favor of plaintiff may
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have been issued as a result of a fraud involving [Dorchester] itself." (SWIFT Letter at 1 [ECF
No. 106, Ex. 4 ]). And Baker's declaration merely confirms that the SWIFT message is the same
document she retrieved while at Chase, which purports to have originated from BRJ. (See Baker
Deel.). Those documents do not raise suspicions that BRJ or SWIFT has withheld evidence in
this action concerning the SWIFT message. Accordingly, Dorchester's motions to compel BRJ
and SWIFT to produce additional evidence. and to vacate the dismissal of its prior action against
SWIFT, are baseless.
For the foregoing reasons, Dorchester's objections to the Memorandum and Order and
Report and Recommendation are OVERRULED. The Court finds that the Memorandum and
Order is not clearly erroneous or contrary to law, and it adopts the Report and Recommendation
with one modification: the Court docs not decide whether Dorchester's meritless Rule 60(b)(6)
motion was timely.

SO ORDERED.
Dated: New York. New York
l:lJe, e1~1'er l , 2014
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K1mba M. Wood
United States District Judge

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