Desarrolladora Farallon S. De R.L. De C.V. v. Cargill, Inc. et al

Filing 134

OPINION AND ORDER: For the foregoing reasons, plaintiff's motion is DENIED. The Clerk of the Court is directed to close this motion (Dkt. No. 124). (As further set forth in this Order.) (Signed by Judge Shira A. Scheindlin on 4/29/2016) (cf)

not, and could not, have impacted this Court’s decision on defendants’ motion to
dismiss. For the following reasons, plaintiff’s motion is DENIED.
I.

BACKGROUND
Plaintiff’s claims in this case revolve around an alleged implied-in-

fact joint venture agreement to construct and manage a luxury resort, entered into
between plaintiff and all defendants. When I dismissed the Complaint, I did so for
two separate and independent reasons: First, I found that plaintiff had failed to
adequately plead the terms of this alleged implied-in-fact joint venture, and second,
even if such an implied joint venture existed, it was replaced by a later, written
Trust Governance Agreement (“TGA”) that contained a merger and integration
clause, terminated all agreements related to the construction and management of
the resort, and covered the same relationship as the alleged joint venture.1
Plaintiff now seeks to vacate this Opinion and Order based on
allegedly new evidence taken from witness statements submitted by Mexvalo — a
wholly owned subsidiary of defendant Cargill Financial Services International, Inc.
(“Cargill Financial”) — in a related arbitration proceeding that took place in
January of this year. Plaintiff argues these witness statements contain admissions
by defendants demonstrating that the parties had agreed to form an implied-in-fact
1

See Desarrolladora Farallon S. De R.L. De C.V. v. Cargill, Inc., No.
15 Civ. 532, 2015 WL 7871040, at *4 (S.D.N.Y. Dec. 3, 2015).
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joint venture that survived plaintiff’s entering into the TGA, and that defendants
believed they were operating under a joint venture agreement after the TGA was
signed.2
A.

Statement of Adam Bernier
The first witness statement is by Adam Bernier, a former employee of

defendant Cargill, Inc. Bernier testified to the process by which defendants
invested in certain property along with plaintiff, and how the resort was financed.3
On cross examination, Bernier gave the following statement:
Q: Was it your understanding that Cargill Financial was
entering into a joint venture with the Diaz Rivera family
to develop this Resort?
A: Yeah. As part of – within that [trust] structure,
correct.4
B.

Statement and Communications of Thomas Huettner
The next witness statement is by Thomas Huettner, a former employee

of Cargill, Inc. and its subsidiary, defendant Carval Investors LLC (“Carval”).

2

In oral argument, plaintiff admitted that it presents no new evidence of
the essential terms of this alleged joint venture agreement. See Transcript of
4/28/16 Oral Argument (“Tr.”) at 25:21-25; 32:4-15.
3

See Statement of Adam Bernier, Ex. B to 4/8/16 Declaration of John
Balestriere in Support of Motion to Amend Judgment (“Balestriere Decl.”) at B-2 B-9.
4

Id. at B-12.
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Huettner describes the relationship between plaintiff and defendants in managing
the resort, defendants’ purchase of a construction loan against the resort, and the
subsequent breakdown in the relationship between plaintiff and the Cargill group
of companies. Huettner neither uses the words “joint venture” nor describes a joint
venture among the parties; however, he does describe how entities other than
Mexvalo actively managed the day to day affairs of the relationship between
Mexvalo and plaintiff in financing, constructing, and managing the resort.5
In cross examination, Huettner was shown an email he wrote to
plaintiff dated May 11, 2011.6 The subject line on the email is “Capella JV
restructuring.”7 Huettner confirms that “JV” stands for “joint venture,” and
confirms that he referred to the relationship between the Cargill parties and
plaintiff as a joint venture in that email.8 In a separate communication submitted
with plaintiff’s reply, Huettner tells an investor that “[y]ou obviously understand
that [the resort] is a joint venture and not something owned or controlled solely by

5

See Statement of Thomas Huettner, Ex. C to Balestriere Decl.

6

This email was also appended to plaintiff’s reply. See 5/13/11 email
by Thomas Huettner, Ex. S to 4/22/16 Declaration of Matthew W. Schmidt,
counsel for plaintiff, in Support of Motion to Amend Judgment (“Schmidt Decl.”).
7

See Testimony of Thomas Huettner, Ex. O to Balestriere Decl., at

706:21-24.
8

See id. at 706:25-707:7.
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Cargill subsidiaries.”9 The investor complains that “[a] solution [to certain
financial issues facing the resort] can only be attained through a meaningful
dialogue with the parties to the Trust.”10 Huettner stated in his testimony that he
“used JV as shorthand . . . for the Trust.”11
C.

Statement of James Dingel
The next witness statement is by James Dingel, a Managing Director

and Senior Counsel at Carval. Dingel’s statement only concerns the corporate
structure governing the relationship between Cargill Financial, Carval, a third party
Cargill entity known as Cargill SOFOM, and Mexvalo.12 He does not discuss
whether there was a joint venture between the Cargill parties and plaintiff. Dingel
discusses how Mexvalo is a holding company for the Cargill parties’ interest in the
resort,13 and how certain management decisions concerning the Cargill parties’
interest in the resort were made by a committee of representatives from several of

9

9/13/12 email by Thomas Huettner, Ex. Q to Schmidt Decl.

10

Id.

11

Testimony of Thomas Huettner, Ex. O to Balestriere Decl., at 709:8-

709:20.
12

See Statement of James Dingel, Ex. D to Balestriere Decl., at D-2 - D-

13

See id. at D-8 - D-9.

5.

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these companies.14
D.

Statement of Matthew Bogart
The next witness statement is by Matthew Bogart, General Counsel

and Chief Compliance Officer for Carval. His brief statement discusses the
purchasing of a construction loan against the resort, and rebuts certain
miscellaneous allegations made by plaintiff concerning him during the
arbitration.15 Bogart does not testify to the nature of the relationship between
plaintiff and defendants.
E.

Statement of Richard Holland
The next witness statement is by Richard Holland, the lead developer

of the resort. In his statement, he describes his firm’s role in the actual
construction of the resort, and in Cargill’s acquisition of financing in the form of a
construction loan it later purchased.16 He does not testify to the relationship
between plaintiff and defendants. In cross examination, Holland stated that “[t]he
difference between Cargill Financial, Cargill, Inc., Mexvalo, and Carval was one

14

See id. at D-11 - D-14.

15

See Statement of Matthew Bogart, Ex. E to Balestriere Decl., at E-3 -

16

See Statement of Richard Holland, Ex. F to Balestriere Decl., at F-2 -

E-7.
F-8.
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that we never treated as a technical distinction. It was Cargill or Carval and those
were interchangeable terms from the way we were practicing under the project.”17
F.

Statement of Miguel Alessio Robles
The next witness statement is by Miguel Alessio Robles, Cargill’s

expert on the law of Mexico. Robles does not characterize plaintiff and
defendants’ relationship as a joint venture, or indeed use the word joint venture
anywhere in his testimony. His testimony is concerned first with describing the
Mexican trust laws governing the TGA,18 and second with rebutting certain of
plaintiff’s claims for relief in arbitration. Robles also discusses the relationship
between Mexvalo and plaintiff, describing how Cargill employees attached to
Cargill SOFOM (as opposed to Mexvalo) represented the Cargill parties on the
governing committee created by the TGA.19
G.

Statement of Richard Mandel
The final witness statement is by Richard Mandel, president of

Ramsfield, a non-party hotel real estate investor, lender, and asset manager. His
brief statement concerns Ramsfield’s role as hotel manager at the resort, and rebuts

17

Id. at F-12.

18

See Statement of Miguel Alessio Robles, Ex. G to Balestriere Decl., at

G-4 - G-5.
19

Id.
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plaintiff’s assertion that it was a potential financier of the resort’s construction.20
He does not testify as to the nature of the relationship between plaintiff and
defendants.
Plaintiff also submitted statements made by plaintiff’s management
and plaintiff’s Mexican legal expert in support of this motion. At oral argument,
plaintiff conceded that these communications could not be new, as they come
directly from the plaintiff and its expert and could have been produced at any time
— certainly in plaintiff’s amended pleadings. These statements are therefore not
considered in deciding this motion.
II.

LEGAL STANDARD
A.

Standard Under Rule 59(e)
A motion to alter or amend a judgment under Rule 59(e) of the

Federal Rules of Civil Procedure is appropriate only if the moving party
establishes: (1) an intervening change in controlling law; (2) the availability of new
evidence that was previously unavailable; or (3) the need to correct clear error or
prevent manifest injustice.21 Whether to grant a Rule 59(e) motion to alter or

20

See Statement of Richard Mandel, Ex. I to Balestriere Decl., at I-2 -

I-4.
21

See Virgin Atl. Airways, Ltd. v. National Mediation Bd., 956 F.2d
1245, 1255 (2d Cir. 1992).
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amend a judgment is “committed to the sound discretion of the district judge and
will not be overturned on appeal absent an abuse of discretion.”22 Reconsideration
of a court’s previous order under Rule 59(e) is an “extraordinary” remedy, which is
“to be employed sparingly in the interests of finality and conservation of scarce
judicial resources.”23
B.

Standard Under Rule 60(b)
“Rule 60(b) was intended to preserve the delicate balance between the

sanctity of final judgments and the incessant command of the court’s conscience
that justice be done in light of all the facts.”24 Rule 60(b) does not provide ap arty
with the opportunity to relitigate the merits of a case in an attempt to win a point
already “carefully analyzed and justifiably disposed.”25 Accordingly, motions for

22

McCarthy v. Manson, 714 F.2d 234, 237 (2d Cir. 1983).

23

In re Health Mgmt. Sys., Inc. Sec. Litig., 113 F. Supp. 2d 613, 614
(S.D.N.Y. 2000) (internal citation omitted).
24

Smalls v. United States, 471 F.3d 186, 191 (D.C. Cir. 2006) (quotation
marks, ellipses, and citation omitted). Accord Nemaizer v. Baker, 793 F.2d 58, 61
(2d Cir. 1986) (“Properly applied, Rule 60(b) strikes a balance between serving the
ends of justice and preserving the finality of judgments. In other words, it should
be broadly construed to do substantial justice, yet final judgments should not be
lightly reopened.”) (quotation marks and citations omitted).
25

In re Bulk Oil (USA) Inc., No. 93 Civ. 4492, 2007 WL 1121739 , at
*10 (S.D.N.Y. Apr. 11, 2007) (stating that a court should not “reconsider issues
already examined simply because [a party] is dissatisfied with the outcome of [its]
case. To do otherwise would be a waste of judicial resources.”) (quotation marks
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relief from judgment under Rule 60(b) are generally disfavored in the Second
Circuit.26
Rule 60(b) provides that a district court may relieve a party from a
final judgment or order in five enumerated circumstances and, according to a sixth
subparagraph, for “any other reason that justifies relief.”27 If any other
subparagraph of Rule 60(b) is applicable, Rule 60(b)(6) will not apply.28 The
Second Circuit has held that “[m]otions under [R]ule 60(b) are addressed to the
sound discretion of the district court and are generally granted only upon a
showing of exceptional circumstances.”29 In fact, “‘[i]t is well established . . . that
a proper case for Rule 60(b)(6) relief is only one of extraordinary circumstances, or

and citation omitted).
26

See Empresa Cubana Del Tabaco v. General Cigar Co., 385 Fed.
App’x 29, 31 (2d Cir. 2010) (“We have cautioned, however, that Rule 60(B)
motions are disfavored. . . .”); Simone v. Prudential Ins. Co. of Am., 164 Fed.
App’x 39, 40 (2d Cir. 2006); United States v. International Bd. of Teamsters, 247
F.3d 370, 391 (2d Cir. 2001).
27

Fed. R. Civ. P. 60(b)(6).

28

See Nemaizer, 793 F.2d at 63.

29

Mendell in behalf of Viacom, Inc. v. Gollust, 909 F.2d 724, 731 (2d
Cir. 1990) (citing Nemaizer, 793 F.2d at 61). Accord Paddington Partners v.
Bouchard, 34 F.3d 1132, 1142 (2d Cir. 1994).
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extreme hardship.’”30 The Second Circuit has set forth a three-prong test in order
for a Rule 60(b) motion to succeed: (1) there must be “highly convincing”
evidence in support of the motion; (2) the moving party must show good cause for
failing to act sooner; and (3) the moving party must show that granting the motion
will not impose an undue hardship on any party.31
Rule 60(b)(2) permits a court to relieve a party from a final judgment,
order, or proceeding in the case of “newly discovered evidence that, with
reasonable diligence, could not have been discovered [at the time of decision].”
When a party seeks relief based on newly discovered evidence under Rules 59(e)
and 60(b)(2), that party “must demonstrate that (1) the newly discovered evidence
was of facts that existed at the time of trial or other dispositive proceeding, (2) the
movant must have been justifiably ignorant of them despite due diligence, (3) the
evidence must be admissible and of such importance that it probably would have
changed the outcome, and (4) the evidence must not be merely cumulative or

30

Harris v. United States, 367 F.3d 74, 81 (2d Cir. 2004) (quoting
United States v. Cirami, 563 F.2d 26, 32 (2d Cir. 1997) (quotation marks and
citation omitted).
31

Kotlicky v. United States Fid. & Guar. Co., 817 F.2d 6, 9 (2d Cir.

1987).
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impeaching.”32
C.

Standard Under Rule 60(b)(3)
Rule 60(b)(3) provides for relief from judgment where there is “fraud

. . . , misrepresentation, or misconduct by an opposing party.” It is well established
that “a Rule 60(b)(3) motion cannot be granted absent clear and convincing
evidence of material misrepresentations and cannot serve as an attempt to relitigate
the merits.”33 According to the Second Circuit, fraud upon the court “is limited to
fraud which seriously affects the integrity of the normal process of adjudication”
and embraces “‘only that species of fraud which does or attempts to, defile the
court itself, or is a fraud perpetrated by officers of the court so that the judicial
machinery cannot perform in the usual manner its impartial task of adjudging
cases.’”34 Examples of conduct that meet the definition of fraud upon the court
include bribery of a judge, jury tampering, or hiring an attorney for the sole

32

Becnel v. Deutsche Bank AG, 838 F. Supp. 2d 168, 171 (S.D.N.Y.

2011).
33

Fleming v. New York Univ., 865 F.2d 478, 484 (2d Cir. 1989). Accord
King v. First Am. Investigations, Inc., 287 F.3d 91, 95 (2d Cir. 2002) (“Fraud upon
the court must be established by clear and convincing evidence.”).
34

Hadges v. Yonkers Racing Corp., 48 F.3d 1320, 1325 (2d Cir. 1995)
(quoting Kupferman v. Consolidated Research & Mfg. Corp. 459 F.2d 1072, 1078
(2d Cir. 1972) (internal quotation marks omitted)).
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purpose of influencing a judge.35
III.

DISCUSSION
Plaintiff has failed to meet the high burden set by each of these rules.

As to Rule 60(b)(3), plaintiff presents no evidence of fraud, misrepresentation, or
misconduct on the part of defendants. Even viewed in the worst possible light, the
witness statements submitted by plaintiff serve only to provide evidence of the
existence of an alleged implied joint venture agreement predating the TGA. The
statements may also serve, if read in the light plaintiff urges this Court to read
them, to impugn the credibility of defendants — an irrelevant consideration in the
context of a motion to dismiss, where I have already taken each and every assertion
made by plaintiff to be true, and drawn all reasonable inferences in its favor. The
alleged new evidence does not indicate defendants perpetrated a fraud on the Court
such that the machinery of the Court could not function impartially. Plaintiff’s
appeal to Rule 60(b)(3) can therefore be dismissed out of hand.
In reviewing plaintiff’s arguments for reconsideration under Rules
59(e) and 60(b)(2),36 this Court must determine (1) that the newly discovered
35

See United States v. Buck, 281 F.3d 1336, 1342 (10th Cir. 2002).

36

Rule 60(b)(6) of the Federal Rules of Civil Procedure provides for
relief from a judgment for “any [] reason that justifies relief,” and may be
considered only when no other subsection of Rule 60 applies. While I find that
plaintiff’s Rule 60(b)(2) arguments fail, I also find that this case does not present
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evidence was of facts that existed at the time of the motion to dismiss, (2) that
plaintiff was justifiably ignorant of them despite due diligence, (3) that the
evidence was admissible and probably would have changed the outcome, and (4)
that the evidence is not merely cumulative or impeaching.37 In doing so, I again
note that I had already taken all allegations in the Complaint as true for purposes of
deciding that motion.
As previously noted, in granting defendants’ motion to dismiss, I
determined both that plaintiff had insufficiently pled the existence of an impliedin-fact joint venture agreement and that any such agreement would be
unenforceable as a matter of law. At oral argument, plaintiff admitted that the
allegedly new evidence contained in the witness statements did not include new
terms for this implied-in-fact joint venture agreement.38 Therefore, plaintiff still
runs afoul of both Rule 8 of the Federal Rules of Civil Procedure and the

the sort of extraordinary circumstances or extreme hardship required by the Second
Circuit to grant relief under Rule 60's residual subsection. Indeed, the
circumstances here could not be more ordinary: If plaintiff believes I erred in
deciding either this motion or defendant’s motion to dismiss, it is free to appeal to
the Second Circuit (and indeed has appealed to the Second Circuit — plaintiff filed
an appeal on December 24, 2015, and stayed the appeal on March 8, 2016 to
pursue this motion). Plaintiff’s application for relief under Rule 60(b)(6) is denied.
37

Becnel, 838 F. Supp. at 171 (S.D.N.Y. 2011).

38

See Tr. at 25:21-25; 32:4-15.
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plausibility standard of Ashcroft v. Iqbal39 — it provides no evidence of the “offer,
the acceptance, the terms of the agreement, or evidence of the parties’ consent to
those terms.”40 It merely asserts that the joint venture exists.41
Even if the terms of the implied-in-fact joint venture agreement were
sufficiently pled, it would have had no impact on the outcome of defendants’
motion to dismiss. The only “new” evidence contained in the witness statements is
that the Cargill parties worked together to finance, construct, and manage the
resort, and that Mexvalo was a shell company designed to hold Cargill’s legal
interest in the resort’s construction and management. These are not new facts. The
Court explicitly considered the relationship between plaintiff, defendants, and
Mexvalo in deciding defendants’ motion to dismiss, including both Mexvalo’s role
as a special purpose vehicle and the Cargill parties’ coordinated efforts to manage
and direct the resort.
At that time, the Court was aware that Mexvalo was a special purpose

39

See 556 U.S. at 678.

40

Desarrolladora Farallon S. De R.L. De C.V., 2015 WL 7871040, at

*4.
41

In oral argument, plaintiff argued that the terms of the implied-in-fact
joint venture were sufficient in plaintiff’s amended pleadings, and that the new
evidence presented in this motion made that clear. See Tr. at 16:7-16:13. This
amounts to an argument for reconsideration based on clear error; however, because
plaintiff neither moved under nor briefed this argument, I disregard it.
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vehicle designed to hold the Cargill parties’ interest in the resort, and that Mexvalo
had signed the TGA with plaintiff. The Court also determined that it did not matter
that Mexvalo, as opposed to a parent Cargill entity, had executed the TGA, because
“[w]hen there is both a written and unwritten contract, the written contract is
upheld if it governs the same subject matter as the unwritten or implied contract,
even if the parties to these agreements are not identical.”42 The TGA reduced the
relationship between the Cargill parties and plaintiff to writing, and rendered any
previous oral agreements unenforceable. The witness statements presented here —
showing that the Cargill parties had their own internal framework for managing
Cargill’s investment in the resort, and that employees assigned to other Cargill
entities dealt with plaintiff — present neither new nor probative information.
There is one exception: the testimony and communications of
Huettner, who referred to the relationship between defendants and plaintiff as a
“JV” or “joint” relationship. However, these minimal references by one person do
not warrant relief from judgment. Huettner is a businessman who, at the time of
these communications, was responsible for managing certain aspects of the
financial relationship between plaintiff, defendants, and the resort. He is not a
lawyer. As he explained in his testimony, Huettner utilized the term “JV” as
42

See id. at *6 (citing Air Atlanta Aero Engineering Ltd. v. SP Aircraft
Owner I, LLC, 637 F. Supp. 2d 185, 196-97 (S.D.N.Y. 2009)).
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shorthand for the complex trust structure governing the relationship between the
parties — a structure embodied in and governed by the TGA. While the
communications and testimony do feature the words “JV” and “joint venture,” and
while these communications do post-date the signing of the TGA, these
communications are between Huettner and plaintiff, were in plaintiff’s possession
at the time defendants’ motion t dismiss was decided, and therefore cannot be
newly discovered. Furthermore, it is likely that Huettner was simply using a
shorter, simpler term than “fideicomiso” (the Mexican trust structure in use here),
as opposed to voicing his reasoned opinion that plaintiff and defendants were
operating under an implied-in-fact joint venture agreement different from and
broader than the relationship embodied in the TGA. Plaintiff has failed to
demonstrate that this new evidence, to the extent it is new, would have changed
this Court’s outcome. Its motion for post-judgment relief is therefore denied.

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- Appearances For Plaintiff:
John Balestriere, Esq.
Jillian McNeal, Esq.
Balestriere, Fariello
225 Broadway
Suite 2900
New York, NY 10007
[phone]
Matthew Schmidt, Esq.
Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
[phone]
For Defendants:
Michael Verde, Esq.
Philip Nemecek, Esq.
Tenly Mochizuki, Esq.
Katten Muchin Rosenman, LLP
575 Madison Avenue
New York, NY 10022
[phone]

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