Submitted: August 30, 2012
Rolin P. Bissell, Esq., Tammy L. Mercer, Esq., Elisabeth S. Bradley, Esq., YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; David R. Marriott, Esq., David Greenwald, Esq., CRAVATH, SWAINE & MOORE, LLP, New York, New York; Attorneys for Plaintiff.
Raymond J. DiCamillo, Esq., Nicole C. Bright, Esq., RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Garrard R. Beeney, Esq., John L. Hardiman, Esq., SULLIVAN & CROMWELL LLP, New York, New York; Attorneys for Defendant Koninklijke Philips Electronics, N.V.
PARSONS, Vice Chancellor.
This action is before me on a motion for summary judgment relating to a dispute between a Netherlands holding company, which controls one of the largest electronics companies in the world, and an Italian businessman, who is the managing shareholder and founder of a large television manufacturing and sales company in Italy.
The holding company is a participant in a joint venture that needed financing and approached the Italian businessman for a substantial loan. The Italian businessman, who had a longstanding business relationship with one of the holding company's other subsidiaries, agreed to make the loan. The joint venture eventually went into bankruptcy and defaulted on its loan obligations, including the loan from the Italian businessman.
The Italian businessman filed this action alleging, among other things, that the Netherlands holding company induced him to make the loan by representing that it would support and continue to back the joint venture. The holding company denies making those representations or having any obligations to the Italian businessman.
The defendant holding company has moved for summary judgment on multiple grounds. As a preliminary matter, the defendant seeks to dismiss all counts because the plaintiff has no standing. The defendant also contends that some of the claims are time-barred by the doctrine of laches. The defendant further asserts that some claims are governed by English law and barred by the English statute of frauds. Finally, the defendant argues that certain counts of the complaint fail to state a claim as a matter of Italian, Dutch, and Delaware law.
Having considered the parties' extensive briefing and arguments and the record before me at this stage, I find that, for the purposes of summary judgment, the plaintiff's claims are not barred for lack of standing. I also deny summary judgment on the ground of laches based on the existence of genuine issues of material fact as to whether the analogous statute of limitations may have been tolled because the plaintiff's injuries were inherently unknowable. Because the defendant failed to prove foreign law sufficiently to establish its English statute of frauds defense and to defeat the plaintiff's Italian law claim for deceit by a third party and bad faith, I refuse to grant summary judgment on those counts. I grant summary judgment in the defendant's favor, however, on the plaintiff's Italian law claim for breach of implied or oral contract and his Dutch law claim, because both claims fail as a matter of foreign law. Finally, I grant the defendant's motion for summary judgment regarding the plaintiff's claim for unjust enrichment.
A. The Parties
Plaintiff, Carlo Vichi, is the managing shareholder and founder of Mivar di Carlo Vichi S.a.p.a. ("Mivar"), a large Italian company engaged in television sales and production. Vichi resides in Milan, Italy.
Defendant Koninklijke Philips Electronics N.V. ("Philips" or "Philips N.V." or "Defendant") is a corporation located in and organized under the laws of the Netherlands. Philips N.V. is a publicly listed holding company with few employees and no operations. Philips N.V. is the parent of the Philips family of companies, which includes hundreds of subsidiaries worldwide operating in a diverse group of industries, ranging from electronics and lighting to healthcare.
Defendant LG.Philips Displays Finance LLC ("Finance") is a subsidiary of LG.Philips Displays Holdings B.V. ("LPD"). LPD, which is not a party to this case, is a joint venture between Philips N.V. and LG Electronics, Ltd. ("LGE"), a South Korean company. Defendant LG.Philips Displays International Ltd. ("International") is also a subsidiary of LPD and was the sole member and manager of Finance.
1. The formation of LPD
LPD was formed on June 30, 2001 as a joint venture between Philips and LGE to operate cathode ray tube ("CRT") television production facilities. Both companies contributed capital, assets, and employees to LPD, but Philips maintained a 50% plus one-share controlling stake.
At formation, LPD expected to have assets valued at $4.58 billion, approximately 36, 000 employees, and a global market share of 26% in both color picture tube and color display tube manufacturing. LPD was financed initially by a $2 billion credit facility (the "Bank Loan") consisting of a $1.35 billion term loan and a $650 million revolving credit facility. The Bank Loan was led by JP Morgan Chase Bank, ABN AMRO, and Citibank/Salomon Smith Barney (the "Bank Syndicate").
After just one year of existence, LPD breached the covenants of the Bank Loan and was forced to renegotiate the Loan with the participants. On May 31, 2002, Philips N.V. and LGE agreed to guarantee $200 million of the Bank Loan and provide $250 million—$125 million each—to LPD.
Mivar had been a longtime customer of Philips television components. Felice Albertazzi and Fabio Golinelli, who were employees of Philips S.p.A. ("Philips Italia") (a wholly owned subsidiary of Philips N.V.), were the primary salespeople with whom Mivar dealt.
In 2001, as a result of the formation of LPD, Vichi began purchasing his television components from LPD. Vichi alleges that "Philips notified Mivar that Philips would be conducting its CRT business through LPD." According to Philips, Vichi "understood that LPD was a 'new company, '" but nonetheless "elected" to become a customer of LPD. Albertazzi and Golinelli became part of the LPD sales organization, although they continued to be employed by Philips Italia. Under a "Sales Support Agreement, " LPD reimbursed Philips Italia for their salaries. Mivar alleges that Albertazzi and Golinelli emphasized their connection to Philips and described LPD as a part of Philips. 
2. The loan and notes transaction
In March 2002, LPD and Mivar discussed the possibility of a short-term loan to LPD of 7 million, which ultimately evolved into a 25 million loan. Mivar made the 25 million loan to LPD on April 23, 2002, and LPD repaid it on June 27, 2002. While they were negotiating for the 25 million loan, LPD and Mivar also discussed a second loan to LPD that would be closer to 200 million. According to Vichi, Albertazzi told him that "Philips wanted to borrow money from Vichi" to demonstrate to the market and Philips N.V.'s lenders that Vichi had confidence in Philips N.V.'s CRT business.Vittorio Necchi, a financial and legal advisor to Vichi and Mivar, engaged in a number of meetings and discussions with Albertazzi and Kiam-Kong Ho, LPD's treasurer, about the terms of the second loan.
In April 2002, Golinelli, Ho, and Necchi met in Hong Kong to negotiate the terms of the larger loan. The parties dispute whether Albertazzi or Ho was the primary negotiator for LPD. Vichi alleges that during the loan discussions, Albertazzi and Golinelli misrepresented that LPD was strong and had a bright future, despite a ¶oundering CRT market. Vichi also avers that Albertazzi represented that Philips "would stand behind LPD to ensure that it could repay Vichi's loan" and that Albertazzi "was 100% Philips, " and that "Vichi need not have any concerns about LPD's ability to repay the Loan." Necchi employed the services of Monte dei Paschi di Siena Finance, Banca Mobilare S.p.A. ("MPS Finance"), a large Italian bank, to assist him in the negotiations. MPS Finance used lawyers from Allen & Overy LLP for the transaction. Plaintiff contends, however, that MPS Finance was limited to the role of "arranger" and that Vichi was not independently represented by counsel. 
The final terms of the notes (the "Notes") provided for: (1) a 200 million loan to LPD Finance; (2) a guarantee by LPD; (3) a five-year term ending in 2007; and (4) a floating interest rate. The agreed interest rate was 262.5 basis points over the 6 month Euro Interbank Offered Rate (Euribor). The Notes comprised a series of documents signed by employees of LPD, including the Notes themselves, a Fiscal Agency Agreement, a Subscription Agreement, and a Guarantee by LPD. These documents each contained a choice of law provision specifying that the agreements are to be "governed by, and shall be construed in accordance with English law."
S.I.R.E.F. Fiduciaria S.p.A. ("SIREF"), an Italian trust company, purchased the Notes on July 9, 2002. LPD and SIREF also entered into a "Put Option Agreement" whereby SIREF could sell the Notes back to LPD Finance if Philips N.V. ceased to own at least 50% of LPD, which itself was a guarantor of the Put Option Agreement.
3. The Offering Circular
The parties had agreed to list the Notes publicly on the Luxembourg Exchange. In furtherance of that goal, on August 26, 2002, Allen & Overy issued an offering circular (the "Offering Circular") to be given to prospective buyers of the Notes. The Offering Circular, which was issued in its final form on August 26, 2002, disclosed, among other things, that: (1) LPD was in the process of restructuring its business; (2) LPD was facing a decrease in spending by end customers; and (3) LPD "expect[ed] to incur losses for some time and . . . cannot give assurance that [it] will achieve profitability soon." Most importantly, the Offering Circular disclosed that "[n]either Philips nor LGE is a party or a guarantor of the Notes."
4. Attempted restructuring
In 2002 and 2003, LPD continued to face challenging market conditions. In late 2003, a second financial restructuring became necessary, and LPD met with Mivar and Vichi to discuss the terms of a possible restructuring. The proposed restructuring would have extended the maturity date of the Bank Loan beyond the maturity date of the Notes. Consequently, LPD requested, among other things, that Vichi and Mivar extend the maturity of the Notes to 2012. During the restructuring negotiations, "[Necchi] expressed his view that the shareholders [LG and Philips] did not believe in the long-term viability of LPD." According to the minutes of a 2003 meeting between LPD (represented by its CFO Peter van Bommel, Edmund Li, Albertazzi, and Golinelli) and Mivar (represented by Necchi and Vichi), Necchi indicated that "if creditors are asked to postpone full repayment of their debts till 2012, the shareholders should give strong support by means of shareholders' guarantee."
In February 2004, Vichi made a counterproposal whereby LGE and Philips each would guarantee 50% of the Notes. In March 2004, Philips N.V. and LGE offered that they each would guarantee $50 million if Vichi would accept the original restructuring proposal.
Ultimately, LPD, Philips N.V., LGE, and the bank participants of the Bank Loan agreed to restructure the loan without Vichi's participation. The restructuring included, among other things, a guarantee by LGE and Philips N.V. for $50 million each.
5. Default and bankruptcy
Thereafter, LPD's financial condition worsened. LPD ultimately defaulted on the Notes and filed for bankruptcy on January 27, 2006. The bankruptcy proceeding is currently pending in the District Court of 's-Hertogenbosch in the Netherlands. Vichi is a member of the Creditors' Committee in that proceeding.
C. Procedural History
On November 29, 2006, Vichi commenced this action by filing a complaint against Philips and other parties, which charged them with various counts of breach of contract, fraud, unjust enrichment, and breach of fiduciary duty. Following extensive discovery, Vichi filed an amended complaint and, later, a second amended complaint (the "Complaint"). Defendants Philips N.V., Peter Warmerdam, and Kiam-Kong Ho moved to dismiss the claims against them based on lack of personal jurisdiction, forum non conveniens, and failure to state a claim.
In an Opinion dated December 1, 2009, I granted the motions to dismiss all claims against Warmerdam and Ho under Court of Chancery Rule 12(b)(2) for lack of personal jurisdiction. I also dismissed Counts III, VIII, and X against Philips under Rule 12(b)(6) for failure to state a claim. As a result, Philips N.V. was the only remaining Defendant and only the following six claims remained against it: Count II (Unjust Enrichment), Count IV (Breach of Implied or Oral Contract under Italian law), Count V (Breach of Oral or Implied Contract under Delaware law), Count VI (Fraud under Delaware law), Count VII (Fraud under Italian law), and Count XI (Breach of Fiduciary Duty under Dutch law).
On July 24, 2012, Philips N.V. moved for summary judgment in its favor on all the remaining claims against it in this action. After extensive briefing, the Court heard argument on August 30, 2012. This Opinion constitutes my ruling on Philips N.V.'s motion.
D. Parties' Contentions
Philips N.V. seeks summary judgment on several independent grounds. First, Philips N.V. argues that all claims against it should be dismissed because Vichi has no standing. Specifically, Philips N.V. argues that Vichi has not proven he is the owner of the Notes, and that his Complaint failed to include all indispensable parties to this dispute. Second, Philips N.V. avers that all of Vichi's claims except Counts IV and V are barred by a three-year period of limitations. Third, Philips N.V. contends that the Notes' English choice of law provisions mandate the application of English law, and that all of Vichi's claims, except Count XI, are barred by the English statute of frauds. Finally, Philips N.V. alleges that Counts II, IV, VII, and XI independently fail to state a claim as a matter of Italian, Dutch, or Delaware law.
Vichi disputes all of Philips N.V.'s contentions and urges the Court to deny Philips N.V.'s motion for summary judgment. Specifically, Vichi argues that he is the sole owner and beneficiary of the Notes, and, thus, has standing. Vichi also asserts that the statute of limitations should be tolled on three separate theories: (1) Vichi's injuries were inherently unknowable; (2) Philips fraudulently concealed its misconduct; and (3) Vichi reasonably relied on Philips as a fiduciary. Regarding the statute of frauds defense, Vichi responds that: (1) Philips N.V. waived the defense; (2) under English law, the choice of law clause in the Notes does not apply to Vichi's claims; and (3) even if that clause did apply, the English statute of frauds still would not bar Vichi's claims. Finally, Vichi contends that Counts II, IV, VII, and XI do meet the requirements for stating a claim under the law of the jurisdictions whose substantive law governs each of those counts.
“Summary judgment is granted if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, 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." In deciding a motion for summary judgment, the evidence and the inferences drawn from the evidence are to be viewed in the light most favorable to the nonmoving party and the moving party has the burden of demonstrating that no material question of fact exists. The party opposing summary judgment, however, may not rest upon the mere allegations or denials contained in its pleadings, but must offer, by affidavit or other admissible evidence, specific facts showing that there is a genuine issue for trial.
In addition, summary judgment may be denied when the legal question presented needs to be assessed in the "more highly textured factual setting of a trial- or the Court "decides that a more thorough development of the record would clarify the law or its application."
Court of Chancery Rule 44.1 provides that matters of foreign law, which abound in this dispute, are questions of law. Therefore, the Court may determine disputes as to foreign law at the summary judgment stage if "there is no genuine issue as to any material fact." Summary judgment, however, is inappropriate where the nonmoving party has demonstrated a triable issue of fact or where the consideration of evidence would aid the court in reaching its decision.
B. Does Vichi Have Standing?
Philips N.V. seeks to dismiss all of Vichi's claims because Vichi lacks standing. ''Standing" refers to the right of a party to invoke the jurisdiction of a court to enforce a claim or redress a grievance. The issue of standing is concerned "only with the question of who is entitled to mount a legal challenge and not with the merits of the subject matter of the controversy." Generally, in order to have standing:
(1) [The plaintiff must have] . . . suffered an injury in fact-an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) there must be a causal connection between the injury and the conduct complained of-the injury has to be fairly traceable to the challenged action of the [respondent] and not the result of the independent action of some third party not before the court; and ...