United States District Court, D. Delaware
filed a Motion for Issuance of a Hague Convention Letter of
Request to Obtain Evidence in Morocco. (D.I. 82). Defendant
does not oppose this motion but does seek to add more
evidence to the request. (D.I. 86). Plaintiff opposes these
additions. (D.I. 89).
Factual and Procedural History
August 6, 2013, Plaintiff Compagnie des Grands Hotels
d'Afrique SA. ("CGHA") commenced an arbitration
proceeding (the "Arbitration") through the
International Chamber of Commerce ("ICC") against
Woodman Maroc S.a.r.l. ("Woodman"), a former
subsidiary of Starwood Capital Group Global I LLC
("SCG") and Defendant Starman Hotel Holdings LLC
("Starman"). (D.I. 82-1 at 4). CGHA contracted with
an entity now known as Woodman approximately thirty years ago
for the management of CGHA's Royal Mansour Hotel (the
"Hotel"). (Id. at 3). The basis of the
Arbitration was that, after Woodman was obtained by Meridian
Group in 2005, Woodman failed to properly invest in the
Hotel. (Id.). Ten months after CGHA commenced the
Arbitration, Starman, which had obtained Woodman's parent
company and Woodman, sold them to a United Kingdom entity,
Maquay Investments Ltd. ("Maquay"). (Id.
at 4). Maquay then placed Woodman's parent into
insolvency proceedings. (Id.). Woodman formally
withdrew from the Arbitration, citing insolvency and
inability to pay any judgment or award. (Id.). CGHA
requested and received an interim order from the Arbitrators
directing Woodman to (1) return possession and operation of
the Hotel to CGHA, (2) account for payments it had made after
ceasing to pay the minimum fee of the Arbitration award, and
(3) cease making payments to third parties. (Id. at
4-5). CGHA was awarded approximately $60 million in damages
from Woodman in the Arbitration. (Id. at 5). The
Arbitrators also found that Starman had acted in the place of
Woodman under the management agreement, that CGHA was led to
believe that it could rely on Starman assuming all of
Woodman's responsibilities under the agreement, and that
Maquay had been formed solely to receive the shares of
Woodman's parent and place it into voluntary liquidation.
(Id.). The Arbitration award was recognized in a
court tribunal in Morocco on December 14, 2016.
Arbitration award was against Woodman only. Because of the
insolvency proceedings, Woodman is now unable or unwilling to
pay the award. (Id.). CGHA brought the present
action against Starman in order to collect the award from it.
(D.I. 83 at 3). CGHA initially claimed that Starman could be
held liable for Woodman's actions based either on agency
theory or alter ego theory. (Id.). This Court
dismissed the agency cause of action on January 9, 2019, but
allowed CGHA to proceed with the alter ego claim.
(Id. at 2).
filed a motion for the issuance of a letter of request to
obtain discovery in Morocco. (D.I. 82). The request seeks
evidence from seven entities and one individual: Woodman, PwC
Maroc, FIDAB, FIGES, Societe Generate, Abdelghani Hadri, KPMG
and Fidaroc Grant Thornton ("FGT"). (Id.
at 5-6). As this evidence is sought in Morocco, a letter of
request must be issued in accordance with the Hague
Convention on the Taking of Evidence Abroad in Civil or
Commercial Matters ("Hague Convention").
(Id. at 1). Both the United States and Morocco are
signatories to the Hague Convention. (Id.).
issues addressed in this opinion are: (1) whether to issue a
letter of request, pursuant to 28 U.S.C. § 1781, to
obtain evidence in Morocco, and (2) if the letter of request
is issued, what evidence to request from KPMG and FGT.
Standard for the Issuance of Letters of Request
parties in this case agree to the issuance of a letter of
request to obtain evidence in Morocco. (D.I. 83 at 5-8).
Further, both the United States and Morocco are signatories
of the Hague Convention, indicating a mutual commitment to
providing evidence for use in the other's legal
proceedings. (D.I. 82 at 3). Courts "routinely issue
such letters where the movant makes a reasonable showing that
the evidence sought may be material or may lead to the
discovery of material evidence." Netherby Ltd. v.
Jones Apparel Grp., Inc., 2005 WL 1214345, at *1
(S.D.N.Y. May 18, 2005); see Tulip Computers Intern. B.
V. v. Dell Computer Corp., 254 F.Supp.2d 469, 474 (D.
Del. 2003). The "burden is not great" for a party
seeking a letter of request because "the Convention
procedures are available whenever they will facilitate the
gathering of evidence by the means authorized in the [Hague]
Convention." Tulip Computers Intern. B. V, 254
F.Supp.2d at 474. However, "[w]here the relevancy or
materiality of the [discovery] sought is doubtful, the court
should not grant the application for letters of
request." Merck Sharp & Dohme Corp. v. Sandoz,
Inc., 2013 WL 12203112, *3 (D.N.J. June 7, 2013)
(quoting United States v. Rosen, 240 F.R.D. 204, 215
(E.D. Va. 2007)).
The Alter Ego Theory
order to prove alter ego liability, a plaintiff "must
show (1) that the corporation and its shareholders operated
as a single economic entity, and (2) that an overall element
of injustice or unfairness is present." Trevino v.
Merscorp, Inc., 583 F.Supp.2d 521, 528 (D. Del. 2008).
The second element requires plaintiffs to prove that
defendants' "use of the corporate form would, if
left unchecked, work as a fraud or something in the nature of
a fraud." Mobil Oil Corp. v. Linear Films,
Inc., 718 F.Supp. 260, 267 (D. Del. 1989). The evidence
sought by the letters of request must relate to one of the
two elements of alter ego liability.
Whether to Issue a Letter of Request
parties agree to the evidence requested of Woodman, PwC
Maroc, FIDAB, FIGES, Societe Generale, and Abdelghani Hadri.
(Id.). The request of Woodman, the judgment-debtor,
is for documents and communications regarding its dealings
with Starman, its financial status, and its dealings with
auditors. (D.I. 83 at 5). The request of PwC Maroc, a legal
service provider, is for documents prepared and filed for
Woodman, and for communications between PwC Maroc and Woodman
and Woodman's parent company. (Id. at 5-6). The
request of FIDAB, a legal service provider, is for documents
prepared and filed for Woodman. (Id. at 6-7). The
request of FIGES, a legal service provider, is for
communications relating to Woodman's handover of the
Hotel to CGHA and communications between FIGES and CGHA and
CGHA's parent company. (Id. at 7). The request
of Societe Generale, a bank, is for materials showing
Woodman's continued payments to third parties while
failing to make minimum fee payments. (Id. at 7-8).
The request of Hadri, the General Manager of the Hotel ...