Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


March 14, 1989


The opinion of the court was delivered by: WEBER

 Plaintiff sued the Republic of Honduras and its economic development arm CONADI to recover for losses it sustained in an aborted project to build a foundry in Honduras. We previously addressed issues of jurisdiction over foreign sovereigns and nationals and dismissed individual defendants for lack of personal jurisdiction. Obenchain v. Corporacion Nacionale de Inversiones, 656 F. Supp. 435 (W.D. Pa. 1987). The remaining defendants have now moved for judgment on the pleadings or for summary judgment. The parties have filed briefs and supporting evidentiary materials and we will treat this as a Rule 56 motion for summary judgment.


 A basic outline of the pertinent background may be found in our previous Opinion, 656 F. Supp. 435, and we will not repeat it here.


 Plaintiff's Complaint consists of 4 counts: Count I v. CONADI for breach of contract and fraud; Count II v. Fundiciones for breach of contract; Count III v. Honduras as guarantor of CONADI's obligations; Count IV v. various individual defendants for fraud. In our previous Opinion we dismissed the individual defendants for lack of personal jurisdiction, eliminating Count IV. We also required plaintiff to effect service upon Fundiciones as required by statute or face dismissal of that defendant. Perhaps because Fundiciones is now defunct, service was apparently not attempted and Fundiciones will therefore be dismissed, eliminating Count II.

 The remaining defendants have now filed a motion for summary judgment on several grounds. CONADI seeks summary judgment on Count I because a) plaintiff was not party to any contract with CONADI; b) CONADI did not obligate itself to loan money to Fundiciones and therefore cannot be in breach for failing to loan funds; c) any claim by plaintiff whether in tort or contract, is barred by applicable statutes of limitations. Defendant Honduras seeks summary judgment because if CONADI is not liable to plaintiff, Honduras cannot be liable as CONADI's guarantor.

 In response plaintiff appears to have narrowed its claims to the contention that CONADI had an obligation to finance Fundiciones and when it ceased financing it breached its obligation causing collapse of the project. On the limitations issues, plaintiff argues for a tolling period or for the application of a longer limitations period under a different statutory provision. Plaintiff appears to have abandoned the fraud component of Count I.


 Plaintiff attempts to ground its breach of contract action in 3 related written contracts and 1 alleged oral modification, created at various points in the life of this project. It is necessary to review these contracts in some detail to understand the parties' interrelation and their concommitant obligations.

 Exhibit A to plaintiff's Complaint is a written contract dated November 21, 1976. The contracting parties are CONADI and Obenchain International, S.A., a Panamanian corporation. Defendants correctly point out that Obenchain Corp., the plaintiff here, is not a party to this agreement, and Obenchain International, S.A. is not a party to this lawsuit. In an unusual attempt to pierce its own corporate veil, plaintiff contends that Obenchain Corp. is the proper plaintiff because Obenchain International is a wholly owned subsidiary with no independent assets or office. The two companies have common directors, officers and employees all of whom are paid solely by Obenchain Corp. Although we consider this shifting corporate identity which changes to suit corporate expediency to be highly questionable, particularly in light of the very real impact it may have on jurisdiction, see Obenchain, 656 F. Supp. at 440, we need not resolve the case on this basis.

 By the first contract Obenchain and CONADI agreed to create a separate corporate entity, Fundiciones. The contract sets forth the parties' relative shares of Fundiciones stock and the amount of capital to be contributed by each party. The agreement also contains the new company's bylaws.

 Exhibit B is a written contract dated August 28, 1979 between Fundiciones and CONADI. By the terms of this agreement, Fundiciones grants mortgages on its land and other assets to CONADI to secure any debts it owes or may owe to CONADI in the future. The agreement does not obligate CONADI to loan any sum to Fundiciones, and indeed paragraph 4 of the agreement specifically states:

a) that the acceptance of the mortgages contained in the present contract does not imply for CONADI the obligation of granting loans, credits, nor to make any of the stated operations, if for reasons it does ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.