United States District Court, Northern District of Illinois, E.D
December 2, 1983
INSTITUTO NACIONAL DE COMERCIALIZACION AGRICOLA (INDECA), PLAINTIFF,
CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge. [fn*] This is one of two opinions issuing concurrently in this action (the other deals with affirmative defenses asserted by the Continental Bank). In each instance the most valuable analytical input for this Court's consideration came from its law clerk, Linda Rusch, rather than the parties' submissions (extensive though they were).
MEMORANDUM OPINION AND ORDER *fn*
Instituto Nacional de Comercializacion Agricola ("Indeca"), a
organized under Guatemalan law, has as part of its responsibility
the purchase on international markets of foodstuffs and
agricultural staples for the Guatemalan people. It sues a group
of defendants for an allegedly fraudulent scheme in which Indeca
was bilked of over $5 million in its attempted purchase of 6,000
metric tons of black beans that proved to be nonexistent.*fn1
Indeca has now moved for summary judgment under Fed.R.Civ.P.
("Rule") 56 against Deborah Bell ("Bell") and Rumex International
("Rumex") on Count I (breach of contract) and against Bell,
Rumex, Robert Tucker ("Tucker") and Michael Ball ("Ball") on
Count II (fraud). Shirley Nagel ("Nagel") and Quosando
Corporation ("Quosando")*fn2 have moved for summary judgment against
Indeca on Counts I, II and VI (asserting a RICO*fn3 violation). For
the reasons stated in this memorandum opinion and order, Indeca's
motion is granted and the Nagel-Quosando motion is denied.
In July 1980 Indeca sought to purchase a large quantity of
black beans. Thomas J. Lipani ("Lipani") learned of Indeca's need
and wanted to submit a bid, but he needed a black bean supplier.
Lipani spoke with Juan Jose Caceres ("Caceres"), a friend and
sometime business associate, who (1) happened to have some
connection to Indeca head Carlos Ramirez ("Ramirez") and (2) knew
Nagel, who Caceres thought might know where Lipani could purchase
the beans. On Caceres' recommendation Lipani communicated with
Nagel, who in turn spoke with Bell, a commodities broker doing
business as Rumex.
Between July 28 and August 19 numerous telexes were sent,
either bearing Nagel-Quosando's name (authorship of those is
disputed by Nagel) or directed to Nagel-Quosando, regarding the
sale of black beans.*fn4 Nagel concededly wrote an August 19 letter
appointing Lipani as Quosando's representative in Guatemala (that
letter was later rejected by the Guatemalan government for its
informality). Bell too sent a letter, this one appointing Lipani
as Rumex' representative.
Nagel said in her deposition she had never seen any of the
telexes before the start of the 1981 FBI investigation into the
transaction, though she admitted writing the Lipani appointment
letter. Nagel also testified she thought she was out of the
transaction once the Guatemalan government
rejected the Lipani appointment letter. In any event, on
August 22 a written contract ("Indeca-Rumex contract") was
entered into by Ramirez on behalf of Indeca and Lipani on behalf
of Rumex for the sale of black beans on virtually the same terms
as stated in the purported "Nagel-Quosando" telexes, except for
changes in the port of origin and the bank at which the letter of
credit should be opened. Neither Nagel nor Quosando is mentioned
in the Indeca-Rumex contract.
Thereafter Bell negotiated a contract dated September 4 with
Irving Pheterson ("Pheterson") doing business as International
Association of Grocers, Inc. ("IAG"), under which Pheterson
agreed to supply the beans for sale to Indeca. Rumex had
represented in the Indeca-Rumex contract it already owned the
beans. Pheterson testified in his deposition he had never heard
of Nagel or Quosando.
Another provision of the Indeca-Rumex contract required Indeca
to open a letter of credit ("Letter") at Continental Illinois
National Bank and Trust Company of Chicago ("Continental"),*fn5 with
delivery of the beans to occur within 30 days of such opening.
Though the Letter was paid the beans were not delivered. There
was a flurry of telexes through the end of 1980 among Rumex,
Bell, Lipani, Caceres and Ramirez, with repeated promises of
delivery by Rumex and Bell — never carried out. Then Tucker's
January 15, 1981 letter told Indeca the beans would not be
delivered, as Rumex had been defrauded by its supplier.
Part of Indeca's Count II fraud claim asserts Tucker's, Bell's
and Ball's participation in presenting false documents to
Continental to obtain payment of the Letter. Those three
defendants have been convicted on nine counts of wire fraud under
18 U.S.C. § 1343, based upon their participation in such
presentation and misrepresentations to Indeca regarding the bean
shipments. All of them have appealed their convictions.
1. Count I: Breach of Contract
To prevail on its breach of contract claim against Bell and
Rumex, Indeca must prove the existence of the contract, Bell's
and Rumex' breach, Indeca's damages as a result of that breach
and Indeca's performance of all its conditions precedent. Thilman
& Co. v. Esposito, 87 Ill.App.3d 289, 296, 42 Ill.Dec. 305, 311,
408 N.E.2d 1014, 1020 (1st Dist. 1980). To meet that burden
Indeca has submitted:
1. the affidavit of Ana Imelda Garavito Castellanos
("Garavito Affidavit"), custodian of all Indeca
records regarding the transaction, which identifies
the following documents;
2. a translated copy of the Indeca contract;
3. Tucker's January 15, 1981 letter admitting
Rumex cannot deliver;
4. Indeca's application for the Letter;
5. issuance by Banco de Guatemala ("Banco") of the
Letter, later confirmed by Continental; and
6. Banco's liquidation of the Letter to Rumex.
Tucker has moved to strike the Garavito Affidavit, claiming (1)
her identification of its attached documents is not based on her
personal knowledge and (2) the affidavit does not show her
competence to testify. Essentially Tucker is objecting to
Indeca's effort to authenticate the documents.*fn6 Even assuming
arguendo the validity of Tucker's objections to the Garavito
Affidavit, the documents essential to Indeca's breach of contract
claim have been authenticated in other permissible ways. Under
Fed.R.Evid. 902(8) the Indeca-Rumex contract is
self-authenticated as a notarized document. By his own May 25,
1983 submission Tucker (1) authenticated his January 15, 1981
letter to Indeca (Tucker Aff. ¶ 21) and (2) submitted Banco's
liquidation of the Letter in Rumex' favor to support
Tucker's own statement of operative facts (Tucker May 23 Exs. 9,
12). All those documents are thus effectively established, and
they in turn establish the existence of the Indeca-Rumex
contract, Indeca's fulfillment of its conditions precedent,
Rumex' breach and Indeca's resultant damages. Indeca has clearly
satisfied its burden on Count I.
Moreover Bell and Rumex have elected not to submit any evidence
in opposition to those matters, but simply to rest on their
pleadings. Without more, summary judgment could properly be
entered against Bell and Rumex on Count I. Posey v. Skyline
Corp., 702 F.2d 102, 105 (7th Cir. 1983), cert. denied, ___ U.S.
___, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983).
However, Tucker's submission in opposition to Indeca's Count II
summary judgment motion has asserted an in pari delicto defense
relevant to both Counts I and II.*fn7 Because of the identity of
issues, further discussion of that defense will be deferred to
the more logical place for its treatment: the next section of
2. Count II: Fraud
Indeca moves for summary judgment on Count II, asserting the
collateral estoppel effects of the criminal convictions of Bell,*fn8
Tucker and Ball for wire fraud under 18 U.S.C. § 1343. That
motion compels consideration both of the elements of a civil
fraud claim and of collateral estoppel principles.
First, to prevail on its fraud claim Indeca must show (Almgren
v. Engelland, 94 Ill.App.3d 475, 477, 50 Ill.Dec. 66, 68,
418 N.E.2d 1060, 1062 (1st Dist. 1981)):
1. misrepresentation of a material fact
2. made for the purpose of influencing the other
party to act,
3. by a person who knew or believed the statement
to be untrue,
4. as it was in fact,
5. to a person who believes and relies on the
Indeca asserts the criminal convictions establish all those
elements except for its reliance, as to which it submits
Again Bell and Rumex offer no evidence in rebuttal, and Ball
has made no submission at all. Tucker however raises five points
in opposition to the motion:
1. Under Illinois rules of collateral estoppel a
criminal conviction is only prima facie evidence, not
conclusive evidence, of matters established in the
2. Under federal collateral estoppel principles the
doctrine is inapplicable here because Tucker, as a
criminal defendant, lacked procedural advantages
afforded civil litigants.
3. Because the convictions have been appealed, this
Court cannot give them preclusive effect.
4. Indeca cannot show it relied on any of Tucker's
statements because he made no direct representations
to Indeca and he was not involved in presenting false
documents to Continental.
5. In pari delicto, an issue not litigated in the
criminal case, bars summary judgment.
Brief analysis confirms Tucker's only possibly viable point is
the last one:
1. Though Illinois does provide the substantive rules of
decision in this diversity case, Illinois collateral estoppel
doctrine is irrelevant. This is so because as to a federal
criminal conviction Illinois choice-of-law rules look to the
effect given by federal law. Nathan v. Tenna Corp., 560 F.2d 761,
763 (7th Cir. 1977). Under
that law such a conviction conclusively (not just presumptively)
establishes issues actually litigated for purposes of later
federal civil litigation — like this case. Id.
2. Any procedural differences that may exist between criminal
and civil cases are not such as to evoke any different collateral
estoppel result. Criminal defendants, like civil litigants,
plainly have every incentive to litigate their cases fully and
vigorously. County of Cook v. Lynch, 560 F. Supp. 136, 139
3. Pendency of an appeal does not alter the preclusive effect
of a criminal conviction. Kurek v. Pleasure Driveway & Park
District of Peoria, 557 F.2d 580, 595 (7th Cir. 1977).
4. Tucker need not have made representations directly to Indeca
to sustain a fraud action. It suffices if:
(a) Tucker intended the fraudulent statement to
reach Indeca and influence its actions.
(b) In fact the statement did reach Indeca, and it
relied on the statement to its detriment.
Roman v. Delta Air Lines, Inc., 441 F. Supp. 1160, 1167 (N.D.Ill.
1977); Rozny v. Marnul, 43 Ill.2d 54, 67, 250 N.E.2d 656, 660
(1969). Of course the statements reached Indeca, and its $5
million of detrimental reliance (discussed hereafter) is what
this action is all about. As for the other facets challenged by
Tucker, they are directly belied by Tucker's criminal conviction:
1. Indictment Count One ¶¶ 18 and 20
specifically charged Tucker's participation in the
presentation of false documents to Continental.
2. Indictment Count Ten was predicated solely on
Tucker's (and Bell's and Ball's) knowing
presentation, or causing the presentation, of false
documents to Continental on September 5, 1980 for the
purpose of influencing Continental to pay the Letter.
3. Indictment Count One's wire fraud charge as to
Tucker was that he participated in sending, or caused
to be sent, a telex to Pheterson September 3, 1980 in
furtherance of the scheme to defraud Continental and
Indeca, two days before the false documents were
presented to Continental.
Tucker was found guilty on all counts by the jury.*fn9
findings directly reject Tucker's argument he was not involved in
the matter until after the September 5, 1980 document
presentation, an argument he is foreclosed (that is, collaterally
estopped) from now asserting.
Indeca admits the criminal convictions do not establish
Indeca's reliance, a necessary element of civil fraud actions,
and that the in pari delicto defense was (of course) not
litigated in the criminal case. On those matters it becomes
necessary to consider the proof in support of Indeca's current
On the reliance issue, Indeca submits (1) evidence showing its
payment of the Letter and (2) the Caceres Affidavit, which
details his communications with Ramirez between October 4, 1980
and January 1981, his telephone calls and telexes to Bell and
Tucker between October 4, 1980 and December 1980, and his
telephone call to Continental on behalf of Ramirez to inquire
about the bean shipment. That evidence makes it clear beyond
cavil Indeca acted in reliance on the false representations to
its detriment. Accordingly Indeca has established all elements of
its civil fraud action against Bell, Rumex,*fn10 Tucker and Ball. It
is therefore entitled to summary judgment unless the claimed in
pari delicto defense raises a genuine issue of material fact.
b. In Pari Delicto
In pari delicto is a defense that bars a plaintiff who has
wrongdoing from recovering for injury resulting from such
wrongdoing.*fn11 Corti v. Fleisher, 93 Ill.App.3d 517, 532, 49
Ill.Dec. 74, 86, 417 N.E.2d 764, 776 (1st Dist. 1981); Stevens v.
Silver Manufacturing Co., 41 Ill.App.3d 483, 488, 355 N.E.2d 145,
151 (2d Dist. 1976); Tarasi v. Pittsburgh National Bank,
555 F.2d 1152, 1156-57 (3d Cir. 1977). Though the doctrine itself is
unimpeachable, the facts do not sustain its applicability to
Tucker has submitted deposition testimony of Paul Rojas Cuyos
("Rojas"), formerly assistant to Indeca's General Manager, to
establish the Indeca-Rumex contract was entered into illegally by
Ramirez. Rojas testified Guatemalan law required Indeca to get
competitive bids, to have the contracting party put up a bond, to
get a resolution on the contract from the Indeca Board of
Directors, and to submit the contract to the Comptroller of
Accounts. Tucker presented some evidence those requisites were
not met in this case (Tucker's Oct. 17, 1983 Exs. 4, 5) and
argues the Indeca-Rumex contract is illegal. Testimony also
establishes, and Indeca admits, Ramirez demanded and was paid a
bribe of $240,000 to let the contract to Rumex.
Tucker contends Ramirez participated in defrauding Indeca,
Indeca is bound by Ramirez' actions and thus Indeca is in pari
delicto with the defendants and cannot recover. On the other
hand, Indeca retorts it is not bound by Ramirez' fraud because
Ramirez was acting for his own benefit — and not within the scope
of his agency — in accepting the bribe and thereby awarding the
contract to Rumex, matters wholly outside the knowledge of Indeca
Under basic principles of agency law, "knowledge will not be
imputed [to the principal] when the agent has a motive or
interest in concealing facts from the principal," as when the
agent engages in illegal or unauthorized conduct. McKey & Poague,
Inc. v. Stackler, 63 Ill.App.3d 142, 152, 20 Ill.Dec. 130, 137,
379 N.E.2d 1198, 1205 (1st Dist. 1978). To raise a fact issue as
to the in pari delicto defense, Tucker must present some evidence
that would show Indeca knew either (1) of Ramirez' illegal
conduct in particular or (2) perhaps of a general practice of
bribery or illegality, such as to create the reasonable inference
of knowledge. See CFTC v. Premex, Inc., 655 F.2d 779, 784 & n. 10
(7th Cir. 1981).
Tucker's evidence however points in just the opposite
direction. Caceres actually testified Ramirez had expressed his
concern about Guatemalan officials, specifically that country's
president, finding out about Ramirez' receipt of the bribe (Oct.
6, 1983 Dep. 167-75). Caceres also testified as to his own
dealings with Indeca when he was a Cargill employee and purchased
grain from Indeca: He was never required to make payments to
Indeca officials nor did he have any knowledge Indeca officials
generally demanded and received payments (Dep. 100-03). In short
Tucker has presented no facts whatever that would support any
reasonable inference Indeca knew of Ramirez' actions, or even of
a general practice of bribery so as to bind Indeca to Ramirez'
fraud and support the in pari delicto defense.*fn12
3. Conclusion as to Indeca's Motion
Accordingly Tucker, Bell, Rumex and Ball have failed to raise
any genuine issues
of material fact as to either Count II or the previously reserved
issue on Count I. Indeca is entitled to summary judgment on both
counts as to all those defendants.
1. Counts II and VI
To obtain summary judgment, Nagel-Quosando*fn13 of course bear the
burden of establishing no genuine issue of material fact exists,
with all reasonable factual inferences to be drawn in Indeca's
favor. Cedillo v. International Ass'n of Bridge & Structural Iron
Workers, Local Union No. 1, 603 F.2d 7, 10-11 (7th Cir. 1979).
Nagel-Quosando have not sustained that burden.
Nagel argues (Count II) she committed no fraudulent actions (in
effect, an argument she had no intent to defraud) and (Count VI)
she is not part of an "enterprise" under RICO,
18 U.S.C. § 1961(4). Those arguments rest on (1) Nagel's deposition
testimony, in which she denied knowledge of the telexes and said
she thought she was out of the deal after August 19 and (2) other
parties' lack of knowledge of Nagel.
In Illinois the actor's intention is an integral part of a
fraud claim. Exline v. Weldon, 57 Ill.2d 105, 110,
311 N.E.2d 102, 105 (1974); Paskas v. Illini Federal Savings & Loan Ass'n,
109 Ill.App.3d 24, 32, 64 Ill.Dec. 642, 647, 440 N.E.2d 194, 199
(5th Dist. 1982). Nagel-Quosando must show there is no genuine
issue of fact as to her intent, with all reasonable inferences
drawn in Indeca's favor.
Under RICO "the term `enterprise' . . . encompasses both legal
entities and illegitimate associations-in-fact." Russello v.
United States, ___ U.S. ___, ___, 104 S.Ct. 296, 301, 78 L.Ed.2d
17 (1983).*fn14 If such an association-in-fact has a common purpose,
continuity of structure and personnel, and a structure distinct
from the pattern of racketeering, it is a RICO enterprise. United
States v. Lemm, 680 F.2d 1193, 1198 (8th Cir. 1982), cert.
denied, ___ U.S. ___, 103 S.Ct. 739, 74 L.Ed.2d 960 (1983). To
prevail on Indeca's RICO claim now, Nagel must show it could not
be found she shared a "common purpose" with Bell.*fn15
Whether Nagel had such "common purpose" with Bell in the RICO
sense is much like the question of Nagel's intent for purposes of
the fraud claim. As to both those issues, although Nagel's
deposition testimony supports her position, the series of telexes
and her Lipani appointment letter — looked at alone, as they must
be on the Nagel-Quosando motion — could reasonably produce the
inference Nagel-Quosando were involved in the transaction.
By definition only Nagel can testify about her own subjective
state of mind.*fn16 Because the trier of fact is not obligated to
accept that testimony even though technically "uncontradicted,"
the presence of other evidence that could reasonably lead to the
opposite inference bars summary judgment. Thornton v. Evans,
692 F.2d 1064, 1075 (7th Cir. 1982); Conrad v. Delta Air Lines, Inc.,
494 F.2d 914, 918 (7th Cir. 1974).*fn17
2. Count I
Nagel contends she is not a party to the Indeca-Rumex contract
and thus cannot be liable for its breach. Indeca retorts it was
Nagel's intention to be a party to such contract even though
Lipani signed the formal agreement on Rumex' behalf.
Nagel's motion raises an issue as to the effect of the series
of telexes among Nagel-Quosando, Lipani and Ramirez (see n. 4).
Nagel appeared as the named sender of the August 13 telex, which
made a detailed offer to sell beans (including price, quantity,
credit terms, shipping and unloading requirements) and went on to
In the event of acceptance of our offer, we will have
for the signing of the contract a duly and legally
authorized representative 24 hours after acceptance
Ramirez' August 14 telex accepted that offer:
Hope to formalize the negotiation with the
corresponding contract. Your legally authorized
On the same day Lipani telexed confirmation of Ramirez'
Likewise we are pleased to inform you that we hope to
be loading next week for which we ask you to proceed
to open as soon as possible a letter of credit. We
hope to have a duly and legally authorized
representative in Guatemala on Monday 18 for which we
request that you proceed to prepare a contract. Again
thanking you for your purchase.
Further telexes before the August 22 contract date requested the
Letter be opened in favor of Quosando (August 18) and said Rumex
and Quosando were acting as one (August 19). On August 22 Banco
in fact opened the Letter in favor of Rumex.
Although it is true Lipani executed the August 22 contract only
in Rumex' name, the inquiry does not end there. Two possibilities
could nonetheless bind Nagel-Quosando as contracting parties:
1. If the offer and acceptance embodied in the
telexes themselves created the binding contractual
relationship, the trier of fact could reasonably find
Nagel-Quosando the contracting party.*fn18
2. Even if the August 22 Indeca-Rumex agreement is
viewed as the only contractual document, the
factfinder could reasonably find Nagel-Quosando bound
as a disclosed principal.
As to the first of those alternatives, the contemplation of a
formal agreement does not of necessity render prior agreements
"mere negotiations." At least that is so where it is clear the
formal agreement will be substantially based on the same terms as
the prior agreement, as is the case here. Interway, Inc. v.
Alagna, 85 Ill.App.3d 1094, 1097-98, 41 Ill.Dec. 117, 120,
407 N.E.2d 615
, 618 (1st Dist. 1980). In such a situation the
parties' intent determines whether (1) the prior agreement has
contractual effect or (2) execution of a formal agreement is a
condition precedent to formation of a binding contractual
relationship. Id., 85 Ill.App.3d at 1098, 41 Ill.Dec. at 120, 407
N.E.2d at 618. If the prior agreement's language is ambiguous as
to the effect of the later-executed formal agreement,
determination of the parties' intention is a fact question. If
such language is unambiguous, such determination of intent is a
question of law for the trial court. This Court must decide as a
matter of law whether the prior agreement is ambiguous. Id., 85
Ill.App.3d at 1098, 41 Ill.Dec. at 120-121, 407 N.E.2d at 618-19.
From all the post-August 13 telexes, it is not wholly clear
what the parties intended by later execution of the Indeca-Rumex
contract. Ramirez' August 14 telex used the phrase "hope to
formalize" and the term "negotiation," but both Lipani's August
14 telex and Bell's August 18 telex convey the impression the
contract was already formed and a written agreement was a mere
Accordingly the telexes are ambiguous as to the intended effect
of the later-executed contract. Under Interway questions of fact
are presented regarding the parties' intention as to (1) when a
binding contractual relationship was formed and (2) consequently,
who were the "real" parties to such a relationship.
But that is not the only possible route leading to the same
end. Suppose the telexes were considered unambiguous, so the
August 22 document were the operative contract. In light of the
Bell-Nagel August 19 telex expressly stating Rumex and Quosando
were "acting as one," the trier of fact could surely find Rumex
executed the August 22 contract both on its own behalf and on
behalf of Quosando as its disclosed principal. On that
alternative too the question is one of intention — again a
question of fact.
Both views of the series of telexes and the August 22 agreement
thus pose questions of intent. And like the questions of
"fraudulent intent" and "common purpose" under Counts II and VI,
the intent of contracting parties for Count I purposes cannot be
resolved on this summary judgment motion. Thornton,
692 F.2d at 1075; Conrad, 494 F.2d at 918.
Based on the foregoing analysis, there is no genuine issue of
material fact as between Indeca and Bell and Rumex on Count I and
Bell, Rumex, Tucker and Ball on Count II. Indeca is entitled to
a judgment against those defendants on those counts as a matter
of law. Nagel-Quosando's motion for summary judgment is denied
because of the presence of material factual issues.
ON MOTION FOR RECONSIDERATION
As this Court has said by way of introduction to all its
numerous earlier opinions in this case, Instituto Nacional de
Comercializacion Agricola ("Indeca"), a quasi-national
corporation organized under Guatemalan law, has as part of its
responsibility the purchase on international markets of
foodstuffs and agricultural staples for the Guatemalan people. It
sues a group of defendants for an allegedly fraudulent scheme in
which Indeca was bilked of over $5 million in its attempted
purchase of 6,000 metric tons of black beans that proved to be
Most recently this Court's December 2, 1983 memorandum opinion
and order (the "Opinion") granted Indeca's motion for summary
judgment against Robert Tucker ("Tucker"), Deborah Bell ("Bell"),
Rumex International ("Rumex") and Michael Ball ("Ball"). Tucker
now moves for reconsideration of the Opinion, and Indeca moves
for entry of judgment under Fed.R.Civ.P. ("Rule") 54(b). For the
reasons stated in this memorandum opinion and order (which
assumes familiarity with the Opinion and its cast of characters),
both motions are denied (Indeca's without prejudice to its future
Motion To Reconsider
Essentially Tucker's motion reargues the same points this Court
considered carefully and rejected in the Opinion. That
misapprehends the limited role of a motion to reconsider:
The motion to reconsider would be appropriate where,
for example, the Court has patently misunderstood a
party, or has made a decision outside the adversarial
issues presented to the Court by the parties, or has
made an error not of reasoning but of apprehension. A
further basis for a motion to reconsider would be a
controlling or significant change in the law or facts
since the submission of the issue to the Court. Such
problems rarely arise and the motion to reconsider
should be equally rare.
Above the Belt, Inc. v. Mel Bohannan Roofing, Inc., 99 F.R.D. 99,
101 (E.D.Va. 1983). Accordingly each of Tucker's arguments will
be stated and dealt with briefly.
In Pari Delicto
1. Tucker urges Ramirez' knowledge of wrongdoing should be
imputed to Indeca solely because Ramirez was a high-level
executive of Indeca. In Tucker's view Indeca is bound by Ramirez'
fraud just as Rumex is bound by Bell's conviction for mail fraud
(Opinion at 8 n. 8). That comparison ignores a critical factual
difference: Indeca is governed by an independent board of
directors, while Rumex was merely Bell's alter ego. Tucker would
have (say) the massive fraud perpetrated for his own benefit by
F. Donald Coster (who was in reality ex-convict Philip Musica)
automatically imputed to what was then McKesson-Robbins
Corporation, based solely on the existence of the fraud and the
high corporate position of the crook. This Court rejected that
distorted version of in pari delicto in the Opinion, and it does
2. Tucker now says a fact issue is raised as to Indeca's
knowledge of the illegality because:
(a) Caceres' testimony established that Guatemala's
Minister of Agriculture Edgar Ponciano received part
of the bribe money.
(b) Further discovery may establish Ponciano as
Chairman of Indeca's Board of Directors.
First, Tucker did not advance this argument in his
previously-filed briefs, extensive though they were. Absent any
justification for its prior omission, the argument is not proper
for a motion for reconsideration. Second, this new contention
raises the propriety of allowing further discovery, an issue
3. Tucker asserts he has presented evidence (a) the Indeca
contract was illegal, (b) Indeca officials knew of such
illegality and (c) such knowledge should be imputed to Indeca
because of a letter from Indeca to Ramirez detailing the
requirements to be met when letting commodities contracts. This
Court held that argument insufficient the first time it was made.
No language in the letter remotely suggests Indeca's knowledge of
Ramirez' past or present misconduct. Tucker would have this Court
raise a fact issue supporting an inference that Indeca knew of
past illegalities merely because the letter was written. Such an
inference is totally unwarranted, even when all reasonable
factual inferences are taken in favor of Tucker as the party
opposing summary judgment.
1. Tucker argues Indeca did not reasonably rely on any of
Tucker's misrepresentations because Indeca officials participated
in the fraud and Tucker himself made no representations to Indeca
on which they relied. Both arguments have been previously made,
specifically considered and specifically rejected (Opinion at
10-11, 13). Tucker has presented no new evidence or legal support
for the renewed assertion of the same arguments.
2. For the first time Tucker claims Indeca has not been damaged
because it has not yet been required to pay the $5 million to
Banco. Such a new argument based on old evidence is wholly
improper on a motion to reconsider. Moreover the very evidence
Tucker cites supports the fact Indeca has been damaged. Rojas'
deposition testimony shows (a) Indeca is now liable to Banco and
(b) it may become liable to the Guatemalan government instead, if
the latter provides funds to pay the obligation to Banco. It is
frankly nonsense for a wrongdoer (Tucker) to cause his victim to
incur a liability, then say no damages have been sustained
because the obligation exists but has not yet been paid.
Finally Tucker urges summary judgment was inappropriate because
he has not yet completed discovery. Further discovery,[fn1a] he says,
would support his in pari delicto defense. Unfortunately that
contention bends the facts beyond recognition, just as Tucker's
legal arguments have done with the law.
Rule 56(f) provides a party opposing summary judgment the
state reasons why he cannot present facts in opposition. On a
proper showing the court may delay its decision on the motion
pending further discovery.
Although Tucker seems to believe a blanket rule prohibits entry
of summary judgment when discovery is still open, clearly no such
rule exists. Wallace v. Brownell Pontiac-GMC Co., 703 F.2d 525,
528 (11th Cir. 1983). Rather Rule 56(f) requires a specific
showing of what facts might be revealed by further discovery and
why the party opposing summary judgment cannot now bring that
evidence forward — "particularly where, as here, ample time
and opportunities for discovery have already lapsed." SEC v.
Spence & Green Chemical Co., 612 F.2d 896, 901 (5th Cir. 1980).
Moreover a party cannot forestall summary judgment by contending
more discovery is needed without showing diligence in proceeding
down the discovery road. See Over the Road Drivers, Inc. v.
Transport Insurance Co., 637 F.2d 816, 820-21 (1st Cir. 1980).
On March 28, 1983 Indeca filed its motion for summary judgment.
On May 25 Tucker requested this Court to stay consideration of
such motion pending completion of two basic categories of
1. completion of Caceres' deposition and
2. translation of Spanish documents produced by
Tucker then mentioned no other areas of discovery to be
completed, save for a vague statement that discovery in the
identified areas might lead to further discovery. This Court
granted Tucker's requested stay of consideration until those two
specified areas of discovery were completed.[fn2a] Thereafter it
issued its Opinion December 2, 1983 — over eight months after
Indeca filed the motion, and over six months after Tucker
identified his need for a stay.
Now for the first time Tucker identifies another area of
discovery, which would allegedly lead to evidence in support of
his in pari delicto defense. During the eight months Indeca's
motion was pending this Court entered no order restricting
Tucker's ability to conduct discovery. Tucker has offered no
reasons why such discovery could not have been taken during that
time or why he did not previously argue his need for such
additional discovery before the motion was ruled upon. See
Bilderback v. City National Bank & Trust Co. of Columbus,
639 F.2d 331, 332-33 (6th Cir. 1981) (per curiam). Tucker's vague
May 25 assertion that the then-identified discovery might lead to
further discovery does not constitute a sufficient Rule 56(f)
showing. See Fontana Aviation, Inc. v. Cessna Aircraft Co.,
460 F. Supp. 1151, 1153-54 (N.D.Ill. 1978).
It was plain from the outset the in pari delicto defense and
the question of imputing knowledge to Indeca were critical
issues. They were briefed extensively by the parties.[fn3a] This
Court's focus on those matters in the Opinion was hardly a
Tucker essentially tries to approach summary judgment by
stages, offering to provide this Court with evidence piecemeal —
after this Court has ruled on the relevancy and adequacy of the
already-presented evidence and after it has rendered its final
decision. Rule 56 does not sanction such a hindsight approach in
the summary judgment context, any more than a litigant could
present evidence at trial and then — after having lost on the
basis of that presentation — seek further discovery to adduce
further evidence. See Canada Dry Corp. v. Nehi Beverage Co.,
723 F.2d 512 (7th Cir. 1983).
Tucker's arguments as to the need for more discovery are
untimely raised. This Court reconfirms its grant of summary
judgment in the Opinion.
Indeca's Rule 54(b) Motion
Indeca moves for entry of final judgment against Tucker, Rumex,
Bell and Ball under Rule 54(b):
When more than one claim for relief is presented in
an action, whether as a claim, counterclaim,
cross-claim, or third-party claim, or when multiple
parties are involved, the court may direct the entry
of a final judgment as to one or more but fewer than
all of the claims or parties only upon an express
determination that there is no just reason for delay
and upon an express direction for the entry of
In literal terms Rule 54(b) determinations are limited to
judgments "as to one or more . . . of the claims" or "as to one
or more . . . of the . . . parties." Because this case does not
literally involve either of those alternatives, this Court must
first examine whether Rule 54(b) can apply at all. See Bank of
Lincolnwood v. Federal Leasing, Inc., 622 F.2d 944, 947 (7th Cir.
One of the alternatives for invoking Rule 54(b) is the
disposition of a single discrete "claim." On that score our Court
of Appeals has said in Local P-171, Amalgamated Meat Cutters v.
Thompson Farms Co., 642 F.2d 1065, 1070-71 (7th Cir. 1981)
Rather than attempting to advance a general
definition of what constitutes "separate claims," we
conclude that a better approach is to state rules of
thumb to identify certain types of claims that
clearly cannot be "separate," and otherwise rely on
the sound discretion of district judges to make that
determination on a case by case basis. At a minimum,
claims cannot be separate unless separate recovery is
possible on each. . . . Hence, mere variations of
legal theory do not constitute separate
claims. . . . Nor are claims so closely related that
they would fall afoul of the rule against splitting
claims if brought separately.
In those terms Indeca has two claims for relief:
1. its state law theories of breach of contract,
fraud and negligence and
2. its RICO[fn4a] claim.
Once Indeca recovers the amount it paid for the beans plus
whatever incidental damages may also be recoverable on any one of
the state law theories, it cannot recover that amount again from
the same defendant on a different theory of liability. For
example, Bell and Rumex have been found liable on both a breach
of contract theory and a fraud theory — but that does not enable
Indeca to collect twice its actual damages (say $10 million).
Rather Indeca has a single state law right of recovery, though it
advances a variety of legal theories to support that recovery.
And that identical right of recovery — under the identical legal
theories and involving the identical facts[fn5a] — remains asserted
and unresolved against other defendants in this action. Thus this
Court's grant of summary judgment against Tucker, Bell, Rumex and
could not represent a "final judgment" on — because it did not
dispose of — any one "claim for relief."[fn6a]
Thus for Indeca to succeed on its request for Rule 54(b) relief
in the present posture of the case, it must bring itself within
the other alternative under the Rule: a final decision as to the
rights and liabilities of at least one of the parties.[fn7a] "Final"
in the Rule 54(b) context is the same as "final" under 28 U.S.C. § 1291
("Section 1291"). 10 Wright, Miller & Kane Federal
Practice & Procedure: Civil 2d § 2656, at 51-52. That concept has
been stated succinctly by the Supreme Court in Catlin v. United
States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911
(1945), quoted in Local P-171, 642 F.2d at 1069:
A "final decision" generally is one which ends the
litigation on the merits and leaves nothing for the
court to do but execute the judgment.
Summary judgment against Rumex, Bell and Tucker on Counts I and
II did not "end the litigation on the merits" between Indeca and
those defendants.[fn8a] All three are also named in Count VI, the RICO
count. Indeca essentially argues that a decision that "ends" the
litigation on its merits as to one party's liability on one
claim, leaving other claims against that party for future
resolution, provides the requisite finality as to that party.
This Court has found (though Indeca did not submit) one case to
support that kind of claim-splitting against a single party for
Rule 54(b) purposes. See Rankin v. Howard, 633 F.2d 844, 846-47
(9th Cir. 1980) (permitting, albeit without any analysis of Rule
54(b)'s language, certification of a 42 U.S.C. § 1983 summary
judgment while 42 U.S.C. § 1985 and 1986 and state tort law
claims remained to be adjudicated against the same defendants).
But any such general application of Rule 54(b) would read the
finality concept out of the Rule, for it would effectively
redefine "claim for relief" to mean any one charge against any
one defendant. It must be remembered Rule 54(b) cannot extend the
scope of Section 1291. Local P-171, 642 F.2d at 1069 n. 4. In
that light Indeca has not established this Court's grant of
partial summary judgment "has resolved . . . all the rights and
liabilities of at least one party with finality." 10 Wright,
Miller & Kane § 2659, at 96-97.
There is another basic flaw that precludes current Rule 54(b)
certification. Tucker is right in pointing out the Opinion
decided liability of the four defendants (Rule 56(c)) and not the
specific amount of Indeca's damages. Though this opinion has
rejected Tucker's argument Indeca has in fact suffered no
damages, there has been no decision as to the precise measure of
those damages — the precise number of dollars involved. That
requires proof in the ordinary way.
Ordinarily the two preceding holdings would end the discussion,
for the first hurdle of a potentially final dollar judgment has
to be overcome before a district court "must decide whether to
release its decision for appellate consideration by making an
express determination that there is no just reason for delay." 10
Wright, Miller & Kane § 2659, at 97. But because Indeca could
cure the threshold problems by (1) opting not to pursue its Count
I and II claims against Nagel, Quosando and Lipani and (2) a
simple proveup against Tucker, Bell, Rumex and Ball, it may serve
judicial economy to look at the "no just reason for delay"
Several factors have been identified by courts attempting to
apply that standard, Bank of Lincolnwood, 622 F.2d at 949:
The Third Circuit has compiled the following
catalogue of relevant considerations along with the
caveat that it is not all-inclusive:
(1) The relationship between the adjudicated and
unadjudicated claims; (2) the possibility that the
need for review might or might not be mooted by
future developments in the district court; (3) the
possibility that the reviewing court might be
obliged to consider the same issue a second time;
(4) the presence or absence of a claim or
counterclaim which could result in set-off against
the judgment sought to be made final; (5)
miscellaneous factors such as delay, economic and
solvency considerations, shortening the time of
trial, frivolity of competing claims, expense, and
Allis-Chalmers [Corp. v. Philadelphia Electric Co.],
521 F.2d , 364 [(3d Cir. 1975)].
Little discussion is required to see the direction in which those
factors would point as applied to a final judgment on Counts I
Two of the Bank of Lincolnwood anti-certification factors are
not in this case at all. As for factor (2), the need to review
the judgment against Tucker, Bell, Rumex and Ball plainly could
not be mooted by future developments in this Court, either (1) on
Indeca's state law claims against Continental or (2) on Indeca's
RICO claim against any of the defendants. And there are no
potential set-offs via claims or counterclaims against Indeca, so
factor (4) also militates in favor of a current entry of
More importantly, the fifth group of factors also counsels
toward rather than against entry of judgment now, given the
amount of money involved and the length of time this case has
already been pending.[fn9a] See Curtiss-Wright Corp. v. General
Electric Co., 446 U.S. 1, 11-12, 100 S.Ct. 1460, 1466-1467, 64
L.Ed.2d 1 (1980). It would be terribly unfair to force a
plaintiff that has been adjudicated as having been wronged, and
as having suffered $5 million in damages, to forego its possible
RICO right to recover treble damages and to recapture its
attorneys' fees, just in order to attempt to make itself whole
now. Yet that coerced choice, compelling Indeca to forecast
whether future developments might impair its ability to collect
from its judgment debtors, would be the result of
That leaves for consideration Bank of Lincolnwood factors (1)
and (3). Those two considerations tend to meld in analysis: the
closer the relationship between the adjudicated and unadjudicated
claims, the more likely the reviewing court might be obliged to
consider the same issues again.
Even though Indeca's RICO count is predicated on the same
sequence of events as Counts I and II, that alone does not
preclude entry of judgment now. Those facts go to prove
analytically distinct elements making up the two claims (contrast
the elements of common-law fraud with the civil RICO
requirements, see United States v. Lemm, 680 F.2d 1193, 1198-1201
(8th Cir. 1982), cert. denied, ___ U.S. ___, 103 S.Ct. 739, 74
L.Ed.2d 960 (1983)). This Court's having found the judgment
defendants guilty of fraud[fn11a] may have brought Indeca closer to
proving a RICO violation, but the fraud holding is surely neither
a necessary nor a sufficient condition to success on the RICO
In view of the separate legal inquiries posed by the two
discrete claims, the relationship
between them is not close enough to preclude entry of judgment on
the first. By the same token, a reviewing court's analysis of the
common law fraud claim would not present the same legal issues as
a later review of the RICO claim.[fn12a]
In sum, if Indeca were to cure the threshold problems
previously identified, this case would qualify for entry of
judgment under Rule 54(b). For the present, however, its motion
must be denied.
Tucker's motion for reconsideration is denied. Indeca's Rule
54(b) motion for entry of judgment is also denied, but without
prejudice to its reassertion as and when the appropriate
groundwork has been laid.