Red Tree Investments, LLC v. Petroleos De Venezuela, S.A.
- P. Castel
- 1:19-cv-02519
- U.S. District Court · Southern District of New York
- 6
In Red Tree Investments v. Petroleos De Venezuela, Judge Nathan denied another stay and reserved judgment on defendants’ discovery request.
Red Tree Investments, LLC and defendants Petróleos de Venezuela, S.A. and PDVSA Petróleo, S.A.; the order denied the defendants’ request for another stay and left their alternative discovery request unresolved.
What happened
Red Tree Investments, LLC sued Petróleos de Venezuela, S.A. and PDVSA Petróleo, S.A. over alleged defaults on loan agreements. The defendants had previously obtained a 120-day stay and later requested another 120-day stay because political conditions in Venezuela allegedly prevented access to documents and personnel needed for their defense.
Red Tree opposed another delay, arguing that it could be harmed while other creditors pursued judgments and assets connected to PDVSA. The defendants also asked the court to postpone consideration of Red Tree’s pending request for summary judgment so they could seek additional information from Red Tree and non-party witnesses.
Judge Alison J. Nathan denied the request for another stay, concluding that the plaintiff’s growing interest in moving forward outweighed the defendants’ interest in more time, especially because it was uncertain whether additional time would provide access to the requested information. The judge reserved judgment on the defendants’ alternative request for additional discovery and set a deadline for the parties to propose the next briefing schedule.
The detailed version
- Red Tree Investments, LLC v. Petroleos De Venezuela, S.A. · No. 1:19-cv-02519
- P. Castel
- Jan. 14, 2020
Background
Red Tree Investments, LLC brought this dispute against Petróleos de Venezuela, S.A. (PDVSA) and PDVSA Petróleo, S.A. The dispute concerns alleged defaults under loan agreements that PDVSA Petróleo guaranteed. Red Tree began the case in New York state court under a procedure allowing a plaintiff to seek summary judgment in lieu of filing a complaint. The defendants removed the case to the Southern District of New York.
The defendants previously obtained a 120-day stay because of political uncertainty in Venezuela. After that stay expired, they moved for another 120-day stay. In the alternative, they asked the court to defer consideration of Red Tree’s pending summary judgment motion so they could obtain discovery—information gathered from parties or non-parties—under Federal Rule of Civil Procedure 56(d).
Motion for Another Stay
The defendants argued that they still could not access documents and personnel in Venezuela needed to defend against Red Tree’s claims. They also relied on Venezuela’s continuing economic and humanitarian crisis. Red Tree argued that further delay would prejudice it, including by allowing other creditors to pursue judgments, enforcement efforts, or attachments involving assets to which Red Tree claimed entitlement.
The court recognized substantial interests on both sides. The defendants had an interest in obtaining information about the negotiation, execution, and possible modification or discharge of the loan agreements, including information potentially relevant to fraud or misrepresentation defenses. The court credited the defendants’ representation that they remained unable to access relevant information. The court also recognized the general judicial interest in deciding cases on their merits.
The court nevertheless concluded that the balance had changed since the first stay. Red Tree’s interest in proceeding and the possible prejudice from delay had increased. The defendants had already had considerable time to obtain the information they sought, and it was unclear whether any additional period would give them access. The court stated that it would not be fair to stay the case indefinitely while waiting for a political transition in Venezuela.
The court therefore denied the defendants’ motion for an additional 120-day stay.
Rule 56(d) Discovery Request
The court reserved judgment on the defendants’ alternative request to defer the pending summary judgment motion. The court allowed the defendants to decide whether to submit a more complete Rule 56(d) request supported by a sufficient affidavit or declaration. If they did so, the parties were to propose a briefing schedule. If they did not, the parties were to propose a schedule for briefing the summary judgment motion.
Disposition
The order denied the additional stay and did not decide the pending summary judgment motion or the alternative discovery request. The parties were directed to submit a joint letter proposing the applicable briefing schedule by January 21, 2020. The order resolved docket entries 49 and 54.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.