Lovati v. Bolivarian Republic of Venezuela

Background

Sergio Lovati, Rudi Lovati, Alessandra Sarago Lovati, and Alessandro Lucibello Piani brought related actions against the Bolivarian Republic of Venezuela. The opinion states that Sergio Lovati and Alessandra Sarago Lovati were later dismissed from the actions after transferring their bond holdings to Rudi Lovati. The remaining plaintiffs, Rudi Lovati and Alessandro Lucibello Piani, held bonds issued by Venezuela under a 2001 Fiscal Agency Agreement and a 1997 Fiscal Agency Agreement.

The bonds required semiannual interest payments. The 2023 bonds had a 9% annual coupon rate, and the 2027 bonds had a 9.25% annual coupon rate. The plaintiffs alleged, and presented undisputed evidence showing, that Venezuela failed to make the required coupon payments beginning in 2017. The opinion also states that Venezuela waived sovereign immunity under the bond terms and consented to the court’s jurisdiction.

Motions and procedural history

The plaintiffs asserted four breach-of-contract claims concerning the two groups of bonds. After discovery ended, they moved for summary judgment under Federal Rule of Civil Procedure 56. Summary judgment is a decision without a trial when the evidence shows that no genuine dispute over an important fact exists and the moving party is entitled to judgment under the law.

Venezuela stated that it did not oppose summary judgment and that the parties had agreed on an amended damages calculation. Venezuela also moved to file a sur-reply responding to new issues raised in the plaintiffs’ reply brief. The court granted that motion.

Liability ruling

The court granted the plaintiffs’ motion for summary judgment on their breach-of-contract claims. Applying New York law, the court explained that a breach-of-contract claim requires a contract, a breach by the other party, and resulting damages. The undisputed evidence showed that the plaintiffs held the bonds, that the bonds required payments on fixed dates, that Venezuela failed to make the required payments, and that the plaintiffs suffered damages. Although Venezuela conceded that summary judgment was appropriate, the court independently reviewed the record before ruling.

Damages

The court found that the plaintiffs could recover $75,242,129.19 in damages, including prejudgment interest, calculated as of December 31, 2022. It also found that they could recover $15,022.21 per day until final judgment was entered.

Requests not addressed at that time

In their reply brief, the plaintiffs sought a declaratory judgment concerning the calculation of damages for future defaults under the bonds. The court did not address the merits of that request because it was raised for the first time in reply, was not included as a cause of action in the complaint, and fell outside the scope of the pending summary-judgment motion. The court stated that the plaintiffs could raise further issues within the scope of a proposed judgment through a new motion if necessary.

The court likewise did not entertain the plaintiffs’ request for attorney’s fees at that time. The request was first raised in reply, did not seek a specific amount, and was not supported by the affidavits or other factual materials needed to evaluate a fee award.

Disposition

The court granted the plaintiffs’ motion for summary judgment. It directed the plaintiffs to file a proposed judgment by May 2, 2023, allowed Venezuela to object to the proposed judgment by May 6, 2023, and allowed the plaintiffs to reply by May 8, 2023. The opinion and order was to be docketed in both related actions.