Lovati v. Bolivarian Republic of Venezuela

Background

Sergio Lovati, Rudi Lovati, Alessandra Sarago Lovati, and Alessandro Lucibello Piani sued the Bolivarian Republic of Venezuela over missed interest payments on Venezuelan bonds. The actions concerned bonds issued under a July 25, 2001 Fiscal Agency Agreement and a September 3, 1997 Fiscal Agency Agreement. Rudi Lovati and Alessandro Lucibello Piani held the bonds at issue. The 2023 Bonds carried a 9% annual coupon rate and were scheduled to mature on May 7, 2023. The 2027 Bonds carried a 9.25% annual coupon rate and were scheduled to mature on September 15, 2027.

The bonds required Venezuela to make interest payments on fixed schedules. The plaintiffs alleged, and submitted evidence showing, that Venezuela had not made required coupon payments since 2017. The plaintiffs gave written notice of the defaults to Venezuela and its fiscal agents. Sergio Lovati and Alessandra Sarago Lovati were dismissed from the actions after transferring their bond holdings to Rudi Lovati.

Procedural History

After discovery ended, the plaintiffs moved for summary judgment. Summary judgment is a decision without a trial when the evidence shows that no important factual dispute requires a jury and that one party is entitled to judgment under the law. Venezuela stated that it did not oppose the motion and that the parties had agreed on a damages calculation. Venezuela also asked for language in the final judgment restricting transfers of the bond interests without court approval. Because the plaintiffs raised new issues in their reply papers, the court granted Venezuela’s motion to file a sur-reply.

Liability

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 court found undisputed evidence that the plaintiffs held the bonds, that the bonds required scheduled coupon payments, that Venezuela failed to make the required payments, and that the plaintiffs suffered damages. The court also noted that Venezuela had waived sovereign immunity under the bonds and consented to the court’s jurisdiction.

Damages

The court found that the plaintiffs could recover $75,242,129.19, including prejudgment interest, calculated as of December 31, 2022. It also awarded $15,022.21 per day until final judgment was entered. The opinion states that this amount reflected the parties’ agreed damages calculation.

Requests Not Addressed at That Time

The plaintiffs asked for 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 the plaintiffs raised it for the first time in reply papers, the complaint did not include a declaratory-judgment claim, and the request was outside the scope of the pending motion. The court stated that the plaintiffs could present 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 specify a sum, and lacked supporting affidavits or other evidence.

Disposition

The court granted the plaintiffs’ motion for summary judgment. It directed the plaintiffs to file a proposed judgment by May 2, 2023, and allowed Venezuela to object to the proposed judgment’s form by letter motion. The clerk was directed to docket the amended opinion and order in both related cases and terminate the specified pending motions. The opinion states that it amended and superseded an earlier version filed on March 6, 2023.