Dismisses damages claim against Lisa, finding shareholder exclusion agreement not yet final
Jan 21 2022
8th Civil Court
The Eighth Civil Court of First Instance of Guatemala dismissed the ordinary damages lawsuit filed by Avícola Las Margaritas, S.A. (successor by merger of Importadora de Alimentos de Guatemala, S.A.) against Lisa, S.A., finding that the claim lacked the necessary procedural prerequisites. The court concluded that the damages sought derived from the agreement to exclude Lisa as a shareholder, and that because Lisa had challenged that exclusion in summary proceedings and a precautionary measure suspending its legal effects was in place, the exclusion was not final and the obligation to respond for damages under Articles 227 and 228 of the Guatemalan Commercial Code was not yet enforceable.
Avícola Las Margaritas, S.A., acting as successor by merger of Importadora de Alimentos de Guatemala, S.A., filed the lawsuit on March 19, 2012. The action was grounded in the resolution adopted by the General Shareholders' Assembly of Importadora de Alimentos de Guatemala, S.A. on April 5, 2011, which resolved to exclude Lisa as a shareholder and instructed the administration to initiate damages actions pursuant to the law.
The plaintiff alleged that Lisa, S.A. had committed willful and fraudulent acts consisting of the indiscriminate filing of lawsuits across multiple jurisdictions (the United States, Panama, Bermuda, the British Virgin Islands, Canada, and Guatemala), fabrication of witness testimony, and the financing of smear campaigns through radio media, print publications, labor unions, and political platforms. The plaintiff preliminarily quantified patrimonial damages at Q2,673,294.05 and requested that moral damages and additional losses be determined by expert appraisal.
Lisa, S.A. was served and filed its negative answer on December 2, 2013.
Lisa, S.A. structured its defense around several pillars. First, it argued that the judicial and extrajudicial actions the plaintiff characterized as wrongful were a legitimate response to the Avícola Villalobos Group's failure to pay dividends since the fiscal year ending June 1999. Lisa supported this with an accounting certification showing annual unpaid dividends of $5,481,851.00, and an economic study estimating the total value of shares and retained dividends at $334,578,171.00 as of January 2012.
Second, Lisa argued that the shareholder exclusion agreement was not final because Lisa had filed a summary opposition proceeding (Expediente 01164-2011-01090, Twelfth Civil Court of First Instance), in which the court decreed as a precautionary measure the provisional cessation of the legal effects of the exclusion agreement. Lisa highlighted that the Avícola Group itself recognized the exclusion was not definitive: its member entities continued to summon Lisa to shareholder assemblies in May 2012, and in reports filed before various courts confirmed that the exclusion was not final and that Lisa's rights as a shareholder were being respected.
Lisa raised the following affirmative defenses: lack of truthfulness in the alleged facts, lack of indispensable procedural prerequisites, nonexistence of the claimed damages, extinction of the plaintiff's right to claim damages, and impropriety of damages claims for acts of third parties. Lisa subsequently raised a lack of standing exception.
Lisa referenced the September 5, 2008 judgment of the Supreme Court of Bermuda in the Bermuda proceedings, which condemned Leamington Reinsurance Company Ltd. to pay $1,954,104.14 for having been used as a vehicle to defraud Lisa, and where the Avícola Group's own expert acknowledged the existence of an off-the-books accounting system.
The court focused its analysis on the nature of the plaintiff's claim. It determined with juridical certainty that the damages action derived from the agreement to exclude Lisa as a shareholder, as expressly stated in the notarial deed of April 25, 2011 and in the terms of the complaint itself, where the plaintiff stated that Lisa's exclusion was "the consequence of its acts" and that the damages constituted "a direct consequence of the acts executed by said entity that caused the exclusion."
The court rejected the plaintiff's attempt, made during final arguments, to recharacterize its claim as independent from the exclusion, deeming such recharacterization an impermissible modification of the facts set forth in the complaint.
Applying Articles 227 and 228 of the Guatemalan Commercial Code, the court reasoned that commercial law provides for the excluded partner's right to oppose the exclusion through summary proceedings, and that the obligation to respond for damages caused by the acts that motivated the exclusion becomes enforceable only when the exclusion agreement takes legal effect. Because Lisa had opposed the exclusion and the court handling that proceeding had decreed the provisional cessation of its legal effects, the exclusion was not final and could not produce legal consequences.
The court also invoked the September 19, 2017 ruling of the Constitutional Court (Expediente 1812-2016), issued in a parallel case between Los Abetos, S.A. and Lisa, S.A., which established that damages cannot be claimed for acts motivating a shareholder's exclusion if the shareholder has opposed the agreement, because only upon a final judgment may the interested party bring a damages action.
The plaintiff appealed to the Fifth Civil and Commercial Court of Appeals, which in its ruling of June 6, 2022 partially modified the judgment by eliminating the procedural prerequisites exception, but confirmed the dismissal of the damages claim because the plaintiff had failed to prove actual harm. Avícola Las Margaritas then filed a cassation appeal, which was rejected by the Supreme Court of Justice on February 20, 2023, rendering the dismissal of the damages claim in favor of Lisa, S.A. final and definitive.