Judgement 42-08

Judgment No. 42-08 of the Eleventh Circuit Civil Court of the First Judicial District of Panama resolved the ordinary proceeding of high value filed by Lisa, S.A. against Villamorey, S.A. et al., declaring all seven of the plaintiff's claims not proven and granting Villamorey, S.A.'s counterclaim for $200,000.00 in material damages. The total judgment against Lisa, S.A. reached $1,440,118.00, comprising $1,200,000.00 in costs on the main claim, $40,000.00 in costs on the counterclaim, and $118.00 in expenses.

Lisa, S.A.'s Claims

The principal claim. Lisa, S.A. alleged that the administrators of Villamorey, S.A., the Panamanian holding company atop the Avicola Villalobos poultry group in Guatemala, engaged in fraudulent conduct to divert dividends and profit distributions owed to Lisa, S.A. The alleged mechanisms included unreported cash sales of poultry and agricultural products, fabricated reinsurance premiums channeled through Leamington Reinsurance Company in Bermuda, and unjustified payments to Multi-Inversiones, S.A. in Guatemala. Lisa, S.A. estimated damages at approximately $12,000,000.00, subject to expert determination.

On Leamington. According to the complaint, Villamorey, S.A. held 100% of the shares in Leamington Reinsurance Company. Lisa, S.A. alleged that payments were made for nonexistent reinsurance policies, creating an artificial liability for Avicola Villalobos, S.A. The funds were then transferred to Villamorey, S.A. as dividends declared by Leamington and used to cover expenses unrelated to Lisa, S.A.'s interests.

Evidentiary Record

The court identified critical failures in Lisa, S.A.'s evidentiary presentation that left the alleged facts unproven.

Untranslated banking records. Hundreds of pages of banking records from U.S. institutions (TotalBank, Hamilton Bank, Republic International Bank of New York) were admitted into evidence. Although a notarial act executed in Miami attested to the originals, the documents were entirely in English and were never translated as required by Article 877 of the Judicial Code. The court denied them all probative value.

"Si los documentos procedentes del extranjero estuvieren escritos en lengua que no sea el español, se presentarán traducidos por intérprete público y en defecto de este, por uno ad hoc, nombrado por el tribunal." (Page 16)

Unexecuted letter rogatory. The court issued Rogatory Letter No. 78 of December 3, 2003, requesting through the Ministry of Foreign Affairs a judicial inspection of Villamorey, S.A.'s offices in Guatemala and depositions of the defendants' legal representatives. None of these proceedings were carried out.

Witnesses not examined. Lisa, S.A. offered three witnesses. The court scheduled two hearing dates, but none appeared or were examined.

The court concluded that Lisa, S.A. failed to discharge its burden of proof under Article 784 of the Judicial Code, which requires each party to prove the facts that constitute the predicate of the legal norms invoked in its favor.

Villamorey, S.A.'s Counterclaim

Villamorey, S.A. counterclaimed alleging that Lisa, S.A. caused material damages and harmed its corporate reputation by filing lawsuits in multiple jurisdictions, forcing Villamorey to retain counsel in each forum and post bonds to lift precautionary measures. Villamorey, S.A. quantified its claim at $200,000.00.

The court-appointed expert quantified supportable material damages at $979,900.00, based on audited financial statements showing $476,710.00 in funds frozen by litigation in the United States, legal defense costs across jurisdictions, and estimated lost returns at 7% annually from April 1999 to January 2003. Because Villamorey, S.A. limited its claim to $200,000.00, the court applied the principle of congruence under Article 475 of the Judicial Code and awarded exactly that amount.

Ruling

• Lisa, S.A.'s seven claims against Villamorey, S.A. et al. were declared not proven.
• Lisa, S.A. was condemned to pay $1,200,000.00 in costs to Villamorey, S.A. et al. under Article 1071 of the Judicial Code.
• Villamorey, S.A.'s counterclaim was declared proven, with material damages fixed at $200,000.00.
• Lisa, S.A. was condemned to pay $40,000.00 in costs on the counterclaim.
• Process expenses to be liquidated by the Clerk under Article 1069 of the Judicial Code.

Legal Basis

• Articles 974, 1644, 1706, and 1711 of the Civil Code — extracontractual civil liability, obligation to repair damage caused by culpable act or omission, and joint and several liability where multiple persons are responsible.
• Articles 669, 991, and 1071 of the Judicial Code — complaint requirements, principle of congruence between what is requested and what is decided, and regulation of costs awards.
• Article 784 of the Judicial Code — burden of proof: each party must prove the facts constituting the predicate of the norms invoked in its favor.
• Article 877 of the Judicial Code — requirement that foreign-language documents from abroad be submitted with certified translation.

Signatories

• Lcda. Maria Leticia Cedeno Suira, Judge, Eleventh Circuit Civil Court of the First Judicial District of Panama
• Raquel Guzman Fernandez, Clerk