Bondi v. Citigroup, Inc.
32 A.3d 1158
| N.J. Super. Ct. App. Div. | 2011Background
- Parmalat collapsed in December 2003; Bondi appointed to oversee extraordinary administration and sued Citi for multiple claims.
- Bondi alleged Citi aided and abetted Parmalat insiders’ looting and misrepresentation through five transactions (Parmalat Canada, Geslat, securitization, leaseback, derivatives).
- Judge Harris granted summary judgment on most tort and contract claims under in pari delicto, leaving only aiding and abetting looting against Citi.
- Parmalat’s insiders admitted long-running fraud; Bondi sought damages for deepening insolvency under Italian law, with standing contested.
- Citi asserted in pari delicto and adverse-interest defenses; Citi and subsidiaries’ damages and counterclaims were at issue in the U.S. litigation and Italian bankruptcy proceedings.
- The NJ appellate court affirmed most of Judge Harris’s rulings, including the in pari delicto defense result, and addressed res judicata, standing, and conversion otherwise.
- Parmalat’s Italian bankruptcy framework (Marzano Decree, extraordinary administration) and cross-jurisdictional preclusion rules framed the analysis throughout.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the in pari delicto adverse-interest exception valid here? | Bondi | Citi | Yes, except for looting; not a complete bar to Bondi’s claims. |
| Does the deepening insolvency claim exist as an independent NJ claim? | Bondi | Citi | Deepening insolvency not an independent NJ action; Italian law standing issues unresolved but not actionable here. |
| Are Citi’s counterclaims barred by res judicata? | Bondi | Citi | Not barred; Italian proceeding did not provide identical, fully precluded relief. |
| Does Citi have standing to sue on behalf of its subsidiaries? | Bondi | Citi | Yes; standing to pursue counterclaims on behalf of subsidiaries established. |
| Is Citi’s conversion counterclaim valid against Bondi? | Bondi | Citi | Conversion claim supported by identified receivables and transfer of title; judgment upheld. |
Key Cases Cited
- NCP Litigation Trust v. KPMG LLP, 187 N.J. 353 (N.J. 2006) (imputation and damages allocation under in pari delicto; atypical factual context discussed)
- McAdam v. Dean Witter Reynolds, Inc., 896 F.2d 750 (3d Cir. 1990) (imputation defense requires substantial equal responsibility to bar claims)
- CBI Holding Co. v. Ernst & Young, 529 F.3d 432 (2d Cir. 2008) (adverse-interest exception; total abandonment standard)
- In re Parmalat Sec. Litig., 383 F.Supp.2d 587 (S.D.N.Y. 2005) (insider fraud and imputation; related discussions cited)
- In re Teleglobe Comm. Corp., 493 F.3d 345 (3d Cir. 2007) (corporate veil and standing principles in complex actions)
- Phar-Mor, Inc. Sec. Litig., 900 F.Supp. 784 (W.D. Pa. 1995) (avoidance of imputation where fraud is primarily insider-driven)
- Crazy Eddie Sec. Litig., 802 F.Supp. 804 (E.D.N.Y. 1992) (fact-intensive inquiry on abandonment and corporate benefit)
- Fallimento Casillo Grani S.N.C. v. Banca Antoniana Popolare Veneta S.C.A.R.L., It. 28 marzo 2006, n. 7030 (It.) (Italian bankruptcy decisions regarding standing and damages)
- Hilton v. Guyot, 159 U.S. 113 (U.S. 1895) (restatement of comity and recognition of foreign judgments)