Trikona Advisers Ltd. v. Chugh
846 F.3d 22
| 2d Cir. | 2017Background
- TAL (Trikona Advisers Ltd.) was a 50/50-owned investment adviser; business collapsed after failed deals (QVT and SachsenFonds) and disputes between owners Chugh and Kalra.
- Chugh (via ARC and Haida) petitioned the Grand Court of the Cayman Islands in 2012 to wind up TAL on just-and-equitable grounds; Kalra (via Asia Pacific) defended, alleging multiple fiduciary breaches by Chugh (unclean hands defense).
- The Cayman court held for Chugh, finding Kalra’s allegations meritless; the judgment was affirmed on appeal to the Cayman Court of Appeal and the Privy Council.
- TAL (substituted for Kalra) sued Chugh and related defendants in U.S. District Court (D. Conn.) alleging breaches of fiduciary duty and related claims substantially matching the defenses Kalra raised in the Cayman proceeding.
- The district court granted summary judgment for defendants based on collateral estoppel (Cayman findings were essential as to Kalra’s unclean-hands defense); TAL’s Rule 59(e) motion was denied; TAL appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chapter 15 bars giving preclusive effect to foreign liquidation findings | Chapter 15 requires recognition procedure for foreign liquidations, so Cayman findings cannot be used without Chapter 15 recognition | Chapter 15 does not apply because no foreign "representative" sought U.S. assistance and the case does not invoke Chapter 15 scenarios | Chapter 15 inapplicable; district court properly considered Cayman findings for preclusion |
| Whether collateral estoppel applies (findings were "essential") | Cayman findings were alternative grounds; no single finding was essential, so issue preclusion fails under Connecticut law | Kalra’s unclean-hands defenses were dispositive—any one proven would have barred the petition—so those findings were essential and correspond to TAL’s claims | Collateral estoppel applies: Cayman determinations of Kalra’s defenses were necessary and correspond to TAL’s claims |
| Whether in rem nature of wind-up prevents preclusion in personam suit | In rem judgment cannot preclude subsequent in personam actions | In rem findings can have preclusive effect as to parties/privities who litigated the issues | In rem findings can preclude later in personam suits where parties/privity existed; Myers and Restatement support preclusion |
| Whether TAL (or defendants) lacked privity with Cayman parties | TAL/defendants not identical to Cayman litigants, so no preclusion | TAL conceded privity/alignment with Asia Pacific (respondent) and was adequately represented; only the party against whom preclusion is asserted must have been represented | Privity satisfied; TAL’s interests were represented in Cayman proceeding so collateral estoppel applies |
Key Cases Cited
- Lyon v. Jones, 291 Conn. 384 (Conn. 2009) (Connecticut collateral estoppel requires issue be fully litigated, actually decided, and necessary to the judgment)
- Lighthouse Landings, Inc. v. Conn. Light & Power Co., 300 Conn. 325 (Conn. 2011) (describes collateral estoppel standard under Connecticut law)
- Abdu-Brisson v. Delta Air Lines, Inc., 239 F.3d 456 (2d Cir. 2001) (standard of review for summary judgment affirmed)
- Johnston v. Arbitrium (Cayman Islands) Handels AG, 198 F.3d 342 (2d Cir. 1999) (in rem foreign chancery findings given preclusive effect in later in personam suit)
- Myers v. International Trust Co., 263 U.S. 64 (U.S. 1923) (in rem adjudications bind parties and privies but do not necessarily bar re-litigation of subsidiary factual issues except as between parties/privies)