*1 prove Mussomelli, DiFiore failed to v. construc Williams 722 F.2d (3d 1983). discharge Pennsylvania both tive under Cir. v. Alleghe
law and federal law. Clowes contends that the District DiFiore Hospital, jury ny Valley we overturned of primary Court’s inclusion four incidents employee and held that was verdict jury in the warning instructions—the two constructively discharged when she letters, mid-year review, performance essentially conduct to close amounted the PIP—-may ju confused supervision. or even “overzealous” rors and led them they to believe that (3d 1993). 1159, 1162 DiFiore F.2d Cir. not permitted were to consider evidence complains similar conduct. She beyond other incidents those four events. subjected unpleas have been to difficult argument DiFiore’s fails. conditions, working ant but these condi correctly The District Court instructed Impor short of tions fall well unbearable. jury that its determination take should sufficiently tantly, explorе DiFiore did not totality into account the circum- improv solutions or means of alternative stances. The instructed that the four court no attempt her situation. She made things,” occurred other “among events PIP, meeting comply with When a allegation her it'described DiFiore’s canceled, the PIP discuss was DiFiore supervisors treat her began to hostile resign chose rather than reschedule. manner she her concerns. after raised attempt prematurely abandoned her She These instructions do not misstate the law to meet with CSL about the Performance mislead, prejudice, confuse do did not Improvement Plan. She demon jury. option no but to strate that she had left resign. IV. the District Court decided When that ho above, explained (cid:127)For reasons jury reasonable find DiFiore’s could of the District Court. affirm orders working conditions so intolerable that were rеsign, correctly dis- she was forced Pennsylvania wrongful
posed both her
discharge claim and that a her contention discharge part
constructive CSL’s
retaliatory conduct
the FCA.
We
CRYSTALLEX INTERNATIONAL
grant of summary judgment.
affirm the
CORP.
v.
Specific Jury
C.
Instructions
S.A.;
VENEZUELA,
DE
PETRÓLEOS
exercise plenary
We
review over
Inc.;
Hold-
and CITGO
PDV
ap
jury instructions
misstatements
America,
Inc.,
ing,
Inc.
PDV
f/k/a
Prescriptions,
Franklin
plicable law.
Inc.
Inc.,
Appellant
Co.,
New
York Times
F.3d
&
16-4012
17-1439
Nos.
(3d
considering
Cir.
When
whether
inadequate,
misleading
instruction is
of Appeals,
United States Court
however,
only
we review
abuse
dis
Third Circuit.
Woodson,
cretion.
ed counsel not reversible error”
OPINION RENDELL, Judge: Circuit glance appears At first this case exceed- debtors, ingly complex—with tangle *3 creditors, subsidiaries, parents, egos, alter complex corporate and internаtional trans- But actions. when one cuts this morass, question at the center quite simple: can a transfer case transfer” un- non-debtor a “fraudulent the Delaware Uniform der Fraudulent (“DUFTA”)? The role of a court in this situation is to predict federal Supreme of Delaware how the would question. answer this We constrained to conclude that a transfer a non-debtor be a “fraudulent transfer” under cannot we do not condone the While DUFTA. actions, and the transferor’s debtor’s Crystallex has must conclude failed under DUFTA.1 state I, Background Eimer, [ARGUED], P. Lisa Nathan S. A. Parties Related Entities and LLP, 224 Mich- Stahl South Meyer, Elmer 1100, Avenue, Chicago, IL Suite igan Crystallex Corp. International Appellant 60604, Nachbar, Morris, Nich- J. Kenneth gold producer, (“Crystallex”), Canadian LLP, ols, 1201 North Arsht & Tunnell gold rights Cristinas to Las owned Street, 19801, DE Wilmington, Market Republic of Bolivarian Vene- reserve Holding, Inc. for Appellant Counsel (“Venezuela”). Venezuela zuela expropriat- gold mines and nationalized its [ARGUED], Weigel, L. Jason Robert W. rights to Las Cristinas. Crystallex’s ed Gibson, Moloo, Dunn & Myatt, Rahim initiated arbi- Crystallex subsequently Avenue, LLP, Park 47th Crutcher Venezuela be- proceeding against tration York, Raymond Floor, J. New NY that, by It claimed Bank. fore the World DiCamillo, Travis S. Jeffrey Moyer, L. rights Las expropriating P.A., Richards, Hunter, Finger, Layton & Cristinas, violated a bilater- had Venezuela King 920 North Rodney Square, One Canada. Vene- treaty al with investment Street, Wilmington, DE Counsel in the arbi- the sole defendant zuela Crystallex Corp. International Appellee only entity proceeding and the tration Crystallex VANASKIE, RENDELL, obligated to be claimed Before: The arbitrators resulting judgment. FUENTES, Judges Circuit interlocutory appeal 28 U.S.C. jurisdiction over this 1. The District Court had 1330(a), 1292(b). §§ pursuant case to 28 U.S.C. jurisdiction hear PDVH’s has This Court pay any anticipated had breached the la would refusе Venezuela found $1,202 proac- arbitral it and treaty bil- award and awarded Corp. v. tively Int’l Bolivarian thwart efforts to enforce lion. such Venezuela, F.Supp.3d Rep. 107 awards.” A40. (D.D.C. 2017). Court for The District part plan “As to thwart enforce- [its] confirmed the arbitra- District Columbia ment,” orchestrated a series Venezuela award, in tion accordance the Federal offerings among debt asset transfers Act, 1,§ seq. et Arbitration U.S.C.A. PDVSA, PDVH, CITGO F.Supp.3d Crystallex, Specifically, CITGO A30. Vene- Petroleum. 'of owns 100% the shares of Venezuela zuela “monetize sought to its interests (“PDVSA”). de S.A. Petróleos [Petroleum],” largest CITGO its' United to be Venezuela’s alter PDVSA asset, repatriate pro- States-based *4 company oil ego, a “national which end, A40. To this Venezuela “enlist- ceeds. implements government policies Venezuela PDVSA,” ego its alter in turn ed who. at home and A31. abroad.” PDVSA owns wholly-owned subsidiary “directed its . (“PDVH”), of Holding, Inc. 100% PDV wholly-owned to its PDVH direct subsid- in owns of which turn 100% CITGO Hold- Holding iary to issue billion CITGO $2.8 (“CITGO ing, Inc. Holding”). CITGO turn, Holding, debt.”4 A31. CITGO Holding owns 100% of CITGO Petroleum from proceeds transferred the the issuance (“CITGO Corporation Petroleum”). of parent debt to as PDVH a sharehold- foreign corporation PDVSA a based er “dividend.” PDVH then A31. declared PDVH, Venezuela. CITGO of parent the to its dividend same amount Petroleum corpora- CITGO are Delaware PDVSA, corporation Venezuelan tions. of alleged ego thereby alter repatriating money to Venezuela and Litigation Against B. PDVH shielding it from an enforcement action Crystallex brought against suit Id. United States. Delaware, PDVH2 in the of alleg- District These transactions formed the basis ing PDVH had violated DUFTA’s claim PDVH. DUFTA prohibition against fraudulent' transfers.3 transfers, As a “nearly result of these $2.8 According Crystallex, Venezuela real- ended, billion in inup ‘dividends’ the hands that it “facing ized was billions of dollаrs in (and Venezuela) out- PDVSA therefore liability from the numerous arbitration side they the United where could States proceedings arising repeated from its ex- hot be reached Venezuela’s creditors.” investments,” propriation foreign includ- DUFTA, A43. Under ing Crystallex proceeding. A30. “On Venezuelan, occasions, govern- A or obligation numerous transfer made incurred officials publicly ment stated Venezue- a credi- PDVSA and CITGO were also claims all three rul- defendants. Those original ings appeal. in the named defendants suit. The us on not before Crystallex's Court District dismissed claims Holding. against PDVSA CITGO Those 4.The offer- mechanics of billion debt rulings appeal. are not before us However, fairly complex. were net result was CITGO Petroleum left was alleged negative equity claims of also common with ren- shareholder insolvent, conspiracy against civil law the three defen- derеd most its value trans- Holding. Court District dismissed ferred CITGO dants. those tor, claim “DUFTA includes within its ambit the creditor’s arose ‘indirect whether mode(s) ... disposing the transfer was or ... of-or parting before after made ” incurred, if obligation the debtor was with an asset an interest an asset.’ transfer or incurred obli- 1301(12)). § made (quoting Id. at 691 6 Del. C. It hinder, ... intent to gation [w]ith actual also cited Merriam-Webster’s definition of creditor of the delay defraud “by,” “through the word which includes 6 Del. C. 1304. debtor. agency or instrumentality of’ and “on be “extensive, half Id. if of.” Given Court Denies C. District PDVH’s not dominating, involvement” of the debtor Motion Dismiss Venezuela, the PDVH transfer was execut complaint moved to dismiss the by an “instrumentality” ed the debtor or Federal a claim failure state Therefore, on its “behalf.” Id. the District 12(b)(6). argued of Civil Rule Procedure reasoned, Court the transfer from PDVH had failed state a every was “a PDVSA transfer made in allegedly under DUFTA becаuse meaningful debtor,’” ‘by sense despite made fraudulent-transfer the fact that PDVH was in fact a is, by Venezuela—as re debtor”—that at 691-92. Finally, debtor. Id. the District 1304(a).5 6 Del. C. quired by the statute. holding Court noted that its inwas line motion The District denied PDVH’s DUFTA, purpose with the which *5 dismiss, concluding in there had “broadly provides application for the of ” Crys a transfer a debtor.” deed been ‘the equity.’ of law at principles and Id. Petróleos de Corp. tallex Int’l v. Venezue 692. (D. 2016). la, S.A., F.Supp.3d 683 Del. 213 certify filed a motion to the Dis conclusion, this reaching In the District interlocutory trict Court’s Order for re Crystal correctly Court stated first 1292(b), to 28 ar pursuant view U.S.C. only potential lex’s were Venezuela debtors guing incorrectly the District Court' alter, Crystal ego its PDVSA. to trans concluded that DUFTA extends lex, Therefore, at 691. F.Supp.3d 213 “in by "briefing fers After non-debtors. term,” of none of sense narrowest argument, granted oral the District Court “directly undertaken the transfers were motion, accepted PDVH’s and we PDVH’s ” Nonetheless, ‘by’ Id. the ‘debtor.’ permissive petition review. “non- District Court PDVH—a found transferor”—could liable under be Analysis6 II. DUFTA for its transfer dividend acknowledge ap While we support In this PDVSA. Id. of conclusion, peal equity the District noted that District Court and Court the. reverse the Court’s order PDVH’s to Dismiss contained two we will Motion District claim, First, argued DUFTA we need not arguments. based on the additional that the PDVSA, the FSIA in- reach issue. PDVH to did not from debtor,” required by property “of volve as a rejected a this review a District Court’s denial of the statute. The 6. We District 12(b)(6) challenge motion to dismiss de novo. argument, Rule and PDVH does not this Second, Corp., Wyndham F.3d legal analysis v. 799 appeal. PDVH ar- F.T.C. Worldwide (3d 2015). "accept by all factu- gued preempted 242 Cir. We DUFTA claim was true, allegations complaint immunity construe provisions the attachment al as ("FSIA”). plaintiff, light to the Foreign Sovereign most favorable Immunities Act whether, any argument reasonable rejected District Court determine may reading complaint, plaintiff appeals well. PDVH that decisiom Because colleague expressed, guidance, predicting we dissenting charged
our
are
compelled
to conclude that we must
how that
we
.court
resolve
issue.” In
denying
Energy
District
re
Holdings Corp.,
reverse the
Court’s Order
Future
dismiss,
(3d
2016).
because trans
In doing
PDVH’s motion
F.3d
253-54
Cir.
so,
not fraudulent
give
fers
non-debtors are
we must
“due deference” to the
DUFTA as it has been
In
rulings.
transfers under
intermediate state courts’
re
(3d
2014).
Makowka,
143, 148
by the
To
interpreted
Delaware courts.
754 F.3d
Cir.
dismiss,
plaintiff
motion to
a
“This
places
significant
survive a
con
standard
allege
“required
Sheridan,
element” of his
must
each
straint on
609 F.3d at
us[.]”
Phillips
Cty. Allegheny,
(quoting
claim.
Karfunkel,
Jewelcor Inc. v.
(3d
2008)).
(3d
F.3d
234-35
Cir.
The DUF
F.3d
676 n.4
Cir.
“Unlike
reads,
law,
part:
TA
our
in interprеting
statute
relevant
role
federal
judicial pioneer’
not ‘act
in a
obligation
A
made
incurred
Sheridan,
diversity case.”
85
Instead, Venezuela,
Capital
Capital,
its Growth
Partners H.I.G.
property.
3601-VCS,
720150,
Inc.,
PDVSA,
C.A. No.
2010
ego
received the
WL
alleged alter
(Del.
3, 2010) (“By
at *2
Ch. Mar.
its own-
The transfer was clear-
question.
billion
terms, the Delaware Fraudulent Transfer
by
been
the non-debtor
ly alleged to have
only
for a
provides
by
cause of action
matter,
initial
this transac-
As an
PDVH.
against
creditor
debtor-transferors
visit-
principal
to lack the
harm
tion seems
transferees.”);
Trust,
In re Wickes
No.
transfer,
in a
upon
ed
creditors
fraudulent
2515-VCS,
4698477,
Civ. A.
WL
namely
alienation of an
the debtor’s
asset
(Del.
16, 2008) (“in
*7-8
Ch. Oct.
order to
Here,
pay
otherwise available to
its debts.
claim,
a fraudulent transfer
have
one must
geograph-
complained
the alienation
against
....
person
valid claim
technically
a transfer
ical. It was not
fraudulently
to have
made
but a transfer
to the debtor
the debtor
transfer”).8
which,
law,
by virtue
international
re-
being
sulted
the assets
out
reach
Chancery Court has also rejected
The
covered,
This
is not
creditors.
situation
transfer claims
non-
fraudulent
contemplated, by
DUFTA.
analogous provi
debtor transferors under
Code, 11
Bankruptcy
sions in the federal
allegations
complaint raise
The
Estate,
Spring
U.S.C.A.
See
Real
First,
questions.
a transfer
two
can
LLC,
Holdings,
No.
LLC v.
C.A.
Echo/RT
non-debtor such
PDVH constitute a
(Del.
7994-VCN,
2016 WL
at *3
not,
If
fraudulent transfer under DUFTA?
18, 2016),
Ch. Feb.
sub
Klauder
nom.
aff'd
allegations
we then ask whether the
LLC,
Holdings,
No.
v. Echo/RT
whereby the
complaint,
debtor Venezuela
(Del.
2016)
(rejecting
WL 7189917
Dec.
scheme,
can state
claim
devised
conveyance
a fraudulent
relief
DUFTA based
either
under
subsidiary of
parent
non-debtor
aiding
abetting
conspiracy theory.
or a
company).
also In re Plassein Int’l
See
questions
to both
no.
answer
Co.,
Corp.
Capital
v. B.A.
B.R.
(Bankr.
2007),
388 B.R.
D. Del.
Liability
A. Non-Debtor
aff'd.
(D.
(3d
2008),
Del.
F.3d
Under DUFTA
aff'd
2009) (dismissing
federal
Cir.
state and
Although
Supreme
the Delaware
al
fraudulent transfer claims because the
opportunity
consider
has
had
by a
legedly
transfer was made
can com-
transferors
whether non-debtor
non-debtor).
DUFTA,
mit
transfers
*7
arises
Although
that
Chancery Court has answered
the
Code,
DUFTA,
negative.
Edgewater
Bankruptcy
under
not
question
the
See
the
prece-
unpublished
PDVSA
the arbitration
decisions are without
that
could
liable for
contrary,
award as well.
Emphatically
the
dential value.
unpublished
opin
and memorandum
letter
Although
Chancery
other
these and several
ions,
rulings from the
and even some oral
opinions
rely
unpublished,
Court
we
on are
bench,
prece-
are afforded a considerable
give
opinions
Delaware courts
such
substan
Delaware], especially
weight
dential
[in
precedential weight.
Aprahamian
tial
See
unreported
of the fact that
decisions
view
Co.,
(Del.
1204,
HBO &
A.2d
1207
Ch.
point
only authority on
where
often are the
1987) ("An unreported
[is]
decision
entitled to
involved").
predicting
In
how
novel issues are
deference”);
great
Corp.
Commercial
1-4
and
Supreme
resolve
Court would
the Delaware
Chancety
Practice in DE Court of
4.04,
issue,
give
opinions
substan
thus
such
(2017) ("The
Lexis
mere fact
a case is
not
weight
precedential
as well.
tial
reported
suggest
should not be taken to
these decisions are instructive. The rele
committed
Bankruptcy
vant DUFTA
provi
and
Code
of DUFTA.
violation
identical,
nearly
sions are
and Delaware
interpreted
applied
courts^have
them
addition, reading
“by a debtor”
uniformly. Compare 11 U.S.C.
548 with
broadly enough to allow a non-debtor sub
§§
6 Del. C.
1302-1306. “Because Dela
sidiary
(here, PDVH)
tránsferor
to be lia
UFTA,
adopted
has
the
ware
Federal
a ble, simply
parent
company
because
statute
was itself 'modeled on Section (here, Venezuela,
ego
its alter
548 of
...
the'Bankruptcy
Delaware
Code
PDVSA)
debtor,
is a
would underminé a
generally recognize
courts
that our state
precept of
corpo
fundamental
Delaware
federal
the
transfer stat
parent
rate law:
and subsidiary corpora
principles
substantially
utes’
are
tions are separate legal
As the
entities.
So,
Ki-Poong
same.”
Lee v.
C.A. No.
noted,
District
correctly
“Delaware
PRW,
6806247,
N14C-08-173
at
WL
public policy
disregard
lightly
does not
(Del,
17, 2016).
*3
Super. Ct. Nov.
See also
separate legal
corporations.”
existence
Corp.,
In re PHP Hеalthcare
128 Fed.
Crystallex,
F.Supp.3d
at 690 (quoting
839,
(“We
(3d
2005)
Appx.
Cir.
need
Estate,
Spring
769586,
Real
2016 WL
at *3
provisions
not discuss
of the Delaware
n.35).
they
“Persuading
Fraudulent
Act ... because
Delaware
court
substantially
are
as the
same
relevant
disregard
corporate entity
is a difficult
,of
Code”).
parts
Bankruptcy
DUFTA task.” Wallace ex rel. Cencom Cable In
“virtually
is
copy
carbon
of the fraudu
Wood,
1175,
come Partners II v.
752 A.2d
under the Bankruptcy
law
lent
(Del.
1999) (internal
1183,
quotation
Ch.
result
Code”
“the
Delaware law
under
omitted).
marks
law “tends
should be the same as
outcome
under
legal
accord
dignity
except
entities
the Bankruptcy Code.” In re
Int’l
Trace
cases in
pierc
which the
law of.
traditional
Holdings,
Co.,
Inc. v. Dow Chemical
287 ing
corporate
veil is met.” Hart Hold
(Bankr.
2002).
B.R.
n.5
S.D.N.Y.
Inc.,
Co. v. Drexel Burnham Lambert
Chancery
Just as the
Court has found that
C.A.
No.
WL
n.11
a.non-debtor
is
transferor
not liable under
(Del.
rare,
Ch.
Suсh
cases
Code,
Bankruptcy
a non-debtor trans-
include
subsidiary
situations
where
is
feror
is
liable under DUFTA.
mere
ego”
Mabon,
parent.
“alter
See
Here, Crystallex
allege
has
failed
Nugent & Co.
Energy Corp.,
v. Texas Am.
a debtor
PDVH would
(Del.
ACIV No.
87 for in- arguments to. remaining cover bad faith non-debtor transferors. Sheridan, DUFTA to cover at terpreting non-debtor 609 F.3d 253. First, also of no
transferors are
avail.
persuaded
Nor are
by Crystallex’s
we
urges that
non-debtor transfer-
jurisdictions
that courts
other
ors
covered
DUFTA because
are
have ftiund non-debtor transferors liable
1307(c)
§
shows that
statute
under similar fraudulent transfer statutes.
liability.
legislature contemplated such
Un- Crystallex
only
cites
two such
Gu
cases:
1307(c),
§
“a
shall
no
der
creditor
have
Givens,
(S.D.
v.
1 F.Supp.2d
tierrez
trustee,
right
against any
attorney
to relief
1998),
Cal.
In re
Candy
Carousel
Co. v
not acted in bad
other advisor who has
Weber,
(E.D.N.Y. 1984).
*4 Super. July Ct. WL 5192179 Ch. Oct. omitted) added), (emphasis tion fraudulent transfer and leeway for “leaves considerable the exеr- finding sup non-debtor transferor and no equitable cise of in doing discretion” so. In port position party that “a third Media, LLC, re Mobilactive C.A. No. making 5725- can be liable VCP, (Del. 2013 297950 Ch. Jan. WL party to whom transfer to the third 1307(a)(3)(e) § See also Del. C. debtor”); party not a Folmar & Assoc’s (courts may equitable invoke principles to (Ala. Holberg, LLP v. 776 So.2d “[a]ny craft relief the circumstances [] 2000), grounds by overruled on other may require”). having broad But latitude IILLC, Grp., LLC v. Sands PRS White to craft a remedy for a DUFTA violation (Ala. 2009) (rejecting a So.3d 5 not necessarily mean we have broad finding transfer claim and “no case in to latitude determine what fits within the of provisions which the Alabama Uni of place. contours the statute in the first form Transfer Act Fraudulent have been Moreover, Chancery Court is a court apply to transferors extended other (“The equity. of See Del. C. 341 debtor”); Int’l, Inc., than the Healthco cf. Chancery jurisdiction shall have to hear (Bankr. 1996) B.R. D. Mass. all matters determine and causes (finding that the transfers at issue were equity.”). It has the opportunity had “not by transfers Debtor and hence conclude, matter, equitable as an immune from fraudulent at transfer by DUFTA covers transfers non-debtors. Code). Bankruptcy tack” the federal under But, far, it so has not. Delaware courts rely also on We decline the broader have closed door to non-debtor trans- “by”—which in- dictionary definition statute, feror state “through agency cludes or instrumen- to open we are free it. tality of’ “on behalf of’—to extend Sidestepping “by the debtor” re- DUFTA to cover non-debtor transferors. quirement, Crystallex looks to other ele- First, do not allegations we read the in the ments the statute in attempt an cover complaint to aver actually that PDVH act- First, Crystallex the transaction. focuses agent ed as an or “on of’ behalf Venezuela. points the “transfer” element. to the Second, dictionary we need not resort “transfer,” statute’s broad definition definitions where the Delaware courts both which includes direct and indirect clearly “by indicated that a debtor” transfers, argues the indirect means the debtor itself must have transfer here is therefore covered made the transfer. 1301(12) (“ statute. See 6 Del. C. ‘Trans- Finally, reject Crystallex’s argument mode, every indirect, fer’ means direct or that DUFTA’s purpose” “broad remedial disposing ... of of or parting with an asset should cause us declare the transfer asset”). or an interest The Dissent Appellant, Br. for fraudulent. alsoWe well, this language arguing cites decline to find the non-debtor transfer interpretation our reads the term “indi- here fraudulent equitable based on consid- rect” out Dissenting Op. statute. erations, as dissenting our colleague sug- argument sepa- 93. But this conflates two gests. Dissenting Op. at 93-94. It is (1) true rate elements a DUFTA claim: grants “DUFTA (2) a court ‘broad lati- made the debtor. other tude’ for the words, court craft a remedy,” DUFTA cover an indirect Holdings, Lake Treasure Foundry transfer, Ltd. v. but nonethe- must LLC, 6546-VCL, Hill GP C.A. No. less be made debtor” in order to be *10 cognizable Nothing “orchestrating” statute. a of under the series transfers that cash, suggests that “converted CITGO’s to complaint value then debtor, removing those from directly asset funds United transferred Indeed, and recipient transferring of States them into indirectly. it was the coffers in PDVSA’s Venezuela.” A31. “All the assets. steps of this fraudulent transfer Crystallex understandably also focuses planned part were out ... and were of a on of the intentional nature the transac- single to scheme” benefit Venezuela. A43. from tion—to remove assets the United they not States to wherе would Venezuela The issue thus becomes whether a subject be execution Venezuela’s claim under DUFTA can be stated where Crystallex points to creditors. various a whereby debtor orchestrated scheme fraud,” “badges including of fact that a non-debtor assets to the transferred publicly several said Presumably, Venezuelan officials debtor. this would be based pay any not government theory of aiding on a abetting and of purpose transfer, arbitral awards and that or on a of theory conspiracy. The the transfers was shield CITGO Petro- though Dissent would find that “even potential judgments. leum from arbitration not Crystallex, was a debtor to it A40-41, Certainly, A62. the intent behind clearly facilitated transfer of this series transactions was to hinder proper is therefore a and defendant in this tempting However, be to conclude Dissenting Op. creditors. at ac case.” courts, that PDVH’s to PDVSA was cording transfer Delaware DUFTA therefore a fraudulent transfer under on theory claim based non-principal of badges go But of DUFTA. these fraud liability cognizable not under the statute. necessary only one of the three elements Chancery Court has foreclosed the of intent” to hin- possibility aiding a DUFTA claim—“actual abetting and der, Edgewater, creditor DUFTA. delay defraud WL (“[T]he Despite C. debtor. Del. detailed *2 Delaware Fraudulent intent, allegations DUFTA does create a cause of not claim fails aiding abetting conspir nonetheless be- action for and commit, transfer.”); allege cause a fraudulent Litigation debtor.” America Trust v. Trenwick L.L.P., Young, Ernst 906 A.2d & Aiding Abetting B. (Del. 2006) (“Despite Theories and Ch. the breadth of Conspiracy Under DUFTA available under state federal remedies statutes, those conveyance laws Crystal- We now must whether decide creating a interрreted been complaint lex’s states a DUF- nonetheless ”), ‘aiding abetting.’ cause action for PDVH, given TA theory on Nor can succeed Venezuela’s role the transfer Chancery Court has conspiracy, as the clearly alleges that scheme. Qua contrary. specifically ruled to the See “Venezuela, PDVSA, ego, its alter Vertin, Co. v. drant Structured Products perpetrated this to hinder or de- 2014) (“Under (Del. Ch. 102 A.3d lay Crystallex’s ability to enforce arbi- law, cannot conspiracy tration award.” A34. Venezuela “devised” transfer”). predicated on fraudulent ego the scheme and “enlisted” its alter give Dela- possi- as much We must deference PDVSA “extract value due issues of opinions these ble from A31. PDVSA did so ware courts’ CITGO.” law, opinions limit DUFTA this part these all Venezuela’s scheme to state *11 expropriate to debtors—which PDVH is transfers investment. substantial cannot extеnd DUF- to be. We seizure, Following the trans- Venezuela beyond leave to TA confínes. “We these Crystallex’s ferred interest the mine' to ,,. and, legislatures where rele- state (“Petróleos”), Petróleos de S.A. vant, courts the to the. state task of ex- Petróleos, turn, a company. state-owned restricting liability panding [theories].” sold 40% that interest to the Venezuelan Corp., v. Johns-Manville Wisniewski Central Bank billion. Venezuela’s $9.5 (3d Crystallex Cir. F.2d has Crystallex seizure bankruptcy. forced into successfully plead a transfer failed Having lost its entire investment successfully thus failed debtor” mine, Crystallex brought an arbitration plead a fraudulent transfer claim treaty Venezuela between under DUFTA. Canada Ultimately, and Venezuela. ar- bitration tribunal found that Venezuela’s III. Conclusion treaty conduct violated and awarded reasons, foregoing For the we will re- Crystallex damages.1 over billion in $T.2 verse order of the Distriсt Court pending, While the arbitration was Ven- proceedings for further remand consistent repeatedly, ezuela including through its opinion. Chávez, former Hugo President main- tained any would refuse FUENTES, pay Judge, Circuit dissenting. end, arbitration To award. Venezuela Crystallex, a company, Canadian owned devised scheme to Cristinas, rights exclusive Las billion out United States. did gold Republic mine of Venezuela complex so series of offer- debt (“Venezuela”). According to ccimplaint, ings involving and dividend transfers Pe- the mine largest has one of the unmined wholly-owned tróleos and its gold world, in the reserves between subsidiaries, Citgo Holding, (“Citgo Inc. gold. 26 million ounces nearly For of. Holding”) and defendant PDV decade, Crystallex invested more than (“PDV Holding”).2 Inc. pur- Venezuela’s However, million to develop the mine. $640 pose was clear: move its assets out despite Crystallex’s many applications, to prеvent judgment United States Venezuela never permits issued the needed Crystallex creditors like executing from gold. extract and sell Eventually, claim- upon them. had progress on stalled development, mine’s termi- following diagram depicts Venezuela the flow nated mining agreement and of funds from the United States Vene- seized the mine. According, to Crystallex, zuela alleged by Crystallex: 1. The Court for the Interestingly, District District Colum offering the bond materials bia later confirmed the award and entered given said "no assurance can judgment Crystallex's favor for over $1.2 challenged of the [t]ransactions would not be 'billion. See Corp. Int’l Bolivarian aas transfer.” A-44. Venez., Republic F.Supp.3d (D.D.C. 2017). writing, As of this Venezuela's appeal pending. of that decision *12 And, majority the District Against lent Transfer Act. like background, cannot assert a Crystallex Court, though holds that I PDV would find that even Holding—the only remaining against PDV Crystallex, not it a debtor was the Dela- defendant this case—under clearly facilitated Fraudulent Transfer Act ware Uniform in this proper is therefore a defendant (the Act” or “Fraudulent Transfer case. “Act”) Holding, a because PDV facts, I it cannot be view As merely a corporation, was non-debtor Act, firmly Transfer which is Fraudulent transferor, transferee, a debtor equity, grounded principles leaves disagree. I in the fraudulent scheme. I purposeful of a Crystallex—the victim affirm the District Court. -remedy ft’aud—without complicated I would conclude that has transferring Holding’s role in for PDV $2.8 pled claim Fraudu adequately under the to avoid of the United States billion out lent Transfer PDV The Fraudulent Venezuela’s creditors. participant direct the fraudulent trans a re- support Transfer Act such Specifically, as the District Court fer. sult. found, Holding’s of a issuance PDV However, majority signals today Petróleos, billion dividend Venezue Holding, may direction, party, as such PDV la’s was a “transfer” of debtor in a knowingly participate property “by a under the Fraudu debtor” long Thus, so as it is not a debtor. Holding. keeping with the Indeed, consequence majority’s requirement Act’s “supplement courts that, holding is provisions” Fraudulent “principles with the law Act, foreign whether, sovereign—such equity,” must determine fraudulently repatri- Venezuela—is free assuming the fraudulent transfer scheme assets, long party making ate so as the alleged, appropriate occurred transfer is a non-debtor. That result does the District conclude that defen- not comport wholly with—but rather is Holding’s presence dant PDV “continued contrary to—the Act’s broad pur- remedial appropriate.”7 this action is pose. Because I would hold that the answer
Moreover, I believe majority yes, I respectfully dissеnt.
wrong as a According matter law. to the
majority, the courts have “Delaware closed I. Stated a Fraudulent door to non-debtor transferor Transfer Act Claim under” the Fraudulent Transfer I Act.3 I completely agree with the District *13 agree. cannot by None cases cited Court that Crystallex pled a Fraudulent majority have held that non-debtor Transfer Act claim Holding. PDV I liability transferors immune from un- agree also with the District Court the Act. der Holding’s PDV non-debtor status not does contrary, (and not)
To the the committee that should it from shield drafted the Uniform Fraudulent repatriation Transfer its fraudulent of billion to $2.8 Act, Petróleos, the model statute on which the Fraud- a Venezuelan state-owned com- based, plainly ulent Transfer Act pany. stated its remedies are not In- exclusive.4
deed, the grants Fraudulent Transfer Act A. The Dividend to Petróleos Was a courts broad latitude to craft remedies “Transfer” (cid:127) response to Specifi- transfers. Act, Under the Fraudulent Transfer a cally, provides the Aet that courts mode, “transfer” “every includes direct “[a]ny craft relief the circumstances [] ... disposing indirect of or parting more, may require.”5 What’s as the Dis- an asset in an interest asset.”8 “As- noted, trict Court the Act states broadly set” is “property of defined as “principles equity” of law and should be debtor.”9 The District Court found that to “supplement used provisions” unless Holding’s PDV billion dividend Pe- $2.8 “displaced by provisions.”6 the [Act’s] debtor,” “property tróleos involved Importantly, therefore, Transfer Fraudulent was a “transfer” not, by terms, Act does conclusion, its own agree bar a claim Act. I with that and PDV against a non-debtor transferor such challenge appeal. it on Maj. Op. 3. 1307(a)(3)(c). § 88-89. 5. 6 Del. C. § 6. Id. 1310. § See Unif. Fraudulent Transfer cmt. 1 Act 7 (1984) (“The specified sec- remedies in this exclusive.”). tion are 7. A-13. The Uniform Fraud- Act, ulent promulgated by Transfer which was ' 1301(12). National Conference 8. 6 of Commissioners on Del. C. adopted Uniform State Law has been 1301(2). in all but a handful of states. Id. “By dictionaries in order to ascertain’ or- their The Transfer Made
B. Was fact, dinary meaning.”12 In this approach Debtor” Supreme mirrors the Delaware Court’s Crystal- first holds that majority for interpreting method undefined words claim fails billion lex’s because $2.8 in statutes.13 Merriam-Webster’s dictio- dividend Petróleos was made PDV nary “by” defines include “on behalf itself, Holding, not thus not Petróleos such, did, of.”14As as the District Court I “by a debtor” under the Fraudulent Trans- that a “by would hold transfer made view, I disagree. my fer Act. consis- the Act debtor” under when is executed Act, Holding’s tent with the dividend PDV on the debtor’s “behalf.” Petróleos, requested by was an indirect As “by a debtor.” Here, Crystallex alleges PDV Hold- such, it is a clear violation of the Act. ing’s billion Petróleos was dividend of a part complex scheme directed Ven- “by A transfer must be debtor” facts, ezuela. On these I would find As actionable under the the District Act. Petróleos, Holding’s dividend to sent noted, “every a “transfer” includes behalf, “by Venezuela’s was a transfer mode, direct or indirect ... of disposing I majority’s arguments debtor.” find or an parting with an asset interest contrary unconvincing.15 interpretation majority’s an asset.”10 The the term “indirect” a debtor” reads Equity C. Hold- Dictates That PDV Act. not com- out This result does is Liable Under Fraudu- “avoid[ing] inter- port practice with our lent effectively out pretations read words
of a statute.”11 Moreover, disagree majority’s I with the transferors,
Further, holding the Act not define that non-debtor such does the liability as are immune from phrase debtor.” “When words are PDV undefined, Specifically, majority have Act. the left turned ‘standard under the legal general that courts have closed reference works such as asserts “Delaware 1301(12) added). (emphasis 10. because the transfer went to the [the Act]” Id. noted, Maj. Op. disagree. 85. I As debtor. Act, 182, "every includes Taylor, 193 under the "transfer” States v. 686 F.3d United 2012). (3d disposing parting or with an ... of Cir. mode 1301(12) (emphasis §C. asset.” 6 add Del. (3d ed). "disposing Thompson, The Act does not define of.” v. 123 Eid 740 F.3d But, terms, 2014) Geiser, dictionary “dispose of” means (quoting in Cir. States v. United distribute, (3d 2008)). arrange.” place, or Merriam- F.3d 294 Cir. "to 527 (10th Collegiate Dictionary ed. Webster’s 335 A,2d 799, 1996). Here, State, Holding's PDV to Pe- Cephas 801 dividend 13. See v. law, (Del. 2006) ("Under proceeds "placed” be De tróleos caused the well-settled case this, I PDV courts look to for assis Venezuela. From would hold that laware dictionaries meaning determining plain Holding's Act be tance in the falls within the dividend (quoting "dispose[d] property. terms which are not Lor it of” cause Venezuela’s defined[.]” Found., sure, Legacy Tobacco Co. v. illard Am. To be since “transfer” also includes (Del. 2006))). asset,” "dispos A.2d "parting phrase an the only captured if it of” redundant Collegiate Dictionary property away 14. Merriam-Webster’s debt- the the movement from (10th Reeves, ed. v. F.2d or. See United States ("A (5th 1985) should be read Cir. statute language if majority argues rendering redundant 15. The that the scheme al to avoid its covered, leged contemplated, reasonably possible.”). or "is not joy fact, liability to non-debtor transferor claim. appear the door In the under” the Act.16 held that Delaware courts ever non- from debtor transferors are immune liabil- regard, majority primarily In this the ity under Act. Chancery on the Delaware Court’s relies Edgewater Capital decision in Growth majority, I Additionally, do unlike Capital, In Partners H.I.G. Inc.17 L.P. interpret Crystallex’s complaint al- binority Edgewater, corpora owner of a leging ¿betting aiding conspiracy sought corporation’s tion to hold the for Insteаd, Holdrng. Crys- (cid:127)claim PDV mer directors liable under the Fraudulent Holding directly tallex asserts that PDV aiding abetting" Act for Transfer the participated scheme. In- the fraudulent corporation’s its sale of assets a senior deed, in Edgewater, unlike directors aiding support In and abet lender. Crystallex' alleges PDV di- ting theory, minority owner rectly conveyed billion dividend “conspired with” the directors proceeds to Petróleos Venezuela. “to corporation senior to cause lender The on In re majority also relies Wickes an, unfair, process.”18 run sales tainted Trust the Delaware the, However, Act Court held assprting Chancery Court has barred non-debtor for not create a cause of “does action transferor Act.21 under the Howev- liability aiding abetting transfer, a fraudulent er, In re only Trust Wickes stands commit, conspiring a. bring that a cannot plaintiff proposition transfеr,”19. Edgewater, In ob claim unless she is a terms, “[b]y served that its own the [] creditor re debtor.22' In Wickes Fraudulent only provides Trust appear does not relevant a cause of action creditor question of recognizes the Act whether debtor-transferors transferees.”20 non-debtor liability.23 transferor majority this to mean interprets Edgewater view, definitively my that non- holds Fraudulent Transfer Holdrng such Act is meant serve a broad transferors remedial with, purpose specific immune from cir respect to the :the *15 Admittedly, cumstances Fraudulent Transfer transfer. As fraudulent Act. reading gives in the Chancery Delaware Court has ob sentence isolation served, argument appeal. Howev- the Act facial Fraudulent Transfer some er, Edgewater “grants merely ... to court latitude’ addressed whether ‘broad craft recognizes abetting remedy position in aiding ‘put Act a creditor 88-89, Maj. Op. 16. at 22. Id. at *7-8. Estate, majority Spring 23.- cites Real also 3601-VCS, (Del. C.A. No. 2010 WL 17. LLC, Holdings, LLC v. No 7994- Echo/RT C.A. 3, 2010). Ch. Mar. VCN, .(Del. 18, WL 769586 Ch. Feb. 2016), stating Chancery 18. Id. at *1. [] n rejected “has Court fraudulent- against claims non-debtor under transferors 19. at *2. Id. analogous provisions Bankrupt in the federal However, cy Maj. Ops at Code.” 85. Id. case, rejected because the'claim .the Here, belong assets did not debtor. 2515-VCS, Holding's plainly
21. C.A. No. WL 4698477 PDV dividend to Petróleos (Del. 16, 2008). property. Ch. Oct. involved Altogether, I hard-pressed she have in had been am con- Moreover, worthy occurred.’”24 ceive of a scenario -of more trial principles Act “the law states invocation of equitable court’s its broad “supplement should equity” powers used under Transfer Act the Fraudulent provisions” “displaced unless view, [Act’s] my Crystallex than this one. In has end, provides To the Act provisions.”25 presented compelling plausible facts equitable principles that courts invoke against its case heard “[a]ny [] to craft relief the circumstances I Act. would therefore affirm may require.”26 the District Court.28 that, alleges after expending money amount a substantial of time and II. Conclusion long-inoperable gold re- developing reasons, For I respectfully the above Cristinas, at unlaw- serves Las Venezuela dissent. fully usurped gifted mine
Petróleos, then 40% of which sold To whopping for a billion.
interest $9.5 worse, matters at the time
make Venezue- Cristinas, Crystallex
la seized Las had yet
to receive return on its investment delays purposeful
because Venezuela’s Moreover, issuing permits. required af- Crystallex lawfully
ter initiated an arbitra- against
tion Venezuela concoct- to repatriate scheme
ed Holding to
billion from PDV Petróleos
Venezuela.27 action, Foundry lining Holdings, Lake relief in such an Treasure Ltd. v. available LLC, 6546-VCL, GP the Act enumerates debtors Hill C.A. No. WL remedies (Del. 2014) Ch. See *15 Oct. and transferees involved in the at transfer. 1308(b). 1307(a), (quoting August August, §§ No. 3180- C.A. id. While the VCS, (Del. specify 2009 WL *10 Ch. Feb. remedies non-debtor at 20, 2009)); Media, transferors, see also In re Mobilactive such as PDV its di- LLC, 5725-VCP, No. "[a]ny C.A. 2013 WL relief the [] rective that courts craft (Del. 25, 2013) ("[The *32 Jan. Fraudu may require” provides Ch. a clear circumstances provides 1307(a)(3)(c). lent broad Act] remedies avenue relief Id. here. leeway creditors and leaves considerable discretion.”), of equitable the exercise PDV Hold- majority 28.The does not reach that, argument ing's even if stated *16 § claim, 25. 6 Del. 1310. C. Sovereign Foreign Immunities prejudgment Act's restrictions attachment on 1307(a)(3)(c). § sovereign property preempt that claim. See Id. Crys- §§ I Since believe U.S.C. 1609-1611. issue, claim, I reach the tallex stated suggests majority I conflate liabil- state; foreign is a is not a ity Maj. Op. remedies. See at 88-89. Not § Act, corporation. 1603. As See id. bring To- a claim under the all. such, yelief seeks plaintiff allege extent that must the existence a fraudu- 1304(a), regard property, I Holding’s As ex- to PDV lent See 6 Del. C. transfer. Thus, prejudg- would hold that the plained, I so. restrictions believe did sovereign property may bring Crystallex- attachment of "an action relief ment transfer," 1307(a). .inapplicable Id. In out- [that] claim.