Kahle v. Cargill, Inc.

• Court: District Court, S.D. New York
• Decided: February 13, 2024
• Docket: 1:21-cv-08532
• Status: Unknown

Opinion

STEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERSON, PA. USDC SDNY Jason P. Hernandez 150 West Flagler Street, Suite 2200 DOCUMENT Miami, FL 33130 Direct: (305) 789-3455 ELECTRONICALLY FILED Fax. (305) 789-2685 DOC #: Email: jhernandez@stearnsweaver.com DATE FILED: —_ 2/13/2024 eeet □ See ee January 12, 2024 Plaintiff's application to submit the two expert reports outlined in ECF SUBMITTED VIA ECF No. 201 is GRANTED. The Honorable Stewart D. Aaron United States Magistrate Judge SO ORDERED. United States Courthouse Dated: February 13, 2024 500 Pearl Street New York, NY 10007-1312 rut oS. Re: Philip Von Kahle, in his capacity as assignee for the benefit of creditors of Coex Coffee International, Inc. v. Cargill, Incorporated, Case No. 1:21-CV-08532 (AT)(SDA) Dear Judge Aaron: Counsel for Plaintiff in the above-reference matter writes to request permission to submit two expert witness reports on March 1, 2024 on a matter for which Plaintiff does not bear the burden of proof. Defendant Cargill, Inc. consents to Plaintiff's request. By way of brief background, this is a fraudulent transfer case brought pursuant to the Florida Uniform Fraudulent Transfer Act. See Fla. Stat. § 726.101, ef. seg. Plaintiff alleges that Coex Coffee International, Inc. (“Coex Miami”) fraudulently transferred more than $90 million to Defendant Cargill, Inc., a limited designation swap dealer, to pay for swaps-related settlements and margin calls made by Cargill on a separate Panamanian company called Corporacién Coex, Inc. (““Coex Panama”). Plaintiff further alleges that Coex Miami entered into three limited corporate guarantees that should be avoided as fraudulent. Cargill denies any liability to Plaintiff and in its Answer to the First Amended Complaint, Cargill asserts that it acted in good faith, which is a statutory affirmative defense. See See Def.’s Ans. to First Am. Compl. at 65 (First and Second Affirmative Defenses); Fla. Stat. § 726.109(a) (“A transfer or obligation is not voidable under s. 726.105(1)(a) against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee.”): Jn re Lydia Cladek, Inc., 494 B.R. 555, 561 (Bankr. M.D. Fla. 2013) (explaining that “good faith” is an affirmative defense under Fla. Stat. § 726.109(a)). “{CJourts apply an objective test” to good faith defenses to fraudulent transfers. Wiand v. Waxenberg, 611 F. Supp. 2d 1299, 1319-20 (M.D. Fla. 2009) (citation omitted). For purposes of the defense, “[t|he relevant question is whether the transferee had actual knowledge of the debtor’s fraudulent purpose or had knowledge of such facts or circumstances as would have induced an

Page 2

ordinarily prudent person to make inquiry, and which inquiry, if made with reasonable diligence, would have led to the discovery of the [transferor’s] fraudulent purpose.” Id. at 1319–20 (internal quotations and citation omitted). “In applying the ‘reasonable person’ standard, the Court must take into account the transferee’s individual circumstances, including their sophistication as an investor and whether they had actual knowledge of the fraud.” In re Lydia Cladek, Inc. at 561–62 (citation omitted).

On January 5, 2024, Your Honor approved the parties’ jointly proposed case schedule, which provided, in relevant part, that the parties would “exchange number and topics of experts for initial reports, based on burden of proof” on February 9, 2024. [1/5/24 Order at D.E. 195]. The Order further set March 1, 2024 as the deadline for the parties to “exchange initial reports, based on burden of proof” and March 29, 2024 as the deadline for the exchange of expert rebuttal reports. [1/5/24 Order at D.E. 195].

On February 9th, Cargill disclosed that it intends to “call two experts submitting initial reports: (1) a forensic accounting expert who will analyze and opine on the Coex entities’ transactions, books, and records; and (2) a swaps expert who will analyze and opine on swaps and related processes.” Neither of the disclosed reports purports to address Cargill’s good faith defense.

Plaintiff intends to rebut Cargill’s good faith defense with testimony from two expert witnesses – an expert in credit related to financial derivatives, including swaps, and a compliance expert. Plaintiff, however, does not bear the burden of proof on this issue – Cargill does – and the Court’s order states that initial expert reports “based on burden of proof” are due on March 1st [1/5/24 Order at D.E. 195].

Accordingly, Plaintiff respectfully requests leave from the Court (with Cargill’s consent) to file the following expert reports on March 1st, even though Plaintiff does not bear the burden of proof on the issue that the reports will address:

(1) a report by a credit expert who will offer opinions on whether Cargill acted reasonably and within generally accepted standards when evaluating and extending credit to Coex Miami and Coex Panama, and

(2) a report by a compliance expert who will opine that Cargill was on inquiry notice for various reasons. Page 3

Respectfully submitted,

/s/Jason P. Hernandez Jason P. Hernandez Stearns Weaver Miller Weissler, Alhadeff & Sitterson, P.A. 150 West Flagler Street, Suite 2200 Miami, FL 33130 Email: jhernandez@stearnsweaver.com Phone: 305-789-3455 Fax: 305-789-2685

Attorneys for Plaintiff Philip Von Kahle

Cc: All Counsel of Record via ECF