In re: ORLAND LTD.; VANDEVCO LIMITED

Case Type:
Business
Case Status:
Affirmed
Citation:
21-1176 & 21-1200 (9th Circuit, Mar 25,2022) Not Published
Tag(s):
Ruling:
Seeing no error and thus no abuse of discretion, the Bankruptcy Appellate Panel of the Ninth Circuit affirmed orders, issued by the U.S. Bankruptcy Court for the Western District of Washington (BC), dismissing two adversary proceedings, launched by Cerner Middle East Ltd., (Cerner), arising from the jointly administered bankruptcy cases of distinct but related debtors indebted to CME on one ground-forum non conveniens-upon finding that (1) the United Arab Emirates was an adequate alternative forum, and (2) the usual private and public interest factors weighed in dismissal's favor.
Procedural context:
Pre-petition litigation had been extensive, spread over three cases, but without ever producing a recovery of any kind. In 2016, Cerner filed two complaints in the United States to enforce contractual guarantees: one against one debtor-defendant-Vandevco Limited (Vandevco)-and its indirect owner, Belbadi Enterprises, LLC (Belbadi LLC), in Washington state court (the Washington Litigation) and a second against the second debtor-defendant-Orland Ltd. (Orland, and together with Vandevco, DRs)-and Belbadi LLC in the Oregon state court (the Oregon Litigation). Essentially, Cerner alleged that Belbadi LLC breached the guarantees and that Vandevco and Orland, as the alter egos of Belbadi LLC, were equally liable for the debt. Through a prejudgment writ of attachment, Cerner sought to enforce its right to "take and hold" Belbadi LLC's beneficial ownership interest in the Vandevco and Orland shares, which are owned by Willamette Enterprises, Ltd. (Willamette), the holding company for both DRs, and held in the Cayman Islands. Over the next four years, Cerner, Belbadi LLC, Vandevco, and Orland litigated matters in the two state courts, the district courts for the District of Oregon and the Western District of Washington, the Ninth Circuit Court of Appeals, and the Oregon Court of Appeals. These efforts added up to little, as things never progressed past the jurisdictional stage in either case, with the crux of the parties' unresolved dispute being unresolved dispute in both cases being whether state court even had personal jurisdiction over Belbadi LLC. In the midst of this litigation, Cerner prevailed against Belbadi LLC in at least one civil action in the UAE, rebuffing Belbadi LLC multi-ground challenge to the guarantees. Indeed, at that suit's end, the UAE trial court not only dismissed the case on the merits but also ordered Belbadi LLC to pay Cerner's attorney's fees and costs. The UAE appellate court affirmed this trial court decision. Bankruptcy law's involvement began when the DRs filed two separate chapter 11 bankruptcy cases on December 6, 2020 (Petition Date). The BC subsequently ordered the joint administration of these cases. In each case, Cerner filed an $87,875,514.65 unsecured proof of claim. The DRs remanded the U.S. state court litigation to the BC, which denied Cerner's motion for remand, a result that Cerner did not appeal. Thereafter, the DRs and Belbadi LLC, as defendants, moved from dismissal of the removed actions, now in the form of adversary proceedings, on forum non conveniens grounds. While the dismissal motions were filed at different times, the substantive arguments for and against were identical. Ultimately, after much briefing, the BC dismissed both adversary proceedings in two orders that were issued one month apart but decided on identical grounds and conditioned dismissal on Belbadi LLC agreeing to submit to UAE jurisdiction and to waive any statute of limitations or jurisdictional defenses. Cerner timely appealed both orders, which, due to the above history, were discussed as though they were filed and decided together by the BAP.
Facts:
As a threshold matter, a corporate factsheet seems most essential. Almed Saeed Al Badi Al Dhaheri (Dhaheri), a citizen and domicilary of the UAE, is the sole member of defendant Belbadi LLC, a UAE limited liability company with its principal place of business in Abu Dhabi, UAE. Belbadi LLC is the sole member of Belbadi Engineering, LLC, a UAE limited liability company. Willamette is an exempted Cayman Island company co-owned by Belbadi Engineering, LLC (99%) and Mr. Ziad A. Elhindi (1%) and is the holding company for both debtors-defendants: Vandevco Limited (Vandevco) and Orland Ltd. (Orland, and together with Vandevco, DRs). Vandevco is a Washington corporation which owns, through other entities, the Vancouver Center, a mixed residential commercial development in Vancouver, Washington, while Orland is an Oregon corporation and was formed for the purpose of real estate ownership and development. Orland owns some acreage and rental homes in Tigard, Oregon. A Cayman Island company with its principal place of business in Kansas City, Missouri. Cerner is a subsidiary of Cerner Corporation, a medical services technology company, and operates in the Middle East and Africa. The parties' pre- and post-petition fights center on a contract. In 2008, the UAE Ministry of Health awarded iCapital S/E (iCapital), a sole proprietorship owned by Dhaheri, a contract to develop medical information software for use by hospitals in the UAE. So as to fulfill its duties under this agreement, iCapital entered into a $94 million contract with Cerner. After iCapital defaulted on its payment obligations under the contract, Cerner commenced its first arbitration proceeding against iCapital and Mr. Dhaheri in Paris, France. Before this arbitration was due to commence, the parties settled the matter. Crucial to this settlement were two agreements to guarantee iCapital's obligations, drafted in both English and Arabic by Cerner's attorneys in the UAE, by Belbadi LLC, a stranger to the parties' contract. As part of the accord, Cerner consented to the UAE courts to resolve any dispute over the guarantees. (Interestingly, the Arabic version of the Guarantees provided for "exclusive" jurisdiction in the UAE, while the English version provided only for a consent to UAE jurisdiction.) When iCapital later again defaulted, this time under the settlement agreement, Cerner filed a second arbitration proceeding against iCapital and Mr. Dhaheri in Paris, France. Cerner was awarded approximately $62 million (U.S. dollars) jointly and severally against iCapital and Dhaheri. Through the Petition Date, Cerner had received nothing under the arbitration award or pursuant to the guarantees.
Judge(s):
Julia W. Brand; Gary A. Spraker; and Scott H. Gan

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