Opinion ID: 503762
Heading Depth: 2
Heading Rank: 2

Heading: Quasi-Contract and Fiduciary Duty Claims

Text: 41 Phoenix objects to the pretrial dismissal of its quasi-contract and breach of fiduciary duty claims. Neither of these claims had been fully briefed or vigorously pursued below. Phoenix never specified the elements of the claims under Ecuadorian law, nor did it explain how its allegations conformed to those elements. As the party seeking to recover under a foreign nation's cause of action, Phoenix bore the burden of proving its entitlement to that relief. Cuba R.R. v. Crosby, 222 U.S. 473, 479, 32 S.Ct. 132, 133, 56 L.Ed. 274 (1912). 42 For ten years, the district court wrestled with this case, battling a seemingly never-ending barrage of paper. In Phoenix II, the court characterized the pretrial condition of the case as a hopelessly confused morass. Phoenix Canada Oil Co. Ltd. v. Texaco, Inc., 560 F.Supp. 1372, 1390 (D. Del. 1983) (Phoenix II ). By that time, seven years after the suit was filed, the court justifiably could expect Phoenix to have clarified its position and finally have settled on its legal theory. The court struggled toward narrowing the issues for trial and deserved the litigants' cooperation. 43 In the 1983 pretrial wrap-up the court ruled that the three-year statute of limitations barred recovery for all tortious acts occurring before November 26, 1973. At that stage in the litigation, Phoenix was alleging that the defendants had tortiously engaged in a continuing scheme to destroy it. However, most of the alleged activity occurred outside the statute of limitations, and was thus time-barred. As to the remaining allegations, the court determined that the facts charged as tortious sounded in contract rather than tort. 44 At a pretrial conference following the 1983 ruling, the parties presented the court with a 184-page proposed pretrial order, which the court declined to accept. The parties subsequently filed additional briefing on Ecuadorian law and further argument followed. Most efforts during this period were devoted to exploring Ecuadorian law on unjust enrichment. As the court noted, only two issues not previously decided were raised: the parameters of an unjust enrichment theory in Ecuador and that relating to a contract dispute over the three quarters of royalty payments. Phoenix III, slip op. at 5. 45 In deciding how to proceed on Phoenix's unjust enrichment claim, the court reviewed the three principal quasi-contract theories enumerated in the Ecuadorian Civil Code: the unsolicited agency, the payment of something not owed, and the community. Phoenix III, slip op. at 9 (citing Civil Code art. 2212 (Ecuador)). The court stated that ambiguities in those provisions of the Code might well lead to a statutory basis behind plaintiff's claim. Nevertheless, the court concluded that Phoenix's inability to fit its allegations squarely into one of these three civil code sections would not preclude a recovery under a general theory of unjust enrichment. Id. 46 After further study, the court announced that Phoenix could proceed to trial on the unjust enrichment de in rem verso theory. The court observed also that Phoenix might have a few lingering contract claims of minor pecuniary significance relating to the three quarters of 1973 and 1974. If plaintiff so desires, those claims, too, will proceed to trial. The court then directed the parties to submit a manageable proposed pretrial order. Phoenix III, slip op. at 18. 47 Phoenix later attempted to resurrect its defunct tort cause of action, this time as a claim for breach of fiduciary duty. The court permitted this count--added seven years after the original complaint was filed--to be briefed, and argued during the final pretrial conference on February 18, 1986. After consideration, the district judge directed that the trial proceed only as to the two theories outlined in the 1983 order: unjust enrichment and breach of contract. As to the belated breach of fiduciary duty claim, the judge stated: It would appear to me that the plaintiff is saying we acknowledge the validity of the decrees of the Ecuadorian government but the plaintiffs are entitled to go through the back door to attack the defendants for permitting the decrees to have been made. 48 After our examination of the lengthy history of this case, we think it appropriate to commend the district judges for their tireless efforts to narrow the issues to manageable proportions. Having carefully monitored the pretrial developments for nearly a decade, the district court's preclusion of an issue raised at the twenty-third hour, it seems to us, was within the court's proper discretion. In any event, though not determinative, our review leads us to conclude that Phoenix had little likelihood of success on either its quasi-contract or breach of fiduciary duty theory. 49 In Phoenix II, Judge Schwartz observed that the concept of unjust enrichment--basically an equitable premise--structurally forms the basis for theories of quasi contract. Phoenix II, 560 F.Supp. at 1384. See Kovacic, A Proposal to Simplify Quantum Meruit Litigation, 35 Am. U.L.Rev. 547, 554 (1986). Phoenix's own legal expert, Rene Bustamente Munoz, has explained that the same is true under the law of Ecuador: We also consider that unjust enrichment or enrichment without cause is the foundation of all the quasi contracts mentioned by Arts. 1480, 2211 and 2212 of the Civil Code as one of the sources of obligations. (App. 804) As a result, our determination that the district court correctly rejected Phoenix's unjust enrichment claim similarly dooms its claims under quasi-contract. 50 There is no reversible error here.