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HFGL Ltd. v. Alex Lyon & Son Sales Managers and Auctioneers

December 22, 2009

HFGL LTD. AND CNH CAPITAL EUROPE LTD., PLAINTIFFS,
v.
ALEX LYON & SON SALES MANAGERS AND AUCTIONEERS, INC., DEFENDANT.



The opinion of the court was delivered by: Irenas, Senior District Judge

OPINION

This dispute arises out of Defendant Alex Lyon & Son Sales Managers and Auctioneers, Inc.'s ("Lyon") sale at auction of construction equipment allegedly owned by Plaintiffs HFGL Ltd. and CNH Capital Europe Ltd. (collectively "HFGL and CNH"). HFGL and CNH have moved for summary judgment, arguing, among other things, that pursuant to certain "hire purchase agreements" --English leasing agreements -- governed by English law, they are the true owners of the construction equipment at issue. In support of their argument, HFGL and CNH submit an expert report by Professor Iwan Davies on the English law governing hire purchase agreements (the "Davies Report"). Lyon presently moves to strike the Davies Report.*fn1 For the reasons that follow, Lyon's Motion will be denied. The Court will issue an appropriate Order.*fn2

I.

In 2005 and 2006, HFGL and CNH, both English corporations, entered into multiple hire purchase agreements with an English corporation, Thornycroft (1862) Ltd., and its affiliate, Cadman Contracts Ltd. (collectively "Thornycroft").*fn3 (Samson Aff. ¶ 5.) HFGL and CNH assert that under these agreements, HFGL and CNH agreed to lease construction equipment to Thornycroft, granting Thornycroft the option to purchase the equipment for a fee at the conclusion of the lease. (Samson Aff. ¶ 8-9.) Most of the agreements contain a provision stating that they are governed by English law.*fn4 (Samson Aff. Ex. 1-9.) HFGL and CNH assert that, without their knowledge, Thornycroft smuggled certain equipment covered by these agreements (the "Equipment"), from England to the United States, where Lyon auctioned it. (Samson Aff. ¶ 14.) HFGL and CNH allege that under the hire purchase agreements, they are the true owners of the Equipment, and Lyon is liable for having converted their property.

Lyon asserts that HFGL and CNH's arrangement with Thornycroft should be properly seen as HFGL and CNH's providing Thornycroft's acquisition financing. (Lyon Aff. ¶ 19.) Lyon generally contests HFGL and CNH's claims of ownership. (Lyon Aff. ¶ 20.) Lyon also asserts that despite HFGL and CNH's apparent belief that the Equipment was in England, in actuality, certain pieces of the Equipment were already in the United States when HFGL and CNH executed the agreements concerning those items. (Lyon Aff. ¶ 21, 24, 26.) Moreover, one piece of Equipment was sold at auction prior to HFGL and CNH's signing an agreement regarding that particular item. (Lyon Aff. ¶ 21.)

In 2006, Thornycroft entered into the English law equivalent of bankruptcy, allegedly after its schemes to defraud financial institutions came to light. (Samson Aff. ¶ 12.) In the wake of Thornycroft's bankruptcy, HFGL and CNH discovered that the Equipment had been auctioned in the United States by Lyon. After first contacting Lyon and other auctioneers, HFGL and CNH initiated the instant action. (Samson Aff. ¶ 13-17.)

At issue in this Motion is the Davies Report, pertaining to the hire purchase agreements.*fn5 In the report, Professor Davies provides background on hire purchase contracts under English law. (Davies Report ¶ 5-8.) He then identifies the agreements in question as hire purchase agreements under English law. (Davies Report ¶ 9-10.) Finally, he provides interpretation of two clauses in the agreements under English law and states that, in his opinion, in light of the facts provided to him, title to the Equipment did not pass to Thornycroft, and HFGL and CNH are the true owners of the Equipment. (Davies Report ¶ 11-12.)

II.

The judicial determination of foreign law is governed by Federal Rule of Civil Procedure 44.1. It provides, in relevant part:

In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination must be treated as a ruling on a question of law.

Fed. R. Civ. P. 44.1. Under this rule, the Court "may rely on its own research and any submissions from the parties when considering foreign law." Nat'l Group for Commc'ns and Computers. Ltd., v. Lucent Techs. Int'l., Inc., 331 F. Supp. 2d 290, 294 (D.N.J. 2004). The Court may seek the aid of expert witnesses and consider material that would be inadmissible at trial. Id; see also, Sidali v. I.N.S., 107 F.3d 191, 198 n.10 (3d Cir. 1997). Pursuant to Fed. R. Civ. P. 44.1, the Court may use an expert report to determine substantive foreign law, but not to assist the Court in determining facts. ID Sec. Sys. Canada, Inc. v. Checkpoint Sys., Inc., 198 F. Supp. 2d 598, 623 (E.D.Pa 2002); Lithuanian Commerce Corp., Ltd. v. Sara Lee Hosiery , 177 F.R.D. 245, 264 (D.N.J. 1997), rev'd on other grounds, 179 F.R.D. 450 (D.N.J. 1998). However, it is within the Court's discretion to "reject even the uncontradicted conclusions of an expert witness and reach [its] own decisions on the basis of independent examination of foreign legal authorities." Nat'l Group , 331 F. Supp. 2d at 294.

III.

Lyon moves to strike the Davies Report, making the following arguments: (1) the Davies Report is beyond the purview of Fed. R. Civ. P. 44.1, because it attempts to instruct the Court on how to make factual determinations; (2) the Davies Report should be excluded because it is unreliable; and (3) the Davies Report consists of inadmissible conclusions that do not satisfy the requirements set forth in Fed. R. Evid. 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). The Court will address each in turn.

First, Lyon contends that the Davies Report is not properly brought before the Court under Fed. R. Civ. P. 44.1, because it improperly attempts to instruct the Court on how to make factual determinations. Under Rule 44.1, the Court may consider a foreign law expert report to aid its determination of foreign law, whether or not the report is admissible under the Federal Rules of Evidence. Fed. R. Civ. P. 44.1; Nat'l Group , 331 F. Supp. 2d at 294. The Davies Report has been submitted to aid the Court's determination of foreign law. The report describes the English law concerning hire purchase agreements and interprets provisions of the agreements in question in accordance with English law. (Davies Report ΒΆ 5-12.) This type of analysis is within the purview of Fed. R. Civ. P. 44.1. ...


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