In a summary order issued on August 30, the United States Court of Appeals for the Second Circuit affirmed the $168 million judgment that Simpson Thacher obtained for its client Merrill Lynch Capital Services ("MLCS") after a bench trial in the Southern District of New York. The case involved a currency and interest rate derivatives transaction between MLCS and UISA Finance, the financing company of Usinas Itamarati ("Itamarati"), a Brazilian company engaged in the production of sugarcane, soy, and related products.
After Itamarati and UISA Finance defaulted on their obligations under the derivatives transaction in the fall of 2008, MLCS, represented by Simpson Thacher, initiated an action in the Southern District of New York to recover the nearly $150 million, plus interest and costs of collection, due and owing under the parties’ derivatives agreement. In June 2010, following a series of motions, the trial court dismissed defendants’ misrepresentation and breach of fiduciary duty counterclaims, and granted partial summary judgment against UISA Finance. The decision left open for trial the enforceability of Itamarati’s guaranty of UISA Finance’s obligations, which Itamarati claimed was not authorized, and MLCS’s claim for damages. Following a bench trial in June 2011, Judge Richard J. Sullivan issued an opinion on April 10, 2012 that found Itamarati’s guaranty to be actually and apparently authorized, and rendered a verdict in favor of MLCS against both defendants for the entire amount of MLCS’s claim, plus interest and expenses including attorney’s fees.
UISA Finance and Itamarati appealed to the Second Circuit. Oral argument was held on August 23, 2013, before a panel consisting of Judges Winter, Wesley, and Carney. In their summary order, the Court of Appeals affirmed without opinion the decision of the trial court, again awarding MLCS the entire amount of their claim, plus interest and expenses.
The Simpson Thacher attorney who argued this case was Thomas C. Rice, supported by partner William T. Russell, Jr. and associates Paul J. Sirkis, Elizabeth Gudis and Preston Miller.
Itamarati and UISA Finance were represented by Richard Werder, Sanford I. Weisburst and Adam Cashman of Quinn Emanuel Urquhart & Sullivan, LLP.