Panama's Eleventh Circuit Civil Court declares Lisa, S.A.'s seven claims for dividend diversion unproven and orders Lisa to pay $200,000 in damages and $1,240,000 in costs.

Lisa, S.A.'s Claims

The principal claim. Lisa, S.A. alleged that the administrators of Villamorey, S.A., the Panamanian holding company atop the Avícola Villalobos poultry group in Guatemala, engaged in fraudulent conduct to divert dividends and profit distributions owed to Lisa, S.A. The alleged mechanisms included unreported cash sales of poultry and agricultural products, fabricated reinsurance premiums channeled through Leamington Reinsurance Company in Bermuda (a scheme separately litigated in Ruling No. 1999-108-2001-79), and unjustified payments to Multi-Inversiones, S.A. in Guatemala. Lisa, S.A. estimated its damages at approximately $12,000,000.00, subject to expert determination.

On Leamington. According to the complaint, Villamorey, S.A. held 100% of the shares in Leamington Reinsurance Company. Lisa, S.A. alleged that premiums were paid for nonexistent reinsurance policies, creating an artificial liability for Avícola Villalobos, S.A.; the funds were then transferred to Villamorey, S.A. as dividends declared by Leamington and applied to expenses unrelated to Lisa, S.A.'s interests.

Evidentiary Record

The court identified critical failures in Lisa, S.A.'s evidentiary presentation that left the alleged facts unproven.

Untranslated banking records. Hundreds of pages of banking records from U.S. institutions (TotalBank, Hamilton Bank, and Republic International Bank of New York) were incorporated into the record. Although a notarial act executed in Miami attested to the originals, the documents were entirely in English and were never translated as required by Article 877 of the Judicial Code. The court denied them all probative value.

"Si los documentos procedentes del extranjero estuvieren escritos en lengua que no sea el español, se presentarán traducidos por intérprete público y en defecto de este, por uno ad hoc, nombrado por el tribunal." (Page 16)

Unexecuted letter rogatory. The court issued Rogatory Letter No. 78 of December 3, 2003, requesting through the Ministry of Foreign Affairs a judicial inspection of Villamorey, S.A.'s offices in Guatemala and the depositions of the defendants' legal representatives. None of these proceedings were carried out.

Witnesses not examined. Lisa, S.A. offered three witnesses. The court scheduled two hearing dates, but none appeared or were examined.

The court concluded that Lisa, S.A. failed to discharge its burden of proof under Article 784 of the Judicial Code, which requires each party to prove the facts that constitute the predicate of the legal norms invoked in its favor.

Villamorey, S.A.'s Counterclaim

Villamorey, S.A. counterclaimed, alleging that Lisa, S.A.'s litigation across multiple jurisdictions caused it material damages and harmed its corporate reputation, forcing it to retain counsel in each forum and to post bonds to lift precautionary measures. Villamorey, S.A. quantified its claim at $200,000.00. The court found the counterclaim proven and, applying the principle of congruence under Articles 475 and 991 of the Judicial Code, which confine the award to the amount sought, fixed material damages at exactly $200,000.00.

Ruling

• Lisa, S.A.'s seven claims against Villamorey, S.A. et al. were declared not proven.
• Lisa, S.A. was ordered to pay $1,200,000.00 in costs to Villamorey, S.A. et al. under Article 1071 of the Judicial Code.
• Villamorey, S.A.'s counterclaim was declared proven, with material damages fixed at $200,000.00.
• Lisa, S.A. was ordered to pay $40,000.00 in costs on the counterclaim.
• Process expenses to be liquidated by the Clerk under Article 1069 of the Judicial Code.

The total condemnation against Lisa, S.A. reached $1,440,118.00: the $200,000.00 counterclaim award, $1,200,000.00 in costs on the principal claim, $40,000.00 in costs on the counterclaim, and $118.00 in expenses.

Legal Basis

• Articles 974, 1644, 1706, and 1711 of the Civil Code — extracontractual civil liability, the obligation to repair damage caused by a culpable act or omission, and joint and several liability where multiple persons are responsible.
• Articles 669, 991, and 1071 of the Judicial Code — complaint requirements, the principle of congruence between what is requested and what is decided, and the regulation of costs awards.
• Article 784 of the Judicial Code — burden of proof: each party must prove the facts constituting the predicate of the norms invoked in its favor.
• Article 877 of the Judicial Code — the requirement that foreign-language documents from abroad be submitted with certified translation.

Signatories

• Lcda. María Leticia Cedeño Suira, Judge, Eleventh Circuit Civil Court of the First Judicial District of Panama
• Raquel Guzmán Fernández, Clerk