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Midbrook Flowerbulbs Holland B.V. v. Holland America Bulb Farms, Inc.

United States Court of Appeals, Ninth Circuit

October 25, 2017

Midbrook Flowerbulbs Holland B.V., Plaintiff-Appellee,
Holland America Bulb Farms, Inc., a Washington corporation, Defendant-Appellant.

          Argued and Submitted May 8, 2017 Seattle, Washington

         Appeal from the United States District Court for the Western District of Washington D.C. No. 3:14-cv-05409-RJB Robert J. Bryan, Senior District Judge, Presiding

          Michael E. Haglund (argued) and Shenoa L. Payne, Haglund Kelley LLP, Portland, Oregon, for Defendant-Appellant.

          Steven J. Wells (argued), Dorsey & Whitney LLP, Minneapolis, Minnesota; Peter S. Ehrlichman and Andrea C. Yang, Dorsey & Whitney LLP, Seattle, Washington; for Plaintiff-Appellee.

          Before: Carlos T. Bea and N. Randy Smith, Circuit Judges, and William Q. Hayes, [*] District Judge.


         Uniform Foreign-Court Money Judgments Recognition Act

         The panel affirmed the district court's order granting summary judgment in favor of Midbrook Flowerbulbs Holland B.V., and denying Holland America Bulb Farms, Inc.'s discovery request under Fed.R.Civ.P. 56(d), in Midbrook's diversity action seeking recognition of an Amsterdam Court of Appeals judgment under Washington's Uniform Foreign-Country Money Judgments Recognition Act ("UFCMJRA").

         Holland America, a Washington company, purchased flower bulbs from Midbrook, a Dutch company, and Midbrook obtained a judgment against Holland America in Dutch court. On appeal, Holland America alleged that proceedings in the Dutch courts which led to the Dutch judgment were "not compatible with the requirements of due process of law" under section 4(c)(8) of the UFCMJRA.

         Concerning the legal standard governing the issue at hand, the panel held that the commentary and prefatory notice to the UFCMJRA demonstrated that under section 4(c)(8), courts need ask only whether the party resisting judgment "was denied fundamental fairness in the particular proceedings leading to the foreign-country judgment, " not whether the foreign proceedings literally conformed to the requirements of due process under the U.S. Constitution. The panel held that it was not necessary to decide whether process accorded to Midbrook also passed muster under American standards of due process.

         The panel held that the Dutch courts' treatment of Holland America's discovery requests were a mere "procedural difference" that was insufficient to establish that the Dutch proceedings were fundamentally unfair. The panel further held that Holland America was not denied due process when the Amsterdam Court of Appeal overturned the Alkmaar District Court's factual finding denying the existence of the parties' alleged October 1999 settlement agreement because the Court of Appeal gave a good reason for overturning the finding. In addition, the panel held that Holland America failed to establish that even the more exacting standards of constitutional due process would have required a United States appellant court to defer to a trial court's factual determination under like circumstances.

         Finally, the panel held that the district court did not abuse its discretion by denying Holland America's motion for additional discovery under Fed.R.Civ.P. 56(d).


          BEA, Circuit Judge

         After the collapse of the Dutch Tulip Bubble of 1637, we've heard little about that flower's market. But it hasn't gone away.

         This action grows out of a family business dispute: The Dutch shipper of tulip bulbs to his brother in America claims his brother shorted him. The dispute was litigated at three court levels in Holland. The shipper won. Now he comes to Seattle to enforce his judgment. Enforce it the district court did. The American importer-buyer appeals that judgment. He will lose.

         I. Background

         A. Factual Background

         Holland America Bulb Farms, Inc. ("Holland America") is a Washington corporation that grows and sells tulips and other varieties of cut flowers. Its sole owners, Benno and Klazina Dobbe, founded Holland America together after immigrating to the United States from the Netherlands in 1980.

         In 1994, Holland America began purchasing flower bulbs from Midbrook Flowerbulbs Holland, B.V. ("Midbrook"), a Dutch corporation in which Arie Dobbe, Benno's brother, was a manager and part owner. Midbrook purchased flower bulbs from farms in the Netherlands and elsewhere, packaged them for shipment, and exported them to Holland America's farm in Washington. Though Holland America and Midbrook never entered into a written agreement regarding payment, Benno and Arie orally agreed that Holland America would pay Midbrook its "actual costs on a one to one basis plus a commission."

         For each shipment, Midbrook sent Holland America an invoice in Dutch guilders.[1] Instead of paying these invoices directly to Midbrook in guilders, Holland America deposited a lump sum of dollars into a Dutch bank account in Midbrook's name (the "dollar account"). At "fixed intervals, " Midbrook withdrew dollars from the dollar account, exchanged them into guilders, and then deposited them into a second Dutch bank account (the "guilder account"), which was also in its name. Then, when the invoices became due, Midbrook paid itself the invoiced amount of guilders from the guilder account. Midbrook regularly sent Holland America statements for the two accounts, and Holland America was responsible for ensuring that there were enough dollars in the dollar account to cover the periodic transfers to the guilder account.

         Sometime in 1997, Benno Dobbe noticed that Midbrook's costs "appeared to be higher than the bulb import costs that [his] competitors were obtaining from other Dutch suppliers." Benno became suspicious that Midbrook was overcharging Holland America, and he asked Arie to provide documentation substantiating Midbrook's costs. Arie assured Benno that Midbrook's invoices were correct, but he refused to provide the requested documentation. In June 1999, the parties agreed that they would "terminate their relationship" the following year, but that Midbrook would "still handle the export of the flower bulb harvest [in the fall] of 1999." Between January 11 and May 22, 2000, Midbrook sent Holland America invoices for the 1999 harvest which totaled 3, 211, 568 guilders. Holland America never deposited dollars into the dollar account sufficient to cover these invoices, and Midbrook overdrew the dollar account to pay itself for them.

         B. Procedural Background

         1. Proceedings in the Alkmaar District Court

         In 2002, Midbrook filed a lawsuit against Holland America in the Alkmaar District Court in the Netherlands, seeking payment for the 1999 harvest shipments. Holland America did not deny that it had not paid Midbrook for the 1999 harvest; rather, it argued that Midbrook had "invoiced [Holland America] for too high an amount for years, " and that Holland America had "[over]paid more in total during the period from 1994 to August 2000 . . . than Midbrook had invoiced [for the 1999 harvest]." Though Holland America "provisionally estimated" the amount of the overcharge to be $4, 434, 387 (roughly 9 million guilders), it asked the court to "order Midbrook to provide its bookkeeping records for the years 1984 up to and including December 2000" so that Holland America could "more particularly specif[y]" its damages.

         In a series of "judgments, "[2] four of which were "interlocutory" and one of which was final, the Alkmaar District Court rejected Holland America's counterclaim and entered judgment in Midbrook's favor. In its first interlocutory judgment, entered after the court had reviewed the parties' pleadings and briefs, the court made several rulings. First, it noted that Midbrook claimed in its briefing "that it [had] agreed with [Holland America] on October 22, 1999 that [Holland America], after receiving a credit note in the amount of . . . 100, 000 [guilders], would have no more right to compensation for damages from improper invoicing in the past." The court ruled that Midbrook would be given "the opportunity [] to provide evidence for [this] agreement."

         Second, although the court agreed with Holland America that "in principle, [it is] Midbrook's responsibility to specify and justify its invoice[s]" with documentation, it noted that "the period for which Midbrook must specify and substantiate its invoice[s]" would depend on whether Holland America had settled its claims for the harvests of 1994-1998; if it had, then it would not be entitled to any discovery with respect to the invoices for that period. Thus, the court deferred ruling on the parties' remaining claims until after it had heard evidence on the alleged settlement agreement.

         The district court entered its second interlocutory judgment after hearing from witnesses from both parties regarding the settlement agreement, which allegedly took place at a meeting between Benno and Arie Dobbe in October 1999 at Midbrook's offices in the Netherlands. Midbrook's witnesses were Johannes Elling, Midbrook's tax advisor; and Elisabeth Dobbe-Ruygrok, Arie Dobbe's wife and a secretary at Midbrook. Elling and Dobbe-Ruygrok both testified that they were present at the meeting when Benno and Arie agreed to settle Holland America's claims for 100, 000 guilders. Holland America's two witnesses, Benno Dobbe and Hugo Dobbe (another of Benno's brothers), testified that no such agreement was reached at the meeting, and that they had come to the Netherlands only because Arie had promised them that they could examine Midbrook's records, which Arie ultimately did not allow them to do. The district court found that Midbrook's witnesses were not credible[3] and therefore determined that no settlement agreement had been reached.

         Having disposed of the settlement issue, the court proceeded to address the parties' claims regarding the invoices for the harvests of 1994-99. It directed Holland America to "specify the [] invoices [to which it objected] concretely, submitting them . . . and indicat[ing] which amounts Midbrook invoiced unjustifiably to [Holland America] and why." Then, the court explained, Midbrook would "be given the opportunity to respond" by "provid[ing] insight into the structure of the invoices" identified by Holland America with "documented evidence."

         After receiving documents and additional briefing from the parties, the court entered its third interlocutory judgment. In that judgment, the court concluded that Holland America "ha[d] not complied with the recommendations of the court in its second interim judgment" with respect to Midbrook's invoices for the harvests of 1994-1998. Although Holland America had "submitted the invoices whose correctness it disputes" and had "state[d] the items that, in its opinion, [were] incorrect" with each invoice, it had "neglect[ed] to substantiate the basis for the amount of the claimed damages." Because of this failure, the district court dismissed Holland America's counterclaim for the harvests of 1994-1998.

         With respect to the 1999 harvest, the district court noted that Midbrook had provided only "cost summaries" explaining "the structure of its invoices." The court did not fault Midbrook for "not having submitted at this moment all the underlying documents concerning costs that it incurred for the 1999 harvest, " however, because Holland America had specified which "cost items it disputed" only after the court had entered its second interlocutory judgment. The court then summarized Holland America's objections to 1999 harvest invoices, [4] and stated that Midbrook would be given "the opportunity to respond to [these objections] with documentation."

         The district court entered its fourth interlocutory judgment after receiving Midbrook's responses. In that judgment, the district court addressed each of Holland America's objections to the 1999 harvest invoices in detail, rejecting some but granting others.[5] In total, the district court concluded that Midbrook had wrongly charged Holland America 40, 403 guilders for the 1999 harvest.

         The court then explained how it would calculate Midbrook's damages. Because Midbrook had paid itself for the 1999 harvest by overdrawing the dollar account, Midbrook's damages were equal to "the overdraft position of the dollar account" in March 2004 (when Midbrook closed that account and converted the deficit into euros), less the amount that Midbrook had "wrongfully charged" to Holland America. In October 2006, after receiving some additional information from Midbrook regarding its bank statements, the district court entered its fifth and final judgment, in which it awarded Midbrook 1, 033, 291 (at the time, the equivalent of $1, 250, 592), plus any interest that had accrued since Midbrook converted the dollar account balance into euros in March 2004.

         2. Proceedings in the Amsterdam Court of Appeal

         Holland America then appealed the Alkmaar District Court's judgment to the Amsterdam Court of Appeal. On appeal, Holland America reiterated its argument that its overpayments for the harvests of 1994-1998 had more than compensated Midbrook for its shipments following the 1999 harvest. It also reiterated its discovery requests for documentation of the costs underlying Midbrook's invoices from 1994 through 2000, and it requested bank statements for the dollar and guilder accounts. Midbrook cross-appealed, arguing that the Alkmaar ...

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