Fifth Circuit Affirms $78 Million Summary Judgment Victory for Oaktree Capital

Ending more than six years of litigation against our client Oaktree Capital Management, L.P., Paul, Weiss defeated an appellate challenge of Oaktree’s summary judgment win in its dispute with a Taiwanese shipping magnate.

In a unanimous decision, a panel of the Fifth Circuit upheld Oatkree’s counterclaims against the shipping magnate, Hsin Chi Su (a.k.a. Nobu Su), seeking to enforce Mr. Su’s guarantees in connection with loans that financed the purchase of shipping vessels by Mr. Su.

The litigation stems from the bankruptcy proceedings of various corporations held by Mr. Su that owned and operated shipping vessels. In 2010, those corporations obtained loans, personally guaranteed by Mr. Su, to finance the purchase of the ships, which served as collateral. An Oaktree affiliate later acquired nearly all of the corporations’ debt under the loan facilities. In 2013, the corporations filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, which subsequently approved the ships’ sale and authorized Oaktree to “credit bid” its debt in order to acquire them. Mr. Su then brought an adversary proceeding against Oaktree, among other defendants, alleging that the bankruptcy court’s order approving the ships’ sale improperly extinguished his right to protect patents he claimed to hold on certain technology used on the ships.

Oaktree asserted counterclaims against Mr. Su seeking to enforce the guarantees executed by him in connection with the loans that financed the ships. Oaktree then successfully moved to dismiss Mr. Su’s complaint for failure to state a claim. Thereafter, the district court held oral argument on Oaktree’s motion for summary judgment on its counterclaims, granted Oaktree’s motion, and ordered that Mr. Su pay Oaktree $78 million, plus pre-judgment interest.

In May 2020, Mr. Su moved to vacate the district court’s judgment under Federal Rule of Civil Procedure 60(b), claiming that his failure to defend against Oaktree’s summary judgment motion was excusable because he was incarcerated in London at the time the district court reopened the case, and because his counsel of record had abandoned him. The district court denied Mr. Su’s motion.

In affirming the district court, the Fifth Circuit observed that the summary judgment motion underpinning the district court’s ruling was fully briefed in 2015, years before Mr. Su was incarcerated. The Fifth Circuit thus held that, because Mr. Su was able to object to Oaktree’s summary judgment motion before the district court through counsel of his choice, and no new evidence was subsequently introduced, the circumstances of the case were not so “extraordinary” as to justify reversal of the district court’s denial of Mr. Su’s Rule 60(b) motion.

The Paul, Weiss team included litigation partners Andrew Ehrlich and Greg Laufer.