The case of the day is Deutsche Bank AG v. Sebastian Holdings, Inc. (Conn. Ct. App. 2017). Sebastian Holdings was a Turks and Caicos company. Deutsche Bank sued Sebastian in England on a claim relating to trading losses Sebastian had incurred in connection with a trading account it had opened with Deutsche Bank. The English court gave Deutsche Bank judgment for more than $243 million. Deutsche Bank then asked the English court to hold Sebastian’s sole shareholder and director, Alexander Vik, personally liable for a portion of its court costs. Vik, incidentally, was described in a 2014 article that discusses the Sebastian Holdings matter as “the most interesting man in the world,” and in the article’s headline as “the most interesting man in the world (as long as he doesn’t owe you money).” The English court agreed and granted Deutsche Bank’s cost application. Sebastian failed to satisfy the judgment.

Deutsche Bank then brought an action in Connecticut seeking recognition and enforcement of the English judgment against Vik personally. The parties cross-moved for summary judgment. Vik and Sebastian asserted that any veil piercing claim was barred by the doctrine of res judicata, because it should have been brought in the English proceeding. Deutsche Bank, for its part, argued that the English court, by deciding the cost reimbursement application as it did, had already held that Vik was Sebastian’s alter ego, and that Vik was collaterally estopped to relitigate the issue. The court denied both motions, and the parties appealed (the case was appealable as of right for purposes that don’t matter to us).

On appeal, the court affirmed. The trial court was right to deny Sebastian and Vik’s res judicata motion, because the “nucleus of operative facts” that Deutsche Bank had to prove in order to prevail in its claim against Sebastian were distinct from the facts that it would have had to prove in order to pierce the veil in the English case if it had wanted to. In any case, the court said, Deutsche Bank could not have been expected to anticipate the possibility that Sebastian would not satisfy the judgment.¹

With regard to Deutsche Bank’s collateral estoppel argument, the court concluded that the two issues were not sufficiently close. In England, the real question was Vik’s role in the proceeding, not his relationship with Sebastian. Moreover, the cost application proceeding in England was summary in nature.

The net result of the decision is that the veil-piercing issues will have to be tried on the merits.

1. I don’t know enough about the facts to know if that is a sensible conclusion. this problem often arises in US litigation because you generally can’t do asset discovery about a defendant until after you’ve obtained judgment.