Article

Note: In the spring of 2002, Fiduciary Trust Company International (Bank) received a presentation of documents from MSF Holdings, Ltd. (Presenter) under a US $250,000 LC issued by Bank in favor of Philips Medical Systems B.V. (Beneficiary). Bank was unable to determine whether the LC was in effect or collateralized because the document supporting it was destroyed in the attack on the World Trade Center on 11 September 2001 and the officer who allegedly issued the LC is deceased. When Bank hesitated, Presenter threatened litigation.

In response, Bank's Senior Vice President and Deputy Corporate Counsel issued instructions as to how payment could be effected once "steps were taken to uncover the history of the letter and the collateral backing it." These steps included two emails, one of which "inquired into the circumstances of the cancellation of a similar letter of credit and the release of the collateral that backed it also seeking information on whether Bank's insurance would cover payment."

Subsequently, an action was commenced against Bank for wrongful dishonor. In the course of discovery, the emails were inadvertently disclosed. Claiming that the documents were attorney work product and not discoverable, Bank moved for their return.

The United States District Court for the Southern District of New York, Francis, J., ruled that the documents were part of Issuer's normal course of business in investigating the claim on the LC, and not in preparation for or anticipation of legal proceedings, as would be required to qualify the documents for work product protection.

"While Bank claims that the email was prepared in anticipation of litigation, it has not presented any facts or made any argument to show that the information would not have been prepared in the same or a substantially similar form without the threat of litigation. The e-mails are primarily concerned with locating the collateral that backs the letter of credit and determining if an insurance policy will cover the expense. The e-mails were written and sent for the purpose of investigating Bank's records to determine if it would honor the letter of credit. When presented with a letter of credit, a financial institution would normally investigate the circumstances surrounding its issuance and determine whether to honor it. The fact that the author of emails has a law degree and also serves as a deputy general counsel does not affect the analysis."

[JEB/dgd]

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