Article

Note: As security for a loan, Rogers International, Inc. (Borrower/Applicant) provided Branch Banking and Trust Co. (Lender/Beneficiary) with a standby letter of credit. When Borrower defaulted on the loan, Lender/Beneficiary drew on the standby and was paid.

Subsequently, Borrower/Applicant sued Lender/ Beneficiary "alleging various equitable and legal causes of action arising from [Lender/Beneficiary's] efforts to collect, inspect, and present documents pursuant" to the standby.

Borrower/Applicant also requested a trial by jury, a right available in civil disputes under United States law. Claiming that Borrower/Applicant had waived its right to trial by jury in the Borrower Agreement, Lender/Beneficiary moved to strike the demand for trial by jury. The United States District Court, D. South Carolina, Greenville Division, Michelle Childs, J., granted the motion and denied Borrower/Applicant's request for jury trial.

The Borrower Agreement provided:

Waiver of Jury Trial. BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT, PROCEEDING OR OTHER LITIGATION BROUGHT TO RESOLVE ANY DISPUTE ARISING UNDER, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE LOAN AUTHORIZATION AGREEMENT, ANY LOAN DOCUMENT, OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OR OMISSIONS OF LENDER, EX-IM BANK, OR ANY OTHER PERSON RELATING TO THIS AGREEMENT, THE LOAN AUTHORIZATION AGREEMENT OR ANY OTHER LOAN DOCUMENT.

The Judge stated:

Although the language of the Borrower Agreement is quite broad, the waiver contained therein clearly applies to "any loan document, or any other agreement, document or instrument executed or delivered in connection herewith or therewith ...." The letter of credit was delivered to [Lender/Beneficiary] in connection with the loan. Accordingly, the waiver contained in the Borrower Agreement extends to the parties' dealings concerning the letter of credit.

The judge ruled that since the LC was posted by the Borrower/Applicant in direct exchange for the loan governed by the Borrower Agreement, the waiver was applicable to the LC as expressly agreed in the terms of the provision.

[JEB/kmw]

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