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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
2002 LC CASE SUMMARIES 2002 U.S. Dist. LEXIS 5631 (S.D.N.Y. Mar. 29, 2002) [U.S.A.]
Topics:Personal Jurisdiction, Forum Non Conveniens
Type of Lawsuit:Beneficiary sued issuer for wrongful dishonor.
Parties:Plaintiff/ Beneficiary/ Seller- Self International (HK) Ltd. (Counsel: unidentified) Defendant/ Issuer- LaSalle National Bank, Chicago (Counsel: Adam D. Perlmutter, Storch, Amini & Munves) Applicant/ Buyer- Montgomery Ward, LLC
Underlying Transaction: Sale of retail goods.
LC: Five commercial LCs. Silent as to amount. Silent as to governing rules.
Decision: The U.S. District Court for the Southern District of New York, Casey, J., denied issuer's motion to dismiss the case for lack of personal jurisdiction, but transferred the case to the United States District Court for the Northern District of Illinois.
Rationale:Doing business in the forum, even though it is not LC business and even though it is done through a separate entity, is sufficient to serve as a basis for jurisdiction in a LC case where the entity was a mere department of the bank. Where all the factors relevant to a case occur in another forum, transfer is appropriate.
Article
Factual Summary:To pay for retail goods, Applicant caused its bank, located in Chicago, to issue five commercial LCs payable to Beneficiary. When Beneficiary presented the documents to Issuer in Chicago, it dishonored, and Beneficiary sued Issuer for wrongful dishonor in New York state court. The case was removed on Issuer's motion to the federal court in New York City. On Issuer's motion to dismiss for lack of jurisdiction and forum non conveniens, the court denied the motion to dismiss and transferred the case to federal court in northern Illinois.
Legal Analysis:
1. Personal Jurisdiction: Issuer contended that it had insufficient contact with the forum state, New York, to justify the exercise of personal jurisdiction, and moved for dismissal. The court denied Issuer's motion because it found Issuer was present and doing business in the jurisdiction. Issuer had operated a subsidiary in NY that the court ruled was not independent but a "mere department" based on factors such as sole ownership, absence of distinct financial statements, identical executive personnel, apparent control of subsidiary's marketing and operational policies, and the exclusive sale of the subsidiaries services through the issuer's web site.
2. Forum Non Conveniens: Issuer contended that the U.S. District Court for the Northern District of Illinois was the most convenient forum and, in the alternative, moved for transfer of the case there. The court granted this motion, finding transfer to be in the interest of justice because Issuer had its principle place of business in Illinois, all documents and witnesses were located in Illinois, no documents or witnesses were located in NY, and Beneficiary was a foreign corporation.
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The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.