38 F.3d 1571 (11th Cir. 1994), 93-8452, Dibrell Bros. Intern. S.A. v. Banca Nazionale Del Lavoro

Docket Nº:93-8452.
Citation:38 F.3d 1571
Party Name:DIBRELL BROTHERS INTERNATIONAL S.A., Plaintiff-Counter-Defendant-Appellant, v. BANCA NAZIONALE DEL LAVORO, Defendant-Counter-Claimant-Appellee.
Case Date:December 02, 1994
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit

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38 F.3d 1571 (11th Cir. 1994)




BANCA NAZIONALE DEL LAVORO, Defendant-Counter-Claimant-Appellee.

No. 93-8452.

United States Court of Appeals, Eleventh Circuit

December 2, 1994

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Peter Howard Strott, Griffin Cochrane & Marshall, Alan Mitchell Wolper, K. Dennis Sisk, Hunton & Williams, Atlanta, GA, Scott Reavis Phillips, John Charles Thomas, Virginia W. Powell, Robert F. Brooks, Hunton & Williams, Richmond, VA, for appellant.

Walter W. Driver, Jr., L. Joseph Loveland, Richard Anthony Schneider, Laura Anne Lewis Owens, Dan Hall Willoughby, Jr., Letitia Arrington McDonald, King & Spalding, Atlanta, GA, for appellee.

Appeal from the United States District Court for the Northern District of Georgia.

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Before COX, Circuit Judge, JOHNSON, Senior Circuit Judge, and PAINE [*], Senior District Judge.


Dibrell Brothers International, S.A. ("Dibrell") brought this civil action against Banca Nazionale Del Lavoro ("BNL") asserting several claims which arise out of BNL's failure to confirm letters of credit issued in favor of Dibrell by an Iraqi bank. On cross-motions for summary judgment, the district court entered a judgment dismissing Dibrell's claims. Dibrell appeals. We affirm in part and reverse in part.


Dibrell is a Swiss corporation in the business of buying and selling tobacco on the world market. In 1988, Dibrell had the opportunity to sell tobacco to the Iraqi governmental agency that controls tobacco products, the State Enterprise for Tobacco and Cigarettes ("SETC"). However, Dibrell was aware that trading with SETC involved an element of risk due to Iraq's ongoing war with Iran and SETC's possible unwillingness or inability to pay for the tobacco. Although SETC was willing to have its bank, Rafidain Bank (Rafidain), issue a letter of credit in Dibrell's favor, Dibrell perceived that similar risks existed concerning Rafidain's willingness or ability to perform on the letter of credit. Consequently, Dibrell was willing to enter a contract to sell tobacco to SETC only if a reputable, non-Iraqi bank confirmed Rafidain's letter of credit. 2 In the fall of 1988, Donald Crane, a vice-president of Dibrell, learned that the Atlanta agency of Banca Nazionale Del Lavoro ("BNL") 3 was willing to confirm letters of credit issued by Iraqi banks. (Crane Dep., Feb. 27, 1991, at 48-49.) At that time, the Atlanta agency of BNL was in fact confirming Iraqi letters of credit for other customers. (Silvestri Dep., November 27, 1991, at 68-69.)

Based upon this information, Crane contacted Paul von Wedel, an officer at BNL's Atlanta agency in charge of the letter of credit department. On October 20, 1988, Crane and von Wedel discussed by telephone the particular terms pursuant to which BNL would agree to confirm the Rafidain letter of credit. In that conversation, von Wedel orally committed BNL to confirming the Iraqi letter of credit. (Crane Dep., Feb. 27, 1991, at 135.) Specifically, the two agreed to the following terms: (1) BNL would confirm a letter (or letters) of credit on a silent basis 4 for up to four million dollars; (2) the letter(s) of credit had to be advised through BNL's Atlanta agency; 5 (3) the confirmation(s) would cover payment terms of up to one year from the shipment date; (4) BNL would not discount the letter(s) of credit; (5) the guaranteed amount would be available to Dibrell or any of its affiliated companies at any time; (6) the letter(s) of credit could be issued in the name of any Dibrell affiliated company; and (7) BNL's fee would be one and one half percent per annum of the amount to be confirmed, payable at the time of collection under the letter(s) of credit. (Id. at 71, 81, 83, 130, 136; R.4-61 Ex. A.) On October 24, 1988, Crane telexed a letter to von Wedel,

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restating the terms on which the two had orally agreed. (R.4-61 Ex. A.) On October 25, 1988, von Wedel telexed a letter to Crane, confirming the agreement reached with Crane in the October 20 telephone conversation. (R.4-61 Ex. B.) Von Wedel's letter indicated that the letter of credit to be confirmed would be issued by the Rafidain Bank in Baghdad. (Id.) Finally, the telex provided that in addition to the one and one half percent fee, a negotiation fee of one-tenth of one percent of the amount to be confirmed would also apply. (Id.)

Having made an agreement with BNL to confirm the Iraqi letter of credit, Dibrell entered into a sales contract with SETC in early November. (Crane Dep., Nov. 6, 1991; R.4-61 Ex. C.) On November 10, 1988, Crane advised von Wedel by telephone of the specifics of Dibrell's sale of tobacco to SETC ("first sale"), including the fact that the sale price and thus the amount of the letter of credit had increased. Crane documented the conversation with a follow-up telex, which reiterated that the sale was to be covered by a confirmation of the letter of credit "under the conditions agreed in our telex of 24 October and your fax of 25 October 1988." (R.4-61 Ex. D.) On December 1, 1988, Tom Fiebelkorn, another vice president in BNL's Atlanta agency, faxed a letter to Crane, acknowledging that the amount of the first letter of credit to be confirmed by BNL would be $4,162,500, reflecting the increased sale price. (R.4-61 Ex. E.) This letter also provided that BNL was prepared to confirm additional letters of credit in an amount up to $4,000,000 to cover future tobacco sales by any of Dibrell's affiliates. (Id.) Finally, the letter established a fee structure for the confirmation and required that the shipments for the covered sales be made in January and February. (Id.) In reliance upon this representation to confirm additional letters of credit, Dibrell agreed to sell to SETC an additional $3,835,000 worth of tobacco on December 18, 1988 ("second sale"). (Crane Dep., Nov. 7, 1991, at 190-191.)

On December 24, 1988, Rafidain Bank issued its first letter of credit in favor of Dibrell in the amount of $4,162,500. This letter of credit was sent to BNL, directing it to notify or advise 6 Dibrell of the terms and conditions of the letter of credit "without adding your confirmation." (Crane Dep., Feb. 27, 1991, Ex. 30.) On January 10, 1989, BNL sent Dibrell an advice informing it of the issuance and terms of the letter of credit from Rafidain Bank for the first $4,162,500 sale. The BNL advice clearly stated that it was merely an advice and did not constitute an engagement or a confirmation of the Rafidain letter of credit. (R.4-61 Ex. F.) On January 16, 1989, Crane faxed a note to von Wedel acknowledging receipt of the BNL advice on the Rafidain letter of credit and stating, "contrary to what you told me by phone 11 January there is no covering [sic] letter indicating your obligations under this L.C. Please FAX this document to me today." (R.2-42 Ex. F.) According to Crane, von Wedel had told him that a cover letter, restating BNL's obligation to confirm, would accompany the advice. When this letter was not immediately forthcoming, Crane faxed another letter to von Wedel and Fiebelkorn again requesting the "promised letter indicating your confirmation of this Letter of Credit." (R.4-61 Ex. G.) On January 20, 1989, Fiebelkorn responded to Crane's request and informed him that "your confirmation letter will be coming from Paul [von Wedel]. In the meantime, you already have his oral commitment to confirm this credit and our written undertaking to cover this sale for you." (R.4-61 Ex. H.) There is no indication that Dibrell ever received a confirmation of the first letter of credit.

On January 29, 1989, Rafidain issued the second letter of credit, which covered the second sale for $3,835,000. On March 27, 1989, BNL sent Dibrell an advice on Rafidain's second letter of credit and again the advice contained language disclaiming any confirmation liability. (R.4-61 Ex. I.) Apparently, no confirmation letter arrived with this advice or at any time thereafter.

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On June 23, 1989, Dibrell made its first shipment of tobacco to Iraq, valued at $1,831,000, under the letter of credit for the first sale. Dibrell presented BNL with shipping documents for this first shipment in accord with BNL's advice on Rafidain's first letter of credit. 7 On July 11, 1989, BNL forwarded these documents to Rafidain for payment. Dibrell made a second shipment of tobacco worth $721,500 under the letter of credit for the first sale on August 30, 1989. On September 14, Dibrell presented documents to BNL relating to the second shipment in an attempt to comply with the terms of the first letter of credit. On September 25, BNL informed Dibrell that the documents did not comply with the terms of the letter of credit. Rather than argue with BNL about the alleged discrepancies, Dibrell directed BNL to forward the shipping documents to Rafidain Bank. The final shipment covered by the first letter of credit was canceled although $1,609,500 worth of tobacco remained undelivered under the first contract. 8

Shipments were also made pursuant to the second sale and under the second letter of credit. Dibrell shipped $2,644,000 worth of tobacco on August 7, 1989 and shipped $1,191,000 worth on August 30, 1989 pursuant to the second sale. Dibrell again presented shipping documents in an attempt to comply with the second letter of credit. On September 25, 1989, BNL notified Dibrell that these documents also contained discrepancies. Again, Dibrell directed BNL to forward the shipping documents to Rafidain Bank rather than argue over the alleged...

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