550 F.3d 442 (5th Cir. 2008), 07-30441, LaBarge Pipe & Steel Co. v. First Bank

Docket Nº:07-30441.
Citation:550 F.3d 442
Party Name:LABARGE PIPE & STEEL CO., Plaintiff-Appellant, v. FIRST BANK; Allen J. David, Defendants-Appellees.
Case Date:November 24, 2008
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 442

550 F.3d 442 (5th Cir. 2008)

LABARGE PIPE & STEEL CO., Plaintiff-Appellant,

v.

FIRST BANK; Allen J. David, Defendants-Appellees.

No. 07-30441.

United States Court of Appeals, Fifth Circuit

November 24, 2008

As Revised Dec. 11, 2008.

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Davis Bradford Allgood (argued), Ryan Estes Johnson, Carla Tircuit Ashley,

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Jones Walker, Baton Rouge, LA, for Plaintiff-Appellant.

Troy John Charpentier (argued), Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, Baton Rouge, LA, for Defendants-Appellees.

Appeal from the United States District Court for the Middle District of Louisiana.

Before JONES, Chief Judge, and GARWOOD and JOLLY, Circuit Judges.

GARWOOD, Circuit Judge:

Plaintiff-appellant, LaBarge Pipe & Steel Co. (LaBarge), appeals the district court's grant of summary judgment for defendants-appellees, First Bank and Allen David. LaBarge sued defendants asserting claims relating to the Irrevocable Standby Letter of Credit No. 180 that First Bank issued to LaBarge, including claims for wrongful dishonor, breach of a letter of credit, detrimental reliance, breach of a good faith obligation, and negligent misrepresentation.1 For the reasons stated below, we affirm in part and reverse and remand in part to the district court.

FACTS AND PROCEEDINGS BELOW

LaBarge, a Missouri company, sells industrial pipe across the United States. PVF USA, LLC (PVF), a Louisiana company, sold industrial pipe, valves, and fittings from its office in Port Allen, Louisiana.2 On November 19, 2002, PVF requested and received a quote for the purchase of steel pipe from LaBarge. On November 25, 2002, PVF ordered 3,800 feet of thirty-inch pipe from LaBarge for a total price of $143,613.40 Matthew Mannhard, a LaBarge salesman, reviewed PVF's credit history, and informed PVF that LaBarge would not sell the requested pipe on open credit terms. Therefore, he gave PVF the following payment options: sending a cashiers check via overnight mail, wire transferring the funds, or obtaining a letter of credit. PVF chose to obtain a letter of credit.

PVF then contacted First Bank, a commercial bank in Baton Rouge, Louisiana, to arrange for First Bank to issue the letter of credit. Acting as LaBarge's representative in the arrangement, Mannhard worked with Allen David, a First Bank employee, to arrange for First Bank to issue a standby letter of credit in the amount of $144,000.00 for the benefit of LaBarge. David and Mannhard discussed and finalized the letter of credit. On November 25, 2002, David faxed a copy of the letter of credit to LaBarge. The facsimile cover sheet stated: “ Here is the letter of credit you requested. Please let me know if you need any additional information." After reviewing the facsimile copy of the letter of credit, Mannhard requested a change in the language of the letter of credit, which First Bank made. On November 26, 2002, David faxed a copy of the thus amended letter of credit to LaBarge. The facsimile cover sheet, which contained David's signature, stated: “ Here is the revision to the letter of credit you requested. Please let me know if you need any additional information."

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The letter of credit issued by First Bank is dated November 25, 2002. It reflects that “ LaBarge Pipe & Steel, Co." is “ BENEFICIARY" and that “ PVF USA, L.L.C." is “ APPLICANT." It is addressed to LaBarge and states “ We hereby establish our Irrevocable Standby Letter of Credit No. 180 in your favor for the account of PVF USA available by your drafts on us payable at sight for any sum of money not to exceed a total of $144,000 ... when accompanied by this Irrevocable Letter of Credit" and by LaBarge's statement certifying that invoices to PVF “ remain unpaid 30 days or more after invoice date" and by copies of the invoices. It also states that: “ the original Irrevocable Letter of Credit must be presented with any drawing so that drawings can be endorsed on the reverse thereof." Furthermore, it states that “ Except so far as otherwise expressly stated, this irrevocable Letter of Credit is subject to the ‘ Uniform Customs and Practice for Documentary Credits (1983 Revision) International Chamber of Commerce Brochure No. 400’ " (the UCP 400). Finally, the letter of credit states that it “ shall be valid until February 23, 2003." It bears the handwritten signatures of David and a First Bank Vice President.

LaBarge claims that in a phone conversation on November 26, 2002, Mannhard asked David at what point LaBarge would be protected by the letter of credit so that it could safely ship the pipe to PVF. At this point, Mannhard allegedly informed David that LaBarge did not want to ship the pipe to PVF until the purchase price was fully secured by the letter of credit. According to LaBarge, David told Mannhard that the letter of credit was issued, that First Bank was obligated to pay if PVF defaulted on its obligations, and that LaBarge could now safely ship the pipe. In their brief, First Bank and David do not explicitly affirm or deny that David made these representations to Mannhard.3 However, in his deposition, David testified that he did not recall speaking with Mannhard on November 25 or 26, 2002 regarding whether LaBarge was secure under the letter of credit at that time.

After these alleged conversations occurred, LaBarge shipped pipe invoiced at $95,216.60 to PVF on November 26, 2002. It sent an additional shipment of pipe (invoiced at $48,396.80) to PVF on December 4, 2002. The total amount of pipe shipped was invoiced at $143,613.40. PVF did not make any payment for any of the pipe, and filed bankruptcy on January 9, 2003.

David never told Mannhard or any other LaBarge representative what he planned to do with the original signed version of the letter of credit. It is unclear what happened to the original November 25, 2002 letter of the credit as LaBarge, First Bank, and PVF have not been able to locate it. In David's deposition, he testified that he kept the letter of credit after faxing a copy of it to LaBarge on November 26, 2002, and called PVF officials multiple times to encourage them to collect the letter of credit from his office. He testified that on December 2, 2002, PVF official, Scott Kirby, took the letter of credit when he came to First Bank to make a deposit. However, in his deposition, Kirby denies ever having received the original letter of credit. Furthermore, in its original complaint, LaBarge asserted that on December 10, 2002, First Bank informed LaBarge that it had given the original of the letter of credit to PVF. Then, from January 15 to 20, 2003, LaBarge attempted to locate the original letter of credit from PVF and First Bank without success.

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In the latter part of January and early February of 2003, LaBarge and First Bank representatives twice talked on the telephone to discuss the documentation that LaBarge needed to present in order to draw on the letter of credit. During these two telephone conversations, LaBarge employees informed First Bank's executive vice president, Andrew Adler, that they could not locate the original letter of credit and only had the facsimile copy that they received from First Bank on November 26, 2002. Adler informed LaBarge representatives that First Bank would not honor a presentation without the original credit. After these conversations, Harold Burroughs, counsel for LaBarge, called for Adler to discuss payment under the letter of credit. James Lackie, First Bank's counsel, returned the call on February 6, 2003. In that phone call, Burroughs informed Lackie that LaBarge could not locate the original letter of credit. Burroughs again so informed Lackie in a letter dated February 11, 2003.

In February 2003, LaBarge attempted to draw on the letter of credit in the amount of $143,613.40, the total price of all pipe it had shipped to PVF. It mailed the letter of credit facsimile it had received on November 26, 2002, along with the relevant unpaid invoice copies and its certificate that they remained unpaid for thirty days or more after their dates, to First Bank on February 14, 2003. First Bank received these documents on the morning of Monday, February 17, 2003. Also included with LaBarge's February 14, letter was an Affidavit of Beneficiary of Irrevocable Letter of Credit and Indemnification of Issuer signed by Michael Brand, CFO, Secretary, and Treasurer of LaBarge, which stated that the “ original letter of credit" could not be produced because it was not delivered to LaBarge and was lost or destroyed. This document also essentially provided that LaBarge would reimburse First Bank if someone were to present the original letter of credit and were able to successfully draw on that document. First Bank, on the day it received LaBarge's presentation, Monday, February 17, 2003, mailed to LaBarge a letter dishonoring its draw. LaBarge received this letter on Friday, February 21, 2003. The letter, which was written by First Bank's attorney, did not advise that First Bank was holding LaBarge's documents at its disposal, or that First Bank would return the documents to LaBarge. While LaBarge was waiting for a response from First Bank, Brand called First Bank officials two times on Wednesday, February 19, 2003. Brand received no response to his inquiries concerning the draw on the letter of credit until Adler returned Brand's call during the afternoon of Thursday, February 20, 2003, and informed Brand that First Bank would not honor the letter of credit because LaBarge did not include the original letter of credit in its presentation.

On April 11, 2003, LaBarge filed suit against First Bank, asserting claims for wrongful dishonor, breach of the letter of credit...

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