Beirut Universal Bank, S. A. L. v. Superior Court for Los Angeles County

• Decision Date: 17 January 1969
• Docket Number: No. 33370,33370
• Parties: BEIRUT UNIVERSAL BANK S.A.L. a Lebanese banking association, Petitioner, v. SUPERIOR COURT of the State of Callfornia FOR the COUNTY OF LOS ANGELES, Respondent; ORBI, S.A., a Swiss corporation, and William R. Forman, Real Parties in Interest. Civ.
• Court: California Court of Appeals Court of Appeals

Page 333

74 Cal.Rptr. 333

268 Cal.App.2d 832

BEIRUT UNIVERSAL BANK S.A.L. a Lebanese banking association, Petitioner, v. SUPERIOR COURT of the State of Callfornia FOR the COUNTY OF LOS ANGELES, Respondent ORBI, S.A., a Swiss corporation, and William R. Forman, Real Parties in Interest.

Civ. No. 33370.

Court of Appeal, Second District, Division 3, California.

Jan. 17, 1969.

Krystal & Paradise, Los Angeles, for petitioner.

No appearance for respondent.

Swerdlow, Glikbarg & Shimer, Beverly Hills, for real parties in interest.

FORD, Presiding Justice.

Petitioner, Beirut Universal Bank, S.A.L., a Lebanese banking association, seeks a writ of mandate to compel the superior court to enter an order quashing service of summons on petitioner. The service was made pursuant to the provisions of section 411, subdivision 2, of the Code of Civil Procedure and sections 6500--6504 of the Corporations Code. ¹

On January 3, 1968, the real parties in interest, Orbi, S.A., a Swiss corporation, and William R. Forman, commenced the present action against petitioner and Selim G. Habib. The relief sought was the rescission of certain agreements and damages for fraud. Service of the summons was made on the Secretary of State on January 18, 1968. On March 11, 1968, petitioner appeared specially and made a motion for an order quashing service of summons on the ground that the court lacked jurisdiction over petitioner. The motion was heard upon affidavits and was denied.

In the first cause of action of the complaint it was alleged that on or about 'December 15 through 20, 1966, in the County of Los Angeles, defendants and plaintiffs negotiated and agreed to certain independent but related oral contracts, portions of which were reduced to writing and signed in Los Angeles on those dates;' that in one agreement defendant Beirut Universal Bank agreed to lend to Orbi the sum of 500,000 Lebanese pounds to be used by Orbi to purchase a fifty percent interest in a motion picture theater business in Beirut, Lebanon, owned by defendant Habib; that the bank also agreed to lend an additional 100,000 pounds to defendant Habib; that the bank expressly represented and agreed that the 600,000 pounds would be used for specified purposes; that the bank made those representations and entered into the agreement 'without ever intending to perform or carry them out;' that in reliance upon those representations and that agreement, plaintiff Orbi executed a letter of commitment (a copy of which was attached to the complaint as exhibit A) and plaintiff Forman 'did execute in Los Angeles at the same time a guaranty of the payments of all amounts due to the Beirut Bank from Orbi' (a copy of which was attached to the complaint as exhibit B); that prior to entering into the oral agreement alleged in the first and second causes of action and executing the documents (copies of which were attached to the complaint as exhibits A, B and C, respectively) the defendants were aware that the theater premises had been seized by the landlord because of the nonpayment of rent by defendant Habib and defendants failed to disclose the fact of such seizure prior to the making of the 'aforesaid agreement;' that if plaintiffs had been informed of that fact they would not have entered into the 'agreement described in this count and in the Second Count;' that in breach of the oral agreement heretofore described, the defendant bank never paid any of the obligations owed by defendant Habib 'on said theatre to parties other than said bank;' and that 'plaintiffs hereby rescind said oral agreement and Exhibits A and B hereto on the ground that their consent thereto was obtained through the fraud of defendants * * * and on the further ground that the consideration therefor has failed * * *.'

In the second cause of action the plaintiffs sought rescission of the contract with defendant Habib (exhibit C).

The third cause of action embodied by reference specified paragraphs of the first and second causes of action. In addition it was alleged: 'The representations described in paragraph 5 above (as to the disposition to be made by the bank of the proceeds of the loan) were made by both Rudolph Manasterski, an officer of defendant Beirut Bank, and also by defendant Habib during extensive negotiations with Pat Notaro, Orbi's president, and plaintiff Forman, in Los Angeles, California, during the period December 15 to December 20, 1966, Habib being present during all these days and Manasterski being present on the 16th, 19th and 20th.' It was further alleged that the defendants, in making such representations, knew that the representations were false and 'never intended that Beirut Bank perform same, but, rather, always intended to have plaintiffs rely thereon (and plaintiffs did rely thereon), thereby intending to defraud plaintiffs into becoming liable for the payment to defendant Beirut Bank of L. 600,000, L. 550,000 of which was used to satisfy Habib's antecedent debt to said defendant, which payment could not conceivably benefit plaintiffs.' It was also pleaded that the plaintiffs relied on the false representations in entering into the agreement.

In support of its motion to quash, the petitioner Beirut Universal Bank filed the affidavit of its president, Rudolph Manasterski. He was a Lebanese citizen residing in Beirut, Lebanon. He stated that the bank had never maintained any office in California and had never owned any property in this state. An officer or representative of the bank had never been present in this state and the bank had not engaged in any business transaction in California by means of correspondence, cable or otherwise, except as hereinafter related.

With respect to the inception of the transaction involved in the present action, Mr. Manasterski stated that in November 1966 defendant Habib visited the bank in Beirut and talked to Mr. Khoury, an officer of the bank, about the matter of making a loan to certain parties who were interested in purchasing a fifty percent interest in Mr. Habib's theater business in Beirut. Habib was then indebted to the bank in the sum of 550,000 Lebanese pounds with respect to that business. A few days thereafter, Pat R. Notaro, an officer of plaintiff Orbi, S.A., a Swiss corporation, acting on Orbi's behalf, discussed with Mr. Khoury and Mr. Manasterski the matter of lending to Orbi the sum of 500,000 Lebanese pounds for the purpose of such purchase. Mr. Manasterski stated that such a loan could be made if an acceptable personal guaranty of the loan could be obtained. Mr. Notaro suggested plaintiff Forman as such guarantor and the bank advised Mr. Notaro that Mr. Forman's guaranty would be acceptable. Mr. Habib's indebtedness to the bank was discussed and it was agreed that the proceeds of the loan would be applied against the indebtedness of Mr. Habib to the bank.

A further portion of Mr. Manasterski's affidavit was as follows: 'Thereafter, at the request of Notaro, the undersigned came to Los Angeles, California, arriving on December 16, 1966. On December 16, 1966 and on December 17, 1966, the undersigned had conversations with Notaro and Habib concerning the proposed loan to Orbi. No conversations were had by the undersigned with any of the parties involved in this transaction on December 18, 1966. On December 19, 1966, the undersigned met with Forman, Notaro and Habib. This meeting was held in the office of Forman at 141 South Robertson Boulevard, in the City of Los Angeles. At this meeting, Notaro, on behalf of Orbi, requested that the proposed loan be increased to L. . 600,000. The undersigned thereupon telephoned the Bank in Beirut and was advised that the increased loan was feasible provided Forman would give the Bank a full guarantee. To expedite the actual making of the loan in Beirut, the undersigned produced a written form of open loan commitment of the type conventionally used in Lebanon which was thereupon signed by Notaro on behalf of Orbi and by the undersigned on behalf of the Bank to become effective if, as, and when the Bank should receive in Beirut the written guarantee of Forman in form acceptable to the Bank. Said written loan commitment was 'open' in that the amount of the loan was not specified therein but left to the convenience and absolute discretion of the Bank. Said open loan commitment provided that it should be performed in and governed by the laws of Lebanon. At this time there was also delivered to the undersigned, to become effective and to be used when Forman's guarantee should be received by the Bank in Beirut, a Lebanese bank form check drawn by Notaro for and on behalf of Orbi in the sum of L. 600,000 Lebanese pounds payable to 'self' and a written authorization from Notaro, on behalf of Orbi, to the Bank to apply said sum to the credit of Habib at the Bank. Copies of the aforesaid documents are hereto attached marked Exhibits A, B and C respectively and by reference thereto incorporated herein.'

Mr. Manasterski further stated in his affidavit that the meeting in Los Angeles on December 19, 1966, terminated prior to noon and that there were no further meetings in California in connection with the transaction which were attended by any representative of the bank. Subsequent to the termination of the meeting on December 19, 1966, Mr. Manasterski had no conversations or transactions with anyone in the State of California in connection with the loan or any other business matter. He left the County of Los Angeles for Beirut on or about December 21, 1966. Thereafter Mr. Forman's guaranty (exhibit B to the complaint) was delivered to the bank in Beirut by Habib accompanied by a letter from Notaro dated December 21, 1966. ²

The plaintiffs filed declarations of Mr. Notaro and Mr. Forman and an affidavit of Mr. Habib in opposition to the motion to quash the service of summons. With respect to the meetings in California, portions of Mr. Notaro's declaration were as follows: 'I met with...