ICICI Bank Ltd. v. Essar Global Fund Ltd.

• Citation: 565 B.R. 241
• Decision Date: 12 January 2017
• Docket Number: 1:16–cv–7836–GHW
• Parties: ICICI BANK LIMITED, acting through its Singapore branch, Plaintiff, v. ESSAR GLOBAL FUND LIMITED, f/k/a Essar Global Limited, Essar Steel Limited Mauritius, f/k/a Essar Steel Holdings limited, Essar Steel Asia Holdings Limited, and Essar Steel Mauritius Limited, Defendants.
• Court: U.S. District Court — Southern District of New York

565 B.R. 241

ICICI BANK LIMITED, acting through its Singapore branch, Plaintiff,
v.
ESSAR GLOBAL FUND LIMITED, f/k/a Essar Global Limited, Essar Steel Limited Mauritius, f/k/a Essar Steel Holdings limited, Essar Steel Asia Holdings Limited, and Essar Steel Mauritius Limited, Defendants.

1:16–cv–7836–GHW

United States District Court, S.D. New York.

Signed January 12, 2017

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David Paul Zaslowsky, Charles Bart Cummings, Robyn Katerina Lym, Baker & McKenzie LLP, New York, NY, for Plaintiff.

Christopher John Major, Stephen Bruce Meister, Meister, Seelig & Fein LLP, Eugene Meyers, Dacheng Law Offices LLP, New York, NY, for Defendants.

MEMORANDUM OPINION AND ORDER

GREGORY H. WOODS, United States District Judge:

Defendants removed this breach of contract action from state court pursuant to the federal bankruptcy removal statute. They now seek an order transferring the action to the District of Delaware pursuant to either the general change of venue statute, 28 U.S.C. § 1404(a), or the bankruptcy change of venue statute, 28 U.S.C. § 1412. For the reasons that follow, Defendants' motion to transfer this action is DENIED.

I. BACKGROUND

A. The Guarantee Agreements, the Underlying Lawsuit, and ESML's Bankruptcy Petition

This suit arises from an iron ore project for which Essar Steel Minnesota LLC ("ESML") sought funding in 2010. As alleged in the complaint, Plaintiff ICICI Bank Limited, Singapore Branch, as facility agent ("ICICI–Singapore" or "Plaintiff"), ICICI Bank Limited, New York Branch, as Lender ("ICICI–New York"), and Essar Steel Minnesota ("ESML"), as Borrower executed a Senior Secured Credit Agreement dated December 29, 2010 (the "Credit Agreement"). ECF No. 1, Notice of Removal, Ex. 1 ("Compl."), ¶¶ 1, 8. As subsequently amended, the Credit

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Agreement extended to ESML a term loan facility totaling approximately $530 million, which was syndicated among ICICI–New York; the State Bank of India, New York Branch; Canara Bank, London Branch; Union Bank of India, Hong Kong Branch; and Syndicate Bank, London Branch (collectively, the "Lenders"). Compl. ¶ 8. Each of the Defendant entities, who are affiliates of ESML, executed guarantee agreements under which they "agreed to unconditionally and irrevocably guarantee the prompt and complete payment of [ESML's] obligations under the Credit Agreement." Compl. ¶¶ 9–14. The guarantee agreements executed by Defendants Essar Global Fund Limited and Essar Steel Limited Mauritius are dated as of December 29, 2010. Compl. ¶¶ 9–10. The guarantee agreements executed by Defendants Essar Steel Asia Holdings Limited and Essar Steel Mauritius Limited are dated as of March 28, 2014. Compl. ¶¶ 11–12.

On January 5, 2016, ESML issued to ICICI–Singapore a "material event notice" stating that ESML was in default under the Credit Agreement because it had failed to make an interest payment of $8,796,721.79 and to pay an agency fee of $25,000. Compl. ¶ 15. On April 25, 2016, ICICI–Singapore informed ESML that, in light of this and other defaults, it was accelerating the loan in accordance with the Credit Agreement. Compl. ¶ 16. ICICI–Singapore demanded immediate payment of principal, accrued interest, and fees. Id. Two days later, ICICI–Singapore notified Defendants of the acceleration and demanded that they pay the amounts due by ESML pursuant to their respective guarantee agreements. Compl. ¶ 17. In May 2016, ICICI–Singapore made two additional demands for payment. Compl. ¶¶ 18–19.

On July 8, 2016, ESML filed a voluntary petition for bankruptcy in the United States Bankruptcy Court for the District of Delaware. ECF No. 1, Notice of Removal, Ex. 3. ESML's bankruptcy petition lists Plaintiff as a creditor with an unliquidated claim of $529,957,247—the same principal amount that Plaintiff seeks to recover from Defendants under the guarantee agreements in this action. Id. at 10.

On September 2, 2016, Plaintiff initiated this lawsuit against Defendants in the Supreme Court of the State of New York, New York County. As of that date, the only payment made by any of the Defendants was $4 million paid by Essar Steel Mauritius. Compl. ¶ 20. Accordingly, Plaintiff asserts claims against each Defendant for breach of their respective guarantee agreements. Plaintiff seeks $529,957,247.70 in principal, $28,885,256.18 in interest through August 2016, $481,948.98 in attorneys' fees pursuant to the Credit Agreement, interest for the period from September 1, 2016 through the date of judgment, and additional attorneys' fees as permitted by the guarantee agreements and applicable law, in an amount to be quantified. Compl. at 7–8.

B. Removal to This Court Pursuant to 28 U.S.C. § 1452(a)

On October 6, 2016, Defendants removed this case to the United States District Court for the Southern District of New York pursuant to the federal bankruptcy removal statute, 28 U.S.C. § 1452(a), which provides:

A party may remove any claim or cause of action in a civil action other than a proceeding before the United States Tax Court or a civil action by a governmental unit to enforce such governmental unit's police or regulatory power, to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.

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28 U.S.C. § 1334(b) provides that federal courts "shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11." Defendants assert that removal is proper here because this case is "related to" the ESML bankruptcy proceeding. ECF No. 1, Notice of Removal, ¶ 11. Plaintiff has not challenged the propriety of Defendants' removal of this action, nor have they sought to remand the action to state court on any other grounds.

A case is within the court's "related-to" jurisdiction if its outcome "might have any ‘conceivable effect’ on the bankrupt estate." In re Cuyahoga Equip. Corp. , 980 F.2d 110, 114 (2d Cir. 1992) ; see also In re Cavalry Constr., Inc. , 496 B.R. 106, 111 (S.D.N.Y. 2013) ("[C]ivil proceedings are ‘related to cases under title 11’ if the outcome of those proceedings in any way impacts upon the handling and administration of the bankrupt estate." (internal quotation marks and citation omitted)). Because any recovery against Defendants in this action would offset the Lenders' claim against ESML's estate in bankruptcy, and because Defendants may assert rights of subrogation, indemnification, or contribution against ESML, the Court is satisfied that this case is "related to" the ESML bankruptcy proceeding. See, e.g. , Merrill Lynch Mortg. Capital Inc. v. Esmerian , No. 08-cv-5058 (NRB), 2008 WL 2596369, at *1 (S.D.N.Y. June 30, 2008) ("A creditor's claim against the guarantor of a bankrupt debtor's obligations is a textbook example of a ‘related’ proceeding...."). Accordingly, removal of this case pursuant to 28 U.S.C. § 1452(a) was proper, and the Court has jurisdiction over the case.

C. Defendants' Counterclaims

On November 3, 2016, Defendants filed their answer to the complaint, interposing numerous defenses and asserting counterclaims for equitable estoppel and fraudulent inducement. ECF No. 12. Defendants seek dismissal of the complaint in its entirety, a judgment declaring that the Lenders are estopped from seeking to enforce the guarantees against Defendants and that the guarantees are deemed satisfied, and damages in an amount to be determined at trial. Id. at 15.

D. The Forum Selection and Choice of Law Clauses

The guarantee agreements executed by each of the Defendants contain identical venue provisions, which read in relevant part:

The Guarantor ... hereby irrevocably consents that any legal action, suit or proceeding arising out of or relating to this Agreement or any of the Loan Documents and any other document or instrument required to be executed in relation thereto may be instituted in or (other than by the Guarantor) removed to the U.S. federal and New York state courts located in the Borough of Manhattan, City and State of New York.... The Guarantor hereby waives any objection it may now or hereafter have to the laying of the venue of any such action, suit or proceeding, and further waives any claim that any such action, suit or proceeding brought in any of the aforesaid courts has been brought in any inconvenient forum.

ECF No. 28, Decl. of Linda Phua in Supp. of Pl.'s Mot. for Summ. J. ("Phua Decl."), Exs. 7, 10, 13, 14.¹ The guarantee agreements

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also provide that they "SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK." Id.

E. Defendants' Motion to Transfer

On November 17, 2016, Defendants filed a motion pursuant to 28 U.S.C. § 1404(a) and 28 U.S.C. § 1412 to transfer this case to the United States District Court for the District of Delaware, whereupon, Defendants assert, the case would...