Msf Holding Ltd. v. Fiduciary Trust Co. Intern., 03 Civ. 1818(PKL).

• Decision Date: 20 June 2006
• Docket Number: No. 03 Civ. 1818(PKL).,03 Civ. 1818(PKL).
• Citation: 435 F.Supp.2d 285
• Parties: MSF HOLDING LTD., Plaintiff, v. FIDUCIARY TRUST COMPANY INTERNATIONAL, Defendant.
• Court: U.S. District Court — Southern District of New York

Page 285

435 F.Supp.2d 285

MSF HOLDING LTD., Plaintiff, v. FIDUCIARY TRUST COMPANY INTERNATIONAL, Defendant.

No. 03 Civ. 1818(PKL).

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

June 20, 2006.

COPYRIGHT MATERIAL OMITTED

Miller Nash, LLP, Portland, Oregon, John F. Neupert, Spencer L. Schneider, New York, New York, Spencer L. Schneider, for Plaintiff.

Jones Hirsch Connors & Bull P.C., New York, New York, Alan M. Gelb, Eugene P. Hanson, for Defendant.

OPINION AND ORDER

LEISURE, District Judge.

Plaintiff MSF Holding Ltd. ("MSF") moves the Court, pursuant to Federal Rule of Civil Procedure 56, for an entry of summary judgment in its favor on its three causes of action against defendant Fiduciary Trust Company International ("FTCI") for the latter's alleged wrongful dishonor of a letter of credit under which plaintiff claims it is the beneficiary.¹ Plaintiff specifically alleges that defendant's dishonor constitutes a breach of contract and violation of Article 5 of New York's Uniform Commercial Code; plaintiff also seeks a declaration that it is the proper holder of the letter of credit and that defendant has breached its terms by refusing to honor a draft made by plaintiff thereunder. Defendant cross-moves for summary judgment, arguing primarily that plaintiff lacks standing to enforce the credit. For the following reasons, plaintiffs motion is denied, and, while defendant's cross-motion is denied for failure to adhere to the requirements of Local Rule 56.1, the Court finds that defendant is entitled to judgment as a matter of law and summary judgment shall, therefore, be granted, sua sponte, in defendant's favor.

BACKGROUND

I. Local Rule 56.1 Requirements

Plaintiff has submitted with its motion for summary judgment, pursuant to Rule 56.1(a) of the Local Rules of the United States District Courts for the Southern and Eastern Districts of New York, a separate numbered statement of material facts as to which it contends there are no genuine issues to be tried ("Rule 56.1 Statement"). S.D. & E.D. N.Y. R. 56.1(a). Defendant has properly submitted, pursuant to Local Rule 56.1(b), a counter-statement responding to each of plaintiffs assertions ("Rule 56.1 Counterstatement"). S.D. & E.D. N.Y. R. 56.1(b). Further, unless otherwise noted, the parties' respective assertions of undisputed and disputed material facts cite adequately to admissible evidence in the record. See Fed.R.Civ.P. 56(e); S.D. & E.D. N.Y. R. 56.1(d); Giannullo v. City of N.Y., 322 F.3d 139, 140 (2d Cir.2003) ("`[A] Local Rule 56.1 statement is not itself a vehicle for making factual assertions that are otherwise unsupported in the record.'" (quoting Holtz v. Rockefeller & Co., 258 F.3d 62, 74 (2d Cir.2001))). The parties' respective factual allegations, which are primarily drawn from those statements, follow below.

II. Factual History

Plaintiff MSF is a Bahamian corporation with its principal place of business located outside the United States (Compl. ¶ 1);² defendant FTCI is a New York corporation with offices in the Southern District of New York (Answer ¶ 4). Plaintiff alleges that Philips Medical Systems D.V. ("Philips"), a nonparty to this action, entered into a contract dated April 27, 1999, with Hospital Privado de Occidente C.A. ("HP"), also a nonparty to this action, pursuant to which Philips sold certain hospital equipment to HP (the "Philips Contract"). (Pl.'s 56.1 ¶ 2; Compl. ¶ 7.) Plaintiff alleges that HP, as part of its payment obligation under the Philips Contract, had defendant issue irrevocable letter of credit no. 649 ("LOC 649") in favor of Philips in the amount of $250,000 as partial security for HP's performance. (Pl.'s 56.1 ¶ 2.)

A. The Assignment of LOC 649

The parties agree that in an Assignment Agreement dated March 23, 2001 ("Assignment Agreement"), Philips assigned to MSF-HSF Nederland B.V. ("MSF-HSF"), an affiliate of plaintiff's, its rights to a number of accounts receivable, which included the receivables owed under the Philips Contract, as well as any additional sureties acquired by Philips in association with those receivables. (Pl.'s 56.1 ¶ 3; Def.'s 56.1 ¶ 3(a); Gelb Aff. Ex. H at Sixth & Seventh Whereas Clauses.) While plaintiff concedes that the assignment was made to its affiliate, MSF-HSF, plaintiff treats itself and MSF-HSF as identical identities, referring to the two interchangeably. (See, e.g., Pl.'s 56.1 ¶ 3.) Defendant recognizes this and, consequently, disputes the fact that plaintiff is the assignee of LOC 649; instead, it differentiates between the two entities, claiming that MSF-HSF, as distinct from plaintiff, is the assignee of LOC 649. (Def.'s 56.1 ¶¶ 3(b)-(c).)

B. Plaintiffs Attempt to Draw Proceeds Under LOC 649

On March 14, 2002, Mr. Fernando Rodriguez Lugo, a representative of "MSF de Colombia Ltda.," sought to draw the proceeds under LOC 649 by faxing³ a copy of the credit to one of defendant's representatives.⁴ (Pl.'s 56.1 ¶ 8.) By letter dated March 15, 2002, defendant denied Mr. Lugo's request on the ground that LOC 649 had been "cancelled upon our receipt of the original Letter of Credit from Philips Medical Systems B.V. on May 15, 2001. At no [point] was this Letter of Credit assigned prior to such cancellation or was a replacement Letter of Credit issued on behalf of or [sic] MSF Holding Ltd. or any designee of Philips Medical Systems B.V." (Hamel Decl. Ex. 2; Pl.'s 56.1 ¶ 8.)⁵ Defendant's reference to an "original Letter of Credit" refers to a letter of credit, numbered 101648, and dated May 21, 1999 ("LOC 648"), that defendant claims it issued in favor of Philips prior to issuing LOC 649. (Def.'s 56.1 ¶ 4(a).)

C. The Purported Prior Issuance of LOC 648

Defendant contends that prior to issuing LOC 649, it issued LOC 648 to HP's agent, Vontobel USA Inc., on May 21, 1999. (Def.'s 56.1 ¶ 4(a).) Three days later, on May 24, 1999, defendant faxed a copy of LOC 648 and its attachments to Philips. (Def.'s 56.1 ¶ 4(a).) On June 1, 1999, a representative of defendant sent an e-mail to Vontobel, stating that, "`[w]e have been advised that Philips Medical Systems B.V. ("Philips") has not yet received Fiduciary Trust Company International's Irrevocable Letter of Credit No. 101648.'" (Def.'s 56.1 ¶ 4(b).) The e-mail advised that defendant would cancel LOC 648 and issue a replacement letter of credit if (1) Vontobel provided defendant with a signed written statement to the effect that Vontobel had been told by Philips that the latter had not received LOC 648, and that, therefore, Vontobel consented to the cancellation of LOC 648; and (2) Philips provided to defendant a written statement that it had not received LOC 648, it had not assigned LOC 648 to any third party, and, if it were to receive LOC 648 at a later date, it would mark it cancelled and return it to defendant. (Pl.'s 56.1 ¶ 4; Garcia Aff. Ex. L.)⁶ While plaintiff and defendant agree in their Rule 56.1 Statement and Rule 56.1 Counterstatement, respectively, that a letter written by Vontobel in satisfaction of the first condition has been produced in discovery, the letter is not located in the part of the record cited to by the parties, nor has the Court located the letter elsewhere in the record.⁷ Consequently, the assertion that Vontobel in fact wrote the letter must be disregarded. See Giannullo v. City of N.Y., 322 F.3d 139, 140 (2d Cir.2003).

Neither party has produced a copy of a letter from Philips that would have satisfied defendant's second requirement for cancellation and reissuance of the credit. (Pl.'s 56.1 ¶ 6.) While the parties make various assertions concerning the efforts undertaken to locate a copy of the letter (see Pl.'s 56.1 ¶ 6; Def.'s 56.1 ¶ 6), the Court need not address them because, even in the event LOC 649 was properly issued in replacement of LOC 648, plaintiff lacks standing to draw under LOC 649 for the reasons discussed below.

D. Plaintiffs Presentment of LOC 649 to Defendant

Plaintiff responded to defendant's letter to Mr. Rodriguez by having its counsel write to defendant seeking proof that LOC 649 had in fact been canceled. (Pl.'s 56.1 ¶ 8; Neupert Decl. Ex. 3.) Thereafter, an employee of plaintiff, Donna Hamel,⁸ met with Susan Garcia, Esq., an in-house lawyer at FTCI, and other FTCI employees, in order to inspect LOC 649. Plaintiff claims that defendant's employees inspected LOC 649, and stated afterwards that it was genuine and, therefore, would be honored.⁹ (Pl.'s 56.1 ¶ 9; Hamel Decl. ¶¶ 14-5.)

E. Defendant's Purported Repudiation of LOC 649

Thereafter, on August 6, 2002, Ms. Garcia provided plaintiff with written instructions on what plaintiff needed to present to defendant under LOC 649 in order to receive payment. (Pl.'s 56.1 ¶ 10; Hamel Decl. Ex. 3.) Accordingly, on September 12, 2002, plaintiff presented defendant with LOC 649 and a request for a replacement credit. (Pl.'s 56.1 ¶ 10; Hamel Decl. Ex. 4.) In response, defendant claims that Ms. Garcia's instructions were induced by plaintiffs "fraudulent concealment" of the existence of the Assignment Agreement. It argues that the existence of the agreement eviscerates plaintiff of the "ownership or authority" to transfer LOC 649. (Def.'s 56.1 ¶ 10(a), (c).) Plaintiff alleges that defendant repudiated its obligations under LOC 649 when, by letter dated October 7, 2002, Ms. Garcia informed Ms. Hamel that, after investigation, defendant had not found any record of issuance of LOC 649 and that it only had a record of issuing a previous letter of credit to Philips as a beneficiary in May 1999, which credit had been cancelled in May 2001. (Pl's 56.1 ¶ 10; Def.'s 56.1 ¶ 10(c); Hamel Decl. Ex. 4.) Thus, defendant declined to issue a new letter of credit with plaintiff as beneficiary. (Pl's 56.1 ¶ 10(c); Hamel Decl. Ex. 4.)

In a letter dated October 21, 2002, plaintiff's counsel wrote to Ms. Garcia, seeking reconsideration of defendant's prior dishonor of LOC 649.¹⁰ (Pl.'s 56.1 ¶ 11; Hamel Decl. ¶ 9, Ex. 6.) Plaintiff avers that its cou...