Resseguros v. Inepar Investments

• Decision Date: 26 April 2011
• Citation: 2011 N.Y. Slip Op. 03275,83 A.D.3d 573,922 N.Y.S.2d 308
• Parties: IRB–BRAZIL RESSEGUROS, S.A., Plaintiff–Respondent,v.INEPAR INVESTMENTS, S.A., Defendant,Inepar S.A. Industria e Construções, Defendant–Appellant.
• Court: New York Supreme Court — Appellate Division

83 A.D.3d 573

922 N.Y.S.2d 308

2011 N.Y. Slip Op. 03275

IRB–BRAZIL RESSEGUROS, S.A., Plaintiff–Respondent,

v.INEPAR INVESTMENTS, S.A., Defendant,Inepar S.A. Industria e Construções, Defendant–Appellant.

Supreme Court, Appellate Division, First Department, New York.

April 26, 2011.

Hoguet Newman Regal & Kenney, LLP, New York (Fredric S. Newman and Helene R. Hechtkopf of counsel), for appellant.Skadden, Arps, Slate, Meagher & Flom LLP, New York (Lea Haber Kuck of counsel), for respondent.SWEENY, J.P., CATTERSON, MOSKOWITZ, RENWICK, RICHTER, JJ.

Judgment, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered December 4, 2009, in favor of plaintiff and against defendants in the principal amount of $27,772,409.86, plus interest at the rate of 9.9% per annum from October 22, 2009 and postjudgment interest at the rate of 9.9%, and bringing up for review orders, same court and Justice, entered August 3, 2009, which denied defendant Inepar SA Industria e Construções (IIC)'s motion for summary judgment and granted plaintiff's motion for summary judgment as to liability, unanimously modified, on the law, to limit the rate of postjudgment interest to the statutory rate of 9% per annum, and otherwise affirmed, without costs. Appeals from the aforementioned orders, from a judgment, same court and Justice, entered August 19, 2009, in favor of plaintiff on the issue of liability, and from an order, same court (Beverly S. Cohen, J.H.O.), entered November 9, 2009, unanimously dismissed, without costs, as subsumed in the appeal from the December 4, 2009 judgment.

Plaintiff established a prima facie case on its motion for summary judgment by submitting evidence of an absolute and unconditional guarantee, the underlying debt and the guarantor's failure to perform ( see Bank of Am., N.A. v. Solow, 59 A.D.3d 304, 874 N.Y.S.2d 48 [2009], lv. dismissed 12 N.Y.3d 877, 883 N.Y.S.2d 172, 910 N.E.2d 1001 [2009] ).

In support of its motion for summary judgment and in opposition to plaintiff's motion, IIC submitted admissible evidence, as well as an expert opinion on Brazilian law, to demonstrate that the two officers who signed the guarantee lacked actual authority under Brazilian law. However, the guarantee, which is in an amount greater than $250,000, contains a New York choice of law clause.

General Obligations Law (GOL) § 5–1401(1) provides, in pertinent part:

“The parties to any contract, agreement or undertaking, contingent or otherwise, in consideration of, or relating to any obligation arising out of a transaction covering in the aggregate not less than two hundred fifty thousand dollars ... may agree that the law of this state shall govern their rights and duties in whole or in part, whether or not such contract, agreement or undertaking bears a reasonable relation to this state.”

GOL 5–1402(1) additionally provides, in pertinent part:

“[A]ny person may maintain an action or proceeding against a foreign corporation, non-resident or foreign state where the action or proceeding arises out of or relates to any contract, agreement or undertaking for which a choice of New York law has been made in whole or in part pursuant to section 5–1401 and which (a) is a contract, agreement or undertaking, contingent or otherwise, in consideration of, or relating to any obligation arising out of a transaction covering in the aggregate, not less than one million dollars, and (b) which contains a provision or provisions whereby such foreign corporation or non-resident agrees to submit to the jurisdiction of the courts of this state.”

These two statutes implement the public policy that favors New York courts retaining and determining actions where New York law is applicable to the dispute pursuant to the agreement of the parties and New York is the designated forum. Some federal courts have held that the choice of law provisions within section 5–1401 are enforceable unless procured by fraud or overreaching ( see Sabella v. Scantek Med., Inc., 2009 WL 3233703, *13, 2009 U.S. Dist. LEXIS 88170, *35–36 [S.D.N.Y.2009]; Sun Forest Corp. v. Shvili, 152 F.Supp.2d 367, 388–389 [S.D.N.Y.2001]; Lehman Bros. Commercial Corp. v. Minmetals Intl. Non–Ferrous Metals Trading Co., 179 F.Supp.2d 118, 136 [S.D.N.Y.2000].

The enforcement of such clauses is favored since it “protect[s] the justifiable expectation of the parties who choose New York law as the governing law” in international financial transactions ( Banco Nacional De Mexico, S.A., Integrante Del Grupo Financiero Banamex v. Societe Generale, 34 A.D.3d 124, 130–131, 820 N.Y.S.2d 588 [2006]; Lehman Bros. Commercial Corp., 179 F.Supp.2d at 136–137).

Thus, where, as here, the parties affirmatively choose New York law and a New York forum...