Speedway Motorsports Int'l Ltd. v. Trading

• Decision Date: 15 February 2011
• Docket Number: No. COA09–1451,COA09–1451
• Citation: 707 S.E.2d 385
• Parties: SPEEDWAY MOTORSPORTS INTERNATIONAL LTD., Plaintiff,v.BRONWEN ENERGY TRADING, LTD., Bronwen Energy Trading UK, Ltd., Dr. Patrick Denyefa Ndiomu, BNP Paribas (Suisse) SA, BNP Paribas S.A., Swift Aviation Group, Inc., Swift Air, LLC, Swift Aviation Group, LLC, and Swift Transportation Co., Inc., Defendants.
• Court: North Carolina Court of Appeals

707 S.E.2d 385

SPEEDWAY MOTORSPORTS INTERNATIONAL LTD., Plaintiff,

v.BRONWEN ENERGY TRADING, LTD., Bronwen Energy Trading UK, Ltd., Dr. Patrick Denyefa Ndiomu, BNP Paribas (Suisse) SA, BNP Paribas S.A., Swift Aviation Group, Inc., Swift Air, LLC, Swift Aviation Group, LLC, and Swift Transportation Co., Inc., Defendants.

No. COA09–1451

Court of Appeals of North Carolina.

Feb. 15, 2011.

OPINION TEXT STARTS HERE

Appeal by defendant from order entered 14 July 2009 by Judge Albert Diaz in Mecklenburg County Superior Court. Heard in the Court of Appeals 14 April 2010.

Parker Poe Adams & Bernstein LLP, Charlotte, by Michael G. Adams and William L. Esser IV, for plaintiff-appellee.

Winston & Strawn LLP, by Nash E. Long, III, Charlotte, and Valerie B. Mullican, for defendant-appellant BNP Paribas (Suisse) SA.

GEER, Judge.

Defendant BNP Paribas (Suisse) SA (“BNPP Suisse”), a Swiss bank, appeals from an order denying its motion to dismiss the claims of Speedway Motorsports International Ltd. (“SMIL”) against BNPP Suisse for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Rules of Civil Procedure. In arguing that jurisdiction does exist, SMIL first contends that BNPP Suisse is bound by the North Carolina forum selection clause in SMIL's contracts with third parties because those contracts were incorporated by reference into SMIL's agreement with BNPP Suisse. We hold that the “incorporation by reference” clause in SMIL's agreement with BNPP Suisse cannot reasonably be construed as subjecting BNPP Suisse to the forum selection clause. Instead, the “incorporation by reference” clause was intended simply to identify the contracts that were the subject of the demand guarantee being issued by BNPP Suisse for SMIL.

In the absence of a forum selection clause, SMIL was required to establish that its claims against BNPP Suisse fell within one of the provisions of North Carolina's long-arm statute and that BNPP Suisse had sufficient minimum contacts with North Carolina. SMIL's evidence is not, however, sufficient to bring BNPP Suisse within the scope of the long-arm statute. We, therefore, reverse the trial court's order denying BNPP Suisse's motion to dismiss.

Facts

In 2006, SMIL, which is “in the business of petroleum products transactions,” opened an account with BNPP Suisse to conduct that business. This case arises out of SMIL's use of its BNPP Suisse account in connection with a series of contracts pursuant to which SMIL agreed to guarantee lines of credit issued to finance petroleum purchases by other parties during 2007.

In early 2007, defendants Swift Aviation Group, Inc., Swift Air, LLC, Swift Aviation Group, LLC, and Swift Transportation Co., Inc. (collectively “Swift”) were attempting to negotiate a long-term supply contract with Kuwait Petroleum Corporation (“KPC”) pursuant to which Swift would purchase petroleum products from KPC. KPC was not, however, willing to enter into a long-term business relationship with Swift until Swift had proven its ability to successfully execute shorter-term spot contracts.

Upon the advice of BNP Paribas S.A. (“BNPP France”), a French bank of which BNPP Suisse is a subsidiary, Swift engaged defendants Bronwen Energy Trading, Ltd. and Bronwen Energy Trading UK, Ltd. (collectively “Bronwen”) to assist Swift in executing the spot contracts with KPC. SMIL, which is headquartered in Charlotte, North Carolina, agreed to provide Bronwen with the financial assistance needed to obtain letters of credit for the purchase of the oil under the spot contracts.

On 12 July 2007, Bronwen and SMIL entered into an agreement relating to the delivery of 80,000 metric tons of Jet A–1 (“the First Oil Contract”). Under the First Oil Contract, SMIL agreed to provide BNPP France with a guarantee of $12,750,000.00 to allow Bronwen to secure from BNPP France one or more letters of credit to effectuate the purchase of the Jet A–1 from KPC. SMIL and Bronwen also agreed: “The funded amount guaranteed will be maintained in SMIL's account with [BNPP Suisse]. SMIL will execute such document(s) as reasonably required by [BNPP France] to effectuate the guarantee of the funded amount.” The First Oil Contract further provided: “All litigation arising from or related to this agreement shall be heard exclusive [sic] in the state or federal courts sitting in Mecklenburg County, North Carolina, USA. Bronwen hereby irrevocably consents to personal jurisdiction [in] such courts.”

To fulfill its obligations under the First Oil Contract, SMIL executed a guarantee (“the Corporate Guarantee”) to BNPP France later that day. The next day, 13 July 2007, SMIL's president, William R. Brooks, also emailed the Corporate Guarantee to BNPP Suisse. BNPP France rejected as insufficient SMIL's Corporate Guarantee on 13 July 2007 and requested that SMIL instead issue instructions to BNPP Suisse to deliver a first demand guarantee to BNPP France. BNPP Suisse also emailed SMIL regarding the Corporate Guarantee and explained:

Thanks for sending your corporate guarantee, but this is not what we need.

What we actually need is your formal request to us, asking us to issue subject first demand guarantee on your behalf in favour of BNPP [France].

We imperatively need these instructions to issue the pament [sic] guarantee on your behalf, otherwise we won't be in a position to move.

Accordingly, later that day, 13 July 2007, SMIL sent instructions (“the First Instructions”) to BNPP Suisse to issue a first demand guarantee of $11,750,000.00 in favor of BNPP France with respect to the fulfillment of the First Oil Contract. The First Instructions stated: “[Bronwen] has a financing facility for principal amount of $100,000,000 USD which has been granted by [BNPP France] pursuant to an agreement dated dated [sic] 13 December 2006 (the ‘Credit Facility’). SMIL has a business relationship with [Bronwen] pursuant to a separate agreement, a true and correct copy of which is attached hereto as Exhibit A, and which is incorporated herein by reference. The Guarantee is to be issued solely with respect to any amounts drawn by [Bronwen] pursuant to the Credit Facility in [Bronwen's] fulfillment of Exhibit A. SMIL will maintain a sufficient amount in its account with [BNPP Suisse] to satisfy the Guarantee.” Exhibit A was a copy of the First Oil Contract executed the day before on 12 July 2007.

After SMIL sent the First Instructions to BNPP Suisse, but still on 13 July 2007, SMIL and Bronwen entered into an amended oil contract (“Amended Oil Contract”), which, by its terms, “supersede[d]” the First Oil Contract executed the previous day. The Amended Oil Contract reduced to $11,750,000.00 the amount guaranteed by SMIL to BNPP France for Bronwen's benefit. Like the First Oil Contract, it provided that the guaranteed amount would be maintained in SMIL's account with BNPP Suisse, and it again stated: “All litigation arising from or related to this agreement shall be heard exclusive [sic] in the state or federal courts sitting in Mecklenburg County, North Carolina, USA. Bronwen hereby irrevocably consents to personal jurisdiction [in] such courts.”

Three days later, on 16 July 2007, BNPP Suisse acknowledged receipt of the First Instructions, but it informed SMIL that it “need[ed] a request with the actual wording of the guarantee” BNPP Suisse was to issue to BNPP France, as opposed to the more general wording of the First Instructions. BNPP Suisse included a draft of a first demand guarantee for SMIL's review. In addition to referencing the purchase by Bronwen of 80,000 metric tons of Jet A–1, as governed by the First Oil Contract and the Amended Oil Contract, the draft also referred to a purchase of 60,000 metric tons of Gasoil from KPC. The last line of the first demand guarantee stated: “This guarantee is subject to Swiss Law, place of jurisdiction is Geneva.”

Later that day, SMIL emailed BNPP Suisse a revised version of the first demand guarantee. The revised version was substantially similar to BNPP Suisse's draft. It confirmed that SMIL agreed to be responsible for Bronwen's repayment of the $11,750,000.00 credit issued to KPC, pursuant to the Amended Oil Contract, and it included the Geneva forum selection clause. It deleted the reference to the 60,000 metric tons of Gasoil that was not part of the Amended Oil Contract. SMIL's president, Mr. Brooks, signed the document after adding the following sentence: “All claims are to be sent to my attention at [Mr. Brooks' email address], and by fax to [a Charlotte, North Carolina fax number].” SMIL also noted in its email attaching the revised “guarantee form” that it had also attached “a superseding agreement [the Amended Oil Contract] between [SMIL] and [Bronwen] that is to be used in substitution for the Exhibit A [SMIL] originally sent to [BNPP Suisse].”

On appeal, the parties do not agree on the purpose or effect of the 16 July 2007 draft first demand guarantee sent by SMIL to BNPP Suisse. BNPP Suisse refers to the document as an actual guarantee by SMIL in favor of BNPP Suisse. SMIL insists that this draft of the first demand guarantee was merely an “Approval Document” that was approving the form of the first demand guarantee BNPP Suisse was going to send to BNPP France. SMIL contends that this Approval Document, which contained the Geneva forum selection clause, was not intended to supersede the First Instructions, which—SMIL argues—had the effect of incorporating by reference the North Carolina forum selection clause contained in the Bronwen contracts. In SMIL's complaint, however, SMIL referred to the 16 July 2007 document as a “supplemental guarantee.”

Meanwhile, also on 16 July 2007 (but apparently before BNPP Suisse received SMIL's response with the revised version of the first demand guarantee), BNPP Suisse went ahead and issued a first demand guarantee to BNPP France by which BNPP Suisse promised that it would be responsible for Bronwen's repayment of the letters of credit to BNPP France. The first...