Nordkap Bank AG v Standard Chartered Bank

[*1] Nordkap Bank AG v Standard Chartered Bank 2011 NY Slip Op 51342(U) Decided on May 6, 2011 Supreme Court, New York County Bransten, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 6, 2011
Supreme Court, New York County

Nordkap Bank AG, Plaintiff,

against

Standard Chartered Bank, Defendant.



650105/2010

 

Plaintiff Nordkap Bank AG:

Robert Sidorsky

Regina M. Alter

of Butzel Long

Defendant Standard Chartered Bank PLC

Marc. J. Gottridge

Michael P. Roffe

of Hogan Lovells

Eileen Bransten, J.

Defendant Standard Chartered Bank moves to dismiss the First Amended Complaint for forum non conveniens and for lack of personal jurisdiction. For the reasons set forth below, the motion is denied.

PROCEDURAL HISTORY

On June 10, 2010, Plaintiff Nordkap Bank AG ("Plaintiff") filed its First Amended Complaint against Defendant Standard Chartered Bank ("Defendant"). Plaintiff alleges five causes of action against Defendant: 1) breach of warranty; 2) breach of guarantee; 3) breach of accommodation party contract under NY U.C.C. § 3-415; 4) negligent misrepresentation; and 5) negligence. First Amended Complaint, ¶¶ 44-76.

On July 16, 2010, Defendant moved to dismiss the First Amended Complaint for forum non conveniens and for lack of personal jurisdiction. Defendant filed a memorandum of law ("Defendant's Memo"); an affirmation by Marc J. Gottridge ("Defendant's Affirmation"); and affidavits by Tahir Khan ("Defendant's Khan Affidavit"); Ahmed Abdul Karim Hussain Abdulla ("Defendant's Abdulla Affidavit"); Zoi Karali ("Defendant's Karali [*2]Affidavit"); Ratna Kumar ("Defendant's Kumar Affidavit"); and Hassan Ali Radhi ("Defendant's Radhi Affidavit").

On August 10, 2010, Plaintiff opposed Defendant's motion to dismiss. Plaintiff filed a memorandum of law in opposition ("Plaintiff's Opp. Memo"); an affirmation by Robert Sidorsky ("Plaintiff's Opp. Affirmation"); and affidavits by Gilbert Samberg ("Plaintiff's Samberg Affidavit"); Stefan Gerig ("Plaintiff's Gerig Affidavit"); Isabelle Scherer ("Plaintiff's Scherer Affidavit"); Jean-Yves Baudoin ("Plaintiff's Baudoin Affidavit"); and Haya Rashed Al Khalifa ("Plaintiff's Al Khalifa Affidavit").

On September 7, 2010, Defendant replied. Defendant filed a memorandum of law in reply ("Defendant's Reply"); another affirmation by Marc. J Gottridge ("Defendant's Reply Affirmation"); and an affidavit by Hassan Ali Radhi (Defendant's Reply Affidavit").

Oral argument was held on the matter on October 28, 2010.

FACTUAL BACKGROUND

This case is about an alleged forgery of the signature of Sulaiman Hamad Algosaibi on a note and a guarantee.

Plaintiff is a bank organized under the laws of Switzerland, with its principal office in Zurich, Switzerland. First Amended Complaint, ¶ 7. Defendant is a bank organized under the laws of England, with its principal offices in London, England. Id., ¶ 8.

On March 1, 2007, Plaintiff made a loan to Algosaibi Finance ("Finance Algosaibi"). First Amended Complaint, ¶ 11. Finance Algosaibi is a division of Algosaibi ("Parent Algosaibi"), a company organized under the laws of and with its principal place of business in Saudi Arabia. Id., ¶ 12. Escoban Finance Limited LLC ("Escoban"), a New York bank, arranged the transaction between Plaintiff and Finance Algosaibi. Id., ¶ 13. White & Case LLP ("White & Case") was hired to give a legal opinion regarding the transaction's enforceability in New York. Id.

As part of the loan, Finance Algosaibi issued a note ("Note") to Plaintiff for $12,000,000, due on March 1, 2010. First Amended Complaint, ¶¶ 14-15. Also as part of the loan, Parent Algosaibi issued a guarantee ("Guarantee") to Plaintiff for payment of the Note. Id., ¶ 24.

The Note states that it is governed by New York law. First Amended Complaint, ¶ 18; Ex. A. The Note also states that Finance Algosaibi submits to the jurisdiction of New York

state courts in New York County. Id., ¶ 18; Ex. A. Defendant certified the following as part of the Note:

We, Standard Chartered Bank, Manama, Bahrain, certify that the above signature is that of Sulaiman Hamad Algosaibi who is duly empowered to obligate Ahmad Hamad Algosaibi & Brothers Co. Finance Development & investment [sic] contractually hereunder both for [*3]financial and commercial matters.

Id., ¶ 20; Ex. A. Two of Defendant's officers endorsed the certification on the Note ("Note Certification"). Plaintiff contends that it relied on and believed Sulaiman Hamad Algosaibi's signature on the Note to be genuine because of the Note Certification. Id., ¶ 23.

Like the Note, the Guarantee also states that it is governed by New York law. First Amended Complaint, ¶ 26; Ex. B. Similarly, the Guarantee states that Parent Algosaibi submits to the jurisdiction of New York state courts in New York County. Id., ¶ 26; Ex. B. Defendant certified the following as part of the Guarantee:

We, Standard Chartered Bank, Manama, Bahrain, certify that the above signature is that of Sulaiman Hamad Algosaibi who is duly empowered to obligate Ahmad Hamad Algosaibi & Brothers Co. Finance Development & investment [sic] contractually hereunder both for financial and commercial matters.

Id., ¶ 28; Ex. B. Two of Defendant's officers endorsed the certification on the Guarantee ("Guarantee Certification"). Id., ¶ 29. Plaintiff contends that it relied on and believed Sulaiman Hamad Algosaibi's signature on the Guarantee to be genuine because of the Guarantee Certification. Id., ¶ 31.

Plaintiff now alleges that the signatures of Sulaiman Hamad Algosaibi on the Note and the Guarantee are forgeries. First Amended Complaint, ¶¶ 33, 41. In addition, Plaintiff alleges that Sulaiman Hamad Algosaibi was not authorized to bind Finance Algosaibi on the Note or Parent Algosaibi on the Guarantee. Id., ¶¶ 20, 28, 41.

ANALYSIS

1. Motion to Dismiss for Forum Non Conveniens

Defendant's motion to dismiss on the grounds of forum non conveniens is denied. The balance of New York interests weighs against dismissal.

Defendant argues that the court should dismiss this matter on the grounds of forum non conveniens because: 1) both parties are non-residents of New York; 2) no witnesses or documents are in New York; 3) all of the acts in the First Amended Complaint occurred in Bahrain; 4) Plaintiff's claims are governed by the law of Bahrain; 5) adjudicating the action will unnecessarily burden this court; 6) litigating in New York will impose a heavy burden on both Defendant and fact witnesses; 7) Bahrain is a suitable alternate forum; and 7) Defendant promptly made the motion to dismiss. Defendant's Memo, pp. 14-25.

Plaintiff argues that the court should not dismiss for forum non conveniens because: 1) Defendant regularly conducts substantial business operations in New York; 2) the transaction out of which the First Amended Complaint arose has a New York nexus; 3) the location of the documents and witnesses favors New York; 4) Plaintiff's claims are governed by New York law; 5) the action will not unduly burden this court; 6) and Bahrain is not a [*4]more preferable or convenient forum. Plaintiff's Memo, pp. 14-27. Plaintiff also argues that because of Defendant's Note Certification and Guarantee Certification, Defendant is bound by the Note and Guarantee's New York choice of law and forum selection clauses. Id., pp. 12-14.

A motion to dismiss for forum non conveniens is governed by CPLR 327. CPLR 327 (a) states:

When the court finds that in the interest of substantial justice the action should be heard in another forum, the court, on the motion of any party, may stay or dismiss the action in whole or in part on any conditions that may be just. The domicile or residence in this state of any party to the action shall not preclude the court from staying or dismissing the action.

On a motion to dismiss for forum non conveniens, the burden of proof rests upon the defendant, but the decision to dismiss rests in the court's discretion. Islamic Republic of Iran v. Pahlavi, 62 NY2d 474, 479 (1984) (in a case where the Islamic Republic of Iran brought a case against its former Shah and his wife in New York for the recovery of money, the

Court of Appeals held that the case was properly dismissed for forum non conveniens

because public interest factors involving the court system and the private interest factors outweighed the claim to litigate the action in New York); see also Ghose v. CNA Reins. Co., 43 AD3d 656, 660 (1st Dep't 2007) (in a case where officers of a Bermuda-based company with an Australian subsidiary sued Defendant insurers seeking a declaration that company's insurance policy could not be rescinded, the lower court denied the defendants' motion to dismiss for forum non conveniens. The First Department reversed, finding that Australia was the more appropriate forum since it was where the company operated; other actions were pending; and that information concerning the company's finances was more likely kept either in Australia or Bermuda, not New York).

Among the factors to be considered on a motion to dismiss for forum non conveniens are: 1) the burden on the New York courts; 2) the potential hardship to the defendant; 3) the unavailability of an alternative forum; 4) the residence of the parties; and 5) the location of the events giving rise to the transaction at issue. Islamic Republic of Iran v. Pahlavi, 62 NY2d at 479; Ghose v. CNA Reins. Co., 43 AD3d at 660. Personal jurisdiction is assumed on a motion to dismiss for forum non conveniens. Shin-Etsu Chem. Co. v. ICICI Bank Ltd., 9 AD3d 171, 176 (1st Dep't 2004) (citing Islamic Republic of Iran v. Pahlavi, 62 NY2d at 474). Courts "should not be under any compulsion to add to their heavy burdens by accepting jurisdiction of a cause of action having no substantial nexus with New York." Silver v. Great America Ins. Co., 29 NY2d 356, 361 (1972); see also Shin-Etsu Chem. Co. v. ICICI Bank Ltd., 9 AD3d at 176 (quoting Silver v. Great America Ins. Co., 29 NY2d at 361).

This case has a strong New York nexus. Both the Note and the Guarantee state on their faces that they were issued in New York. First Amended Complaint, Exs. A, B. The Note and the Guarantee designate New York courts as the forum for disputes and New York [*5]law as the governing choice of the law. Id., Exs. A, B. Much, if not all of the transaction's materials are allegedly located in New York. Plaintiff's Baudoin Affidavit, ¶ 34; Plaintiff's Opp. Memo, p. 20. The forensic examinations allegedly proving the forgeries are partially located in New York. Plaintiff's Opp. Affirmation, Ex. F; Plaintiff's Opp. Memo, pp. 20-21. These factors show the matter is sufficiently tied to New York to prevent dismissal based on forum non conveniens.

Furthermore, Defendant has not shown that this case should be adjudicated elsewhere. Defendant has not shown that this case would be an undue burden upon New York courts. Although Plaintiff is not a New York resident, non-residents may "enter New York courts to litigate their disputes," Islamic Republic of Iran v. Pahlavi, 62 NY2d at 478, and Plaintiff chose to do so here by filing the motion in New York. What is more, Defendant, has a branch office in the state, further eroding its argument for forum non conveniens.

Defendant's Affirmation, Ex. 5, p. 7. Mionis v. Bank Julius Baer & Co., 9 AD3d 280, 282 (1st Dep't 2004) (denying a motion to dismiss a case for forum non conveniens in part because the defendant foreign company had a New York branch).

Defendant has also failed to show that a New York forum would cause undue hardship. Defendant is a large international bank with ample resources to bring witnesses to New York if needed, a fact which makes any hardship minimal. Intertec Contracting A/S v. Turner Steiner International, 6 AD3d 1, 6 (1st Dep't 2004); Mionis v. Bank Julius Baer & Co., 9 AD3d at 282 (large multinational companies with ample resources have minimal problems bringing foreign witnesses to New York courts). In addition, Defendant fails to identify any non-party witnesses that reside in Bahrain, further eroding Defendant's claim of hardship. O'Connor v. Bonanza International, Inc., 129 AD2d 569, 570 (2nd Dep't 1987) (failure to identify nonparty witnesses in South Carolina who would be inconvenienced by a trial in New York is one factor in denying a motion to dismiss). Most or all of the documents regarding the negotiations of the Note and the Guarantee are in New York. Plaintiff's Baudoin Affidavit, ¶ 34; Plaintiff's Opp. Memo, p. 20. The forensic evidence showing the signature to be a forgery are claimed to be in New York, Switzerland, and England, not in Bahrain. Plaintiff's Opp. Affirmation, Exs. E, F; Plaintiff's Opp. Memo, pp. 20-21. The people identified by Plaintiff as potential non-party witnesses are located in

the United States, England, and Singapore, not in Bahrain. Plaintiff's Baudoin Affidavit, ¶ 20, 35; Plaintiff's Opp. Memo, pp. 21-22.

This case has strong New York ties: the Defendant is a resident of New York; there is minimal hardship to Defendant in trying the case here and not in Bahrain; and Defendant has not met its burden in showing that New York is a forum non conveniens. Therefore, Defendant's motion to dismiss for forum non conveniens is denied.

Although Defendant's motion to dismiss for forum non conveniens is denied on the grounds stated above, the court makes will not address Plaintiff's argument that the forum [*6]selection clauses of the Note and the Guarantee bind Defendant.Although the parties have commented on the differences between Bahrainian and New York law, the court makes no finding as to whether Bahrainian or New York law should apply. The issue of whether Bahrainian or New York law should apply was not the subject of this motion, and the issue has not been properly briefed.

2. Motion to dismiss for lack of personal jurisdiction

Defendant's motion to dismiss for lack of personal jurisdiction is denied as well.

Plaintiff argues that the court has personal jurisdiction under CPLR § 301. Plaintiff's Opp. Memo, pp. 29-30. Defendant argues that, even if CPLR § 301's requirements are met,

Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987) denies this court personal jurisdiction on Due Process grounds. Defendant's Memo, pp. 25-29.

CPLR 3211 (a) (8) governs a motion to dismiss for lack of personal jurisdiction. A party opposing a CPLR 3211 (a) (8) motion to dismiss "need only demonstrate that facts may

exist whereby to defeat the motion. It need not be demonstrated that they do exist." Peterson v. Spartan Industries, 33 NY2d 463, 466 (1974) (quotations omitted); CPLR 3211 [d]. "In the context of a CPLR 3211 (a) (8) motion to dismiss ... a plaintiff is not required to make a prima facie showing of jurisdiction." Mobile Training & Education v. Aviation Ground Schools of America, 28 Misc 3d 1226A, 1226A (NY Supreme Court NY County 2010) (decision by Justice Bransten) (citing Peterson v. Spartan Industries, 33 NY2d at 466). "In order to defeat a dismissal motion, a plaintiff need only demonstrate that jurisdictional facts may exist and that it is entitled to the disclosure expressly sanctioned by CPLR 3211 (d)." Id.

The court finds that it has personal jurisdiction over Defendant pursuant to CPLR § 301. "A foreign corporation is subject to personal jurisdiction [under CPLR § 301] if it is doing business in the State of New York." American Dental Cooperative, Inc. v. Attorney General of New York, 127 AD2d 274, 280 (1st Dep't 1987). "Although an abstract test for determining the presence of a foreign corporation has never been articulated, if it is doing business here, not occasionally or casually, but with a fair measure of permanence and continuity it is within the jurisdiction of our courts." Id.

Defendant has a branch of its bank in New York, regulated by the New York State Banking Department. Defendant's Affirmation, Ex. 5, p. 7. Defendant has over four

hundred employees in New York. Defendant's Reply Memo, p. 5. Defendant clearly was

and still is "doing business" in New York at the time of the transaction at issue "with a fair measure of permanence and continuity" to place Defendant within the personal jurisdiction of New York courts. American Dental Cooperative, Inc. v. Attorney General of New York, 127 AD2d at 280. Therefore, the court has personal jurisdiction over Defendant under CPLR § 301. Plaintiff has alleged sufficient facts to defeat the motion under CPLR 3211 (a) (8).

Next, the court finds that Asahi Metal Industry Co. v. Superior Court of California does not deny this court personal jurisdiction on due process grounds. Defendant argues that: [*7]1) litigating in New York would impose a heavy burden on Defendant; 2) New York has no significant interest in adjudicating this action; 3) Plaintiff has no particular interest in obtaining relief in New York; 4) adjudicating this action in New York would be an inefficient administration of justice; and 5) adjudicating this action would not advance relevant policies. Defendant's Memo, pp. 27-29; Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. at 113-114. However, Defendant's arguments are unavailing.

First, litigating in New York would not impose a heavy burden on Defendant. Defendant is a large international bank with ample resources to bring witnesses to New York if needed, a fact which makes any hardship minimal. Intertec Contracting A/S v. Turner Steiner International, 6 AD3d at 6, Mionis v. Bank Julius Baer & Co., 9 AD3d at 282.

Second, New York has a significant interest in adjudicating this case. Both the Note and the Guarantee were issued in New York. First Amended Complaint, Exs. A, B. The Note and the Guarantee designate New York courts as the forum for disputes and New York law as the choice of the law. Id., Exs. A, B. Defendant has a branch of its bank in New York. Defendant's Affirmation, Ex. 5, p. 7. Defendant has over four hundred employees in New York. Defendant's Reply Memo, p. 5. The transaction's materials are allegedly located in New York. Plaintiff's Baudoin Affidavit, ¶ 34; Plaintiff's Opp. Memo, p. 20. The forensic examinations allegedly proving the forgeries were developed in New York, Switzerland, and England, not in Bahrain. Plaintiff's Opp. Affirmation, Ex. F; Plaintiff's Opp. Memo, pp. 20-21. Given all these ties to New York, this matter has a strong New York nexus.

Third, Plaintiff has a particular interest in obtaining relief in this forum. Plaintiff signed the Note and the Gurantee under the belief that New York would be the forum, and that New York law would be the governing law to resolve any contract-related disputes. First Amended Complaint, Exs. A, B.

Fourth, this case will be more efficiently administered in New York instead of Bahrain. Many of the documents relating to the transaction appear to be in New York.

Plaintiff's Baudoin Affidavit, ¶ 34; Plaintiff's Opp. Memo, p. 20. Many witnesses are

claimed to be outside of Bahrain, and some in the United States. Plaintiff's Opp. Affirmation, Ex. F; Plaintiff's Opp. Memo, pp. 20-21. With many materials and

witnesses allegedly located outside Bahrain and in New York, it would be more efficient to try the matter here.

Finally, adjudicating this case would advance relevant policies. Adjudicating this case will advance the relevant public policy of New York courts adjudicating cases in which New York has a strong interest.

This court has jurisdiction under CPLR § 301, and Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987), does not compel dismissal of this action. Defendant's motion to dismiss for lack of personal jurisdiction is denied.

Accordingly, it is

ORDERED that Defendant Standard Chartered Bank's motion to dismiss Plaintiff [*8]Nordkap Bank AG's first amended complaint for forum non conveniens is DENIED; and it is further

ORDERED that Defendant Standard Chartered Bank's motion to dismiss Plaintiff Nordkap Bank AG's first amended complaint for lack of personal jurisdiction is DENIED.

This constitutes the Decision and Order of the Court.

Dated: New York, New York

May____, 2011.

E N T E R

Hon. Eileen Bransten, J.S.C.