United States District Court, N.D. Oklahoma
OPINION AND ORDER
E. DOWDELL, UNITED STATES DISTRICT JUDGE.
Court has for its consideration Defendant's Motion to
Dismiss and Opening Brief in Support (Doc. 26). Defendant
filed a Response (Doc. 31), Plaintiff filed a Reply (Doc.
38), and both parties submitted supplemental briefs (Doc. 49,
explained in this Court's recent Order (Doc. 55),
Plaintiff Zeeco, Inc. (“Zeeco”), an Oklahoma
corporation, contracted with Fernas Construction India Pvt.
Ltd. (“Fernas”) to supply and install a flare
system in India. (Doc. 2 at 67 of 104 [First Am. Compl. at
¶ 16]). According to the First Amended Complaint,
Zeeco caused JPMorgan Chase Bank, N.A. (“Chase”)
to issue “Bank Guarantees” to Fernas in an
amount totaling approximately USD $1, 500, 000. (Id.
at 67-68 [First Am. Compl. at ¶ 17]). The Bank
Guarantees were secured by letters of credit issued under
loan agreements between Chase and Zeeco. (Id. at 68
[First Am. Compl. at ¶ 17]).
alleges that it performed under the contract with Fernas, but
Fernas made a demand for payment under the Bank Guarantees
nonetheless. (Id. [First Am. Compl. at ¶¶
19-21]). Zeeco contends that Fernas sought fraudulent payment
under the Bank Guarantees due to its own financial woes.
(Id. [First Am. Compl. at ¶ 22]).
October 26, 2016, Zeeco initiated an action in the Tulsa
County District Court and filed a motion seeking to enjoin
Chase from paying or transferring any funds to Fernas.
(Id. at 13, 23). The Tulsa County District Court
granted an ex parte temporary restraining order that
same day, stating that “Defendant JP Morgan [Chase] is
Restrained from transferring or paying Fernas Construction
India Pvt Ltd.” (Id. at 27). Zeeco also sought
an injunction from a court in Mumbai “out of an
abundance of caution.” (Id. at 69 [Am. Compl.
at ¶ 29]). A hearing before the Mumbai court was
ultimately scheduled for 1:00 p.m. (Mumbai time) on October
27, 2016. (Id. at 71 [Am. Compl. at ¶ 30(f)]).
Zeeco alleges that, despite the TRO and the impending court
hearing in Mumbai, Chase honored the Bank Guarantees and made
payment to Fernas no later than 12:20 p.m. on October 27,
2016 (Mumbai time). (Id. at 72 [First Am. Compl. at
20, 2017, Zeeco filed its First Amended Verified Petition and
Claim for Restitution, which includes three counts: (1)
wrongful honor of the Bank Guarantees and breach of the loan
agreements, (2) misappropriation of funds, and (3) indirect
contempt of court. (Id. at 74-77 [First Am. Compl.
at ¶¶ 38-57]). On December 21, 2017, this Court
entered an Order (Doc. 55) remanding the indirect contempt of
court claim to the Tulsa County District Court. Because this
third claim is no longer before this Court, Chase's
Motion to Dismiss is moot as to that claim.
survive a motion under Rule 12(b)(6), a plaintiff must plead
sufficient factual allegations ‘to state a claim to
relief that is plausible on its face.'”
Brokers' Choice of America, Inc. v. NBC
Universal, Inc., 861 F.3d 1081, 1103 (10th Cir. 2017)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). “A claim has facial plausibility when the
pleaded factual content allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). In ruling on a Rule 12(b)(6) motion,
the court must liberally construe the pleadings, take all
well-pleaded facts as true, and make all reasonable
inferences in favor of the non-moving party. Brokers'
Choice of Am., 861 F.3d at 1105.
Matters Outside of the Pleadings
Civ. P. 12(d) provides that “[i]f, on a motion under
Rule 12(b)(6) or 12(c), matters outside the pleadings are
presented to and not excluded by the court, the motion must
be treated as one for summary judgment under Rule 56.”
“A district court may, however, consider documents
attached to or referenced in the complaint if they are
‘central to the plaintiff's claim and the parties
do not dispute the documents' authenticity.'”
Brokers' Choice of Am., Inc., 861 F.3d at 1103
(quoting Jacobsen v. Deseret Book Co., 287 F.3d 936,
941 (10th Cir. 2002)). Zeeco argues that the only integral
documents, besides those attached to the Amended Complaint,
are the Second Amended and Restated Export Loan Agreement
(“Export Loan Agreement”) and the Fourth Amended
and Restated Credit Agreement (“Credit
Agreement”). (Doc. 31 at 25-26). The Court finds that
the Continuing Agreement for Commercial and Standby Letters
of Credit Between Zeeco, Inc. and JPMorgan Chase Bank, N.A.
(“Continuing Agreement”) is also central to
Zeeco's claims, as it supplements the Credit Agreement in
regard to letters of credit. Furthermore, the Court finds
that the Bank Guarantees themselves are integral, given that
Zeeco is asserting that Chase wrongfully honored those
instruments. All other documents brought forth by Chase as
part of its Motion to Dismiss will not be considered at this
regard to the first claim-wrongful honor of the Bank
Guarantees and breach of the loan agreements-Chase makes
several arguments for dismissal. First, Chase contends that
Indian law governs the honor of the Bank Guarantees by
Chase's Mumbai Branch and that Zeeco has failed to allege
a violation of Indian law. (Doc. 26 at 14-15).
federal court sitting in diversity must apply the substantive
law of the state in which it sits, including the forum
state's choice-of-law rules.” Boyd Rosene &
Assocs., Inc. v. Kan. Mun. Gas Agency, 123 F.3d 1351,
1352-53 (10th Cir. 1997). Oklahoma has adopted Article 5 of
the Uniform Commercial Code (“U.C.C.”), which
includes choice-of-law rules pertaining to letters of credit.
Under Okla. Stat., tit. 12A, § 5-116(a),
“[t]he liability of an issuer . . . for action or
omission is governed by the law of the jurisdiction chosen by
an agreement in the form of a record signed or otherwise
authenticated by the affected parties . . . or by a provision
in the person's letter of credit, confirmation, or other
points to the Bank Guarantees themselves, issued by Chase
Mumbai Branch to Fernas. Two of these Bank Guarantees include
a provision stating that “this guarantee shall be
governed and construed in accordance with Indian laws and
subject to the exclusive jurisdiction of Indian Courts of the
place from where tenders have been invited.”
(See Doc. 48-1 at 5, 10). Yet the Fourth Amended and
Restated Credit Agreement (“Credit Agreement”)
between Chase and Zeeco clearly provides that Oklahoma law
governs. Section 11.09(a) of the Credit Agreement states that
the “[Credit] Agreement shall be construed in
accordance with and governed by the law of the State of
Oklahoma.” (Doc. 26-1 at 111). Furthermore, Section
2.05(a) of the Credit Agreement includes the following
In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of
any form of letter of credit application or other agreement
submitted by Borrowers to, or entered into by Borrowers with,
the Issuing Bank relating to any Letter of Credit,
the terms of this Agreement shall control.
(Doc. 26-1 at 44) (emphasis added).
the Bank Guarantees are significant to the case, the Court
finds that Zeeco's cause of action ultimately rests upon
the Credit Agreement. See Transamerica Delaval Inc. v.
Citibank, N.A., 545 F.Supp. 200, 204 (S.D.N.Y. 1982)
(“[The plaintiff's] cause of action rests upon its
Credit Agreement with Citibank, not the letter of credit
issued by Citibank . . . . While the letter of credit was
clearly contemplated by the Credit Agreement, it is an
independent contract.”). The parties agree that the
Credit Agreement governs the overall relationship between
Zeeco and Chase. (See Doc. 26 at 12, n.6, Doc. 31 at
19). In fact, the Credit Agreement sets out the “terms
and conditions” purportedly applicable to any letters
of credit issued by Chase on Zeeco's behalf.
(See Doc. 26-1 at 44-50). The Court further notes