Fimbank P.L.C. v. Woori Fin. Holdings Co., N.Y. App. Div., Judgment, Law, casemine.com

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Docket Number

Attorney(S)

Sullivan & Worcester LLP, New York (Michael T. Sullivan of counsel), for appellant. Burke & Parsons, New York (Stephen P. Kyne of counsel), for Woori Finance Holdings co., LTD., and Woori Bank, respondents.

Judges

David Friedman

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Smart Summary

Factual and Procedural Background

This case arises from two letters of credit issued in Korea to plaintiff FIMBANK P.L.C., a Maltese corporation. The defendants are commercial banks headquartered in Korea and wholly owned subsidiaries of Woori Finance Holdings (WFH), a Korean holding company. The letters of credit were issued for the benefit of plaintiff's customer, a company in Dubai, United Arab Emirates, related to a purchase of scrap steel to be shipped from Japan to South Korea. The defendant banks made the decision to dishonor the letters of credit in Korea. The Supreme Court, New York County, granted defendants' motions to dismiss the complaint pursuant to CPLR 3211(a)(8) and CPLR 327, and this opinion affirms those orders.

Legal Issues Presented

Whether the New York courts have personal jurisdiction over defendants WFH and Kwangju Bank LTD. given their contacts with New York.
Whether WFH can be subjected to personal jurisdiction in New York based on its ownership and control of Woori Bank.
Whether the motion court properly dismissed the complaint against Woori Bank on the ground of forum non conveniens.
Whether plaintiff was entitled to jurisdictional discovery to establish personal jurisdiction.

Arguments of the Parties

Plaintiff's Arguments

All three defendants constitute a highly integrated enterprise dominated by WFH, warranting personal jurisdiction over WFH in New York.
WFH exercises pervasive control over Woori Bank, making Woori Bank effectively a department of WFH.
Requested jurisdictional discovery might reveal facts supporting personal jurisdiction.
Allegations of bias in Korean courts justify refusal to dismiss on forum non conveniens grounds.

Defendants' Arguments

Defendants are not engaged in continuous and systematic business in New York to establish personal jurisdiction.
WFH is merely a holding company and does not control Woori Bank’s day-to-day operations or finances to justify piercing the corporate veil.
Jurisdictional discovery is unwarranted as plaintiff cannot establish jurisdiction.
Korea is an adequate and appropriate alternative forum, and there is no credible evidence of bias in Korean courts.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
McGowan v. Smith, 52 N.Y.2d 268 (1981)	Standard for personal jurisdiction requiring continuous and systematic business presence to establish presence in the jurisdiction.	Used to determine defendants were not “present” in New York for jurisdictional purposes.
Simonson v. International Bank, 14 N.Y.2d 281 (1964)	Definition of presence for personal jurisdiction under New York law.	Quoted to support absence of sufficient contacts with New York.
Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846 (2011)	Personal jurisdiction requires contacts related to the cause of action and substantial presence.	Applied to reject jurisdiction based on unrelated contacts with New York.
International Shoe Co. v. Washington, 326 U.S. 310 (1945)	Establishes minimum contacts standard for personal jurisdiction.	Referenced in evaluating defendants’ contacts with New York.
Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (2d Cir. 2000)	Clarifies limits on jurisdiction based on unrelated business activities.	Used to support dismissal for lack of jurisdiction.
Moreau v. RPM, Inc., 20 A.D.3d 456 (2nd Dept. 2005)	Ownership alone does not establish personal jurisdiction over parent corporation.	Applied to reject jurisdiction over WFH based on ownership of Woori Bank.
Delagi v. Volkswagenwerk AG of Wolfsburg, Germany, 29 N.Y.2d 426 (1972)	Test for piercing corporate veil requires showing subsidiary is “merely a department” of parent.	Used to conclude WFH did not control Woori Bank sufficiently to pierce veil.
Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117 (2d Cir. 1984)	Factors for determining corporate separateness and control.	Applied to assess WFH’s lack of control over defendants’ operations.
Peterson v. Spartan Indus., 33 N.Y.2d 463 (1974)	Standard for granting jurisdictional discovery requires a showing that discovery could yield relevant facts.	Applied to deny plaintiff’s request for jurisdictional discovery.
Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474 (1984)	Standards for dismissal on forum non conveniens grounds.	Used to affirm dismissal of complaint against Woori Bank on forum non conveniens basis.
Shin–Etsu Chem. Co., Ltd. v. ICICI Bank Ltd., 9 A.D.3d 171 (1st Dept. 2004)	Application of forum non conveniens and interpretation of letters of credit under UCP and governing law.	Applied to explain that Korean law governs interpretation of letters of credit and supports forum non conveniens dismissal.
In re Arbitration between Monegasque De Reassurances S.A.M. v. Nak, 311 F.3d 488 (2d Cir. 2002)	Insufficient evidence of foreign court bias requires dismissal of bias claims.	Used to reject plaintiff’s speculation of bias in Korean courts.

Court's Reasoning and Analysis

The court analyzed whether defendants had sufficient contacts with New York to justify personal jurisdiction, applying established standards requiring continuous and systematic business presence or substantial contacts related to the cause of action. It found that defendants, as Korean entities, did not have such contacts. The court rejected plaintiff’s argument that WFH’s ownership of Woori Bank subjected it to jurisdiction, noting that ownership alone does not establish control sufficient to pierce the corporate veil. The court further found that plaintiff failed to demonstrate that jurisdictional discovery could reveal facts establishing jurisdiction. Finally, the court affirmed dismissal on forum non conveniens grounds, reasoning that the dispute had no substantial nexus to New York, might require application of Korean law, and that Korea was an adequate alternative forum. The court dismissed plaintiff’s allegations of bias in Korean courts as conclusory and unsupported by evidence.

Holding and Implications

The court unanimously affirmed the Supreme Court’s orders granting defendants’ motions to dismiss the complaint pursuant to CPLR 3211(a)(8) and CPLR 327, without costs.

The decision results in dismissal of plaintiff’s claims against the defendants in New York courts due to lack of personal jurisdiction and forum non conveniens. No new legal precedent was established; rather, the court applied existing jurisdictional and forum non conveniens principles to the facts at hand.

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FIMBANK P.L.C., Plaintiff–Appellant, v. WOORI FINANCE HOLDINGS CO. LTD., et al., Defendants–Respondents.

FRIEDMAN

Sullivan & Worcester LLP, New York (Michael T. Sullivan of counsel), for appellant. Burke & Parsons, New York (Stephen P. Kyne of counsel), for Woori Finance Holdings co., LTD., and Woori Bank, respondents.
Choi & Park, LLC, New York (Chull S. Park of counsel), for Kwangju Bank LTD., respondent.
FRIEDMAN, J.P., MOSKOWITZ, DeGRASSE, RICHTER, GISCHE, JJ.

Orders, Supreme Court, New York County (Barbara R. Kapnick, J.), entered September 14, 2012, which granted defendants' motions to dismiss the complaint pursuant to CPLR 3211(a)(8) and CPLR 327, unanimously affirmed, without costs.

In this action arising from two letters of credit issued in Korea to plaintiff, a Maltese corporation, defendants, commercial banks, are headquartered in Korea, and are wholly owned subsidiaries of defendant Woori Finance Holdings (WFH), a Korean holding company. The letters of credit were made for the benefit of plaintiff's customer, a company located in Dubai, United Arab Emirates, in connection with the purchase of scrap steel which was to be shipped from Japan to South Korea. Defendant banks made the decision to dishonor the letters of credit in Korea.

The motion court properly granted the motions by defendants WFH and Kwangju Bank LTD. to dismiss the complaint for lack of jurisdiction (CPLR 3211[a][8] ). Defendants are not “engaged in such a continuous and systematic course of ‘doing business' here as to warrant a finding of [their] ‘presence’ in this jurisdiction” ( McGowan v. Smith, 52 N.Y.2d 268, 272, 437 N.Y.S.2d 643, 419 N.E.2d 321 [1981],quoting Simonson v. International Bank, 14 N.Y.2d 281, 251 N.Y.S.2d 433, 200 N.E.2d 427 [1964] ). Nor are there contacts with New York “so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities” ( Goodyear Dunlop Tires Operations, S.A. v. Brown, ––– U.S. ––––, 131 S.Ct. 2846, 2853, 180 L.Ed.2d 796 [2011],quoting International Shoe Co. v. Washington, 326 U.S. at 310, 318, 66 S.Ct. 154, 90 L.Ed. 95 [1945];see also Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 [2d Cir.2000], cert. denied532 U.S. 941, 121 S.Ct. 1402, 149 L.Ed.2d 345 [2001] ).

Plaintiff contends that all three defendants are part of a highly integrated enterprise, led and dominated by WFH. However, even assuming Woori Bank is subject to personal jurisdiction here, WFH is not subject to personal jurisdiction based on its ownership of Woori Bank ( see Moreau v. RPM, Inc., 20 A.D.3d 456, 457, 799 N.Y.S.2d 113 [2nd Dept. 2005] ). Plaintiff has not established that WFH's control over Woori Bank's activities is so complete that Woori Bank is in fact “merely a department” of WFH ( Delagi v. Volkswagenwerk AG of Wolfsburg, Germany, 29 N.Y.2d 426, 432, 328 N.Y.S.2d 653, 278 N.E.2d 895 [1972] ). It has shown only common ownership, demonstrating that WFH is simply a holding company. WFH does not control defendants finances, interfere with the selection and assignment of executive personnel or fail to observe the corporate formalities ( Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117 [2d Cir.1984] ). Nor does the SEC Form 20–F, relied on by plaintiff, establish pervasive control by WFH. The form's language describes an appropriate parental role of WFH in supervising its subsidiaries.

Plaintiff's alternate request for jurisdictional discovery was properly denied. Plaintiff failed to show that the requested discovery could adduce facts establishing personal jurisdiction in New York ( see Peterson v. Spartan Indus., 33 N.Y.2d 463, 467, 354 N.Y.S.2d 905, 310 N.E.2d 513 [1974] ).

The motion court providently exercised its discretion in dismissing the complaint as to Woori Bank on the ground of forum non conveniens ( seeCPLR 327; Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 478–80, 478 N.Y.S.2d 597, 467 N.E.2d 245 [1984],cert. denied469 U.S. 1108, 105 S.Ct. 783, 83 L.Ed.2d 778 [1985];Shin–Etsu Chem. Co., Ltd. v. ICICI Bank Ltd., 9 A.D.3d 171, 178, 777 N.Y.S.2d 69 [1st Dept. 2004] ). This dispute has no substantial nexus with New York and the resolution of this case may require consideration of Korean law. Contrary to plaintiff's contention, even though the letters of credit are subject to the terms and conditions of the UCP, “the UCP does not cover every contingency and the meaning of the letter's terms will have to be determined by reference to the law governing the transaction” ( Shin–Etsu, 9 A.D.3d at 176, 777 N.Y.S.2d 69).

Korea is an adequate alternative forum for this dispute. There is no evidence to support plaintiff's allegations and speculation about bias in the Korean courts in favor of defendants. Meager and conclusory allegations are insufficient to support a finding of bias by a foreign court ( see In re Arbitration between Monegasque De Reassurances S.A.M. v. Nak, 311 F.3d 488, 499 [2nd Cir.2002] ).

Fimbank P.L.C. v. Woori Fin. Holdings Co.