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AVERBACH v. VNESCHECONOMBANK

August 19, 2003

YVACHESLAV AVERBACH ETC., PLAINTIFF,
v.
VNESCHECONOMBANK, ET AL., DEFENDANTS



The opinion of the court was delivered by: Edward Chen, Judge.

JUDGMENT IN A CIVIL CASE

() Jury Verdict. This action came before the Court for a trial by jury. The issues have been tried and the jury has rendered its verdict.

(X)Decision by Court. This action came to trial or hearing before the Court. The issued have been tried or heard and a decision has been rendered.

IT IS SO ORDERED AND ADJUDGED pursuant to the Order Granting Summary Judgment in Favor of Defendant filed August 19, 2003, Judgement is entered in favor of

Defendant on all claims.

ORDER GRANTING SUMMARY JUDGMENT IN FAVOR OF DEFENDANT (Docket No. 6)
In this suit, Plaintiff alleges breach of contract; intentional fraud, negligent misrepresentation, intentional infliction of emotional distress, and negligent infliction of emotional distress. The Court held a hearing on Defendant's motion to dismiss on March 19, 2003. Robert Capron appeared on behalf of the Plaintiff and Stephen Bomse and Todd Adler of Heller Ehrman White & McAuliffe appearing on behalf of Defendant. Having considered the papers filed in support of and in opposition to the motion and the argument of counsel, and good cause appearing therefor, the Court hereby treats Defendant's motion to dismiss as one for summary judgment and GRANTS Defendant's motion (Docket No. 6).

I FACTS

Defendant Vnescheconombank (hereinafter "VEB") is a bank with its principal offices in Moscow, Russia. Complaint ¶ 2. Plaintiff Vyacheslav Averbach (hereinafter Averbach) is a citizen of the United States, resident of California, doing business as Glaster Laboratories. Complaint ¶ 1. [ Page 2]

In May 1991, Plaintiff entered into a written contract with Central Innovation Alter Corporation (hereinafter "Central Innovation") for the sale of zippers to Central Innovation in Kiev, Ukraine for $759,375.00. Complaint ¶ 5. Pursuant to the terms of the contract, Central Innovation provided Plaintiff with an irrevocable letter of credit (hereinafter "LOC") through VEB for $759,375.00. Complaint ¶¶ 6-7. On January 9, 1992 VEB issued the LOC to Plaintiff in California. Complaint ¶ 8. The LOC required Plaintiff to comply with the conditions set forth in the LOC by January 30, 1992 (including submitting Title, Insurance, and Shipping Documents to VEB) and reported Bank of America in San Francisco as the paying bank. Complaint ¶¶ 7-8. Plaintiff shipped the zippers to Central Innovation and completed the conditions set forth in the LOC by January 30, 1992. Complaint ¶¶ 9-10.

On April 7, 1992, VEB informed Plaintiff by a teletyped letter that payment of the LOC was temporarily suspended until funds are given by the Central Bank of Russia, in accordance with a January 13, 1992 decision by the "Presidium of the Soviet Supreme" and a February 14, 1992 letter VEB received from the Central Bank of Russia. Complaint ¶ 11; Plaintiff's Supp. Brief, Exh. 2. Plaintiff alleges on information and belief that sometime after the LOC was issued on January 9, 1992, and before Plaintiff authorized shipment of the zippers, VEB knew but failed to disclose to Plaintiff the decision of the Presidium of the Soviet Supreme. Complaint ¶ 28. Plaintiff further contends that it relied on VEB's April 7, 1992 "promise" to pay when funds were made available by the Central Bank of Russia. Complaint ¶¶ 11-12.

The next contact between the parties alleged by Plaintiff occurred in September 1995 when VEB informed Plaintiff that the LOC debt of $759,375.00 was recorded on VEB's books and requested that Plaintiff verify that amount. Complaint ¶ 13. Soon thereafter Plaintiff informed VEB in writing that this amount was correct. Id.

VEB contacted Plaintiff on July 31, 1996 and claimed that Central Innovation never received the zippers which were the basis of the contract and LOC. Complaint ¶ 14. Accordingly, VEB requested that Plaintiff cancel the LOC. Id. On August 5, 1996 Plaintiff informed VEB in writing that delivery was completed to Central Innovation in January 1992 and that all of the terms of the LOC had been met. Id. Plaintiff requested payment in accordance with the LOC once VEB received [ Page 3]

funds from the Central Bank of Russia. Id. Plaintiff heard nothing further regarding VEB's assertion that Central Innovation did not receive the zippers. Id.

On August 12, 1998 VEB informed Plaintiff, in writing, that the documents Plaintiff submitted to VEB in January 1992 were "in accordance with the terms set forth" in the LOC. Complaint ¶ 15.

In June 2001, VEB requested from Bank of America it's Album of Signatures authorizing the Bank of America to act on Plaintiff's behalf with regard to the LOC. Complaint ¶ 16. Bank of America submitted the appropriate paperwork to VEB. Complaint ¶ 16. At this point, VEB informed Plaintiff that the January 1992 LOC was still registered in their books (Complaint ¶ 17) and VEB requested verification from Plaintiff that they were authorized to operate as Glaster Laboratories, which Plaintiff promptly provided. Id.

On November 22, 2001 VEB informed Plaintiff that the documents submitted by Plaintiff in January 1992 did not meet the terms of the LOC and therefore VEB would not honor the LOC. Complaint ¶ 19.

II. PROCEDURAL BACKGROUND

On September 17, 2002, Plaintiffs filed in the Superior Court of California a complaint for: [1] breach of contract; [2] intentional fraud; [3] negligent misrepresentation; [4] intentional infliction of emotional distress; and [5] negligent infliction of emotional distress.

On October 24, 2002, Defendant filed for removal to the Northern District of California pursuant to 28 U.S.C. § 1441 and 1446. On December 24, 2002, Defendant filed a Fed.R.Civ.P. Rule 12(b)(6) motion to dismiss.

After reading the papers submitted by the parties, the Court ordered the parties to produce certain documentary evidence referred to in the parties' papers. On March 14, 2003, this Court ordered the following documents be authenticated and produced. In particular, such documents include:

1. February 14, 1992 letter from the Central Bank of Russia.
2. April 7, 1992 contact informing Plaintiff that payment was suspended. Please clarify if this was in writing. [ Page 4]
3. September 1995 contact informing Plaintiff that debt was on VEB's books. Please clarify if this was in writing.
4. July 31, 1996 contact informing Plaintiff that Central Innovation did not receive the zippers which were the basis of the contract. Please clarify if this was in writing.
5. August 5, 1996 reply verifying that zippers were sent.
6. August 12, 1998 contact from VEB affirming that Plaintiff had complied with terms of the 1992 LOC.
7. VEB's June 2001 request to Bank of America and Bank of America's reply to VEB.
8. Additional information about the contracting for the LOC. Specifically, did any in-person meeting occur?
9. Any additional information about the role Bank of America played in the transaction: Was the bank a confirming bank? How active was its role?
The parties submitted documents and supplemental briefs. A hearing was conducted on March 19, 2003, and both parties stipulated to the authenticity of the documents provided to the Court, including the accuracy of documents translated from Russian.

The Court's ruling was deferred pending the parties' attempt to mediate a resolution of the case. That effort did not produce settlement.

III. LEGAL ANALYSIS

A. Motion to Dismiss Treated as a Motion for ...


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