Amardeep Garments Industries Pvt. v. Cathay Bank
United States District Court for the Central District of California
2012 WL 12886849 (2012)
- Written by Steven Pacht, JD
Facts
Starting in 2003, Amardeep Garments Industries Pvt. Ltd. (Amardeep) (plaintiff) exported garments from Asia to 4004 Inc. in the United States. Between August 2006 and February 2008, Cathay Bank (Cathay) (defendant) served as an intermediary for the Amardeep-4004 transactions. During this period, the parties utilized a documents-against-payment process (D/P) pursuant to which Amardeep shipped the garments to the United States and simultaneously delivered title documents, payment instructions, and bills of exchange to Cathay, which released the title and shipping documents to 4004 only after paying Amardeep. The bills of exchange for these sales listed Cathay as the drawee, meaning that Cathay guaranteed payment. In February 2008, Amardeep agreed to 4004’s request to change to a documents-against-acceptance process (D/A) whereby Cathay would release the title documents when 4004 accepted the transaction rather than upon payment. Per Amardeep, it agreed to this change only because it believed that Cathay would continue to be listed as the drawee on the bills of exchange. However, the parties later agreed to Cathay’s request to change the February bills of exchange to remove Cathay as the drawee. 4004 thereafter filed for bankruptcy without paying for the garments, leading Amardeep to sue Cathay in federal court in New York for, among other things, breach of contract based on the parties’ course of conduct, the implied covenant of good faith and fair dealing, fraud, conversion, negligence, and negligent misrepresentation. Amardeen’s claims largely were based on its allegations that Cathay should have disclosed that (1) Cathay would not be guaranteeing the transactions once it was removed as the drawee and (2) 4004’s financial condition was precarious. The case was transferred to California federal court on convenience grounds, after which Cathay moved to dismiss the complaint.
Rule of Law
Issue
Holding and Reasoning (Matz, J.)
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