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July 2, 1992


The opinion of the court was delivered by: CHARLES S. HAIGHT, JR.

 HAIGHT, District Judge :

 This case arises out of defendant Seattle-First National Bank, N.A.'s ("SeaFirst") refusal to pay plaintiff on certain letters of credit issued on behalf of Eddie Bauer, Inc. ("Eddie Bauer").

 This case is before the Court on plaintiff's motion to remand the action to state court.

 For the reasons set forth below, plaintiff's motion is denied.


 In or about 1990-91 Media Industries, Inc. ("Media"), an importer and clothing wholesaler with its principal place of business in Los Angeles, California, agreed to a series of contracts for the shipment of merchandise to Eddie Bauer in Ohio and Canada. The merchandise was mens sportswear, most of which was labeled with the name "Eddie Bauer" (hereafter "Merchandise"). Eddie Bauer ordered the Merchandise by issuing purchase orders to Media. Eddie Bauer agreed to make payment on each purchase order by opening letters of credit in favor of Media at SeaFirst. To pay for the Merchandise Eddie Bauer opened eight letters of credit with SeaFirst which were numbered as follows: 77508, 77548, 77501, 80162, 79850, 79865, 80275 and 80157 (the "Letters of Credit"). Complaint PP7-11.

 Plaintiff Contitrade Services Corporation ("CTS"), a Delaware corporation with its principal place of business in New York, New York, had a credit facility agreement with Media. Under the agreement CTS agreed to finance Media's purchase of goods, including the Merchandise for Eddie Bauer, under a "back to back" payment arrangement. In these "back to back" transactions, CTS would open letters of credit for the benefit of Media's suppliers, thus enabling Media to purchase the Merchandise ordered by Eddie Bauer. Cross Ocean Trade Finance Corporation ("Cross Ocean"), was to process the drafts presented by Media's suppliers under the credit facility agreement. Cross Ocean is a wholly owned subsidiary of CTS with its principal place of business in New York, New York. Media granted CTS a security interest in the financed goods, including the Merchandise ordered by Eddie Bauer. Media assigned to CTS its right to collect the proceeds from any inventory financed by CTS and to make presentment for payments upon the Letters of Credit. Complaint PP12-15.

 Between May 1, 1990 and January 29, 1991 Eddie Bauer issued at least twelve purchase orders to Media for various items of mens sportswear. Several months after each purchase order the covered merchandise was delivered either to Eddie Bauer's retail distribution center in Columbus, Ohio or Eddie Bauer's warehouse in Toronto, Ontario, Canada. Complaint PP16-38.

 Under the credit facility agreement with Media, Cross Ocean presented SeaFirst with packages of documents required to obtain payment under the Letters of Credit. These presentments included documentation stating that the goods had been delivered to Eddie Bauer and referenced the purchase order issued for those goods. Cross Ocean had submitted such documentation since at least March 1990 and those presentments had been honored by SeaFirst. In or about October through December 1990 Cross Ocean made a series of presentments under five letters of credit which totalled $ 177,167.75. In a telephone conversation on or about January 22, 1991 SeaFirst officials informed CTS that these presentments would not be honored. Although no written explanation of the dishonor was provided, plaintiff alleges that a SeaFirst employee indicated that Eddie Bauer needed to give its permission for the payments. A second set of presentments totalling $ 108,646.50 was refused on March 22, 1991. Although CTS alleges that SeaFirst officials reassured it that payment would be made, the two series of presentments were never honored. Complaint PP39-50.

 While it was not provided with any reasons for the failure to honor the presentments, CTS alleges that it knows the motivation for the dishonors of the Letters of Credit. CTS says that Media lost its source of financing in early 1991 and began to wind down its operations. CTS alleges that Eddie Bauer learned of Media's difficulties and feared that any claims against Media, including charge backs and offsets for unsold or unsatisfactory goods, would not be honored. CTS alleges that Eddie Bauer instructed SeaFirst to dishonor the Letters of Credit in order to obtain an advantage over other creditors of Media. CTS alleges that Eddie Bauer is also trying to exact a measure of damages resulting from alleged failure by Media to provide Eddie Bauer with its "spring goods." Despite numerous demands by CTS for an accounting and payment by Eddie Bauer, Eddie Bauer has not made any payments for the merchandise to CTS. Complaint PP51-59.

 On July 31, 1991 CTS brought suit against SeaFirst and Eddie Bauer in New York Supreme Court, County of New York seeking recovery for wrongful dishonor, breach of contract, violation of the Uniform Commercial Code, fraud, conversion, interference with contract, misrepresentation and unjust enrichment. Complaint PP60-119.

 Defendants removed this action to this Court pursuant to 28 U.S.C. §§ 1331 and 1441 and predicated federal jurisdiction on 12 U.S.C. § 632. Section 632 gives the district courts original jurisdiction over suits "arising out of transactions involving international or foreign banking." SeaFirst and Eddie ...

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