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CONCESIONARIA DHM, S.A. v. INTERNATIONAL FINANCE CORP.

March 6, 2004.

CONCESIONARIA DHM, S.A. Plaintiff, -against- INTERNATIONAL FINANCE CORPORATION and CORPORACION ANDINA DE FOMENTO, Defendants


The opinion of the court was delivered by: JOHN KOELTL, District Judge

OPINION and ORDER

The defendants, International Finance Corporation ("IFC") and Corporacion Andina de Fomento ("CAF"), are international organizations that entered into two separate loan agreements with the plaintiff, Concesionaria DHM, S.A. ("DHM"), to provide partial financing for the plaintiff's toll road construction project in Ecuador. The plaintiff sued the defendants for breach of contract and breach of an implied covenant of good faith and fair dealing after each defendant refused to make disbursements allegedly due under the respective loan agreements. Both defendants have brought motions to dismiss based on improper venue pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure, and CAF has also moved to dismiss on the grounds of forum non conveniens. Both parties, in the alternative, move to dismiss the causes of action for breach of Page 2 good faith and fair dealing for failure to state a claim pursuant to Rule 12(b)(6).*fn1

I.

  On a motion to dismiss, the allegations in the complaint are accepted as true. See Grandon v. Merrill Lynch & Co., 147 F.3d 184, 188 (2d Cir. 1998); Cohen v. Koenig, 25 F.3d 1168, 1172-73 (2d Cir. 1994). A court generally may consider documents referenced in the complaint and documents that are in the plaintiff's possession or that the plaintiff knew of and relied on in bringing suit. See Brass v. Am. Film Tech., Inc., 987 F.2d 142, 150 (2d Cir. 1993); Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir. 1991); VTech Holdings Ltd, v. Lucent Techs., Inc., 172 F. Supp.2d 435, 437 (S.D.N.Y. 2001). In particular, in deciding a motion to dismiss for improper venue, the "court may examine facts outside the complaint to determine whether venue is proper. The court must draw all reasonable inferences and resolve all factual conflicts in favor of the plaintiff." E.P.A. ex rel. McKeown v. Port Authority, 162 F. Supp.2d 173, 183 (S.D.N.Y. 2001) (quoting 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure: Civil 2d § 1352 (1990 & Supp.1999)); Burrell v. State Farm Fire & Cas. Co., No. 00 Civ. 5733, 2001 WL 797461, at Page 3 *3 (S.D.N.Y. July 12, 2001) (stating that in deciding motion for improper venue "a court may consider facts outside the pleading" and should view facts viewed in light most favorable to plaintiff). The relevant facts, as alleged in the Complaint and in the affidavits and declarations submitted by the parties in connection with the current motions, are as follows.

  DHM is an Ecuadorian special purpose company created to enter into a toll road concession contract with the Government of Ecuador. (Compl. ¶ 2.) DHM was organized by two foreign construction companies that are organized and existing under the laws of the Kingdom of Spain and of Republic of Ecuador. (Id.) IFC, part of the World Bank Group, is an international organization that finances private sector projects in developing countries. (Id. ¶ 3.) IFC was established by Articles of Agreement among its member countries (Id.) and is headquartered in Washington, D.C. (See Decl. of Pablo Berckholtz ("Berckholtz Decl.") ¶ 4.) CAF is an international organization that provides loans and guarantees for companies investing in development projects. (Compl. ¶ 4.) CAF was established by an agreement of its member countries, including Ecuador, Bolivia, Colombia, Chile, Peru, and Venezuela. (See id.; Decl. of Luis Enrique Berrizbeitia ("Berrizbeitia Decl."), Ex. B at 1 (Agreement Establishing the Corporacion Andina de Fomento Page 4 (English translation)).) CAF's headquarters is in Caracas, Venezuela. (Berrizbeitia Decl. ¶ 8.)

  In the mid-1990s, Ecuador's Ministry of Public Works ("MOP"), through a competitive bidding process, awarded a toll road concession contract to DHM, whereby DHM would develop, maintain, and operate roads along the Ecuadorian coast. (See Compl. ¶¶ 7-9.) To provide partial financing for the project, DHM entered into separate loan agreements with IFC and CAF on August 13, 1998. (Id. ¶ 15.) Under the respective agreements, IFC agreed to lend § 26,500,000 in project financing, and CAF agreed to lend $12,600,000. (See id. ¶¶ 16-17.)

  In connection with the drafting of the loan agreements and related agreements, DHM retained the Manhattan law firm Simpson Thatcher & Bartlett while IFC and CAF both retained Becker, Glynn, Melamed & Muffly ("Becker Glynn"), also a Manhattan law firm. (See Decl. of Antonio Gomez Encinas ("Gomez IFC Decl.") ¶¶ 3-4; Decl. of Antonio Gomez Encinas ("Gomez CAF Decl.") 55 4-5.) Becker Glynn provided services out of its New York office, including reviewing and commenting on various drafts of the loan agreements. (See Gomez IFC Decl. 5 4; Gomez CAF Decl. ¶ 4.) According to the plaintiff, which has provided copies of Becker Glynn invoices, the law firm conferred with IFC and CAF regarding the agreements through telephone conferences, e-mail, and other correspondence. (See Gomez IFC Decl. 5 4 & Ex. B; Page 5 Gomez CAF Decl. ¶ 4 & Ex. B.) The plaintiff states, that, pursuant to the defendants' instructions, it paid for Becker Glynn's services on behalf of IFC and CAF by means of a money transfer to Becker Glynn's bank account in New York, New York. (See Gomez IFC Decl. 55 4-5; Gomez CAF Decl. 55 4-5.)

  The in-person negotiations, as alleged by the defendants, did not occur in New York, and instead took place largely at CAF's main offices in Caracas, Venezuela, and at IFC's offices in Washington, D.C. (See Berckholtz Decl. ¶ 9; Decl. of Sergio Bracho ("Bracho Decl.") ¶ 9.) Other meetings occurred in locations such as Madrid, Spain, at the offices of DHM's principal shareholder, and Ecuador, at the offices of the MOP and at the offices of DHM's other founding shareholder. (See Berckholtz Decl. 5 9; Bracho Decl. 5 10.) The defendants allege that all written and oral communications between the parties also originated in and were directed to those locations. (See Berckholtz Decl. 5 10; Bracho Decl. 5 11.) On August 13, 1998, the loan agreements were executed at a closing in Washington, D.C. attended by representatives of DHM, IFC, and CAF. (See Berckholtz Decl. ¶ 11; Bracho Decl. 5 12.)

  Under the agreements, the disbursement and repayments were to be made as follows. IFC agreed to make no more than eight disbursements "at a correspondent bank in The City of New York." (IFC Loan Agreement (Part I) § 3.05.) All payments by DHM to Page 6 IFC were to be made to an account at Citibank, N.A., New York, New York. (Id. § 3.08.) CAF agreed to make up to four disbursements "to the account as from time to time may be designated by the Company [DHM] in writing and as accepted by CAF." (See CAF Loan Agreement § 3.02.) DHM designated its bank account at Citibank at 111 Wall Street in New York, New York as the account to which CAF should disburse the funds. (Gomez CAF Decl. ¶ 6.) While the CAF Loan Agreement originally provided for DHM's payments to CAF be made to a bank account in Stamford,-Connecticut, CAF formally revised the instructions to direct payments to an account at 7 World Trade Center, New York, New York. (See id. ¶ 8 & Ex. F.) DHM made a payment of certain fees to that account in New York in September 1999. (Id. ¶ 9 & Ex. G.)

  Both loan agreements provided that they would be governed by New York law and contained permissive forum selection clauses in which DHM agreed to submit to the "non-exclusive jurisdiction" of courts in New York. (See IFC Loan Agreement (Part I) § 7.01(b)-(c) (specifying "the courts of the State of New York or of the United States of America located in the Southern District of New York" as courts in which DHM agreed it could be sued); CAF Loan Agreement § 8.06(b) (requiring DHM to submit to suit in any "court of the State of New York or court of the United States of America sitting in the State of New Page 7 York").) The loan agreements explicitly required DHM to waive any defense that New York was an inconvenient forum and any objection to "the laying of venue" in the designated New York courts. (IFC Loan Agreement (Part I) § 7.01(g); CAF Loan Agreement § 8.06(b), (f).) Both agreements required DHM to designate CT Corporation System of New York, New York as an agent authorized to receive service of process for any action proceeding in New York arising out of the loan agreements or any related agreements. (IFC Loan Agreement (Part I) § 7.01(c); CAF Loan Agreement § 8.06(b).) The agreements did not require IFC or CAF to agree that they could be sued in New York.

  One of the related agreements was the Account Assignment Agreement, which DHM was required to execute as a condition to the IFC and CAF loan agreements and which appointed Bankers Trust Company as a collateral agent. (See Gomez IFC Decl. 1 5; Gomez CAF Decl. ¶ 10.) DHM was required to establish a "debt service reserve account" and a "large repairs reserve account" at Bankers Trust Company, and it gave IFC and CAF security interests in those accounts. (See Gomez IFC Decl. 5 7; Gomez CAF Decl. ¶ 11.) Bankers Trust Company is a bank that was headquartered in New York and that negotiated the Account Assignment Agreement with the assistance of New York counsel. (See Gomez IFC Decl. ¶ 6; Gomez CAF Decl. f 10.) As directed by the Assignment Agreement, the plaintiff paid for the services Page 8 rendered by Bankers Trust Company's counsel through, a money transfer to that counsel's New York bank account. (See Gomez IFC Decl. ¶ 6; Gomez CAF Decl. ¶ 10.) Bankers Trust Company's fees as collateral agent were paid by the plaintiff to one of Bankers Trust Company's New York bank accounts. (See Gomez IFC Decl. ¶ 6; Gomez CAF Decl. ¶ 11.)

  In April 1999 IFC and CAF made their first disbursements under the loan agreements. IFC disbursed $6,752,000 and CAF disbursed $3,210,000 to DHM's designated account at Citibank, N.A., at 111 Wall Street, New York, New York. (See Compl. 5 23; Gomez IFC Decl. 5 9; Gomez CAF Decl. ¶ 6.) In November 1999, DHM contacted IFC and CAF to request a second disbursement to DHM's designated account in New York. (Compl. ¶ 29.) Neither IFC nor CAF made the disbursements requested, and DHM has alleged that their failure to make the disbursements was unjustified and constituted a breach of the loan agreements. On February 5, 2003, DHM sued IFC and CAF in this Court for breach of contract and breach of an implied covenant of good faith and fair dealing. DHM's Complaint asserted jurisdiction pursuant to 28 U.S.C. § 1331 and 22 U.S.C. § 282f, which provides the federal courts with original jurisdiction over any action in which IFC is a party. (Id. f 5.) The parties also agree that there is jurisdiction in this Court pursuant to the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1330(a), because Page 9 CAF is an agent or instrumentality of a foreign state. See 28 U.S.C. § 1603.*fn2

  III.

  IFC and CAF move to dismiss the action for improper venue pursuant to Rule (12) (b)(3). The plaintiff bears the burden of showing that venue is proper once an objection is raised, and it must show that venue is proper for each claim against each defendant. PI, ...


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