The opinion of the court was delivered by: MARK FILIP, District Judge
MEMORANDUM OPINION AND ORDER
Before the Court are various motions of Defendant GCR Eurodraw
S.p.A. and Defendant AS Associated Contractors, S.A. (sued herein
as Andre Soditic, S.A.). Defendants collectively move to dismiss
Plaintiffs' Second Amended Complaint with prejudice in favor of
arbitration for lack of subject matter jurisdiction under
Fed.R.Civ. P. 12(b)(1), to dismiss for lack of personal jurisdiction
under Fed.R. Civ. P. 12(b)(2), and to dismiss for failure to
state a claim upon which relief can be granted under Fed.R. Civ.
P. 12(b)(6) and 9(b). Defendant GCR Eurodraw S.p.A. also moves to
dismiss for insufficient service of process under Fed.R. Civ. P.
12(b)(5). For the reasons stated below, the Court grants
Defendants' motion to dismiss for lack of personal jurisdiction
and denies the remaining motions as moot.
The parties in this case are commercial entities that have
various connections to locations in the United States and Europe.
Plaintiff LaSalle Bank National Association is a national banking association located in Illinois (Second Am. Compl. (D.E.
19) ¶ 2), and Plaintiff LaSalle Business Credit, L.L.C., one of
LaSalle's Bank National Association's affiliates, is a Delaware
company with offices in Illinois (id. ¶ 1).*fn1 LaSalle
Business Credit is in the business of, among other things,
issuing letters of credit. (Id.) As explained further below,
Plaintiffs (collectively, "LaSalle") do not sue in their own
capacities, but rather sue "in the place of, and as the assignees
of the rights of" North American Wire, an Ohio corporation and
former client of LaSalle. (Id. ¶ 10.)
Defendant GCR Eurodraw S.p.A. ("GCR") is an Italian corporation
that constructs machines for manufacturing and processing steel
wire. (Id. ¶ 4.) Plaintiffs allege that GCR maintains offices
in the United States through its agent, GCR-Eurodraw, Inc., which
is located in South Carolina. (Id.) Defendant AS Associated
Contractors, S.A. ("Associated") is a Swiss financial company
that sometimes acts as an intermediary (and did act as GCR's
intermediary in this case) in international transactions. (Id.
This suit arises from GCR's agreement to sell wire
manufacturing equipment to non-party North American Wire Products
("NAW"), an Ohio company with its principal place of business in
Ohio. (Id. ¶ 3.) Specifically, on September 26, 2000, NAW, GCR,
Associated, and non-party Confirmec S.p.A., an Italian exporter,
entered into a contractual arrangement regarding the sale of
machinery to NAW and transportation of the machinery from Italy
to Ohio. (Id. ¶ 11; see also Pls.' Resp. to Defs.' Mot. to
Dismiss the Second Am. Compl. (D.E. 36), Ex. B ("Agreement") at 1
¶ 4 (calling for delivery of the machinery in Cleveland, Ohio).)
Prior to entering into this contractual arrangement, officers of
NAW, the Ohio corporation, and officers of GCR, the Italian supplier, had several face-to-face meetings in Italy, Ohio, and
Georgia, to negotiate the terms of the arrangement. (D.E. 19 ¶¶
The terms of the arrangement were memorialized as follows. In a
document titled "Agreement," GCR agreed to produce machinery in
Italy and sell and deliver it to NAW in Ohio. (Id. ¶ 11;
Agreement at 1 ¶¶ 2-4.) Pursuant to the Agreement, GCR was to
manufacture and deliver the machinery to NAW in Ohio "[s]ubject
to the terms and conditions set out in contract no. ED-019/00
R1." (Agreement at 1 ¶ 2.) Contract No. ED-019/00 R1 appears to
be a separate document labeled "Order Confirmation K. N°
ED-019/00 R1," which describes in detail the machinery to be
sold, as well as other aspects of the sale, sometimes duplicating
or nearly duplicating provisions of the Agreement. (D.E. 36, Ex.
A ("Order Confirmation").)
The Agreement contained an arbitration clause, calling for
arbitration in Geneva, Switzerland (Agreement ¶ 10.) The
Agreement provided that all disputes "which may arise between the
parties hereto, out of or in relation to or in connection with
this Agreement or the breach thereof shall be finally settled by
arbitration conducted in accordance with the rules of the
International Chamber of Commerce. . . . Such arbitration shall
take place in Geneva. . . . The arbitrators shall apply the laws
of Switzerland, as to substantive questions." (Id.) The Order
Confirmation did not contain an arbitration clause or address the
subject of arbitration.
As part of the transaction, NAW obtained a letter of credit
from LaSalle Bank, which guaranteed 85% of the purchase price.
(D.E. 19 ¶¶ 2, 12.) In this regard, the Agreement called for
eighty-five percent of NAW's total payment to GCR to be deferred
and guaranteed by a "Stand-By Letter of Credit . . . issued by
LaSalle Bank NA and advised to ABN-Amro Bank N.V., Monaco"
("ABN-Amro" or "ABN-Amro Monaco") (Agreement ¶ 7), in favor of Associated as GCR's intermediary (D.E. 19 ¶ 2). LaSalle issued
the letter of credit on March 8, 2001. (D.E. 19 ¶ 15.) The letter
of credit named NAW as applicant and allowed Associated to draw
on the letter through presentment of a certificate to LaSalle
stating that the amount drawn was equal to the value of machinery
shipped by GCR and due from NAW under a purchase order. (Id.,
Ex. C ("Letter of Credit") at 1.) The parties revised the Letter
of Credit on April 10, 2001 (before any draws were made on it),
substituting the Order Confirmation for the purchase order and
allowing ABN-Amro Monaco to "ADD THEIR CONFIRMATION." (Id., Ex.
D at 1.) As a consequence, the parties added ABM-Amro Monaco as a
confirming bank, which required ABM-Amro Monaco to pay Associated
upon presentation by Associated of appropriate documents to
ABM-Amro in Monaco, and removed ABM-Amro Monaco from its status
as merely an advising bank, as was originally called for in the
Agreement. (Agreement ¶ 7.)*fn2
Plaintiffs allege (again, suing in place of and as assignees of
the claims of NAW (D.E. 19 ¶ 10)) that GCR, among other things,
lied about its production and delivery capacity to induce NAW to
purchase the machinery (id. ¶¶ 26-27). NAW allegedly told GCR
during negotiations in Italy, Ohio, and Georgia (and never in
Illinois) that delivery of the machinery according to NAW's
timetable and specifications was "essential to [NAW's]
willingness to enter into the Agreement." (Id. ¶ 18.) Plaintiffs claim that although GCR was
planning to relocate its production facilities within Italy
(id. ¶ 22) which GCR knew would leave it without the
production capacity to meet either of NAW's requirements (id. ¶
27) GCR did not tell NAW about the relocation and assured NAW
that it could meet NAW's specifications (id. ¶¶ 19, 21, 23).
Plaintiffs further claim that, without the proper production
capacity, GCR did not, and could not, perform the contract.
Indeed, according to Plaintiffs' allegations, most of the
machinery NAW purchased was never delivered to Ohio or installed
as promised. (Id. ¶ 24.) And, according to Plaintiffs'
allegations, what machinery did arrive in Ohio came late and was
so defective as to be "inoperable." (Id.)
Plaintiffs allege that although GCR and Associated both knew
that GCR had not performed in accordance with the Agreement and
Order Confirmation (id. ¶ 43), Associated, on behalf of itself
and GCR, presented five documents for payment to ABN-Amro in
Monaco pursuant to the credit arrangement, each of which falsely
certified that GCR had performed a portion of its obligations "in
accordance with all of the terms and conditions of" the Order
Confirmation (id. ¶ 25). Defendants allegedly drew
$2,072,186.14 in this fashion over a period of five months
(id.), and the entire transaction allegedly harmed NAW's
business in the amount of some $8 million beyond the $2.6 million
paid on the contract (id. ¶ 30), leaving NAW unable to repay
its obligations to LaSalle under the Letter of Credit and its
loan documents with LaSalle (id. ¶ 10).
NAW assigned its claims against the Defendants to Plaintiffs.
(Id.) In Count I, Plaintiffs sue GCR for fraudulent inducement.
Plaintiffs claim that GCR falsely promised that it could
manufacture and deliver certain machinery to NAW in Ohio when GCR
allegedly knew that it could not meet the promised schedule; in doing so, Count I
alleges, GCR fraudulently induced NAW to enter into the
Agreement, to enter into other commercial agreements with
potential customers, to enter into the Letter of Credit, and to
spend money remodeling NAW's Ohio production facilities. (Id.
¶¶ 26-31.) Plaintiffs seek compensatory damages in excess of
$10.6 million, as well as punitive damages. (Id. ¶¶ 30-31.)
In Count II, Plaintiffs are suing GCR for promissory fraud, and
this count is substantially similar to Count I. (Id. ¶¶ 32-41.)
It also is based on alleged misrepresentations made to NAW in
Georgia and Italy. (Id. ¶¶ 32-35.) Count II seeks $2.6 million
in damages for the purchase price under the Agreement, and more
than $8 million for "lost opportunities, sales, profits,
reputation and goodwill" for NAW and for "expenses associated
with preparing and modifying" NAW's (id. ¶ 40) facilities in
Ohio, and punitive damages (id. ¶ 41).
In Count III, Plaintiffs sue both GCR and Associated for
fraudulent misrepresentation in drawing on the Letter of Credit.
(Id. ¶¶ 42-46.) More specifically, Plaintiffs allege that
Defendants made false statements of material fact to ABN-Amro in
Monaco when they represented that "GCR had performed in
accordance with [the] Agreement and Confirmation No.
ED-019/00/R1." (Id. ¶ 43.) Plaintiffs allege that as a result
of Defendants' wrongful conduct, "North American Wire incurred
damages in ...