Wachovia Bank v. Deutsche Bank Trust
Co. Americas, 2006 NCBC 8.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR
COURT DIVISION
COUNTY OF MECKLENBURG 04
CVS 86
WACHOVIA BANK, National Association, )
)
Plaintiff, )
)
v. )
)
DEUTSCHE BANK TRUST COMPANY ) ORDER
AMERICAS, formerly known as BANKERS )
TRUST COMPANY, )
)
Defendant. )
)
Kennedy
Covington Lobdell & Hickman, LLP by John H. Culver and Sara W. Higgins;
Hahn & Hessen, LLP by Maria A. Arnott and Steven J. Mandelsberg for
Plaintiff Wachovia Bank, National Association.
Shumaker
Loop & Kendrick, LLP by Peter Crane Anderson and Frederick M. Thurman, Jr.;
Pillsbury Winthrop Shaw Pittman, LLP by Edward Flanders, F. Joseph Owens and
Kenneth A. Newby for Defendant Deutsche Bank Trust Company Americas, formerly
known as Bankers Trust Company.
Diaz, Judge.
{1} The
Court heard this matter on April 24, 2006, on the Defendant’s Motion for a Stay
to Permit Trial in New York (“Stay Motion”) pursuant to N.C. Gen. Stat. §
1-75.12. After considering the Court
file, the written Motion, the briefs and exhibits submitted by the parties, and
the arguments of counsel, the Court GRANTS the Defendant’s Motion. In support of its ruling, the Court enters
the following:
{11} The
Asset Funding and Servicing Agreement provides, inter alia:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO . . . HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO . . . HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS[.]
(Exhibit H to Affidavit of Edward Flanders (hereinafter "Flanders Affidavit"), § 13.7 at p.
105.)
{12} The events giving rise to the Plaintiff's claims in this case—Deutsche Bank's performance (and alleged breach) of its contractual obligations—took place in New York. (Affidavit of Robert Frier (hereinafter “Frier Affidavit”) ¶ 2.)
{13} In early 2002, FUSI removed Deutsche Bank as Backup Servicer and Collateral Custodian.
{28} On
January 13, 2006, the Chief Justice of the Supreme Court of North Carolina
designated this matter as an “exceptional” case and assigned it to the North
Carolina Business Court.
{45} In my view, both
North Carolina and New York have an interest in litigating this dispute. Plaintiff Wachovia maintains its principal
office in Charlotte, North Carolina.
Additionally, Wachovia is one of the largest employers in Mecklenburg
County and this State. Moreover,
Deutsche Bank is registered to do business in North Carolina, and it does not
dispute that it transacts substantial business in this State. Due to the parties’ presence in this State,
North Carolina clearly has an interest in resolving this dispute.
{58} Deutsche
Bank argues that to allow this action to proceed simultaneously with the SDNY
Action would “subject the judicial process and the parties to needless burden,
hardship, and expense since the SDNY Action will proceed in any event.” (Defendant’s Memo. at p. 3.) The parties here, however, are sophisticated
business entities with resources sufficient to litigate their dispute in this
or any other jurisdiction. And, both
parties have retained counsel in New York and North Carolina. Moreover, while there may be some
inefficiency in proceeding with duplicative actions, this will always be the
case when a court is asked to consider a stay motion. Accordingly, this factor alone is not
determinative of whether this action should proceed.
{59} A
critical practical consideration, however, is that the SDNY appears to have
jurisdiction over many (if not all) of the relevant third parties and witnesses
to the disputed transactions, whereas this Court does not. And, while this Court is certainly capable of
resolving that portion of the litigation before it, judicial economy and the conservation
of judicial resources weigh in favor of a stay.
ORDER
{60} I
find that both North Carolina and New York would be reasonable, fair and
convenient forums for trying this case.
{61} I
find further that the factors relevant to the Court’s analysis of the Stay Motion
favor a stay.
{62} I
also find that, while the Plaintiff’s choice of forum generally is entitled to
substantial weight, its significance here is diluted by (a) the consent to
jurisdiction clause in the Asset Funding and Servicing Agreement, which
contemplated that New York would be a suitable forum for litigating any
disputes arising out of the Agreement; and (b) the SDNY’s more expansive
jurisdictional reach over other parties and witnesses.
{63} As
a result, I conclude that it would work a substantial injustice for this action
to be tried in North Carolina.
[1] Defendant disputes that Wachovia is the proper party in interest. For purposes of this Stay Motion, the Court assumes that Wachovia has standing to bring this action.
[2] Deutsche Bank contends it first learned of Wachovia’s claims at a meeting on April 24, 2002, when Wachovia representatives met with Deutsche Bank personnel to discuss Wachovia’s claims under the Credit Facility. (Defendant’s Memorandum of Law in Support of Defendant’s Motion for a Stay to Permit Trial in a Foreign Jurisdiction (“Defendant’s Memo.”) at p. 7.)
[3] Deutsche Bank did not serve the Summons with Notice until April 2004, some four months later.
[4] In its December 22, 2003 letter to Wachovia, Deutsche Bank did not mention that it had filed the Summons with Notice against the Plaintiff three days earlier.
[5] The Standstill Agreement defines “Litigations” to include the NC State Action and the NY State Action.
[6] The Standstill Period originally expired on March 31, 2004, but was extended until November 30, 2004 by the Seventh Amendment to Standstill, Confidentiality and Information Exchange Agreement. (Exhibit Z to Flanders Reply Affidavit.)
[7] In the SDNY Action, Deutsche Bank also seeks not less than $3 million in damages from (a) the PrinVest Entities for contractual indemnification; (b) the former PrinVest officers for fraud; and (c) Wachovia Securities for breach of its implied duty of good faith and fair dealing and unjust enrichment for concealing PrinVest’s misrepresentations and fraudulent behavior, and for impairing Deutsche Bank’s contractual indemnification rights against PrinVest.