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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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15‐2776

Mago Int’l, LLC v. LHB AG

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

______________              

August Term 2015

(Argued: June 15, 2016     Decided: August 15, 2016)

Docket No. 15‐2776

              

MAGO INTERNATIONAL,

Plaintiff‐Appellant,

‐v.‐ 

LHB AG,

Defendant‐Cross‐Claimant‐Appellee.

*

______________

 

* The Clerk of Court is respectfully directed to amend the caption as set

forth above.

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Before:

STRAUB, WESLEY, and LIVINGSTON, Circuit Judges.

______________

Appeal from an order and judgment of the United States

District Court for the Southern District of New York (McMahon,

J.), entered after resolution of cross‐motions for summary

judgment. The District Court granted summary judgment to

defendant LHB AG on the basis of plaintiff Mago International’s

failure to comply strictly with the terms of a standby letter of

credit. We AFFIRM the order and judgment of the District Court.

______________

THEODORE GEIGER, New York, NY, for Plaintiff‐

Appellant.

MARK A. BERMAN (Jeremy B. Stein, on the brief),

Hartmann Doherty Rosa Berman & Bulbulia, LLC, New York,

NY, for Defendant‐Cross‐Claimant‐Appellee.

______________

WESLEY, Circuit Judge:

Mago International (“Mago”) appeals from an order and

judgment of the United States District Court for the Southern

District of New York (McMahon, J.), in which judgment was

entered in favor of LHB AG (”LHB”) after resolution of cross‐

motions for summary judgment. The central question concerns

whether Mago complied with terms of a standby letter of credit

(“SLOC”) issued by LHB—specifically, whether the submission

of unsigned copies of bills of lading complied with the letter’s

requirement that Mago provide a “photocopy of [a bill of lading]

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evidencing shipment of the goods to the applicant.” App. 101.  

The District Court concluded that the unsigned copies did not

evidence shipment and thus Mago did not strictly comply. We

agree and accordingly affirm the order and judgment of the

District Court.

BACKGROUND

In 2011, Mago—a company based in New York—entered

into a contract to sell chicken, beef, and other meat products to

NTP Genita (“Genita”), a company based in Pristina, Kosovo. As

is common in international transactions, in order to ensure it

received payment, Mago required Genita to obtain an SLOC,

issued by Bank for Business, a Kosovar bank, and confirmed by

LHB. Under the terms of the letter, if Genita failed to pay Mago

within forty‐five days after the date of an invoice, Mago could

present a defined set of documents to LHB and obtain payment

on the SLOC. Among the documents LHB required was a

“photocopy of B/L evidencing shipment of the goods to the

applicant.” App. 101.

Mago shipped twelve containers of products to Genita

under four invoices, designated 199(1‐5), 199(6‐7), 208(1‐2), and

208(3‐5), respectively. Genita defaulted on all four invoices.

Mago tendered its first set of documents to LHB on September

19, 2012, including two unsigned bills of lading for each of the

two 199 invoices. App. 114–21.  LHB rejected this tender for, inter

alia, not containing signed bills of lading. App. 129. Mago’s

second tender cured other deficiencies identified by LHB but

contained the same unsigned bills of lading for the two 199

invoices. App. 139–44. LHB again rejected the tender, emailing

Mago’s managing director that the unsigned bills of lading were

not in conformity with the terms of the letter. Mago’s third

tender occurred on October 8, 2012, the last day possible to

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submit a demand for payment. As all previous tenders had

done, this one contained signed bills of lading for the 208

invoices—but instead of unsigned bills of lading for the 199

invoices, Mago provided two telexes from the shipping

company, Mediterranean Shipping Company (“MSC”). These

telexes announced that MSC had retained the original, signed

bills of lading in its files and authorized release of the shipments

to Genita without the latter presenting the original bill of lading.

App. 160, 166. LHB rejected this tender as well. Finally, on

October 11, 2012, Mago tendered a set of documents containing

signed bills of lading for each invoice. App. 172–84.    LHB

rejected this tender as untimely. App. 185.

Mago then filed suit in the Southern District alleging

wrongful dishonor of the SLOC and naming both LHB and Bank

for Business as defendants.2 On April 1, 2015, both LHB and

Mago cross‐moved for summary judgment. The District Court

issued its order granting LHB’s motion and denying Mago’s

motion on August 4 and entered judgment on August 6. Mago

timely appealed from both the order and the judgment.

DISCUSSION

An SLOC is an agreement by a bank to pay a beneficiary

on behalf of a customer who obtains the letter, if the customer

defaults on an obligation to the beneficiary. See, e.g., Tudor Dev.

Grp. v. U.S. Fid. & Guar. Co., 968 F.2d 357, 360 (3d Cir. 1992).  

“Originally devised to function in international trade, a letter of

credit reduced the risk of nonpayment in cases where credit was

extended to strangers in distant places” Voest‐Alpine Int’l Corp. v.

Chase Manhattan Bank, N.A., 707 F.2d 680, 682 (2d Cir. 1983). “The

 

2 However, Bank for Business was never served with the complaint,

and the District Court dismissed it from the case. App. 238.

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issuing bank, or a bank that acts as confirming bank for the

issuer, takes on an absolute duty to pay the amount of the credit

to the beneficiary, so long as the beneficiary complies with the

terms of the letter.” Beyene v. Irving Tr. Co., 762 F.2d 4, 6 (2d Cir.

1985). However, “[i]n order to protect the issuing or confirming

bank, this absolute duty does not arise unless the terms of the

letter have been complied with strictly.” Id.  “Adherence to this

rule ensures that banks, dealing only in documents, will be able

to act quickly, enhancing the letter of credit’s fluidity. Literal

compliance with the credit therefore is also essential so as not to

impose an obligation upon the bank that it did not undertake

and so as not to jeopardize the bank’s right to indemnity from its

customer.” Voest‐Alpine, 707 F.2d at 682–83. Therefore, “[i]n

determining whether to pay, the bank looks solely at the letter

and the documentation the beneficiary presents[] to determine

whether the documentation meets the requirements in the

letter.” Marino Indus. Corp. v. Chase Manhattan Bank, N.A., 686

F.2d 112, 115 (2d Cir. 1982). “The corollary to the rule of strict

compliance is that the requirements in letters of credit must be

explicit and that all ambiguities are construed against the bank.

Since the beneficiary must comply strictly with the requirements

of the letter, it must know precisely and unequivocally what

those requirements are.” Id. (citations omitted).

As the District Court noted, resolution of this case turns

on whether Mago strictly complied with the terms of the

SLOC—specifically, whether presentation of unsigned copies of

bills of lading satisfy the credit’s requirement that Mago submit

a “photocopy of B/L evidencing shipment of the goods to the

applicant.” App. 101.3 Mago argues principally that, under the

 

3 We review de novo a district court’s grant of summary judgment, and

“[w]here there are no disputed issues of material fact, our task is to

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Uniform Customs and Practice for Documentary Credits (the

“UCP”) and interpretive guidance issued by the International

Chamber of Commerce Banking Commission, where a letter of

credit requires “copies” of transport documents like bills of

lading, those copies do not need to be signed. Although the letter

does explicitly incorporate the UCP and even assuming Mago

interprets the UCP correctly, Mago’s argument fails for the

simple reason that LHB’s letter did not simply require a copy of

a bill of lading, but required one that “evidenc[ed] shipment of

the goods to the applicant.” App. 101. Thus, whatever general

guidelines are applicable, the copies here were required to

evidence shipment. Because the bill of lading at issue required a

signature to evidence shipment, the presentation of those

documents did not strictly comply with the terms of the letter.  

Even though the unsigned copies of the bills of lading

here reflect the name of a ship and purported date of shipment,

absent the carrier’s signature, there is no evidence that the

shipping information on the bill of lading reflects the actual

shipment of the goods—precisely the information that the SLOC

requires. Notably, the signature block on the bills where the

carrier would have signed is immediately preceded by language

to that effect:  

RECEIVED by the Carrier in apparent good

order and condition (unless otherwise stated

 

determine whether the district court correctly applied the law.” Mario

v. P&C Food Mkts., Inc., 313 F.3d 758, 764 (2d Cir. 2002) (internal

quotation marks omitted). “We must resolve any documentary

ambiguity in [Mago’s] favor at this stage of the proceedings, because

in ruling upon a motion for summary judgment, we construe

ambiguous contractual terms in favor of the party opposing the

motion.” Bouzo v. Citibank, N.A., 96 F.3d 51, 58 (2d Cir. 1996).

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herein) the total number or quantity of

Containers or other packages or units indicated

in the box entitled Carrier’s Receipt for carriage

subject to all the terms and conditions thereof

from the Place of Receipt or Port of Loading to

the Port of Discharge or Place of Delivery,

whichever is applicable.

App. 181. Without the carrier’s signature, the presented copy of

the bill of lading does not appear to fulfill the terms of the SLOC.

While copies of bills of lading may not generally require

signatures, see INTERNATIONAL STANDARD BANKING PRACTICE FOR

THE EXAMINATION OF DOCUMENTS UNDER DOCUMENTARY CREDITS

SUBJECT TO UCP 600 (“ISBP”) ¶ 20, the copies of the bill of lading

here appear to require such a signature to satisfy the SLOC’s

requirement that the document “evidenc[e] shipment of the

goods to the applicant.” App. 101; see also UCP 600, Art. XIV

(“[B]anks will accept the document as presented if its content

appears to fulfill the function of the required document.”

(emphasis added)). Although Mago presented telexes that it

claimed also evidenced shipment, those telexes cannot satisfy the

letter’s requirement that such evidence be contained in a bill of

lading. For the same reason, Mago’s argument that the SLOC did

not explicitly require a signature is unavailing; it explicitly

required evidence of shipment in the bill of lading, and the bill

of lading at issue required a signature for confirmation of

shipment. Accordingly, neither the unsigned bills of lading nor

the telexes tendered by Mago in its presentations to LHB

satisfied the requirement of strict compliance, and LHB was

entitled to reject the presentations. See Beyene, 762 F.2d at 6–7.

Mago finally argues that the District Court erred in

granting summary judgment to LHB on the entire amount of the

SLOC since Mago presented conforming documents with respect

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to the 208 invoices covering five containers of food products.

Instead, Mago contends, the District Court should have not have

granted summary judgment to LHB on those invoices. But

Mago’s complaint does not present invoice‐specific claims to the

District Court, nor does it anywhere request at least partial

payment on the 208 invoices. App. 18–21, 45–47. During oral

argument on the summary judgment motions, the District Court

expressly asked for clarification on the differences between the

199 and 208 invoices—Mago still did not contend it was owed at

least partial payment on the SLOC. Supp. App. 177–86. In its

summary judgment order, the District Court expressly noted

that Mago had briefed nothing regarding the 208 invoices and

further noted that that it did not know whether that was

“because Mago was paid with respect to the 208 invoices or

because the failure to present conforming documents for the 199

invoices meant that Mago forfeited payment even for invoices

that did on their face confirm to the terms of Item 46A.” App.

242. Mago did not move for reconsideration or otherwise argue

this point; it simply filed a notice of appeal.

“We have repeatedly held that if an argument has not

been raised before the district court, we will not consider it . . . .”

Kraebel v. N.Y.C. Dep’t of Hous. Pres. & Dev., 959 F.2d 395, 401 (2d

Cir. 1992) (citation omitted). We have, on occasion, permitted

new arguments in support of “a proposition presented below.”

Eastman Kodak Co. v. STWB, Inc., 452 F.3d 215, 221 (2d Cir. 2006).

But Mago is not making a new argument for a proposition made

below; it never requested this relief from the District Court. In

fact, Mago still has not made an argument that the law permits

(much less requires) partial payment on an SLOC.4 It has cited

 

4 LHB’s briefing argues that while the UCP permits partial draws on

the SLOC, Mago never made a request for a partial draw and thus

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no case law on appeal, merely requesting vacatur and remand to

the District Court for consideration in the first instance—on the

basis of what theory we have not been told. Where a party has

had such numerous occasions to request certain relief from the

District Court and, failing to do so, has presented no legal

argument of error to us on appeal, we will not set aside the

District Court’s judgment.

CONCLUSION

We have considered all of Mago’s arguments and find

them to be without merit. For the reasons stated in this opinion,

we AFFIRM the order and judgment of the District Court.

 

LHB could only evaluate the presentation as a whole. Because we hold

Mago forfeited its claims to partial payment, we need not address

whether LHB has correctly stated the law governing partial draws.

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