Court Opinion

ID: 1021009
Source: CourtListenerOpinion
Date Created: 2013-07-04 22:59:54.457928+00
Date Added: 2024-06-11T15:14:05.589359
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                               No. 06-1078

SAMUEL BUCHBINDER,

                                              Plaintiff - Appellant,

           versus

RONY NATANZON,

                                               Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore. J. Frederick Motz, District Judge. (1:03-
cv-02945-JFM)

Argued:   September 19, 2006             Decided:    November 16, 2006

Before NIEMEYER, Circuit Judge, HAMILTON, Senior Circuit Judge, and
Henry F. FLOYD, United States District Judge for the District of
South Carolina, sitting by designation.

Affirmed by unpublished opinion. Senior Judge Hamilton wrote the
majority opinion, in which Judge Floyd joined.    Judge Niemeyer
wrote a dissenting opinion.

ARGUED: David Bart Goldstein, DANEKER, MCINTIRE, SCHUMM, PRINCE,
GOLDSTEIN, MANNING & WIDMAN, P.C., Baltimore, Maryland, for
Appellant. Robert Benjamin Levin, SHAPIRO, SHER, GUINOT & SANDLER,
Baltimore, Maryland, for Appellee. ON BRIEF: Brooke Schumm, III,
DANEKER, MCINTIRE, SCHUMM, PRINCE, GOLDSTEIN, MANNING & WIDMAN,
P.C., Baltimore, Maryland, for Appellant. Paul Mark Sandler, John
J. Leidig, SHAPIRO, SHER, GUINOT & SANDLER, Baltimore, Maryland,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

                             - 2 -
HAMILTON, Senior Circuit Judge:

      This is a breach of contract action with subject matter

jurisdiction        based   upon    diversity      of    citizenship.         Samuel

Buchbinder     (Buchbinder)        is   the   plaintiff,    and   Rony       Natanzon

(Natanzon)     is    the    defendant.        On   cross-motions       for    summary

judgment, the district court granted summary judgment in favor of

Natanzon and denied summary judgment in favor of Buchbinder.

Buchbinder appeals the district court’s grant of summary judgment

in favor of Natanzon.         We affirm.

                                         I.

      In early 2001, as part of various business transactions with

a   Maryland   limited      liability     company       named   ERN,    LLC   (ERN),

Buchbinder entered into two letters of credit with UBS AG (UBS) in

the aggregate amount of one million dollars on behalf of ERN’s

affiliated Israeli company (ERN Israel) and in favor of Bank Leumi.

These two letters of credit (collectively the Letters of Credit)

were issued to secure the obligations of ERN Israel to Bank Leumi.

At the time of issuance, the Letters of Credit were set to expire

on January 31, 2002.          Under the “General Terms and Conditions”

applicable to the Letters of Credit, Buchbinder agreed to reimburse

UBS in the amount of any draw on the Letters of Credit made prior

to January 31, 2002.        (J.A. 179).       As security for his obligations,

Buchbinder posted cash and 85,000 shares of Concord EFS, Inc. stock

                                        - 3 -
(the Concord Stock).      Notably, Buchbinder and UBS also expressly

agreed in writing that the respective expiration dates of the

Letters of Credit could not be extended without each other’s

written permission.

     In   late   2001,   Bank   Leumi   requested   that   the   respective

expiration dates of the Letters of Credit be extended one year to

January 31, 2003.    The parties do not dispute that both Buchbinder

and UBS agreed to this request in writing.

     The seed of the present litigation was planted, however, in

early 2002 when UBS mistakenly notified Bank Leumi that the Letters

of Credit had been extended to December 31, 2003. Specifically, on

January 9, 2002, UBS sent Bank Leumi a SWIFT message1 mistakenly

reporting December 31, 2003 rather than January 31, 2003 as the

extended expiration date of the Letters of Credit, an eleven-month

difference.

     On July 12, 2002, Buchbinder and Natanzon entered into a

memorandum of understanding (the MOU) to settle certain litigation

then pending in the United States District Court for the District

of Maryland.     As part of the settlement, the MOU provided that

Buchbinder would transfer to Natanzon his fifty-percent ownership

interest in ERN Israel, and “[i]n consideration of the immediate

     1
      A “SWIFT message” is an electronic message sent through the
global banking telecommunications network called the Society for
Worldwide Interbank Financial Telecommunications. Boris Kozolchyk,
The Paperless Letter of Credit and Related Documents of Title, 55
Law & Contemp. Probs. 39, 40-46 (1992).

                                   - 4 -
transfer of said Buchbinder 50% interest, Natanzon guarantees

personally that he will reimburse Sam Buchbinder without offset

demand or counterclaim any draw on the $1,000,000 letters of credit

with all costs and attorneys fees of collection.”2    (J.A. 83-84).

As counsel for Buchbinder stated at oral argument in the present

appeal, “the whole point to this personal guarantee to reimburse

Buchbinder for any draws on the lettter[s] of credit was that

Buchbinder would give up his fifty-percent interest in ERN Israel

so that Natanzon would be the one-hundred percent owner and control

the company in exchange for Natanzon substituting himself for

financial responsibility on the letters of credit.”    Notably, the

record in this case contains no evidence to suggest that, at the

time Buchbinder and Natanzon executed the MOU, either man believed

the Letters of Credit expired on any date other than January 31,

2003.    In short, as far as the record reveals, UBS’s unilateral

extension of the Letters of Credit via its typographical error in

the January 9, 2002 SWIFT message to Bank Leumi was unbeknownst to

Buchbinder and Natanzon at the time they entered into the MOU on

July 12, 2002.

     All was quiet until January 29, 2003, when Bank Leumi notified

UBS that it considered the Letters of Credit as valid and in force

until December 31, 2003.   In response, UBS advised Bank Leumi that

     2
      From here forward, we refer to this quoted language as “the
Reimbursement Provision.”

                               - 5 -
it had made a typographical error in its January 9, 2002 SWIFT

message confirming the extension of the expiration date of the

Letters of Credit, and stated that January 31, 2003 was the

intended and correct expiration date.    UBS   requested that Bank

Leumi agree to cancel the Letters of Credit as of January 31, 2003.

Bank Leumi rejected the request and notified UBS by SWIFT message

on February 3, 2003,

     THAT ON STRENGTH OF YOUR EXTENSION UNTIL 31 DECEMBER,
     2003 WE HAVE EXTENDED CREDIT LINE TO THE CUSTOMER. THE
     CUSTOMER IS IN DEFAULT OF HIS OBLIGATIONS TO US UNDER THE
     CREDIT LINE AND WE THEREFORE DEMAND PAYMENT OF ONE
     MILLION USD, UNDER YOUR ABOVE STANDBY L/CS.
     WE HEREBY STATE THAT THE AMOUNT DEMANDED REPRESENTS AN
     AMOUNT WHICH E.R.N. NO. 1 LTD. HAS FAILED TO PAY WHEN
     DUE.
     PLEASE CREDIT OUR ACCOUNT WITH YOU UNDER SWIFT ADVICE TO
     US, QUOTING OUR ABOVE REF. NOS.

(J.A. 136).   On February 4, 2003, UBS sent Bank Leumi a SWIFT

message requesting that Bank Leumi submit one claim per Letter of

Credit in accordance with the terms of the Letters of Credit.    Bank

Leumi complied with this request via two SWIFT messages on February

5, 2003.

     On February 5, 2003, UBS fully honored Bank Leumi’s draws on

the Letters of Credit by paying Bank Leumi $1,000,000.    UBS then

demanded that Buchbinder reimburse it for the $1,000,000 in draws.

Buchbinder refused on the ground that he had not authorized any

extension of the Letters of Credit beyond January 31, 2003.

     On or about February 20, 2003, UBS debited funds totaling

approximately $318,609 from Buchbinder’s account with UBS without

                              - 6 -
Buchbinder’s permission.        UBS also refused to return the Concord

Stock Buchbinder had pledged as partial collateral for the Letters

of Credit.

     On May 16, 2003, Buchbinder filed a civil action against UBS

in the United States District Court for the Northern District of

Illinois     (the   Illinois    Action)         on    the   basis     of     diversity

jurisdiction. In the Illinois Action, Buchbinder sought the return

of his $318,609 in cash and his Concord Stock under state law

theories    of   conversion    and      unjust       enrichment.      According      to

Buchbinder, because he never authorized in writing extending the

expiration dates of the Letters of Credit beyond January 31, 2003,

he had no legal liability to reimburse UBS for any draws made on

the Letters of Credit after that date.               In support of his position,

Buchbinder relied upon the terms of his agreement with UBS that the

expiration dates of the Letters of Credit could not be extended

without each other’s written permission. In addition to the return

of his cash and stock, Buchbinder also sought punitive damages,

reasonable attorney’s fees incurred in the action and costs.                         On

May 29, 2003, UBS returned the Concord Stock to Buchbinder, but

continued to retain his $318,609 in cash.

     On October 15, 2003, Buchbinder filed the present civil action

against Natanzon in the United States District Court for the

District    of   Maryland   (the     Maryland         Action)    on   the    basis   of

diversity    jurisdiction.         In    the     Maryland       Action,     Buchbinder

                                        - 7 -
initially sought to enforce the Reimbursement Provision of the MOU

in an amount equal to the principal value of the seized assets

($1,000,000) plus costs, interest, and attorneys’ fees.               After UBS

returned Buchbinder’s $318,609 in cash on November 11, 2003, and

Buchbinder and UBS settled the Illinois Action, Buchbinder modified

his demand in the Maryland Action such that he now sought from

Natanzon only:       (1) $114,450.47, an amount representing his lost

interest    income    on   his   seized   collateral   and   his   litigation

expenses in the Illinois Action; and (2) an as yet to be finalized

amount representing his attorneys’ fees and costs in the Maryland

Action.

     Buchbinder      and   Natanzon    made    cross-motions    for    summary

judgment.     On December 14, 2005, the district court issued a

Memorandum Opinion in which it denied Buchbinder’s motion for

summary    judgment    and   granted      Natanzon’s   motion   for    summary

judgment.     The heart of the district court’s analysis in its

Memorandum Opinion is as follows:

          The outcome of this case turns on the meaning of the
     words “any draw on the $1,000,000 letters of credit” in
     the MOU. Natanzon claims the money paid by UBS to Bank
     Lemui [sic] on February 5, 2003 was not a draw on the
     letters of credit under the MOU, which only contemplated
     timely and proper draws. Buchbinder contends the broad
     language (“any draw”) of the MOU encompasses untimely
     payments. Although the issue is not free from doubt, I
     agree with Natanzon.1

          Maryland follows the law of objective interpretation
     of contracts, whereby a court must determine what a
     reasonable person in the position of the parties would
     have thought the language of the agreement to mean.

                                      - 8 -
     Atlantic Contracting & Material Co., Inc. v. Ulico Cas.
     Co., 844 A.2d 460, 469 (Md. 2004); Calomiris v. Woods,
     727 A.2d 358, 363 (Md. 1999). In my view, a reasonable
     person in the position of the parties would not have
     understood “any draw on the . . . letters of credit” to
     include demands on letters that ceased to legally exist.
     If that had been the meaning of the words, in the MOU
     Nantanzon [sic] would have been assuming an obligation of
     infinite duration, unlimited by the express written terms
     of the letters of credit. Reasonable business people do
     not assume -- or expect others to assume -- such
     obligations.

          1
           To the extent that Buchbinder is now contending
     that the letters of credit had not expired on February 5,
     2003, his contention is inconsistent with the allegation
     he made in the suit against UBS in the United States
     District Court for the Northern District of Illinois that
     “the Letters of Credit were expired and invalid at the
     time of the payment on February 5, 2003.” Moreover, his
     allegation in the Illinois action was correct.        The
     letters of credit did expire January 31, 2003.        The
     letters specifically required Buchbinder’s written
     consent to modify the expiration date, and such consent
     was not given to extend the letters past January 31,
     2003. UBS’s typographical error did not (and could not)
     breathe life into the letters of credit after their
     expiration date, because UBS never had the power to act
     unilaterally to extend the letters.

(J.A. 488-89).    The district court entered final judgment in favor

of Natanzon.     This timely appeal followed.

                                  II.

     We review the grant of summary judgment de novo.    Higgins v.

E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1167 (4th Cir. 1988).

A motion for summary judgment may be granted if “there is no

                                 - 9 -
genuine issue as to any material fact and . . . the moving party is

entitled to a judgment as a matter of law.”             Fed. R. Civ. P. 56(c).

In reviewing a district court’s grant of summary judgment, we must

construe the facts in the light most favorable to the non-moving

party; here, Buchbinder.     Smith v. Virginia Commonwealth Univ., 84

F.3d 672, 675 (4th Cir. 1996) (en banc).

                                    III.

     The parties agree that Maryland law applies to the substantive

legal issues in this case.       Under Maryland law, “when the language

of the contract is plain and unambiguous, there is no room for

construction, and a court must presume that the parties meant what

they expressed.”     Towson Univ. v. Conte, 862 A.2d 941, 947 (Md.

2004).   Significantly, “[i]n these circumstances, the true test of

what is meant is not what the parties to the contract intended it

to mean, but what a reasonable person in the position of the

parties would have thought it meant.”             Id.

     If, on the other hand, the contractual language at issue is

ambiguous,    the   trier   of    fact     must    resolve    the   ambiguity.

University of Baltimore v. Iz, 716 A.2d 1107, 1121 (Md. Ct. Spec.

App. 1998); see also Atalla v. Abdul-Baki, 976 F.2d 189, 192 (4th

Cir. 1992).   Under Maryland law, contractual language is ambiguous

if, when read by a reasonably prudent person, the language is

susceptible of more than one meaning. Calomiris v. Woods, 727 A.2d

                                   - 10 -
358, 363 (Md. 1999).   “The determination of whether language is

susceptible of more than one meaning includes a consideration of

the character of the contract, its purpose, and the facts and

circumstances of the parties at the time of execution.”          Id.

(internal quotation marks omitted).   Whether contractual language

is ambiguous is a question of law for the court.   Id. at 362.

     Here, Buchbinder premises his theory of liability against

Natanzon upon the independence principle of letter of credit law

and what he considers the plain and unambiguous meaning of the

phrase “any draw” in the Reimbursement Provision. The independence

principle of letter of credit law provides that, upon presentation

of a draft against a letter of credit which is accompanied by

certifying documentation, the bank becomes obligated to honor the

draft whether or not the documentation was substantively accurate.

Provident Bank of Maryland v. Travelers Prop. Cas. Corp., 236 F.3d

138, 147 (4th Cir. 2000).   Thus, the obligation of the letter of

credit’s issuer, here UBS, to the letter of credit’s beneficiary,

here Bank Leumi, is independent from any obligation between the

letter of credit’s issuer and the customer of the letter of

credit’s issuer, here Buchbinder.   See id.

     Buchbinder relies upon the independence principle to argue

that, because the Letters of Credit were valid as between UBS and

Bank Leumi until December 31, 2003, Bank Leumi’s full draws on the

Letters of Credit on February 5, 2003 simultaneously triggered a

                             - 11 -
$1,000,000 reimbursement obligation on the part of Natanzon under

the “any draw” language of the Reimbursement Provision. After all,

as Buchbinder’s argument goes, the term “any” means “‘regardless of

sort, quantity, or number’ and ‘without restriction or exception,’”

(Buchbinder’s   Opening   Br.   at    17)    (quoting   Webster’s   II     New

Riverside Univ. Dictionary, 115 (1984)), and therefore, the “any

draw” language in the Reimbursement Provision, means all draws

without exception, not just those draws which reasonable business

people would consider timely and proper, (J.A. 26).           We note that,

having   subsequently   regained     possession   of    his   $1,000,000    in

collateral from UBS, the relief Buchbinder currently seeks in the

Maryland Action is judgment in an amount equal to:                  (1) the

interest income from which he was deprived during UBS’s improper

seizure of his collateral and his litigation expenses in the

Illinois Action ($114,450.47); and (2) his attorneys’ fees and

costs in the Maryland Action (an amount yet to be finalized).

     While we ultimately decide to affirm the judgment below, we

initially note our agreement with Buchbinder on one significant

point of letter of credit law.              Specifically, we agree with

Buchbinder’s assertion that the district court erred in holding

that, at the time of Bank Leumi’s February 5, 2003 draws on the

Letters of Credit, the Letters of Credit had ceased to legally

exist.   The district court reasoned that the Letters of Credit

completely expired on January 31, 2003, because Buchbinder had

                                   - 12 -
never given his written permission to extend the expiration dates

on the Letters of Credit beyond January 31, 2003.             The district

court’s reasoning is at odds with the well-established independence

principle   of   letter      of   credit   law,    which   provides   for   the

independence     of   each    distinct     relationship    pertaining   to    a

particular letter of credit.

     Buchbinder’s legally enforceable financial obligations under

the Letters of Credit had most definitely expired as of January 31,

2003.   Thus, under the independence principle, the Letters of

Credit had expired between UBS and Buchbinder as of January 31,

2003, but remained intact as between UBS and Bank Leumi until

December 31, 2003.     This is so despite the fact that Buchbinder’s

legally enforceable financial obligations under the Letters of

Credit expired as of January 31, 2003.            Indeed, UBS recognized the

Letters of Credit as valid between it and Bank Leumi by honoring

Bank Leumi’s February 5, 2003 draws on them.

     As will become evident from our following discussion, the fact

that the Letters of Credit remained valid and in force as between

UBS and Bank Leumi does nothing to aid Buchbinder’s breach of

contract claim against Natanzon.             At this point, we turn our

attention to the operative language of the Reimbursement Provision:

“In consideration of the immediate transfer of said Buchbinder 50%

interest [in ERN Israel], Natanzon guarantees personally that he

will reimburse Sam Buchbinder without offset demand or counterclaim

                                    - 13 -
any draw on the $1,000,000 letters of credit with all costs and

attorneys fees of collection.”       (J.A. 83-84).   Focusing on the

plain meaning of this language, we completely agree with counsel

for Buchbinder’s statement at oral argument, that “the whole point

to this personal guarantee to reimburse Buchbinder for any draws on

the lettter[s] of credit was that Buchbinder would give up his

fifty-percent interest in ERN Israel so that Natanzon would be the

one-hundred percent owner and control the company in exchange for

Natanzon substituting himself for financial responsibility on the

letters of credit.” (emphasis added).      A reasonable person in the

position of the parties would have thought no different.

     This point is fatal to Buchbinder’s breach of contract claim

against Natanzon.      The term “reimburse,” which means “[t]o pay

back,” American Heritage Dictionary, 4th Ed., 705 (Houghton Mifflin

2001), inherently assumes a prior pay-out.           Here, Buchbinder

rightly concedes that he did not pay-out any funds or assets in

connection with any legally enforceable financial responsibility

that he had with respect to the Letters of Credit.     Indeed, in his

reply brief, Buchbinder affirmatively states:     “the Buchbinder-UBS

part of the Letter of Credit transaction had expired as of January

31, 2003, and UBS could not enforce its Letter of Credit agreement

against Buchbinder.”      (Buchbinder’s Reply Br. at 10).   Buchbinder

even adds that “UBS’s repayment of the $1 million to [him] confirms

[his] position.”    Id.    Also, the record in this case is devoid of

                                 - 14 -
any evidence suggesting that, at the time Buchbinder and Natanzon

executed the MOU, either man believed the Letters of Credit expired

on any date other than January 31, 2003.                     Thus, the January 31,

2003    date    was    the     date   both    men     understood    as    the     end   of

Buchbinder’s legally enforceable financial responsibility with

respect to the Letters of Credit.

       The fact that Buchbinder suffered damages in the form of lost

interest-income and incurred attorneys’ fees in connection with

reacquiring his wrongfully seized assets from a third-party has

nothing    to    do     with    reimbursing         Buchbinder     for    any    legally

enforceable financial responsibility that he had on the Letters of

Credit.    Because Buchbinder did not pay-out any funds or assets in

connection with any legally enforceable financial responsibility

that he had with respect to the Letters of Credit, the damages

Buchbinder      seeks    from     Natanzon      are    not   within      the    scope    of

Natanzon’s      obligations           under     the    Reimbursement           Provision.

Buchbinder’s argument that reasonable persons in the position of

Buchbinder      and     Natanzon      could     have    meant    the     Reimbursement

Provision to obligate Natanzon to reimburse Buchbinder for an

amount equal to the amount of any assets wrongfully seized by a

third-party in connection with draws on the Letters of Credit, made

after Buchbinder’s legally enforceable financial responsibility on

those Letters of Credit had expired, his lost interest income while

his    assets   were     wrongfully      held    by    the   third-party,        and    his

                                         - 15 -
attorneys’ fees in connection with reacquiring his assets is

patently absurd.

     In    conclusion,      we    hold      that,   based     upon    the   plain    and

unambiguous      language        of   the     Reimbursement          Provision,      once

Buchbinder’s      legally   enforceable           financial    obligations      on   the

Letters of Credit expired as of January 31, 2003 (i.e., once

Buchbinder’s collateral was no longer legally at risk), Natanzon’s

reimbursement obligations under the Reimbursement Provision expired

as well.       Thus, the damages sought by Buchbinder in the present

breach    of    contract    action     are    not    within    the     scope    of   the

Reimbursement Provision.3

                                            IV.

     For the foregoing reasons, we affirm the district court’s

entry of summary judgment in favor of Natanzon.

                                                                               AFFIRMED

     3
      We note that Natanzon presses an alternative independent
argument in favor of affirmance, which argument he presented to the
district court, but which the district court did not address.
Given our analysis, we do not address it either.       The crux of
Natanzon’s alternative argument is that, pursuant to other terms of
the MOU, no payment can be due from him under the Reimbursement
Provision until July 31, 2007.

                                         - 16 -
NIEMEYER, Circuit Judge, dissenting:

       Samuel Buchbinder commenced this action against Rony Natanzon

to enforce an indemnity agreement signed by Natanzon.                   In the

agreement,    Natanzon    “guarantee[d]       personally   that    he   [would]

reimburse Sam Buchbinder without offset demand or counterclaim any

draw on the $1-million letters of credit with all costs and

attorneys fees of collection.”         (Emphasis added).         Natanzon gave

this    indemnification    agreement     in    exchange    for    Buchbinder’s

transfer of his 50% interest in ERN Israel, a company that the two

had theretofore jointly owned. While ERN Israel was jointly owned,

Buchbinder had, on the basis of his own assets, obtained the

issuance of the $1-million letters of credit for ERN Israel.

       On cross-motions for summary judgment, the district court

concluded that the letters of credit expired on January 31, 2003,

even though the face of the documents indicated that they would not

expire until December 31, 2003.        The district court relied on the

fact that the issuing bank had made an error in extending the

letters of credit from January 31 to December 31, 2003, to conclude

that the letters of credit had “ceased to legally exist” after

January 31.       But this conclusion overlooked the legal principle

that    letters    of   credit   are   enforced    as   written     under   the

“independence principle.”        See Provident Bank of Md. v. Travelers

Prop. Ca. Corp., 236 F.3d 138, 147 (4th Cir. 2000).               Accordingly,

when the Israeli bank drew on the letters of credit after January

                                   - 17 -
31 but before December 31, the issuing bank was obligated under

well-established principles to pay the Israeli bank the $1 million.

The district court, however, reasoned from its erroneous finding

that the letters of credit “ceased to legally exist” after January

31 to conclude that there could no longer be a draw as referred to

in Natanzon’s indemnity agreement after that date.

       The majority opinion appropriately recognizes that the letters

of credit did not cease to exist, because on their face they had

not expired.    The Israeli bank was entitled to rely on the letters

of credit as written under the “independence principle” that

attends letters of credit.    See Provident Bank of Md., 236 F.3d at

147.

       But the majority then ignores the plain language of Natanzon’s

indemnity agreement and reforms the agreement to conform to its

understanding of the contextual transaction. I respectfully submit

that we are not free to reorder the parties’ expectations that were

clearly and unambiguously stated in a binding document.          The

agreement required Natanzon to indemnify Buchbinder for “any draw

on the $1-million letters of credit.”        “Any” means any, i.e.,

every.    See Norfolk Southern Ry. v. James N. Kirby, Pty Ltd., 543

U.S. 14, 31 (2004) (chiding court of appeals for limiting the

meaning of “any” as used in a contract); United States v. Gonzales,

520 U.S. 1, 5 (1997) (noting that “any” means “‘one or some

                                - 18 -
indiscriminately of whatever kind’” (quoting Webster’s Third New

Int’l Dict. 97 (1976))).

     The Israeli bank in effect paid $1 million to Natanzon by

drawing on the $1 million letters of credit in accordance with

their terms to discharge Natanzon’s debt to the bank.    Under the

indemnity agreement, Natanzon then became obligated to reimburse

Buchbinder for that draw. In failing to recognize this obligation,

we now inappropriately rearrange the business relationships and

provide Natanzon with a $1 million windfall that he otherwise would

not have had.

     Accordingly, I would reverse.

                              - 19 -