BNP Paribas v. Kurt Orban Partners LLC

Background

BNP Paribas brought one breach-of-contract claim against each defendant: Kurt Orban Partners LLC ("KOP") and Matt Orban (referred to in the opinion as "Orban"). The claims concerned KOP’s alleged failure to pay for steel alloy bars purchased from Traxys North America LLC. The amount originally owed under the steel transaction was $4,531,713.03, and BNP Paribas later demanded $5,028,690.56, including a late-payment penalty.

KOP and Traxys signed a Steel Contract for 2,619.423 metric tons of steel at $1,730.04 per metric ton. The contract stated that disputes could be brought in New York state court or federal court in New York and that the buyer consented to jurisdiction in those courts. Orban had separately signed a guarantee promising, as a primary and separate obligor, payment of amounts KOP owed Traxys under covered steel-purchase agreements.

Traxys and BNP Paribas had entered into an agreement under which Traxys could sell accounts receivable to BNP Paribas. BNP Paribas purchased the KOP steel receivable, including KOP’s monetary obligation and related rights and remedies under the Steel Contract. BNP Paribas then demanded payment from KOP and Orban and filed this action.

Defendants’ motion

The defendants moved to dismiss for lack of personal jurisdiction over KOP and Orban. They also argued that BNP Paribas lacked standing to sue Orban because the guarantee was a special guarantee and therefore could not be assigned. They further argued that BNP Paribas had not adequately alleged reliance on the guarantee.

Personal jurisdiction over KOP

The parties disputed whether the forum-selection clause in the Steel Contract or different clauses in KOP’s purchase order and incorporated terms governed their agreement. The purchase order and terms purportedly selected courts in California or Texas, while the later Steel Contract selected New York courts.

The court held that the Steel Contract controlled. It was a final signed agreement containing the material terms of the transaction, and its conditions stated that it superseded prior orders or confirmations concerning the steel. The purchase order had been sent unilaterally by KOP, and Traxys had not signed or otherwise agreed to its terms. The court therefore concluded that the Steel Contract functioned as both the offer and acceptance, so the competing-forms rule under Uniform Commercial Code section 2-207 did not apply.

The court also rejected the significance of a stamp KOP placed on the Steel Contract after Traxys had already signed it. The court stated that one party could not unilaterally add contract terms after the other party had signed. It further found that KOP had not provided the express written objection required by the Steel Contract. The New York forum-selection and consent-to-jurisdiction clause therefore governed, allowing the court to exercise personal jurisdiction over KOP.

Personal jurisdiction over Orban

The guarantee provided that federal and state courts in New York County would have jurisdiction over disputes arising from or connected with the guarantee. The defendants argued that this provision was permissive and did not expressly state consent to jurisdiction.

The court rejected that argument. It held that the parties’ agreement that New York courts would have jurisdiction sufficiently indicated consent to jurisdiction. Because the defendants did not argue that the clause was unreasonable or invalid, the court applied it and concluded that it could exercise jurisdiction over Orban.

Standing and assignment of the guarantee

The court rejected the argument that BNP Paribas could not enforce the guarantee. Although the defendants characterized it as a special guarantee, the guarantee expressly stated that it would benefit the beneficiary and guarantor and their successors and permitted assigns. The court held that this language showed that the guarantee was assignable.

Considering the guarantee, the receivables-purchase agreement, and BNP Paribas’s purchase of the steel receivable, the court concluded that BNP Paribas acquired the right to enforce the guarantee in Traxys’s place. The court also rejected the argument concerning BNP Paribas’s reliance. It explained that any reliance requirement concerned whether Traxys relied on the guarantee when it entered the steel transaction, not whether BNP Paribas relied on it when it later purchased the receivable. The court found that BNP Paribas had sufficiently alleged that Traxys relied on the guarantee.

Disposition

The court denied the defendants’ motion to dismiss. The opinion did not decide the ultimate merits of BNP Paribas’s breach-of-contract claims; it decided the defendants’ challenges to personal jurisdiction and BNP Paribas’s ability to assert the claim against Orban.