## Facts

- Great Wall de Venezuela C.A. (Great Wall) agreed to sell an automobile-manufacturing plant in Venezuela to ICA International Automobile Limited (ICA).
- ICA arranged for Interaudi Bank (Interaudi), a New York bank, to issue a letter of credit in Great Wall’s favor for the plant’s purchase price, payable upon Great Wall’s complying demand under the letter of credit.
- Great Wall made a demand for payment that it claimed complied with the letter of credit’s terms.
- ICA told Interaudi that Great Wall had committed fraud in the underlying sale transaction and threatened to sue Interaudi if it honored the letter of credit and paid Great Wall.
- Great Wall sued Interaudi in the Southern District of New York seeking payment under the letter of credit and asserting additional claims, including a civil theft theory.
- Interaudi responded by asserting an interpleader counterclaim against Great Wall and filing a third-party interpleader complaint against ICA and ICA’s principals (the Yammine defendants), alleging it faced competing claims to the same funds and asking the court to take the funds, discharge Interaudi, and resolve the dispute between Great Wall and ICA.
- Great Wall moved for partial summary judgment on its claims and for summary judgment dismissing Interaudi’s interpleader claims; Interaudi moved for summary judgment on interpleader and for judgment on the pleadings dismissing Great Wall’s claims.
- The ICA defendants moved to stay the case and compel arbitration in Venezuela only if the court granted interpleader.

## Issues

1. Whether a letter-of-credit issuer may obtain interpleader relief when the beneficiary demands payment and the applicant alleges fraud in the underlying transaction and threatens suit, but does not present a direct, present adverse claim to the same letter-of-credit proceeds.
2. Whether the independence of a letter of credit from the underlying sales contract limits an issuer’s ability to use interpleader to avoid honoring a conforming demand.
3. Whether Great Wall stated a plausible civil theft claim against Interaudi sufficient to survive judgment on the pleadings.
4. Whether the ICA defendants’ motion to stay and compel arbitration should be decided after the court ruled on interpleader.

## Decision

- Interaudi’s motion for summary judgment on its interpleader counterclaim was denied.
- Great Wall’s motion for summary judgment dismissing Interaudi’s interpleader counterclaim and third-party interpleader complaint was granted.
- The ICA defendants’ motion to stay the action and compel arbitration was denied as moot.
- Interaudi’s motion for judgment on the pleadings was granted as to Great Wall’s civil theft claim and denied as to Great Wall’s other claims.
- Great Wall’s motion for partial summary judgment was denied without prejudice to renewal after further proceedings.
- The discovery stay was lifted.

## Legal Principles

- Interpleader is available only when a stakeholder faces competing, adverse claims to the same stake that create a real risk of multiple liability; speculative exposure or threatened litigation, without a present adverse claim to the fund, is not enough.
- Letters of credit are treated as independent obligations: disputes about the underlying contract between applicant and beneficiary generally do not excuse an issuer from paying against a complying presentation.
- An issuer may not reframe a letter-of-credit payment obligation as a neutral “stakeholder” position through interpleader merely because its customer disputes the underlying deal and threatens suit.
- On a Rule 12(c) motion, the court applies the same plausibility standard used for Rule 12(b)(6); a theft-based civil claim requires factual allegations showing a wrongful taking or appropriation, not conclusory assertions.
- A motion contingent on a ruling the court rejects (here, arbitration requested only if interpleader were granted) may be denied as moot.

## Conclusion

The court refused to allow Interaudi to use interpleader to avoid or delay payment under an independent letter of credit based on ICA’s fraud accusations and litigation threats, dismissed Great Wall’s civil theft claim at the pleadings stage, and otherwise allowed the case to proceed with discovery and further merits litigation.


Great Wall de Venezuela C.A. v. Interaudi Bank, 117 F. Supp. 3d 474 (2015)