Samuel Buchbinder v. Rony Natanzon

UNPUBLISHED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Affirmed by unpublished opinion.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.

-- 1 of 19 --

- 2 -
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

-- 2 of 19 --

- 3 -
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 of 19 --

1A “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 -
(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 message 1 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

-- 4 of 19 --

2From here forward, we refer to this quoted language as “the
Reimbursement Provision.”
- 5 -
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

-- 5 of 19 --

- 6 -
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 of 19 --

- 7 -
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 of 19 --

- 8 -
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 of 19 --

- 9 -
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 of 19 --

- 10 -
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 of 19 --

- 11 -
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 of 19 --

- 12 -
$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 of 19 --

- 13 -
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 of 19 --

- 14 -
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 of 19 --

- 15 -
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 of 19 --

3We 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 -
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

-- 16 of 19 --

- 17 -
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 of 19 --

- 18 -
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 of 19 --

- 19 -
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 of 19 --