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Note: When PNC Bank, National Association (Issuer) declined to renew LCs payable to Prince William County, Virginia in connection with its real estate development project, Princeton Woods, L.L.C. (Applicant) sued for breach of contract, fraud, and fraudulent concealment and sought punitive damages. Issuer moved to dismiss the Complaint. The US District Court of the Eastern District of Virginia, Cachieris, J., granted the motion with respect to the claims regarding fraud and the demand for punitive damages but denied it as to the breach of contract claim.

The Judge reviewed the allegations in the Complaint to the effect that there was a course of dealing between Issuer and Applicant with respect to the renewal of LCs, that on a request for renewal, that Applicant submitted requested information and paid required fees by checks which were cashed, and that Issuer failed to inform Applicant that it had decided not to renew the LCs. Applicant alleged that it discovered the non renewal from Beneficiary who imposed various penalties on it for failure to renew the LCs. In light of Issuer's request for the payment of fees and submission of information, the Judge concluded that the allegations, taken most favorably to the Applicant, suggested the formation of a contract to issue LCs. He rejected the argument that such an action was in violation of the Statute of Frauds, requiring a writing, in view of the partial performance of Applicant by paying the fees or equitable estoppel, both of which are exceptions to the Statute.

As to the fraud claims, the Judge ruled that they should be dismissed because they merely replicate the claims alleged in the contract action and would not stand alone apart from the existence of a contract. He also struck the claim for punitive damages since they were not available in Virginia in the absence of a willful tort, a claim that had not been alleged.

[JEB]

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