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Note: Ajax Tocco Magnethermic Corporation (Seller) sold heat-treating equipment to IPSCO Tubulars, Inc. (Buyer), a steel pipe manufacturer. Seller guaranteed that after Buyer's pipes were treated by Seller's equipment, the pipes would meet certain industry standards. As part of the guarantee, Seller stated that a letter of credit was in place to back its warranty obligations.

When the equipment did not perform at the level guaranteed by Seller, Buyer sued Seller for constructive fraud, alleging, among other things, that Seller falsely stated that it had procured an LC. Seller moved to dismiss and the United States District Court for the Eastern District of Arkansas, Miller, J., granted Seller's motion because Buyer failed to allege that a special or confidential relationship existed between the Buyer and Seller, which is necessary to state an actionable claim for fraud in Arkansas.

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