Article

Note: Turquoise Properties Gulf, Inc. (Developer) entered into pre-construction purchase agreements with purchasers for the sale of its condominium units at Turquoise Place (Condominium) in Alabama. U.S. Bank National Association (Escrow Agent/Beneficiary) served as escrow agent for the condominium development, a task that included the administration of letters of credit posted by condominium unit purchasers as security for their purchase agreements.

Due to a dispute over reimbursement of fees and payment of funds with Developer, Escrow Agent/ Beneficiary resigned and made a successful request to deposit escrowed funds into the registry of the court. Escrow Agent/Beneficiary sued Developer for a declaration that it owed no further duties to Developer and to obtain money damages for "indemnity, unjust enrichment, assumpsit/money had and received, and breach of contract."

In response, Developer sought a temporary restraining order and preliminary injunction directing Escrow Agent/Beneficiary to reacquire from the court the LC since it was about to expire. Developer also sought to draw on the letter of credit. The LC was not able to be reissued or extended past its initial expiration date. The Alabama Southern District Court, Steele, J., denied the motion for a temporary restraining order and preliminary injunction.

The Judge noted that there was an inadequate showing of injury. First, the Judge found that Developer was dilatory in handling the letter of credit and filing its motion only three business days before the expiration of the letter of credit itself. The Judge noted that "[h]ad [Developer] wanted to recover the proceeds of the letter of credit, it could have moved forward promptly with notice and an opportunity to cure, which would have enabled [Developer] to draw on the letter of credit . . . . Yet [Developer] waited [five months] before notifying the [applicants] of their default and right to cure." In denying Developer's request for temporary restraining order and injunctive relief the Judge also noted that "the type of harm threatened here . . . is readily compensable via an award of money damages at trial."

[JEB/meg]

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