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Note: Alkemal (Investor) sought financing to engage in a new business venture of importing and exporting timber. DEW Global Finance LLC (Promoter) represented to Investor that “Scotia Bank, or a similar bank, would issue a leased standby letter of credit to [Investor] in the amount of [USD]20 million.”As part of the deal, Investor was to deposit USD 2.6 million into Promoter’s bank account. After “Escrow Instructions” were sent to Investor, three versions of a “Lease Agreement” were drafted. All three versions of the Lease Agreement stated that Avion Consulting Group, LLC (Avion) would provide the standby letter of credit, and Velocity Partners Limited (Escrow Agent) would be the escrow agent. Exhibit A, included in the Lease Agreement, “was the Lease Application in which the Lessee was to apply to the Applicant’s Representative for a lease of the standby letter of credit.”The parties disputed whether Investor agreed to be bound to any of the three versions of the Lease Agreement.

Investor wired USD 2.6 million to Promoter’s bank account, and Promoter retained a USD 400,000 fee and then released the remainder of the funds to Escrow Agent. Escrow Agent received a fraudulent email from someone claiming to be a representative of Scotia Bank. Velocity then closed the escrow account, retained a USD 55,000 escrow fee and wired the remaining money to Avion and other parties. Subsequently, Investor sent a letter to Promoter requesting a refund because it had not received a standby letter of credit by the agreed deadline. Later, Investor discovered that Scotia Bank was not involved with any transaction involving Investor and all of the e-mails and documents Investor had received were fraudulent.

Investor sued Promotor for breach of contract, breach of fiduciary duty, constructive fraud, fraud, negligent misrepresentation, civil conspiracy, conversion, unfair and deceptive trade practices, unjust enrichment, constructive trust, and for an accounting. Investor moved for Partial Summary Judgment on the claims of breach of contract, breach of fiduciary duty, constructive fraud, fraud, conversion, and unfair and deceptive trade practices. Promoter subsequently moved to Amend Answer, alleging that Investor had signed the escrow instructions. The Superior Court of North Carolina, Henderson County Business Court, Robinson, J., denied both of the motions.

In the Motion to Amend Answer, Promoter claimed that it believed Investor had signed the escrow instructions until Investor attached a copy of the unsigned agreement to its brief. However, the Judge noted that throughout discovery and up until the time Investormoved for Partial Summary Judgment, Promoter never disputed the escrow instructions and only did so almost two years after Promoter had filed its answer and six months after the deadline.

The Judge denied Investor’s motion because genuine issues of material fact remained as to which agreement the parties intended to be bound by and what their intentions were regarding Promoter’s role. To determine whether there was a breach of contract, the Judge determined that it would first be necessary to decide which was the binding agreement among the Escrow Instructions, the Lease Agreement, and the Funds Release Agreement. Regarding fiduciary duty, the Judge states that the question of Promoter’s duty depended on what role the parties intended Promoter to have. To determine constructive fraud, fraud, and conversion, the court would also first need to determine which of the documents was the binding agreement. Lastly, to establish unfair and deceptive trade practices, a jury would need to determine as a question of fact whether Promoter committed an alleged unfair or deceptive act.

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