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A. Energy Group, Ltd. v. Northeast Direct Corp.

United States District Court, D. South Carolina, Charleston Division

September 22, 2014

Atlantic Energy Group, Ltd., Plaintiff,
v.
Northeast Direct Corp., Hector Reyes, and Wells Fargo Bank, N.A., Defendants

For Atlantic Energy Group Ltd, Plaintiff: Mark W McKnight, LEAD ATTORNEY, Charleston, SC.

Page 811

ORDER

PATRICK MICHAEL DUFFY, United States District Judge.

This matter is before the Court upon Defendant Wells Fargo Bank, N.A.'s (" Wells Fargo" ) Motion to Dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (" Motion to Dismiss" ). For the reasons that follow, the Court grants Wells Fargo's Motion to Dismiss.

BACKGROUND[1]

This case arises out of a Sales and Purchase Agreement (" Purchase Agreement" ) between Plaintiff Atlantic Energy Group, Ltd. (" Plaintiff" ) and Defendant Northeast Direct Corp. (" Northeast Direct" ). Pursuant to the Purchase Agreement, Plaintiff agreed to pay Northeast Direct to procure diesel fuel for Plaintiff for resale to end users. Section 8.2 of the Purchase Agreement required both Parties to " [l]odge contracts with their respective banks," Purchase Agreement § 8.2, ECF No. 1-1, which, for both Parties, was Wells Fargo, id. § 14. Section 15.1 of the Purchase Agreement provides that Northeast Direct's " bank will issue a Performance Bond for the Charter Vessel Payment. The bond is for the Initial Payment of twenty-five percent of the Charter Vessel cost as per the Commercial Invoice." Id. § 15.1. The total charter-vessel cost per the Purchase Agreement was $1,600,000.00, and the performance bond to be issued by Northeast Direct's bank, Wells Fargo, was to be $400,000.00.

Pursuant to the Purchase Agreement, Plaintiff, through agent JHH Investments, Inc., executed an " Outgoing Wire Transfer Request," authorizing the Wells Fargo branch located on James Island, South Carolina, to transfer $400,000.00 to the Wells Fargo branch in New York where Northeast Direct did business. In the " Beneficiary/Recipient Information" section of the Outgoing Wire Transfer Request form, a note in the box for " Information/Comments" states: " Deposit for shipping per contract with Atlantic Energy

Page 812

Group, Ltd." Wire Request 1, ECF No. 8-1. Wells Fargo processed the wire transfer and made the funds available to Northeast Direct. Thereafter, Northeast Direct failed to procure the first shipment of diesel fuel as provided in the Purchase Agreement.[2]

On April 28, 2014, Plaintiff filed this suit against Defendants Northeast Direct and Wells Fargo. Plaintiff asserted causes of action against Northeast Direct for breach of contract and for failure to procure a performance bond. Plaintiff asserted a sole count of negligence against Wells Fargo. In that count, Plaintiff alleges that a copy of the Purchase Agreement between Northeast Direct and Plaintiff was to be lodged with each Party's bank. Plaintiff further alleges that it provided a copy of the Purchase Agreement to its Wells Fargo branch in South Carolina and that Northeast Direct provided a copy to its Wells Fargo branch in New York. Plaintiff alleges that the Purchase Agreement set forth the terms and conditions under which Wells Fargo could make the funds available to Northeast Direct including, among others, the issuance by Wells Fargo of a performance bond for the vessel deposit. Wells Fargo neither issued a performance bond for the vessel deposit nor confirmed that all documentation required under the Purchase Agreement was actually in place before disbursing the funds. Plaintiff alleges that Wells Fargo's negligence caused or contributed to Plaintiff's loss.

Wells Fargo filed the instant Motion to Dismiss on June 20, 2014. On July 15, 2014, Plaintiff filed its Response. On July 25, 2014, Plaintiff filed an Amended Complaint, adding Hector Reyes (" Reyes" ), the chief executive officer of Northeast Direct, as a party and alleging one count of fraud and one count of negligence against him. The Amended Complaint also added a claim against Wells Fargo for breach of fiduciary duty. Plaintiff alleges that it reposed a special trust and confidence in Wells Fargo that the bank would adhere to the requirements of the Purchase Agreement between Plaintiff and Northeast Direct in processing the wire transfer. Wells Fargo allegedly breached its fiduciary duty to Plaintiff when it processed the wire transfer without either ensuring that it had adhered to the Purchase Agreement's requirement that it provide a performance bond or advising Plaintiff that a performance bond had not been issued. Plaintiff alleges that only Wells Fargo would have had knowledge of the status of the performance bond at the time the wire transfer was authorized.

Also on July 25, 2014, Plaintiff requested entry of default against Northeast Direct. The Clerk entered default as to Northeast Direct on July 28, 2014. On July 29, 2014, Wells Fargo filed its Reply, in which it addresses the new claim asserted in the Amended Complaint. The Motion to Dismiss has been fully briefed and is ripe for review.

JURISDICTION

This Court has subject matter jurisdiction over this matter based on 28 U.S.C. ยง 1332, as there is complete diversity of the Parties and the amount in controversy ...


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