Jaffe v. Bank of America, N.A.
| Decision Date | 18 August 2009 |
| Docket Number | Case No. 07-21093-CIV. |
| Citation | 667 F.Supp.2d 1299 |
| Parties | John JAFFE & Barbara Jaffe, Plaintiffs, v. BANK OF AMERICA, N.A. & Agricultural Bank of China, Defendants. |
| Court | U.S. District Court — Southern District of Florida |
Michael T. Moore, Moore & Company, Scott Andrew Wagner, Moore & Company, Clay Michael Naughton, Moore & Company, Coral Gables, FL, for Plaintiff.
Peter W. Homer, Gregory J. Trask, Adam Matthew Shonson, Homer Bonner, P.A., Miami, FL, Glenn Michael Rissman, Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., Fort Lauderdale, FL, Jaclyn Dana Goldstein, Hodgson Russ, Boca Raton, FL, Jacqueline Meyer, Mark A. Harmon, S. Robert Schrager, Hodgson Russ LLP, New York, NY, Meredith James Gussin, Assouline & Berlowe, P.A., Miami, FL, for Defendants.
OPINION FINDINGS OF FACT AND CONCLUSIONS OF LAW
The original Complaint filed by John Jaffe and his wife, Barbara Jaffe on April 24, 2007 sought a Temporary Restraining Order and Injunctive Relief against a single Defendant, Bank of America, N.A. (BoA). Plaintiffs sought an immediate emergency hearing to enjoin the Defendant BoA from paying an irrevocable standby letter of credit in the amount of $6,030,500.00 to either FoShan Polymarine Engineering Co., Ltd. (FoShan), a Chinese yacht construction company or to the Agricultural Bank of China (ABC) on April 25, 2007.
The Plaintiffs alleged in their Verified Complaint that they had requested and authorized issuance of the letter of credit by BoA to pay for the Jaffes' purchase of a luxury motor yacht to be built in China by FoShan. Plaintiffs further alleged that, although the contract with the shipyard provided for the vessel to be completed by June of 2006 and delivered to Plaintiffs in Miami, Florida, the FoShan shipyard had They further allege that FoShan had ". . . provided the letter of credit to its bank Agricultural Bank of China (ABC), as security for debts unrelated to the Jaffe project."
Plaintiffs asserted, and their counsel argued, that the Chinese boatyard (FoShan) and ABC were conspirators to acquire by material fraud from Mr. and Mrs. Jaffe, funds intended by the Jaffes for payment for the purchase of a luxury yacht that had never been built. Unless emergency injunctive relief was immediately entered by the Court, Plaintiffs asserted that the $6 million would vanish into China, beyond the jurisdiction of this Court.
In support of their request for an injunction, Plaintiffs also filed an Emergency Motion for a Temporary Restraining Order (DE #3) and an Emergency Motion for Hearing (DE # 4). Plaintiffs attached an affidavit from Peter Tsou (DE # 3-2), the President of Custom Marine International (CMI), the seller in the yacht sales agreement, stating that the letter of credit existed, that FoShan had not commenced constructing the yacht, and that Tsou had notified ABC that the letter of credit should be terminated immediately. Also attached was the affidavit of John Robert Newton (DE # 3-3), Plaintiffs' yacht broker, attesting to the contract between the Jaffes and FoShan for the building of the yacht, and an affidavit from Arthur Barbeito (DE # 3-4), the engineer in charge of approving the construction plans, attesting to the existence of the construction contract and that he had not received the vessel's engineering schematics for his approval.
On April 27, 2007, this Court granted Plaintiffs' Motion for Hearing (DE #8), noting that Plaintiffs' controversy appeared to be with FoShan, and that BoA appeared to be an innocent bystander. Thus, this Court ordered a hearing on May 3, 2007 for the purpose of allowing BoA, FoShan, and ABC to clarify their positions in the matter. Plaintiffs then filed a Supplemental Memorandum (DE # 9), attaching an email correspondence showing that Plaintiffs' counsel informed BoA of the May 3 hearing, but that BoA would not be appearing (DE # 9-2). Plaintiffs' counsel also detailed attempts to notify FoShan, by fax and email, of the hearing.
On May 2, 2007, Plaintiffs filed an affidavit from Michael Moore (DE # 10), Plaintiffs' counsel, declaring that Plaintiffs had attempted to secure a performance bond with a company named Allianz for Plaintiffs' financial protection in the yacht transaction. The affidavit noted that the performance bond obtained from Allianz was subsequently determined to be fraudulent. Allianz was being investigated by the FBI for issuing fraudulent performance bonds. Plaintiffs also attached a signed letter from Xu Wei, General Manager of FoShan, stating that Peter Tsou was empowered to sign yacht construction contracts on behalf of FoShan (DE # 10-3). An affidavit of John Jaffe (DE # 11-2) declared that BoA had assured him that the letter of credit would not be honored until the yacht construction was completed.
Although noticed, BoA did not attend the Court's scheduled May 3, 2007 hearing. Only the Plaintiff, John Jaffe, and his counsel appeared. Mr. Jaffe testified that he was the victim of a fraud committed by this Defendant Bank in a conspiracy to unlawfully obtain $6 million from him for a boat that was either (a) never built, or (b) if built, sold to others who had vanished with it.
With ABC and FoShan ignoring the Court's Order to appear and defend themselves against the Plaintiffs' sworn assertions of fraud, the Court had before it only an uncontradicted record which appeared to entitle Plaintiffs to the temporary injunctive relief sought. It later developed (after ABC and BoA finally appeared and defended themselves) that Mr. Jaffe and his counsel had been informed by the only then Defendant (BoA) that it would not object to Plaintiffs seeking a temporary injunction preventing payment to the beneficiaries of the letter of credit.1
The Court then entered an injunction preventing BoA from dispersing any funds pursuant to the letter of credit, directing Plaintiffs to immediately notify both BoA and the other two named alleged conspirators (ABC and FoShan) of the entry of the Court's injunctive order, with directions to respond to these serious charges within thirty days. On May 4, 2007 (DE # 13) as the Court anticipated, the entry of the injunctive order on May 4 brought ABC into this litigation defending itself against the serious charges brought against it, as well as galvanizing BoA into defensive action.
On May 25, 2007, BoA filed a response with attached emails and faxes showing that they had been attempting to notify ABC, telling ABC that BoA could not represent them in the matter, and advising them to retain local counsel and enter an appearance (DE #14, 14-11, 14-12, 14-13). On May 31, 2007, BoA requested a hearing (DE # 17), claiming that it wished to present documentary evidence which was in its possession prior to the Court scheduled temporary injunction hearing at which BoA had failed to appear on May 3, 2007. This Court denied the request on June 1, 2007 (DE #18), and directed Plaintiffs to respond to BoA's response.
On June 1, 2007, ABC finally appeared2 by moving to vacate the preliminary injunction (DE # 19), attaching an affidavit of Zhenjiang Zhang (DE # 21), the New York Representative of ABC, outlining ABC's position that it had relied on the letter of credit from BoA in making a loan to FoShan, and that the letter of credit should be payable immediately upon demand by ABC. On June 8, 2007, BoA filed its Answer denying the material allegations and asserting a counterclaim against the Jaffes and third-party claims against ABC and FoShan, seeking a declaration of its rights and obligations with respect to each party (DE # 24).
This Court then made every effort to schedule a prompt hearing with all parties present to determine whether to consider Defendants' motions to vacate. On June 11, 2007, this Court scheduled a hearing on the matter for June 20, 2007 (DE # 26). Plaintiffs' motion to continue was granted to accommodate counsel's pre-paid vacation, and the hearing was rescheduled for June 27, 2007 (DE #30). On June 25, 2007, this Court allowed ABC to intervene in this matter and ordered it to appear at the June 27 hearing (DE # 38). ABC then requested to reschedule the hearing, which this Court granted, moving it to July 17, 2007 (DE #39). On June 29, 2007, this Court granted Plaintiffs' Motion to Expedite Discovery, ordering ABC to respond to Plaintiffs' discovery requests before the July 17 hearing (DE # 43). On July 16, 2007, this Court denied Plaintiffs' request to continue the July 17 hearing (DE # 54).
At the July 17 hearing, Plaintiffs submitted affidavits from Stephen Oliver (DE # 60), an employee of CMI, purporting to show that FoShan could not have built the yacht in question. On July 23, 2007, the Court granted the preliminary injunction requiring Plaintiffs to post an injunction bond in the amount of $150,000 (DE # 67). Plaintiffs then, on August 3, 2007, filed an Amended Complaint naming BoA, ABC, and FoShan as defendants (DE #73). The Amended Complaint alleged that BoA made certain oral misstatements and omissions in connection with the irrevocable standby letter of credit that Plaintiffs requested be issued by BoA. Plaintiffs asserted claims against BoA for purported negligent misrepresentation, breach of fiduciary duty, and equitable estoppel predicated on those alleged misstatements and omissions. On August 7, 2007, ABC filed an Answer to BoA's third party complaint, denying the material allegations (DE #74).
On September 11, 2007, ABC filed a motion to vacate (DE # 81), simply relying on legal...
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