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Grupo Internacional Cantabria Co., S.A. v. ABN AMRO Inc.

January 11, 2008

GRUPO INTERNACIONAL CANTABRIA CO., S.A., A PANAMANIAN CORPORATION; VICTOR CHACON, RAFAEL CHACON; AND INVERSIONS VILLAS DE CANTABRIA, S.A., A GUATEMALAN CORPORATION, PLAINTIFFS,
v.
ABN AMRO INCORPORATED, F/K/A ABN AMRO CHICAGO CORPORATION, A NEW YORK CORPORATION; AND UBS AMERICAS INCORPORATED, A DELAWARE CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER

Plaintiffs Grupo Internacional Cantabria Co., S.A. ("Grupo"), Victor Chacon ("Victor"), Rafael Chacon ("Rafael"), and Inversions Villas de Cantabria, S.A. ("Inversions"), brought an eight-count complaint against defendants ABN AMRO Inc., f/k/a ABN AMRO Chicago Corp. ("ABN") and UBS Americas Inc. ("UBS")*fn1 regarding an investment fund that the parties had planned to launch as a joint venture. The complaint alleges: breach of oral contract*fn2 (Counts I and V); promissory estoppel (Counts II and VI); equitable estoppel (Counts III and VII); and fraud (Counts IV and VIII). Defendants have brought a motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons discussed below, the court grants defendants' motion.

FACTS*fn3

Plaintiffs Victor and Rafael Chacon are the president and vice-president, respectively, of Grupo, an investment banking and real estate development company located in Panama. In September 1996, Victor met with Eric Nadelberg ("Nadelberg"), a Vice-President of the Chicago Corporation (later acquired by defendant ABN), to discuss the prospect of offering investment banking services in Central America. According to plaintiffs, Nadelberg represented to Victor that the Chicago Corporation had a "stellar reputation" and "vast resources and global contacts."

In January 1997, Victor met with Nadelberg in Chicago to discuss Victor becoming the exclusive agent for the Chicago Corporation in Central America. In September 1997, Nadelberg went to Guatemala to discuss the creation of a structured note product that Grupo and the Chicago Corporation would launch together. At that time, Nadelberg and Victor made a presentation to several potential clients regarding that structured note product, later called the Lighthouse Fund. Nadelberg told the prospective clients that the product would be ready for purchase and investment in the near future, and that plaintiff Grupo would receive commissions for the sale of its shares.

In November 1997, Victor traveled to El Salvador to make a presentation to officers of Banco Agricola Comercial ("BAC") about the Lighthouse Fund. Victor represented to BAC that the fund would be available within several months. By January 1998, Victor had met with several other prospective clients regarding the Lighthouse Fund. Victor and Nadelberg then met with those potential investors together, along with plaintiff Rafael, and informed them that the Lighthouse Fund would be ready in approximately four and a half months. In May 1998, Rafael and Victor traveled to Costa Rica for the inauguration of the new president; at that time, they met with members of the new Costa Rican cabinet and other financial institutions to discuss potential investment in the Lighthouse Fund.

In June 1998, Victor and Rafael went to Chicago to meet with Nadelberg and Roxanne Bennett ("Bennett"), another Vice-President of ABN and Product Developer of the Lighthouse Fund, to discuss the venture. Also present was James Gary ("Gary"), Executive Vice-President of ABN in charge of futures. At that meeting, they discussed that plaintiff Grupo would receive a 1% up-front commission for sales of the product, along with an annual commission of 1.5% of the value of all outstanding shares. Gary concluded the meeting by stating, in reference to the Lighthouse Fund, "This is going to happen."

On February 3, 1999, Victor sent Bob Gaffney ("Gaffney"), Senior Vice-President of ABN, a letter expressing plaintiffs' concern that there was a lack of communication from ABN. Gaffney reassured Victor that ABN would communicate more frequently and in a more timely manner. On September 30, 1999, Victor sent ABN a confidential list of prospective Lighthouse Fund clients located in the United States, Panama, Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica.

On July 25, 2000, Bennett told Victor and Rafael that ABN's Risk Management Committee had approved the Lighthouse Fund. On February 20, 2001, Bennett provided Victor with a draft Offering Memorandum for the Lighthouse Fund. The offering was structured to raise $100 million in capital; it had an initial launch date of April 1, 2001 and required a minimum subscription of $500,000. ABN did not launch the fund on April 1, but in April 2001 Bennett faxed "burn ratios," or performance models, to Victor and Rafael. Those burn ratios projected fees, costs, performance expectations, and the commissions to be paid to Grupo, as well as a quote of $50 million as the initial investment from Rafael and Victor's clients.

On August 14, 2001, Bennett assured Victor that ABN still intended to launch the fund. On November 9, 2001, Bennett sent Victor an updated and revised Offering Memorandum, along with a professionally designed cover proof for the Lighthouse Fund. On February 12, 2002, Bennett e-mailed Victor, "Our goals remain the same: LAUNCH THE FUND." On March 28, 2002, Bennett e-mailed Victor that the fund was "an important piece of our business and we will launch it for ALL our sakes." On May 23, 2002, Bennett e-mailed Victor to inform him that ABN's counsel was completing a final review of the prospectus and that she was finalizing the marketing materials.

On August 14, 2002, Bennett sent Victor an updated version of the fund prospectus and advised Victor that "ABN will make a substantial investment in the Lighthouse Fund." She also told Victor that ABN was "incorporating in the Cayman Islands so that the companies are all set up." Bennett informed Victor that ABN had completed due diligence on the portfolio accounting and risk management aspects of the fund.

On September 4, 2002, Bennett mailed Victor the Lighthouse Fund brochure. On September 9, 2002, Bennett e-mailed Victor that the company was incorporated in the Cayman Islands as Lighthouse Global Fund, Ltd. On October 22, 2002, Bennett e-mailed Victor that the marketing materials were at the printer and would be available in two weeks. She closed the e-mail with "Yes, we are weeks away from launch."

On December 10, 2002, Bennett, on behalf of ABN, and Victor, on behalf of Grupo, executed a Selling Agreement. In that agreement, ABN agreed, through Lighthouse Global, to pay Grupo up to 1.25% of the subscription price of each share it sold as the Selling Agent, as well as 1.5% per year of the month-end net asset value of the shares Grupo sold as the Selling Agent. Also on December 10, 2002, Bennett and Gaffney set a new launch date of January 15, 2003, in the presence of plaintiffs Victor and Rafael and their attorney, Alan Johnson. Bennett and Gaffney told them they could begin receiving capital from their clients for the Lighthouse Fund, although the money would have to be escrowed until January 15, 2003.

On December 18, 2002, Victor and Rafael asked Bennett to contact Mike Conway ("Conway"), Senior Investment Officer for AON Corporation, who had expressed interest in investing in the Lighthouse Fund. Victor and Rafael sent six e-mails ...


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