United States District Court, E.D. Missouri, Southeastern Division
MEMORANDUM AND ORDER
CRITES-LEONI UNITED STATES MAGISTRATE JUDGE
matter is before the Court on Plaintiff Dinosaur Merchant
Bank Limited's Motion for Judgment on the Pleadings.
(Doc. 18.) For the following reasons, the Court will grant
Dinosaur Merchant Bank Limited (“Dinosaur”)
brought this action alleging breach of contract, breach of
good faith and fair dealing, and conversion against Defendant
Bancservices International, LLC (“BSI”).
Dinosaur's claims arise out of a contract (the
International Payment Services Agreement or
“IPSA”) between Dinosaur and BSI dated October
13, 2017. Under the IPSA, Dinosaur engaged BSI to provide
payment services for Dinosaur. Dinosaur claims that BSI
improperly withheld $3, 469, 718.26 in funds Dinosaur
entrusted to BSI for the transmission of money to purchase
crude oil on behalf of Dinosaur's client. The Complaint
requests an award of $3, 469, 718.26 in compensatory damages,
as well as punitive damages, pre-judgment interest and
post-judgment interest; and attorneys' fees pursuant to
the terms of the IPSA.
filed a Counterclaim, setting forth claims for fraud, breach
of contract, and indemnity. BSI alleges that Dinosaur failed
to disclose to BSI information material to the transaction at
issue that would have raised significant compliance issues
and may have caused the transaction to be rejected by other
Motion, Dinosaur argues that it is entitled to a judgment on
its Complaint directing the return of its funds wrongly
withheld by BSI, and an award of expenses and attorneys'
fees. Dinosaur further argues that the Counterclaim should be
dismissed for failure to state an actionable claim. BSI
opposes the Motion. (Doc. 31.) Dinosaur has filed a Reply, in
which it requests oral argument on its Motion. (Doc. 32.) The
Court finds that the pleadings are sufficient to resolve
Dinosaur's Motion and will therefore deny Dinosaur's
request for oral argument.
the pleadings are closed-but early enough not to delay
trial-a party may move for judgment on the pleadings.”
Fed.R.Civ.P. 12(c). A motion for judgment on the pleadings
should be granted when, accepting all facts pled by the
nonmoving party as true and drawing all reasonable inferences
from the facts in favor of the nonmoving party, the movant
has clearly established that no material issue of fact
remains and that the movant is entitled to judgment as a
matter of law. Schnuck Markets, Inc. v. First Data
Merchant Services Corp., 852 F.3d 732, 737 (8th Cir.
2017). As will be discussed below, a motion for judgment on
the pleadings is analyzed differently depending on whether
the motion seeks a merits disposition or seeks to press a
Rule 12 defense. Dinosaur does both in its Motion.
sets out its version of the relevant facts in the Complaint.
(Doc. 1.) BSI denies most of those facts on the basis it has
insufficient information to form a belief as to the
allegations. (Doc. 9.) The Court sets forth the following
summary merely to provide context to the allegations and does
not consider them in ruling on the Motion. Any material
disputes are set forth and discussed in the Court's
is a private company organized under the laws of the United
Kingdom and is majority-owned by a citizen of the State of
New York. Under the laws of the United Kingdom, Dinosaur is
authorized to accept deposits, provide credit, give
investment advice, and arrange deals in investments, as well
as provide payment services. BSI is a limited liability
company organized under the laws of the State of Missouri and
is a registered money services business.
October 30, 2018, Dinosaur enlisted the services of
BSI to assist it with a transaction involving the purchase of
Boscan crude oil by a Thai asphalt company (Tipco Asphalt
Public Company Limited, hereinafter “Tipco”) from
a Venezuelan petroleum company (Petroleos de Venezuela, S.A.,
hereinafter “PdVSA”). In this instance, PdVSA
intended to sell Tipco a quantity of oil that was being
stored aboard a vessel, the Stena Surprise, against which a
prejudgment attachment had been entered by a Curacao Court.
The attachment was entered against PdVSA for the benefit of
an Italian energy company, Energy Coal, to satisfy a debt
PdVSA owed to Energy Coal that accrued between 2012 and 2014.
The attachment allowed PdVSA to find a buyer for the oil
rather than selling it at a public auction, so long as the
sales contract was for at least $17, 348, 645.
and Tipco had previously entered into a Sales Contract for
the delivery of Boscan crude oil, subject to PdVSA's
availability. The Sales Contract set forth the
“Particular Conditions of Sale” for the time
period of January 1, 2014 through December 31, 2017;
it was numbered SA144531 and signed by a representative of
Tipco on January 13, 2014.
October 20 and 22, 2018, an Escrow Agreement (Doc. 17 at pp.
21-25) concerning the oil purchase was signed by
representatives of PdVSA, Tipco, and a Panamanian law firm
named De Jesus & De Jesus (identified as “Escrow
Agent”). The Escrow Agreement noted that PdVSA and
Tipco agreed upon a purchase price of $23, 468, 931.86 for
the Boscan crude oil. A portion of the agreed sale price, a
total of $17, 348, 645, was to be paid to the Curacao Court
to pay Energy Coal's attachment lien. The remainder of
the $23, 468, 931.86 totaling $6, 120, 286.86 was to remain
with the Escrow Agent.
consummate the sales contract for the 380, 225 barrels of oil
between Tipco and PdVSA, De Jesus & De Jesus used Barnett
Capital Bank (an international financial institution located
and registered in the Commonwealth of Dominica) to deposit
$23, 468, 931.86 with Dinosaur on October 22, 2018.
According to Dinosaur, the wire instructions advised that the
purpose of the funds was for the further benefit of De Jesus
& De Jesus and that the purpose of the funds were
“cost of goods, Boscan crude oil sales agreement dated
1/1/14 cargo load per vessel Mt. Stena Surprise with BL.
14707-703-1-1.” (Doc. 1 at ¶ 8.)
October 26, 2018, Barnett Capital Bank instructed
Dinosaur to originate a wire transfer from its account with
Dinosaur in the sum of $17, 348, 645, the funds to be sent to
the Curacao bank Banco di Caribe N.V. for the benefit of an
account maintained there by “Gemeenschappeljik Hof Van
Justice, Curacao, ” which is Dutch for Common Court of
Justice, Curacao (“Curacao Court”). Id.
at ¶ 9. According to the wire instructions the wire was
for “Cost of gods [sic] sales agreement cargo load per
vessel Mt. Stena surprice [sic] with BL 14707/7031/1 Energy
Coal Case.” Id.
reportedly engaged in a due diligence investigation between
October 26, 2018, and October 30, 2018. See Doc. 1
at p. 3-4. Dinosaur states that it concluded from its
investigation that the requested $17, 348, 645 transfer was
for the purpose of lifting the Curacao Court-imposed
attachment and enabling Tipco to take possession of the crude
oil then stored as cargo in the MT Stena Surprise. Dinosaur
further states that it discovered that PdVSA was subject to
sanctions in connection with any debt incurred by PdVSA after
August 24, 2017. Dinosaur asserts that the Curacao Court
attachment had occurred pre-August 24, 2017, and therefore
did not fall under the sanctions.
October 30, 2018, Dinosaur engaged BSI to transmit
$17, 348, 645 using its BANCwire product to the Curacao
Court's account at Banco di Caribe Bank pursuant to the
preexisting IPSA (“Transaction”). Dinosaur states
that, along with the wire payment instructions, it provided
BSI with the “fruits of its due diligence, including
the contract of crude oil sale between PdVSA and Tipco, the
escrow agreement between Tipco and De Jesus & De Jesus, a
letter from De Jesus & De Jesus describing the crude oil
transaction, and two orders of the Curacao Court relating to
the attachment of the crude oil cargo in the MT Stena
Surprise.” Id. at ¶ 13.
accepted the Transaction. At some point downstream in the
chain of transfers involved in the Transaction, either Banco
di Caribe or another bank in the chain rejected the payment
and returned the $17, 348, 645 to BSI. On November 21,
2018, Dinosaur requested that BSI send the $17, 348, 645
to a different account maintained by the Curacao Court, for
the same purposes as the October 30, 2018 request. (Doc. 17-2
at pp. 3-4.) On November 29, 2018, Dinosaur directed
BSI to cancel the wire payment transfer and to return the
$17, 348, 645 to Dinosaur.
November 30, 2018, BSI informed Dinosaur that it was
retaining $3, 469, 718.26 and returning only $13, 848, 926.74
of the $17, 348, 645 Dinosaur had instructed be returned to
Dinosaur. See Doc. 15-5 at pp. 2-3. BSI represented
in this communication that it was entitled to a 5%
“transaction fee” of $867, 429.63, and a 15%
“escrow holdback” of $2, 602, 288.63 in
connection with the funds. Id. BSI noted:
We are continuing to examine the reasons for the payment
rejection and continue to be concerned that this payment has
subjected us to substantial potential legal and financial
risk given that it was rejected by the recipient bank and
given that it involved Petroleos de Venezuela, S.A.
(“PdVSA”), an entity considered part of the
Government of Venezuela and subject to various prohibitions
and sanctions imposed by the United States Office of Foreign
Assets Control (“OFAC”) as well as various recent
Id. at 2. While BSI expressed appreciation for
Dinosaur's assistance in investigating the payment
rejection, it stated that additional information was needed.
In particular, “one item we need to receive is
documentation from the Curacao court that authorizes this
payment given that Payment Request BCB2117 was
rejected.” Id. BSI then requested
“documentation from the Curacao court that directs any
payment from Tipco Asphalt Public Company Ltd
(“Tipco”) to be paid to the Curacao court.”
Id. As further explanation for deducting a
processing fee and holding funds in escrow, BSI explained:
Also, in the October 10, 2018 “Payment
Instruction” delivered by PdVSA to Tipco, PdVSA
indicates that the purchase price under the contract between
PdVSA and Tipco is USD $23, 468, 931.86. Accordingly, it
appears that USD $17, 348, 645 of the purchase price was
needed to pay PdVSA's creditors and release the seized
cargo from the Curacao court. We are examining to understand
what portion of the USD $6, 120, 286.86 balance has been or
will be paid to PdVSA, but any information you can provide
would be appreciated…
Id. BSI added:
Upon our satisfaction that there are no damages, claims,
losses or other liability resulting from this transaction
(after our confirmation that we have received all requested
documentation to our satisfaction), we will remit to Dinosaur
the remaining escrow amount, less any amounts needed to
satisfy such damages, claims, losses or other liability. If
within sixty (60) days of the date of this correspondence we
have not reached such satisfaction for any reason (including
any failure by Dinosaur to deliver any and all requested
supporting documentation), the then remaining balance of the
escrow shall be remitted to BSI (or any BSI-designated
entity) and Dinosaur shall have no further claim to such
Id. at 3.
response, counsel retained by Dinosaur emailed a letter (Doc.
15-6) to BSI on December 3, 2018, wherein BSI demanded return
of the “$17, 348, 645, minus applicable fees, by no
later than December 7, 2018.” Id. at 3.
Dinosaur's counsel further disagreed with BSI's
imposition of the $867, 429.63 transaction fee and holdback
in escrow of $2, 602, 288.63. Counsel explained:
DMBL values its continued relationship with Bancservices
International LLC. To that end, DMBL shared, and will
continue to share, the results of its extensive transaction
due diligence with you. We note that the underlying
legitimate business purpose of the $17, 348, 645 originated
by DMBL for the benefit of Gemeenschappellijik Hof Van
Justitie of Curacao, i.e., the Curacao Court, was clear. The
payment was made to satisfy an order of that court in a
proceeding related to judgements obtained by PdVSA creditors.
True, the recipient bank rejected the transaction, apparently
for compliance reasons. We cannot state with certainty why
the recipient bank rejected the transaction. We do not
believe on the basis of the available information that the
transaction violated U.S. or other sanctions. As you may
know, the Curacao court has scheduled a hearing for Friday,
December 7, 2018, apparently to obtain an update regarding
the status of the transaction.
DMBL, like you, continues to inquire regarding the nature and
purpose of the $6, 120, 286 held by De Jesus & De Jesus.
Pursuant to the escrow agreement DMBL obtained from its
client, and which DMBL provided to you, De Jesus & De
Jesus is the escrow agent for PdVSA and Tipco Asphalt,
PdVSA's counterparty with respect to the Curacao
court-managed transaction related to certain Curacao
court-attached PdVSA assets. The escrow agreement states that
any amount in excess of $17, 348, 645 (i.e. the sale amount
imposed by the Curacao court) and the actual sale amount paid
by PdVSA's counterparty (which resulted in the residual
$6, 120, 286.86) would be used to pay other PdVSA obligations
upon PdVSA's written instructions. De Jesus & De
Jesus assert, in a letter that DMBL supplied to you, that the
residual funds would be used to pay attorney and courts fees.
DMBL continues to investigate this issue.
Notably, the Curacao court-required transaction involving the
$17, 348, 645 does not involve the residual funds currently
held by De Jesus & De Jesus. Until DMBL has satisfied
its anti-money laundering and sanctions-related inquiries
with respect to the residual $6, 120, ...