Bank of America Obtains Victory; Claims by Argentine Real Estate Development Company Dismissed

June 23, 2011

Cleary Gottlieb successfully represented Bank of America in obtaining the dismissal of multi-million dollar litigation brought by an Argentine company that contended the Bank had orally agreed to finance a real estate development outside of Buenos Aires that, allegedly, failed because the Bank failed to fund as promised. In a series of rulings at the trial court level, all claims but one were dismissed prior to discovery. The final one, in which the development company contended it was the third party beneficiary of the oral contract, was dismissed on summary judgment. The development company appealed, and on June 23 the Second Circuit issued an order rejecting that appeal, and ending the case. The Circuit agreed with the trial court that if the development company in fact was a third party beneficiary of the alleged oral contract, it was required -- but failed -- to make disclosure to that effect in Argentine bankruptcy proceedings commenced by the development company. Having failed to do so, found both the trial court and the Circuit, the company was precluded from arguing in a US.. court that it was a beneficiary of a contract; otherwise, the company would have effectively hidden from the Argentine court (and creditors) the existence of a substantial asset whose prosecution could only benefit the company’s shareholder.