The Complaint Bermuda Aug 1 2017

FILED: NEW YORK COUNTY CLERK 07/19/2017 06:03 PM INDEX NO.
654913/2017
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 07/19/2017
SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK
MEXICO INFRASTRUCTURE FINANCE, LLC,

Index No. /17
Plaintiff,
COMPLAINT
THE CORPORATION OF HAMILTON and
THE BANK OF NEW YORK MELLON,
Defendants.
Plaintiff Mexico Infrastructure Finance, LLC ("MIF" or "Plaintiff'), by and through its
undersigned counsel, as and for its Complaint against Defendants The Bank of New York
Mellon ("BNY Mellon") and The Corporation of Hamilton ("Hamilton") (collectively
"Defendants"), alleges as follows:
NATURE OF THE ACTION
1. This action arises out of BNY Mellon's wrongful release of $13,749,858.00 of
MIF's funds entrusted to BNY Mellon, as "Escrow Agent," to the personal bank account of the
principals of MIF's borrower, Par-La-Ville Hotel and Residences, Ltd. ("PLV"), at the direction
of Hamilton, and in direct violation of the parties' written escrow agreement. As a result, MIF's
funds are gone and, according to press reports, have since financed extravagant purchases,
including an Aston Martin, an engagement ring, and two properties in the English countryside.
(See, e.g., "Businessman Sued Over `Missing' $12.Sm", The Royal Gazette, February 6, 2017.)
2. By the terms of the parties' escrow agreement, BNY Mellon, as "Escrow Agent,"
was only authorized to release MIF's escrowed funds to a SenioN EscNow Account established to
fund PLV's expenses in connection with securing approximately $325 million in long-term
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FILED: NEW YORK COUNTY CLERK 07/19/2017 06:03 PM INDEX NO. 654913/2017
"senior" financing for a hotel and residential development in Hamilton, Bermuda. BNY Mellon
could not release MIF's funds unless and until Hamilton represented that PLV had, in fact,
procured the requisite "senior" financing, and that Hamilton had itself reviewed and approved
the loan documents and escrow agreement established to hold MIF's funds to pay the costs of
securing the "senior" financing.
3. As MIF was not permitted to review or approve the loan documents itself, due to
supposed confidentiality concerns, MIF necessarily relied on Defendants to ensure that PLV
secured the requisite long-term, senior financing and that MIF's escrowed funds would only be
disbursed to a qualified senior escrow account for use in connection with the senior financing.
4. PLV never secured the required senior financing, and a proper senior escrow
account was never established. However, Hamilton falsely represented that the senior financing
was in place and that Hamilton had received and approved the executed loan documents and
escrow agreement, fully intending that BNY Mellon, as MIF's agent holding its funds, would
rely on the representations, and directed BNY Mellon to release MIF's escrowed funds to the
personal bank account of PLV's principal -- the very individual who had signed the Escrow
Agreement on behalf of PLV.
5. Notwithstanding that the Hamilton and PLV notices to BNY Mellon never
identified a Senior Escrow account (as required by the Escrow Agreement), and instead
purported to authorize the release of MIF's funds to a personal bank account of PLV's principals,
BNY Mellon ignored the notices' deficiencies and disbursed $13,749,858.00 to the personal
account of PLV's principals.
6. As a result of the Defendants' negligence, breaches of their respective contractual
obligations and fiduciary duties to MIF, and Hamilton's fraudulent and negligent
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misrepresentations, more than $13.7 million of MIF's funds were diverted.
7. Accordingly, MIF brings this action to recover its $13,749,858.00 of wrongfully
released escrow funds, plus exemplary damages, as well as attorneys' fees, interest, and costs, all
as permitted by law.
THE PARTIES
8. Plaintiff MIF is a limited liability company organized under the laws of the State
of Delaware with its principal place of business in Miami Beach, Florida.
9. Upon information and belief, Defendant Hamilton is a corporation existing
pursuant to the Municipalities Act 1923 (as amended) in the Islands of Bermuda and has its
principal place of business in Hamilton, Bermuda.
10. Upon information and belief, Defendant BNY Mellon is a New York banking
corporation with its principal place of business in New York.
JURISDICTION AND VENUE
11. Defendant Hamilton has consented to submit to the jurisdiction of the Courts
located within the City and State of New York. This action arises out of or relates to a contract
that was performed in New York and for which a choice of New York law has been made by
Hamilton, and relates to an obligation arising out of a transaction covering in the aggregate, not
less than one million dollars.
12. Defendant BNY Mellon transacts business within the State of New York and
maintains its headquarters in New York City.
13. Venue is appropriate in New York County pursuant to CPLR 501, 503 and
509.
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ALLEGATIONS APPLICABLE TO ALL CAUSES OF ACTION
MIF's Bridge Loan to PLV
14. In or around 2012, PLV leased certain land and a car park from Hamilton upon
which PLV sought to develop a hotel and residences at an anticipated cost of approximately
$325 million.
15. On or about July 9, 2014, Plaintiff MIF entered into financing agreements with
PLV in relation to the project whereby MIF agreed to lend PI,V $18 million (the "MIP Loan")
and permitted, subject to various conditions, PLV to draw down from an escrow account the sum
of $15,449,858 (the "Loan Disbursement"). The purpose of the Loan Disbursement was to cover
PL,V's expenses associated with procuring $325 million in long-term, senior financing in order to
construct the luxury hotel and condominium and car park project (the "Project"). The MIF Loan
was a short term "bridging" loan that would mature on December 30, 2014.
16. To ensure that the Loan Disbursement was used only for its intended purpose,
MIF did not directly release the funds to PLV; nor did it have any authority over the
disbursement of the Escrow Funds. Instead, MIF restricted PLV's access to the funds by
establishing an escrow account. MIF only allowed PLV initially to draw down a maximum of
$1.2 million of the Loan Disbursement, subject to satisfying certain conditions, for expenses that
PLV had already incurred in connection with the Project.
17. The balance of the Loan Disbursement (over $13.7 million) could not be accessed
by PLV unless and until PLV had secured a loan of at least $225 million and an equity
investment of at least $100 million to finance the Project (the "Permanent" or "Senior Loan")
Even if and when PLV secured a Senior Loan for the Project, the MIF Loan proceeds were not to
be disbursed directly to PLV, but instead to a "senior" escrow account established for the
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purpose of paying PLV's expenses associated with the Senior Loan.
The Escrow Agreement
18. To control the release of the Loan Disbursement, MIF, Hamilton, PLV, and BNY
Mellon, as Escrow Agent, entered into a written Escrow Agreement dated as of July 9, 2014 (the
"Escrow Agreement," attached as Exhibit A hereto). As stated therein, the purpose of the
Escrow Agreement was to "(a) establish a controlled account for the escrowed funds in order to
perfect [MIF's] security interest in such funds; and (b) restrict the disbursement of the escrow
until the satisfaction of certain conditions, specified [therein,] relating to the Permanent Loan to
[be] obtained by PLV." See Escrow Agreement (Ex. A), at p. 1. MIF relied on both Hamilton
and BNY Mellon to ensure that MIF's funds were protected, and both Hamilton and BNY
Mellon assumed obligations under the Escrow Agreement to ensure that MIF's funds would be
properly disbursed.
19. On or about July 9, 2014, MIF deposited the Loan Disbursement into an escrow
account maintained by BNY Mellon, as Escrow Agent, under the terms of the Escrow
Agreement.
20. The Escrow Agreement directed BNY Mellon, as Escrow Agent, to hold MIF's
funds in escrow, and only to release the Loan Disbursement (less a $500,000 reserve to remain in
escrow until BNY Mellon was notified that the MIF Loan was paid in full) after certain
enumerated conditions precedent were satisfied. See id. at I, 3.
21. Specifically, the Escrow Agreement provided that only up to $1.2 million of the
Loan Disbursement could be distributed to PLV, and only for the payment of expenses associated
with the MIF Loan or the Permanent Loan (the "Initial Drawdown"). See id.
22. The balance of $13,749,858.00 of the Loan Disbursement (excluding the
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$500,000 reserve) (the "Escrow Funds") could only be disbursed by BNY Mellon into the
"Senior Escrow, "and only upon satisfaction of all of the conditions set forth in I, 3.3(a) and
(b) of the Escrow Agreement (the "Conditions"), which provided that:
(a) PLV shall deliver to [Hamilton] (with copies to [MIF] for information
purposes only): (i) a certification, signed by an officer [of] PLV, certifying that
all conditions precedent have been satisfied for the funding of a loan of
$225 million and an equity investment of $100 million or for such
substantially similar financing structure from the Permanent Lender in
substance reasonably acceptable to [Hamilton] (in any event in an amount no
less than the aggregate of the principal, fees, costs and interest outstanding on
the Loan plus the Corporation Expense Payment), to PLV (the "Permanent
Loan"); and (ii) copies of the Permanent Loan Funding Agreement, the Senior
Escrow Agreement and all ancillary documents, duly executed by the parties
thereto, and in form and substance reasonably acceptable to [Hamilton]; and
(b) No sooner than three (3) Business Days after receipt by [Hamilton] (and
receipt of copies for information purposes only by MIF) of the items in
subsection 3.3(a) above, [Hamilton] and PLV shall provide joint written notice
to the Escrow Agent [BNY Mellon] (i) stating that the documents delivered
pursuant to subsection 3.3(a)(i) and (ii) above are approved by [Hamilton]
(such approval not to be unreasonably withheld, delayed or conditioned), and
(ii) authorizing the disbursement to the Senior Escrow.
Escrow Agreement (Ex. A) at I, 3.3 (p. 2).
23. The Escrow Agreement defined "Senior Escrow" as "an escrow to be established
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by PLV, the Permanent Lender, and Escrow Agent [BNY Mellon] (or another escrow agent
reasonably acceptable to [Hamilton]) for the purpose of paying expenses associated with the
Permanent Loan." See id. at I, 3.8(c) (p. 3).
24. The Escrow Agreement provides that, "[u]pon satisfaction of the [conditions set
forth in 3.3], Escrow Agent [BNY Mellon] shall, within three (3) Business Days after receiving
written notices in accordance with clauses 3.3(a) and (b) above, transfer the [Escrow Funds] to
the SenioN Escrow." See id. at I, 3.4 (p. 3) (emphasis added).
25. In short, the Escrow Funds in the amount of $13,749,858.00 could not be
accessed by PLV (or anyone else for that matter) unless and until Hamilton received, reviewed,
and approved the duly executed "Permanent Loan Funding Agreement," "Senior Escrow
Agreement," and all ancillary documents, and, finding the documents in form and substance
reasonably acceptable to it, provided written notice to BNY Mellon of Hamilton's receipt,
review and approval of the requisite documents and that Hamilton was authorizing disbursement
of the Escrow Funds to the Senior Escrow. In addition, the Escrow Funds could only be
disbursed by BNY Mellon to a proper "Senior Escrow" (which would have been identified in the
documents PLV was required to provide and Hamilton was required to review and approve), not
to PLV or anon-escrow, personal bank account of PLV's principals.
26. These Conditions served as a safeguard for MIF -- to ensure that PLV had secured
a Permanent Loan and equity investors as specified in the Escrow Agreement and that a "Senior
Escrow" account was established solely for the purpose of paying expenses associated with the
Permanent Loan -- before any of the Escrow Funds could be disbursed.
27. This was critical to MIF because MIF had no contractual right to receive, review
and/or approve the permanent loan arrangements (due to alleged confidentiality concerns) in
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advance of disbursement of the Escrow Funds.
28. Hamilton had a duty, pursuant to the Escrow Agreement, and BNY Mellon and
MIF relied upon Hamilton, to review the required Permanent Loan and Senior Escrow
documentation to confirm that they existed, complied with the terms of the Escrow Agreement
and were duly executed by the appropriate parties thereto.
29. BNY Mellon had a duty, pursuant to the Escrow Agreement, and MIF also relied
upon BNY Mellon, to ensure that the Escrow Funds were only released upon satisfaction of the
Conditions, and only paid to a "Senior Escrow" account established for the express purpose of
holding MIF's funds and to be released solely for the payment of expenses associated with the
Permanent Loan.
30. MIF reposed trust and confidence in the Defendants, and they knowingly accepted
such trust and confidence.
Hamilton Falsely Represented that the Conditions

Had Been Satisfied to Procure
Disbursement of the Escrow Funds to PLV's Directors
31. On or about October 20, 2014, PLV director Michael Richard MacLean advised
Hamilton by letter that PLV had entered into a financing agreement with Argyle Limited
("Argyle") "in accordance with section 3.3(a) of the Escrow Agreement." The letter referenced a
prior meeting in London between a principal of Argyle, MacLean, Hamilton's Mayor Graeme P.
Outerbridge, and Hamilton's Chief Operating Officer &Secretary Edward E. Benevides.
32. As MIF would later discover, the agreement referenced in MacLean's October 20,
2014 letter was not a Permanent Loan Funding Agreement, as required under the Escrow
Agreement. Rather, it was a document entitled "Trade and Profit Share Agreement" that had
been entered into by and between Argyle, and Shane Mora and Matthew Hollis, as Trustees of
The Skyline Trust, dated October 20, 2014 (the "Argyle Agreement"). The Skyline Trust was
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created on October 19, 2014 for the benefit of PLV's directors (the MacLeans) and their
descendants.
33. The Argyle Agreement was not and does not even purport to be a "loan
agreement," and unquestionably did not qualify as a "Permanent Loan" to PLV as defined in the
Escrow Agreement. Indeed, PLV is not a party to the Argyle Agreement.
34. Despite this, by letter dated October 24, 2014, Hamilton sent to BNY Mellon
(Attention: Regina Jones) a "Notice of Approval of Disbursement from Escrow Account" (the
"Hamilton Notice," attached as Exhibit B hereto), purporting to represent that the Conditions had
been satisfied and that Hamilton "received and approved" the requisite Senior Escrow and
Permanent Loan documents. The Hamilton Notice was signed by Hamilton Mayor Graeme
Outerbridge and Hamilton's Chief Operating Officer and Secretary, Edward Benevides. Upon
information and belief, Hamilton had never received such documents.
35. Notwithstanding Hamilton's representations in the Hamilton Notice, and
unbeknownst to MIF, PLV never secured a Permanent Loan as required by the Escrow
Agreement, and never delivered to Hamilton an executed "Permanent Loan Funding Agreement"
or a "Senior Escrow Agreement." Thus, the Hamilton Notice was false when it represented the
existence, receipt, review and approval of documents which never even existed.
36. Further, the Hamilton Notice purported to authorize and direct the payment of the
full balance of the Escrow Funds not to a Senior Escrow as required by the Escrow Agreement,
but to the non-escrow, personal bank account in the names of Michael MacLean and his wife,
Yasmin MacLean, PLV's directors (the "PLV Directors' Personal Account"). The Hamilton
Notice, therefore, was defective on its Face and non-compliant with the terms of the Escrow
Agreement.
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37. Hamilton thus knowingly and willfully made materially false representations in
the Hamilton Notice, intending to induce BNY Mellon, MIF's escrow agent, to disburse MIF's
Escrow Funds to the PLV Directors' Personal Account.
38. By letter dated October 24, 2014, PLV sent to BNY Mellon its own "Notice of
Approval of Disbursement from Escrow Account" (the "PLV Notice," attached as Exhibit C
hereto, and together with the Hamilton Notice, the "Notices"). The PLV Notice is identical in all
material respects to the Hamilton Notice, and purported to represent that the Conditions had been
satisfied and that Hamilton approved the requisite Senior Escrow and Permanent Loan
documents. The PLV Notice was signed by Michael MacLean as PLV's director -- the very
person who signed the Escrow Agreement on behalf of PLV -- and purported to authorize and
direct the payment of the full balance of the Escrow Funds to the PLV Directors' Personal
Account (in the names of Michael and Yasmin MacLean).
39. The PLV Notice, therefore, was defective on its face and non-compliant with the
terms of the Escrow Agreement.
40. As the Conditions had not been met, the representations made by Hamilton and
PLV in the Notices were knowingly false, and intended to induce BNY Mellon to disburse over
$13.7 million of MIF's funds to the MacLeans' personal bank account.
41. Furthermore, the fact that the Notices purported to direct payment of the Escrow
Funds to the PLV Directors' Personal Account was a "red flag" that BNY Mellon was grossly
negligent in ignoring.
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BNY Mellon's Unauthorized Release of the Escrow Funds
42. On or about October 27, 2014, BNY Mellon received the facially defective
Notices, purportedly directing BNY Mellon to release the Escrow Funds to the non-escrow,
personal bank account in the name of PLV's directors, Michael and Yasmin MacLean.
43. Despite the fact that the Notices failed to identify a "Senior Escrow" account or
disclose the identity of any "Permanent Lender," and instead sought release of the Escrow Funds
to the PLV Directors' Personal Account, BNY Mellon notified MIF that BNY Mellon intended
to disburse the Escrow Funds on Wednesday, October 29, 2014. See October 27, 2014 email
from BNY Mellon's Vice President and Client Service Manager, Regina Jones, attached as
Exhibit D hereto.
44. In response to Ms. Jones' e-mail, MIF's principal inquired: "To what account is
the money being asked to be sent to? Have you done [Know Your Customer] on that account?"
See Ex. D (October 27, 2014 e-mail from MIF's principal to Ms. Jones and Faraz Khan, BNY
Mellon's Vice President, Sales and Relationship Management, Latin America/Canada).
45. BNY Mellon failed to provide MIF with the requested account information.
Although it was not the responsibility of MIF, had that information been provided, MIF could
have alerted BNY Mellon (which should have known in any event) that the terms of release were
not met and an apparent fraud was taking place. Instead, BNY Mellon replied: "The account is
listed on the notice provided. [BNY Mellon has] received all required documents to make the
transfer. [Know Your Customer] is only required on the contracting parties and not the account
holder. As long as we receive the required documentation for the transfer, we are ok to execute."
See Ex. D (October 28, 2014 email from Mr. Khan). Regardless of whether BNY Mellon's
response was technically accurate, it was expressly put on notice of a serious issue (that it should
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have realized on its own) -- particularly when, as a party to the Escrow Agreement, BNY Mellon
knew the Conditions that were required to be satisfied before it could release the Escrow Funds.
46. As MIF was not contemporaneously provided with copies of the Notices or the
supporting documents, and had no way of knowing if the account to which PLV and Hamilton
requested MIF's Escrow Funds be sent was in fact a qualified Senior Escrow account or if PLV
had even secured a Permanent Loan, the failure of BNY Mellon to make appropriate inquiry was
a breach of its duties under the Escrow Agreement and as a fiduciary.
47. On or about October 31, 2014, BNY Mellon released MIF's Escrow Funds in the
amount of $13,749,858 to the PLV Directors' Personal Account.
48. The PLV Directors' Personal Account is not a "Senior Escrow" as defined in the
Escrow Agreement. Thus, BNY Mellon's disbursement of the Escrow Funds to the PLV
Directors' Personal Account was not authorized under the Escrow Agreement.
49. MIF entrusted BNY Mellon to exercise due care in carrying out its duties as
Escrow Agent and to disburse MIF's Escrow Funds only to a Senior Escrow account as required
by the Escrow Agreement.
50. By ignoring the facially obvious defects in the Notices, failing to address MIF's
inquiries regarding the account to which BNY Mellon intended to disburse more than $13
million of MIF's funds, and failing to confirm that the funds were being directed to a "Senior
Escrow" account, BNY Mellon was grossly negligent and breached the Escrow Agreement and
its fiduciary duties to MIF.
51. As a consequence of BNY Mellon's improper release of the Escrow Funds to the
PLV Directors' Personal Account, over $13.7 million of MIF's funds were dissipated and
diverted.
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FIRST CAUSE OF ACTION

(Breach of Contract against Hamilton)
52. MIF repeats and realleges each allegation contained in paragraphs 1 51 of the
Complaint as if fully set forth herein.
53. MIF and Hamilton are parties to the Escrow Agreement, which is a valid and
enforceable contract.
54. MIF has complied with all of its obligations under the Escrow Agreement.
55. Hamilton's duties under the Escrow Agreement required it to, among other things,
examine as to form and substance, and approve specified documents from PLV evidencing
PLV's loan funding agreement, senior loan and senior escrow, and represent same to BNY
Mellon. Hamilton did not receive any documents purporting to be the required documents.
Accordingly, Hamilton had actual knowledge that the sole document received from PLV did not
satisfy the requirements of the Escrow Agreement.
56. As alleged herein, Hamilton materially breached the Escrow Agreement by
falsely representing that the required conditions precedent to the release of the Escrow Funds had
occurred and submitting the false and erroneous Hamilton Notice to MIF's escrow agent, BNY
Mellon.
57. As a result of Hamilton's breaches, MIF has been damaged in an amount to be
determined at trial, but not less than $13,749,858, plus interest thereon to the date of entry of
judgment.
SECOND CAUSE OF ACTION

(Breach of Fiduciary Duty against Hamilton)
Complaint as if fully set Forth herein.
59. By agreeing to represent that the Conditions had been satisfied, knowing that
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BNY Mellon, as Escrow Agent for MIF, would rely on the Hamilton Notice and Hamilton's
superior knowledge of the facts by reason of Hamilton's superior access to and knowledge about
the existence (or non-existence) of the Senior Escrow, the Senior Escrow Agreement and
Permanent Loan Funding Agreement, Hamilton owed to MIF obligations of undivided loyalty
and good faith, and to impart honest, complete and accurate information to MIF and its Escrow
Agent.
60. As alleged herein, MIF did not receive copies of the Senior Escrow, the Senior
Escrow Agreement or the Permanent Loan Funding Agreement before its funds were released.
61. Hamilton breached its fiduciary duties to MIF by its actions and omissions alleged
herein, including among other things, by submitting the false and erroneous Hamilton Notice
based on documents that did not exist and/or were, on their face, non-compliant, failing to
conduct any inquiry at all, failing to advise and warn MIF that its funds were being requested to
be paid to the PLV Directors' Personal Account, and failing to advise and warn MIF that there
was no Senior Escrow, no Senior Escrow Agreement and no Permanent Loan Funding
Agreement.
62. As a result of Hamilton's breach of its fiduciary duties, MIF has been damaged in
an amount to be determined at trial, but not less than $13,749,858, plus interest thereon to the
date of entry of judgment.
63. In conducting itself in the manner alleged herein and in committing the acts
alleged herein, Hamilton acted maliciously and with wanton disregard of the rights of MIF. By
reason thereof, MIF is entitled to exemplary damages against Hamilton in an amount to be
determined at trial.
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THIRD CAUSE OF ACTION

(Negligence against Hamilton)
65. As alleged herein, Hamilton had a duty to comply with its obligations under the
Escrow Agreement, and a special relationship of confidence and trust with MIF by virtue of
Hamilton's superior access to and exclusive knowledge about the existence (or non-existence) of
the Senior Escrow, the Senior Escrow Agreement and Permanent Loan Funding Agreement.
Hamilton had superior knowledge to that of MIF of the true facts as to whether PLV had in fact
secured a Permanent Loan and established a qualified Senior Escrow.
66. Hamilton also knew that the Hamilton Notice would be directed to BNY Mellon,
as Escrow Agent of MIF's fiends, that the Hamilton Notice was a condition of BNY Mellon's
release of MIF's Escrow Funds, and that BNY Mellon, as Escrow Agent, would rely on the
Hamilton Notice in releasing MIF's Escrow Funds.
67. As alleged herein, the Hamilton Notice was false and intentionally, recklessly
and/or negligently executed and submitted in order to effectuate the improper release of the
68. As further alleged herein, Hamilton was negligent by, among other things,
submitting the false and erroneous Hamilton Notice, failing to conduct any inquiry at all, failing
to advise and warn MIF that its funds were being requested to be paid to the PLV Directors'
Personal Account, and failing to advise and warn MIF that there was no qualified Senior Escrow,
no Senior Escrow Agreement and no Permanent Loan Funding Agreement.
69. Hamilton's conduct evidenced indifference to the rights of MIF and a failure to
exercise even the slightest degree of care.
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70. As a result of Hamilton's negligence, MIF has been damaged in an amount to be
determined at trial, but not less than $13,749,858, plus interest thereon to the date of entry of
judgment.
FOURTH CAUSE OF ACTION

(Fraud against Hamilton)
72. Separate from its violation of its contractual obligations, Hamilton knowingly and
intentionally made materially false statements, including that the Conditions had been satisfied,
intending to induce BNY Mellon, as Escrow Agent for MIF, to wrongfully release and deliver
MIF's Escrow Funds to the PLV Directors' Personal Account.
73. As alleged herein, Hamilton falsely represented in the Hamilton Notice that PLV
had delivered to Hamilton, and that Hamilton had reviewed and approved, a Permanent Loan
Funding Agreement and a Senior Escrow Agreement. In fact, PLV had never secured a
Permanent Loan and had never delivered to Hamilton an executed Permanent Loan Funding
Agreement or Senior Escrow Agreement.
74. Hamilton delivered the Hamilton Notice to BNY Mellon, notwithstanding
knowledge of its falsity, and knowing and intending that Hamilton's false representations would
be communicated to MIF through its agent BNY Mellon, and that MIF would rely on those
representations to its detriment. MIF was defrauded by Hamilton because it had been induced to
entrust its funds with the Escrow Agent in reliance that the funds would be distributed only
pursuant to the terms of the Escrow Agreement; and MIF was led to believe the Conditions had
been satisfied such that the funds could be distributed. Instead, Hamilton, which knew that its
representations were false and would be relied on by BNY Mellon and MIF, participated in the
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wrongful diversion of the funds.
75. As Hamilton fully intended and expected when it delivered the Hamilton Notice
to BNY Mellon as escrow agent for MIF's funds, Hamilton's false representations were then
communicated to MIF through its agent BNY Mellon, and MIF was thereby led to believe that
the Conditions had been satisfied.
76. Had MIF known that the Conditions had not been satisfied and there was no
Permanent Loan or Senior Escrow, MIF would have immediately put a stop to the release of its
Escrow Funds. Instead, MIF reasonably relied on Hamilton's representations, which resulted in
the wrongful release and diversion of MIF's Escrow Funds.
77. As a result of Hamilton's fraudulent conduct, MIF has suffered damages in an
amount to be determined, but not less than $13,749,858, plus interest thereon to the date of entry
of judgment.
78. In conducting itself in the manner alleged herein. and in committing the acts
alleged herein, Hamilton acted maliciously and willfully, with the intent to injure and oppress
MIF, and is guilty of a wanton disregard of the rights of MIF. By reason thereof, MIF is entitled
to exemplary damages against Hamilton in an amount to be determined at trial.
FIFTH CAUSE OF ACTION

(Negligent Misrepresentation against Hamilton)
80. As alleged herein, Hamilton had a special relationship of confidence and trust
with MIF by virtue of Hamilton's superior access to and exclusive knowledge about the
existence (or non-existence) of the Senior Escrow, the Senior Escrow Agreement and Permanent
Loan Funding Agreement. Hamilton had superior knowledge to that of MIF of the true facts as
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to whether PLV had in fact secured a Permanent Loan and established a proper Senior Escrow.
81. Hamilton also knew that the Hamilton Notice would be directed to BNY Mellon,
as Escrow Agent of MIF's funds, that the Hamilton Notice was required as apre-condition to
BNY Mellon's release of MIF's Escrow Funds, and that BNY Mellon, as Escrow Agent, would
rely on the Hamilton Notice in releasing MIF's Escrow Funds.
82. By reason of the foregoing, Hamilton owed a special duty of care to MIF,
including the obligation to impart honest, complete and accurate information to MIF and its
designated agents.
83. In the Hamilton Notice, Defendant Hamilton negligently and/or recklessly made
false and misleading statements and misrepresentations of material fact, which Hamilton either
knew, or should have known in the exercise of reasonable diligence, were untrue and/or
misleading at the time they were made.
84. As alleged herein, Hamilton negligently and/or recklessly falsely represented in
the Hamilton Notice that PLV delivered, and Hamilton reviewed and approved, a Senior Escrow
Agreement and a Permanent Loan Funding Agreement, and that PLV had satisfied the
Conditions to the release of the Escrow Funds, despite the fact that no Senior Escrow Agreement
or Permanent Loan Funding Agreement ever existed.
85. As further alleged herein, Hamilton delivered to BNY Mellon the Hamilton
Notice, which contained misrepresentations of material facts, knowing and intending that BNY
Mellon, as escrow agent for MIF's funds, would rely on the Hamilton Notice and release MIF's
86. As Hamilton fully intended and expected when it delivered the Hamilton Notice
to BNY Mellon, BNY Mellon, as Escrow Agent for MIF's funds, justifiably relied on
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Hamilton's false representations in the Hamilton Notice as confirmation that PLV had secured a
Permanent Loan, and that Hamilton had reviewed and approved a Permanent Loan Funding
Agreement.
87. As a result of Hamilton's misrepresentations and omissions, MIF has suffered
damages in an amount to be determined, but not less than $13,749,858, plus interest thereon to
the date of entry of judgment.
SIXTH CAUSE OF ACTION

(Breach of Contract against BNY Mellon)
89. MIF and BNY Mellon are parties to the Escrow Agreement, which is a valid and
enforceable contract.
90. MIF has complied with all of its obligations under the Escrow Agreement.
91. As Escrow Agent, BNY Mellon was legally bound to strictly comply with the
terms and conditions of the Escrow Agreement.
92. As alleged herein, BNY Mellon breached the Escrow Agreement by, among other
things, releasing and paying $13,749,858 of MIF's Escrow Funds to the PLV Directors' Personal
Account, instead of to an escrow account constituting a Senior Escrow account as required under
the Escrow Agreement.
93. As a result of BNY Mellon's breach, MIF has been damaged in an amount to be
determined at trial, but not less than $13,749,858, plus interest thereon to the date of the entry of
judgment.
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SEVENTH CAUSE OF ACTION

(Breach of Fiduciary Duty against BNY Mellon)
95. As Escrow Agent, BNY Mellon owed fiduciary duties to MIF, including the duty
to exercise the utmost good faith and undivided loyalty toward its principal, MIF, to act with the
utmost care in BNY Mellon's execution of its obligations and duties under the Escrow
Agreement.
96. As Escrow Agent, BNY Mellon acted as a fiduciary of MIF, and was obligated to
both hold MIF's escrowed funds in trust and disburse those funds only as expressly permitted by
the Escrow Agreement.
97. As alleged herein, BNY Mellon breached its fiduciary duties by, among other
things, failing to ensure that the Escrow Funds were released only to a qualified "Senior Escrow"
that would use the funds for their intended purpose, and failing to advise and warn MIF that
Hamilton and PLV sought to have the Escrow Funds released to the personal bank account of the
MacLeans.
98. As a result of BNY Mellon's breach of its fiduciary duties, MIF has been
damaged in an amount to be determined at trial, but not less than $13,749,858, plus interest
thereon to the date of the entry of judgment.
EIGHTH CAUSE OF ACTION

(Gross Negligence Against BNY Mellon)
100. As Escrow Agent, BNY Mellon owed a duty to MIF to use the utmost care in
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strictly executing its duties under the Escrow Agreement. The Escrow Agreement provides no
protection to BNY Mellon where, as here, its conduct was grossly negligent.
101. As alleged herein, BNY Mellon was grossly negligent by, among other things,
recklessly disregarding its fiduciary duties, failing to ensure that the Escrow Funds were only
released to a qualified "Senior Escrow" that would use the funds for their intended purpose,
failing to inquire about the account identified in the Notices, and failing to advise and warn MIF
that Hamilton and PLV sought to have the Escrow Funds released to the personal bank account
of the MacLeans.
102. The request to pay MIF's Escrow Funds to the PLV Directors' Personal Account,
as opposed to a bona fide Senior Escrow account, was a "red flag" that BNY Mellon willfully
and recklessly ignored.
103. BNY Mellon's conduct evidenced a reckless indifference to the rights of MIF and
a failure to exercise even the slightest degree of care.
104. As a result of BNY Mellon's gross negligence, MIF has been damaged in an
amount to be determined at trial, but not less than $13,749,858, plus interest thereon to the date
of entry of judgment.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff demands judgment against Defendants, as follows:
1. On the First Cause of Action, against Hamilton for breach of contract, damages in
an amount to be determined, but not less than $13,749,858, plus interest thereon to the date of
entry of judgment;
2. On the Second Cause of Action, against Hamilton for breach of fiduciary duties,
the date of entry of judgment, together with exemplary damages in an amount to be determined
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at trial;
3. On the Third Cause of Action, against Hamilton for negligence, damages in an
amount to be determined, but not less than $13,749,858, plus interest thereon to the date of entry
of judgment;
4. On the Fourth Cause of Action, against Hamilton for fraud, damages in an amount
to be determined, but not less than $13,749,858, plus interest thereon to the date of entry of
judgment, together with exemplary damages in an amount to be determined at trial;
5. On the Fifth Cause of Action, against Hamilton for negligent misrepresentation,
the date of entry of judgment;
6. On the Sixth Cause of Action, against BNY Mellon for breach of contract,
the date of entry of judgment;
7. On the Seventh Cause of Action, against BNY Mellon for breach of fiduciary
duties, damages in an amount to be determined, but not less than $13,749,858, plus interest
thereon to the date of entry of judgment;
8. On the Eighth Cause of Action, against BNY Mellon for gross negligence,
the date of entry of judgment; and
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9. Together with an award of costs and attorneys' fees and such other and further
relief as this Court deems just and proper.
Dated: New York, New York

July 19, 2017
FLEMMING ZULACK WILLIAMSON

ZAUDERER LLP
~~
Mar C. Zauder
Craig S. Kesch
One Liberty Plaza
New York, New York 10006
(212) 412 9500 (tel.)
~21z~ 964 9200 ~faX~
mzauderer@fzwz.com
ckesch@fzwz.com
Attorneys fog Plaintiff

Mexico Infrastructure Finance, LLC
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The Complaint Bermuda Aug 1 2017

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FILED: NEW YORK COUNTY CLERK 07/19/2017 06:03 PM INDEX NO.

SUPREME COURT OF THE STATE OF NEW YORK

MEXICO INFRASTRUCTURE FINANCE, LLC,

Mellon ("BNY Mellon") and The Corporation of Hamilton ("Hamilton") (collectively

"Defendants"), alleges as follows:

NATURE OF THE ACTION

1. This action arises out of BNY Mellon's wrongful release of $13,749,858.00 of

securing the "senior" financing.

Agreement on behalf of PLV.

account of PLV's principals.

6. As a result of the Defendants' negligence, breaches of their respective contractual

misrepresentations, more than $13.7 million of MIF's funds were diverted.

7. Accordingly, MIF brings this action to recover its $13,749,858.00 of wrongfully

of Delaware with its principal place of business in Miami Beach, Florida.

9. Upon information and belief, Defendant Hamilton is a corporation existing

principal place of business in Hamilton, Bermuda.

corporation with its principal place of business in New York.

JURISDICTION AND VENUE

less than one million dollars.

maintains its headquarters in New York City.

ALLEGATIONS APPLICABLE TO ALL CAUSES OF ACTION

MIF's Bridge Loan to PLV

PLV had already incurred in connection with the Project.

purpose of paying PLV's expenses associated with the Senior Loan.

The Escrow Agreement

enumerated conditions precedent were satisfied. See id. at I, 3.

22. The balance of $13,749,858.00 of the Loan Disbursement (excluding the

(b) of the Escrow Agreement (the "Conditions"), which provided that:

$225 million and an equity investment of $100 million or for such

substantially similar financing structure from the Permanent Lender in

substance reasonably acceptable to [Hamilton] (in any event in an amount no

thereto, and in form and substance reasonably acceptable to [Hamilton]; and

receipt of copies for information purposes only by MIF) of the items in

pursuant to subsection 3.3(a)(i) and (ii) above are approved by [Hamilton]

(such approval not to be unreasonably withheld, delayed or conditioned), and

(ii) authorizing the disbursement to the Senior Escrow.

Escrow Agreement (Ex. A) at I, 3.3 (p. 2).

Permanent Loan." See id. at I, 3.8(c) (p. 3).

the SenioN Escrow." See id. at I, 3.4 (p. 3) (emphasis added).

to PLV or anon-escrow, personal bank account of PLV's principals.

Permanent Loan -- before any of the Escrow Funds could be disbursed.

advance of disbursement of the Escrow Funds.

and were duly executed by the appropriate parties thereto.

such trust and confidence.

Hamilton Falsely Represented that the Conditions

Outerbridge, and Hamilton's Chief Operating Officer &Secretary Edward E. Benevides.

Escrow Agreement. Indeed, PLV is not a party to the Argyle Agreement.

information and belief, Hamilton had never received such documents.

35. Notwithstanding Hamilton's representations in the Hamilton Notice, and

Escrow Funds to the PLV Directors' Personal Account.

Account (in the names of Michael and Yasmin MacLean).

terms of the Escrow Agreement.

$13.7 million of MIF's funds to the MacLeans' personal bank account.

BNY Mellon's Unauthorized Release of the Escrow Funds

Mellon's Vice President, Sales and Relationship Management, Latin America/Canada).

a breach of its duties under the Escrow Agreement and as a fiduciary.

amount of $13,749,858 to the PLV Directors' Personal Account.

by the Escrow Agreement.

its fiduciary duties to MIF.

FIRST CAUSE OF ACTION

Complaint as if fully set forth herein.

satisfy the requirements of the Escrow Agreement.

56. As alleged herein, Hamilton materially breached the Escrow Agreement by