The U.S. District Court for the Eastern District of Virginia granted summary judgment in favor of Robbins Russell client Chain Bridge Bank, N.A., and two of its senior officers, against plaintiff Blue Flame Medical, LLC and third-party defendant JPMorgan Chase Bank, N.A. Robbins Russell partners Gary Orseck, Matthew Madden, and Donald Burke, along with associates Carolyn Forstein, Leslie Esbrook, and Zachary Ferguson, litigated this case for Chain Bridge and its officers.
In mid-March 2020, just as the COVID-19 pandemic hit, two political operatives formed Blue Flame Medical and immediately began attempting to sell N95 masks to state and local governments. On March 26, 2020, just three days after its founding, Blue Flame convinced California officials to wire it $456.9 million as a down-payment for 100 million N95 masks. When Chain Bridge officials received the incoming wire, they took responsible steps to investigate the large transfer to a brand-new entity. California’s bank, JPMorgan Chase Bank, N.A., subsequently cancelled the wire. Chain Bridge accommodated JPMorgan’s request and returned the funds to JPMorgan Chase which, in turn, restored the funds to California’s account.
In June 2020, Blue Flame filed a ten-count complaint against Chain Bridge, alleging that Chain Bridge’s return of the wire violated various Federal Reserve regulations, the Uniform Commercial Code, and state laws. Blue Flame sought more than half a billion dollars in damages. Robbins Russell achieved the dismissal of some of those counts early in the case, and has now obtained summary judgment on the remaining claims.
Judge Leonie M. Brinkema concluded that there was “no basis beyond rank speculation that Blue Flame was capable of fulfilling its order to California,” and that Blue Flame’s promises to California were based on “apparent initial misrepresentations to California authorities.” Blue Flame therefore could not establish any injury based on the returned wire. Nor was Blue Flame entitled to restoration of the full wired sum to its account. The court also dispatched common-law tortious interference and defamation claims as being unsupported by the factual record that Robbins Russell had developed during discovery.
The court further held that JPMorgan Chase was liable to indemnify Chain Bridge’s attorney’s fees and other expenses resulting from the wire cancellation under the applicable regulatory provision.
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