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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division
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BLUE FLAME MEDICAL LLC
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Plaintiff,
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v.
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Civil Action No. 1:20-cv-00658
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CHAIN BRIDGE BANK, N.A.,
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The Honorable Leonie Brinkema
JOHN J. BROUGH, and
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DAVID M. EVINGER
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Defendants.
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CHAIN BRIDGE BANK, N.A.
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Third-Party Plaintiff,
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v.
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JPMORGAN CHASE BANK, N.A.
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Third-Party Defendant.
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PLAINTIFF BLUE FLAME MEDICAL LLC’S REPLY MEMORANDUM OF LAW
IN FURTHER SUPPORT OF ITS MOTION FOR PARTIAL SUMMARY JUDGMENT
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Table of Contents
Page
PRELIMINARY STATEMENT .....................................................................................................1
ARGUMENT ...................................................................................................................................2
I.
BLUE FLAME IS ENTITLED TO SUMMARY JUDGMENT AS TO
LIABILITY UNDER SECTION 4A-404(a). ..........................................................2
A.
Defendants’ Erroneous Interpretations of Article 4A Do Not Prevent
Summary Judgment on Chain Bridge’s Liability Under Section 4A-
404(a). ..........................................................................................................2
B.
Blue Flame Demanded Payment from Chain Bridge. .................................6
C.
Defendants’ Affirmative Defenses Fail as a Matter of Law. .......................7
II.
BLUE FLAME IS ENTITLED TO SUMMARY JUDGMENT AS TO
LIABILITY UNDER SECTION 4A-204. ...............................................................9
A.
Defendants’ Erroneous Interpretation of Section 4A-204(a) Does Not
Prevent Summary Judgment as to Chain Bridge’s Liability. .......................9
B.
Chain Bridge Credited Blue Flame’s Account Before Returning the
Funds to JPMC. ..........................................................................................11
III.
THERE ARE NO DISPUTES OF MATERIAL FACT AS TO
DEFENDANTS’ LIABILITY FOR TORTIOUS INTERFERENCE. ..................14
A.
Undisputed Facts Establish Blue Flame’s Contract and Business
Expectancy with California........................................................................14
B.
Undisputed Facts Establish Defendant’s Wrongful Intent to Interfere
with Blue Flame’s Relationships with California. .....................................15
C.
Undisputed Facts Establish Defendant’s Use of Improper Methods. ........16
IV.
BLUE FLAME CAN ESTABLISH DAMAGES. .................................................18
CONCLUSION ..............................................................................................................................20
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TABLE OF AUTHORITIES
Page(s)
Cases
Banca Commerciale Italiana, N.Y. Branch v. N. Trust Int’l Banking Corp.,
160 F.3d 90 (2d Cir. 1998).......................................................................................................11
Banque Worms v. Bank America Int’l.,
726 F.Supp. 940 (S.D.N.Y. 1989) .....................................................................................11, 13
Banque Worms v. BankAmerica Int’l,
570 N.E.2d 189 (N.Y. 1991) ......................................................................................................5
Bayerische Hypo-Und Vereinsbank Ag v. HSBC Bank USA, N.A.,
No. 602761/2009, 2015 WL 4455948 (N.Y. Sup. Ct. July 15, 2015) .......................................4
CFTC v. Rust Rare Coin Inc.,
469 F. Supp. 3d 1211 (D. Utah 2020) ........................................................................................3
Commerce Funding Corp. v. Worldwide Sec. Servs. Corp.,
249 F.3d 204 (4th Cir. 2001) .............................................................................................15, 16
Dunlap v. Cottman Transmission Sys., LLC,
754 S.E.2d 313 (Va. 2014).......................................................................................................16
Eisenberg v. Wachovia Bank, N.A.,
301 F.3d 220 (4th Cir. 2002) ...................................................................................................18
Gen. Elec. Capital Corp. v. Cent. Bank,
49 F.3d 280 (7th Cir. 1995) .................................................................................................4, 11
Human Rights in China v. Bank of China,
No. 02 Civ. 4361 (NRB), 2005 WL 1278542 (S.D.N.Y. Dec. 19, 2007) ................................11
Langman v. Alumni Ass’n of Univ. of Va.,
442 S.E.2d 669 (Va. 1994).........................................................................................................4
Professional Recovery Services., Inc. v. GE Capital Corp.,
642 F. Supp. 2d 391 (D.N.J. 2009) ..........................................................................................16
Regions Bank v. Provident Bank, Inc.,
345 F.3d 1267 (11th Cir. 2003) ...............................................................................................10
Simbeck, Inc. v. Dodd Sisk Whitlock Corp.,
508 S.E.2d 601 (Va. 1999).......................................................................................................16
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Statutes and Rules
12 C.F.R. § 229.10 ...........................................................................................................................5
55 Fed. Reg. 40791-01 (Oct. 5, 1990) ...........................................................................................13
UCC Article 4A ..................................................................................................................... passim
UCC § 1-304 ................................................................................................................................8, 9
UCC § 4A-103 ...........................................................................................................................9, 10
UCC § 4A-104 .................................................................................................................................9
UCC § 4A-104, cmt. 1 ...................................................................................................................10
UCC §§ 4A-201 .............................................................................................................................10
UCC § 4A-204(a) ................................................................................................................... passim
UCC § 4A-211 .............................................................................................................................3, 7
UCC § 4A-211, cmt. 8 .....................................................................................................................4
UCC § 4A-301 ...............................................................................................................................10
UCC § 4A-404, cmt. 1 .....................................................................................................................5
UCC § 4A-404, cmt. 3 .................................................................................................................4, 7
UCC § 4A-404(a) .............................................................................................................1, 2, 5, 6, 7
Other Authorities
James J. White & Robert S. Summers, Uniform Commercial Code,
Practitioner Treatise Series § 22–4 (5th ed.2008) ..................................................................18
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PRELIMINARY STATEMENT
It is ironic that, while insisting they never suggested to California that Blue Flame1 was a
fraud, Defendants premise their entire defense to Blue Flame’s Motion for Partial Summary
Judgment on the notion that Blue Flame was a fraud. That notion is as baseless today as it was on
March 26, 2020. None of Defendants’ arguments undercuts the undisputed material facts
supporting Blue Flame’s requested relief, nor the straightforward application to those facts of UCC
Article 4A and its official comments (in the case of Counts I and II) or the law of tortious
interference (in the case of Counts IV and V).2
Lacking any authority to support their interpretations of the relevant provisions of UCC
Article 4A, and faced with the foreseeable impacts of their efforts to sow doubts about Blue Flame
with California officials, Defendants attempt to shift the focus away from themselves and onto
Blue Flame. First, they claim Blue Flame fraudulently procured its contract with California by
pointing to irrelevant “facts” that Defendants did not know when they reversed the Wire Transfer
and which cannot justify their violations of the law. In any case, despite numerous investigations
triggered by Defendants’ actions on March 26, no fraud has ever been uncovered. Instead, the
undisputed evidence shows that Blue Flame acted in good faith and that none of its purported
misrepresentations influenced California’s vetting of or negotiations with Blue Flame. Second,
Defendants assert Blue Flame cannot prove damages under any circumstances. That argument
ignores undisputed evidence that Blue Flame and California were both performing under their
1 Capitalized terms not defined herein have the meaning assigned to them in Plaintiff’s Motion for
Partial Summary Judgment (ECF No. 128).
2 Citations to “Pl. Br.” refer to Blue Flame’s brief in support of its motion for summary judgment
(ECF No. 128), and those to “Pl. Opp.” refer to its brief in opposition to Defendants’ motion for
summary judgment (ECF. No. 149). Citations to “Defs. Br.” refer to Defendants’ brief in support
of their motion for summary judgment (ECF No. 119), and those to “Defs. Opp.” refer to their
brief in opposition to Blue Flame’s motion for summary judgment (ECF No. 140).
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agreement before Defendants intervened and induced JPMC to request the return of the funds.
Defendants’ factual arguments are even more strained, attempting to exploit technicalities
to deny what is obvious from Defendants’ own internal discussions and documents: Chain Bridge
credited Blue Flame’s account with the funds, despite denying it did so to both California and
JPMC. Then, Defendants orchestrated the return of the funds due to concerns about the Wire
Transfer’s impact on Chain Bridge’s business3 and in disregard for the business and reputation of
its longtime customer. The facts and law both require that Blue Flame’s motion be granted and
that this action proceed to trial on Blue Flame’s damages under Counts I, II, IV, and V, and on its
remaining defamation claim (Count IX).
ARGUMENT
I.
BLUE FLAME IS ENTITLED TO SUMMARY JUDGMENT AS TO LIABILITY
UNDER SECTION 4A-404(a).
As demonstrated in Blue Flame’s opening brief, the undisputed evidence proves that Chain
Bridge is liable under UCC Section 4A-404(a) for failing to make the funds wired by California
available to Blue Flame. Defendants attempt to avoid that liability by misinterpreting Article 4A,
appealing to irrelevant facts, and misrepresenting relevant, undisputed facts.
A.
Defendants’ Erroneous Interpretations of Article 4A Do Not Prevent
Summary Judgment on Chain Bridge’s Liability under Section 4A-404(a).
3 Defendants contend that they were not concerned about the impact of the Wire Transfer on Chain
Bridge’s balance sheet, that those concerns did not motivate any of their actions, and that their
repeated expressions of concern on that issue were focused solely on maximizing Blue Flame’s
FDIC insurance coverage. See Defs. Opp. at 8-11 ¶¶ 8-9, 11, 17; see also Defs. Br. at 20 n.9. But
they cannot speak evidence out of existence. Defendants do not dispute, nor can they, that senior
bank officers repeatedly stated on March 25 and 26 that Chain Bridge could not hold the funds
wired to Blue Flame on its balance sheet (see Pl. Br. at 6-10 ¶¶ 8, 11). None of those
communications mentioned Blue Flame’s FDIC insurance coverage. Furthermore, Brough and
Evinger have admitted that the Wire Transfer would have negatively impacted Chain Bridge’s
leverage ratio. See Pl. Opp. at 21 n.19.
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First, Defendants again trot out the flawed argument that the reversal of a wire transfer
automatically constitutes a cancellation and nullifies acceptance even where Section 211(c)(2) says
that cancellation is impossible. Defs. Opp. at 16-17. That argument failed at the motion to dismiss
stage (see ECF No. 19 at 9-10), and it fails here as well because it renders the limitations on
cancellation under Section 211(c)(2) meaningless and thereby completely undermines the purpose
of that section—and the purpose of Article 4A as whole—to ensure finality and certainty in wire
payments (see ECF No. 27 at 11-14; Pl. Br. at 16-18).
Second, Defendants argue that a wire transfer induced by fraud constitutes a “mistake”
permitting cancellation under Section 4A-211(c)(2). That argument is refuted by Article 4A’s text,
comments, structure, and relevant case law. See Pl. Opp. at 16-18; CFTC v. Rust Rare Coin Inc.,
469 F. Supp. 3d 1211, 1218-19 (D. Utah 2020) (rejecting argument that wire transfer procured by
beneficiary’s fraud is a “mistake” within meaning of Section 4A-211(c)(2)). In any event, that
argument rests on the false premise that Blue Flame procured California’s order through fraud.
The undisputed evidence, however, proves that Blue Flame procured California’s order
legitimately. See Pl. Opp. at 2-5 ¶¶ 1-9.4 To date, California has never alleged that Blue Flame
4 Blue Flame denies that it made any “false representations” concerning 3M masks, its capabilities,
or its rough delivery schedule to California officials (see Defs. Opp. at 3-4 ¶ 2, 5-6 ¶ 5, 14-15 ¶¶ 1-
3) for the reasons detailed in its Opposition (see Pl. Opp. at 2-5 ¶¶ 4-9). In any event, Defendants’
obsession with Blue Flame’s statements to California officials other than those in the Department
of General Services (“DGS”) is a red herring, since it is undisputed that DGS was the California
agency responsible for contracting on behalf of the state, negotiating PPE purchases, and vetting
potential suppliers. Compare Pl. Br. at 3 ¶ 2 with Defs. Opp. at 3-4 ¶ 2. Defendants also ignore
uncontroverted facts that disprove their suggestion that Blue Flame was not forthcoming with
California about Blue Flame’s need for prepayment. See Defs. Opp. at 4-5 ¶¶ 3, 5. In fact, on
March 23, 2020 Blue Flame offered to take a smaller prepayment, but California did not accept
that offer. See Ex. 5, 200137-38. Specifically, Thomas told Wong via text message: “I can take a
small partial deposit” of “10-15% for a large order depending on the manufacturer” and also
suggested California “do a small test order too before the big one.” Id. Wong never responded to
those offers and later prepared and signed California’s purchase order to Blue Flame that reflected
a 75% prepayment for the entire order. Ex. 17, DGS2491-95; Ex. 18, 108:12-109:2.
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attempted to defraud it, despite investigations of Blue Flame by the California Highway Patrol and
FBI prompted by Chain Bridge’s illegal reversal of the Wire Transfer. Ex. 119, DGS6517-18; Ex.
120, 125:21-127:5, 135:21-136:9, 155:7-156:1; Ex. 121, 274. Nor did JPMC’s investigation
uncover any fraud. Ex. 122, 183:10-14.5 Thus, Defendants allege a fraud that the purported victim
itself (or its bank) has never alleged. Plainly, no reasonable jury could find by clear and convincing
evidence that Blue Flame procured California’s order by fraud. See Langman v. Alumni Ass’n of
Univ. of Va., 442 S.E.2d 669, 677 (Va. 1994) (“a party alleging fraud has the burden of proving
by clear and convincing evidence all the elements of the cause of action”).
Defendants continue to assume the truth of their false premise in arguing that upholding
Article 4A’s policy goals of finality and certainty in funds transfers “would disserve public policy
by leaving a wrongdoer with the fruits of its own misconduct.” Defs. Opp. at 18. Leaving its
circularity aside, that reasoning fails because Article 4A, its comments, and the case law repeatedly
articulate that finality and certainty are stronger policy interests than fraud prevention. See UCC §
4A-404, cmt. 3 (beneficiary’s bank must pay beneficiary despite fraud claims); UCC § 4A-211,
cmt. 8 (“Because rights of the beneficiary and the originator are directly affected by acceptance,
subsection (c)(2) severely limits cancellation”); Gen. Elec. Capital Corp. v. Cent. Bank, 49 F.3d
280, 286 (7th Cir. 1995) (“Requiring receiving banks to inquire into the source of the
funds…would raise the costs of funds transfers and slow down a mechanism that is designed to
allow the movement of huge sums within minutes.”).6 After all, the integrity of the wire transfer
5 “Ex.” refers to exhibits to the Affirmation of Peter H. White dated May 6, 2021, ECF No. 132
(for Exhibits 1-84), the Affirmation of Peter H. White, dated May 20, 2021, ECF. No. 150 (for
Exhibits 85-118), and the Affirmation of Peter H. White, dated May 27, 2010, and filed herewith
(for Exhibits 119-132).
6 See also Banque Worms v. BankAmerica Int’l, 570 N.E.2d 189, 195 (N.Y. 1991) (citations
omitted) (“Establishing finality in electronic fund wire transactions was considered a singularly
important policy goal [by Article 4A’s drafters].”); Bayerische Hypo-Und Vereinsbank Ag v.
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system ultimately rests on participants’ faith that wire transfers will be final and discharge their
payment obligations.7
Next, Defendants argue that Blue Flame’s observation that Chain Bridge could have
continued to “hold” the funds wired by California “demonstrates that Chain Bridge did not act
unlawfully in refusing to pay Blue Flame.” Defs. Opp. at 19. That argument is immediately
betrayed by the fact that Defendants do not even attempt to explain how “refusing to pay Blue
Flame” (id.) could comply with an express obligation to “to pay the amount of the [payment] order
to the beneficiary of the order.” UCC § 4A-404(a). Moreover, Blue Flame did not suggest that
Chain Bridge could have held the funds beyond the point at which Regulation CC would have
mandated they be made available to Blue Flame (i.e., the next day) without incurring any liability.8
See 12 C.F.R. § 229.10; UCC § 4A-404, cmt. 1. But Regulation CC afforded Defendants
approximately 20 more hours to conduct their due diligence than they used here. Much can be
learned in that time, especially where a bank is willing to answer even one phone call from its
customer of more than ten years. Instead, Defendants ordered bank staff not to communicate with
Blue Flame and hastily asked for JPMC to recall the Wire Transfer barely 90 minutes after its
HSBC Bank USA, N.A., No. 602761/2009, 2015 WL 4455948, at *8 (N.Y. Sup. Ct. July 15, 2015)
(quoting UCC § 4A-102, cmt. 1) (“The drafters of Article 4A…made the ‘deliberate decision’ to
limit cancellation of accepted orders in order [to] promote finality and predictability….”).
7 Defendants’ appeal to BSA/AML principles fails for all of the reasons detailed in Blue Flame’s
opening and opposition briefs. See Pl. Br. at 25-26; Pl. Opp. at 18-21. The BSA is a recordkeeping
and reporting statute that provides no exception to or exemption from the express obligations
imposed by Article 4A. Defendants’ assertion that Chain Bridge “may well have faced regulatory
jeopardy” for complying with those obligations (Defs. Opp. at 19) is unsubstantiated speculation.
8 Even if Chain Bridge had “held” the funds beyond the point at which Regulation CC mandated
payment, that course of action would have dramatically limited its liability under Article 4A by
precluding any claim under Section 4A-204(a) for the return of the funds to the originator.
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receipt, all the while misrepresenting to JPMC and California the status of the payment and their
understanding of Blue Flame’s business.9 See Pl. Br. at 10-13; Pl. Opp. at 8-12.
B.
Blue Flame Demanded Payment from Chain Bridge.
Defendants turn a blind eye to the undisputed evidence in arguing that Blue Flame did not
demand payment of the Wire Transfer. In fact, Blue Flame demanded payment multiple times and
in multiple ways, including in: (i) Thomas’s phone communications with Cole, both immediately
before and after Chain Bridge’s receipt of the Wire Transfer, in which Thomas said that Blue
Flame would be using the funds to immediately pay suppliers and requested that Cole prepare a
$22.6 million wire to Suuchi;10 (ii) Thomas’s email to Cole authorizing Bearman’s instructions for
the Suuchi wire and requesting that Cole prepare the wire “asap”;11 and (iii) repeated calls from
Gula, Thomas, and Bearman to Defendants after Chain Bridge received the Wire Transfer, which
Defendants intentionally ignored. Consequently, Blue Flame has satisfied the “demand” element
of its Section 4A-404(a) claim.12 See Pl. Br. at 8-9 ¶¶ 12-16, 12-13 ¶ 23.
9 Blue Flame did not suggest that returning the funds to JPMC constitutes an independent violation
of Section 4A-404(a), either. See Defs. Opp. at 19. Rather, Blue Flame explicitly argued in its
opening brief that returning the funds violated Section 4A-204(a). Pl. Br. at 14, 19, 23-24.
10 There is no merit to Defendants’ argument that Thomas’s demands for payment do not count
because he did not sign the account agreement. Defs. Opp. at 23. Thomas had signed a “wire
transfer agreement authorizer designation form” for Blue Flame’s account, which “show[ed] he
was associated or accepted the ability to wire funds from the account.” Ex. 123, 557. He also was
listed as a beneficial owner of Blue Flame on the account opening documents. Ex. 124, 567-68. In
any case, Gula had explained that Thomas was his business partner in Blue Flame to Defendants
during their 19-minute call on March 25. Ex. 34, 4445; Ex. 35, 133:10-19, 138:16-22, 251:7-15;
Ex. 36, 4442; Ex. 67, 4463. Chain Bridge’s familiarity with Thomas also is demonstrated by his
phone calls with Maria Cole. Ex. 40 (audio); Ex. 52 (audio).
11 Defendants are wrong that those instructions contradicted the wire information that Chain Bridge
had received from Gula. Defs. Opp. at 11 ¶ 16. It is undisputed that Gula told Brough and Evinger
that Blue Flame would be sending “outgoing wire transfers to domestic bank accounts for its
suppliers.” Compare Pl. Br. at 6-7 ¶ 9 (emphasis added) with Defs. Opp. at 8 ¶ 9. Thus, the wire
instructions to Suuchi should not have raised any concern, and, indeed, there is no documentary
evidence suggesting that Defendants harbored any such concern.
12 Defendants assert that “Gula apologized for the transaction and did not object to the return of
the funds to [JPMC]” when he came to the bank on March 26 after being told by Brough that Chain
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C.
Defendants’ Affirmative Defenses Fail as a Matter of Law.
Defendants try (and fail) to establish two affirmative defenses to their liability under
Section 4A-404(a). The first is the “reasonable doubt” defense built into Section 4A-404(a)’s cause
of action. As with their erroneous interpretation of “mistake” under Section 4A-211(c), Defendants
premise that defense on the unsubstantiated claim that Blue Flame defrauded California. See Defs.
Opp. at 20-21. Even if that factual premise had any support in the record, the official UCC
commentary expressly rejects it as a matter of law. See UCC § 4A-404, cmt. 3. Defendants’
attempts to distinguish that commentary fall woefully short of the mark.
For their first attempt, Defendants point out that JPMC, rather than California, requested
the cancellation of the payment order, and then assert, without explanation, that “[t]he cancellation
thus supplied grounds for reasonable doubt as to Blue Flame’s right to the funds….” Defs. Opp.
at 20-21. Defendants argue, in other words, that a cancellation request itself supplies the
“reasonable doubt” necessary to prove the affirmative defense. By that logic, a bank that agrees to
a cancellation—even one prohibited by Article 4A—can never be liable under Section 4A-404(a).
The commentary says otherwise. See UCC § 4A-404, cmt. 3 (emphasis added) (“Unless the
payment order has been cancelled pursuant to Section 4A-211(c), there is no excuse for refusing
to pay the beneficiary”).13 Moreover, Defendants asked JPMC to issue the recall request (Ex. 68
Bridge had received notice to “return the wire” and that he should “resolve directly with the State
of California.” Defs. Opp. at 15; see also Ex. 71, 74101. That misleading portrayal of the encounter
omits that Brough and Evinger did not inform Gula that Chain Bridge had not yet completed its
return of the funds, depriving Gula of any opportunity to object. Ex. 1, 206:9-209:12. Defendants
also told Gula that Blue Flame’s account would be closed. See Pl. Opp. at 11-12 ¶ 30.
13 To the extent the “reasonable doubt” defense to liability under Section 4A-404(a) is established
by the beneficiary bank’s receipt of the sender’s cancellation request, that is only because Section
4A-204(a) provides an adequate remedy for the reversal of a wire transfer effected in contravention
of Section 4A-211(c)(2). However, Blue Flame maintains that Sections 4A-404(a) and 4A-204(a)
provide separate remedies for separate harms (see Pl. Br. at 14, 18-19, 23-24), and thus disagrees
with Defendants’ characterization of Blue Flame’s claim under Section 4A-204(a) as an
“alternative claim” (see Defs. Opp. at 23).
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(audio)) that supposedly “supplied” their “reasonable doubts” (see Defs. Opp. at 21). Defendants
cannot legitimize their motives by laundering them through JPMC’s recall request.
Defendants also attempt to distinguish the comment to Section 4A-404 on the basis that it
is phrased in terms of an originator’s fraud claims, rather than in terms of a beneficiary bank’s
fraud claims. Defs. Opp. at 21. Of course it is. The originator, as the beneficiary’s counterparty
and the potential victim in such circumstances, is the party most likely to have knowledge of any
potential fraud and the party with the strongest motive to prevent it. The comment thus addresses
the most compelling fraud claims and provides that even those do not nullify the obligation to pay
the beneficiary. Here, by contrast, the originator, California, repeatedly confirmed the legitimacy
of the transfer—and thus, Blue Flame’s right to payment. See Pl. Br. at 10-11 ¶¶ 17-20; Pl. Opp.
at 8-12 ¶¶ 19-31.
Aware of the weakness of their first affirmative defense, Defendants invent another one
out of whole cloth, arguing that UCC Section 1-304 prevents Blue Flame from enforcing its rights
under Article 4A. That defense fails for a host of reasons detailed in Blue Flame’s opposition brief,
first and foremost because Section 1-304 provides a defense to a contract claim, not to a claim
created by federal law. See Pl. Opp. at 21-25. Even if Blue Flame’s Article 4A claims were treated
as contract claims, Chain Bridge cannot establish a breach of good faith claim against Blue Flame
because it cannot point to a single specific contractual duty in the account agreement that Blue
Flame failed to perform in good faith. See id. at 23-24.14 Defendants’ baseless argument that Blue
14 Blue Flame disputes Defendants’ claim that Gula “ignored warnings from Blue Flame’s counsel
to disclose California’s incoming wire” and other information about Blue Flame’s business when
he filled out the account opening forms on the morning of March 25. Defs. Opp. at 15 ¶ 4. That
argumentative, purported “fact” ignores undisputed evidence showing that Gula did not know the
precise amount of the expected wire from California at that time (see Pl. Opp. at 24), as the
“warning” to which Defendants refer did not provide any estimate of the dollar value of the wire
transfers California would be sending Blue Flame (see ECF No. 130-32). In any event, Blue Flame
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Flame lacked good faith in its dealings with California is irrelevant because Defendants do not
have standing to enforce California’s rights. See id. at 24-25. Finally, even if Defendants’ Section
1-304 defense were legally viable, the undisputed material facts show that Blue Flame acted in
good faith in its dealings with both Chain Bridge and California. See id. at 2-7 ¶¶ 1-16.
II.
BLUE FLAME IS ENTITLED TO SUMMARY JUDGMENT AS TO LIABILITY
UNDER SECTION 4A-204.
Blue Flame has established that undisputed facts render Chain Bridge liable under Section
4A-204(a) for returning the funds wired by California and credited to Blue Flame’s account. Chain
Bridge’s only proffered defense is that it “never received a payment order purporting to come from
Blue Flame” and therefore it never accepted “a payment order issued in the name of [Chain
Bridge’s] customer as sender.” Defs. Opp. at 24-25 (emphasis in original). Far from relieving
Chain Bridge of liability, that argument only highlights how egregiously Chain Bridge violated
Article 4A when it intentionally sent a wire transfer from Blue Flame’s account without its consent.
Defendants also contest indisputable evidence proving that the Wire Transfer was credited to Blue
Flame’s account before Chain Bridge engineered its reversal. See infra Section II.B.
A. Defendants’ Erroneous Interpretation of Section 4A-204(a) Does Not Prevent
Summary Judgment as to Chain Bridge’s Liability.
Blue Flame agrees that Chain Bridge never “received” a payment order purporting to come
from Blue Flame. See id. at 24. Instead, Chain Bridge itself created a payment order listing Blue
Flame as “originator”15—without Blue Flame’s knowledge or consent—that it then sent to JPMC
did not fraudulently induce Chain Bridge to open its account, which remained open even after Gula
disclosed the information Defendants argue was concealed. See Pl. Opp. at 5-8 ¶¶ 11-16.
15 That Blue Flame is identified by name and account number as the originator confirms that the
funds had been credited to its account. If Chain Bridge were correct that the funds wired by
California were held exclusively in its Federal Reserve account (see Defs. Opp. at 10 n.6), Chain
Bridge would have been identified as the originator in the payment order it sent to JPMC. See
UCC § 4A-104(c) (defining “originator” as “the sender of the first payment order in a funds
transfer”); see also infra Section II.B.
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in order to return the funds to California.16 See Pl. Br. at 13 ¶ 25; Pl. Opp. at 12 ¶ 31; Ex. 78, 2534;
Ex. 79, 791-92. Put more simply, Chain Bridge stole Blue Flame’s money by sending an
unauthorized wire transfer from Blue Flame’s account. Given the preemption of Blue Flame’s
conversion claim (see ECF Nos. 30 & 31), Section 4A-204(a) provides the only remedy for that
misconduct. If it did not, then Article 4A would provide no remedy to a customer whose bank
intentionally sends an unauthorized wire transfer from his account.17 Because Article 4A is not “a
shield for fraudulent activity,” Chain Bridge is liable under Section 4A-204(a). See Regions Bank
v. Provident Bank, Inc., 345 F.3d 1267, 1276 (11th Cir. 2003).
Chain Bridge’s appeal to case law only highlights how blatantly it violated the law. Blue
Flame does not dispute that Section 4A-204(a) claims typically arise as the result of some unknown
fraudster “purporting to be the bank’s customer or the customer’s agent.” Defs. Opp. at 24 n.9. In
the typical case, the bank is liable for sending the unauthorized payment order if it did not adhere
to an agreed-upon and commercially reasonable security procedure to verify the authenticity of the
customer’s payment order. See UCC §§ 4A-201-4A-204. That is, the bank is liable under Section
4A-204(a) even if its sending of the unauthorized payment order was merely negligent or reckless.
It is true that Blue Flame’s Section 4A-204(a) claim looks different than the typical cases
cited by Defendants. See Defs. Opp. at 24 n.9. Instead of an unknown fraudster, here it is the bank
16 Brough’s instruction to Thais Ribeiro and Claudia Mojica-Guadron to return the funds to JPMC
(Ex. 69 (audio), 0:09-1:05, 1:24-1:42, 2:36-2:49) constitutes the “payment order issued in the name
of [Chain Bridge’s] customer as sender” (UCC §§ 4A-204(a), 4A-103(a)(1)). Chain Bridge
accepted that payment order when it sent the payment order listing Blue Flame as originator (Ex.
74, 2781) to JPMC (UCC §§ 4A-209(a), 4A-301(a), 4A-103(c)). That Chain Bridge was the
“sender” of the payment order identifying Blue Flame as originator is irrelevant (see Def. Opp. at
24), as the originator’s bank is always the “sender” of the payment order sent to the beneficiary’s
bank (or an intermediary bank). See, e.g., UCC § 4A-104, cmt. 1.
17 Section 4A-204(a) contains Article 4A’s only cause of action against a bank that sends an
unauthorized payment order.
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itself that caused the unauthorized payment order to be sent. Rather than mere negligence or
recklessness, here the bank’s liability derives from its own knowing and intentional sending of an
unauthorized payment order. Those differences from the typical Section 4A-204(a) case counsel
in favor of Chain Bridge’s liability, not against it.
Cases involving the unauthorized return of wired funds by the beneficiary’s bank
demonstrate Chain Bridge’s liability under Section 4A-204(a). In Banca Commerciale Italiana,
N.Y. Branch v. Northern Trust Int’l Banking Corp., the beneficiary’s bank returned funds it had
already credited to the beneficiary’s account at the request of the originator’s bank. 160 F.3d 90,
91-92 (2d Cir. 1998). After the beneficiary refused to consent to the debiting of its account to
reflect the return of the funds, the beneficiary’s bank demanded that the originator’s bank return
the funds to it and re-credited the beneficiary’s account. Id.; see also Banque Worms v. Bank
America Int’l., 726 F.Supp. 940, 942 (S.D.N.Y. 1989) (same); Human Rights in China v. Bank of
China, No. 02 Civ. 4361, 2005 WL 1278542 at *4 (S.D.N.Y. Dec. 19, 2007) (“The parties agree
that once funds are credited to a beneficiary’s account, a receiving bank must receive permission
from the beneficiary in order to return any funds.”). Because the beneficiary’s bank in each of
those cases understood that it could not debit its customer’s account for the return of the funds
without its customer’s consent, there was no need to litigate the issue—the obligation to obtain the
beneficiary’s consent was obvious. See Gen. Elec. Capital Corp., 49 F.3d at 282 & 286 (holding
beneficiary’s bank liable for conversion where, after accepting payment order and crediting
beneficiary’s account, beneficiary’s bank reversed credit upon receiving revised payment order,
which “no rule of law obliged” it to do).
B.
Chain Bridge Credited Blue Flame’s Account Before Returning the Funds to
JPMC.
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Defendants concede that Blue Flame’s account was “memo credited” with the funds Chain
Bridge accepted from California on behalf of Blue Flame, but insist that there is “no evidence that
funds were ever credited to or deposited into Blue Flame’s account” because the account would
not actually be credited “until the memo posting was processed overnight during Chain Bridge’s
nightly batch data processing.” Defs. Opp. at 10 ¶14. In support, Defendants identify only
deposition testimony of their own witnesses (and testimony from their banking expert based solely
on the testimony of their witnesses), and argue they have produced no records reflecting any
crediting of the account. Id.; Ex. 125, 137:9-138:11.
Defendants’ litigation position is contradicted by multiple contemporaneous admissions by
Chain Bridge staff and officers that the bank had credited Blue Flame’s account for the Wire
Transfer. Defendants concede, as they must, that Rick Claburn, the operations employee who
manually approved the wire for Chain Bridge, immediately notified bank personnel that “[t]he
wire has been received and credited to the client’s account.” Defs. Opp. at 10 ¶ 14; Ex. 59, 664;
Pl. Br. at 9-10 ¶¶ 15-16. Similarly, it is undisputed that the operations employee who processed
the return of the funds at Brough and Evinger’s direction specifically stated that “in this case, we
credited the customer’s account” when asking if Chain Bridge would be getting an indemnity letter
from JPMC, to which Brough responded, “don’t worry about it…it is what it is” and “this is what
we have to do.” See Pl. Br. at 12; Ex. 69 (audio) at 1:17-1:25, 2:15-2:49. At no point did any Chain
Bridge employee observe that those statements regarding the crediting of the account were
inaccurate or that the account had not actually been credited at that time. In fact, Evinger himself
told a Blue Flame employee on March 27, 2020 that “[Blue Flame’s] account was opened and
money was accepted and then returned. We can’t ‘void’ it.” Ex. 126, 785. Defendants also concede
that the “memo credit” affected the account’s “Current Balance” as shown in their records (Ex. 48,
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13
2673 (showing “Amount” of $456,888,600.00 in Blue Flame’s account); Pl. Br. at 10 ¶ 17) and
that when they placed the “hold” on the funds at 12:25 PM ET on March 26, they did so in Blue
Flame’s account (Ex. 60, 4468; Pl. Br. at 10 ¶ 17). Furthermore, Chain Bridge’s wire transfer
policy provides that “[w]hen wires are received into the bank, the funds are deposited into the
designated beneficiary’s account and a notice will be sent to the customer by secure email.” ECF
No. 113-10, 4298. It is undisputed that Gula received the secure email notice of the receipt of the
wire. Pl. Br. at 9 ¶ 15; Ex. 50, 1938-39; SUF ¶ 17. In addition, both Gula and Thomas testified that
Gula saw the funds appear in Blue Flame’s account on Chain Bridge’s online account portal after
receiving that email. Pl. Br. at 9 ¶ 15; Ex. 1, 221:2-17; Ex. 2, 226:6-17.18
The distinction Defendants seek to draw between a “memo credit” and a “hard post” after
“nightly batch data processing” is meaningless in any event. As Blue Flame’s banking expert
explained, a “memo credit” (or “memo debit”) is simply shorthand for a transaction. Ex. 127,
322:4-326:11. The bank’s “nightly batch data processing,” meanwhile, is nothing more than a
bookkeeping mechanism that allows the bank to account for all transactions on a daily basis.19 It
is irrelevant under the law. Banque Worms, 726 F.Supp. at 942 (citation omitted) (rejecting
18 The cited testimony plainly supports that Gula saw the funds appear in Blue Flame’s account,
though Defendants bizarrely dispute that fact. See Defs. Opp. at 10 ¶ 15. Were Gula clairvoyant,
he would have taken a picture to provide the “documentary evidence” Defendants argue is lacking.
See id.
19 Defendants argue in a footnote that there is no evidence in Chain Bridge’s general ledger
showing the crediting of the account. See Defs. Opp. at 10 n.6. That is irrelevant because, as
Defendants have explained, all accounting entries for the bank’s business demand checking
accounts are aggregated together (see Ex. 128, 321:11-324:15); as a result, intra-day, offsetting
movements of funds would not have left a record in the bank’s general ledger (see Ex. 129, 190:14
-194:16). In response to repeated discovery requests, Defendants’ counsel confirmed that the
detailed daily transaction logs that would have reflected all activity related to Blue Flame’s
account, including intra-day, offsetting movements of funds, were too “ephemeral” to have been
retained and do “not persist for more than a few days and are not included as part of any periodic
back-ups of the Bank’s system.” Ex. 130.
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argument that wire transfer sent via Clearing House Interbank Payments System (CHIPS) is
complete and final only after it settles at close of business day because the “final settling of the
accounts” at end of day is “mere bookkeeping”); see also Funds Transfers Through Fedwire, 55
Fed. Reg. 40791-01, 40800 (Oct. 5, 1990) (“Fedwire…payment orders are final and irrevocable to
the receiver when made”). Logic also dictates that there is no legally cognizable distinction
between a “memo credit” and a “hard post.” As Chain Bridge’s funds availability policy states,
funds received via wire transfer typically are made available to the beneficiary the day the bank
receives the wire, and thus before the “nightly batch data processing” converts the “memo credit”
to a “hard post.” Ex. 131, 4310 (“Cash and electronic direct deposits will be available on the day
we receive the deposit….”). Because funds received by wire transfer can be (and typically are)
released to a customer prior to “nightly batch data processing,” it would make no sense for the law
to distinguish between a “memo credit” and a “hard post.”
III.
THERE ARE NO DISPUTES OF MATERIAL FACT AS TO DEFENDANTS’
LIABILITY FOR TORTIOUS INTERFERENCE.
A.
Undisputed Facts Establish Blue Flame’s Contract and Business Expectancy
with California.
As demonstrated in Blue Flame’s opening brief (Pl. Br. at 27), the evidence establishes that
Blue Flame had a valid contract and business expectancy with California. Defendants concede
that: Blue Flame had a contract to sell 100 million N95 masks to California (Pl. Br. at 4 ¶ 5; Defs.
Opp. at 5 ¶ 5); California had made its prepayment of 75% of the purchase price as agreed under
that contract (see Defs. Opp. at 5 ¶ 5); Defendants were aware of the existence of that contractual
relationship and business expectancy as of March 25 (see Pl. Br. at 5-7; Defs. Opp. at 8 ¶ 9) and
were told that the Wire Transfer was “legitimate” and a “good transfer” by California officials
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(Defs. Opp. at 12 ¶ 19);20 Blue Flame had entered contracts and orders with suppliers to provide
the N95 masks to California as of the time of California’s wire to Blue Flame (Pl. Br. at 7); and
Defendants were aware Blue Flame stood to profit by over $100 million upon successful delivery
of California’s order (see id. at 6 ¶ 8).
With no real rejoinder to those undisputed facts, Defendants incorrectly argue that Blue
Flame procured California’s order by fraud and, therefore, Blue Flame had no valid contract with
California. See Defs. Opp. at 14-15. Not so. As Blue Flame has explained, those purported
“misrepresentations” were based on information represented and available to Blue Flame at the
time they were made. Pl. Opp. at 2-8; supra Section I.A. Moreover, it is undisputed that the
statements Defendants rely on were made to individuals with no role in negotiating with or vetting
Blue Flame, and thus could not have been material in any event. Pl. Opp. at 2-8.
B.
Undisputed Facts Establish Defendant’s Wrongful Intent to Interfere with
Blue Flame’s Relationships with California.
Evidence shows that Defendants acted with the requisite intent to be liable for interference
with Blue Flame’s contract and business expectancy with California. Pl. Br. at 28-29. Rather than
provide contrary evidence to establish a disputed issue of material fact, Defendants merely repeat
their mistaken assertion that Blue Flame was somehow engaged in fraudulent activity. See Defs.
Br. at 30 ¶ 4. Because Defendants knew or were substantially certain that their insinuations that
Blue Flame was a fraud would cause California to terminate its order (Pl. Br. at 28-29),21 the
20 In addition to California’s order, Defendants also were on notice at the time of their actions that
Blue Flame had contracts with other purchasers (see, e.g., Ex. 67, 4463; Ex. 1, 193:5-17), and do
not dispute that Blue Flame had told them that its successful completion of the California
transaction would enable Blue Flame to fill other orders (Defs. Opp. at 9-10 ¶ 12).
21 Indeed, during motion to dismiss briefing, Defendants referred to the statements made to
California as conveying “fraud concerns.” ECF No. 27 at 17. Yet, incredibly, they now suggest it
is impossible that California officials could have understood Defendants’ fraud concerns to suggest
that Blue Flame was potentially engaged in fraud.
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intentional interference prong of Blue Flame’s claim is satisfied. See Commerce Funding Corp. v.
Worldwide Sec. Servs. Corp., 249 F.3d 204, 213 (4th Cir. 2001) (finding intentional interference
where defendant twice contacted plaintiff’s contractual counterparty knowing that it was
substantially likely to harm performance of plaintiff’s contract).22
C.
Undisputed Facts Establish Defendant’s Use of Improper Methods.
Uncontroverted evidence also establishes that Defendants used improper methods23 in
interfering with Blue Flame’s relationship with California in multiple independent ways, including
by deviating from standard industry practices24 and by violating Regulation J.25 Defendants first
try to escape liability by insisting that its deviation from standard banking practices was justified
because “both Chain Bridge and California had a shared interest in investigating the wire transfer
to verify its validity.” Defs. Opp. at 28.26 But Defendants ignore the undisputed facts that
22 Notably, Defendants do not argue that Commerce Funding Corp. is inapplicable or otherwise
distinct in any way, preferring to counter only with feigned indignity. See Defs. Opp. at 26-27.
23 Defendants claim that Blue Flame’s argument regarding “improper methods” concedes that its
contract with California was terminable at will. Defs. Opp. at 22. Defendants misread Blue Flame’s
truthful recitation of the law that “improper methods” must be established either where there was
interference with business expectancy or a contract may be terminated at will. Dunlap v. Cottman
Transmission Sys., LLC, 754 S.E.2d 313, 318 (Va. 2014). Because Blue Flame has claimed
interference with its business expectancy, it must demonstrate improper methods for that claim.
24 Defendants assert that while the Virginia Supreme Court has “posited” that the improper
methods element may be satisfied by violating the established standards of a trade/profession, “we
are unaware of any decision of that court upholding liability…based on that theory.” Defs. Opp.
at 29 n.14. It has done so. See Simbeck, Inc. v. Dodd Sisk Whitlock Corp., 508 S.E.2d 601, 604
(Va. 1999) (affirming liability for tortious interference where the “defendant intentionally
interfered with the expectancy by using improper means” because it “violated unwritten trade
customs or ethical practices in the trucking insurance business[.]”).
25 Defendants argue that “Blue Flame premised its tortious interference claims on allegations that
Defendants ‘unilaterally contacted California officials and accused Blue Flame of fraud[‘]” only
to “now retreat[] from that theory[.]” Defs. Opp. at 27. Defendants are wrong. Blue Flame has not
“retreated” from its defamation claim, but acknowledges it involves disputed issues of fact that
cannot be resolved on summary judgment. There are no disputed issues of fact concerning
Defendants’ violations of federal regulations and deviation from standard industry practice, either
of which can supply “improper means” for tortious interference under Virginia law.
26 Defendants’ citation to Prof. Recovery Servs., Inc. v. Gen. Elec. Capital Corp. is inapposite.
That case concerned multiple financial institutions exchanging information, not a financial
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California viewed the Wire Transfer as “legitimate” and was in the midst of performing at the time
of their unsolicited contact. See id. at 12 ¶19. That also is why there is a distinction between
Defendants’ communications with California and those with JPMC. See id. at 28. JPMC was not
the party originating the Wire Transfer and thus plausibly could have had a joint interest in
investigating it with Defendants. Moreover, it would have been reasonable to expect that California
would have a different—and more severe—reaction to its vendor’s own bank raising fraud
concerns related to the transaction than to JPMC flagging such concerns.
There is no genuine dispute that Defendants’ actions violated standard banking practices.
In an attempt to obfuscate those practices, Defendants refer to their banking expert’s assertions
that it is common to directly contact the originator of a wire transfer when investigating a wire.27
Defs. Opp. at 29. However, Grice’s assertion was that it is routine and appropriate to contact a
counterparty where the bank requires further information to verify a transaction.28 Here,
Defendants had already been provided with information to verify the transaction by Blue Flame,
including the originator, the amount, and the purpose. Pl. Opp. at 9-10 ¶¶ 23-25. It was therefore
institution sharing information with the contractual counterparty of a customer. See 642 F. Supp.
2d 391, 401 (D.N.J. 2009) (emphasis added) (“Defendant[]’s fraud division had a practical, legal,
and ‘moral duty’ to prevent identity theft and report the risk to those with the same duty in the
same industry”).
27 Notably, in its Memorandum in Opposition to Chain Bridge Bank, N.A.’s Motion for Summary
Judgment, JPMC—the largest bank in the United States by total assets—referred to Defendants
decision to reach out to California as “extraordinary.” ECF No. 145 at 5.
28 Grice said that when investigating a transaction: “My one early source of information is my
client, right, the beneficiary.” Ex. 125, 291:23-25. He continued “So the other information banks
routinely gather is, you know, web search, Internet information, Google hits, news about the
originator, you know, trying to build a profile for what does this originator do.” Id. at 292:7-11.
Finally, Grice stated that “And then if doubts persist, again, in particular, against the backdrop of
an extremely large transaction, I am free to call the originator.” Id. at 292:14-17 (emphasis added).
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18
inconsistent with standard banking practices to reach out to California to “verify” the Wire
Transfer, much less to continue questioning it after California officials did verify the transfer.29
Finally, Defendants claim that their Article 4A violations cannot serve as the “improper
methods” for a tortious interference claim because (1) they did not violate Article 4A and (2) even
if they did, Article 4A (as incorporated by Regulation J) preempts state law causes of action like
tortious interference. Defs. Opp. at 30. As discussed above, Blue Flame is entitled to summary
judgment on its Article 4A claims. See supra, Sections I & II. Moreover, Defendants’ own cited
authority demonstrates that Article 4A does not preempt causes of action that cover different
conduct and offer different remedies. In Eisenberg v. Wachovia Bank, N.A., the Fourth Circuit held
that a tort claim was not preempted by Article 4A where the claim challenged not the wire transfer
processing itself, but surrounding conduct. 301 F.3d 220, 224 (4th Cir. 2002). Blue Flame’s
tortious interference claims are no different. They are predicated not on Chain Bridge’s handling
of the Wire Transfer, but on Defendants’ interference with Blue Flame’s relationship with
California, and thus are not “duplicative” of Article 4A. See id.30
IV.
BLUE FLAME CAN ESTABLISH DAMAGES.
Defendants argue that Blue Flame’s motion for summary judgment on liability under
Counts I, IV, and V must fail because they assert it is impossible for Blue Flame to establish it has
suffered any damages as a result of Defendants’ actions.31 Defs. Opp. at 22-23, 30. Yet there is
29 Schoeppe’s self-serving testimony that she frequently contacts originators of wire transfers (see
Defs. Opp. at 29) fails to raise an issue of material fact; what Chain Bridge purportedly does as its
standard practice does not establish standard practice throughout the banking industry. Indeed,
Chain Bridge’s failure to follow industry practices is the reason for this lawsuit.
30 See also James J. White & Robert S. Summers, Uniform Commercial Code, Practitioner Treatise
Series § 22-4 at 29 (5th ed. 2008) (“When there is some sort of additional act that occurred outside
of the funds transfer itself ... there is no reason to preclude a state law fraud claim.”).
31 Blue Flame is not seeking summary judgment as to the amount of its damages, which turns on
questions of fact that require a trial.
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19
ample evidence from which a reasonable jury would conclude that Blue Flame suffered damages
as a result of Defendants’ refusal to pay Blue Flame (under Count I) and/or Defendants’ tortious
interference (under Counts IV and V). After all, it is undisputed that California paid Blue Flame
under a contract to sell 100 million N95 masks, and that Blue Flame was attempting to pay its
suppliers and stood to profit over $100 million. See supra Section III.A.
Defendants’ arguments that Blue Flame cannot prove damages ignore relevant evidence
and are circular in that they ignore the impact of Defendants’ own actions in frustrating Blue
Flame’s business objectives. First, Defendants argue that “Blue Flame could not have forced
California to proceed with the transaction over California’s objection.” Defs. Opp. at 22. That
argument ignores that there was no objection from California prior to Defendants’ actions. Indeed,
the undisputed evidence shows that, before Defendants took the extraordinary steps of repeatedly
contacting California officials and sowing doubts about Blue Flame, California and Blue Flame
were in the process of performing on that contract. See Pl. Opp. at 13-14.
Second, Defendants argue that “there is no evidence that Blue Flame had any source of
supply to fulfill California’s order” (Defs. Opp. at 22) and dispute that “Blue Flame could deliver
any of the products or inventory” that California agreed to purchase (id. at 4 ¶ 3). Yet, Defendants
concede that Blue Flame’s suppliers told Blue Flame that they could deliver N95 masks to
California (id. at 4 ¶ 4), and that Blue Flame placed orders with those suppliers prior to California’s
payment (see id. at 7). Furthermore, the CEO of Blue Flame’s primary supplier for California’s
order, from whom Blue Flame ordered 100 million N95 masks meeting California’s specifications,
has confirmed that his company would have been able to deliver the masks to California had
Defendants not interfered and prevented Blue Flame from making the prepayment to which
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20
California, Blue Flame, and its supplier had agreed. Ex. 95 ¶¶ 22-23, 29-30, 32-40.32 Plainly, there
is evidence that Blue Flame had suppliers that agreed to deliver the masks California purchased.
Ultimately, Defendants’ argument takes their own destruction of the deal as proof that it never
could have happened. To the extent Defendants dispute how many masks Blue Flame would have
been able to deliver within 30 days (see, e.g., Defs. Opp. at 6-7), that dispute goes to the amount
of Blue Flame’s damages, not whether there are any damages at all.33
Finally, Defendants argue that Blue Flame would not have performed on California’s
contract because Blue Flame was unable to fulfill certain other PPE orders. See Defs. Opp. at 22.
But it was Defendants’ unauthorized reversal of the Wire Transfer that disrupted Blue Flame’s
supplier relationships and robbed it of the capital it needed to prepay for those orders. See Ex. 86,
119:22-120:9, 125:15-127:8, 203:12-204:2, 206:19-22, 259:18-260:19; Ex. 95 ¶ 38. In any event,
Defendants ignore undisputed evidence that Blue Flame delivered other PPE orders, including
over 1.6 million N95 masks accepted by the State of Maryland and City of Chicago. Ex. 111,
207341; Ex. 112, Schedule A at 5.
CONCLUSION
For these reasons, Blue Flame’s Motion for Partial Summary Judgment should be granted.
32 Huang also confirmed the following facts that Defendants attempt to dispute: (1) that the
“allocable inventory” and “monthly capacity” figures in GHC’s products catalog did not represent
maximum capacities for a prepaid order the size of California’s (Ex. 95. ¶ 18; see Defs. Opp. at 5-
6); and (2) that the entity for which Gula provided wire instructions in response to Evinger’s
question is a GHC affiliate (Ex. 95 ¶ 28; see Defs. Opp. at 8-9 ¶ 10; Pl. Br. at 7 ¶ 10).
33 For example, Defendants’ purported PPE expert witness concludes primarily on the basis of
otherwise inadmissible hearsay that it would have been impossible for Blue Flame to supply 100
million N95 masks of the designated models within sixty days. See ECF No. 130-22 at ¶¶ 47-52.
Blue Flame’s PPE expert disagrees with that analysis, creating an issue that cannot be resolved on
summary judgment (see Pl. Opp. at 14 n.7; Ex. 117 ¶¶ 16-24), but in any event Blue Flame’s
successful delivery of any quantity of the specified masks to California would result in damages.
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21
Dated: May 27, 2021
Respectfully submitted,
/s/ Peter H. White
Peter H. White (VA Bar No. 32310)
Jason T. Mitchell (pro hac vice)
Gregory Ketcham-Colwill (pro hac vice)
SCHULTE ROTH & ZABEL LLP
901 Fifteenth Street, NW, Suite 800
Washington, DC 20005
Tel.: (202) 729-7476
Fax: (202) 730-4520
pete.white@srz.com
jason.mitchell@srz.com
gregory.ketcham-colwill@srz.com
William H. Gussman, Jr. (pro hac vice)
Steven R. Fisher (pro hac vice)
SCHULTE ROTH & ZABEL LLP
919 Third Avenue
New York, New York 10022
Tel.: (212) 756-2044
Fax: (212) 593-5955
bill.gussman@srz.com
steven.fisher@srz.com
Counsel for Plaintiff Blue Flame Medical LLC
Case 1:20-cv-00658-LMB-IDD Document 159 Filed 05/27/21 Page 25 of 26 PageID# 4191
CERTIFICATE OF SERVICE
I hereby certify that on this 27th day of May, 2021, I caused the foregoing document
to be filed and served electronically using the Court’s CM/ECF system, which automatically sent
a notice of electronic filing to all counsel of record.
Dated: May 27, 2021
/s/ Peter H. White
Peter H. White, Esq. (VSB# 32310)
SCHULTE ROTH & ZABEL LLP
901 Fifteenth Street, NW, Suite 800
Washington, DC 20005
Tel: 202-729-7476
Fax: 202-730-4520
peter.white@srz.com
Counsel for Blue Flame Medical LLC
Case 1:20-cv-00658-LMB-IDD Document 159 Filed 05/27/21 Page 26 of 26 PageID# 4192