Unreported / Non-Citable
Background
James Spano transferred $335,000 during negotiations over a proposed transaction involving Sol-REIT and BCF Loans. The deal failed, and defendants returned only $50,000. Spano alleged that they had promised to return the full transfer if the contemplated transaction did not close.
Defendants sought summary judgment on California promissory-fraud and conversion claims, arguing that the evidence could not show a false promise, reasonable reliance, ownership of the funds, or a sufficiently identifiable sum of money.
The Court’s Holding
The court denied summary judgment. Emails and other evidence could allow a jury to find that defendants repeatedly promised repayment after it was clear they would not perform, including a message suggesting a wire had been processed when it had not. Although the evidence was not overwhelming, fraudulent intent may be proven circumstantially.
The conversion claim also survived. Evidence supported Spano’s ownership or possessory interest in the jointly controlled funds, and the $335,000 wire was a specific, identifiable sum. California law did not require every dollar to be separately earmarked.
Key Takeaways
- Nonperformance alone is not promissory fraud, but repeated assurances and misleading statements after default may evidence intent at the time of the promise.
- Reasonable reliance is often a jury question on a disputed record.
- A discrete wire transfer can satisfy conversion’s identifiable-sum requirement.
- Joint control of an account may support a possessory interest sufficient for conversion.
Why It Matters
Transaction counsel should document who owns transferred funds, the conditions for repayment, and what happens if closing fails. Litigators should look beyond the initial promise to later communications that may reveal the promisor’s original intent.