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On April 4, 2014, a decision and order of the New York Supreme Court granted summary judgment dismissing a breach of contract claim against PSD client AMERRA Agri Fund, LP. Plaintiffs in the case included Federated Project and Finance Core Fund (a Federated Investors fund) and GML Agricultural Commodity Trade Finance Fund, LLC. PSD previously obtained the dismissal of claims against AMERRA Capital Management LLC.
The dispute arose from investments in commodities financing for a large Mexican grain company known as Covadonga. While AMERRA and the plaintiffs ultimately faced issues concerning the collateral that Covadonga had pledged, the court found it indisputable that AMERRA had relied “on repeated confirmations and detailed reports from General and Gomez, Mexican-government regulated and licensed warehouseman, who were hired to store and monitor the grains.” During the relevant time period, “Gomez and General confirmed existence of all grains represented on AMERRA’s CDs.” On top of that, AMERRA “relied on reports from Maloney [Commodities Services], its expert inspector, independent from the warehousemen, confirming that the grain Repo Collateral in the warehouses conformed to the CD values assigned by Covadonga and routinely confirmed by the warehousemen.” The court explained that “Suresh Advani, a principal of plaintiff GML, testified that plaintiffs routinely rely on ‘experts’ like Maloney for commodities inspections.” Under such circumstances, the court concluded that an “exercise of due diligence will not always guarantee a lack of wrongdoing or harm caused by others.”
AMERRA Capital Management LLC is a registered investment adviser based in New York managing funds and accounts offering customized agriculture finance solutions.