PITTSBURGH Franklin Global Resources has filed a lawsuit over a stalled rail scrap deal with two South Korean steel companies.
The Henderson, Nev.-based commodities trader filed a breach-of-contract lawsuit in Cameron County District Court in Texas against Shinjeong Steel & Trading Co. and its chief executive officer, Sang Don Lee, and Jangsoo Iron & Steel Co. Ltd. and its chief executive officer, Chang Ho Kwun.
The Industrial Bank of Korea (IBK) and branch manager Won Seob Byeon also are being sued for allegedly conspiring to stop the deal by canceling a letter of credit and failing to issue a new one, court documents show.
The lawsuit says that after receiving a letter of credit in August for $1,185,000 from IBK, Franklins office in Brownsville, Texas, contracted to sell 3,000 tonnes of used rail scrap to Shinjeong. The material was sourced in South America and was to be shipped in containers to a port in South Korea at $395 per tonne c.i.f.
Franklin alleges that the defendants worked together to cancel the order after the buyers were able to get more competitively priced scrap from one of Franklins competitors, which was not named.
"IBK willfully and intentionally aided the defendant to breach and violate the provisions of the contract," says the lawsuit, claiming that IBK knowingly aided the defendants to breach and violate the contract by pulling the letter of credit and not reissuing a new letter of credit, stating afterward that the deal had been canceled.
Franklin is asking the court to award $1,325,000the amount of the canceled letter of credit, plus interestas well as court fees.
None of the parties could be reached for comment.