Opinion ID: 1852412
Heading Depth: 1
Heading Rank: 1

Heading: Initial Consortium-STAR Financing Agreement

Text: In early 1995, Selle learned about Consortium through a loan officer at Mortgages Unlimited. On July 25, 1995, STAR and Consortium negotiated the preliminary terms of a financing agreement. After the meeting, Selle and John Karr, a consultant to and investor in STAR, sought additional information about Consortium. Selle and Karr learned from Consortium that Consortium had retained Faegre. They decided to question Faegre about Consortium. Selle stated he phoned Andrew Humphrey, a Faegre attorney, to determine whether Humphrey knew anything about Consortium. According to Selle, Humphrey responded that he did not know anything about Consortium, agreed to find out what he could about Consortium, and ultimately responded that [Faegre] had some smaller dealings with [Consortium], but nothing came up, whether it be bad or good. Karr did not remember whether it was he or Selle who asked Faegre about Consortium, nor did he remember the precise language of Faegre's response. Karr stated, however, that Faegre's response left him and Selle with the impression that Consortium was, indeed, a legitimate business. Humphrey recalled Selle's inquiry about Consortium. According to Humphrey, he responded by stating that he did not know anything about Consortium and that it would be inappropriate for him to say anything about Consortium if Consortium was Faegre's client. Selle denied that Humphrey made such a statement to him. In an August 7, 1995, letter to STAR, Gary Gandrud, a Faegre attorney, expressed the terms under which the firm's representation of STAR in connection with its new financing project could continue. Shortly thereafter, Faegre obtained Consortium's and STAR's consent to Faegre's representation of STAR in connection with its financing project. On August 9, 1995, STAR and Consortium executed a preliminary commitment agreement. A closing scheduled for October 1995 did not take place because Consortium was unable to prepare some documents. Faegre did little or no work on the deal after the closing did not take place. STAR and Consortium rescheduled the closing for December 1995 or January 1996. That closing also did not take place, however, because a shutdown of the federal government prevented STAR from obtaining part of its financing package, a loan from the Small Business Administration.