Opinion ID: 3023443
Heading Depth: 3
Heading Rank: 3

Heading: Was SIP Acting on Behalf of the Fund When

Text: It Refused to Pay IFC? The Fund argues that although the placement fee arrangement was made on its behalf, the failure to pay IFC for its services was not done on its behalf. We believe that this draws too fine of a line and that, as a matter of law, SIP was acting on the Fund’s behalf in contracting with IFC and in its actions that constituted a breach of that contract. It is unquestioned that SIP had the authority to enter into the placement fee arrangement and to monitor the contract. SIP’s refusal to pay IFC was because SIP claimed that IFC was defrauding it. SIP has vigorously maintained this position throughout this litigation. When SIP refused to pay, it was acting in accordance with its management duties to protect the Fund from fraud and believed in good faith, as far as we can tell, that withholding payment was excused by IFC’s prior breach. Only now, when it appears that the Fund might be on the hook, does the Fund disown SIP’s actions. We are unimpressed. The failure to pay IFC its placement fees was done on behalf of the Fund and is covered by the indemnification agreement.