Hook Point, LLC v. Branch Banking and Trust Co.
Supreme Court of South Carolina
725 S.E.2d 681 (2012)
Hook Point (plaintiff) secured a $5.1 million loan from BB&T (defendant) with a $1.5 million standby letter of credit; after Hook Point acknowledged defaulting on $70,000, BB&T sought to draw the letter of credit's full amount, and nothing in the loan agreement or letter of credit expressly limited BB&T's draw to the default amount. Hook Point sued to enjoin BB&T from drawing the full amount, alleging BB&T had fraudulently induced the loan in the first place, and the circuit court granted a preliminary injunction limiting the draw.
Whether a court may enjoin payment of a letter of credit where the beneficiary's fraud has allegedly undermined the entire underlying transaction and thwarted the legitimate purpose of the issuer's independent obligation.