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RBS Wins Dismissal of Mill Financial Claim

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July 26 (Bloomberg) -- Royal Bank of Scotland Group Plc won the dismissal of a breach-of-contract claim in a lawsuit brought by a lender over a $70 million personal loan to former Liverpool soccer club owner George Gillett.

Mill Financial sued Gillett in November 2010 in New York state court over the loan, seeking $117 million in principal, fees and legal expenses. The Springfield, Virginia-based lender added Edinburgh-based RBS to the suit last year.

Liverpool’s banks forced a sale of the club to Boston Red Sox owner John W. Henry’s New England Sports Ventures -- now known as Fenway Sports Group -- for 300 million pounds ($471 million) in October 2010 after Gillett and Liverpool co-owner Tom Hicks failed to pay back debt.

New York State Supreme Court Justice Eileen Bransten in an order dated yesterday granted a motion by RBS to dismiss the breach of contract claim, while denying a motion to throw out a second claim for breach of implied of covenant of good faith and fair dealing.

Mill Financial seeks “purely consequential” damages in the suit based on the theory that it lost its ability to profit from related transactions, a legal remedy that was barred from a contract between Mill Financial, RBS and Wachovia Bank, Bransten wrote.

‘General Damages’

“Plaintiffs have not alleged that they sustained general damages as a result of RBS’ breach of the Tri-Party Agreement, nor have they provided any affidavit in support of this contention,” Bransten said. “Plaintiffs allege only consequential damages that stem from their preclusion from either refinancing the club’s debt to RBS or buying the club outright.”

Bransten gave the plaintiffs 30 days to refile the claim to include damages that aren’t prohibited by the agreement.

Ed Canaday, a spokesman for Royal Bank of Scotland, declined to comment on the ruling in a telephone interview. Tad O’Connor, an attorney with Kasowitz Benson Torres & Friedman LLP who is representing Mill Financial, declined to comment immediately.

The case is Mill Financial LLC v. Gillett, 10-652055, New York State Supreme Court in Manhattan (New York County).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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