Frost Brown Todd. Diego M. Radzinschi/ALM

A Houston drilling company is suing Frost Brown Todd, alleging that the Ohio-based Am Law 200 firm and a Texas funding manager failed to return $945,000 in escrow funds.

The plaintiffs, Drilling Structures International of Houston and its president and founder Philip Rivera, alleged in a petition filed Tuesday that they have been deprived of business opportunities valued at more than $10 million because that escrow money was not returned. The former Frost Brown lawyer mentioned in the complaint is no longer with that firm.

Frost Brown and the fund manager—Terra Master, of Nederland, Texas—face causes of action including breach of fiduciary duty, fraud by nondisclosure, fraud, negligent misrepresentation, conversion and statutory theft-conversion. The plaintiffs are seeking more than $1 million in damages, including punitive damages.

Matthew Blickensderfer, a Frost Brown partner in Cincinnati who is the firm's general counsel, initially declined to comment on the case. He later said in a statement: “The plaintiffs, who were never clients of our firm, sent funds to our firm to be distributed as part of an investment transaction. After the funds were distributed, the plaintiffs claimed the funds should have been returned to them. The fraud and conversion allegations, in particular, lack any merit, and we will vigorously defend the allegations.”

In Drilling Structures International v. Frost Brown Todd, the plaintiffs allege that Drilling Structures, which manufactures drilling equipment, secured a project in Colombia and entered into a financing contract with Terra in May 2016. Terra entered into an escrow agreement with Frost Brown on June 6, 2016, the plaintiffs allege.

Around June 15, 2016, Drilling Structures sent $500,000—which was reduced to $445,000 after professional fees were deducted—and Rivera sent another $500,000 that was to be held in the escrow account, according to the petition. Jason George, then a partner in Frost Brown, was overseeing the matter, the petition said.

However, the petition said, because Terra did not provide the financing, Drilling Structures demanded return of their money.

“Despite repeated demands, Frost [Brown] has declined to return the escrow money. Terra likewise has declined to return plaintiffs' funds,” the petition said.

The plaintiffs alleged that Frost Brown “improperly transferred” the escrow funds to Terra. They alleged that Terra and George, who is no longer at Frost Brown, said “numerous” times that they would return the funds, but it has not happened.

“In the meantime, the firm and/or the attorney(s) acting under the firm's and its agent(s) wrongfully led plaintiffs to believe that the money had not been diverted and that it was forthcoming,” the petition said.

Because of the defendants' actions, the plaintiffs allege they lost the escrow funds as well as the money they would have earned on the business opportunities forgone because of the inability to secure the promised funding.

The plaintiffs also claim that Frost Brown sued Terra in Ohio for the money and obtained a default judgment. Plaintiffs lawyer Brian Ettinger, who is outside general counsel for Drilling Structures, said he believes Frost Brown has not collected on the default judgment.

Ettinger is representing the plaintiffs along with Michael Wynne, a partner in Houston's Hughes Arrell Kinchen, who is a former federal prosecutor who does white-collar crime defense work.

Wynne said he could not give a more specific estimate of damages but said he is confident the plaintiffs missed out on “significant business opportunities” because the escrow money was not returned.

George, now of The George Law Group in Columbus, Ohio, did not respond to a call seeking comment.

William Stephens, who is listed in state business records as a director of Terra Master, declined comment on the case, saying he was unaware of it.