John Paulson must face a fraud claim by his former Puerto Rico business partner over a $17 million investment in a luxury car dealership, though a federal judge threw out other parts of the lawsuit against the hedge fund billionaire.

US District Judge Camille L. Velez-Rive in San Juan, Puerto Rico, ruled Monday that Fahad Ghaffar could proceed with securities fraud and breach of contract claims against Paulson for allegedly failing to deliver a promised convertible note giving him a 50% stake in the dealership, which was owned by a Paulson family trust.

Velez-Rive said a note provided to Ghaffar didn’t detail his interest in the investment and “failed to reflect the agreement’s most basic terms.” She also rejected Paulson’s argument that the note at issue wasn’t a “security” under US law.

But the judge dismissed claims against Paulson under a Puerto Rico law she said was limited to companies in the securities industry. She also tossed an unjust enrichment claim, saying it was duplicative of Ghaffar’s other claims.

Ghaffar’s September lawsuit, which asked for $50 million in damages, revealed a fractious relationship between the two men, who met in 2013 when Paulson was under contract to buy the St. Regis Bahia Beach resort. Paulson has invested heavily in the US Caribbean territory and owns several luxury resorts there, including the St. Regis and the Condado Vanderbilt. Ghaffar had been by his side for many of his deals.

Lawyers for both sides claimed victory on Monday.

“It is significant that the court has already decisively dismissed half of his claims,” said Paulson’s lawyers, Terrence and Darren Oved of Oved & Oved. “We are confident the other half will be dismissed in short order.”

“We are very pleased with the federal district court decision,” said Martin Russo, Ghaffar’s lawyer. “The judge clearly recognized that Paulson’s conduct alleged in the complaint amounts to securities fraud. We look forward to proving our case at trial.”

Paulson hit back in October with his own $190 million lawsuit accusing Ghaffar and several members of his family of engaging in a scheme to siphon off millions of dollars from the Paulson’s businesses. According to the suit, Ghaffar used the money to fund a lavish lifestyle, including private jet travel and six-figure shopping sprees at Louis Vuitton and Chanel.

In his suit, Paulson called Ghaffar an “unemployed small-time commercial real estate investor” who sought out the “self-made highly successful owner of Paulson & Co.” in 2013 and “begged for an opportunity to work for him.” Starting as a junior analyst, Ghaffar earned Paulson’s trust over the years and eventually became the billionaire’s senior manager in Puerto Rico.

Ghaffar has asked the court to throw out Paulson’s suit, calling it part of a “concerted smear campaign” and “a mishmash of mudslinging allegations.”

The case is Ghaffar v Paulson, 23-cv-1455, US District Court, District of Puerto Rico.

This article was provided by Bloomberg News.