Preview
FILED: NEW YORK COUNTY CLERK 03/30/2018 03:35 PM INDEX NO. 655978/2016
NYSCEF DOC. NO. 130 RECEIVED NYSCEF: 03/30/2018
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
TROJAN MARITIME, INC.,
INDEX NO. 655978/2016
Plaintiff,
-against- Justice Melissa A. Crane
odon Seq. No. 005
TPG SIXTH STREET PARTNERS, LLC, f/k/a
TPG SPECIAL SITUATIONS PARTNERS,
LLC,
Defendant.
MEMORANDUM OF LAW IN REPLY TO PLAINTIFF'S OPPOSITION TO
DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
CKR LAW LLP
1330 Avenue of the Americas
14th Floor
New York, New York 10019
Tel. (212) 259-7300
Attorneys for Defendant
Of counsel: Rosanne E. Felicello
Zofia Rubens
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TABLE OF CONTENTS
TABLE OF ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 2
AUTHORITIES........................................................................................................
PRELIMINARY STATEMENT 1
..................................................................................................
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 2
ARGUMENT.................................................................................................................................
POINT I.PLAINTIFF HAS FAILED TO ESTABLISH THAT THE CONTRACT IS
AMBIGUOUS 2
................................................................................................................................
POINT II.PLAINTIFF IGNORES THE PLAIN WORDS OF THE AGREEMENT.................... 2
PARTIES'
POINT III.PLAINTIFF IGNORES THE CONDUCT.................................................
5
POINT IV. THE TESTIMONY OF THIRD PARTY MICHAEL KIRK IS IRRELEVANT.......... 6
POINT V. AN ANALYSIS OF THE EVIDENCE PRODUCED BY DEFENDANT SHOWS
THAT TSSP EXPENDED MORE THAN $225,000 ON DUE DILIGENCE EXPENSES........... 7
CONCLUSION .............................................................................................................................
9
.
1
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TABLE OF AUTHORITIES
Cases
(1st
Ashwood Capital, Inc. v. OTG Mgmt., Inc., 99 A.D.3d 1, 948 N.Y.S.2d 292 Dep't 2012) ......
7
Banco Espirito Santo, S.A. v. Concessionaria Do Rodoanel Oeste S.A., 100 A.D.3d 100, 951
(1st
N.Y.S.2d
.Y.S.2d
~ ~ ~ 19 (1
QL ~
Dep't L Cr
2012) ..................................................................................................
7, 8
Gee v. Zee Ying Wng, 49 Misc. 3d 1215(A), 29 N.Y.S.3d 847 (N.Y. Sup. 2015) 4
...........................
Greenfield v.Philles Records, Inc., 98 N.Y.2d 562, 780 N.E.2d 166 (2002)..................................
7
Nat'l Union Fire Ins. Co. of Pittsburgh, Pennsylvania v. TransCanada Energy USA, Inc., 52
Misc. 3d 455, 28 N.Y.S.3d 800 (N.Y. Sup. Ct. 2016).............................................................
.............................................................
2, 7
Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 660 N.E.2d 415 (1995)4
(1st
Perella Weinberg Partners LLC v.Kramer, 153 A.D.3d 443, 58 N.Y.S.3d 384 Dep't 2017)... 2
Schron v. Grunstein, 32 Misc. 3d 231, 917 N.Y.S.2d 820 (N.Y. Sup. Ct. 4
2011).............................
Zuckerman v. City of New York, 49 N.Y.2d 557 (1980)........................................................
........................................................
5, 6, 10
..
11
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Defendant TPG Sixth Street Partners, LLC, f/lda TPG Special Situations Partners, LLC
("TSSP" "Defendant"
or "Defendant"), by and through itsundersigned attorneys, hereby respectfully submits
("Trojan" "Plaintiff'
this memorandum of law in reply to Plaintiff Trojan Maritime, Inc.'s or "Plaintiff")
opposition to Defendant's motion for summary judgment.
PRELIMINARY STATEMENT
To decide this motion, the Court must answer two questions:
1. Has Plaintiff raised an issue of material fact as to whether TSSP breached the
contract by failing to return the funds advanced for due diligence?
Plaintiff contends that the $150,000 transferred for due diligence expenses was subject to
being returned to Plaintiff ifa third party (RBS) did not sign a settlement agreement. The plain
language of the agreement does not contemplate a refund. Plaintiff proffers the testimony of a
third party in an attempt to create a fact issue as to the interpretation of the agreement. But absent
a finding of ambiguity, which must be determined without consideration of parol evidence, courts
may not look outside the contract to interpret the meaning of the contract terms. Because the
agreement is not ambiguous and does not create a condition precedent, there is no material issue
of fact and the Court should find that TSSP did not breach the contract.
2. Has Plaintiff raised an issue of material fact as to whether Plaintiff owes itfor due
diligence expenses?
The parties agreed to cap Plaintiff's due diligence expenses at $225,000. TSSP has
provided evidence that TSSP spent more than $225,000 on due diligence expenses. Trojan
disputes the validity of the charges, but does not offer any evidence to support itsdispute. Notias
Aff. at ¶ 26. Thus, Plaintiff owes TSSP the difference between the amount advanced and the
agreed cap and is entitled to summary judgment on thisissue.
I
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ARGUMENT
POINT I.
PLAINTIFF HAS FAILED TO ESTABLISH THAT THE CONTRACT IS AMBIGUOUS
"To be found ambiguous, a contract must be susceptible of more than one commercially
interpretation."
reasonable Perella Weinberg Partners LLC v.Kramer, 153 A.D.3d 443, 446, 58
(1"
N.Y.S.3d 384, 388 Dep't 2017). "[P]rovisions in a contract are not ambiguous merely
differently."
because the parties interpret them Nat'l Union Fire Ins. Co. of Pittsburgh,
Pennsylvania v. TransCanada 52 Misc. 3d — 28 N.Y.S.3d 806
Energy USA, Inc., 455, 461-62, 800,
(N.Y. Sup. Ct. 2016) (citing Mount Vernon Fire Ins. Co. v. Creative Hous. Ltd., 88 N.Y.2d 347,
352, 668 N.E.2d 404, 406 (1996)). Plaintiff failed to show how the Term Sheet provision at issue
is susceptible of more than one commercially reasonable interpretation.
Precedent."
The Term Sheet sets out certain "Conditions This listdoes not include the
condition that RBS sign a settlement agreement. But satisfactory conclusion of due diligence is
one of the conditions precedent (see Affidavit of Samuel Ditter Submitted in Support of
Defendant's Motion for Summary Judgment ("Ditter Aff."), Exhibit E, at p. 6, (xi)). Thus,
Plaintiff's interpretation that would hold Plaintiff not responsible for the due diligence expenses
unless the deal closes does not comport with the plain words of the agreement and is not
commercially reasonable.
POINT II.
PLAINTIFF IGNORES THE PLAIN WORDS OF THE AGREEMENT
parties'
Plaintiff misstates the terms of the agreement. The agreement does not state "if
expenses"
the Settlement Agreement was not executed, Trojan would not be responsible for these
as Plaintiff blithely asserts in itsAmended Complaint. See Affirmation of Rosanne Felicello
Submitted in Support of Defendant's Motion for Summary Judgment (the "Felicello Aff."),
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Exhibit B, at ¶ 23. The Term Sheet states that Trojan will not be responsible for the due diligence
"until"
expenses RBS signs the settlement agreement. Trojan provides no legal support for its
interpretation.
Expenses"
Plaintiff's reliance on the second paragraph under "Transaction is misplaced.
The Term Sheet states:
To avoid any doubt, the Charterer [Plaintiff] and Charter Guarantors
shall not be responsible for any expenses whatsoever, including
but not limited to the Arranger's and TSSP's expenses incurred in
progressing the Transaction, the costs and fees of legal, tax, technical
and other professional advisers until a final Settlement Agreement is
agreed and signed with RBS. Any costs, expenses incurred during
RBS'
the period waiting for agreement and the signed Settlement
Agreement, shall be solely for each party's own expense.
(Ditter Aff., Exhibit E, at p.7.)
While this paragraph purports to disclaim responsibility for expenses incurred "until a
signed"
final Settlement Agreement is agreed and and maintains that any expenses incurred
while waiting for the signed Settlement Agreement "shall be solely for each party's own
expense,"
this language does not impose on TSSP the duty to maintain in escrow funds that are
"unless"
advanced for expenses. It does not say that a Settlement Agreement is signed no funds
(" until"
may be expended. Rather, itis clearly a statement of timing ("until"). Plaintiff waived itsright to
wait for the Settlement Agreement to be signed when ittransferred funds to TSSP prior to
receiving the signed Settlement Agreement. Thus, Plaintiff cannot look to this paragraph of the
Term Sheet to provide itwith relief.
This language does not include words of condition. "To make a provision in a contract a
condition precedent, itmust appear from the contract itself that the parties intended the provision
..."
so to operate Schron v. Grunstein, 32 Misc. 3d 231, 239, 917 N.Y.S.2d 820, 827 (N.Y. Sup. Ct.
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condition" "if,"
2011). The Term Sheet does not include "unmistakable language of such as "unless
until," void."
and and/or "null and Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86
N.Y.2d 685, 691, 660 N.E.2d 415, 418 (1995); Gee v. Zee Ying Wng, 49 Misc. 3d 1215(A), 29
N.Y.S.3d 847, *6 (N.Y. Sup. 2015) (internal citations omitted). It similarly does not use
that," that," to,"
"conditional language, such as "on the condition "provided "subject or "in the
that."
event Gee, 29 N.Y.S.3d at *6. See, Gee v.Zee Ying Wng, 49 Misc. 3d 1215(A), 29 N.Y.S.3d
847 (N.Y. Sup. 2015) (Where defendant argued that the condition precedent was never met because
she was never advised to consummate the transaction pursuant to the language of the agreement
that provided that "[t]he parties shall use their best efforts to consummate the transactions
parties'
contemplated herein as soon as advised by both CPAs.", the court found said language to
be "simply a timing mechanism to determine the date of transfer of the properties in accordance
with the agreed-upon terms, rather than a condition precedent to performance.") The court in Gee
also emphasized that conduct of the parties did not support treating the subject language as a
condition precedent as the parties began performance and, as shown by their e-mails, only the issue
of the timing of the transfer remained to be established. Id. at *7. Similarly, here the Term Sheet
("until"
language at issue ("until") describes the timing of the deposit payment and does not create a
condition precedent for the payment. If the parties meant to create a condition precedent, they
"unless"
would have included the word that would signal that they payment might never be made.
requests" "insiste[d]"
Trojan contends that it made "repeated and that "it would not be
responsible for the due diligence expenses unless and until a final settlement agreement was
signed."
signed. Plaintiffs Mem. Of Law at p. 17. But this contention ignores the timeline of events. While
Trojan may not have wanted to transfer the funds until after the RBS signed the settlement
agreement, at some point Trojan decided to advance the funds even before RBS signed the
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settlement agreement. Trojan does not provide any evidence-not one email or even a party
affidavit-that itreached a new agreement with TSSP (or even that Trojan demanded) at the time
that ittransferred the funds that the $150,000 should be returned to Trojan if RBS did not sign the
settlement agreement. See Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980) (finding that
party opposing summary judgment "must produce evidentiary proof in admissible form . . .
unsubstantiated allegations are insufficient.")
Rather the fact is, as Trojan concedes, that Trojan transferred the funds because TSSP was
likely to walk away from the deal if Trojan did not begin to fund the due diligence. Felicello Aff.,
Exhibit B, at ¶ 20. Given that TSSP was unwilling to proceed with the Transaction unless Trojan
agreed to advance the $150,000, it isunreasonable for Trojan to expect that the $150,000 would
be returned if the deal did not close. The interpretation advanced by Trojan ex post facto does not
make commercial sense and the only viable interpretation of the agreement is the one proffered by
TSSP. Thus, there is no ambiguity and no issue of fact.TSSP did not breach the contract.
POINT III.
PARTIES'
PLAINTIFF IGNORES THE CONDUCT
parties'
As discussed in TSSP's opening brief, to the extent the agreement imposed a
condition precedent, Trojan waived that condition by sending the funds before the RBS settlement
agreement was signed and by approving expenditure of those funds by TSSP on due diligence
expenses. Plaintiff argues that there was no waiver because it insisted that its responsibility for
funding the due diligence expenses not arise until RBS signed the settlement agreement. This
argument misses the point entirely. TSSP's contention is that the waiver occurred after the
agreement was signed. Plaintiff does not address this argument.
Nor does Plaintiff offer any explanation for why Plaintiff would be given the opportunity
to approve, and would approve, the expenditure of funds that Plaintiff would expect itwould not
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be liable to pay for if the deal failed to close. In addition, Plaintiff fails to explain why Plaintiff
would be concerned at capping its exposure at $225,000 if itdid not intend to be liable for the due
diligence funds at all absent the executed settlement agreement with RBS. The only logical
explanation is that Plaintiff developed this theory of contract interpretation after the Transaction
fell through.
Plaintiff's conduct should not be countenanced. As shown in the emails attached to Ditter
Aff. as exhibits F and G, TSSP relied on Plaintiff to provide its share of the due diligence expenses.
Plaintiff encouraged TSSP's reliance by sending the funds for these expenses. Plaintiff has
provided no evidence, in an email or affidavit, that Trojan told TSSP not to expend the funds
advanced on due diligence expenses until and unless the settlement agreement was signed. See
Zuckerman, 49 N.Y.2d, at p. 562.
POINT IV.
THE TESTIMONY OF THIRD PARTY MICHAEL KIRK IS IRRELEVANT
Plaintiff fails to explain why the court should look to the testimony of Michael Kirk as
parties'
evidence of the parties intent. Plaintiff does not claim that Mr. Kirk was serving as the agent of
Plaintiff or Defendant. In fact, Mr. Kirk and his related company, RMK Maritime LLP, was a third
party. "The best evidence of what the parties to an agreement intended is the language of the
entities."
agreement itself, especially where ... the parties ... were sophisticated Nat'l Union Fire
Ins. Co. of Pittsburgh, Pennsylvania v. TransCanada Energy USA, Inc.,,5252Misc. 3d.455,
455, 461, 28
N.Y.S.3d 800, 806 (N.Y. Sup. Ct. 2016) (citing Broad Street, LLC v. Gulf Ins. Co., 37 A.D.3d 126,
130, 832 N.Y.S.2d 1 (1st Dept. 2006) (citations omitted)). "[I]n order to determine the contracting
parties' parties'
intent, a court looks to the objective meaning of contractual language, not to the
it."
individual subjective understanding of Ashwood Capital, Inc. v. OTG Mgmt., Inc., 99 A.D.3d
(1" parties'
1, 6, 948 N.Y.S.2d 292, 296 Dep't 2012). "[E]xtrinsic evidence of the intent may be
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ambiguous."
considered only ifthe agreement is Banco Espirito Santo, S.A. v. Concessionaria Do
(1st
Rodoanel Oeste S.A., 100 A.D.3d 100, 106, 951 N.Y.S.2d 19, 24 Dep't 2012). Whether a
decide."
contract is ambiguous "is an issue of law for the courts to Greenfield v. Philles Records,
Inc., 98 N.Y.2d 562, 569, 780 N.E.2d 166 (2002).
The Term Sheet is not ambiguous. A contract is unambiguous if "on its face [it] is
meaning.""
reasonably susceptible of only one Banco Espirito Santo, S.A., 100 A.D.3d, at 106
(quoting Greenfield, 98 NY2d at 570). Here the agreement, when read together, is only
susceptible to the interpretation that the money was to be sent to be used for due diligence and
that the parties expected the transfer of funds to happen after RBS signed the settlement
agreement. Plaintiff concedes that ittransferred the funds and that the funds were used for due
diligence. Plaintiff's Counterstatement of Material Facts in Opposition to Defendant's Motion
for Summary Judgment, at ¶ 8, Felicello Aff., Exhibit B, at ¶ 23. Therefore, extrinsic evidence, in
this case a third-party's testimony, is not admissible and the court should not consider evidence
parties'
of the supposed intent offered by Mr. Kirk. Mr. Kirk's testimony is not helpful for the
additional reason that he has not been shown to be able to provide any evidence of TSSP's intent.
Itis telling that Plaintiff has not offered itsown testimony and has not sought the deposition
of TSSP. It is likely because the Term Sheet, together with the emails exchanged between the
parties'
parties and the conduct make clear that the parties intended that the $150,000 sent by
Trojan be used for the due diligence expenses. The evidence also shows that the full $150,000 was
used for the intended expenses.
POINT V.
AN ANALYSIS OF THE EVIDENCE PRODUCED BY DEFENDANT SHOWS THAT
TSSP EXPENDED MORE THAN $225,000 ON DUE DILIGENCE EXPENSES
Defendant incurred the following due diligence expenses up to September 2015 in
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connection with the transaction with Plaintiff 1:
Invoice Date Issuer Services Period Services Amount
and Number
11.17.2015 BankServe August 2015 Report on insurance £850.00
Insurance documentations relating to the
B5FEE2015-
Services Ltd. vessels.
APO612
27.11.2015 Idwal Marine September 2015 Inspections of the vessels, audit $38,955.00
Services Ltd of Trojan, dry docking
IMS01629
specification and plan reviews,
technical advisory.
10.30.2015 Kelly Hart & September 2015 Preparation of confidentiality $154.00
444899-20959
Hanman W agreements.
09.08.2015 KPMG LLP from Professional tax services, $9,110.00
01.01.2015 to research, consultation and
800811341
08.15.2015 discussions on Project Trojan
08.20.2015 Maritime 1st instalment of Dry Bulk £16,500.00
Strategies Market (Supramax)- 75%
Study
5375
International of total
Limited
08.31.2015 Maritime 2nd instalment of Dry Bulk £5,500.00
Strategies Market (Supramax)-
Study
5384
International remaining 25% of total
Limited
09.092015 The Risk from Due diligence investigation of $12,000.00
Advisory Group 07.31.2015 to Nicholas Notias.
SIN003464
09.09.2015
10.09.2015 Roosevelt BPO/CMA Orders $760.00
Management Value Reconciliation
RMC0046840
Company LLC Realquest Data Reports
£94,546.892
11.19.2015 Watson, Farley from Review of documents such as
& ams 01.30.205 to tem sheet, lease agreement,
1097498B
LLP 10.13.2015 bareboat charter, guarantee note;
draft memo on guarantees, on
risks of being a lessor vs lender,
equitable subordination; review
of issues relating to withdrawal
of vessels under bareboat
charter, relieffrom forfeiture;
emails, discussions regarding
bareboat charter structure.
TOTAL: $60,979.00
1 H
The listedexpenses are evidenced by invoicesannexed as Exhibit to the Affidavitof Daniel Louis Wanek
Submitted in Support of Defendant's Motion forSummary Judgment, dated November 14, 2017. See also,Affidavit
of Daniel Louis Wanek Submitted in Support of Defendant's Motion forSummary Judgment, dated March 30,2018,
correcting the November 14,2017 Affidavit.
2
The totalamount on the 11.19.2015 Watson, Farley 4 Williams LLP invoice is£100,725.85. Defendant is not
including the amount of £6,178.96 for charges incurred inOctober, 2015.
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£117,396.89
Plaintiff fails to provide any evidence disputing these charges. Instead, Plaintiff merely
argues that some of the charges do not appear to be related to the Transaction. Even omitting
charges on the April 30, 2015 invoice from Watson, Farley & Williams LLP in the amount of GBP
23,862.50 as well as the charges for January 2015 (GBP 120.00), TSSP has provided evidence that
itexpended more than $225,000 on due diligence relating to the Transaction. Plaintiff is required
allegations."
to do more on a motion for summary judgment than merely raise "unsubstantiated
See Zuckerman, 49 N.Y.2d, at p. 562.
Plaintiff also says that it is not responsible for payments made to Watson, Farley &
Williams LLP because it did not approve the invoices. But the Term Sheet does not provide
Plaintiff with approval rights.
Thus, TSSP has provided evidence to support that it expended these funds for due
diligence. Plaintiff has failed to provide evidence in admissible form to counter TSSP's evidence.
Thus, the Court should rule that TSSP is entitled to be paid by Trojan the amount of $75,000.00.
CONCLUSION
For allthe foregoing reasons, the Court should enter an Order granting Defendant's motion
for summary judgment, and granting such other and further relief as the Court deems just and
proper.
Dated: New York, New York Respectfully submitted,
March 30, 2018
CKR LAW LLP
By: /s/ Rosanne E. Felicello
Rosanne E. Felicello
Zofia Rubens
1330 Avenue of the Americas
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14th Floor
New York, New York 10019
Tel. (212) 259-7300
rfelicello@ckrlaw.com
zrubens@ckrlaw.com
Attorneys for Defendant/Counter-Plaintiff
I
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