Opinion
No. 04 Civ. 3777 (HB) (FM).
January 10, 2005
OPINION ORDER
Plaintiff, Blue Ridge Investments, LLC ("Blue Ridge"), filed the instant action to recover the prepayment penalty of $784,731.93 triggered by Defendant's, Anderson-Tully Company ("ATCO") early redemption of ATCO shares held by Blue Ridge. Blue Ridge moves for summary judgment pursuant to Fed.R.Civ.P. 56. For the reasons set forth below, the motion for summary judgment is GRANTED.
I. BACKGROUND
ATCO is a timber company currently organized under the laws of the State of Mississippi. (Springer Decl. at ¶ 3). An affiliate of Bank of America ("Bank"), Blue Ridge was created to purchase equity that, because of regulatory restrictions, the Bank was not permitted to purchase directly. (Springer 11/11/2004 Dep. Tr. 20:23-21:24.)
A. Certificate of Designation
In May 1999, ATCO's Board of Directors adopted and filed with the Mississippi Secretary of State a Certificate of Designation (the "Certificate") which, inter alia, issued "25 Class A Voting Cumulative Participating Mandatory Redeemable Preferred Shares, with a par value of $1.00 per share." ("Preferred Shares") (Springer Decl. Ex. 1, Certificate at 1). The Certificate also articulated two ways ATCO could redeem the Preferred Shares once sold: (1) Mandatory Redemption and (2) Optional Redemption. (Certificate, (vi)(A) at 10).
Redemption is "the reacquisition of a security by the issuer." Black's Law Dictionary (8th ed. 2004). Here, the redemption would be ATCO's reacquisition of the Preferred Shares from Blue Ridge.
1. Mandatory Redemption
"Mandatory Redemption" required ATCO to repurchase the Preferred Shares from the holder by June 15, 2004 (the "Mandatory Redemption Date") or upon certain events such as:
[T]he aggregate value of all outstanding shares of Class A Preferred Stock held by the Original Holder [ATCO] . . . is equal to or exceeds 25% (the "Preferred Percentage") . . . in which case, only those number of shares of Class A Preferred Stock held by the Original Holder (as defined herein) . . . shall be redeemed as is necessary to reduce the Preferred Percentage to 24.9%.
(Certificate, (vi)(A) at 10) ("Mandatory Redemption Event").
2. Optional Redemption
"Optional Redemption" granted ATCO the option of redeeming the Preferred Shares before the Mandatory Redemption Date or Event. To invoke the Optional Redemption, ATCO would be required to pay a set price equal to: (i) "Liquidation Preference" plus (ii) a prepayment penalty equal to the "Make-Whole Amount." (Certificate, (vi)(B) at 11). The "Liquidation Preference" was $3,000,000 per share of Preferred Stock "plus an amount equal to all dividends accumulated, accrued and unpaid on the Preferred Stock as of the date of final distribution" (Certificate, (iv) at 6) and the:
"Make Whole Amount" means, with respect to any Class A Preferred Stock, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Preferred Stock over the Discounted Value of the Adjusted Remaining Scheduled Payments with respect to the Called Preferred Stock, provided that the Make Whole Amount may in no event less than zero . . .
(Certificate, (vi)(B) at 11).
B. Subscription Agreement
On May 11, 1999, ATCO and Blue Ridge agreed to Blue Ridge's purchase of $75,000,000 of ATCO Preferred Shares. (Springer Dec. Ex. 2, at 2) (herein, "Subscription Agreement"). The Subscription Agreement included a "governing law" clause, "[t]his Subscription agreement . . . shall be governed by and construed in accordance with the law of the state of New York." (Subscription Agreement § 5(d), at 7). Also included in the Subscription Agreement was a clause that prohibited oral modifications:
. . . No amendment, modification or waiver of any provision of this Subscription Agreement and no consent by any party to departure herefrom shall be effective unless and until such amendment, modification or waiver shall be in writing and duly executed by both of the parties hereto. (Subscription Agreement § f(g), at 8). Pursuant to the terms of the Subscription Agreement, the Certificate controlled the terms and conditions of both Blue Ridge's ownership rights and ATCO's Mandatory and Optional Redemption rights. (Certificate, (vi)(A)-(B), at 10-11).C. "Optional Redemption" Negotiations
As a condition to closing, the Subscription Agreement also required that "A copy of the Restated Articles of Incorporation of the Company, as amended, certified as of a recent date by the Secretary of State or other appropriate official of the State of Mississippi." (Subscription Agreement § 4(a)(iv)(A), at 5).
According to ATCO Executive Vice-President-Treasurer, E. David Coombs, Jr. ("Coombs"), approximately two years after the issuance of the Preferred Shares, Managing Director of Bank, David Springer ("Springer"), contacted Coombs regarding ATCO's ability to redeem the Preferred Shares from Blue Ridge before the Mandatory Redemption date:
Springer told me that that he had assumed all along that ATCO had no intention of leaving the shares in Blue Ridge's hands for the full five years . . . that Blue Ridge had an interest in terminating its investment [and] asked what the Bank could do to help facilitate ATCO's early redemption of the Preferred Shares. At that time, I told Springer that we could not do anything prior to June 15, 2001, pursuant to the terms of the Certificate of Designation.
(Coombs Aff. at ¶ 10).
On January 24, 2003, representatives from Bank and ATCO met in Chicago. (Coombs Aff. at ¶ 15). According to Coombs, during the meeting, ATCO made clear that it did not want to purchase the Preferred Shares back from Blue Ridge if the Make Whole Amount was included. (Coombs Aff. at ¶ 15). The Bank acquiesced. (Coombs Aff. at ¶ 15).
Participants at the meeting included, from Bank, John Masters ("Masters"), David Springer ("Springer"), Liam Stokes ("Stokes"), Maria Banuchi ("Banuchi"), Molly Sicuro ("Sicuro"), and from ATCO, President Chip Dickinson ("Dickinson"), outside counsel, John Rayis ("Rayis"), and Coombs. (Coombs Aff. at ¶ 15).
According to the depositions of Blue Ridge employees' Stokes, and Springer, and Sicuro, Blue Ridge did not waive the Make Whole Amount but, rather, merely consider providing some relief and, in no way, made any firm commitments. ( See Stokes Dep. at 74:24 — 85:23; Springer Dep. at 72:3 — 89:4, 90:5 — 101:25; Sicuro Dep. at 26:7 — 39:4). However, "For purposes of this motion only . . . Blue Ridge is willing to concede that such [a waiver was] made." Pl. Mtn. Summ. J. at 2.
In accordance with Blue Ridge's early redemption request, Coombs and others explored the various methods to achieve the necessary financing to redeem the Preferred shares. Ten months later, in October 2003, ATCO signed an Agricultural Mortgage Loan Application for $115 million with Citigroup to provide funds for the redemption. (Coombs Aff. at ¶ 27), and, in November 2003, Springer advised Blue Ridge of the Citigroup loan agreement. (Coombs Aff. at ¶ 19).
On Friday, December 12, 2003, Coombs called Springer and Stokes. (Coombs Aff. at ¶ 31). After Coombs stated that the agreement would not include the Make-Whole Amount, Springer "got a little tension in his voice and expressed that this was not the deal" and that "he did not recall any commitment such as that." (Coombs Aff. at ¶ 31).
D. Redemption
On March 29, 2004, Coombs sent an email to Stokes, informing him in writing that ATCO intended to redeem the Preferred Shares and pay $75,281,155.25 to Blue Ridge. (Coombs Aff. at ¶ 40, Ex. 5, 3/29/2004 Email from Coombs to Stokes). Stokes inquired as to whether ATCO planned to pay the Make-Whole Amount. Coombs responded, "that ATCO did not plan to pay the Make-Whole Amount, consistent with [Blue Ridge's] prior statements that it would not look to ATCO to pay such amounts." (Coombs Aff. at ¶ 40).
On March 31, 2004, ATCO wired $75,581,155.21 to Bank in consideration for Blue Ridge's Preferred Shares. (Coombs at ¶ 41), In response, on April 1, 2004, Stokes wrote Owen and Coombs of ATCO and demanded the Make Whole-Amount. (Springer, Ex. 8, 4/01/2004 Ltr. from Culver to Owen and Coombs) (Stokes Decl. at ¶ 4).
According to Blue Ridge, while ATCO paid the Liquidation Preference, its failure to pay the Make Whole Amount was in breach of the Certificate and ATCO owes Blue Ridge the remaining $784,731.93.
II. APPLICABLE STANDARD
A. Summary Judgment Standard Fed.R.Civ.P. 56(c)
A court will not grant a motion for summary judgment unless it determines that there is no genuine issue of material fact and the undisputed facts are sufficient to warrant judgment as a matter of law. Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby Inc., 477 U.S. 242, 250 (1986). The party opposing summary judgment "may not rest upon the mere allegations or denials of the adverse party's pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). In determining whether there is a genuine issue of material fact, the Court must resolve all ambiguities, and draw all inferences, against the moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) ( per curiam); Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987). It is not the court's role to resolve issues of fact; rather, the court may only determine whether there are issues of fact to be tried. Donohue, 834 F.2d at 58 (citations omitted). However, a disputed issue of material fact alone is insufficient to deny a motion for summary judgment, the disputed issue must be "material to the outcome of the litigation," Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), and must be backed by evidence that would allow "a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
III. DISCUSSION
According to ATCO, Blue Ridge verbally agreed to modify the Subscription Agreement, permitted ATCO to exercise the Optional Redemption clause, and agreed to forgo the Make-Whole Amount. Conversely, Blue Ridge contends that any alleged oral modification to the Subscription Agreement is unenforceable under the Statute of Frauds. Accordingly, the issue on summary judgment is the enforceability of the oral waiver of the Make Whole Amount juxtaposed beside the Subscription Agreement's prohibition on oral modifications.
A. Statute of Frauds
Under New York Law, the Statute of Frauds requires that certain contracts be in writing:
A written agreement or other written instrument which contains a provision to the effect that it cannot be changed orally, cannot be changed by an executory agreement unless such executory agreement is in writing and signed by the party against whom enforcement of the change is sought or by his agent.
N.Y. Gen. Oblig. Law § 15-301(1) (McKinney 2004); see also John St. Leasehold LLC v. Fed. Deposit Ins. Corp., 196 F.3d 379, 382 (2d Cir. 1999). The Statute of Frauds "renders unenforceable oral modifications to written agreements which contain a clause barring such oral modifications." Merrill Lynch Interfunding, Inc. v. Argenti, 155 F.3d 113, 120 (2d Cir. 1998).
Here, the Subscription Agreement includes a prohibition on oral modifications and, therefore, if no exception to the Statute of Frauds applies, any alleged oral modification to the written contract is barred. See Josephthal Holdings, Inc. v. Weisman, 773 N.Y.S. 2d 398 (1st Dep't. 2004) (holding that oral promises breached the contract despite promisees contention that the payment obligation were orally modified); Richardson Lucas, Inc. v. N.Y. Athl. Club of City of N.Y., 758 N.Y.S. 2d 321, 322 (1st Dep't. 2003). B. Exceptions to the Statute of Frauds
New York law provides two exceptions to the Statute of Frauds. The first exception applies when there has been partial performance of the oral agreement and if that performance is "unequivocally referable to the oral modification." Rose v. Spa Realty Assocs., 397 N.Y.S. 2d 922, 926 (1977); see also Berk v. Tradewell, Inc., No. 01 Civ. 9035, 2003 WL 21664679, at *8 (S.D.N.Y. Jul. 16, 2003) (discussing Rose) ("[A]n oral modification can be enforced when it has in fact been acted upon to completion or when there is partial performance of the oral modification sought to be enforced"). The second exception is the doctrine of equitable estoppel. Pursuant to the doctrine of equitable estoppel, an oral modification to a written contract will be enforced if "a party to a written agreement has induced another's significant and substantial reliance upon an oral modification, the first party may be estopped from invoking the statute to bar proof of that oral modification." Rose, 397 N.Y.S. 2d at 927 (citation omitted); Veltri v. Bldg. Serv. 32B-J Pension Fund, No. 03 Civ. 9287, 2004 WL 2980239, at *6 (2d Cir. Dec. 27, 2004) (citations omitted) (holding that the defense of equitable estoppel can be raised "where the enforcement of the rights of one party would work an injustice upon the other party due to the latter's justifiable reliance upon the former's words or conduct.")
1. Partial Performance
Under New York law, the doctrine of part performance "may be invoked only if plaintiff's actions can be characterized as unequivocally referable to the agreement alleged. . . . The actions alone must be unintelligible or at least extraordinary, explainable only with reference to the oral agreement." Anostario v. Vicinanzo, 59 N.Y. 2d 662, 664 (1983) (citation omitted) (emphasis added). This Circuit has held:
[T]he existence of an oral agreement must be inferred from conduct, actions that might well have been undertaken in fulfillment of the agreement but could also have been done for entirely different reasons are insufficient to prove the existence of the agreement.Messner Vetere Berger McNamee Schmetterer Euro RSCG Inc. v. Aegis Group PLC, 150 F.3d 194 (2d Cir. 1998). The standard articulated by the Second Circuit "is a stringent one" because if the performance can be "reasonably explained" by any other possible reason than the alleged oral modification, the performance is equivocal. See John St. Leasehold LLC v. F.D.I.C., No. 95 Civ. 10174, 1998 WL 411328, at *9 (S.D.N.Y. Jul. 22, 1998).
In John St. Leasehold, plaintiff alleged that the defendant institution orally agreed to waive a provision in a mortgage agreement that provided the institution with the option of requiring the prepayment of the outstanding balance at any time after a date certain. John St., No. 95 Civ. 10174, 1998 WL 411328, at *1. Relying on the Statute of Frauds, the district court granted defendant's motion for summary judgment and dismissed plaintiff's breach of contract claim because plaintiff's contention that capital improvements were "undertaken in reliance on the alleged Oral Agreement . . . failed to meet the stringent standard required under New York law to demonstrate . . . partial performance." John St., No. 95 Civ. 10174, 1998 WL 411328, at *9.
An alleged oral modification to an existing contract was also the focus of Am. Int'l. Tel., Inc. v. Mony Travel Serv. Inc. No. 99 Civ. 11581, 2001 WL 209918 (S.D.N.Y. Feb. 23, 2001). In Amer. Int'l. Tel., plaintiff filed a breach of contract action and defendant counterclaimed that plaintiff breached the orally modified contract. See Am. Int'l Tel., No. 99 Civ. 11581, 2001 WL 209918, at *2. While the original contract was silent on the specific long-distance minutes to be provided by plaintiff or the specific cost to defendant, the alleged oral modification required plaintiff to purchase a set amount of long-distance minutes and defendant to pay a set fee. See Am. Int'l Tel., No. 99 Civ. 11581, 2001 WL 209918, at *1, *4. Pursuant to the Statute of Frauds, the district court rejected defendant's claim of partial performance because "the partial performance alleged by [defendant] was the payment of money, which it was already required to do under the original agreements" and, ultimately, dismissed defendant's counterclaim. Am. Int'l Tel., No. 99 Civ. 11581, 2001 WL 209918, at *4.
Here, ATCO contends that the Optional Redemption was at Blue Ridge's behest and contingent upon a waiver of the Make Whole Amount and, absent the waiver of the Make Whole Amount, there is no economic justification for early redemption of the Preferred Shares. As stated in John St. and Am. Int'l Tel., absent an alternative justification, ATCO's actions could be characterized as "unequivocally referable" to an orally amended agreement.
However, ATCO's argument ignores the alternative justification contained in the Certificate itself — the mandatory redemption event. While ATCO disputed Blue Ridge's valuation of their Preferred Shares, ATCO acknowledges that in early summer 2003:
[T]he Bank threatened to force ATCO to redeem the Preferred Shares early, on the basis that the Bank believed that ATCO was in violation of the Certificate of Designation's provision relating to the 25% limit of the value of Blue Ridge's share of the company.
(Coombs Aff. at ¶ 25). Pursuant to the terms of the Certificate, ATCO was required to either find a third party to purchase Blue Ridge's Preferred Shares or repurchase the shares itself if the percentage of Blue Ridge's Preferred Shares exceeded 24.9%. (Certificate, (vi)(B) at 11).
As in John St. and Am. Int'l Tel., ATCO's attempt to secure new financing and sufficient capital to redeem the Preferred Shares was not "unequivocally" referable to the oral modification of the Purchase Agreement but, rather, already required under the terms of the original agreements. The Mandatory Redemption Event required ATCO to pay the Make-Whole Amount and the only way for ATCO to satisfy that obligation was to utilize alternative financing. (Coombs Aff. at ¶¶ 13, 26). The likelihood of a Mandatory Redemption Event presents sufficient alternative justification to prevent the application of the partial performance exception to the Statute of Frauds.
See also Amresco Fin. I, L.P. v. Stone-Tec, Inc., No. 98 CIV. 2872, 1998 WL 888987 at *3 (S.D.N.Y. Dec. 21, 1998) (noting that where alleged partial performance was payment of moneys due under the contract, partial performance exception does not apply, and finding no legal consequence in fact that payments matched terms of alleged oral modification).
Accordingly, ATCO failed to satisfy the stringent standard required under New York law to demonstrate partial performance.
2. Equitable Estoppel
Akin to partial performance, equitable estoppel is another exception to the Statute of Frauds. The doctrine of equitable estoppel applies "if one party to the written contract has induced another's significant and substantial reliance upon an oral modification, and if the conduct relied upon is not otherwise compatible with the agreement as written." EMI Music Mktg. v. Avatar Records, Inc. 317 F. Supp. 2d 412, 421 (S.D.N.Y. 2004) ( citing to Rose, 397 N.Y.S. 2d at 928).
In Merrill Lynch Interfunding, Inc. v. Argenti, 155 F.3d 113 (2d Cir. 1998), a district court's judgment in favor of the defendants was reversed when the Second Circuit held that the requirements of equitable estoppel and partial performance were not satisfied and, therefore, plaintiff was entitled to judgment as a matter of law. In reversing the trial court's decision, the Second Circuit rejected defendants' affirmative defense of equitable estoppel. Id. at 123. While the defendant may have satisfied one aspect of equitable estoppel — the presence of an oral modification — the defendant failed to demonstrate detrimental reliance sufficient "to estop the plaintiff from asserting § 15-301." Id. at 123 — 124. Accordingly, plaintiff was entitled to judgment as a matter of law on breach of contract claim pursuant to § 15-301.
Similarly, in Richardson Lucas, Inc. v. N.Y. Athl. Club of City of N.Y., the Appellate Division reversed a trial court's decision to grant defendant's motion for summary judgment because the defendant had failed to demonstrate that their performance was "unequivocally referable to the oral agreement." 758 N.Y.S.2d 321, 323 (N.Y.A.D. 1st Dep't. 2003). The Appellate Division determined that while there may have been an oral agreement, the defendant failed to demonstrate that the sole explanation for defendant's termination of the contract was the oral modification. Id. at 322-323. Rather, "issuing the termination without cause letter was consistent with the written contract." Id. at 232.
Put another way, an alleged oral waiver is insufficient to warrant equitable estoppel, the defendant must also demonstrate detrimental reliance. While ATCO demonstrated the presence of an oral modification, they failed to demonstrate detrimental reliance sufficient "to estop the plaintiff from asserting § 15-301." Merrill Lynch Interfunding, 155 F.3d at 123 — 124.
First, ATCO's Agricultural Mortgage Loan application itself was not necessarily referable to the oral modification of the Purchase Agreement. ATCO's application was for $115 million and the Optional Redemption necessitated $75 million. Indeed, the stated purpose of the loan itself was to "[R]epay debts accumulated with construction/startup of {sic} Flooring Operation. . . . [and] [a]lso purchase approximately $65,000,000 of outstanding Preferred Stock." (Culver Decl. Ex 1). The terms of the loan application itself demonstrate that the purchase of Preferred Shares was hardly the exclusive justification for the loan.
Second, regardless of any oral modification to the Purchase Agreement, ATCO was required to obtain financing for the Mandatory Redemption of Blue Ridge's Preferred Shares in June 2004. If ATCO breached the Certificate of Designation and had been unable to secure the financing necessary to redeem Blue Ridge's Preferred Shares in June 2004, ATCO would have been precluded from declaring dividends for its common shareholders. The need to obtain near term financing provides a second justification, beyond the oral modification, for ATCO's actions.
Third, as already discussed, pursuant to the terms of the Certificate of Designation, ATCO was required to ensure that Blue Ridge's total ownership stake never exceeded 25%. The Mandatory redemption trigger would require ATCO to pay the proportionate Make Whole Amount, which would require outside financing. ATCO's attempts to acquire the financing necessary to redeem Blue Ridge's Preferred Shares were commensurate with ATCO's need to solve the ownership percentage issue. C. Waiver
"Under New York law, a claim of waiver requires proof of an intentional relinquishment of a known right with both knowledge of its existence and an intention to relinquish it." Capitol Records, Inc. v. Naxos of Am., Inc. 372 F.3d 471, 482 (2d Cir. 2004). Distinct from an oral modification, "waiver, to the extent that it has been executed, cannot be expunged or recalled, but, not being a binding agreement, can, to the extent that it is executory, be withdrawn, provided the party whose performance has been waived is given notice of the withdrawal and a reasonable time after notice within which to perform." Nassau Trust Co. v. Montrose Concrete Prod. Corp. 451 N.Y.S. 2d 663, 668 (1982). Provided the waiver is valid, it cannot be withdrawn once the parties have performed in accordance with its terms. See Id. The burden is on the party alleging the waiver to demonstrate both a valid waiver and that the waiver was not withdrawn. See Jefpaul Garage Corp. v. Presbyterian Hosp. in City of N.Y., 61 N.Y. 2d 442, 446 (1984).
According to ATCO, Blue Ridge waived the payment of the Liquidation Preference and Make Whole Amount. However, Coombs concedes that ATCO was informed of Blue Ridge's insistence on compliance with the Make Whole Amount and Liquidation Preference more than four months prior to the redemption, in December 2003:
Mr. Springer then got a little tension in his voice and expressed that this was not the deal. I told him that was the commitment that had been made by Stokes in the meeting in Chicago. Springer said he did not recall any commitment such as that. I told him it was made, and we have been operating under that understanding. He then said that was not the case. I asked if he was going to live up to that commitment, and he replied that there was no commitment.
(Coombs Aff. at ¶ 31). Coombs acknowledges that the alleged waiver was executory and withdrawn and, therefore, ATCO impermissibly relied on a waiver that was no longer viable. Accordingly, defendant has failed to demonstrate the existence of a valid waiver at the time of execution.
See Blackman De Stefano Real Estate, Inc. v. Smith, 550 N.Y.S. 2d 443, 445 (3rd Dep't. 1990) ("where, as here, the waiver is executory, it may be withdrawn"). See also Resol. Tr. Corp. v. Lesal Assoc., No. 91 Civ. 2025, 1992 WL 98843, at *4 (S.D.N.Y. May 06, 1992); Sec. Pac. Mortg. Real Estate Ser., Inc. v. Canadian Land Co., N.V., 690 F. Supp 1214, 1218 n. 10 (S.D.N.Y. 1988) (holding "the three months between that notice and the initiation of this action provided more than adequate opportunity for [defendant] to cure"); Barclay's Bank v. Smitty's Ranch, 504 N.Y.S. 2d 295, 297 (3d Dep't. 1986) (holding "any waiver of previous noncompliance was rescinded once plaintiff asserted that compliance was required"); 13 Williston on Contracts § 39:20 (4th ed. 2004).
IV. ATTORNEY'S FEES COSTS
Under Federal and New York precedent, "attorneys' fees are the ordinary incidents of litigation and may not be awarded to the prevailing party unless authorized by agreement between the parties, statute, or court rule. This policy provides freer and more equal access to the courts and promotes democratic and libertarian principles." Folksamerica Reinsurance Co, No. 03 Civ. 0402, 2004 WL 2423539, at *2 (S.D.N.Y. Oct. 29, 2004) (Baer, J.) ( citing to Oscar Gruss Son. Inc. v. Hollander, 337 F.3d 186, 199 (2d Cir. 2003)).Here, the relevant indemnification provision in the Certificate provides:
Indemnification. Whether or not the purchase and sale of the Class A Preferred Shares contemplated hereby is consummated, [ATCO] shall, on demand, . . . (b) indemnify and hold [Blue Ridge] harmless from and against all losses suffered, and pay or reimburse the Subscriber for all out-of-pocket expenses incurred by the Subscriber, including fees and disbursements of counsel, in connection with any claim (whether asserted by [ATCO] or any other person) and the investigation or defense thereof, in any manner related to or arising out of this Subscription Agreement, the Class A Preferred Shares . . .
(Subscription Agreement § 5(l), at 9) (emphasis added). Thus, Blue Ridge is entitled to attorneys' fees from ATCO. The indemnification provision expressly requires ATCO to indemnify Blue Ridge for "for all out-of-pocket expenses" incurred by Blue Ridge "whether asserted by [ATCO] or any other person." (Subscription Agreement § 5(l), at 9) (emphasis added).
Since the parties contracted to permit recovery of fees and, under New York law, the authorization of attorneys' fees is permitted, Blue Ridge is entitled to attorneys' fees and costs associated with its breach of contract claim. See Folksamerica Reinsurance Co. v. Republic Ins. Co. No. 03 Civ. 0402, 2004 WL 2423539 (S.D.N.Y. Oct. 29, 2004) (Baer, J.).
V. CONCLUSION
For the foregoing reasons, plaintiff's motion for summary judgment is GRANTED as against Defendant in the amount of $784,731.93, plus attorneys' fees and costs incurred in connection with the action.
Blue Ridge will submit, ATCO will respond and plaintiff will reply, if necessary, all by February 7, 2005. The submissions will include time sheets, affidavits and, of course, any objections. The parties will, as well, provide their view with respect to costs to be awarded in accordance with the Federal Rules of Civil Procedure and Local Rules.
The Clerk is instructed to close this motion and any other open motions and remove this case from my docket.
IT IS SO ORDERED.