In Re: Fontainebleau Las Vegas Contract Litigation

MOTION to Dismiss State Court Complaint

S.D. Fla.February 18, 2010

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MASTER CASE NO. 09-2106-MD-GOLD/BANDSTRA In re: FONTAINEBLEAU LAS VEGAS CONTRACT LITIGATION MDL NO. 2106 This document relates to Case Numbers: 09-CV-23835-ASG 10-CV-20236-ASG ______________________________________/ DEFENDANTS’ JOINT MOTIONS TO DISMISS THE TERM LENDER COMPLAINTS AND SUPPORTING MEMORANDUM OF LAW Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 1 of 37 i TABLE OF CONTENTS PRELIMINARY STATEMENT................................................................................................. 1 BACKGROUND........................................................................................................................ 3 ARGUMENT ............................................................................................................................. 8 I. The Term Lenders Lack Standing to Enforce the Revolving Lenders’ Promises to Fontainebleau ....................................................................................................................... 9 II. The Term Lenders Cannot State a Breach of Contract Claim Based on Fontainebleau’s March 2 and 3 Notices of Borrowing......................................................... 12 A. Breach of Contract Claims That Contradict Unambiguous Contract Language Fail as a Matter of Law...................................................................... 13 B. Fontainebleau’s March Notices of Borrowing Were Improper Under Credit Agreement Section 2.1(c)(iii) .................................................................. 14 1. The Credit Agreement, Read as a Whole, Makes Clear That “Fully Drawn” Means “Fully Funded”.............................................................. 14 2. The Term Lenders’ In Balance Test Argument Does Not Alter the Plain Meaning of “Fully Drawn”............................................................ 16 III. Material Breaches of the Credit Agreement, as Alleged in the Complaints, Are Fatal to the Term Lenders’ Claims............................................................................................... 20 A. Plaintiffs’ Allegations of Material Breaches Defeat Their Claims ...................... 20 B. Section 2.1(c) Does Not Eliminate the Due Performance Requirement .............. 22 IV. Plaintiffs Fail to Allege a Breach of Contract Concerning Termination of Commitments ..................................................................................................................... 25 V. The Avenue Plaintiffs Fail to State a Claim For Breach of the Implied Covenant of Good Faith.......................................................................................................................... 26 CONCLUSION ........................................................................................................................ 28 Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 2 of 37 ii TABLE OF AUTHORITIES Page(s) Cases AIG Centennial Ins. Co. v. Fraley-Landers, 450 F.3d 761 (8th Cir. 2006) ................................................................................................................................... 24 Alexander v. U.S., 640 F.2d 1250 (Ct. Cl. 1981) ......................................................................... 9 All States Warehousing, Inc. v. Mammoth Storage Warehouses, Inc., 180 N.Y.S.2d 118 (N.Y. App. Div. 1958)..................................................................... 25 Ari & Co. v. Regent Int’l Corp., 273 F. Supp. 2d 518 (S.D.N.Y. 2003) ................................................................................................................................... 26 Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009).................................................................................... 8 Atwater & Co. v. Panama R.R. Co., 159 N.E. 418 (N.Y. 1927)................................................. 14 Bank of N.Y. v. Sasson, 786 F. Supp. 349 (S.D.N.Y. 1992) ....................................................... 27 Bear, Stearns Funding, Inc. v. Interface Group-Nevada, Inc., 361 F. Supp. 2d 283 (S.D.N.Y. 2005) ......................................................................................... 24 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ........................................................................ 8 Berry Harvester Co. v. Walter A. Wood Mowing & Reaping Mach. Co., 46 N.E. 952 (N.Y. 1897)......................................................................................9, 10, 11 Biltmore Bank of Ariz. v. First Nat’l Mortgage Sources, No. CV- 07-936-PHX-LOA, 2008 WL 564833 (D. Ariz. Feb. 26, 2008) ............................................ 24 Brooke Group v. JCH Syndicate 488, 663 N.E.2d 635 (N.Y. 1996)........................................... 16 CIBC Bank & Trust Co. v. Banco Central do Brasil, 886 F. Supp. 1105 (S.D.N.Y. 1995) .......................................................................................................... 27 Dalton v. Educ. Testing Serv., 87 N.Y.2d 384 (N.Y. 1995) ....................................................... 27 Day v. Taylor, 400 F.3d 1272 (11th Cir. 2005) ........................................................................... 3 First Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162 (2d Cir. 1998) ............................................................................................................................ 20 Furia v. Furia, 498 N.Y.S. 2d 12 (N.Y. App. Div. 1986) .......................................................... 20 Greiner v. A. Rosenblum, Inc., 207 N.Y.S.2d 75 (N.Y. Sup. Ct. 1959) ................................................................................................................................... 25 Harris v. Provident Life & Accident Ins. Co., 310 F.3d 73 (2d Cir. 2002) ................................................................................................................................... 26 Helmsley-Spear, Inc. v. New York Blood Ctr., Inc., 687 N.Y.S.2d 353 (N.Y. App. Div. 1999)................................................................................................... 16 Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 3 of 37 iii Hubbard v. BankAtlantic Bancorp Inc., 625 F. Supp. 2d 1267 (S.D. Fla. 2008) .............................................................................................................................. 3 In re Adelphia Commcn’s Corp., No. 02-41729 (REG), 2007 WL 2403553 (Bankr. S.D.N.Y. 2007)......................................................................................... 22 In re Fontainebleau Las Vegas Holdings, LLC, 417 B.R. 651 (S.D. Fla. 2009) ..................................................................................................................... passim In re Ionosphere Clubs, Inc., 147 B.R. 855 (Bankr. S.D.N.Y. 1991) ......................................... 17 Instead, Inc. v. ReProtect, Inc., No. 08 Civ. 5236 (DLC), 2009 WL 274154 (S.D.N.Y. Feb. 5, 2009)..................................................................................... 13, 14 Int’l Klafter Co. v. Cont’l Cas. Co., 869 F.2d 96 (2d Cir. 1989)................................................ 17 InterDigital Commc’ns Corp. v. Nokia Corp., 407 F. Supp. 2d 522 (S.D.N.Y. 2005)................................................................................................................... 19 Kass v. Kass, 696 N.E.2d 174 (N.Y. 1998) ............................................................................... 14 Long v. Marubeni Am. Corp., No. 05 Civ. 0639, 2006 WL 1716878 (S.D.N.Y. June 20, 2006)....................................................................................... 26 M/A-COM Sec. Corp. v. Galesi, 904 F.2d 134 (2d Cir. 1990) ............................................. 27, 28 Maxcess, Inc. v. Lucent Techs., Inc., 433 F.3d 1337 (11th Cir. 2005) ................................................................................................................................... 13 Merit Group, LLC v. Sint Maarten Int’l Telecomms. Servs., NV, No. 08-cv-3496 (GBD), 2009 WL 3053739 (S.D.N.Y. Sept. 24, 2009) ............................................................................................................................. 13, 14 Merrill Lynch & Co. Inc. v. Allegheny Energy, Inc., 500 F.3d 171 (2d Cir. 2007) ...................................................................................................................... 24 Merritt Hill Vineyards Inc. v. Windy Heights Vineyard, Inc., 460 N.E.2d 1077 (N.Y. 1984) ..................................................................................................... 24 Metro. Life Ins. Co. v. RJR Nabisco, Inc., 906 F.2d 884 (2d Cir. 1990) ................................................................................................................................... 17 Perlbinder v. Bd. of Managers of the 411 E. 53rd Street Condo., 886 N.Y.S.2d 378 (N.Y. App. Div. 2009) ............................................................................ 19 R.H. Damon & Co., Inc. v. Softkey Software Prods., Inc., 811 F. Supp. 986 (S.D.N.Y. 1993) ............................................................................................ 22, 25 Slatt v. Slatt, 477 N.E.2d 1099 (N.Y. 1985) .............................................................................. 17 Superb Gen. Contracting Co. v. City of N.Y., 833 N.Y.S.2d 64 (N.Y. App. Div. 2007) ......................................................................................................... 19 UniCredito Italiano SPA v. JPMorgan Chase Bank, 288 F. Supp. 2d 485 (S.D.N.Y. 2003) ....................................................................................................... 11 Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 4 of 37 iv Uphoff v. Wachovia Secs., LLC, No. 09 CIV 80420 (KAM), 2009 WL 5031345 (S.D. Fla. Dec. 15, 2009) .................................................................................. 8 Zullo v. Varley, 868 N.Y.S.2d 290 (N.Y. App. Div. 2008) ........................................................ 15 Other Authorities 13 Williston on Contracts § 38:5 (4th ed. 2009)........................................................................ 24 13 Williston on Contracts § 63:3 (4th ed. 2009)........................................................................ 24 22 N.Y. Jur. 2d Contracts § 260 (2008)....................................................................................... 9 Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 5 of 37 1 Defendants1 jointly move, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss the Amended Complaints filed in Avenue CLO Fund, Ltd., et al. v. Bank of America, N.A., et al. (the “Avenue Action”) and ACP Master, Ltd., et al. v. Bank of America, N.A., et al., (the “Aurelius Action”) (collectively, the “Term Lender Actions” maintained by the “Term Lenders” or “Plaintiffs”) for failure to state a claim upon which relief can be granted. Defendants also respectfully submit this memorandum of law and the Declaration of Thomas C. Rice (“Rice Decl.”) in support of their joint motions. PRELIMINARY STATEMENT2 The Avenue and Aurelius Actions arise out of the same Credit and Disbursement Agreements (as defined below) and substantially the same circumstances that were the subject of this Court’s August 26, 2009 Decision and Order (the “August 26 Decision”)3 denying partial summary judgment to Fontainebleau Las Vegas LLC (“Fontainebleau”) in its lawsuit against the same Revolving Lenders named herein (the “Fontainebleau Action”). The Plaintiffs in the Avenue Action (the “Avenue Plaintiffs”) are a group of lenders that participated in Initial and/or Delay Draw Term Loans under the Credit Agreement with Fontainebleau. The Plaintiffs in the Aurelius Action (the “Aurelius Plaintiffs”) claim to be successors in interest to other institutions that were Initial Term and/or Delay Draw Lenders under the Credit Agreement. The Amended Complaints are predicated on the same two flawed theories on which Fontainebleau based its motion for partial summary judgment that this Court rejected in 1 Bank of America, N.A., Merrill Lynch Capital Corporation, JPMorgan Chase Bank, N.A., Barclays Bank PLC, Deutsche Bank Trust Company Americas, The Royal Bank of Scotland plc, Sumitomo Mitsui Banking Corporation, Bank of Scotland plc, HSH Nordbank AG, MB Financial Bank, N.A., and Camulos Master Fund, L.P. (collectively, the “Revolving Lenders” or “Defendants”). 2 Unless otherwise indicated, capitalized terms have the same meaning as in the Credit Agreement and/or Disbursement Agreement. See Rice Decl. Exs. A (Credit Agreement) & B (Disbursement Agreement). 3 The August 26 Decision has been published as In re Fontainebleau Las Vegas Holdings, LLC, 417 B.R. 651 (S.D. Fla. 2009). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 6 of 37 2 the August 26 Decision. These theories-that “fully drawn” means “fully requested” rather than “fully funded” and that Fontainebleau’s prior material breaches of the Credit Agreement did not relieve the Revolving Lenders of their obligation to loan money under the Credit Agreement- are even less viable here than they were in the Fontainebleau Action. The Amended Complaints fail to state a claim for relief and should be dismissed. First, Plaintiffs allege that the Revolving Lenders breached the Credit Agreement by not honoring a March 2, 2009 Notice of Borrowing delivered by Fontainebleau, which was amended on March 3 and which simultaneously requested $350 million in Delay Draw Term Loans and $656.5 million in Revolving Loans (the “March 2 and 3 Notices of Borrowing”). As a threshold matter, Plaintiffs lack standing to assert a claim against the Revolving Lenders for breach of any lending commitment to Fontainebleau. Furthermore, Fontainebleau’s March 2 and 3 Notices of Borrowing did not comply with the Credit Agreement, which provides that the outstanding balance under the revolving loan facility (the “Revolver”) cannot exceed $150 million “unless the Total Delay Draw Commitments have been fully drawn.” Plaintiffs contend-as did Fontainebleau in the Fontainebleau Action-that “fully drawn” means “fully requested” and that Fontainebleau satisfied the Credit Agreement’s sequential funding requirements by simply requesting all of the Delay Draw funds and the remainder available under the Revolver in the same notice. This Court rightly rejected Plaintiffs’ strained interpretation in the August 26 Decision, ruling that “in the context of the entire agreement, the unambiguous meaning of ‘fully drawn’ in section 2.1(c)(iii) means ‘fully funded.’”4 The “fully requested” argument is even less convincing in this action, because, as alleged in the Aurelius Action, certain of the Delay Draw 4 August 26 Decision, 417 B.R. at 660. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 7 of 37 3 Lenders also declined to honor the March 2 and 3 Notices of Borrowing. Second, Plaintiffs allege that the Revolving Lenders were obligated to fund the March 2 and 3 Notices of Borrowing despite pre-existing material breaches of the Credit Agreement by Fontainebleau. In rejecting this argument in the August 26 Decision, this Court recognized that the Credit Agreement and established New York law relieved the Revolving Lenders of their funding obligations if Fontainebleau materially breached the Credit Agreement before March 2. Furthermore, here Plaintiffs affirmatively allege that Events of Default occurred prior to March 2009, based, inter alia, on defaults by Lehman Brothers Holdings, Inc. (“Lehman Brothers”) and First National Bank of Nevada under certain Material Agreements, as defined in the Credit Agreement. These allegations, taken as true for purposes of the present motion, are fatal to Plaintiffs’ claims. Finally, the claim by the Avenue Plaintiffs for breach of the covenant of good faith and fair dealing is facially deficient. This claim is duplicative of the Avenue Plaintiffs’ breach of contract claim and seeks to impose obligations beyond those contained in the Credit Agreement. Under well-settled New York law, this claim should also be dismissed. BACKGROUND5 A. The Loans On June 6, 2007, Fontainebleau and a number of sophisticated financial institutions (the “Lenders,” or individually, a “Lender”) entered into an agreement that provided for $1.85 billion in financing (the “Credit Agreement”) for the construction of the Fontainebleau 5 The following background facts are taken from the Amended Complaints (the “Avenue Compl.” and the “Aurelius Compl.”) and from the Credit Agreement and Disbursement Agreement, which the Court may consider on this motion to dismiss. See Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005) (a court may consider a document on a motion to dismiss “if the document’s contents are alleged in a complaint and no party questions those contents” and the document is “central to the plaintiff’s claim”); see also Hubbard v. BankAtlantic Bancorp Inc., 625 F. Supp. 2d 1267, 1279 (S.D. Fla. 2008) (same). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 8 of 37 4 Las Vegas Resort and Casino (the “Project”). The Credit Agreement created three credit facilities: (i) a $700 million initial term loan facility (the “Initial Term Loan”); (ii) a $350 million delay draw term facility (the “Delay Draw Term Loan,” and with the Initial Term Loan, the “Term Loan Facility”), and (iii) an $800 million revolving loan facility (the “Revolver”).6 The Avenue Plaintiffs were participants in either the Initial Term Loan and/or the Delay Draw Term Loan.7 The Aurelius Plaintiffs purport to be successors in interest to Initial Term and/or Delay Draw Lenders.8 Defendants were Lenders under the Revolver.9 In addition, defendant Bank of America, N.A. (“Bank of America”) acted as Administrative Agent under the Credit Agreement.10 Construction of the Project was to be funded by, among other sources, the three facilities established under the Credit Agreement, the proceeds from a $675 million Second Mortgage Note offering (the “Second Lien Facility”) and a $350 million Retail Facility Agreement.11 In addition to the Credit Agreement, on June 6, 2007, Fontainebleau, Bank of America, as Disbursement Agent, Wells Fargo Bank, N.A., as Trustee for the Second Mortgage Notes and Lehman Brothers, as Agent for the Retail Facility Agreement, entered into an agreement governing the disbursement of the funds loaned to Fontainebleau under each of the Credit Agreement, the Second Lien Facility, and the Retail Facility Agreement (the “Disbursement Agreement”). Together, the Credit Agreement and the Disbursement Agreement governed the 6 Aurelius Compl. ¶¶ 23-24; Avenue Compl. ¶ 115. 7 Avenue Compl. ¶¶ 115, 117. 8 Aurelius Compl. ¶ 25. 9 Aurelius Compl. ¶¶ 11-22; Avenue Compl. ¶¶ 102-12. 10 Aurelius Compl. ¶ 11; Avenue Compl. ¶ 102. 11 Aurelius Compl. ¶ 28; Avenue Compl. ¶ 114. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 9 of 37 5 Fontainebleau Project lending relationships and established a two-step funding process.12 First, following Fontainebleau’s submission of a notice of borrowing specifying the requested loans and a designated borrowing date (a “Notice of Borrowing”), the Lenders were required, subject to Fontainebleau’s satisfaction of the Credit Agreement’s terms, to fund loans made pursuant to their respective commitments into a Bank Proceeds Account.13 Second, to access funds in the Bank Proceeds Account, Fontainebleau was required to submit an advance request pursuant to the Disbursement Agreement (an “Advance Request”), and upon the satisfaction of certain conditions, Fontainebleau could obtain funds from this account under an Advance Request to pay Project Expenses.14 Most pertinent to the present motions, the making of loans under the Revolver was governed by, inter alia, Section 2.1(c) of the Credit Agreement. That provision reads: Subject to the terms and conditions [of the Credit Agreement], and in reliance upon the applicable representations and warranties set forth herein and in the Disbursement Agreement, each Revolving Lender severally agrees to make Revolving Loans . . . to Borrowers . . . provided that . . . (iii) unless the Total Delay Draw Commitments have been fully drawn, the aggregate outstanding principal amount of all Revolving Loans . . . shall not exceed $150,000,000.15 As Section 2.1(c) makes clear and as this Court determined in the August 26 Decision, the Revolving Lenders’ obligation to make loans was subject to Fontainebleau’s compliance with the terms and conditions of the Credit Agreement, and an Event of Default under the Credit Agreement would relieve the Revolving Lenders of their funding obligation. Section 8 of the Credit Agreement sets forth various circumstances that would constitute an Event of Default. 12 Aurelius Compl. ¶ 33; Avenue Compl. ¶ 119. 13 Aurelius Compl. ¶ 33; Avenue Compl. ¶ 119; Credit Agmt. §§ 2.1(c), 2.4(c). 14 Aurelius Compl. ¶ 37; Avenue Compl. ¶ 120. 15 Credit Agmt. § 2.1(c) (emphasis added). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 10 of 37 6 B. The March 2009 Notices of Borrowing On March 2, 2009, Fontainebleau submitted a Notice of Borrowing that requested $350 million under the Delay Draw Term Loan and $679 million under the Revolver (the “March 2 Notice of Borrowing”).16 On March 3, 2009, citing a purported “scrivener’s error,” Fontainebleau issued an amended Notice of Borrowing, reducing the amount requested under the Revolver to $656.5 million (the “March 3 Notice of Borrowing”).17 On March 3, 2009, the Administrative Agent, Bank of America, informed Fontainebleau that the March 2 Notice of Borrowing did not comply with Section 2.1(c)(iii) of the Credit Agreement because the notice contained a simultaneous request for loans under the Delay Draw Term Loan, which had not yet been “fully drawn.”18 In a March 4, 2009 message posted on Intralinks and available to all Lenders, Bank of America reported that a Steering Committee, which included both Term and Revolving Lenders, “unanimously supports the position that the [March 3 Notice] does not comply with the terms of the Credit Agreement.”19 Bank of America further advised that Lenders who disagreed with that position should “immediately contact Bank of America . . . to make operational arrangements for funding their portion of the requested borrowing.”20 The Aurelius Plaintiffs allege that certain of their predecessors in interest participating as Delay Draw Term Lenders did not fund the March 2 or 3 Notices of Borrowing.21 Several days later, on March 9, 2009, Fontainebleau issued a new Notice of 16 Aurelius Compl. ¶ 44 (referencing Ex. C, Rice Decl. (March 2 Notice of Borrowing)); Avenue Compl. ¶ 141. 17 Aurelius Compl. ¶ 56 (referencing Ex. D, Rice Decl. (March 3 Notice of Borrowing)); Avenue Compl. ¶ 141. 18 Aurelius Compl. ¶¶ 50-51; Avenue Compl. ¶¶ 144-45. 19 Aurelius Compl. ¶ 57 (referencing Ex. E, Rice Decl. (March 4 Intralinks posting)); accord Avenue Compl. ¶ 143. 20 Aurelius Compl. ¶ 57 (referencing Ex. E, Rice Decl.). 21 Id. ¶ 53. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 11 of 37 7 Borrowing to the Delay Draw Lenders alone for the full amount of the $350 million Delay Draw Term Loan (the “March 9 Notice of Borrowing”).22 The Term Lenders allege that they (or their predecessors in interest, as applicable) funded $337 million of the $350 million sought under the March 9 Notice of Borrowing on March 10, 2009.23 C. Termination of The Revolving Lenders’ Commitments and the April 21 Notice of Borrowing Section 8 of the Credit Agreement allows a majority of the Revolving Lenders to terminate the Revolver upon the occurrence of an Event of Default.24 In accordance with this section, on April 20, 2009, Bank of America, in its capacity as Administrative Agent, sent a letter to Fontainebleau, the Lenders, and others advising that the Revolving Lenders had determined that “one or more Events of Default have occurred and are continuing” (the “April 20 Termination Letter”).25 This letter followed a number of disclosures by Fontainebleau indicating that numerous Events of Default had occurred, some of which may have pre-dated the March 2 Notice of Borrowing.26 According to the Avenue and Aurelius Complaints, at least two such Events of Default had taken place prior to March 2009. The first arose out of the bankruptcy of Lehman Brothers and its ensuing breach of the Retail Facility Agreement.27 The second arose out of the failure of First National Bank of Nevada, which went into receivership in July 2008, and thereafter repudiated its obligations as a Lender.28 Plaintiffs allege that these events constituted 22 Aurelius Compl. ¶ 65; Avenue Compl. ¶ 151 (referencing Ex. F, Rice Decl. (March 9 Notice of Borrowing)). 23 Aurelius Compl. ¶ 66; Avenue Compl. ¶ 154. 24 Credit Agmt. § 8. 25 Aurelius Compl. ¶ 73; Avenue Compl. ¶ 167 (referencing Ex. G, Rice Decl. (April 20 Termination Letter)). 26 See, e.g., Avenue Compl. ¶¶ 139, 157-59. 27 Aurelius Compl. ¶¶ 99-106; Avenue Compl. ¶ 128. 28 Aurelius Compl. ¶¶ 118-21; Avenue Compl. ¶¶ 133-35. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 12 of 37 8 breaches of Material Agreements under the Credit Agreement, and thus constituted an Event of Default under Section 8(j) and other provisions of the Credit Agreement. The April 20 Termination Letter further notified its recipients that pursuant to Section 8 of the Credit Agreement, the Revolver was “terminated effectively immediately.”29 Despite the Revolving Lenders’ termination of their obligations, one day later, on April 21, 2009, Fontainebleau submitted a Notice of Borrowing (the “April 21 Notice of Borrowing”) to Bank of America, requesting $710 million under the Revolver.30 The Revolving Lenders did not fund that request. ARGUMENT Plaintiffs fail to allege the essential elements of a cognizable claim for relief.31 As a threshold matter, Plaintiffs lack standing to pursue claims based on contractual promises made by the Revolving Lenders to Fontainebleau. Even if Plaintiffs had standing, they do not allege facts that constitute a breach of the Credit Agreement by the Revolving Lenders. Nor do Plaintiffs allege due performance of the Credit Agreement by Fontainebleau or themselves; rather, Plaintiffs allege material breaches of the Credit Agreement that relieved the Revolving Lenders of any funding obligation. Finally, the Avenue Plaintiffs’ claim for breach of the covenant of good faith and fair dealing fails to state a claim because it is duplicative of the 29 Aurelius Compl. ¶ 73; Avenue Compl. ¶¶ 167-68 (referencing Ex. G, Rice Decl.). 30 Aurelius Compl. ¶ 71; Avenue Compl. ¶ 169 (referencing Ex. H, Rice Decl. (April 21 Notice of Borrowing)). 31 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citation omitted). As the Supreme Court has confirmed, the plausibility test applies to “‘all civil actions,’” including, but not limited to breach of contract cases. Id. at 1953 (citing Fed. R. Civ. P. 1 and 8 and Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)); see Uphoff v. Wachovia Secs., LLC, No. 09 CIV 80420 (KAM), 2009 WL 5031345, at *2 (S.D. Fla. Dec. 15, 2009) (dismissing breach of contract claim and citing Iqbal instruction that “only a complaint that states a plausible claim for relief survives a motion to dismiss”). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 13 of 37 9 contract claims asserted and seeks to impose obligations beyond those contained in the Credit Agreement. I. THE TERM LENDERS LACK STANDING TO ENFORCE THE REVOLVING LENDERS’ PROMISES TO FONTAINEBLEAU The mere fact that Plaintiffs as Term Lenders are parties to the Credit Agreement does not give them standing to enforce every obligation set forth in the Credit Agreement. Rather, as New York courts32 have recognized for more than a century, a party to a multi-party contract can enforce only those promises expressly intended for that party’s benefit and supported by mutual consideration.33 In Berry Harvester, the court considered a tripartite contract in which (i) plaintiff Berry Harvester agreed to license to defendant Wood Mowing certain patented machine designs; (ii) Wood Mowing agreed to pay Berry Harvester a license fee plus a royalty for every machine sold; and (iii) Wood Mowing agreed to employ Mr. Berry (the machine’s inventor) for three years to develop new machines, which Wood Mowing would then sell subject to its royalty agreement with Berry Harvester.34 After unsuccessful development efforts, Wood Mowing withdrew its support for Mr. Berry’s research, and Berry Harvester sued Wood Mowing for breach of contract. The court identified the intended beneficiary of each individual promise in the 32 New York law governs both the Credit Agreement and the Disbursement Agreement. Credit Agmt. § 10.11; Disbursement Agmt. § 11.6. 33 Berry Harvester Co. v. Walter A. Wood Mowing & Reaping Mach. Co., 46 N.E. 952, 955 (N.Y. 1897) (“Whether the right or privilege conferred by the promise of one party to a tripartite contract belongs to one or both of the other parties depends upon the intention of the parties; the mere fact that there are three parties to the contract does not enlarge the effect of any promise”); accord Alexander v. U.S., 640 F.2d 1250, 1253 (Ct. Cl. 1981) (“[T]he mere fact that [a party] signed the agreement is not controlling; they may have enforceable rights under some of its provisions and not have enforceable rights under other provisions. The critical inquiry is whether the parties to the agreement intended to give the [party] the right to enforce . . . [the] obligation.” (citing Berry Harvester as a “leading case”)); see also 22 N.Y. Jur. 2d Contracts § 260 (2008). 34 Berry Harvester, 46 N.E. at 954. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 14 of 37 10 contract and concluded that while Wood Mowing was “interested in every stipulation, the interests of the others are mainly severed. [Wood Mowing] covenanted with [Berry Harvester] as to certain things, with Mr. Berry as to others, and with both as to others still.”35 The court found this structure unambiguous because “the covenants in favor of [Berry Harvester] were supported by a consideration furnished by it only, while those in favor of [Mr.] Berry rest upon a consideration flowing from him only.”36 Thus, it held that “[w]here a several right is conferred upon [Berry Harvester], Mr. Berry is not interested in it, and where a several right is conferred upon Mr. Berry, [Berry Harvester] has no interest in that.”37 The court then affirmed the trial court’s judgment for Wood Mowing because the covenant that Wood Mowing allegedly breached “was, by the form of the agreement, confined to [Mr. Berry] . . . [and, thus,] would be immaterial in this controversy between the other parties to the contract.”38 Here, Plaintiffs do not identify any provision in the Credit Agreement that gives them standing to assert breach of contract claims based on the Revolving Lenders’ alleged failure to fund Revolver commitments. As with the Berry Harvester contract, the Credit Agreement’s unambiguous terms reflect separate promises between the various parties. Credit Agreement Section 2.1 provides that each Lender “severally agrees to make [either Term or Revolving] loans to Borrowers,”39 and further provides separate conditions precedent for each of the Initial Term Loans, Delay Draw Term Loans, and Revolving Loans. Credit Agreement Section 2.23(g) reiterates that the Revolving and Term Lenders’ individual funding obligations “are several and 35 Id. 36 Id. at 955. 37 Id. 38 Id. 39 Credit Agmt. § 2.1(a)-(c) (emphasis added); Berry Harvester, 46 N.E. at 955 (observing that contractual promise introduced with words specifically limiting the promise to two of a tripartite contract’s three parties showed intent that the provision should only apply to two of the three contracting parties). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 15 of 37 11 not joint” (emphasis added). Moreover, each Lender’s funding commitment was supported by separate consideration received from Fontainebleau, including, among other things, Fontainebleau’s obligations to repay the loans “for the account of the appropriate [Lender]”40 and to pay each Lender a commitment fee.41 In contrast, there is no provision in the Credit Agreement that permits the Term Lenders to enforce the Revolving Lenders’ commitments. Indeed, no Lender received consideration from any other Lender for its funding commitment.42 As this Court has previously recognized, the Credit Agreement “did not impose any shared obligations on lenders to ensure the absence of a financing gap.”43 The Term Lenders’ attempt to manufacture new inter-Lender obligations is unavailing and is undermined by the clear terms of the Credit Agreement. For example, the Term Lenders allege that they entered into the Credit Agreement in reliance on their ability to enforce the Revolving Lenders’ funding obligations.44 But each Term Lender expressly acknowledged, in Credit Agreement Section 9.7, that it had not relied “on any other Lender . . . [in making the] decision to enter into this Agreement,” and “will . . . without reliance upon . . . any other Lender . . . make its own decisions in taking or not taking action under or based upon this Agreement.” (Emphasis added.)45 In a related vein, in Section 2.1(a), the Term Lenders 40 Credit Agmt. § 2.7(a). 41 Id. § 2.2. 42 See Berry Harvester, 46 N.E. at 955 (“The covenants in favor of plaintiff were supported by a consideration furnished by it only, while those in favor of Berry rest upon a consideration flowing from him only.”). 43 See August 26 Decision, 417 B.R at 661 (emphasis added). 44 Aurelius Compl. ¶ 76 (alleging Term Lenders “relied upon their ability to enforce loan commitments made by the Revolving Lenders”); Avenue Compl. ¶ 118 (alleging Term Lenders “relied upon the obligation of the other lenders to comply with their funding obligations”). 45 See also UniCredito Italiano SPA v. JPMorgan Chase Bank, 288 F. Supp. 2d 485, 499 (S.D.N.Y. 2003) (contract provision in which plaintiff lenders agreed to “make their own credit decisions and would not rely on the Defendant banks” barred plaintiffs from arguing they relied on the banks). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 16 of 37 12 agreed to lend to Fontainebleau in “reliance upon the representations and warranties” in the Credit Agreement-none of which was made by the Revolving Lenders or concern any Revolving Lender obligations (emphasis added).46 Similarly unavailing is the Term Lenders’ allegation that the Credit Agreement reflects some vague, unstated inter-Lender agreement to “share the risks of the lending transaction ratably.”47 The Term Lenders ignore the Credit Agreement’s structure, which, as this Court held, “reflects the parties’ intent to employ a sequential borrowing and lending process” that did not permit Fontainebleau access to the entire Revolver until the Term and Delay Draw Lenders fully funded their commitments.48 Thus, the Term Lenders always bore the risk that Fontainebleau would not receive the Revolver funds. Contrary to the Term Lenders’ assertions, Credit Agreement Section 2.4(b) says nothing about the allocation of risk between Term and Revolving Lenders-it simply establishes procedures for the Lenders to meet their several funding obligations.49 Therefore, the Term Lenders lack standing to assert the alleged breaches on which they sue, and the Amended Complaints should be dismissed on that basis alone. II. THE TERM LENDERS CANNOT STATE A BREACH OF CONTRACT CLAIM BASED ON FONTAINEBLEAU’S MARCH 2 AND 3 NOTICES OF BORROWING Even if Plaintiffs had standing to sue for breach, the Revolving Lenders did not breach the Credit Agreement by rejecting Fontainebleau’s March 2 and 3 Notices of Borrowing. The notices were improper under the Credit Agreement’s unambiguous terms because they 46 See Credit Agmt. § 4 (“Each Borrower hereby represents and warrants to . . . each Lender that . . . .”). 47 Aurelius Compl. ¶ 77. 48 August 26 Decision, 417 B.R. at 660. 49 See Aurelius Compl. ¶¶ 78-79; Credit Agmt. § 2.4(b) (“Upon receipt of each Notice of Borrowing . . . such [L]ender will make the amount of its pro rata share of each borrowing available.”). The Aurelius Complaint’s reliance on the March 9 Notice of Borrowing is improper because such parol evidence cannot be used to alter the Credit Agreement’s unambiguous terms. See infra at II.B.2. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 17 of 37 13 simultaneously requested the full amounts available under both the Delay Draw Term Loan and the Revolver. Credit Agreement Section 2.1(c)(iii) forbids Fontainebleau to borrow more than $150 million under the Revolver “unless the Total Delay Draw Commitments have been fully drawn.” As this Court has already held, the plain meaning of “fully drawn” in Section 2.1(c)(iii) is fully funded.50 Thus, the Revolving Lenders properly rejected Fontainebleau’s $656.5 million Revolver request, and the Term Lenders’ claims based on the March 2 and 3 Notices of Borrowing (Avenue Compl. Counts II, IV, and VI; Aurelius Compl. Count I) must be dismissed.51 A. Breach of Contract Claims That Contradict Unambiguous Contract Language Fail as a Matter of Law A breach of contract claim “cannot withstand a motion to dismiss if the express terms of the contract contradict plaintiff’s allegations of breach.”52 Under New York law, courts must enforce a contract that is “complete, clear and unambiguous on its face” according to “the plain meaning of its terms.”53 A contract is unambiguous if its language has “a definite and precise meaning . . . concerning which there is no reasonable basis for a difference of opinion.”54 The Court “is not required to accept the allegations of the complaint as to how to construe the 50 August 26 Decision, 417 B.R. at 662. 51 Separate and apart from the question of what “fully drawn” means, neither the March 2 Notice of Borrowing nor the March 3 Notice of Borrowing complied with all of the conditions set forth in the Credit Agreement. As Fontainebleau has acknowledged, the March 2 Notice of Borrowing failed to take into account outstanding letters of credit, which reduced the amount available under the Revolver to less than the $670 million requested. The March 3 Notice of Borrowing, which sought $656.5 million under the Revolver, did not comply with Section 2.4(d) of the Credit Agreement (or the condition set forth in Section 5.2(a) that the Notice of Borrowing be in compliance with Section 2), which required that the requested amount under the Revolver be a multiple of $5 million. 52 Merit Group, LLC v. Sint Maarten Int’l Telecomms. Servs., NV, No. 08-cv-3496 (GBD), 2009 WL 3053739, at *2 (S.D.N.Y. Sept. 24, 2009) (granting motion to dismiss breach of contract claim). 53 See Maxcess, Inc. v. Lucent Techs., Inc., 433 F.3d 1337, 1342 (11th Cir. 2005) (affirming dismissal of complaint based on contract’s plain meaning and applying New York law); Instead, Inc. v. ReProtect, Inc., No. 08 Civ. 5236 (DLC), 2009 WL 274154, at *5 (S.D.N.Y. Feb. 5, 2009) (granting motion to dismiss based on plain language); accord August 26 Decision, 417 B.R. at 662. 54 Maxcess, 433 F.3d at 1342. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 18 of 37 14 parties’ agreement.”55 Rather, the Court “‘should examine the entire contract and consider the relation of the parties and the circumstances under which it was executed. Particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby.’”56 The fact that the Term Lenders and the Revolving Lenders “urge different interpretations” of Section 2.1(c)(iii) does not create an ambiguity or prevent the Court from enforcing the Credit Agreement according to its terms.57 B. Fontainebleau’s March Notices of Borrowing Were Improper Under Credit Agreement Section 2.1(c)(iii) 1. The Credit Agreement, Read as a Whole, Makes Clear That “Fully Drawn” Means “Fully Funded” In the August 26 Decision, this Court held that “the unambiguous meaning of the term ‘fully drawn’ is ‘fully funded.’”58 As the Court explained, The structure of the lending facilities, as discerned from the Credit Agreement itself, reflects the parties’ intent to employ a sequential borrowing and lending process that places access to Delay Draw Term Loans ahead of Revolving Loans when the amount sought under the Revolving Loan facility was in excess of $150 million. The most persuasive interpretive approach is to read section 2.1(b), which governs Delay Draw Term Loans, and section 2.1(c), which governs Revolving Loans, together.59 The Court correctly observed that Section 2.1(b)(iii) provides that “the proceeds of each Delayed [sic] Draw Term Loan will be applied first to repay in full any then outstanding Revolving Loans . . . and second, to the extent of any excess, be credited to the Bank Proceeds Account.”60 55 Merit Group, 2009 WL 3053739, at *2 (citations omitted). 56 Kass v. Kass, 696 N.E.2d 174, 180-81 (N.Y. 1998) (finding contractual language unambiguous in context of the entire agreement) (quoting Atwater & Co. v. Panama R.R. Co., 159 N.E. 418 (N.Y. 1927)); accord August 26 Decision, 417 B.R. at 559 (“[T]he court should examine the entire contract and consider the relation of the parties and the circumstances under which it was executed.”). 57 ReProtect, 2009 WL 274154, at *5. 58 August 26 Decision, 417 B.R. at 660. 59 Id. 60 Id. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 19 of 37 15 (underscore in original, italics added). Thus, the Credit Agreement’s plain terms require that the proceeds of a Delay Draw Term Loan-i.e., the money that is actually provided to the Borrower-first be used to repay in full any outstanding Revolving Loans before the remainder is deposited into the Bank Proceeds Account.61 To ensure that a Delay Draw Term Loan would be sufficient “to repay in full” any outstanding Revolving Loans, Section 2.1(b)(i) sets the minimum Delay Draw Term Loan amount at $150 million-which, as the Court observed, is the same as the maximum amount that Section 2.1(c)(iii) permits Fontainebleau to “borrow[] ‘freely’ under the Revolving Loan facility without [the] conditions associated with the Delay Draw Term Loans.”62 Permitting Fontainebleau simultaneously to request a Delay Draw Term Loan and a Revolving Loan exceeding $150 million would render Section 2.1(b)(iii)’s “repay in full” requirement meaningless. In order for “section 2.1(b)(iii) to be given effect, all of the proceeds from the Delay Draw [Term Loan] must first be made available and used to repay outstanding Revolving Loans, which would be under $150 million, before the rest of the Revolving Loan facility could be made available.”63 Accordingly, as the Court concluded, “‘fully drawn’ must mean ‘fully funded.’”64 61 Id. 62 Id. 63 Id. (emphasis in original) (citing Zullo v. Varley, 868 N.Y.S.2d 290, 291 (N.Y. App. Div. 2008) (“a court should not adopt an interpretation which would leave any provision without force and effect”) (citation omitted)). 64 August 26 Decision, 417 B.R. at 660. This conclusion is further supported by examining what would have happened had Lenders honored the March 2 Notice of Borrowing. Fontainebleau simultaneously requested $350 million under the Delay Draw Term Loan and $670 million under the Revolver, with the loans to fund on the same day. Therefore, on the day Fontainebleau would have received the Delay Draw Term Loan proceeds, the then-outstanding Revolving Loans would have been $738 million (Fontainebleau had borrowed $68 million in Revolving Loans in February 2009). This means that Fontainebleau could not have complied with Section 2.1(b)(iii)’s mandate because the Delay Draw Term Loan’s proceeds ($350 million) were insufficient to “repay in full any then outstanding Revolving Loans.” Thus, Plaintiffs’ “fully requested” interpretation would render Section 2.1(b)(iii) superfluous. Under New York law, it is “a fundamental rule of contract interpretation [that] . . . when interpreting a contract, the entire contract must be considered so as to give each part meaning.” Brooke Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 20 of 37 16 The Revolving Lenders were not the only ones who determined that the March 2 and 3 Notices of Borrowing did not comply with the Credit Agreement. As acknowledged in the Aurelius Complaint, most Delay Draw Lenders refused to fund the March 2 and 3 Notices and did not provide funds to Fontainebleau until the company issued a March 9 Notice of Borrowing that sought to borrow funds through only the Delay Draw Term Loan and no monies under the Revolver.65 Indeed, the Delay Draw Lenders did not honor the March 3 Notice of Borrowing despite a March 4, 2009 message from Bank of America to all Lenders explaining that a Steering Committee of Lenders, including Term and Revolving Lenders, “unanimously supports the position that the [March 3 Notice] does not comply with the terms of the Credit Agreement” and advising that Lenders who disagreed with that position should “immediately contact Bank of America . . . to make operational arrangements for funding their portion of the requested borrowing.”66 Because Section 2.1 does not permit the outstanding Revolver balance to exceed $150 million until the Delay Draw Term Loan has been fully funded, the claims based on the March 2 and 3 Notices of Borrowing must be dismissed. 2. The Term Lenders’ In Balance Test Argument Does Not Alter the Plain Meaning of “Fully Drawn” The Term Lenders incorrectly assert that the contract parties’ alleged course of dealing with respect to the In Balance Test calculation somehow establishes that “drawn” means Group v. JCH Syndicate 488, 663 N.E.2d 635, 637 (N.Y. 1996) (citations omitted); Helmsley-Spear, Inc. v. New York Blood Ctr., Inc., 687 N.Y.S.2d 353, 357 (N.Y. App. Div. 1999) (contract must be interpreted to “give meaning to all of its language and avoid an interpretation that effectively renders meaningless a part of the contract”). 65 Aurelius Compl. ¶ 68. 66 Id. ¶ 57 (referencing Ex. E, Rice Decl.). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 21 of 37 17 “requested” under Section 2.1(c)(iii).67 As an initial matter, the Term Lenders’ argument must be rejected because it improperly attempts to use parol evidence to alter an unambiguous contract’s meaning.68 This includes evidence concerning the parties’ conduct during the contract term.69 Thus, the Term Lenders’ course-of-dealing allegations are simply not relevant to this motion. Moreover, the Term Lenders’ tortured interpretation of the In Balance Test provisions set forth in the Disbursement Agreement (an argument not previously raised in their prior complaints or amicus filing on Fontainebleau’s summary judgment motion) does not alter the plain meaning of “fully drawn” and would result in a palpably unreasonable construction of the operative documents. Under the Disbursement Agreement, the “In Balance Test is ‘satisfied’ when Available Funds equal or exceed the Remaining Costs.”70 “Remaining Costs” are those costs needed to complete the Project.71 Among the components of “Available Funds” is “Bank 67 Avenue Compl. ¶¶ 146-49; Aurelius Compl. ¶¶ 62-63. 68 “It is a fundamental principle of contract interpretation that, in the absence of ambiguity, the intent of the parties must be determined from their final writing and no parol evidence or extrinsic evidence is admissible.” Int’l Klafter Co. v. Cont’l Cas. Co., 869 F.2d 96, 100 (2d Cir. 1989) (applying New York law); see also Metro. Life Ins. Co. v. RJR Nabisco, Inc., 906 F.2d 884, 889 (2d Cir. 1990) (applying New York law and holding that an unambiguous contract’s meaning must “be fathomed from the terms expressed in the instrument itself rather than from extrinsic evidence as to terms that were not expressed”). This is especially true where, as here, the contracts at issue contain an integration clause. See Credit Agmt. § 10.10 (“[T]here are no promises, undertaking, representations or warranties by the Administrative Agent, any Arranger, any Manager or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.”); Disbursement Agmt. § 11.5 (“[The Loan Documents] integrate all the terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations and prior writings in respect to the subject matter hereof, all of which negotiations and writings are deemed void and of no force and effect.”). 69 Int’l Klafter, 869 F.2d at 100 (“Since the language of the contracts is unambiguous, there is no need here to examine the conduct of the parties over the intervening years to ascertain their intent.”) (citation omitted); In re Ionosphere Clubs, Inc., 147 B.R. 855, 863 (Bankr. S.D.N.Y. 1991) (“Having determined that the language chosen by the parties is clear and unambiguous on its face, extrinsic evidence, such as the parties’ subsequent course of conduct, may not properly be received in evidence”); Slatt v. Slatt, 477 N.E.2d 1099, 1100 (N.Y. 1985) (“There is no need here to examine the conduct of the parties over the intervening years to ascertain their intent in respect to the application of the cost of living increase. Such an inquiry might be appropriate in the instance of an ambiguity or where the contract is of ‘doubtful meaning’ . . . none of which is present”). 70 Disbursement Agmt. Ex. A at 15. 71 Disbursement Agmt. Ex. A at 26; Disbursement Agmt. Ex. C-1 at Appendix VIII. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 22 of 37 18 Revolving Availability minus $40,000,000.”72 “Bank Revolving Availability” means “as of each determination, the aggregate principal amount available to be drawn on that date under the Bank Revolving Facility.”73 The Term Lenders allege that prior to March 2009, the parties calculated the In Balance Test using the total unfunded Revolver commitment (minus $40 million) as the “amount available to be drawn on that date.”74 The Term Lenders claim that this somehow proves that the parties interpreted “drawn” to mean “requested” rather than “funded” because otherwise “the [Revolver] amount ‘available to be drawn on th[e] date’ of each In Balance Test . . . could not have exceeded $150 million unless and until the Delay Draw Loans were fully funded” and the In Balance Test would not have been satisfied.75 These verbal gymnastics are unavailing. The Term Lenders’ In Balance Test argument turns on an unjustifiable construction of the words “on that date.” The Term Lenders ask the Court to read those words as limiting the phrase “amount available to be drawn” to funds that could be borrowed without condition on the In Balance Test date. This limitation is inconsistent with the In Balance Test’s undisputed purpose of ensuring that “the remaining available financing is sufficient to cover the remaining anticipated costs required to complete the Project.”76 It would be nonsensical to weigh the anticipated costs to complete the Project against anything other than the total financing available through completion. Indeed, the Term Lenders’ suggested “on that date” limitation would lead to the 72 Disbursement Agmt. Ex. A at 3 (emphasis in original). 73 Id. at 4. 74 Avenue Compl. ¶ 147; Aurelius Compl. ¶ 61. 75 Avenue Compl. ¶¶ 148-49; Aurelius Compl. ¶¶ 61, 92. 76 Avenue Compl. ¶ 146 (emphasis added); see also Aurelius Compl. ¶ 87 (the In Balance Test “was used to ensure that the project was on track [and] weighed the Borrowers’ available financing against expected costs necessary to complete construction”). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 23 of 37 19 absurd conclusion that the Credit Agreement’s original closing conditions were not met. Satisfaction of the In Balance Test was a condition precedent to the Credit Agreement’s closing.77 Credit Agreement Section 2.1(b)(ii) provides that Fontainebleau cannot request any Delay Draw Term Loans before the “date upon which the amount on deposit in the Second Mortgage Proceeds Account is disbursed.” But the full amount of the Second Mortgage Proceeds Account was not to be disbursed until after closing.78 Consequently, Fontainebleau could not request a Delay Draw Term Loan on the closing date, and could only request a Revolver Loan of up to $150 million. Thus, even if the Term Lenders were correct that “drawn” means “requested,” the Term Lenders’ “on that date” limitation would mean that the In Balance Test was not satisfied at closing and the Credit Agreement’s closing conditions were not met.79 The only construction of “Bank Revolving Availability” that avoids absurd results and is consistent with the provision’s text and the In Balance Test’s purpose is that “aggregate principal amount available to be drawn on that date” simply refers to the total unfunded Revolver commitment as of that date.80 In any event, the “Bank Revolving Availability” definition does not depend on-and thus has no bearing on-whether “drawn” means “funded” or “requested.” 77 Credit Agmt. § 5.1; Disbursement Agmt. § 3.1.29. 78 See Disbursement Agmt. Ex. T (Flow of Funds Memo) at 10-12 (requiring that Fontainebleau confirm satisfaction of conditions precedent to closing before the funds are transferred to the Second Mortgage Proceeds Account), 14 (listing disbursements from the Closing Date Advance); see also Disbursement Agmt. §§ 2.1.1 (stating that the Closing Date Advance will be conducted in accordance with the disbursements in the Flow of Funds Memo), 2.1.2 (stating that all other advances shall be made after the Closing Date). 79 The Term Lenders’ interpretation would lead to a similarly absurd result in that it would also have precluded Fontainebleau from treating any available Revolver balances as Available Funds when the date of the In Balance Test representation was less than 30 days after a Notice of Borrowing. That is because under Section 5.2(c) of the Credit Agreement, Fontainebleau must wait 30 days after a borrowing request before submitting a new Notice of Borrowing. 80 InterDigital Commc’ns Corp. v. Nokia Corp., 407 F. Supp. 2d 522, 529 (S.D.N.Y. 2005) (“It is hornbook law that a contract should be interpreted so as not to render its terms nonsensical.”); Perlbinder v. Bd. of Managers of the 411 E. 53rd Street Condo., 886 N.Y.S.2d 378, 381 (N.Y. App. Div. 2009) (“In construing a contract, [a]n interpretation that gives effect to all the terms of agreement is preferable to one that . . . accords them an unreasonable interpretation.”); Superb Gen. Contracting Co. v. City of N.Y., 833 N.Y.S.2d 64, 67 (N.Y. App. Div. 2007) (“A contract should not be interpreted to produce a result that is absurd”). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 24 of 37 20 Accordingly, the Term Lenders’ convoluted In Balance Test argument does not alter the plain meaning of “fully drawn” in Section 2.1(c)(iii), and cannot salvage their breach of contract claims. III. MATERIAL BREACHES OF THE CREDIT AGREEMENT, AS ALLEGED IN THE COMPLAINTS, ARE FATAL TO THE TERM LENDERS’ CLAIMS To state a claim for breach of contract, a plaintiff must allege that the counterparty fully performed its obligations under the operative contract.81 As this Court correctly observed in the August 26 Decision, even if the Revolving Lenders otherwise had an obligation to honor the March 2 or 3 Notices of Borrowing, that obligation would be excused if Fontainebleau materially breached the Credit Agreement prior to the March 2 and 3 Notices of Borrowing.82 Nonetheless, the Term Lenders do not-because they cannot-allege that Fontainebleau fully performed its obligations under the Credit Agreement prior to the March 2 and 3 Notices of Borrowing. To the contrary, Plaintiffs affirmatively allege the existence of material breaches of the Credit Agreement prior to March 2009. These allegations are fatal to Plaintiffs’ claims. A. Plaintiffs’ Allegations of Material Breaches Defeat Their Claims The Term Lenders allege that Lehman Brothers breached its obligations under the Retail Facility Agreement following its bankruptcy. For example, the Aurelius Plaintiffs allege that “Lehman Brothers breached the Retail Facility Agreement by declaring bankruptcy and failing to honor advance requests made by the Borrower in September 2008, December 2008, January 2009, February 2009 and March 2009. In total, Lehman Brothers failed to honor its 81 See, e.g., First Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168 (2d Cir. 1998); Furia v. Furia, 498 N.Y.S. 2d 12, 13 (N.Y. App. Div. 1986) . 82 August 26 Decision, 417 B.R. at 663-66. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 25 of 37 21 obligations under the Retail Facility Agreement in the amount of $14,259,409.47.”83 The Avenue Plaintiffs also allege that Lehman’s breach of the Retail Facility Agreement was a breach of a Material Agreement that had a Material Adverse Effect, as those terms are defined in the Credit Agreement and, thus, constituted an Event of Default under Section 8(j) of the Credit Agreement.84 Plaintiffs further allege that the Lehman Brothers Event of Default violated the representation and warranty contained in Section 4.9 of the Disbursement Agreement that “[t]here is no default or event of a default under any of the Financing Agreements,” which includes the Retail Facility Agreement.85 Such a materially inaccurate representation under the Disbursement Agreement constitutes an additional Event of Default under Section 8(b) of the Credit Agreement.86 Accordingly, these allegations, deemed true for purposes of the present motion, establish the existence of an Event of Default under the Credit Agreement prior to the March 2 and 3 Notices of Borrowing that excused any performance by the Revolving Lenders. The Term Lenders similarly allege that the July 25, 2008 collapse of First National Bank of Nevada, a Term Lender and a Revolving Lender under the Credit Agreement, resulted in the breach of another Material Agreement and constituted another Event of Default that occurred prior to the March 2 and 3 Notices of Borrowing. Specifically, the Term Lenders allege that the Federal Deposit Insurance Company, as receiver for the First National Bank of Nevada, [R]epudiated the [bank’s] commitments under the Credit Agreement. As a result, 83 Aurelius Compl. ¶ 99; see also Avenue Compl. ¶ 128 (“[B]eginning in September 2008 and on four occasions thereafter, Lehman failed to honor ‘its obligation to fund a total of $14, 259,409.74 under the Retail Facility,’ and thereby defaulted in its lending obligations under the Retail Facility Agreement.”). 84 Avenue Compl. ¶ 128. 85 Id.; accord Aurelius Compl. ¶ 106. 86 See Credit Agmt. § 8(b) (stating that an inaccurate representation or warranty creating a Disbursement Agreement Event of Default shall also constitute an Event of Default under the Credit Agreement). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 26 of 37 22 beginning in January 2009, the Borrower’s calculation of Available Funds under the In Balance Test was therefore reduced by the amount of the total commitment by First National Bank of Nevada . . . Such a breach by a party to a Material Agreement (which the Credit Agreement was) was a Default, based upon Section 8(j) of the Credit Agreement.87 Plaintiffs also allege that the First National Bank of Nevada Event of Default violated the “no default” representation in Section 4.9 of the Disbursement Agreement, which, as stated above, resulted in an Event of Default under Section 8(b) of the Credit Agreement.88 These allegations, deemed true for purposes of the present motion, establish the existence of another Event of Default prior to the March 2 and 3 Notices of Borrowing that defeats Plaintiffs’ breach of contract claims.89 B. Section 2.1(c) Does Not Eliminate the Due Performance Requirement Despite their inability to allege due performance under the Credit Agreement, Plaintiffs nonetheless allege that “the [Revolving Lenders] were, and continue to be, obligated to honor the [March 2 and 3] Notices of Borrowing.”90 In support of this contention, Plaintiffs cite the following language in Section 2.1(c): The making of Revolving Loans which are Disbursement Agreement Loans to the Bank Proceeds Account shall be subject only to the fulfillment of the applicable 87 Avenue Compl. ¶¶ 133-34; accord Aurelius Compl. ¶¶ 118-19. 88 Avenue Compl. ¶ 134; Aurelius Compl. ¶ 121. 89 Notably, Plaintiffs also do not allege that each of them or their predecessors in interest, many of whom were Delay Draw Term Lenders, honored the March 2 or 3 Notices of Borrowing. As discussed in Point II supra, each of the Lenders was given the opportunity to fund its share of the Notices of Borrowing if it believed that those Notices complied with the Credit Agreement. Indeed, the Aurelius Plaintiffs allege that certain of their predecessors in interest breached the Credit Agreement by not funding the March 2 or 3 Notices of Borrowing. Aurelius Compl. ¶¶ 53, 68. Both sets of Plaintiffs are precluded by their failure to perform their own obligations from seeking to pursue a contract claim for the same alleged breach against the Revolving Lenders. See In re Adelphia Commcn’s Corp., No. 02-41729 (REG), 2007 WL 2403553, at *4 (Bankr. S.D.N.Y. 2007) (“The failure to allege all four elements required under New York law to state a breach of contract claim [including the plaintiff’s performance under the contract] will result in dismissal.”); R.H. Damon & Co., Inc. v. Softkey Software Prods., Inc., 811 F. Supp. 986, 991 (S.D.N.Y. 1993) (“[W]hen pleading a claim for the breach of an express contract…the complaint must contain some allegation that the plaintiffs actually performed their obligations under the contract.”) (emphasis added). 90 Avenue Compl. ¶ 183; Aurelius Compl. ¶ 136. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 27 of 37 23 conditions set forth in Section 5.2, and shall thereafter be disbursed from the Bank Proceeds Account subject only to the conditions set forth in Section 3.3 of the Disbursement Agreement.91 Plaintiffs also point to Section 5.2, which states that the “agreement of each Lender to make Disbursement Agreement Loans . . . is subject only to the satisfaction of the following conditions precedent.”92 Plaintiffs presumably contend, much like Fontainebleau did on its motion for partial summary judgment, that whether any of the other terms of the Credit Agreement were breached is irrelevant, so long as the March 2 and 3 Notices of Borrowing complied with the conditions set forth in Sections 2.1 and 5.2. As noted in Point II above, the March 2 and 3 Notices of Borrowing did not comply with the conditions set forth in Sections 2.1 and 5.2 of the Credit Agreement. Moreover, even if the Notices of Borrowing had complied, the pre-existing material breaches that Plaintiffs themselves affirmatively allege would excuse any funding obligation on the part of the Revolving Lenders. As this Court rightly observed in its August 26 Decision, Section 5.2 expressly requires compliance with “applicable provisions of Section 2” of the Credit Agreement which, in turn: [I]ndicates that the making of [Revolving] loans is “[s]ubject to the terms and conditions hereof, and in reliance upon the applicable representations and warranties set forth herein and in the Disbursement Agreement.” Consequently, while [the] word “only” is emphasized in section 2.1 as one of only two terms that are in boldface in the entire Credit Agreement, by the plain language of the relevant provisions, the word “only” is intended to make clear that other than applicable provisions of sections 2 and 5.2 of the Credit Agreement, no other provisions shall control the Revolver Bank’s obligation to make their share of the loans to the Bank Proceeds Account. It cannot be read to disregard the requirement that the terms and conditions set forth in the Credit Agreement and 91 Aurelius Compl. ¶ 34; Credit Agmt. § 2.1(c). 92 Aurelius Compl. ¶¶ 34-36; Avenue Compl. ¶ 119. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 28 of 37 24 representations and warranties under the Credit Agreement and Disbursement Agreement be satisfied.93 Indeed, contractual conditions are distinguishable from other contractual terms or covenants.94 A condition precedent is an event that must occur to trigger performance by one or more parties to a contract. If a condition does not occur, there is no breach, but there is no obligation to perform unless and until the condition precedent is satisfied.95 Thus, while Sections 2.1 and 5.2 set forth the conditions precedent to the Revolving Lenders’ funding obligations, those obligations were also dependent on Fontainebleau’s substantial performance of the other terms of the Credit Agreement, both as a matter of New York contract law and the terms of the of the Credit Agreement. New York law makes clear that one party’s material breach of a contractual term or covenant relieves a counterparty of its obligation to perform.96 Where, as here, Plaintiffs do not and cannot allege due performance and, to the contrary, affirmatively allege the existence of material breaches of the Credit Agreement, a claim against the Revolving Lenders for failure to 93 August 26 Decision, 417 B.R. at 664. 94 See, e.g., 13 Williston on Contracts § 38:5 (4th ed. 2009) (“A promise is a manifestation of an intention to act or refrain from acting in a specified way, so made as to justify the promisee in understanding that a commitment has been made, while a condition is an event, not certain to occur, which must occur, unless its nonoccurrence is excused, before performance under a contract becomes due.”) (emphasis added). 95 See Merritt Hill Vineyards Inc. v. Windy Heights Vineyard, Inc., 460 N.E.2d 1077, 1081 (N.Y. 1984); see also AIG Centennial Ins. Co. v. Fraley-Landers, 450 F.3d 761, 764 (8th Cir. 2006) (“Unlike a mere contract term, the breach of which must be material before it excuses another party from performing, one party’s failure to fulfill a condition precedent entirely excuses any remaining obligations of the other party.”); Biltmore Bank of Ariz. v. First Nat’l Mortgage Sources, No. CV-07-936-PHX-LOA, 2008 WL 564833, at *7-8 (D. Ariz. Feb. 26, 2008) (same). 96 Merrill Lynch & Co. Inc. v. Allegheny Energy, Inc., 500 F.3d 171, 186-87 (2d Cir. 2007); Bear, Stearns Funding, Inc. v. Interface Group-Nevada, Inc., 361 F. Supp. 2d 283, 291 (S.D.N.Y. 2005); see also 13 Williston on Contracts § 63:3 (4th ed. 2009) (“A party who first commits a material breach cannot enforce the contract. Otherwise stated, a party who has materially breached a contract is not entitled to recover damages for the other party’s subsequent nonperformance of the contract, since the latter party’s performance is excused.”). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 29 of 37 25 lend fails as a matter of law to state a claim on which relief can be granted.97 IV. PLAINTIFFS FAIL TO ALLEGE A BREACH OF CONTRACT CONCERNING TERMINATION OF COMMITMENTS Plaintiffs’ half-hearted claims for breach based on the April 20, 2009 termination are woefully deficient. Pursuant to Section 8 of the Credit Agreement, if one or more Events of Default occur, then “with the consent of the Required Facility Lenders for the respective Facility, the Administrative Agent shall, by notice to Borrowers, declare the Revolving Commitments and/or the Delay Draw Commitments, as the case may be, to be terminated forthwith, whereupon the applicable Commitments shall immediately terminate.”98 Pursuant to this provision, on April 20, 2009, after receiving information that indicated the occurrence of numerous Events of Default and with the consent of the Revolving Lenders, Bank of America, as Administrative Agent, delivered the April 20 Termination Letter. While Plaintiffs allege that the Revolving Lenders’ termination under the April 20 Termination Letter was improper or ineffective, neither alleges any facts to support this claim. Plaintiffs do not assert the absence of Events of Default prior to April 20, 2009. To the contrary, Plaintiffs affirmatively allege that several Events of Default occurred prior to March 2009.99 The Aurelius Plaintiffs further allege that the Revolving Lenders “did not identify or set forth the Events of Default upon which they were relying to terminate their 97 See R.H. Damon, 811 F. Supp. at 991 (S.D.N.Y. 1993) (dismissing breach of contract claims because plaintiffs failed to allege due performance); All States Warehousing, Inc. v. Mammoth Storage Warehouses, Inc., 180 N.Y.S.2d 118 (N.Y. App. Div. 1958) (same); Greiner v. A. Rosenblum, Inc., 207 N.Y.S.2d 75, 76 (N.Y. Sup. Ct. 1959) (dismissing breach of contract action where “[p]laintiff has failed to plead, as he must, the necessary facts showing compliance on his part or due performance”). 98 “Required Facility Lenders” means “with respect to any Facility at any time, Non-Defaulting Lenders holding more than 50% of the Obligations outstanding under such Facility.” Credit Agmt. § 1.1. 99 See supra Point III.A. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 30 of 37 26 commitment.”100 There is, however, nothing in Section 8 or in any other part of the Credit Agreement that required the Revolving Lenders to identify the Events of Default in the notice of termination. In short, Plaintiffs do not allege any facts or contractual provisions or theory of any kind that even remotely suggests a basis for a breach of contract claim arising out of the April 20 Termination Letter. V. THE AVENUE PLAINTIFFS FAIL TO STATE A CLAIM FOR BREACH OF THE IMPLIED COVENANT OF GOOD FAITH. The Avenue Plaintiffs allege that the Revolving Lenders breached a duty of good faith and fair dealing under the Credit Agreement.101 This allegation fails to state a claim because it is duplicative of Plaintiffs’ breach of contract claim and seeks to impose obligations beyond those set forth in the governing agreement. Under New York law, a claim for breach of the implied covenant of good faith and fair dealing fails where “a breach of contract claim, based upon the same facts, is also pled.”102 Claims for breach of the implied covenant of good faith that seek to recover damages “intrinsically tied to the damages allegedly resulting from the breach of contract” must be dismissed as redundant.103 Here, the allegations underlying the Avenue Plaintiffs’ breach of the implied covenant of good faith claim against all Revolving Lenders (Count IV) are identical to those underlying their breach of contract claim against the same defendants (Count II). The Avenue Plaintiffs allege that the Revolving Lenders breached the implied covenant “by adopting a 100 Aurelius Compl. ¶ 73. 101 Avenue Compl. ¶¶ 194-200. 102 Harris v. Provident Life & Accident Ins. Co., 310 F.3d 73, 81 (2d Cir. 2002). 103 Ari & Co. v. Regent Int’l Corp., 273 F. Supp. 2d 518, 522-23 (S.D.N.Y. 2003); see also Long v. Marubeni Am. Corp., No. 05 Civ. 0639, 2006 WL 1716878, at *1 (S.D.N.Y. June 20, 2006) (dismissing plaintiffs’ breach of good faith claim where “the claims clearly arise from the same contract and the same breach, and seek essentially the same relief”). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 31 of 37 27 contrived construction of the Credit Agreement in order to justify their refusal to fund the March 2 Notice and the March 3 Notice,”104 an allegation that mirrors their earlier contentions that “[t]he March 2 Notice and March 3 Notice complied with all applicable conditions under the Credit Agreement” and that the Revolving Lenders “breached the Credit Agreement” by “fail[ing] to honor [those] Notices of Borrowing.”105 Moreover, the damages asserted for the alleged breach of the implied covenant are the same as those requested for the alleged breach of the Credit Agreement.106 Furthermore, as New York’s highest court has explained, the obligation of good faith cannot be employed to imply an “obligation . . . that would be inconsistent with other terms of the contractual relationship.”107 Accordingly, “[t]he parties’ contractual rights and liabilities may not be varied, nor their terms eviscerated, by a claim that one party has exercised a contractual right but has failed to do so in good faith.”108 In particular, a party cannot be found liable for breach of the implied covenant of good faith and fair dealing for merely exercising its own rights under a contract, even if doing so “may incidentally lessen the other party’s anticipated fruits from the contract.”109 As demonstrated in Point II supra, the Revolving Lenders simply exercised their 104 Avenue Compl. ¶ 198. 105 Id. ¶¶ 181-86. 106 Compare id. ¶ 188 with ¶ 200 (alleging injury suffered as a result of each breach because “the amount and value of Plaintiffs’ collateral has been and continues to be diminished.”). 107 Dalton v. Educ. Testing Serv., 87 N.Y.2d 384, 396-97 (N.Y. 1995) (citations omitted). 108 CIBC Bank & Trust Co. v. Banco Central do Brasil, 886 F. Supp. 1105, 1118 (S.D.N.Y. 1995) (defendants’ exercise of their rights under a debt restructuring agreement was not actionable as a breach of the implied covenant of good faith) (citation omitted). 109 M/A-COM Sec. Corp. v. Galesi, 904 F.2d 134, 136 (2d Cir. 1990) (“[T]he implied covenant does not extend so far as to undermine a party’s general right to act in its own interests.”); see also Bank of N.Y. v. Sasson, 786 F. Supp. 349, 353 (S.D.N.Y. 1992) (implied covenant of good faith did not require bank to extend a line of credit to the borrower because an event of default under the loan agreement had occurred). Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 32 of 37 28 contractual rights under the Credit Agreement when they declined to fund the March 2 and 3 Notices of Borrowing. Therefore, even if the Revolving Lenders’ conduct “incidentally lessened” the Avenue Plaintiffs’ “anticipated fruits from the contract,” such conduct is not actionable.110 CONCLUSION For all of the foregoing reasons, the Revolving Lenders respectfully submit that the Term Lenders’ Complaints should be dismissed. Respectfully Submitted, Dated: February 18, 2010 By: /s/ John B. Hutton GREENBERG TRAURIG, P.A. John B. Hutton Florida Bar No. 902160 Mark D. Bloom Florida Bar No. 303836 1221 Brickell Avenue Miami, FL 33131 Telephone: (305) 579-0500 Facsimile: (305) 579-0717 E-mail: huttonj@gtlaw.com bloomm@gtlaw.com -and- SIMPSON THACHER & BARTLETT LLP Thomas C. Rice (pro hac vice) David Woll (pro hac vice) 425 Lexington Avenue New York, New York 10017 Telephone: (212) 455-2000 Facsimile: (212) 455-2502 E-mail: trice@stblaw.com dwoll@stblaw.com 110 Galesi, 904 F.2d at 136. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 33 of 37 29 By: /s/ Craig V. Rasile HUNTON & WILLIAMS LLP Craig V. Rasile Kevin M. Eckhardt 1111 Brickell Avenue, Suite 2500 Miami, Florida 33131 Telephone: (305) 810-2500 Facsimile: (305) 810-1669 E-mail: crasile@hunton.com keckhardt@hunton.com -and- O’MELVENY & MYERS LLP Bradley J. Butwin (pro hac vice) Jonathan Rosenberg (pro hac vice) Daniel L. Cantor (pro hac vice) William J. Sushon (pro hac vice) 7 Times Square New York, New York 10036 Telephone: (212) 326-2000 Facsimile: (212) 326-2061 E-mail: bbutwin@omm.com jrosenberg@omm.com dcantor@omm.com wsushon@omm.com ATTORNEYS FOR BANK OF AMERICA, N.A. and MERRILL LYNCH CAPITAL CORPORATION By: /s/ Harold D. Moorefield, Jr. STEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERSON, PA Harold D. Moorefield, Jr. Drew M. Dillworth Museum Tower ATTORNEYS FOR DEFENDANTS JPMORGAN CHASE BANK, N.A., BARCLAYS BANK PLC, DEUTSCHE BANK TRUST COMPANY AMERICAS, and THE ROYAL BANK OF SCOTLAND PLC By: /s/ Arthur Halsey Rice RICE PUGATCH ROBINSON & SCHILLER, P.A. Arthur Halsey Rice 101 Northeast Third Avenue, Suite 1800 Fort Lauderdale, Florida 33301 Telephone: (954) 462-8000 Facsimile: (954) 462-4300 -and- KAYE SCHOLER LLP Aaron Rubinstein (pro hac vice) Phillip A. Geraci (pro hac vice) 425 Park Avenue New York, New York 10022 Telephone: (212) 836-8000 Facsimile: (212) 836-8689 ATTORNEYS FOR DEFENDANT HSH NORDBANK AG, NEW YORK BRANCH By: /s/ Robert Fracasso SHUTTS & BOWEN LLP Robert Fracasso 1500 Miami Center 201 South Biscayne Boulevard Miami, Florida 33131 Telephone: (305) 358-6300 Facsimile: (305) 347-7802 E-mail: fracasso@shutts.com -and- MAYER BROWN LLP Jean-Marie L. Atamian (pro hac vice) Jason I. Kirschner (pro hac vice) 1675 Broadway Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 34 of 37 30 150 West Flagler Street, Suite 2200 Miami, Florida 33130 Telephone: (305) 789-3200 Facsimile: (305) 789-3395 -and- KATTEN MUCHIN ROSENMAN LLP Kenneth E. Noble (pro hac vice) Anthony L. Paccione (pro hac vice) 575 Madison Avenue New York, New York 10022 Telephone: (212) 940-8800 Facsimile: (212) 940-8776 ATTORNEYS FOR DEFENDANT BANK OF SCOTLAND PLC By: /s/ Bruce J. Berman MCDERMOTT WILL & EMERY LLP Bruce J. Berman, Esq. 201 South Biscayne Boulevard Suite 2200 Miami, Florida 33131-4336 (305) 358-3500 (tel) (305) 347-6500 (fax) E-mail: bberman@mwe.com Andrew B. Kratenstein (limited appearance) Michael R. Huttenlocher (limited appearance) McDermott Will & Emery LLP 340 Madison Avenue New York, New York 10173 (212) 547-5400 (tel) (212) 547-5444 (fax) E-mail: akratenstein@mwe.com mhuttenlocher@mwe.com ATTORNEYS FOR DEFENDANT CAMULOS MASTER FUND, L.P. New York, New York 10019-5820 Telephone: (212) 506-2500 Facsimile: (212) 262-1910 ATTORNEYS FOR SUMITOMO MITSUI BANKING CORPORATION By: /s/ Peter Roberts SHAW GUSSIS FISHMAN GLANTZ WOLFSON & TOWBIN LLC Robert W. Glantz (limited appearance) Peter J. Roberts (limited appearance) 321 North Clark St., Suite 800 Chicago, IL 60654 Telephone: (312) 541-0151 Facsimile: (312) 980-3888 -and- ASTIGARRAGA DAVIS MULLINS & GROSSMAN, PA Gregory S. Grossman 701 Brickell Avenue, 16th Floor Miami, Florida 33131 Telephone: (305) 372-8282 Facsimile: (305) 372-8202 E-mail: ggrossman@astidavis.com ATTORNEYS FOR DEFENDANT MB FINANCIAL BANK, N.A. Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 35 of 37 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing Defendants’ Joint Motions to Dismiss the Term Lender Complaints and Supporting Memorandum of Law was furnished via e-mail (where an e-mail address is listed) and First Class U.S. Mail to those on the attached service list on February 18, 2010. By: /s/ John B. Hutton John B. Hutton Service List: Andrew B. Kratenstein MCDERMOTT WILL & EMERY LLP 340 Madison Avenue New York, NY 10017 akratenstein@mwe.com James B. Heaton, III BARTLIT BECK HERMAN PALENCHAR & SCOTT 54 West Hubbard Street Suite 300 Chicago IL 60610 jb.heaton@bartlit-beck.com Jean-Marie L. Atamian MAYER BROWN LLP 1675 Broadway New York, NY 10019 jatamian@mayerbrown.com New York NY 10029 jbergman@kasowitz.com Daniel L. Cantor O’MELVENY & MYERS LLP Times Square Tower 7 Times Square New York, NY 10036 dcantor@omm.com Jed I. Bergman KASOWITZ BENSON TORRES & FRIEDMAN LLP 1633 Broadway Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 36 of 37 Peter J. Most HENNIGAN BENNETT & DORMAN LLP 865 S. Figueroa Street Suite 2900 Los Angeles, CA 90017 most@hbdlawyers.com Anthony L. Paccione KATTEN MUCHIN ROSENMAN LLP 575 Madison Avenue New York, NY 10022 anthony.paccione@kattenlaw.com Peter J. Roberts SHAW GUSSIS FISHMAN GLANTZ WOLFSON & TOWBIN LLC 371 North Clark Street Suite 800 Chicago, IL 60654 proberts@shawgussis.com Aaron Rubinstein KAYE SCHOLER LLP 425 Park Avenue 12 th Floor New York, NY 10022 arubinstein@kayescholer.com Case 1:09-md-02106-ASG Document 36 Entered on FLSD Docket 02/18/2010 Page 37 of 37