United States District Court, S.D. New York
August 12, 2005.
ARISTOCRAT LEISURE LIMITED, Plaintiff,
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee, Defendant. KBC FINANCIAL PRODUCTS UK LTD, KBC ALPHA MASTER FUND SPC KBC CONVERTIBLE OPPORTUNITIES FUND, KBC ALPHA MASTER FUND SPC KBC MULTI-STRATEGY ARBITRAGE FUND, AMARANTH LLC, ALEXANDRA GLOBAL MASTER FUND, LTD., UFJ INTERNATIONAL PLC, DEEPHAVEN INTERNATIONAL CONVERTIBLE TRADING, LTD., CALAMOS ADVISORS LLC ON BEHALF OF CALAMOS GROWTH AND INCOME FUND, CALAMOS GLOBAL GROWTH AND INCOME FUND AND CERTAIN OTHER INSTITUTIONAL CLIENTS, CQS CONVERTIBLE AND QUANTITATIVE STRATEGIES MASTER FUND LTD., D.E. SHAW INVESTMENT GROUP, LLC, D.E. SHAW VALENCE INTERNATIONAL, INC, and QVT FUND LP, Intervening Defendants.
The opinion of the court was delivered by: PETER LEISURE, District Judge
OPINION AND ORDER
Plaintiff, Aristocrat Leisure Limited ("Aristocrat"), seeks
reformation of a bond indenture ("Indenture") to correct a
scrivener's error, and a declaration of plaintiff's immediate
right to call the bonds for redemption under the Indenture.
Plaintiff claims that it legitimately called the bonds on
December 20, 2004, and that call simultaneously terminated the
intervening defendants' ("Bondholders") right to convert their
bonds to Aristocrat common stock. Defendant Trustee, Deutsche
Bank Trust Company Americas ("Trustee"), defends this action on
behalf of all of the convertible bondholders and is an affiliate
of one of the lead underwriters and managers of the bond offering
at issue. The Trustee and the Bondholders claim that notice is
required to effect a call of the bonds, and that the Bondholders
have a right to convert after notice is given. The Trustee and
Bondholders argue that Aristocrat's December 20, 2004 alleged
notice and call were not sufficient under the Indenture and seek
declaratory judgment that the alleged notice and call did not
terminate the Bondholders' right to convert their bonds to stock.
The Trustee and Bondholders also seek declaratory judgment that
the Bondholders' notices of conversion are valid and effective,
and that Aristocrat is liable for any diminution in the value of
its common stock effective after Aristocrat refused to honor the
Bondholders' notices of conversion.*fn1 The Trustee seeks
indemnification for its expenses in defending against this
action. The parties now concurrently move for judgment on the
pleadings pursuant to Federal Rule of Civil Procedure 12(c). BACKGROUND*fn2
I. The Parties
Plaintiff Aristocrat, an Australian corporation, is a global
supplier of gaming machines and video gaming machines.
Plaintiff's supply area includes New York State. (Plaintiff's
Complaint ("Compl.") ¶ 4.)
Defendant Trustee is a New York corporation. The Trustee was
originally named Bankers Trust Company ("BTC") as referenced on
the Indenture, and was acquired by Deutsche Bank in 1999. In
April 2002, the Trustee officially changed its name to Deutsche
Bank Trust Company Americas, as referenced in the above caption.
(Defendant Trustee's Answer ("Tr.'s Ans.") ¶ 5.)
The intervening defendant Bondholders are various corporations
organized in England, the Caribbean, and the United States
(Delaware). The Bondholders own a substantial majority of the
outstanding bonds here at issue. (Intervening Defendant's Answer
("BHs' Ans.") first unnumbered paragraph.)
II. The Bonds
On May 31, 2001, plaintiff issued US$130,000,000 of 5%
convertible bonds, due May 2006, to qualified institutional
buyers ("QIBs"). The bonds were issued under an Indenture which
lays out the rights and obligations of the issuer (Aristocrat),
the Trustee, and the Bondholders. Unfortunately, the Indenture
contains a scrivener's error regarding the proper exchange rate.
The exchange rate was mistakenly transposed so that, instead of
reading "US$0.514 = A$1.00,"*fn3 the Indenture read "A$0.514 =
US$1.00." This error is continuous and consistent throughout the
The Indenture allows the Bondholders to convert principal due
under the bonds to newly-issued ordinary shares of Aristocrat
stock. (Compl. Ex. A § 13.01.) In order to convert, the
Bondholders must give effective irrevocable notice to the
Trustee. (Id. § 13.02.) However, this right to convert
terminates "immediately upon, and simultaneously with, any call
by the Issuer for the redemption of the Bonds in accordance with
Article 12." (Id. § 13.01.) Any bonds "not validly redeemed by
the Issuer pursuant to such redemption shall regain" their
conversion rights. (Id.)
The bonds are redeemable at Aristocrat's option on or after May
31, 2004, "on not less than 30 nor more than 60 days' notice to
the Holders and not less that 45 days' notice to the Trustee,"
provided that, prior to the notice, the closing price of
Aristocrat's ordinary shares exceeds 140% of the conversion price
of the bonds for 20 of 30 trading days. (Id. § 12.02(a).)
Aristocrat must "mail notice of such redemption" to the
Bondholders. (Id. § 12.04.) Such notice must:
specify the unpaid principal amount of each Bond held
by such Holder to be redeemed, the Redemption Date,
the redemption price and the amount of any accrued
and unpaid interest payable on the Redemption date,
the . . . identifying number of the Bonds and . . .
that payment will be made upon presentation and
surrender of the Bonds to be redeemed and . . . the
Conversion Price then in effect and the date on which
the right to convert such Bonds . . . to be redeemed
(Id.) Further, prior to the issuance of notice, "the election
of the Issuer to redeem any Bonds shall be evidenced by a Board
Resolution." In order to effect redemption, Aristocrat must
deposit funds, "[n]o later than 10:00 a.m. at least one Business
Day prior to the Redemption date specified in the notice of redemption[,] . . . sufficient to
redeem on the Redemption Date all of the Bonds so called for
redemption." (Id.) If the deposit is over-funded "because of
the conversion of such Bonds as provided in" article 12, the
surplus "shall after such conversion be repaid to the Issuer by
the Trustee." (Id. § 13.10.)
The scrivener's error skewed the stock-price trigger for
Aristocrat's right to redeem the bonds. As written into the
Indenture, Aristocrat's right had not been triggered as of the
parties' submissions on this motion. However, as corrected,
Aristocrat's right materialized on November 22, 2004. Realizing
the error, Aristocrat contacted the Trustee to correct it. The
Trustee refused to correct the error because Aristocrat insisted
the correction would allow it immediately to terminate
Bondholders' right to convert their bonds to stock. All parties
agree that the exchange rate is a scrivener's error and should be
the converse of that written.
On December 20, 2004, plaintiff attempted to give notice of
redemption and call the bonds for redemption. Plaintiff sent a
communique to the Bondholders titled "Notice of Redemption" and
[t]he Issuer has elected to call for the redemption
of all outstanding Bonds, such redemption to occur on
the date that is 45 days after the date that the
correction of the Exchange Rate to A$1.00=US$.5140
(such date, the "Redemption Date"). This redemption
is made at the option of the Issuer under Article 12
of the Indenture.
(Memorandum of Law in Support of Defendant Trustee's Motion for
Judgment on the Pleadings ("Tr.'s Mem.") Ex. A.) The notice
identified the unpaid principal amount as US$130,000,000, and
stated the Bondholders would receive 100% of the principal plus
interest. (Id.) Further, the Bondholders were put on notice
that "[p]ursuant to Section 13.01 of the Indenture, the
Conversion Rights terminate immediately upon, and simultaneously
with, the call by the Issuer for the redemption of the Bonds.
Accordingly the Conversion Rights have terminated as of the date hereof." (Id.) This notice was faxed and mailed to the
Trustee and the Bondholders. The next day, Aristocrat also made a
media announcement that it had called the bonds for redemption.
Also on December 20, 2004, Aristocrat instigated the instant
suit against the Trustee, seeking declaratory judgment that
Aristocrat's redemption right came into being on November 22,
2004, Aristocrat called for redemption on December 20, 2004,
terminating the Bondholders' right to convert and requiring the
Trustee to redeem the bonds. This Court allowed the Bondholders
to intervene as of right as defendants on March 30, 2005. By
stipulation dated March 9, 2005, the parties agreed that
plaintiff need not answer nor conduct discovery regarding the
Bondholders' contingent counter-claims until this Court renders
its decision on this motion.
I. Motion on the Pleadings Standard
Disposition of a litigation on the pleadings "is appropriate
where material facts are undisputed and where a judgment on the
merits is possible merely by considering the contents of the
pleadings." Sellers v. M.C. Floor Crafters Inc., 842 F.2d 639,
642 (2d Cir. 1988). "In deciding a Rule 12(c) motion, we apply
the same standard as that applicable to a motion under Rule
12(b)(6) . . . accept[ing] the allegations contained in the
complaint as true, and draw[ing] all reasonable inferences in
favor of the non-movant." Sheppard v. Beerman, 18 F.3d 147, 150
(2d Cir. 1994). When analyzing a 12(c) motion, the Court
considers "the pleadings and exhibits attached thereto,
statements or documents incorporated by reference in the
pleadings, matters subject to judicial notice, and documents
submitted by the moving party, so long as such documents either
are in the possession of the party opposing the motion or were
relied upon by that party in its pleadings." Prentice v. Apfel
11 F. Supp. 2d 420, 424 (S.D.N.Y. 1998) (Leisure, J.) (citing Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150
(2d Cir. 1993)). A court should dispose of the claims on the
pleadings "if, from the pleadings, the moving party is entitled
to judgment as a matter of law." Burns Int'l Sec. Servs., Inc.
v. Int'l Union, United Plant Guard Workers of Am., 47 F.3d 14,
16 (2d Cir. 1994). The Second Circuit reviews a district court's
judgment on the pleadings de novo. Ziemba v. Wezner,
366 F.3d 161, 163 (2d Cir. 2004).
II. Scrivener's Error
All parties agree that the exchange rate in the Indenture
resulted from a scrivener's error and should be the converse of
that printed. Where it is shown by clear and convincing evidence
that both "parties to a bilateral transaction share the same
erroneous belief and their acts do not in fact accomplish their
mutual intent," the court should reform the contract to conform
with the parties' intent. See Healy v. Rich Prods. Corp,
98 F.2d 68, 73 (2d Cir. 1992); Banque Arabe Et Internationale
D'Investissement v. Maryland Nat'l Bank, 850 F. Supp. 1199, 1225
(S.D.N.Y. 1994) ("A court may reform or rescind an agreement,
where it finds . . . mutual mistake.") (quotation omitted); Nash
v. Kornblum, 12 N.Y.2d 42, 46, 186 N.E.2d 551, 553
(1962).*fn4 Parol evidence is admissible to correct a mutual
mistake. Investors Ins. Co. of Am. v. Dorinco Reinsurance Co.,
917 F.2d 100, 105 (2d Cir. 1990). Also, when enforcing the
contract, reformation is retroactive to the creation of the
contract as it reflects the parties' intentions when entering
into the contract. See Aramony v. United Way of Am.,
28 F. Supp. 2d 147, 168 (S.D.N.Y. 1998) (noting that, in the case of a
scrivener-like error, "courts typically enforce the parties'
agreement or understanding . . . `if the actual intention of the
parties can be and is determined'") (quoting 1, 3 Arthur Linton
Corbin, Corbin on Contracts §§ 95, 608 (1960)), rev'd in part on other grounds, Aramony v. United Way Replacement
Benefit Plan, 191 F.3d 140 (2d Cir. 1999). It is clear from the
parties' admissions that the scrivener's error is a mutual
mistake acknowledged by all involved in the Indenture. Thus, the
contract is reformed according to the parties' intentions and the
exchange rate is reversed to read "US$0.514 = A$1.00."
Aristocrat's right to redeem the bonds materialized on November
22, 2004. Of course, this does not end the Court's analysis as it
must consider the consequences of this reformation.
III. Effect of Aristocrat's December 20, 2004 Communication
"Under New York law `the initial interpretation of a contract
is a matter of law for the court to decide.'" Fleet Capital
Corp. v. Yamaha Motor Corp., No. 01 Civ. 1047, 2002 U.S. Dist.
LEXIS 18115, at *62-63 (S.D.N.Y. Sept. 25, 2002) (quoting
Alexander & Alexander Servs., Inc. v. These Certain Underwriters
at Lloyd's, 136 F.3d 82, 86 (2d Cir. 1998)). The Court
interprets bond indentures pursuant to contract law. See Met.
Life Ins. Co. v. RJR Nabisco, Inc., 906 F.2d 884, 889 (2d Cir.
1990) (applying New York contract law to review the District
Court's interpretation of an indenture). So long as there is no
reasonable basis for differing meanings of contractual language
when viewing the contract as a whole, the contract is
unambiguous. See Fleet Capital, 2002 U.S. Dist. LEXIS 18115,
at *63. Where unambiguous, courts are to interpret contractual
language pursuant to its plain meaning, especially when dealing
with "sophisticated, counseled business people negotiating at
arm's length." See Vt. Teddy Bear Co. v. 538 Madison Realty
Co., 1 N.Y.3d 470, 475, 807 N.E.2d 876, 879 (2004); see also
Alexander & Alexander, 136 F.3d at 86 ("If the court finds that
the contract is not ambiguous it should assign the plain and
ordinary meaning to each term and interpret the contract without
the aid of extrinsic evidence."). "Language whose meaning is
otherwise plain is not ambiguous merely because the parties urge
different interpretations in the litigation. The court should not find the language ambiguous on the basis of the
interpretation urged by one party, where that interpretation
would strain the contract language beyond its reasonable and
ordinary meaning." Met. Life Ins., 906 F.2d at 889 (quotation
and citation omitted).
The Indenture terminates the Bondholders' conversion rights
simultaneously with "any call by the Issuer for the redemption of
the Bonds." (Compl. Ex. A § 13.01.) Aristocrat claims it "called"
the bonds for redemption on December 20, 2004 by issuing several
demands for redemption: (1) a public Board resolution; (2) a
notice faxed to the Bondholders; (3) the same notice sent to the
Trustee with a cover letter; and, (4) a press release stating
that Aristocrat has called for redemption of the bonds.
Aristocrat presses the Court to accept the noun definition of a
"call" "[a] demand for the presentation of a security
(esp[ecially] a bond) for redemption before the maturity date."
(Pl.'s Mem. at 12 (citing Black's Law Dictionary (7th ed.
1999).) Through this, Aristocrat asserts that its December 20,
2004 actions evidenced a demand for the bonds and therefore
called the bonds, terminating the Bondholders' right to convert.
However, under the Indenture, the language "any call by the
Issuer for the redemption" plainly requires action to be taken by
the Issuer instead of merely describing an object of action.
Accordingly, the Court finds that there is no reasonable dispute
regarding the use of "call" in the Indenture when viewed in
context, and that the verb definition is more appropriate "[t]o
redeem (a bond) before maturity." Black's Law Dictionary (7th
ed. 1999). The language is unambiguous. Further, it is clear that
redemption requires far more than simply a demand for the bonds;
rather, the Indenture describes a multi-step process of
redemption, as described below.
Under the Indenture, redemption requires detailed notice,
deposit of sufficient funds, and Board resolution. (Compl. Ex. A.
§ 12.04.) The entire process constitutes calling the bonds, culminating in payment on the redemption date.*fn5 (Id. §
12.08.) No bonds can be said to have been redeemed or called
prior to their surrender and payment, as the Indenture states
that "[o]n presentation and surrender of such Bonds" for which
the Issuer has issued notice and deposited sufficient funds,
"said Bonds shall be paid and redeemed by the Issuer." (Id.)
This paragraph requires the reading that redemption occurs only
when the Bonds are surrendered and paid. That conclusion is
necessary also because the paragraph provides for the contingency
that the bonds might not be redeemed if they are not surrendered
on the redemption date: "immediately after such Redemption Date,
such Bond will cease to be Outstanding and interest (if any) on
such Bond will cease to accrue, whether or not such Bond is
delivered to a Paying Agent." (Id. (emphasis added).) It is
only on "presentation and surrender of such Bonds" that the bonds
are "paid and redeemed." (Id.)*fn6 Thus, because "to call"
is the same as "to redeem," the two occur simultaneously and are
subject to the same prerequisite steps.
This interpretation comports with other language in the
Indenture. First, section 13.10 provides that, if the Issuer
deposited funds to pay the principal, interest and premium of the
bonds, and those funds were rendered surplussage by the
subsequent conversion of bonds, the excess will be returned to
Aristocrat. (Compl. Ex. A § 13.01.) Because Aristocrat must
deposit funds as part of calling the bonds, it is clear that the
Bondholders' conversion right exists after the deposit of funds. Any other interpretation would obviate the
need for this section because the only time Aristocrat pays the
principal, interest and premium on the bonds is when they are
redeemed under the Indenture. Second, section 2.11 provides for
the payment of interest on the bonds and states that "if such
Bond . . . has been called for redemption on a Redemption Date"
interest payments are not required. (Id. § 2.11.) Here, this
language strongly suggests that calling occurs on a redemption
date, when the bonds are scheduled to be surrendered and paid.
Similarly, in the tax redemption provision, through which
Aristocrat can redeem the bonds if changing tax laws increase
Aristocrat's tax liability on the bonds or otherwise affect the
bonds' value, the Indenture states that notice to the
Bondholders, "shall contain a statement informing Holders that
their entitlement to exercise their Conversion Right shall
terminate immediately pursuant to Section 13.01." (Id. § 12.01
(emphasis added).) It is counterintuitive to think that "shall"
refers to an event that has already occurred or is concurrent
with the notice. Instead, it seems the termination occurs with
the calling of the bonds, as stated in Section 13.01, which
Moreover, if the bondholder does not present the bond on the
redemption date, the bondholder's right to interest "and all
other rights of the Holder shall terminate (other than the right
to receive the relevant redemption price.)." (Id. § 12.08.)
This termination would necessarily include the Bondholders'
conversion right. It is entirely logical that the Indenture
contains this fail-safe provision to protect Aristocrat from the
wayward bondholder seeking to retain his or her conversion right
by improperly refusing to surrender the bond on the redemption
date, thus negating the "any call" conversion right termination
clause in section 13.01. If such a tactic is employed, Aristocrat
can rest easy knowing that, though the calling process is
incomplete and, therefore, the section 13.01 termination remains
dormant, the rogue bondholder's right to convert the bond along with all other
rights, save that of receiving the redemption price, terminated
on the redemption date. Therefore, Aristocrat's rights and
obligations are unaffected by the bondholder's action.
Aristocrat's right to redeem and ensure that the Bondholders'
conversion right ends simultaneously with redemption under
article 12 dovetails perfectly with this Court's reading of
article 13 that the Bondholders' right to convert exists up until
the redemption date. Further, it is clear that sections 12.01,
12.02, and 12.03 describe the types of redemption possible under
the Indenture: tax, Issuer-opted or maturity-based, and as
mandated by the gaming laws, respectively. Sections 12.04 and
12.08 follow those descriptions by outlining the procedures for
redeeming the bonds. Thus, the fail-safe provision terminating
the Bondholders' right to convert on the redemption date in
section 12.08 applies equally to all three types of redemption.
Thus, Aristocrat has not called the bonds for redemption. It
has merely attempted to complete some of the steps required to
call the bonds. The Bondholders and the Trustee dispute whether
Aristocrat's December 20, 2004 communication constituted
effective notice under the Indenture. It is to this contention
the Court now turns.
IV. Validity of Aristocrat's December 20, 2004 Notice
As stated above, a notice of redemption must be given by first
class mail to the Bondholders at least 30 days and not more than
60 days prior to the specified redemption date. (Id. § 12.04.)
In addition to (1) the redemption date, the notice must specify
(2) the unpaid principal owed on each bond to be redeemed, (3)
the redemption price, (4) the amount of interest payable on the
redemption date, (5) the CUSIP (identifying) number on the bonds,
(6) the place of payment, (7) "that payment will be made upon
presentation and surrender of the Bonds," (8) the conversion
price, (9) "and the date on which the right to convert such Bonds
expires." (Id.) Here, the parties dispute whether Aristocrat's notice satisfied
the above criteria. Aristocrat claims that it was necessary to
clarify the terms of the Indenture based on the Trustee's refusal
to accept Aristocrat's reading of the Indenture. Thus, plaintiff
claims, it could not specify the redemption date other than to
state that "such redemption to occur on the date that is 45 days
after the date that the correction of the Exchange rate" is made
pursuant to the litigation before this Court. (Pl.'s Mem. Ex. B.)
Similarly, the allocation of interest is dependent on the date of
this Court's decision. The Bondholders and Trustee contend this
position is unacceptable and Aristocrat has failed to abide by
the letter of the Indenture; thus, the December 20, 2004 notice
The Court need not reach this sticking point, however, as
Aristocrat has not specified the appropriate date on which the
conversion right terminated. As determined supra, Discussion
Part III., the bonds are not called, and the conversion rights
are not terminated until the entire process of redemption is
complete. Further, if the process cannot be completed due to the
Bondholders' failure to surrender the bonds on the redemption
date, their conversion rights are still terminated on that date
pursuant to § 12.08. Thus, the appropriate date on which the
conversion right terminated is the redemption date. Aristocrat's
denotation of the notice date, December 20, 2004, is therefore
erroneous and rendered the notice invalid under the Indenture.
V. Effect of Aristocrat's Failure to Honor the Bondholders'
In their motion for judgment on the pleadings, the Bondholders
assert that they are entitled to ordinary shares of Aristocrat
stock and damages for the decrease in price of that stock from
February 11, 2005 to today. The Bondholders claim that Aristocrat
defaulted on the Indenture by failing to convert the bonds when
the Bondholders tendered allegedly valid notices of conversion.
Aristocrat claims (1) specific performance is not appropriate,
(2) damages are allowed only on the date of the alleged breach, not continuously
up to today, and (3) that the Bondholders' assertion requires
disposition of a contested question of fact, thereby rendering it
inappropriate for a Rule 12(c) motion. However, the Bondholders'
merely seek a declaration regarding their rights under the
Indenture. Specifically, the Bondholders wish this Court to
declare that § 4.09, stating that "the right of any Bondholder . . .
to receive the Ordinary Shares when such Ordinary Shares are
required to be delivered following conversion of a Bond held by
such Holder . . . shall not be impaired or adversely affected
without such Holder's consent," is a "right of election for
Holders who have filed valid notices of conversion." (Compl. Ex.
A § 4.09; Reply Memorandum of Law in Further Support of the
Intervening Defendants' Motion for Judgment on the Pleadings
("BHs' Reply") at 7.) Further the Bondholders assert that damages
will not compensate them for their losses incurred due to
Aristocrat's alleged breach because solely awarding damages would
preference bondholders who have not converted over those involved
in the instant suit, in contravention of the Indenture.
The Bondholders concede that "Aristocrat has denied that valid
notices were filed, and an order directing delivery [of the
shares] could not be entered until that factual dispute has been
resolved." (BHs' Reply at 8.) The Court sees no distinction, for
Rule 12(c) purposes, between the factual question arising from
whether specific performance is appropriate and that arising from
whether damages are appropriate. At the least, both require a
determination of whether the Bondholders presented valid notices
of conversion. Further, the Court notes that this topic was given
short shrift by the parties; they devoted only six pages of their
fifty-five page submission to the issue. Breach of contract is a
complicated, fact-based analysis, more so when a party alleges
that equity requires specific performance and continuing damages.
Therefore, the Court defers its decision on what remedies are due
the Bondholders based on Aristocrat's erroneous interpretation of the Indenture until the facts are sufficiently
culled and this issue receives the full benefit of the parties'
The Trustee seeks declaratory judgment that section 5.06 of the
Indenture mandates that the Trustee be duly compensated for its
expenses incurred in defending the instant litigation. Plaintiff
argues that the Trustee has not reasonably documented its
expenses as required by the Indenture, and that the Trustee acted
in bad faith when it conditioned reformation of the scrivener's
error on Aristocrat's waiver of its immediate call right. The
Trustee acknowledges that it has not fully quantified its
expenses as they are on-going.
First, the Court finds Aristocrat's briefly pleaded allegation
that the Trustee was required to submit expenses prior to filing
for declaratory judgment meritless. The Indenture makes no such
claim, stating clearly that:
the Issuer agrees to pay or reimburse the Trustee . . .
upon its request for all reasonably documented
expenses, disbursements and advances properly
incurred or made by or on behalf of it in accordance
with any of the provisions of this Indenture
(including . . . of its counsel . . .) except . . .
from its gross negligence, bad faith or willful
(Compl. Ex. § 5.06 (emphasis added).) It is undeniable that
reimbursement contemplates past expense and there is no mention
of when the request must be made. Further, Aristocrat's bases for
alleging bad faith are rendered moot by this Court's
determination that the Indenture did not contain an "immediate
call right." The Trustee has steadfastly maintained that it did
not object to the reformation of the Indenture to correct the
scrivener's error. Rather, the Trustee refused to accept an
erroneous interpretation of the Indenture which would deprive its
charges, the Bondholders, of a highly valuable benefit of their
bargain. However, the Court finds that the Trustee has not reasonably
documented its expenses as of yet. The Trustee only appends a
conclusory invoice of $25,042 in expenses incurred from
extraordinary services as Trustee in connection with the
Trustee's "time spent on the administrative and other work caused
by: (1) Aristocrat's redemption notice, (2) the conversion
notices, & (3) the litigation, not including attorneys' fees &
expenses." (Tr.'s Mem. Ex. C.) The invoice is not itemized nor is
it clear what "other work" entails. This perfunctory invoice is
insufficient even under the low bar of reasonable documentation.
Thus, the Court cannot find as a matter of law that the Trustee
is owed compensation under section 5.06 until the terms therein,
including the provision of reasonable documentation, are
For the foregoing reasons, plaintiff Aristocrat's motion on the
pleadings, pursuant to Federal Rule of Civil Procedure 12(c), is
DENIED. Defendant Trustee's motion on the pleadings is GRANTED IN
PART and DENIED IN PART. Intervening defendant Bondholders'
motion on the pleadings is GRANTED IN PART and DENIED IN PART.
Plaintiff's claims are DISMISSED. Defendant Trustee's claim for
indemnification survives. Intervening defendant Bondholders'
claim for specific performance and damages survives. Plaintiff is
ORDERED to respond to the intervening defendant Bondholders'
counter-claims, stayed pending the disposition of this motion,
WITHIN 20 DAYS of this Opinion and Order. The parties are ORDERED
TO APPEAR before this Court for a pre-trial conference on August
31, 2005 at 10:30 a.m., in Courtroom 18b at 500 Pearl Street, New
York, New York. SO ORDERED.