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Northern Shipping Funds I, LLC v. Icon Capital Corp.

United States District Court, S.D. New York

January 24, 2013

NORTHERN SHIPPING FUNDS I, LLC, Plaintiff,
v.
ICON CAPITAL CORP., Boa Sub C AS, Boa Deep C AS, Boa Holding AS, Boa Offshore AS, and Taubatkompaniet AS, Defendants. Taubatkompaniet AS, Boa Holding AS, Boa Sub C AS, Boa Offshore AS, and Boa Deep C AS, Counter Claimants,
v.
Icon Capital Corp., Counter Defendant.

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Philip Ransom Schatz, Mary Katherine Sherman, Wrobel & Schatz LLP, New York, NY, for Plaintiff.

Michael Darren Traub, Akerman Senterfitt, LLP, New York, NY, for Cross Claimants and Defendants.

Thomas Owen Johnston, Porzio, Bromberg & Newman, P.C., New York, NY, for Counter Claimants and Defendants.

MEMORANDUM AND ORDER

JAMES C. FRANCIS IV, United States Magistrate Judge.

Plaintiff Northern Shipping Funds I, LLC (" Northern" ) brings this action against defendants Icon Capital Corporation (" Icon" ) and Boa Sub C AS, Boa Deep C AS, Boa Holding AS, Boa Offshore AS, and Taubã kompaniet AS (collectively " Boa" ). This lawsuit relates to and arises from a prior lawsuit, Icon Capital Corp. v. Boa Sub AS, 11 Civ. 1746 (the " Prior Action" ), where Icon sued Boa for failing to complete an agreed-upon financing

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transaction. The parties eventually entered into an agreement settling that litigation. In the instant suit, Northern alleges that Icon did not own the exclusive rights to settle the case against Boa in the Prior Action and that Northern also owned those claims. As to Icon, Northern asserts claims of breach of contract, unjust enrichment, money had and received, constructive trust, and breach of fiduciary duty; as to Boa, it asserts a claim of breach of contract. The parties have consented to my jurisdiction for all purposes, in accordance with 28 U.S.C. § 636(c). Icon now moves to dismiss the breach of fiduciary duty and constructive trust claims under Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons set forth below, the motion is granted.

Background

In accordance with the standard for assessing a motion to dismiss, the allegations in the complaint are taken as true, and all reasonable inferences are drawn in the plaintiff's favor. In addition, I have considered documents that are incorporated by reference into the complaint or integral to the complaint. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153-54 (2d Cir.2002); Cortec Industries, Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir.1991).

On September 17, 2010, Northern, Icon, and Boa entered into a binding contract (the " Commitment Letter" ) under which Northern and Icon would provide Boa with a $70,000,000 loan, bearing an interest rate of 15.75% per annum (the " transaction" ). (Complaint (" Compl." ), ¶¶ 14, 19; Letter of C. Tobias Backer and John Hartigan dated Sept. 16, 2010 (the " Commitment Letter" ), attached as Exh. A to Compl.). The Commitment Letter identified Northern and Icon collectively as the " Arrangers" and the " Subordinated Lenders." (Compl., ¶ 15). According to the complaint, as Arrangers and Lenders, Icon and Northern were co-venturers. (Compl., ¶¶ 50, 56). The Commitment Letter also identified Icon as the " Agent" and the " Security Trustee." (Compl., ¶ 16). Northern and Icon jointly drafted the Commitment Letter, and both their corporate logos appear at the top of each page. (Compl., ¶ 18). The Commitment Letter was signed by C. Tobias Back, Senior Director of Icon, and was to be signed by John Hartigan, Senior Investment Manager of Northern. (Compl., ¶ 18 & n. 1).

The Commitment Letter provided that Boa was to pay Northern and Icon Upfront and Arrangement Fees, totaling $2,450,000. (Compl., ¶ 20). Upon signing the Commitment Letter, Boa was to pay an earnest money deposit to Northern and Icon of $300,000; Boa complied by paying $299,985 to Icon as the Agent. (Compl., ¶ 21). The Commitment Letter further provided that if Boa were to withdraw from the transaction prior to closing, it would pay Northern and Icon 50% of the Upfront and Arrangement Fees, minus the earnest money deposit. (Compl., ¶ 22).

Shortly before the transaction was expected to close, Boa informed Northern and Icon on December 15, 2010, that it was withdrawing from the transaction. (Compl., ¶ 23). On December 23, 2010, Northern and Icon advised Boa that under the Commitment Letter they were entitled to no less than 50% of the Upfront and Arrangement Fees as well as reimbursement of all legal fees, travel costs, and other expenses incurred by them in preparing the transaction. (Compl., ¶ 24).

On January 20, 2011, Icon informed Northern of its intention to pursue legal action against Boa and inquired as to whether Northern was interested in joining the lawsuit. (Compl., ¶ 25). Northern declined, stating it preferred to reach a settlement with Boa through negotiation.

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(Compl., ¶ 25). Northern also declined to join because Boa was close to bankruptcy and because Icon refused to consult Northern about choice of counsel and litigation strategy. (Compl., ¶ 25). During that exchange and subsequent ones, Northern reminded Icon that Northern would not waive its rights under the Commitment Letter regarding Icon's duty to represent and protect Northern's interests in any legal action against Boa. (Compl., ¶¶ 25-27).

In a complaint dated March 14, 2011, Icon initiated the Prior Action against Boa. (Compl., ¶ 28). Once the complaint was filed in the Prior Action, Icon refused to keep Northern informed about the status of the case and minimized or misstated Northern's involvement in the Commitment Letter in that lawsuit. (Compl., ¶¶ 29-30). Instead of answering the complaint, Boa sought to negotiate a resolution of the claims with both Icon and Northern. (Compl., ¶ 31). Without notice or warning, on July 11, 2011, Icon obtained judgment by default against Boa in the Prior Action. (Compl., ¶ 31). Boa then moved for relief from the default judgment. (Compl., ¶ 32).

Boa and Icon eventually reached a settlement of the Prior Action on January 19, 2012. (Compl., ¶ 34). It is Northern's understanding that Boa agreed to pay Icon $750,000 to settle the Prior Action, which was more than Icon's 50% share of the contractual damages, and waived all rights to the earnest deposit money of approximately $300,000, which Icon had previously agreed to split with Northern. (Compl., ¶ 38). Northern contends that Icon was able to achieve this settlement by failing to advise the Court and the parties in the Prior ...


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