United States District Court, S.D. New York
As Corrected June 21, 2013.
For Complex Systems, Inc., Plaintiff: Jeffrey Ira Kaplan, LEAD ATTORNEY, Sorin RoyerCooper LLC, East Brunswick, NJ; Michael Robert Gilman, LEAD ATTORNEY, Gilman & Pergament LLP, Woodbridge, NJ; Alan Stuart Gruber, SorinRand LLC (NYC), New York, NY; Jonathan Michael Doloff, Kaplan Gilman & Pergament LLP, Woodbridge, NJ; Lawrence Bennett Goodwin, Kasowitz, Benson, Torres & Friedman LLP, New York, NY.
For ABN AMRO Bank N.V., Defendant: Howard Schiffman, LEAD ATTORNEY, Dickstein Shapiro LLP (DC), Washington, DC; Michael Everett Swartz, LEAD ATTORNEY, Schulte Roth & Zabel LLP (NY), Washington, DC; Christopher M McLean, PRO HAC VICE, Robert P. Macchia & Associates, Mineola, NY; John Charles Garces, Schulte Roth & Zabel LLP (NY), New York, NY.
KATHERINE B. FORREST, United States District Judge.
CORRECTED OPINION & ORDER
This motion raises the question of whether -- in the chaos of a fast-paced transaction -- a mission-critical license was successfully assigned to the entity that needed it most. For the reasons set forth below, the Court finds that it was not.
In 2007, a Dutch banking institution, defendant ABN AMRO Bank N.V. (" ABN" ) sold a significant group of assets to Bank of America Corporation (" BAC" ). Part of that transaction involved the sale of an entity, ABN AMRO Information Technology Services Company, Inc. (" IT" ), which was the licensee of a mission critical financial services software application called " BankTrade." Among the agreements ABN and BAC negotiated was a rather routine transition services agreement (" TSA" ) which allowed for the parties to insure that services which needed to be transferred over time could be, without significant business disruption. What was not done, however, was a clear transfer of important contract rights pre-closing -- including as to the BankTrade application. The instant lawsuit has been litigated now for more than four years based almost entirely on a theory of assignment. That theory is unhelpful to ABN as briefed on this motion and described throughout the record. However, as determined below, other theories remain unresolved -- the parties have not moved as to them and the Court does not here address them. With respect to the assignment theory here briefed, the story proceeds as follows:
ABN continued to need BankTrade post-closing, and it was too late to take advantage of what pre-closing had been a clear ability to assign without cost or penalty. Post-closing the world changed in that regard -- what was not done could not be retroactively accomplished without the involvement and agreement of BankTrade's owner, plaintiff Complex Systems, Inc. (" CSI" ). And, as it happened, CSI exercised its right to simply say " no" -- or, more correctly, " no, without significant additional payment." Such payment was not forthcoming. Instead, ABN, which acknowledges that it has continued to use BankTrade without interruption since the 2008 sale transaction, tried to reinterpret pre-closing events to include an assignment of the BankTrade license. Such an assignment would indeed have been easy to effect pre-closing. But it was not effected -- and the law does not credit revisionist history with the weight of truth.
Instead, ABN must live with the events that, in fact, occurred -- not what could have occurred, or should have occurred.
That such failure to assign was perhaps an oversight, or that such a failure to assign has resulted in significant economic exposure, is not the issue. The issue is whether there was a pre-closing assignment. There was not. That much is clear.
In August 2008, CSI sued ABN for its unlicensed use of BankTrade. CSI now moves for partial summary judgment that ABN does not hold a license to the BankTrade software. ABN's opposes the motion and cross-moves for summary judgment, arguing that an assignment was in fact conveyed between IT and ABN pre-closing. On the evidence in the record, no rational juror could so find. Accordingly, CSI's motion for partial summary judgment is granted and ABN's motion for summary judgment is denied. Left unresolved, however, are ABN's remaining defenses -- most of which were not addressed in either party's motion.
The facts set forth below are undisputed except as indicated.
The Parties and Their Transactions
Plaintiff CSI is a provider of software and related services used in the banking industry. CSI owns the BankTrade software product that is used by well known banking institutions to assist with automating aspects of various financial products including, for instance, letters of credit.
In October 1997, CSI and IT entered into a license agreement (" License Agreement" ) relating to BankTrade. At the time, IT had its principal office in Chicago, Illinois, and was owned by LaSalle Bank Corporation (" LaSalle" ). LaSalle was, in turn, owned by ABN AMRO North America Holding Company (" ABN AMRO North America" ), which was owned by ABN.
The License Agreement states that while the agreement is non-transferable, it may be assigned to IT's subsidiaries, affiliates and any direct or indirect parent or any subsidiary or affiliate of such parent. (See Decl. of Jeffrey I. Kaplan in Support of Pl. [CSI]'s Combined Mem. in Opp'n to ABN's Mem. for Summary Judgment and in Supp. of CSI's Mot. for Summary Judgment, dated Aug. 3, 2012 (" Kaplan Decl." ) Ex. A, § § 1, 20.) The License Agreement provides for the following scope of use:
The License granted under this Agreement authorizes the Licensee to use a required number of copies of the System in machine readable form to service all North American (i.e. Canada, United States, Mexico) entities as listed below, as permitted by the License Agreement, by the Licensor, in any location. The copies shall be used solely for processing Licensee internal banking work of any parent, subsidiary or affiliated entity, direct or indirect, of Licensee, and not for any other purpose of entity. A direct or indirect parent, subsidiary or affiliate of Licens[ee] shall be defined as any entity which is at least 80% owned by ABN-AMRO Bank N.V. and / or ABN-AMRO North America . . . . No right to print or copy, in whole or in part, the System is granted hereby except as hereinafter expressly provided.
(Id. § 2.) CSI and IT entered into two addenda to the License Agreement -- the first in June 2001, and the second in July 2002. (Kaplan Decl. Ex. B.) The 2001 addendum extended the use of the system to allow for processing banking work for other banks and for use of the system outside of North America. (Id.) Both addenda state that, except as specified, the License Agreement shall not be amended or modified and shall continue in full force and effect. (Id.)
A decade later, in April 2007, ABN and BAC entered into a Purchase and Sale Agreement (" PSA" ) pursuant to which ABN would sell LaSalle and certain of its United States assets to BAC (the " LaSalle Transaction" ). The LaSalle Transaction was negotiated quickly -- in a matter of days -- in an attempt by ABN to thwart being targeted by a consortium of banks led by The Royal Bank of Scotland (" RBS" ). ABN believed that the RBS consortium was interested in its United States retail banking operations. Newspapers reported the quickly-negotiated sale transaction as an attempted " poison pill" measure to avoid a deal with RBS.
ABN and BAC negotiated a purchase price of $21 billion for ABN North America, LaSalle, and IT. The PSA was executed on April 22, 2007. The PSA does not include language indicating that ABN would execute any assignments of any licenses or cause any of its subsidiaries to do so. The PSA does include provisions requiring that prior to closing, ABN would transfer certain assets to subsidiaries being acquired by BAC, and other provisions in which subsidiaries were transferring assets up to ABN (so that they would not be acquired). (Kaplan Decl. Ex. D § § 6.12, 6.13.) These sections do not mention software licenses or BankTrade.
The transaction closed on October 1, 2007. During the interim period of almost six months, the parties engaged in significant discussions regarding transitioning business and operations. They accordingly entered into a Transition Services Agreement (the " TSA" ), which provided that ABN and BAC would provide certain services to each other. Annex 1(d) to the TSA is a " [l]ist, complete in all material respects, prepared by ABN AMRO, of all third party vendors used in the provision of services by either party as Service Provider." (Kaplan Decl. Ex. E § 1(d)(vii); see also id. Annex 1(d).) The TSA does not include language in which ABN assigned or agreed to cause its subsidiaries to assign any licenses.
In this litigation, ABN's license defense rests upon its assertion that Section 1(a)(vii) of the TSA either acts as an assignment of BankTrade from IT to ABN pre-closing, or reflects that such an assignment has already occurred. (See, e.g., ABN Mem. in Supp. at 12-31.) There is no explicit language to ...