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Northern Shipping Funds I, L.L.C. v. Icon Capital Corp.

United States District Court, S.D. New York

February 24, 2014


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For Northern Shipping Funds I, L.L.C., Plaintiff: Philip Ransom Schatz, LEAD ATTORNEY, Mary Katherine Sherman, Wrobel & Schatz LLP, New York, NY.

For Icon Capital Corp., Defendant, Cross Defendant, Cross Claimant: Thomas Owen Johnston, Porzio, Bromberg & Newman, P.C.,(NYC), New York, NY.

For Boa Sub C AS, Boa Deep C AS, Boa Holding AS, BOA Offshore AS, Taubatkompaniet AS, Defendants, Cross Claimants, Cross Defendants: Michael Darren Traub, Akerman LLP, New York, NY.

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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" ), alleging breach of contract, unjust enrichment, and money had and received; Boa asserts cross-claims against Icon for fraud and breach of contract and seeks rescission of a settlement agreement; and Icon cross-claims against Boa for breach of contract. Under Rule 56 of the Federal Rules of Civil Procedure, Northern and Icon each move for summary judgment against the other on Northern's contract, unjust enrichment, and money had and received claims; Icon moves for summary judgment on Boa's fraud and breach of contract cross-claims; Icon and Boa each move for summary judgment against the other on Icon's breach of contract cross-claim; and Boa moves for summary judgment on Northern's breach of contract claim. The parties have consented to my exercising jurisdiction over the action for all purposes, in accordance with 28 U.S.C. § 636(c). For the reasons set forth below, Boa's and Icon's motions for summary judgment are granted in part and denied in part, and Northern's motion is denied.

Factual Background

The factual background of this dispute is set forth in the Local Rule 56.1 Statements of Undisputed Material Facts submitted by the parties,[1] their subsequent responses

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to these statements,[2] and documents included as exhibits to the motions. While the parties offer differing interpretations of the underlying facts and draw divergent inferences, most of the actual events, documents, and communications are undisputed. Disagreements over what actually happened are noted here and discussed later in further detail as necessary to adjudicate the motions.

A. The Contract

The Boa entities, based in Norway, provide " offshore services" such as " barge transportation, rig moves, coastal towages, and salvage operations." (Boa 56.1 Statement, ¶ 1). Northern is based in the Marshall Islands and is in the business of " [s]ourcing, arranging, structuring and funding transactions in the shipping and offshore oil services sectors." (Deposition of Sean Durkin dated Sept. 18, 2013, attached as Exh. 54 to Declaration of Thomas O. Johnston, Esq. dated Oct. 31, 2013 (" Johnston Decl." ), at 16; Northern 56.1 Statement, ¶ 1). Icon is an " independent equipment leasing and financing company" working with entities in " a wide range of industries, including the maritime industry." (Icon 56.1 Statement Boa, ¶ 2). In January of 2010, Icon and Northern proposed an arrangement to provide Boa with refinancing of some of its outstanding loans. (Northern 56.1 Statement, ¶ 4; Icon 56.1 Statement Boa, ¶ ¶ 6-7). Neither was able to provide all of the necessary financing by itself. (Northern 56.1 Statement, ¶ ¶ 5-6; Boa 56.1 Statement, ¶ 4). From February to September of 2010, the three parties exchanged draft contracts setting forth the proposed terms of the deal. (Icon 56.1 Statement Boa, ¶ 8; Northern 56.1 Statement, ¶ 7; Boa 56.1 Statement, ¶ ¶ 7-9). Boa believed that Northern and Icon " had authority to act for [each] other with respect to the [contract]" during these negotiations. (Boa 56.1 Statement, ¶ 11).

On September 16, 2010, Northern and Icon sent Boa a proposed contract (the " Commitment Letter" and " Term Sheet" ) under which Northern and Icon (acting jointly as the " Arrangers" ) would provide Boa with a $70,000,000 loan (the " Transaction" ). (Commitment Letter, attached as Exh. A to Complaint; Term Sheet, attached as Exh. A to Commitment Letter). These documents were drafted on paper that bore the logos of both Northern and Icon on the top of each page. (Commitment Letter; Term Sheet; Northern 56.1 Statement, ¶ 23). The Commitment Letter had spaces for C. Tobias Backer, the Senior Director of Icon, and John Hartigan, the Senior Investment Manager of Northern, to sign jointly " [o]n behalf of the Arrangers" ; however, only Mr. Backer signed the letter. (Commitment Letter at 20; Northern 56.1 Statement, ¶ ¶ 21-33).[3] Ole T. Bjornevik, Boa's Chairman, executed the contract by signing the Term Sheet on behalf of Boa on September 17, 2010.

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(Term Sheet at 30). The absence of Northern's signature on the Commitment Letter surfaced in later discussions regarding Northern's claims under the contract, and Boa asserted as an affirmative defense in this action that Northern's failure to execute means there is no privity of contract. (Boa's Answer, Defenses, and Cross-Claims at 9, ¶ 68). However, the parties now appear to agree that a binding contract existed between Boa and both Arrangers, Icon and Northern. (Northern 56.1 Statement, ¶ ¶ 8, 10, 27-33, 39-40, 42-47; Northern Response to Icon 56.1 Statement, ¶ 11; Boa 56.1 Statement, ¶ 12).

The Term Sheet provides details regarding the financing arrangement, Boa's payment obligations, the Arrangers' Fees, consequences of a default on the loan, and conditions precedent to the Transaction. (Term Sheet at 23-24, 28-29; Northern 56.1 Statement, ¶ ¶ 10-13, 20; Boa 56.1 Statement, ¶ ¶ 14-15). It also includes liquidated damages clauses in the event Boa was unable or unwilling to go forward with the Transaction. (Term Sheet at 23-24; Icon 56.1 Statement Northern, ¶ 14). Of the $70 million in financing, Icon was to provide $25 million and Northern was to provide $17.5 million of its own capital and $27.5 million from other investors. (Northern 56.1 Statement, ¶ ¶ 34-38). Upon the execution of the contract, Boa paid Icon a $300,000 ...

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