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France v. Thermo Funding Co., LLC

United States District Court, S.D. New York

August 7, 2014

THALES ALENIA SPACE FRANCE, Plaintiff,
v.
THERMO FUNDING COMPANY, LLC, Defendant.

Elliot E. Polebaum, Esq., Eugene N. Hansen, Esq., Fried, Frank, Harris, Shriver & Jacobson LLP, Washington, DC, for Plaintiff.

Gerald S. Greenberg, Esq., W. Stuart Dornette, Esq., Matthew D. Lawless, Esq., Taft Stettinius & Hollister LLP, Cincinnati, OH, for Defendant.

OPINION AND ORDER

SHIRR A. SCHEINDLIN, District Judge.

I. INTRODUCTION

Plaintiff Thales Alenia Space France ("Thales") brings this diversity breach of contract suit against Thermo Funding Company, LLC ("Thermo"). Thales now moves for summary judgment. For the following reasons, Thales's motion is GRANTED.

II. BACKGROUND

This action arises from a series of contractual relationships among three entities. Thales is a French aerospace company involved in the manufacture of low Earth orbit ("LEO") satellites.[1] Globalstar, Inc. ("Globalstar") is a publicly traded, commercial provider of satellite communication services that owns and operates LEO satellites.[2] Thermo is a limited liability company that has invested millions of dollars in Globalstar and, as of April 2012, owned a controlling interest in Globalstar.[3] The material facts are undisputed.

A. The Parties' Business Relationships

In 2009, Thales and Globalstar entered into an Amended and Restated Contract for the Construction of the Globalstar Satellite for the Second Generation Constellation ("Construction Contract"), which required Thales to design and manufacture forty-eight LEO satellites.[4] In order to fund this arrangement, Globalstar arranged for financing from the Compagnie Francaise d'Assurance pour le Commerce Exterieur ("COFACE")-the French export credit agency-and several French banks.[5] As part of this agreement, Globalstar was required to fund a Debt Service Reserve Account ("DSRA") of $12.5 million, and COFACE and the banks requested Thales provide a guarantee of the full amount of the DSRA.[6] Thales agreed, provided that Thermo reimburse Thales for any payments it made under the guarantee.[7] This arrangement between Thermo and Thales was memorialized in a separate 2009 contract (the "Reimbursement Agreement"), which provided that such reimbursements must be made by December 31, 2012, or within ten business days of a change in control of Globalstar.[8] Ultimately, Thales paid the maximum $12.5 million, thereby obligating Thermo to reimburse it for the same amount.[9]

B. The Thales-Globalstar Arbitration

In 2011, Globalstar initiated arbitral proceedings against Thales in relation to its obligations under the Construction Contract, and Thales filed counterclaims against Globalstar.[10] Thales prevailed in the arbitration, winning an approximately 52.7 million award on its counterclaims.[11] Knowing Globalstar would file for Chapter 11 bankruptcy if Thales proceeded to enforce the arbitral award, Thales agreed to enter into settlement negotiations with Globalstar, which included discussing the terms of Globalstar's purchase of six additional satellites from Thales.[12]

C. The Settlement Agreement and the Release Agreement[13]

As part of the settlement, Thales sought to resolve claims relating to the Construction Contract that Globalstar had threatened to bring and obtain a release from Globalstar of all potential claims relating to the Construction Contract.[14] To this end, Thales insisted that Thermo be a party to any settlement and Thermo did not object.[15] After weeks of negotiation, beginning in mid-May 2012, Thales, Thermo, and Globalstar ("Parties") reached a ...


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