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Long Side Ventures, LLC v. Adarna Energy Corporation

United States District Court, S.D. New York

September 24, 2014

LONG SIDE VENTURES, LLC et al., Plaintiffs,
v.
ADARNA ENERGY CORPORATION f/k/a ECOSYSTEM CORPORATION, et al., Defendants.

MEMORANDUM OPINION AND ORDER

LAURA TAYLOR SWAIN, District Judge.

Plaintiffs Long Side Ventures, LLC ("LSV") and Sunny Isles Ventures, LLC ("SIV" and, together with LSV, "Plaintiffs") bring eight breach of contract claims against Defendants Adarna Energy Corporation f/k/a Ecosystem Corporation ("Ecosystem"), GreenShift Corporation ("GreenShift") and Minority Interest Fund (II), LLC ("MIF" and, collectively, "Defendants") arising out of Defendants' alleged failure to pay principal and interest due and owing under six convertible debentures[1] (the "Debentures") and failure to provide debentures owed under a debt purchase agreement (the "Debt Purchase Agreement") and assignment agreement (the "Assignment Agreement"). This Court has jurisdiction of the action pursuant to 28 U.S.C. § 1332. Currently pending before the Court is Plaintiffs' motion pursuant to Federal Rule of Civil Procedure 56, seeking summary judgment on the eight breach of contract counts asserted in the Complaint, and an award of aggregate damages of $766, 127.79, plus contractual interest and pre- and post-judgment interest and costs. For the following reasons, Plaintiffs' motion is granted in part and denied in part.

BACKGROUND[2]

The following material facts are undisputed, except as otherwise indicated. Over a period of several years, Plaintiffs purchased six convertible Debentures issued by GreenShift and EcoSystem. (Pl. 56.1 St. ¶ 15.) Pursuant to the Debentures' terms, Plaintiffs were entitled to recover the principal amount of each Debenture, along with interest at a contractually specified rate, at each Debenture's maturity date. Alternatively, Plaintiffs could convert the outstanding debt, "in whole or in part at any time and from time to time, " subject to certain restrictions, into common stock of the issuing corporation. (Id. ¶ 16.) The Plaintiffs converted to company stock, or were paid, a portion of the principal value of each of the Debentures, and assert that each has passed its maturity date with a principal balance and contractual interest outstanding. (Id. ¶¶ 17-19.) Plaintiffs' First through Sixth Claims for Relief allege that Defendant Ecosystem owes a total of $62, 317 plus contractual interest to LSV and that GreenShift owes a total of $145, 095.85 plus contractual interest to SIV and a total of $50, 406.64 plus contractual interest to LSV. (Id.)[3]

On June 12, 2009, SIV and MIF entered into the Debt Purchase Agreement, pursuant to which SIV agreed to make two purchases from MIF, each in the amount of $125, 000, for a $250, 000 GreenShift Debenture in respect of each purchase. (Pl. 56.1 St. ¶ 20.)[4] On or about June 17, 2009, SIV wired the first $125, 000 payment to MIF and, in return, MIF assigned a $250, 000 convertible GreenShift Debenture (Debenture No, 2009-SIV004)[5] to SIV. (Id. ¶¶ 21, 22.) Plaintiffs contend that SIV complied with its obligations under the Debt Purchase Agreement by wiring the second $125, 000 purchase payment to MIF on or about July 9, 2009, but that MIF failed to deliver to SIV the corresponding $250, 000 GreenShift convertible Debenture. (Id. ¶¶ 23, 24.) Plaintiffs' Seventh Claim for Relief is for the remaining $250, 000, plus contractual interest, that MIF allegedly owes SIV pursuant to this Debt Purchase Agreement. (Id. ¶ 24.) Defendants do not deny that SIV paid the additional $125, 000.

On April 15, 2010, SIV and MIF entered into an Assignment Agreement pursuant to which, in exchange for SIV's acknowledged payment to MIF of $300, 000, MIF agreed to assign to SIV: (I) a $50, 000 portion of debenture ESYR-MIF004 (the subject of Plaintiffs' Second Claim for Relief); (ii) a $50, 000 portion of Debenture GERS-JKD 001 (the subject of the Fifth Claim for Relief); and (iii) "up to FIVE (5) additional FIFTY THOUSAND DOLLAR ($50, 000) convertible debentures with an aggregate face value of TWO HUNDRED AND FIFTY-SEVEN THOUSAND FIVE HUNDRED DOLLARS ($257, 500)" (the "Additional Debentures"). (See Pl. 56.1 St. ¶ 25). The Agreement also provided that each Additional Debenture must be issued by Ecosystem or Greenshift, and "hav[e] a minimum conversion rate of FIFTY PERCENT (50%)." (Id.) SIV's rights under the agreement were subsequently assigned to LSV by written agreement. (Kaplan Aff. ¶ 11.) Plaintiffs contend that, despite their proper demand on MIF, MIF has failed to assign any portion of the remaining $257, 500 in convertible debentures to LSV. (Pl. 56.1 St. ¶¶ 26-27.) Plaintiffs' Eighth Claim for Relief seeks a damages award of $257, 500, plus contractual interest. (Id.)

In opposition to Plaintiffs' motion for summary judgment on the first six Claims for Relief, Defendants assert that, from June 2009 to April 2010, they delivered and Plaintiffs accepted 330, 354, 139 shares of GreenShift and Adarna stock with a market value of $760, 377 in satisfaction of the amounts Plaintiffs now allege are due, and that these shares represented agreedupon modifications in the terms of the subject instruments and the satisfaction of Defendants' obligations under those instruments. (Def. 56.1 St. ¶ 5.) As for Plaintiffs' Seventh Claim for Relief, Defendants contend that MIF's obligation to deliver the first GreenShift Debenture was satisfied by its delivery of the $250, 000 GreenShift No. 2009-SIV004 Debenture. (Id. ¶ 7.) Then, according to Defendants, the subsequent Assignment Agreement between the same two parties "expressly cancelled" all prior written or oral arguments, so "any right of plaintiffs which might otherwise [have] exist[ed] to demand an additional GreenShift Debenture (or any other Debenture) [was] wiped out." (Kreisler Aff. ¶¶ 12-13.)[6] In opposition to Plaintiffs' Eighth Claim for Relief, Defendants argue that MIF delivered the first $250, 000 GreenShift No. 2009-SIV004 Debenture under the Debt Purchase Agreement, contemporaneously with the $300, 000 in cash referenced in the Assignment Agreement, which shows that the $250, 000 must be counted toward the $257, 500 allegedly owed to LSV under the Assignment Agreement. (Id. ¶ 14.)

Defendants also argue that, even assuming that MIF is liable under the Debt Purchase Agreement and/or the Assignment Agreement, Plaintiffs should only be awarded damages in the amount of the actual value of the allegedly undelivered Debentures and not money damages calculated by reference to the principal amount of such debentures because "(1) MIF delivered shares to plaintiffs with a value of over $760, 000 between June 2009 and April 2010 which plaintiffs accepted and sold between June 2009 and April 2010, and [(2)] neither of these Agreements required MIF to deliver cash to plaintiffs." (See Kreisler Aff. ¶¶ 15-16.) Defendants further assert that determination of the "actual value" of the non-delivered Debentures would require expert testimony. (Id. ¶ 17.)

DISCUSSION

Summary judgment is appropriate when there "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986). A fact is considered material "if it might affect the outcome of the suit under the governing law, " and an issue of fact is "genuine" where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Holtz v. Rockefeller & Co. Inc. , 258 F.3d 62, 69 (2d Cir. 2001) (internal quotation marks and citations omitted). When deciding a motion for summary judgment, the court must draw all reasonable inferences in favor of the party against whom summary judgment is sought, only granting the motion for summary judgment if "no reasonable trier of fact could find in favor of the non-moving party." Lund's Inc. v. Chemical Bank , 870 F.2d 840, 844 (2d Cir. 1989). "Once the movant has established a prima facie case demonstrating the absence of a genuine issue of material fact, the nonmoving party must come forward with enough evidence to support a jury verdict in its favor, and the motion will not be defeated merely upon a metaphysical doubt' concerning the facts." Bryant v. Maffucci , 923 F.2d 979, 982 (2d Cir. 1991) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586 (1986)); see also Jeffreys v. City of New York , 426 F.3d 549, 554 (2d Cir. 2005) (citation omitted) (a party cannot survive a motion for summary judgment based on "conclusory allegations or unsubstantiated speculation"). In deciding the motion, the Court may consider only that evidence that would be admissible at trial. Azrielli v. Cohen Law Offices , 21 F.3d 512, 517 (2d Cir. 1994). See also Fed.R.Civ.P. 56(c)(2), 56(c)(4).

"It is the primary rule of construction of contracts that when the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving a practical interpretation to the language employed and the parties' reasonable expectations." Slamow v. Delcol , 571 N.Y.S.2d 335, 336 (2d Dep't 1991) (citing cases).[7] "[C]lear, complete writings should generally be enforced according to their terms." W.W.W. Assoc. v. Giacontieri , 77 N.Y.2d 157, 160 (N.Y. 1990). Therefore, "[w]here the language [of a contract] is plain and unambiguous, a court may construe the contract and grant summary judgment." Brass v. American Film Technologies, Inc. , 987 F.2d 142, 148 (2d Cir. 1993) (citing Seiden Associates Inc. v. ANC Holdings, Inc. , 959 F.2d 425, 428 (2d Cir. 1992) (the proper interpretation of an unambiguous contract may properly be reached on summary judgment)); see also Al Sayegh Bros. v. Doral Trading & Export Inc. , 219 F.Supp.2d 285, 291 (E.D.N.Y. 2002) ("the question of whether a writing is ambiguous is a question of law for the Court, while the meaning of an ambiguous contract is a question of fact for the fact finder"). "Because of the simplicity of issues in dispute, suits to enforce promissory notes and guaranties are particularly appropriate for disposition by summary judgment." Fed Deposit Ins. Corp. v. LDM Props., Inc., No. 96 Civ. 945778 (CPS), 1996 WL 449346, at *3 (E.D.N.Y. Jul. 29, 1996) (internal quotation marks and citation omitted).

Breach of Contract Claims

New York law requires a moving party to establish the following elements for a breach of contract claim: "(1) the existence of an agreement; (2) adequate performance of the contract by the plaintiff; (3) breach of contract by the defendant; and (4) damages." Roswell Capital Partners LLC v. Alternative Constr. Techs, 08 Civ. 10647 (DLC), 2009 WL 222348, at *8 (S.D.N.Y. Jan. 30, 2009) (citing Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. , 375 F.3d 168, 177 (2d Cir. 2004)). The existence of the agreements at issue here is uncontested. Plaintiffs have proffered uncontroverted evidence that they performed their obligation under each of the eight agreements (the six Debentures and the two later Agreements) by paying money to the Defendants, that Defendants have failed to pay cash upon maturity or convert the outstanding value of the issued Debentures in accordance with their terms, and that MIF failed ...


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