United States District Court, S.D. New York
[Copyrighted Material Omitted]
For Sagi Genger, Plaintiff: John Dellaportas, Mary Christina Pennisi, LEAD ATTORNEYS, Morgan Lewis & Bockius, LLP (NY), New York, NY; Nicholas Schretzman, LEAD ATTORNEY, Morgan, Lewis & Bockius LLP, New York, NY.
For Orly Genger, Defendant: Bryan Dean Leinbach, Yoav Michael Griver, Zeichner Ellman & Krause LLP, New York, NY.
OPINION & ORDER
KATHERINE B. FORREST, United States District Judge.
As Tolstoy famously wrote, " Happy families are all alike; every unhappy family is unhappy in its own way." Leo Tolstoy, Anna Karenina 1 (Constance Garnett trans., 1978). In the case of the wealthy Genger family, that unhappiness has taken the form of a seemingly never-ending series of lawsuits stemming from the divorce of Arie Genger and Dalia Genger, the family patriarch and matriarch, respectively. Together, Arie, Dalia, their son Sagi, and their daughter Orly have employed a small army of lawyers to fight over the pieces of the family pie and, it seems, to make each other's lives as miserable as possible.
This latest installment in the Genger family's litigation saga concerns a straightforward contract dispute between Sagi and Orly. Sagi alleges that he and Orly entered into a tri-party agreement with Dalia, under which Sagi and Orly would receive shares of stock in exchange for providing Dalia with financial support derived from the economic value obtained from that stock. Sagi contends that Orly has breached the agreement, and now seeks damages from her. Orly, for her part, denies the agreement's validity and enforceability, primarily because she claims she never actually received the promised shares of stock, which means that the agreement is not supported by consideration. But, as it turns out, Orly has effectively monetized an interest in the very shares she claims not to have received to the tune of $32.3 million.
Orly contends that this case is " an attempt to push the camel's nose under the tent flaps," and that Sagi and Dalia " hope to create a pipeline allowing them to siphon money from Orly for the rest of her life." (ECF No. 92 at 1.) The Court sees things differently: this case is a simple breach of contract action. Nothing more, nothing less.
Because there is no triable issue as to whether there was a valid and enforceable agreement supported by consideration, and for the reasons that follow, the Court GRANTS Sagi's motion for summary judgment, DENIES Orly's motion for summary judgment, and DENIES AS MOOT Orly's motion to disqualify and all pending motions in limine.
A. Factual Background
The Genger family consists of father Arie, mother Dalia, son Sagi, and daughter
Orly. (DSOF ¶ 5.) Sagi is currently the President and CEO of TPR Investment Associates, Inc. (" TPR" ). (DSOF ¶ 4.) In 2004, Arie and Dalia divorced. (DSOF ¶ 5; PRSOF ¶ 5.) As part of the divorce, Dalia agreed to convey her marital rights to 794.40 shares of TRI to trusts benefiting Sagi and Orly (the " Sagi Trust" and the " Orly Trust,"  respectively) in exchange for a commitment by Sagi and Orly to financially support her. This arrangement was effectuated via three documents.
First, Dalia and Arie signed a stipulation of settlement finalizing the terms of their divorce settlement (the " 2004 Divorce Stipulation" ), which was fully executed on October 30, 2004. (PSOF ¶ 1; DSOF ¶ 7.) In the 2004 Divorce Stipulation, Dalia promised to convey equal interests in a total of 794.40 shares of TRI to the Orly Trust and the Sagi Trust. (PSOF ¶ 1; DSOF ¶ 27.) The 2004 Divorce Stipulation contains an " entire understanding" clause, which is subject to a carve-out for other agreements expressly incorporated by reference and those " entered into concurrently herewith." (DSOF ¶ 24.)
The second was a letter signed by Sagi and Dalia dated October 30, 2004 (the " 2004 Promise" ). (PSOF ¶ 3; DRSOF ¶ 51.) In the 2004 Promise, Sagi agreed to pay Dalia up to an amount equal to all dividends, distributions, proceeds or other payments attributable to the TRI shares, upon Dalia's demand. (PSOF ¶ 3.) The 2004 Promise also states that the agreement is made " in consideration of" the following: " Orly and [Sagi] are benefiting by the receipt of a total of 794.40 shares of [TRI], or beneficial interests in those shares, by trusts for [their] benefit." (DSOF ¶ 52.) The parties dispute whether
the 2004 Promise was intended to be integrated with the 2004 Divorce Stipulation. (See DRSOF ¶ 3.)
At the time the 2004 Promise was signed, Orly was vacationing in Fiji, and thus could not contemporaneously sign the 2004 Promise. (PSOF ¶ 4.) However, before Sagi signed the 2004 Promise, Orly verbally agreed to indemnify Sagi for 50% of the payments he would have to make under the 2004 Promise. (PSOF ¶ 4.)
The third agreement was a letter signed by Sagi and Orly dated November 10, 2004 (the " 2004 Indemnity" ). (PSOF ¶ 5.) In the 2004 Indemnity, Orly agreed to indemnify Sagi " for and against one-half (1/2) of any and all payments, liabilities, damages, claims, actions, losses, settlements, penalties, judgments or obligations . . ., including [Sagi's] reasonable counsel and other professional fees, expenses and costs, which arise from [Sagi's] undertakings in the [2004 Promise]." (PSOF ¶ 5.)
On August 22, 2008, Sagi-controlled TPR entered an agreement with the Trump Group to sell the Sagi Trust's shares of TRI to the Trump Group for $26.7 million. (DSOF ¶ 34.) Sagi also sold the Orly Trust's TRI shares to the Trump Group for approximately $10.3 million, subject to the condition that TPR was determined to be an owner of the shares. (DSOF ¶ 35.)
In 2011, the Supreme Court of Delaware affirmed a judgment invalidating the 2004 transfer of the TRI shares to the Orly Trust as to record ownership. Genger v. TR Investors, LLC, 26 A.3d 180, 198-200 (Del. 2011). As a result of this invalidation, record ownership of the TRI shares reverted to Sagi-controlled TPR. In that same decision, the Supreme Court of Delaware held that because the trial court lacked personal jurisdiction over the Orly Trust and TPR, it lacked the power to declare who beneficially owned the TRI shares, and therefore reversed the beneficial ownership determinations flowing from the trial court's orders. Id, at 203.
On June 16, 2013, Orly entered into a settlement agreement (the " 2013 Settlement Agreement" ) with the Trump Group and others regarding her claims to ownership of the TRI shares. (ECF No. 84 ex. A (" 2013 S.A." ).) The agreement provides
that Orly, Arie, and their litigation funders will receive $32.3 million in exchange for a declaration that the Trump Group owns " all right, title and interest (beneficially, of record, and otherwise)" to the TRI shares, and that Orly waives all of her claims to the TRI shares, both as a trust beneficiary and individually. (2013 S.A. ¶ ¶ 2-4.) The 2013 Settlement Agreement does not waive any of the Orly Trust's claims. (See 2013 S.A. ¶ 4.) However, in the agreement Orly agreed to cause the Orly Trust to do the same. (2013 S.A. ¶ 8(a)(ii).)
Then, on August 30, 2013, the Orly Trust (by Dalia), TPR, and the Trump Group agreed that " the Trump Group owns, for all purposes, all right, title and interest (beneficially, of record and otherwise) to all authorized and issued shares of [TRI]." (ECF No. 85 ex. 5 ¶ 2.) This stipulated agreement was so-ordered by the Delaware Court of Chancery. (ECF No. 85 ex. 5 at 7.) Subsequently, a court in this District and New York's First Department both concluded that this so-ordered stipulation determined the Trump Group to be the beneficial owner of the TRI shares. TPR Inv. Assocs., Inc. v. Pedowitz & Meister LLP, No. 13 Civ. 8243 (JFK), *5-6 (S.D.N.Y. May 15, 2014); Genger v. Genger, 121 A.D.3d 270, 280, 990 N.Y.S.2d 498 (N.Y.App.Div. 2014).
On or about January 22, 2014, Dalia demanded $200,000 from Sagi under the 2004 Promise, which Sagi paid. (PSOF ¶ ¶ 6, 9.) On January 23, 2014, Sagi informed Orly of Dalia's demand. (PSOF ¶ 7.) On February 17, 2014, Sagi demanded $100,000 from Orly under the 2004 Indemnity. (PSOF ¶ 10.) ...