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Dean Street Capital Advisors LLC v. Otoka Energy Corp.

United States District Court, S.D. New York

February 2, 2017

DEAN STREET CAPITAL ADVISORS, LLC, Plaintiff,
v.
OTOKA ENERGY CORP. et al., Defendants.

          OPINION & ORDER

          RICHARD J. SULLIVAN, District Judge

         Plaintiff Dean Street Capital Advisors, LLC (“Dean Street”) brings this diversity action against Defendants Otoka Energy LLC (formerly Otoka Energy Corporation) (“Otoka”), Amador Biomass, LLC (“Amador”), Buena Vista Biomass Power, LLC (“BVBP”), and Buena Vista Biomass Development, LLC (“BVBD”), alleging that Defendants breached an oral agreement to pay Plaintiff $200, 000 in broker fees related to the financing of a power plant project in California. (Doc. No. 21, Compl. ¶ 1.) On February 1, 2016, the Court issued an opinion and order denying Defendants' motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) without prejudice to renewal following jurisdictional discovery. (Doc. No. 31.) Now before the Court is Defendants' renewed motion for dismissal or summary judgment on the ground that Plaintiff cannot invoke the forum selection clause in an agreement between Amador and BVBD. (Doc. No. 44.) Because the Court relies on evidence submitted by the parties that is outside of Plaintiff's pleading, the Court treats Defendants' motion as one for summary judgment and, for the reasons that follow, grants the motion.[1]

         I. Background[2]

         In 2012, Defendants Amador, BVBD, and Otoka, along with Antrim Corporation, a subsidiary of State Street Bank & Trust, closed a $35 million deal to finance a power plant project in Ione, California, near Sacramento. (Doc. No. 21, Compl. ¶ 16.) To memorialize their agreement regarding the transaction, they executed two contracts: the Purchase and Sale Agreement (Doc. No. 46-3, Hanson Decl. Ex. C (“PSA”)), and the Member Interest Purchase and Equity Capital Contribution Agreement (“ECCA”). The PSA states that the parties consent to personal jurisdiction for disputes arising under the PSA in the state and federal courts of New York. (PSA § 11.15.) Plaintiff, a non-party to the contracts that provides consulting services to entities seeking to raise capital, claims that it located funding for the power plant transaction and that Defendants agreed to pay Plaintiff a $200, 000 finder's fee for that service. (Doc. No. 21, Compl. ¶ 2.)

         Plaintiff commenced this action on February 4, 2015 (Doc. No. 1), and Defendants moved to dismiss for lack of personal jurisdiction on May 15, 2015 (Doc. No. 24). On February 1, 2016, as noted above, the Court denied that motion without prejudice to renewal, finding that (1) Plaintiff could not establish personal jurisdiction under New York's long-arm statute, but (2) Plaintiff might be able to enforce the PSA's New York forum selection clause if it could establish that the contracting parties intended to confer third-party beneficiary status on Plaintiff. (Doc. No. 31.)[3]

         Specifically, as explained in the Court's February 1 opinion and order, the PSA contains a forum selection clause establishing personal jurisdiction over the parties to the PSA in “the courts of the State of New York and the federal courts of the United States sitting in New York County.” (PSA § 11.15.) While Defendants did not dispute that they would be subject to suit in the Southern District of New York for disputes related to the power plant transaction brought by signatories to the PSA, they argued that Plaintiff - a non-signatory third party - has no right to invoke the PSA's forum selection clause. In support of this argument, Defendants relied on the PSA's “negating clause, ” which disclaims, with certain exceptions, any intent to confer third-party beneficiary rights:

Section 11.12 No Third-Party Beneficiary. Except as provided hereinbelow, the terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not the intention of the parties to confer third-party beneficiary rights upon any other Person other than any Person entitled to indemnity under Article IX; provided, however, that the Seller [BVBD] acknowledges that the Class B Investor [Antrim Corporation] may enforce any rights available to the Purchaser [Amador] hereunder.

(PSA § 11.12 (emphasis in original).)

         Although the Court found that the foregoing provision was intended to exclude any third-party beneficiaries from the PSA unless an exception applies, the Court also found that the “hereinbelow” clause arguably reflects the contracting parties' intent to exempt Plaintiff from the negating clause, in light of a reference to Plaintiff's broker fee agreement in a schedule attached to the PSA. Specifically, Schedule 3.19 of the PSA, entitled “Brokers, ” states that, “[u]nder the terms of a verbal commitment by [BVBD], [Plaintiff] is entitled to receive $200, 000 upon the closing of (1) the [PSA] and (2) the [ECCA].” (Doc. No. 46-4, Hanson Decl. Ex. D.) This schedule is also referenced in Section 3.19 of the PSA, which states that, “[e]xcept as set forth in [Schedule 3.19], no broker, finder, investment banker, or other person is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated under [the PSA].” (PSA § 3.19.)

         Based on its review of the terms of the PSA, the Court found that it was not clear whether the word “hereinbelow” in Section 11.12 refers only to that section of the PSA, or whether the word applies more broadly to all subsequent portions of the PSA, including the reference to Plaintiff's fee in Schedule 3.19 appended to the end of the PSA. (Doc. No. 31 at 9-10.) Accordingly, the Court denied Defendants' motion to dismiss without prejudice to renewal following the completion of limited discovery regarding the intent of the contracting parties with respect to the “hereinbelow” clause. (Id. at 10-11.) The parties completed jurisdictional discovery on April 25, 2016. (Doc. No. 39.)

         On May 31, 2016, Defendants filed a renewed motion for dismissal or in the alternative summary judgment, arguing that jurisdictional discovery has confirmed that the “hereinbelow” clause was not intended to exempt Plaintiff from Section 11.12's disclaimer of third-party beneficiary rights. (Doc. No. 44.) The motion was fully briefed by June 9, 2016. (Doc. No. 49.)

         II. Legal Standard

         Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment should be rendered “if the movant shows that there is 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). There is “no genuine dispute as to any material fact” where (1) the parties agree on all facts (that is, there are no disputed facts); (2) the parties disagree on some or all facts, but a reasonable fact-finder could never accept the nonmoving party's version of the facts (that is, there are no genuinely disputed facts), see Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); or (3) the parties disagree on some or all facts, but even on the nonmoving party's version of the facts, the moving party would win as a matter of law (that is, none of the factual disputes are material), see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         In determining whether a fact is genuinely disputed, the court “is not to weigh the evidence but is instead required to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments.” Weyant v. Okst, 101 F.3d 845, 854 (2d Cir. 1996). Nevertheless, to show a genuine dispute, the nonmoving party must provide “hard evidence, ” D'Amico v. City of N.Y., 132 F.3d 145, 149 (2d Cir. 1998), “from which a reasonable inference in [its] favor may be drawn, ” Binder & Binder PC v. Barnhart, 481 F.3d 141, 148 (2d Cir. 2007). “Conclusory allegations, conjecture, and speculation, ” Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir. 1998), as well as the existence of a mere “scintilla of evidence in support of the [nonmoving party's] position, ” Anderson, 477 U.S. at 252, are insufficient to create a genuinely disputed fact. A moving party is “entitled to judgment as a matter of law” on an issue if (1) it bears the burden of proof on the issue and the undisputed facts meet that burden; or ...


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