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Dominick & Dominick LLC v. Deutsche Oel & Gas AG

United States District Court, S.D. New York

August 24, 2017

DOMINICK & DOMINICK LLC, Plaintiff,
v.
DEUTSCHE OEL & GAS AG, Defendant.

          MEMORANDUM AND ORDER

          P. KEVIN CASTEL UNITED STATES DISTRICT JUDGE

         Dominick & Dominick LLC, now known as Dominick & Dickerman, LLC, ("Dominick") brings this action against Deutsche Oel & Gas AG ("Deutsche") for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. Dominick, a financial services institution, entered into an agreement with Deutsche, a German energy company, to provide Deutsche with assistance in acquiring funding for an energy development project in Alaska (the "Agreement"). Dominick alleges primarily that Deutsche breached the terms of the Agreement when it failed to pay Dominick a $2.9 million dollar fee after Deutsche closed a funding deal with a third-party investor, Energy Capital Partners ("ECP"). The Court denied Dominick's motion for summary judgment on its breach of contract and good faith and fair dealing claims (Memorandum and Order, August 15, 2016 (the "Memorandum and Order")). (Dkt. 56.)

         Deutsche now moves for summary judgment on all of Dominick's claims pursuant to Rule 56, Fed.R.Civ.P. For reasons to be explained, Deutsche's motion for summary judgment is granted.

         BACKGROUND

         The following facts are undisputed except where otherwise noted. All reasonable inferences are drawn in favor of Dominick, as the non-movant. Costello v. City of Burlington, 632F.3d41, 45(2dCir. 2011).

         At all times relevant to this action, Deutsche was a German holding company based in Stuttgart, Germany. (Plaintiffs Counterstatement of Material Facts ("PI. 56.1") ¶ 3.) Through its wholly-owned subsidiaries Cornucopia Oil and Gas Company, LLC ("Cornucopia") and Furie Operating Alaska, LLC ("Furie"), Deutsche engaged in the development of oil and gas resources in Cook Inlet, Alaska. (PI. 56.1 ¶¶ 6, 8-9.) In or around November 2013, Furie obtained permits to construct an offshore production facility in Cook Inlet, which gave Furie the opportunity to commence operation of a new natural gas field. (PI. 56.1 ¶ 12.) Deutsche and its subsidiaries sought to raise substantial capital through outside investors in order to advance this new project. (PI. 56.1 ¶ 4j.)

         On October 1, 2013, Deutsche formally engaged Dominick, a New York-based financial services institution, to assist Deutsche in procuring that funding (the "Agreement"). (PI. 56.1 ¶¶ 1, 4, 13, 15.) The written Agreement between Deutsche and Dominick provided that Dominick would be Deutsche's "exclusive advisor on all Funding transactions in the United States." (Declaration of William R. Fried (the "Fried Decl.") Ex. 11, Clause 5.) Dominick agreed to:

[U]se its commercially reasonable efforts to assist [Deutsche] to: (a) secure up to Three Hundred Twenty Five Million Dollars ($325, 000, 000) in primarily debt-based funding (and/or eventually equity-based funding) upon terms acceptable to [Deutsche] ("Funding(s)"); and, (b) undertake such other activities as the parties may from time-to-time mutually agree and determine ("Financial Services"). Dominick shall provide such Financial Services to [Deutsche] in such form, manner and place as [Deutsche] may reasonably request.

(Fried Decl. Ex. 11, Clause 1.) In exchange, Dominick received an "Initial Advisory Fee" of $15, 000, which was for preliminary work including "completing requisite due diligence review of [Deutsche] and its operations, [and] developing a valuation model, " as well as "otherwise positioning [Deutsche] for Funding activities." (Fried Decl. Ex. 11, Clause 3.) The Agreement also entitled Dominick to other "Funding Fee[s], " i.e. commissions, calculated as a certain percentage of each "Funding" closed. (Fried Decl. Ex. 11, Clause 3.)

         The Agreement provides that New York law governs the contract, "without giving effect to its conflicts of law principles." (Fried Decl. Ex. 11, Clause 12.)

         By the middle of 2014, Dominick procured term sheets for Deutsche on two possible funding transactions with two different investors: The Campo Group ("Campo") and Freepoint Commodities LLC ("Freepoint"). (Dkt. 46 ¶¶ 44, 52.) For a variety of reasons, neither the Campo nor Freepoint deals ever closed.

         During the same time period, approximately June to July 2014, Deutsche and its subsidiaries negotiated and finalized a funding deal with ECP for $160 million. (Fried Decl. Ex. 28.) The deal provided operational funding directly to Furie, but required Deutsche and its other affiliates to fully guarantee the transaction. (Fried Decl. Ex. 26.) On July 15, 2014, after ECP publically announced the deal (Fried Decl. Ex. 28), Dominick requested a draft copy of the ECP term sheet to present to Campo, who, according to Dominick, remained a potential investor, (Declaration of Gil Feder (the "Feder Decl.") Ex. P.) Deutsche did not provide Dominick with the ECP term sheet. About ten days later on July 24, 2014, Dominick sent Deutsche another email requesting a copy of the ECP agreement, but this time Dominick attached an invoice for a $2.9 million fee arising out of the ECP transaction. (Feder Decl. Ex. R.) Shortly after receiving that invoice, Deutsche terminated the Agreement with Dominick and explicitly disputed Dominick's entitlement to any "Funding Fee" from the ECP deal. (Feder Decl. Ex. S.)

         PROCEDURAL HISTORY

         As will be seen, Dominick in its opposition to summary judgment has endeavored to assert new claims of breach of contract and breach of the covenant of good faith and fair dealing that are not alleged in its amended complaint. Dominick has attempted to raise these new theories after the date for amendments to the pleadings, after the close of discovery and after the Court's decision denying Dominick's motion for summary judgment. Accordingly, the procedural history bears some relevance to the disposition of the present motion. The action was filed on August 13, 2014 and Dominick amended its complaint on September 3, 2014. (Dkt. 6.) At an initial conference, the Court gave the parties 30 days for further amendments of the pleadings, i.e. until February 4, 2015, and set the close of discovery for July 10, 2015. (Dkt. 17.) Thereafter the Court extended discovery to September 30, 2015. (Dkt. 24.)

         Shortly before the close of discovery and beyond the period set for any amendments to the pleadings, Deutsche sought to amend its answer. (Dkt. 25.) Dominick opposed the application arguing that Deutsche failed to meet the 30-day deadline of February 4, 2015, should have known the facts upon which the amendments were based at an earlier juncture, the timing of the request "supports a finding of bad faith, " and that it would be "highly prejudicial" to Dominick to allow Deutsche to raise new defenses with so little time left in the discovery period. (Dkt. 26.) The Court denied Deutsche's application writing, in part, that "[g]iven the date set in the Scheduling Order for motions to amend a pleading and the absence of good cause, leave to amend the answer is DENIED." (Dkt. 27 (citing Parker v. Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir. 2000).)

         Thereafter, Dominick moved for summary judgment on its claims for breach of contract and breach of the implied covenant of good faith and fair dealing. (Dkt. 40.) The Court concluded that under New York law, a contract granting an exclusive right to a broker or agent to secure a transaction for the principal must clearly and expressly provide that payment is due the broker or agent even when a sale is independently secured by the principal, and that the Agreement contained no such provision. (Memorandum and Order at 10-11.) Domini ck would nevertheless be entitled to a commission on the ECP deal if it had been the procuring cause of that deal. (Id. at 14-15.) But, in the context of Dominick's motion, the Court ...


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