United States District Court, S.D. New York
O.F.I. IMPORTS INC., a California corporation, Plaintiff,
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation; and DOES 1-20, inclusive, Defendants.
OPINION AND ORDER
VALERIE CAPRONI, United States District Judge
plaintiff O.F.I. Imports, Inc.'s (“OFI”)
second motion for leave to amend and third attempt at
pleading a plausible claim. OFI alleged initially that the
defendants, General Electric Capital Corporation and twenty
unnamed individuals acting as its agents (collectively
“GE Capital”), fraudulently induced OFI to
overpay for the assets of Contessa Premium Foods, Inc.
(“Contessa”). The Court dismissed those claims on
September 26, 2016, Dkt. 60, and dismissed them with
prejudice on July 20, 2017, Dkt. 69. Shifting theories, OFI
now alleges that GE Capital breached the terms of the credit
agreement used to finance the Contessa transaction by
refusing to release its lien on OFI's assets. The Court
previously dismissed these claims without prejudice on July
20, 2017. Dkt. 69. Before the Court is OFI's motion for
leave to amend and file its proposed third amended complaint.
Dkts. 70, 74. For the reasons that follow, the Court finds
that leave to amend would be futile. Accordingly, OFI's
motion is DENIED. This case is DISMISSED WITH PREJUDICE, and
the Clerk of the Court is directed to enter judgment in favor
of GE Capital.
backstory to OFI's acquisition of the Contessa assets is
discussed at length in the Court's September 26, 2016
opinion, see O.F.I. Imports, Inc. v. Gen. Elec. Capital
Corp., No. 15-CV-7231 (VEC), 2016 WL 5376208 (S.D.N.Y.
Sept. 26, 2016) (“OFI I”), and the
Court's July 20, 2017 opinion, see O.F.I. Imports,
Inc. v. Gen. Elec. Capital Corp., No. 15-CV-7231 (VEC),
2017 WL 3084901 (S.D.N.Y. July 20, 2017) (“OFI
II”). The Court assumes familiarity with the facts
and only discusses those facts relevant to OFI's motion
for leave to amend.
purchased nearly all of Contessa's assets on May 19,
2014. Proposed Third Am. Compl. (the “PTAC”)
(Dkt. 70 Ex. 1) ¶ 10. GE Capital provided financing for
the transaction through a revolving credit facility. PTAC
¶ 11. In order to secure the loan, GE Capital took a
lien on substantially all of OFI's assets. PTAC ¶
this litigation began, on May 4, 2016, OFI repaid the balance
of the loans to zero. PTAC ¶ 15. OFI then demanded that
GE Capital release its liens. PTAC ¶ 17. According to
OFI, “[d]espite having been paid in full and despite
the stated requirements of the Credit Agreement, GE Capital
refused to release its lien[s].” PTAC ¶ 18.
Section 8.10(b) of the credit agreement (Dkt. 30 Ex. 1) (the
“Credit Agreement”) governs GE Capital's
obligation to release its liens. There are four conditions
precedent to a release of GE Capital's liens:
(A) termination of the Revolving Loan Commitments, (B)
payment and satisfaction in full of all Loans, . . . and all
other Obligations under the Loan Documents . . ., (C) deposit
of cash collateral with respect to all contingent Obligations
. . . (excluding contingent Obligations . . . as to which no
claim has been asserted) and (D) to the extent requested by
Agent, receipt by Agent and the Secured Parties of liability
releases from the Credit Parties each in form and substance
acceptable to agent.
Credit Agmt. § 8.10(b)(iii).
OFI II, the Court explained that OFI's proposed
second amended complaint did not plausibly allege
satisfaction of each of these conditions precedent. See
OFI II, 2017 WL 3084901, at *5. “At most”
the second proposed amended complaint “plausibly
alleged the occurrence of the first two conditions
[precedent]” because the Revolving Loan Commitments had
terminated in accordance with the Credit Agreement on May 21,
2017, and OFI had repaid the outstanding loans. Id.
at *6. The proposed second amended complaint did not,
however, allege plausibly that OFI had provided a release to
GE Capital “in form and substance acceptable to [GE
Capital]” or that OFI had deposited cash collateral in
respect of all contingent obligations. Id.
PTAC attempts to cure those deficiencies. According to OFI,
the Revolving Loan Commitments were terminated when OFI
repaid the outstanding loans. PTAC ¶ 20(A). For the same
reason, according to OFI, there were no outstanding
obligations under the Credit Agreement as of May 4, 2016.
PTAC ¶ 20(B). OFI was not required to post any cash
collateral to cover contingent obligations because, according
to OFI, “there were [no] contingent obligations that
required any deposit.” PTAC ¶ 20(C). And, OFI
alleges that it was excused from providing GE Capital with a
release because GE Capital “required [OFI] to sign a
release that would have released GE [Capital] from all of the
wrong doing as was alleged in the original complaint, the
first amended complaint and the proposed second amended
complaint.” PTAC ¶ 20(D). According to OFI,
“GE [Capital] may not insist upon performance of a
condition precedent when its non-performance has been caused
by the [sic] GE [Capital] itself.” PTAC ¶ 20(D).
Capital opposes OFI's motion for leave to amend.
Opp'n (Dkt. 77).
15(a) of the Federal Rules of Civil Procedure provides that
“[t]he court should freely give leave” to a party
to amend its complaint “when justice so
requires.” Fed.R.Civ.P. 15(a)(2). “Leave may be
denied ‘for good reason, including futility, bad faith,
undue delay, or undue prejudice to the opposing
party.'” TechnoMarine SA v. Giftports,
Inc., 758 F.3d 493, 505 (2d Cir. 2014) (quoting
McCarthy v. Dun & Bradstreet Corp., 482 F.3d
184, 200 (2d Cir. 2007) (additional citations omitted)).
“A proposed amendment to a complaint is futile when it
‘could not withstand a motion to dismiss.'”
Balintulo v. Ford Motor Co., 796 F.3d 160, 164-65
(2d Cir. 2015) (quoting Lucente v. IBM Corp., 310
F.3d 243, 258 (2d Cir. 2002)). To survive a motion to dismiss
for failure to state a claim upon which relief can be
granted, “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Court
must also accept as true all factual allegations contained
within the complaint; this tenet “is inapplicable to
legal conclusions.” Iqbal, 556 U.S. at 678.
PTAC does not plausibly allege satisfaction of each of the
four conditions precedent to GE Capital's obligation to
release its liens under Section 8.8(b). Although OFI
extinguished the balance of Loans under the Credit Agreement
as of May 4, 2016, the “Revolving Loan
Commitments” did not terminate until the Credit
Agreement terminated on May 21, 2017. Assuming that as of
that date OFI had satisfied two of the four conditions
precedent to a release - termination of the ...