940 F.3d 825 (2nd Cir. 2019), 16-1124, Attestor Value Master Fund v. Republic of Argentina

Docket Nº:16-1124
Citation:940 F.3d 825
Opinion Judge:Per Curiam
Party Name:ATTESTOR VALUE MASTER FUND, Bybrook Capital Master Fund LP, Bybrook Capital Hazleton Master Fund LP, Trinity Investments Limited, White Hawthorne, LLC, Plaintiffs-Appellants, Arag-A Limited, Arag-O Limited, Arag-T Limited, Arag-V Limited, MCHA Holdings, LLC, Honero Fund I, LLC, Red Pines LLC, Spinnaker Global Emerging Markets Fund LTD, ...
Judge Panel:Winter, Judge dissents
Case Date:October 18, 2019
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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940 F.3d 825 (2nd Cir. 2019)

ATTESTOR VALUE MASTER FUND, Bybrook Capital Master Fund LP, Bybrook Capital Hazleton Master Fund LP, Trinity Investments Limited, White Hawthorne, LLC, Plaintiffs-Appellants, Arag-A Limited, Arag-O Limited, Arag-T Limited, Arag-V Limited, MCHA Holdings, LLC, Honero Fund I, LLC, Red Pines LLC, Spinnaker Global Emerging Markets Fund LTD, Spinnaker Global Special Situations Fund LP, Yellow Crane Holdings, L.L.C., White Hawthorne II, LLC, Plaintiffs,


REPUBLIC OF ARGENTINA, Defendant-Appellee.

No. 16-1124

United States Court of Appeals, Second Circuit

October 18, 2019

Submitted: November 21, 2016

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[Copyrighted Material Omitted]

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Appeal from the United States District Court for the Southern District of New York (Griesa, J. )

Peter Sabin Willet (Kenneth I. Schacter, on the brief), Morgan, Lewis & Bockius LLP, Boston, MA and New York, NY, for Plaintiffs-Appellants.

Carmine D. Boccuzzi, Jr., Cleary Gottlieb Steen & Hamilton LLP, New York, N.Y. (Michael A. Paskin, Daniel Slifkin, and Damaris Hernández, Cravath, Swaine & Moore LLP, New York, NY, on the brief), for Defendant-Appellee.

Before: Katzmann, Chief Judge, Winter, Circuit Judge, and Stein, District Judge.1


Winter, Judge dissents in a separate opinion.

Per Curiam

After more than a decade of litigation, defendant-appellee the Republic of Argentina (the " Republic" ) sought to settle with certain holders of its defaulted bonds. Plaintiffs-appellants hold defaulted bonds and claim that they entered into binding settlement agreements with the Republic. The Republic responds that it was not bound by the purported agreements because it did not countersign them. There is no dispute that the Republic never signed the agreements. The question before us is whether the unexecuted agreements were nonetheless binding.

Our precedents and those of the New York Court of Appeals supply a clear answer: " [I]f the parties to an agreement do not intend it to be binding upon them until it is reduced to writing and signed by both of them, they are not bound and may not be held liable until it has been written out and signed." Scheck v. Francis, 26 N.Y.2d 466, 311 N.Y.S.2d 841, 260 N.E.2d 493, 494 (1970). We generally look to the four factors set out in Winston v. Mediafare Entertainment Corp., 777 F.2d 78, 80 (2d Cir. 1985), to determine whether parties intended not to be bound until the formalities of execution were satisfied. In the present case, the first factor is most prominent. The purported agreements between plaintiffs and the Republic expressly require the Republic’s countersignature before binding the parties. The other Winston factors also indicate that the parties did not intend to be bound in the absence of a countersigned agreement. Accordingly, we affirm the judgment of the district court (Griesa, J. ).


A. The Republic’s Settlement Proposal

In 2001, the Republic defaulted on bonds issued pursuant to a 1994 Fiscal Agency Agreement. The Republic’s default spawned extensive litigation. See, e.g.,

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NML Capital, Ltd. v. Republic of Argentina, 727 F.3d 230 (2d Cir. 2013); NML Capital, Ltd. v. Republic of Argentina, 699 F.3d 246 (2d Cir. 2012). As part of this litigation, the district court entered pari passu injunctions barring the Republic from making payments on certain other bonds unless it also made payments on its defaulted bonds.

On February 5, 2016, the Republic published a settlement proposal (the " Proposal" ) to holders of its defaulted debt. The Proposal presented two offers to holders of defaulted bonds. Bondholders without pari passu injunctions could receive the amount of their original principal plus 50% of that principal. Bondholders with pari passu injunctions could receive payment of any money judgment or accrued claim against the Republic, less a discount of 30%; if bondholders with pari passu injunctions settled by February 19, 2016, this discount would be reduced to 27.5%. The Proposal states that it is " subject ... to the judicial decision ordering the lifting of the Pari Passu Injunctions." Joint App. 218 (boldface omitted).

On February 17, 2016, the Republic supplemented the initial Proposal with three documents: a set of Instructions for Bondholders to Accept its Settlement Proposal (the " Instructions" ), a Master Settlement Agreement, and an Agreement Schedule. The basic plan, as set forth in the Instructions, was for bondholders to complete an Agreement Schedule specific to their holdings, including information about their bonds and the particular amount of money to be paid. Once executed and exchanged, this bespoke Agreement Schedule would become part of a Master Settlement Agreement, which contained standard terms for all bondholders. Specifically, the Instructions state as follows: Holders may become a party to a Settlement Agreement by executing and exchanging with the Republic a completed Agreement Schedule .... The holder must complete, sign and send the Agreement Schedule to the Republic .... That Agreement Schedule, when countersigned by the Republic, shall constitute a binding agreement between the parties to settle all claims in respect of the bonds on the terms contained in the Master Settlement Agreement.

Joint App. 90-91.

The language of the Master Settlement Agreement and Agreement Schedule confirms the plan set out in the Instructions. The Master Settlement Agreement contains standard provisions applicable to all settling bondholders, including a provision that New York state law governs the agreement. The Master Settlement Agreement also states: This Master Settlement Agreement ... is made, in accordance with the terms of the Proposal ..., between [the Republic] and the Holder identified in item (i) of the Agreement Schedule signed by the parties in connection with this Agreement (such Agreement Schedule, when executed and exchanged by the Republic and the Holder, being an integral part of this Settlement Agreement).

Joint App. 92. The Agreement Schedule contains blanks for bondholders to provide personal information and various details about their bonds. It also contains a blank for the monetary settlement amount above a statement that " [t]his Settlement Amount has been reconciled between the Republic and the Holder." Joint App. 97-98. The signature page of the Agreement Schedule states in its entirety: " By executing counterparts of this Agreement Schedule in the space provided below and exchanging those counterparts, the parties agree to be bound by the terms of the Settlement Agreement, as completed by the information contained in this Agreement

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Schedule." Joint App. 99. Below this text, there are two open lines marked with " /s/" symbols. Id.

B. The District Court’s Vacatur Order

Soon after the Republic posted the Proposal, it reached settlement agreements with several bondholders. Thereafter, on February 11, 2016, the Republic moved to vacate the pari passu injunctions. The district court lacked jurisdiction to lift some of the injunctions due to a pending appeal, but, on February 19, 2016, it issued an Indicative Ruling explaining that the district court would vacate these injunctions if two conditions were met: (1) the repeal of legislative obstacles to the Republic’s settlement with its bondholders and, (2) " full payment [by the Republic] in accordance with the specific terms of each ... agreement" to " all plaintiffs that enter[ed] into agreements in principle with the Republic on or before February 29, 2016." See Indicative Ruling at 23, NML Capital, Ltd. v. Republic of Argentina, No. 14-cv-8601-TPG, ECF No. 59 (S.D.N.Y. Feb. 19, 2016).

Upon remand after the Republic voluntarily dismissed two pending appeals, the Republic moved the district court to enter the Indicative Ruling as an order and to lift all of the injunctions. In making this request, the Republic represented to the district court that it had already settled claims worth $6.2 billion and that " [n]egotiations with other plaintiffs are ongoing." Joint App. 120. The Republic also submitted seven settlement agreements in principle to demonstrate its progress. Six of these agreements in principle were countersigned by the Republic, but one, with Red Pines LLC, was not.

On March 2, 2016, the district court entered an order (the " Vacatur Order" ) implementing its earlier Indicative Ruling and vacating all of the injunctions upon the occurrence of the two conditions set out in the Indicative Ruling, including that the Republic make full payments to all bondholders that entered into agreements in principle before February 29, 2016. See Vacatur Order at 5, NML Capital, Ltd. v. Republic of Argentina, No. 14-cv-8601-TPG, ECF No. 76 (S.D.N.Y. March 2, 2016).

C. The Present Action

Plaintiffs-appellants in...

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