FT Glob. Capital v. Future Fintech Grp.
| Docket Number | Civil Action 1:21-CV-00594-JPB |
| Decision Date | 31 August 2023 |
| Parties | FT GLOBAL CAPITAL, INC., Plaintiff, v. FUTURE FINTECH GROUP, INC., Defendant. |
| Court | U.S. District Court — Northern District of Georgia |
1
FT GLOBAL CAPITAL, INC., Plaintiff,
v.
FUTURE FINTECH GROUP, INC., Defendant.
Civil Action No. 1:21-CV-00594-JPB
United States District Court, N.D. Georgia, Atlanta Division
August 31, 2023
ORDER
J.P. BOULEE, UNITED STATES DISTRICT JUDGE
This matter comes before the Court on Future Fintech Group, Inc.'s (“Defendant”) Motion for Summary Judgment [Doc. 34]. This Court finds as follows:
PROCEDURAL HISTORY
FT Global Capital, Inc. (“Plaintiff”) is a corporation that offers financial services, primarily to raise capital, for publicly-traded companies. Defendant is a technology application company that is publicly traded on NASDAQ. This case arises from a dispute over the terms of an agreement between the parties.
Plaintiff filed this action against Defendant in the Fulton County Superior Court on January 14, 2021, bringing four claims: breach of contract; breach of the covenant of good faith and fair dealing; fraud; and attorney's fees under O.C.G.A.
§ 13-6-11. [Doc. 1-1]. Defendant removed the case to this Court on February 9, 2021, on the basis of diversity jurisdiction.[1] [Doc. 1, p. 3].
Defendant moved to dismiss Plaintiff's claims on March 9, 2021. [Doc. 5]. The Court granted in part and denied in part the motion to dismiss on November 10, 2021. [Doc. 18-1]. Specifically, the Court dismissed part of Plaintiff's breach of contract claim and Plaintiff's fraud claim in its entirety. Defendant moved for summary judgment on October 12, 2022, seeking summary judgment on all of Plaintiff's remaining claims. [Doc. 34].
FACTUAL HISTORY
The Court derives the facts of this case from Defendant's Statement of Undisputed Facts in Support of its Motion for Summary Judgment [Doc. 34-1]; Plaintiff's Response to Defendant's Statement of Undisputed Facts and Statement of Additional Facts [Doc. 37]; and Defendant's Response and Objections to Plaintiff's Statement of Additional Facts [Doc. 42-1]. The Court also conducted its own review of the record. For the purpose of adjudicating the instant motion, the facts of this case are as follows.
On July 28, 2020, Plaintiff and Defendant executed a Placement Agent Agreement (the “PAA”). [Doc. 37, p. 2]. Under the PAA, Plaintiff agreed to serve
as Defendant's “Executive Placement Agent” “in connection with public or private offering[s] or other financing or capital-raising transaction[s] . . . of unregistered or registered securities.” [Doc. 1-1, p. 17]. As Defendant's Executive Placement Agent, Plaintiff's principal responsibility was to raise capital for Defendant using Plaintiff's network of institutional investors. [Doc. 42-1, p. 5]. The PAA specified that the terms of any transaction[2] would be “mutually agreed upon by [Defendant] and the investors (each, an ‘Investor' and collectively, the ‘Investors').” [Doc. 1-1, p. 17].
The PAA stated that it “embodie[d] the entire agreement and understanding between the parties” and that it “may not be amended or otherwise modified or waived except by an instrument in writing signed by each” party. Id. at 20. The PAA's term was for three months or upon the completion of a transaction, whichever was earlier. Id. at 19.
The PAA contained terms about Plaintiff's compensation as Executive Placement Agent. Under the PAA, Defendant would compensate Plaintiff with a
“Placement Agent Fee”[3] if Defendant closed a transaction facilitated by Plaintiff. Id. at 18. Under certain circumstances, Plaintiff was entitled to a Placement Agent Fee even after the expiration of the PAA. The terms governing those circumstances are at the center of the parties' dispute. Broadly, Defendant was obliged to pay the Placement Agent Fee if, during the twelve months following the PAA's termination (the “Tail Period”), Defendant entered into a transaction with an investor to which Plaintiff had introduced or “wall-crossed” to Defendant. Id. Because the parties dispute this language, the Court reproduces it below:
The Placement Agent shall be entitled to a Placement Agent Fee . . . with respect to any public or private offering or other financing or capital-raising transaction of any kind (“Tail Financing”) to the extent that such financing or capital is provided to the Company by investors whom the Placement Agent had introduced to the Company during the Term or investors “wall-crossed” by the Placement Agent in connection with the Placement, if such Tail Financing is consummated at any time within the 12-month period following the termination of this Agreement (the “Tail Period”), provided that, at the request of the Company or within 10 days after termination of this Agreement[,] the Placement Agent shall provide a written list of such investors the Placement Agent had introduced or “wall-crossed” to the Company during the Term
Id. Under the PAA, the “Company” refers to Defendant, and the “Placement Agent” refers to Plaintiff. See id. at 17.
Plaintiff asserts that “introduce” and “wall-cross” have specific meanings in the securities placement industry. Plaintiff defines “introduce” as “to show a company seeking an investment to a potential investor” and “wall-cross” as “to share material non-public information about a company . . . with an investor, as a result of which the investor becomes unable to buy and sell shares of that company in the public markets before the transaction becomes public.” [Doc. 37, p. 15].
It is undisputed that during the PAA, Plaintiff brought Defendant to the attention of both Amin Nathoo, of Anson Advisors and Anson Funds Management LP (“Anson”),[4] and Richard Allison, of Hudson Bay Capital Management (“Hudson Bay”). [Doc. 42-1, p. 10]. In August 2020, Patrick Ko, Plaintiff's owner and sole principal, contacted Nathoo about Defendant's business. [Doc. 368, p. 4]. Plaintiff asserts that Ko sought to wall-cross Nathoo in this conversation. [Doc. 37-1, p. 22]. Similarly, in October 2020, Ko exchanged emails with Allison,
the director and senior counsel for Hudson Bay. See [Doc. 36-11, p. 2]; [Doc. 36 10]. In an October 24, 2020 email, Ko wrote that Allison was “officially ‘over-the-wall' with regards to a potential PIPE transaction for [Defendant].”[5] [Doc. 36-10, p. 3]. It does not appear, however, that either Anson or Hudson Bay ever executed a transaction with Defendant during the term of the PAA.
The PAA ultimately expired on October 28, 2020. [Doc. 37, p. 3]. On November 2, 2020, Ko emailed a “Tail List”[6] to Shanchun Huang, Defendant's Chief Executive Officer, identifying twelve entities and their affiliates that Plaintiff claimed to have introduced or contacted on behalf of Defendant. Id. at 4. The Tail List named the following:
• Anson Funds Management LP and its affiliates
• Ayrton Capital, Altos Opportunity Fund and their affiliates
• Crede Capital Group, Acquitas Capital and its affiliates
• CVI Investment, Heights Management, SIG and their affiliates
• Connective Capital and its affiliates
• Empery Asset Management and its affiliates
• Intracoastal Capital LP and its affiliates
• Hudson Bay Capital Management and its affiliates
• Ionic Venture LLC and its affiliates
• Lind Partners and its affiliates
• Li Capital Global Opportunities Master Fund and their affiliates
• Sabby Management LLC and its affiliates
[Doc. 34-4, p. 10]. According to Plaintiff, the Tail List identified investors by reference to an investment manager and its “affiliates,” i.e., the family of investment vehicles that it managed. [Doc. 37, p. 17]. Plaintiff further asserts that many of the potential investors that it contacted on behalf of Defendant operate as a family of hedge funds, all managed by the same investment advisor. Id. Defendant never informed Plaintiff that it did not accept the Tail List. [Doc. 3510, p. 13].
Defendant did not engage a placement agent between October 28, 2020, and December 13, 2020. [Doc. 37, p. 6]. On December 13, 2020, Defendant negotiated a new placement agent agreement with Alliance Global Partners (“AGP”). Id. That same day, Defendant emailed AGP the Tail List and asked to confirm that the placement agent agreement “will not involve any of the investors on the [T]ail [L]ist below.” [Doc. 34-5, p. 1]. AGP responded “confirmed.” [Doc. 37, p. 6].
AGP ultimately solicited three potential investors for Defendant. [Doc. 421, p. 14]. Two of those investors were A&T SPV, LLC and Tech Opportunities,
LLC. [Doc. 37, p. 7]. With AGP acting as the placement agent, Defendant executed a securities purchase agreement with these investors on December 24, 2020. [Doc. 42-1, p. 15]. Defendant did not learn the names of the investors until shortly before the securities purchase agreement was signed. [Doc. 37, p. 11]. The transaction was announced on December 28, 2020, on a Form 8-k filed with the Securities and Exchange Commission, but the names of the investors were not disclosed on that form or elsewhere. [Doc. 42-1, p. 15]. Defendant closed additional transactions with A&T SPV and Tech Opportunities on January 14, 2021; February 11, 2021; and April 1, 2021. Id. at 16. Likewise, the names of the investors in those transactions were not publicly disclosed. Id.
Central to this case and disputed by the parties is whether A&T SPV and Tech Opportunities were identified on the Tail List. Defendant asserts that they were not. Plaintiff, on the other hand, contends that A&T SPV and Tech Opportunities are “affiliates” of, respectively, Anson and Hudson Bay. As to A&T SPV, the parties do not dispute that A&T SPV shares an address with Anson; the signatory for the agreement with A&T SPV was Bruce Winson, the founder and chairman of Anson, and the contact email provided was Nathoo's, who appears as a “principal” on Anson's webpage; and Nathoo and Winson made the decision for A&T SPV to invest in Defendant. See [Doc. 42-1, p. 16]. Nathoo testified that the
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