In Re Fontainebleau Las Vegas Contract Litigation. This Document Applies To: Case No.: 09-cv-23835-asg, Case No. 09-MD-2106-CIV.

• Decision Date: 28 May 2010
• Docket Number: Case No. 09-MD-2106-CIV.
• Parties: In re FONTAINEBLEAU LAS VEGAS CONTRACT LITIGATION. This document applies to: Case No.: 09-CV-23835-ASG, Case No.: 10-CV-20236-ASG.
• Court: U.S. District Court — Southern District of Florida

716 F.Supp.2d 1237

In re FONTAINEBLEAU LAS VEGAS CONTRACT LITIGATION.

This document applies to: Case No.: 09-CV-23835-ASG, Case No.: 10-CV-20236-ASG.

Case No. 09-MD-2106-CIV.

United States District Court,S.D. Florida.

May 28, 2010.

Susan Heath Sharp, Stichter Riedel Blain & Prosser, Tampa, FL, David M. Friedman, Jed I. Bergman, Seth A. Moskowitz, Kasowitz Benson Torres & Friedman, Arthur S. Linker, Kenneth E. Noble, Katten Muchin Rosenman LLP, David Parker, Marc R. Rosen, Kleinberg, Kaplan, Wolff & Cohen, New York, NY, Craig Vincent Rasile, Hunton & Williams, Harold Defore Moorefield, Jr., Stearns Weaver Miller Weissler Alhadeff & Sitterson, Mark David Bloom, Greenberg Traurig, Brett Michael Amron, Bast Amron LLP, Miami, FL, James B. Heaton, John D. Byars, Steven James Nachtwey, Vincent S.J. Buccola, Bartlit Beck Herman Palenchar & Scott, Chicago, IL, for Plaintiffs.

Bradley J. Butwin, Daniel L. Cantor, Jonathan Rosenberg, William J. Sushon, O'Melveny & Myers LLP, David J. Woll, Lisa H. Rubin, Steven S. Fitzgerald, Simpson Thacher & Bartlett LLP, Frederick D. Hyman, Jason I. Kirschner, Jean-Marie L. Atamian, Mayer Brown LLP, Aaron Rubinstein, W. Stewart Wallace, Phillip A. Geraci, Steven C. Chin, Kaye Scholer LLP, Andrew B. Kratenstein, Michael R. Huttenlocher, McDermott Will & Emery, New York, NY, Craig Vincent Rasile, Kevin Michael Eckhardt, Hunton & Williams, John Blair Hutton, III, Mark David Bloom, Greenberg Traurig, Robert Gerald Fracasso, Jr., Shutts & Bowen, Gregory Stewart Grossman, Astigarraga Davis Mullins & Grossman, Bruce Judson Berman, McDermott Will & Emery LLP, Miami, FL, Sarah A. Harmon, Bailey Kennedy, Nicholas J. Santoro, Santoro Driggs Walch Kearney Johnson & Thompson, Las Vegas, NV, Arthur Halsey Rice, Rice Pugatch Robinson & Schiller, Fort Lauderdale, FL, Laury M. Macauley, Lewis & Roca LLP, Reno, NV Peter J. Roberts, Shaw Gussis Fishman Flantz Wolfson & Towbin LLC, Chicago, IL, for Defendants.

Thomas C. Rice, Simpson Thacher & Bartlett LLP, Anthony L. Paccione, Katten Muchin Rosenman LLP, New York, NY, Bruce Bennett, J. Michael Hennigan, Kirk Dillman, Lauren A. Smith, Michael C. Schneidereit, Peter J. Most, Sidney P. Levinson, Hennigan Bennett & Dorman LLP, Los Angeles, CA, David Alan Rothstein, Lorenz Michel Pruss, Dimond Kaplan & Rothstein PA, Coconut Grove, FL, Susan Williams Scann, Deaner Deaner Scann Malan & Larsen, Las Vegas, NV, for Plaintiffs and Defendants.

AMENDED ¹ MDL ORDER NUMBER EIGHTEEN; ² GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS [DE 35]; [DE 36]; REQUIRING ANSWER TO COMPLAINTS; VACATING FINAL JUDGMENT ³

ALAN S. GOLD, District Judge.

I. Introduction

THIS CAUSE is before the Court upon the Revolving Lender Defendants' Motion to Dismiss [DE 36] and Bank of America's Motion to Dismiss [DE 35] (“the Motions”). Responses and replies were timely filed with respect to both motions, see [DE 50]; [DE 52]; [DE 56]; [DE 57], and on May 7, 2010, oral argument was held. I have jurisdiction pursuant to 12 U.S.C. § 632, as it is undisputed that both actions at issue are “suits of a civil nature at common law ... to which [a] corporation organized under the laws of the United States [is] a party [and which] aris[es] out of transactions involving international or foreign banking.” Having considered the relevant submissions, the arguments of the parties, the applicable law, and being otherwise duly advised in the Premises, I grant the Motions in part and dismiss certain claims for the reasons that follow.

II. Relevant Factual and Procedural Background ⁴

Although the facts giving rise to the claims at issue are detailed in my August 26, 2009 Order Denying Fontainebleau's Motion for Partial Summary Judgment in the Southern District of Florida Action, see generally Fontainebleau Las Vegas, LLC v. Bank of America, N.A., 417 B.R. 651 (S.D.Fla.2009) (“August 26 Order”), I reiterate the relevant factual background here with citations to the operative complaints ⁵ to ensure that the record clearly demonstrates that the facts and inferences upon which this Order is predicated are drawn only from the operative complaints and the referenced undisputed central documents.

A. The Credit Agreement and Disbursement Agreement

On June 6, 2007, Fontainebleau Las Vegas LLC and affiliated entities (“Fontainebleau”) entered into a series of agreements with a number of lenders (“the Lenders”) for loans to be used for the construction and development of the Fontainebleau Resort and Casino in Las Vegas, Nevada (“the Project”). (Avenue Compl. ⁶ at ¶¶ 113-115); (Aurelius Compl. at ¶¶ 2-4); see generally [DE 37-1] (“Cr. Agr.”); [DE 37-2] (“Disb. Agr.”). Among the agreements entered into by Fontainebleau and the Lenders were a Credit Agreement and a Disbursement Agreement. (Avenue Compl. at ¶ 115); (Aurelius Compl. at ¶¶ 3, 27). It is these two agreements that are the subject of the operative complaints.

In connection with the June 6, 2007 loan transaction, Fontainebleau and the Lenders entered into a Credit Agreement that provided, among other things, for a syndicate of lenders to provide three kinds of loans to Fontainebleau: (a) $700 million initial term loan facility (“the Initial Term Loan”); (b) a $350 million delay draw term loan facility (“the Delay Draw Term Loan”); and (c) an $800 million revolving loan facility (“the Revolving Loan”). (Avenue Compl. at ¶ 115); (Aurelius Compl. at ¶¶ 23-24); (Cr. Agmt. at 22, 38). The Plaintiffs proceeding on the Avenue Complaint (“the Avenue Plaintiffs”) are comprised of certain term lenders that participated in either the Initial Term Loan and/or the Delay Draw Term Loan. (Avenue Compl. at ¶¶ 115, 117). The Plaintiffs proceeding on the Aurelius Complaint (“the Aurelius Plaintiffs”) are successors-in-interest to certain Term Lenders that participated in either the Initial Term Loan and/or the Delay Draw Term Loan (Aurelius Compl. at ¶¶ 10, 25). Both the Avenue and Aurelius Defendants (collectively “Defendants”) are lenders that agreed to fund certain amounts under the Revolving Loan. (Avenue Compl. at ¶¶ 102-112); (Aurelius Compl. at ¶¶ 11-22). In addition to being a Revolving Lender, Defendant Bank of America also was the Administrative Agent for purposes of the Credit Agreement. (Cr. Agr. at 8).

While the Initial Term Loan was to be made on the date of closing, (Cr. Agmt. at 22), the borrowing of funds under the Delay Draw and Revolving Loans prior to the Project's opening date was governed by a two-step borrowing process set forth in the Credit and Disbursement Agreements. (Aurelius Compl. at ¶ 32-33); (Avenue Compl. at ¶ 119). First, Fontainebleau was required to submit a Notice of Borrowing to the Administrative Agent (i.e., Bank of America) specifying the requested loans and the designated borrowing date. (Aurelius Compl. at ¶ 33); (Avenue Compl. at ¶ 119); (Cr. Agmt. § 2.4(a)). Upon receipt of each Notice of Borrowing, the Administrative Agent was required to notify each lender, as appropriate, so that each lender could, “subject [ ] to the fulfillment of the applicable conditions precedent set forth in Section 5.2 [of the Credit Agreement]” and in accordance with Section 2.1, make its pro rata share of the requested loans available to the Administrative Agent on the borrowing date requested by Fontainebleau. (Cr. Agr. § § 2.1(c); 2.4(b)). Then, “[u]pon satisfaction or waiver of the applicable conditions precedent specified in Section 2.1,” Section 2.4(c) of the Credit Agreement called for the proceeds of the loans to be “remitted to the Bank Proceeds Account and made available to [Fontainebleau] in accordance with and upon fulfillment of conditions set forth in the Disbursement Agreement.”

The second step in the borrowing process concerns Fontainebleau's access to the funds remitted to the Bank Proceeds Account and is governed by the Disbursement Agreement. To access these funds, Fontainebleau was required to fulfill certain conditions set forth in the Disbursement Agreement-including, but not limited to, the submission of an Advance Request to Defendant Bank of America as Disbursement Agent-at which point the loan proceeds would be disbursed in accordance with the Disbursement Agreement. (Avenue Compl. at ¶ 120); (Aurelius Compl. at ¶ 37); see also (Disb. Agr. § § 2.4, 3.3).

However, pursuant to Section 2.5.1 of the Disbursement Agreement, Fontainebleau's right to disbursements was not absolute. That section provides that Defendant Bank of America (as Disbursement Agent) was required to issue a Stop Funding Notice “[i]n the event that (i) the conditions precedent to an Advance [set forth in Section 3.3 of the Disbursement Agreement] have not been satisfied, or (ii) [Wells Fargo, N.A. or Bank of America] notifies the Disbursement Agent [Bank of America] that a Default or an Event of Default has occurred and is continuing ....” (Disb. Agr. § 2.5.1); (Aurelius Compl. at ¶ 37); (Avenue Compl. at ¶ 124). Under the Disbursement Agreement, the issuance of a Stop Funding Notice has the effect of preventing disbursements from the accounts subject to certain waiver provisions and limited exceptions not at issue. (Disb. Agr. § 2.5.2).

As noted, Defendants' agreement to make Revolving Loans to Fontainebleau is governed by Section 2.1(c) of the Credit Agreement. The first sentence of Section 2.1(c) provides, in pertinent part, that “[s]ubject to the terms and conditions [of the Credit Agreement], ⁷ each Revolving Lender severally agrees to make Revolving Loans to [Fontainebleau] provided that ... unless the Total Delay Draw Commitments have been fully drawn, the aggregate outstanding principal amount of all Revolving Loans and Swing Line Loans shall not exceed $150,000,000.” (emphasis in original). The second sentence of Section 2.1(c) provides that “[t]he making of Revolving Loans which are Disbursement Agreement Loans shall be subject only to the fulfillment of the applicable conditions set forth in Section 5.2.” (emphasis in...