N. Shipping Funds I, L.L.C. v. Icon Capital Corp.

• Citation: 998 F.Supp.2d 301
• Decision Date: 24 February 2014
• Docket Number: No. 12 Civ. 3584(JCF).,12 Civ. 3584(JCF).
• Parties: NORTHERN SHIPPING FUNDS I, L.L.C., Plaintiff, v. ICON CAPITAL CORP., Boa Sub C AS, Boa Deep C AS, Boa Holding AS, Boa Offshore AS, and Taubãtkompaniet AS, Defendants.
• Court: U.S. District Court — Southern District of New York

998 F.Supp.2d 301

NORTHERN SHIPPING FUNDS I, L.L.C., Plaintiff,

v.ICON CAPITAL CORP., Boa Sub C AS, Boa Deep C AS, Boa Holding AS, Boa Offshore AS, and Taubãtkompaniet AS, Defendants.

No. 12 Civ. 3584(JCF).

United States District Court, S.D. New York.

Feb. 24, 2014.

Philip Ransom Schatz, Mary Katherine Sherman, Wrobel & Schatz LLP, New York, NY, for Plaintiff.

Thomas Owen Johnston, Porzio, Bromberg & Newman, P.C., Michael Darren Traub, Akerman LLP, New York, NY, for Defendants.

MEMORANDUM AND ORDER

JAMES C. FRANCIS IV, United States Magistrate Judge.

Plaintiff Northern Shipping Funds I, LLC (“Northern”) brings this action against defendants Icon Capital Corporation (“Icon”) and Boa Sub C AS, Boa Deep C AS, Boa Holding AS, Boa Offshore AS, and Taubãkompaniet AS (collectively, “Boa”), alleging breach of contract, unjust enrichment, and money had and received; Boa asserts cross-claims against Icon for fraud and breach of contract and seeks rescission of a settlement agreement; and Icon cross-claims against Boa for breach of contract. Under Rule 56 of the Federal Rules of Civil Procedure, Northern and Icon each move for summary judgment against the other on Northern's contract, unjust enrichment, and money had and received claims; Icon moves for summary judgment on Boa's fraud and breach of contract crossclaims; Icon and Boa each move for summary judgment against the other on Icon's breach of contract cross-claim; and Boa moves for summary judgment on Northern's breach of contract claim. The parties have consented to my exercising jurisdiction over the action for all purposes, in accordance with 28 U.S.C. § 636(c). For the reasons set forth below, Boa's and Icon's motions for summary judgment are granted in part and denied in part, and Northern's motion is denied.

Factual Background

The factual background of this dispute is set forth in the Local Rule 56.1 Statements of Undisputed Material Facts submitted by the parties,¹ their subsequent responses to these statements,² and documents included as exhibits to the motions. While the parties offer differing interpretations of the underlying facts and draw divergent inferences, most of the actual events, documents, and communications are undisputed. Disagreements over what actually happened are noted here and discussed later in further detail as necessary to adjudicate the motions.

A. The Contract

The Boa entities, based in Norway, provide “offshore services” such as “barge transportation, rig moves, coastal towages, and salvage operations.” (Boa 56.1 Statement, ¶ 1). Northern is based in the Marshall Islands and is in the business of “[s]ourcing, arranging, structuring and funding transactions in the shipping and offshore oil services sectors.” (Deposition of Sean Durkin dated Sept. 18, 2013, attached as Exh. 54 to Declaration of Thomas O. Johnston, Esq. dated Oct. 31, 2013 (“Johnston Decl.”), at 16; Northern 56.1 Statement, ¶ 1). Icon is an “independent equipment leasing and financing company” working with entities in “a wide range of industries, including the maritime industry.” (Icon 56.1 Statement Boa, ¶ 2). In January of 2010, Icon and Northern proposed an arrangement to provide Boa with refinancing of some of its outstanding loans. (Northern 56.1 Statement, ¶ 4; Icon 56.1 Statement Boa, ¶¶ 6–7). Neither was able to provide all of the necessary financing by itself. (Northern 56.1 Statement, ¶¶ 5–6; Boa 56.1 Statement, ¶ 4). From February to September of 2010, the three parties exchanged draft contracts setting forth the proposed terms of the deal. (Icon 56.1 Statement Boa, ¶ 8; Northern 56.1 Statement, ¶ 7; Boa 56.1 Statement, ¶¶ 7–9). Boa believed that Northern and Icon “had authority to act for [each] other with respect to the [contract]” during these negotiations. (Boa 56.1 Statement, ¶ 11).

On September 16, 2010, Northern and Icon sent Boa a proposed contract (the “Commitment Letter” and “Term Sheet”) under which Northern and Icon (acting jointly as the “Arrangers”) would provide Boa with a $70,000,000 loan (the “Transaction”). (Commitment Letter, attached as Exh. A to Complaint; Term Sheet, attached as Exh. A to Commitment Letter). These documents were drafted on paper that bore the logos of both Northern and Icon on the top of each page. (Commitment Letter; Term Sheet; Northern 56.1 Statement, ¶ 23). The Commitment Letter had spaces for C. Tobias Backer, the Senior Director of Icon, and John Hartigan, the Senior Investment Manager of Northern, to sign jointly “[o]n behalf of the Arrangers”; however, only Mr. Backer signed the letter. (Commitment Letter at 20; Northern 56.1 Statement, ¶¶ 21–33). ³ Ole T. Bjornevik, Boa's Chairman, executed the contract by signing the Term Sheet on behalf of Boa on September 17, 2010. (Term Sheet at 30). The absence of Northern's signature on the Commitment Letter surfaced in later discussions regarding Northern's claims under the contract, and Boa asserted as an affirmative defense in this action that Northern's failure to execute means there is no privity of contract. (Boa's Answer, Defenses, and Cross–Claims at 9, ¶ 68). However, the parties now appear to agree that a binding contract existed between Boa and both Arrangers, Icon and Northern. (Northern 56.1 Statement, ¶¶ 8, 10, 27–33, 39–40, 42–47; Northern Response to Icon 56.1 Statement, ¶ 11; Boa 56.1 Statement, ¶ 12).

The Term Sheet provides details regarding the financing arrangement, Boa's payment obligations, the Arrangers' Fees, consequences of a default on the loan, and conditions precedent to the Transaction. (Term Sheet at 23–24, 28–29; Northern 56.1 Statement, ¶¶ 10–13, 20; Boa 56.1 Statement, ¶¶ 14–15). It also includes liquidated damages clauses in the event Boa was unable or unwilling to go forward with the Transaction. (Term Sheet at 23–24; Icon 56.1 Statement Northern, ¶ 14). Of the $70 million in financing, Icon was to provide $25 million and Northern was to provide $17.5 million of its own capital and $27.5 million from other investors. (Northern 56.1 Statement, ¶¶ 34–38). Upon the execution of the contract, Boa paid Icon a $300,000 deposit on the Arrangers' fees to cover its expenses. (Commitment Letter at 19; Term Sheet at 23; Northern 56.1 Statement, ¶¶ 25, 52–53; Icon 56.1 Statement Northern, ¶¶ 15–16).

The Commitment Letter states that it is “issued for [Boa's] benefit only and no other person or entity may rely hereon.” (Commitment Letter at 19; Icon 56.1 Statement Northern, ¶ 18). It also “sets forth the entire agreement between the parties as to the matters [ ] herein.” (Commitment Letter at 20). Northern argues, contrary to Icon's interpretation, that this language does not apply to the relationship between Northern and Icon as co-Arrangers, but rather to their relationship with Boa as the borrower. (Northern Response to Icon 56.1 Statement, ¶¶ 12–13). The Commitment Letter does not contain any language with respect to how the Arrangers would apportion the fees paid to them by Boa (Term Sheet; Icon 56.1 Statement Northern, ¶ 21), and there are no other final documents setting forth the relationship or obligations between Northern and Icon as co-Arrangers (Icon 56.1 Statement Northern, ¶¶ 18–19).

B. Breach of Contract and Demand

On December 15, 2010, Boa unilaterally withdrew from the Transaction, claiming that the refinancing had “proven to be more complicated and [ ] taken [a] much longer time to conclude than we all have anticipated.” (E-mail of Ole Bjornevik dated Dec. 15, 2010, attached as Exh. 7 to Johnston Decl.). Boa alleges that it broke off the Transaction because the Arrangers were moving too slowly (Boa 56.1 Statement, ¶¶ 23–25), but Northern and Icon dispute this interpretation of the e-mail and claim that they were prepared to move forward with the Transaction at that time (Icon Response to Boa 56.1 Statement, ¶¶ 23–25; Northern Response to Boa 56.1 Statement, ¶¶ 23–25).

After Boa withdrew from the Transaction, representatives from Northern calculated the amount owed to the Arrangers as liquidated damages under the Term Sheet. (Northern 56.1 Statement, ¶ 56). On December 23, 2010, Mr. Backer of Icon sent an e-mail to Mr. Bjornevik of Boa, with a copy to Mr. Hartigan of Northern, demanding payment of “the fees, costs and expenses that are payable by you under the Commitment Letter in the case where the Borrower terminates the Transaction closing process.” (E-mail of C. Tobias Backer dated Dec. 23, 2010 (“Backer 12/23/10 E–Mail”), attached as Exh. 8 to Johnston Decl.). Northern asserts that this e-mail was sent “on behalf” of Northern and Icon as the Arrangers and represented a demand for the fees owed to both Arrangers. (Northern 56.1 Statement, ¶¶ 59, 61–63). Icon disputes that the e-mail was sent “on behalf of” Northern, noting that there was no reference to “ ‘we,’ ‘Northern and Icon’ or ‘Northern’ in the e-mail;” Icon also disagrees that the fees were owed to both Arrangers, arguing that the Commitment Letter was “silent” as to who was entitled to the Arrangers' fees “in the event collection efforts [were] required.” (Icon Response to Northern 56.1 Statement, ¶¶ 20, 49–50, 59–62). This disputed interpretation of the e-mail demand is part of a larger disagreement about whether Northern and Icon had ever discussed how they would split the fees from the Transaction, including those recovered in the event that Boa withdrew; Northern alleges that there was an oral agreement to split at least some of the fees equally, but Mr. Backer claimed that he did not recall such an oral agreement. (Icon Response to Northern 56.1 Statement, ¶ 76; Northern Response to Icon 56.1 Statement, ¶¶ 21–22). In any event, Mr. Backer admitted in deposition testimony that he sent the December 23, 2010 e-mail on behalf of both Arrangers, and that if Boa had paid the fees prior to litigation, Northern would have had a claim to at least some portion of the money collected. (Examination Before Trial of C. Tobias Backer dated Sept. 13, 2013 (...