Alta Capital Partners Intl. LLC v Parsons Capital LLC

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Alta Capital Partners Intl. LLC v Parsons Capital LLC 2017 NY Slip Op 31246(U) June 5, 2017 Supreme Court, New York County Docket Number: 656550/2016 Judge: David B. Cohen Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [*FILED: NEW YORK COUNTY CLERK 06/09/2017 04:02 PM 1] NYSCEF DOC. NO. 28 INDEX NO. 656550/2016 RECEIVED NYSCEF: 06/09/2017 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY I PRESENT: 58 PART HON. DAVID BENJAMIN COHEN Justice -------~L--------------------------------------------------------------------~----X ALTA CAPITAL PARTNERS INTERNATIONAL LLC, AND ALPHASOURCE CAPITAL SECURITIES LLC, INDEX NO. MOTION DATE Plaintiff, MOTION SEQ. NO. i 656550/2016 1/19/2017 001 -v- PARSONS CAPITAL LLC, AND GENERAL INTERNATIONAL HOLDINGS, INC.,, DECISION AND ORDER Defendant. i I i -------~---------------------------------------------------------------------------X The following e-filed documents, listed by NYSCEF document number 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19,20, 21, 22,23,24,25, 26,27 I i werelread on this application to/for DISMISSAL 11 :!. Upon the foregoing documents, it is Deciqed that the motion seeking dismissal based upon documentary evidence and failure to state I ! a cause of action is denied in part and granted in part. ,On May 25, 2017 and as amended by ·I furth~r agreement June 15, 2016, the parties entered into an agreement where plaintiffs agreed to ' act as the exclusive financial advisor for defendants in their attempt to purchase a stake in a ~ .. I publiely traded company. If successful, plaintiffs were to receive no less than $200,000. In ' addition, if certain conditions were met plaintiff was tO receive $7,500 per month. The .,i agre~ment also contained a statement that it would not apply for a NASDAQ-listed services company that defendants were already pursuing. On June 29, 2016, defendants entered into a preliminary agreement to purchase a stake in Lightbridge Co., a NASDAQ listed company. The ,, .l 656550/2016 ALTA CAPITAL PARTNERS vs. PARSONS CAPITAL LLC Moti6n No. 001 1 of 4 Page 1of4 [*FILED: NEW YORK COUNTY CLERK 06/09/2017 04:02 PM 2] NYSCEF DOC. NO. 28 INDEX NO. 656550/2016 RECEIVED NYSCEF: 06/09/2017 ' purchase was completed on July 5, 2016 and defendants terminated the agreement on July 6, 2016. l Initially, plaintiffs made a demand for payment 'and defendants failed to pay, plaintiffs filed a Demand for Arbitration with the American Arbitration Association, as required in the ' agree1'.i1ent. Defendants allegedly did not appear. Upon determining that the agreement lacked I the requisite legal terms to be an enforceable arbitration agreement rendering a motion to compel I arbitr~tion unlikely to succeed, plaintiffs commenced this action seeking $207,500 under the i agreeinent plus legal fees. The agreement did contain a clause stating "All disputes arising out I , of this agreement shall be governed by, and construed in accordance with, New York law and be ' resol~ed by arbitration in New York City. The legal, filing, arbitration, and other fees and ! experises arising out of such arbitration shall be borne by the losing party or in such proportion as th~ arbitrator(s) shall decide." · Defendants moved pursuant to CPLR 321 l(a)(l) and (7). They argue that a plain reading i ' of the agreement shows that defendants cannot state a cause of action for breach of contract as ·I ,, (1) the agreement carved out the Lightbridge transaction from the agreement; and (2) plaintiffs have not earned their fee under the agreement as they did not introduce Lightbridge to I I defendants. I The motion is denied. The agreement simply ~tates that it would not apply to a transaction involving a NASDAQ-listed services company without other identifying features. Although defendants argue that there is no dispute that Lightbridge is a NASDAQ-listed services, that point is disputed and in any event, does ~ot prove from the documentary evidence I I that 1ightbridge was the intended company. ! The M&A success fee provides "The Buyer shall pay Advisor, due at close of each I transaction, and as a condition to each close, in Advisor's U.S. bank account, a cash fee in ' 656550/2016 ALTA CAPITAL PARTNERS vs. PARSONS CAPITAL LLC Motion No. 001 2 of 4 Page 2 of 4 [*FILED: NEW YORK COUNTY CLERK 06/09/2017 04:02 PM 3] NYSCEF DOC. NO. 28 INDEX NO. 656550/2016 RECEIVED NYSCEF: 06/09/2017 l I , immeaiately available funds equal to 5%, of the aggregate value of all consideration, including i assumed indebtedness, paid or to be paid to, by, or on behalf of the Buyer, with a minimum fee of no\ess than $200,000." This clause does not have a requirement that the transaction be ! . introduced by plaintiffs, who had been engaged as defendants' "exclusive financial advisor." I ; Although, the non-circumvention clause is limited to entities introduced by plaintiffs, the M&A portion of the negotiated agreement did not contain su~h a limitation. ; When deciding a motion to dismiss pursuant to CPLR §3211, the court should give the i ' ' pleading a "liberal construction, accept the facts alleged in the complaint to be true and afford •1 I the plaintiff the benefit of every possible favorable inference" (Landon v. Kroll Laboratory Speci~lists, ! Inc., 22 NY3d 1, 5-6 [2013]; Faison v. Lewis, 25 NY3d 220 [2015]. The Complaint i alleg~s that the agreement (as amended by the June 15, 2016) except for the two exclusions, I i I obligated initially defendants to plaintiffs in the event either defendant made an investment in a i company, whether with or without the involvement of plaintiffs. Giving plaintiffs all favorable i J inferbnces, as the M&A provision did not specifically require plaintiffs introduction, the I ' complaint states a cause of action for breach of contract. 'I Defendants also moved to dismiss the second cause action for breach of contract on the I claini for $7,500. The agreement contains a Retainer Fee provision which states "When a com~any, a shareholder, or a group of shareholders ("Target") has expressed interest in a sale of . shares or an investment by the [Defendants] evidenced by the earliest of (i) the signing of an NDA, (ii) the sharing of information, or (iii) the holding of a conference call or meeting with the [Defendants] or [their] representative, the [Defendant~] shall immediately pay [Plaintiffs] ... a non-refundable fee of $7,500." Defendants argue that plaintiffs do not allege that any of these three, prerequisites actually occurred. Paragraph 19 -23 allege that plaintiffs introduced potential I 656550/2016 ALTA CAPITAL PARTNERS Motion No. 001 vs. PARSONS CAPITAL L.!LC Page 3 of 4 3 of 4 I J [*FILED: NEW YORK COUNTY CLERK 06/09/2017 04:02 PM 4] NYSCEF DOC. NO. 28 INDEX NO. 656550/2016 RECEIVED NYSCEF: 06/09/2017 ! target to defendants and shared information with defendants' counsel regarding said target. Giving plaintiffs all favorable inferences, plaintiff has stated a cause of action for breach of " contract. i' Finally, defendants' motion to dismiss the third cause of action seeking legal fees is 1 ' grantid. The plain language of the agreement permits the prevailing party in an arbitration to entitlement for fees as decided by the arbitrator. This litigation is not an arbitration and the I i I Comtlis not an arbitrator. The cause of action does not' seek damages for breach of contract . based; upon defendants' refusal to comply with the arbitration requirement. For the above reasons, it is therefore ORDERED, that defendants' motion to dismiss the first and second causes of action is denie~; and it is also ORDERED, that defendants; motion to dismiss the third cause of action is granted. This constitutes the decision and order of the Court. 6/5/2017 DAVID B. COHEN, J.S.C. DATE I CHECK ONE: CASE DISPOSED H GRANTED APPLICATION: CHECK IF APPROPRIATE: D NON-FINAL DISPOSITION DENIED ' GRANTED IN PART SETTLE ORDER SUBMIT ORDER DO NOT POST FIDUCIARY APPOINTMENT 656550/2016 ALTA CAPITAL PARTNERS vs. PARSONS CAPITAL LLC Motion No. 001 4 of 4 D OTHER D REFERENCE Page 4 of 4

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