S.A. De Obras Y Servicios, Copasa v Bank of Nova Scotia

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S.A. De Obras Y Servicios, Copasa v Bank of Nova Scotia 2018 NY Slip Op 31371(U) January 12, 2018 Supreme Court, New York County Docket Number: 651649/2013 Judge: O. Peter Sherwood Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 1] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 SUPREME COl.JRT OF THE ST A TE OF NEW YORK COUNTY OF NE"'' YORK: COMMERCIAL DIVISION PART 49 -------------------------------------------X S.A. de OBRAS Y SERVICIOS, COPASA, Plaintiff, - against THE BANK OF NOVA SCOTIA AND SCOTIABANK GLOBAL BANKING AND MARKETS f/k/a SCOTIA CAPTIAL INC., DECISION AND ORDF:R Index No. 651649/2013 Motion Seq. No. 002 Ddendants. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - -- -X COINTER CHILE, S.A. AND AZVI CHILE, S.A. AGENCIA EN CHILE, Plaintiffs, -againstTHE BANK OF NOV A SCOTIA AND SCOTIABANK GLOBAL BANKING AND MARKETS f/k/a SCOTIA CAPITAL INC., DECISION AND ORDER Index No. 651555/2012 Motion Seq. No. 003 Defcndants. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - -- -X 0. PETER SHEIHVOOD, J.: On June 12, 2014 this court rendered a Decision and Order dismissing the first cause of action of plaintiff, S.A. de Obras y Servicios, Copasa ("Copasa") and plaintiff Cointer Chile S.A. ("'Cointer'') alleging gross negligence in connection with plaintiffs' bid for a m1tjor toll road construction project in Chile and denying the motion of defendant, the Bank of Nova Scotia (''Scotia") to dismiss Cointer's Sixth Cause of Action \vhich alleges breach of an October 2011 agreement (October Agreement). On appeal, the First Department reversed this court's dismissal of the gross negligence claims, stating in a two sentence decision that "[a]t this stage of the litigation, prior to key depositions being held, it cannot be detennined whether any 'outrageous acts of folly' were involved (see Har{(ord Ins. Co. v Holmes Protection Group, 250 AD2d 526, 528 flst Dept 1998]). 2 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 2] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 Accordingly, the contract-based claims for gross negligence should not have been dismissed.'' (NYSCEF Doc. No. I 49). Otherwise, the court affirmed. including as to sixth cause of action where this court concluded that issues of fact exist as to whether the parties reached a binding preliminary contract giving rise to a duty to negotiate in good faith, and, if so, whether Scotiabank hrcached it. The parties having completed discovery, Scotia now moves for summary judgment under motion sequence 003 in the case bearing ind.ex number 651555/2012 (the "Cointer Action'") and motion sequence number 002 in the case bearing index number 651649/2013 (the "Copasa Action'') dismissing all remaining claims. 1 With the benefit of a fuller record, once again the court grants the motion to dismiss the gross negligence claims, and denies Scotia's motion to dismiss the Sixth Cause of Action alleging breach of the October Agreement. l. BACKGROUND On March 26, 2010, plaintiffs Cointer, its parent company, Azvi Chile, S.A. Agencia en Chile (collectively, "Cointer Plaintiffs"), and S.A. de Obras Y Servicios, COPASA (''Copasa'') (together with Cointcr Plaintiffs "Sponsors" or "plaintiff<>"), executed an Engagement Letter the parties entered into a contingency fee contract with Scotia in connection with a public works tollroad concession project for the construction, operation and maintenance of a section of Ruta 5 highway between the Chilean cities of La Serena and Vallenar (the ''Project" or the "Ruta 5 Project'") (NYSCEF Doc. Nos. 178 l"DSUMF"] 259 f"PSUMF'j, collectively 259 [''SUMF"l ~1 1). The engagement letter contains a "Special Damages and Limitation of Liability'' provision which limits Soctia's aggregate liability in contract or tort "to 50% of the amount of the Success ree actually received ... " (NYSCEF Doc. No. 206. § 20). Pursuant to the Engagement Letter, Scotia's "proposed core team"' \\las to include: ·'Mr. Conor Kelly, Managing Director, who will oversee the engagement and relationship with [plaintiffs]. l\fr. Kelly will be assisted by Joao Carneiro, Director; Yann Megret Associate Director: and Cesar Bodden, Associate" (id. § 22). Among the tasks Scotia \.Vas to perfonn was to .. Develop and manage detailed financial models for the Sponsors ... and to be submitted with the bid'' (the "Bid Model'') (id. at BNS00000006). This model was to be "prepared in accordance with the tender requirements'' (id.). A. 1 Development of the Biel Model Unless otl11~rwisc noted, all citations to NYSCEF arc to dm.:uments filed under index numhcr 65 I 555/2012. 2 3 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 3] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 The parties agree that Bodden was the primary person responsible for preparing the Bid Model and that Carneiro, the ·'Team Leader" had at least some involvement in the development process (see PSUMF ilii 6-9). The parties dispute whether Bodden was suili.ciently qualified to take on this role, and the extent to which Carneiro supervised Bodden. Bodden's qualifications included an MBA from the Stern School ofl1usiness at NYU, a CPA license, and at least 36 months in post-graduate experience (id ~ 6). Plaintiffs assert that before joining Scotia, Bodden had never worked on financial models for infrastructure finance projects in particular (NYSCEF Doc. No. 263 Bodden Tr. 15:5-13), and described himself as "a junior guy" on the team (id. 26:19). Ho"Wever, he had worked on numerous other financial models. Of particular relevance here. after joining Scotia, Bodden served as the primary modeler on a similar road construction project for plaintiffs, referred to as the Antofagasta Project (NYSCEf Doc. Nos. 262, Carneiro Tr. al 117: 1719 ;md 272, Mcgret Tr. 65:2-4). Regarding the extent of Carneiro's supervision of Bodden's work, Scotia notes that both Bodden and Carneiro testified that they discussed the Project and the Bid Model frequently leading up to the October 2010 bid date (NYSCEF Doc. No. 263 Bodden Tr. at 77 :4-11; 262 Carneiro Tr. at 92:25- 93: 17). Carneiro testified that he spent approximately twenty hours working with Bodden on the Bid Model (id., Carneiro Tr. at 240:4-23 )2. Plaintiffs dispute this account to the extent it suggests Carneiro was working on the Bid Model during the period just before the bid date, as Carneiro \vas travelling in the four weeks leading up to the bid date (PSUMF if 8). Plaintiffs also note that Carneiro testified that he was not responsible for reviewing the Bid Model (Carneiro Tr. at 33:4-14, 39:12-14 ("Q. Were you responsible for reviewing the bid model? A. No."). that his \vork on the model \'I/as limited to '·plac[ing] sensitivities in the model'' and ''understand! ing] the model" (id. at 33: 15-21, 39:24-40:2), and that he did not '·inquire[] of the model audit process" before Bodden sent the model to plaintiffs (id. at 55:9-19). Camciro's work was not "limited" in the sense plaintiffs assert (PSUMf if 7). He explained that as team leader he \Vas responsible for making sure that everything runs smoothly and reviewing the bid requirements (see id at 12:9- 40:6). The task of reviewing the Bid Model was assigned to the modelers (see id at 37:14-19; I 19:2-4 ). Carneiro supervised their work (see id 32:9- 18). 2 Yann Megret, another modeler, testified similarly (see NYSCEF Doc. No. 272. Megrel Tr. at 196: 16-24 ["[Carneiro] did spend a lot of time on [the Bid t\.fodcl) working with !Boddcnl"l). 3 4 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 4] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 After clearing il with Carneiro. Bodden sent a draft of the Bid Model to plaintiffs on September 7, 2010 (SUMF iJ 9). Jesus Martinez ofCointer ("Martinez") and Juan Ruiz de Velasco of Copasa (''Velasco''). reviewed certain aspects of the Bid Model, asked questions, and provided their input (id. ii 13). On September 10, 2010, Bodden asked plaintiffs to review the VPI tab, which the plaintiffs did thereafter (id. if 14). The Error B. The Bid Model was comprised 29 excel worksheets, with one tab dedicated for the VPI (id iJ 5). The "VPI'' calculation. vvhich was based on a discounted cash llov.·· formula provided by the MOP, was meant to indicate the present value of projected revenues from the to! I road (id. ii 10). The VPI was lo play a critical role in the bidding process. Where bidders were to provide the lowest VPI they would accept in return for building and operating the toll road. The bidder with the lowest VPI would win the bid (id.). ff the bid winner then formed a concession company and built and operated the toll road pursuant to the MOP's requirements, it would be entitled to receive the revenues from the toll road until such revenues reached the VPI bid, or for 35 years, whichever came first (id). If operating correctly, the VPI calculation would begin discounting projected revenues when the project began generating revenues, i.e .. the date of completion and opening of the first section of the toll road (id. i! I 0). That date was correctly entered in cell C 12 of the VP I calculation sheet. but the Bid Model Scotia sent plaintiffs on or around September 7, 20 l 0, incorporated an error in cell C 19 such that it referred to cell C 13, which contained the date the concession was projected to be granted to plaintiffs, instead of C 12, the date it was projected to begin generating revenue (id). The error caused the VPI calculation to begin discounting at too early a date, \vhich in turn artificially lowered the VPI (id). 3 If the formula in cell C 19 had referenced cell C 12 instead of Cl3, the formula would have produced the intended VPI, and the Bid Model would have performed exactly as intended (id ii 12). The parties dispute the extent to which the error was visible to those reviewing the Bid Model. Scotia contends that this error was visible on the face of the VPI calculation spreadsheet (DSUMF ~l 14), whereas plaintiffs note that both Megrct of Scotia and Velasco ("Velasco") of ' The precise e1rnr is undi:>putcd. As was the ca.<.c on the previous motions before this court, the parties dispute whether the error is more accurately described as a "typo'' limited to one cell, or a "fundamental'' error arising fTom an interpretation of the tender documents that found its way intn multiple cells in column C (sec SUMF IO~ 11 ). 4 5 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 5] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 Copas a indicated there might be some di11lculty in detecting the error on the face of the spreadsheet (PSUMF ii 14)4 . The court having examined the VPI calculation spreadsheet, observes that while the VP! calculation fomrnla was imbedded in the Bid Model and may have been difficult to detect, the effects of the error was plainly visible on the spreadsheet. It shows the Discount Factor being applied beginning on the Concession Date of January l, 2011, years before the Projected Completion Dale of the first section of the toll road and opening the toll road to fee generating tra11k. Plaintiffs used the Bid Model lo calculate their bid, and on October 26, 20 l 0, tendered a bid of lJF 5.973,001, -.vhich after release of the results of the bidding process around November 23, 2010, were discovered to be approximately 27 percent below that of the next lowest hid (id 16. 20). Roughly two weeks later, Velasco identified the error in the Bid Model (id. C. 1il ii 21 ). Tlte October Agreement Thereafter, Scotia, Cointer, and Copasa began to assess possible ways to proceed with the project (id. ~ 22). Tn or around February 2011, Copasa withdrew· from negotiations \Vhile Scotia and Co inter continued pursue options for moving forward (id. ii 23 ). In J unc 20 l l, Scotia represented to plaintiffs that SNC-Lavalin ("SNC"), a Canadian engineering and construction company \Vi th an established presence in Chile, expressed interest in joining the Project as a partner (id. i: 24). ln October, 201 I. the parties negotiated an agreement to form a concession company (the "October Agreement") (id , 25). Scotia maintains. as it has previously in this action, that the document was merely a "proposal to outline the understandings between the parties," and is not a binding contract (see DSUMF ~ 25). The October Agreement was conditioned on (i) "SNC's final due diligence on the Project's construction as well as SNC's commitment to [purchase] 25% of 4 l'v1r. Megrcl disagreed that the average person with "a basic understanding of finance infrastructure in general would not be able to detecl the error if they read the tender documents," because he didn't think "an average person could [read the tenderl document and be able to tell that the formula \Vas wrong. I don't think it is as simple as thn1.•· (NYSCEf Doc. No. 272. l'v1egret Tr. at 179: I 0-23). The inability of a non-expert to know the cause of an error, would not prevent !he non-expert from noticing the existence of an CITO!" simply by observing that the VP! spreadsheet shows the Discount Factor being applied during a period when no revenue was being generated to support it. The testimony of Mr. Velasco that !he column containing the Discount Factor was not visible on the electronic version of the VPI chart he received. was simply the result or settings made on his Excd software that caused the Date and Discount Factor columns to be hidden so as lo allow him to view two other columns to the right on his computer monitor (see NY SCEF Doc. No. 30 I, Velasco Tr. at 244:6-245: 16). His election to hide the Date and Discount Factor columns does not explain away his failure to see an obvinus error. 5 6 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 6] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 the equity for the Project," and (ii) receipt of "EUR 3 MM from ... COPASA ... payable upon the creation of the" concession company (SUMF if 26). Scotia contends that neither of these conditions could have been met. Regarding SNC's commitment, Scotia states that SNC and Scotiabank received an engineer's report analyzing the Project on or around October 26, 2011 (the "RyQ Report"), that warned that plaintiffs had budgeted for costs that were approximately 30% below the level comparable projects indicated was realistic (OSUMF if 27). Around that same date, it learned that SNC would no longer participate in the Pn~ject. Thereafter, Scotia advised Cointer that it \Vas no longer \Villing to participate as well (id ii 30). Cointer contends the RyQ Report was merely a preliminary assessment that did not draw any "'formal or final conclusions" but requested further information to add to its analysis (PSUMF ir 27). Cointcr adds there is no admissible evidence that SNC decided to withdraw before Scotia withdrew. Il contends that instead, during a call between Scotia and Cointer representatives on the day the RyQ Report was issued, Scotia gave two reasons for its decision neither of which was related to SNC (id. 1 30). Regarding Copasa's contribution of 3 million euros, Scotia contends that testimony by Copasa's general manager, Jose Luis Saravia, and a Jetter sent by Copasa on November 2, 2011, demonstrate that Copasa would have never contributed 3 million euros (DSUMF , 28, citing '.'JYSCEF Doc. No. 217, Saravia Tr. at 257: 14- 258:22, 270: 11-271 :8 [stating that ''Copasa \Va" not in agreement to inject 3 million euros'" and that the October Agreement was an ''agreement in which Copasa had not participated in, and in any event ... Copasa's position has always remained the same: not to contribute anything or not to apportion anything"]; and NYSCEF Doc. No. 243 [Letter from Copasa to Cointer, Nov. 2, 2011, substantiating the sarneJ). Cointer disputes this, directing the court's attention to notes from a September 29, 2011 meeting at the MOP attended by representatives of Scotia, Cointer, and Copasa, where Copasa stated that "[t]hey asked me to formally pronounce on 'vvhcther COPASA was willing to put up this money and I told them that J.L. Suarez had spoken to [Alfonso] and told him that if this money was a solution to the problem, it would not he an obstacle to its resolution" (NYSCEf Doc. No. 326 at COPASA0014830). All parties agree that Copasa had not pai<l the requisite 3 million euros at the point Scotia \Vithdrew from lhc project (SUMF ir 28). During the negotiation process between Cointcr and Scotia, Scotia requested that Cointcr provide standby letkrs of credit, which Cointc:r refused (id 6 7 of 21 ii 29). Scotia contends this request [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 7] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 was made in good faith in order to protect Scotia from the possibility it might be forced to contribute funds in excess of 14.5 million euros if Cointer could not supply such funds when necessary under the terms of the Project (DSUMF ,I 29). On October 28, 2011, Scotia informed Cointer that it would no longer be participating in the project (SlHv1F ii 30). Pursuant to the October Agreement, the deadline to satisfy the third party conditions \Vas to occur on November 4, 201 l (NYSCEF Doc. No. 236 at CJ\00003179). Thereafter, Cointer reached out to Copasa in an attempt to salvage the project, but was unsuccessful (SUMF IL fr 31 ). Cointer formally withdrew its bid on November 3, 2011 (id. ii 32). ARGUMENTS A. Grm•s Neglige11ce 1. Scotia's Memorandum in Support Scotia notes that courts have found no gross negligence from allegations of "negligent undcrstaffing·· (Ifartjord Ins. Co. v Holmes / 1rotection Group, 250 AD2d 526, 528 l l st Dept 1998]), "the overlooking of a few articles in an otherwise massive and fruitful search'' (Platinum Partners Value Arbitrage Fund LP v Kroll Assoc.. Inc., 102 AD3d 483 llst Dept 2013]), or "a series of mistakes alone, without a showing of recklessness'' (Am Tel. & TeL Co. v Cit_v· of New York, 83 FJd 549, 556 [2d Cir 1996]). (NYSCEF Doc. No. 179 ["defs' mem"] at 20). Scotia contends that the following facts arc undisputed and, rnnsidering the high standard for gross negligence, dispositive: • • • Scotia spent months working on the Bid Model; Bodden was qualified to build the Bid Model; Bodden co11aborated with Carneiro in building the Bid Model and working on the Project more generally: • • • • Carneiro checked and "played with" the Model prior to Scotiabank sending it to plaintiffs: Scotia worked with plaintiffs to revise the Bid Model more than a dozen times, Bodden asked plaintiffs to review the sheet that contained the mistake; and all of the 28 other sub-sheets of the Bid Model worked exactly as required (defs' rnem at 21-22). Scotia further contends that, even if Bodden were neither qualified to build the Bid Model nor properly supervised, such facts would not rise to the level of gross negligence (id. at 22, citing e.g. Calisch Assoc.. Inc. v Manufacturers Hanover Tr. Co., 151 AD2d 446, 448 list Dept 19891 [finding that allegations that bank had failed to detect fraud by "not adequately training and supervising its employees regarding proper bank procedures ... at most ... amount to a claim that defendant ... was negligent" and dismissing cause of action for gross negligence I 7 8 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 8] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 and Har(ford Ins. Co., 250 AD2d at 528 [dismissing cause of action for gross negligence based primarily on allegations of "negligent understaffing"J). Anticipating that plaintiffs' attempt to show Scotia failed to abide by internal policies and industry standards. Scotia offers three arguments why such an attempt fails to show gross negligence (defs' mcrn at 23-26). First, plaintiffs already made these allegations in their complaints, and the First Department implicitly recognized these allegations as insufficient when it reversed to allow for ''key depositions ... [to] determine [] whether any 'outrageous acts of folly"' occurred, as opposed to allow for plaintiffs to substantiate these specific allegations (NYSCEF Doc. No. 250). Second, industry standards are irrelevant to plaintiff~' gross negligence claims since. '·industry standards are relevant ... when evaluating professional malpractice" and since Scotia's work does not qualify as "profossional" for the purposes of a malpractice claim (dcfa · mcm at 24 ). The court notes that this argument fails in that, while Scotia offers support for its contention that industry standards arc relevant to malpractice claims, it ofiers no support for the proposition that industry standards are relevant only to malpractice claims. Third, there is no evidence that shows its actions did not comport with industry standards. Although plaintiffs' expert, Todd Antonelli, concludes that Scotia's conduct constituted an extreme departure from industry standards, Scotia contends Antonelli used the standards for an industry "far broader than infrastructure modeling," and was rooted in Sarbanes-Oxley legislation and guidance, which has ''no bearing on the standards for a model created to support a bid submission'" (id. at 25-26). 2. Plaintiffs' Memorandum in Opposition In opposition, plaintiff<; argue that Scotia makes certain factual presumptions in their moving papers that are not appropriate on a motion for summary judgment. First, Scotia presumes the credibility of Bodden's testimony, despite evidence that plaintiffs say "raise[] serious questions" about his credibility (NYSCEF Doc. No. 258 f"pls' mem"] at I 8). In pai1icular, plaintiffs note that, while Bodden testified that Mcgret "was the secondary modeler" (NYSCEF Doc. No. 263 Bodden Tr., 67:14-15), Mcgret testified that he was not the secondary modeler (N YSCEf Doc. No. 272 Megret Tr., 65:7-17). 5 Plaintiffs also note that the issue of whether the 'Megret was identified in the Engagement Letter as a member of the Project team (see NYSCEF Doc. No. 206, ir 7).). Although he was not a designated "secondary modeler," Bodden was not the only member of the ream who 8 9 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 9] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 error was merely the result of a typo, as Scotia argues. or a fundamental error of interpretation of the tender documents, as plaintiff<; contend, is within Boddcn's exclusive knowledge (pls' mem at 18-19 ). Plaintiff5 contend that this too precludes finding in Scotia's favor since "self-serving statements of an interested party which refer to matters exclusively within that party's knowledge create an issue of credibility which should not be decided by the court" on a motion for summary judgment (id., quoting Quiroz v 176 N Main, LLC, 125 AD3d 628, 631 [2d Dept 2015]). Second, plaintiffs contend Scotia has wrongly presumed the t()llowing disputed facts are undisputed when they arc actually under dispute (pis' mcm at 19-22): • • • • • • that Bodden worked on the model over six months: plaintiffs note an email from Bodden states he had only two months to work on the model (NYSCEF Doc. No. 296 at BNS00067071 ); that Carneiro provided extensive assistance to Bodden: plaintiffs argue Carnciro's involvement was far more limited than Scotia describes. and that Carneiro did not conduct an audit of the mode! or check to confirm it followed tender requirements; that the error in the model was merely a "typo": plaintiffs contend contemporaneous emails show that, after discovering the error, Bodden used similar attributions in order to "minimize our liability"' for the error, and that Carneiro rejected this description as inaccurate and described the error as an "error of interpretation'' that was "not related to fomllllas or calculations'" (NYSCEF Doc. No. 292 at BNS00058349 to BNS00058350). that the model contained only a single erroneous cell: as noted above, plaintiffs contend the error \Vas contained in multiple cells in column C; that plaintiffs had the ability to find the error, or should have been expected to: plaintiffs note various testimony supporting their contention that the error would have been difficult to detect (pis' mem at 21-22, citing e.g. Megret Tr. 179:20-23, 181:17-183:12) and argues that, under the Agreement, Scotia was solely responsible with ensuring the model was prepared in accordance \.vith the tender requirements; and that, under the circumstances, Scotia was not required lo conduct an external audit: plaintiffs contend that the failure to do so is relevant to whether Scotia committed gross negligence since. both plaintiffa' expert and Megrct indicated that, in the absence of an internal audit, an external audit \voul<l be common practice (id at 22, citing Godwin aff, ehixibt 60 ["Antonelli Report"] held the view thac Mcgret played that role. Under questioning by counsel for Co inter, team leader, Carneiro tcsti fied that Rodden was responsible for ensuring that the Bid Model was prepared in accordance with the cender requirements (Carneiro Tr. at 37: 14 - 38:3). Counsel then asked and got the foll<>wing response: "Q. And Yann Mcgret'? A. And Yann was also like a secondary modekr. But like I said the person that was mostly responsibk for model preparation was Cesar. (id at 37:23 38:3). And later: Q. Other than Cesar Bodden do you know if <myone else formally reviewed the financial model to ensure that it complied with the tender requirements? A. I know or I ... I ... I think I can say that I know that Yann also worked on at least parts of the model. But I don't think Yann formally reviewed the financial model the final financial model. Q. Do you know which part of the financial model Yann reviewed? A. No, I don't but Yann was someone that Cesar would consult with some frequency and would also seek his advice for help when he felt he needed. They sat very close so they would talk between themselves frequently" (id at 40:7 - 23). Similarly, Matthew Gitkn testified that "it was [his] belief that Yann had indeed perfbrmcd the secondary check" (Giffon Tr. at IOI :19-20). 9 10 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 10] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 fi 21 and Mcgrct Tr. 23:25-24:5 [stating that, while he worked at Depfa Bank, "'there \Vas an external audit performed on each model"!). Finally, plaintiffs argue Scotia dismisses certain factual disputes as immaterial, when they in fact preclude summary judgment (pis' mem at 23-28). The first of these disputes involves Ivlegret 's testimony that he did not perfonn the duties of the secondary modeler. Plaintiffs contend this fact is material as it relates to whether Scotia complied with its own audit protocol and whether anyone other than Bodden checked the model to ensure it complied with tender requirements (id at 23-24). The second is whether Scotia failed to follow its internal protocol. Plaintiff'> cite to a number of cases that took some form of preexisting protocol into account in evaluating a claim of gross ncgligence. 6 Plaintiffs also argue that the fact that Scotia had any such protocol demonstrates that Scotia was aware of the risk of"prccisely the type of error that occuffed here,'' which plaintiffs argue bears directly on the issue of Scotia's recklessness (pis' mem at 24-25, citing Internationale Nederlanden (US) Capital Corp. v Bankers Tr. Co., 261AD2d117, 122 [1st Dept 1999] (noting !hat the "l t]ailure to keep accurate records has been considered evidence of gross negligence where ... the defendant was a\varc that significant losses could result from inaccurate records"J). The third is whether Scotia's conduct constituted an "extreme departure" from the standard of care in the industry (id. at 25-27). Plaintiffs note that "the particular standard of care which a defen<lant is judged against in a given case is a factual matter for the jury'' (id., quoting Food Pageanl. Inc., 54 NY2d at 172), and argue that the issue of whether a defendant's conduct constitutes an extreme departure from the applicable standard of care is relevant to a determination of gross negligence (id. citing Baycrische Landesbank, New York Branch v Aladdin Capital Mgt. LLC. 692 F3d 42, 61 l 2d Cir 20121 l recklessness in the context of a gross negligence claim means '·an extreme departure from the standards of ordinary care, such that the danger was either known 'Pis' mem at 24 n 117, citing Food Pageant. Inc. l' Consul. Edison Co" Inc. (54 NY2d 167, 173-174 [1981] lattirming jury verdict for gross negligence where defendant power company failed to adhere to protocol provided for in agreement between defendant and other utilities in the New York Power Pool]), Foothill Capital Corp v Grant Thornton LlP (276 :\D2d 437 [!st Dept 2000] [finding plaintiff.~ states a cause of action for gross negligence where complaint alleged, among other failures, that defendant determined that additional auditing procedures were necessary but never performed them]), Baidu. Inc. v Register.com. Inc. (760 F Supp 2d 312, 319 [SD NY 20 IOJ [finding the same where complaint allegcJ that ddendant '"failed to follow its m.vn security protocols and essentially handed over control of [plaintiff's] account to an unauthorized Intruder, who engaged in cyber vandalism"]), and f·,·.11a1e of !!ammond v Brunswick Ho:-,p. Ctr .. Inc_ (38 Misc 3d 12 l4[A] fSup Ct, Suffolk County 20 I JJ [denying motion for summary judgment in medical malpractice action where there were issue of fact as to "whether the defendants appropriately followed protocol, and \.vhcthcr their actions, and alleged failures lo act, rose to the level of gross negligence, thus precluding summary .iudgmcnt"l). 10 11 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 11] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 to the defendant or so obvious that the defendant must have been aware of it"J and ,Horgan Stanley Jfortg. Loan Tr. 2006-JJARX v ,i\forgan Stanley Mortg. Capital Holdings LLC, 143 AD3d 1. 8 11 st Dept 2016] [sustaining claim for gross negligence where, among other allegations, defendant ''failed to adhere to even minimal underwriting standards'']). The last is whether Scotia failed to adequately supervise Bodden (id at 27-28. citing e.g. :')ommer v Fed SiR1wl Corp., 79 N Y2d 540, 548-49 [ 1992] [finding triable issue of fact for gross negligent claim relating to un "'allegedly ... untrained, inexperienced substitute" dispatcher ignored fire alarms from a building that caused that fire to develop into a four-alarm fire]). Plaintiffs argue that, granting them all requisite inferences on a motion for summary judgment, the facts in this case are enough to constitute gross negligence under New York law (pis· mem at 15-18). In particular. plaintifTs note that courts have held that instances involving a defendant who committed '·several careless acts," failed to properly supervise an employee (Food Pageant, 54 NY2d at 171) or "clos[ed] its eyes to known risks (Ambac Assur. UK Ud. v .I.I' Almxan Inv. Mgr., Inc , 88 AD3d I, 11 p st Dept 201 l l) were sufficient to constitute gross negligence. Plaintiffs further contend that "misconduct considerably less outrageous than Scotia's can constitute gross negligence" (id. at 17-18, citing e.g. Jnternationale Nederlanden. 261 AD2d at 1.22-123; S. Wine & Spirits o/Am .. Inc. v Impact Envtl. Eng'g, PLLC, 104 AD3d 613. 614 [1st Dept 2013J [finding allegations that defendant failed to disclose "the presence of 38 dry wells, containing potential contaminants, on plaintiffs' property, despite the availability of this information in the public records" raised an issue of fact as to gross negligencej; Dolphin Holdings. Ltd v Gander & White Shipping. Inc., 122 AD3d 901, 903 [2d Dept 2014] [finding issue of fact where defendant allegedly "failed to exercise even slight care by, among other things, placing two valuable works in close proximity to each other, in violation of the defendant's own policy and practice" causing more than $1 million in damage I). 3. Scotia's Reply In reply, Scotia first examines the concessions of plaintiffs' responsive 19-a statement and argue that, despite plaintiffs' hair-splitting, the same dispositive facts defendants listed in their moving papers remain undisturbed (NYSCEF Doc. No. 328 ["defs' reply"] at 1-3). Scotia also disputes plaintiffs' characterizations of relevant caselaw - specifically that no case has determined the conduct involved in this case is neither grossly negligent or willful, that "several acts of negligence" can constitute gross negligence, and that cases have found gross negligence arising 11 12 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 12] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 out of less extreme conduct (dcfs' reply at 7-9). Scotia further argues that the factual disputes plaintiffs highlight arc either misattributions (i.e. Scotia does not dispute plaintiffs' position), or immaterial under the correct standard of Jaw (id. at 9-11 ). Finally, Scotia reiterates its argument that the failure to follow internal protocol, to conduct an external audit, and purported departure from industry standards have no bearing on whether Scotia's actions rose to the level of gross negligence (id. at 11-13). B. Wlietller Scotia Properly Withdrew from tfte October Agreement 1. Scotia's Memorandum in Support Scotia contends that the record conclusively demonstrates the failure of conditions precedent to the October Agreement -· that is, that Copasa \vould have never agreed to pay Scotia three million euros, and that SNC would not participate after seeing the RyQ Report (defs' mem at 29-31 ). Scotia contends that the fact that it withdrew from negoliations roughly one week before the deadline for the conditions precedent to be met is immaterial since the conditions precedent had failed before Scotia's withdrawal and since Cointer cannot meet its burden of showing the conditions failed because of Scotia's conduct (id. at 31-32, citing e.g. Pesa v Yoma Dev. Group, Inc., 18 NY3d 527, 532 [2012] Ifinding that a buyer in a damages suit must show that a transaction \Vould have closed but for the seller's repudiation since, "is axiomatic that damages fr.ff breach of contract arc not recoverable where they were not actually caused by the brcach-i.e., where the transaction would have failed, and the damage would have been suffered, even if no breach oct.:urred"]). ln the event the court finds there exists a question of fact regarding the conditions precedent, Scotia further contends the record conclusively shows it did not violate a duty to negotiate in good faith (id. at 32-34). Scotia notes that Alfonso Budifio General Manager of Cointer testified that negotiations failed because of Scotia's demand for standby letters of credit (NYSCEF Doc. No. 190. Budifio Tr. at 394:7-396:2). 7 Scotia also notes that Budifio further testified that once Scotia became a shareholder of the concession company, Scotia might be held responsible for additional equity contributions if Cointer did not contribute its share of funds when required, \Vhich could in tum "take Scotiabank above its 14.5 million euro maximum contribution'' 7 Scotia also contends Budiiio stated that negotiations also failed because due diligence was not successfully completed. but the portion of the transcript cited :states only that the October Agreement was subject to SNC"s completion of due diligence (defs· mcm at 33, citing Rudiiio Tr, at 37l:15-20), 12 13 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 13] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 (id at 397:5-399: 19). Scotia argues that its demand for standby letters of credit wa<; done to protect the terms of the October Proposal, \'< hich provided that Scotia would not be required to invest more 1 th:in 14.5 million euros and that Cointer would provide all necessary guarantees. Although Budifio testified that Cointer felt it was unfair fi.)r Scotia to make such a demand without offering to provide standby letters of credit itself, Scotia argues that seeking the additional protection was not unreasonable in light of the different financial positions of the two entities and the unilateral obligations of Cointer to invest and provide all necessary guarentees. Scotia also argues the record demonstrates it withdrew from the Project only ·'after it learned ... SNC \.vould ncit participate because due diligence had uncovered significant concerns relating to the Project,'' (id at 30, citing Garcia Tr. and at 11 l :24-112:24 [stating that Scotia withdrew from negotiations because of the RyQ Reportj; and Giffen Tr. at 197:7-14. 273:15274: 17 [stating that SNC indicated it \Vas not prepared to continue with the Project in light of the RyQ Report]). 2. Cointer's r.,,1emorandum in Opposition In opposition. Co inter argues that there are material issues of fact regarding whether either condition precedent would have been realized. Regarding the condition that Copasa contribute three million euros, Cointcr asserts that it would have been ·'economically irrational" for Copasa to refuse to agree to pay the three million in order to avoid (a) forfeiture of its 501% share of the approximately $I 0 million bid bond, and (b) the "'reputational consequenct:s that would result if the Sponsors did not follow through on their bid" (NYSCEF Doc. No. 313 ["Co inter opp''] at 67). Cointer also argues there is "ample evidence" that Copa'>a would have agreed lo make the payment which, at minimum, raises an issue of fact when viewed next to Scotia's evidence (id at 7-8, citing e.g. NYSCEF Doc. No. 313). 8 Regarding whether Scotia and SNC withdrew as a result of the RyQ Report Cointer argues Scotia made its decision to withdraw at some point on October 25, 2011 (id. at 4). It bases this 3 Other exhibits that Cointcr relies on arc Budiflo Tr. at 165: 15-166: I !(testifying lo a telephone conversation with Saravia of Copasa: "I explaincc.I to him the October agreement and the need of the funding that Copasa had to do for this lo he viable, because of the Scotia requirements, he said he was willing to help us injecting about 2 to 2.5 million curos"); at 314: 17-316: 14 ("Saravia told me without a doubt that he was willing to help so that they wouldn't execute on their guaranties, their own guaranties .... I am sure that if we had actually reached agreement, Copasa woulc.I have collaborated."); NYSCEF Doc. No. 327, Lacassie Tr. at 178: I 7-179:24 (recalling a meeting with J'vlOP where Saravia .stated that C'opasa was "not going to do anything to block the deal with Scoliabank, and they were also talking about zero cost. And zero cost for them was not spending more money than the amount of the bid hond .. ). 13 14 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 14] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 assertion on the deposition lestimony of a Scotia Managing Director, Pablo Garcia, who testified that Scotia had decided to withdraw before Garcia had sent an email at 12:25 AM on October 26, 2011. to Matl Giffen, another Scotia Managing Director, reporting that he spoke to a public relations firm (presumably during business hours on the 25th) that specialized in corporate communications emergency management. The 25th was a day before the RyQ Report was purportedly sent to SNC and Scotia and before SNC told Scotia that it would no longer proceed (id at 4 n 18, citing NYSCEF Doc. No. 317, Garcia Tr. at 121:9-122:4: and NYSCEF Doc. No. 325, email sent October 26, 2011, 6:27 Alvl allaching RyQ Report). In addition, Budifio states in his affidavit that during the call in which Scotia stated it decided to withdraw, the stated reason for the decision was due to Cointer's refosal to agree to Scotia's demands an<l concerns regarding the Project's profitability (NYSCEP Doc. No. 315, Budiii.o aff., ~ 26). Cointer also argues that the only evidence Scotia relies on - deposition testimony regarding what SNC allegedly told Scotia is inadmissible hearsay which cannot be relied upon at summary judgment (id. at 8, citing IYen ring Ji v Ruckrose Dev. Corp., 34 AD3d 253, 254 [ l st Dept 2006) [finding that an "affidavit was, in important respects, hearsay evidence, and as such \Vas insufficient to satisfy the movant's burden of establishing a prima facie showing of entitlement to an award of sw11mary judgment"J). Co inter also contends that whether Scotia acted in good faith raises a question of fact (id at 9). It notes that the '"obligation to negotiate in good faith bars a party from insisting on conditions that arc materially at odds with an already established preliminary agreement" (id., quoting /DJ' Corp. v Tyco Group, S'.A.R.L., 104 ADJd l 70, 177 [1st Dept 2012], revd, 23 NY3d 497 120 I 4 ]: see also Cun West Gloh. Communications Corp. v lvfirkuei Tihhoret Ltd., 9 Misc Jd 845, 871 [Sup Ct 2005] [''The obligation of good faith requires parties to refrain from insisting on terms that do not confonn to the preliminary agreement'']). Cointer contends that Scotia's demand for non-reciprocal standby letters of credit violated this principle, and notes that Scotia· s employees stated that the demand was '·a hard ask," (NYSCEF Doc. No. 320), that Azvi's rejection of Scotia's proposal \Va'\ "nut unreillionable," and that the demand based on a belief"that Azvi will go under [inJ the next 3 months,'' which was "very unlikely" (NYSCEF Doc. No. 322). 3. Scotia's Reply In reply, Scotia argues that Cointer has offered no evidence showing that Scotia's withdrawal caused the failure of the conditions precedent, or to rebut Scotia's argument that these conditions would not have occurred, regardless of Scotia's \Vithdrawal ( dcfs' reply at 16-17). 14 15 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 15] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 Scotia fuithcr argues that the evidence shows its withdrawal was done in good faith (id at 14-16 ). Regarding the RyQ Report, Scotia argues that the record establishes, \•lithout contradiction, that when Scotia withdrew on October 26, 2011, it had already received the RyQ Report. While this account may he technically correct, it does not address Cointer's evidence showing Scotia's decision to withdraw came before receipt of the RyQ Report. Scotia also argues the evidence it relies on is not hearsay (id at 15 n 15, citing Stern v Waldbaum. Inc., 234 AD2d 534, 535 [2d Dept 1996] [holding out-of-court statement admissible to establish notice since the truth of the statement is not at issue]). Regarding Scotia's demand for standby letters of credit, Scotia argues that the employee who referred to this demand as a ''hard ask" was not familiar with the details of October Agreement and did not suggest the ask was inconsistent with the October Agreement. Scotia further argues that this evidence demonstrates Scotia's good faith by seriously considering Cointer's opposition. Scotia also argues that its request for standby letters of credit do not violate the terms of the October Agreement and that Cointer offers nothing more than "bald conclusions, contradicted by the only relevant document referred to, that [Scotia] insisted 'on terms that conflicted with the [October] Agreement .. ' (id. at 16, quoting IDT Corp. v Tyco Group, S.A.R.L., 23 NY3d 497, 504 [2014]). HI.. DISCUSSION The standards for summary judgment are well settled. Summary judgment is a drastic remedy which will be granted only when the party seeking summary judgment has established that there are no triable issues of fact (see CPLR 3212 [b]; Alvarez v Prw.pect /lu:-ip .. 68 NY2d 329 [1986]; Si!!man v J'wentieth Centwy-Fox Film Cwporalion, 3 NY2d 395 [1957]). To prevail, the party seeking summary judgment must make a prima facie showing of entitlement to judgment as a matter of la\v tendering cvidentiary proof in admissible form, which may include deposition transcripts and other proof annexed to an attorney's allinnation (see Alvarez v Prospect Hosp. supra; Olan v Farrell Lines, 64 NY2d 1092 [1985]; Zuckerman v City of New York, 49 NY2d 557 11980]). Absent a sufficient showing, the court should deny the motion without regard to the strength of the opposing papers (see Winegrad \'New York Univ. Med. Ctr., 64 NY2d 851 [ 19851 ). Once the initial showing has been made, the burden shifts to the party opposing the motion for summary judgment to rebut the prima facie showing by producing evidentiary proof in admissible fonn sufficient to require a trial of material issues of fact (see Km~fman v Silver. 90 NY2d 204, 208f19971). Although the court must carefully scrutinize the motion papers in a light 15 16 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 16] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 most favorable to the party opposing the motion and must give that party the benefit of every favorable inference (see Negri v .<,'1op & Shop, 65 NY2d 625 11985]) and SLunmary judgment should he denied where there is any doubt as to the existence of a triable issue of fact (see Rotuha /<,);truders. 1' Ceppos, 46 NY2d 223, 231 [1978]), bald, conclusory assertions or speculation and "[a] shadowy semblance of an issue" arc insufficient to defeat a summary judgment motion (S../. Capahn Assoc v Globe A{f'g. Corp., 34 NY2d 338. 341 ft 9741; see Zuckerman v City ufNew York. supra; E'hrlich v American Muninger Greenhouse lvffg. Corp., 26 NY2d 255, 259 [1970]). Lastly. ''[a] motion for summary j udgmcnt should not be granted where the facts are in dispute, where conflicting inferences may be drawn from the evidence, or where there are issues of credibility" (Rui:z v (iriffin. 71 AD3d 1112 [2d Dept 2010], quoting Scoff v Long Is. Power A111h, 294 AD2d 348 f2d Dept 2002]). A. Gross Negligence In this court's Decision and Order dated June 12, 2014, the court held that. affording plaintiffs the inferences required on a motion to dismiss, the specific conduct plaintifls alleged did ''not rise to the exacting standard of gross negligence that must be met where, as here, sophisticated parties have entered into a limitation ofliability agreement'' (NYSCEF Doc. No. 133 f"June 2014 Dccision"J at 17-18). The first Department's decision took no stance on whether the fact.s as alleged rose to the level of gross negligence. It held simply that at that "stage of the litigation. prior to key depositions being held, it [could not] be determined whether any 'outrageous acts of folly' were involved'' (NYSCEF Doc. No. 149, quoting Hartford Ins. Cu., 250 AD2d at 528). Significantly, the facts plaintiffs now ask the court to adopt for the purposes of this motion are precisely the same as those the court rejected on the motion to dismiss. In relevant portion, this court held that: "the conduct alleged does not rise to the exacting standard of gross negligence that must be met \Vhere, as here, sophisticated parties have entered into a limitation of liability agreement. Whether the error is characterized as a "fundamental misinterpretation" of tender documents (as alleged by plaintiffs, ... ) or a "single cell error'' (as alleged by Scotia ... ), the damage alleged is the result of a single error in a complex of twenty-seven (sic) spreadsheets that, according to the plaintiffs, was not detected for many months due to 'repeated, fundamental and completely avoidable lapses in supervision, cross-checks, audits and financial modeling' .... The error resulted in the forfeiture of a $10 million bid bond, a relatively modest sum when measured against the amount of plaintiffs' bid of approximately $278 million .... The conduct alleged, including the alleged failure to provide adequate supervision (see. e.g.. Har(fiJrd Ins. Cu. v Holmes Protection Grp., 250 AD2d 526, 527-528 [1st Dept 1998]), is not the type of conduct that ''smack of intentional 16 17 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 17] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 wrongdoing·'. Nor does it "evinccr la reckless indifference to the rights ofolhers .. (Ahacus, 18 NY3d at 683). As the Complair.;s do not make "a compelling demonstration or egregious intentional misbehavior evincing extreme culpability: malice, recklessness. deliberate or callous indifference to the rights of others, or an extensive pattern of wanton acts'· necessary lo nullify the limitation of liability provision of the Engagement Letter. they do not state a cause of action for gross negligence (see. Net2Globe Intl, 273 F Supp 2d at 454; Platinum Partners, I 02 AD3d at 483). (June 2014 Decision at 18). This court also rejected plaintiff's allegations "regarding Scotia's alleged failure to supervise Bodden, specifically that Bodden was Jell to prepare the Bid Model \Vi th no or only minimal supervision in violation of professional standards and Scotia's own protocol for managing risk" and held that plaintiffs allegations "to the effect that Scotia failed to follow its inlem!fl policies and to conform to industry standards do not 'smack of intentional \vrongdoing' as is required to stale a claim for gross negligence involving sophisticated parties who contract to limit their risk" (id. at 17). Plaintiffs have advanced neither new factual considerations, nor new points of law, that arguably should alter the court's previous determination. Rather, plaintiffs principally rely on the same legal arguments this court rejected previously (compare pis' mem at 28 [arguing that "courts have frequently taken into account allegations that a defendant improperly staffed a project. or inadequately supervised an employee, in determining that plaintiffs sufficiently alleged or demonstrated gross negligence" and citing e.g. Sommer, 79 NY2d at 548-491 with June 2014 Decision at 18-19 l distinguishing Sommer from the same facts plaintiffs rely on in this motion]). Accordingly, the parties having concluded all discovery, including ''key depositions," plaintiffs have failed to identify material issues of fact sufficient to warrant a trail because plaintiffs have not met the exacting legal standards applicable here. Moreover, the fact record now before the court reveals a picture of the circumstances that is not nearly as stark as that portrayed in the complaints, thereby making the case for dismissal on this motion for summary judgment more compelling than that presented in the motion to dismiss. For example, the record shmvs that the Bid Model was reviewed at length by at least four people involved in the Project other than Bodden: Carneiro who sat with Bodden working on the Bid Model for over 20 hours prior to its initial release; Megret who also spent time with Bodden \vorking on the Bid Model and Martinez of Cointer and Velasco of Compasa who studied the Bid Model for over one and a half months prior to submission and who made over twelve inquiries of 17 18 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 18] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 Scotia during that time. Neither these individuals, nor several other involved with the Project noticed the anomaly on the VPI spreadsheet (see pp 4-5 and n. 4, supru). Alfonso Budifio, General Director of Cointer confirmed that, but for the one mistake. the Rid Model Bodden prepared "worked fine", albeit that the mistake was a "very serious error" (NYSCEF Doc. No. 190 at 184 ). And although the parties spar over whether the error was properly characterized as a "'typo" or a "fundamental ... error of interpretation·· (SUMF ,l 11 and Opp. Br. at 20) which could not be detected readily (PSUMF ~[ 14 and Opp. Br. at 2 I), discovery confirmed that the effect of the error was apparent on the face of the VPl spreadsheet to anyone familiar with the tender requirements (see pp 4-5, supra). Similarly, Bodden was more experienced than plaintiffs contend (PSUMF ~! 7). The Ruta 5 Toll Road project was not his first such project. He was the "primary" modeler for the successful Antofagasta project (Carneiro Tr. at 117:7 - 19), an earlier project involving the same sponsor as the sponsor of the Ruta 5 project (Carneiro Tr. at 114:24- I 15:12). We know too that Antofagasta bid model accounted for 95 percent of the work needed for the Ruta 5 model, although the VPI \Vas a new and important area for the later model (id at 111 :8 - 21 ). B. Scotia's Alleged Breach of tlte October Agreement There remains an issue of fact regarding whether both conditions precedent to the October Agreement would have occurred, but for Scotia's withdrawal from negotiations. Scotia has failed to make a prima facie showing that, as it contends, SNC would not have participated because of the conclusions of the RyQ Report. The only evidence Scotia offers in support of this point are hearsay statements regarding what SNC purportedly represented to Scotia, which Scotia relies 011 for the truth of the matter asserted (see e.g defa' mem at 15, citing Giffen Tr. at 273:15-274:17; former Scotia Managing Director Pablo Garcia Tr. 198:6-20). This evidence is '"insufficient to satisfy the movant's burden of establishing a prima facie showing of entitlement to an award of summary judgment" as a matter of law Uflen Ying .Ji, 34 AD3d at 254). Scotia has made a prima facie showing that Copasa would have never agreed to pay the three million euros in the form ofSaravia's testimony staling the same. However, Cointcr presents contrary evidence that raises an issue of fact on this point (see Baker aff, exhibit 12 at COPASA0014830 [meeting notes reflecting that Copasa stated that "[t]hcy asked me to formally pronounce on whether COPASA was willing to put up this money and I told them that J.L Suarez 18 19 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 19] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 had spoke to [Alfonso] and told him that if this money was a solution to the problem, it would not be an obstacle to its resolution"]; see also n. 8, supra). J'vloving to whether Scotia satisfied its duty to negotiate in good faith, there is an issue of fact regarding whether Scotia withdrew as a result of SNC's withdrawal and the RyQ Report. As Cointer notes, Garcia's deposition provides evidence supporting Cointer's theory that Scotia had decided to withdraw before the RyQ Report was sent. Budifto also states in his affidavit that Scotia initially represented that its decision was due to Cointer's refusal to agree to Scotia's demands and concerns regarding the Project's profitability (NYSCEF Doc. No. 31 S ii 26 ). There also remain issues of fact regarding Scotia's demand for standby letters of credit. Neither Scotia nor Cointer dispute that negotiations broke down due to Scotia's demand for standby letters of credit among other reasons. Although the October Agreement did not provide Scotia \vith the right to demand standby letters of credit, Scotia contends the request did not contradict the terms of that agreement but rather was made in furtherance of the provision providing that Azvi to provide all construction guarantees, and that Scotia would contribute only no more than 14.5 million euros. Credit Suisse First Boston v Utrecht-Am. Fin. Co. (80 AD3d 485, 487-488 fist Dept 201 11) is directly on point and controls the outcome here. In that case, the parties disputed \Vhether plaintiff had negotiated in good faith in requesting that defendants supply certain information that. under the parties' preliminary agreement, defendants "were under no obligation to supply" (id.). \Joting first that the '"obligation to negotiate in good faith bars a party from insisting on conditions that do not conform to the preliminary agreement," the first Department held that, while the information plaintiff had requested might have fallen under the category of ''any other ... documentation Jrelated to the Credit Agreement] reasonably requested by Buyer," which defendants would have been obligated to provide, "the issue of \Vhether plaintiff's request for the same was reasonable, presents a question of fact not amenable to summary resolution" (id). While the plaintiff's request in that case \Vas more consistent with the terms of the parties' preliminary agreement than Scotia's demand is here, the First Department still found an issue of fact as to \Vhether the request was consistent with such terms. Accordingly, whether Scotia's demand for standby letters of credit \Vere reasonably conformed to the terms of the preliminary agreement raises an issue of fact that cannot be resolved on a motion for summary judgment. 19 20 of 21 [*FILED: NEW YORK COUNTY CLERK 01/17/2018 09:56 AM 20] NYSCEF DOC. NO. 269 INDEX NO. 651649/2013 RECEIVED NYSCEF: 01/17/2018 Scotia's reliance on IDT Corp. v Tyco Grp., S.A.R.L. (23 NY3d 497, 504 [2014]) docs not warrant a di11erent result. Jn that case, the Court of Appeals found that the complaint did not sulficicntly allege breach of the obligation to negotiate in good faith in light of the fact that, as the First Department described, "neither the complaint nor the record l were J specific as to the 10 inconsistencies" plaintiffs had alleged between defendants' proposal and the terms of the preliminary agreement (IDT Corp. v Tyco Group, S.A.R.L., I 04 AD3d 170, 177 [I st Dept 20121, rewl, 23 NY3d 497 l2014]). Such is not the case here, where Cointcr specifically identifies the demand that purp011edly violated the terms of the preliminary agreement. Accordingly, it is hereby ORDERED that the motion for summary judgment of defendants Scotia to dismiss the complaint in the case bearing index number 651649/2013, is GRANTED and the complaint in that case is hereby DIStv11SSED in its entirety; and it is hereby ORDERED that the motion for summary judgment of defendants Scotia lo dismiss the Sixth Crnsc of Action in the case bearing index number 651555/20 l '.2 ("Cointer Matter") is DENTED; and it is further ORDERED that the Clerk of the Court is directed to enter judgment in the case hearing index number 651649/2013 dismissing the case in its entirely together \.vith costs against plaintiff: S.A. de Obras y Servicios, COP ASA upon submission of a proper bill of costs; and it is further ORDERED that counsel for the parties in the Cointer Matter shall appear at an initial pretrial conference on February 13, 2018 at 9:30 AM. This constitutes the decision and order of the court. DATED: .January 12, 2018 ENTER, 0 20 21 of 21

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