GLCA Sec., LLC v AGC Networks, Inc.

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GLCA Sec., LLC v AGC Networks, Inc. 2020 NY Slip Op 32372(U) July 20, 2020 Supreme Court, New York County Docket Number: 650759/2019 Judge: Debra A. James 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: 1] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/20/2020 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY lAS MOTION 59EFM PART HaN. DEBRA A. JAMES PRESENT: Justice ----------------------------------------------------------------------------GLCA SECURITIES, X INDEX NO. LLC 650759/2019 MOTION DATE Plaintiff, 8/8/2019 MOTION SEQ. NO. 002 -v( AGC NETWORKS, DECISION + ORDER ON MOTION INC., Defendant. ------------------~:---------------------------------------------------- X 002) 16, 17, 18, 19, 20, 37, 38, 39,40,41,42,43,44,45,4~,47, 48, 72, 73,74, 75, 76, 77, 78, 79, 80, 81, 82, 83, The following e~filed documents, listed by NYSCEF document number (Motion 21,22,23,24,25,26,27,28,29,30,31,32,33,34,35,36, 49,50,51,52,53,54,55,56,64,65,66,67,68,69,70,71, 84,85,86,87,88,96,97,99 were read on this motion to/for JUDGMENT-SUMMARY ORDER Upon the foregoing ORDERED plaintiff summary that the motion, GLCA Securities, judgment is granted shall have judgment action for breach ORDERED against pursuant LLC to CPLR 3212, of (motion sequence of contract; to a Special money damages that plaintiff on its cause of to be assessed Inc., and the amount for reasonable Referee 002) for and it is further AGC Networks, expenditures number in part to the extent that the issue of CPLR 4317(b); it is on the issue of liability the defendant plaintiff's referred documents, attorney's to hear and determine of the fees, are pursuant to and it is further 650759/2019 GLCA SECURITIES, LLC Motion No. 002 VS. AGC NETWORKS, INC. 1 of 14 Page 1 of 14 [*FILED: 2] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/20/2020 ORDERED that counsel for the plaintiff days from the date of this order, with notice Sheet, of entry, together and proof of service, the General Clerk's this matter on the calendar the earliest Office co~venient ORDERED Electronically the court's with a completed Clerk (Room 119), who is directed of the Special Referee's in to place Part for date; and it is further with the procedures Referee (accessible at the address Clerk set forth in the and County Clerk Procedures Filed Cases website Information Referee that such service upon the Special on Courthouse 30 serve a copy of this order upon the Special shall be made in accordance Protocol shall, within for at the "E-Filing" page on www.nycourts.gov/supctmanh); and it is further ORDERED Clerk and ADJUDGED is directed the report that pursuant to enter-judgment of the aforesaid Special to CPLR 4317(b) the against in accordance Referee without with any further application. DECISION In this breach Securities, complaint LLC of contract (GLCA) moves for breach Inc., pursuant 650759/2019 GLCA SECURITIES, Motion No. 002 for summary of contract to CPLR 3212 action, against plaintiff judgment INC. 2 of 14 on the defendant (motion sequence LLC VS. AGC NETWORKS, GLCA number AGC Networks, 002). Page 2 of 14 [*FILED: 3] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/20/2020 Background GLCA is a t"inancial services advisory company, incorporated liability corporation Defendant AGC Networks, communications Delaware. pursuing digital and investment in Delaware and licensed Inc. technology solutions to do business services venture provider to provide in New York. (AGC) is an information company to acquire interested Black Box Corporation AGC with financial advisory a contract and investment outside use in its acquisition Df Black Box (the contract). behalf of AGC, and GLCA's managing executed it on behalf The relevant financing Deepak Kumar Bansal executed director in (Black Box) . with seeking officer in Texas-based, in connection financial and also incorporated non-party, To that end, on June 13, 2018, AGC executed services as a limited At some point in 2018, AGC became a business banking with GLCA banking for AGC to AGC's chief the contract Douglas on Lane of GLCA portions of the contract state as follows: "1. Scope of Engagement: On the terms and subject to the conditions of this Agreement, GLCA will provide the following financial and capital market related advisory services: (a) to the extent necessary or appropriate, familiarizing ourselves with [AGC]'s and [Black Box]'s financial condition, operations and business; (b) assisting [AGC] the preparation and review of the Information Memorandum (as defined below), which shall not be made available to or used in 650759/2019 GLCA SECURITIES, Motion No. 002 LLC VS. AGC NETWORKS, INC. 3 of 14 Page 3 of14 [*FILED: 4] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM NYSCEF DOC. NO. 104 INDEX NO. 650759/2019 RECEIVED NYSCEF: 07/20/2020 discussions with prospective investors in the Financing without [AGC] 's prior consent; (c) advising and assisting, on a best efforts basis, [AGC] in obtaining, examining, analyzing, structuring and negotiating the financial aspects of any potential or proposed Financing; (d0 to the extent necessary or appropriate, coordinating due diligence review; (e) if requested, advising and assisting [AGC] in making presentations to the Board of Directors of [AGC] concerning the Financing; and (f) providing such other financial advisory services as may be agreed in writing between GLCA and [AGC]. "In rendering its services pursuant to this Agreement, and notwithstanding anything to the contrary herein, GLCA is not assuming any responsibility for any decision to pursue (or not to pursue) any business strategy or to effect (or not to effect) any Financing. GLCA shall not have any obligation or responsibility to provide legal, regulatory, accounting, tax, audit, valuation, or business consultant advice or services hereunder. "The advisory services and compensation arrangements set forth herein do not encompass other financial advisory services not set forth in this Section 1. If [AGe] and GLCA later determine to expand the scope of services to include other services not otherwise set forth herein, such future agreement will be the subject of a further and separate written agreement of. the parties. "2. Fees and Expenses: For GLCA's services hereunder, [AGC] agrees to pay to GLCA the following non-refundable fees in' cash: (a) Financing Fee: a cash fee equal to 1.75% of the gross amount of Financing Proceeds at the closing (the 'Financing Fee'); provided, however, that for any Financing Proceeds provided by any of the parties listed on Schedule A, as amended from time to time by [AGC] and GLCA, the cash fee shall equal 50bps (0.5%). For purposes of this agreement, the term 'Financing Proceeds' means the sum of any investment in debt, equity, or other capital securities into [AGC] raised in 650759/2019 GlCA SECURITIES, llC Motion No. 002 VS. AGC NETWORKS, INC. 4 of 14 Page 4 of 14 ,.[*FILED: 5] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM NYSCEF DOC. NO. 104 INDEX NO. 650759/2019 RECEIVED NYSCEF: 07/20/2020 any Financing in which GLCA provides Services hereunder (other than funds provided by [AGC] or its parent). The Cash Fee shall be payable in cash in full at the closing of the Financing. GLCA will not receive any fees from any lenders or investors for the Financing. (b) Expense Reimbursement: GLCA shall, whether or not the Financing is consummated, be entitled to reimbursement, from time to time upon written request and invoice, and upon consummation of the Financing or upon termination of GLCA's services pursuant to this Agreement, from [AGC] of reasonable out-of-pocket expenses incurred in connection with the services to be provided under this Agreement, including, without limitation, travel fees, document productions fees, GLCA's reasonable out-of-pocket fees and expenses for outside legal counsel and other profe~sional advisors incurred in connection with the negotiation and performance of this Agreement and the matters contemplated hereby, and sales, use or similar ta~ incurred thereon, up to an aggregate maximum amount of $25,000, or such other amount as agreed in advance by [AGC] and GLCA. In connection with the foregoing, [AGC] shall, upon execution of this Agreement, provide GLCA with an advance retainer in the amount of $25,000 (the 'Expense Retainer'). The Expense Retainer will be maintained throughout the engagement and returned to [AGC] upon completion of GLCA's services. GLCA reserves the right to apply the Expense Retainer to outstanding statements in the event that [AGC] fails to make monthly payments in accordance with this Section 2 (b), and [AGC] shall replenish the Expense 'Retainer promptly thereafter, provided that GLCA shall have provided [AGC] with an invoice or othe~ similar documentation with reasonable detail of such expenses. * * * "4. 650759/2019 Term of Agreement: "(a) This Agreement may be terminated at any time by GLCA or [AGC] on thirty (30) days' prior written notice to the other. Any termination or expiration of this Agreement shall not affect any provisions that survive the termination hereof, GLCA SECURITIES; 5 of INC. 14 LLC VS. AGC NETWORKS, Page 5 of 14 [*FILED: 6] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/20/2020 including, (i) the indemnification, reimbursement, contribution and other obligations set forth in this Agreement, including Schedule I, and (ii) GLCA's right to receive payment of fees earned and expenses incurred by GLCA pursuant to Section 2 hereof, and [AGC] shall immediately payor cause to be~paid all such reasonable fees and expenses due and owing. "(b) Additionally, in the event of any termination of this Agreement by a party hereto (other than GLCA, unless GLCA has terminated the Agreement), GLCA shall be entitled to payment of the Financing Fee referred . to in Section 2 (a) if a Financing in which GLCA provides' Services hereunder is consummated at any time prior to the expiration of twelve (12) months after the date of this Agreement (the 'Tail Period')U(emphasis added). GLCA asserts on January 7, 2019. fully performed and having AGC an invoice to pay it. the contract, and deliver entitled GLCA also asserts all of the services tendered AGC has refused misreads that AGC closed its acquisition financing which actually As a result April 12, 2019. for breach LLC GLCA to obtain VS. AGC does not that it submitted dispute of contract. AGC NETWORKS, in order to be GLCA did not do so, it is and complaint Some discovery 650759/2019 GLCA SECURITIES, Motion No. 002 required or that it has refused of its unresolved 11, 2019, that GLCA willfully under the contract. services, 6, 2019 GLCA filed a summons cause of action in the contract for the Black Box project deny that GLCA performed having for them on January AGC responds to compensation for those services, that, despite specified to a fee, and that because not entitled of Black Box ensued, INC. 6 of 14 an invoice to pay the invoice. with AGC, on February that alleges a single AGC filed an answer and the parties on each Page 6 of 14 [*FILED: 7] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/20/2020 submitted orders evidentiary to show cause permitting submissions and 003, respectively), 2019. under seal them to file certain (motion sequence which the court granted numbers on August On that same day, the court held oral argument summary judgment motion (motion sequence number 001 8, on GLCA's 002). DISCUSSION When seeking burden summary of proving, material judgment, by competent, and triable admissible issues of fact exist New York Univ. Med. Ctr., Dunaud, Mercadier the moving the party & Carreras opposing admissible material v Lacher, the motion form, sufficient Zuckerman [1980]; Pemberton that no (see e.g., Winegrad 299 AD2d to produce to establish issues of fact which require (see ~, evidence, the v 64 NY2d 851, 853 [1985]; Sokolow, Once this showing has been made, 2002]). party bears 64, 70 [1st Dept the burden shifts to evidentiary proof, in the existence. of a trial of the action v City of New York, 49 NY2d v New York City Tr. Auth., 557, 562 304 AD2d 340, 342 [1St Dept 2003]). Here, the claim on which GLCA moves breach of contract. terms and validity enforce 270 AD2d itH Thus, "the burden of a contract (Eden Temporary Servs.v [1st Dept 1989]). 650759/2019 GLCA SECURITIES, Motion No. 002 LLC VS. AGC NETWORKS, of proving 7 of 14 seeking House of Excellence Paz v Singer The proponent INC. judgment is the existence, rests on the party 66, 67 [1st Dept 2000]; quoting AD2d 234, 235 for summary to Inc., Co., 151 of a breach of . Page 7 of 14 [*FILED: 8] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/20/2020 contract binding Gordon claim must plead the existence contract, its breach, v Dino De Laurentiis However, "'on a motion an unambiguous contract and terms of a valid, and resulting Corp., for summary damages 141 AD2d is a question [1st Dept 1988]) 435 judgment, (see ~, the construction of of law for the court to .J . circumstances pass on, and . varying interpretations considered, gathered of the contract ... the intention from the instrument v Standard quoting where Microsystems Maysek extrinsic or will not be can be (Koren Rogers Assoc. 79 AD3d & Moran v Warburg provisions of the parties itself'" Corp., to the agreement Inc. [1st Dept 2010]; 607, 608 & Co., 284 AD2d [1st 203, 204 Dept 2001]). GLCA contends elements it has established of its breach no dispute regarding The parties contract, several that GLCA rendered which AGC has not paid. GLCA has calculated "financing although elements services With respect of GLCA's pursuant calculations for those to the element to include reimbursement" to Section it does not accept the specific LLC VS. AGC NETWORKS, INC. 8 of 14 of the to the contract, AGC does not dispute pursuant to be cause of action. terms and validity" a figure that purports fee" and the "expense 650759/2019 GLCA SECURITIES, Motion No. 002 There appears AGC with an invoice 2 of the contract. of GLCA's claim. agree on ~the existence, and that GLCA presented Section of contract all of the component services of damages, both the provided for in the methodology 2 of the contract, amounts set forth in Page 8 of 14 [*FILED: 9] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 GLCA's RECEIVED NYSCEF: 07/20/2020 damages summary judgment element of breach. arguing AGC specifically arrange financing support this argument, paragraph, Instead, AGC opposes calculations. GLCA's that GLCA failed to establish the argues that "GLC was required. to be entitled to any financing AGC cites the contract's which provides . to fee." To preamble that: "This letter Agreement (this 'Agreement'), entered ~nto as of June 13, 2018 (the 'Effective Date'), confirms the terms of the agreement between [GLCA] and [AGC] ., pursuant to which GLCA has been engaged to act as the agent and financial advisor to [AGC] and to provide financial advisory services and investment banking services ('Services') in connection with arranging a financing of capital securities (the 'Financing') for [AGC] 's prospective acquisition of all or part of [Black Box] within twelve (~2) months of the date of this Agreement." AGC contends 'arranging that the preamble a financing acquisition" "arrange" of capital of Black Box. 'interpretation' AGC's contractual GLCA replies to receive that the contract, any compensation under that "AGC's alternative of the contract duty consisted used in its that AGC breached of the unambiguous reading as for the On that basis, AGC concludes GLCA was not entitled the contract. 'financing' that GLCA did not that AGC ultimately GLCA has failed to establish because ~he term securities' of Black Box and asserts the financing acquisition "defines agreement asserts of "arranging 650759/2019 GLCA SECURITIES.; LLC vs. AGC NETWORKS, Motion No. 002 INC. 9 of 14 is not credible." that GLCA's a financing of capital Page 9 of 14 [*FILED: 10] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/20/2020 securities . for [Black Box] " However, omits the preceding actually GLCA's advisory . in connection securities." this reading portion describes financial [AGC] 's prospective of the preamble "arrange financing," distinction GLCA to "provide unquestionably sentence that "to provide services of capital of the language, services," the and not to The significance as AGC asserts. is clear, and inexplicably bankjng a financing Thus, by the plain meaning obligated of . duty as being and investment with arranging contract of this since section 2 of the contract provides that GLCA is entitled from AGC of a "financing to receive fee" and an "expense the event that GLCA performs in Section improperly contractual services acquisition the "services" payment reimbursement" in that are described 1 of the contract. AGC premises much of its opposition argument that Section dispute, rather than Section the contract to GLCA's motion 4 (b) of the contract only applies 2. governs By its own terms, in the event that either on the the parties' Section 4 of of the '\ parties argues Section acts to "terminate" the contract, that such a "termination" 4 of the contract and AGC's reliance 650759/2019 GLCA SECURITIES, Motion No. 002 ever took place. is inapposite of its argument opposing case law, including LLC VS. AGC NETWORKS, INC. 10 of 14 of them As a result, to the parties' on such section misplaced. In furtherance AGC cites certain and neither dispute, I summary this court's judgment, decision in Page 10 of 14 [*FILED: 11] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/20/2020 PBS Realty Advisors, 11075828 [Sup Ct, NY County April 27, 2011], [1st Dept 2012]), to payment cause" LLC v Jones Lang LaSalle for the proposition of a financing of the financing However, Black Box. acted as "brokers" transactions, obtained involved to obtain parties financing to them because the financing inapplicable to the case at bar because AGC retained GLCA ~s who had for business of "finder's they had not that was used. a "financial 450 used to acquire who later sought to receive payment fees," but were not entitled actually affd 100 AD3d it was not the "procuring that AGC ultimately retained (2011 WL that GLCA is not entitled fee because such decisions AIDs. Inc. Such case law is the contract services advisor" states that and not a "broker." The court likewise "whether GLCA arranged precludes summary rejects AGC's the financing judgment." immaterial whether ultimately used to complete not a "search As discussed above, of fact that it is the financing "financial firm" only entitled advisor" that AGC entitled since to that it rendered, to a commission and was in the event of its search were used. The court also rejects AGC's contention judgment that the Black Box acquisition, for all of the services that the results argument is a question or not GLCA obtained GLCA was a duly retained compensation further is improper 650759/2019 GLCA SECURITIES, Motion No. 002 LLC because VS. that "summary GLCA has failed to satisfy AGC NETWORKS, INC. 11 of 14 its Page 11 of 14 [*FILED: 12] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 burden RECEIVED NYSCEF: 07/20/2020 of proving agreement is the only reasonable misconstrues contract the law (Dreisinger citations v Teglasi, Microsystems judgment, question Corp., Such argument of an unambiguous of law for the court of whether omitted]; one." of the letter ( "The interpretation is a question determination contractual 130 AD3d 524, language [1St is ambiguous" Dept 2015] 79 AD3d at 608 ["on a motion for summary of an unambiguous of an unambiguous contract of fact to be resolved contract judgment documents because . and the parties As discussed, question by the court does not that "summary GLCA has failed of a contract to produce any discovery." is a legal by the court, not a factual by the weighing of of law. have not yet exchanged the interpretation to be resolved be resolved Such this court rejects AGC's argument is ~mproper is a by the application of proof but is solely a question Finally, [internal Inc. v Standard of law for the court to pass on"J). raise a question ., as is the . see also Koren Rogers Assoc. the construction interpretation burdens that its interpretation question to . of evidence.1 IThe court does not, nor does it need to, reach the parties' respective arguments concerning the admissibility of the affidavit provided by GLCA's managing director Douglas Lane. Such affidavit merely offer's such witness's interpretation of the contract, and "'circumstances extrinsic to the agreement or varying interpretations of the contract provisions will not be considered, where ... the intention of the parties can be 650759/2019 IIIntlnn Nn GLCA SECURITIES, nn2 . 12 of INC. 14 LLC VS. AGC NETWORKS, Page 12 of 14 [*FILED: 13] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/20/2020 As the parties "services," refusal both agree that GLCA did provide AGC is obligated to pay GLCA for them, and its to honor a duly tendered constitutes resulted a b~each of Section in GLCA sustaining established invoice monetary claim, judgment on the issue of liability. damages GLCA is entitled calculation, As such presents refers the issue of calculating GLCA using the methodology contract to a Special The complaint's "prejudgment interest, legal fees." these amounts. incidents prayer of summary the on a an issue of fact, the court the amount of damages due to 2 of the to hear and determine. for relief "Under the general the parties, do not dispute includes a request and all costs and expenses, rule, attorney's statute or court rule" 13 of 14 to recover fees are party may not collect an award is authorized gathered from the instrument itself.'" Inc., supra, 79 AD3d at 608). for including GLCA is entitled and a prevailing them from the loser unless between of its breach they have not agreed The court finds that of litigation has Having set forth in Section Referee which to a grant of partial while the parties of GLCA's amount. damages. elements contract methodology for such "services" 2 of the contract, all of the component As for damages, such by agreement (Hooper Assoc. (Koren Rogers Assoc. v AGS [*FILED: 14] NEW YORK COUNTY CLERK 07/20/2020 05:00 PM INDEX NO. 650759/2019 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/20/2020 Computers, Ave. 74 NY2d 487, 491 I Assoc., Sections involve (1st Dept 2007). LLC, 39 AD3d 279 7 and Schedule indemnify (1989); see also, Sykes v RFD'Third 1 of the contract provide GLCA for its legal fees expenditures litigation recovery of the legal fees that it expended Further, CPLR 8101 provides judgment is entered otherwise provided or unless submis~ion in this action, of an appropriate that to favor a unless the court determines Thus, GLCA is likewise that it incurred in whose to costs in the action, that to so allow costs would not be equitable, circumstances." in actions in this action. that "[t]he party by statute that AGC must Thus, GLCA is entitled of the contract. is entitled Here, both under all of the entitled to court costs which it may recover upon the bill of costs to the Clerk, upon filing of the final judgment. tr ~ 7/20/2020 DATE 1''') DRAA: CHECK ONE: CASE DISPOSED APPLICATION: SETTLE CHECK IF APPROPRIATE: INCLUDES GRANT~D ~ 650759/2019 GLCA SECURITIES, Motion No. 002 ' D NON.FINAL X DENIED ORDER GRANTED DISPOSITION IN PART SUBMIT ORDER TRANSFER/REASSIGN LLC VS. AGC NETWORKS, ~ INC. 14 of 14 FIDUCIARY APPOINTMENT ~-==t;d. AMES, J.S.C. D o OTHER REFERENCE Page 14 of 14

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