### Atalaya Special Opportunities Fund VII LP v Whited 2023 NY Slip Op 34559(U) December 31, 2023 Supreme Court, New York County Docket Number: Index No. 652767/2020 Judge: AndreaMasley Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op30001(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.NYSCEF DOC. NO. 184 INDEX NO. 652767/2020 RECEIVED NYSCEF: 12/31/2023



### SUPREME COURT OF THE STATE OF NEWYORK COUNTY OFNEWYORK: COMMERCIAL DIVISIONPART

### 48

-----------------------------------------------------------------------------------X

ATALAYA SPECIAL OPPORTUNITIES FUND VII LP and MIDTOWN MADISON MANAGEMENT LLC, Plaintiffs,

- V - JIMMY ERIC WHITED, Defendant.

-----------------------------------------------------------------------------------X HON. ANDREA MASLEY: INDEX NO. 652767/2020
MOTION DATE
MOTION SEQ. NO. 004

DECISION+ORDERON MOTION

Thefollowing e-filed documents, listed by NYSCEF document number (Motion 004) 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 103, 104, 105,106,107, 108, 109, 110, 111,112,113,114,115,116, 117, 118, 119, 120,121,122,123, 124, 125, 126, 127,128,129,130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171,172,173,174,175,176,177,178,179,180,181,182, 183 were read on this motion to/for 

### JUDGMENT-SUMMARY Plaintiffs Atalaya Special Opportunities Fund VII LP (Atalaya) and Midtown Madison Management LLC (Midtown) bring this action to enforce a guarantyexecuted by defendantJimmy Eric Whited. Plaintiffs assert claims for breach ofcontract to collect on the guaranty and for a declaratoryjudgment, seeking a declaration that Whited's liability includes on-demand payment of plaintiffs' out-of-pocket expenses, including reasonable attorneys' fees. Plaintiffs now move for summaryjudgment on both claims. Background Unless indicated otherwise, the following facts were taken from the parties' joint statement of undisputed facts (JSUF) and Rule-19 Statements of Material Factwhere undisputed.

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Whited was, at times, "the chief executive officer, managing member, and/orsole memberofa group of insurance businesses (the 'Windhaven Entities')." (NYSCEF Doc No. [NYSCEF] 101, JSUF 

### ,i 3.) Among these insurance businesses were Windhaven Insurance Company (WIC) and Windhaven National Insurance Company (WNIC), domiciled in Florida and Texas, respectively. (NYSCEF 166 Defendant's Counterstatement of Material Fact [Defendant Counterstatement] 

### ,i 32; NYSCEF 169, Plaintiffs' Response to Defendant's Counterstatement [Plaintiffs' Response] 

### ,i 32.) Greenlight Reinsurance, Ltd. (Greenlight) was the Windhaven Entities' reinsurer. 

### (Id. 

### ,i 44.) Its reinsurance agreementwith WIC provided for "sliding-scale ceding commissions," meaning that the ceding commissions, which the reinsurer paid to WIC for procuring policies, were subject to adjustment based on those policies' performance. 

### (Id. 

### ,i,i 45-47.) Greenlight and WIC agreed to deferthe payment ofcommissions owed to Greenlight based on these adjustments. 

### (Id. 

### ,i 48.) On March 4, 2019, five Windhaven Entities (Whited and Sons LLC, Windhaven Select, LLC, Windhaven Underwriters, LLC, Clutch Analytics, LLC, and Windhaven Insurance Holdings Corporation), as borrowers, Atalaya, as lender, and Midtown, as Atalaya's administrative and collateral agent, entered into a credit agreement (Credit Agreement) in connection with a $35.5 million loan (Loan). (NYSCEF 101, JSUF 

### ,i,i 4, 5; NYSCEF 83, Credit Agreement.) The Credit Agreement identifies WIC and WNIC as "Subsidiaries" ofa "Loan Party." (NYSCEF 83, Credit Agreement at 36/90, 1 84/90 [§ 5 (h), Schedule 5 (h)].) "A 'major point' ofthe

... Loan was to enable Windhaven to meet its sliding scale obligations to Greenlight." (NYSCEF 166 Defendant's

1 NYSCEF pagination.

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Counterstatement Defendant Counterstatement 

### ,i 49; NYSCEF 169, Plaintiffs' Response 

### ,i 49.) In pertinent part, the Credit Agreement defines an "Event of Default" to include the following: "(c) (i) the occurrence ofa Bankruptcy Eventwith respect to any Loan Party orWhited, (ii) any Loan Party orany ofits Subsidiaries becomes unable oradmits in writing its inability orfails generallyto pay its debts as they become due or is deemed unable to pay its debts as theyfall due forthe purposes ofany Debtor Relief Law, or (iii) any Insurance Company Subsidiaryfails to maintain minimum capital and surplus as required by any Insurance RegulatoryAgency with jurisdiction thereover orover its business that requires or permits such regulator to institute liquidation, rehabilitation, conservation or other similarsupervision of such Insurance Subsidiary, unless cured within forty-five (45) days." (NYSCEF 83, CreditAgreement at 11/90 [§ 1(a)].)2 It defines "Bankruptcy Event" to mean: "with respect to any Person, the commencement by such Person ofa voluntary case orother proceeding involving its liquidation, winding-up, bankruptcy orsequestration or otherwise seeking reorganization or other reliefwith respect to itselfor its debts underany Debtor Relief Law orseeking the appointment ofa trustee, receiver, liquidator, conservator, rehabilitator, custodian or othersimilar official of it or any substantial part of its property, orsuch Person shall consent to any such relief orto the appointment ofortaking possession by anysuch official in any involuntary case or other proceeding commenced against it, orshall make a general assignmentforthe benefit ofcreditors, orshall fail generally, oradmit in writing its inability, to pay its debts as

2 "Debtor Relief Laws" is defined as "the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit ofcreditors, moratorium, rearrangement, receivership, insolvency, reorganization, orsimilar debtor relief laws of the United States ofAmerica, anystate, orother applicablejurisdictions from time to time in effect affecting the rights ofcreditors generally, including applicable Insurance Laws." (NYSCEF 83, CreditAgreement at 10-11/90 [§ 1(a)].)

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they become due, orshall take anycorporate action to authorize any ofthe foregoing; orany involuntary case or other proceeding shall be commenced against such Person involving its liquidation, winding-up, bankruptcy or sequestration or otherwise seeking reorganization or other reliefwith respect to it or its debts underany Debtor Relief Lawthat is not dismissed, discharged, stayed or restrained in each case within 45 days ofthe institution or presentation thereof; oran orderfor relief is entered in anysuch proceeding orsuch Person becomes the subject ofthe appointment ofa trustee, receiver, rehabilitator, conservator, liquidator, custodian, or othersimilar official with respect to a substantial part of its property." (Id. at 6-7/90.) The Credit Agreement gives Atalaya the right to appoint a single representative to receive notices of, and be present at, all meetings ofthe board of directors for each borrower entity and its subsidiaries. (Id. at 47-48/90 [§ 6 (a) 

### (xiv)].) In connection with the Loan, Whited, as guarantor, and Midtown, as agent for the CreditAgreement's lenders, entered into a validity guaranty (Validity Guaranty). (NYSCEF 166 Defendant's Counterstatement 

### ,i 49; NYSCEF 169, Plaintiffs' Response 

### ,i 49; NYSCEF 84 and 1193
, Validity Guaranty.) The Validity Guaranty is a bad actor guaranty, intended to align Atalaya's and Whited's interests during the life ofthe Loan. (NYSCEF 166, Defendant's Counterstatement 

### ,i,i 60, 64; NYSCEF 169, Plaintiffs' Response 

### ,i,i 60, 64.) It provides that Whited becomes liable forthe borrowers' obligations underthe Credit Agreement upon the occurrence ofany "Trigger Event"

3 The parties submit two versions ofthe Validity Guarantywhich are identical except for the date. (Compare NYSCEF 84 [dated March 4, 2019] with NYSCEF 119 [dated March 1, 2019].) The parties disputewhetherthe Validity Guarantywas executed on the first orthe fourth of March 2019. (See NYSCEF 166 Defendant's Counterstatement 

### ,i 49; NYSCEF 169, Plaintiffs' Response 

### ,i 59.) For convenience, the court will cite to the first version ofthe document, NYSCEF 84, when refencing the Validity Guaranty.

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(NYSCEF 84, Validity Guaranty at 2-5/15 [§ 1 (a), (b)].) One Trigger Event, "Voluntary Bankruptcy" (Voluntary Bankruptcy Provision), states: "VoluntaryBankruptcy: any Loan Party or any Subsidiary thereofcommences a voluntary case or other proceeding involving its liquidation, winding-up, bankruptcy or sequestration or otherwise seeking reorganization orother reliefwith respect to itselfor its debts underany Debtor Relief Laworseeking the appointment ofa trustee, receiver, liquidator, conservator, rehabilitator, custodian or other similar official of it oranysubstantial part of its property, any such relieforto the appointment ofortaking possession by anysuch official in any involuntary case orother proceeding commenced against it (an 'Involuntary Proceeding'), or shall make a general assignment forthe benefit ofcreditors, or shall fail generally, or admit in writing its inability, to pay its debts as they become due, orshall take anycorporate action to authorize anyofthe foregoing (unless, in anysuch case, the Agent on behalfofthe Lenders, provided its prior written consentthereto); orthe Guarantoror any Company Partyshall intentionally collude with anythird party in to effectthe filing or petition ofan Involuntary Proceeding against a Loan Party or Subsidiarythereof." (Id. at 4/15 [§ 1 (b) (viii)].) The Validity Guaranty provides that "capitalized terms used but not defined herein have the meanings assigned to such terms in the Credit Agreement" (id. at 2 [Recital A]) and that "[t]he Guarantor shall pay on demand all outof-pocket expenses (including reasonable attorneys' fees and expenses) in anyway relating to the enforcement or protection of Guaranteed Parties' rights underthis Guaranty" (id. at 9/15 [§ 7].) On March 4, 2019, Whited also executed a validity guarantywith Greenlight. (NYSCEF 101, JSUF 

### ,i 6; NYSCEF 85, Greenlight Guaranty.) Atalaya and Greenlight entered into an intercreditor agreement, whereby Greenlight subordinated its debtto that ofAtalaya's. (NYSCEF 166 Defendant's Counterstatement

### ,i,i 82, 83; NYSCEF 169, Plaintiffs' Response 

### ,i,i 82, 83.)

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Afterthe Loan closed, Sachin Sarnobat, who was a managing directorat Atalaya at the time and Atalaya's "deal lead" on the Loan, "attended WIC and WNIC Board meetings as an observer, and Atalaya was in regular contactwith Windhaven by email, phone, and in-person visit." 

### (Id.

# ,m 37-38, 90.) Afterthe Loan closed, the Windhaven Entities experienced financial difficulties. 

### (Id. 

### ,i 93.) In April 2019, Ambina Partners (Ambina), a private equityfirm retained by Atalaya to provide consulting services in connection with the Loan, predicted that a Windhaven defaultwas highly likely. 

### (Id. 

### ,i,i 42, 95.) On November 15, 2019, Greenlight's General Counsel emailed the Windhaven Entities, stating that the ceding commission liability ofmore than $26 million was 108 days overdue. (NYSCEF 134, Greenlight Email.) However, Whited claims that this amountwas "not set." (NYSCEF 160, tr at 447:17-21 [Whited Depa].) It is undisputed that Greenlight owed WNIC more than $10 million in ceding commissions and additional capital. (NYSCEF 166 Defendant's Counterstatement 

### ,i 102; NYSCEF 169, Plaintiffs' Response 

### ,i 102.) The Windhaven Entities claim that "it is unclearwhether Greenlight tookthat amount into consideration as part ofits unilateral demand." (NYSCEF 166, Defendant's Counterstatement response to 

### ,i 24.) Also on November 15, 2019, with the consent ofWIC's board ofdirectors, Whited executed: (1) a Consent OrderforAdministrative Supervision (Consent Order) and (2) a Consentto Order of Receivership. (See NYSCEF 166 Defendant's Counterstatement 

### ,i,i 110-112; NYSCEF 169, Plaintiffs' Response 

### ,i,i 110-112; NYSCEF 137, Consent Orderand Consentto Order of Receivership.) The Consent Order placed WIC under administrative supervision ofthe Florida Office of Insurance Regulation (FLOIR) for a

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period of 120 days, during which time WIC had to satisfy the conditions ofa corrective plan. (NYSCEF 137, Consent Order

# ,m 3-4, 6.) The Consent Orderstates that, should WIC fail to comply with any of its provisions, WIC "consent[ed] to the entry ofan Order appointing the [Florida Department of Financial Services ('DFS')] as Receiver and acknowledge[d] that [DFS] [could] applyto the Court for an Order of Rehabilitation or Liquidation, at the sole discretion of [DFS]." (Id. 

### ,i 16). "In the eventthat [DFS] initially obtained an [Order of Rehabilitation], [WIC] further consent[ed] to [DFS] obtaining a subsequent [Order of Liquidation]

... at anytime and in its sole discretion." (Id.) In the Consent to Order of Receivership, "[WIC] admitted that grounds existed for the appointment of a Receiver" and that its board consented to "the entry of an Orderof Rehabilitation or Liquidation, at the sole discretion of [DFS]." (Id., Consent to Order of Receivership at 13/32 

### ,i,i2, 3). Annexed as "attachmentA" to the Consentto Order of Receivership, the resolution ofWIC's board ofdirectors, dated November 15, 2019, provided unanimous consent to the entry ofan Order of Rehabilitation or Liquidation at the discretion of DFS. (Id., Board Resolution at 16/32.) On November 18, 2019, Midtown sent notices ofdefault to Whited at Whited and Sons LLC and Greenlight, stating that four separate events ofdefault occurred under the CreditAgreement. (NYSCEF 166 Defendant's Counterstatement 

### ,i 114; NYSCEF 169, Plaintiffs' Response 

### ,i 114; NYSCEF 135, 136, Notices of Default.) On November22, 2019, Whited stepped down as CEO ofthe Windhaven Entities and was replaced by Greg Hoeg ofAlvarez & Marsal (A&M), a management consulting firm, whowas appointed Chief Restructuring Officer ofWindhaven. (NYSCEF 166 Defendant's Counterstatement 

### ,i 115; NYSCEF 169, Plaintiffs' Response 

### ,i 115.)

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The parties disputewho was in control ofthe Windhaven Entities afterthis point. Plaintiffs claim that Whited, on behalfof"Whited & Sons, LLC and its subsidiaries and affiliates and assigns and successors," executed the engagement letterwith A&M (see NYSCEF 139, Engagement Letter at 1) and that, as the sole shareholder, Whited retained control overthe Windhaven Entities (see NYSCEF 98, tr at 367:4 -368:20 [Spiro4 Depa]; see also NYSCEF 142, WIC Board Meeting Minutes [December 4, 2019] [indicating Whited was chairman ofthe board].) Whited, on the other hand, claims that the Windhaven Entities engaged A&M to comply with Atalaya's demands following default underthe Credit Agreement and that Hoeg exercised managerial control over the Windhaven Entities, including WIC and WNIC. (NYSCEF 160, tr at 250:19-251 :2, 495:4-6 [Whited Depa].) Notably, it does appearthat A&M was hired atAtalaya's behest. (See NYSCEF 166 Defendant's Counterstatement 

### ,i 96; NYSCEF 169, Plaintiffs' Response 

### ,i 96; see also NYSCEF 164, Atalaya's Internal Presentation on Windhaven at 12/14 [stating that, "(u)pon and Event of Default, Atalaya has the right to appoint a restructuring advisorto help protect value" and thatA&M "has been identified and can be parachuted in on short notice"]; NYSCEF 125, Ambina's Investment Memorandum atATALAYA00058640 [noting that, "in a downside case (forthe Loan) Atalaya has the right to appoint a restructuring advisorto help protect value" and that "Atalaya anticipates hiring (A&M)"].) Atalaya had liens on the Windhaven Entities' assets and declined to permit these assets to be used to support WIC. (NYSCEF 166 Defendant's Counterstatement 

### ,i 117;

4 Matt Spiro is Atalaya's corporate representative. (NYSCEF 98, tr at 4:3-5 [Spiro Depa].)

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NYSCEF 169, Plaintiffs' Response 

### ,i 117; NYSCEF 140, Letterfrom Whited to FLOIR [November 25, 2019] at ATALAYA00034793.) On December4, 2019, WIC's board of directors held a meeting, attended by Sarnobat and anotherAtalaya representative. (NYSCEF 166 Defendant's Counterstatement 

### ,i 119; NYSCEF 169, Plaintiffs' Response 

### ,i 119.) Among the issues discussed was FLOIR's request to proceed with WIC's liquidation. (NYSCEF 142, WIC Board Meeting Minutes [December4, 2019].) "Hoeg told the board he believed liquidation was inevitable based on the feedback he received from the [FLOIR] supervisorso best consent." (NYSCEF 166 Defendant's Counterstatement 

### ,i 120; NYSCEF 169, Plaintiffs' Response 

### ,i 120; NYSCEF 142, WIC Board Meeting Minutes [December 4, 2019].)5 The board unanimously passed a motion authorizing Whited "to sign a consent order regarding liquidation of [WIC] after Greenlight

... and Atalaya

... approved." (NYSCEF 142, WIC Board Meeting Minutes [December4, 2019].) On December6, 2019, during another meeting ofWIC's board, Hoeg "relayed that there had been no formal approval from Atalaya Capital on consentfor liquidation, but it was Atalaya's position thattheir approval isn't necessary." (NYSCEF 166 Defendant's Counterstatement 

### ,i 121; NYSCEF 169, Plaintiffs' Response 

### ,i 121; NYSCEF 144, WIC Board Meeting Minutes [December 6, 2019] at 1.) On December 12, 2019, upon the petition of DFS, a Florida state court issued an orderappointing DFS as receiver ofWIC for purposes ofrehabilitation (NYSCEF 145, Amended Consent Order.) On December30, 2019, upon DFS's motion for an orderto

5 It is unclearwhythis additional consent was requested, considering the consents Whited executed on November 15, 2019.

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liquidate WIC, the Florida court appointed DFS as receiver ofWIC for purposes of liquidation, effective January 6, 2020. (NYSCEF 147, Consent OrderAppointing DFS
as Receiver.) On January 16, 2020, the Texas Department of Insurance issued a confidential orderofsupervision to WNIC. (NYSCEF 166 Defendant's Counterstatement 

### ,i 130; NYSCEF 169, Plaintiffs' Response 

### ,i 130.) On February 21, 2020, the State ofTexas filed a petition for an order appointing a liquidator and requesting injunctive relief against WNIC. 

### (Id. 

### ,i 134; NYSCEF 91, Petition.) On March 5, 2020, a Texas state court entered an order appointing a liquidatorand issuing a permanent injunction and notice ofautomatic stay against WNIC. (NYSCEF 166 Defendant's Counterstatement 

### ,i 137; NYSCEF 169, Plaintiffs' Response 

### ,i 137; NYSCEF 90, Appointment and Pl Order.) Discussion Plaintiffs contend that they are entitled to summaryjudgmentfor breach ofthe Validity Guaranty, because the following Trigger Events occurred underthe Voluntary Bankruptcy Provision: (1) WIC's consentto administrative supervision and subsequent liquidation (Florida Liquidation) satisfies the "Loan Party orany Subsidiarythereof
commences avoluntary case or other proceeding involving its liquidation

... orseeking the appointment of receiver" trigger (Voluntary Proceeding Trigger); (2) WNIC's liquidation (Texas Liquidation) satisfies the "any Loan Party or any Subsidiarythereof

... anysuch relief orto the appointment ofortaking possession by anysuch official in any involuntary case or other proceeding commenced against it" trigger (Involuntary Proceeding Trigger); and (3) the failure to pay Greenlight satisfies the "Loan Party or any Subsidiarythereof

... shall fail generally

... to pay its debts as they become due"

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trigger (General Failure to Pay Debts Trigger). (NYSCEF 84, Validity Guaranty at 4 [§ 1 (b) (viii)].) As concerns the Involuntary Proceeding Trigger, plaintiffs concede that "the wording is awkward" (NYSCEF 170, Memo in Support at 23/26) and suggestthat "[t]he word 'to' appears to have been substituted forthe word 'seeking' just before the words 'the appointment of,"' such thatthe corrected clause would read, "any such relief or seeking the appointment of

..." 

### (Id. at n 11.) They, nonetheless, contend that there is
no ambiguity, because "the language is susceptible to only one reasonable interpretation: that the parties intended that an involuntary bankruptcyfiling, like the Texas Liquidation, would be aTrigger Event." 

### (Id. at 23.) Whited counters that the Validity Guaranty is a bad actor guaranty ratherthan an absolute guarantyagainst default underthe Credit Agreement and that, as such, the parties intentionally omitted involuntary proceedings brought by an insurance regulator from the Trigger Events. He argues that ifthe parties intended to protect against involuntary bankruptcies and similar occurrences, the language ofthe Voluntary Bankruptcy Provision would mirrorthat ofthe contemporaneously executed Credit Agreement, which expressly includes such occurrences under Events of Default. Instead, he argues, the parties made a conscious choice to exclude that language, opting to use language that protected Atalaya from Whited's intentional bad acts. Therefore, neitherthe Florida northe Texas Liquidation, which were involuntaryand commenced by operation ofstate law, constitutes a Trigger Event. At the very least, Whited argues, the language is ambiguous, and the parties' intentions constitute an issue offact. He also argues that, because Atalaya effectively controlled Windhaven

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from November 22, 2019, it should be estopped from denying its role in the events that led up to the Florida and Texas Liquidations. Lastly, he asserts that the failure to pay Greenlight is not a Trigger Event. Whited contends the "shall fail generally

... to pay its debts as they become due" language (NYSCEF 84, Validity Guaranty at 4 [§ 1 (b) (viii)]), "which echoes definitions of insolvency in the Bankruptcy Code and the [NewYork Debtor and Creditor Law ("DCL"), unambiguously restricts Whited orWindhaven from intentionally bringing about insolvency proceedings by indirect means" and is not intended "to force Whited to personally guarantee the solvency of his distressed business." (NYSCEF 165, Memo in Opp at 25-26/29.) Moreover, he argues, liability cannot be triggered by debts embodied in the underlying loan agreements, i.e., Atalaya was aware ofWindhaven's liability to Greenlight, and this was the subject ofa simultaneously executed intercreditor agreement. Pursuant to CPLR 3212, to obtain summaryjudgment, the movant "must make a prima facie showing ofentitlement to judgment as a matterof law, tendering sufficient evidence to demonstrate the absence ofany material issues offact." (Alvarez v ProspectHosp., 68 NY2d 320, 324 [1986].) "Failure to make such prima facie showing requires a denial ofthe motion, regardless ofthe sufficiency ofthe opposing papers." (Id.) Once the movant satisfies its burden, the opposing party must "produce evidentiary proof in admissible form sufficient to establish the existence ofmaterial issues offact which require a trial ofthe action." (Id.) A cause ofaction for breach ofcontract requires a plaintiffto demonstrate "the existence ofa contract, the plaintiff's performance thereunder, the defendant's breach

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thereof, and resulting damages." (Harris v SewardParkHaus. Corp., 79 AD3d 425, 426 [1st Dept 2010] [citation omitted].) "A contract ofguaranty is subject to the fulfillment of any condition precedent to the liability imposed on the guarantor." (Madison Ave. Leasehold, LLC vMadison BentleyAssoc. LLC, 30 AD3d 1, 10 [1st Dept 2006], affd8 NY3d 59 [2006] [internal citations omitted].) Because "a bad [actor] guarantee is triggered when one ofthe enumerated bad acts occurs" (Nexbank, SSB v Soffer, 2014 NY Slip Op 31433[U], *3 [Sup Ct, NY County 2014], affd 129 AD3d 485 [1st Dept 2015]), on summaryjudgment, the plaintiff bears the burden ofdemonstrating that such
a condition precedentwas satisfied. (See Madison Ave. Leasehold, LLC, 30 AD3d at 10-11.) "Whether or not a writing is ambiguous is a question oflawto be resolved by the courts." (W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990] [citation omitted].) "[A] contract is ambiguous when read as a whole, [it] fails to disclose its purpose and the parties' intent, orwhen specific language is susceptible oftwo reasonable interpretations." (Georgia Malone 

### & Co., Inc. vE 

### & MAssoc., 163 AD3d 176, 185 [1st Dept 2018] [internal quotation marks and citations omitted].) "[T]he best evidence ofwhat parties to a written agreement intend is what they say in theirwriting." (Banco Espirito Santo, S.A. v Concessionaria Do Rodoanel Oeste S.A., 100 AD3d 100, 106 [1st Dept 2012] [internal quotation marks and citation omitted].) "[A]greements executed at substantiallythe same time and related to the
same subject matter are regarded as contemporaneous writings and must be read together as one." (1471 Second Corp. vNATofNYCorp., 162AD3d 449, 450 [1st Dept 2018] [internal quotation marks and citations omitted].) The writing must be read

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as a whole, as its "meaning

... may be distorted where undueforce is given to single words or phrases." (MatterofWestmoreland CoalCo. vEntech, Inc., 100 NY2d 352, 358 [2003] [internal quotation marks and citation omitted].) "[C]ourts must construe contracts in a mannerwhich gives effect to each and every part, so as not to render any provision meaningless orwithoutforce or effect." (Western 

### & S. Life Ins. Co. v U.S. BankN.A., 209 AD3d 6, 13 [1st Dept 2022] [internal quotation marks and citations omitted].) Here, plaintiffs fail to demonstratetheir prima facie entitlement to summary judgment. First, they fail to demonstrate that the Florida Liquidation satisfies the Voluntary Proceeding Trigger. Underthis trigger, the guarantor is liable when "any Loan Party orany Subsidiarythereofcommences avoluntary case or other proceeding involving its liquidation

... orseeking the appointment ofa ... receiver." (NYSCEF 84, Validity Guaranty at 4 [§ 1 (b) (viii)]). The triggering event is "any Loan Party orany Subsidiary

... commenc[ing] a voluntary case or other proceeding." (Id.) The language that follows, set off by "involving its" and "or seeking the appointment of," merely describes the "voluntary case or other proceeding." (Id.) Plaintiffs fail to demonstrate that WIG commenced any action or proceeding for its liquidation. The November 15, 2019 Consent OrderforAdministrative Supervision placed WIG in administrative supervision for 120 days. (See NYSCEF 137, exhibitA at 18/32). To the extent that plaintiffs contend that FLOIR's administrative supervision constitutes
a case or a proceeding involving WIC's liquidation (see NYSCEF 183, oral arguments tr at 5:10 - 6:13), they offer nothing in support ofthis proposition. The consent order itself indicates that the supervision was not an administrative proceeding (see NYSCEF Doc

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No. 137, exhibitA, 

### ,i 19) and that WIC's compliance with FLOIR's corrective plan could have avoided receivership for purposes of rehabilitation or liquidation. (See id, 

### ,i,i 6, 16.) As for the subsequent court orders, neitherwas initiated by WIC. On December 12, 2019, upon the petition ofDFS, a Florida court appointed DFS as receiver ofWIC for purposes of rehabilitation. (NYCEF 145, Petition.) On December30, 2019, upon DFS's motion, the court appointed DFS as receiver ofWIC for purposes of liquidation (NYSCEF 147, Motion.) DFS commenced the proceeding and WIC was the "respondent" (see NYCEF 145, 147.) ThatWIC consented to the Florida Liquidation is immaterial and plaintiffs mistakenlyfocus on this conduct being voluntary. (See NYSCEF 170, Plaintiffs' MOL in support, at 6/26 n 3.) The plain language ofthe Voluntary Proceeding Trigger requires that WIC be the one to "commence[] a voluntary
case or other proceeding." As this did not occur, plaintiffs fail to demonstrate that the Florida Liquidation constitutes a Trigger Event. 6

6 Notably, ifthe intention ofthe parties was for the Involuntary Proceeding Triggerto mirrorsimilar language found in the Credit Agreement (see NYSCEF 83, Credit Agreement at 7, 2 [defining "Event of Default" and "Bankruptcy Event"]), it would read: "any Loan Party or any Subsidiary thereof commences a voluntary case or other proceeding involving its liquidation

..

.orseeking the appointment ofa ... receiver

... , [or consents to] anysuch relief orto the appointment ofor taking possession by anysuch official in any involuntary case or other proceeding commenced against it (an 'Involuntary Proceeding')." Undersuch a provision, the Florida Liquidation would be a Trigger Event. However, plaintiffs do not make this argument. In fact, they insist that the Validity Guaranty should not be read in this way. (See NYSCEF 183, oral arguments tr at 37:8 - 38: 13). Indeed, as will be discussed shortly, they argue that the Involuntary Proceeding Trigger means something different.

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Second, plaintiffs fail to demonstrate that the Texas Liquidation satisfies the Involuntary Proceeding Trigger. Plaintiffs' contention, that the only reasonable interpretation is that the parties intended an involuntary bankruptcyto be a Trigger Event, is untenable. While the language ofthis clause is unclear, due to one or more missing words, when the Voluntary Bankruptcy Provision is read as awhole, it does not entirelyfail to disclose the parties' intent. Rather, when the provision is read as awhile, it could not have been the intention ofthe parties that an involuntary proceeding, without more, be a Trigger Event. A contrary interpretation would renderthe last clause ofthe Voluntary Bankruptcy Provision-defining a Trigger Event to include "the Guarantoror any Company Party

... intentionally collud[ing] with anythird party in to effect the filing
or petition of an Involuntary Proceeding against a Loan Party or Subsidiary thereof"- superfluous. Such an interpretation must be avoided. (See Western 

### & S. Life Ins. Co., 209 AD3d at 13; see also Georgia Malone 

### & Co., Inc., 163 AD3d at 187) Further, a review ofthe Credit Agreement makes clearthat the parties intentionally omitted an involuntary proceeding as a Trigger Event. The Credit Agreement was executed at the same time and addresses the same subject matteras the Validity Guaranty. Hence, the two must be read together. (See 1471 Second Corp., 162 AD3d at 450 [reading a guaranty and the related lease together].) The Credit Agreement uses language nearly identical to that ofthe Voluntary Bankruptcy Provision in defining what constitutes an Event of Default. The two provisions track each other, nearlyword for word, until the final clause, where they diverge drastically. The Credit Agreement treats the commencement ofan involuntary proceeding against the borrower
orthe appointment ofa receiver over its property as an Event of Default, whereas the

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Validity Guaranty requires the Guarantorto collude in the commencement ofan involuntary proceeding against a Loan Party or its Subsidiaryfor it to constitute a Trigger Event. (Compare NYSCEF 83, Credit Agreement at 7, 2 [defining "Event of Default" and "Bankruptcy Event"], with NYSCEF 84, Validity Guaranty§ 1 [b] [viii].) "Even where there is ambiguity, if parties to a contract omit terms-particularly, terms that are readily found in other, similar contracts-the inescapable conclusion is that the parties intended the omission." (Quadrant StructuredProds. Co., Ltd. v Vertin, 23 NY3d 549, 560 [2014].) Here, the inescapable conclusion is that the parties intended for an involuntary proceeding to be an Event of Default underthe CreditAgreement, but not a Trigger Event underthe Validity Guaranty. Whatever else the parties intended bythe Involuntary Proceeding Trigger, they did not intend for an involuntary proceeding, without more, to constitute aTrigger Event. To the extentthat plaintiffs point to deposition testimony in support oftheir interpretation. (See NYSCEF 170, Plaintiffs' MOL in Support, at 11-12, 20), because the language ofthe agreement is clear on this point, the court may not considertestimonythat reveals a contrary intention. (See Riverside S. Planning Corp. v CRP/Exte/1 Riverside, L.P., 60 AD3d 61, 66 [1st Dept 2008], ["(p)arol evidence cannot be used to create an ambiguitywhere the words ofthe parties' agreement are otherwise clear and unambiguous"], affd 13 NY3d 398 [2009].) Forthe foregoing reasons, the Texas Liquidation, which plaintiffs concede was "an involuntary bankruptcyfiling." (See NYSCEF 170, Plaintiffs' MOL in Supoort at 19), is not aTrigger Event underthe Validity Guaranty. Finally, plaintiffs fail to demonstrate, primafacie, that Windhaven's debt to Greenlight satisfies "General Failure to Pay Debts Trigger." "'[G]enerally' imports

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something that involves or is applicable to the 'whole' and with regard to the overall picture, as opposed to specific instances." (MatterofB. D. Intl. Discount Corp., 15 BR 755,762 [BankrSD NY 1981], affd24 BR876 [SD NY 1982], affd701 F2d 1071 [2d Cir 1983] [discussing cases interpreting 11 USC 303 (h) (1)], certdenied464 US 830); see also Merriam-Webster.com Dictionary, generally [https://www. merriamwebster.com/dictionary/generally] [defining "generally" as "in a general manner" and "in disregard ofspecific instances and with regard to an overall picture"].) As such, when bankruptcy courts determine whether a "debtor is generally not paying such debtor's debts as such debts become due" (11 USC 303 [h] [1]), they consider: "(1) the number of unpaid claims; (2) the amount ofsuch claims; (3) the materiality ofthe non-payments; and (4) the debtor's overall conduct of its financial affairs." (MatterofA 

### &J Quality Diamonds, Inc., 377 BR 460, 463 [Bankr SD NY 2007] [internal quotation marks and citations omitted]; see also MatterofManolo Blahnik USA, Ltd., 619 BR 81, 99 [Bankr SD NY 2020].) Additionally, "[t]he failure to payjustone significant creditor can support
a finding thatthe debtor is generally not paying its debts ifthe creditor represents a significant amount ofthe total debt." (MatterofA 

### &J QualityDiamonds, Inc., 377 BR at 464 [internal citations omitted]; see also MatterofManolo Blahnik USA, Ltd., 619 BR at 99.) Here, plaintiffs point to Greenlight's demand for payment, without any evidence of Windhaven's overall financial condition orwhat portion ofWindhaven's overall debtwas represented by the commissions owed to Greenlight. Therefore, plaintiffs fail to demonstrate, prima facie, that there has been a general failure to pay debts as they
come due. (See MatterofA 

### &J QualityDiamonds, Inc., 377 BR at 464 [finding that the petitionerfailed to demonstratethat the debtorwas generally not paying its debts as

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they became due in the "the absence ofproofaboutthe number and amount ofother creditors' claims, and the Debtor's overall conduct of its financial affairs"].) Plaintiffs' argument, that bankruptcy cases interpreting the Bankruptcy Code are unrelated to the Voluntary Bankruptcy Provision and do not provide guidance in interpreting the contractual language at issue in this case. (See NYSCEF 168, Plaintiffs' Reply MOL, at 11; NYSCEF 183, oral arguments tr at 10:5-17), is disingenuous. "Besides the common meaning ofthe language employed, the expectations and purposes ofthe parties in view ofthe factual context in which the agreementwas made must be considered in interpreting a contract term, with due regard to the parties' sophistication." (Madison Ave. Leasehold, LLC, 30 AD3d at 8 [internal citations omitted].) Furthermore, "[w]hile words are generally assigned their ordinary meaning, where a word has attained the status ofaterm ofart and is used in a technical context
... ,the technical meaning is preferred overthe common orordinary meaning" (id. [internal citation omitted].) Here, the ValidityAgreement was drafted by attorneys, the provision in question was expressly concerned with relief available to Windhaven under "any Debtor Relief Law" (NYSCEF 84, ValidityAgreement§ 1 [b] [viii]), and the parties chose to employ a phrase common to such laws. (See e.g. 11 USC 303 [h] [1]; DCL § 271 [b] [providing that "(a) debtorthat is generally not paying the debtor's debts as they become due

... is presumed to be insolvent"].) Bearing in mind the sophistication ofthe parties and the context, consideration of bankruptcy cases interpreting similar language in the Bankruptcy Code is appropriate. Forthe foregoing reasons, to the extent that plaintiffs seeksummaryjudgment on theirfirst cause ofaction for breach ofcontract, the motion is denied.

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To the extentthat plaintiffs seeksummaryjudgment on theirsecond cause of action for declaratoryjudgment, they have made no showing ofentitlementto such relief. Their memorandum oflaw in support ofthe motion briefly mentions thatWhited agreed to provide "on-demand payment ofany out-of-pocket costs, including reasonable attorneys' fees and expenses, arising from the enforcement of rights under the Validity Guaranty." (NYSCEF 170, Plaintiffs' MOL in Support at 3.) This occurs in the memorandum'sfacts section and no further reference is made to this claim, not
even in the concluding requestfor relief, which is limited to the breach ofcontract claim. (see id. at22.) Therefore, plaintiffs have failed to demonstrate, prima facie, their entitlementto this reliefand denial is appropriate. (See Alvarez, 68 NY2d at 324.) Accordingly, it is ORDERED thatthe motion by plaintiffs, Atalaya Special Opportunities Fund VII LP and Midtown Madison Management LLC, forsummaryjudgment is denied; and it is furtherORDERED that parties mayfile motions in limine by February29, 2024. Otherwise waived. Ifthe parties fail to file motions in limine, they shall appearfor atrial scheduling conference on March 4, 2024 at 4 pm.

12/31/2023 DATE CHECKONE:

APPLICATION: CHECK IF APPROPRIATE:

# ~ CASE DISPOSED GRANTED 

# 0 DENIED SETTLE ORDER INCLUDES TRANSFER/REASSIGN

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20 of 20 ANDREA MASLEY,J.S.C. NON-FINAL DISPOSITION GRANTED IN PART SUBMITORDER FIDUCIARYAPPOINTMENT

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