### BR Fund IV Acq Inv, LLC v Brightwood Capital Fund III 2024 NY Slip Op 33314(U) September 19, 2024 Supreme Court, New York County Docket Number: Index No. 651756/2024 Judge: Margaret A. Chan 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.INDEX NO. 651756/2024 NYSCEF DOC. NO. 125 RECEIVED NYSCEF: 09/20/2024

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### SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY
PRESENT: HON. MARGARET A. CHAN Justice 

### --------------------X

BR FUND IVACQ INV, LLC,BR FUND V ACQ INV, LLC, Plaintiffs,


### -vBRIGHTWOOD CAPITAL FUND Ill-INSTITUTIONAL, LP, BRIGHTWOOD CAPITAL FUND Ill, LP, BRIGHTWOOD CAPITAL FUND 111-U, LP, BRIGHTWOOD CAPITAL FUND MANAGERS Ill, LLC,BRIGHTWOOD CAPITAL FUND IllINSTITUTIONAL HOLDING CORP~. BRIGHTWOOD CAPITAL FUND Ill HOLDINGS, LP, AND BRIGHTWOOD FUND 111-C, LP, Defendants. 

### --------------------X PART 49M

INDEX NO. 651756/2024 04/22/2024, 04/25/2024, MOTION DATE 05/31/2024
MOTION SEQ. NO. 001 003 004

DECISION 

### + ORDER ON MOTION

The following e-filed documents, listed by NYSCEF document number (Motion 001) 14, 15, 16, 17, 18, 19,20,21, 73 were read on this motion to/for SEAL
The following e-filed documents, listed by NYSCEF document number (Motion 003) 39, 40, 42, 58, 59, 60,61,62,63,64,65,66,67,68,69, 70, 71 were read on this motion to/for SEAL
The following e-filed documents, listed by NYSCEF document number (Motion 004) 90, 91, 92, 93, 94, 95,96, 97,98,99, 100,101,102,103,109 were read on this motion to/for SEAL



### In this breach ofcontract action related to plaintiffs' investment in defendants' continuation fund, defendants Brightwood Capital Fund III-Institutional, LP 

### etal. (Brightwood) move to seal documents in Motion Sequences 001, 003, and 004. Plaintiffs BR Fund IVAcq Inv, LLC and BR FundV Acq Inv, LLC (Banner Ridge) oppose the motion. MS 001 Defendants move, by order to show cause, to sealExhibits 1 and 2 ofthe Complaint (NYSCEF#s 3 and 4) and to replace them with redacted versions attached as Exhibits A and B to the Affirmation ofSengal Selassie (NYSCEF#s 17 and 18). Exhibit 1 is the Transaction Agreement between the parties, and Exhibit 2, the LetterAgreement (together, Transaction Documents). Plaintiffs oppose this motion.

651756/2024 BR FUND IV ACQ INV, LLC, ET AL vs. BRIGHTWOOD CAPITAL FUND 111- INSTITUTIONAL, LP, ET AL Motion No. 001 003 004 Page 1 of4



### [* 1]INDEX NO. 651756/2024 NYSCEF DOC. NO. 125 RECEIVED NYSCEF: 09/20/2024

2 of 4 Defendants note that the documents reveal commercially-sensitive information that Brightwood guarded closely and neverintended to be public, including detailed information regarding Brightwood's business structure, business and tax-planning strategies, internal finances and valuation, the identity ofthe companies in Brightwood's private investment portfolio, the identity ofnon-parties who provide financing to Brightwood, amounts and formulas for calculating pricing in the transaction, detailed formulas for the distribution of investment proceeds to investors, and information regarding the amounts and calculation of Brightwood's management fees (id. at 5). Defendants argue that the disclosure ofsuch information to the public will cause commercial and competitive harm to Brightwood and there is no overriding public interest in the detailed terms ofthe transactions between private investment funds (id.). Defendants also point out that the TransactionAgreement contained a confidentiality provision and plaintiffs' filing thereofon a public docket breached that provision (id. at 2). Plaintiffs on the other hand argue that no "good cause" exists to partially seal the Transaction Documents and that such documents are central to Banner Ridge's breach of contract claim against Brightwood. Plaintiffalso argues that the confidentiality provision in the Transaction Agreement does not apply because the TransactionAgreement only requires that the TransactionAgreement remain confidential "except as required by [l]aw" (NYSCEF# 73

- Dfts' MOL at 3). Plaintiffs also point out that the Letter Agreement contains no such provision (id.). Plaintiffs argue that defendants fail to substantiate their assertions that such disclos-μres will harm defendants (id. at 2-3). Plaintiffs also note that Banner Ridge filed the Exhibits on April 4, but Banner Ridge did not have them removed from the public docket until two weeks later onApril 19 (id. at 5). MS003 Along with their submission ofthe Affirmation ofBrandon Fetzer in Support ofthe Plaintiffs' Order to Show Cause for a Preliminary Injunction (NYSCEF # 46), plaintiffs filed 11 exhibits under provisional seal (NYSCEF# 28-38 and# 47-57). Plaintiffs assert that while theyremained unconvinced that there is good cause to seal the exhibits attachedto the FetzerAffirmation, they filed the documents under seal as a precautionary measure since the information therein was similar to that in the pending Motion Sequence 001 (NYSCEF# 40 at 2). Plaintiffs also submitted a proposed Order to Show Cause, requesting that the court require defendants to explainwhy the exhibits should remain under seal. In response, defendants filed papers to support a partial sealing ofnine ofthe documents and provided redacted versions ofexhibits B through H (NYSCEF#s 63-69) and J through K (NYSCEF#s 70 and 71) ofthe FetzerAffirmation. Defendants contend that the exhibits containinformation similar to that in Motion Sequence 001 (NYSCEF# 61- Dfts' MOL at 4-5). Specifically, the exhibits to the Fetzer Affirmationinclude emails and attachments that disclose confidential, commercially sensitive details regarding Brightwood's valuation, balance sheets, the identities of companies in its private investment portfolio, the identities ofnon-parties who provide financing to Brightwood (along with the amounts offinancing), and the financial terms of private transactions, including pricing formulas, distribution ofinvestment proceeds, and Brightwood's management fees and discounts (id.). Defendants argue that public disclosure ofthis information would place them at a competitive disadvantage by allowing competing funds, investors, and market counterparties to access detailed, confidential business and

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### financial information, including the terms on which Brightwood enters agreements with other parties (id). 

### MS004 Defendants move, by order to show cause, to sealexhibits A, C, D, F, G, H, J, 

### Kand M 

### to the Affirmation ofSengal Selassie in Opposition to Plaintiffs' Applicationfor a Preliminary Injunction (Selassie Affirmation) (NYSCEF#s 77, 79, 80, 82, 83, 84, 86, 87, and 89). Defendants also filed redactedversions ofthese exhibits to the motion (NYSCEF#s 93-101). Because ofthe similarities between the materials in Motion Sequences 003 and 004, the parties make almost identical arguments in support and in opposition oftheir sealing. 

### Discussion Under New York law, there is a presumptionthat the public has a right to access judicialproceedings andcourt records 

### (Mosa.llem vBerenson, 76 AD3d 345, 348 [1st Dept 2010], citing

### Mancheski v Ga.belli Group CapitalPartners, 39AD3d 499, 501 [2d Dept 2007]). However, this right is not absolute 

### (Danco Labs v Chemical Works of Gedeon Richter, 274AD3d 1, 8 [1stDept 2000]). A court can sealor redact court records under section 216.l(a) ofthe Uniform Rules for Trial Courts upon a showingof"good cause" (22 NYCRR 216.l[a]). Atthe same time, "[c]onfidentiality is clearly the exception, not the rule" 

### (Matterof Hoffman, 284AD2d 92, 93

- 94 [1stDept 2001]), and the party seeking to seal court records must demonstrate compellingcircumstancesjustifyingrestrictedpublic access 

### (Mancheski, 39AD3d at 502). Upon review ofthe documents sought to be sealed and the defendants' proposed redactions, together with plaintiffs' opposition to sealing, the court finds good cause exists under 216.1 ofthe Uniform Rules ofTrial Courts for sealing all ofthe proposed documents, except for the LetterAgreement (NYSCEF# 4) 

### (seeDawson v White & 

### Case, 184AD2d 246, 247 [1st Dept 1992] [sealingiswarrantedin the absence of"anylegitimate public concern, as opposed to mere curiosity, to counter-balance the interest [a business'] partners andclients have in keeping their financial arrangements private"]; 

### D'Amour v Ohrenstein &

### Brown, LLP, 17 Misc 3d 1130[A], *20 [Sup Ct, NY County 2007] ["[s]ealing a court file may be appropriate to preserve the confidentiality ofmaterials which involve the internal finances ofa party and ~re ofminimalpublic interest"]). Here, defendants are primarily seeking to partially seal confidentialfinancial information andthe names ofnon·parties. In those instances in which defendants seek to seal informationthat is alreadypublic-facingin the Complaint, as suchinformation goes to the parties' central arguments, good cause was not sufficiently established. 

### Conclusion For the foregoing reasons, itis hereby ORDERED that plaintiffs' motions to seal (MS 001, MS 003, andMS 004) are grantedin part and deniedinpart; anditis further

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### ORDERED that the Clerk ofthe Court is directed, upon service upon the clerkofa copy ofthis Decision and Order with notice ofentry, to seal the following NYSCEF documents: 3, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 77, 79, 80, 82, 83, 84, 86, 87, 89; andit is further ORDERED that untilfurther order ofthe court, the Clerkofthe Court shall deny access to those documents (NYSCEF#s 3, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 77, 79, 80, 82, 83, 84, 86, 87, 89) to anyone (other than the staffofthe Clerk or the court) except for counsel ofrecord for anypartyto this action, any party, and any representative ofthe counsel ofrecord for a party uponpresentation to the County Clerk ofwritten authorization from saidcounsel and appropriate identification; and itis further ORDERED that service upon the Clerk ofthe Court shallbe made in accordance with the procedures setforth inthe Protocol on Courthouse and County Clerk Procedures for Electronically Filed Cases (accessible at the ''E·Filing" page on the court's website at the address www.nycourts.gov/supctmanh).

9/19/2024



### DATE
CHECK ONE: MAR~

APPLICATION: CHECK IF APPROPRIATE:

# ~ CASE DISPOSED GRANTED

### □ DENIED SETTLE ORDER INCLUDESTRANSFER/REASSIGN · NON-FINAL DISPOSITION GRANTED IN PART SUBMIT ORDER FIDUCIARY APPOINTMENT

651756/2024 BR FUND IV ACQ INV, LLC, ET AL vs. BRIGHTWOOD CAPITAL FUND 111- INSTITUTIONAL, LP, ET AL Motion No. 001 003 004

### □ OTHER

### □ REFERENCE

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