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. C arm an of t he U ni t ed S t at es C our t of Int ernat i onal T r ade, s i t t i ng * bydes i gnat i on. 09-3029 -cv E *T RAD E Fi n . C orp . v. D eu t s c h e B ankAG

UNI TED S TATES CO URT O F AP PEALS F O R T H E S E C O N D C IR C U IT S UM M ARY OR DER R U L I N G S B Y S U M M A R Y O R D E R D O N O T H A V E P R E C E D E N T I A L E F F E C T . C I T A T I ON T O A S UM M ARY ORDE R F I L E D ON OR AF T E R J ANUARY 1 , 20 0 7 , I S P E RM I T T E D AND I S GOVE RNE D BY FED ERA L RU LE O F AP PELLA TE PRO C EDU R E 32 . 1 AN D TH I S C O U R T’ S LO C A L R U LE 32 . 1. 1. W H EN C I TI N G A S U M M A R Y O R D ER I N A D O C U M ENT FI LED W I TH TH I S C O U R T , A P A R T Y M U ST C I TE E I T HE R T HE F E D E R A L A PP E ND I X OR A N E L E C T R ON I C D A T A B A S E ( W I T H T HE N OT A T I ON “ S UM M ARY ORDE R” ) . A PA RT Y CI T I NG A S UM M ARY ORDE R M US T S E RVE A COPY O F I T ON ANY PA R TY N O T REPR ESENTED BY CO U N SEL. A t a s tate d ter m o f

th e U n ited S tate s C o u rt o f A p p e a ls f

o r th e S e c o n d C irc u it, h e ld att he D ani el Pat r i ck M oyni han U ni t ed St at es C our t hous e, 500 Pear l St r eet , i n t he C i t yof N ew Y or k, on t he 30 dayof M ar ch, t w o t hous and t en. th P R E S E N T : R E E N A R A G G I,

PETE R W
. HA LL,

C i r cui tJudges , GR E GOR Y W. CA RMAN,

Judge
. *

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - E *T R A D E FI N A N C I A L C O R PO R A T I O N and E *T R A D E B A N K , a F ederal l yC hart ered Sa vings B ank, P l ai nt i f f s -Appel l ees , v. N o. 09- 3029- cv DE UT S CH E BA NK AG, D ef endant

-Appel l ant .

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - A PPE A R I N G FO R A PPE L L A N T : SC O T T D
. M U SO FF ( J er emyA
. B erm an, J as on C . V ig n a , C h ri s to s R a v a n id e s , on the br i ef ), Skad de n, A rps , Sl a t e , M e a gh e r& Fl om LL P, N ew Y or k, N ew Y or k.2

A P P E A R IN G F O R A P P E L L E E S : D O U G L A S P
. L O B E L (D av id A
. V o g el, R o b ert T . C a h ill, on the br i ef

), C oo l eyG od w ard K roni sh L L P, R es t on, V i r gi ni a. A p p ea l from the U n it ed S tat es D istri ct C o u rtfo r the S o u thern D istri ct o f N ew Y o rk (R o b e rt W . S w e e t, Judge ). UP ON DUE CO NS I DE RA T I ON, I T I S HE RE BY OR DE RE D, ADJ UDGE D, AND D E C R E E D t hatt he corr ect ed j udgm entent er ed on J ul y2, 2009, and t h e o rde r ent er ed on February5, 2010, a r e AF F I RMED
. P l a i n t i f f s E * T R A D E F i n a n c i a l C o rp o r a t i o n a n d E * T R A D E B a n k ( c o l l e c t i v e l y, “E*T R A D E ”) s ued def

endant D eut s che B ank A G forbr eac h of a s t ock pur chas e agr eement ( “SPA ”), byw hi ch E*T R A D E acqui r ed the D eut s che Recr eat i onal A s s etFundi ng C orpor at i on ( “D R A FC O ”)
. D eut s che Bank now appea l s fr om a $17, 490, 924. 85 j udgm ent
en tered in E * T R A D E ’s fa v o r af ter a thirt ee n -da yb en ch tr ial
. W e re v iew the d istri ct co u rt ’s fac tual fi ndi ngs for cl ear err or and i t s concl us i ons of l aw , and mi xed fa ctand l aw , de novo. See Skor os v. C i t y of N ew Y or k, 437 F. 3d 1, 12 ( 2d C i r . 2006)
. W hen, as i n t hi s cas e, t he
re lev a n t co n tra c t lan g u a g e is u n a m b ig u o u s, its m e a n in g is a q u e stio n o f law f o r th e c o u rt to deci de. See J A A ppar el C orp. v. A bboud, 568 F. 3d 390, 397 ( 2d C i r . 2009)
. W e as s um e the p a rties ’ f a m ili a rityw ith th e f

a c ts a n d re c o rd o f

p rio r p ro c e e d in g s, w h ich w e re f e re n c e o n ly
a s n e c e s s a r yt o e x p l a i n o u rd e c i s i o n t o a f f i r m.3

1. D eut s che Bank B r eac hed i t s C ovenanti n § 2. 06 T he SPA cont ai ned a c ovenantt hatD eut s che Bank w oul d pr epar e a c l os i ng bal ance
s he e t“ i n a c c or da nc e w i t h U. S. G A A P [Gen e r a l l y A c c e pt e d A c c ou nt i ng Pr i nc i pl e s ]
. ” SPA § 2. 06( a)
. B as ed on ext ens i ve fa ctual fi ndi ngs , t he di s t r i ctcour tconcl uded thatD eut s che B ank br eac hed thi s covena ntby( 1) i ncl udi ng ( a) s ervi ci ng fee s and (b) l i qui dat i on expens es i n i t s cal cul at i on of r es i dual i nt er es tand gai n on s al e at t he t i m e of s ecur i t i zat i on butfai l i ng to de ductt hos e expe ns es on D R A FC O ’ s t ax r etur ns w hen theyw er e ac tual l ypai d, and ( 2) cal cul at i ng t he val ue of t he defe r r ed t ax as s et ( “D T A ”) us i ng a bl ended t ax r at e ac count i ng forbot h fede r al and s t at e t axes w hen i tw as notpr obabl e thatD R A FC O w oul d have s t at e t ax li ab il ity , there b y(3) ca u sing the D T A o n the c losing b alan ce sh ee t t o b e o v erstated b ym o re th a n $ 1 1 m ill io n . A s th e d istric t co u rt f o u n d , D e u tsc h e B a n k ’s o w n a c c o u n tan t ef f e c tiv e ly acknow l edged the i nadequa cyof thes e number s byl at er referr i ng t o t he D T A audi tas “garbage i n, garbage out
. ” E*T R A D E Fi n. C orp. v. D eut s che Bank A G , 631 F. Supp. 2d 3 1 3 , 3 6 4 (S
. D
. N
. Y
. 2 0 0 9 ). On a p p e a l , Deu t s c h e Ba n k d o e s n o t c h a l l e n g e t h e d i s t r i c t c o u r t ’ s f i n d i n g t h a tt h e DTA
w a s o v e rst a te d
. R a th e r, itsu b m its th a t it s f a ilu re p ro p e rlyto a c c o u n t f o r th e D T A is
es s ent i al l ya di s put e r egar di ng an “a m ount [] r efl ect ed on t he C l os i ng B al ance Sheet , ” w hi ch mayon l ybe resol ved t hr ou gh a po s t - c l os i ng pu r c ha s e pr i c e a dj us t mentpr oc e s s . SPA § 2. 06( b) ( i i )
. A ccor di ng t o D eut s che Bank, t he di s t r i ctcourti m per m i s s i bl ydi s turbed the “f inal, b ind ing an d co n clus ive” clos ing b alan ce sh ee t, id., b yco n clud ing that E * T R A D E ’s4

br eac h of contr act cl ai m w as i ns t ead amenabl e t o t he i ndemni t y pr ovi s i ons i n SPA §§ 9. 01 and 9. 02. W e ar e notper s uaded. A s i n W es t m or el and C oal C o. v. E nt ech, I nc. , 1 00 N
. Y
. 2d 352, 358, 763 N
. Y
. S. 2d 5 2 5 , 5 2 8 ( 2 0 0 3 ) , E* TRA DE’ s “ o b j e c t i o n s r el at ed t o acc ount i ng convent i ons , es t i m at es , [and]
as s um pt i ons . . . unambi guous l yfal l w i t hi n t he A gr eement ’ s i ndemni fi cat i on pr ovi s i ons , not i t s purchase pri ce adjust m ent pr ov i si on s. ” D euts che B ank ’s effo rt s t o d i st i ng uis h W estm or el and ar e unava i l i ng. L i ke the contr acti n W es t m or el and, t he SPA pr ovi des t hat “[t ] he s ol e and e xcl us i ve r emedyforanybr eac h of anyr epr es ent at i on , w arr anty , covena nt
oragr eements hal l be pur s uantt o Sect i on 9. 02, ” the SPA ’ s i ndemni t ypr ovi s i on. SPA § 9. 01. T hatt he part i es i n W es t m or el and had noty etcompl et ed the pur chas e pr i ce a dj ust m ent p ro c e ss d o e s n o t alte r o u r c o n c lu sio n . If E * T R A D E ’s c laim s w e re n o t am e n a b le to
r es ol ut i on byan i ndepende ntacc ount antw i t hi n t hi r t yday s of cl os i ng, as W est m o reland h o l d s , t h e n i tf

o l l o ws t h a tt h e ya r e s t i l l n o ta me n a b l e t o t h a tp r o c e s s n o w. N ori s D el t a H ol di ngs , I nc. v. N at i onal D i s t i l l er s & C hemi cal C orp. , 945 F. 2d 1226 ( 2d C i r . 1991) , t o t he contr ary . T her e, t he courts ugges t ed that pl ai nt i ffs coul d chal l enge the
acc ur acy of defe ndant s ’ acc ount i ng and t hei r compl i ance w i t h G A A P, bu t no t un der l y i ng, G A A P- compl i antes t i m at es t hatpr oved i ncorr ecti n t he future. See i d. at1246- 49. H er e, how ever , E *T R A D E does nots eek t o s hi ftt he r i s k of futur e l os s t o D eut s che Bank, but
s i m pl yt o enfor ce D eut s che Bank’ s pr om i s e of “ acc ount i ng acc ur acy and r egul ar i t y . ” I d. at 1248.5

W e r ecogni ze thats om e di s t r i ctcour t s i n t hi s ci r cui thave su g g est ed thatdi s put es regar ding acco un t i ng m et ho ds shou l d b e res olved by pu rchase p ri ce adjust m ent pr oced ures. See Tal egen H ol di ngs , I nc. v. Fr emont G en. C orp. , N o. 98 C i v. 0366, 1998 W L 513066, at *6 ( S. D
. N
. Y
. A ug. 19, 1998) ; A dvans t arC om m c’ ns I nc. v. B eckl ey - C ar dy , I nc. , N o. 93 C i v. 4230, 1994 W L 176981, at *3 ( S. D
. N
. Y
. M ay 6, 1994) ; G es t etnerH ol di ngs , PL C v. N as hua C orp. , 78 4 F
. S up p. 78 , 81 (S. D
. N
. Y
. 19 92 ). L i ke the di stri ct cou rt , w e con cl ud e t hat these
cas es ar e di s t i ngui s habl e. W e “mer el y cons t rue[] t he agr eement befor e [the cour t ] and [do] notpr ohi bi ts ophi s t i cat ed bus i nes s par t i es fr om agre ei ng t o vary i ng m eans of r es ol vi ng d isput es over adjustm ents t o p urchase pri ce. ” V i oli n E ntm ’tA cqu i si t i on C o. v. V i rg in En t m’ t Hol d i n g s , I n c . , 5 9 A. D. 3 d 1 7 1 , 1 7 2 , 8 7 1 N. Y. S. 2 d 6 1 3 , 6 1 3
- 1 4 ( 1 s t Dep ’ t2009) (i n terna l qu o tat ion m ark s o m itted). Fi nal l y , w e nee d not addr es s t he par t i es ’ ar gum ent s r egar di ng t he br eac h of w arr ant i es
c o n tain e d in § § 3 .0 6 , 3 .0 7 , an d 3 .1 4 . B e c a u se w e c o n c lu d e th a t E * T R A D E m a yre c o v e r, v ia §§ 9. 01 and 9. 02, t he ful l amount byw hi ch i toverpai d forD R A FC O under§ 2. 06, anyerr or
m ade byt he di str i ctcour ti n cons t rui ng t hes e otherpr ovi s i ons w oul d, i n anyevent , be harm l ess. 2
. E* TRADE I s En t i t l e d t o Da ma g e s f o ri t s Ov e rp a yme n tf

o rDRAFC O A s a di r ectr es ul tof D eut s che Bank’ s br eac h, E *T R A D E B ank s uffe r ed damages of $ 1 1 ,5 6 6 ,8 3 8 , the a m o u n t b yw h ich th e D T A w a s o v e rsta ted . A lth o u g h th e su b se q u e n t sa le of D R A FC O t o E *T R A D E Fi nanci al m ay have c om pens at ed E*T R A D E B ank, cf. O s t ano6

C o m m e rz a n sta lt v . T e lew id e S y s., In c ., 7 9 4 F .2 d 7 6 3 , 7 6 6 (2 d C ir. 1 9 8 6 ) (n o tin g th a t p a rty

“ su f f e re d n o o u t-o f

-p o c k e t lo ss ” w h e n it so ld p u rc h a se in d u c e d b y f r a u d f o r m o re th a n it pai d) , w e ca nnot i gnor e, as D eut s che B ank ur ges , t hatE *T R A D E B ank mer el yt r ans ferr ed t he l os s t o i t s aff

i l i at e, E *T R A D E Fi nanci al
. C ont emplati n g ci r cumst ance s w her e the t r ans act i on caus es damage t o a r el at ed e n t i t y , t he SPA pl ai nl yext ends i ndemni t yt o “the P u r c h a s e r a n d its A f

f ili a tes .” S P A § 9 .0 2 (e m p h a sis a d d e d ). W e th e re f o re c o n c lu d e th a t, undert he SPA , E *T R A D E Fi nanci al has s t andi ng t o r ec o v er loss es di r ect l ycaus ed by D e ut s c he Bank ’ s br e a c h o f i t s ob l i ga t i on t o c ompl yw i t h GA A P. No ra r e we p e r s u a d e d b yDe u t s c h e Ba n k ’ s a r g u me n t s a s t o t h e a wa r d
. E * T RA DE F inan cial’s da m ag es a re n o t “m ere lysp ec u lat iv e , p o ssible o r i m ag inary ”; t h eyare “r eas onabl ycert ai n and di r ect l yt r ace abl e t o t he br eac h, notr emot e ort he r es ul tof other i nt er veni ng caus es . ” K enfor d C o. v. C ount yof Eri e, 67 N
. Y
. 2d 257, 261, 502 N
. Y
. S. 2d 131, 1 3 2 (19 8 6 ) (cit ing W ak em an v . W h ee ler & W il so n M fg
. C o . , 1 0 1 N
. Y
. 2 0 5 , 2 0 9 (18 8 6 )). N ori s E *T R A D E Fi nanci al ’ s l os s offs etei t herbyt ax r efunds t hat it co u ld se ek for D R A FC O ’ s over s tat em en tof t axabl e i ncome i n pas ty ear s ( as the di s t r i ctcour tobs er ved, under§§ 7. 01 and 7. 02 of the SPA , t hos e r efunds w oul d be due onl yt o D eut s che Bank) or b yE * T R A D E F in a n c ial’s w rite- d o w n o f th e D T A a n d c o rre sp o n d in g in c re a se in g o o d w ill
. F in a lly , b e c a u se w e c o n c lu d e sim p ly th a t E * T R A D E F in a n c ial m a yre c o v e r th e f u ll
am ou nt of ov erpaym ent for D R A F C O a s an “A ffi l i at e” un der § 9.02, w e need no tadd res sLI BO R s t a n d s f o r t h e Lo n d o n i n t e r - b a n k o f f e r e d r a t e . Her e , t h e p a r t i es defi ned 1 L IB O R in § 1 .0 1 o f

th e S P A
. [ A 1176- 77] 7 D eut s che Bank’ s ar gum entthat E *T R A D E fai l ed t o pr ove anyactual t ax l os s es s uppor t i ng t he di s t r i ctcour t ’ s damages aw ar d. 3. P rej ud gm ent I nter est D euts che B ank subm i t s that the d i stri ctcou rterr ed in com pu t i ng prej ud gm ent i nter est
a tt h e N e w Y o r k s t a tu t o r yr a t e , s e e N
. Y
. C
. P
. L
. R
. § 5 0 0 4 , r a t h e rt h a n a tL I B O R
. We 1 dis agree. U nd er N ew Y ork l aw , t he d i stri ctcou rtw as r equ i red t o aw ard prej ud gm ent i nter est at t h e statuto ryrate, see A cti o n S
. A
. v . M arc R ich & C o . , 9 5 1 F
. 2 d 5 0 4 , 5 0 8 (2d C ir
. 1 9 9 1 ), unl es s t he part i es contr act ed fora di ffe r entr at e, s ee O ’ B r i en v. Y oung, 95 N
. Y
. 428, 432- 33 ( 1884) ; N Y C T L 1998- 2 T rus tv. W agner , 61 A
. D
. 3d 728, 729, 876 N
. Y
. S. 2d 522, 523 ( 2d D e p ’t 2 0 0 9 ). L ik e th e d istric t c o u rt, w e c o n c lu d e th a t § 2 .0 6 (d ) p ro v id e s th a t o n lyp a ym e n ts
m ade “ pur s uantt o Sect i on 2. 06( c) s hal l beari nt er es t. . . att he LIBO R R at e. ” Sect i on 2. 06( c) m andat es paym ent s f o rth e d i f f e r e n c e b e t w een t angi bl e s t ockhol der ’ s equi t yr ecor ded on t he r efe r ence and cl os i ng bal ance s heet s . T he di s t r i ctcour t ’ s damages aw ar d w as nots uch a paym ent , butr ather an ind emni t yunder§§ 9. 01 and 9. 02 forD eut s che Bank’ s br eac h of i t s pr om i s e t o compl y w i t h G A A P. T hatt he amountof E*T R A D E ’ s i nj ur ed expe ct at i on w as
a lso th e a m o u n t b yw h ich it “ o v e rp a id ” f o r D R A F C O d o e s n o t tran sf o rm th is in d e m n ityin to a pos t - c l o s i n g p u r c h a s e p r i c e a d j u s t me n tma n d a t e d b y§ 2
. 0 6 ( c )
. Acc o r d i n g l y , t h e d i s t r i ct
cour tcorr ect l yaw ar ded pr ej udgm enti nt er es tatt he st atut or y r at e, s ee O ’ B r i en v. Y oung, 958

N
. Y
. at432- 33, acc rui ng fr om t he dat e of the s al e of D R A FC O s t ock on O ct ober20, 2003,
see R en o v . B u ll , 2 2 6 N
. Y
. 5 4 6 , 5 5 2 -53 (19 1 9 ). 4. A t t or ney s ’ Fees D eut s che B ank fi nal l y chal l enges t he di s t r i ct cour t ’ s aw ar d of att or ney s ’ fee s . “U nder th e A m e ric a n R u le, it is w e ll es tab lish e d th a t atto rn e y s’ f e e s a re n o t o rd in a rilyre c o v e ra b le in th e a b s e n c e o f a s ta tu te o r e n f o rc e a b le c o n tr a c t p ro v id in g th e re f o r.” U n ite d S ta te s F id . & G uar . C o. v. B r as petr o O i l Ser vs . C o. ( “B r as petr o”) , 369 F. 3d 34, 74 ( 2d C i r . 2004) ( i nt ernal q u o tatio n m a rk s a n d a ltera tio n s o m itt e d )). A “ c o u rt sh o u ld n o t in f e r a p a rty ’s in ten tio n to
w ai ve the bene fi tof th e rule u n les s t he i nt ent i on t o do s o i s unm i s t akabl ycl earfr om t he l ang u a g e o f t h e p r o mi s e . ” Hoo p e r As s o c s . , Lt d
. v . AG S Comp u t e r s , I n c . , 7 4 N. Y. 2 d 487, 492 , 5 4 9 N. Y. S. 2 d 3 6 5 , 3 6 7 ( 1 9 8 9 ) ; a c c o r d Coa s t a l Po wer I n t ’ l , Lt d
. v . Tr a n s c o n. C api t al C o rp ., 1 8 2 F .3 d 1 6 3 , 1 6 5 (2 d C ir . 1 9 9 9 ). A ppl y i n g thes e s t andar ds , w e conc l ude thatt he part i es ’ i nt ent i on t o i ndemni fy at t or ney s ’ fee s i s unm i s t akabl ycl earfrom l anguage s t at i ng t hatE *T R A D E “s hal l be i ndemni fi ed and hel d harm l es s by t he Sel l er fr om and aga i ns tal l l i abi l i t i es , cos t s orexpens es (i n clud ing , w ith o u t l im it ati o n , rea so n ab le att o rne y s’ fe es).” S P A § 9
. 0 2 (em p h asis ad d ed ). D eut s che Bank’ s ar gum entt hatt hi s l anguage appl i es onl yt o t hi r d- par t y cl ai m s i s unavai l i ng beca us e the SPA m akes § 9. 02 t he “s ol e and e xcl us i ve r emedyforanybr eac h of any
r epr es ent at i on, w arr anty , covena ntor agr eement , ” i d. § 9. 01, i ncl udi ng di s put es betw een the part i es. F urther, t he S P A has a separat e i nd em nityprovis i on for t hir d-partycl ai m s.9

T he ca s es ci t ed byD eut s che Bank ar e nott o t he contr ary . Forexampl e, i n B r as petr o,
w e conc l uded that a cont r actpr ovi di ng for“l egal cos t s ” w as not“unmi s t akabl ycl ear . ” 369 F
. 3d at75 -78; see al so D olphi n D i rectE qu i t yP artners, L P v. Int eract i ve M o to rsp ort s & E nt m ’ tC orp. , N o. 08 C i v. 1558, 2009 W L 577916, at*10 ( S. D
. N
. Y
. M ar . 2, 2009) (c o n c lu d in g th a t co n tra c t “d o e s n o t co n tain ‘u n m ista k a b lyc lea r’ la n g u a g e o f a n in ten t to i ndemni fyat t or ney s ’ fee s ” w hen i t“does [not ] m ent i on at t or ney s ’ fee s ” ( i nt ernal quot at i on
m a rk s o m itte d )) . H e re , h o w e v e r, t h e S P A p la in ly p ro v id e s f o r “ a tto rn e y s ’ f

e e s .” Fi nal l y , t o t he ex t entD eut s che Bank chal l enges t he amount of att or ney s ’ fee s
aw ar ded, “a di s t r i ctcour thas br oad di s cr et i on i n aw ar di ng at t or ney s ’ fee s , and an a w ar d of
s u c h f e e s m a y b e s e t as id e o n ly f o r a b u s e o f d is c re tio n .” M c G u ir e v . R u s s e ll M ille r, I n c ., 1 F
. 3 d 1 3 0 6 , 1 3 1 3 (2d C ir
. 1 9 9 3 ). W e ide n tif y n o ab u se o f d iscreti o n in the d istri ct co u rt ’s t hought ful and compr ehens i ve fe es deci s i on. W e have cons i der ed D eut s che Bank’ s r emai ni ng ar gum ent s on appea l and conc l ude t hatt heyar e w i t houtm er i t . A ccor di ngl y , w e A FFIRM t he di s t r i ctcour t ’ s Ju ly 2 , 2009
co rrected jud g m en t and F eb rua ry5 , 2 0 1 0 o rde r. FOR TH E CO UR T: C A T H E R IN E O ’H A G A N W O L F E , C lerk o f C o u rt