## In the Court of Appeals Second Appella te District of Texas at Fort Worth

___________________________
No. 02

- 21

- 00333

- CV

___________________________

On Appeal from the 236th District Court Tarrant County, Texas Trial Court No. 236

- 302212

- 18

Before Kerr, Bassel, and Walker, JJ. Memorandum Opin ion by Justice Bassel 

### 1701 C OMMERCE 

### A CQUISITION 

### , LLC

, Appellant

V



### .

M ACQUARIE 

### US T RADING 

### , LLC , Appellee2 M EMORANDUM OPIN ION

I. Introduction

Appellant 1701 Commerce Acquisition , LLC sued its lender, Appellee

Macquarie US Trading , LLC

, after Mac quarie declared two event s of default on

Appellant ’ s loan and began chargi ng Appellant a defau lt rate of interest. In t wo iss ues

w

ith multiple su bparts

, Appellant challenges (1) the trial cou rt ’ s final judgment that

in co rporated a prior summ ary

- judgment ruling and that dec reed that Appellant

recover n othing on it s suit and (2) a ruling on a moti on to de termine fees by wh ich

the trial court awar de d approxi mat e ly $ 1 .5 m illion in attorneys ’ fees to Mac quarie

. W e

overrule the issues surrou nding the default s or do not reach them. W e sustai n
Appellant ’ s i ss ue challenging Macquarie’s r ecovery of attorne ys ’ fees

.

At the outse t , we hold that Macquarie did not br e ach the term s of its loan

a greement with Appellant or a duty of goo d faith and fair dealing under N ew York

law wh en Macquarie declared a def ault b ased on Appellant ’ s failure to ob tai n
Macquarie ’ s w ritten consent before a subord inate m ezzanine loan was prepaid. This

holdi n g obviat es a need to discuss (1) the propriety of a second alleg ed default

dec lared by Macquarie that resulted from Appellant ’ s exercise of a parki ng

- lot option

a nd (2) the sound ne ss of the evidence pre sented b y Appellant to support a damage

claim predic a t ed on Macq uarie’s public dis closure that the loan was in default

— an

action that Appellant claimed d evalued the property securing the loan

. Ne xt, we hold

that A pp ellant has not a de quately briefed the is sue of whe ther Ma cquarie “ consented ”3 to prepayment of the m ezzanine l oan and thus waived appellate rev iew of that issue.

But we do sustain one issue that Appellant raises on appe al: the loan agreement

between the p arties d oes not co ntain a provi sion that entitles Macqua r ie to re cover its

attorneys ’ fees and expenses in this litig ation f r o m Appellant

. Accordingly, we affirm

the portion of the trial court ’ s summary judgment that Appellant take noth ing on its

claims a gainst Ma cquarie

, and we reverse the por tion of the trial court ’ s judgment

awarding Macquar ie its fees and expense s and render judgment that Macquarie take

nothing on its fee claim.

II. F actual and Procedural Bac kground

A. Factual Background

1. The own e r shi p and debt st ru cture of Appellant

The p reside nt of Appellant is Sushil Patel

, and much of th e evidence that

Appellant relies on was presented th r ough his affidavit that was filed as par t of

Appellant ’ s summa ry

- judgment evidence a nd through his dep osit i o n

. Appellant o wns

a Sher aton Ho tel located in downt o wn Fort Worth

. Appellant purchased the hot el

out of a bankru ptcy pr oceeding. According to Mr. Pat e l ’ s affidavit

, he had indi r ectly

ow ned the hotel th r ough anoth er entity before t he bankruptcy

, and in th e bankruptcy

proce eding

, th e hotel was surrender ed to a secured cre ditor i n li eu of foreclosu re.

T he financing st ructure for the purchase of the hotel by Appellant involved

t wo tier ed loans : (1) a $35 m illion senio r lo an (Mac quar ie ’ s Loan) made by Macqu arie

to Appellant ; and (2) a $21 mil lio n jun ior loan (the Mezzanine Loan ) made b y DOF4 I V Reit Holdings , LLC ( which the parties refer to as Torc hl ight and which we will

refe r to a s t he Mezzanine L e nder ) to 1701 M ezzco One LL C

, which is apparent ly

Appellant ’ s parent

. Both loan s were governed by lengt hy loan agr eements ; the loa n
agreement governing Macquarie’s L oan span s 12 9 single

- spaced pages of text

. ( W e

wi ll refer to Macquarie’s l oan agreement as the Loan Agreement and the one
governi ng the Me zz an ine Loa n as the Me zzanine Loan Agre ement. ) I n additio n t o

the complexities created by its leng th , the L o an A greement p rov id e s that it is

governed by New Yor k l aw, and it is that state ’ s l aw that we must apply t o in ter pret i ts

provi s ions. A n addi tional agreement overlay s the Loan Agreemen t and th e

Mezzanine Lo a n Agreement because t he re lation shi p between the two l enders was

go v erned by an Inter c r editor Agreement, which in essence subordinated the

Mez zanine Lend er to Macqua ri e’s secur ity inter ests and gave Macquar ie the r ight of

first p ayme nt

.

2. The alleged d efaults by A ppellant on the Loan Agr ee ment tha t for m t h e co re o f the parties ’ disp ut es and a sum mary of the controversies arising from those disputes

A s noted, t he controv ersy below focused on wheth er t wo ev e nts cons tituted

events of defaults unde r the Loan Agr eement and justified Macquari e ’ s actio n of

c harg i ng a defau lt inter es t rate . The a pplicable i nteres t r ate under the Loan

Ag reement was specified to be 4.8 28 %

, but be cause Macquarie contended tha t e vents

o f d efa u lt had occurred, Macquarie began charging a post

- de fault rate t hat increa sed

the original in t erest rate by 5 %. The increase in the r ate caused Appellant to pay5 app roxi matel y $1 million in addi tiona l interest before it pai d off Macquarie ’ s L oan

th an App ellan t would hav e paid ha d th e int erest rate no t been inc reased

. Each party

cl aim s t hat the other ’ s actions breach ed the Loan Agreement.

As to the ev e n t of default th at Macquarie c la imed bec ause of th e a lleged

prepayment of the Mezzan ine Loan wit h ou t Macq uarie’s written consent , this alleged

default star te d when t he Mezz anine L ender d eclared its lo an in default b y asserting

that Appellant carried a bal an ce of t rade pay abl e s tha t e xc eeded the limits allowe d in

the Mezzanine Loan Agre ement. T h e Mezz an ine L e nder ma de a protectiv e advance

of funds to red uce the trade payable s balanc e below the limit allowed in the

Mezza n ine L oa n A greement and th en increa sed the pr in cipal balance of i ts loan by

the amount of its adva nce

. The M ezzanine L ende r then d eman de d repa yment o f the

amount of the advance. When the advance w as not paid to the satisfaction o f t he

M ezzanine Lende r , t hat lende r accelera te d its debt

, dec lared the entire b alance of the

Mezzanine Loan du e , an d set a date f or fore closure

. App e llant c hal le nged t he

propriety of the Mezza nine Lender ’ s acti on s

. But the fraug ht st at e of affairs wi th the

Mezzanin e Lender caused Appellant to consi der paying off the Mezzan ine L o a n.

T he circumstan ces of t he eve ntual payoff of the Mezzanine Loan

— and

whether those c ircums tances gav e Macquarie the right to d eclare that an event of

def ault h ad occurred a nd to charge a default r ate of interest

—generate d most of the

issues discussed in this opinion

. The deter mination of w hether Macquarie acted

p r operly o r instea d brea ch ed the Loan Agreement by declaring a default revolves6 around questions ab ou t (1) t h e com munic ations between Appe llant a n d M acquarie

a bo ut whether Macquarie would consent to the p ay off of the Mezzanine L o a n , (2 ) what entity m ade t h e payment to discharg e th at loa n, (3) t he status of the loan

wh en it was paid and the way in which t hat discharge w as documented

, an d (4) how

the Loan Agreement ’ s terms im pact whether its de fault provisions were triggered by

the circumst ance s u nder which the Mezzanine Loan was d is charg e d

.

W ith resp ect to the communicat ions regarding the payoff

, Appella nt a rgues

t hat Ma cqu arie represen te d that it would consent to the payoff if certain conditi ons

were met , and Appellant contends that it satisfied tho se cond i tions

. Macquarie

counte rs that the comm unications re ferenced by Appellant de mo nstrate t ha t the parti es

ha d e ng aged only in preliminary discussions and that questions remained that were

never answered abou t the payoff and how th e discharge of the Mezzanine Loan would

affect Macqu ar ie ’ s p osition. Macquar ie also highlig hts th a t Mr . Pat el testi fied in his

depos it ion that Macquarie never consen ted to a p repayment of the Mez zan ine Loa n.

With r espect to the identity of th e party that made the payment to discharge

the Mezzanine Lo a n , t h e partie s agree that the f unds paid t o di scharge t he Me zzanine

Loan were p rovided by a n entity named Vesta Equ ity , LL C

, which is d esc ribed i n the

parties’ br i efing as an indirect owner of the hotel

. The impact of Vesta ’ s making the

payment triggers a cont ro versy regard ing w het h er the Loa n Agr eemen t specified that

only c ertain parties were prohibited from making a payoff ; Vesta was not li sted as on e

of those parties.7 T he circ um stances of the payment to discharge the Mezzanine Loan trigger

two sub cont ro versi e s

. Th e firs t is whe ther the Loan Agr eement h as language th at

alter s the conventio nal defini tion of pr e pa yment ; Ap pellant argue s that the

con vention a l defin ition was no t met if the Mezzanine L oan was accelerate d before its

payment. Th i s question is piv ot al becau s e the par t ies also agree that the Mezza nine

Lender ha d a ccelerated it s debt before it wa s p aid

. T he se cond is whe ther the wa y the

discharge of the Mezzanin e Loan was docu ment ed creates a question regarding

whether th a t loan wa s p aid off or simp ly r elease d

.

W e will only briefly touch on the second de fault tha t Macquarie rel ie d on to

cha rge a de fau l t in terest r ate . This alleged default resulted f rom the fa ilure of

Appellant to obt ain Macquarie ’ s w ritte n consent pri or to i ts e xercise of an option to

p urchas e a parking lot. This event of default allegedly occurred after the all eged

pr epa y ment def aul t that was de s cribed above

. W e will not de lve into the facts of this

default b ecause we hold th at t he prepay ment of the Mezzanine Loan constituted an

eve n t of de fault and that the existence of that default independently supports the

judgment en tere d by th e t ria l cour t

.

3. The damages t ha t Appellant c l aimed that it was caused by Macquarie and the fee re co ver y that Macquari e obtained against Appellant

T he f ir st mea sure of damages tha t Appellant claims resulted from Macquarie ’ s
allegedly wrong ful declaratio n s of def ault is straig htforward

. Appellant see ks to8 recover the amount of money it paid Macquarie as defaul t i nterest, which

, as we have

n oted

, is approx im ately $ 1 million

.

T he second measure i s bottomed i n Appellant ’ s c laim tha t it never de faulted on
Macquarie ’ s Loa n , bu t in its efforts to sell t ha t lo an , Macquarie public ly claimed that

Appellant had d one so. This damage cla i m is predicated on Appellan t ’ s con t ention

that Macquarie had no right to decla re Macquarie ’ s Loan was in def ault and thus no
right t o make the public claim t hat a default had occ ur red. A s Appellant co nceded a t

oral argument, this damage claim depends on our conc l usion tha t Appellan t di d no t

defau l t on th e L oan Agr eement , or if it did, the stat ements that Macquarie made were

accurate , and a damage claim ca nn ot be predi cated o n the statement s

.

O n the other side of t he ledger

, Macquarie claimed that th e Loan Agr eement

entitled it to r e cove r i ts atto rneys ’ fee s and expenses from Appellant in this litig ation

. Appellan t disputed that the provi sion of the Loan Ag reemen t that Macquarie relied

on to s up port i t s fee recovery was suffi ci ent under New York la w to permit that

recovery. Beca u se t he par tie s are at l oggerheads about th e rel e va nt holding s of New

Yo rk cases imp acting the questio n and whe ther the Lo an Agr eement has a provi sion

mee ting the crit er ia for Macquarie to recover its fe es , th e fee issue is another to w hich

this opi nion wi l l devo t e l ength y consideration.9 B. Proced ural bac kground

1. The claims a nd defenses plea ded by the pa r ties

Appellant in itially sued Mac qu a rie, alleging (1) tha t Appellan t was en titled to

declar atory relief tha t t he payment to the Mezz anine Lender and the ex ercis e o f the

parkin g

- lot o ption were not events o f d efault

, (2) that Macquarie had brea ched the

Lo a n Agr eement and t h e duty of good faith an d fair d ea ling by declaring the payment

and exercise of the p arking

- lot option to be ev ents of defau lt

, and (3) t ha t the br each

caused damage to Appellant by requiring payment of de fault i nter est and by r educing

th e h otel ’ s va lue

. A ppellant also s ought various form s of injunctive rel ief

.

A fter the suit was filed, t he parties reach ed a partial settle m e nt and executed a

mutu al release by which Appellant paid off Macquarie ’ s L oan b ut re s erved Appellant ’ s
right t o purs ue i ts litigation claims against Macquari e. After e xecution of the release,

Appellant amended its p etition to delete its c la i m for injunctive relief

. Appel lant als o
eventually quantified it s damages as t h e approx i mately $ 1 mill ion for the default inte rest

collected b y Macquarie and the approx i mately $ 15 millio n devaluation of t he ho tel by

Macquarie ’ s pu bli c sta t emen ts about Ap pellant ’ s alleged defaults tha t “ tain ted and

severely impaired the market per cept ion of [Appellant] an d o f th e [h] otel and negatively

im pacted the terms on which [Appellant] co uld sell or refinance the [h] ote l. ”

A s the l itigat i on progressed, Macqu ari e filed coun ter claims against Appellan t

all egi ng that prepayment of the Mezzanin e Lo an and e xer c ise of t he p a r k ing

- l ot
option were bre aches of the Loan Agr eemen t. The counterclaim also p leade d for the10 recovery o f Macqua r ie’s attorneys ’ fees a nd cost s. Appellant answere d the c ounterclaim

a n d alleg ed various aff irmative defe nse s , including wa i ve r , estoppel

, and quas i

- estoppel

.

2. The mot ion practi c e tha t eventually resulted in a final j udgmen t

Macqu a rie filed an i nitial motion for summary judgment

, and Appellant filed a

c ross

- m ot i on for summar y jud gme nt

— bot h of whic h the tri al co ur t denied.

Macquarie th e n filed a second m otion for summar y jud gment that resulted in th e

dis p o sition of Appellant ’ s c laims th a t are on appeal. In essence, Macquarie’s mot ion

for summary ju dgment co ntended that (1) A ppell ant breac hed the Loa n Agreement

when

, without Macquarie ’ s written consent, the Mezzanine Loan was prepa id and th e

p arkin g

- l ot opt ion was exercised ; (2) Ma cquarie had no duty of good faith and f ai r
dealing under New York law ; (3) no evi dence supp or t s A ppell ant ’ s c laims that

Macquarie’s act io n s dam ag e d the value of the hotel ; a nd (4) the clai m of damage to th e

v al ue o f the hotel wa s not fores eeable when the Loan Agr eeme nt was entered into

.

The trial court granted Macquar ie’s motion g e n era lly by decr eein g tha t “ [a] fter

considering Macq uar ie ’ s [m] ot ion for [s] ummary [j] udgment, the response, the ev idence,

a n d the argum ents of counsel, the [c] ou rt has determined that t he [m] otion is

GRANTED. ”

After the tri al c ourt granted M acqu arie’s motion for su mmary j udg ment,

Ma cquarie then filed a m oti on fo r determination of its reasonable attorney s ’ fees a n d

expenses a nd a moti on f or judgment. Appella nt f iled a lengthy objection to11 Macquarie ’ s motion seeking att orneys ’ fees. The trial court grante d Macquarie ’ s fee

mot i on a nd awa r ded it a pproximately $1.5 million i n attorneys ’ fees th r ough trial , as

well as appellate f ees. The tria l cour t then signed a fi nal judgme nt embodying i ts

s ummary

- judgment and fee r ulings

. A ppellant fil ed a noti c e of appeal and al so a first

an d sec o n d ame nd ed notice of app e al

.

III. Analysis

A. We set forth t he s tandard s o f rev iew that we appl y to s um mary j udgmen t s a nd to contract const ruction

. We review a summary judgment de novo. Travelers Ins. v. J oachim , 315 S.W.3d

860 , 862 (Te x . 2010). We co nsi der the evidence presented in the li ght m o st favorable

to the nonmovant, crediting evidence favo rabl e t o the nonmo vant if reasonable juror s
could, and disregarding evidence cont rary to the nonmovant unles s reasonable jurors

coul d not. M a nn Frankfo rt St ein & Lipp Advisors, Inc. v. Fielding

, 289 S

. W. 3d 844, 848

(Tex. 2009). We indulge every reasonabl e in fer ence and re solv e any doubts i n the

nonmovant’s favor. 20801, Inc. v. Park er , 249 S.W.3d 392, 399 (Te x. 2008). A

defendant t hat concl u sively neg ates at least o ne essential element of a pla intif f

’s cause
of action is entitled to summary judgment on that cl aim. Frost Nat ’l Bank v. Fer nandez

, 315 S.W.3d 494, 508 (Tex. 2010); see Tex. R. Civ. P. 166a(b), (c ). 1

1 Macqu arie appear s t o hav e raised a no

- evidence summary

- judgment ground wit h respec t to Appellant ’s devalu at ion c laim. Although we usually address no

evidence summary

- judgment grounds first, we may address the traditional grounds first if that ap p ro ac h is more eff icient or if traditional grounds are dispositive in our resolution of the appeal. Ver os Credit, L.L.C. v. Sur

. Bonding Co

. of Am

. , No. 05

- 19

-12 Because m any of the question s before us invo lve the cons tructio n of the Loan

A gr eement , we also set forth th e standard of review for construing a c o ntract

. “ The

co n stru c ti on of an unamb iguous contract is a question of law for the court , which we

may consider under a de novo standard of review. ” Ta wes v . Barnes , 340 S.W.3d 419,

425 (Tex. 2011)

.

B. We set forth t he ge neral principles of New York l aw tha t go vern

co ntr act interpretati on
.

A s noted above, the L o a n Agreement s pecifies th at it is govern ed by New York

law , and the p arties a gree tha t o ur in ter p retation of th e Loan A greement is govern ed

by that state ’ s law

. 2 The Second Circuit has outlined the guidin g pri nci ple s of contract

inte r pre t at ion under New York law as follows: 3

00586

- C V, 2020 WL 25 69911

, at *4 n.3 (Tex. App.

— Dallas May 21, 2020, pet. denied) ( mem. op.) ; Webb v. Ellis , No. 05

- 1 9

- 00673

- CV, 2020 W L 1983358 , at *9 (Tex. App.

— Dallas Apr

. 27, 20 20, pet. dis m ’ d ). Here, it is both m ore efficient to a ddress Macquarie’s traditional summary

- judgment grou nds first and those issues are dispositi ve.

2 The Loan Ag reement pro vides th at

T H E NOT E AND THE OTHER LO AN DOCUME NT S A ND THE OBLIG ATIONS AR ISING HEREU NDER AND T HEREUNDE R SHALL BE G OVERN E D BY , AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERF ORMED IN SUCH STATE (WITHOU T REGARD TO P RINCI P LES OF C ONFLICT O F L AWS)

. . . .

3 Throughout the opi nion

, when a New Yo rk case appears with in quote d material , we cite it as it appears in the or iginal quotation even though many of the citation s d o not conform to the Bluebo ok regard ing the re p orter th at should be cited

.13 When interpreti ng a c ontra ct, our “primary obje c tive .

. . is to gi ve ef fec t
to the intent of the parties as revealed by the language o f their agreement.” Compagnie Financ ie re de CIC e t de L ’ Union Europeenne v. M err i ll Ly nch, Pierce, Fenner & Smith, Inc

. , 232 F.3d 153 , 157 (2d C ir. 2000). “[T]he word s and ph r ase s [in a contr act ] sho uld be given their plain meaning, and the contract should be construed so as to give full mean ing and eff ect to all of its provisi ons .” Ol i n Cor p. v. Am. Home Assur. Co. , 704 F .3d 89, 99 (2d Cir. 20 12) ( internal quotation mar ks om i tt ed )

.

Und er Ne w Y ork l aw, a contract is ambiguous if its terms “could suggest more than one meaning when viewed obje ct ively by a re aso nably intelligent pe r son who ha s e xamined the context of the entire integrated
ag reemen t and who is cognizant o f t he cu s to ms, pract ices, us ages [,] and terminology as generally understood in the particular tr ade or business.” Law Debentur e T r [

. ] Co. of N.Y . v. Maverick Tube Co rp. , 595 F. 3 d 458 , 466 (2d Cir. 2010) (internal quotation marks o mitted ). “N o ambiguity e xists wh e re the c ont ract lan guage ha s a definite and precise meaning, unattended by danger of misco nception in the purport of t he [cont ract] i tse lf, and concerning wh ich t here is n o rea sonable basis for a difference of opinion.” Id

. at 46 7 (in ternal quota tion mar k s omitted ). “[W ]he n the

term s of a written contract are clear and unambiguous, the intent o f the parties must be foun d wit hin t he fo u r corners of the contra ct

. . . .” Howa rd v

. How ard , 292 A.D.2d 345, 740 N.Y.S.2d 71, 71 (2d De p ’ t 20 02) ( citatio ns omit t ed).

C

hesa peak e E n e rgy Corp. v. Bank of N.Y. Mellon Tr. Co. , 773 F.3d 110, 11 3

– 1 4 (2d Cir.

2014). Neither Appe llant n or Ma cquarie cl aim s th at any of the pro vi sion s of the

various document s that we interpret are ambiguous

.

C. An event of default occurred by the prep aymen t o f the Mezzan ine Loan

.

The re is no dispute th at the Mezzanine Loan was discharged. But Appellant

l aun che s a th re e

- p ronged attack o n Macq uarie ’ s c ontention that th e discharge wa s an

event o f defa ult because it constituted a pre payment o f the Mezza nine Loa n wit hout

Ma cquarie’s writt en conse nt: (1) the Mezzanine Loan had been accelerated before it14 w as d i scharg ed

, and no provi sion of th e Loan Agreement alters the conventional

definit ion of prepayment , which provides that discharge of a m a t ured obliga t ion is not

a prepayment; (2) the en tity making the payment to discharge the Mezzanine Loan

was not a n ent i t

y prohibite d fro m doing so by the Lo a n Agr eement ; and (3) there is a

fact issue regarding whethe r the discharge of the Mezzanin e Loan w a s a settlem ent of

t hat o bligation rather than a p repayment. W e reject these arguments because (1) both

the Loan Agree m ent an d the Me zza nine L oan Agreement p rov ide tha t a p repayment

may occur after acceleration ; (2) the L oan Agreement provides tha t Macqua r ie’s

consen t was re qu ired for any p repayment and not just a pr epayment m ade by a

limited number of entities; and (3) t h e docu ment atio n o f the discharge of th e

Mezz a nine L oan descri bed it as a payoff

, and the attemp t to use the testimony of

Appella nt ’ s rep r esentative

— tha t h is “ unde rstanding ” of the tran saction was di ffere nt

than how it was documented

— does not create a fact issue.

1. W h y we r ej ect Appellant ’ s argument that pay ment of t he Mezzanine Loan after it was accel e ra ted coul d not constitute a prepayme n t

In the f irst p or ti on of its a rgument under its I ssue 1.a

. , Appellant ar gues that

the re was no prepayment of the Mez z anine Loa n b ecaus e i t was p aid after it was

accelerated b y the M ez zanine Lender

, and thus the debt cou l d not have been “ pre ”

-

p aid becaus e it had alr eady m at ured

. Appellant ’ s argu ment pivots on the contentio ns

that New Yor k law defi n es pr epayment as payme n t that occur s pri or to ma tu rity ; the

Loan Ag reeme n t d oes not provide any d ef in ition that alters the co nventional15 definition ; a nd because the convent ional de finition is not altered by the agreement ,

there was no prepayment of the Mez zanin e Loan. Macquarie counters t ha t the

con ven t ional defin ition of p repay ment may be altered by agr ee me nt and that the lo an

documents governing both its loa n a nd the Mezz anine Lo an define prepaymen t to

in clude payment ma de after m aturity ; t h us , Macquarie contends that the pay o f f of the

Mez zanin e Loan was a prepay ment even though it occur red af ter accelera tion of t hat

debt. We agree wi th M ac quarie ’ s a nalysis.

a
. The conven tion al d efi nit i on of “ p repayment ” under New York l aw and how the parties ’ a greement ma y have alter ed that d e finition

Fo r its conv en ti onal defin ition of prepayment , Appe llant relies on New York

cas e s tha t generally provid e that

“ ‘ [p] r epa y me nt ’ i s a payment befor e maturity. ‘ Accelerati o n ’ is a c hange in the date of maturity from the fu ture to the present. O nce the maturit y date is accelerated to the present, it is no longer po ssible to prepa y the debt before matu rity. Any p aym ent mad e af ter a c c eleration o f the

ma turity date is payment m a de a f

ter maturity, not be fore [. ’ ] ” ( Rodgers v. Rainier Nat [ ’ l ] Bank , 111 W ash.2d 23 2, 237, 757 P.2d 976 [1 988 ] [empha sis in the original]; s ee [] also [] In re LHD Realty Corp. , 72 6 F.2 d 327, 330

– 331 [7 th Ci r. 19 8 4 ] )

.

Nw. M ut. Li fe Ins. Co. v. Uniondale Realt y A ss o cs. , 816 N.Y.S.2d 831, 83 4 (N.Y. Sup. Ct.

2006)

.

B ut one of the ve ry cases t hat A ppellant cites fo r the conventional definition of

prepayment notes that the conve ntion al definition may be a l tered by agr e em ent ; t he

full c on te xt of a quote from a case t ha t Appellant re lies on observes that16 [c] ontrary to the mortgag ee ’ s con tention, the mo rtgagor ’ s tender of pa ymen t of the e ntir e mo rtgag e principal plus inter est to the scheduled date of cl o sing in r esponse t o her accele ra t io n o f t he debt upon default did not constitute a “pr epayment” of th e debt within the mea ning of the p rep ayment clause s et forth in the mortga ge. Accordingl y, a bsen t a

c ontractual provision t o the contrary, the mortgagee w a s pre clud ed from

a s sessing a p re p ay m en t p en alty ( see Kilpatrick v. Germania Life In s. Co. , 183 N.Y. 1 63, 168, 75 N.E. 1124 ; 3C Ass oc [ s ]

. v . I C & LP Realty C o. , 137 A.D.2d 439, 44 0, 5 24 N.Y.S.2 d 70 1; [ N w

. ] Mut. Life Ins. Co.

. . . , 11 Mi sc .3 d 980, 985, 816 N.Y.S. 2 d 8 31; Ge or ge H. Nutma n, Inc . v. Aetna Bus. Cred i t , 11 5 Misc.2d 168, 169, 453 N.Y.S.2d 586 ).

D .I.S. LLC v. Sa gos , 832 N.Y.S.2 d 581

, 582 ( N.Y. App. Div. 2007) ( emphasis added )

.

Ma cquarie , in tu rn, cites case s emphasizin g t ha t prepayme nt , in gener al, is

s ubject t o the definitio n tha t t he parties place o n it and that, in particu lar

, a specif ic

def ini tion m ay pro vid e that a debt p aid af ter a ccelerat ion is still a prepayment.

SO/Bluest ar, LLC v. Canarsie Hot el Co rp. , 825 N.Y.S.2d 80, 81 (N.Y. App. Div. 2006 )

( “ Pre p ay men t clauses will be enforced accordin g to their terms

. The Note c o ntain ed

an exp res s provisi on provid ing for the pay ment of prepayment consideration in the

event of acc elera tion upon default, and such a pr o v ision is enforceable [ .] ” (citations

omi tted) ) ; In r e Fin

. C t r

. Assoc s

. of E

. Meadow, L.P. , 14 0 B.R. 829, 83 5 (Bankr. E.D.N.Y.

1 9 92) ( analyz i ng New Yo rk case law an d holdin g that it perm itted l ender to assess

pre pay ment penalties e ven t hough it had accele ra ted the obl ig ation )

.

b. Why Appellant a rgues th a t the conve nti ona l d efi nitio n of prepayment a dheres an d why we reject that argument

The centr al pil lar s of App ella nt ’ s argument are ap parent ly (1) that the Loan

Agreement , th ou gh it contain s twent y

- eight pa ges of de fi nitions

, do es not defin e17 pre payment a nd (2) that the prov i sions o f the Loan Ag r eement re qui ring wri tten

consent for “ any prepayment or ref inancing of the M e zzanine Loan ” can not mean a

p ayment after acce leration because the Loan Agre ement does n o t prov ide a d efini ti on

that alt ers th e conv e nti o nal defini tion of th e term. Thus

, Appellant a rgues that

“ [

b] ecause ‘ prepa yment ’ is n ot defined in the Agreem ent, N e w York law commands

that this term be given it s ordinary and customary meani n g and application. ”

The Loan Agree ment sp eci fies that an event of default occurs “ i f an y

p r ep ayment or refinanc i ng of the Mezzanine Lo an shall o ccur with out the prior

writ ten conse nt of Len der , or i f Borrower shall fail to co mply with a ny of th e terms ,

covenant s [

, ] and co nditions of Section 4. 2.21. ” In turn, Sectio n 4

. 2

. 21 provides

,

“ Ex cep t to the extent express ly per mitted pur sua nt to the terms o f this Agreemen t,

neithe r Borrower , Guarantor [,] nor Mezzanine Borrower shall make a ny p artial or full

prepa yments of amounts owing under t he Mez zanine Loan or refin ance the

M ezzanine Loa n witho ut the p rior written consent of Len der. ” It is tru e that neither

of these sections contains an internal definition of pre payment

.

But M ac quarie re lie d on a d iffere nt provi sion t o argue that the Loan

A gree me nt h as a mo re tail o red de fi nition of p repay m ent

. S e c tio n 2 .3.3 of the L oan
Agr eem ent is the provis ion in question, and it provides that

[i] f all or any part of the pri ncipal amo unt of th e Loan is prepaid upon

a cc e leration of the Loan following th e occurrence of an Ev ent of Default prior to the Permitte d Prepay ment Date, Borrower sha ll be required to pa y Lend er, in addition to all other amoun ts then payable he reunder (including, w ithout li mitation, (i) in the event that such18 prepayment is received on a Monthly Pa yme nt Date, i nterest accruing on such amou n t calcu lated through and in clu din g the end of the Intere st Per iod in which such Monthly Payment Date occurs, or (ii) in the event that s uc h prepayment is received o n a date other than a Mon thly Payment Date, inter est ac cruing on such amount calculated thr o u gh and including the end o f t he Interest Period i n whic h the next Monthly Payment Date occurs), together with the Exit Interest, a Spr e ad Maintenance Premium calcu l ated with respect to the amount of principal bei ng rep aid [,] and Brea kage Costs.

Appellan t does n ot challen ge t hat this provi s ion est ablishe s that a p rep aymen t may

occur after acceleration but instead argues that it is of no aid to Macquari e becau s e it

reference s the p repayment o f Macquarie’s L o an an d not tha t o f t he Mezza nine L o a n.
Appellant reads a great dea l i n to t he tailorin g of th e definitio n of p re payment to

go vern Macquarie ’ s L oan but not a correspo nding de fi niti on of prepayment of the

Mezzan ine Loan ; Appellant argues , “ I n o ther words, if the par tie s k new ho w to def ine

or qualify a ‘ pre p ayment ’ such that on e may oc cur af te r accel eration, then t heir failure

to e mploy that same language in the other p rovision mu st be deeme d as intenti onal. ”

Macquarie responds by emphasizing t hat Appellant is no t arguing that t h e
langu age of S ecti o n 2.3. 3 fail s t o establis h th at a prep ayment may occu r aft er

a cceleration

. It then highlights tha t the Me zz anin e Loan Agreement co ntain s a

substant ially id e ntical provision to the Loan Ag r e e ment ’ s S ec t ion 2.3.3 in its ow n

S ection 2 .3. 3

. I n M acqu arie ’ s wo rds

, “ T h ese mat e ri a lly identica l provisions establish

that the parties contempla te d a prepay ment after ac cel eration under both the Loan

Agreement and the Mezzanine Loan A gre em e nt. ”19 Macquarie also notes that o ther pro vi s i o ns of both t he L o a n A g reement and

th e Mez za nine Loa n Agreeme nt support an interpretation that a paym en t afte r

acce leration co nstitute s a pr epaym ent

. B oth loan a greements contain a Section 2.4.1

.

I n the Mezzanine Loan Agreement

, the provi sion r ea ds

, “ Exc e pt as otherwis e
provi d ed herein

, Borro w er s hall no t have the right to prepay t he L oan in whole or in

part

. Borro wer may , provided no Event of D efault has occ ur red

, at its option

, prepay

the De b t i n w hole but not in part

, provided the f ollowing con diti ons a re

sa tis fied

. . . . ” I n the L oan Agreeme nt , the provis ion reads

, “ Ex cept as otherwise

provid ed here in, Bo rrower shall n ot have the righ t to prepay th e Loan in whole or in

part. On an d af te r the Permitted Prepayment D ate , Bo r rower may , provide d no

Eve nt of D efault ha s occu rr ed, at its opt ion, pr epay the D ebt in whole but n ot in

part

. ” By its terms

, Section 2.4.1 in both loan a g reements co ntemplates that there

m ay be prepayme nt after an event of d ef ault

— on e con seq uenc e of wh ich coul d be

the acceler ation of the debt.

Both ag r eements also con t ain another provi s i on that fu rth er undermin e s a

conclusion t ha t the agree ments conte mplat e that a repayment ca nn ot occur after

acceleration

. Section 2.4.3 of the loan a gree men ts provid es that “ [i] f after an E v ent of

Default, payme nt of al l or any p art of the principa l of th e Loan is ten dered by

Bo rrower, a purchaser at foreclosure [,] or any other Per s on, su ch tend er shall be

deemed an a ttempt to circumvent the pr ohibiti on a g ainst pre pay men t set forth i n

Secti o n 2. 4.1

. ” Again

, p rep ayment u nder this provi sio n o ccu rs a f ter an event of20 default and cont emplates th e possibility tha t a fore closure s ale has occurred ; a

f

oreclosure sale presuma bly would o ccur a fter accele ration of the d e bt. Thus, t he

im por t of this provi sion is con trary to Appella nt ’ s ar gumen t that t h e Loan A greement

con t emplate s that a prepayment may occur only before acceleration

.

I n its r eply b rief, Appellant r aises two ar gume nt s to challen g e re liance on the

secti on s of the loan a g ree ments that M acquarie ’ s argument s hig hlight

. First,

Appellant ar g ues that

[o] nly one provision in the Ag reement uses the phrase “prepaid upon acceleratio n .” Yet, again, the provisions Ma cquarie accuses [Appella nt]

o f viola tin g emplo y d i ff erent langu age. P ara graph 4.2.2 1 refers to “partial or full prep ayment s [,] ” an d p aragraph 11.1(a)(x x ii i) refers to “prepayment or refinancing

. . . . ” Neithe r ment ions a cceleration, and that om ission must mean something. “ Und er ac c epted can o ns of

cont ra ct const ruc tio n, when certain la nguage is omitted fro m a p rov isi on but placed i n o ther pro vis ions, it mus t be assumed that the omission was in tentional

. . . .” Ster ling I nv. Servs., Inc. v. 1155 Nobo Assoc [ s ] ., LLC , 30 A.D.3d 579

, 5 81 (N.Y.S .C. App. D iv. 20 06) (c iting U [

. ] S [

. ] Fid. & Guar. Co. v. Annunzia ta , 67 N [.] Y [. ] 2 d 2 [2] 9, 233 ( N.Y. 19 86)). [Reco rd references omitted.]

But t his argument ignore s another princip le of construction under New York law th a t

we conclude i s mo re app lic able

— the p rinciple t hat the provi sion s o f a contr act

sh ould be harm on i zed

. In re AM R Corp. , 485 B.R. 279, 3 0 3 (Bankr. S.D. N.Y. 2013)

( “Ne w York law p rovides that a court sho uld construe a contract in a wa y that

reasonably harm onize s its pro visions and avoids inconsis te nci es .” )

. Appellant ’ s

ar

gu ment i s a t odds with t h is princip le ; Appe llant concedes that several p rovi sions of

the Loan Agreement provide that p repayment includes payment af ter accelera tion

, but21 Appe llant contends that w h en the Loan Agreeme nt uses the word “ pr ep ay ment ”

w

ithout further elab ora tion, th en i t m ust be gi ven a di fferent d ef in ition. App ell an t ’ s
argument fails to expl ain why, if the loan a greements c ontemplate a prepayment ma y

occur af t er ac celeration

, a drafter would be f o rced t o define the term every ti me i t is used

or else face a construc tion that it has a meani n g not elsewhere use d in th e documen t

. Appellant ’ s se cond argument challenges Macquarie ’ s reliance on the provi s ions

of the Mezza nine Loan Agr ee ment ; in Appellant ’ s view

, tha t agreement h as no

be aring o n th e c onstructi on of the Loan Agreem ent beca use they are separate

docume nts bet w een diff ere nt parties

. Appel lant argues that “ Macquarie prov ides no

reason why a compl etely dif fer ent contract should gov ern thi s dispute. ” But “ [u] nde r

New York law

, a ll writing s f ormi ng part of a single tr ansaction a re to be read

togeth er. ” Th is I s M e, Inc. v. Tayl or

, 157 F.3d 139, 143 (2d Cir. 1998)

. Appellant itself

acknowledges tha t Macquarie ’ s Loan an d the Mezz anine Loan were a part of the

pack age put togeth er to purch ase the hotel

. Indeed

, M a c quarie and t he Me zzanine

L e nder entered in to a n Inte rc re ditor Agr eement

— the stated purpose of which was to

coordinate th e i mpact of the respective lo an agreements :

WHERE AS Senior Lender and M ez zanine Lender d es ire to e nte r i nto this Agreement to provide f or the relative pr iority o f the Senior Loa n Do cuments an d the Mezzanine Loan Documents on the t erms and conditions herein bel ow set fo rth

, and to eviden ce certain ag re ement s

w

ith respect to the re lationship betw ee n t he M ezz a nin e Loan and the Mezzanine Loan D ocuments , on the one hand and th e Senior Lo an and th e S en ior Loan Documen ts , on the other hand

.22 Appellant does no t expl ain why the Loan A gr eeme nt and the Mez za nine Loa n
Agreement shou ld not be read toget he r w hen they we re integrated together as part of

the same transactio n n o r w h y there should be va r ian t d efinition s of p repayment in the

different loan agreem ents

. Ap pellan t ’ s argument appears to be a recipe for ch aos

because the two lo an a greements were int egr ated togethe r a n d c oordinat ed the right

to payment bu t , accordin g to App ellant, are supposed to be interpreted as having

different definitions of prepayment for th e Me zzanine Loan. In ot her w ords, the

effec t of Appellant ’ s argumen t is that pre payme nt u nde r the Mezzanine Loan

Agreement can occur after acceleration

, but it cann ot un de r the L o a n Ag ree ment

. At

a more basic level, Appellant also fails to explain the logic of why Macquarie cou ld

not view t he Mezz ani ne Loan as having been p repaid

, e ven though th e payment

oc curred after acceleration

, whe n the agreement gov er n ing th at loan provid es tha t

s uch a p ayment is a prepayment.

The provi sions of the Loan Agreeme nt an d t he Mezzanine L o a n A g r eement

demonstrate that the parties contemp lated that the early p ay o ff of the M ezzanine

Loan was a prepayment
, even if that loan had been ac ce lerated

. W e ov err ule t he first

portion of Appellan t ’ s argument under its Issue 1.a

.

2. Wh y w e reject Appellant ’s argument that the L oan Agreemen t did not pr ohibit prepayment of t he Mezza nine Loan by the entity that made the paym ent

In the secon d portio n of its argument un de r its Is sue 1.a

. , Appellant argues tha t

th e Loan Agreement pro hibi t s prep ayment only by certa in entitie s and that the en tity23 t hat paid of f the Mezzanine Loan

— V est a

— i s not included i n that list ; thus, even i f

the Loan Ag ree ment prohibi ted a prepayment aft er acce lera tion

, it did no t p rohibit the

prepayment that occurred bec ause t h e payment was not m ad e by a n entity pro hibited by

the L o a n Agre ement f rom making a pr e pa yment

. W e d is agre e because th e provi sion that

Appellant r efe ren c es cre a tes tw o alternate ev e nt s of default

— on e o f whic h p roh ibited

a ny prepayment of the Mezzani ne L oa n with out Macqu arie ’ s written con se nt.

T he parties agree tha t th e Loan Agreement’s p roh ibition on pre pa yment is

found in it s Section 11.1(a)(xxiii) , wh i ch as we hav e noted provide s that a n event of

de fault occ urs “ if any prepayment or refinancing o f the Mezzanine Loan shall occur
without the p rio r writ te n cons ent of Lender, or if Borr ower sh all fail to comply wi th

any of th e terms, covenants [,] and condit i ons of Sectio n 4.2.2 1

. ” [Em phasis added.]

Again , t he Section 4.2 .21 referred to in the s ec ond ph ras e of the quo ted section

pr ovides

, “ Except to the extent expressly pe rm it t ed pu rsuant to the terms of this

Agreement, neith er Borrower, Guarantor [,] nor Mez zanine B orro wer shall make a ny

p art ial o r full prepaymen ts of amoun ts owi ng under th e Mezz anine Loan or refina nce

th e Mezzanine Lo an without the prio r written consent of Le n d er

. ”

The parties agree tha t the par ty that a ctually pa id off the Mezzanine L oan wa s

not on e of the parties lis te d in Section 4.2 .21. To ca pit ali ze on th is fac t, Appellant

argues tha t the bro adly phrased fir st clause o f Section 11.1(a)( xx iii)

— “ i f a ny

pre payment or refinancing of the Mezzanine Loan shal l occur with out the prior

wri t ten c onsent o f Lender ”

— should be read to parallel Section 4 .2 .21 an d cre ate s an24 ev ent o f de fault o n ly if the prepayment is made by on e of the entities li sted in the

lat t e r section

. [Emp hasis added.]

Macquar ie counters tha t Appellant ’ s in terpret ation ignor es th e disjun ctiv e

structure of S ection 11. 1(a)(xxiii)

, which creates two d is tinct events of defau l t

— on e of

which is an all

- encompassing p repa yment of th e Mezza nine L oan without it s consent

.

A gain, we must ad here to the term s of the docume n t as writt en , and M a cquarie ’ s

i nt erpretation is m ore f a ith ful to the Loan Agr eement ’ s terms

.

Ma cquarie presents a s tra ightforward in te rpretat ion of t he default provi sion :

[ Sec tion ] 11.1(a)(xxiii) states t hat any prepayment without Macquarie’s prior writte n consent consti tute s an Eve n t of Default. Alth ough th is sectio n als o prohib its an y violation of [Sect ion] 4.2 .21 , i t is not l imit ed to such violati o ns

. The prohib ition on “ any prepayment or refinancing ” is in a separate phrase from the prohibiti on rela ted to

. . . [S ection ] 4.2.2 1 [,] and these phrase s ar e s eparated by a n “o r,” indicating t hat e ither one of them separate ly const itu tes an event of d e f au lt. Th e use of the modifi er “a ny” f urther confirms that all prep ayments required M acquarie’s prior written c onsent. See Ali v. Fed. Bureau of P risons
, 552 U.S . 214, 219 (200 8) (“‘any’ has a n expan sive m eaning, that is, ‘on e or s ome in discri minately

o f wh atever kind’”); Zanghi v. G reyh ound L ines , Inc. , 651 N.Y.S.2d 833, 834

– 35 (N.Y. App. Div. 1996) (separate cate gories “dis junc tively j oined by ‘or ’” were “separa te alternat ives ”). [Record refere nces omitte d.]

T h e case s that Macqu ari e cite s fo r t he po wer of the d is juncti ve d eal with

st atutory interpretation

. N ew York cases deal ing with contra ct inter pretation ves t the

disjuncti v e with the s ame power

. For exampl e, a New York federal dist rict c ourt dealt

with the question of whe the r a concrete slab had t o meet two tests or only one test

for the levelness specified in a contract. See Pioneer Valley Concrete Serv., Inc. v. JAG I,

LLC , No. 1: 10

- CV

- 1311, 2013 WL 6230 105, at *13 (N.D.N.Y. Dec. 2, 20 13) (mem.25 decision a nd order )

. On e party argued that even t hough the two tests of l evelness

were separated by the disjunctive, the slab’s levelness had to meet both tests’

s tandards. Id

. The c ou rt summarized the ar gument made and the authority

est ablish ing that the use of the disjunc tiv e was an unambiguous signa l that the phrases

were free standing alternatives :
Plaintiff argues that the use of the word “or” in the Gymnasium Floor Specs sh ould be interpreted to mean “and.” Thus, Plaintiff argu es, P ioneer was obligated to Wh it ing

–

Turne r, and JAG was obligated to P ioneer, to place and fin ish the Gymnasium Floors suc h that they met both the F

- number and 10 ′ straightedge tests [ for levelness]. The pl ain terms of the con tract d o not support such an inte rpreta tion.

The Court fin ds the t erm s o f the Gymnasium F l oor Specs to be unambiguous. Accordingl y, the C ourt need no t go out side the four

cor ner s o f the contract t o understand it s meaning. Con tr ary to Pla intiff ’ s positio n, the Court finds as a matt er of law t hat Pioneer ’ s obli ga tion to Wh i tin g

–

Turne r, and by e x tension JAG ’ s obligation to Pi oneer, co uld be sa tisfied by placing a nd finishing Gymn asi um Floors that me t either the F

- n umber or 10 ′ st ra ighted ge test. See Del Global Te ch [ s. ] Corp. v. Park

, No. 03 Civ . 8867, 2008 WL 5329 963, *4 (S. D.N .Y. Dec. 15, 2008 ) (holding that the second cla use in a co ntract provision whi ch was introduced by the di sju nctive “or” in di cates an alterna tive

event and could sa tisfy a condition independe nt o f the first claus e); P ortsid e Growth [ & ] Opp ortu nity Fun d v . G igabeam Corp.

. . . , 557 F. Supp. 2d 427, 431 (S. D.N.Y. 20 08) (obser ving that “[f]or [de fendant] to preva il

. . . the contested l anguage mus t override the ordinar y presumption that the term ‘or’ expr esses an alter native ” and explaining “th at ‘ or’ is a d is junctive particle u sed to express an alternative or t o give a choice of

one or among two or more things”) (c ita tio ns and quotati on s omitted); Cresvale Int ’ l v. Reu ters Am., Inc. , 257 A.D.2d 502, 684 N .Y.S.2d 2 19, 2 22 (1s t Dept. 1999) (holdi ng th at wor ds in a contract clause state d in the disjunctive must be c onsid ered separate ly (cit ing Coutu v. Exch. Ins. Co.

, 1 74 A.D .2d 241, 579 N .Y .S.2d 751, 752 (1st Dept

. 1992)) ; cf. P rogressive [ N e

. ] Ins . Co. v. Stat e Far m Ins. [ Co s

. ] , 81 A.D.3d 1 376 , 916 N. Y.S. 2d 454, 456

– 57 (4 th Dep t. 2011) (holding that “[i]nter pre ting [contract] lang uag e in the man ner urged by [def end ant ] effectively tu rn[ed] the conjunctive26 ‘and ’ in to a dis junctive ‘or’ “ which was u nsup ported by “[t] he str ucture of the senten ce” and con trary to the “plain l anguage of the sentence as it would b e u nderstood by an aver age or ordinary citizen”).

Id.

Thus, giving th e di sjun ctive the power that it c omma n ds

, Sec tion 11.1(a ) (xxiii)

off ers two altern ati ve ev ent s o f default:

• if any pr epaymen t o r r efinancing of th e Mezzanine Loan shall occur

without the prior written consent of Lend er

or

• if Borrower shall fail to comply with any of the te rms, covenants , and

co nditio ns o f Section 4.2.21

.

B ase d on our hold ing a bove

, there was a prepayme nt of th e M ezz anine Loan , and the

prepa ym ent tr iggere d a default under the first altern ative ph rase.
Appell ant tries to sidestep the presence of the two co equal al ternat ive s cr eated

by Section 11.1(a)(xxiii) ’ s u se of the dis junc tive by argui ng ( 1) that t he two al t er natives

are incons istent , so we mu st pri oriti z e what Appellant ar gues i s the more s pecific

phras e ref erring to Section 4.2.21

, and (2) that not a dopting this app r oach will re nder

Section 4.2.21 superfl uous

. To rea d into the Loan Agreement th e inconsis tency that

Appellant sees requires an int erp ret ation that it wa s t h e par ties ’ intent that only a
prepayment by the entities specif ied in Section 4.2.21 could trigger a de fault

, b ut that

is si mply not what the d ocu me nt provides. W e ha ve no ide a w hat the partie s ’27 s ubjective intent was i n creating th e b elt

- and

- suspenders a pp roac h evidenced by t he

two a lter native phrases of S ection 11.1(a)( x xii i ) an d need not delve into t he p arties ’

intent in view of the lang u age utiliz ed because no on e a rgu es tha t t he language is

ambiguous , nor do we think that it is

. I n deed, at various points in its br ief and in the

summa ry

- judgment record, Appellant touts the sophis tication of its prin cipa ls and t he

ca liber of the law fir m s ne gotiati n g the Agreem ent. 4 O n e resu lt of these n eg ot ia tions

was a clause w ritten in pl ain lan guage that set as one of the alt ernative events of

defa ult any prepa yment of the Mezzan ine Lo an with out Macqu arie’s w ri tt en c on sent

.

We overrule the second po r ti on of Ap pellant ’s arg ument u nder its Is sue 1.a

.

3. Why w e reject Appellant ’ s argument t ha t a fact iss ue exist s because dis charge of the Mez zanine Lo an was a settlement rather than a payoff

Appellant ’ s f i nal c h alle nge u nder it s Issue 1.a. is to the cha r ac terizati on of the

discharge of the M ezz an ine Loan as a prepayment because it was not a p ayoff of that

loan but rather a termina ti on of that loan to se ttle a prelitiga tion dispute

. We reject

this argument b ecaus e i t i s co ntrar y to the te rm s o f the do cume nt impl ementing the

dis c har ge ; that docume nt char acterizes the paym ent as a p ayoff.

T o give the disch arge of t h e Mezzanine Loan the glo ss of a “ settlement

, ”

Appellant re li es on the “ unde rstanding o r belief ” of how th e tr an sa cti o n should be

4 When dealing with another is sue, Ap pellant h ig hlig ht s that “ [h ] ere, e ven
t ho ugh th e Ag reement extends to some 129 singl e

- spaced pages [of text] and was entered into by sophistic ated partie s emplo ying high ly capable law f irms, the A greem e nt conta in s no at torne y

- f e e provision at all. ”28 cha racteriz ed a s contained in t he affid avi t of its rep res entative

, Mr. Pat el . The

affidavit state s the following :

It was no t the understanding or beli ef of me or of [Appellant] that the Mezzanine T rans fer w as a p ayment of the Mezza nine Loan

. Rather, both [A ppell ant ] an d t he Mezzanine Lender m ad e legal allegati ons an d threatened legal action , there were multiple and substan tial disputes as to whether th ere was a defaul t and whether the Mezzanine Le nder ’s

ca lculati on of $3 0, 175,559.4 8 as a lo an payoff was c orr ect , [Ap pell ant] had threate ned to f il e bankruptcy to stop the foreclosure, and the issues became not amounts owing on a promissory note [] but conte sted legal righ ts and legal damages. It is in thi s c on text th at the M ez zanine Tr ansf er occ ur red [] and th at t he par t ies ente red into the settlem ent agreement incl uded as Exhibit E, which agreeme nt does not reference any paymen t [] but rather speaks in terms of settlement, ex haustion [ o f ] rights, and termin atio n o f the M ezzanine L oan.

R e lyi ng o n th is par ag r aph ’ s “ under standi n g or b eli ef” of h o w the di scha rge of the

Mezzanine Loan should be characterized, Appellant arg ue s , “ Thus, the payment by

Vesta Equity to the Mezzani ne Lender was a payment to set tle complica te d and hotl y
disputed leg a l r ights , a nd the M ez za nin e L oan was t e rminat ed, not pai d off

. ” [E mphasis

added

. ]

But the very document tha t Appellant points us to d escrib es t he payment th at
was made to discharge the M e zzanine Loan as a “ p ayoff. ” I n fact

, t he very page of

the re cor d that A ppella nt ’ s brief ref ers us to

— the first page o f the document

refe re ncing th e discha rge o f the debt

— characterizes th e payment as follows :

Len der has been asked to acce pt a discounted payoff amount w ith

r espe ct to the L oan ( hereinafter referred to as t he “ Di sc oun t

ed Payo ff A

mou nt ”). Th e Di scounted Payo ff Amount for a discounted payoff of

t he L oan on or before March 23, 2018 [,] is $28,57 5,000.00

. Borrower29 shall pay the Disco unted Payoff Amount in accorda n ce with t h e wire ins tru ctions set forth bel ow.

A s um mary

- j u dg men t af fidavit that atte mpt s to gl oss over and contradi ct the

term s of the very docum ent to whic h it refers transgress es a host o f rules governing

wh at constitutes admissible summ a ry

- judgmen t evidence

. The p arol

- evidence rul e

preven ts a pa r t y f r om r ely in g o n su mmary

- ju dg ment ev i dence that varies or

contradicts a written do cument

. H.E.B. , L.L.C. v. Ardinger , 369 S.W.3d 496 , 5 11 (Te x.
App.

— Fort Worth 2012, no pet. ). A p er son ’ s su b jective be liefs are not comp etent

summary

- j udg ment evi dence. Kri s

hn an v. Law O f f

s

. of Pre st on Henri c hson, P.C. , 83

S.W.3d 295, 299 (Tex. App.

— Co rpus Christi

– Edinburg 200 2, pet. denied)

( “ Statemen ts of su bjective belie f a re no mo re than conclusio ns and are not competent

summ a ry [

- ] judgment evidence.” ) ( citin g Tex. Div

. – Tr anter , I nc. v. Carrozza

, 876 S.W.2d

312, 314 (Tex. 199 4 ) )

. Nor do legal conclusions con stitute compete n t summary

judgmen t evidence

. Johnson v. D unh a m , No. 1 1

- 20

- 00123

- CV, 2022 WL 96 9516, at * 8

(Tex . App.

— East land Mar. 31, 2022 , n o pet.) (mem. op.) ( citi ng M erce r v . Daor an Cor p. ,

676 S .W. 2d 580, 583 (T ex. 1984) ).

At bottom, the “ understanding o r beli ef ” that Appellant of fers to

recharacterize the na ture of the payment made to disch ar ge the M ezzanine Loan is

unava iling when it st ands in c ontradiction to t he terms of the do c ume nt tha t

con v e yed and characterized that payment

. W e overrule Appellant ’ s last arg umen t

under its Issue 1.a. and thus overru le Issue 1.a. in its entirety

.30 D. Because of our disposition of Appellant ’ s I s sue 1. a., we do not reach it s Is su e 1.b.

Appellant ’ s I ssue 1.b

. ch alleng es Macqu arie ’ s actions of declar ing the loan to be

in default and charg ing t he default rate of inte re st b ec a use Appellant allegedly

exerci sed a parking

- lot op tion w ith Macquar ie ’ s written consent

. T his a lleged even t of

def ault occurre d after t he pre payment default tha t w e h ave al rea dy addressed

, and

Macquarie was already charging the default rate of intere st be fore the alleged second

defaul t occurred. Th us , we have concluded t hat a defau l t occurred t hat suppor t ed t h e
charg ing of d efault in te rest for the full period tha t i t was cha rged

. Th is conclusion

supports the trial court ’ s judgment that Macquarie d i d n ot breach the Loan Agreement

by c harging default i nterest. Therefore

, w e do no t r e ach the q u estion of the pro p riety

o f Macqua rie’s act io ns in de claring the loan in default based on the failure of Appellant

t o obtain written co nsent before allegedly exerci si n g the par kin g

- l ot optio n

. 5

5 We al s o do no t re ac h Appellant ’ s a r gument s mad e wit ho u t s upport of an i s su e that the trial court impro perly accepted Macquarie ’ s chall enges to its damag e m odel ; those arguments c laime d that M ac q uarie ’ s publicati on of i ts invali d c laims that Macquarie ’ s L oan wa s in defa ul t deval u ed the ho t e l pro per ty ow ned by Appellant

. This c laim appears to be pleaded a s a measure of damage assoc iat ed wi th the breach

of

- contract claim by im prop e rly decl aring an event of defa ult

. Specif ically

, Appellant pleaded that

u pon inf or matio n and beli ef

, [ Macquarie ] has recently attem p ted to sell its lo an. In the process, [Macquarie] (through its agent) prep ared a flyer, whi ch it caused to be t ransmitted to many broker s, b u yers, l enders, and

o ther pa rticipa nts in the hote l industry. In that flyer , [ M acqua rie ] (thr oug h its
ag ent ) fals e ly claimed t hat th e loan was in default, and [ Macquarie ] referenced the defa ult interest now being charged as a “premiu m.” This ca used f ur t her da mag e
to [Appella nt] by way of a loss of v alue of the [h] ot el , damage th at w as31 E. Appellant has wai ved its issue on appeal t hat Mac q uarie cons en ted to the prep a yment o f the Mezzanine L oa n.

I n i ts Issue 1

. c

. , Appellant a rgues that “ Macquarie’s consen t precluded

summary judgm ent. ” But Appellan t d oes n o t cha ll eng e th a t th e L o an A greement

requ ired written consent to the p repa y ment of th e Mezzanine L oan. 6 Appe llan t ’ s

brie f neve r te ll s us what l egal de fense prevented Mac quarie f r om f orgoing its

contractu al ri ght to r eq uire written consent , what th e e lements are for that de fe n se, or

how its summar y

- judgment evide nce m et the requ i red sta nda rd. A ppellant ha s wai ve d

an y such c omplai nt on app eal.

fo res eeable b y [Macquarie ] , tha t was inte nded by [ Macquarie]

, and that was proximately caused by [Macqu arie]

. Namely, even as [Appellant]

was a bout to ma r ket the [h] ote l f or a pote ntial sale, [Macq uarie] created an impression in the ma rk et that the loa n was in defau lt

, leading to a bel i ef that [Appellant ] may be more desperate to sell the [h] otel, leading

to a lower value due to the false market impression caused b y [Mac qua rie]

. [E mphasis added .]

A lso, d uri ng oral argu ment , Appellant ’ s c ouns el co nc eded that Appellan t was
not brin ging a free standing trade disparagement claim because of Macquarie ’ s
sta t e ments

. Because the deva luation c laim was predicated on the claim that Macquarie imprope rly declare d the loan in defaul t and because we ha v e held that the loan was in d efa ult , we do not re a ch the challenges rel a ted t o a dam age model that presumed there was a bre a ch of co ntract.

A lso as a result of our holding, we need not re ach Appellant ’ s a lternative issu es on wh ether Mr. Patel was a credibl e witness a nd whether the pa y ments made by Appell a nt were voluntary. Wi th re spect to Appellant ’ s arguments regar ding wheth e r one party was a t tempting to smear another, those arguments ar e irrelevant base d on our legal rulings that are predicated on our co nstruction of the loan a greem ents.

6 The L oa n Agre e ment required a n y modi f icat ions or waivers to b e in w riting ( Se c tion 12.4 ) and required all notice u nder the agreemen t to be in writing ( S ection 12.6).32 Based on our hold in g s and the summary

- judgment re cord, two matte r s are no

l onger in dispute : (1) the L o a n Ag reement p r ovid es th at it is a n e vent o f defau lt “ if

an y prepaym en t or refinanci n g of the M ezzanin e L oan shal l o ccu r wi tho ut t h e prior

writte n consent of the Lender

, ” and (2) Macquarie never ga ve written consent for the

prepayment at issue. In r e spo nse to Ma c quar ie ’ s cou nterc laim asserti ng th at

prepaym ent of th e Mezzanine Loan constitute d a bre ach of cont rac t, Appella nt

p leaded

— w

i t hout elaboration

— that “ [A ppellant] asserts th at [Macquarie ’ s]

coun t erclaim s a re barred by waiver

, estoppel, and /or qua si

- estoppel. ” I n its r esp onse

to Ma cquarie ’ s motion for s ummary ju d g ment, Appe llant argued that Ma cquar ie

“ conse nt ed ” to p r epay me nt, ev en t hough ther e was no writ ten consent , an d Appellant

specifically reli e d on t he d efense s of estoppel a nd oral m odification of the contr act.
Appellant ’ s br ief a sserts that M acquarie “ cons ented ” to t he pr e payment but

then ci tes on l y a sma ttering of senten ce s from Mr. Patel ’ s affidavi t ; A p pellant do es
not cite any cas e s or even reference a leg al theory that allowed it to av o i d the

requireme nt of wri tten con sent

. 7 A p pellant ’ s reply b rief is n o more enligh tening when

7 The substa nce of Appellant ’ s bri efing on this issue i s as follow s :

F or the a l leg e d “prepayment ,” the s u mmary [

- ] judgm en t r eco rd includ es evidence that Ma cqu ar ie se t for t h the con di t ions [ tha t Appellant] needed

t o satisf y to obtain Macquarie’ s c ons en t. Mr. Patel tes t ified [,]

M acquarie indicat ed and represente d to me

. . . that it would c onsent to a pa yoff o f th e Mez zanin e Loa n, prov ided t hat the f unds to m ake such p a ym en t did not

c om e f rom [A ppellant] (which t hey did not), p r ovided that33 it ar gue s that M a c quarie ’ s brie f im pr oper ly invokes the sham

- affidavit doctrine to

challe nge Mr. Patel ’ s affidavit and lea ves it at that

— again, not eve n refer e nci ng wh at

d efens e Appellan t rel ied on or cit ing any a u t hority to guide u s in determining whether

a fact issue was raised on the def ens e , wh atever it m ight b e.

Proced ur ally , i f App ella nt were a ttempting to raise a n aff irmative defense to

thwart t he Loan Agreeme nt ’ s re qui reme nt of wr itten consent , A p pellant bor e the

burde n to esta bl i sh that a fact issu e existed on each e l ement o f t hat defens e :

the f unds w ou ld no t be i n the f orm of additional debt
aga inst the [h] otel (which they were not), and pr ovided that th ere wo u ld be no chan ge in contro l whic h might j eopardize th e fran c h is e, the liquo r l ice nse, o r [h] otel operations ( which th ere was not).

M r. Pa t el co n tinued, “Ultimately, [Appellant] s atisf ied each re quirement tha t Macquarie set f o rth as a co nditio n for ob tainin g its co n sent. ” Fo r the avoidan ce of d oub t [,]

N on e of t h e f u n ds u se d to ma ke the Mezza n ine Tran sfer

cam e from funds or p roperty of [Appel lant] or any affiliate,

or from any e ntity that was o bligated on or h ad guarante ed [Appellant] ’ s o b li gations to Macqua r ie

. Non e of the f un ds used to make t he Me zzani ne Tr a nsfer c am e f rom Ma cquari e’s col la teral [] or the proceeds of its coll atera l. Th e fun d s cam e in as pure equity, and not as debt against [App ellant]

, any o ther obligo r o r gu arantor, t h e pr operty of [Appel l ant] or any o the r obligor or guaran tor , or an yone

e lse.

T he do cum enta ry evide nce b acks up Mr. Pate l’s testimony. The wire r eceip t show s the fu nds came [ from] an e ntity known as V esta Equity, LLC. A s Mr. P atel expl a i ned , Vesta was o ne of [Appel lant ] ’ s in d ire ct eq uity o wner s. [Re cord references omitted. ]34 If, as here, the non [] mova nt relies on an af firmative defens e to oppose the su mmary [

- ] judgment motion, he must provide su fficient
summary [

- ] jud gmen t evi den ce t o create a f a ct issue on eac h element o f the defense. See Brownlee v. B rownlee , 665 S.W .2d 111, 112 (T ex. 1984 ); Anglo

– Dut ch Petro leum Int ’ l , I nc. v. Haskell , 193 S.W. 3d 87, 95 (Tex. App.

— Houston [1st D ist.] 2006, pet . denied). The non [] mo van t is not req u ired to pro ve the affirmati ve de fense as a matter of law; raising a fact i ssue is s uffi cient to defeat sum mary j udgment. See Brownle e , 665 S.W.2d at 112; Anglo

– Dutch Pet roleum , 193 S.W.3d at 95.

Tello v. Bank One, N .A. , 218 S.W.3d 109, 11 4 (T ex

. App.

— Ho u ston [14th Dist.] 20 07,

no pet.)

. The parties ’ summar y

- judgment br iefing cont ain s a hos t of arg ument s and

coun ter

- argument s regarding whether co nsent occurre d or why N ew York law did or

d id not permit a w aiver of the written

- consent re quirement

. T he argu m ents even

i nclude a citatio n to a provision of th e New York General Obligat ion Law tha t
alleged ly prohibited any att empt t o orally modify t h e writ ten

- consent requireme nt

. App ellant ’ s brief leaves i t t o us to u nea rth w hat lega l do c trines the parties invo ked

, to

det er mine the elem ents and pa rameters of th ose doctrines

, and then to formula te h ow

the e vidence in tera cts with thos e e lements. The sup erf icial treatment that Appellant

giv es the cons ent issue d oes not constitute proper bri e fing

. See Tex. R. App. P.

38.1(f) , (h), (i).

A concurri ng opinion from the Dallas Court o f App eals has out line d wha t

c onstitutes proper b rie fing as f oll ows :
An appel lan t has the burden to present an d discuss hi s a ssertions of

e rro r in compliance with th e a ppellate briefing rules. Amir

- Sharif v. Te x

. D ep ’ t o f Fam [

. ] & Protectiv e Servs. , No. 05

- 13

- 00 958

- CV, 201 5 WL35 49672 39 , at *2 (Te x. Ap p.

— D al l as A u g. 2 0, 2015, pet. d eni ed) (mem.

o p.); Ayati

- Ghaffari v. Gumbodete

, No. 05

- 14

- 01019

- CV , 2015 WL 4482158, at *3 ( Tex. App.

— Dallas July 23, 201 5, no pet.) ( m em. o p. ); C

ruz v. Van Sickle

, 452 S.W.3d 503, 511 ( Tex. App.

— D alla s 2014

, [ pet s

. d enied] ). The Te x as R ul es of App ell ate P rocedu re have specif i c requirements for briefing. Tex . R. App. P. 38; Bol ling v. Farmers Branch Ind ep. Sch. Dist. , 315 S.W. 3d 89 3, 895 (Tex. A pp.

— Dal la s 2010, no pet.). Th ese rules require appe l lants to st ate thei r complaint concis e l y; to provi de u nde rstan dabl e, succinct, and clear argument f or why their

co m plaint has merit in fact and in law; and t o ci te and apply law that i s appl icable to the i r compl a i nt along with record references that are

a p propriate. Tex. R. A pp. P. 38 .1(f), (h ), ( i); RSL Fund ing , LLC v. Ne wsome , 569 S.W

. 3d 116, 126 (Te x. 2018); see a ls o Bolling , 315 S. W.3 d at 895. This requ i rement is n ot satisfied by merely m aking brief,

c onclus o ry statements unsuppor ted by legal citation s

. Canton

- Carter v

. Ba ylor Co ll. of Me d. , 27 1 S .W.3d 928 , 9 31 (T e x. App.

— Houston [14 t h Dist.] 2008 , no pet.). An d ref erences to sweepi ng statements of gen e ral law are rarely appropri ate. Bolli ng , 315 S.W .3 d at 896

.
Eco Planet, LLC v. ANT Trading , No. 0 5

- 19

- 00239

- CV, 2020 WL 67 07561 , at *5 ( Te x.
App

. — D allas Nov . 1 6, 2 0 20 , pet. denied) (me m . op.) (Osb orne, J., concu rring)

.
Further, we h ave previously note d why we cann ot take on the role of briefing a

par ty’s argument for it :

[W] e do not and cannot assume the respon sibility of doing the par tie s ’ br ief ing f or t hem

. Our rol e is to review t h e arguments made and dispos e of the appeals; we c annot search the rec or d and r esea rch the law

to formulate parties’ arg u m ents fo r them. See Tex. R. Ap p. P. 38.1(i); see als o Bollin g

, 315 S .W.3d at 895. Si mpl y put, w e a re no t ad voc ates fo r any of the parti e s. Jones v. Am. Real Est ate Inv. , No. 05

- 19

- 0 0546

- CV, 2020 WL 583 4 30 1, at *1 ( T ex. App.

— Dallas Oct. 1, 2020 , no pet. ) (m e m. op.)

.

De Los Reyes v. Mar is

, No. 02

- 21

- 000 22

- CV , 2021 WL 5227 179, at * 9 (Tex. App

. —

Fort Wo rth Nov. 10, 20 21, n o pet.) (mem. op.).36 A s we hav e noted, Appell ant ’ s argument does not ev en t ell us which l eg al

theory und erpins its argument and would le a ve it to us t o analy ze another state ’ s law

and then formulate argument s from our re sear ch

. W e will n ot take on t hat rol e

.

At times

, w e will acc o rd a party an opportunity to rebrief aft er i t has filed a

d e f icient brie f. Her e , we wi ll not order rebrie fin g beca use Appellant has a lready ha d

an op portunity to corre ct it s briefi ng deficiency

. S ee id. at * 8

. Macquarie ’ s br ief poin ts

out that “ [ Appellant ] has not rais e d any legal bas is to relieve itself of t h e
prior [

- ] written [

- ] cons ent oblig ation, and any such arguments are therefore waive d. ”

Even when fa ced w it h Mac quar ie ’ s cha lle nge , Appellant ’ s r epl y b r i e f still failed to

addr ess what theory o r authority support s its p os itio n

. I ns t ea d , it focuse d on

Macquarie’s conte ntion t h at Appellant ’ s representative ’ s af fidavit i s a sham . After

b ei ng accorded an o ppo rt u nity in it s r eply b ri ef to support its argu me n t wit h l e g al

argu men t an d citations and after b e ing warned by th e o pp osing pa rty of t he deficie ncy

in its briefing

, A ppellant still failed to b r ief its issue adeq uately

. I n the face of this

s ituation

, we see no need to accord A ppe lla nt a n addit ion al opportunity to r eme dy i ts

def i c ient b ri efing

. 8

8 Macquarie ’s a rgume n t

— that Mr. Patel ’ s affidavit is a sham because in it he

conte n ds t hat Macq ua rie had consented

— center s on the f act that Mr. Patel ha d

an swered no w hen asked at his d eposition

, “ D i d M a cq u arie ever consent to any payof f o f the [M] e z zanine [L] oan? ” Macq uar ie als o note s that the email tha t it argues Mr. Patel w as referring t o in his aff idav it clearly showed that Ma cquarie was not stating that if certain condi t ions were m et, it would c onse nt

. But M r . Pa tel ap pears t o have t e stif ied tha t he wa s rely in g on another emai l, though h e had not reviewed the

e mail before his dep ositio n , c ould not state when he ha d last read the email , and cou ld37 W e overrule Appellant ’ s I ss ue 1.c.

F. W e reject Appel lant ’s ar g ument that t he Loan Agre ement im posed

a duty of g ood f ai th and f air d eal ing o n Mac quarie.

In it s Issue 1. d., Appe l lant arg ues th at Mac quarie v iolated the dut y of good

faith a n d f air d e ali ng that exists under N ew York la w by declar ing an event of de fault.

W e d isagree

. T h ough the duty is generally implied in all c ontracts, it is n ot imposed

when to d o so wou ld be contr ar y to t he ter m s o f the part ie s ’ cont r act. A s explained

more fully below, a con tract that gives a part y sole and co mplete discreti on to

impleme nt a cont rac tua l pro vi sion n egates the du ty , tho ug h that rule is tempered in

limited circumst ances if the e xerci se of di scr eti on depr ive s a party of the fr uits of a

contr act and make s the performance i t was promised i llusory.

He r e , the provisi on s govern ing Macquari e ’ s deci si on to refus e i t s consent to

matt ers suc h as prepayment vested it with so le d iscre t ion and mad e its de cis ion with

regard t o that discre tio n final an d con clusive. And o ther than a pas sing reference t o
the princ iple, Appellant d oes not argue tha t i t w o uld be de p riv ed of th e fruits of the

L o a n A greemen t unless the duty of good f a ith and fa ir de aling wer e imp ose d o n
Macquarie. I n deed, Macq uarie did perform b y providing the financing that the Loan

A gre em ent promise d

, and to impos e the duty in the face of the pr ovisio n g ivi ng

Ma cqu a rie broad discretion would nega te tha t v er y provis ion

. Thus

, w e concl u d e that

not rem ember all o f its statements

. To f u rther co m p lica t e matters, A ppella nt ’ s

co unsel seem ed to ackno wledge dur ing the summ ar y

- jud gment argument that the email tha t Macqua rie refer s t o is the email tha t Mr. P atel mentioned

. B ecause of ou r holding, we n eed not sort out wh et her Mr. Pa t el ’ s affidavit is a sham.38 N ew Yor k law d id not impo se a dut y of good faith a nd f air dealing on Macqu arie

whe n it d id not c on s ent to the prepayment of the Mezzanine L oan

.

1. W e e xpl ain t h e principles of New Yor k law on the duty of good faith and fair dealing and ho w a contrac t may ab rog ate the exis tenc e of th at duty.

Undoubtedly , New York appli es a general duty of good f ai th an d f air d eal ing to

contract ual relations

. As a s ummary of New Yor k law o n th e sc op e o f t he du t y, we

quote extensively from the recen t federa l district court d e cis i on s of S outhern Te lecom

Inc. v

. ThreeSixty Brands Gr ou

p

, LLC , No. 20

- CV

- 2151 ( L

JL), 520 F. Su p p

. 3d 497

(S .D.N.Y. Feb. 17, 2021) (corrected o rder and opinion)

, and Goureau v. Lemonis

,

No. 1: 20

- CV

- 0 4691, 202 1 WL 4 847 07 3 (S.D

. N.Y . Oct. 1 5, 2021) (orde r g rantin g in

part moti on t o reconsider )

. ThreeSixty provide d the following overview of the o ri gin of the duty o f good

faith an d fair dealing , its pu rpose , and how it cannot be imposed when that doctri ne ’s

applicatio n operates incon sistentl y with a co ntrac t ua l provision :

“Unde r N ew Y ork l aw , a cov e nan t of go od faith and fair dealing is implied in all co nt racts. ” St at

e St. Bank & Tr. Co. v. Inversiones Errazuriz Limitada , 374 F.3d 158, 1 70 (2d Cir. 2 00 4) (quoting 1

- 1 0 Indu s. Assocs., LLC v. Trim Corp. of Am

. , 297 A.D.2d 630, 74 7 N

. Y. S. 2d 2 9, 31 (2d D ep ’ t 2002) ). “ ‘This covenant embraces a pledge t hat ne it her par ty s ha ll do anythin g [that] will have the effect of destroying or injuring the right of the o th e r party to r eceive the fruits of the contract.’ ” Id

. ( q uoting 511 W. 232n d O w ne rs Cor p. v. Jenn i fer Realty Co. , 98 N.Y.2d 144, 746 N.Y.S.2d 131, 135, 77 3 N.E.2d 49 6 ( 2002) ). “[T ]he implied obligation is in aid and furtherance of other te rms of the ag re em e nt of the pa rties. ” Murphy v. Am. Home Prods. C orp

. , 5 8 N.Y.2d 293, 461 N .Y.S

. 2d 2 32

, 237 , 4 48 N

. E.2 d 86 (1 983). Accordingly, “[n]o obligation can b e implied .

. .39 [that] woul d be inconsistent with other terms of the agreement of the parties .” Id

. 520 F. Sup p

. 3d at 5 04.

Goureau note d New Yo r k ’ s highe st court ’ s app lication of th e d u t y to a co nt r act

t hat gives a party di scretion ove r the invoc a tion of a contract ual pr ovisi on :

The New York Court of Appeals has suggested that a contract pr ovisio n grant in g d iscretionary authority to one par ty may be s ubj ec t t o the impli ed covena nt of go o d fai th and f ai r de aling. See Dalton v. Educ. Testing Serv.

, 87 N. Y. 2d 384, 396

, 639 N .Y.S. 2d 9 77, 663 N.E.2d 289 (1 995) (“To be sure, there is a covenant of good faith a nd f a ir dealing i mplicit in [a ] contr act [that i nvol v es discretiona ry functi ons].” )

. Re lyin g

o n t hi s g uid ance, c ourts have ruled that where a cont ract cl ause imbued i n a pa rty t he d iscretion to take so me action, the implied covenant of good fa ith an d fair de al i ng could adh ere to requi re that the action take n b e exercised in a way that w a s no t ar bit rar y or irr ational

. See, e.g.

, Maddaloni Jew [ e ] lers, I nc

. v. Rolex Wa tch U. S.A., Inc

. , 41 A.D.3d 269, 838 N.Y.S.2d 536 (1st Dep ’ t 2007).

20 21 W L 4847073

, at * 6.

Go u reau th en went on to descr ibe how the t erm s of the contract may del im it the

sco pe of the d u ty a n d h ow a co ntract m a y vest a p arty with such a degr ee of

di scret ion th at it abr ogates a duty to act i n good faith. Again , we quote Go u reau ’ s
analysis of New York law:

Ho we ve r, the New Y o rk C ourt of Appe als i n M oran v. E [ r ] k provide d f

ur the r guid anc e [ on t h e sc ope o f th e duty of good faith and f air deal i ng ]

. In Moran , t he Cou rt of App eals ruled th at a cont in gent approval clause in a real estate contract did not implicate the i mp lied

c ovena n t of good faith and f air dealing. 1 1 N.Y.3 d 452

, 458

– 59, 8 72 N .Y

. S.2d 696 , 901 N.E .2d 187

. The M oran Court looked to t he plain

mean ing of t he at

- i ssue contract p rovisio n an d found that where no limitation was p laced on the contingent approv al a s part of t h e bargained

- fo r lan gua ge, the impl ied cov enant of go od fai th a nd fair40 dea ling did not att ach. Id

. at 459, 8 72 N. Y.S.2 d 696, 901 N. E.2d 187. Subs equently, Courts in th is dis trict and New York have applied Moran and its logic broadly to discr et io nary c la us e s in contract s. S ee Stokes v. Lu sker , 2 009 U.S. Di st. LEXI S 23 4 71 , 200 9 WL 6123 36, at *8 ( S.D.N.Y

. Mar. 4, 2 009 ) (“[ A] discretion ary conting ency clause does not c arry with i t an implied duty of good faith, unles s it was explicitly part of th e ba rgain. ” ); P a

xi, LLC v. Shise ido Ams. Corp.

, 636 F. Supp. 2d 2 75, 286 ( S.D

. N. Y. 20 09) (“[T] he o bligati on of g ood faith a nd fair de aling does not negate an e xpressly bargained

- for clause that allows a party to exercise its d iscretion, unless that clause im po ses a l im it on the disc retio n
t o be exercis ed or e xplicitly s tat es th a t t h e duty of g ood f aith and fa ir deal ing applies .”) ; Ser da revic v. Ce ntex Homes, LLC , 760 F. Supp. [2d] 322

, 33 4 (S.D. N.Y. 2010).

Subsequent to Moran , stat e courts applying New York law h av e al so refu s ed to recog nize a c laim for bre ac h of the impli ed co venan t of
go od fa ith and f air dealing where the contrac t e ntitl es one party to exercise com plete and sole dis cret ion wit h respect to the complained [

- ] of actions

. Cambridge Invs. LLC v. Proph ec y A ss e t Mgt., LP , 188 A.D.3 d 5 21, 522, 132 N .Y.S.3d 622 (1st D e p ’ t 2 020) ( “ D ef endan t ca nnot brea ch the

covenan t of good f aith an d fair deal ing if the con t ract gives it sole an d complete discretion .”); Transit Funding Assoc., LLC v. Capital One Equip. Fin

. Co r p. , 149 A. D .3d 23, 29

– 30 , 4 8 N.Y.S.3d 110 (1st Dep ’ t 2017) ( cov en ant of g oo d fai th a nd fa ir d ealing cannot negate expr ess p ro vision of c ontract); ELBT Realty, LLC v. Mineol a Garden Ci ty Co. , 14 4 A.D.3d 1083, 1084, 42 N.Y. S.3d 304 (2d Dep ’ t 2016) (reje ct in g i m plied c o venant

a rgume nt where plain la nguage of contrac t gav e term in a t io n dis cret ion

t o de fendant in “it s sole disc retio n. ”).

Id. at *6

– 7

. Becaus e the contract provi si on under ex amination in Go u reau permitted

certain actions in the sole discretio n of th e party e x ercisin g the ri ght under the provision

,

no clai m la y tha t t h e p arty e xer cising the right h ad to do so in g o od faith. Id

. at * 7. 9

9 Appellant cites a c ase that it argues stands for t he pro pos i tion “ that the duty [of good faith and fair de al ing ] can be di sclaimed ‘ only

. . . by a s pecific ref erence to the dut y of g o o d f aith and fa ir dea ling. ’ ” Se e Akal Taxi NYC LL C v. City of N .Y.

, N o

. 7 0860 2/201 7, 202 0 WL 2 066 39 6 (N. Y. Sup. Ct. Mar . 1 6, 2020)

. As Mac quarie poi nts out , the language that Appellant cites is n ot a ho ldin g of the court but a41 But tur nin g back to Three S ixty
, t he court did no t r ead the seminal Moran

opinion that Go u reau cited to co mpletel y i n s ul at e a party f rom a cl aim of breach of

d uty o f g ood fait h an d fair de ali ng even though a co n t r actual pro v isi on vested a party

wi th the sole d iscretion t o make a decision

. I n Th ree Sixty ’ s view

, M oran required a

more subtle and exp ansive ana ly sis :

Rat h er , Moran requires the cou r t to use the l aw ap p lica b le in all c o ntract

cases to de term ine the me an in g of a co nt ra ct term and then, af ter looking a t both that term in isolation and the contract as a whole, to decide (1) whether the cov enant wou ld ne gat e th e t e r ms of the barga ined

- fo r clause; and ( 2) if not, whe the r a pp l ication of t he cov enan t is ne ces sa ry to prese rv e the fruits of the co ntract and pr event it from being illusory. The two questions are relate d. Courts presume that parties do not m ak e e m pty p ro mis e s. When the implicat io n of a duty of
go od faith and fa ir de a ling would be i nco nsis tent wi th the langua ge o f a provisi on of a cont ract and i s not necessary to mak e the agree ment meaningful, the court w ill not invoke the covenant. B ut where, b y

c ont r as t, it is necessar y to rea d a n obligatio n of g ood fait h in o r der t o avoid rend erin g a con tract p r omise illus ory

— in the word s of the case s, where necessary so as not to deprive a c ontracting party of the “fru its of the contract”

— the court s will no t he s ita t e to in f er an oblig ation to ac t in good f aith. A l icens e e g r an ted t h e exclusive rig hts to sell th e licen sor ’ s pr odu cts, for example, cann ot autom atically relieve itself of the obli gation to exercise that cont ractual right in good faith by the simp le

ex pe d ie nt of a dding the language “so le discret ion,” i f t he fa i lur e t o act in good fai th w oul d re nder th e contr act illu sor y. See Advanced Water Techs. v. Amiad U.S.A., Inc. , 45 7 F. Supp. 3d 313, 319

– 21 (S.D.N.Y. 202 0). That is what was meant whe n Judge C a r doz o l ong ago s poke of a contra ct rig ht as be ing “inst inc t wit h a n ob ligat i on.” Wood v . Lu cy, Lad y Du ff

Gordon

, 222 N.Y. 8 8, 11 8 N.E. 214, 214 ( 1917)

. No magic words can ipso

des cript ion of a n arg ument made by the plainti ff in the cas e

. And h ere , we a re n ot de alin g with a bo il er pl at e discl aim er of the duty but a contr actual provis ion gran ting Macquarie ex clusive dis cretio n to make a decision

. The case s th at we have cite d m a k e cl ear that a provision ve sting a party w i th thi s level of d isc reti o n may d is able a cla i m f

or the breach o f the duty

.42 f

acto and wi thout review of the contract as a whole relieve a contract ing part y o f t h at obligat i on.

T

hreeSixt y , 520 F. Supp

. 3d at 5 0 7

.
Thus, we gl e an t h e following from t h e qu ota tion s prov i ded from Go u re au and

ThreeSixty :

• N ew Yo rk applies the duty of good faith and fair dealing to contracts;

• T he duty applies when a contrac t gives a p a rt y discretio n in p erformin g a
duty under a contractu al pro v i s ion ;

• V esti n g a party w ith t he sol e d i scre tion o r a similar sc ope of discretion

nega tes the existence of the duty; and

• The duty may still ex ist , even i n the face of a provision vesting a par ty

w

i th sole discretion

, but to ap pl y t he duty i n t h e face of suc h a pr ovisio n

r equ ir es a two

- pro n g e d a naly sis of (1) whether th e appli cati on of t he

d uty ne gates t h e bargained

- for discretion that the contract ual provision

p rovide s and (2) shou ld the analys is i n di cate tha t th e dut y does n ot
negate th e bar ga ine d

- for right

, whether app li cat ion of the du t y i s

n ec essar y “ t o pr ese rve the fruit s of the contract a nd prevent it fro m
being il l usory. ” Three Sixty , 520 F. Supp. 3d at 50 7.43 2. W e describe t he provisions of t h e Loan A greement af fecting

t he Lende r’s co nsent to the app roval of prepaymen t of the Mezzanine Loan.

We have al re ady di scussed i n d eta il wh y we c on c lude that t he r e was a

prepa yment of the Mezzanine Loan as prep ayment is defi ned in the L oan A greement

and w hy the prepayment —s tructure d as it was

— triggered a de fault of th e Loan

A gree ment because there was no prior written consent to make the p ay m ent

.

T he qu estion of whether a duty of good f aith and fair dealing impacted

Macq uar ie ’ s abi lity to declare a de faul t t urns on the scope of the followin g pr ovision

that both parties agree should be the primary focus o f our an alysi s:

Sectio n 12.2 Le nde r’ s Discret io n. Wheneve r pursuant to this Agreeme nt Lender exercises any right given to it to approve or disapprove , or an y arrangement or term is to be satis f actory to Lender, the decision of Lender to approve or disapprove or to decide whet her

arra ng eme n ts or term s are satisfa ct ory or not satisfactory shall (except as is otherwise specifically herein provided) be in the s ol e discretion of L ender an d shall be f inal and conclusive. Prior to a Securitization, whenever pursuant to this Agreemen t the Rat i ng A gencies ar e given any rig ht to approve or disapprove, or any arrangement or term is to be satisfactory to the Ratin g Ag e nc ies, the decision of Lend er to appro v e or disapprove or to decide whether arrangements or terms ar e satisfactory

or not satisfact o ry, based upon L ender ’ s dete r mination of Rating Agenc y criteria, shall be substituted therefore.

3. W e conc lude t ha t the Lo an Agreement negate s the existen ce of t he duty of good faith and fair de aling.

The p artie s ag ree that t he existenc e of a cl aim fo r the breac h o f the duty of

good fai th and fair deal in g turn s on an int erpretat ion of Section 12.2. On i ts f ace, this

provis io n is broad enough to e mbr ace the ques ti on of prepa ymen t with its lan guage44 stati ng that when the “ Lender exercises a ny right given to it to appr ov e or disapprove,

or any arrangement or term is to be satisfactory to Lender, the decision of Lender

. . .

sha ll . . . be in the sole discretion of Lender and shall be final and con c lusive

. ” T he

only argumen t that Appellant musters regarding w hy the pro v i sion shou ld not negate

the duty of good faith and fair dealing for conse nt t o pr epayment of the Mez zanine

Loan i s t hat ot her s ecti ons of the Loan A gr eement grant Ma cquarie sol e and

“ absolute ” d isc retion t o take specifi c acts

. Fro m th is

, Appellant dra ws t h e argum ent

that

[c] learly Macquarie kn ew how to draf t t he Agreemen t s o as to giv e it “a bsolute” di s cretion for c ertain things, yet the absenc e of such a pro vision for a ppr ovin g any alleged “ pre payment” or “exer cise” of the parking [

- ] l ot [o] pti on de m o n s tra tes t hat Mac quarie’s discretion with respec t to those i ssu es was not abso l u te and, th erefore , was subje c t to th e duty of good faith and fair deal i ng [,] i.e. [,] “n ot t o act a rb itr ari ly or irratio nally in exercisi ng that discretion.”

The argument begs the question of whether the level of discret ion that Secti on 12.2

vests in Macquarie is sufficient to negate a duty of good faith and fai r dealing when it

decid ed w hether to consent to prepayment of the Mezzanine Loa n. It i s

. Appellan t also tries to ca bin the language of Section 12.2 by a rgu i ng that i t s

r ef erenc e to “ sole d iscr etion ” is not suffi cie nt to grant Macquar ie suffici en t discretio n

to ov ercome a cl ai m of b r eac h of the duty of goo d faith and fai r deali ng

. Appel lant

p i t ches i ts arg ument as follows : “ That an y discretion is solely tha t of Macq ua rie is not

in d i spu te. B u t ‘ sole ’ di scretion means just that; that a n y discretion is that o f

M acquarie’s and Ma cqua r ie’ s a lone. But that is an issue comp letely separ ate f rom t h e45 scope of tha t dis cretion and whether that discretion is absolute. ” The re are t w o f laws

in this argu ment. F irst, G o u reau cites to ELBT Realt y , 4 2 N.Y.S.3d at 306

, in whi ch a

Ne w Y or k co ur t reject ed an “ implied [

- ] covenant argument where [the] plain languag e

of [t he] c o nt rac t ga ve ter m i n ati on di scretion to [t he] defenda nt in ‘ its sol e dis cretion

. ’ ”

2021 WL 48 4 7073

, at * 7

.

An d second, as Ma cqua rie p oints o ut , Section 12.2 g oes beyo nd gra nting it so le

discr et i on and a lso provides th a t the discretion i t exerci ses “ shall b e final an d

co n clusi ve. ” Mac quarie no tes “ final and co nclusive ” c arries a mea ning of terminal

and u n appe alable

. Fin al , Bla ck’s La w Di ctionary (11th ed. 2019 ). Conclusive car ries

the m eaning o f authorita t ive ; decisive ; convincing

. Co nclusive

, Black’s La w Dictionary

(11 t h e d. 20 1 9)

. Th u s, S ec tio n 12.2 goes beyond stat ing that Macquarie a ct s with sole

discretion a nd au gment s the pro vi si on with lan guage that mak es its decision the last

w or d on the su bject.

Undete rre d by the br e adth of t he langu age giving M acqua rie final and

concl usive disc re ti o n , A ppellant a r gu es in its r e ply b rief that the failure to use t he

word “ absol ute ” in Sec ti o n 12 .2 when oth er sect ion s of t he Loan Agreement

specifi cal ly provide d t hat the L e nde r h ad absolut e d i scr etion im pacts th e an alysis

because different words have diff er en t me anings a n d bec ause t he Lender used

abso l ute in some sect ions of the ag reement and “ fi nal and conc lu si ve ” in Se ct ion 12 .2

,

that diffe re nce must ha ve some signi ficance

. In Appellant ’ s view

, “ [g] iven the

omissio n of the w ord ‘ absolute, ’ o ne c an no t es ca pe t he concl usion that Macquari e46 enjoyed less

- than

- abs olute dis cretion under ¶ 1 2. 2 o f th e A gree ment

. ” Of cou rse , this

argumen t ignores tha t differ ent wor ds can carr y th e same meaning. In deed, on e

defi nition th at Black ’ s Law Di cti onary gives of th e wo r d “ a bsolu te ” u ses on e of the

words found in Section 12.2 with its definiti on of a bsolute as “ c o n clusive and no t li able

to rev ision

. ” Absolute

, Black’s Law Dictionar y (11th ed. 20 19 ) (e mphasis add e d). For

th is rea son , w e reject Ap pel lant ’ s atte mpt to water down the degr ee of discretion v e ste d

in Mac q uar ie b e cause Section 12.2 has lang ua ge tha t i s d ifferent tha n other sections of

the Loan Agreement when it use s words granting Macqu arie unbridled dis c r etion

— a
degree of discretion th a t u sually nega tes the duty of good faith and fair dealing

.

Next , we turn to T hreeSixty ’ s discussion of Ne w York ’ s se mi n al opinion of

Mor an and its holding that the dut y of goo d faith and f air de al ing may ex ist e ve n in the

face of a pr ovi s io n granting a pa rty sole discre tion to mak e a decision

. 520 F. Supp

.

3d at 507. Appellant ’ s reference to Moran is passin g at best w he n it states

, “ One o f

t he key aspe c ts of th is imp lied prom ise is t hat ‘ neith er par ty sh all do anyt hing [t hat]

wil l have th e e ffect o f des t royi n g or injur ing the rig ht of the other part y to receive the

fruits of the contract. ’ Moran v. Erk , 11 N

. Y.3d 45 2, 4 5 6 (N.Y. 2008). ”

Look i ng to th e s pec ifics of the Mora n analysi s that Appellant fleetin gly i n v o kes,

we co nclu d e t ha t it does not apply h er e

. A g ain, Th r eeSixt y described t he analysis

mandated by Moran a s

r equir [ ing] th e c ourt t o use the la w app l icable in al l contract cases to deter mine the mea ni ng of a contra c t ter m a nd then, aft er lo o king a t both that ter m i n i solat ion and the con tract as a whole , to d e cide (1) wh ether47 th e covenant would negate the terms of the barga in ed

- for cl ause; and (2 ) if n ot, wh ethe r application of the covena nt is necess ar y t o p reserve
t he fr uit s of the con tract and pr event it from b ein g i lluso ry.

Thre e Si xty , 520 F. Su pp

. 3d at 5 0 7

. T o follow the path marked by T hreeSixt y , ( 1) Section 12.2 vest s M acqua rie wi th “ fina l and conclusive ” discretion to make

decision s s uch as those regardin g w het her to cons e nt to pr epayment of the M ezzanine

L oa n; ( 2 ) it w ould be a d irect cont r adicti on t o the languag e of S e ction 12.2 to overl a y

on it the duty of good faith and fair de aling o n tha t Secti on

— i mp os it io n of the du ty
would negate the terms of th e provision ve st ing th e Lender w ith br o ad

- rangin g

d isc re tion; an d ( 3 ) even i f o ur analysis in step 2 is in correct, Appellant i s n o t deprived

of the fruits of the contract unless the du ty i s impo s ed on t he L en der when deciding

whethe r to grant cons ent. App ellant ha d obtained the f rui ts of the c o ntrac t when the

fin anc in g wa s p rov id ed by the Lend er. T he co nsequence of Macquarie’s act was to

inc r ease the in terest rate

— an act that had a substa nt ial f inanci al im pa ct o n Appellant

but was not one that made Macquarie’s performance of th e Lo an Agr eemen t i l lusor y.

T o ac cep t a n arg ument t ha t M oran neg at e s the discr etion vested in the Lende r in

Sectio n 12.2 would create an exception that swallowed the r ule. The disc re ti o n

crea ted by Section 12.2 woul d be read out of the agre ement when Appellant ha d

obt ai n ed the l i on ’ s sha re of t h e pe rform a nc e r eq uired by Macquarie b ut disagreed

with how Ma cquarie resolved the questio n of whether prepayment of the Mezz an ine

L oan affecte d its positi on and prompted it to ch arge a post

- de fau lt in terest rate.48 At b ot to m , we co n clude tha t Se ction 12.2 of the Loan Ag re e ment vest s

suffic ient dis cretio n in Macqua ri e to negate a du ty of good faith and fai r dealing in

deciding whe th er to co nse nt t o p repayment of t he Mezzanine Loan. Under the

circumstanc es of th is cas e , th e M o ra n a nal ysis

— t hat pe rm its impos iti on of the du t y

e ven though sole discr etion is ves ted to mak e th e de cision in q uestion

— does not apply.

We overrule Appellant ’ s I ssue 1.d.

G. W e a ccept Appella nt ’ s a rgument tha t the L o a n Agre ement does

not permit Macquarie to r eco ve r it s attorneys ’ f ees a nd expenses f

ro m A ppellant

.

I n its seco nd issue, Appella nt a ttacks the trial cou rt ’ s award of approximately

$1 .5 milli on in atto rney s ’ fees to M ac quarie

. Appellant do es not challenge the

evidence that Macqua rie offered to s upport t he amount or the r eason abl eness of i ts

at torneys ’ fe es

. But Ap pellant makes a m ore fundament al attack : Appellant in its

Issue 2. a. assert s t hat no pro visio n of the Lo an Ag reement pe rmits Macquarie to

rec over its fees and that the existence of su ch a prov ision i s a prereq u isite to a fee

re c ov ery under New York law. 10 Appellant underpin s its arg ument w ith the

co ntention that th e provision of the L oan Agre ement that Macqu ar ie relied on i n the

trial court to obtain its fe e r e covery , when properl y interpreted under New York la w , provid es no basi s for Macquarie to shift i t s attorneys ’ fee s to Appellant

. I n
Appellan t ’ s view, th e provisi on addresses i nde mnity

, and t hough un der N ew York law

10 Ou r holdings obviate the n eed to address A ppellant ’ s 2.b.(1) regarding whe ther A p pellant d id not oppo se a request fo r attorney s ’ f ees as raised in Macquarie ’ s motion for summary j udgmen t.49 a n indemnity provi sion ma y sometim es support an interpart y fee claim , the provi sion

relied o n by Mac qua rie lac ks th e necessary c larity to accomplish that resu lt. W e agree

with Appe llant

. But we fir st turn to Macqua rie’s arg u ment that Appell an t waived its

right to contest the fee recovery

.

1. A s a preliminary matter, we do not agree with Macqua r ie that Ap pe llant ha s wai ved its arg ument that Macquarie cannot recover its attorneys ’ fee s.

Ma cquarie argue s tha t Appellant ha s waived t he issue of at torneys ’ fees on
appeal b y n ot challenging the ground raised in Macquari e ’ s motion for summary
judgmen t

— th at the L oan Agreem en t p ermit ted it to recover its fees. Macquarie

argues that its mo tion for summary judgment prov ided fair notice tha t on e of the

m o tion ’ s gr ou nds was that it wa s entitled to recover its attorneys ’ fee s. We reject the

waiver arg ument bec ause Ap p ellant f il ed a moti on to reconsider whether the L o a n
Agr ee ment entitled Macquarie to reco ver its at torne ys ’ fees

, and th e tri al court

consid er ed and ruled on that mot i on. Appellant ra ises an issue on appeal chall eng i ng

th e ruli ng on that motio n

. Th e rul i ng on the mo tion to reconsider and the is sue
challenging th at ruling a dequatel y postures the fee issue for our review

. Further,

Macq ua rie c ar ried the burden t o establish its fee claim on summary judgment a s a

matter of law ; App ellan t ’ s alleged fai lure in the trial co urt to c hallenge that the cla im

for attorne ys ’ fee s was legally de ficient d o es no t free Macq uarie f rom sh owing on

appeal that it w as entitled to that relief as a mat te r of law, i.e. , Macquarie i s not50 entitle d to a su mmary judgment b y de fault s i mply because Appellant d id not respond

to on e of Macquarie’s summary

- judgment grounds.

W hen M acquarie filed i t s mot ion seeking fees after t h e trial court had granted

Mac qua rie ’ s mot io n for sum mary judgmen t , App ellant responded b y arg uing tha t t he

s ummary

- j udgment m ot i on di d not state a ground f or th e recovery of attorneys ’ fees

.

B u t Appellan t ’ s p lead ing also sought re consideration of th at rul in g if t he trial court

det ermined tha t Macquarie ’ s moti on had ra i se d that gr oun d. T he o rder granting

M ac qua rie ’ s fe e motion dea lt with the mo ti on to reconsider as follows :

Mac quari e moved fo r sum mary judgment on its en titlement to fees and expenses under [S ection] 12 .13 of the Loan Agreeme nt on p ages five through s ix of its Mot ion f or S umm ar y J udgment. Specifica lly

, M acquarie asked the c ourt to ord er t hat it “ is entitled to rec ov er all of its fees a nd ex penses, including exper t expenses, under the terms o f the parti es ’ Loan Agreement ”

— name ly, [Section] 12 .13(a). [Appella nt] acknowl edg ed M a c qua rie ’ s ar gument [] but did no t o ppo se it on t he merits. The [c] our t t hen granted Macquarie ’ s mot io n. Mac qu arie ’ s ins t ant motion, and the subject of this order, is to d etermine the amount [of] f ees and expenses Ma cquarie sho uld be awarded.

[ Appellant ] h as a s ked the [ c ] our t to reconsider i ts r ulin g on summary judgment that Macq u arie is entitled to recover fe es and e xpens es. Th e [ c ] ourt declines to do so , primarily bec au se its ruling on summary judg m ent was correct: Section 12.1 3 of the Lo an Agree ment co ver s c la ims b etwee n the parties. [ E mphasis added

. ]

App e llant ’ s second iss ue in Issue 2.b.(2) questi on s “ wheth er the [t] rial [c] ourt erred as

a matter of law in deny in g [ Appellant ’ s ] motion for reconsideration on th is i ssue

. ”

When con f r o nte d with a mo tio n to rec o n si der a summar y jud gment , th e tria l

cou r t has two options

— disregard it o r rul e on its m e rits. If the t ri al cou rt t ake s the51 l at t er course, the ruling on recon si deration may be reviewed on appe al. A s the

San Antoni o Court of A p p e als has explai ned

,

Wh en a moti on for new tria l is fil ed after the rendi ti on of summary judgment, “a tria l cour t has the discretion to c on sider the gr ounds i n a post

- judgment motion and su pporting proof[ ] and reaffirm its s umma ry ju dgment based on the ent ir e r ecord.” Ti m ot hy Patto n, Summary Judgment s in Texa s § 7.06 [1] ( 3d ed

. 2012 ); see also Auten v. DJ Cla r k, In c. , 209 S.W.3d 695, 702 (T ex

. App.

— Hous ton [14t h Dist.] 2006, no pet.). Th e trial court also has the discretion to sim pl y deny a motion filed a fter th e entry o f s ummary j udgment wi thout consid ering its subs tance

. Fir s

t Gibra ltar Bank, FSB v. Farley

, 895 S.W.2d 425, 430 (Tex. App.

— S an Anton io 1995, writ denied). In the latter s it uation, an appellate court need onl y conside r arguments and evidenc e pre se nt ed prio r t o the

su mmary

- jud gme nt hearing. Tim othy Pat ton, Summar y Judgment s in Texas § 7.06 [1] ( 3 d ed. 2012); see also Laurel v. Her sc

hap , 5 S.W.3d 799, 802 (Tex. App.

— San Anton io 1999, no pet.). “Thus, the effica cy of a p os t

judgment motion to prese rve a compl ain t for ap pe llate rev iew depends upo n whe ther the t rial c o urt affirmat ively considers the new g rounds and proof as memorialize d by a w ritten order. ” Tim othy Patton, Summ ar y Judgment s in Texas § 7.06[1] (3d ed. 2012) (ci ting Auten , 209 S.W .3d a t 701; S tep hen s v. Dol cefi no , 126 S .W. 3d 120, 133

– 34 (T ex. App.

— Houst o n [1st Dist.] 2 003 [)

, pet. denied , 181 S.W.3d 741 ( Tex. 2005 ) ] ).

C

harbonnet v. Shami , No. 04

- 12

- 007 11

- CV, 2 013 WL 264572 0, at *5 (Tex. App.

—

San Antonio June 12, 2013, pet. denied ) (mem. o p.) ; see als o Bauer v. Gulsh an En te rs.,

Inc. , 617 S.W .3d 1, 2 1 (T ex. App.

— Hou s ton [1st Dist .] 202 0, pet . denied) (op. on

reh ’ g) ( “ When, as her e, however, the trial court ’ s order af fi rm ative l y states that it

considered the evidence attached to a motion to reconsi der, w e r evi ew the summary

judgm ent b ased on the grounds an d p roof in b o th the p rejudg ment and post

- judgme nt

fil ings. ” ) ; PNP Petroleum I, LP v. Taylor , 438 S.W.3d 723, 729

– 30 ( Tex

. App.

— S an

Antonio 20 14, pet. denied) (applying the rule in Charbonnet to a moti on to rec on sider52 filed with resp ect t o a su mmary

- jud gment r ulin g and sta tin g that when “ the tria l co urt

af firmativel y ind icates on the rec ord that it accepted or conside re d the evid en ce

att ached to a mo tion to reconsider, this court reviews ‘ the summary ju dgm ent ba sed

upon the grounds an d pro of in both prejud gment and pos t

- judgmen t f ilings ’ ” ).

As w e rea d the trial cour t ’ s or der, though t he t rial court denied Appellant ’ s

mot io n to reco nsider, it di d co nsider the motion a nd reaffirm its ruling by noting that

App ellan t had filed a motion to recon s ider but t hat “ [ t] he [c] ourt de cline [d] to

[ re consider its ru ling]

, pri marily becau se it s ruling on summary j udgment was correct:

Se ct ion 12.13 of the Loan Agreement covers cl ai ms bet ween the pa rties. ” The import

of thi s sen tence i s that the trial court had consid ered Appell ant ’ s argu ment s on

wheth er the Loan Agr e emen t provide d f o r the recov e ry o f atto rneys ’ fee s an d rejected

th ose ar gu ments. S imply on the issue of whethe r Appellant h as preserved its

argu ment on the fee issu e for appea l, Appellant ’ s mot i on in comb ina tion wit h the tr i a l

court ’ s ruling convinces u s that it has. Our hold ing co mpo rts wit h ou r duty to act
liberally in de t er mining wh ether an issue is preserved for appellat e review

. See, e.g. ,

Arkoma Bas in Ex pl

. Co. v. FMF Assocs. 1990

–

A , Ltd

. , 249 S .W. 3d 380, 3 88 (T e x. 200 8)

( “ Lik e all other proc e dural rules, those reg ardin g the spec ificity of p ost

- trial o bjections

should be co nstrued liberally so that the right to app ea l is n ot lost unnecessarily. ” ).

Furth e r , if Macquarie did raise in i t s su mmary

- judgm en t motion the ground

that it was entitled t o recov er i ts fees, it b ore t he burden to esta blish that claim as a

matter of l aw

. See T e x. R. Civ. P. 166a. E ven i f Appellant failed to challenge that53 ground in its response, it still retai n ed the a bility on a ppeal to ch allenge wh ether

Ma cquarie established its fee claim as a mat te r of l aw

— on e aspe ct of which is whether

the Loan A gr ee ment pr ovided for the recove ry of fees. Simply,

a non [] movant who f ails to raise an y issues in response to a sum mary [

- ] judgment motion may still cha lleng e, on appeal

, the legal sufficiency of the grou nds p rese nted by the movant. T he nonmovant has no b ur den to respond to a summary [

- ] judgment motion unless the movant

con clusively establi shes its cause of action or d efens e. The tri al court

ma y not gr an t summar y judgment by default because th e nonmo vant d id

n ot respond t o the summ ary [

- ] judgment motion w he n the m ovant ’ s

summa ry [

- ] judgment proof is legally insufficient.

Amedisys, Inc. v. Ki ngwood Home He alth Care , LLC

, 437 S.W.3d 507, 51 2 (Tex. 2014)

(int ernal ci tation and quotation mark s omitted) (q u ot ing Rhone

– Po u lenc, I nc. v. Steel , 997

S.W.2d 217, 222

– 2 3 (T ex. 1999) )

. Thus, the failure to challenge the ground by which

Macquarie sought i ts fees does not foreclose Ap pella nt ’ s argume nt that Mac quarie

fai led to e stablish that ground as a matter of law

.

2. We s et o u t the pr inciples enunciat ed by New York c ou rts 11 to de term in e whether an indemnity provisi on permits an interp a rty fee recovery.

The parti es agree tha t the b ell we ther opini o n of the Ne w York C ou rt of

Ap peals on the qu est ion of whether the Lo an Ag r ee me nt h as a pro vision that permit s

11 Macquar i e predic ated its claim for fees on th e Loan Agreement. Thus, the Agreement’s choice of law provision selecting New York law governs. Midwest Med

. Supply Co

. v. Wingert , 317 S.W.3 d 530 , 537 (Tex. App.

— Dallas 2010, no pet.) ( “A claim f

or attorn eys ’ fees f or bre ach of contr act is not an independent cause of action. We have recognized th at the recovery of attorneys ’ fees for breach of a contract is a substantive, not a proc edural, is sue a nd will be governed by the law governing the subs t antive is sues.”)

.54 Macqu ar ie’s f ee recovery is Hooper Assoc iates, L t d. v. AGS Comput er

s , Inc.

, 548 N. E.2d

903 ( N.Y. 1989 )

. Hooper stated th e ge neral rule of fee rec overy as “ a ttorn ey ’ s fe es are
incidents of litigat io n and a prevaili ng pa rty may not co lle ct t hem from t he los er

unless an aw ard is authorized by agreement between the parties, stat u te [,] or court

rule

. ” Id

. at 904

. Hooper then exami n ed t he qu estion of w hether a ho ld

- ha rmles s

pro vi s ion that permitted the recov er y of f ees “ is limited to attorn ey ’ s fe es incu rre d by

plain tiff i n acti ons involvi ng third parties or also includes those incurred i n
prosecuting a suit against defendant for claim s under the contra ct. ” Id

.

Noti ng tha t a cont ract had to be read in vie w of “ the pa rticu lar object [that] the

par tie s ha d i n vi ew ” a nd that t his principle had special sway for indemnity co ntracts,

Hooper hel d that “ [w] hen a par ty is unde r no legal duty to i ndemn ify, a cont ract

assum ing t hat o bligatio n must be stric tly construed to a vo id rea ding into it a duty

[that] t he par ties did no t inte nd t o be ass umed

. ” Id

. at 905. To ensure that the

lang uage of an ind e m n ity / hold

- harm less provi sion was not expande d to permit loose

la ngu age in the provi si on to s wallow th e rul e restricting the recovery o f fe es , H ooper

articulated the fo llo wi ng i nterpr et iv e pr inciple for re solving the question of whe ther

an in demn ity /hold

- harmle ss provision em b raced an int erparty fee claim :

Inasmuch a s a pr omise by on e p arty to a contrac t to ind emnify the ot her for attorney ’ s fees incurred in litig ation be twee n the m i s cont ra ry t o the

we ll

- understood rule that parties are respo nsible for thei r own attorney ’ s fees, the court should not i nfer a party ’ s i nten ti on to waive th e benef it of the rule unl ess the inten tion to do so is un mista kably cle ar from the l ang uage of t he promis e [

. ]55 I

d

.

Ho op er concluded that the indemnity provisi on s that it had reviewed di d not

includ e interpar ty fee clai ms be caus e “ [n] one are ex clus ively o r unequiv o cally ref erable

t o claims between the parties th emsel ves or support an infere nce th at def e ndant

p r o mised to in de mni fy plaintiff for counsel fees in an actio n o n the contract. ” Id

. Hooper b uttressed it s holding that the indemnit y / hold

- harmless pr ov isio ns did not

embra c e i nterpa rty fee claims by noting that several o f the cont r act’s other provis ions

p ro vi ded for matter s suc h as notic e that the claim was being made and an assum ption

of defense ; Hoo pe r conc lu ded that these provisions would be sur plusag e if rea d t o

extend “ th e ind e m nificati on clause to require defendant to re imburse plaintiff for

at torn ey ’ s fees in the breach [

- ] of [

- ] contract ac tion against defendant

. ” Id.

A later New Yor k Court of Appeals deci sion dis tilled Ho o per ’ s holding and

co n clude d that the following contract provi sio n did not exhibit the necessary clar ity to

permi t an interpa r ty fe e recovery when it provided for reimbursement of “charges,

fees, c os ts [,] and expenses [,]

. . . including reasonable attorneys ’ . . . fees and exp e nses,

in connect ion with

. . . the enforcem ent, defense [,] or preservation of a ny rights in

respect of any of t h e Operative Documents , including defending, monitoring [,] or

pa rt icipatin g in any litigation or pro ceeding . . . relating to any of the Operati v e

Doc uments.” A mbac Assu r ance Corp . v. Cou ntrywide Home Loans, Inc.

, 106 N.E.3 d 1176,

118 0 (N.Y. 2018 )

. T h e p rovis ion failed to satisfy the clarity required by Hooper

becaus e “ the subjects set forth in this provision are al l ‘ s usceptible to third

- party56 c laims ,’ and ‘ [n] one are e x clusively or uneq uivocally referable to claims b etwee n the

partie s themselves ’

. . . . Ac cordingly, there is no unmistakable promise to reimburse

at to rneys ’ fe es in a case brought by ” the party enti tled to reimbursement under th e

quot ed contract ual provi s ion

. Id

. at 1186 (quoting Hooper

, 5 48 N.E.2d at 905 ).

Not unexp ec te dly, t he d evil l ies i n the details of wh en a provision

unequivocally r ef ers to a n interparty f ee recovery. The premise s used by d ifferent

co urts to assess the c larit y needed by a provis i on ha ve no t, in ou r view, been totally

consistent

. On e c our t emph asized that “ the re quirem ent tha t parties express their

intent with ‘ unmistakable cl ar it

y’ i s not the same as a ‘ magic w ords ’ te st, an d courts

have interp reted inde m nific ation provi sions to c over liti gation e xpenses between the

parties eve n whe re that cov e rage was no t expl ic itly m andated i n such words but,

nonetheless, the intent was clea r.” Ca rb on yx License & Lease LLC v. Carbonyx I nc. , No.

19

- cv

- 1540 (JSR), 2019 W L 6701910 , at *8 (S.D.N.Y. Dec. 9, 2 019) (me m. o rder)

(citing Mid

- Hudson Ca tskil l Rural Migr ant Minist ry

, Inc

. v. Fin e Host C o rp. , 418 F.3d 168,

178 (2d Cir. 2005) ). Another cour t’ s appr o ach s eem e d to com e close t o establishi ng
that magic words are indeed nee ded:

The bott om line i s that a c ontract provision employing the languag e of third

- party claim inde mn i fica ti on may n ot be re ad broadly to encompass an award of at torney ’ s fees to the pr evailin g part y based on t he other party’ s breach of the contract; th e pr ov ision must explicitl y so state

. The H ooper standard requires more th an me rely an argu able infere n ce of w hat the p arties must have me ant; the intention to autho rize an award o f fees to the pr evail ing party in such circum s tances must be virtually ines c apab le

.57 Gotham Partners, L.P. v. H igh Riv e r Ltd. P ’ ship

, 906 N.Y.S.2d 20 5

, 20 9 (N.Y. A pp. Div.

20 10 ) ( b olde d and underlined emphasis a dd ed).

C ertain N ew York courts adopt a s eemingly hyb rid approach that re li es on

contextual cl ues to augmen t the text ual a na lysi s . On e cou rt summa ri zed this

approac h as follows :
In applying this stan dard of unmistakable clari ty, th e courts have
g ene rally declin ed to in fer indemnification obligat ions arising from an indemnitee/indem nito r s uit i f the contra ctual languag e does not

ex pressly ref er to or e xplicitl y contem plate such circumstances and t he

co ntext d o es not suggest tha t th e contracting par tie s were speci fi cal ly

con cerned with prospective litigation between themselves.

Lu na v. Am. Airlin es , 769 F. Supp. 2d 231, 244 (S .D.N.Y . 2011) ; se e also T ho r 725 8t h

Ave. L LC v. Goonetillek e , No. 14 CIV

. 4 9 6 8 (PA E ) , 2015 WL 8784211, at * 4 (S.D.N.Y.

Dec. 15, 2015) (op inion and or d er) ( following an d a pp l yin g Luna test ) ; Shah v. 20 E.

64th St

. , LLC

, 154 N .Y.S.3d 6

, 21 (N.Y. App. Div. 20 21) ( h olding that indemn ity

provi s ion incl uded interparty fee claim beca use of highl y inclusive language i n

p rov ision and no other provi sion of a g reement would be rendered m eaningless if

provis ion rea d to include interparty claims ).

Luna catalog ed the co nt extual clues tha t guided it s analy sis :

Whe n an indemnification a gre ement c ontains p ro vi sions that app ear to b e inapp licable to suits between the contracting parties

— such a s requirin g that notic e of a c laim be given to the in demn itor or allowing the indemni tor to ass ume the indemn ite e ’ s def ense

— the courts have concluded th at th e contract do es not e vidence an unm is takably clear intent to indemnify a ttorney ’ s fees incur red in a lawsuit between the

c o ntract ing parties.58 In contra st, when the language of an inde mnific ation provi sion sp eci fically evi denc es the par ti e s ’ in tent to cov e r claims by contracting parties, in de mnificati on for suits against the in demn itor will be e nforce d. For instance, when confr onted with indemnification provisions that include bo th bro ad ind emnity clau ses and na rrower clau ses that

s pecif ic a lly t arget th ird

- party claim s, courts have deter min ed that the broad provisi ons cover cla ims b etween the c on tracti ng parties, thereby ensurin g that neither clause is su perfluous.

Absent speci fic cont ractua l language authori zin g in dem nificat i on in s u its b etween t he c ontra cting partie s, the courts may st ill d et ermine that the parties int ended for such ind em nifica tion based on clear

context ual evid ence. Thus [,] the court will enforce such an obl igation if it is apparent that a t t he time of cont ra cting t he parti es had n o r ea son to
ant ic ipate the possibilit y o f the i ndemnitee being faced wi th third

- p arty claims.

. . . By comparison, if third

- par ty claims were possible at th e time of contracting an d the co ntract ual languag e did n ot eviden c e the pa r ties ’ in te n t reg arding t he in demnificat io n of attorney ’ s fees in cu rred in suits between them, the courts have refused t o awar d such expenses as indemnif ication.

769 F. Supp. 2d at 244

– 45 (citations omitte d)

.

3. W e set forth t he p rovi sio n o f the L oan Agre ement that M acquarie reli es on to support it s fe e claim.

Macq ua r ie predicates it s fee claim on a single provi si on o f the L oa n Agreement.

It re lie s on Sec tio n 12.13 tha t is titled “ Expenses ; I ndemnity

. ” This sect ion co ntains

six subsec t ion s, but Macquari e relies on only one of t hem

. Placing t h e operati ve

subsect io n , wh ich we have italici zed below , in conte xt with the introductory and

concluding c lau se s of the section

, the provisio n reads as follows :

Bor rower shal l pay or, if Borr ower fa ils to pay , reimbu rse Lender upon receipt o f no t ice from L ende r, for all r easona ble c osts and expenses (including rea sonabl e attorneys’ fees and disbursements) incurred by59 Len der in connection with

. . . (v) enforc ing or p reserving any ri ghts, in re sponse
to t hird [

- ] party c laims or the prosecuting or de f

ending of any actio n or proceed ing o r oth er litigation or otherwise, i n ea ch case against, under [ , ] or af fecting Borrower, any other Bo rro wer Party [ , ] or any Affiliate of Bo rrower , this Agr eement , the other Loan Docu m ents, th e Property, the Other Col later al

[ , ] or a ny other security g iven f or the Loan

. . . p rovided, however, that Bor rowe r shall not be liable for the p ayment of any such costs and e xpe nses to the extent the same aris e b y

reason o f the gross neg li gence, i ll egal a cts, fraud [,] or willful misco nduct of Lend er

. [ Emphasis added.]

O u r focus is on this pro vi sion al o ne; n either party points us to any other provisions of

the Loan Agreement that mi ght create the con te xtual cl ues th at we have enumerated

fr om Luna

.

4. W e a gree with Ap pella nt tha t Section 12.13 does not entitle Ma cquarie t o recover i ts fees for prosecuting and d efending its claims against Appellant

.

W e agree with Appellant that Sectio n 12.13 l acks th e clarity t hat it needs to

s upport an in terparty f ee cl aim

. Tho ug h t her e is an arguable i nterpretation of the

s ect ion t hat s upports the read in g advocat ed for by Macquarie, t hat reading does not

meet the standard art iculated by New York’s c ourt o f last r esort that th e refe rence be

“ e xclusively o r unequivo c ally re fera ble to claim s between t he pa rties themselves

. ” See

H ooper , 5 48 N.E.2d at 905.

Before explai ning our rationale, we detail o n e of Ap pellant ’ s argument s that we

reject. Appellant places great emphasis on th e fact tha t the L oan Agreem en t does not

contain a sta ndard fee provision t hat might look fam iliar to Tex as lawye rs

. B ut that

argument begs th e questi on bec ause the question is n ot what the Loan Agr eement did

not include but whet her the section that it di d in clude s atisfies t he Hooper standard.60 And , again, ne i ther party mentions the Luna prin cipl es that look to vari ou s

textual clues to clarify the scope of the fee provisio n. The parties do not poi nt us to

provi si ons of the Loan Agreeme nt that wo uld be rende red su rplusage or suggest t hat

it wo uld be “ ap parent t hat at the time of contracting th e parties ha d no reason to
anticipate the possibility of the indemnitee be ing face d wi th third

- party claims. ” See

L

una , 769 F. Supp. 2d at 244

.

Here , t he argumen t focus es on whether sub section ( a )(v) o f S ection 12. 13

c ove r s bo th third

- party and interparty claims. Th is a r gument is c rystalized in

Macquarie’s b rief as follows :

He re too, [Se ction] 12 .13 of the Loan Agreement distinguishe s third

party cla ims from claims bet ween the p artie s and must be interpr e ted as

cov ering bo th. [Appellant] is correct that [Section] 12.13( a)(v) fi rs t addr e sses costs and expenses incurred in connection with “enfo rcing or pre serving any rig hts, in response to th ird[

- ]part y claims.” But that s ame secti on al so cov ers costs a nd expense s i ncurr ed “ p

rosecuting or defending of any action or procee ding or ot her ob l igation or otherwise, in each case against, under [
, ] or affe cting Borrow e

r, any other Borrower Party [
, ] or any Affil iate of Borrower

, this Agree ment, the

o ther L oan Documen ts, the Pr opert y, th e Other Collateral [,] or any other security given for t he loan.” S ectio n 12.13 of the Loan Agreement therefore covers claims b etween the part ies, and the trial court correc tly

awa rded Macqua rie its re asonable atto rneys ’ fees and expens es. See, e.g. , Mi d

- Hudson Catskill Rural Migrant Ministry

. . . , 41 8 F.3 d [at] 178

– 79

. . . (distinguishing provision indemni fying a party for cert ain actions “brought by third partie s” from one covering “ actio ns of any kind or

nature ar ising , g ro wing out of, or otherwise connected with any activ ity und er this Ag reeme nt”). [ B r ief and record r e ferences omitted.]

Certain ly, Section 12.13 desc ribes act ion s “ prosecuting or de fending ” matt ers

“ ag ain st

. . . or affec ting ” the borro w er, and th is suit was such. But the open question61 is whether th e secti on ca n be inte rpreted to includ e a suit b y Macquarie against

Appellan t simply because a l iteral interpretatio n is broad enough to sup port

Macquar ie ’s co nstruc tion

. The phrase s Ma cquarie r elies on are pregn a nt w ith th e
possib ility that they include such claims b ut do n ot carr y that poss ibility to fruition

w

ith the necessary clarity to meet the H ooper standard ; th e p rovision never expl icitly

states th at a suit bro ught by Macqu a rie a gainst Appe llant fall s wit h in i ts amb it.

Appe llant argues , and we agree

, that S ecti on 12.13 ’ s la ng uage paral lels the

provis ion examined in Ambac that provide d for the recovery of “charges, fees, costs [,]

and expenses [,]

. . . i ncluding reasona ble att orneys ’ . . . fee s and expe nses, in

c onnect ion with . . . the enforcement, defense [,] or preservation of any right s in

respect of any of th e Operative Documents

, i ncluding defending, monitoring [,] or
participatin g in any litigation o r pro ceeding . . . rela ting t o any of th e Operativ e

Doc u ment s .” 1 06 N.E.3 d at 1180

. If literally interpret ed

, this language s eems to ho ld

a possible inter pretation that would allow an i nterpart y fee recovery. Even so, th e

New York Court o f Appeals found that it fai led to carr y the unm is takabl e promise

neces s ary to sup port tha t claim. Id

. at 1186

. Macquarie a lso places emphasis on the fa ct that Section 12.13 is broken down

in to t w o sections

— on e deal ing with exp enses a nd the other indemnity

. Sp ecifica lly

, Macquarie argu e s,
[S e ction] 1 2.13, which is ti tled “ Ex pe n s es; In demnity” and not just “indemnity [

, ” ] has t wo p arts

. Section 12.13(b)

, which starts wi th “Borrower shall indemnify ,” is the indemnific ation p rovision. Section62 12.13(a), o n the other hand, c ove rs expenses; it requi res [Ap pellan t ] to p ay o r reim bu rs e Macqua rie for reasonable “costs and expenses ” incurr ed, “including reaso nab le attorneys ’ fees” incurred in “prosecuting or defending of any ac tion or proceeding . . . against, under [,] or affectin g” [Appellant]. [Reco rd refere nces o mitted.]

B ut , ag ai n , Ambac h ad a pro vi si on that was also phrased in terms of reimbu rsement

but stil l applied the rule o f Hooper to conclude that the provi sion lacked the necessary

clarity

. Id. at 1180 , 1186

. Thu s, th e c ourt o f l ast reso rt in Ne w Yo rk does not app ear

to s e e the mate rial dis tinction advo cated for by Macquar ie si mply bec ause the

provi sio n deals with reimbursement.

We sustain Appellant ’ s Issue 2.a. and hold as a mat te r of law that Macqua rie

cannot r e cover i ts att orneys ’ fee s a nd ex pe nse s f rom Appellant bec ause S e ction 1 2.13

can not be int er preted a s having t he neces sary clarity to create th at claim. See id. For

the same reason, w e also sustain Appellant ’ s Issue 2.b.(2)

, in w hich Appellant

cont ends that th e trial court e rred by d eny in g i ts mot ion for reconsider ation on t he

issue of Macquar ie ’ s ability to recov er att orneys ’ fees.

I V. Co nclu sion

W e have o verruled the portions of Appellant ’s first issue that challenge t he trial

court ’ s grant of summa ry jud gme nt that Appellant r eco ver n ot hing on its claims that

Mac quarie bre ached th e Lo a n Agre ement by de c laring a defaul t because the

Mezzanine L oan wa s pre paid wi th out it s written consent and that Macquarie owed

Appellant a duty of good fait h and fair de aling. W e have a lso conclud ed tha t
Ap pellant has waived the p ort ion of its first i ssue claiming that a fact q uesti on exi sts63 re garding whether Mac quarie consented to the prepa yment of the Me zzanine L oan.

O ur resolution of these issues obvia tes the need to address wh ether Appellant a l so

defa ul ted on the Loa n A g reemen t b y its exer cise of a parking

- lot op tion o r wh ether

Mac qua r ie’s public s tatement s t hat th e loan was in default devalued the h ot el. Thus,

we affirm the portion of the t rial court ’s judgment that Appella nt recov er nothing o n

i ts c la ims against Macqu arie. How ever, w e h old that the re is an error i n the tri al

court ’ s judg ment b ecause having s us tain ed Appellant ’ s second issue

, we re ve r se the

trial court ’ s judgment awarding Macquarie its attorneys ’ fees a nd e xpenses ; S e ctio n

12.13 of th e Lo an Agreem ent cannot be r ead as hav ing t he requisite clarity to entitle

Macqua rie t o th at recovery. Accor dingly, we render judgment that Macquarie take

not hing on it s fee claim.

/s/ Dabney Bassel

D abne y Bassel J u stice

Delivered: August 31, 2022