Case Name: Andrew Sasson et al., Appellants, v. TLG Acquisition LLC et al., Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 2015-04-09
Citations: 127 A.D.3d 480
Docket Number: 
Parties: Andrew Sasson et al., Appellants, v TLG Acquisition LLC et al., Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 127
Pages: 480–485

Head Matter:
Andrew Sasson et al., Appellants, v TLG Acquisition LLC et al., Respondents.
[9 NYS3d 2]—

Opinion:
Order, Supreme Court, New York County (Salliann Scarpulla, J.), entered February 7, 2014, which granted defendants' motion to dismiss the complaint, reversed, on the law, without costs, and the motion denied.
Plaintiffs sought to accelerate the payment of the notes and to increase the interest rate due, based on a "Change of Control" in the board of a nonparty entity. The notes provided that a "Change of Control" brought about by "the Permitted Investors" would not constitute a "Change of Control," but did not define the term "Permitted Investors." The motion court correctly read the notes in conjunction with a contemporaneous credit agreement that defined "Permitted Investors," since the notes provided that a default under the agreement would also constitute a default under the notes (see Nau v Vulcan Rail & Constr. Co., 286 NY 188, 197 [1941]; Fundamental Long Term Care Holdings, LLC v Cammeby's Funding LLC, 20 NY3d 438, 445 [2013]). That the notes did not incorporate the agreement by reference does not alter this conclusion (see Brax Capital Group, LLC v WinWin Gaming, Inc., 83 AD3d 591, 592 [1st Dept 2011]).
However, in interpreting the term "Permitted Investors," the court relied unduly on the rule of construction set forth in the notes that made singular and plural interchangeable, and thus erred in finding the term to be singular in this instance. "Permitted Investors" was defined as "OTK Associates, David T. Hamamoto and Yucaipa." The definition was in the conjunctive, unambiguous, and not subject to any rule of construction in the relevant documents or to any special commercially reasonable interpretation. It plainly required all three of those investors to take over the entity's board for there to be no "Change of Control." Therefore, the successful insurgency by OTK Associates alone was a "Change of Control" within the meaning of the notes.
We fail to see how the provision in question here is ambiguous. A contract is not rendered ambiguous simply because one of the parties attaches a different, subjective meaning to one of its terms (Bajraktari Mgt. Corp. v American Intl. Group, Inc., 81 AD3d 432 [1st Dept 2011]). The definition of "Permitted Investors" as "OTK and [two others]," using the conjunctive "and" and not the disjunctive "or," is plainly interpreted in the plural, because otherwise it would have stated "a Permitted Investor" not "the Permitted Investors" (see e.g. Progressive Northeastern Ins. Co. v State Farm Ins. Cos., 81 AD3d 1376, 1378 [4th Dept 2011], appeal dismissed 16 NY3d 891 [2011], Iv denied 17 NY3d 849 [2011]). Thus, because there is no ambiguity in the word "and" in the definition of "Permitted Investors," there is no reason to resort to rules of contract construction based on contractual provisions or context, as our concurring colleague does (see Greenfield v Philles Records, 98 NY2d 562, 569 [2002]; Deerkoski v East 49th St. Dev. II, LLC, 120 AD3d 1387 [2d Dept 2014]). Concur — Renwick, J.P., Moskowitz and DeGrasse, JJ.