Opinion ID: 213071
Heading Depth: 3
Heading Rank: 1

Heading: The Agreement’s Withdrawal Provision

Text: Under Delaware law, “[w]hen the contract is clear and unambiguous, [courts] will give effect to the plain-meaning of the contract’s terms and provisions.” Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159–60 (Del. 2010). As noted above, § 5.03 of the Agreement gave the limited partners the right to withdraw from GSS if Banerjee “ceases to be directly or indirectly involved in the activities of [GSS GP].” The district court defined the term “involved” in this phrase to mean “to engage as a participant.” This definition was proposed by Defendants and accepted by Alkek. Accordingly, summary judgment was inappropriate if there was a genuine dispute over whether Banerjee had ceased to directly or indirectly “engage as a participant” in the activities of GSS GP.
The district court thoroughly documented Banerjee’s participation in GSS GP immediately after his termination—and in the months that followed—and concluded that Banerjee “remained both directly and indirectly involved in the management of GSS GP.” The record fully supports this conclusion. In its letter advising the limited partners of Banerjee’s termination, Tuckerbrook noted that he would continue to be a managing member of GSS GP. Within days of his 5 Case: 10-20395 Document: 00511419977 Page: 6 Date Filed: 03/22/2011 No. 10-20395 termination, Banerjee corresponded with the limited partners in GSS, counsel for GSS, GSS’s administrator, and GSS’s bank, stating that GSS GP could not act without his approval because he retained authority as a managing member and fifty percent owner of GSS GP. Shortly after this flurry of communication, GSS’s administrator, Michael J. Liccar & Co., CPAs (“Liccar”), took the position that it could not make disbursements to Tuckerbrook or take other actions without Banerjee’s approval. Alkek argues that Tuckerbrook had successfully frozen Banerjee out of GSS GP by removing him from the position of portfolio manager, denying Banerjee access to GSS GP’s books, reports and statements, unilaterally communicating with the limited partners, and attempting to execute separate investment management agreements with the limited partners and GSS GP that formalized Tuckerbrook’s previous duties as investment manager. As the events of the months following Banerjee’s termination demonstrate, however, these efforts to exclude Banerjee from participation were nugatory. Banerjee obtained a court order to resume access to GSS GP’s books and records. Tuckerbrook was unable to collect management fees from Liccar without Banerjee’s approval. Liccar required Banerjee’s approval prior to releasing financial statements on behalf of GSS GP. Despite Tuckerbrook’s directions to do so, Liccar refused to write off one of GSS’s investments without Banerjee’s approval. Banerjee also advised the limited partners on the proposed redemption of investments. All of this evidence competently demonstrates that, as the district court put it, “even to the extent that Tuckerbrook might not have wanted Banerjee to maintain any authority regarding GSS, Banerjee did in fact exert his influence.” Thus, there is no genuine dispute over whether Banerjee remained directly and indirectly involved in the activities of GSS GP. 6 Case: 10-20395 Document: 00511419977 Page: 7 Date Filed: 03/22/2011 No. 10-20395
Alkek also argues that the district court erred in granting summary judgment because § 5.03 is ambiguous.3 “[A] contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings”. Rhone–Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992). Alkek argues that summary judgment was inappropriate because the relevant portion of § 5.03 could reasonably be read as allowing the limited partners to withdraw if Banerjee ceases to be either (1) directly involved in the activities of GSS GP as portfolio manager of GSS, or (2) indirectly involved in the activities of GSS GP as a managing member of GSS GP. This interpretation is unnecessarily narrow. The language at issue in this appeal focuses Banerjee’s involvement vel non; it does not hinge on his title as portfolio manager of GSS. If Banerjee’s removal from the position of portfolio manager was to be sufficient to trigger the limited partners’ withdrawal rights, such a term would have been stated in the Agreement. See id. (“Courts will not torture contractual terms to impart ambiguity where ordinary meaning leaves no room for uncertainty.”). Furthermore, Alkek’s proposed reading incorrectly suggests that the portfolio manager is the only party that exerts direct control over the activities of GSS GP. Under the Agreement, both the portfolio manager and GSS GP (and therefore the managing members of GSS GP) exert authority over the activities of GSS GP. The Agreement vests the portfolio manager with the responsibility 3 Defendants argue that Alkek waived this argument because Alkek raised it in its response to Defendants’ first motion for summary judgment but failed to raise it again in response to Defendants’ second motion for summary judgment. Because we dispose of Alkek’s issue on the merits, we need not decide this issue. 7 Case: 10-20395 Document: 00511419977 Page: 8 Date Filed: 03/22/2011 No. 10-20395 of allocating the amount of time GSS GP will spend on certain matters, but it does not diminish the enumerated powers of GSS GP. These enumerated powers include, among other things, providing investment strategies to the limited partners, making reports to the limited partners, collecting fees, and closing accounts, all of which are activities Banerjee participated in after his termination as portfolio manager. Alkek has a further argument (which appeared only periodically in the district court) about the phrase “ceases to be directly or indirectly involved” in the activities of GSS GP that can only be described as strained. It is enough to say that the words “direct” and “indirect” are obviously intended to clarify that the word “involved” has a broad scope. Alkek’s reading of § 5.03 is unreasonable and does not create the type of contract ambiguity that requires reversal of the district court’s order granting summary judgment.