Opinion ID: 3163904
Heading Depth: 1
Heading Rank: 1

Heading: The Shareholders’ First Claim

Text: First, the Shareholders argue that Sikorsky breached a provision of the Stock Purchase Agreement that they contend required Sikorsky to provide written notice to their agent within 60 days of settling two product liability lawsuits. There is no dispute that Sikorsky failed to provide notice in this precise form. The district court held that the disputed provision did not require written notice of the settlements largely because the two lawsuits were known to the Shareholders at the time the Stock Purchase Agreement was signed, but we need not resolve this dispute over the contract’s interpretation. Instead, we agree with the district court’s alternative holding that the Shareholders’ claim fails even if the Stock Purchase Agreement required Sikorsky to provide written notice of the two settlements and their related costs. Under New York law, “strict compliance with contractual notice provisions need not be enforced where the adversary party does not claim the absence of actual notice or prejudice by the deviation.” Fortune Limousine Serv., Inc. v. Nextel Commc’ns, 826 N.Y.S.2d 392, 395 (App. Div. 2006) (collecting cases). The Shareholders do not claim prejudice here, nor could they: It is undisputed that Sikorsky had sole discretion under the Agreement to settle the two lawsuits and that the total amount of the damages and costs for the two lawsuits exceeded the amount owed to the Shareholders. The Shareholders were also kept abreast of the lawsuits’ progression after the deal closed, and they had actual notice of Sikorsky’s intent to settle both lawsuits for an amount that would exceed their “Contingent Payment Amount.” Even if notice were required, then, we may excuse Sikorsky’s failure to provide written notice to the Shareholders’ agent within 60 3 days of settling the lawsuits because the Shareholders had actual notice and were not prejudiced by the lack of written notice to their agent. Moreover, even if the notice requirement were, as the Shareholders contend, a condition precedent—and it is not at all clear that it is—this does not mean that the notice requirement must be enforced regardless of its import or its consequences. Rather, “to the extent that the nonoccurrence of a condition would cause disproportionate forfeiture, a court may excuse the nonoccurrence of that condition unless its occurrence was a material part of the agreed exchange.” Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 660 N.E.2d 415, 418 (N.Y. 1995) (quoting Restatement (Second) of Contracts § 229 (Am. Law. Inst. 1981)). There is no dispute that the Shareholders are not entitled to the Contingent Payment Amount if the total sum of the product liability settlements and related costs exceeded the earned contingent payment plus the liability reserve. Enforcing the disputed notice provision according to the Shareholders’ interpretation would therefore result in a $5.5 million windfall in their favor. The Shareholders likewise fail to demonstrate that providing written notice to their agent was a material part of the parties’ agreed exchange. Thus, even if the notice requirement were a condition precedent, we may excuse its non-occurrence on the facts here. Cf. Restatement (Second) of Contracts § 229 illus. 2.