Opinion ID: 2321828
Heading Depth: 3
Heading Rank: 1

Heading: Did the Trump Group Ratify The 2004 Transfer To the Sagi Trust?

Text: Genger claims that the undisputed facts establish that the Trump Group twice ratified the 2004 Transfers to the Sagi Trust. The first ratification, Genger argues, occurred at the June 25, 2008 meeting when the Trump Group solicited and accepted Genger's vote of the Sagi Trust Shares to approve the (later repudiated) 2008 Funding Agreement. Genger claims that by recognizing his right to vote the Sagi Trust Shares, the Trump Group necessarily ratified the disputed 2004 Transfers. The second ratification is said to have occurred when the Trump Group purchased the disputed Trans-Resources shares from the Sagi Trust under the 2008 Purchase Agreement. Without the 2004 Transfers, Genger insists, the Sagi Trust would have had no Trans-Resources shares to sell to the Trump Group. Therefore, the 2004 Transfers were necessarily ratified if the 2008 Purchase Agreement was to have any legal force. Neither argument, in our view, has merit. Ratification is an equitable defense [55] that precludes a party who [has] accept[ed] the benefits of a transaction from thereafter attacking it. [56] Ratification may be either express or implied through a party's conduct, but it is always a voluntary and positive act. [57] It is undisputed that the Trump Group never expressly or formally ratified the 2004 Transfers. The Court of Chancery explicitly found that [a]t no point did the Trump Group tell Genger that it [had] accepted the 2004 Transfers. [58] The sole issue, then, becomes whether the Trump Group, by its post-June 13, 2008 conduct, [59] implicitly ratified the 2004 Transfers. The record establishes that no implied ratification of the 2004 Transfers by the Trump Group ever took place. Implied ratification occurs [w]here the conduct of a complainant, subsequent to the transaction objected to, is such as reasonably to warrant the conclusion that he has accepted or adopted it, [and] his ratification is implied through his acquiescence. [60] Ratification of an unauthorized act may be found from conduct which can be rationally explained only if there were an election to treat a supposedly unauthorized act as in fact authorized. [61] Ratification may also be found where a party receives and retains the benefit of [that transaction] without objection, [] thereby ratify[ing] the unauthorized act and estop[ping] itself from repudiating it. . . . [62] The Court of Chancery found no basis to conclude that the Trump Group assented to the 2004 Transfers by accepting Genger's vote on behalf of the Sagi and Orly Trust[s] in favor of the [2008] Funding Agreement. [63] The record evidence fully supports that finding. The Trump Group never received or retained any benefit from the 2008 Funding Agreement, and ratification is not the only rational explanation for the Trump Group's conduct. The uncontroverted evidence shows that the Trump Group was reluctant to invest additional risk capital into Trans-Resources, and would do that only if given majority voting control. The Trump Group agreed to enter into the 2008 Funding Agreement with Genger, because Genger represented that he would rectify [his] violation of the Stockholders Agreement by ensuring that the Trump Group had voting control. [64] Moreoverand of critical importancethe parties never performed or even executed the 2008 Funding Agreement, because Genger repudiated it. [65] In these circumstances, the Trump Group's willingness to accept Genger's vote on behalf of the Sagi and Orly Trusts in favor of the 2008 Funding Agreement cannot be fairly viewed as acquiescing in the 2004 Transfers. That is because the Trump Group never received the negotiated benefit ( i.e., voting control) that was to be the quid pro quo for the Trump Group's alleged willingness to accept and recognize Genger's vote on those Trusts' behalf. [66] Nor can the Trump Group's conduct after the June 13, 2008 meeting be fairly viewed only as evincing an intent to approve the unauthorized acts [67] (here, the 2004 Transfers). Contrary to Genger's assertion, the 2008 Purchase Agreement did not implicitly ratify the 2004 Transfers, because in that 2008 Agreement, the Sagi Trust and TPR expressly conveyed only such interest as they may have had in the disputed Trans-Resources shares. Moreover, in Section 10 of the 2008 Purchase Agreement, both the purported transferor (TPR) and the purported transferee (the Sagi Trust) agreed on a mechanism where-by the Trump Group's share acquisition would be fully protected if the 2004 Transfers were determined to be void. Thus, the 2008 Purchase Agreement itself fatally undermines any claim that the Trump Group intended, by its conduct, to ratify the 2004 Transfers. At no point did the Trump Group ratify the 2004 Transfers, either expressly or by implication. To the contrary, at all times the Trump Group acted consistently with their position that the 2004 Transfers were void. [68] Genger's ratification claim, therefore, fails on factual and legal grounds.