Opinion ID: 65369
Heading Depth: 2
Heading Rank: 2

Heading: The Indenture

Text: Wilmington Trust's other arguments center on the Indenture. Under New York law, [t]he words and phrases used by the parties must, as in all cases involving contract interpretation, be given their plain meaning. Brooke Group Ltd. v. JCH Syndicate 488, 87 N.Y.2d 530, 534, 640 N.Y.S.2d 479, 663 N.E.2d 635 (N.Y. 1996) (citing Levine v. Shell Oil Co., 28 N.Y.2d 205, 211, 321 N.Y.S.2d 81, 269 N.E.2d 799 (N.Y.1971)). [C]ourts may not fashion a new contract under the guise of contract construction; rather, they are required to discern the intent of the parties, to the extent that the parties evidenced what they intended by what they wrote. Slatt v. Slatt, 64 N.Y.2d 966, 967, 488 N.Y.S.2d 645, 477 N.E.2d 1099 (N.Y. 1985) (internal quotation marks and citations omitted). At least one New York state court has construed an indenture provision similar to the provision at issue in this case. In BearingPoint, the court considered the following provision: [T]he Company shall file with the Trustee, within fifteen days after it files such annual and quarterly reports, information, and documents and other reports with the SEC, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company shall comply with the other provisions of TIA Section 314(a). BearingPoint, 2006 WL 2670143, at . The court rejected BearingPoint's argument that it did not breach the indenture by failing to provide the trustee with timely SEC filings. The court stated that the provision unambiguously obligates BearingPoint to make the required SEC filings and to provide copies of them to the Trustee, and BearingPoint's tortured parsing of the provision vitiated the clear purpose of the indenture to provide information to investors so they could protect their investments. Id. at . In making that determination, the court focused on the following phrases in the indenture provision: [T]he Company shall file with the Trustee . . . copies of its annual reports and of the information, documents, and other reports . . . which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. Id. (emphasis and omissions in original). The Eighth Circuit, however, rejected BearingPoint 's parsing of the indenture provision. The [ BearingPoint ] court's analysis focused on the mandatory language of the indenture but did not distinguish between two distinct duties: one to file reports with the SEC in the first instance and another to forward copies of the reports to the trustee. More importantly, the court did not consider any timing issues and simply eliminated the phrase within 15 days after it files such. . . reports . . . with the SEC, replacing it with a set of ellipses. UnitedHealth, 548 F.3d at 1129-30 (omissions in original). The court in UnitedHealth did not set out the full text of the pertinent indenture provision in that case, but it stated its essence as follows: the Company shall cause copies of . . . financial reports . . . which the Company is then required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act to be filed with the Trustee. . . within fifteen days of filing with the Commission. Id. at 1128 (omissions in original). The Eighth Circuit, in a matter of first impression, held that the plain meaning of the indenture provision imposed no independent obligation timely to file SEC reports. The court emphasized that the plain language of [the indenture provision] makes clear that any duty actually to file the reports is imposed pursuant to Section 13 or 15(d) and not pursuant to the indenture itself. Id. at 1128-29 (internal quotation marks omitted). The court further explained the then required to file language: [T]he phrase then required to file is part of a longer clause introduced by the relative pronoun which. The antecedent of which is clearly and unambiguously the word reports. Thus, as a simple matter of syntax, the phrase then required to file modifies the word reports and indicates which reports are subject to § 504(i)'s terms. Just as clearly and just as unambiguously, the phrase within fifteen days of filing with the Commission modifies shall cause. . . to be filed and indicates when § 504(i)'s commands must be fulfilled. Id. at 1128 (omission in original). We find UnitedHealth 's reasoning persuasive. In this case, § 4.03 of the Indenture provides in part that [ACS] shall file with the Trustee, within 15 days after it files the same with the SEC, copies of the annual reports . . . that [ACS] is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The unambiguous language of § 4.03 does not impose an independent obligation actually timely to file reports with the SEC. Rather, the phrase that [ACS] is required to file indicates those reports copies of which ACS is required to file with the Trustee. [W]ithin 15 days after it files the same with the SEC designates the time in which to file the reports with the Trustee. At best, the provision anticipates that ACS is required to file reports with the SEC pursuant to Section 13 or 15(d), but the provision neither incorporates the SEC's timing requirements nor imposes a deadline by which ACS must actually file the reports. We therefore hold that § 4.03 of the Indenture does not impose an obligation timely to file reports with the SEC.
Wilmington Trust also contends that ACS cannot take advantage of its failure to fulfill its statutory obligation timely to file reports with the SEC to argue that it has not breached its obligation to provide the Trustee with the required reports. ACS argues that in the absence of a deadline in § 4.03 for filing with the SEC, ACS did not fail to perform under the Indenture. We find no condition precedent timely to file reports with the SEC. We have already held that neither the Indenture nor § 314 of the TIA requires ACS timely to file reports with the SEC. Wilmington Trust may not rely on ACS's failure to comply with statutory obligations not made part of the parties' contract to argue that ACS breached its contractual obligation. See Camp Kennybrook Inc. v. Kuller, 214 A.D.2d 264, 632 N.Y.S.2d 874, 875 (N.Y.App.Div.1995) (While plaintiff assumed a duty of care and supervision over Max, . . ., such duty is imposed of law independent of and extraneous to the contract. . . . Accordingly, plaintiff had no contractual or quasi-contractual duty to care for and supervise Max.) (citations omitted); see generally Nuzzi Family Ltd. Liability Co. v. Nature Conservancy, Inc., 304 A.D.2d 631, 758 N.Y.S.2d 364, 365 (N.Y.App.Div.2003) (rejecting time of the essence argument and stating that [c]ontrary to the plaintiff's contention, the contract did not contain a condition precedent that its validity or the plaintiff's performance under the contract required its assignment to the DEC by a date certain) (citations omitted)