Opinion ID: 6495350
Heading Depth: 2
Heading Rank: 2

Heading: UBS’s Summary Judgment Motion

Text: As the district court noted, “GIT does not dispute the existence of the loans and Guaranties or its failure to perform under the Guaranties.” UBS AG, 2020 WL 1957530, at . Instead, GIT argues that it raised affirmative defenses that should have precluded summary judgment. In particular, GIT argues that four of the counterclaims it asserted—for breach of 6 contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel, and fraudulent inducement—should have been deemed affirmative defenses sufficient to deny UBS summary judgment. 2 It also argues that two further defenses it did not initially raise on summary judgment—that the subsequent TCAs UBS entered into discharged the Guaranties, and that no valid Event of Default occurred triggering GIT’s liability under the Guaranties—raised genuine factual disputes. Each of GIT’s defenses and counterclaims falls short substantially for the reasons stated by the district court. GIT waives its breach of contract and promissory estoppel arguments by failing to develop them in its briefing, Norton v. Sam’s Club, 145 F.3d 114, 117 (2d Cir. 1998), and effectively conceding that its breach of contract theory should be dismissed as duplicative, Appellant Br. at 49 (“[T]he absence of any express contractual directive requiring UBS to adhere to the PV-10 methodology in subsequent litigation . . . means that the claim is actionable under the implied covenant, rather than as a breach of contract.” (emphasis added)). With respect to the breach of implied covenant argument, we see no error in the district court’s conclusion that “[a] reasonable person would not be justified in thinking that the Guaranties . . . imply an obligation on UBS to agree with the PV-10 value of the reserves.” UBS AG, 2020 WL 1957530, at . PV-10 values are not referenced in the Guaranties, appearing instead in the Solvency Certificates provided by the Borrowers to UBS pursuant to the Credit Agreements as a condition precedent to UBS’s obligations. Those certificates constituted a representation from the Borrowers to UBS, upon which UBS was entitled to rely without further investigation. See Merrill Lynch & Co. v. Allegheny Energy, Inc., 500 F.3d 171, 181 (2d Cir. 2007). Reading such language to impose an obligation on UBS to adhere to the 2 While GIT also asserted a counterclaim for innocent misrepresentation below, it does not address it on appeal, and has therefore abandoned the argument. See LoSacco v. City of Middletown, 71 F.3d 88, 92 (2d Cir. 1995). 7 PV-10 methodology in future litigation would transform the contracts, “requir[ing] inferences beyond what could have reasonably been intended,” Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 408 (2d Cir. 2006), and adding a “substantive provision not included by the parties,” Broder v. Cablevision Sys. Corp., 418 F.3d 187, 199 (2d Cir. 2005). 3 GIT’s fraudulent inducement defense similarly fails. GIT primarily attacks the district court’s holding that “UBS’s view on the PV-10 value was an opinion, not a fact,” UBS AG, 2020 WL 1957530, at , and therefore not actionable. Under New York law, “the general principle [is] that statements of opinion generally cannot constitute fraud,” but there is a “narrow exception to that rule: namely, that opinions may constitute actionable fraud where a present intent to deceive exists.” Catskill Dev., L.L.C. v. Park Place Ent. Corp., 547 F.3d 115, 134 (2d Cir. 2008) (internal quotation marks omitted). But nothing in the record here provides support for the application of this “narrow” exception. Here, as the district court found, there is essentially no evidence, nor non-conclusory allegations, in the record from which the Court can infer a present intent to deceive—that is, that in 2016, UBS believed the PV-10 methodology to be inaccurate, let alone that it intended to deceive GIT by conveying a belief in PV-10’s soundness. UBS AG, 2020 WL 1957530, at  (“There is no evidence that in 2016, UBS held the same view on the PV-10 value as that of its expert witness in 2019.”). Pointing to UBS’s subsequent position in bankruptcy litigation in 2019 is not sufficient. See, e.g., Perella Weinberg Partners LLC v. Kramer, 58 N.Y.S.3d 384, 390 (App. Div. 1st Dep’t 2017) (“[T]he facts alleged are insufficient to raise an inference of a present intent to deceive at the time the 3 GIT develops a theory on appeal that “UBS sought that solvency certificate specifically so it could rely on it in future litigation over the GIT’s guaranties and, in particular, to defeat possible claims by other creditors of GIT that the Guaranties could be voided or rescinded as fraudulent conveyances.” Appellant Br. at 5; see also id. at 36–37. These arguments and allegations were not made in the pleadings or briefing below, and accordingly, the Court declines to consider them on appeal. See Norton, 145 F.3d at 117. 8 alleged misrepresentations were made in 2011. None of the misconduct alleged occurred until at least three years later.”). GIT’s argument that UBS discharged the Guaranties by agreeing to the TCAs—first raised in its untimely reconsideration motion—is barred by the terms of § 2.02 of the Guaranties. Under New York law, the guaranty “[b]y its plain terms, in broad, sweeping and unequivocal language . . . forecloses any challenge to the enforceability and validity of the documents which establish defendant’s liability for payments arising under the purchase agreement, as well as to any other possible defense to [its] liability” for payments due on the underlying loans. Cooperatieve Centrale Raiffeisen–Boerenleenbank, B.A., “Rabobank Int’l,” N.Y. Branch v. Navarro, 25 N.Y.3d 485, 494 (2015); see also Compagnie Financiere de CIC et de L’Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 188 F.3d 31, 35 (2d Cir. 1999) (“Absolute and unconditional guaranties have in fact been found to preclude guarantors from asserting a broad range of defenses under New York law.”). GIT failed to address this contractual language in the proceedings below, and the district court “conclude[d] that GIT therefore concedes the issue and acknowledges that its defenses are barred by Section 2.02.” UBS AG, 2021 WL 1759109, at . GIT similarly elides the § 2.02 waiver on appeal. GIT failed to cite the provision in its opening brief, instead arguing that the Guaranties only waived contractual, rather than statutory, rights by quoting an entirely different provision, § 6.12(c). In reply, GIT argues for the first time that the § 2.02 waiver incorporated a negligence standard and could not “waive[] . . . a defense based on a creditor’s bad faith impairment of collateral, such as that UBS accomplished” via the TCAs. Reply Br. at 29. As this argument was neither raised below, nor in GIT’s opening brief, it has been waived. See Norton, 145 F.3d at 117; Conn. Bar Ass’n v. United States, 620 F.3d 81, 91 n.13 (2d Cir. 2010). 9 Even assuming the premise of GIT’s argument were correct, the record contains no evidence of bad faith on UBS’s part with respect to the TCAs, a point which GIT effectively concedes. See Reply Br. at 31 (“[H]ad GIT received the requested discovery . . . GIT’s defenses based on the Trustee Credit Agreements would have been revealed, along with triable issues preventing summary judgment prior to depositions and written discovery.” (emphasis added)). Finally, GIT also argues that no valid Event of Default occurred because § 7.01(h) of the Credit Agreements is an unenforceable ipso facto clause. This argument was not raised in GIT’s summary judgment or reconsideration briefing below and accordingly has been waived. Allianz Ins. Co. v. Lerner, 416 F.3d 109, 114 (2d Cir. 2005). In any event, it fails in light of U.S. Bank Trust National Ass’n v. AMR Corp. (In re AMR Corp.), 730 F.3d 88 (2d Cir. 2013). There, we considered the same arguments based on similar contractual language, but held that the “argument that the Code categorically prohibits enforcement of such [ipso facto] clauses . . . is without merit”; rather, we held that “ipso facto clauses in a nonexecutory contract are not unenforceable pursuant” to the Bankruptcy Code. Id. at 106–07, 112. GIT does not argue that the Guaranties or Credit Agreements are executory contracts or otherwise articulate why the Bankruptcy Code renders § 7.01(h) unenforceable beyond advancing the categorical argument rejected in In re AMR.