Court Opinion

ID: 9916499
Source: CourtListenerOpinion
Date Created: 2024-01-10 01:08:30.266426+00
Date Added: 2024-06-11T13:25:30.339413
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Atalaya Special Opportunities Fund VII LP v Whited
               2023 NY Slip Op 34559(U)
                   December 31, 2023
           Supreme Court, New York County
        Docket Number: Index No. 652767/2020
                  Judge: Andrea Masley
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
 Op 30001(U), are republished from various New York
 State and local government sources, including the New
  York State Unified Court System's eCourts Service.
 This opinion is uncorrected and not selected for official
                       publication.
                                                                                                                        INDEX NO. 652767/2020
  NYSCEF DOC. NO. 184                                                                                             RECEIVED NYSCEF: 12/31/2023

            SUPREME COURT OF THE STATE OF NEW YORK
            COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 48
            ----------------------------------------------------------------------------------- X

             ATALAYA SPECIAL OPPORTUNITIES FUND VII LP and                                          INDEX NO.         652767/2020
             MIDTOWN MADISON MANAGEMENT LLC,

                                                          Plaintiffs,                               MOTION DATE

                                                - V -                                               MOTION SEQ. NO.        004
             JIMMY ERIC WHITED,
                                                                                                     DECISION+ ORDER ON
                                                          Defendant.                                       MOTION

            ----------------------------------------------------------------------------------- X

            HON. ANDREA MASLEY:

            The following e-filed documents, listed by NYSCEF document number (Motion 004) 80, 81, 82, 83, 84,
            85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 103, 104, 105,106,107, 108, 109, 110,
            111,112,113,114,115,116, 117, 118, 119, 120,121,122,123, 124, 125, 126, 127,128,129,130,
            131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150,
            151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170,
            171,172,173,174,175,176,177,178,179,180,181,182, 183
            were read on this motion to/for                                             JUDGMENT-SUMMARY

                      Plaintiffs Atalaya Special Opportunities Fund VII LP (Atalaya) and Midtown

            Madison Management LLC (Midtown) bring this action to enforce a guaranty executed

            by defendant Jimmy Eric Whited. Plaintiffs assert claims for breach of contract to

            collect on the guaranty and for a declaratory judgment, seeking a declaration that

            Whited's liability includes on-demand payment of plaintiffs' out-of-pocket expenses,

            including reasonable attorneys' fees. Plaintiffs now move for summary judgment on

            both claims.

            Background

                      Unless indicated otherwise, the following facts were taken from the parties' joint

            statement of undisputed facts (JSUF) and Rule-19 Statements of Material Fact where

            undisputed.
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             Motion No. 004

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                      Whited was, at times, "the chief executive officer, managing member, and/or sole

            member of a group of insurance businesses (the 'Windhaven Entities')." (NYSCEF Doc

            No. [NYSCEF] 101, JSUF ,i 3.) Among these insurance businesses were Wind haven

            Insurance Company (WIC) and Windhaven National Insurance Company (WNIC),

            domiciled in Florida and Texas, respectively. (NYSCEF 166 Defendant's

            Counterstatement of Material Fact [Defendant Counterstatement] ,i 32; NYSCEF 169,

            Plaintiffs' Response to Defendant's Counterstatement [Plaintiffs' Response] ,i 32.)

                      Greenlight Reinsurance, Ltd. (Greenlight) was the Windhaven Entities' reinsurer.

            (Id. ,i 44.) Its reinsurance agreement with WIC provided for "sliding-scale ceding

            commissions," meaning that the ceding commissions, which the reinsurer paid to WIC

            for procuring policies, were subject to adjustment based on those policies' performance.

            (Id. ,i,i 45-47.) Greenlight and WIC agreed to defer the payment of commissions owed

            to Greenlight based on these adjustments. (Id. ,i 48.)

                      On March 4, 2019, five Windhaven Entities (Whited and Sons LLC, Windhaven

            Select, LLC, Windhaven Underwriters, LLC, Clutch Analytics, LLC, and Windhaven

            Insurance Holdings Corporation), as borrowers, Atalaya, as lender, and Midtown, as

            Atalaya's administrative and collateral agent, entered into a credit agreement (Credit

            Agreement) in connection with a $35.5 million loan (Loan). (NYSCEF 101, JSUF ,i,i 4,

            5; NYSCEF 83, Credit Agreement.) The Credit Agreement identifies WIC and WNIC as

            "Subsidiaries" of a "Loan Party." (NYSCEF 83, Credit Agreement at 36/90, 1 84/90 [§ 5

            (h), Schedule 5 (h)].) "A 'major point' of the ... Loan was to enable Windhaven to meet

            its sliding scale obligations to Greenlight." (NYSCEF 166 Defendant's

            1
                NYSCEF pagination.
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                Motion No. 004

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            Counterstatement Defendant Counterstatement ,i 49; NYSCEF 169, Plaintiffs'

            Response ,i 49.)

                   In pertinent part, the Credit Agreement defines an "Event of Default" to include

            the following:

                             "(c) (i) the occurrence of a Bankruptcy Event with respect to
                             any Loan Party or Whited, (ii) any Loan Party or any of its
                             Subsidiaries becomes unable or admits in writing its inability
                             or fails generally to pay its debts as they become due or is
                             deemed unable to pay its debts as they fall due for the
                             purposes of any Debtor Relief Law, or (iii) any Insurance
                             Company Subsidiary fails to maintain minimum capital and
                             surplus as required by any Insurance Regulatory Agency
                             with jurisdiction thereover or over its business that requires
                             or permits such regulator to institute liquidation,
                             rehabilitation, conservation or other similar supervision of
                             such Insurance Subsidiary, unless cured within forty-five (45)
                             days."

            (NYSCEF 83, Credit Agreement at 11/90 [§ 1(a)].) 2

            It defines "Bankruptcy Event" to mean:

                             "with respect to any Person, the commencement by such
                             Person of a voluntary case or other proceeding involving its
                             liquidation, winding-up, bankruptcy or sequestration or
                             otherwise seeking reorganization or other relief with respect
                             to itself or its debts under any Debtor Relief Law or seeking
                             the appointment of a trustee, receiver, liquidator,
                             conservator, rehabilitator, custodian or other similar official of
                             it or any substantial part of its property, or such Person shall
                             consent to any such relief or to the appointment of or taking
                             possession by any such official in any involuntary case or
                             other proceeding commenced against it, or shall make a
                             general assignment for the benefit of creditors, or shall fail
                             generally, or admit in writing its inability, to pay its debts as

            2 "Debtor Relief Laws" is defined as "the Bankruptcy Code, and all other liquidation,

            conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
            rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of
            the United States of America, any state, or other applicable jurisdictions from time to
            time in effect affecting the rights of creditors generally, including applicable Insurance
            Laws." (NYSCEF 83, Credit Agreement at 10-11/90 [§ 1(a)].)
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                              they become due, or shall take any corporate action to
                              authorize any of the foregoing; or any involuntary case or
                              other proceeding shall be commenced against such Person
                              involving its liquidation, winding-up, bankruptcy or
                              sequestration or otherwise seeking reorganization or other
                              relief with respect to it or its debts under any Debtor Relief
                              Law that is not dismissed, discharged, stayed or restrained
                              in each case within 45 days of the institution or presentation
                              thereof; or an order for relief is entered in any such
                              proceeding or such Person becomes the subject of the
                              appointment of a trustee, receiver, rehabilitator, conservator,
                              liquidator, custodian, or other similar official with respect to a
                              substantial part of its property."

            (Id. at 6-7/90.) The Credit Agreement gives Atalaya the right to appoint a single

            representative to receive notices of, and be present at, all meetings of the board of

            directors for each borrower entity and its subsidiaries. (Id. at 47-48/90 [§ 6 (a) (xiv)].)

                      In connection with the Loan, Whited, as guarantor, and Midtown, as agent for the

            Credit Agreement's lenders, entered into a validity guaranty (Validity Guaranty).

            (NYSCEF 166 Defendant's Counterstatement ,i 49; NYSCEF 169, Plaintiffs' Response

            ,i 49; NYSCEF 84 and 119 3 , Validity Guaranty.) The Validity Guaranty is a bad actor

            guaranty, intended to align Atalaya's and Whited's interests during the life of the Loan.

            (NYSCEF 166, Defendant's Counterstatement ,i,i 60, 64; NYSCEF 169, Plaintiffs'

            Response ,i,i 60, 64.) It provides that Whited becomes liable for the borrowers'

            obligations under the Credit Agreement upon the occurrence of any "Trigger Event"

            3
              The parties submit two versions of the Validity Guaranty which are identical except for
            the date. (Compare NYSCEF 84 [dated March 4, 2019] with NYSCEF 119 [dated
            March 1, 2019].) The parties dispute whether the Validity Guaranty was executed on
            the first or the fourth of March 2019. (See NYSCEF 166 Defendant's Counterstatement
            ,i 49; NYSCEF 169, Plaintiffs' Response ,i 59.) For convenience, the court will cite to
            the first version of the document, NYSCEF 84, when refencing the Validity Guaranty.
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            (NYSCEF 84, Validity Guaranty at 2-5/15 [§ 1 (a), (b)].) One Trigger Event, "Voluntary

            Bankruptcy" (Voluntary Bankruptcy Provision), states:

                           "Voluntary Bankruptcy: any Loan Party or any Subsidiary
                           thereof commences a voluntary case or other proceeding
                           involving its liquidation, winding-up, bankruptcy or
                           sequestration or otherwise seeking reorganization or other
                           relief with respect to itself or its debts under any Debtor
                           Relief Law or seeking the appointment of a trustee, receiver,
                           liquidator, conservator, rehabilitator, custodian or other
                           similar official of it or any substantial part of its property, any
                           such relief or to the appointment of or taking possession by
                           any such official in any involuntary case or other proceeding
                           commenced against it (an 'Involuntary Proceeding'), or shall
                           make a general assignment for the benefit of creditors, or
                           shall fail generally, or admit in writing its inability, to pay its
                           debts as they become due, or shall take any corporate
                           action to authorize any of the foregoing (unless, in any such
                           case, the Agent on behalf of the Lenders, provided its prior
                           written consent thereto); or the Guarantor or any Company
                           Party shall intentionally collude with any third party in to
                           effect the filing or petition of an Involuntary Proceeding
                           against a Loan Party or Subsidiary thereof."

            (Id. at 4/15 [§ 1 (b) (viii)].) The Validity Guaranty provides that "capitalized terms used

            but not defined herein have the meanings assigned to such terms in the Credit

            Agreement" (id. at 2 [Recital A]) and that "[t]he Guarantor shall pay on demand all out-

            of-pocket expenses (including reasonable attorneys' fees and expenses) in any way

            relating to the enforcement or protection of Guaranteed Parties' rights under this

            Guaranty" (id. at 9/15 [§ 7].)

                   On March 4, 2019, Whited also executed a validity guaranty with Greenlight.

            (NYSCEF 101, JSUF ,i 6; NYSCEF 85, Greenlight Guaranty.) Atalaya and Green light

            entered into an intercreditor agreement, whereby Greenlight subordinated its debt to

            that of Atalaya's. (NYSCEF 166 Defendant's Counterstatement ,i,i 82, 83; NYSCEF

            169, Plaintiffs' Response ,i,i 82, 83.)
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                   After the Loan closed, Sachin Sarnobat, who was a managing director at Atalaya

            at the time and Atalaya's "deal lead" on the Loan, "attended WIC and WNIC Board

            meetings as an observer, and Atalaya was in regular contact with Windhaven by email,

            phone, and in-person visit." (Id.    ,m 37-38, 90.)
                   After the Loan closed, the Windhaven Entities experienced financial difficulties.

            (Id. ,i 93.) In April 2019, Ambina Partners (Ambina), a private equity firm retained by

            Atalaya to provide consulting services in connection with the Loan, predicted that a

            Windhaven default was highly likely. (Id. ,i,i 42, 95.)

                   On November 15, 2019, Greenlight's General Counsel emailed the Windhaven

            Entities, stating that the ceding commission liability of more than $26 million was 108

            days overdue. (NYSCEF 134, Greenlight Email.) However, Whited claims that this

            amount was "not set." (NYSCEF 160, tr at 447: 17-21 [Whited Depa].) It is undisputed

            that Greenlight owed WNIC more than $10 million in ceding commissions and additional

            capital. (NYSCEF 166 Defendant's Counterstatement ,i 102; NYSCEF 169, Plaintiffs'

            Response ,i 102.) The Wind haven Entities claim that "it is unclear whether Greenlight

            took that amount into consideration as part of its unilateral demand." (NYSCEF 166,

            Defendant's Counterstatement response to ,i 24.)

                   Also on November 15, 2019, with the consent of WIC's board of directors, Whited

            executed: (1) a Consent Order for Administrative Supervision (Consent Order) and (2) a

            Consent to Order of Receivership. ( See NYSCEF 166 Defendant's Counterstatement

            ,i,i 110-112; NYSCEF 169, Plaintiffs' Response ,i,i 110-112; NYSCEF 137, Consent

            Order and Consent to Order of Receivership.) The Consent Order placed WIC under

            administrative supervision of the Florida Office of Insurance Regulation (FLOIR) for a

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            period of 120 days, during which time WIC had to satisfy the conditions of a corrective

            plan. (NYSCEF 137, Consent Order           ,m 3-4, 6.) The Consent Order states that, should
            WIC fail to comply with any of its provisions, WIC "consent[ed] to the entry of an Order

            appointing the [Florida Department of Financial Services ('DFS')] as Receiver and

            acknowledge[d] that [DFS] [could] apply to the Court for an Order of Rehabilitation or

            Liquidation, at the sole discretion of [DFS]." (Id. ,i 16). "In the event that [DFS] initially

            obtained an [Order of Rehabilitation], [WIC] further consent[ed] to [DFS] obtaining a

            subsequent [Order of Liquidation] ... at any time and in its sole discretion." (Id.)

                   In the Consent to Order of Receivership, "[WIC] admitted that grounds existed for

            the appointment of a Receiver" and that its board consented to "the entry of an Order of

            Rehabilitation or Liquidation, at the sole discretion of [DFS]." (Id., Consent to Order of

            Receivership at 13/32 ,i,i 2, 3). Annexed as "attachment A" to the Consent to Order of

            Receivership, the resolution of WIC's board of directors, dated November 15, 2019,

            provided unanimous consent to the entry of an Order of Rehabilitation or Liquidation at

            the discretion of DFS. (Id., Board Resolution at 16/32.)

                   On November 18, 2019, Midtown sent notices of default to Whited at Whited and

            Sons LLC and Greenlight, stating that four separate events of default occurred under

            the Credit Agreement. (NYSCEF 166 Defendant's Counterstatement ,i 114; NYSCEF

            169, Plaintiffs' Response ,i 114; NYSCEF 135, 136, Notices of Default.)

                   On November 22, 2019, Whited stepped down as CEO of the Wind haven Entities

            and was replaced by Greg Hoeg of Alvarez & Marsal (A&M), a management consulting

            firm, who was appointed Chief Restructuring Officer of Wind haven. (NYSCEF 166

            Defendant's Counterstatement ,i 115; NYSCEF 169, Plaintiffs' Response ,i 115.)

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                      The parties dispute who was in control of the Wind haven Entities after this point.

            Plaintiffs claim that Whited, on behalf of "Whited & Sons, LLC and its subsidiaries and

            affiliates and assigns and successors," executed the engagement letter with A&M (see

            NYSCEF 139, Engagement Letter at 1) and that, as the sole shareholder, Whited

            retained control over the Windhaven Entities (see NYSCEF 98, tr at 367:4 -368:20

            [Spiro 4 Depa]; see also NYSCEF 142, WIC Board Meeting Minutes [December 4, 2019]

            [indicating Whited was chairman of the board].) Whited, on the other hand, claims that

            the Windhaven Entities engaged A&M to comply with Atalaya's demands following

            default under the Credit Agreement and that Hoeg exercised managerial control over

            the Windhaven Entities, including WIC and WNIC. (NYSCEF 160, tr at 250:19-251 :2,

            495:4-6 [Whited Depa].) Notably, it does appear that A&M was hired at Atalaya's

            behest. (See NYSCEF 166 Defendant's Counterstatement ,i 96; NYSCEF 169,

            Plaintiffs' Response ,i 96; see also NYSCEF 164, Atalaya's Internal Presentation on

            Windhaven at 12/14 [stating that, "(u)pon and Event of Default, Atalaya has the right to

            appoint a restructuring advisor to help protect value" and that A&M "has been identified

            and can be parachuted in on short notice"]; NYSCEF 125, Ambina's Investment

            Memorandum at ATALAYA00058640 [noting that, "in a downside case (for the Loan)

            Atalaya has the right to appoint a restructuring advisor to help protect value" and that

            "Atalaya anticipates hiring (A&M)"].)

                      Atalaya had liens on the Windhaven Entities' assets and declined to permit these

            assets to be used to support WIC. (NYSCEF 166 Defendant's Counterstatement ,i 117;

            4
             Matt Spiro is Atalaya's corporate representative. (NYSCEF 98, tr at 4:3-5 [Spiro
            Depa].)
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            NYSCEF 169, Plaintiffs' Response ,i 117; NYSCEF 140, Letter from Whited to FLOIR

            [November 25, 2019] at ATALAYA00034793.)

                   On December 4, 2019, WIC's board of directors held a meeting, attended by

            Sarnobat and another Atalaya representative. (NYSCEF 166 Defendant's

            Counterstatement ,i 119; NYSCEF 169, Plaintiffs' Response ,i 119.) Among the issues

            discussed was FLOIR's request to proceed with WIC's liquidation. (NYSCEF 142, WIC

            Board Meeting Minutes [December 4, 2019].) "Hoeg told the board he believed

            liquidation was inevitable based on the feedback he received from the [FLOIR]

            supervisor so best consent." (NYSCEF 166 Defendant's Counterstatement ,i 120;

            NYSCEF 169, Plaintiffs' Response ,i 120; NYSCEF 142, WIC Board Meeting Minutes

            [December 4, 2019].) 5 The board unanimously passed a motion authorizing Whited "to

            sign a consent order regarding liquidation of [WIC] after Greenlight ... and Atalaya ...

            approved." (NYSCEF 142, WIC Board Meeting Minutes [December 4, 2019].) On

            December 6, 2019, during another meeting of WIC's board, Hoeg "relayed that there

            had been no formal approval from Atalaya Capital on consent for liquidation, but it was

            Atalaya's position that their approval isn't necessary." (NYSCEF 166 Defendant's

            Counterstatement ,i 121; NYSCEF 169, Plaintiffs' Response ,i 121; NYSCEF 144, WIC

            Board Meeting Minutes [December 6, 2019] at 1.)

                   On December 12, 2019, upon the petition of DFS, a Florida state court issued an

            order appointing DFS as receiver of WIC for purposes of rehabilitation (NYSCEF 145,

            Amended Consent Order.) On December 30, 2019, upon DFS's motion for an order to

            5 It is unclear why this additional consent was requested, considering the consents

            Whited executed on November 15, 2019.
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            liquidate WIC, the Florida court appointed DFS as receiver of WIC for purposes of

            liquidation, effective January 6, 2020. (NYSCEF 147, Consent Order Appointing DFS

            as Receiver.)

                   On January 16, 2020, the Texas Department of Insurance issued a confidential

            order of supervision to WNIC. (NYSCEF 166 Defendant's Counterstatement ,i 130;

            NYSCEF 169, Plaintiffs' Response ,i 130.) On February 21, 2020, the State of Texas

            filed a petition for an order appointing a liquidator and requesting injunctive relief against

            WNIC. (Id. ,i 134; NYSCEF 91, Petition.) On March 5, 2020, a Texas state court

            entered an order appointing a liquidator and issuing a permanent injunction and notice

            of automatic stay against WNIC. (NYSCEF 166 Defendant's Counterstatement ,i 137;

            NYSCEF 169, Plaintiffs' Response ,i 137; NYSCEF 90, Appointment and Pl Order.)

            Discussion

                   Plaintiffs contend that they are entitled to summary judgment for breach of the

            Validity Guaranty, because the following Trigger Events occurred under the Voluntary

            Bankruptcy Provision: (1) WIC's consent to administrative supervision and subsequent

            liquidation (Florida Liquidation) satisfies the "Loan Party or any Subsidiary thereof

            commences a voluntary case or other proceeding involving its liquidation ... or seeking

            the appointment of receiver" trigger (Voluntary Proceeding Trigger); (2) WNIC's

            liquidation (Texas Liquidation) satisfies the "any Loan Party or any Subsidiary thereof

            ... any such relief or to the appointment of or taking possession by any such official in

            any involuntary case or other proceeding commenced against it" trigger (Involuntary

            Proceeding Trigger); and (3) the failure to pay Greenlight satisfies the "Loan Party or

            any Subsidiary thereof ... shall fail generally ... to pay its debts as they become due"

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            trigger (General Failure to Pay Debts Trigger). (NYSCEF 84, Validity Guaranty at 4 [§ 1

            (b) (viii)].)

                     As concerns the Involuntary Proceeding Trigger, plaintiffs concede that "the

            wording is awkward" (NYSCEF 170, Memo in Support at 23/26) and suggest that "[t]he

            word 'to' appears to have been substituted for the word 'seeking' just before the words

            'the appointment of,"' such that the corrected clause would read, "any such relief or

            seeking the appointment of ... " (Id. at n 11.) They, nonetheless, contend that there is

            no ambiguity, because "the language is susceptible to only one reasonable

            interpretation: that the parties intended that an involuntary bankruptcy filing, like the

            Texas Liquidation, would be a Trigger Event." (Id. at 23.)

                     Whited counters that the Validity Guaranty is a bad actor guaranty rather than an

            absolute guaranty against default under the Credit Agreement and that, as such, the

            parties intentionally omitted involuntary proceedings brought by an insurance regulator

            from the Trigger Events. He argues that if the parties intended to protect against

            involuntary bankruptcies and similar occurrences, the language of the Voluntary

            Bankruptcy Provision would mirror that of the contemporaneously executed Credit

            Agreement, which expressly includes such occurrences under Events of Default.

            Instead, he argues, the parties made a conscious choice to exclude that language,

            opting to use language that protected Atalaya from Whited's intentional bad acts.

            Therefore, neither the Florida nor the Texas Liquidation, which were involuntary and

            commenced by operation of state law, constitutes a Trigger Event. At the very least,

            Whited argues, the language is ambiguous, and the parties' intentions constitute an

            issue of fact. He also argues that, because Atalaya effectively controlled Wind haven

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            from November 22, 2019, it should be estopped from denying its role in the events that

            led up to the Florida and Texas Liquidations.

                   Lastly, he asserts that the failure to pay Greenlight is not a Trigger Event.

            Whited contends the "shall fail generally ... to pay its debts as they become due"

            language (NYSCEF 84, Validity Guaranty at 4 [§ 1 (b) (viii)]), "which echoes definitions

            of insolvency in the Bankruptcy Code and the [New York Debtor and Creditor Law

            ("DCL"), unambiguously restricts Whited or Windhaven from intentionally bringing about

            insolvency proceedings by indirect means" and is not intended "to force Whited to

            personally guarantee the solvency of his distressed business." (NYSCEF 165, Memo in

            Opp at 25-26/29.) Moreover, he argues, liability cannot be triggered by debts embodied

            in the underlying loan agreements, i.e., Atalaya was aware of Windhaven's liability to

            Greenlight, and this was the subject of a simultaneously executed intercreditor

            agreement.

                   Pursuant to CPLR 3212, to obtain summary judgment, the movant "must make a

            prima facie showing of entitlement to judgment as a matter of law, tendering sufficient

            evidence to demonstrate the absence of any material issues of fact." (Alvarez v

            Prospect Hosp., 68 NY2d 320, 324 [1986].) "Failure to make such prima facie showing

            requires a denial of the motion, regardless of the sufficiency of the opposing papers."

            (Id.) Once the movant satisfies its burden, the opposing party must "produce

            evidentiary proof in admissible form sufficient to establish the existence of material

            issues of fact which require a trial of the action." (Id.)

                   A cause of action for breach of contract requires a plaintiff to demonstrate "the

            existence of a contract, the plaintiff's performance thereunder, the defendant's breach

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            thereof, and resulting damages." (Harris v Seward Park Haus. Corp., 79 AD3d 425, 426

            [1st Dept 2010] [citation omitted].) "A contract of guaranty is subject to the fulfillment of

            any condition precedent to the liability imposed on the guarantor." (Madison Ave.

            Leasehold, LLC v Madison Bentley Assoc. LLC, 30 AD3d 1, 10 [1st Dept 2006], affd 8

            NY3d 59 [2006] [internal citations omitted].) Because "a bad [actor] guarantee is

            triggered when one of the enumerated bad acts occurs" (Nexbank, SSB v Soffer, 2014

            NY Slip Op 31433[U], *3 [Sup Ct, NY County 2014], affd 129 AD3d 485 [1st Dept

            2015]), on summary judgment, the plaintiff bears the burden of demonstrating that such

            a condition precedent was satisfied. (See Madison Ave. Leasehold, LLC, 30 AD3d at

            10-11.)

                   "Whether or not a writing is ambiguous is a question of law to be resolved by the

            courts." (W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990] [citation omitted].)

            "[A] contract is ambiguous when read as a whole, [it] fails to disclose its purpose and

            the parties' intent, or when specific language is susceptible of two reasonable

            interpretations." (Georgia Malone & Co., Inc. v E & M Assoc., 163 AD3d 176, 185 [1st

            Dept 2018] [internal quotation marks and citations omitted].)

                   "[T]he best evidence of what parties to a written agreement intend is what they

            say in their writing." (Banco Espirito Santo, S.A. v Concessionaria Do Rodoanel Oeste

            S.A., 100 AD3d 100, 106 [1st Dept 2012] [internal quotation marks and citation

            omitted].) "[A]greements executed at substantially the same time and related to the

            same subject matter are regarded as contemporaneous writings and must be read

            together as one." ( 1471 Second Corp. v NAT of NY Corp., 162 AD3d 449, 450 [1st

            Dept 2018] [internal quotation marks and citations omitted].) The writing must be read

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            as a whole, as its "meaning ... may be distorted where undue force is given to single

            words or phrases." (Matter of Westmoreland Coal Co. v Entech, Inc., 100 NY2d 352,

            358 [2003] [internal quotation marks and citation omitted].) "[C]ourts must construe

            contracts in a manner which gives effect to each and every part, so as not to render any

            provision meaningless or without force or effect." (Western & S. Life Ins. Co. v U.S.

            Bank N.A., 209 AD3d 6, 13 [1st Dept 2022] [internal quotation marks and citations

            omitted].)

                   Here, plaintiffs fail to demonstrate their prima facie entitlement to summary

           judgment. First, they fail to demonstrate that the Florida Liquidation satisfies the

            Voluntary Proceeding Trigger. Under this trigger, the guarantor is liable when "any

            Loan Party or any Subsidiary thereof commences a voluntary case or other proceeding

            involving its liquidation ... or seeking the appointment of a ... receiver." (NYSCEF 84,

            Validity Guaranty at 4 [§ 1 (b) (viii)]). The triggering event is "any Loan Party or any

            Subsidiary ... commenc[ing] a voluntary case or other proceeding." (Id.) The language

            that follows, set off by "involving its" and "or seeking the appointment of," merely

            describes the "voluntary case or other proceeding." (Id.) Plaintiffs fail to demonstrate

            that WIG commenced any action or proceeding for its liquidation.

                   The November 15, 2019 Consent Order for Administrative Supervision placed

            WIG in administrative supervision for 120 days. (See NYSCEF 137, exhibit A at 18/32).

            To the extent that plaintiffs contend that FLOIR's administrative supervision constitutes

            a case or a proceeding involving WIC's liquidation (see NYSCEF 183, oral arguments tr

            at 5:10 - 6:13), they offer nothing in support of this proposition. The consent order itself

            indicates that the supervision was not an administrative proceeding (see NYSCEF Doc

             652767/2020 ATALAYA SPECIAL vs. WHITED, JIMMY ERIC                            Page 14 of 20
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            No. 137, exhibit A, ,i 19) and that WIC's compliance with FLOIR's corrective plan could

            have avoided receivership for purposes of rehabilitation or liquidation. (See id, ,i,i 6,

            16.)

                      As for the subsequent court orders, neither was initiated by WIC. On December

            12, 2019, upon the petition of DFS, a Florida court appointed DFS as receiver of WIC

            for purposes of rehabilitation. (NYCEF 145, Petition.) On December 30, 2019, upon

            DFS's motion, the court appointed DFS as receiver of WIC for purposes of liquidation

            (NYSCEF 147, Motion.) DFS commenced the proceeding and WIC was the

            "respondent" (see NYCEF 145, 147.) That WIC consented to the Florida Liquidation is

            immaterial and plaintiffs mistakenly focus on this conduct being voluntary. (See

            NYSCEF 170, Plaintiffs' MOL in support, at 6/26 n 3.) The plain language of the

            Voluntary Proceeding Trigger requires that WIC be the one to "commence[] a voluntary

            case or other proceeding." As this did not occur, plaintiffs fail to demonstrate that the

            Florida Liquidation constitutes a Trigger Event. 6

            6
             Notably, if the intention of the parties was for the Involuntary Proceeding Trigger to
            mirror similar language found in the Credit Agreement (see NYSCEF 83, Credit
            Agreement at 7, 2 [defining "Event of Default" and "Bankruptcy Event"]), it would read:

                              "any Loan Party or any Subsidiary thereof commences a
                              voluntary case or other proceeding involving its liquidation ..
                              . or seeking the appointment of a ... receiver ... , [or
                              consents to] any such relief or to the appointment of or
                              taking possession by any such official in any involuntary
                              case or other proceeding commenced against it (an
                              'Involuntary Proceeding')."

            Under such a provision, the Florida Liquidation would be a Trigger Event. However,
            plaintiffs do not make this argument. In fact, they insist that the Validity Guaranty
            should not be read in this way. (See NYSCEF 183, oral arguments tr at 37:8 - 38: 13).
            Indeed, as will be discussed shortly, they argue that the Involuntary Proceeding Trigger
            means something different.
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                   Second, plaintiffs fail to demonstrate that the Texas Liquidation satisfies the

            Involuntary Proceeding Trigger. Plaintiffs' contention, that the only reasonable

            interpretation is that the parties intended an involuntary bankruptcy to be a Trigger

            Event, is untenable. While the language of this clause is unclear, due to one or more

            missing words, when the Voluntary Bankruptcy Provision is read as a whole, it does not

            entirely fail to disclose the parties' intent. Rather, when the provision is read as a while,

            it could not have been the intention of the parties that an involuntary proceeding, without

            more, be a Trigger Event. A contrary interpretation would render the last clause of the

            Voluntary Bankruptcy Provision-defining a Trigger Event to include "the Guarantor or

            any Company Party ... intentionally collud[ing] with any third party in to effect the filing

            or petition of an Involuntary Proceeding against a Loan Party or Subsidiary thereof"-

            superfluous. Such an interpretation must be avoided. (See Western & S. Life Ins. Co.,

            209 AD3d at 13; see also Georgia Malone & Co., Inc., 163 AD3d at 187)

                   Further, a review of the Credit Agreement makes clear that the parties

            intentionally omitted an involuntary proceeding as a Trigger Event. The Credit

            Agreement was executed at the same time and addresses the same subject matter as

            the Validity Guaranty. Hence, the two must be read together. (See 1471 Second Corp.,

            162 AD3d at 450 [reading a guaranty and the related lease together].) The Credit

            Agreement uses language nearly identical to that of the Voluntary Bankruptcy Provision

            in defining what constitutes an Event of Default. The two provisions track each other,

            nearly word for word, until the final clause, where they diverge drastically. The Credit

            Agreement treats the commencement of an involuntary proceeding against the borrower

            or the appointment of a receiver over its property as an Event of Default, whereas the

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            Validity Guaranty requires the Guarantor to collude in the commencement of an

            involuntary proceeding against a Loan Party or its Subsidiary for it to constitute a

            Trigger Event. (Compare NYSCEF 83, Credit Agreement at 7, 2 [defining "Event of

            Default" and "Bankruptcy Event"], with NYSCEF 84, Validity Guaranty§ 1 [b] [viii].)

            "Even where there is ambiguity, if parties to a contract omit terms-particularly, terms

            that are readily found in other, similar contracts-the inescapable conclusion is that the

            parties intended the omission." (Quadrant Structured Prods. Co., Ltd. v Vertin, 23 NY3d

            549, 560 [2014].) Here, the inescapable conclusion is that the parties intended for an

            involuntary proceeding to be an Event of Default under the Credit Agreement, but not a

            Trigger Event under the Validity Guaranty. Whatever else the parties intended by the

            Involuntary Proceeding Trigger, they did not intend for an involuntary proceeding,

            without more, to constitute a Trigger Event. To the extent that plaintiffs point to

            deposition testimony in support of their interpretation. (See NYSCEF 170, Plaintiffs'

            MOL in Support, at 11-12, 20), because the language of the agreement is clear on this

            point, the court may not consider testimony that reveals a contrary intention. (See

            Riverside S. Planning Corp. v CRP/Exte/1 Riverside, L.P., 60 AD3d 61, 66 [1st Dept

            2008], ["(p)arol evidence cannot be used to create an ambiguity where the words of the

            parties' agreement are otherwise clear and unambiguous"], affd 13 NY3d 398 [2009].)

                   For the foregoing reasons, the Texas Liquidation, which plaintiffs concede was

            "an involuntary bankruptcy filing." (See NYSCEF 170, Plaintiffs' MOL in Supoort at 19),

            is not a Trigger Event under the Validity Guaranty.

                   Finally, plaintiffs fail to demonstrate, prima facie, that Windhaven's debt to

            Greenlight satisfies "General Failure to Pay Debts Trigger." "'[G]enerally' imports

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            something that involves or is applicable to the 'whole' and with regard to the overall

            picture, as opposed to specific instances." (Matter of B. D. Intl. Discount Corp., 15 BR

            755,762 [BankrSD NY 1981], affd24 BR876 [SD NY 1982], affd701 F2d 1071 [2d Cir

            1983] [discussing cases interpreting 11 USC 303 (h) (1)], cert denied 464 US 830); see

            also Merriam-Webster.com Dictionary, generally [https://www. merriam-

            webster.com/dictionary/generally] [defining "generally" as "in a general manner" and "in

            disregard of specific instances and with regard to an overall picture"].) As such, when

            bankruptcy courts determine whether a "debtor is generally not paying such debtor's

            debts as such debts become due" (11 USC 303 [h] [1]), they consider: "(1) the number

            of unpaid claims; (2) the amount of such claims; (3) the materiality of the non-payments;

            and (4) the debtor's overall conduct of its financial affairs." (Matter of A & J Quality

            Diamonds, Inc., 377 BR 460, 463 [Bankr SD NY 2007] [internal quotation marks and

            citations omitted]; see also Matter of Manolo Blahnik USA, Ltd., 619 BR 81, 99 [Bankr

            SD NY 2020].) Additionally, "[t]he failure to pay just one significant creditor can support

            a finding that the debtor is generally not paying its debts if the creditor represents a

            significant amount of the total debt." (Matter of A & J Quality Diamonds, Inc., 377 BR at

            464 [internal citations omitted]; see also Matter of Manolo Blahnik USA, Ltd., 619 BR at

            99.) Here, plaintiffs point to Greenlight's demand for payment, without any evidence of

            Windhaven's overall financial condition or what portion of Windhaven's overall debt was

            represented by the commissions owed to Greenlight. Therefore, plaintiffs fail to

            demonstrate, prima facie, that there has been a general failure to pay debts as they

            come due. ( See Matter of A & J Quality Diamonds, Inc., 377 BR at 464 [finding that the

            petitioner failed to demonstrate that the debtor was generally not paying its debts as

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            they became due in the "the absence of proof about the number and amount of other

            creditors' claims, and the Debtor's overall conduct of its financial affairs"].)

                   Plaintiffs' argument, that bankruptcy cases interpreting the Bankruptcy Code are

            unrelated to the Voluntary Bankruptcy Provision and do not provide guidance in

            interpreting the contractual language at issue in this case. ( See NYSCEF 168,

            Plaintiffs' Reply MOL, at 11; NYSCEF 183, oral arguments tr at 10:5-17), is

            disingenuous. "Besides the common meaning of the language employed, the

            expectations and purposes of the parties in view of the factual context in which the

            agreement was made must be considered in interpreting a contract term, with due

            regard to the parties' sophistication." (Madison Ave. Leasehold, LLC, 30 AD3d at 8

            [internal citations omitted].) Furthermore, "[w]hile words are generally assigned their

            ordinary meaning, where a word has attained the status of a term of art and is used in a

            technical context ... , the technical meaning is preferred over the common or ordinary

            meaning" (id. [internal citation omitted].) Here, the Validity Agreement was drafted by

            attorneys, the provision in question was expressly concerned with relief available to

            Windhaven under "any Debtor Relief Law" (NYSCEF 84, Validity Agreement§ 1 [b]

            [viii]), and the parties chose to employ a phrase common to such laws. ( See e.g. 11

            USC 303 [h] [1 ]; DCL § 271 [b] [providing that "(a) debtor that is generally not paying the

            debtor's debts as they become due ... is presumed to be insolvent"].) Bearing in mind

            the sophistication of the parties and the context, consideration of bankruptcy cases

            interpreting similar language in the Bankruptcy Code is appropriate.

                   For the foregoing reasons, to the extent that plaintiffs seek summary judgment on

            their first cause of action for breach of contract, the motion is denied.

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                      To the extent that plaintiffs seek summary judgment on their second cause of

            action for declaratory judgment, they have made no showing of entitlement to such

            relief. Their memorandum of law in support of the motion briefly mentions that Whited

            agreed to provide "on-demand payment of any out-of-pocket costs, including

            reasonable attorneys' fees and expenses, arising from the enforcement of rights under

            the Validity Guaranty." (NYSCEF 170, Plaintiffs' MOL in Support at 3.) This occurs in

            the memorandum's facts section and no further reference is made to this claim, not

            even in the concluding request for relief, which is limited to the breach of contract claim.

            (see id. at 22.) Therefore, plaintiffs have failed to demonstrate, prima facie, their

            entitlement to this relief and denial is appropriate. (See Alvarez, 68 NY2d at 324.)

                      Accordingly, it is

                      ORDERED that the motion by plaintiffs, Atalaya Special Opportunities Fund VII

            LP and Midtown Madison Management LLC, for summary judgment is denied; and it is

            further

                      ORDERED that parties may file motions in limine by February 29, 2024.

            Otherwise waived. If the parties fail to file motions in limine, they shall appear for a trial

            scheduling conference on March 4, 2024 at 4 pm.

                      12/31/2023
                        DATE                                                    ANDREA MASLEY, J.S.C.

                                      ~
             CHECK ONE:                    CASE DISPOSED                 NON-FINAL DISPOSITION

                                           GRANTED         0    DENIED   GRANTED IN PART          □ OTHER
             APPLICATION:                  SETTLE ORDER                  SUBMIT ORDER

             CHECK IF APPROPRIATE:         INCLUDES TRANSFER/REASSIGN    FIDUCIARY APPOINTMENT    □ REFERENCE

             652767/2020 AT ALAYA SPECIAL vs. WHITED, JIMMY ERIC                                  Page 20 of 20
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