Court Opinion

ID: 5721532
Source: CourtListenerOpinion
Date Created: 2022-01-12 16:10:16.019043+00
Date Added: 2024-06-11T08:40:42.833223
License: Public Domain

Order, Supreme Court, New York County (Ira Gammerman, J.H.O.), entered June 14, 2005, which, in an action for breach of contract, granted plaintiffs motion for partial summary judgment declaring that certain claims asserted against plaintiff constitute taxes as defined in the parties’ agreement and that any guarantee required to contest these claims is defendants’ responsibility, affirmed, without costs.
In August 1994, plaintiff Innophos paid more than $530 million to acquire Rhodia Fosfatados and other specialty phosphate businesses from defendants. The purchase and sale agreement requires that defendants indemnify plaintiff for all “Taxes” assessed for periods prior to the closing date. Three months after the deal closed, the Comisión Nacional del Agua (CNA) (National Water Commission), an agency of the Mexican government, assessed Innophos Fosfatados (the successor in interest to Rhodia Fosfatados) in excess of $130 million dollars for outstanding water extraction fees between 1998 and 2002. According to plaintiff, defendants had received notice of an audit of their water usage and had been aware of these outstanding water usage fees well in advance—indeed months—prior to closing, but defendants never advised plaintiff.
Upon receiving formal notification of the outstanding fees, plaintiff requested that defendants indemnify it pursuant to the agreement. Defendants did not, and, consequently plaintiff commenced this action. Plaintiff moved for partial summary judgment, and the motion court found that the Mexican government’s assessment is a tax as defined by the agreement, and, to the extent a guarantee was required to further contest the CNA assessment, defendants were obligated to provide it.
*369We agree. The agreement defines “Tax or Taxes” as follows: “all . . . United States federal, state or local or non-United States taxes, assessments, charges, duties, levies or other similar governmental charges of any nature, including all income, gross receipts, employment, franchise, profits, capital gains, capital stock, transfer, sales, use, occupation, property, excise, severance, windfall profits, stamp, stamp duty reserve, license, payroll, withholding, ad valorem, value added, alternative minimum, environmental, customs, social security (or similar), unemployment, sick pay, disability, registration and other taxes, assessments, charges, duties, fees, levies or other similar governmental charges of any kind whatsoever, whether disputed or not, together with all estimated taxes, deficiency assessments, additions to tax, penalties and interest.”
The relevant issue here is not whether the CNA assessment is a tax under New York or Mexican law, but rather whether the CNA assessment is considered a tax as that term is defined in the parties’ agreement. Here, the parties were involved in a sophisticated, multimillion dollar business transaction governed by a detailed 76-page purchase agreement. They chose to define the term “Tax or Taxes” with broad, sweeping language. The language, “or other similar charges of any kind whatsoever,” is all-encompassing, not limiting, and, indeed, broad enough to cover the government assessment at issue.
When a written agreement is clear and unambiguous on its face, “extrinsic and parol evidence is not admissible to create an ambiguity” (Intercontinental Planning v Daystrom, Inc., 24 NY2d 372, 379 [1969]; see also W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 163 [1990]). Indeed, “mere assertion by a party that contract language means something other than what is clear when read in conjunction with the whole contract is not enough to create an ambiguity sufficient to raise a triable issue of fact” (New York City Off-Track Betting Corp. v Safe Factory Outlet, Inc., 28 AD3d 175, 177-178 [2006]). Had the parties wished to limit this expansive verbiage by requiring that their contractual definitions would only be enforceable if consistent with New York or Mexican law, they could have easily provided for such specific, enumerated exceptions to their agreement’s chosen sweeping words. Indeed, it is highly unlikely, if not utterly unthinkable, that plaintiff had intended to incur a prior debt of this magnitude—i.e., more than $130 million that defendants knew about and failed to divulge, and predated the closing by two to six years—in the absence of clear language that it agreed to assume such an enormous obligation, postclosing.
The dissent maintains that the contractual definition of *370“Governmental Order” can be read to include the liability at issue. We disagree and note that the word “assessment” and the phrase “deficiency assessment” are, on the one hand, conspicuously absent from that definition, but, on the other hand, included in the agreement’s definition of “Tax or Taxes” and, further, denominated as such in the official notification sent preclosing to defendants. Furthermore, the sweeping language in the agreement’s definitions of “Tax or Taxes” specifically mentions “deficiency assessments” almost immediately following “other similar governmental charges of any kind whatsoever,” language that also follows equally sweeping language, i.e., “or other similar governmental charges of any nature, including.” It is virtually impossible for us to imagine how two sophisticated parties could have made the language any more sweeping than it is.
While we agree that a contract should be interpreted to give meaning to all of its terms, the dissent’s strained interpretation would eviscerate language that is obviously intended to cover the charges at issue here. Moreover, as for ejusdem generis, the above-mentioned contractual definition of “Tax or Taxes” is not at all at odds with that principle of statutory construction. Finally, the dissent’s reference to the principle noscitur a sociis is unpersuasive mainly because the specific word “assessment” and the specific phrase “deficiency assessments” either precede and/or follow “or other similar governmental charges of any nature” and “or other similar governmental charges of any kind whatsoever,” and thus are clearly linguistically connected to, i.e., in the company of, these general phrases.
Defendants maintain that Mexican law prohibits conditioning an appeal on the posting of a guarantee, and, in any event, they have no contractual obligation to provide a guarantee. However, the motion court correctly declared that if collateral is required, defendants must provide it. Indeed, pursuant to the parties’ agreement, if defendants assume and control the defense of a third-party claim, it is at their expense (see agreement § 7.04 [b]; § 9.02 [b]). Concur—Marlow, J.E, Sullivan, Buckley and Catterson, JJ.