Court Opinion

ID: 9555273
Source: CourtListenerOpinion
Date Created: 2023-08-11 15:00:26.725103+00
Date Added: 2024-06-11T15:42:08.530089
License: Public Domain

21-1916-cv (L)
Tarpon Bay Partners LLC v. Zerez Holdings Corporation

                                 In the
          United States Court of Appeals
                     For the Second Circuit

                         August Term, 2022
                      Nos. 21-1916-cv, 21-2010-cv

                     TARPON BAY PARTNERS LLC,
 Plaintiff–Consolidated Defendant–Counterclaim Defendant–Appellant–
                            Cross-Appellee,

                       STEPHEN M. HICKS,
SOUTHRIDGE ADVISORS II, LLC, a Delaware limited liability company,
   Consolidated Defendants–Counterclaim Defendants–Appellants–
                         Cross-Appellees,

                                    v.

  ZEREZ HOLDINGS CORPORATION, an Oklahoma corporation, FKA
              DEFINITIVE REST MATTRESS COMPANY,
   Defendant–Consolidated Plaintiff–Counterclaim Plaintiff–Appellee–
                          Cross-Appellant,

                             DOES, 1–25,
     Consolidated Defendants–Counterclaim Defendants–Appellees. *

             Appeal from the United States District Court
                   for the District of Connecticut

                        ARGUED: MARCH 3, 2023
                       DECIDED: AUGUST 11, 2023

      *  The Clerk of Court is respectfully directed to amend the caption
accordingly.
Before: NARDINI, MERRIAM, Circuit Judges, and KATZMANN, 1 Judge.

       Plaintiff-Appellant Tarpon Bay Partners LLC (“Tarpon Bay”)
and Defendant-Appellee Zerez Holdings Corporation (“Zerez”)
attempted to reach an investment deal in which Tarpon Bay would
purchase Zerez’s debt obligations and, in return, receive stock in
Zerez pursuant to section 3(a)(10) of the Securities Act of 1933. As
part of this attempt, Zerez issued a promissory note that allowed
Tarpon Bay to convert $25,000—the signing fee for the attempted
transaction—into Zerez’s common stock at a 50 percent discount in
stock price. After the deal broke down, Tarpon Bay demanded more
than 278 million shares worth nearly $2.23 million on the date of
conversion. Zerez refused to issue the shares.
        Tarpon Bay sued Zerez to enforce the note, and Zerez
countersued Tarpon Bay, Southridge Advisors II, and Stephen Hicks
(together, “Counterclaim Defendants”). On Tarpon Bay’s motion for
summary judgment, the United States District Court for the District
of Connecticut (Underhill, J.) held that although genuine issues of
material fact remained as to whether the note lacked consideration,
the note was unconscionable as a matter of law and therefore
unenforceable. On Zerez’s later motion for summary judgment on its
counterclaims, the district court held in relevant part that Zerez was
not entitled to relief under the Connecticut Unfair Trade Practices Act
(“CUTPA”). Tarpon Bay appeals and Zerez cross-appeals from the
final judgment.
       We first vacate the district court’s holding that the note was
unconscionable as a matter of law on the record before it at summary
judgment. We next conclude the district court correctly determined
that genuine issues of material fact remained as to whether

      1  Judge Gary S. Katzmann, of the United States Court of International
Trade, sitting by designation.

                                     2
consideration supported the note. Finally, we affirm the district
court’s grant of summary judgment for the Counterclaim Defendants
on CUTPA on the alternative ground that CUTPA does not apply to
the case at bar. We VACATE in part, AFFIRM in part, and REMAND
for further proceedings consistent with this opinion.

                        GEORGE O. RICHARDSON, III, Sullivan &
                        Worcester LLP, New York, NY, for Plaintiff–
                        Appellant and Counterclaim Defendants–
                        Appellants.

                        JONATHAN M. SHAPIRO, (Evan K.
                        Buchberger, on the brief), Aeton Law
                        Partners, Middletown, CT, for Defendant–
                        Cross-Appellant.

GARY S. KATZMANN, Judge:

      Before us are the appeal of Plaintiff-Appellant Tarpon Bay

Partners LLC (“Tarpon Bay”) and cross-appeal of Defendant-

Appellee Zerez Holdings Corporation (“Zerez”) from the Judgment

of the United States District Court for the District of Connecticut.

Tarpon Bay and Zerez are commercial parties who regularly transact

in the capital markets and attempted to reach an arm’s-length

investment deal. After the deal broke down, Tarpon Bay sued to

                                 3
enforce an allegedly valid promissory note issued by Zerez (the

“Signing Fee Note”).    Among other defenses and counterclaims,

Zerez raised the defense of unconscionability and counterclaimed

that Tarpon Bay, Southridge Advisors II, LLC (“Southridge”), and

Stephen M. Hicks (“Hicks”) (together, “Counterclaim Defendants”)

had violated the Connecticut Unfair Trade Practices Act (“CUTPA”),

Conn. Gen. Stat. §§ 42-110a to -110q.

      In September 2019, the district court denied summary

judgment for Tarpon Bay on its enforcement claims because genuine

issues of material fact remained as to whether the Signing Fee Note

was supported by consideration. It then held in the same opinion that

the   Signing   Fee   Note   was       unconscionable   and   therefore

unenforceable. Tarpon Bay challenges these two holdings on appeal.

In July 2021, the district court granted summary judgment for Tarpon

Bay on Zerez’s CUTPA counterclaim, which Zerez challenges on

                                   4
cross-appeal.

      We first hold that the record at the summary judgment stage

did not establish that the Signing Fee Note was unconscionable under

Connecticut law. We next hold that the district court correctly denied

summary judgment for Tarpon Bay on its enforcement claims.

Finally, we hold that the district court’s grant of summary judgment

on Zerez’s CUTPA claim was warranted on the alternative grounds

that CUTPA does not apply to the case at bar. Accordingly, we

VACATE in part, AFFIRM in part, and REMAND for further

proceedings consistent with this opinion.

I.    Background

      A.    Factual Background

      Unless otherwise stated, the parties do not dispute the

following facts. Zerez and Tarpon Bay are sophisticated commercial

parties who are routine players in the capital markets. Zerez is a

publicly traded holding company, formed in Oklahoma and operated

out of California, that invests in and manages emerging technology

                                  5
businesses. Joint App’x at 867, 915, 1149. Trading at fractions of a

cent, Zerez’s common stock is a penny stock listed on the over-the-

counter (“OTC”) market under the stock symbol “SCNA.” 2 Id. at 867,

870. Tarpon Bay is a Florida limited liability company managed by

Southridge, an investment advisory firm based in Connecticut and

headed by Hicks. Id. at 867–68, 874.

       In January 2016, Zerez sought new capital to fund its continued

       2   OTC “securities are securities not listed on a national securities
exchange.”            Over-the-Counter        (OTC)      Securities,   Investor.gov,
https://www.investor.gov/introduction-investing/investing-basics/glossary/over-
counter-otc-securities (last visited Aug. 10, 2023). And microcap stocks,
commonly referred to as “penny stocks,” refer to shares in “companies with low
or micro market capitalizations. . . . of less than $250 or $300 million.” Microcap
Stock, Investor.gov, https://www.investor.gov/introduction-investing/investing-
basics/glossary/microcap-stock (last visited Aug. 10, 2023).
        Due to the very low price, and to the lack of disclosure requirements that
are generally applicable to securities listed on national exchanges, penny stocks on
the OTC market are typically highly volatile in price and generally illiquid. See
Joshua T. White, U.S. SEC, Outcomes of Investing in OTC Stocks 8–9 (Dec. 16, 2016),
https://www.sec.gov/files/White_OutcomesOTCinvesting.pdf. Because it can be
difficult to find a buyer, parties holding penny stock often cannot sell shares
quickly without lowering the price.
        As of August 10, 2023, SCNA trades at $0.0007 per share. See SCNA,
OTCMarkets, https://www.otcmarkets.com/stock/SCNA/overview (last visited
Aug. 10, 2023). Zerez changed its name to “Smart Cannabis Corp.” in September
2017. See Joint App’x at 972.

                                         6
operations and growth. Id. at 1150. The company had more than

$500,000 of debt on its books, so it entertained offers from fundraising

brokers to provide or procure new capital in exchange for stock or

other debt. Id. Juan Carlos Murga, Zerez’s then-CEO, was in contact

with individuals from several venture capital and investment funds

but ultimately proceeded with Anish Aswani of Southridge. 3 Id. at

1149–51. The parties dispute how they were initially put in touch. 4

However it happened, Aswani and Murga engaged in discussions

that Tarpon Bay would purchase Zerez’s debt obligations and, in

exchange, receive a commensurate amount of stock in Zerez. Id. at

915–16, 1296. The transaction would reduce Zerez’s carried debt and

make the company more attractive for future lenders or investors. Id.

at 916, 1296. Because Zerez would need to issue equity in exchange

       3   Aswani was an employee who negotiated with Zerez on behalf of
Southridge and Tarpon Bay. Id. at 928.
         4 Tarpon Bay alleges that they connected “through a third party familiar

with both companies that had recommended to Zerez that Tarpon might be able
to assist Zerez in reducing its carried debt.” Id. at 916. Zerez denies the
involvement of a third party and insists that Aswani placed a “cold call” to Murga.
Id. at 1302.

                                        7
for its outstanding debt, the parties were aware that the transaction

would require a court order approving the fairness of the terms

pursuant to section 3(a)(10) of the Securities Act of 1933. 5 Joint App’x

at 915–16, 1296.

       Aswani sent Murga a proposed term sheet outlining the key

aspects of the deal (the “Term Sheet”). Id. at 916, 1296. Under the

Term Sheet, Tarpon Bay would individually engage and execute

agreements with Zerez’s creditors to buy the debt; Tarpon Bay would

seek court approval of the section 3(a)(10) transaction within five days

       5 Section 3(a)(10) of the Securities Act exempts issuers from registration for
securities issued in exchange for outstanding securities or other qualifying value.
Specifically, the provision exempts from registration:

       [A]ny security which is issued in exchange for one or more bona
       fide outstanding securities, claims or property interests, or partly in
       such exchange and partly for cash, where the terms and conditions
       of such issuance and exchange are approved, after a hearing upon
       the fairness of such terms and conditions at which all persons to
       whom it is proposed to issue securities in such exchange shall have
       the right to appear, by any court, or by any official or agency of the
       United States, or by any State or Territorial banking or insurance
       commission or other governmental authority expressly authorized
       by law to grant such approval . . . .

15 U.S.C. § 77c(a)(10).

                                         8
of executing the agreements with Zerez’s creditors; and Zerez would

issue a commensurate amount of stock to Tarpon Bay, subject to

certain limitations not relevant here. Id. at 981–82. The Term Sheet

also specified that Tarpon Bay would receive (1) a $25,000 fee payable

in cash or a promissory note for stock at Tarpon Bay’s election

(“Signing Fee”) and (2) a fee worth $75,000 at minimum upon judicial

approval of the transaction. Id. at 983. But the signature page of the

Term Sheet indicated that the Term Sheet “merely represent[s]

proposed terms for possible liabilities satisfaction. Until definitive

documentation is executed by all parties, there shall not exist any

binding obligation,” other than two provisions relating to

confidentiality and exclusivity. Id. at 984. Murga was personally

involved in the discussions with Aswani, but Zerez alleges that it

played no role in drafting the Term Sheet. Id. at 917, 1297, 1303. Zerez

signed the Term Sheet on January 15, 2016. Id. at 984.

      On January 27, 2016, Zerez executed a convertible promissory

                                   9
note to Tarpon Bay for the Signing Fee (“Signing Fee Note”). Id. at

1005, 1012. The Signing Fee Note was issued pursuant to the Signing

Fee provision in the Term Sheet. Id. at 917–18, 1296–98. Crucially, the

Signing Fee Note was payable on demand and allowed Tarpon Bay

“to convert all . . . of the Outstanding Principal Amount . . . into

Common Stock at a conversion price . . . for each share of Common

Stock at a 50% discount from the lowest closing bid price in the 30

trading days prior to the day that [Tarpon Bay] requests conversion.”

Id. at 1005–06. The Signing Fee Note also obligated Zerez “to reserve

at least Five hundred million (500,000,000) shares of its Common

Stock for issuance to Holder in connection with conversion of this

Note.” Id. at 1011. Aswani told Murga that Zerez was issuing the

Signing Fee Note solely for the services that Southridge and Tarpon

Bay would provide as part of the section 3(a)(10) transaction, and that

Murga would need to execute the Signing Fee Note to proceed

because it was a prerequisite to entering into a definitive agreement.

                                  10
Id. at 918, 1304. Zerez alleges that it played no role in drafting the

Signing Fee Note and that it felt that it had no meaningful choice in

negotiating its terms given its financial condition. Id. at 1304. One

day after Zerez executed the Signing Fee Note, Hicks signed the Term

Sheet on January 28, 2016. Id. at 984. Murga alleges that he was

unaware of Hicks’s involvement prior to that point. Because Hicks

had been the subject of unrelated lawsuits filed by federal and state

securities regulators, Murga further alleges that Zerez would not have

agreed to move forward with Tarpon Bay and Southridge had it

known that Hicks was involved. Id. at 1151–52.

      Between February and April 2016, Tarpon Bay proceeded to

reach out to Zerez’s creditors and ultimately executed agreements,

termed “Claim Purchase Agreements,” with eight creditors to

purchase a total of $512,874.06 of Zerez’s debt. Id. at 428, 919. Zerez

has not disputed that it was aware of this process; two of Zerez’s

largest creditors, whom Tarpon Bay had engaged with Claim

                                  11
Purchase Agreements, were Murga himself and Claudia Lima

(Zerez’s Secretary and Treasurer). Id. at 428, 919, 1000. On June 13,

2016—more than five days after the last Claim Purchase Agreement

was executed, which was the time period expressly required by the

Term Sheet 6 —Tarpon Bay filed an action against Zerez in Florida

state court seeking a fairness hearing to approve the securities

transaction pursuant to section 3(a)(10) of the Securities Act. See

Tarpon Bay Partners, LLC v. Zerez Holdings, No. 2016-CA-001300 (Fla.

Cir. Ct. filed June 13, 2016); see also Joint App’x at 920–21, 1299.

       But the section 3(a)(10) transaction was never approved. Zerez

did not appear at the hearing, and the parties dispute why. 7 Id. at 921,

       6  Moreover, the Claim Purchase Agreements required that Tarpon Bay file
the section 3(a)(10) lawsuit within ten business days of execution. See, e.g., id. at
1016. The latest Claim Purchase Agreement was executed on April 26, 2016. Id. at
1063. While the Claim Purchase Agreements were binding on Tarpon Bay, Zerez
was not a party to those agreements, and the agreements made clear that there
were no third-party beneficiaries. See, e.g., id. at 1020.
        7 Tarpon Bay asserts that Murga confirmed via email that Zerez had

obtained counsel to accept service of the section 3(a)(10) complaint but that Tarpon
Bay never received the contact information of that attorney. Joint App’x at 921.
Zerez counters that it was never told to retain counsel or pay the attorney’s fee in

                                         12
1299. On September 22, 2016, Murga emailed Aswani stating that

Zerez wished to “stop and cancel the [3(a)(10)] filing” and to “pull

back on the filing.” Id. at 1067. The next day, Tarpon Bay was

informed that three creditors were exercising their undisputed rights

to cancel the Claim Purchase Agreements. 8 Id. at 1178–79.                       On

October 10, 2016, Zerez sent a letter to Tarpon Bay on official

letterhead informing Tarpon Bay that Zerez “HEREBY rescinds and

cancels any and all consulting and/or services relationships with

Southridge and/or Tarpon Bay . . . , and further HEREBY rescinds and

cancels the $25,000” Signing Fee Note, citing the lack of “sufficient,

adequate, []or material services” rendered to Zerez.                  Id. at 1069.

Tarpon Bay responded via letter on October 17, 2016, asserting that

Zerez had “no grounds to rescind” the Signing Fee Note and

the Florida proceeding, and that it was never notified once litigation was filed. Id.
at 1305, 1665. Zerez maintains that Murga followed up repeatedly with Tarpon
Bay, and in a call from Murga to Aswani about the transaction’s progress, Aswani
stated that the transaction was imminent. Id. at 1665.
        8 The Claim Purchase Agreements allowed either party to terminate the

agreement if the section 3(a)(10) transaction was not approved within ninety days
of the date of execution. See, e.g., id. at 1017.

                                         13
demanding “immediate payment of all principal and interest due

under the Note.” Id. at 1071–72 (emphasis removed). Zerez also

changed control and management by the end of October 2016 after it

had acquired a new principal subsidiary, Next Generation Farming

Inc. Id. at 945.

       On November 29, 2016, Tarpon Bay sent Zerez a “Notice of

Conversion” that demanded 278,958,900 shares of Zerez stock worth

nearly $2.23 million on the date of conversion. Id. at 1074–76. Tarpon

Bay relied on the Signing Fee Note provision that allowed payment

in stock, rather than in cash; the cash value at the time, with accrued

interest and fees, was $27,895.89. Id. at 1005–06, 1075. Tarpon Bay

took advantage of very low stock pricing in the thirty days before

November 29, 2016—specifically, the stock price of $0.0002 on

October 17, 2016—and demanded conversion at the 50 percent

discounted price per share of $0.0001 pursuant to the Signing Fee

Note’s conversion formula. Id. at 1075. Hicks candidly stated in later

                                  14
deposition testimony that Tarpon Bay timed the conversion to take

advantage of a price dip: “[W]e wanted to get the lowest possible

conversion price, receive the shares and sell them in the market at the

highest possible price. If we waited too long with the stock moving

up, we would lose the low prices.” Id. at 1228. Tarpon Bay’s request

for 278,958,900 shares was approximately 55.6 percent of the

500,000,000 reserve shares that the Signing Fee Note had required

Zerez to set aside for potential conversion. See id. at 1011. Zerez

refused to issue the shares to Tarpon Bay, and this litigation ensued.

      B.     Procedural History

      In January 2017, Zerez sued Counterclaim Defendants in the

U.S. District Court for the Eastern District of California for a

“judgment enforcing its rescission of the Term Sheet and Note for

failure of consideration” and damages for unjust enrichment and

fraud. See Compl. at 7, Zerez Holdings Corp. v. Tarpon Bay Partners LLC,

No. 2:17CV00029(TLN)(DB) (E.D. Cal. filed Jan. 6, 2017); Joint App’x

at 157–65. Tarpon Bay separately sued Zerez in Connecticut Superior

                                  15
Court in March 2017 seeking specific performance of the conversion

pursuant to the Signing Fee Note and Term Sheet. See Compl. at 11–

12, Tarpon Bay Partners LLC v. Zerez Holdings Corp., No. DBD-CV17-

6021890-S (Conn. Super. Ct. filed Mar. 3, 2017); Joint App’x at 38–39.

Zerez successfully removed the Connecticut action to the U.S. District

Court for the District of Connecticut in April 2017. Joint App’x at 20.

The California case was transferred to the District of Connecticut in

January 2018, see Zerez Holdings Corp. v. Tarpon Bay Partners LLC, No.

2:17CV00029(TLN)(DB), 2018 WL 402238 (E.D. Cal. Jan. 12, 2018), and

the two cases were consolidated into the case from which this appeal

was taken, Joint App’x at 10.

      In June 2018, Tarpon Bay filed the Amended Complaint seeking

(1) immediate delivery of the 278,958,900 shares, (2) declaratory

judgment in its favor, and (3) damages in the amount of $25.9 million

(together, the “Affirmative Claims”). Id. at 842–43. Zerez filed the

                                  16
Answer in August 2018 and asserted twelve affirmative defenses 9 and

eleven counterclaims against Counterclaim Defendants. 10 Id. at 865–

66, 882–890.      Notable to this appeal, Zerez’s second affirmative

defense alleged that the terms of the Signing Fee Note were

“unconscionable and/or unenforceable.” Id. at 865.

       Tarpon Bay moved for summary judgment in January 2019 on

the Affirmative Claims and Zerez’s twelve affirmative defenses, and

Counterclaim Defendants moved for summary judgment on all

eleven of Zerez’s counterclaims. Id. at 911. Zerez did not cross-move

       9  Zerez asserted the following affirmative defenses: (1) failure to state a
claim; (2) unconscionability; (3) lack of consideration; (4) unclean hands; (5)
estoppel; (6) failure to satisfy the conditions precedent of the Signing Fee Note; (7)
waiver; (8) laches; (9) rescission of the contract; (10) unjust enrichment; (11)
voidness for misrepresentations made by Plaintiff; and (12) bad faith. Id. at 865–
66.
        10 Zerez alleged the following counterclaims: (1) Breach of implied contract,

against Tarpon Bay; (2) Declaratory relief, against Tarpon Bay; (3) Breach of
fiduciary duty, against Southridge; (4) Usury, against Tarpon Bay; (5) Rescission
for failure of consideration, against Tarpon Bay; (6) Fraudulent inducement,
against Counterclaim Defendants; (7) Mistake, against Counterclaim Defendants;
(8) Aiding and abetting, against Counterclaim Defendants; (9) Civil conspiracy,
against Counterclaim Defendants; (10) Violation of the California Unfair
Competition Law, Cal. Bus. & Prof. Code §§ 17200–17210, against Counterclaim
Defendants; and (11) Violation of CUTPA, Conn. Gen. Stat. §§ 42-110a to -110q,
against Counterclaim Defendants. Joint App’x at 882–90.

                                         17
for summary judgment and argued only that Tarpon Bay’s motion for

summary judgment should be denied; regarding the Affirmative

Claims, Zerez argued that its affirmative defenses precluded

summary judgment in favor of Tarpon Bay.            Id. at 1120.   On

unconscionability, Zerez submitted that, “[a]t a minimum, issues of

fact remain as to whether the Note was unconscionable including a

determination of whether the circumstances give rise to terms that are

so one-sided as to be unconscionable.” Id. at 1123. The motions for

summary judgment were resolved in two decisions: one in September

2019 on the Affirmative Claims and unconscionability, Tarpon Bay

Partners LLC v. Zerez Holdings Corp. (Tarpon Bay I), No.

3:17CV00579(SRU), 2019 WL 4646061 (D. Conn. Sept. 24, 2019), and

another in July 2021 on all eleven of Zerez’s counterclaims, Tarpon Bay

Partners LLC v. Zerez Holdings Corp. (Tarpon Bay II), 547 F. Supp. 3d

195 (D. Conn. 2021).

      In the first summary judgment decision, dated September 24,

                                  18
2019, the district court denied summary judgment for Tarpon Bay on

the Affirmative Claims. First, there remained “a question of material

fact with respect to whether the” Signing Fee Note “was supported

by adequate consideration.” Tarpon Bay I, 2019 WL 4646061, at *7.

Second, the Signing Fee Note was “unconscionable and, therefore,

unenforceable.” Id. at *8. The district court held that the Signing Fee

Note was procedurally unconscionable because “[t]he undisputed

facts of the case show that Tarpon Bay very clearly exploited its

superior bargaining power over Zerez, which was on the verge of

financial collapse, in order to control the terms of the agreement, and

resultant partnership, and deprive Zerez of any meaningful choice in

the agreement.” Id. at *10. It also concluded that the Signing Fee Note

was substantively unconscionable because the “terms . . . are

extremely one-sided in Tarpon Bay’s favor” and it would be entitled

                                  19
to $25 million 11 “for little to nothing in return.” Tarpon Bay I, 2019 WL

4646061, at *10. But despite holding that the Signing Fee Note was

unenforceable, the district court denied Tarpon Bay’s motion for

summary judgment without expressly indicating that the Affirmative

Claims were dismissed as a matter of law or entering partial judgment

for any party.        The district court also denied without prejudice

Counterclaim Defendants’ summary judgment motion on Zerez’s

counterclaims because Zerez had indicated that it would likely

abandon those counterclaims if the Signing Fee Note were deemed

unconscionable. Id. at *11.

        Shortly after the decision, Tarpon Bay moved to certify the

        11The September 2019 decision initially stated that Tarpon Bay would be
“entitled to $25 million for little to nothing in return. . . . It cannot be that Tarpon
Bay receives [a] $25 million windfall with no promise in return or, at most, a
promise to attempt to retire Zerez’s debt.” Tarpon Bay I, 2019 WL 4646061, at *10.
But the July 2021 decision acknowledged that the $25 million sum represents the
damages that Tarpon Bay sought, not the value of the stock requested under the
Signing Fee Note. The latter was valued at $2.23 million at the time of conversion.
While it is unclear how Tarpon Bay calculated the $25 million sum for damages,
we agree with the district court’s July 2021 decision that the appropriate number
to consider is $2.23 million, not $25 million. Tarpon Bay II, 547 F. Supp. 3d at 209
n.6.

                                          20
September 2019 order for interlocutory appeal to this court pursuant

to 28 U.S.C. § 1292(b). 12 Joint App’x at 13. The district court denied

the motion to certify in October 2019, concluding that its ruling did

“not involve a controlling question of law” but rather “the application

of undisputed facts in this case to the well-settled Connecticut law of

unconscionability.” Tarpon Bay Partners LLC v. Zerez Holdings Corp.,

No. 3:17CV00579(SRU), 2019 WL 10984250, at *2 (D. Conn. Oct. 29,

2019). Zerez decided to pursue its counterclaims notwithstanding the

September 2019 decision, and Counterclaim Defendants renewed

their motion for summary judgment on Zerez’s counterclaims. Joint

App’x at 1438. Zerez also moved for partial summary judgment on

       12   Section 1292(b) states in relevant part:

       When a district judge, in making in a civil action an order not
       otherwise appealable under this section, shall be of the opinion that
       such order involves a controlling question of law as to which there
       is substantial ground for difference of opinion and that an
       immediate appeal from the order may materially advance the
       ultimate termination of the litigation, he shall so state in writing in
       such order.

28 U.S.C. § 1292(b).

                                           21
two of its eleven counterclaims, both of which it pursues on appeal:

Counterclaim Two, seeking declaratory judgment as to Zerez’s

obligations under the Signing Fee Note, and Counterclaim Eleven,

alleging a violation of CUTPA. Id. at 1806–07.

      In the second summary judgment decision, dated July 7, 2021,

the district court granted in part and denied in part Counterclaim

Defendants’ and Zerez’s motions for summary judgment. Tarpon Bay

II, 547 F. Supp. 3d at 227. Notably, the court granted summary

judgment for Zerez on Counterclaim Two and concluded that

“[b]ecause the Signing Fee Note is unconscionable and unenforceable,

Zerez has no rights or obligations under the Signing Fee Note.” Id. at

217. The court also granted summary judgment for Counterclaim

Defendants on the CUTPA claim for two reasons: the deceptive

conduct alleged was duplicative of the unconscionability claim, and

Zerez had not established that it suffered an ascertainable loss under

the statute. Id. at 223–24. As to Zerez’s other counterclaims, judgment

                                  22
was either entered for Counterclaim Defendants, or the counterclaims

were dismissed as moot. Id. at 210, 227. The district court entered

judgment on the eleven counterclaims and closed the case, but it did

not enter judgment on the Affirmative Claims. Judgment at 1–2,

Tarpon     Bay    Partners    LLC     v.   Zerez     Holdings    Corp.,   No.

3:17CV00579(SRU) (D. Conn. July 8, 2021).

      The relevant dispositions from the district court’s September

2019 and July 2021 opinions are summarized in the following table:

                         AFFIRMATIVE CLAIMS
                          Decided in September 2019

      Claim Asserted by                       Disposition of Tarpon Bay’s
No.                     Defendant
         Tarpon Bay                               Mot. for Summ. J.
            Delivery of
 1.                              Zerez                  Denied
         278,958,900 shares
 2.      Declaratory relief      Zerez                  Denied
 3.   Award of damages           Zerez                  Denied
                     COUNTERCLAIMS ON APPEAL
                              Decided in July 2021

                                        Disposition of          Disposition
          Counterclaim                   Countercl.              of Zerez’s
No.                           Defendant
         Asserted by Zerez              Defs.’ Mot. for         Partial Mot.
                                          Summ. J.              for Summ. J.

                                      23
                                Tarpon
  2.      Declaratory relief                 Denied           Granted
                                 Bay
            Violation of       Countercl.
 11.                                         Granted          Denied
              CUTPA              Defs.

         Tarpon Bay timely appealed from the Judgment, and Zerez

timely cross-appealed.         Joint App’x at 1970, 2006.     The parties

participated in the Second Circuit’s mediation program, but the case

was ultimately reinstated on March 24, 2022.

II.      Jurisdiction and Standard Of Review

         Before turning to the merits of the dispute, we first address an

issue that affects our jurisdiction. We have jurisdiction over “appeals

from all final decisions of the district courts of the United States.” 28

U.S.C. § 1291. “Finality is determined on the basis of pragmatic, not

needlessly rigid pro forma, analysis. . . . What essentially is required is

some clear and unequivocal manifestation by the trial court of its

belief that the decision made, so far as it is concerned, is the end of the

case.”     Fiataruolo v. United States, 8 F.3d 930, 937 (2d Cir. 1993).

Although the parties do not challenge jurisdiction in this case, see

                                      24
Appellants’ Br. at 1; Cross-Appellant’s Br. at 2, “we are obliged to

raise the issue of our jurisdiction nostra sponte when it is

questionable.” Massaro v. Palladino, 19 F.4th 197, 208 (2d Cir. 2021)

(internal quotation marks and citation omitted).

      The district court denied summary judgment for Tarpon Bay in

its September 2019 order “with respect to [Tarpon Bay’s] three claims

against Zerez because the purported agreement is unconscionable as

a matter of law,” Tarpon Bay I, 2019 WL 4646061, at *12, but did not

enter judgment on those three claims—the Affirmative Claims—in

favor of any party.   See Judgment at 1–2.      Denials of summary

judgment are “by their terms interlocutory” and ordinarily not

reviewable absent a final judgment disposing of the claims. Ortiz v.

Jordan, 562 U.S. 180, 188 (2011) (internal quotation marks and citation

omitted). A denial of summary judgment for one party on the claims

it has raised, without an accompanying grant of summary judgment

for the opposing party on the same claims, would ordinarily mean

                                  25
that the status quo is preserved and the claims proceed to trial. But

we have clear indication here that the district court meant otherwise.

The subsequent July 2021 order—which entered summary judgment

only on Zerez’s counterclaims, not Tarpon Bay’s Affirmative

Claims—stated that “[a]s a result of [the court’s] rulings, no claims

remain[ed] live in this action.” 13 Tarpon Bay II, 547 F. Supp. 3d at 211.

       We therefore interpret the district court’s September 2019 order

denying summary judgment for Tarpon Bay to also include a grant of

summary judgment for Zerez on the Affirmative Claims. Summary

judgment is appropriate “if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment

       13  Moreover, in the October 2019 decision denying Tarpon Bay’s motion for
certification to the Second Circuit, the district court suggested that the
unconscionability ruling was dispositive of all three of Plaintiff’s breach of contract
claims. See Tarpon Bay, 2019 WL 10984250, at *2 & n.1 (noting also that the
September 2019 “Ruling is not dispositive of the case as a whole” because “Zerez’s
eleven counterclaims [were] still pending”). But as mentioned earlier, the district
court nonetheless refrained from characterizing its September 2019 decision as a
ruling on “a controlling question of law” but rather viewed it as an “application
of undisputed facts . . . to the well-settled Connecticut law of unconscionability.”
Id. at *2.

                                          26
as a matter of law.” Fed. R. Civ. P. 56(a). “A material fact is one that

would ‘affect the outcome of the suit under the governing law,’ and a

dispute about a genuine issue of material fact occurs ‘if the evidence

is such that a reasonable [factfinder] could return a verdict for the

nonmoving party.’” Aetna Life Ins. Co. v. Big Y Foods, Inc., 52 F.4th 66,

72 (2d Cir. 2022) (alteration in original) (quoting Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986)). By ultimately holding that the

Signing Fee Note was “unconscionable as a matter of law,” Tarpon Bay

I, 2019 WL 4646061, at *12, the September 2019 decision necessarily

concluded that any genuine issue of fact regarding consideration was

not material. 14 See Anderson, 477 U.S. at 248 (“Factual disputes that

       14 The district court reached two conclusions in the September 2019
opinion: first, that “there is a question of material fact with respect to whether the
Promissory Note was supported by adequate consideration,” and second, that
“the Promissory Note was . . . unconscionable and, therefore, unenforceable.”
Tarpon Bay I, 2019 WL 4646061, at *8 (emphasis added).
       But the second holding would have to render the “question of . . . fact with
respect to whether the Promissory Note was supported by adequate
consideration” not material. Id.          As discussed below, infra pp. 34–35,
unconscionability is a defense to contract enforcement under Connecticut law. So
even if Tarpon Bay had shown that there was no genuine issue of fact that

                                         27
are irrelevant or unnecessary will not be counted.”). Put simply, the

district court reasoned—without formally stating it—that summary

judgment for Zerez on the Affirmative Claims was proper. Later, in

July 2021, the district court entered judgment on Zerez’s

counterclaims, which were the only live claims that remained in the

case. See Judgment at 1–2. After that point, “there was nothing left

for the district court to decide that would have affected the respective

positions of the parties.” Massaro, 19 F.4th at 208–09. The July 2021

Judgment was therefore “final” under 28 U.S.C. § 1291. And because

the September 2019 summary judgment order merges into the July

2021 final judgment on appeal, we have jurisdiction to review both

decisions. See Gold v. N.Y. Life Ins. Co., 730 F.3d 137, 144 (2d Cir. 2013)

(merging earlier summary judgment decisions into the judgment

consideration supported the Signing Fee Note, the district court’s legal
determination that the contract was unconscionable would have still meant that
the contract is unenforceable. Facts relating to consideration should have,
therefore, been deemed not material for summary judgment purposes. See
Anderson, 477 U.S. at 248 (“Only disputes over facts that might affect the outcome
of the suit under the governing law will properly preclude the entry of summary
judgment.”).

                                       28
upon timely appeal).

      Tarpon Bay also asks us to review the district court’s denial of

its motion for summary judgment on the Affirmative Claims. The

denial of a motion for summary judgment is usually not immediately

appealable. See id. at 144 n.4; Spavone v. N.Y. State Dep’t of Corr. Servs.,

719 F.3d 127, 133 (2d Cir. 2013) (applying the collateral order doctrine,

which renders some summary judgment denials immediately

appealable, in a qualified immunity case). But the more precise

jurisdictional question here is not whether the denial is immediately

appealable, but whether the denial becomes reviewable upon appeal

from final judgment.      In cases where appeal is taken from final

judgment, we have the discretion to review a denial of summary

judgment that accompanies a grant of summary judgment on cross-

motion. See Barhold v. Rodriguez, 863 F.2d 233, 237 (2d Cir. 1988) (“[A]s

we have jurisdiction to decide [the appellants’] appeal from the

granting of [the appellees’] motion for summary judgment, we

                                    29
exercise our discretion to decide [the appellants’] claim of error in the

denial of their summary judgment motion as well.”); see also Gary

Friedrich Enters., LLC v. Marvel Characters, Inc., 716 F.3d 302, 320 (2d

Cir. 2013) (“Because we have jurisdiction over the grant of summary

judgment, we have the discretion to review the otherwise

unappealable order denying [the appellants’] cross-motion for

summary judgment.” (citing Barhold, 863 F.2d at 237)); see also Am.

Motorists Ins. Co. v. United Furnace Co., 876 F.2d 293, 302 (2d Cir. 1989)

(citing Barhold, 863 F.2d at 237) (similar). 15

       Because we interpret the September 2019 order denying

       15 Gold does not compel a different result here. In that case, the court
“decline[d] to review the district court’s decision” and explained that “[w]here a
district court has denied summary judgment because resolution of such claim
requires the adjudication of issues of fact that are inseparable from the merits, the
denial of such motion is not immediately appealable notwithstanding the merger
doctrine.” Gold, 730 F.3d at 144 n.4. But the denial of summary judgment in Gold
was not on cross-motion to the grant of summary judgment that the court
reviewed; the motions underlying the grant and denial requested summary
judgment on independent causes of action at different stages in the litigation
before the district court. See id. at 140–41.
        By contrast, Barhold’s line of cases establishes that we may review denials
of summary judgment that accompany grants on cross-motion. And each of those
cases reviewed denials of summary judgment for questions of fact or mixed

                                         30
summary judgment for Tarpon Bay on the Affirmative Claims to also

grant summary judgment for Zerez, the district court’s denial and

corresponding sua sponte grant disposed of the Affirmative Claims

on what effectively were cross-motions for summary judgment. Cf.

Coach Leatherware Co. v. AnnTaylor, Inc., 933 F.2d 162, 167 (2d Cir. 1991)

(“[I]t is most desirable that the court cut through mere outworn

procedural niceties and make the same decision as would have been

made had [the nonmoving party] made a cross-motion for summary

judgment.” (quoting Local 33, Int’l Hod Carriers Bldg. & Common

Laborers’ Union of Am. v. Mason Tenders Dist. Council of Greater N.Y.,

291 F.2d 496, 505 (2d Cir. 1961))). Just as the merger doctrine extends

our review from the final disposition in July 2021 to the earlier grant

of summary judgment for Zerez in September 2019, see Gold, 730 F.3d

at 144, it also extends our appellate jurisdiction to the corresponding

denial of summary judgment for Tarpon Bay, see Marvel Characters,

questions of law and fact. See Marvel, 716 F.3d at 320; Am. Motorists, 876 F.2d at
303; Barhold, 863 F.2d at 237.

                                       31
716 F.3d at 320. For reasons of judicial economy, we exercise our

discretion to review the denial here.

       We review the district court’s summary dispositions de novo.

See id.   For summary judgment to be warranted, the evidence,

construed in the light most favorable to the party against whom it was

entered, must show that there is no genuine issue of material fact, and

the moving party must be entitled to judgment as a matter of law. See

Aetna Life Ins., 52 F.4th at 72; Fed. R. Civ. P. 56(a). The “mere existence

of some alleged factual dispute” is insufficient to reverse a grant of

summary judgment. Anderson, 477 U.S. at 247–48.

III.   Discussion

       The parties present three questions on appeal. First, Tarpon

Bay challenges the district court’s ruling that the Signing Fee Note

was unconscionable. Second, Tarpon Bay argues that the district

court erred in determining that there remained a genuine issue of

material fact as to whether consideration supported the Signing Fee

Note. And third, Zerez challenges on cross-appeal the district court’s

                                    32
grant of summary judgment for Tarpon Bay on Counterclaim Eleven,

which alleged that Counterclaim Defendants violated CUTPA.

       For the reasons discussed below, we first vacate the district

court’s ruling that the Signing Fee Note was unconscionable as a

matter of law, on the record before it at summary judgment. We then

conclude that the district court correctly determined that genuine

issues of material fact remained as to whether consideration

supported the Signing Fee Note. The district court’s dismissal of the

Affirmative Claims is therefore also vacated, and the denial of

summary judgment for Tarpon Bay is affirmed. 16 Finally, we affirm

the district court’s grant of summary judgment on Zerez’s CUTPA

counterclaim on the alternative ground that CUTPA does not apply

       16 The district court also dismissed as moot Counterclaims Five
(Rescission), Six (Fraud), Seven (Mistake), Nine (Civil Conspiracy), and parts of
Counterclaim Two (Declaratory Relief) because the relief sought by those
counterclaims was duplicative of its September 2019 holding that the Signing Fee
Note was unenforceable. Tarpon Bay II, 547 F. Supp. 3d at 216–18, 220. Zerez has
not pursued those claims on appeal.

                                       33
to the case at bar.

       A.     Unconscionability

       The Signing Fee Note makes clear that Connecticut law governs

the dispute. Joint App’x at 1008. Under Connecticut law, the doctrine

of unconscionability is a defense to contract enforcement that is

intended “to prevent oppression and unfair surprise.” 17 Cheshire

Mortg. Serv., Inc. v. Montes, 223 Conn. 80, 87–88 (1992) (internal

quotation marks and citation omitted). “The classic definition of an

unconscionable contract is one which no man in his senses, not under

delusion, would make, on the one hand, and which no fair and honest

man would accept, on the other.” Bender v. Bender, 292 Conn. 696,

731–32 (2009) (internal quotation marks and citation omitted). The

question of whether a contract is unconscionable “is a matter of law

to be decided by the court based on all the facts and circumstances of

       17In reviewing the district court’s unconscionability ruling, we assume
arguendo that there are genuine issues of material fact regarding whether the
Signing Fee Note was part of a validly formed contract between Tarpon Bay and
Zerez. See infra section III.B.

                                     34
the case.” Cheshire, 223 Conn. at 87 (internal quotation marks and

citation omitted).

       Like those of many other jurisdictions, Connecticut courts have

parsed the unconscionability inquiry into procedural and substantive

prongs. See Restatement (Second) of Conts. § 208 (Am. L. Inst. 1981)

(collecting cases by jurisdiction).            A successful unconscionability

defense “‘generally requires a showing that the contract was both

procedurally and substantively unconscionable when made—i.e.,

some showing of an absence of meaningful choice on the part of one

of the parties together with contract terms which are unreasonably

favorable to the other party.’” Bender, 292 Conn. at 732 (quoting Hottle

v. BDO Seidman, LLP, 268 Conn. 694, 719 (2004)). 18 Procedural

       18  The district court cited Bender but nonetheless stated that “only
substantive unconscionability is required.” Tarpon Bay I, 2019 WL 4646061, at *9.
When determining the applicable law as it would be applied by the state courts in
diversity cases, federal courts must consult the forum state’s constitution, statutes,
and highest court. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Chufen Chen v.
Dunkin’ Brands, Inc., 954 F.3d 492, 497 (2d Cir. 2020); Travelers Ins. Co. v. 633 Third
Assocs., 14 F.3d 114, 119 (2d Cir. 1994). We conclude that the district court’s

                                          35
holding ultimately does not follow the Connecticut Supreme Court’s most recent
authority on unconscionability.
         Noting that the quotation in Bender derived from Hottle v. BDO Seidman, a
Connecticut Supreme Court case interpreting New York law, see 268 Conn. at 719–
20 (citing Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 10 (1988)), the district
court relied instead on an earlier case applying Connecticut law. See Smith v.
Mitsubishi Motors Credit of Am., Inc., 247 Conn. 342, 353 (1998) (“Even in the absence
of procedural unconscionability, [the defendant] might avoid liability . . . if he
could establish that the clause was substantively unconscionable.”); Tarpon Bay I,
2019 WL 4646061, at *9. But notwithstanding its New York origins, the Bender rule
is controlling here. Bender interpreted Connecticut contract law, see 292 Conn. at
730–31 (collecting Connecticut cases on unilateral mistake), and applied the Hottle
quotation as part of Connecticut contract law, see id. at 732–34 & n.26 (following its
recitation of the Hottle quotation with an evaluation of both procedural and
substantive unconscionability). What was once a statement of New York law is
now adopted into Connecticut law. The Bender Court’s general requirement that
both unconscionability prongs be established is, therefore, “state law as
announced by the highest court of the State,” and we are compelled to apply it.
Comm’r v. Bosch’s Est., 387 U.S. 456, 465 (1967).
         Smith may still supply an exception to the general rule in Bender. The
Bender court only “generally require[d]” both unconscionability prongs and, in its
statement of the rule on unconscionability, approvingly quoted another portion of
Smith; the court did not appear to view the two cases in tension. See 292 Conn. at
731–32 (emphasis added). The Connecticut Supreme Court has never overruled
or otherwise cast doubt on its unconscionability analysis in Smith. Moreover, the
Hottle case—from which Bender derived its standard—held that under New York
law, a contract may be rendered “unenforceable solely on the ground of
substantive unconscionability.” Hottle, 268 Conn. at 720–21 (citing Gillman, 73
N.Y.2d at 12).
         But acknowledging that Smith may provide an exception to Bender’s
general rule is not to say that only substantive unconscionability is required.
Equating the two elides a question of degree. Proving oppressive terms under
two-pronged unconscionability is already a difficult task, but prevailing on
substantive unconscionability alone would require an even more onerous showing
of oppression. Cf. Hottle, 268 Conn. at 721 (“[P]rocedural and substantive
unconscionability operate on a ‘sliding scale’; the more questionable the

                                          36
unconscionability relates to the “process by which the allegedly

offensive terms found their way into the agreement.” Cheshire, 223

Conn. at 87 n.14 (internal quotation marks and citation omitted). It

applies when there was “an absence of meaningful choice” by one of

the parties. Bender, 292 Conn. at 732 (internal quotation marks

omitted). Substantive unconscionability, by contrast, relates to “the

content of the contract,” Cheshire, 223 Conn. at 87 n.14 (internal

quotation marks and citation omitted), and applies when contract

terms are “unreasonably favorable” to one party, Bender, 292 Conn. at

meaningfulness of choice, the less imbalance in a contract’s terms should be
tolerated and vice versa.” (quoting State v. Wolowitz, 468 N.Y.S.2d 131, 145 (App.
Div. 1983))). To date, no Connecticut appellate court has determined how extreme
the facts may be to justify application of the Smith exception. And recent cases
have all cited the Bender, not Smith, rule on unconscionability. See Hirsch v.
Woermer, 184 Conn. App. 583, 589 (2018); Emeritus Senior Living v. Lepore, 183 Conn.
App. 23, 29 (2018); Bank of Am., N.A., v. Aubut, 167 Conn. App. 347, 379–380 (2016);
R.F. Daddario & Sons, Inc. v. Shelansky, 123 Conn. App. 725, 741 (2010). But see
Velasco v. Comm’r of Corr., 214 Conn. App. 831, 841–42 (questioning but ultimately
declining to clarify the status of Smith after Bender), cert. denied, 345 Conn. 960
(2022); Shoreline Commc’ns, Inc. v. Norwich Taxi, LLC, 70 Conn. App. 60, 70–71 (2002)
(stating that the court “know[s] of no case, and the defendant has cited none, in
which a party may invoke unconscionability without a showing of some kind of
relevant misconduct by the party seeking enforcement of a contract,” but then
evaluating whether substantive unconscionability existed). The Smith exception
ultimately falls far short of swallowing the Bender rule.

                                         37
732 (internal quotation marks omitted). In short, the doctrine of

procedural unconscionability is “intended to prevent unfair

surprise,” and the doctrine of substantive unconscionability is

“intended to prevent oppression.” Smith, 247 Conn. at 349.

       Prevailing on unconscionability is generally difficult, and for

good reason. It asks the court to step in and undo the allocation of

risk in a contract. While courts have the power “to police explicitly

against     the   contracts   or   clauses   which   they   find   to   be

unconscionable,” the principle underpinning unconscionability “is

one of the prevention of oppression and unfair surprise . . . and not of

disturbance of allocation of risks because of superior bargaining

power.” U.C.C. § 2-302 cmt. 1 (Am. L. Inst. & Unif. L. Comm’n 1977)

(citation omitted). 19

       Unconscionability has its origins in Roman law doctrines of

       Connecticut has adopted verbatim section 2-302 of the Uniform
       19

Commercial Code (“UCC”), which reads in relevant part:

                                     38
“just price” and in English courts of equity; it serves as a flexible last

resort when other contract law doctrines are unable to redress the

injustice at issue. See Robert E. Scott & Jody S. Kraus, Contract Law

and Theory 501, 507–08 (2013); U.C.C. § 2-302 cmt. 1. Procedural

unconscionability fills in the gaps left by other doctrines intended to

regulate the bargaining process, such as incapacity, fraud, and duress.

Substantive unconscionability is similar to, but more pliable than, the

invalidation of contract on public policy grounds. But an overly

expansive      unconscionability        doctrine      would      undermine        the

countervailing principles that “courts do not unmake bargains

       If the court as a matter of law finds the contract or any clause of the
       contract to have been unconscionable at the time it was made the
       court may refuse to enforce the contract, or it may enforce the
       remainder of the contract without the unconscionable clause, or it
       may so limit the application of any unconscionable clause as to
       avoid any unconscionable result.

Conn. Gen. Stat. § 42a-2-302(1). Although article 2 of the UCC applies only to
“transactions in goods” and does not strictly apply here, id. § 42a-2-102,
Connecticut courts have looked to the UCC as “a useful guide in examining a claim
of unconscionability.” Texaco, Inc. v. Golart, 206 Conn. 454, 461–62 (1988); see also,
e.g., Cheshire, 223 Conn. at 88–89; Hamm v. Taylor, 180 Conn. 491, 495 (1980).

                                         39
unwisely made,” and that parties have the autonomy to bargain and

allocate risks as they please. Osborne v. Locke Steel Chain Co., 153 Conn.

527, 533 (1966); see also Kent Literary Club of Wesleyan Univ. v. Wesleyan

Univ., 338 Conn. 189, 241 (2021) (“It is axiomatic that courts do not

rewrite contracts for the parties.” (internal quotation marks and

citation omitted)). In short, “‘unconscionability’ cannot be equated

with ‘harshness’ as an abstract matter.”            Arthur Allen Leff,

Unconscionability and the Code—the Emperor’s New Clause, 115 U. Pa. L.

Rev. 485, 540 (1967).

      Moreover, an unconscionability claim is typically reserved for

vulnerable consumers seeking to prevent enforcement of exploitative

terms by relatively more sophisticated businesses. See Emlee Equip.

Leasing Corp. v. Waterbury Transmission, Inc., 31 Conn. App. 455, 465

(1993) (“Although [certain] provisions might be unconscionable in an

ordinary consumer lease, a different conclusion may follow where, as

here, the contract is a commercial finance lease executed by two

                                   40
corporate entities.”); Iamartino v. Avallone, 2 Conn. App. 119, 126

(1984) (“The loan was a commercial, not a consumer, transaction.”);

cf. Cheshire, 223 Conn. at 124–25 (Berdon, J., dissenting in part and

concurring in part) (stating that the majority reviewed the case

“through the lens of commercially savvy parties” instead of “between

a professional mortgage lender and unsophisticated credit consumers

who had a total monthly income below the poverty level”). Indeed,

“[c]ourts do not generally find contracts unconscionable where the

parties are businesspersons.” Stamford Hosp. v. Schwartz, 190 Conn.

App. 63, 76 (2019) (quoting Emlee, 31 Conn. App. at 464); see also 1

James J. White, Robert S. Summers & Robert A. Hillman, Uniform

Commercial Code § 5:3 (6th ed. 2020) (“The modal successful

unconscionability claimant is a consumer of small means who has

purchased a television or the like for a price that well exceeds the price

available at stores where the middle class shop.”). Where commercial

parties engage in arm’s-length negotiations and are sufficiently

                                   41
sophisticated to understand the agreements they execute, raising the

unconscionability defense asks the court to reconstruct economic

outcomes. We decline to do so in this case.

      First, the Signing Fee Note is not procedurally unconscionable.

Both Zerez and Tarpon Bay are sophisticated commercial parties:

Zerez is publicly traded, and both parties routinely invest in other

companies. Murga, Zerez’s then-CEO, was personally involved in the

discussions with Aswani and had the opportunity to review the terms

before signing. While Zerez alleges that Murga played no role in

drafting the Signing Fee Note, there is no indication that Murga ever

asked to edit any of the Signing Fee Note’s provisions. See Joint App’x

at 917, 1297, 1303; see also Smith, 247 Conn. at 351–52 (“We have never

held that principles of unconscionability supersede, in toto, the duty

of a contracting party to read the terms of an agreement or else be

deemed to have notice of the terms.”). Moreover, Zerez had counsel

on retainer at the time of the Signing Fee Note’s execution. In an

                                  42
invoice for services rendered from October 2015 to February 2016—

which overlapped with the execution of the Term Sheet and Signing

Fee Note in January 2016—attorney Mark H. Cheung billed $30,000

to Zerez for legal work on “promissory notes” and “review of

contractual matters.” Joint App’x at 1259. The record at this stage

does not reveal whether Cheung reviewed or otherwise had a role in

negotiating the Term Sheet and Signing Fee Note in January 2016.20

But even if Cheung did not review the contracts for Zerez, Zerez

cannot now claim hardship where it was able to solicit legal advice on

the Signing Fee Note if it felt coerced or did not understand the terms’

implications.     See Cheshire, 223 Conn. at 90–91 (finding that an

attorney’s explanation to the defendants of a loan’s terms supported

the trial court’s finding that the loan was not procedurally

       20  Cheung must have been aware of the section 3(a)(10) transaction by April
2016 because his law office was also a creditor of Zerez whom Tarpon Bay had
engaged with a Claim Purchase Agreement; moreover, Cheung was the person
who, in September 2016, emailed Aswani that he, along with two other creditors,
were cancelling their Claim Purchase Agreements once the deal had broken down.
See id. at 1178, 1245–46, 1248.

                                        43
unconscionable). Zerez’s failure to consult with readily available

counsel, in these circumstances, precludes a finding of procedural

unconscionability.

      Zerez also argues that the Signing Fee Note was procedurally

unconscionable because its business desperately needed to retire its

debt, and the company was “susceptible to coercion” because “it was

presented with only one choice to address its debt.”            Cross-

Appellant’s Br. at 29. Zerez maintains that because Aswani told

Murga that “signing of the Note was a prerequisite to entering in[to]

a definitive agreement,” Murga understood that he “had no

meaningful choice in negotiating its terms given Zerez’s financial

condition.” Id. at 30 (citations to record omitted). But Zerez could

have walked away or engaged other parties if it did not like Aswani’s

terms. Zerez received cold calls from multiple entities yet nonetheless

chose to proceed with Tarpon Bay. Joint App’x at 871. Murga himself

suggested that Zerez had options. He stated in a sworn declaration

                                  44
that “Zerez would not have agreed to move forward with Southridge

or Tarpon” if it knew that Hicks, facing unrelated allegations of

securities fraud, was involved in the transaction. Id. at 1151–52. And

after the transaction with Tarpon Bay had failed, Zerez was able to

merge in a newly acquired subsidiary, which involved the issuance of

two billion new shares and a change in company management. See

id. at 967. Zerez may not have had many options, but it had more

than one.     See Marcus Dairy, Inc. v. Rollin Dairy Corp., No.

3:05CV00589(PCD), 2008 WL 4425954, at *11 (D. Conn. Sept. 24, 2008)

(finding no unconscionability where defendant received pricing

information from several other suppliers before choosing plaintiff).

Nor does Zerez argue that its financial distress—the $500,000 of debt

on its books and resulting need for new capital—was somehow

caused by Tarpon Bay’s actions. See Krishnamurti v. Tortorici, No. FST-

CV19-6042031-S, 2021 WL 2403325, at *7 (Conn. Super. Ct. May 21,

2021) (“Any financial pressure that the defendant was under was not

                                  45
caused in any way by the plaintiff.”). Even when construed in favor

of Zerez, the circumstances surrounding execution of the Signing Fee

Note do not rise to the level of unfair surprise, lack of knowledge of

terms, lack of legal representation, and absence of meaningful choice

that characterizes procedural unconscionability.

        Nor are the terms of the Signing Fee Note substantively

unconscionable. Zerez argues that the Signing Fee Note is oppressive,

even if redemption were limited to $25,000 in cash, because it was

redeemed “for nothing” in return. Cross-Appellant’s Br. at 24. That

argument fails as a matter of law. “The general rule is that, in the

absence of fraud or other unconscionable circumstances, a contract

will not be rendered unenforceable at the behest of one of the

contracting   parties   merely     because   of   an     inadequacy   of

consideration.” Rockstone Cap., LLC v. Caldwell, 206 Conn. App. 801,

815 (2021) (quoting, ultimately, Osborne, 153 Conn. at 533) (reversing

trial   court’s   holding   that    agreement      was     substantively

                                   46
unconscionable     because     defendant      received    “no    direct

consideration”), cert. denied, 339 Conn. 914 (2021) . To hold otherwise

misappropriates the unconscionability doctrine, meant for vulnerable

contracting parties, for what is substantively a challenge to the

adequacy of consideration.

      Zerez further contends that the Signing Fee Note is “even

more” unconscionable “under the Note’s conversion provision” that

resulted in the claim of 278,958,900 shares, worth $2.23 million. Cross-

Appellant’s Br. at 24. In other words, Zerez challenges the method of

payment of the Signing Fee—the conversion provision—rather than

the fact that Zerez had to render payment at all ($25,000 or 278,958,900

shares). This argument, too, fails.

      The Signing Fee Note allowed for two payment methods: (1)

payment of a fixed $25,000 fee, in addition to accrued interest and

other fees, or (2) payment of the same value in stock using a

predetermined cash-to-stock conversion ratio, which was a “50%

                                  47
discount from the lowest closing bid price in the 30 trading days

prior” to the conversion notice. Joint App’x at 1006. Zerez, short on

cash, might have benefitted from paying out a Signing Fee in stock.

But penny stocks “are considered to be particularly high risk and not

suitable to all investors,” SEC v. Bronson, 14 F. Supp. 3d 402, 404 n.1

(S.D.N.Y. 2014); see also supra note 2, so in choosing an alternative

payment method, Zerez agreed to a risky bet. Specifically, Zerez

wagered that its stock price would remain low enough that Tarpon

Bay would prefer stock to cash, yet stable enough that Zerez could

issue the shares quickly before prices appreciated.       By contrast,

Tarpon Bay wagered that the stock price would also remain low

enough to prefer stock to cash, but sufficiently volatile that Tarpon

Bay could opportunistically convert shares after a drastic price dip.

The parties could have agreed to a straightforward payment of cash

but instead executed—assuming consideration arguendo—the

Signing Fee Note, which introduced market risk in determining the

                                  48
payment method.       And a bet on the public markets between

commercial parties, without more, does not constitute a “contract

term[] which [is] unreasonably favorable” to the profiting party.

Bender, 292 Conn. at 732 (quoting Hottle, 268 Conn. at 719).

      Zerez’s reliance on the conversion amount of $2.23 million to

establish substantive unconscionability as a matter of law is also

misplaced. The district court calculated the $2.23 million sum by

multiplying the 278,958,900 shares that Tarpon Bay requested by

$0.008, Zerez’s stock price on November 28, 2016, one day before the

Notice of Conversion. See Tarpon Bay II, 547 F. Supp. 3d at 208; supra

note 11.   But unconscionability is evaluated at the time of the

contract’s formation, not at any time thereafter when the oppression

allegedly took place. See Cheshire, 223 Conn. at 89. At the time of the

contract’s formation, the Signing Fee Note obligated Zerez “to reserve

at least Five hundred million (500,000,000) shares of its Common

Stock for issuance to [Tarpon Bay] in connection with conversion of

                                  49
this Note.” Joint App’x at 1011. The quantity of 278,958,900 shares—

constituting 55.6 percent of the total amount of reserved shares—

could not have been oppressive at the time of execution because Zerez

agreed to a provision that expressly contemplated a conversion of up

to 500,000,000 shares. And on at least ten occasions from December

2014 to January 2016, Zerez had issued common stock pursuant to

convertible promissory notes and compensation packages at

conversion prices ranging from $0.0001—the same as Tarpon Bay’s

requested conversion price—to $0.003. 21 See Appellants’ Br. at 22–23;

Joint App’x at 959. Where the allegedly problematic conversion was

contemplated by another provision in the Signing Fee Note and

executed at a price consistent with prior share issuances, we cannot

conclude that the Signing Fee Note payment method was oppressive

       21 The record is silent as to how these conversion prices were determined,
and it is likewise unclear whether Zerez has in the past agreed to a conversion
formula comparable to the formula in this case.

                                       50
to Zerez.

      This case does not involve vulnerable consumers seeking relief

from unfairly surprising and oppressive terms. Instead, we are asked

to undo an investment deal that unevenly distributed risk among

sophisticated parties.      For a commercial party like Zerez,

unconscionability demands much more. Yes, the Signing Fee Note

may have been executed under confusing circumstances, and yes, it

may have featured terms benefitting one side more than the other.

But that does not compel us to conclude on the record as currently

developed that the Signing Fee Note—if it was a valid contract—was

either unfairly surprising or oppressive. We vacate the district court’s

September 2019 order dismissing Tarpon Bay’s claims on the basis

that the Signing Fee Note is unenforceable. For the same reasons, we

also vacate the district court’s grant of summary judgment on

                                  51
Counterclaim Two. 22

       B.     Consideration

       In the same September 2019 order, the district court denied

Tarpon Bay’s motion for summary judgment on the Affirmative

Claims because “there is a question of material fact with respect to

whether the [Signing Fee Note] was supported by adequate

consideration.” Tarpon Bay I, 2019 WL 4646061, at *7. We affirm that

ruling. The factual issues regarding consideration may reasonably be

resolved in favor of either party, and consideration is material to

whether Tarpon Bay may prevail on its Affirmative Claims. The

Affirmative Claims are accordingly remanded for trial.

       “Under the law of contract, a promise is generally not

       22 Counterclaim Two sought a declaration of Zerez’s “rights and duties, if
any, under the [Signing Fee] Note and any implied in fact contract and [a]
declaration as to Tarpon’s obligations to provide any performance.” Joint App’x
at 883. In July 2021, the district court granted summary judgment on Counterclaim
Two because it had held in September 2019 that the Signing Fee Note was
unconscionable and unenforceable. Tarpon Bay II, 547 F. Supp. 3d at 217. Because
we here vacate the underlying unconscionability holding, we also vacate the grant
of summary judgment on Counterclaim Two.

                                       52
enforceable unless it is supported by consideration.”         Stewart v.

Cendant Mobility Servs. Corp., 267 Conn. 96, 104 (2003) (internal

quotation marks and citation omitted). Consideration “consists of a

benefit to the party promising, or a loss or detriment to the party to

whom the promise is made.” Viera v. Cohen, 283 Conn. 412, 440–41

(2007) (internal quotation marks and citation omitted). A return

promise for performance is sufficient consideration, so long as the

party making the return promise does not have a preexisting duty to

honor that return promise. See, e.g., Bilbao v. Goodwin, 217 A.3d 977,

988 (Conn. 2019); Christophersen v. Blount, 216 Conn. 509, 511 n.3

(1990); see also Conn. Gen. Stat. § 42a-3-303(a) (“An instrument is

issued or transferred for value if . . . [t]he instrument is issued or

transferred for a promise of performance, to the extent the promise

has been performed . . . .”).      It is longstanding precedent in

Connecticut that “[i]n the case of . . . promissory notes, the expression

for value received[] raises a presumption of . . . legal consideration.”

                                   53
Alcantara v. Pimentel, No. UWY-CV13-6020129-S, 2017 WL 4621386, at

*2 (Conn. Super. Ct. Aug. 21, 2017) (quoting Raymond v. Sellick, 10

Conn. 480, 484 (1835)). But a formal recitation of consideration, such

as “for value received,” “is simply prima facie evidence, shifting the

burden of proof to the party disputing the consideration.”           TIE

Commc’ns, Inc. v. Kopp, 218 Conn. 281, 292 (1991) (citing Raymond, 10

Conn. at 483).

      The Signing Fee Note reads in relevant part:

      FOR VALUE RECEIVED, the Company promises to pay
      Tarpon Bay Partners, LLC . . . the principal sum of
      Twenty Five Thousand Dollars and No Cents
      ($25,000.00) . . . or such lesser principal amount
      following the conversion or conversions of this Note in
      accordance        with  Paragraph   2 . . . payable on
      demand . . . .

Joint App’x at 1005. Because this language “raises a presumption

of . . . legal consideration,” Alcantara, 2017 WL 4621386, at *2 (quoting

Raymond, 10 Conn. at 484), the burden shifts to Zerez to establish a

genuine issue of material fact which, if taken as true, would rebut the

presumption. See Taft Realty Corp. v. Yorkhaven Enters., Inc., 146 Conn.

                                   54
338, 342–43 (1959); cf. Fieldpoint Priv. Sec. v. Fed. Ins. Co., No. FST-

CV21-6049713-S, 2021 WL 5919792, at *5 (Conn. Super. Ct. Nov. 29,

2021) (“In connection with a hypothetical summary judgment motion,

the court presumably would have before it a factual record, such that

if the defendant were to present evidence affirmatively establishing

(on a prima facie basis) that no consideration had been paid to the

plaintiff by the Bermuda claimants, the burden would shift to the

plaintiff to establish a material issue of fact as to payment of fees (or

establish the non-materiality of the issue of payment).”). Tarpon Bay

contends on appeal that Zerez failed to rebut the “for value received”

presumption, and accordingly argues that summary judgment on the

Affirmative Claims should enter in its favor. See Appellants’ Br. at

39–40, 45; Appellants’ Reply at 14–17.

      We disagree. Zerez raises genuine issues of material fact that

may, if resolved in its favor at trial, rebut the presumption of

consideration.   We discern from the parties’ summary judgment

                                   55
arguments that there are three possible ways a contract could have

been formed:

         1. The Term Sheet is an unenforceable agreement to agree.
            But the Signing Fee Note was executed by Zerez in
            exchange for a return promise by Tarpon Bay—made at
            some point after the Term Sheet was signed but before
            the Signing Fee Note was executed—to begin the section
            3(a)(10) transaction pursuant to the Term Sheet’s
            contemplated deal structure.

         2. The Term Sheet is an unenforceable agreement to agree.
            But the Signing Fee Note was an offer by Zerez to induce
            Tarpon Bay to proceed with the section 3(a)(10)
            transaction.    Tarpon Bay accepted that offer by
            commencing performance when it contacted creditors,
            executed Claim Purchase Agreements, and filed suit in
            Florida state court.

         3. The Term Sheet itself is a binding agreement. It includes
            a return promise by Tarpon Bay to begin the debt-for-
            equity transaction pursuant to the Term Sheet’s
            contemplated deal structure. The Signing Fee Note is
            effectively an addendum that specifies the Signing Fee
            provision of the Term Sheet in greater detail.

We analyze the three possibilities in turn and conclude that Zerez

meets its burden of production on rebutting each.

      The first option is precluded because Zerez submitted

                                 56
deposition evidence that raised a genuine issue of material fact as to

whether Tarpon Bay ever made a valid return promise to begin the

section 3(a)(10) transaction. Hicks stated in his deposition testimony:

      Q. Did Tarpon Bay have any obligation to purchase the
      liabilities of Zerez at the time the note was executed?

      A. That certainly was the plan, and that’s what
      happened.

      Q. Do you have an understanding of whether that
      obligation existed at the time the promissory note was
      executed?

      A. I believe—I’m not a lawyer, but I believe that it was a
      valid note regardless of whether or not Tarpon Bay
      ultimately performed work.

Joint App’x at 1203. If Tarpon Bay was entitled to the Signing Fee

Note “regardless of whether or not Tarpon Bay ultimately performed

work,” then there was no return promise to perform made by Tarpon

Bay. Id. The Signing Fee Note would then be an unenforceable

executory promise. To be clear, there is record evidence suggesting

that Tarpon Bay made a return promise. Aswani stated to Murga

during the Signing Fee Note negotiations that Murga would need to

                                  57
sign the Signing Fee Note in order to proceed because it was a

prerequisite to entering into a definitive agreement. Id. at 1152.

Tarpon Bay also signed the Term Sheet one day after Zerez executed

the Signing Fee Note, which could reflect the existence of a return

promise.   And Tarpon Bay’s subsequent performance—when it

contacted creditors, executed eight Creditor Purchase Agreements,

and initiated a lawsuit in Florida state court—may also be evidence

of a return promise. But because the factual issue of whether there

was a return promise may reasonably be resolved in favor of either

party, summary judgment under option one is unwarranted.

      The second option is precluded because the record does not

clearly establish that the Signing Fee Note (separate and apart from

the Term Sheet) was an offer that Tarpon Bay accepted by beginning

performance. In its July 2021 decision, the district court evaluated

Zerez’s counterclaim for “breach of implied contract” and reasoned:

      Some implied contract likely existed between the parties.
      Without executing the definitive documentation that the

                                 58
      Term Sheet called for, Tarpon Bay entered into Claim
      Purchase Agreements to acquire over $500,000 of Zerez’s
      outstanding debt and filed the Florida Case. It is difficult
      to believe that Tarpon Bay would have undertaken those
      actions if it thought that Zerez had made no return
      promises.

Tarpon Bay II, 547 F. Supp. 3d at 212. Under this theory of implied

contract, the Term Sheet was a nonbinding agreement to agree, and

the Signing Fee Note was an offer by Zerez.          Tarpon Bay then

accepted Zerez’s offer by return promise: not by verbally

communicating a return promise, but by performance—namely

contacting creditors, executing Claim Purchase Agreements, and

filing the Florida lawsuit. See Restatement (Second) of Conts. § 50

cmt. b (“[T]he beginning of performance or a tender of part

performance    operates    as   a    promise    to   render   complete

performance.”). Zerez was aware of Tarpon Bay’s actions—two of its

corporate officers were creditors whom Tarpon Bay had engaged—

yet never objected or attempted to revoke the Signing Fee Note.

Under this implied contract theory, Zerez’s promise to pay the

                                    59
Signing Fee was exchanged for Tarpon Bay’s return promise to

initiate the section 3(a)(10) proceeding.

      But genuine issues of material fact remain as to whether there

was valid offer and acceptance under this theory. An offer is a

“manifestation of willingness to enter into a bargain, so made as to

justify another person in understanding that his assent to that bargain

is invited and will conclude it.” U.S. Bank Nat’l Ass’n v. Eichten, 184

Conn. App. 727, 773 (2018) (quoting Restatement (Second) of Conts. §

24); see also Restatement (Second) of Conts. § 2 cmt. b (“A promisor

manifests an intention if he believes or has reason to believe that the

promisee will infer that intention from his words or conduct.”

(emphasis added)). A factfinder may well conclude that, independent

of Zerez’s subjective intent, Tarpon Bay was justified in

understanding the Signing Fee Note to be an invitation to initiate the

transaction.   Its execution, after all, shortly followed Aswani’s

statement to Murga that the Signing Fee Note was meant to

                                   60
compensate Tarpon Bay for transaction services and was a

prerequisite to entering into a definitive agreement, and Murga did

not say anything to the contrary. See Joint App’x at 1152. But as

mentioned above, Hicks stated in deposition testimony that he

believed Tarpon Bay was entitled to the Signing Fee Note “regardless

of whether or not Tarpon Bay ultimately performed work.” Id. at

1203. That evidence supports the contrary conclusion that Tarpon

Bay did not understand the Signing Fee Note as an offer that, once

accepted, would compel performance.         There is ultimately little

evidence of “[t]he parties’ intentions manifested by their acts and

words,” which “are essential to the court’s determination of whether

a contract was entered into and what its terms were.” Auto Glass Exp.,

Inc. v. Hanover Ins. Co., 293 Conn. 218, 225 (2009) (internal quotation

marks and citation omitted). Because the questions of offer and

acceptance are at the heart of this case and will benefit from a full

                                  61
record at trial, the second option is foreclosed at summary judgment.

        Finally, the third option is precluded because the record does

not clearly establish that the Term Sheet was a binding agreement.

Indeed, the Term Sheet contains a caveat:

        The terms set forth above do not constitute a contractual
        commitment of the Company or the Purchaser, but
        merely represent proposed terms for possible liabilities
        satisfaction. Until definitive documentation is executed by
        all parties, there shall not exist any binding
        obligation . . . .

Id. at 984 (emphasis added). The parties dispute the meaning and

importance of “definitive documentation.” Zerez argues that because

there was no “definitive documentation,” the Term Sheet does not

represent a “binding obligation.” See Cross-Appellant’s Br. at 34.

Hicks    testified   that   this paragraph was “leftover        from   a

different . . . strategy” and unintentionally integrated into this

transaction.    Joint App’x at 1206.     Yet he also testified that the

“definitive agreement is the complaint” filed in state court, and that

“the claims purchase agreements are really the first thing as far as

                                    62
documentation is concerned.” Id. at 1204. Because the meaning and

satisfaction of the “definitive documentation” requirement raise

genuine issues of material fact as to whether the Term Sheet was

binding, option three does not support summary judgment for

Tarpon Bay. 23

       The record in this case presents several genuine issues of

material fact as to whether there was consideration supporting the

Signing Fee Note. Because these factual issues “may reasonably be

resolved in favor of either party,” Anderson, 477 U.S. at 250, the district

court correctly held that Zerez established a genuine dispute of

material fact as to whether the Signing Fee Note was supported by

consideration.     We affirm the district court’s denial of summary

judgment and remand the issue of contract formation for further

       23 Tarpon Bay does not appear to argue that the Signing Fee Note was itself
the “definitive documentation” that would render the Term Sheet binding. Hick’s
deposition testimony, as well as Aswani’s statement to Murga that the Signing Fee
Note was a prerequisite to entering into a definitive agreement, both suggest that
“definitive documentation” referred to a document after the Signing Fee Note. Id.
at 1152.

                                       63
proceedings.

       C.     CUTPA

       Zerez also argues that the district court erred in granting

summary judgment on Counterclaim Eleven, which alleged that

Counterclaim Defendants violated CUTPA. See Conn. Gen. Stat. §§

42-110a to -110q.       A party seeking to “prevail on a CUTPA

claim . . . must prove that (1) the defendant engaged in unfair or

deceptive acts or practices in the conduct of any trade or commerce;

and (2) each class member claiming entitlement to relief under

CUTPA has suffered an ascertainable loss of money or property as a

result of the defendant’s acts or practices.” Artie’s Auto Body, Inc. v.

Hartford Fire Ins. Co., 287 Conn. 208, 217 (2008) (internal quotation

marks and citations omitted); see also Conn. Gen. Stat. § 42-110b(a), -

110g(a). 24 The district court concluded that “Zerez simply assert[ed]

       24Under the CUTPA provisions relevant here, “[n]o person shall engage in
unfair methods of competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce.” Conn. Gen. Stat. § 42-110b(a). “Any person
who suffers any ascertainable loss of money or property, real or personal, as a

                                      64
a breach of contract claim in the guise of a CUTPA claim” and did not

demonstrate an “ascertainable loss” cognizable under the statute.

Tarpon Bay II, 547 F. Supp. 3d at 223. Because Zerez failed to establish

a CUTPA claim, the district court determined that it “need not decide

whether . . . CUTPA applies to the Signing Fee Note.” Id. Summary

judgment entered for Counterclaim Defendants on that count

accordingly. Judgment at 2.

        We affirm the district court’s grant of summary judgment on

the alternative grounds that CUTPA does not apply to the case at

bar. 25 “CUTPA does not apply to deceptive practices in the purchase

result of the use or employment of a method, act or practice prohibited by section
42-110b, may bring an action . . . to recover actual damages.” Conn. Gen. Stat. § 42-
110g(a).
         25 While the parties raised the issue of CUTPA’s applicability before the

district court, see Joint App’x at 1867–68, they did not do so in their briefing before
this court. An argument not raised on appeal is generally deemed abandoned. See
United States v. Joyner, 313 F.3d 40, 44 (2d Cir. 2002). But rules concerning waiver
are “prudential, not jurisdictional,” and we have exercised our discretion to review
waived or abandoned arguments “where . . . the argument presents a question of
law and there is no need for additional fact-finding.” Sniado v. Bank Aus. AG, 378
F.3d 210, 213 (2d Cir. 2004); see also United States v. Babwah, 972 F.2d 30, 35 (2d Cir.
1992) (noting that a court of appeals has discretion to consider argument not raised
on appeal “if manifest injustice otherwise would result”).

                                          65
and sale of securities.” Russell v. Dean Witter Reynolds, Inc., 200 Conn.

172, 180 (1986).     Despite the broad sweep of CUTPA’s text

encompassing “deceptive acts . . . in the conduct of any trade or

commerce,” Conn. Gen. Stat. § 42-110b(a) (emphasis added), “Federal

Trade Commission (FTC) rulings and cases under the Federal Trade

Commission Act . . . serve as a lodestar for interpret[ing]” CUTPA,

Russell, 200 Conn. at 179. Because “[t]he FTC has never undertaken

to adjudicate deceptive conduct in . . . transactions fall[ing] under the

comprehensive regulatory umbrella of the Securities and Exchange

Commission,” transactions governed by the federal securities laws

likewise fall outside CUTPA’s ambit. Id. at 180. That said, the

securities carveout is not so broad that the mere involvement of stock

in an allegedly deceptive act is sufficient to preclude CUTPA’s

application.   See, e.g., Halo Tech Holdings, Inc. v. Cooper, No.

3:07CV00489(AHN), 2008 WL 877156, at *19 (D. Conn. Mar. 26, 2008)

(“[U]se of a stock sale simply as the means for effecting the transfer of

                                   66
a corporation should not remove it from the purview of CUTPA,

when CUTPA would clearly apply if a sale of assets occurred

instead.” (internal quotation marks omitted) (quoting TIE/Commc’ns,

Inc. v. Kopp, No. 64983, 1993 WL 515680, at *8 (Conn. Super. Ct. Nov.

29, 1993)).

      CUTPA does not apply to the alleged deception in this case.

Zerez alleges that “Counterclaim Defendants’ . . . acts violate the

Connecticut Unfair Trade Practices Act . . . , in that their conduct was

unfair, immoral, oppressive, unethical, unscrupulous and/or

deceptive and has caused substantial injury to Zerez.” Joint App’x at

890. But any deceptive conduct would have been in furtherance of

the parties’ transaction, which intended a sale of debt for equity

pursuant to section 3(a)(10) of the Securities Act.       Because the

antifraud provisions of the federal securities laws would regulate

allegedly deceptive conduct in section 3(a)(10) transactions, the

dispute at bar falls outside of CUTPA’s scope. See Russell, 200 Conn.

                                  67
at 179–80.

      Upon supervision and approval by a judicial or administrative

body, section 3(a)(10) of the Securities Act of 1933 may exempt an

issuer from registering securities issued in exchange for outstanding

securities or other qualifying value. See 15 U.S.C. § 77c(a)(10). The

provision specifically exempts from registration:

      [A]ny security which is issued in exchange for one or
      more bona fide outstanding securities, claims or
      property interests, or partly in such exchange and partly
      for cash, where the terms and conditions of such issuance
      and exchange are approved, after a hearing upon the
      fairness of such terms and conditions at which all
      persons to whom it is proposed to issue securities in such
      exchange shall have the right to appear, by any court, or
      by any official or agency of the United States, or by any
      State or Territorial banking or insurance commission or
      other governmental authority expressly authorized by
      law to grant such approval . . . .

Id.   Section 3(a)(10) transactions arise most frequently in three

contexts: litigation settlement involving an exchange of shares,

bankruptcy proceedings not subject to Chapter 11 of the Bankruptcy

Code, or, as here, the reorganization or capital restructuring of solvent

                                   68
businesses. See 7 J. William Hicks, Exempted Transactions Under the

Securities Act of 1933 § 3:1 (2023).

      Despite their exemption from registration, see 15 U.S.C.

§ 77c(a), section 3(a)(10) transactions are still subject to the antifraud

provisions of the Securities Act, see id. § 77q(c). Section 17(a) makes it

illegal for “any person in the offer or sale of any securities . . . to

employ any device, scheme, or artifice to defraud,” or “to engage in

any transaction, practice, or course of business which operates or

would operate as a fraud or deceit upon the purchaser.” 15 U.S.C.

§ 77q(a)(1), (3). Although there is a paucity of case law on point, it

appears undisputed that allegedly fraudulent or deceptive conduct in

the course of executing section 3(a)(10) transactions may indeed

violate section 17(a) upon meeting all the requisite elements. See, e.g.,

In re Am. Trailer Rentals Co., 325 F.2d 47, 52 & n.11 (10th Cir. 1963),

rev’d on different grounds sub nom. SEC v. Am. Trailer Rentals Co., 379

U.S. 594 (1965); SEC v. Johnson, No. 2:20CV08985(FWS), 2023 WL

                                       69
2628680, at *6–8 (C.D. Cal. Mar. 2, 2023); SEC v. Currency Trading Int’l,

No. 02CV05143(PA), 2004 WL 2753128, at *6, 10 (C.D. Cal. Feb. 2,

2004); SEC v. Granco Prods., 236 F. Supp. 968, 970 (S.D.N.Y. 1964); see

also Staff Legal Bulletin No. 3A (CF), U.S. SEC (June 18, 2008),

https://www.sec.gov/corpfin/staff-legal-bulletin-3a (stating the SEC’s

view that “the anti-fraud requirements of the federal securities laws

would govern disclosure” to parties to whom securities would be

issued after a section 3(a)(10) transaction).

      Any attempt to separate the Signing Fee Note from the

underlying scheme to effectuate a section 3(a)(10) transaction is

ultimately unconvincing.      While one may confine the allegedly

deceptive conduct to the Signing Fee Note rather than the transaction

writ large, all parties agreed that the Signing Fee Note was executed

pursuant to the Signing Fee provision in the Term Sheet. See Joint

App’x at 1445 (“[I]n satisfaction of its obligation to pay Tarpon the

Signing Fee, Zerez executed . . . the Signing Fee Note.”); id. at 1298

                                   70
(“Admitted and Zerez respectfully refers the Court to the referenced

document for its complete terms.”). The Term Sheet, in turn, makes

clear that the parties contemplated a debt-for-equity transaction

under section 3(a)(10) that would be exempt from registration. See id.

at 981. Moreover, even if the motives behind the Signing Fee Note

were limited to the Term Sheet’s stated purpose of covering Tarpon

Bay’s “legal fees due upon the execution of the term sheet,” id. at 983,

the Signing Fee Note’s option to convert the Signing Fee into Zerez

stock renders it part of the larger securities transaction. See 15 U.S.C.

§ 77b(a)(3) (“Any security given or delivered with, or as a bonus on

account of, any purchase of securities or any other thing, shall be

conclusively presumed to constitute a part of the subject of such

purchase and to have been offered and sold for value.”).

      CUTPA may not exceed its broad yet well-defined limits where

the transactions “for the purchase and sale of securities” are such that

the federal securities laws would apply. Russell, 200 Conn. at 180.

                                   71
Because section 17(a) of the Securities Act would apply to allegedly

deceptive behavior in a section 3(a)(10) transaction, CUTPA does not

apply to Counterclaim Defendants’ alleged actions.      The district

court’s grant of summary judgment for Counterclaim Defendants on

Counterclaim Eleven is accordingly affirmed.

IV.   Conclusion

      For the foregoing reasons, we VACATE the district court’s

holding that the Signing Fee Note was unconscionable and therefore

unenforceable as a matter of law, AFFIRM the district court’s denial

of summary judgment because genuine issues of material fact remain

as to whether consideration supported the Signing Fee Note, and

AFFIRM the Judgment as to the CUTPA counterclaim. Without

intimating a view on Zerez’s counterclaims not raised on appeal, we

accordingly REMAND to the district court for further proceedings

consistent with this opinion.

                                72