Court Opinion

ID: 9408963
Source: CourtListenerOpinion
Date Created: 2023-07-14 15:00:42.769458+00
Date Added: 2024-06-11T17:20:47.813573
License: Public Domain

22-2053
     Brown v. Building Engines, Inc.

                                       UNITED STATES COURT OF APPEALS
                                           FOR THE SECOND CIRCUIT

                                                 SUMMARY ORDER

     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
     ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE
     OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY
     ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL
     APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY
     CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
     COUNSEL.

 1           At a stated term of the United States Court of Appeals for the Second Circuit, held at the
 2   Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
 3   14th day of July two thousand twenty-three.
 4
 5   Present:
 6                    JON O. NEWMAN,
 7                    EUNICE C. LEE,
 8                    SARAH A. L. MERRIAM,
 9
10                             Circuit Judges.
11
12
13   MICHAEL BROWN, as agent on behalf of former
14   equityholders of Emergent Properties Inc.,
15
16                             Plaintiff-Appellant,
17
18                    v.                                                     22-2053
19
20   BUILDING ENGINES, INC.,
21
22                             Defendant-Appellee.
23
24
25   For Plaintiff-Appellant:                         BONNIE SHIRA LEVINE,
26                                                    Verse Legal LLC,
27                                                    Atlanta, GA.
28
29
30   For Defendant-Appellee:                          EMILY KIMMELMAN WHEELING (Laura Hughes
31                                                    McNally & Michael E. Kenneally, on the brief),
32                                                    Morgan, Lewis & Bockius LLP,
33                                              Philadelphia, PA
34                                              Washington, D.C.
35
36           Appeal from an order of the United States District Court for the Southern District of New

37   York (Castel, J.).

38           UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

39   DECREED that the order of the district court is AFFIRMED.

40           Plaintiff-Appellant Michael Brown appeals from the August 11, 2022, order of the district

41   court adopting the United States Magistrate Judge’s report and recommendation to dismiss

42   Brown’s Complaint for Declaratory Relief regarding Brown’s contract with Defendant-Appellee

43   Building Engines, Inc. for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6)

44   and granting leave to amend. See Brown ex rel. Emergent Props. Inc. v. Bldg. Engines Inc., 21-

45   cv-10893 (PKC) (SDA), 2022 WL 3274124 (S.D.N.Y. Aug. 11, 2022). For the reasons explained

46   below, we AFFIRM the district court’s decision.

47           Brown sought declaratory judgment regarding the proper construction of a contract that

48   provided the terms by which a company he started, Emergent Properties, Inc. d/b/a LogCheck, was

49   sold to Building Engines (the “Merger Agreement”). Under the Merger Agreement, Building

50   Engines acquired LogCheck for an up-front payment of $10 million cash in May of 2021, with an

51   additional earnout payment to be made in the future. Brown alleged that the sale of Building

52   Engines in November of 2021 triggered an acceleration provision in the Merger Agreement that

53   made the earnout payment due immediately.

54           The Merger Agreement lists several conditions that, if they occur, would cause the due date

55   for earnout payments to accelerate. Section 2.3(e) of the Merger Agreement lists these conditions

56   and then says that, if they are met, “

57                                             ” Sealed App’x at 74. The Merger Agreement then says

                                                      2
 1   that, “

 2                                                                         ” Id. The Merger Agreement

 3   defines “                       ” to mean “                                                         ”

 4   Id. at 72.

 5             After the district court granted Building Engines’ motion to dismiss with leave to amend

 6   for Brown to pursue a breach of contract claim, Brown appealed. Before oral argument in this

 7   case, we ordered the parties to file supplemental briefing as to our jurisdiction given the rule that

 8   “[a] dismissal with leave to amend is a non-final order and not appealable.” Slayton v. Am. Express

 9   Co., 460 F.3d 215, 224 (2d Cir. 2006). The parties filed their supplemental briefs on May 9, 2023.

10                                             *       *      *

11             As an initial matter, we find that we may hear this appeal under the Circuit law of

12   hypothetical jurisdiction. Although appeals from orders dismissing pleadings while also granting

13   leave to amend are generally not appealable under 28 U.S.C. § 1291, Slayton, 460 F.3d at 224,

14   “[i]f, as here, the jurisdictional constraints are imposed by statute, not the Constitution,” we may

15   “assume hypothetical jurisdiction where the jurisdictional issues are complex and the substance of

16   the claim is plainly without merit,” Butcher v. Wendt, 975 F.3d 236, 242–43 (2d Cir. 2020)

17   (internal quotation and alteration marks omitted). Brown received leave to amend approximately

18   eleven months ago but still has not filed any amended complaint. Brown was not given a deadline

19   by which he had to amend, but we think it is possible that the district court would see this lengthy

20   delay as a reason to find that Brown’s time “for amendment has passed,” which in turn would

21   render its order final. Slayton, 460 F.3d at 224 n.7. Because this issue only calls into question the

22   finality requirement of § 1291, we find it “prudent” to exercise hypothetical jurisdiction here.

23   Butcher, 975 F.3d at 242. We therefore turn to the merits.

                                                       3
 1          Under Delaware law, which governs the Merger Agreement, we “determine the intent of

 2   the parties from the language of the contract…. If a contract is unambiguous, extrinsic evidence

 3   may not be used to interpret the intent of the parties, to vary the terms of the contract, or to create

 4   ambiguity.” Exelon Generation Acquisitions, LLC v. Deere & Co., 176 A.3d 1262, 1267 (Del.

 5   2017) (internal quotation marks omitted). “A contract is not rendered ambiguous simply because

 6   the parties do not agree upon its proper construction. Rather, an ambiguity exists when the

 7   provisions in controversy are fairly susceptible of different interpretations or may have two or

 8   more different meanings.” GMG Cap. Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d

 9   776, 780 (Del. 2012) (internal quotation marks omitted).          “[A]ny defined terms” are to be

10   understood through “the provided for definition in the contract in question.” In re FAH Liquidation

11   Corp., 581 B.R. 98, 107 (Bankr. D. Del. 2017) (collecting Delaware cases); see, e.g., Exelon

12   Generation Acquisitions, 176 A.3d at 1268 (rejecting proffered construction of an “earn-out

13   payment” provision because certain “defined term[s]” cut against that reading).

14          We hold that Brown’s argument that the sale of Building Engines triggered the acceleration

15   of the earnout payment is foreclosed by the plain terms of the Merger Agreement. The Merger

16   Agreement says that any “                                                        ” is a “

17          ” Sealed App’x at 72, and that a “

18                                                                                                         ”

19   id. at 74. All of Brown’s arguments on appeal would require us to displace this clear definition

20   and state that the sale of Building Engines in November of 2021 triggered acceleration, despite the

21   Merger Agreement’s express language to the contrary. For this reason, Brown’s complaint was

22   properly dismissed.

23                                              *       *      *

                                                        4
1          We have considered Brown’s remaining arguments and find them to be without merit.

2   Accordingly, we AFFIRM the judgment of the district court.

3                                                    FOR THE COURT:
4                                                    Catherine O’Hagan Wolfe, Clerk of Court

                                                 5