Court Opinion

ID: 9375928
Source: CourtListenerOpinion
Date Created: 2023-03-01 15:02:10.783609+00
Date Added: 2024-06-11T17:17:02.873481
License: Public Domain

22-907
     In re Fusion PM Holdings, 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,
 2   held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
 3   New York, on the 1st day of March, two thousand twenty-three.
 4
 5   PRESENT:
 6               GUIDO CALABRESI,
 7               MICHAEL H. PARK,
 8               WILLIAM J. NARDINI,
 9                     Circuit Judges.
10   _____________________________________
11
12   IQMax, Inc.,
13                               Appellant,
14
15                      v.                                                       22-907
16
17   Fusion PM Holdings, Inc.,
18
19                     Debtor-Appellee. *
20   _____________________________________
21
22
23   FOR APPELLANT:                                                      Craig V. Gabbert, Jr., Bass, Berry &
24                                                                       Sims PLC, Nashville, TN
25
26   FOR DEBTOR-APPELLEE:                                                Jared R. Friedmann and Sarah M.
27                                                                       Sternlieb, Weil, Gotshal & Manges
28                                                                       LLP, New York, NY
29

              *
                  The Clerk is respectfully directed to amend the caption accordingly.
 1          Appeal from a judgment of the United States District Court for the Southern District of

 2   New York (Kaplan, J.).

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

 4   DECREED that the judgment of the district court is AFFIRMED.

 5          Appellant IQMax, Inc. sold substantially all of its assets to Debtor-Appellee Fusion PM

 6   Holdings, Inc. in 2018, including its proprietary software. The asset purchase agreement (“APA”)

 7   provided that, in addition to other fees, IQMax would receive a “royalty fee . . . equal to nineteen

 8   percent . . . of the Net Revenue derived by [Fusion] from sales of” IQMax’s software in excess of

 9   $1.75 million annually.     Joint App’x at JA-1221.      Fusion filed for Chapter 11 bankruptcy

10   protection in 2019. Fusion’s confirmed bankruptcy plan assumed some executory contracts and

11   rejected others under 11 U.S.C. § 365(a). In particular, Fusion “deemed rejected” “all executory

12   contracts and unexpired leases to which any of the Debtors are parties.” Joint App’x at JA-1149.

13   But the plan excepted “all intellectual property contracts, licenses, royalties, or other similar

14   agreements to which the Debtors have any rights or obligations in effect as of the date of the

15   Confirmation Order,” which Fusion assumed. Id. at JA-1152.

16          In 2021, after the bankruptcy court (Jones, J.) confirmed Fusion’s bankruptcy plan, IQMax

17   moved for a declaration that Fusion had assumed, rather than rejected, the APA. The bankruptcy

18   court denied the motion, concluding that “the plain language of the asset purchase agreement,

19   combined with the confirmed plan . . . preclude[d]” IQMax’s motion. Id. at JA-1713. It held

20   that the bankruptcy plan was best read as assuming “ongoing intellectual property arrangements

21   on which the business depended . . . such that the reorganized Debtor would be []able to use

22   intellectual property that it . . . negotiated access to from business partners or licensors.” Id. at

                                                      2
 1   JA-1718. The APA was not such a royalty, but instead “a form of deferred compensation . . . for

 2   assets that had already been conveyed in full.” Id. “The mere use of the term royalty fee . . . to

 3   characterize one aspect of the consideration for an outright purchase” did not “transform IQMax’s

 4   entitlement into the sort of licensing or intellectual property ongoing arrangement that” Fusion’s

 5   assumption encompassed. Id. at JA-1719.

 6           IQMax appealed to the U.S. District Court for the Southern District of New York. The

 7   district court (Kaplan, J.) “affirmed substantially for the reasons stated” by the bankruptcy court.

 8   Id. at JA-1751. We assume the parties’ familiarity with the facts, the procedural posture, and the

 9   issues on appeal.

10           “A district court’s order in a bankruptcy case is subject to plenary review, meaning that

11   this Court undertakes an independent examination of the factual findings and legal conclusions of

12   the bankruptcy court.” In re Duplan Corp., 212 F.3d 144, 151 (2d Cir. 2000). “The Bankruptcy

13   Court’s interpretation of the text of the Plan . . . [is] reviewed de novo.” Id. (citation omitted).

14   “The Court follows principles of contract interpretation to interpret a confirmed plan of

15   reorganization.” In re FFS Data, Inc., 776 F.3d 1299, 1304 (11th Cir. 2015) (citation omitted). 1

16   “[W]e need not decide whether to apply state law contract principles or federal common law

17   principles because they do not conflict here.” Id. at 1304 n.5. “[A] contract that is complete,

18   clear, and unambiguous on its face must be enforced according to the plain meaning of its terms.”

19   Utica Mut. Ins. Co. v. Fireman’s Fund Ins. Co., 957 F.3d 337, 344 (2d Cir. 2020) (cleaned up)

             1
              Accord, e.g., Barraford v. T & N Ltd., 778 F.3d 258, 263 (1st Cir. 2015); In re Settlement Facility
     Dow Corning Trust, 628 F.3d 769, 772 (6th Cir. 2010); In re Tex. Com. Energy, 607 F.3d 153, 158 (5th
     Cir. 2010); In re Shenango Grp., Inc., 501 F.3d 338, 344 (3d Cir. 2007); Miller v. United States, 363 F.3d
     999, 1004 (9th Cir. 2004); In re Harvey, 213 F.3d 318, 320 (7th Cir. 2000).

                                                          3
1    (under New York law); accord Fay v. Oxford Health Plan, 287 F.3d 96, 104 (2d Cir. 2002) (noting

2    that “according to federal common law,” a court should “giv[e] terms their plain meanings,” and

3    “[w]here the contract language is plain and unambiguous, a court may construe the contract and

4    grant summary judgment” (cleaned up)).

 5          We see no error in the bankruptcy court’s interpretation of the bankruptcy plan or its

 6   application of the plan to the APA. We thus affirm for the reasons stated by the bankruptcy court.

 7   See Joint App’x at JA-1710 to -20.

 8          We have considered IQMax’s remaining arguments and find them to be without merit.

 9   For the foregoing reasons, the judgment of the district court is AFFIRMED.

10                                                FOR THE COURT:
11                                                Catherine O’Hagan Wolfe, Clerk of Court
12
13

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