Court Opinion

ID: 9929182
Source: CourtListenerOpinion
Date Created: 2024-02-01 21:08:13.305513+00
Date Added: 2024-06-11T10:05:55.163789
License: Public Domain

Regions Bank v VativoRx, LLC
               2024 NY Slip Op 30331(U)
                    January 26, 2024
           Supreme Court, New York County
        Docket Number: Index No. 654741/2022
                 Judge: Melissa A. Crane
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
 Op 30001(U), are republished from various New York
 State and local government sources, including the New
  York State Unified Court System's eCourts Service.
 This opinion is uncorrected and not selected for official
                       publication.
                                                                                                  INDEX NO. 654741/2022
  NYSCEF DOC. NO. 289                                                                       RECEIVED NYSCEF: 01/26/2024

                             SUPREME COURT OF THE STATE OF NEW YORK
                                       NEW YORK COUNTY
            PRESENT:        HON. MELISSA A. CRANE                             PART                              60M
                                                                    Justice
                           -----------------------------------X
                                                                              INDEX NO.          654741/2022
             REGIONS BANK, BANKUNITED, N.A., FIRST HORIZON
             BANK, TRUSTMARK NATIONAL BANK, SANTANDER                         MOTION DATE         N/A, N/A
             BANK, N.A.,
                                                                              MOTION SEQ. NO.    009 010 012
                                                Plaintiffs,

                                        - V -
                                                                                DECISION + ORDER ON
             VATIVORX, LLC,                                                            MOTION

                                                Defendant.
            --------------------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 009) 187, 188, 189, 190,
            191, 192, 193, 194, 195, 196, 197, 198,199,200,228,229,230,231,232,233,243
            were read on this motion to/for                       SUMMARY JUDGMENT(AFTER JOINDER

            The following e-filed documents, listed by NYSCEF document number (Motion 010) 201, 202, 203, 204,
            205,206,207,208,209,210,211,212,213,214,215,216,217,218,219,220,221,222,223,224,225,
            226,227,234,236,237,238,239,240,241,242
            were read on this motion to/for                             PARTIAL SUMMARY JUDGMENT

                   This commercial dispute arises from a December 29, 2021 Credit Agreement between

           Plaintiffs Regions Bank, Bank.United, N.A., First Horizon Bank, Trustmark National Bank, and

            Santander Bank (collectively, "Plaintiffs"), and Defendant VativoRx, LLC ("Defendant" or

           "VativoRx"). Plaintiffs allege that Defendant defaulted under the agreement.

                                                       Factual Background

                   It is undisputed that Plaintiffs and Defendant entered into a Credit Agreement in December

           2021, (Doc 189 [Credit Agreement]). Under the Credit Agreement's terms, Plaintiffs, as lenders,

           extended $105 million in credit to Defendant as a borrower.

                   Under Section 7.1 (b ), Defendant was required to deliver to Plaintiffs audited financial

            statements for its fiscal year ending December 31, 2021. The audited financial statements were to

             654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                    Page 1 of 14
             Motion No. 009 01 O

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           "be unqualified as to going concern and scope of audit," and were to be delivered no later than

           May 30, 2022. Specifically, Section 7.l(b) provides the following:

                    (b) Audited Annual Financial Statements. Upon the earlier of the date that is
                    one hundred and twenty (120) (or, solely in the case of the Fiscal Year ending
                    on December 31, 2021, one hundred and fifty (150)) days after the end of each
                    Fiscal Year and the date such information is filed with the SEC, (i) the
                    consolidated balance sheets of the Borrower and its Subsidiaries as of the end of
                    such Fiscal Year and the related consolidated statements of income,
                    stockholders' equity and cash flows of the Borrower and its Subsidiaries for such
                    Fiscal Year, setting forth in each case in comparative form the corresponding
                    figures for the previous Fiscal Year, all in reasonable detail and prepared in
                    accordance with GAAP, together with a Financial Officer Certification with
                    respect thereto, and (ii) with respect to such consolidated financial statements a
                    report thereon of independent certified public accountants of recognized national
                    standing selected by the Credit Parties, which report shall be unqualified as to
                    going concern and scope of audit, and shall state that such consolidated financial
                    statements fairly present, in all material respects, the consolidated financial
                    position of the Borrower and its Subsidiaries as of the dates indicated and the
                    results of their operations and their cash flows for the periods indicated in
                    conformity with GAAP applied on a basis consistent with prior years (except as
                    otherwise disclosed in such financial statements) and that the examination by
                    such accountants in connection with such consolidated financial statements has
                    been made in accordance with generally accepted auditing standards;

           (Doc 189 [Credit Agreement] at pg. 94, emphasis added)

                  Under Section 7.12(d)(i), Defendant was required to ensure that its deposit accounts were

           subject to Account Control Agreements no later than April 28, 2022. Additionally, under Section

           9. l(c), Defendant's failure to comply with either of the foregoing obligations in Section 7. l(b) and

           Section 7.12(d)(i), is considered an event of default.

                  Specifically, Section 9.l(c) states:

                    (c) Breach of Certain Covenants. Failure of any Credit Party to perform or
                    comply with any term or condition contained in Section 7 .1, Section 7.2, Section
                    7.6, Section 7.8, Section 7.9, Section 7.12, Section 7.13, Section 7.14 or Section
                    .8.; or
           (Doc 189 [Credit Agreement] at pg. 109).

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                      Page 2 of 14
            Motion No. 009 010

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                   Section 9 .2 detailed Plaintiffs' contractual rights upon the occurrence of an event of default,

           including the right and ability to demand immediate repayment of all outstanding obligations

           without any further notice or cure period. It is undisputed that Defendant did not provide the

           audited financial statements by the deadline set forth in the Credit Agreement, in violation of

           Section 7.l(b).    It is further undisputed that Plaintiffs then granted defendant two 30-day

           extensions to deliver the audited financials the Credit Agreement required, but that Defendant

           nonetheless still failed to provide any final audited financial statements to Plaintiffs. Instead, after

           the twice-extended deadline had passed, Defendant's auditors provided a "draft, non-final Audit"

           to Plaintiffs on August 12, 2022. This draft audit also stated that there was "Substantial doubt

           about the Company's ability to continue as a going concern" because "there can be no assurances

           that the Company will be able to execute on [their] strategic shift to an alternative [manager] and

           the ultimate resolution of' certain legal matters (Doc 233 [08/09/23 Email Delivery of Draft Audit]

           at pg. 7). Thus, to this day, Defendant has failed to provide unqualified, final audited financial

           statements.

                  On August 15, 2022, Plaintiffs notified Defendant that an Event of Default had occurred

           and was continuing under Section 9.1 (c) of the Credit Agreement, because Defendant failed to

           deliver annual audited financial statements without a going concern qualification by the date that

           was set forth in the underlying Credit Agreement.

                  On August 26, 2022, the Administrative Agent sent a notice of implementation of default

           rate. On September 23, 2022, the Administrative Agent sent a notice of acceleration and demanded

           repayment of the underlying loans. The Administrative Agent's notice of acceleration (Doc 196)

           outlined the Existing Events of Default, in Schedule A attached to the notice, that included the

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                        Page 3 of 14
            Motion No. 009 01 O

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           Defendant's breaches of Sections 7.l(b) and 7.12(d)(ii) of the Credit Agreement. Defendant

           ultimately failed to repay the outstanding loan amounts.

                                                   Procedural Posture

                   Plaintiffs commenced this case by filing the Summons and Complaint on December 9,

           2022.   On January 20, 2023, Defendant moved for a preliminary injunction and temporary

           restraining order to prevent Plaintiffs from exercising potential remedies under the Credit

           Agreement and the UCC. On January 23, 2023, the court denied Defendant's application for a

           temporary restraining order (Doc 56). On January 31, 2023, the court denied Defendant's motion

           for a preliminary injunction (Doc 88 [finding "it is unlikely that [D]efendant will prevail on the

           merits to demonstrate that [P]laintiffs do not have the right to exercise any and all remedies the

           Credit Agreement allows in the event of a default"]).

                   Defendant interposed five counterclaims in its answer: 1) Breach of contract - alleging

           Plaintiffs exercised remedies without an underlying event of Default; 2) Breach of the implied

           covenant of good faith and fair dealing - based on the same alleged conduct; 3) Tortious

           interference with contract - for issuing standard payment demand letters to Defendant's account

           debtors in accordance with the UCC; 4) Tortious interference with prospective business advantage

           - for allegedly not cooperating sufficiently with Defendant's efforts to enter into a business

           relationship with non-party ThirdWaveRX; and 5) a claim seeking a Temporary restraining order,

           preliminary and permanent injunction.

                   In Mot. Seq. No. 007, Defendant moved for an order, pursuant to CPLR 321 l(a)(7),

           dismissing Plaintiffs' fraudulent inducement claim.         On June 5, 2023, the court granted

           Defendant's motion in its entirety (Doc 156 [Decision+ Order]).

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                   Page 4 of 14
            Motion No. 009 01 O

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                  Plaintiffs now move, pursuant to CPLR 3212, for summary judgment on their breach of

           contract claim against Defendant, and to strike Defendant's answer and counterclaims. Plaintiffs

           also ask the court to enter judgment against Defendant, in the amount of $97,875,000, plus interest

           calculated under the loan documents at the contractual default rate from and after August 26, 2022

           through the date of entry of judgment (less interest amounts paid to date) and an inquest to

           determine the amount of Plaintiffs' expenses and attorneys' fees.

                  Defendant, in turn, moves for partial summary judgment against Plaintiffs. Defendant

           seeks an order finding that its purported breaches of the underlying credit agreement were non-

           material, and that as a result, Plaintiffs have no right to accelerate the underlying loan.

                                                        Discussion

                  Summary judgment is a drastic remedy that will be granted only when the party seeking

           summary judgment has established that there are no triable issues of fact (see CPLR 3212[b];

           Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; DeCintio v Lawrence Hosp., 33 AD3d 329,

           329 [1st Dept 2006]). To prevail, the party seeking summary judgment must make aprimafacie

           showing of entitlement to judgment as a matter of law by tendering evidentiary proof in admissible

           form (see Olan v Farrell Lines, 64 NY2d 1092, 1093 [1985]; Zuckerman v City of New York, 49

           NY2d 557, 562 [1980]). If the movant makes that initial showing, the burden shifts to the party

           opposing the motion to rebut that showing by establishing that there are material issues of fact that

           require a trial (see Kaufman v Silver, 90 NY2d 204, 208 [1997]).

                  The court must scrutinize the motion papers in a light most favorable to the party opposing

           the motion and must give that party the benefit of every favorable inference (see Negri v Stop &

           Shop, 65 NY2d 625, 626 [1985]). Summary judgment should be denied where there is any doubt

           as to the existence of a triable issue of fact (see Ahmad v City of New York, 129 AD3d 443, 444

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                       Page 5 of 14
            Motion No. 009 01 O

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           [1st Dept 2015]).     However, bald, conclusory assertions or speculation and "[a] shadowy

           semblance of an issue" are insufficient to defeat a summary judgment motion (Belle Lighting LLC

           v Artisan Constr. Partners LLC, 178 AD3d 605,606 [1st Dept 2019]).

           I.      Plaintiffs' Motion for Summary Judgment [MS 09]

                   Plaintiffs move for summary judgment awarding them judgment on their breach of contract

           claim and dismissing Defendant's counterclaims and defenses.

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

           of a contract, the plaintiffs performance thereunder, the defendant's breach thereof, and resulting

           damages" (Harris v Seward Park Haus. Corp., 79 AD3d 425, 426 [1st Dept 2010]). "[W]hen

           parties set down their agreement in a clear, complete document, their writing should ... be enforced

           according to its terms" (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475

           [2004] [internal quotation marks and citation omitted]).

                   a. Plaintiffs' Breach of Contract Claim

                   Here, Plaintiffs have demonstrated entitlement to summary judgment on their breach of

           contract claim and the dismissal of Defendant's counterclaims (Mot. Seq. No. 009). Defendant

           has failed to raise a genuine issue of fact in opposition.

                   First, Plaintiffs have demonstrated that the Credit Agreement (Doc 189 [Credit

           Agreement]) required Defendant to comply with Section 7.l(b) and Section 7.12(d)(ii), and that

           Defendant failed to comply with either Section. Specifically, the Credit Agreement required

           Defendant to deliver annual audited financial statements, without a qualification as to going

           concern, to the Administrative Agent for the fiscal year ended December 31, 2021, along with

           related certifications and accompanying documentation, within 150 days of the end of the fiscal

           year.   Defendant, twice, requested extensions of the deadline to provide audited financial

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                    Page 6 of 14
            Motion No. 009 01 0

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           statements without a qualification as to going concern. Plaintiffs agreed to both those requests in

           May 2022 and July 2022.

                   Nevertheless, after those extensions, Defendant produced only draft Financial Statements

           and a draft audit opinion in August 2022. Further, that draft audit opinion recognized factors that

           raised doubts as to Defendant's ability to go as a going concern. Thus, it is undisputed that

           Defendant did not timely deliver the audited financial statements for the year ending December

           31, 2021, without a going concern qualification, in contravention of the Credit Agreement. In fact,

           Defendant never delivered any final audited financial statements (see Answer 1 66 [admitting that

           Defendant has "not delivered any such audits"]). At oral argument, Defendant expressly conceded

           that the failure to provide an unqualified going concern statement from the relevant auditor or

           accountants was an event of default under the Credit Agreement (Doc 254 [11/6/23 Transcript] at

           14).

                   Additionally, Plaintiffs have adequately established that Defendant breached Sections

           7 .12(d)(i) and 7.16 of the Credit Agreement by failing transfer their bank accounts to Regions

           Bank.

                   Defendant also defaulted under the Credit Agreement by failing to repay the underlying

           Loans once they were accelerated.        Under Section 9.2 of the Credit Agreement, upon the

           occurrence and during the continuance of any Event of Default, the Administrative Agent may call

           all revolving and term loans due at the request of, or with the consent of, the Required Lenders. It

           is undisputed that the Administrative Agent, at the direction of the Required Lenders, notified

           Defendant of Plaintiffs' rights under Section 9 .2 of the Credit Agreement and demanded

           immediate payment in full of Defendant's Obligations (see Answer 170).

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                    Page 7 of 14
            Motion No. 009 010

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                  Further, Section 9. l(a) of the Credit Agreement defines an Event of Default to include the

           failure by Defendant to pay the principal of any Loan when due, whether at stated maturity, by

           acceleration, or otherwise. Accordingly, under the Credit Agreement's relevant terms, Plaintiffs

           were entitled to accelerate the entire debt due upon Defendant's failure to adhere to its contractual

           obligations (Letter Grade, Inc. v Jasmine Tech., Inc., 50 AD3d 383, 384 [1st Dept 2008] citing

           Fifty States Mgt. Corp. v. Pioneer Auto Parks, 46 N.Y.2d 573, 577 [1979]).

                  Thus, Plaintiffs established prima facie entitlement to judgment as a matter of law on their

           breach of contract claim. In addition, Plaintiffs demonstrate that Defendant owes the $97,875,000

           outstanding principal balance, together with interest at the contractual default rate from August 26,

           2022 (less any interest payments made by Defendant since that date). Plaintiffs' submissions

           establish that, as of August 9, 2023, Defendant owed $3,518,870.21 for unpaid default interest

           [i.e., the total default interest accrued from 8/26/22-8/9/22, $9,800,811.58, less the $6,281,941.37

           in regular interest paid by Defendant during that period] (see Docs 197-199).

                  b. Defendant's Opposition to MS 09

                           i. Waiver

                  In opposition to this motion, Defendant argues that Plaintiffs are precluded as a matter of

           law from asserting either claimed breach because the Plaintiffs waived strict compliance with the

           deadlines (Doc 228 [MOL In Opposition] at pg. 1). Defendant contends that, with respect to the

           alleged Breach of Sections 7 .12(d)(ii) and 7.16, Plaintiffs waived any failure to comply strictly

           with the imposition of the Account Control Agreements and transfer to Regions. Defendant

           contends Plaintiffs only later tacked this purported default onto the Plaintiffs' assertion of the

           Audit Default (Doc 228 [MOL In Opposition] at pg. 2). Defendant also argues that, by extending

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                     Page 8 of 14
            Motion No. 009 01 O

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           the deadline for audited financials twice, Plaintiffs waived strict compliance with the Audit

           deadline.

                   Defendant's waiver arguments are unavailing.           Under Section 11.4(a) of the Credit

           Agreement, "no amendment, modification, termination or waiver of any provision of the Credit

           Documents, or consent to any departure by any Credit Party therefrom, shall in any event be

           effective without the written concurrency of the Administrative Agent and the Required Lenders."

           Additionally, Section 1 l.4(d) provides that "[a]ny waiver or consent shall be effective only in the

           specific instance and for the specific purpose for which it was given." Section 11.8 also provides

           that "n[ o] failure or delay on the part of [Plaintiffs] in the exercise of any power, right or privilege

           hereunder ... shall impair such power, right or privilege or be construed to be a waiver of any default

           or acquiescence therein." True to the Credit Agreement, both prior extensions were in writings

           that the parties signed. Any further extension needed to be in writing, and Plaintiffs needed to sign

           that writing. This did not occur.

                  Nothing in Plaintiffs' conduct manifested an intent to waive their rights under the Credit

           Agreement. Even if an oral amendment to the Credit Agreement were possible, Defendant does

           not submit admissible evidence demonstrating that Plaintiffs offered any oral assurances they

           would further extend the Audit Deadline.

                           ii. Equity

                   Defendant also argues that equitable principles preclude the acceleration as an

           unconscionable penalty. Specifically, they argue that the Audit Breach is a trivial or technical

           breach, and that the inadvertent nature of the Audit Breach and the Plaintiffs' involvement in

           precipitating the breach justifies equity intervening to prevent the requested remedy of

           acceleration.

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                         Page 9 of 14
            Motion No. 009 010

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                   "Equity may intervene to prevent a substantial forfeiture occasioned by a trivial or technical

           breach, or where the default consists of a good faith mistake, promptly cured by the defaulting

           party, and where there is no prejudice to the creditor (L & L Assoc. Holding Corp. v Seventh Day

           Church ofGod ofthe Apostolic Faith, 188 AD3d 1180 [2d Dept 2020] [internal citations omitted]).

           Defendant does not allege or present any evidence that Plaintiffs have engaged in fraud, exploitive

           overreaching or unconscionable conduct (see Fifty States Mgt. Corp. v Pioneer Auto Parks, Inc.,

           46 NY2d 573, 577 [1979] ["Absent some element of fraud, exploitive overreaching or

           unconscionable conduct on the part of the landlord to exploit a technical breach, there is no

           warrant, either in law or equity, for a court to refuse enforcement of the agreement of the parties."])

                  Defendant's inability to provide audited financial statements, with unqualified going

           concern language, demonstrates that Defendant is not a financially stable entity. Defendant cannot

           argue its breaches of the Credit Agreement were inadvertent, the result of a good faith mistake, or

           that Plaintiffs contributed to its inability to provide a clean final audited financial statement by the

           underlying Audit Deadline. Defendant does not deny that it was aware of the Audit deadline. It

           is also undisputed that Defendant missed the twice extended deadlines.

                  Plaintiffs' refusal to grant another retroactive extension after the Audit Deadline had passed

           in no way contributed to Defendant's failure to deliver unqualified audited financial statements by

           the July 29, 2022 deadline. Defendant also does not assert that it was unaware of its obligation to

           institute Account Control Agreements, or that Plaintiffs somehow prevented it from doing so.

                  As such, no circumstances warranting equitable intervention are present (see e.g. Fifty

           States Mgt. Corp. v. Pioneer Auto Parks, 46 N.Y.2d 573, 576-577 [1979]; 1029 Sixth v. Riniv

           Corp., 9 A.D.3d 142, 149-150 [1st Dept. 2004], lv. dismissed 4 N.Y.3d 795, 795 N.Y.S.2d 170,

           828 N.E.2d 86 [2005]).

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                       Page 10 of 14
            Motion No. 009 010

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                          iii. Materiality of Breaches

                   Finally, Defendant argues that Plaintiffs are not entitled to the remedy of acceleration

           because Defendant's breaches were not material. Defendant contends that the Audit Breach is not

           material because it does not involve a breach of Defendant's primary financial obligations to repay

           the loan. Defendant further contends that the account breach is not material because it performed

           the essential part of the bargain, i.e. it made payments. Moreover, Defendant did eventually move

           their bank accounts over to Regions, albeit grudgingly and pursuant to court order.

                   However, the court rejects Defendant's arguments. The breaches were clearly material. A

           breach is considered material if it is "substantial enough to defeat the parties' objectives in making

           the contract" (Alberts v CSTV Networks, Inc., 96 AD3d 447, 447 [1st Dept 2012]). Defendant's

           argument ignores the purpose of Section 7.1 (b) and Section 7.12( d)(i) in the context of the

           underlying credit facility and Credit Agreement. The requirements to provide audited financial

           statements and implement Account Control Agreements protected the lenders by giving visibility

           into the borrower's financial condition and permitting the lender to exercise remedies as quickly

           as possible in the event of a downturn in the borrower's business.

                   Defendant's failure to meet those obligations under the Credit Agreement significantly

           undermined Plaintiffs' security.       Plaintiffs required audited financial statements without a

           qualification as to Defendant's ability to continue as a going concern to ensure that Defendant

           could meet its financial obligations under the Credit Agreement. Defendant's inability to provide

           compliant audited financial statements, after receiving multiple extensions from the Plaintiffs,

            reflected Defendant's poor financial condition and amount to a material breach.

                   In addition, Defendant's failure to implement required Account Control Agreements

            deprived Plaintiffs of the ability to exercise their respective rights upon Defendant's defaults. As

             654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                     Page 11 of 14
             Motion No. 009 010

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           such, Defendant's breaches of the Credit Agreement were material and sufficient grounds for

           Plaintiffs to accelerate the loans.

                  Accordingly, Plaintiffs are awarded judgment on their contract claim and Defendant's

           defenses are dismissed.

                   c. Defendant's Counterclaims

                  Plaintiffs have also established that they are entitled to summary judgment dismissing

           Defendant's counterclaims. In its answer, Defendant asserts the following five counterclaims: (1)

           breach of contract for Plaintiffs alleged improper acts without an underlying Event of Default; (2)

           breach of the implied covenant of good faith and fair dealing (based on the same); (3) tortious

           interference with contract for Plaintiffs' issuance of payment demand letters to account debtors;

           (4) tortious interference with prospective business advantage for purportedly interfering with

           Defendant's business efforts with a nonparty [ThirdWaveRx]; and (5) a claim seeking a temporary

           restraining order, preliminary and permanent injunction.       In sum, Defendant's counterclaims

           largely assert that Plaintiffs improperly declared a default under the agreement.

                  As set forth above, Plaintiffs have established that they properly declared a default under

           the agreement, and Defendant has not raised a triable issue of fact.             Thus, Defendant's

           counterclaims for breach of contract and breach of the implied covenant of good faith and fair

           dealing are dismissed. Defendant's fifth cause of action for injunctive relief must be dismissed for

           the same reasons.

                   Likewise, Plaintiffs have established that they are entitled to summary judgment dismissing

           the tortious interference claims. Plaintiffs, as Defendant's creditors, are not liable for the alleged

           tortious interference because they were protecting their own interests. Moreover, Defendant does

           not establish that Plaintiffs acted with malice or by fraudulent or illegal means (White Plains Coat

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                      Page 12 of 14
            Motion No. 009 010

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           & Apron Co., Inc. v Cintas Corp., 8 NY3d 422, 426 [2007]; E.F. Hutton Intern. Assoc. Ltd. v

           Shearson Lehman Bros. Holdings, Inc., 281 AD2d 362, 362 [1st Dept 2001] ["To overcome the

           defense of economic justification ... [Defendant] must establish 'either malice on the one hand,

           or fraudulent or illegal means on the other."'] [citation omitted]).

                   d. Attorneys' Fees

                   Plaintiffs are also entitled to recover costs, including their reasonable attorneys' fees, under

           Section 11.2 of the agreement. The issue of Plaintiffs' costs and attorneys' fees is severed and

           shall continue at an inquest.

           II.     Defendant's Motion for Partial Summary Judgment [MS 10)

                   Defendant's arguments in support of its partial summary judgment motion mirror its

           opposition to Plaintiffs' motion. The court has reviewed Defendant's submissions and finds that

           Defendant has not established prima facie entitlement to judgment as a matter of law.

                                                        Conclusion

                   As set forth above, Plaintiffs established their prima facie entitlement to judgment as a

           matter of law with respect to their breach of contract claim, and Defendant failed to raise a triable

           issue of fact.   Further, Plaintiffs are entitled to summary judgment dismissing Defendant's

           affirmative defenses and counterclaims. The issue of Plaintiffs' costs and reasonably attorneys'

           fees is severed and shall proceed to an inquest. Defendant's partial motion for summary judgment

           is denied. As a result of this decision, Defendant's motion 12, for contempt, has been rendered

           moot.

                   The court has considered the parties' remaining arguments and finds them unavailing.

                   Accordingly, it is

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                       Page 13 of 14
            Motion No. 009 010

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                     ORDERED that Plaintiffs' motion for summary judgment (Mot. Seq. No. 009) is granted,

           and the Clerk is directed to enter judgment in favor of Plaintiffs and against the Defendant in the

           amount of $101 ,393 ,870.21 , together with interest at the contractual default rate of $32,178.08 per

           diem from August 10, 2023 until the date of this decision and order, and thereafter at the statutory

           rate, as calculated by the Clerk, together with costs and disbursements to be taxed by the Clerk

           upon submission of an appropriate bill of costs; and it is further

                     ORDERED that Defendant' s partial motion for summary judgment (Mot. Seq. No. 010)

           is denied; and it is further

                     ORDERED that Motion Sequence No. 012, for contempt, is denied as moot; and it is

           further

                     ORDERED that the court will hold an inquest to determine the amount of Plaintiffs'

           recoverable expenses and attorneys ' fees under the Agreement. The parties must appear for a

           conference over Microsoft Teams on 2/9/24 at 11:00 a.m. to set a schedule for the inquest.

                     1/26/2024
                                                                          ~
                                      8
                       DATE                                                     MELISSA A. CRANE, J.S.C.
             CHECK ONE :                  CASE DISPOSED                  NON-FINAL DISPOSITION

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

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

            654741/2022 REGIONS BANK ET AL vs. VATIVORX, LLC                                      Page 14 of 14
            Motion No. 009 01 O

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