MEMORANDUM OPINION
Opinion By Justice MORRIS.
The trial court dismissed with prejudice inmate Loyd Tom Logan's personal injury lawsuit against Ricky Ray Francois after Logan failed to appear for trial. Appellant, representing himself while in prison, brings four issues generally asserting the trial court abused its discretion in dismissing his lawsuit without notice and a hearing, in failing to hold a hearing on his motion to reinstate, and in dismissing the case with prejudice. For the reasons that follow, we affirm the trial court's order.
Appellant sued Francois on November 15, 2007 alleging he was injured when the vehicle he was driving was struck from behind by a vehicle driven by Francois. The trial court notified appellant that the case was set for a jury trial on October 26, 2009 at 9:00 a.m. The trial court's notice further indicated that if plaintiff failed to appear at trial, the case would be dismissed for want of prosecution in accordance with rule 165a of the Texas Rules of Civil Procedure. Appellant filed two motions for a "bench warrant" to appear in person for trial on October 26. In the motions, appellant states that he is presently incarcerated in the Texas Department of Criminal Justice Institutional Division. The record contains no orders on either of appellant's motions. Appellant then filed a motion for continuance of the case asserting that he was currently incarcerated and had not yet received any orders on his motions for a bench warrant. In the motion, appellant indicated that he had a mandatory release date that "can be as early as March of 2010 but no later than December 10, 2010." Although appellant apparently signed his motion on October 19, 2009, it was file-stamped October 27, 2009, the day after the scheduled trial date. When appellant failed to appear for trial on October 26, the trial court dismissed appellant's case with prejudice. Appellant then filed a motion to reinstate, which was overruled by operation of law. This appeal followed.
The term "bench warrant" is the vernacular phrase often used to describe a writ of habeas corpus ad testificandum, which is issued to compel an inmate to be brought before the court to testify. See Brewer v. Taylor, 737 S.W. 2d 421, 424 n. 3 (Tex. App.-Dallas 1987, no writ).
In his first and second issues, appellant argues that the trial court abused its discretion by dismissing his case without first providing notice and a hearing. Rule 165a authorizes a trial court to dismiss a case for want of prosecution on the failure of any party seeking affirmative relief to appear for a trial of which the party had notice. Tex. R. Civ. P. 165a(1). The decision to dismiss rests in the sound discretion of the trial court. Franklin v. Sherman Indep. Sch. Dist., 53 S.W.3d 398, 401 (Tex. App.-Dallas 2001, pet. denied). The trial court's notice setting the trial for October 26 specifically warned appellant that he could expect his case to be dismissed for want of prosecution if he failed to appear. Thus, appellant clearly had notice of the trial court's intention to dismiss the case upon his failure to appear on the trial date. Moreover, rule 165a(1) does not preclude a trial court from scheduling a trial or hearing, giving notice that failure to attend may result in dismissal for want of prosecution, and also deciding at that trial or hearing whether the case should be dismissed for want of prosecution if a party seeking relief fails to appear. See Alexander v. Lynda's Boutique, 134 S.W.3d 845, 852 (Tex. 2004). Rule 165a(1) only requires notice of intent to dismiss and the date, time, and place for the hearing. Id. The trial court is not required to hold a separate dismissal hearing before a case may be dismissed for want of prosecution pursuant to rule 165a(1). Id. Because the trial court's notice clearly set a date and time for the trial and stated the trial court's intention to dismiss for want of prosecution for failure to appear, the order satisfies any requirement that there be notice and an opportunity to be heard. Id. Accordingly, we resolve appellant's first and second issues against him.
In appellant's third issue, he contends the trial court abused its discretion in failing to hold a hearing on his motion to reinstate. Relying on Thordson v. City of Houston, 815 S.W.2d 550 (Tex. 1991) (per curiam), appellant argues that the trial court had no discretion to fail to hold an oral hearing on his motion to reinstate. We conclude that Thordson is not controlling authority in this case. In Thordson, the plaintiff specifically requested a oral hearing. In this case, appellant does not argue, and there is nothing in the record to suggest, he ever requested an oral hearing on his reinstatement motion or that he complained to the trial court that a hearing had not been set. As such, appellant has not preserved this complaint for review on appeal. See Tex. R. App. P. 33.1(a)(1); see also Rainbow Home Health, Inc. v. Schmidt, 76 S.W.3d 53, 57 (Tex. App.-San Antonio 2002, pet. denied). We resolve appellant's third issue against him.
In his fourth issue, appellant asserts the trial court abused its discretion by dismissing his lawsuit with prejudice. Because appellant did not present this complaint to the trial court, it is not preserved for our review. See Tex. R. App. P. 33.1(a)(1); Bridwell v. Mulder, 315 S.W.3d 657, 659-60 (Tex. App.-Dallas, no pet. h.).
We affirm the trial court's dismissal order.
Parc further breached the terms of the Note by failing pay additional interest.
Finally, Six Flags claims that it is entitled to a declaratory judgment for future breaches of the Contested Provision.
F. The Motion to Dismiss
Id. at ¶¶ 37-41.
Id. at ¶¶ 43-47.
Id. at ¶¶ 49-51. Under the Note, the alleged failure to pay Excess Amounts would constitute an event of default, triggering an increased interest rate. See Note, § I(A)(1), I(B), at p. 3.
Compl. at ¶ 56 [D.I. 1].
Parc filed a motion to dismiss all counts of the Complaint. The motion alleges that the complaint failed to state breach of contract claims because at Equalization the Deferred Amount is added to the balloon payment and is no longer subject to reduction, creating a "one-time" Excess Amount at Equalization. Parc next argues that even if the Court were to agree with Six Flags' interpretation of the Contested Provision, the Excess Amounts were not permitted by the Subordination Agreement. Accordingly, the motion further argues that Six Flags' failed to state a claim (1) for turnover because the contractual dispute renders the claim premature and (2) for declaratory judgment because such a claim is duplicative of the breach of contract claims.
Defs.' Br., ¶ 3 [D.I. 19].
Id.
LEGAL DISCUSSION
I. The Standard Regarding Sufficiency of Pleadings When Evaluating a Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted.
A motion under Rule 12(b)(6) serves to test the sufficiency of the factual allegations in the plaintiff's complaint. "Standards of pleading have been in the forefront of jurisprudence in recent years." With the Supreme Court's recent decisions in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal, "pleading standards have seemingly shifted from simple notice pleading to a more heightened form of pleading, requiring a plaintiff to plead more than the possibility of relief to survive a motion to dismiss."
Federal Rules of Civil Procedure 8(a) and 12(b)(6) are made applicable to this adversary proceeding pursuant to Federal Rules of Bankruptcy Procedure 7008 and 7012, respectively.
Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993) ("The pleader is required to set forth sufficient information to outline the elements of his claim or to permit inferences to be drawn that these elements exist." (citations omitted)).
Fowler v. UPMC Shadyside, 578 F.3d 203, 209 (3d Cir. 2009).
550 U.S. 544 (2007).
129 S. Ct. 1937 (2009).
Fowler, 578 F.3d at 210.
In Iqbal, the Supreme Court makes clear that the Twombly "facial plausibility" pleading requirement applies to all civil suits in the federal courts. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements" are insufficient to survive a motion to dismiss. Rather, "all civil complaints must now set out sufficient factual matter to show that the claim is facially plausible." A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the
See Fowler, 578 F.3d at 210.
Iqbal, 129 S. Ct. at 1949. See also Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2007) (citations omitted); Bartow v. Cambridge Springs SCI, 285 Fed. Appx. 862, 863 (3d Cir. 2008) ("While facts must be accepted as alleged, this does not automatically extend to bald assertions, subjective characterizations, or legal conclusions.); General Motors Corp. v. New A.C. Chevrolet, Inc., 263 F.3d 296, 333 (3d Cir. 2001) ("Liberal construction has its limits, for the pleading must at least set forth sufficient information for the court to determine whether some recognized legal theory exists on which relief could be accorded the pleader. Conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss. While facts must be accepted as alleged, this does not automatically extend to bald assertions, subjective characterizations, or legal conclusions." (citations omitted)).
Fowler, 578 F.3d at 210 (internal quotations omitted). See also Iqbal, 129 S. Ct. 1950 ("While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations."); Buckley v. Merrill Lynch Co. (In re DVI, Inc.), 2008 Bankr. LEXIS 2338 (Bankr. D. Del. Sept. 16, 2008) ("Rule 8(a) requires a showing rather than a blanket assertion of an entitlement to relief. We caution that without some factual allegation in the complaint, a claimant cannot satisfy the requirement that he or she provide not only fair notice, but also the grounds on which the claim rests."(citations omitted)).
misconduct alleged." Determining whether a complaint is "facially plausible" is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but not shown — that the pleader is entitled to relief."
Iqbal, 129 S. Ct. at 1949.
Iqbol, 129 S. Ct. at 1950. "It is the conclusory nature of [plaintiff's] allegations, rather than their extravagantly fanciful nature, that disentitles them to the presumption of truth." Id. at 1951.
Id. at 1950 (citations and internal quotations omitted).
After Iqbal, the Third Circuit has instructed this Court to "conduct a two-part analysis. First the factual and legal elements of a claim should be separated. The [court] must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions." The court "must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a plausible claim for relief."
Fowler, 578 F.3d at 210-11. See also Twombly, 550 U.S. at 555 (holding that a court must take the complaint's allegations as true, no matter how incredulous the court may be); Iqbal, 129 S. Ct. at 1949-50 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. . . . When there are well-plead factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief."); Winer Family Trust v. Queen, 503 F.3d 319, 327 (3d Cir. 2007); Carino v. Stefan, 376 F.3d 156, 159 (3d Cir. 2004). The Court may also consider documents attached as exhibits to the Complaint and any documents incorporated into the Complaint by reference. In re Fruehauf Trail Corp., 250 B.R. 168, 183 (Bankr. D. Del. 2000) ( citing PBGC v. White, 998 F.2d 1192, 1196 (3d Cir. 1993)). "[I]f the allegations of [the] complaint are contradicted by documents made a part thereof, the document controls and the Court need not accept as true the allegations of the complaint." Sierra Invs., LLC v. SHC, Inc. (In re SHC, Inc.), 329 B.R. 438, 442 (Bankr. D. Del. 2005). See also Sunquest Info. Sys., Inc. v. Dean Whitter Reynolds, Inc., 40 F. Supp. 2d 644, 649 (W.D.Pa. 1999) ("In the event of a factual discrepancy between the pleadings and the attached exhibit, the exhibit controls." (citations omitted)).
Fowler, 578 F.3d at 211 (internal quotations omitted) ("[A] complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to `show' such an entitlement with its facts." (citations omitted)). "The plaintiff must put some `meat on the bones' by presenting sufficient factual allegations to explain the basis for its claim." Buckley v. Merrill Lynch Co., Inc. (In re DVI, Inc.), 2008 Bankr. LEXIS 2338, at *13 (Bankr. D. Del. Sept. 16, 2008).
The Third Circuit has further instructed that "[s]ome claims will demand relatively more factual detail to satisfy this standard, while others require less."
In re Ins. Brokerage Antitrust Litig., 2010 U.S. App. LEXIS 17107, 46-47 n. 18 (3d Cir. Aug. 16, 2010). See also Arista Records LLC v. Doe, 604 F.3d 110, 120-21 (2d Cir. 2010) (stating that Twombly and Igbal require factual amplification where needed to render a claim plausible, not pleadings of specific evidence or extra facts beyond what is needed to make a claims plausible).
II. The Plausibility of Plaintiff's Claims for Relief.
A. Counts II and III: Breach of Contract Claims Against Parc.
The threshold disputes presented before the Court are (i) the timing of payment of an Excess Amount, if any; and (ii) whether it is plausible that the Deferred Amount (the amount actually deferred by Parc, $4 million) continued to be reduced creating additional Excess Amounts due; as opposed to adding the Deferred Amount, at Equalization, to the balloon payment subject to no further reductions.
Counts II and III of the Complaint are breach of contract claims. [c1]Count II seeks damages of $2,001,875 for Parc's alleged failure to pay Excess Amounts due under the Contested Provision of the Note. Count III seeks damages claiming that the failure to pay the Excess Amounts was a termination event under the Note which triggers additional interest (4%) which was allegedly owed since January 30, 2009.
Parc's motion to dismiss argues that the terms of the Note do not warrant payment of the Excess Amounts allegedly owed in the Complaint. Claiming that the Note is unambiguous, Parc interprets the Contested Provision as stating that, upon Equalization, the Deferred Amount is added to the balloon payment, and no further reductions to the Deferred Amount occur. They contend that a balloon payment, by definition, is made at maturity and cannot be prepaid. Furthermore, Parc argues that even if the Note allows further reductions to the Deferred Amount, the Excess Amount payments would be prohibited payments under the terms of the Subordination Agreement.
In response, Six Flags claims that the unambiguous language of the Note provides that the Deferred Amount is subject to reductions after Equalization, therefore, entitling Six Flags to the Excess Amount payments it seeks. Six Flags also contests that the Subordination Agreement has no bearing on the alleged Excess Amount payments owed by Parc.
Parc replied that a plain reading of the Note as a whole is incongruous with Six Flag's interpretation of the Note, arguing that Six Flag's interpretation would erroneously lead to the absurd result of Parc owing far more in Excess Amounts than the amount of Accrued Deferred Payments, $4,001,875. Parc also reiterates that the terms of the Subordination Agreement prohibit the Excess Amount payments.
For simplicity's sake the reduction to the Deferred Amount as accrual of the Accrued Deferred Payments works as follows: Principal and Maximum interest actually deferred Date deferred ("Accrued amount Event Explanation Deferred ("Deferred Amount") Amount") April 6, 2007 N/A $10 million Parc's annual January 1, 2008 $2 million $9 million $1 million annual principal payment reduction and interest thereon January 1, 2009 $4 million $8 million $1 million annual is deferred reduction January 1, 2010 $6 million $7 million $1 million annual reduction January 1, 2011 $8 million $6 million $1 million annual Equalization occurs; reduction including accrual of an "Excess Amount"; Parc begins monthly interest payments January 1, 2012 Parc begins paying annual principal, in addition to its continued obligation to make monthly interest payments Parc argues that (in this example) the following occurs: (i) $6 million (the Deferred Amount) is added to the balloon payment, (ii) Parc pays the $2 million Excess Amount ($8 million — $6 million), and (iii) Parc pays principal and interest when due per the Note. In Parc's argument the chart would be as follows, again using the simplistic explanation:
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Principal and Maximum interest actually deferred Date deferred ("Accrued amount Event Explanation Deferred Amount") ("Deferred Amount") April 6, 2007 N/A $10 million Parc's annual principal January 1, 2008 $2 million $9 million $1 million payment and interest annual thereon is deferred reduction January 1, 2009 $4 million $8 million $1 million annual reduction January 1, 2010 $6 million $7 million $1 million annual reduction January 1, 2010 $8 million $6 million $1 million Equalization occurs; annual including accrual of an reduction "Excess Amount"; Parc beings making it interest obligation payments per the terms of the Note $6 million would be added to the balloon payment; Parc would pay the "Excess Amount ($8 million - $6 million = $2 million) and Pare would begin making payments of principal; and continue its monthly interest obligations per the terms of the Note Six Flags claims that the Deferred Amount continues to reduce annually (or upon the other two reduction scenarios) and concurrent with each reduction-event, Parc would pay the (in this scenario) $1 million annual reduction until the Deferred Amount was paid-in-full. In Six Flags' argument the chart would be as follows, again using the simplistic explanation:
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Principal and Maximum interest actually deferred Date deferred amount Event Explanation ("Accrued ("Deferred Deferred Amount") Amount") April 6, 2007 N/A $10 million Parc's annual principal payment January 1, 2008 $2 million $9 million $1 million and interest thereon is deferred annual reduction January 1, 2009 $4 million $8 million $1 million annual reduction January 1, 2010 $6 million $7 million $1 million annual reduction January 1, 2010 $8 million $6 million $1 million Equalization occurs; including annual accrual of an "Excess Amount" reduction Parc begins to pay principal and interest per the terms of the Note, as well as, the Excess Payment ($8 million - $6 million = $2 million) January 1, 2011 $6 million $5 million $1 million In addition to principal and annual interest per the terms of the Note, reduction Parc would pay an additional Excess Amount of $1 million January 1, 2012 $5 million $4 million $1 million In addition to principal and annual interest per the terms of the Note, reduction Parc would pay an additional Excess Amount of $1 million January 1, 2013 $4 million $3 million $1 million In addition to principal and annual interest per the terms of the Note, reduction Parc would pay an additional Excess Amount of $1 million January 1, 2014 $3 million $2 million $1 million In addition to principal and annual interest per the terms of the Note, reduction Parc would pay an additional Excess Amount of $1 million January 1, 2015 $2 million $1 million $1 million In addition to principal and annual interest per the terms of the Note, reduction Parc would pay an additional Excess Amount of $1 million January 1, 2016 $1 million $0 $1 million In addition to principal and annual interest per the terms of the Note, reduction Parc would pay an additional Excess Amount of $1 million i. New York Law Regarding Contract Interpretation
Under New York Law, a breach of contract claim must allege: "(1) formation of an agreement, (2) performance by one party, (3) breach of the agreement by the other party, and (4) damages." A breach of contract claim must allege specific facts regarding the date of the formation of the contract, the parties to the contract, and the contract's "major terms." In addition, the pleading must "contain allegations about the specific provisions upon which liability is predicated." To survive a motion to dismiss, however, a plaintiff does not have to plead a "concrete amount of damages," but facts upon which damages caused by the defendant can be inferred.
See note 10, supra.
Berman v. Sugo, LLC, 580 F.Supp.2d 191, 202 (S.D.N.Y. 2008). Am. Home Mortg. Inv. Corp. v. Lehman Bros. (In re Am. Home Mortg. Holdings, Inc.), 388 B.R. 69, 93 (Bankr. D. Del. 2008).
Id.
Rodriguez v. It's Just Lunch, Int'l, 2010 U.S. Dist. WL 685009, at *10 (S.D.N.Y. Feb. 23, 2010) ( citing Sud v. Sud, 621 N.Y.S.2d 37, 38 (N.Y. App. Div. 1995)). See also Krouner v. Koplovitz, 572 N.Y.S.2d 959, 962 (N.Y. App. Div. 1991) (holding the complaint failed to state a breach of contract action because "[t]he terms of the agreement [were] not set out, nor [did] the complaint allege that the defendants promised plaintiff to achieve a specific result).
In re Food Mgmt. Group, LLC, 380 B.R. 677, 700 (Bankr. S.D.N.Y. 2008).
Weber v. Align Tech., 2010 U.S. Dist. WL 2265418 (N.D.N.Y. June 2, 2010) ( citing In re Grumman Olson Indus., 329 B.R. 411, 423 (Bankr. S.D.N.Y. 2005)) (finding plaintiff's pleading sufficient to survive a motion to dismiss because the allegations put defendant on fair notice of the alleged damages and claimed that the damages were caused by the breach of contract).
The Complaint establishes three of the breach of contract elements for Counts II and III. Existence of the agreement is provided with the attachment of the Note in an exhibit, Six Flags performed their obligation under the agreement by executing the Note and supplying seller financing to Parc, and both breach of contract claims state sufficient allegations of damages caused by Parc. The only element in dispute is the alleged breach of the Note by Parc. Because the event of the default in Count III exists only if the terms of the Note were breached under Count II, Count II is determinative of Count III.
ii. Does Parc owe Excess Amounts Continually under the Contested Provision?
To determine the plausibility of Parc's breach, the Court must construe the meaning of the Contested Provision and whether, in light of both parties' interpretations, the terms of the Note are ambiguous. "It is not necessarily true that a court considering a Rule 12(b)(6) motion in the context of a contract dispute must accept as true the construction of a contract proffered by the plaintiff." The determination of the existence of ambiguity in a contract and the interpretation of a clear and unambiguous contract are both appropriate questions of law for a court to decide when adjudicating a motion to dismiss. Agreements must be interpreted "in accord with the parties' intent." Extrinsic evidence of intent may only be considered if an agreement is
Falkenberg Capital Corp. v. Dakota Cellular, Inc., 925 F.Supp. 231, 236 (D. Del. 1996).
Id. ("It is for the Court to determine whether a contract term is ambiguous or unambiguous, as this determination is a question of law."); Kass v. Kass, 696 N.E. 2d 174, 180 (N.Y. 1998) ("Whether an agreement is ambiguous is a question of law for the courts . . . Ambiguity is determined by looking within the four corners of the document"); In re Am. Home Mortg. Holdings, Inc., 388 B.R. at 90-91 ("As the relevant terms of the [contract] are clear and unambiguous, their meaning is an issue of law, which the Court may consider in the context of a motion to dismiss."); Sunrise Mall Assoc. v. Import Alley of Sunrise Mall, Inc., 621 N.Y.S.2d 662, 663 (N.Y. App. Div. 1995) ("Interpretation of an unambiguous contract is a matter for the court").
Greenfield v. Philles Records, Inc., 780 N.E. 2d 166, 170 (N.Y. 2002).
ambiguous, where two reasonable interpretations of contractual provisions exist. However, language that has a plain meaning "`does not become ambiguous merely because the parties urge different interpretations in the litigation.'"
Id. ("A contract is unambiguous if the language it uses has a `definite and precise meaning' . . . if the agreement on its face is reasonably susceptible of only one meaning, a court is not free to alter the contract to reflect its personal notions of fairness and equity."); Maxim Group, LLC v. Life Partners Holdings, Inc., 690 F.Supp.2d 293, 304 (S.D.N.Y. 2010) ("[A] contractual provision is not rendered ambiguous simply because two interpretations are technically possible; both interpretations must also be reasonable"); See e.g. Mellon Bank, N.A. v. United Bank Corp. of N.Y., 31 F.3d 113, 116 (2d Cir. 1994) (finding a contract ambiguous given two reasonable interpretations).
JA Apparel Corp. v. Abboud, 568 F.3d 390, 396 (2d Cir. 2009) ( quoting Hunt Ltd. v. Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1277 (2d Cir. 1989). See Riverside South Planning Corp. v. CRP/Extell Riverside, L.P., 869 N.Y.S. 2d 511, 517 (N.Y. App. Div. 2008).
"When parties set down their agreement in a clear, complete, document, their writing . . . should be enforced according to its terms. . . . [I]n the context of real property transactions, where commercial certainty is a paramount concern and where . . . the instrument was negotiated between sophisticated, counseled business people negotiating at arm's length" this principle of contractual interpretation is particularly important. Grammatical construction is a "reliable signpost" to discover the parties' intent. The New York Supreme Court has adopted the "last antecedent doctrine" and has applied it to contract interpretation. The last antecedent doctrine states:
Relative or qualifying words or clauses in a statute are to be applied to words or phrases immediately preceding, and are not to be construed as extending to others more remote, unless the intent clearly indicates otherwise.
South Road Assocs. v. Intern. Business Machines Corp., 826 N.E.2d 806, 809 (N.Y. 2005) ( citing Vermont Teddy Bear Co. v. 538 Madison Realty Co., 807 N.E.2d 876, 879 (N.Y. 2004). See Quantum Chemicals Corp. v. Reliance Group, Inc., 580 N.Y.S.2d 275, 276 (N.Y. App. Div. 1992) ("There is a presumption that a deliberately prepared and executed written instrument manifests the true intention of the parties; such a presumption should apply with even greater force when the instrument is between sophisticated, counseled businessmen."); John Doris, Inc. v. Solomon R. Guggenheim Found., 618 N.Y.S.2d 99, 100 (N.Y. App. Div. 1994) ("[C]ourts may not rewrite the agreement to relieve a sophisticated contracting party from terms that it later deems disadvantageous."). See also Greenfield, 780 N.E. 2d at 170 ("`The best evidence of what parties to a written agreement intend is what they say in their writing.'" (citations omitted)).
Amusement Consultants v. Hartford Life Insurance Co., 625 N.Y.S. 2d 901, 902 (N.Y. App. Div. 1995) ( quoting Wirth Hamid Fair Booking v. Wirth, 192 N.E. 297 (N.Y. 1934)).
Duane Reade, Inc. v. Cardtronics, 863 N.Y.S.2d 14, 17 (N.Y. App. Div. 2008) (stating that applied to a contract, the last antecedent doctrine "becomes essentially an application of English language grammar, with an eye to the four corners of the contract.").
Nevertheless, a contract should be read as a whole, so that "[f]orm [does] not prevail over substance and [the] sensible meaning of words."
The rules of construction of contracts require us to adopt an interpretation which gives meaning to
every provision of a contract or, in the negative, no provision of a contract should be left without force and effect. Even if there was an inconsistency between a specific provision and a general provision of a contract . . ., the, [sic] specific provision controls.
Kass, 696 N.E.2d at 180-81 ( citing Atwater Co. v. Panama R.R. Co., 159 N.E. 418 (N.Y. 1927)). See Westmoreland Coal Co. v. Entech, Inc., 794 N.E.2d 667, 670 (N.Y. 2003) (stating that a contract will be read as whole because if "undue force" is placed on certain parts, the "general purpose" or meaning may be distorted); USA Network v. Jones Intercable, Inc., 729 F.Supp. 304, 308 (S.D.N.Y. 1990) (declining to interpret a contract in a way that would reach an absurd result clearly contrary to the plain and unambiguous language").
A court's goal should a "practical interpretation of the expressions of the parties to the end that there [is] a `realization of [their] reasonable expectations.'" Thus, a court may consider a contract's reasonable implications in addition to its literal language.
Duane Reade, Inc., 863 N.Y.S.2d at 16 ( quoting Brown Bros. Elec. Constr. v. Beam Constr. Corp., 361 N.E.2d 999 (N.Y. 1977)).
Id. (quoting Sutton v. East River Sav. Bank, 435 N.E.2d 1075 (N.Y. 1982)). But see Vermont Teddy Co., 807 N.E.2d at 879 ("`[C]ourts should be extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include.'" ( quoting Rowe v. Great Atl. Pac. Tea Co., 835 N.E.2d 566 (N.Y. 1978)).
The language of the Contested Provision, notwithstanding the two interpretations proffered by the parties, is clear and unambiguous. Furthermore, both Six Flags and Parc are sophisticated business entities, who, at arm's length, executed a real property transaction.
a. Timing and Payment of Excess Amount(s)
The Note speaks to the timing for the payments of the Excess Amount:
concurrently, therewith, the amount, if any, by which the Accrued Deferred Payments exceeds the Deferred Amount, as adjusted, shall be paid in the full to the [Six Flags].
This language appears in two places in the Contested Provision, immediately following descriptions of reductions to the Deferred Amount. This phrase speaks directly to the timing of the payments to Six Flags. "Concurrently" is defined as "operating at the same time. . . . " The plain and unambiguous language of the Note indicates that upon Equalization, if the Accrued Deferred Payments exceeded the Deferred Payments (i.e. the Excess Amount), the Excess Amount would be due concurrently with the Equalization event.
Note at ¶ 1, pp 1-2 [D.I. 1]. Upon Equalization, the Deferred Amount is reduced by (i) $1 million each January 1st, (ii) the value of any guaranteed rend paid by Six Flags under the Limited Rent Guaranty, and (iii) the amount of net proceeds from an Equity Event.
Black's Law Dictionary (8th ed. 2004).
This calculation is algebraic: If Accrued Deferred Amount Deferred Amount; then Accrued Deferred Amount — Deferred Amount = Excess Amount.
Therefore, it is plausible that Parc must pay any Excess Amount at the same time as Equalization. But, is it plausible that the Deferred Amount continues to reduce after Equalization, thereby creating continuous Excess Amounts until the Deferred Amount is paid in full?
b. Is the Deferred Amount Reduced After Equalization?
Parc argues that once Equalization has occurred the Deferred Amount is added to the balloon payment and no further reductions to the Deferred Amount take place. Parc focuses on the following language, that upon Equalization:
the Deferred Amount shall be added to the balloon payment due hereunder.
This phrase supersedes the Deferred Amount reduction/payment language. Six Flags argues that the entire "provided, further however" clause applies to the whole preceding clause which describes Equalization and the clause "the Deferred Amount shall be added to the balloon payment. . . ." Arguing that the reduction language also attaches to the last phrase, thereby continually reducing the Deferred Amount.
Parc responds that adapting Six Flags' construction of the Contested Provision would lead to an absurd result. The Court agrees. If the Deferred Amount is not added to the balloon payment upon Equalization, it would write-out the contractual phrase "and the Deferred Amount shall be added to the balloon payment due hereunder."
See note 66, supra.
Moreover, if the Deferred Amount is added to the balloon payment and then reduced (or pre-paid) then it would controvert the definition of a balloon payment. Although Six Flags has pled sufficient facts taken as true to support its claims, the Note contradicts the allegations and controls.
"Balloon payment" is defined as "[a] final payment that is usually mush larger than the preceding regular payments and that discharges the principal balance of the loan. Black's Law Dictionary (8th ed. 2004) (emphasis added). Furthermore, a "balloon note" is defined as "[a] note requiring small periodic payments but a very large final payment." Id. (emphasis added).
See Sierra Invs., LLC v. SHC, Inc. (In re SHC, Inc.), 329 B.R. 438, 442 (Bankr. D. Del. 2005).
It simply does not make sense that with this complicated system of deferral the deferral was only temporary as it is continually reduced even after Equalization. The Court is further convinced by what the Note does not say. For example, assuming arguendo that Six Flags' interpretation is correct, the Note is silent as to the treatment of the Deferred Amount ($4 million) while it is being reduced. The Note does not state that the $4 million is added to the balloon payment, including accrual of interest (if any), but the principal ($4 million) is then pre-paid; the Note does not state that the $4 million becomes a different fund, including but not limited to how interest (if any) accrues on this "new fund." The Court finds that Six Flags interpretation of the Contested Provision is not logical when looking at the Contested Provision in toto. The Court finds that the only plausible interpretation of the Contested Provision is that at Equalization, the Deferred Amount, $4 million, is added to the balloon payment and is not subject to further reductions.
Iqbol promotes the use of judicial experience and common sense. Iqbol, 129 S. Ct. 1950.
At Equalization, $4 million would be added to the balloon payment; but Six Flags claims that Parc would pay-back annually part of the balloon payment that was reflective of the Deferred Amount. In the Court's view this is akin to a penalty.
Duane Reade, Inc., 863 N.Y.S.2d at 18-19. "[I]t has long been the rule, in construing contracts, that "particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby." Id. at 19 (citations and internal quotations omitted).
iii. Conclusion
As the Court holds that Six Flags' position that the Deferred Amount decreases even after Equalization is not plausible. However, the Court finds that it is plausible that at Equalization the Excess Amount, alleged to be $1,875, should have been paid concurrently with Equalization. The Court believes that in the scope of this Note, $1,875 is a de minimis amount and, as such, does not implicate the Subordination Agreement; therefore the Court will not address whether the Subordination Agreement would prohibit this payment ($1,875). Thus, the Court grants the motion to dismiss Count II of the Complaint. B. Count III: The Second Claim for Breach of Contract against Parc
The Court notes that the remaining amount alleged owed is .04% of the amount at issue.
Out of an abundance of caution, the Court reserves the parties' rights to argue that such payment would controvert the Subordination Agreement.
Count III alleges that Parc's alleged failure to pay the Excess Amounts upon Equalization would constitute an "Event of Default" under the terms of the Note, triggering an interest rate increase. Taking into account the Court's ruling above, Six Flags' remaining contention related to the Excess Amount is $1,875. Viewing the allegations in the Complaint as true, this Excess Amount has not been paid by Parc. However, as such amount is de minimis, the Court grants the motion to dismiss regarding Count III, without prejudice. Six Flags' rights to plead payment of $1,875 and whether it would constitute an "Event of Default" triggering the interest rate increase are hereby reserved.
Under the Note, the alleged failure to pay Excess Amounts would constitute an event of default, triggering an increased interest rate. See Note, § I(A)(1), I(B).
C. Count I: The Claim for Turnover of Property to the Estate Against Parc
Count I of the Complaint alleges that Parc owed Six Flags Excess Amounts on January 1, 2009, and January 1, 2010, under the terms of the Note, and that these Excess Amounts are matured and due and payable, therefore, subject to turnover. It further alleges that because Parc failed to pay the Excess Amounts, Six Flags is entitled to turnover of $2,001,875.
As discussed above, the only plausible Excess Payment that Six Flags alleges Parc did not pay is $1,875. As noted above, it is plausible that this alleged debt is matured and may be subject to turnover. However, as this alleged amount is de minimis, the motion to dismiss is granted, without prejudice. Six Flags' rights to plead turnover related to the alleged Excess Amount of $1,875 is hereby reserved.
D. Count IV: The Claim for Declaratory Judgment against Parc
As the Court has found that Six Flags' interpretation of the Contested Provision is not plausible, the Court finds that Six Flags' averments of declaratory judgment are moot. As such, the Court grants the motion to dismiss Count IV of the Complaint.
CONCLUSION
For the foregoing reasons, the Court grants, without prejudice, the motion to dismiss Count I of the Complaint for turnover of the property of the estate; grants, as set forth herein, the motion to dismiss Count II; grants, without prejudice, the motion to dismiss Count III of the Complaint for breach of contract; and grants the motion to dismiss Count IV of the Complaint for declaratory judgment.
An order will be issued.