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Oneida's financial difficulties continued and in the spring of 2005, Oneida was again looking for a financial advisor. PJSC insisted that the Tail Provision of the Letter Agreement was applicable since Oneida never sent a written notice of termination of the Letter Agreement after the 2004 Transaction. In response, on April 27, 2005, Oneida sent such a termination letter. On August 1, 2005, Oneida hired Credit Suisse First Boston ("CSFB"); on March 19, 2006, Oneida filed a pre-packaged chapter 11 plan. During the bankruptcy, the court approved both interim and final DIP facilities. And, on August 30, 2006, the court approved the plan of reorganization and in October 2006, the court approved Oneida's exit financing facility and final fee applications. PJSC argues that it is due $6.3 million based on three agreements Oneida executed in the 2006 bankruptcy case: the plan support agreement, the DIP credit agreement, and the exit financing agreement (together, the "2006 Chapter 11 Transactions").
Issues: Whether PJSC was entitled to a separate transaction fee under the Tail Provision of the Letter Agreement.
Rules: In New York, "a contract is interpreted so as to give effect to the intention of the parties as expressed in the unequivocal language employed... [a] contract should not be interpreted to produce a result that is absurd, commercially unreasonable or contrary to the reasonable expectations of the parties... courts may examine events that take place subsequent to the execution of a contract to ascertain the intent of the parties." "'Full performance of a duty under a contract discharges the duty.'" Restatement (Second) of Contracts, § 235(1) (1981).
Holding: PJSC is not entitled to any payment due to the 2006 Chapter 11 Transactions.
Reasoning: There was no dispute among the parties that PJSC's employment was limited; in other words, PJSC was not hired "to provide ongoing general financial advisory services." Additionally, there is no dispute that, at the end of its engagement in 2004, PJSC was paid both its monthly fee and its transaction fee and PJSC "correctly viewed the contract as completed and fulfilled." Section 6 of the Letter Agreement (in which the Tail Provision resides), gives either party the right to terminate the Letter Agreement before the completion of a transaction and the earning of a transaction fee. But, if the Letter Agreement "is terminated prior to the occurrence of a 'Transaction,' and PJSC is not able to earn a transaction fee, PJSC has certain rights and certain protections. One of these is the tail-if a 'Transaction' is consummated within thirteen months of a written termination, PJSC is nevertheless entitled to its fee." But, PJSC's position here is absurd in that PJSC is trying to get a second transaction fee because Oneida entered into a second transaction, despite the fact that the Letter Agreement had been completed long before and merely because Oneida failed to 'terminate' a contract that both parties had deemed completed. The language in another section of the Letter Agreement supports such a reading: section 5 of the Letter Agreement contemplates termination, expiration, or completion of PJSC's engagement. Therefore, Oneida's objection to PJSC's proof of claim is sustained and the claim is expunged.
Facts: Certain investors (the "Investors") in a limited partnership - W.C. Perry Properties, L.P. (the "Partnership") - filed proofs of claim in the individual debtor's chapter 11 case seeking to hold the debtor personally liable, as 'control person' of the Partnership's general partner - W.C. Perry Brokerage Services Group, LLC (the "General Partner") - for fraudulently omitting material facts from the prospectus. The prospectus attached the General Partner's partnership agreement and specifically stated that "all statements relating to the Partnership Agreement are qualified in their entirety by reference to the Partnership Agreement... each investor should carefully read and review the entire Partnership Agreement..." In the debtor's bankruptcy, the Investors sought to rescind their investments under Texas Securities Act, article 581-1, based upon their argument that there were two material omissions in the Partnership's prospectus: (1) the failure to disclose that Class A limited
