BERNARD J. FRIED

Jeff Ross, Esq., Ross & Orentstein, LLC, Mineapolis, MN, for Plaintiff. Andrew Fishkin, Esq., Edwards Angell Palmer & Dodge, LLP, New York, for Defendants.
BERNARD J. FRIED, J.

This is a motion and a cross-motion for summary judgment on the first and second causes of action in the amended complaint.

Briefly, the facts are as follows.

On March 9, 2009, defendant American Tower Mauritius and plaintiff Horse–Shoe executed a Purchase and Sale Agreement (“PSA”) pursuant to which American Tower Mauritius purchased all of the outstanding shares of XCEL Telecom Private Ltd. from Horse–Shoe. Upon the closing of the transaction on May 27, 2009, and as required by the PSA, American Tower Mauritius deposited approximately $15.7 million of the purchase price into a tax escrow account.

That same day, the parties entered into a Tax Escrow Agreement to provide for the maintenance and eventual disbursement of those funds. The Tax Escrow Agreement provides that 75% of the escrowed funds shall be held until the “Tax Escrow Termination Date,” which is defined as the later of August 10, 2013 or “in case of litigation until a final non-appealable resolution under the Indian Tax Laws.” The Tax Escrow Agreement permits an earlier release of the escrowed funds only if certain specified conditions are met. On March 22, 2010, the Authority for Advanced Rulings in India (AAR) issued its ruling in E*Trade. Soon thereafter, Horse–Shoe demanded that American Tower agree to release the escrowed funds on the basis that the AAR's decision in E*Trade constituted an early triggering event under section 4(e)(i) of the Tax Escrow Agreement. Defendants have not agreed to release the escrowed funds.

Both parties have moved for summary judgment on the issue of whether the E*Trade decision issued by the AAR entitles the plaintiff to early release of the escrowed funds pursuant to section 4(e)(i) of the Tax Escrow Agreement. Section (4)(e)(i) of the Tax Escrow Agreement provides that the escrowed funds may be released: in case of any Indian Tax litigation relating to application of capital gains taxes to the transactions contemplated by the Purchase Agreement or a transaction substantially similar thereto, a final non-appealable resolution of such litigation to the effect that the transactions contemplated by the Purchase Agreement or transaction substantially similar thereto is not subject to taxation under the Indian Income Tax Act, 1961 (or a successor statute) (Affidavit of Ruth Dowling, Exh. B). The parties dispute whether the AAR proceeding qualifies as “Indian Tax Litigation” and whether the AAR's decision in E*Trade is a “Final Non–Appealable Resolution” under section 4(e)(i) of the Tax Escrow Agreement.

“The proponent of a motion for summary judgment must demonstrate that there are no material issues of fact in dispute, and that it is entitled to judgment as a matter of law.” (Dallas–Stephenson v. Waisman, 39 AD3d 303, 306 [1st Dep't 2007], citing Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985] ). Upon proffer of evidence establishing a prima facie case by the movant, “the party opposing a motion for summary judgment bears the burden of produc[ing] evidentiary proof in admissible form sufficient to require a trial of material questions of fact.” (People v. Grasso, 50 AD3d 535, 545 [1st Dep't 2008], quoting Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980] ). If there is any doubt as to the existence of a triable issue of fact, summary judgment must be denied. (Rotuba Extruders v. Ceppos, 46 N.Y.2d 223 [1978];Gross v. Amalgamated Hous. Corp., 298 A.D.2d 224 [1st Dep't 2002] ).

Summary judgment is appropriate where an action turns on the construction of a contract, and the contract language is unambiguous. (Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 NY3d 470 [2004] [construction of unambiguous contract is matter of law for disposition by court]; Namad v. Salomon Inc., 74 N.Y.2d 751 [1989] ). “When the terms of a contract are clear and unambiguous, the intent of the parties must be found within the four corners of the document ...” (ABS P'ship v. AirTran Airways, 1 AD3d 24, 29 [1st Dep't 2003] [citations omitted] ).

As a threshold matter, the parties dispute whether the relevant terms of the parties' Tax Escrow Agreement are clear and unambiguous. The defendants argue that there is no ambiguity in the terms “litigation” or “final” or “non-appealable” as each of these words has a plain and ordinary meaning in our lexicon. The plaintiff argues that these terms are ambiguous as they may be interpreted differently and are not defined in the contract. Furthermore, the plaintiff offers parol evidence to support its interpretation of these terms.

“Whether an agreement is ambiguous is a question of law for the courts ... Ambiguity is determined by looking within the four corners of the documents, not to outside sources.” (Riverside S. Planning Corp v. CRP/Extell Riverside, L.P., 13 NY3d 398, 404 [2009] ). In determining whether an agreement is ambiguous, the inquiry is “whether the agreement on its face is reasonably susceptible of more than one interpretation.” (Chimart Ass'n v. Paul, 66 N.Y.2d 570, 573 [1986] ). The language of a contract is not ambiguous simply because the parties urge different interpretations. (Bethlehem Steel Co. v. Turner Constr. Co., 2 N.Y.2d 456, 460 [1957];Slattery Skanska Inc v. American Home Assur. Co., 67 AD3d 1, 14 [1st Dep't 2009]; Moore v. Kopel, 237 A.D.2d 124, 125 [1st Dep't 1997] ).

Here, the relevant terms of the Tax Escrow Agreement are clear and unambiguous, and may be interpreted as a matter of law. The Tax Escrow Agreement was negotiated by sophisticated parties and the agreement specifically defines terms where definitions are required. However, terms that have a plain and ordinary meaning, such as “litigation” and “final” and “non-appealable” are not defined in the agreement. These terms have a definite and precise meaning that cannot reasonably be misunderstood.

Since the relevant terms of the Tax Escrow Agreement are unambiguous, they will be interpreted according to their plain and ordinary meaning. (Matter of Covert, 97 N.Y.2d 68, 76 [2001] [if the contract terms are clear and unambiguous, these terms are to be taken and understood in their plain, ordinary and proper sense]. The parol evidence submitted by the plaintiff in support of its interpretation of the contract is excluded. (ABS P'ship v. AirTran Airways, 1 AD3d 24, 29 [1st Dep't 2003] [when the terms of a contract are clear and unambiguous, the intent of the parties must be found within the four corners of the document].

To assist the Court in determining what the AAR is and whether AAR proceedings are “litigation” in the ordinary and plain meaning of the term, the defendant has submitted excerpts from the AAR's website, relevant sections of the Indian Income Tax Act which establish the authority of the AAR, and a copy of the Delhi High Court's decision. (Affidavit of Ruth Dowling, Exhs. F, G, H). The AAR's website states that the AAR was created to provide “the facility of ascertaining the Income-tax liability of a non-resident, to plan their Income-tax affairs well in advance and to avoid long drawn and expensive litigation....” ( Id., Exh. F). The website describes the AAR as an alternative to expensive and time consuming litigation which might arise from normal income-tax assessment proceedings. ( Id.). Furthermore, a party cannot seek an advance ruling from the AAR if the question is already pending before any income-tax authority, the Appellate Tribunal, or any court. ( Id., Exh. G, § 245R[2] ). Based on this evidence, it is clear that AAR proceedings are an alternative to litigation.

The plaintiff argues that the AAR proceeding is litigation because the AAR tribunal is vested with the powers of a civil court and because cases before the AAR are briefed, argued by counsel, and adjudicated by a panel which issues an opinion indistinguishable from a judicial decision. Furthermore, the plaintiff argues that the court should not refer to a dictionary definition of litigation because that is not what the parties intended when they negotiated the contract. Instead, the plaintiff argues that the term litigation should be interpreted in the “generic” sense to encompass civil litigation, arbitration, and administrative proceedings.

It is common practice for courts to refer to the dictionary to determine the plain and ordinary meaning of contract terms. (Mazzola v. County of Suffolk, 143 A.D.2d 734, 735 [2d Dep't 1998]; Laba v. Carey, 29 N.Y.2d 302 [1971];Allied Chem. Corp v. Alpha Portland Inds., 58 A.D.2d 975 [4th Dep't 1977] ). According to Black's Law Dictionary, “litigation” is defined as “the process of pursuing a lawsuit.” (Black's Law Dictionary 1017 [9th ed.2009] ). Likewise, “lawsuit” is defined as “any proceeding by a party or parties against another in a court of law.” ( Id. at 1572 [“suit”] ).

The claim by the plaintiff that the AAR looks like a court is not persuasive. Indeed the AAR itself has made it clear it is not a court, or more precisely not litigation, but rather an alternative to “expensive and time consuming litigation.” This is controlling, not the plaintiff's description of the AAR. Therefore, the AAR proceeding is not “Indian Tax Litigation” in the plain and ordinary meaning of the term and the E*Trade decision issued by the AAR does not trigger the early release of the funds in the tax escrow account.

Accordingly, it is hereby

ORDERED that the defendants' motion for partial summary judgment is granted and the first and second causes of action in the amended complaint are dismissed; and it is further

ORDERED that the plaintiff's cross-motion for partial summary judgment is denied; and it is further

ORDERED that the action shall continue as to the third cause of action.