Opinion
01 Civ. 4749 (LAK).
February 4, 2002
ORDER
This diversity action was brought by plaintiff on June 1, 2001 to recover on two promissory notes, each in the amount of $58,500, for specific enforcement of certain rights under a certain agreement, and for collection and enforcement costs, including attorneys' fees. Following the institution of the action, the notes were paid and the allegedly agreed performance rendered. Accordingly, the only remaining issues are whether defendants are liable to plaintiff for attorneys' fees and other costs and, if so, in what amount. Plaintiff has moved for summary judgment.
The Notes
The notes each provided that the maker, defendant Tempest Software, Inc. ("TSI"), would pay the agreed sums to the order of Trust f/b/o Carolyn Cooper (the "Trust") "on the earliest of October 13, 2001, (b) immediately following the consummation of a financing in which the aggregate net proceeds to [TSI] exceed $5,000,000 and (c) the occurrence of a Specified Event (as defined below) . . ." Each provided that [TSI] shall pay all costs of collection (including reasonable counsel fees), if default is made in payment of this note." (Emphasis added) It is undisputed that the notes were paid on or about June 15, 2001. Defendants have submitted evidence that the other events upon the occurrence of which the notes would become payable did not occur prior to payment of the notes. In consequence, plaintiff has failed to establish the absence of a genuine issue of material fact with respect to the question whether there was any default in payment of the notes. That being so, he is not entitled to summary judgment with respect to the cost of collection of the notes.
The Agreement
Section 8 of the Agreement in question obliged TSI to furnish plaintiff with copies of certain financial information that it "furnishes to any third party investor that provides [it] with financing from time to time, as and when [it] furnishes such financial statements and budgets to any such third party investor." Section 12.3, entitled remedies, (i) acknowledged that the parties would be injured irreparably absent specific performance of the agreement, (ii) provided for the issuance of temporary restraining orders and injunctions restraining votes or transfer of securities without bond in the event of a dispute concerning voting or transfer, (iii) provided for specific performance of rights or obligations to vote or purchase securities without bond in the event of a dispute concerning voting or transfer, (iv) provided for temporary restraining orders and injunctions without bond with respect to obligations under section 7, and (v) stated that the remedies thereunder shall not be exclusive. It then went on to say that "[t]he prevailing party in any proceeding under this section 12.3 shall be entitled to recover from the other parties in the proceeding its attorneys' fees and costs incurred in connection therewith."
Plaintiff claimed that it was entitled to financial information under Section 8. After the action was commenced, TSI provided the requested information, although it maintains that it was not obliged to do so prior to May 29, 2001. Plaintiff asserts that it is entitled to recover the cost of obtaining the information under Section 12.3. But there is an issue of material fact, at least as to whether plaintiff was entitled to the information under Section 8 prior to the commencement of the action. Absent such an entitlement, there would have been no basis for an action for specific performance. Further, the Court is not prepared at this juncture to hold that the phrase "prevailing party" as used in Section 12.3 unambiguously characterizes plaintiff's situation with respect to the financial information. See Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources, 121 S.Ct. 1835, 1839 (2001) ("prevailing party" within meaning of federal fee shifting statutes is one who has been awarded relief by a court).
Conclusion
Plaintiff's motion for summary judgment is denied. The parties are urged to resume settlement discussions promptly.
SO ORDERED.