Avenue CLO Fund, Ltd. et al v. Bank of America, N.A., et al

Filing 79

CERTIFIED REMAND ORDER. MDL No. 2106. Signed by MDL (FLSD) on 1/14/14. (Attachments: # 1 Transmittal from FLSD, # 2 1 09-md-02106 Designation of Record, # 3 1 09-md-02106 Dkt. Sheet - flsd, # 4 09-MD-2106 DE 1, 2, 4-30, # 5 0 9-MD-2106 DE 32-36, # 6 09-MD-2106 DE 37 part 1 of 3, # 7 09-MD-2106 DE 37 part 2 of 3, # 8 09-MD-2106 DE 37 part 3 of 3, # 9 09-MD-2106 DE 38, 39, 41-47, 49, 50, # 10 09-MD-2106 DE 51, # 11 09-MD-2106 DE 52-59, 61-65, 68, 70, 72-76, # (1 2) 09-MD-2106 DE 78-84, 86-91, # 13 09-MD-2106 DE 93, 95-103, 106-108, # 14 09-MD-2106 DE 110-115, # 15 09-MD-2106 DE 116-125, 127-129, 132-134, # 16 09-MD-2106 DE 136-140, 142-158, # 17 09-MD-2106 DE 160-162, 164-167, 170-175, 177-190, # ( 18) 09-MD-2106 DE 191-199, 201-215, # 19 09-MD-2106 DE 217-229, 232-247, # 20 09-MD-2106 DE 248, # 21 09-MD-2106 DE 249 part 1 of 2, # 22 09-MD-2106 DE 249 part 2 of 2, # 23 09-MD-2106 DE 251-253, 262-266, 284-287, 300, 301, 310, 319, 326-3 31, # 24 09-MD-2106 DE 335, 336, 338-344, 346-349, # 25 09-MD-2106 DE 350, # 26 09-MD-2106 DE 351-358, # 27 09-MD-2106 DE 360-366, 368-374, # 28 09-MD-2106 DE 375 part 1 of 3, # 29 09-MD-2106 DE 375 part 2 of 3, # 30 09-MD-2106 DE 375 p art 3 of 3, # 31 09-MD-2106 DE 376 part 1, # 32 09-MD-2106 DE 376 part 2, # 33 09-MD-2106 DE 376 part 3, # 34 09-MD-2106 DE 376 part 4, # 35 09-MD-2106 DE 376 part 5, # 36 09-MD-2106 DE 376 part 6, # 37 09-MD-2106 DE 376 part 7, # 38 09-MD-2106 DE 376 part 8, # 39 09-MD-2106 DE 376 part 9, # 40 09-MD-2106 DE 377 part 1, # 41 09-MD-2106 DE 377 part 2, # 42 09-MD-2106 DE 378, # 43 09-MD-2106 DE 379, # 44 09-MD-2106 DE 380, # 45 09-MD-2106 DE 381 part 1, # 46 09-MD-2 106 DE 381 part 2, # 47 09-MD-2106 DE 382 part 1, # 48 09-MD-2106 DE 382 part 2, # 49 09-MD-2106 DE 382 part 3, # 50 09-MD-2106 DE 382 part 4, # 51 09-MD-2106 DE 383 part 1, # 52 09-MD-2106 DE 383 part 2, # 53 09-MD-2106 DE 383 part 3, # 54 09-MD-2106 DE 383 part 4, # 55 09-MD-2106 DE 383 part 5, # 56 09-MD-2106 DE 383 part 6, # 57 09-MD-2106 DE 383 part 7, # 58 09-MD-2106 DE 383 part 8, # 59 09-MD-2106 DE 383 part 9, # 60 09-MD-2106 DE 383 part 10, # 61 09-MD-2106 DE 383 part 11, # 62 09-MD-2106 DE 384 part 1, # 63 09-MD-2106 DE 384 part 2, # 64 09-MD-2106 DE 384 part 3, # 65 09-MD-2106 DE 384 part 4, # 66 09-MD-2106 DE 384 part 5, # 67 09-MD-2106 DE 384 part 6, # 68 09-MD-2106 DE 384 part 7, # ( 69) 09-MD-2106 DE 384 part 8, # 70 09-MD-2106 DE 384 part 9, # 71 09-MD-2106 DE 384 part 10, # 72 09-MD-2106 DE 384 part 11, # 73 09-MD-2106 DE 385 part 1, # 74 09-MD-2106 DE 385 part 2, # 75 09-MD-2106 DE 386 part 1, # 76 09-MD-2106 DE 386 part 2, # 77 09-MD-2106 DE 386 part 3, # 78 09-MD-2106 DE 386 part 4, # 79 09-MD-2106 DE 386 part 5, # 80 09-MD-2106 DE 386 part 6, # 81 09-MD-2106 DE 386 part 7, # 82 09-MD-2106 DE 387 part 1, # 83 09-MD-2106 DE 387 part 2, # 84 09-MD-2106 DE 388, # 85 09-MD-2106 DE 389 part 1, # 86 09-MD-2106 DE 389 part 2, # 87 09-MD-2106 DE 389 part 3, # 88 09-MD-2106 DE 389 part 4, # 89 09-MD-2106 DE 390, 392-394, # 90 1 10-cv-20236 Dkt. Sheet - flsd, # 91 10cv20236 DE #1-27, 29-31, 45, 53, 60-65, 67-70, 73, # 92 1 09-cv-23835 Dkt. Sheet - flsd, # 93 09cv23835 DE 112, 115-126, # 94 09cv23835 DE 130, 134, 135 and 145)(Copies have been distributed pursuant to the NEF - MMM)

Case 1:09-md-02106-ASG Document 387 Entered on FLSD Docket 12/06/2013 Page 1 of 4

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Miami Division
CASE NO.: 09-2106-MD-GOLD/GOODMAN
IN RE:
FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL NO. 2106
This document relates to all actions.
______________________________________/
NOTICE OF FILING ON THE PUBLIC RECORD
DOCUMENTS PREVIOUSLY FILED UNDER SEAL RELATED TO BANA’S
OPPOSITION TO PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT
Defendant Bank of America N.A. (“BANA”) hereby gives notice that it is filing on the
public record certain documents, previously filed under seal related to BANA’s Opposition to
Plaintiffs’ Motion for Partial Summary Judgment in the above-titled case.
On October 4, 2013, this Court issued an Order Upon Mandate [D.E. #368] requiring the
parties to specify, by district court docket entry number, which documents previously filed under
seal could be unsealed. 1 However, because the parties could not view the sealed entries on the
electronic CM/ECF docket in this case—and therefore, could not determine which district court
docket entry numbers corresponded to each sealed document—the Court later issued a Sua
Sponte Order Regarding Mandate and Documents Filed Under Seal [D.E. #370] requiring the
parties to make a recommendation by November 1, 2013 regarding how they proposed to comply

1

The parties previously filed with the Eleventh Circuit a letter dated December 14, 2012,
identifying documents and testimony that should remain sealed. Since that time, the parties have
determined that certain evidence included on that list no longer needs to remain sealed and, upon
further review of the record, the parties have identified other evidence that should remain sealed
which was inadvertently omitted from the letter.

Case 1:09-md-02106-ASG Document 387 Entered on FLSD Docket 12/06/2013 Page 2 of 4

with this Court’s October 4, 2013 Order Upon Mandate.
On November 1, 2013, the parties filed a Joint Notice Regarding Proposal for Partially
Unsealing Summary Judgment Filings [D.E. #373]. The parties proposed submitting to the
Court redacted copies of all memoranda of law and statements of material facts, in addition to
one copy of each exhibit and a single compilation of each witness’s deposition transcript
excerpts cited in all memoranda of law. On November 5, 2013, this Court entered an Order
Approving Joint Proposal [D.E. #374], approving the parties’ joint proposal and ordering the
parties to file via CM/ECF redacted copies of the summary judgment memoranda of law,
statements of facts, and exhibits, on or before December 6, 2013.
BANA previously filed under seal the documents listed below on September 9, 2011 and
October 7, 2011. In compliance with this Court’s Order Approving Joint Proposal, BANA now
files the following documents on the public record:2
BANA’S OPPOSITION TO PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY
JUDGMENT AND RELATED FILINGS
No.
Document
Date Filed Under Seal
Filing Status
BANA’s Opposition to Plaintiffs’ Motion for Partial Summary Judgment
1
BANA’s Opposition to Plaintiffs’
September 9, 2011
Publicly filed with
Motion for Partial Summary Judgment
redactions (attached)
2
BANA’s Response to Plaintiffs’
September 9, 2011
Publicly filed with
Statement of Undisputed Material Facts
redactions (attached)
and Statement of Additional
Undisputed Material Facts in
Opposition to Plaintiffs’ Motion for
Partial Summary Judgment

2

Additional documents previously filed under seal related to BANA’s Motion for Summary
Judgment and Plaintiffs’ Motion for Partial Summary Judgment, including exhibits to the Cantor
Declarations, deposition exhibits, and other memoranda of law and statements of facts, will be
filed under separate cover.
2

Case 1:09-md-02106-ASG Document 387 Entered on FLSD Docket 12/06/2013 Page 3 of 4

BANA’S OPPOSITION TO PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY
JUDGMENT AND RELATED FILINGS
No.
Document
Date Filed Under Seal
Filing Status
3
Declaration of Daniel L. Cantor in
September 9, 2011
Publicly filed with
Support of BANA’s Opposition to
redactions (attached)
Plaintiffs’ Motion for Partial Summary
Judgment and Request for Judicial
Notice (without exhibits)
BANA’s Opposition to Plaintiffs’ Request for Judicial Notice
4
BANA’s Opposition to Plaintiffs’
September 9, 2011
Publicly filed
Request for Judicial Notice in Support
(attached)
of Term Lender Plaintiffs’ Motion for
Partial Summary Judgment
BANA’s Reply to Plaintiffs’ Response to BANA’s Evidentiary Objections
5
BANA’s Reply to Plaintiffs’ Response October 7, 2011
Publicly filed with
to BANA’s Evidentiary Objections
redactions (attached)
Date: Miami, Florida
December 6, 2013
By: /s/ Jamie Zysk Isani
Jamie Zysk Isani
Jamie Zysk Isani (Florida Bar No. 728861)
HUNTON & WILLIAMS LLP
1111 Brickell Avenue, Suite 2500
Miami, Florida 33131
Telephone: [phone]
Facsimile: [phone]
E-mail: [e-mail]
-andBradley J. Butwin (pro hac vice)
Jonathan Rosenberg (pro hac vice)
Daniel L. Cantor (pro hac vice)
William J. Sushon (pro hac vice)
O’MELVENY & MYERS LLP
7 Times Square
New York, New York 10036
Telephone: [phone]
Facsimile: [phone]
E-mail: [e-mail]
[e-mail]
[e-mail]
[e-mail]
Attorneys for Defendant Bank of America, N.A.

3

Case 1:09-md-02106-ASG Document 387 Entered on FLSD Docket 12/06/2013 Page 4 of 4

CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing was served by transmission
of Notice of Electronic Filing generated by CM/ECF on December 6, 2013 on all counsel or
parties of record on the Service List below:
J. Michael Hennigan, Esq.
Kirk Dillman, Esq.
Robert Mockler, Esq.
MCKOOL SMITH, P.C.
865 South Figueroa Street, Suite 2900
Los Angeles, California 90017
Telephone: [phone]
Facsimile: [phone]
E-mail:
[e-mail]
[e-mail]
[e-mail]

David A. Rothstein, Esq.
Lorenz Michel Pruss, Esq.
DIMOND KAPLAN & ROTHSTEIN, P.A.
2665 South Bayshore Drive
Penthouse 2-B
Miami, Florida 33133
Telephone: [phone]
Facsimile: [phone]
E-mail:
[e-mail]
[e-mail]

Attorneys for Plaintiffs Avenue CLO Fund, Ltd. et al.
By:

4

/s/ Jamie Zysk Isani
Jamie Zysk Isani, Esq.

Case 1:09-md-02106-ASG Document 387-1 Entered on FLSD Docket 12/06/2013 Page 1 of 39

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Miami Division
CASE NO.: 09-2106-MD-GOLD/GOODMAN
INRE:
FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDLN0.2106
This document relates to all actions.

----------------------------~'
DEFENDANT BANK OF AMERICA, N.A.'S OPPOSITION
TO TERM LENDER PLAINTIFFS' MOTION FOR
PARTIAL SUMMARY JUDGMENT

O'MELVENY & MYERS LLP
Bradley J. Butwin (pro hac vice)
Jonathan Rosenberg (pro hac vice)
Daniel L. Cantor (pro hac vice)
William J. Sushon (pro hac vice)
Times Square Tower
7 Times Square
New York, New York 10036
Telephone: [phone]
Facsimile: [phone]
-andHUNTON & WILLIAMS LLP
Jamie Zysk Isani (Fla. Bar No. 728861)
Matthew Mannering (Fla. Bar No. 39300)
1111 Brickell Avenue, Suite 2500
Miami, Florida 33131
Telephone: [phone]
Facsimile: [phone]
Attorneys for Bank of America, N.A.

CONTAINS INFORMATION THAT IS "CONFIDENTIAL" AND "IDG.Efl,Y
CONFIDENTIAL" UNDER PROTECTIVE ORDER

FILED UNDER SEAL

Case 1:09-md-02106-ASG Document 387-1 Entered on FLSD Docket 12/06/2013 Page 2 of 39

TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ..................................· ....................................... .'............................. iii
....
.PRELIMINAR.Y STATEI\4ENT ................................................................................................... 1
THE UNDISPUTED MATERIAL FACTS .................................................................................. 4

I.

TIIE PARTIES ..... ~ ................................................................................................ 4

TI.

TIIE PROJECT ....................................................................................................... 4

ill.

THE PROJECT'S FINANCING ........................................................................... 4

A.

The Senior Credit Facility .................. :....................... :.............................. 4.

B.

The Retail Facility ..................................................................................... 5

C.

The Disbursement. Agreement ........................................................... :....... 6

IV.

CONTRACTUAL PROTECTIONS FOR DISBURSEMENT AGENT
AND ADMINISTRATIVE AGENT .............................. :........ :............................. 7

V.

LEHMAN'S BANKRUPTCY Fll...JNG AND ITS AFTERMATH ...................... 9
A.

BANA Determines That the September 2008 Advance Request's
Conditions Precedent Are Satisfied ........................................................... 9

B.

Fontainebleau Conceals That FBR Had Funded Lehman's Portion
of the September 2008 Advance Request.. .............................................. 10

C.

Fontainebleau Provides Repeated Assurancc~s That the Advance
Request Conditions Precedent Were Satisfied Despite Lehman's
Bankruptcy ................................................................~ .............................. 12

D.

......................................................................................................... 14
E.

BANA Evaluates Highland's Claim That Lehman's Bankruptcy
Was a Default Under the Loan Documents ............................................. 14

AR.GUMENT............................................................................................................................... 16

I.

BANA SATISFIED ITS CONTRACTUAL DUTIES BY APPROVING
AND FUNDING FONTAINEBLEAU'S ADVANCE REQUESTS ONLY
AFfER RECEIVING THE REQUIRED CERTIFICATIONS ........................... 17

A.

The Disbursement Agreement Expressly Permitted BANA to Rely
·on Fontainebleau's Representations, Certifications, and Statements ...... 18

B.

Plaintiffs' Extrinsic Evidence Cannot Modify BANA's
Disbursement Agreement Duties............................................................. 20

FILED UNDER SEAL

Case 1:09-md-02106-ASG Document 387-1 Entered on FLSD Docket 12/06/2013 Page 3 of 39

TABLE OF CONTENTS
(continued)

Page

II.

PLAINTIFFS OFFER NO EVIDENCE THAT BANA WAS GROSSLY
NEGLIGENT ....................................................................................................... 24

Ill.

PLAINTIFFS CANNOT ESTABLISH THAT BANA APPROVED
FONTAINEBLEAU'S ADVANCE REQUESTS KNOWING THAT
CONDITIONS PRECEDENT WERE NOT SATIS FlED ................. :................ 27
A.

BANA Did Not Know that the Retail Lenders had Failed to Make
Advances in Violation of Section 3.3.23 ................................................. 28 ·

B.

BANA Did Not Have Information Materially and Adversely
Inconsistent With the Borrowers' Certifications in Violation of
Section 3.3.21 .......................................................................................... 29

C.

Fontainebleau's October 7 Memorandum Did Not Violate
Section 3.3.24 ........................................................................................... 30

D.

BANA Did Not Know That Lehman Defaulted Under the Retail
Facility Agreement .................................................................................. 30

CONCLUSION............................................................................................................................ 32

11

FILED UNDER SEAL

Case 1:09-md-02106-ASG Document 387-1 Entered on FLSD Docket 12/06/2013 Page 4 of 39

TABLE OF AUTHORITIES
Page

CASES
Aguirre v. City of New York,
625 N.Y.S.2d 597 (N.Y. App. Div. 2d Dep't 1995) ............................................................. 23
Chemical Bank v. Stahl,
637 N.Y.S.2d 65 (N.Y. App. Div. 1st Dep't 1996) .............................................................. 24
-Colnaghi, USA v. Jewelers Protection Services, Ltd.,
611 N.E.2d 282 (N.Y. 1993) .....................................: ........................................................... 25
Columbus Park Corp. v. Department of Housing Preservation & Development,
598 N.E.2d 702 (N:Y. 1992) ................................................................................................. 17
Corhill Corp. v. S.D. Plants, Inc.,
176 N.E.2d 37 (N.Y. 1961) ................................................................................................... 23
David Gutter Furs v. Jewelers Protection Services, Ltd.,
594 N.E.2d 924 (N.Y. 1992) ................................................................................................. 25
DRS Optronics, Inc. v. North Fork Bank,
843 N.Y.S.2d 124 (N.Y. App. Div. 2d Dep't 2007) ........................................................ 26-27
EJS-Asoc Ticaret Ve Danismanlik Ltd. Sti. v. AT&T Co.,
92 Civ. 3038 (PNL), 1993 U.S. Dist. LEXIS 10344 (S.D.N.Y. July 28, 1993) ................... 25
Excess Insurance Co. v. Factory Mutual Insurance Co.,
822 N.E.2d 768 (N.Y. 2004) ........................................................................................... 22, 23
Excess Insurance Co. v. Factory Mutual Insurance Co.,
769 N.Y.S.2d 487 (N.Y. App. Div. 1st Dep't 2003) ............................................................ 22
In re Fontainebleau Las Vegas Contract Litigation,
716 F. Supp. 2d 1237 (S.D. Fla. 2010) ...................................................................•............. 17
Global Crossing Telecommunication, Inc. v. CCT Communication, Inc.
(In re CCT Communication),
Adv. Proc. No. 07-1942, 2011 WL 3023501 (Bankr. S.D.N.Y. July 22, 2011) ................... 25
God's Battalion of Prayer Pentecostal Church, Inc. v. Miele Associates, LLP,
845 N.E.2d 1265 (N.Y. 2006) ............................................................................................... 17
.
Goldstein v. Carnell Associates,
906 N.Y.S.2d 905 (N.Y. App. Div. 2d Dep't 2010) ............................................................. 25
Greenfield v. Phillies Records,
780 N.E.2d 166 (N.Y. 2002) ................................................................................................. 17
Hess v. Zoological Society of Buffalo,
521 N.Y.S.2d 903 (N.Y. App. Div. 4th Dep't 1987) ............................................................ 22
International Klafter Co. v. Continental Casualty Co.,
869 F.2d 96 (2d Cir. 1989) ..·................................................................................................. 20
Kovar v. CSX Transportation, Inc.,
327 Fed. App'x 197 (11th Cir. 2009) .............................................................................. 16-17
iii

FILED UNDER SEAL

Case 1:09-md-02106-ASG Document 387-1 Entered on FLSD Docket 12/06/2013 Page 5 of 39

TABLE OF AUTHORITIES
(continued)
Page
Lipper Holdings, LLC v. Trident Holdings, LLC,
.766 N.Y.S.2d 561 (N.Y. App. Div. 1st Dep't 2003) ............................................................ 29
Metropolitan Life Insurance Co. v. Noble Lowndes International, Inc.,
643 N.E.2d 504 (N.Y. 1994) ........................................................................................... 24, 25
Muzak Corp. v. Hotel Taft Corp.,
133 N.E.2d 688 (N.Y. 1956) ................................................................................................. 23
Peak Partners, LP v. Republic Bank,
191 Fed. App'x ll8 (3d Cir. 2006) ...................................................................................... 24
R/S Associates v. New York Job Development Authority,
771 N.E.2d 240 (N.Y. 2002) .. ~ .............................................................................................. 20
South West Georgia Financial Corp. v. Colonial American Casualty
and Surety Co.,
397 Fed. Appx. 563 (llth Cir. 2010) .................................................................................... 16
Stuart Rudnick, Inc. v. Jewelers Protection Services, Ltd.,
598 N.Y.S.2d 235 (N.Y. App. Div. 1st Dep't 1993) ............................................................ 25
United States v. Baker,
432 F.3d ll89 (llth Cir. 2005) ·····························'······························································ 29
W. W. W. Associates, Inc. v. Giancontieri,
566 N.E.2d 639 (N.Y. 1990) ................................................................................................. 21

RULES
Federal Rule of Civil Procedure 56 .................................................................................. 1, 16, 17

OTHER AUTHORITIES
Allison Taylor & Alicia Sansone, THE HANDBOOK OF LOAN SYNDICATIONS AND
TRADING (McGraw Hill2007) ............................................................................................. 21
RESTATEMENT (SECOND) OF CONTRACTS§ 203 ......................................................................... 23

IV

FILED UNDER SEAL

Case 1:09-md-02106-ASG Document 387-1 Entered on FLSD Docket 12/06/2013 Page 6 of 39

DEFENDANT BANK OF AMERICA, N.A.'S OPPOSITION
TO THE TERM LENDER PLAINTIFFS' MOTION
FOR PARTIAL SUMMARY JUDGMENT
Defendant Bank of America, N.A. ("BANA"), hereby opposes the Term Lender
Plaintiffs' motion under Federal Rule of Civil Procedure 56 for partial summary judgment. The
facts and legal arguments upon which this opposition is based are set forth in (i) this
memorandum of law, (ii) Defendant Bank of America, N.A.'s Response to Plaintiffs' Statement
of Undisputed Material Facts and Statement of Additional Undisputed Material Facts in
Opposition to Plaintiffs' Motion for Partial Summary Judgment ("BANA Add. SOUMF"), and
(iii) the September 9, 2011 declaration of DanielL. Cantor.

PRELIMINARY STATEMENT
Plaintiffs' motion for partial summary judgment should be denied because the breach of
contract claim on which it is based fails as a matter of black-letter New York contract law.
Plaintiffs argue that after Lehman's September 2008 bankruptcy filing, BANA breached the
Disbursement Agreement by acting "commercially unreasonably" in approving Fontainebleau
Advance Requests that were supported by Fontainebleau's certifications and representations.
This argument collides headlong with the contractual provisions that flatly refute it. The
governing Disbursement and Credit Agreements could not be clearer in defining-and
limiting-BANA's duties in responding to Fontainebleau's Advance Requests:
•

BANA's duties are limited to (i) determining whether Fontainebleau, the General
Contractor, the Construction Consultant, and the Architect had submitted "all required
documentation"; and (ii) reviewing the Advance Requests to ensure that they contained
all representations, warranties, and certifications necessary to satisfy the conditions
precedent to an Advance. (Disbursement Agmt. § 2.4.4(a).)

•

BANA ·"may rely and shall be protected in acting or refraining from acting upon"
Fontainebleau's certifications and other statements. (Id. § 9.3.2.)

•

BANA "shall be entitled to rely on certifications from the Project Entities ... as to
satisfaction of any requirements and/or conditions imposed by this Agreement." (Id.)

•

BANA had no obligation "to conduct any independent investigation as to the accuracy,
veracity or completeness of any such items or to investigate any other facts or
circumstances to verify compliance by the Project Entities with their obligations
hereunder." (!d.)

•

BANA "shall have no duty to inquire of any Person whether a Default or an Event of
Default has occurred and is continuing." (!d.§ 9.10.)

FILED UNDER SEAL

Case 1:09-md-02106-ASG Document 387-1 Entered on FLSD Docket 12/06/2013 Page 7 of 39

Plaintiffs pretend this language does not exist-failing even to mention it, much less explain it.
Under the governing contracts and undisputed facts, Plaintiffs' summary judgment motion
should be denied for the following reasons:
First, the undisputed facts establish that BANA approved and funded Advance Requests
only after receiving all required documentation, representations, warranties, and certifications.
Under the Disbursement Agreement and Credit Agreement's clear and unambiguous terms
described above, those facts bar Plaintiffs' claim. Recognizing that they cannot prevail under the
Disbursement Agreement's terms, Plaintiffs offer parol evidence to rewrite that contract. )'lew
York law bars that attempt, as does the provision that "nothing in this Agreement, expressed or
implied, is intended to or shall be so construed as to impose upon [BANA] any obligations in
respect of this Agreement except as expressly set forth herein or therein." Moreover, the parol
evidence Plaintiffs offer is unavailing. Plaintiffs' expert relies on a misinterpretation of
Disbursement Agreement Section 9.1-which requires BANA to "exercise commercially
reasonable efforts and utilize commercially prudent practices in the performance of its duties
hereunder." That provision simply describes how BANA should perform the duties that the
contract otherwise imposes; it does not defme those duties. Nor can Section 9.1 nullify the more
specific Section 9.3.2 and 9.10 provisions that allow BANA to rely on Fontainebleau's
certifications and representations, and relieve BANA of any duty to investigate. Put simply,
BANA could not be deemed to have acted "commercially unreasonably" by relying on
Fontainebleau and not undertaking the onerous investigation that Plaintiffs now prescribe, when
the contract unambiguously provided that BANA was entitled to rely on Fontainebleau and had
no duty to investigate Fontainebleau's representations. Plaintiffs' parol evidence also
mischaracterizes BANA witnesses' testimony-a pattern repeated throughout Plaintiffs' brief.
For example, the portion of the LSTA Handbook they cite only deals with lenders' rights-not
an agent's duties-and other sections of that treatise define the agent's duties in terms virtually
identical to the Disbursement Agreement.
Second, both the Disbursement Agreement and the Credit Agreement limit BANA's
liability as agent to acts of gross negligence, bad faith, fraud, or willful misconduct. Gross
negligence is a high standard under New York law, requiring proof that defendant acted with
reckless indifference or intent to harm plaintiff. There is no evidence in the factual record
)

.

. indicating that BANA's actions were intended to harm Plaintiffs, or that it recklessly disregarded

2

FILED UNDER SEAL

Case 1:09-md-02106-ASG Document 387-1 Entered on FLSD Docket 12/06/2013 Page 8 of 39

their rights. To the contrary, BANA conscientiously performed its duties as agent in the face of :
Lehman's unprecedented and unexpected barikruptcy, exercising far more than just the ..slight
diligence" that marks the upper boundary of gross negligence.

Third, apart from being legally irrelevant, Plaintiffs cannot establish that BANAknew
that certain Advanqe Request conditions precedent were not satisfied for the following additional
reasons:
•

•

BANA did not know that the Retail Lenders failed to make advances in violation of
Section 3.3.23 because (i) the undisputed facts establish that BANA did not know that
Fontainebleau Resorts had funded Lehman's September 2008 Shared Cost Portion;
{ii) as far as BANA knew, a Retail Lender-either Lehman (October-November) or
U L L I C - h a d funded Lehman's Shared Costs, as Section 3.3.23
required; (iii) Plaintiffs' suggestion that Section 3.3.23 can only be satisfied if each
Retail Lender funds a specific portion of the Advance is inconsistent with the
condi~ion's plain terms; and (iv) it is undisputed that neither BANA nor the Lenders
were aware that Soffer, ~R. and Turnberry covered ULLICO's payment of
Lehman's Shared Costs portion.
BANA did not have information materially and adversely inconsistent with the
Borrowers' certifications in violation of Section 3.3 .21 because (i) BANA did not
know that FBR had funded Lehman's share of the September 2008 Advance;
au.u•vu;:.A•BANA knew that ULLICO had funded Lehman's share- ·
Plaintiffs fail to explain why ULLICO covering
was not a viohl.tion of any other condition precedentamounted to "material and adverse" information regarding the Project; and
(iii) Lehman and ULLICO's ~ ................!'
. that BANA had no reason to be cot1ceme:a
to assume Lehman's obligations.

•

Fontainebleau's October 7 memorandum did not violate Section 3.3.24-Plaintiffs'
post hoc conclusion that one response to BANA's long list of potential Lender
questions was evasive does not establish that BANA was required to reject
Fontainebleau's Advance Requests, especially given that, at the time, BANA believed
that Fontainebleau's memorandum confirmed funding by Lehman and adequately
responded to the inquiry.

•

There was no - iolation of Sections 3.3.3 and 3.3:2(a) because (i) Lehman's
v
bankruptcy flling was not, ih and of itself, a Default under the Retail Facility
Agreement; (ii) again, BANA did not know that FBR had funded for Lehman in
September 2008; and (iii) Plaintiffs cannot establish that BANA knew that ULLICO's
funding of Lehman's commitment was a Lender Default under the Retail Facility
Agreement.

Accordingly, Plaintiffs; motion for partial summary judgment should be denied.

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THE UNDISPUTED MATERIAL FACTS
I.

THE PARTIES
BANA is a nationally chartered bank with its main office in Charlotte, North Carolina.

· (BANA Add. SOUMF,!fl.) Plaintiffs are a group of sophisticated financial institutions who
were lenders-or in most cases, successors-in-interest to len~ers-to Fontainebleau Las Vegas.
LLC and Fontainebleau Las Vegas II, LLC (collecti:vely, "Borrowers" or "Fontainebleau"). (ld.
1[3.)

TI.

THEPROJECT
This case involves a partially completed hotel and casino development on an

approximately 24.4-acre parcel at the Las Vegas Strip's north end (the "Project"). (Jd.<f6.) The
Project's developer was the Borrowers' parent, Fontainebleau Resorts, LLC ("Fontainebleau
Resorts" or "FBR"). (Id.

t

7 .) FBR was led by Jeff Soffer (Chairinan) and Glenn Schaeffer

(CEO), who together had decades of experience developing major casino, resort and residential
projects in Las Vegas and elsewhere. (It). 'IrJl 8, 9.) The Project's general contractor was
Turnberry West Construction ("TWC" or "Contractor"), a member of the Tumberry group of
companies. (!d. t 10.) The Tumberry group of companies had a 40-year track record building
high-end hotels and residential developments across the United States, including several
prominent Las Vegas projects. (ld. <j[ 11.)

III.

THE PROJECT'S FINANCING
The Fontainebleau Las Vegas project's construction was to be financed through a

combination of debt and equity capital, including $1.85 billion in senior secured debt ("Senior
Credit Facility"), equity co~tributions by Fontainebleau and its affiliates, $675 million in Second
Mortgage Notes, and a $315 million loan earmarked for the Project's retail space ("Retail
Facility"). (/d. l'f12, 14.)

A.

The Senior Credit Facility

Fontainebleau, BANA, Plaintiffs (or their predecessors-in-interest), and other non-party
lenders entered into a June 6, 2007 Credit Agreement creating the Senior Credit Facility, which

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comprised three senior secured loans: (i) a $700 million term loan (the "Initial Term Loan");
(ii) a $350 million delay draw term loan (the "Delay Draw Term Loan"); and (iii) an $800
million revolving loan (the "Revolver Loan"). (!d. 'l[13.) Plaintiffs own only Initial Terril Loan
and Delay Draw Term Loan notes. (Id. 'l[15.) BANA was a Revolver Loan lender and was
Administrative Agent under the Credit Agreement for the Senior Credit Facility lenders
(together, the "Lenders"). (Id, 'l[2; Pis.' Statement of Undisputed Material Facts ("Pis.'
SOUMF"), 'll'l!4, 8.)

B.

The Retail Facility

The Project's retail space was to be developed by Fontainebleau Las Vegas Retail, LLC
(the "Retail Affiliate"), a Fontainebleau Resorts subsidiary distinct from the Borrowers. (BANA
Add. SOUMF 'l[16.) Fontainebleau Resorts specifically designed the retail component's
financing to be distinct from the Senior Credit Facility. (!d. 'l[18.) Thus, the $315 million Retail
Facility was subject to a separate June 6, 2007 agreement between the Retail Affiliate and
Lehman Brothers Holdings, Inc. (the "Retail Facility Agreement"). (!d. 'l[19.) BANA was not a
lender under the Retail Facility Agreement or otherwise a party to that agreement (Id. 'l[20.)
But while the Project's resort and retail components each had their own separate credit facilities
and construction budgets, the resort; budget included $83 million in costs that were to be funded
through the Retail Facility ("Shared Costs"). (ld. 'll'l!18, 21.) These Shared Costs were used to
fund construction of the portions of the Project's retail space that were inseparable from the
resort component (ld. 'l[22.)
Lehman Brothers Holding, Inc. ("Lehman") signed the Retail Facility Agreement as a
retail lender and as the agent for one or more retail co-lenders (each a "Retail Co-Lender"). (ld.
'l[23.) The Retail Facility permitted Lehman "to sell ... all or any part of [its] right, title, or
interest in, and to, and under the Loan : . . to one or more additional lenders" and did not impose
any limitations on how Lehman could divide that interest. (Id. 'l[24.) Lehman syndicated the
Retail Facility under a separate confidential agreement (the "Co-Lending Agreement"), the terms
of which were not disclosed to BANA or the Lenders. (Id. 'll'l!24, 25.) BANA and the Lenders
did not even know the identity of the Retail Co-Lenders until the Borrowers revealed the
participants in late 2008. (Id. 'l[26.) The Retail Facility Agreement permitted Lehman to
"delegate all or any portion of its responsibilities under [the Retail Facility Agreement] and the

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other Loan Documents to the Servicer." (!d. 'J[27.) Lehman designated TriMont Real Estate
Advisors, Inc. (''TriMont") as the Retail Facility Servicer. (ld. 'J[28.)

C.

The Disbursement Agreement

The Borrower's access to the construction financing was governed by a June 6, 2007
Master Disbursement Agreement ("Disbursement Agreement"). (Id. 'J[30.) Together with the
Credit Agreement, the Disbursement Agreement established a two-step funding process for the
Senior Credit Facility. No more than once per month, Fontainebleau submitted a Notice of
Borrowing that, subject to certain terms and conditions, required Lenders to transfer funds into a
designated bank account (the "Bank Proceeds Account"). (!d. 'J[31.) Fontainebleau could not
withdraw funds directly from the Bank Proceeds Account. (Pls.' SOUMF 'J[l4.) To access the
Bank Proceeds Account funds, Fontainebleau was required to submit a monthly Advance
Request, the form and contents of which the Disbursement Agreement prescribed. (ld. 'J[l5.)
BANA was appointed as Disbursement Agent under the Disbursement Agreement (ld.
'J[7), which sets forth the Disbursement Agent's responsibilities in responding to Fontainebleau's
Advance Requests. BANA was required to "review the Advance Request and attachments
thereto to determine whether all required documentation has been provided." (BANA Add.
SOUMF 'J[32.) It was also required to confirm that the Advance Request contained all the
representations, warranties, and certifications necessary to satisfy Disbursement Agreement
Section 3.3's twenty-four separate, multi-part conditions precedent to an Advance. (ld. 'Jl'Jl33,
35.) For example, each Advance Request required Fontainebleau, among other things, to
"represent, warrant and certify" that "the conditions set forth in Section[]3.3 ... of the.
Disbursement Agreement are satisfied as of the Requested Advance Date." (Id. 'J[35; see also
Pls. SOUMF 'J[75.) And the Advance Request also included multiple specific representations
that generally tracked the substance of Section 3.3's conditions precedent. (BANA Add.
SOUMF 'J[36.)
As part of its monthly Advance Request, Fontainebleau routinely requested that the
Retail Affiliate advance Shared Costs from the Retail Facility. Lehman delegated to TriMont the
responsibility for collecting the Retail Co-Lenders' respective Shared Costs obligations in
response to an Advance Request and transferring those funds to BANA, as Disbursement Agent.
(Id.'J[29.) Once it received the Retail Co-Lenders' .funds, TriMont sent a single wire transfer for

the entire requested Shared Costs amount to BANA-it did not identify the specific amounts

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funded by each Retail Co-Lender. (!d. 'l[37.) The Disbursement Agent's receipt of the requested
Shared Costs was an Advance Request condition precedent under Section 3.3.23. (ld. 'l[38.)
For each Advance Request from September 2008 through March 2009, BANA received
all the required documentation. (Pis. SOUMF 'l[75.) Consequently, BANA (as Disbursement
Agent) and Fontainebleau were required to execute an Advance Confirmation Notice. (BANA
Add. SOUMF 'l[39.) In each Advance Confirmation Notice, Fontainebleau confirmed "that each
of the representations, warranties and certifications made in the Advance Request ... (including
the various Appendices attached thereto), ... are true and correct as of the Requested Advance
Date and Disbursement Agent is entitled to rely on the foregoing in authorizing and making the
Advances herein requested" and "that the [Advance Request] representations, warranties and
certifications are correct as of the Requested Advance Date." (ld. 'l[40.) The Advance
Confirmation Notice instructed the Bank Agent (also BANA) to transfer the requested funds
from the Bank Proceeds Account to payment accounts on the Scheduled Advance Date for
further disbursement to Fontainebleau. (Id. 'l[41.) If the conditions precedent were not satisfied,
the Disbursement Agent was required to issue a Stop Funding Notice. (!d. 'l[42.) A Stop
Funding. Notice temporarily suspended the Lenders' obligations to fund loans under the Credit
Agreement. (ld. 'l[44.) A Stop Funding Notice would also be issued if "the [Funding Agent]
notifies the Disbursement Agent that a Default or an Event of Default has occurred and is
continuing." (Id. 'l[43.) BANA never received a notice of Default or an Event of Default.

IV.

CONTRACTUAL PROTECTIONS FOR DISBURSEMENT AGENT AND
ADMINISTRATIVE AGENT
In describing the Disbursement Agreement and the Credit Agreement's relevant terms,

the Term Lenders simply ignore the numerous provisions establishing that the Disbursement
Agent and Administrative Agent positions are purely ministerial and do not involve investigating
the Borrowers' status. Disbursement Agreement Article 9 sets forth the Disbursement Agent's
rights and responsibilities. Section 9.3.2 provides, among other things, that BANA "may rely
and shall be protected in acting or refraining from acting upon" certifications and other
statements by Fontainebleau, and that "[n]otwithstanding anything else in this Agreement to the
contrary, in ... approving any Advance Requests, ... [BANAl shall be entitled to rely on
certifications from the Project Entities ... as to satisfaction of any requirements and/or
conditions imposed by this Agreement." (ld. 'l[45.) Section 9.3.2 further provides that BANA
"shall not be required to conduct any independent investigation as to the accuracy, veracity or

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completeness of any such items[in the Advance Request] or to investigate any other facts or
circumstances to verify compliance by the Project Entities with their [Disbursement Agreement]
obligations." (ld.)
Thus, BANA had no obligation to determine independently before approving an Advance
Request whether Fontainebleau had satisfied the conditions precedent in Disbursement
Agreement Section 3.3. Indeed, if a default occurred under the Disbursement Agreement, it was

Fontainebleau's obligation to "provide to the Disbursement Agent ... and the Funding Agents
written notice of: Any Default or Event of Default of which the Project Entities have
knowledge, describing such Default or Event of Default and any action being taken or proposed
to be taken with respect thereto." (!d. 'J[46.)
Section 9.10 builds on these protections to limit BANA's duties as Disbursement Agent,
by providing, among other things, that:
•

BANA "shall have no duties or obligations [under the Disbursement Agreement]
except as expressly set forth herein, shall be responsible only for the performance of
such duties and obligations and shall not be required to take any action qtherwise than
in accordance with the terms hereof';

•

"nothing in this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon [BANAl any obligations in respect of this Agreement
except as expressly set forth herein or therein"; and

•

BANA "shall have no duty to inquire of any Person whether a Default or an Event of
Default has occurred and is continuing." ({d. 'J[47 .)

In addition, Section 9.10's broadexculpatory provision limits BANA's potential liability
to bad faith, fraud, gross negligence, or willful misconduct:
Neither the Disbursement Agent nor any of its officers, directors,
employees or agents shall be in any manner liable or responsible
for any loss or damage arising by reason of any act or omission to
act by it or them hereunder or in connection with any of the
transactions contemplated hereby, including, but not limited to,
any loss that may occur by reason of forgery, false representations,
the exercise of its discretion, or any other reason, except as a result
of their bad faith, fraud, gross negligence or willful misconduct as
finally judicially determined by a court of competent jurisdiction.
(!d. 'J[48.)
The Credit Agreement conferred similarly broad protections on BANA as Administrative
Agent, including provisions expressly permitting BANA to rely on representations by
Fontainebleau and others, relieving it of any obligation to investigate those representations,

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placing the burden on Fontainebleau to report defaults, and limiting BANA's liability to gross
negligence or worse. (ld. at 'll'J[49-52.)

V.

LEHMAN'S BANKRUPTCY FILING AND ITS AFTERMATH
Plaintiffs' partial summary judgment motion only addresses their claim that BANA

breached the Disbursement Agreement by funding Advance Requests from September 2008
through March 2009 when it allegedly knew that Lehman's bankruptcy and subsequent failure to
fund Retail Advances had caused numerous Advance Request conditions precedent to fail. (Pls.
Br. at 1.) Lehman filed for bankruptcy on September 15, 2008-just four days after
Fontainebleau submitted its September 2008 Advance Request. (Pls. SOUMF '1!33.) Lehman's
bankruptcy filing was not itself a default under the Retail Agreement, Disbursement Agreement,
or Credit Agreement, nor was it specifically addressed by any condition precedent to
disbursement. (BANA Add. SOUMF '1!64; see also infra at 31.) Nevertheless, as a Retail
Facility lender, Lehman's bankruptcy created potential fmancial problems for the Project. (Pls.
SOUMF '1!44.) Of immediate concern to Fontainebleau was the nearly $3.8 million in Retail
Facility funds it had requested as part of its $103.7 million September 2008 Advance Request.
(BANA Add. SOUMF '1!53.) If the Retail Facility did not fund its entire $3.8 million Advance
Request portion, no funds would be disbursed to Fontainebleau from the Bank Proceeds
Account, and Fontainebleau might be unable to pay that month's Project construction costs. (Id.
'1!54.)

A.

BANA Determines That The September 2008 Advance Request's Conditions
Precedent Are Satisfied.

Contrary to Plaintiffs' suggestion (Pls. Br. at 8-9), BANA did not conclude that the
Project was doomed upon learning of Lehman's bankruptcy filing. Rather, BANA was
concerned that "Lehman may be the death nail for FB"-Plaintiffs misleadingly omit the word
"may"-and sought further information regarding the Lehman bankruptcy's impact on the
Borrowers. 1 In the days after the Lehman bankruptcy filing, BANA held a series of calls with
Fontainebleau to discuss its implications for the September 2008 Advance Request. (BANA
Add. SOUMF '1!56.) Those conversations focused on whether Lehman would fund its portion of
the Advance Request and on potential alternative financing arrangements if Lehman did not
Dep. Ex. 67 (emphasis added). Mr. Yunker testified that the e-mail was sent on the day
Lehman filed for bankruptcy and mere! y reflects his uninformed reaction to that event.
(Cantor Opp. Dec!. Ex. 6 (Yunker Dep. at 40:13-18.)

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fund, including funding by the other Retail Facility Lenders or Fontainebleau. (!d. '][57.) .
Fontainebleau did not know whether Lehman would fund. BANA listened to Fontainebleau
CFO Jim Freeman's discussion of Fontainebleau's options, but did not suggest what option
Fontainebleau should pursue. (!d. '][58.) Internally, however, BANA concluded that
Fontainebleau funding Lehman's share would not satisfy the Advance Request's conditions
precedent. (Pis. SOUMF '][49.) On the other hand, if the entire requested Shared Costs were
received from TriMont, and the Advance Request certifications remained in effect, BANA
believed that it was required to honor Fontainebleau's September 2008 Advance Request.
(BANA Add. SOUMF '][59.)
On September 26, 2008, TriMont sent BANA a single wire transfer for the entire
requested Shared Costs. (!d. '][60.) Later that day, but before disbursing funds to Fontainebleau,
BANA received oral and written representations from Fontainebleau's Freeman re-affirming the
Advance Request's certifications that all conditions precedent to funding-including funding by
the Retail Lenders-were satisfied. (!d. '][61.) In addition to Freeman's assurances, there had
been no announcement that Lehman would reject the.Retail Facility Agreement in bankruptcy
and, thus, BANA believed (correctly) that the agreement was "in full force and effect." (!d.
'][62.) Nor was there any notice from Fontainebleau that Lehman had defaulted under the Retail
Facility Agreement. Indeed, based on information from Fontainebieau and BANA's own
involvement in other syndicated loans, BANA understood that Lehman was continuing to honor
some loan commitments. (!d. '][63.) Consequently, BANA concluded that the conditions
precedent were satisfied and disbursed Fontainebleau's September 2008 Advance Request. (!d.
'][64.)

B.

Fontainebleau Conceals That FBR Had Funded Lehman's Portion of The
Septemb_er 2008 Advance Request.

Contrary to Freeman's repeated representations to BANA, Lehman's September 2008
Advance Request portion was funded not by Lehman or a Retail Co-Lender, but by
Fontainebleau Resorts, which made a $2,526,184 "equity contribution" to "prevent an overall
project funding delay and resulting disruption of its Las Vegas project" after Lehman had failed
to fund its required September 2008 Shared Costs portion. (!d. '][65.) And despite Plaintiffs'
naked assertion that "BofA knew it" (Pis. Br. at 10), there is no evidence that BANA actually
knew that Fontainebleau Resorts had funded for Lehman in September 2008. Indeed,
contemporaneous internal BANA documents reflect BANA' s belief that Lehman had funded the
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September 2008 Shared Costs. (!d. 'j[66.) In addition, on at least two occasions, Fontainebleau
executives told BANA that the Retail Lenders (either Lehman or Co-Lenders) had funded the
September 2008 Advance Request. BANA's Jeff Susman testified that Freeman told him the
Retail Lenders had funded the September Shared Costs. (ld. 'j[76.) And Fontainebleau CEO
Glenn Schaeffer told Bill Newby that Lehman itself had funded in September 2008. (Id. 'l[77.)
Freeman.has admitted that Fontainebleau concealed FBR's involvement. He testified that
Fontainebleau counsel instructed him not to reveal that Fontainebleau Resorts had funded for
Lehman and, thus, he deliberately and continuously hid the truth from BANA and the Lenders in
written and oral communications after September 2008. (!d. 'j[67.) And Fontainebleau's
deception was not limited to BANA and the Lenders. For example, on October 6, 2008,
Freeman told Moody's that "Retail funded its small portion last month." (Id. 'j[74.) Freeman did
not tell Moody's that FBR had funded for Lehman because "[b ]ased on the discussion that I had,
the advice of counsel, I was -- I was not talking to people about the source of funding." (Id. ·
'j[75.) But Plaintiffs' suggestion that BANA was somehow aware of counsel's instruction to
Freeman (Pls. SOUMF 'j[55) is not supported by the factual record. (BANA Add. SOUMF 'll'll
68, 69.)
Lacking any evidence actually reflecting BANA's alleged knowledge that FBR had
funded for Lehman, Plaintiffs offer only misleading citations to the factual record. For example,
in their statement of undisputed facts (but not their brief), Plaintiffs suggest that TriMont told
BANA that FBR funded for Lehman because it was TriMont's "custom and practice to inform
BANA of who funded retail advances." (Pls. SOUMF 'j[70.) This is simply not true. Mr.
Rafeedie did not testify to any custom and practice. Rather, he testified that he could not "recall
the exact things that were discussed" during a September 2008 call with BANA, and he
speculated that "consistent with [his] practice," he "could have" told BANA that FBR funded for

.

Lehman; but he also testified that the discussion "could have been just that Lehman's dollars
were funded, not necessarily who funded what." (BANA Add. SOUMF 'j[70.) Moreover,
BANA's Jeanne Brown (Mr. Rafeedie's principal contact at BANA) testified that she did not
remember TriMont telling her that Lehman did not fund in September 2008. (BANA Add.
SOUMF 'j[71.) Ms. Brown also testified that she communicated all information she obtained in
her role as Disbursement Agent to others at BANA, and there are no BANA documents
reflecting any communication from TriMont about FBR funding for Lehman. (Id. at 'll'l!72-73).

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Plaintiffs also inaccurately describe an October 2008 meeting and conference call
involving Bane of America Securities persolUlel, Freeman and other Fontainebleau executives,
and the Retail Co-Lenders (other than Lehman). (See Pis. Br. at 13; Pls. SOUMF at 162.) The
.
.
call and meeting were scheduled at the Retail Lenders' request, so that BANA could update them
on the Project's overall progress. (BANA Add. SOUMF 189.) But contrary to Piaintiffs'
assertion, there is no evidence that Lehman's failure to fund was "discussed openly at the
meeting." (Pls. Br. at 13.) None of the participants could recall any discussion about whether

Lehman had funded the September draw

-)

C.

Fontainebleau Provides Repeated Assurances That The Advance Request
Conditions Precedent Were Satisfied Despite Lehman's Bankruptcy.

~e Lehman

bankruptcy also bad potential implica~ions for the Project's financing

beyond the September 2008 Advance Request because Shared. Costs were due each month. But
'following the September disbursement, Fontainebleau went to great lengths to assuage any
concerns that Lehman's bankruptcy would prevent it from satisfying future Advance Request
conditions precedent and building the Project.
For example, Fontainebleau provided BANA and the Lenders repeated written assurances
that the Retail Facility remained viable notwithstanding Lehman's bankruptcy. On

.

September 22, 2008, BANA asked Fontainebleau to schedule a call with Lenders to address their
Lehman-related questions. (ld. C)[ 78.) A week later, in anticipation of that call, BANA sent
Fontainebleau a list of potential Lender questions, including whether Lehman funded its
September 2008 Shared Costs portion, the identity of any entity that funded on Lehman's behalf,
and the Lehman bankruptcy's effect on Fontainebleau's ability to complete the Project. (ld.
<j[ 79.) Fontainebleau agreed to the call, but later backed out, Instead, on October 7, 2008,

Fontainebleau sent BANA and the Lenders a memorandum addressing the Retail Facility's
status. (Id. TJ[ 80-81.)
Fontainebleau's memorandum discussed the August and September Shared Costs and
assured the Lenders that "all of [it] was funded." (ld. <j[ 82.) The memorandum also stated that
Fontainebleau was ''continuing active discussions with Lehman Brothers to ensure that,
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regardless of the Lehman bankruptcy filing and related acquisition by Barclay's, there is no
slowdown in funding for the project." (!d. 'I[ 83.) Fontainebleau added that it did not "believe
there will be any interruption in the retail funding of the project." (!d. 'I[ 84.) Thus, the
memorandum subtly-and (as discussed above) deliberately-avoided revealing that Lehman
had not actually funded its Shared Costs portion. But Plaintiffs' assertion that by using the
passive voice-" all of [it] was funded"-Fontainebleau actually disclosed that Lehman itself did
not fund the September Retail Advance (Pis. Br. at 13) is pure fantasy. At the time, BANA
believed that Fontainebleau had confirmed funding by Lehman. (BANA Add. SOUMF 'I[ 85; see

also Resp. to Pis. SOUMF 'II 57.) For example, Brandon Bolio testified that although the memo
did not provide "as much detail as would have been ... nice," it adequately "answer[ed] the
. question." (Id.) And Bret Yunker also testified that-he could not recall any dissatisfaction on the
part of BANA employees with Fontainebleau's memo responses, and that from his personal
perspective Fontainebleau's response provided sufficient clarity to resolve the issue. (ld.)
On October 22, 2008, Fontainebleau provided the Lenders with a further written update,
stating that "Lehman Brothers' commitment to the Retail Facility had not been rejected in
bankruptcy court and remained in full force and effect." (Id. 'I[ 86.) Fontainebleau added that
"Lehman Brothers has indicated to us that it has sought the necessary approvals to fund its
commitment this month," and it had received assurances from the "co-lenders to the retail
facility" that "[i]f Lehman Brothers is not in a position to perform ... that they would fund
Lehman's portion of the draw." (!d.

'II 87.)

On December 5, 2008, FBR issued financial statements for the period ended
September 30, 2008 that included disclosures regarding the Retail Facility's status. (Id. 'II 91.)
FBR represented that "[t]he Company has been working diligently with Lehman Brothers and
the co-lenders to ensure that there is no interruption in funding for the retail component." (Id.
'I[ 92.) And FBR's "Equity Contributions" disclosure made no mention of its September 2008

equity contribution on Lehman's behalf. (Id. 'II 93.)
Fontainebleau's assurances appeared to be well-founded because Lehman actually funded
its Shared Costs portion for the October and November Advances. (Id.

'II 94.)

In addition, each

month from October 2008 through March 2009, Fontainebleau submitted Advance Requests
containing all of the required certifications, representations, and warranties-including that the
Retail Lenders were funding the Shared Costs. (Pis.' SOUMF 'II 75.) And although BANA
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learned in December 2008 that ULLICO would be funding Lehman's Shared Costs portion, that
arrangement satisfied Section 3.3.23's condition precedent that "the Retail Agent and the Retail
Lenders shall ... make any Advances required of them" because ULUCO was a Retail CoLender. (BANA Add. SOUMF 1['Jl95-96.) Each month from September 2008 tluough March
2009, TriMont wired BANA the full requested Shared Costs-not a penny of the Retail Facility
commitments went unfunded. (/d. <f97.)

D.

-

(!d.<][ 98.) In December 2008, ULLICO entered an agreement with Soffer,

Fontainebleau Resorts and TRLP under which. ULLICO would pay Lehman's December 2008
Shared Costs portion, and Soffer, FBR and TRLP would guarantee repayment within ninety

(ld. 'lf 104.) In fact, in their recently fiLed Nevada state court action, Plaintiffs rely on

-

these samefacts to plead a fraud claim against FBR, Soffer, Freeman, and ULLICO. (See Cantor
Decl.

Ex. 10111 159-164.)
E.

BANA Evaluates IDghland's Claim That Lehman's Bankruptcy Filing Was a
Default Under The Loan Documents.

On September 26, 2008, Highland Capital Management ("Highland")-an Initial Term
Loan and Delay Draw Term Loan Le~der-sent BANA an e-IIJ.ail claiming that

a

"[a]s result of [Lehman]'s bankruptcy filing earlier this month,
the fmancing agreements are no longer in full force and effect,
triggering a number of breaches under the Loan Facility - resulting
in the following consequences: {i) No disbursements may be Il_lade
under the Loan Facility; and (ii) The Bon·ower should be sent a
notice of breach immediately to protect the Lenders' rights and

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ensure ·that any cure period commence as soon as possible."
(BANA Add. SOUMF <J[ 106.)
BANA, through its outside counsel ~heppard Mullin Richter & Hampton LLP, told
Highland that the Bankruptcy Code specifically provides that "no executory contract may be
terminated or modified solely based on the commencement of a Chapter 11 case," and asked
Highland to identify any "authority or documents supporting a contrary conclusion." (ld. 'J[ 107.)
Following discussions with Highland and further internal analysis, BANA concluded that
Lehman's bankruptcy filing did not provide a basis for rejecting Fontainebleau's September
2008 Adva,nce Request. (ld. <j{ 108.) BANA provided additional information to Highland in a
September 29, 2008 Sheppard Mullin e-mail, explaining that it had been "monitoring all
[Lehman] court orders" and was "unaware pf a restriction on performance of this agreement."

(/d.C)[109.) The e-mail also deblillked Highland's claim that Lehman's bankruptcy filing was an
"anticipatory repudiation of the contract." (/d.)
On September 30, 2008, Highland sent BANA another e-mail, this time claiming that
Lehmari'·s bankruptcy filing constituted a Material Adverse Effect ("MAE"). (!d. <J[ 110.) Again, ·
BANA concluded that Highland's claim wa:s incorrect because there was no indication that there
would be a Retail Funds shortfall or that Lehman would be unable to honor its obligations under
the Retail Facility. (/d. 'J[ 111.)

(ld. '1[112.) On October 13, Highland forwarded to BANA a Merrill

Lynch research analyses e-mail that discussed nine different industry developments and, in the
only sentence refetTing to Fontainebleau, stated: "We understand that FBLEAU equity sponsors
have funded the amount required from Lehman on ~e retail credit facility due this month
($4 million)." (ld. <J[ 113.) The research e-mail did not identify a source or basis for the

statement, and it significantly overstated Lehman's Shared Costs portion. (ld.)

(ld.<J[ 116.) Nonetheless, Highland claimed that this

market rt~mor created "a breach concern under.the Disbursement Agreement" and that "Lehman
[was] in breach of the [Retail] [A]greement because it failed to fund and thus the agreement
[was] not in full force and effect." (/d. I)[ 114.) BANA evaluated Highland's claim, but rejected
it in.view of Fontainebleau's numerous representations and warranties in the September and ·

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October 2008 Advance Requests, Freeman' s September: 26 reaffirmation, the continued receipt

of the requested Shared Costs from TriMont, and the other statements by Fontait:tebleau. (!d.
<J[l17.)
On October 22, 2008, Highland asked Freeman numerous questions about Lehman
during a one~on-one telephone call. (/d.<j[121 [Dep. Exs. 254, 465].)

(ld. '1[122 [Rourke Dep. Tr. at 136:21-137:12].) Highland asked the same
(!d. '1[ 123.) -

question in an e-mail to F reeman the next

Highland did not report the call or the e-mail to B.AJ.'\JA or submit a
formal Notice of Default regarding the Lehman bankruptcy. (!d. ljf124.) And following the call,
Highland did not raise with BANA any further concerns about the Lehman bankrUptcy. (Jd.) •

(/d. , 130.)
While BANA ultimately rejected the various Highland assertions ori theii merits, it had ·
good reason to view Highland's claims skeptically. In September 2008, numerous credible
publications reported that certain Highland funds had suffered staggering losses and faced a

en n9:)
plaintiff. (/d.<Jl25.)

ARGUMENT
Plaintiffs' motion for pru.1ial summary judgment on their breach of contract Claim should
be denied because there is no genuine issue of material fact concerning BANA's proper
performance as Disbursement Agent and Bank Agent and, thus, Plaintiffs cannot establish that
they are entitled to.judgment as a matter of Law.2 Sununary judgment for Plaintiffs on their

2

Fed. R. Civ. P. 56(a)~ see also S. W. Ga. Fin. Corp. v. Colonial Am. Casualty & Surety Co.,
397 Fed. App'x 563, 568 (11th Cir. 2010) (affirming denial of plaintiff's and grant of
defendants' respective surrunary judgment motions ·because there were no facts in the record
demonstrating that defendants breached the contract); Kovar v. CSX Transp., Inc., 327 Fed.
App'x 197, 198 (11th Cir. 2009) (affirming denial of plaintiff's and grant of defendant's
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Lehman-related claim is inappropriate here because the undisputed facts demonstrate that
(i) BANA performed its duties under the Disbursement and Credit Agreement by approving and
funding Fontainebleau Advance Requests only after receiving the required certifications, on
which BANA was entitled to rely, and which BANA had no additional duty to investigate; (ii)
BANA's actions were not grossly negligent, as the Disbursement Agreement requires to impose
liability; and (iii) BANA did not know that various conditions precedent allegedly were not
satisfied by Lehman's bankruptcy and subsequent failures to fund. To the contrary, because the
unambiguous contract terms and undisputed facts establish that BANA properly performed its
Disbursement Agent duties, the Court should grant BANA summary judgment dismissing
Plaintiffs' Lehman-related claim. 3

I.

BANA SATISFIED ITS CONTRACTUAL DUTlliS BY APPROVING AND
FUNDING FONTAINEBLEAU'S ADVANCE REQUESTS ONLY AFTER
RECEIVING THE REQUIRED CERTIFICATIONS.
As Plaintiffs acknowledge, New York law requires a court to enforce a contract provision

that is "complete, clear and unambiguous on its face" according to "the plain meaning of its
.terms."4 Moreover, contracts should be interpreted so as to give effect to all their provisions. 5
Plaintiffs' claim that BANA breached its Disbursement Agent duties by funding Advance
Requests that "violated conditions precedent to disbursement under the Disbursement
Agreement" (Pis. Br. at 19) fails as a matter of law because it (i) ignores the Disbursement
Agreement provisions limiting BANA's duties to approving and funding Advance Requests only
after receiving the required certifications, and the provisions entitling BANA to rely on those
certifications and relieving BANA of any obligation to investigate; and (ii) improperly seeks to
impose extra-contractual duties.
summary judgment motions where material facts demonstrated that defendants had not
breached the contract).
·
3

See Fed. R. Civ. P. 56(f)(1) (Court may grant summary judgment for a non-movant); see also
BANA's Mot. for Summ. J. & Incorporated Mem. of Law at 24-37.

4

Pis. Br. at 18; see also Greenfield v. Phillies Records, 780 N.E.2d 166, 170 (N.Y. 2002); In
re Fontainebleau Las Vegas Contract Litig., 716 F. Supp. 2d 1237, 1251 (S.D. Fla. 2010).

5

See God's Battalion of Prayer Pentecostal Church, Inc. v. Miele Assocs., LLP, 845 N.E.2d
1265, 1267 (N.Y. 2006) ("A contract should be read to give effect to all its provisions.")
(quotation omitted); Columbus Park Corp. v. Dep't Housing Pre{!. Dev., 598 N.E.2d 702,708
(N.Y. 1992) (rejecting contract interpretation that would "make[] a contract provision
meaningless [as] contrary to basic principles of contract interpretation").
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A.

The Disbursement Agreement Expressly Permitted BANA to Rely on
Fontainebleau's Representations, Certifications, and Statements.

The Disbursement Agreement provisions governing Advance Requests are "complete,
clear and unambiguous." Taken together, they establish that although BANA could not approve
or fund an Advance Request unless the conditions precedent were satisfied, BANA was
permitted to rely solely on the Advance Request certifications to make that determination.
First, BANA's duties in approving and funding Advance Requests are limited to
(i) determining whether Fontainebleau, the General Contractor, the Construction Consultant, and
the Architect had submitted "all required documents" and (ii) reviewing Advance Requests to
confirm that Fontainebleau made all representations, warranties, and certifications necessary to
establish that Disbursement Agreement Section 3.3' s conditions precedent to Advance were
satisfied. 6 Second, BANA is permitted to rely on the documents it received from Fontainebleau,
the General Contractor, the Construction Consultant and the Architect "in performing its duties
hereunder, including approving any Advance Requests, ... as to satisfaction of any requirements
and/or conditions imposed by this Agreement," without "conduct[ing] any independent
investigation as to the accuracy, veracity or completeness of any such items or ... investigat[ing]

any other facts or circumstances to verify compliance by the Project Entities with their
obligations hereunder."7 Third, BANA "does not represent, warrant or guaranty to ... the
Lenders the performance by the Project Entities, the General Contractor, the Construction
Consultant, the Architect, or any other Contractor of their respective obligations under the
Operative Documents and shall have no duty to inquire of any Person whether a Default or an
Event of Default has occurred and is continuing." 8

6

See supra at 7-8; see also Pls. Br. at 4-6.

7

Disbursement Agmt. § 9.3.2 (emphasis added); see also Credit Agmt. § 9.4 ("The
Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or
other writing (including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person.").

8

Disbursement Agmt. § 9.10; see also Credit Agmt. § 9.3 ("The Administrative Agent shall
not be'responsible for or have any duty to ascertain or inquire into (i) any statement, warranty
or representation made in or in connection with this Agreement or any other Loan Document,
(ii) the contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or observance of any

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The undisputed facts demonstrate that BANA performed its contractual duties. Plaintiffs
acknowledge that before BANA approved and funded the September 2008 Advance, it requested
and received from Fontainebleau representations affirming that all certifications, representations
and warranties contained in the Advance Request were correct. (Pis. SOUMF 'J[ 75.) And
Plaintiffs do not dispute that for each Advance Request from October 2008 through March 2009,
Fontainebleau submitted (i) all the documentation that the Disbursement Agreement required,
and (ii) a certification that all conditions precedent to an Advance were satisfied as of the
requested Advance Dates. Plaintiffs also do not dispute that BANA received the required
certifications from the General Contractor, the Construction Consultant, and the Architect for
each Advance Request. And there is likewise no dispute that Fontainebleau unfailingly executed
and delivered an Advance Confirmation Notice "confirm[ing] that each of the representations,
warranties and certifications made in the Advance Request ... [were] correct as of the Requested
Advance Date."9
There is also no evidence that BANA ever received a notice of default from
Fontainebleau or any Lender. Highland's September-October 2008 e-mails were not notices of
default because (i) as discussed above, BANA correctly determined that thee-mails contained
facially inaccurate information and (ii) the vague and cursory e-mails did not identify-much
less provide notice of-any Default or Event of Default. The September 26, 2008 e-mail simply
asserted that Lehman's bankruptcy triggered "a number of breaches under the Loan Facility," but
did not identify the claimed breaches, much less any Event of Default as defined in the loan
documents. (BANA Add. SOUMF 'll'li 106.) And while this e-mail also claimed that Lehman's
bankruptcy rendered the Retail Facility "no longer in full force and effect," BANA concluded
that Highland's assertion was erroneous as a matter of bankruptcy law-and BANA's conclusion
was confirmed by, among other things, Fontainebleau's repeated assertions that the Retail
Facility remained in "full force and effect," and Lehman's funding of the October and November
2008 Advances. (ld. 'J['J[ 94, 106-108.) BANA similarly rejected Highland's baseless assertion
that Lehman's bankruptcy had caused a MAE. (Id.

'll'li 110-111.) Highland's other e-mails also

do not identify Defaults, they merely raise "questions and concerns" and seek additional
of the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default.").
9

Disbursement Agmt. § 2.4.6; Ex. E.
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information from Fontainebleau. (!d. 'll'll112-115.) A request for information is not a notice of
default upon which BANA could issue a Stop Funding Notice.
Thus, having received all the necessary documents, BANA properly concluded that
Fontainebleau had satisfied the conditions precedent to Advance and approved Fontainebleau's
Advance Requests. 10 Plaintiffs, therefore, cannot prevail on their breach of contract claim, either
on summary judgment or at trial.

B.

Plaintiffs' Extrinsic Evidence Cannot Modify BANA's Disbursement
Agreement Duties.

Plaintiffs resort to out-of-context quotations from a leading industry treatise and the
parties' expert witnesses in a futile attempt to establish that Sections 9.3.2 and 9.10 do not mean
what they say. Thus, even though the agreement provides that BANA in "approving any
Advance Requests, ... shall be entitled to rely on certifications from the Project Entities ... as to
satisfaction of any requirements and/or conditions imposed by this Agreement," and that BANA
"may rely and shall be protected in acting or refraining from acting upon" such certifications,
and that BANA has no obligation "to conduct any independent investigation as to the accuracy,
veracity or completeness of any such items or to investigate any other facts or circumstances to
verify compliance by the Project Entities with their obligations hereunder," or "to inquire of any
Person whether a Default or an Event of Default has occurred and is continuing," Plaintiffs claim
that BANA can be held liable for funding and approving Advance Requests in reliance on those
same certifications. (Pis. Br. at 14-15.) That argument falls of its own weight.
As an initial matter, the treatise and the expert testimony are inadmissible parol evidence.
It is black-letter New York law that parol evidence cannot be used to modify a contract's clear
and unambiguous terms.ll It is equally well established that parol evidence cannot be used "to

10

See id. § 2.4.6.

11

See R/S Assocs. v. N.Y. Job Dev. Auth., 771 N.E.2d 240,242 (N.Y. 2002) ("[W]hen
interpreting an unambiguous contract term, evidence outside the four comers of the
document is generally inadmissible to add to or vary the writing."); Int'l Klafter Co. v. Cont.
Cas. Co., 869 F.2d 96, 100 (2d Cir. 1989) ("Itis a fundamental principle of contract
interpretation that, in the absence of ambiguity, the intent of the parties must be determined
from their final writing and no parol evidence or extrinsic evidence is admissible.").
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create an ambiguity in a written agreement which is complete and clear and. unambiguous upon
its face." 12 But even if it were admissible, Plaintiffs' parol evidence would be unavailing.
First, the treatise on which Plaintiffs rely-the Handbook of Loan Syndications and
Trading (the "LSTA Handbook") from the Loan Syndications and Trading Association (the trade
association for the syndicated loan industry)-is consistent with Section 9.3.2's plain meaning.
It states that the agent's role "in confirming the satisfaction of the conditions ... will commonly
be limited to the stated documentary conditions"-i.e., ensuring that the borrower has delivered
the required documentation. 13 The LSTA Handbook further observes that "[t]he administrative
agent will be permitted to rely upon notices, certificates, and other documents that it believes to
be genuine and sent by the proper, authorized person ... Most agency provisions will also allow
the administrative agent to assume that a lender believes that conditions to the making of a loan
have been satisfied unless the administrative agent has received notice to the contrary prior to
making funds available to the borrower." 14 On the other hand, the sentence Plaintiffs quote"Credit agreements do not normally allow the mere delivery of a certificate to satisfy the
condition itself; rather, the conditions will go to the underlying facts, so that, if the lenders have
reason to believe that the certificate is inaccurate, they are not barred from asserting that the·
condition has not been satisfied" (Pis. Br. at 14-15 (quoting LSTA Handbook at 274))-simply
recognizes that even where an agreement permits an agent to rely on a borrower's certifications,
individual lenders are always free to assert that a condition has not actually been satisfied and
withhold funding on that basis. But contrary to Plaintiffs' suggestion, that sentence deals only
with "lenders" and does not address the scope of an agent's contractual duties.
Moreover, the provision Plaintiffs quote is reflected in the loan documents-not in
Disbursement Agreement Section 9.3.2, as Plaintiffs' claim, but in Credit Agreement Section
9. 7' s requirement that Lenders are to make their own decisions regarding the loans
"independently and without reliance upon" BANA. Thus, the Lenders could have challenged
Fontainebleau's representations and prevented BANA from disbursing funds by submitting a
12

W W W Assocs., Inc. v. Giancontieri, 566 N.E.2d 639, 642 (N.Y. 1990) (overturning
summary judgment granted based on consideration of extrinsic evidence) (internal citations
and quotation marks omitted).

13

See Allison Taylor & Alicia Sansone, THE HANDBOOK OF LOAN SYNDICATIONS AND TRADING
274 (McGraw Hill2007).

14

!d. at 357.
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notice of a de~ault to the Administrative Agent. 15 But such action would have exposed the
complaining Lender to potential liability to Fontainebleau (or other Lenders) if the Lender were
· wrong in declaring a default. As one Plaintiff put it, "we didn't want open ourselves up to
liabilities with the company, with other lenders, by not funding our draws or allowing-- or
·requesting that advances not be approved.") (BANA Add. SOUMF «Jll35 (Mule Dep. at 253:2- .
20).) Indeed, the few remaining Plaintiffs who were Lenders when Lehman filed for bankruptcy
testified that they "believe[d)" that "at least one [of Lehman's Retail] advance[s] had been made
by another retail lender." (ld. «J[l34.) Yet none of those Lenders raised this concern. (/d. 'J[

(/d. '1[ 139

(Sheffield Dep. at 199:13-18).) Remarkably, Plaintiffs now claim that BANA was somehow ·
,contractually required to expose itself to precisely the same potential liability to other Lenders
for wrongfully declaring a default that Plaintiffs were themselves unwilling to risk.
Second, expert and lay witnesses' subjective views on what constitutes commercially
reasonable behavior by a disbursement agent cannot tmmp the contractual terms that defme the
agent's duties. 16 Indeed, Plaintiffs' misleading reference to BANA witnesses Susman, Bolio,
and V amelr s testimony (Pis. Br. at 14) ignores that each clearly limited their responses to what
they would have done in practice-had they possessed "credible evidence" that a borrower's
representations were false, which did not happen here-not what the Disbursement Agreement
required as a legal matterP And BANA's expert, Daniel Lupiani, simply testified that it would
be commercially reasonable, but not mandatory, for an agent to investigate information
15

Credit Agmt. § 9.3; Disbursement Agmt. §§ 2.5.1, 2.5.2.

16

See Excess Ins. Co. v. Factory Mut. Ins. Co., 769 N.Y.S.2d 487,489 (N.Y. App. Div. 1st
Dep't 2003), aff'd 822 N.E.2d 768 (N.Y. 2004) ("the expert affidavit submitted by defendant
regarding industry custom is extrinsic evidence which should not be considered in
interpreting this clear and unambiguous document"); Hess v. Zoological Soc'y of Buffalo,
521 N:Y.S.2d 903,904 (N.Y. App. Div. 4th Dep't 1987) (affrrm.ing refusal to consider expert
opinion where contract was "clear and unambiguous").

t7.

See BANAResp. to Pls. SOUMF175; CantorOpp. Decl. Exs. 21 (Bolio Dep. at 175:6-18;
26 (Susman Dep. at 182:3-183:20); 13 (Varnell Dep. at 211:16-212:5).
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indicating that conditions precedent were not satisfied, as long as the information was
sufficiently reliable and definitive.

18

Only Plaintiffs' expert, Shepherd Pryor IV, testified that the

Disbursement Agent was subject to a "commercially reasonable" standard that supersedes
Sections 9.3.2 and 9.10. See Pis. Br. at 14. But this assertion is based on a faulty reading of
Disbursement Agreeme~t Section 9.1:
•

•

Reading Section 9.1 to restrict BANA's ability to rely on Fontain~bleau representations,
warranties, certifications, and statements without investigating their accuracy or
determining whether a Default or an Event of Default has occurred would nullify Section
9.3.2 and 9.10's unambiguous provisions and violate the maxim that contracts should not
be read so as to render provisions "without force and effect." 19

•

18

Contrary to Plaintiffs' assertion (Pis. Br. at 5), Section 9.1 does not impose any additional
duties on BANA. It merely describes the standard applicable to BANA's existing "duties
hereunder." Plaintiffs' brief misleadingly omits the key word "hereunder" from its
Section 9.1 quotation. (!d.)

Specific provisions control general ones. Section 9.1 is a general provision broadly
discussing the Disbursement Agent's performance of its duties, while Sections 9.3 .2 and
9.10 contain more specific provisions limiting those duties-including Section 9.3.2's
directive that it applies "[n]otwithstanding anything else in this Agreement to the

20

Cantor Opp. Dec!. Ex. 27 (Lupiani Dep. at 131:10-132:19 (observing that there is an
"opportunity" but "no requirement" that the agent investigate information)).

19

See Excess Ins. Co. v. Factory Mut. Ins. Co., 822 N.E.2d 768,771-72 (N.Y. 2004) (rejecting
interpretation of contract provision that "would render [another provision] a nullity"); Corkill
Corp. v. S.D. Plants, Inc., 176 N.E.2d 37, 38 (N.Y. 1961) ("It is a cardinal rule of
construction that a court should not 'adopt an interpretation' that will operate to leave a
provision of a contract ... without force and effect.") see also RESTATEMENT (SECOND) OF
CONTRACTS § 203(a) ("[A]n interpretation whichgives a reasonable, lawful, and effective
. meaning to all terms is preferred to an interpretation which leaves a part unreasonable,
unlawful, or of no effect.").

20

Muzak Corp. v. Hotel Taft Corp., 133 N.E.2d 688, 690 (N.Y. 1956) ("Even if there was an
inconsistency between a specific provision and a general provision of a contract (we find
none), the specific provision controls."); Aguirre v. City of New York, 625 N.Y.S.2d 597, 598
(N.Y. App. Div. 2d Dep't 1995) ("Where there is an inconsistency between a specific
provision and a general provision of a contract, the specific provision controls.").
23

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contrary." Accordingly, Sections 9.3.2 and 9.10's specific provisions eliminating any
duty to investigate control over Section 9.l's generalized discussion. 21
Thus, Section 9.1 only applies to those Disbursement Agent duties that are not addressed by
more specific provisions. For exaruple, BANA was required to "exercise commercially
reasonable efforts" when "review[ing] the Advance Request and attachments thereto to
determine whether all required documentation has been provided" (Section 2.4.4(a)) or when
determining that a document submitted by Fontainebleau was "genuine and ... signed or
presented by the proper party" (Section 9.3.2).

II.

PLAINTIFFS OFFER NO EVIDENCE THAT BANA WAS GROSSLY
NEGLIGENT.
As Plaintiffs recognize, their breach of contract claim cannot succeed unless they can

prove that BANA was grossly negligent in performing its agent duties. (Pis. Br. at 25.) Under
both the Disbursement Agreement and the Credit Agreement, BANA has no liability other than
for its own gross negligence, bad faith, fraud, or willful misconduct.22 Those provisions are fully
enforceable under established New York law. 23 But Plaintiffs have presented noevidence that
BANA was grossly negligent. For this reason as well, the Court should not only deny Plaintiffs'
summary judgment motion, it should grant BANA summary judgment dismissing Plaintiffs'
Lehman-related allegations.
Plaintiffs acknowledge that New York law imposes a high standard for gross negligence
in the commercial context: Plaintiffs bear the burden of proving that BANA's conduct "evinces

21

Chern. Bank v. Stahl, 637 N.Y.S.2d 65, 66 (N.Y. App. Div. 1st Dep't 1996) (holding that
contract's "specific provisions that defendant had no obligation to remove the Atrium were
controlling over any inconsistent general provisions regarding compliance with, e.g., zoning
regulations"); Peak Partners, LP v. Republic Bank, 191 Fed. App'x 118, 124-25 (3d Cir.
2006) (New York law) (holding that any "general duty not to be negligent ... is limited ... by
[the trustee's] right to rely on any document believed by it to be genuine" and further
determining that contract permitted the trustee to rely on such a document "without the need
to investigate any fact or matter stated in the document") (internal quotation marks omitted).

22

Disbursement Agmt. § 9.10; Credit Agmt. § 9.3.

23

Metro. Life Ins. Co. v. Noble Lowndes Int'l, Inc., 643 N.E.2d 504, 507,509 (N.Y. 1994)
(enforcing contract provision "limiting defendant's liability for consequential daruages to
injuries to plaintiff caused by intentional misrepresentations, willful acts and gross
negligence" because it "represents the parties' Agreement on the allocation of the risk of
economic loss in the event that the contemplated transaction is not fully executed, which the
courts should honor.").
24

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a reckless disregard for the rights of others or 'smacks' of intentional wrongdoing.''24 Stated
differently, a party is grossly negligent only "when it fails to exercise even slight care or slight
diligence."

25

And while Plaintiffs erroneously equate "willful misconduct" with a "knowing and

intentional" breach of contract (Pis. Br. at 28), New York's highest court has made it clear that
Plaintiffs must prove that BANA engaged in "conduct which is tortious in nature, i.e., wrongful
conduct in which defendant willfully intends to inflict harm on plaintiff at least in part through

the means of breaching the contract between the parties."26 Courts routinely deny plaintiffs'
summary judgment motions-or, conversely, grant defendants' summary judgment motionsbased on exculpatory provisions like those here where plaintiff offers no evidence from which a
reasonable fact-fmder could conclude that defendant acted with reckless indifference or intent to
harm plaintiff. 27
Plaintiffs can point to no evidence in the record that BANA intended to harm them, or
that BANA recklessly disregarded their rights. Indeed, Plaintiffs claim only that BANA was
grossly negligent because it allegedly "fail[ed] to 'exercise even slight diligence"' in disbursing
funds to Fontainebleau. (Pis. Br. at 27.) But this assertion is demonstrably false. Leaving aside

24

Pls .. Br. at 25, citing Colnaghi; USA v. Jewelers Prot. Servs., Ltd., 611 N.E.2d 282, 284 (N.Y.
1993).

25

Goldstein v. Carnell Assocs., 906 N.Y.S.2d 905, 906 (N.Y. App. Div. 2d Dep't 2010)
(quotations omitted).

26

Metro. Life Ins. Co., 643 N.E.2d at 508 (emphasis added); see also Global Crossing
Telecomm., Inc. v. CCT Commc'n, Inc. (In re CCT Commc'n), Adv. Proc. No. 07-1942,2011
WL 3023501, at *5 (Bankr. S.D.N.Y. July 22, 2011) ("[W]illfu(misconduct does not include
the voluntary and intentional failure or refusal to perform a contract for economic reasons.").

27

David Gutter Furs v. Jewelers Prot. Servs., Ltd., 594 N.E.2d 924, 924-25 (N.Y. 1992)
(granting defendant.summary judgment because "[t]aken together, these allegations do not
raise an issue of fact whether the defendant performed its duties with reckless indifference to
plaintiffs rights.''); Goldstein, 906 N.Y.S.2d at 906 (granting summary judgment enforcing
exculpatory provision where no evidence of conduct that "evince[d] a reckless indifference to
the rights of others or a failure to exercise even slight care"); Stuart Rudnick, Inc. v. Jewelers
Prot. Servs., Ltd., 598 N.Y.S.2d 235, 236 (N.Y. App. Div. 1st Dep't 1993) (granting
summary judgment enforcing exculpatory provision where no evidence of "conduct that
evinces a reckless disregard for the rights of others or 'smacks' of intentional wrongdoing");
EJS-Asoc Ticaret Ve DanismanlikLtd. Sti. v. AT&T Co., 92 Civ. 3038 (PNL), 1993 U.S.
Dist. LEXIS 10344, at **8-9 (S.D.N.Y. July 28, 1993) (denying plaintiffs' summary
judgment motion and granting defendants' motion for summary judgment where nothing in
the factual record suggested conduct that "smack[ed] of intentional wrongdoing.").
25

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that the Disbursement Agreement and Credit Agreement unambiguously permitted BANA to
rely exclusively on Fontainebleau's certifications in approving Advance Requests and disbursing
funds (see supra at 7-9), the factual record clearly shows that BANA took additional steps,
especially with respect to the Lehman bankruptcy:
•

BANA discussed the Lehman bankruptcy's effect on the Project and the issues raised
by Lenders (including Highland): (i) internally, (ii) with counsel, and (iii) with
Fontainebleau (BANA Add. SOUMF'J['J[ 56-58,61,63, 107, 109, 117, 126, 128, 129;
Pis.' SOUMF 'J[ 49);

•

BANA responded to Lender concerns by specifically addressing and analyzing
whether (i) Lehman's bankruptcy filing was a valid basis to deny Fontainebleau's
Advance Request (BANA Add. SOUMF 'J[108); (ii) it was required to honor
Fontainebleau's Advance Request if the entire requested Shared Costs were received
from TriMont and all required Advance Request certifications were made (id. 'J[59);
and (iii) based on the information available, the Lehman bankruptcy filing was a
Material Adverse Event (id. 'J[111 );

•

On September 26, 2008, before disbursing funds to Fontainebleau, BANA requested
and received a reaffirmation from Fontainebleau CFO Jim Freeman that all
certifications, representations and warranties in the 'September 2008 Advance
Request-including the representation that the Retail Agerit and Retail Lenders had
funded the September 2008 Advance-were true and that all conditions precedent to
funding were satisfied (id. 'J[61);

•

BANA waited until after it received the full Shared Costs from TriMont to make any
disbursements to Fontainebleau (id. 'J[97);

•

BANA was responsive to questions from Term Lenders (including Highland) and-as
Plairltiffs themselves observe-pushed Fontainebleau to provide the Lenders with
additional information concerning Lehman specifically and the Project generally (id.
'J['J[ 78-80, 87, 89, 106-110, 120); and

•

lri October 2008, ·BANA facilitated calls between Fontainebleau and numerous
Lenders (including Highland, Brigade, and Halcyon) to discuss the Lehman
bankruptcy (id. 'J[120).

Thus, BANA's diligence was obviously far more than merely "slight," the threshold for
exculpation under New York law.
Plaintiffs' reliance on DRS Optronics, Inc. v. North Fork Banll 8 is misplaced. lri DRS,
defendant North Fork Bank entered into a custodial agreement with plaintiff DRS and another
party, EDM, under which North Fork was required to ensure that no payments were made

28

843 N.Y.S.2d 124 (N.Y. App. Div. 2d Dep't 2007) (cited in Pis. Br. at 26-27).
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without the "joint written instructions made by authorized signatories of DRS and EDM."29 The
court held that North Fork was grossly negligent because it made no effort "to implement any
procedure to ensure that the two-signature requirement would be enforced" and, instead,
established a system that "enabled EDM to unilaterally direct transfers."30 But DRS is factually
inapposite here, where there is ample evidence of BANA' s efforts to ensure compliance with the
Disbursement Agreement's requirements for approving and disbursing Advance Requests.
Plaintiffs' last-ditch assertion that BANA "elected to disregard the knowledge it had and
the warnings it received" (Pis. Br. at 28) simply restates their argument that BANA should have
uncovered the alleged defaults that Fontainebleau fraudulently concealed. Plaintiffs fail to cite
any evidence that BANA actually knew of the alleged defaults in 2008 or early-2009-or any
time prior to non-party discovery in this action. And even though BANA had no duty under the
contract to investigate whether conditions precedent were satisfied or whether an Event of
Default had occurred, the undisputed facts discussed above establish that BANA did conduct an
investigation. Plaintiffs' self-serving, 20/20 hindsight assertion that BANA should have done a
better job is insufficient to meet Plaintiffs' burden of proving that BANA was grossly negligent.

III.

PLAINTIFFS CANNOT ESTABLISH THAT BANA APPROVED
FONTAINEBLEAU'S ADVANCE REQUESTS KNOWING THAT CONDITIONS
PRECEDENT WERE NOT SATISFIED.
Even if Plaintiffs could establish that, contrary to Section 9.3.2's express terms, BANA

was not "entitled to rely on certifications from the Project Entities" when "approving any
Advance Requests," Plaintiffs still could not prevail on summary judgment motion unless they
submit undisputed evidence that, in their own words, BANA "knew that [Lehman's] bankruptcy
and subsequent defaults ... had caused multiple conditions precedent to disbursement to fail."
(Pis. Br. at 1.) Plaintiffs identify five conditions precedent that they claim failed as a result of
Lehman's bankruptcy filing or its subsequent failure to fund: Disbursement Agreement Sections
3.3.2(a), 3.3.3, 3.3.21, 3.3.23, and 3.3.24. (See Pis. Br. at 19-25.) But as demonstrated below,
Plaintiffs' assertion that BANA "knew" that these conditions precedent were not satisfied
misstates the factual record. For this reason as well, Plaintiffs' motion for partial summary
judgment should be denied.

29

!d. at 126.

30

!d. at 127-28.
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A.

BANA Did Not Know That the Retail Lenders Had Failed to Make Advances
in.Violation of Section 3.3.23.

Plaintiffs argue that BANA improperly disbursed funds following Lehman's bankruptcy
flling because Lehman's "failure to make the Advances required of it violated the plain language
of Section 3.3.23 [and] created a funding hole in available funds of more than $120 million, the
vast bulk of the remaining Retail Facility." (Pis. Br. at 20.) As an initial matter, Plaintiffs'
allegation that Lehman's bankruptcy created a "funding hole" is demonstrably false: It is
indisputable that every month from September 2008 through March 2009, TriMont wired BANA
the full requested Shared Costs. (BANA Add. SOUMF <j[ 97 .) The Retail Facility never failed to
fund any AdvanceRequest and, thus, there was no "funding hole."
Contrary to Plaintiffs' assertion, BANA did not breach the Disbursement Agreement by
funding the September 2008 Advance because, as described in detail above (see supra at 10-12),
BANA did not know that FBR had funded Lehman's Shared Costs portion. It cannot be
legitimately disputed that Fontainebleau concealed FBR's funding for Lehman by, arnong other
things, providing ass\lfances to BANA, on the day that BANA funded the Advance, that all .
conditions precedent to funding (including funding by the Retail Lenders) were satisfiedassurances that it confinned over the ensuing months. And Plaintiffs· claim that TriMont. told
BANA that FBR had ftmded for Lehman is false, as the evidence Plaintiffs ·cite demonstrates.

(See supra at 11.)
. To the extent Plaintiffs' claim is based on BANA allegedly learning after September
2008 that FBR had funded for Lehman, that claim is baseless as well. The evidence does not
support Plaintiffs' allegation that the Retail Co-Lenders told BANA that FBR had funded for
Lehman. (See supra at 12.) And Plaintiffs' reliance on BANA's dealings with Highland in
October 2008 is similarly unavailing. Highland's e-mail forwarding a Merrill Lynch research
analyst's e-mail reporting the analyst's "understand[ing]" that "equity sponsors" had funded
Lehman's September Advance Request portion (Pis. Br. at 11-12) is insufficient to establish
BANA's knowledge because the analyst's e-mail did not identify a source or basis for the
statement, and its credibility was suspect because it significantly overstated Lehman's September
Shared Costs portion and was uncorroborated by any other sources. (BANA Add. SOUMF <j[
113.) The e-mail simply rep~ted an unsubstantiated market runaor·-

(Id. 1:116.) Plaintiffs' allegation that~ e-mail from Highland's
counsel to BANA's counsel confrrmed their mutual Q.nderstanding "that Lehman has not made
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any disbursements while in bankruptcy" (Pls. Br. at 12) mischaracterizes the illadmissible
hearsay in that e-mail.

31

Highland's e-mail simply listed its own positions on various Lehman-

related issues and asked BANA to confirm them. 32 But Plaintiffs fail to identify any evidence
that BANA subsequently confirmed those self-serving assertions, and contemporaneous internal
BANA documents reflect BANA's belief that, contrary to Highland's e-mail, Lehman funded in
September 2008. (See BANA Add. SOUMF <J[ 66.)
BANA' s funding of post-September Advances did not violate Section 3.3.23 because as
far as BANA knew, a Retail Lender-either Lelunan (October-November) or ULLICO
- - h a d funded Lehman's Shared Costs in those months, as the condition
precedentrequrired.

Plaintiffs' suggestion that Section 3.3.23 can only be satisfied if each Retait Lender funds a
specific portion of the Advance is inconsistent with the condition's plain terms. And it makes no
se:QSe, bec~use BANAhad no ability to determine the amount of each individual Re~il CoLender's required contribution.33 It is undisputed that the Retail Facility was syndicated under a
confidential process, and that BANA and the Lenders did not know the Retail Co-Lenders'
identities or commitment amounts. (See id.

':1[':1[ 25,

26.) Thus, Section 3.3.23 should be read as

simply requiring that the total Shared Costs be received from the Retail Co-Lenders as a_
group.
B. ·

BANA Did Not Have Information Materially and Adversely Inconsistent
With the Borrowers' Certifications in Violation of Section 3.3.21.

Plaintiffs' argument that BANA was aware of "information [that] caused Section 3.3.21
to fail" because it was "material and adverse to the Project" (Pis. Br. 21-22) largely re-plows old
ground. For example, Plaintiffs again incorrectly assert that BANA knew that FBR had funded
Lehman's share of the September2008 Advance. "(See supra at 10-12. 27-29.) And while
BANA knew that ULLICO had funded Lelunan's share

that

was not a violation of Section 3.3.23 or any other condition precedent. (See supra at 1.3 -14, 2931

See United States v. Baker, 432 F.3d 1189, 1211' (11th Cir. 2005) (holdiilg that newspaper
reports were "inadmissible hearsay" when offered "to establish the truth of theit contents").

32

See Dep. Ex. 80.

33

Lipper Holdings, LLC v. Trident Holdings, LLC, 766 N.Y.S.2d 561, 562 (N.Y. App. Div. 1st
Dep't 2003) ("A contract should not be interpreted to produce a result that is absurd,
commercially unreasonable, or contrary to the reasonable expectations of the parties.").

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30.) Plaintiffs fail to explain why ULLICO covering Lelunan's shortfall, thereby avqiding the
so-called "fWlding hole," \Yas "material and adverse" infonnation regarding the Project.
Plaintiffs misleadingly claim that BANA's employees considered Lehman's failure to fund .
"material and adverse" while citing only to their reaction to the actual bankruptcy flling, not to
ULLICO's decision to ftmd for Lehman. (Pls. Br. at 22 and n.105.)
Plaintiffs' assertion that BANA "knew that no one else had or was willing to asswne .
Lehman's continuing ~bligations" (id. at 21) similarly distorts the factual record because it is
based on Retail Co~ Lenders' alleged statements in October 2008, the first of two consecutive
months when Lehman funded its Shared Costs portion. Moreover, in an October 22
memorandum to Lenders, Fontainebleau represented that "Le~an Brothers has indicated to us
that it has sought the necessary approvals to fund its COD1Dlitment this month," and it had
received assurances from the "co-lenders to the retail facility" that "[i]f Lehman Brothers is not
in a position to perform ... that they would fund Lehman's portion of the draw." (Pis. SOUMF

'J[ 95.) Thus, BANA had no reason to be concerned with the other Retail Lenders' willingness to
assume Lehman's obligations. And because ULLICO had ''funded Lehman's Advances . .
(id.), the earlier statements about assuming Lehman's obligations
were no longer relevant, much less material and adverse.

C.

Fontainebleau's October 7 Memorandum Did Not Violate Section 3.3.24.

Plaintiffs anomalously assert that Fontainebleau's October 7, 2008 memorandum to
Lenders· somehow meant that BANA did not "receive[] such documents and evidence as are
customary for transactions of this type," as required by Section 3.3.24. (Pis. Br. at 22.) But
Plaintiffs' hindsight observation that Freeman used the passive voice in responding to one
question on BANA's long list of potential Lender questions concerning the Lehman bankruptcy
(id. at 13, 22) does not prove that BANA was required to reject Fontainebleau's Advance
Requests. Indeed, as detailed above, BANA's contemporaneous reaction was that
Fontainebleau's memorandum confmned funding by Lehman and adequately responded to the
questions asked. (BANA Add. SOUMF <j 85; see also BANA's Resp. to Pls.' SOUMF '}[57.)
Thus, there was :rio basis for BANA to conclude that Section 3.3.24 had not been satisfied.

D.

BANA Did Not Know That Lehman Defaulted Under the Retail Facility
Agreement.

Plaintiffs erroneously claim that BANA knew Lehman's bankruptcy filing and
subsequent failures to fund Advances were Defaults under the Retail Facility Agreement such
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that Sections 3.3.3 and 3.3.2(a)'s conditions precedent were not satisfied. Plaintiffs' assertion
that Lehman's bankruptcy filing in-and-of itself breached the Retail Facility Agreement (Pis. Br.
at 24-25) is simply untrue. Lehman's bankruptcy filing made Lehman a "Defaulting Lender" 34
but the bankruptcy filing was not a "Lender Default," which is only triggered by "the failure or
refusal ... of a [Retail] Lender or Co-Lender to make available its portion of any Loan when
required to be made by it hereunder."35 Nor was the Lehman bankruptcy filing otherwise a
"Default" or "Event of Default" under the Retail Facility Agreement, both of which are tied to
the retail borrowers' performance, not the Retail Lenders'. 36 Thus, BANA' s knowledge of
Lehman's bankruptcy filing was irrelevant because there was no failure of Sections 3.3 .3 and
3.3.2(a)'s conditions precedent. Conversely, although Lehman's failure to fund the September
2008 Advance indisputably was a Lender Default under the Retail Facility Agreement, there is
no evidence that BANA knew at the time that FBR had funded for Lehman (see supra at 10-12,
27-29) and, therefore, Plaintiffs cannot establish that BANA knew that Sections 3.3.3 and
3.3.2(a) were not satisfied for that Advance Request.
Plaintiffs also cannot establish that BANA knew that ULLICO's funding of Lehman's
commitment meant that there was a Lender Default under the Retail Facility Agreement. It is
undisputed that the Retail Facility was syndicated under a confidential process, and that BANA
did not have access to the Co-Lending Agreement. That made it impossible· for BANA to
determine whether or not the ULLICO funding reflected a Lender Default-a fa~t that was by no
means certain. Retail Facility Agreement Section 9.7.2 permitted Lehman "to sell ... all or any
part of [its] right, title, or interest in, and to, and under the Loan ... to one or more additional

lenders" without limiting how that interest could be divided up. Thus, under Section 9. 7.2
Lehman could validly transfer even a single draw-e.g., Lehman's December 2008 Shared Costs
portion-without committing a Lender Default, if the transfer were made before Lehman had
ever refused or failed to make available its portion of a Loan when required. Similarly,
Section 9. 7 .2(b). granted any Retail Co-Lender the right "to make the defaulting Co-Lender's pro

34

Retail Agmt. § 1 at 8 ("'Defaulting Lender' shall mean at any time ... any Lender or CoLender that as a result of any voluntary action is the subject (as a debtor) of any action or
proceeding (A) under any existing or future law ... relating to bankruptcy.").

35

!d. § 1 at 15.

36

!d.§§ 1 at7, 8.1.
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rata share of such advance pursuant to the Co-Lendi.n.g Agreement," thereby allowing the
defaulting Co-Lender to avoid an actual Lender Default. All that BANA knew was that Lehman
had funded the October and November 2008 Advances
· But there is no evidence that BANA knew how and when ULLICO
agreed to fund Lehman's obligations. Thus, it could not know whether there had been a tender
Default and, consequently, a failure to satisfy Sections 3.3.3 and 3.3.2(a)'s conditions precedent.

CONCLUSION
BANA's duties as Disbursement Agent were straightforward and limited. The sole issue
on this motion is whether BANA performed those ministerial duties. Under the undisputed facts,
it clearly did. BANA complied with its contractual duties by approving and funding Advance
Requests only after receiving all required documentation, and representations, warranties, and
certifications from Fontainebleau, on which the Disbursement Agreement and Credit Agreement
unambiguously permitted BANA to rely. Thus, Plaintiffs have no contract claim against BANA.
Plaintiffs' response to this unavoidable conclusion is to attempt to re-write the contract-and the
factual record. That attempt should be swiftly rejected: the general ..commercial
reasonableness" standard did not create additional duties, nor did it vitiate BANA's specific
contractual entitlement to rely on Fontainebleau's certifications. Nor can that general provision
overcome the contract's exculpation of BANA for all conduct except for acts of gross
negligence, bad faith, fraud, or willful misconduct, a high standard that Plaintiffs do not come
close to satisfying on this record. Accordingly, Plaintiffs' motion for partial summary judgment
on their breach of contract claim should be denied~ and summary judgment should instead be
entered for BANA.

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Dated: September 9, 2011

R~b.UttOO~

Cl

By:·~~---------------+-~----~~~------­
O'MELVENY & MYERS LLP
Bradley J. Butwin (pro hac vice)
J onatban Rosenberg (pro hac vice)
Daniel L. Cantor (pro hac vice)
William J. Sushon (pro hac vice)
Times Square Tower
7 Times Square
New York, New York 10036
Telephone: [phone]
Facsimile: [phone]
E-mails: [e-mail];
[e-mail]; [e-mail];
[e-mail]
-and-

HUNTON & WILLIAMS LLP
Jamie Zysk Isani (Fla. Bar No.728861
Matthew Mannering (Fla. Bar No. 39300)
1111 Brickell A venue, Suite 2500
Miami, Florida 33131
Telephone: [phone]
Facsimile: [phone]
E-mail: [e-mail];
[e-mail]
Attorneys for Bank of America, N.A.

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CERTIFICATE OF SERVICE
I, Asher L. Rivner, hereby certify that on September 9, 2011 , I served by electronic .
means pursuant to an agreement between the parties a true and correct copy of the foregoing
Defendant Bank of America, N.A. 's Opposition to Term Lender Plaintiffs' Motion for Partial
Summary Judgment upon the below-listed counsel of record and that the original and a paper
copy of these documents is being filed with the Clerk of Court under seal.
Kirk Dillman, Esq.
Robert Mockler, Esq.
HENNIGAN DORMAN LLP
865 South Figueroa Street, Suite 2900
Los Angeles, California 90017
Telephone: [phone]
Fascirnile: [phone]

E-mail: [e-mail]
[e-mail]

Attorneys for Plaintiffs Avenue CLO Fund, Ltd. et al.

Asher L. Rivner