Memoryten, Inc. v. Silicon Mountain Holdings, Inc. et al
OPINION AND ORDER re: 207 MOTION for Summary Judgment filed by LAURUS CAPITAL MANAGEMENT, LLC, Laurus Master Fund, Ltd. (In Liquidation), VALENS CAPITAL MANAGEMENT, LLC, LV Administrative Services, Inc., Valens Investmen t Advisors, L.P., 203 SECOND MOTION to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6) filed by Waytech, LLc: For the reasons set forth in this Opinion, the LV Defendants' motion for summary judgment is GRANTED, and Defendant Wa yTech's motion to dismiss is GRANTED. Plaintiff MemoryTen's claims against these Defendants are DISMISSED WITH PREJUDICE. Neither Silicon (Silicon Mountain Holdings, Inc.) nor SMM (Silicon Mountain Memory, LLC) has appeared in this lit igation or moved for summary judgment or to dismiss the case. However, it is the Court's understanding both that these companies have ceased to have independent legal existence and that the reasoning of this Opinion necessarily disposes of wh atever claims might lie against these Defendants. Accordingly, the Clerk of Court is directed to terminate all pending motions, adjourn all remaining dates, and close this case; provided, however, that within thirty (30) days of the date of this Opi nion, Plaintiff MemoryTen may submit to the Court a letter explaining why it believes that a cause of action set out in the Complaint remains against Silicon or SMM. This Opinion shall be deemed a final dismissal of the claims against Silicon and SMM in thirty (30) days absent such a request. (Signed by Judge Katherine Polk Failla on 3/16/2015) (tn)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SILICON MOUNTAIN HOLDINGS, et al.,
DOC #: _________________
DATE FILED: March 16, 2015
14 Civ. 635 (KPF)
OPINION AND ORDER
KATHERINE POLK FAILLA, District Judge:
Plaintiff MemoryTen, Inc. (“MemoryTen”) brought this action against
Defendants Silicon Mountain Holdings, Inc. (“Silicon”), Silicon Mountain
Memory (“SMM”), WayTech, LLC (“WayTech”), and the LV Defendants (defined
infra). After proceeding for several years in the United States District Court for
the District of Colorado, the case was transferred to this District. Plaintiff
alleges breach of contract, unfair competition, and unjust enrichment — under
theories of direct liability, alter-ego liability, and agency liability — and seeks
damages and declaratory and injunctive relief. The LV Defendants move for
summary judgment on all claims, and WayTech moves to dismiss the
Complaint for failure to state a claim upon which relief can be granted. For the
reasons set forth in this Opinion, both motions are granted.
This case arises from a series of transactions involving Silicon, a
Colorado corporation that is involved in the sale of computer memory products.
In 2007, Silicon acquired all outstanding and issued stock of a predecessor
corporation, SMM, and its subsidiary, VCI Systems, Inc. (LV Def. 56.1 ¶ 14).
As part of this transaction, Silicon also acquired the outstanding debt of SMM
to certain of the LV Defendants; thereafter, it entered into a separate agreement
with the LV Defendants that is described in more detail below. (Id.).
The LV Defendants are a group of five companies that operate in tandem.
(Compl. ¶ 9). The four investment companies beneath this umbrella are
Laurus Master Fund, Ltd., a Cayman Islands corporation (id. at ¶ 5); Laurus
The facts in this Opinion are drawn from the LV Defendants’ Local Rule 56.1 Statement
(“LV Def. 56.1”) (Dkt. #208); Plaintiff’s response to the LV Defendants’ Local Rule 56.1
Statement (“Pl. 56.1 Response”) (Dkt. #212); Plaintiff’s Local Rule 56.1 Statement (“Pl.
56.1”) (Dkt. #211); the LV Defendants’ response to Plaintiffs’ Local Rule 56.1 Statement
(“LV Def. 56.1 Response”) (Dkt. #222); and the declarations and affidavits (cited as
“[Name] Decl.”) and exhibits thereto submitted with the parties’ briefs. Where
appropriate, the Court has adopted the naming and capitalization conventions used by
the parties. Citations to a party’s Local Rule 56.1 Statement incorporate by reference
the documents and deposition testimony cited therein. Where cited directly, deposition
testimony is cited as “[Name] Dep.” The parties’ memoranda of law submitted in
connection with the LV Defendants’ motion for summary judgment are cited as “LV Def.
Br.”; “Pl. SJ Opp.”; and “LV Def. Reply.”
With regard to Defendant WayTech’s motion to dismiss, the facts are drawn from
Plaintiff’s Second Amended Complaint (the “Complaint” or “Compl.”) (Dkt. #125), and
are taken as true for purposes of the pending motion to dismiss. Faber v. Metro. Life
Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011) (when reviewing a complaint for failure to state
a claim, the court will “assume all well-pleaded factual allegations to be true” (internal
quotation marks omitted)). The Court also considers “documents attached to the
complaint as exhibits, and documents incorporated by reference in the complaint.”
DiFolco v. MSNBC Cable LLC, 622 F.3d 104, 111 (2d Cir. 2010). The parties’
memoranda of law submitted in connection with WayTech’s motion to dismiss are cited
as “WayTech Def. Br.,” “Pl. MTD Opp.,” and “WayTech Def. Reply.”
Capital Management, LLC, a private investment adviser incorporated in
Delaware that provides investment management for Laurus Master Fund (id. at
¶ 6); Valens Capital Management, LLC, a private investment adviser
incorporated in Delaware (id. at ¶ 7); and Valens Investment Advisers, L.P., a
limited partnership organized under the laws of Delaware (id. at ¶ 8). LV
Administrative Services, Inc. is a Delaware corporation that acts as the
administrative and collateral agent to the other four companies. (Id. at ¶ 4).
All five companies are engaged in the same business, have the same ownership
and management, and operate out of the same New York office. (Id. at ¶ 9).
Defendant WayTech is a Missouri limited liability company “in the
business of selling computer equipment, software, and parts.” (Compl. ¶ 14).
In 2011, WayTech purchased Silicon from the LV Defendants.
Plaintiff MemoryTen, a California corporation, “is a manufacturer,
distributor and reseller of various computer components/modules, both
domestically and internationally.” (Compl. ¶ 3).
The LV Defendants’ Loans to Silicon
On September 25, 2006, SMM entered into a “Security and Purchase
Agreement” (Regan Decl. Ex. 2), by which a subset of the LV Defendants agreed
to loan up to $8.5 million to SMM. (LV Def. 56.1 ¶ 14(a)). The Security and
Purchase Agreement, among its other terms, granted the LV Defendants a first
priority lien upon all of the assets of SMM. (Security and Purchase Agreement
On August 28, 2007, Silicon acquired all issued and outstanding stock of
SMM. (LV Def. 56.1 ¶ 14(b)). In connection with this transaction, Silicon
entered into a Master Security Agreement, Joinder Agreement, and Guaranty
(collectively, with the Security and Purchase Agreement, the “Loan
Documents”) with the LV Defendants. (Id.). The Master Security Agreement
(Regan Decl. Ex. 3), which is governed by New York law (id. at ¶ 10), similarly
granted the LV Defendants a first priority lien and security interest in all of the
assets of Silicon (id. at ¶ 1). The Master Security Agreement provided that
Silicon would “not, without the Purchasers’ prior written consent, sell,
exchange, lease or otherwise dispose of any Collateral” (id. at ¶ 3(g)), and that it
would as well “keep its Collateral free and clear of all … encumbrances of any
kind and nature,” except for certain limited (and not relevant) exceptions (id. at
¶ 3(e)). It further provided that, in an Event of Default, the LV Defendants
would have the remedies available to a secured party under the Uniform
Commercial Code (the “UCC”) in effect in New York (id. at ¶ 5). 2 As part of
these transactions, the LV Defendants also gained substantial common stock
(though never exceeding 9.99% of Silicon’s total outstanding stock (Regan Decl.
¶ 8)), along with warrants to obtain additional common stock that were not
exercised (LV Def. 56.1 Response ¶ 1).
An Event of Default was defined to include, among other events, a material breach of
the Master Security Agreement or any Event of Default so defined under the Security
and Purchase Agreement. (LV Def. 56.1 ¶ 4).
The Subscription Agreement
Beginning in or around 2007, Silicon began purchasing products for
resale from MemoryTen. (Pl. 56.1 ¶ 6). Silicon initially incurred an unpaid
balance of $89,284, in satisfaction of which it gave MemoryTen 89,284 shares
of common stock. (Id.). Through 2008, Silicon continued to purchase products
from MemoryTen, incurring by August 2008 an unpaid balance of $500,000.
(Id. at ¶ 8). Silicon and MemoryTen entered into discussions over how to settle
this debt, eventually arriving at the Subscription Agreement (Olsen Decl.
Ex. A), which was signed on August 12, 2008. 3
The Subscription Agreement provided MemoryTen with two primary
benefits. First, MemoryTen received $500,000 worth of common stock.
(Subscription Agreement ¶¶ 1.1, 1.2, 2.1). 4 Second — and more significantly
for the purposes of this litigation — the Subscription Agreement provided
MemoryTen a first option and right to acquire Silicon’s Memory Component
Distribution Business (the “Distribution Business”) under certain
circumstances. (Id. at ¶¶ 8.1-8.4).
Under Paragraph 8.1, “[s]ubject to the rights of” the LV Defendants under
the Loan Documents, MemoryTen would have “the first option and right to
acquire all of the shares in [Silicon] from [Silicon] at a price mutually agreed
The Subscription Agreement appears to contemplate written memorializations of certain
other agreements in principle (see Subscription Agreement Recitals), but there is no
evidence that such additional agreements were executed (see LV Def. 56.1 Response
The Subscription Agreement (as well as the parties’ briefing) refers to the constituent
provisions of that document interchangeably as “sections” and “paragraphs.” For
consistency, the Court refers to them as paragraphs.
upon by the parties by the process outlined in Paragraph 8.4.” (Subscription
Agreement ¶ 8.1). These rights would be triggered if Silicon entered into a
“Corporate Transaction” (defined as an acquisition, sale, or transfer of Silicon
or substantially all of its assets), for an amount less than $6 million, pursuant
to the approval of Silicon’s Board of Directors and stockholders holding at least
50% of its voting stock. (Id.). Paragraph 8.1 further provided that the LV
Defendants would not “unreasonably withhold consent or approval, and
[would] not unreasonably withhold any related waiver, under the [Loan]
Under Paragraph 8.2, again “[s]ubject to the rights of” the LV Defendants
under the Loan Documents, MemoryTen would have the first option and right
to acquire the Distribution Business if Silicon were to offer it for sale.
(Subscription Agreement ¶ 8.2). The sale would take place “at a price mutually
agreed upon by the parties hereto by the process outlined in Paragraph 8.4,”
and again the LV Defendants would not “unreasonably withhold consent or
approval, and [would] not unreasonably withhold any related waiver, under the
[Loan] Documents.” (Id.).
Paragraph 8.4, again still “[s]ubject to the rights of” the LV Defendants
under the Loan Documents, defined the Distribution Business and set forth
three possible procedures by which the parties would arrive at a sale price for
it. (Subscription Agreement ¶ 8.4). The price would be the highest of (i) the
fair market value of the Distribution Business as determined by a third party;
(ii) the highest and best offer selected as the winning bid or offer in a
bankruptcy proceeding; or (iii) “the price mutually agreed to by the parties
hereto and the [LV Defendants], and on other terms and conditions mutually
agreed to by the parties hereto and the [LV Defendants] in good faith.” (Id. at
The Subscription Agreement, which is governed by Colorado law
(Subscription Agreement ¶ 10), additionally contained an integration clause
stating that “[t]his Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties hereto with respect to the subject matter hereof.” (Id. at ¶ 12). It
identified the LV Defendants as a third-party beneficiary (id. at ¶ 14), and was
signed by MemoryTen, Silicon, and the LV Defendants.
Shortly after the Subscription Agreement was signed, during negotiations
over a subsequent agreement, the LV Defendants stated in an email
correspondence their understanding of the interplay between the Subscription
Agreement and the Master Security Agreement:
Laurus will not provide a Waiver for any deal that allows
MemoryTen to exercise [the purchase] option in an
Event of Default as that would effectively give
MemoryTen a first priority lien over all the assets of the
Memory Components Division. From our perspective,
in an Event of Default, MemoryTen would have the
option but not the obligation to purchase the Memory
Components Division for $5 million. If it doesn’t believe
that to be a worthwhile price then it can choose not to
exercise that option and pursue other options.
(Kripalani Decl. Ex. A). MemoryTen’s chief executive has declared in this
litigation that it was his understanding that MemoryTen’s option to acquire the
Distribution Business would not be eliminated by a foreclosure on Silicon by
the LV Defendants and a consequent sale of its assets pursuant to the latters’
rights under the UCC. (Olsen Decl. ¶¶ 8-10).
The LV Defendants’ Foreclosure on Silicon and the Sale to WayTech
Between the signing of the Security and Purchase Agreement in
September 2006 and August 2008, the LV Defendants repeatedly granted
advances to SMM and Silicon, deferred payments, and amended the
agreements governing Silicon’s debt; notwithstanding these facts, the LV
Defendants maintain that an Event of Default never technically occurred
during this period. (Hrafnkelsdottir Dep. 16-17, 116-17). To the contrary, the
LV Defendants sent Silicon an email stating that Silicon was not technically in
default on August 14, 2008, two days after the Subscription Agreement was
entered into. (Jacobs Decl. Ex. B). Plaintiff maintains, supported by the
declaration of Silicon’s former Chief Operating Officer during the relevant
period, that Silicon was in default and merely had not received a formal notice
of such default. (See Hanner Decl. ¶ 11). Moreover, according to MemoryTen,
over the course of this period the LV Defendants came to exercise effective
control over the business operations of Silicon. (Id. at ¶¶ 4-10). The LV
Defendants deny that such close control existed.
In December 2008, the LV Defendants and Silicon began to discuss the
potential sale of Silicon’s Distribution Business, entering into discussions with
MemoryTen and at least one other potential buyer. (Pl. 56.1 ¶ 26). Such
discussions actively continued through at least April 2009. (Id. at ¶¶ 27-28).
On December 14, 2010, the LV Defendants sent a Notice of Default to Silicon.
(LV Def. 56.1 ¶ 19). This notice was followed by a “peaceful possession” letter
on January 14, 2011. (Pl. 56.1 ¶ 31). After taking possession of Silicon, the
LV Defendants continued negotiations with MemoryTen for the sale of Silicon,
while also negotiating with WayTech. (Id. at ¶ 32). In March 2011, MemoryTen
and WayTech made competing offers of $400,000 and $432,000, respectively,
for Silicon; in April 2011, the LV Defendants accepted WayTech’s offer and sold
Silicon. (Id. at ¶¶ 33-36).
On April 13, 2012, MemoryTen filed suit against the LV Defendants and
Silicon in the United States District Court for the District of Colorado. (Dkt
#1). On December 20, 2012, MemoryTen filed its First Amended Complaint
against the same Defendants, plus SMM and “Way Technology, LLC.” (Dkt.
#98). On March 5, 2013, MemoryTen filed its Second Amended Complaint
against the LV Defendants, Silicon, SMM, and WayTech. (Dkt. #125). Several
motions to dismiss the claims, to dismiss counterclaims, and for summary
judgment were filed over this period and affected by the various amendments.
Ultimately considered by the Colorado District Court were the LV Defendants’
motion for summary judgment and WayTech’s motion to dismiss for failure to
state a claim. The Court initially granted WayTech’s motion to dismiss on April
30, 2013. (Dkt. #163). However, on January 29, 2014, the Court granted
Plaintiff’s motion for relief from the April 30, 2013 order and transfer to the
Southern District of New York. (Dkt. #176). On January 31, 2014, the case
was transferred to the Southern District of New York and assigned to the
undersigned. (Dkt. #177).
On August 7, 2014, WayTech filed its motion to dismiss for failure to
state a claim (Dkt. #203), and on August 8, 2014, the LV Defendants filed a
motion for summary judgment (Dkt. #207). On September 9, 2014,
MemoryTen filed its response to the motion for summary judgment (Dkt. #210),
and on September 10, 2014, its response to the motion to dismiss (Dkt. #214).
The briefing was complete upon the filing of WayTech’s reply on September 23,
2014 (Dkt. #218), and the LV Defendants’ reply on September 30, 2014 (Dkt.
The LV Defendants’ Motion for Summary Judgment Is Granted
Under Federal Rule of Civil Procedure 56(c), summary judgment may be
granted only if all the submissions taken together “show that there is no
genuine issue as to any material fact and the moving party is entitled to
judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986) (quoting previous version of Fed. R. Civ. P. 56(c)); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The moving party bears the
Plaintiff points out that the scheduling orders issued by the Court spoke only of the LV
Defendants’ summary judgment motion and did not provide for WayTech’s motion to
dismiss. (Pl. MTD Opp. 2). The Court will not, however, penalize WayTech for the
imprecision of its own orders, particularly since counsel for WayTech indicated at the
April 24, 2014 pre-motion conference that it contemplated filing a motion to dismiss in
tandem with the LV Defendants’ motion for summary judgment. (Apr. 24, 2014 Tr. 2021).
initial burden of demonstrating “the absence of a genuine issue of material
fact.” Celotex, 477 U.S. at 323. A fact is “material” if it “might affect the
outcome of the suit under the governing law,” and is genuinely in dispute “if
the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Anderson, 477 U.S. at 248; see also Jeffreys v. City of New
York, 426 F.3d 549, 553 (2d Cir. 2005) (citing Anderson). The movant may
discharge this burden by showing that the nonmoving party has “fail[ed] to
make a showing sufficient to establish the existence of an element essential to
that party’s case, and on which that party will bear the burden of proof at
trial.” Celotex, 477 U.S. at 322; see also Selevan v. N.Y. Thruway Auth., 711
F.3d 253, 256 (2d Cir. 2013) (finding summary judgment appropriate where the
non-moving party fails to “come forth with evidence sufficient to permit a
reasonable juror to return a verdict in his or her favor on an essential element
of a claim” (internal quotation marks omitted)).
If the moving party meets this burden, the nonmoving party must “set
out specific facts showing a genuine issue for trial” using affidavits or
otherwise, and cannot rely on the “mere allegations or denials” contained in the
pleadings. Anderson, 477 U.S. at 248, 250; see also Celotex, 477 U.S. at 32324; Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009). The nonmoving party
“must do more than simply show that there is some metaphysical doubt as to
the material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 586 (1986) (internal quotation marks omitted), and cannot rely on “mere
speculation or conjecture as to the true nature of the facts to overcome a
motion for summary judgment,” Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d
Cir. 1986). Furthermore, “[m]ere conclusory allegations or denials … cannot by
themselves create a genuine issue of material fact where none would otherwise
exist.” Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (internal quotation
marks and citations omitted).
Plaintiff’s Right to Acquire Under the Subscription
Agreement Was Negated by the LV Defendants’ Exercise
of Their Article 9 Rights
The parties agree that the LV Defendants were within their rights, as
secured creditors under Article 9 of the UCC, to take possession of the assets
identified as collateral by the Loan Documents, including Silicon and its
Distribution Business. (See Kripalani Tr. 117). Further, MemoryTen does not
challenge the general proposition that a secured creditor, upon taking
possession of collateral, is entitled to sell it in satisfaction of an obligation
under Article 9. (See Dkt. #192 (Transcript of April 24, 2014 Hearing) at 8).
Instead, the parties’ dispute centers on the effect, if any, that the Subscription
Agreement had upon the LV Defendants’ rights as conferred by the Loan
Documents. This requires the Court to examine the meaning of Paragraphs
8.1, 8.2, and 8.4 of the Subscription Agreement — and, more particularly, the
clause in each paragraph according rights to MemoryTen “subject to” the LV
Defendants’ rights under the Loan Documents. The LV Defendants argue that
the phrase “subject to” means that MemoryTen’s purchase rights are entirely
subservient to those of the LV Defendants under the Loan Documents, and
thus are eliminated by the exercise of those Article 9 rights. (LV Def. Br. 4-8;
LV Def. Reply 1-2). MemoryTen argues that, in context, the phrase should be
interpreted as “consistent with,” so that MemoryTen’s rights cannot impair the
LV Defendants’ right to seize the collateral, but the LV Defendants
correspondingly cannot exercise their resulting sale rights in a manner
inconsistent with MemoryTen’s right to acquire Silicon or the Distribution
Business. (Pl. SJ Opp. 3-6, 8-10).
Under Colorado law, which governs the Subscription Agreement, a
court’s “primary aim in contract interpretation is to ascertain and implement
the intent of the parties.” Fed. Deposit Ins. Corp. v. Fisher, 292 P.3d 934, 937
(Colo. 2013). In interpreting the language of a deed — and noting throughout
that the principles of contract interpretation applied — the Colorado Supreme
Court stated that “the weight and momentum of authority is behind the more
flexible approach to [interpretation],” under which approach “extrinsic evidence
is used to explain and give context to the language.” Lazy Dog Ranch v.
Telluray Ranch Corp., 965 P.2d 1229, 1236-37 (Colo. 1998), as modified on
denial of reh’g (Oct. 19, 1998). The Court approvingly quoted the Restatement
(Second) of Contracts, which noted that “[i]t is sometimes said that extrinsic
evidence cannot change the plain meaning of a writing, but meaning can
almost never be plain except in context.” Id. at 1237 n.7 (quoting Restatement
(Second) of Contracts § 212 cmt. b). It has elsewhere stated:
[a]lthough we have noted that in construing contracts,
as distinguished from statutes or rules having general
applicability, it may be appropriate to look beyond the
“four corners” of the document and consider context
and surrounding circumstances, not only for resolving
ambiguity but even for determining whether it exists,
we have always made clear that extrinsic evidence of
intent can never contradict or change the language of a
contract or justify an interpretation not reasonably
derivable from the contract itself.
Fort Lyon Canal Co. v. High Plains A & M, LLC, 167 P.3d 726, 729 (Colo. 2007).
Thus this Court, in interpreting the Subscription Agreement, looks to both the
text of the contract and the extrinsic evidence in determining whether there is
ambiguity, while ensuring that the unambiguous meaning of the text not be
overcome by ambiguous extrinsic evidence.
Ordinarily the phrase “subject to” is defined as “liable, subordinate,
subservient, inferior, obedient to; governed by or affected by; provided that;
provided; answerable for.” Black’s Law Dictionary 1425 (6th ed. 1990).
Plaintiff, however, argues that Paragraphs 8.1 and 8.2 — stating that Silicon’s
ability to sell the distribution and MemoryTen’s ensuing right to acquire are
“subject to” the LV Defendants’ Article 9 rights — must be read to state that,
whatever the rights exercised by the LV Defendants, MemoryTen’s right to
acquire persists through to the Article 9 sale. In effect, MemoryTen would
make subordinate the provisions of the Loan Documents, and make
superordinate the provisions of the Subscription Agreement. In doing so,
MemoryTen would turn the meaning of the phrase “subject to” precisely on its
head, reading it to mean “notwithstanding.” Yet as noted by Garner’s
Dictionary of Legal Usage, those two phrases are antitheses: “notwithstanding”
is used “to introduce a superordinate provision,” while “subject to” is used “to
introduce a subordinate provision.” Garner’s Dictionary of Legal Usage 616 (3d
ed. 2011); cf. also Hellenic Lines, Ltd. v. Embassy of Pak., 467 F.2d 1150, 1155
(2d Cir. 1972) (“The phrase ‘subject to’ indicates that the terms of the bill of
lading were subordinate to the terms of the respective freight contracts.”);
Swan Magnetics, Inc. v. Superior Court, 56 Cal. App. 4th 1504, 1510 (Cal. Ct.
App. 1997), as modified (Sept. 12, 1997) (“The phrase ‘subject to’ is not
synonymous with ‘according to’ or ‘consistent with’; it means conditioned upon,
limited by, or subordinate to.”).
Within the four corners of the text, then, there is no ambiguity to be
found; MemoryTen’s preferred interpretation is simply the opposite of what the
text plainly states. Pursuant to the Colorado precedent discussed above,
however, the Court considers the contextual and extrinsic evidence that
MemoryTen argues supports its interpretation, or at least evinces ambiguity.
First, MemoryTen argues that the LV Defendants demonstrated an intent
to be constrained in their exercise of their Article 9 rights merely by signing
onto the contract: given that their Article 9 rights were otherwise
unconstrained, why else sign? (See Pl. SJ Opp. 4-5). The answer is simple.
The LV Defendants’ accession was a necessary precondition to MemoryTen’s
ability to acquire any option in any portion of Silicon. The Loan Documents
forbade Silicon from encumbering or disposing of the collateral without the LV
Defendants’ consent (see Master Security Agreement ¶¶ 4(e), 4(g)); thus,
because an option is a form of encumbrance, without the LV Defendants’
consent Paragraphs 8.1 and 8.2 of the Subscription Agreement would have
been presumptively invalid. In short, the Court finds that the LV Defendants
signed the Subscription Agreement to enforce their rights rather than waive
Second, MemoryTen argues that the transaction as a whole is
commercially unreasonable under the LV Defendants’ interpretation:
MemoryTen would not have paid for an option that could be nullified at any
time by the LV Defendants, given that Silicon was already in default under the
Loan Documents. (See Pl. SJ Opp. 5, 10-11). 6 It is true that under Colorado
law courts “must construe the terms of the agreement in a manner that allows
each party to receive the benefit of the bargain, and the scope of the agreement
must faithfully reflect the reasonable expectations of the parties.” Allen v.
Pacheco, 71 P.3d 375, 378 (Colo. 2003). But MemoryTen has not shown either
that the terms of the contract deprive it of the benefit of the bargain or that the
unambiguous language does not reflect the parties’ intent. 7 MemoryTen settled
The Court accepts, as it must due to the procedural posture, MemoryTen’s contested
assertion that Silicon was in fact in default in August 2008.
To the extent MemoryTen argues that the contract is unconscionable, that argument is
equally foreclosed. Under Colorado law, a party asserting that a contract is
unconscionable must prove “both procedural and substantive unconscionability,”
looking to a number of factors including:
(1) the use of a standardized agreement executed by parties of
unequal bargaining power; (2) the lack of an opportunity for the
customer to read or become familiar with the document before
signing it; (3) the use of fine print in the portion of the contract
containing the provision in question; (4) the absence of evidence
that the provision was commercially reasonable or should
reasonably have been anticipated; (5) the terms of the contract,
including substantive fairness; (6) the relationship of the parties,
including factors of assent, unfair surprise, and notice; and (7) the
circumstances surrounding the formation of the contract,
including setting, purpose, and effect.
a $500,000 debt for common stock worth that amount and an option
exercisable only under certain circumstances; particularly given MemoryTen’s
argument that Silicon was already in default to the LV Defendants, this may
well have been the best deal that it could hope for. All contracts have winners
and losers, and all conditional option contracts have the potential to go
unexercised. The fact that MemoryTen did not get all that it hoped to from the
contract does not mean that it was wrongly deprived of any benefit for which it
Third, Plaintiff provides an email sent on October 13, 2008 — two
months after the Subscription Agreement was signed — from an officer of the
LV Defendants to an officer of MemoryTen during discussions over a
subsequent Credit Agreement. (See Pl. SJ Opp. 13-14 (citing Kripalani Decl.
Ex. 1)). In the email, Jay Drezner of the LV Defendants notes that the language
of the proposed Credit Agreement does not match that of the Subscription
Agreement with regard to MemoryTen’s right to purchase Silicon in the event it
sells itself or sells the Distribution Business. (Kripalani Decl. Ex. 1). He then
Nesbitt v. FCNH, Inc., No. 14 Civ. 990 (RBJ), 2014 WL 6477636, at *3 (D. Colo. Nov. 19,
2014). MemoryTen has not shown the sort of inequality of bargaining power or
deceptiveness necessary to showing of procedural unconscionability. See id. (looking at
the first, second, third, sixth, and seventh factors to determine procedural
unconscionability). And while the contract worked out to MemoryTen’s disadvantage, it
has not shown that the settling of a $500,000 debt for common stock worth that
amount and an option exercisable only under certain circumstances amounts to the
sort of severe imbalance that amounts to substantive unconscionability, and thus
cannot be countenanced by courts. See Bailey v. Lincoln Gen. Ins. Co., 255 P.3d 1039,
1056 (Colo. 2011) (citing, for the standard for substantive unconscionability, Tillman v.
Commercial Credit Loans, Inc., 362 N.C. 93, 103 (2008) (“Substantive unconscionability,
on the other hand, refers to harsh, one-sided, and oppressive contract terms.”)).
To be clear, however, Laurus will not provide a Waiver
for any deal that allows MemoryTen to exercise that
option in an Event of Default as that would effectively
give MemoryTen a first priority lien over all the assets of
the Memory Components Division. From our
perspective, in an Event of Default, MemoryTen would
have the option but not the obligation to purchase the
Memory Components Division for $5 million. If it doesn’t
believe that to be a worthwhile price then it can choose
not to exercise that option and pursue other options.
(Id. (emphasis added)). MemoryTen argues that the italicized language clearly
demonstrates the LV Defendants’ understanding that MemoryTen’s right to
acquire the Distribution Business persists through a default under the Loan
It is true that post-drafting correspondence between the parties can shed
light on a contract’s interpretation. See Ocean Transp. Line, Inc. v. Am.
Philippine Fiber Indus., Inc., 743 F.2d 85, 90 (2d Cir. 1984) (looking to “a series
of memoranda and correspondence exchanged” after the drafting of the
contract). Yet MemoryTen’s reading of this correspondence is highly cramped.
It entirely ignores the first sentence, which appears to reject precisely the
reading that MemoryTen urges upon the Court. While MemoryTen does not
provide the full context of the email, it appears that Drezner is rejecting an
interpretation proposed by MemoryTen that would allow MemoryTen’s rights
under the Subscription Agreement to persist through default, and in effect
“give MemoryTen a first priority lien over all the assets of the” Distribution
Business. (Kripalani Decl. Ex. 1). In addition, MemoryTen ignores the
colloquial use of “option” in the final sentence (i.e., MemoryTen can “pursue
other options”), which raises the question of whether the “option” referred to in
the second sentence is a legal right or simply a choice being offered by the LV
Defendants. (Id.). The second sentence, in context, is thus better read as the
LV Defendants’ expressing a willingness to sell the Distribution Business even
in the event of Silicon’s default, while still rejecting MemoryTen’s assertion of
an irrevocable legal right to acquire the business. This interpretation is also
consistent with what actually happened: after foreclosing on Silicon, the LV
Defendants negotiated with MemoryTen as well as WayTech for the sale of the
Even after reviewing MemoryTen’s proffered extrinsic evidence, the Court
concludes that the interaction of the Subscription Agreement and the Loan
Documents is not ambiguous. The phrase “subject to” meant that
MemoryTen’s right to acquire was at all times subordinate to the LV
Defendants’ right to foreclose in the event of default and freely sell Silicon or its
assets without being bound to a single buyer. The evidence offered by
MemoryTen may suggest that its entry into this contract ultimately proved
unwise, but the evidence does not suggest that the Subscription Agreement’s
language is ambiguous.
Plaintiff’s Claims Against the LV Defendants Fail
With a proper understanding of the Subscription Agreement’s terms, the
Court can now turn to Plaintiff’s claims for relief against the LV Defendants:
breach of contract, unfair competition, unjust enrichment, alter-ego liability,
and declaratory relief. Two of these claims — unfair competition and unjust
enrichment — are abandoned in MemoryTen’s brief in opposition. 8 MemoryTen
essentially proceeds on a theory that the LV Defendants breached the
Subscription Agreement either directly, or by acting as the agents or alter egos
of Silicon. So framed, the viability of these claims hinges upon a showing that
any of the parties — whether the LV Defendants or Silicon — breached the
MemoryTen’s first argument is that a “triggering event” under paragraph
8.1 of the Subscription Agreement occurred, either when Silicon surrendered
its assets for peaceful possession by the LV Defendants or when the LV
Defendants took such possession. (Pl. SJ Opp. 15). The text of the
Subscription Agreement does not bear out either of these arguments. Although
Paragraph 8.1 applies to a “Corporate Transaction,” and although the
foreclosure by the LV Defendants could be construed to satisfy its definition of
Corporate Transaction, Paragraph 8.1 further specifies that it is only triggered
“if the Board of Directors of the Corporation and the stockholders representing
more than fifty percent (50%) of the then issued voting stock of the Corporation
approve of a proposed Corporate Transaction.” (Subscription Agreement ¶ 8.1).
As the Second Circuit has remarked, “a partial opposition [to a motion for summary
judgment] may imply an abandonment of some claims or defenses. Generally … a
partial response reflects a decision by a party’s attorney to pursue some claims … and
to abandon others.” Jackson v. Fed. Exp., 766 F.3d 189, 196 (2d Cir. 2014). In such a
case, where “abandonment by a counseled party is not explicit but such an inference
may be fairly drawn from the papers and circumstances viewed as a whole, district
courts may conclude that abandonment was intended.” Id. Here, the LV Defendants
spend a significant portion of their brief in support of summary judgment
demonstrating that MemoryTen fails to state a claim for unfair competition or unjust
enrichment. (See LV Def. Br. 18-21). The Court thus infers from the fact that
MemoryTen makes no defense of these claims in its brief in opposition to summary
judgment that it has abandoned these claims.
There is nothing in the record to suggest that these requirements were met in
the course of the LV Defendants exercising their contractual rights.
MemoryTen also looks to Paragraph 8.2, in which its right to acquire the
Distribution Business is triggered “in the event [Silicon] proposes to offer the
Memory Component Distribution Business … for sale or transfer in a
transaction.” (Pl. SJ Opp. 15-17 (citing Subscription Agreement ¶ 8.2)).
MemoryTen first argues that Silicon did, in fact, propose to offer the
Distribution Business for sale when it and the LV Defendants entered into
negotiations with MemoryTen and others from December 2008 to January
2010. MemoryTen puts forward evidence of serious negotiations during this
period, but such negotiations do not meet the requirements of Paragraph 8.2.
Under Colorado law, “[a]n offer is the manifestation of willingness to enter into
a bargain, so made as to justify another person in understanding that his
assent to that bargain is invited and will conclude it.” Sumerel v. Goodyear Tire
& Rubber Co., 232 P.3d 128, 133 (Colo. App. 2009) (quoting Restatement
(Second) of Contracts § 24 (2008)). A proposal, meanwhile, is defined as “[t]he
act of putting something forward for consideration.” Black’s Law Dictionary
1413 (10th ed. 2014). Putting these two terms together, to “propose to offer”
something is “to put an offer forward for consideration.” This would suggest
that, to trigger Paragraph 8.2, negotiations cannot merely have been begun,
but have arrived at the point at which a formal offer — sufficiently complete to
be capable of binding the offeror by the offeree’s acceptance — is ready to be
made; at that point, the same formal offer to be given to the third party must
first be given to MemoryTen.
This reading of Paragraph 8.2 is bolstered by the course of performance
between the parties. See KN Energy, Inc. v. Great W. Sugar Co., 698 P.2d 769,
779 (Colo. 1985) (“The parties’ course of performance following execution of the
contract is also relevant to the interpretation of the agreement…. [A] course of
performance may explain but not contradict the express terms of the writing.”).
Despite the long period of negotiations from December 2008 to January 2010,
MemoryTen proffers no evidence to suggest that at any point during this period
it understood the negotiations to have triggered its right to acquire the
Distribution Business. Rather, the email exchange cited by MemoryTen
involves the LV Defendants “engag[ing] potential buyers” and “approaching
MemoryTen and For All Memory … to determine potential interest.” (Jacobs
Decl. Ex. A). No evidence put forward speaks to a formal offer being made or
proposed during this period. 9
MemoryTen states in its Local Rule 56.1 Statement that “the LV Defendants were
serious about selling the memory component division of Silicon, thus triggering LV’s
contractual obligations under [Paragraph] 8.4 of the Subscription Agreement.” (Pl. 56.1
¶ 26). While the Court accepts for the purposes of this motion the factual statement
that “the LV Defendants were serious about selling the memory component division of
Silicon,” it rejects the statement that the contractual obligations were so triggered, as it
is a legal conclusion inappropriate for inclusion in a statement of undisputed facts, and
one not supported by citation to the record. (See id. (citing Hrafnkelsdottir Dep. 156-60
(Plaintiff’s counsel urging Lara Hrafnkelsdottir to state that the contractual obligations
were triggered, and Hrafnkelsdottir stating that they were not))). The Court finds that
such “[m]ere conclusory allegations cannot by themselves create a genuine issue of
material fact where none would otherwise exist.” Hicks, 593 F.3d at 166 (internal
quotation marks and alteration omitted).
MemoryTen’s next argument is that Silicon “propose[d] to offer the
Memory Component Distribution Business … for sale or transfer in a
transaction” when it sent its April 28, 2011 letter to the LV Defendants
acknowledging its default and conveying peaceful possession. (See Pl. SJ
Opp. 15-16; Hrafnkelsdottir Decl. Ex. B (peaceful possession letter)). Again,
such an acknowledgment of default and declination to challenge a debtor’s
seizure of collateral does not constitute the sort of contractual offer
contemplated by the language of Paragraph 8.2.
MemoryTen then invites the Court to step through the looking glass and
conclude that when the LV Defendants offered Silicon for sale, it was actually
Silicon offering itself for sale, because the LV Defendants were operating as the
agent or alter ego of Silicon. (Pl. SJ Opp. 17-20). MemoryTen’s alter-ego theory
fails because there is no liability to impute: the LV Defendants may well have
acted as Silicon’s puppeteer (a finding the Court need not make), but as the
Court has concluded that Silicon did not itself violate the Subscription
Agreement, there is no liability to impute to the LV Defendants. MemoryTen
then seeks to establish the necessary liability by arguing that when the LV
Defendants offered Silicon up for sale, they did so as the agents of Silicon, thus
making Silicon liable, which liability in turn can be imputed to the LV
Defendants. This dizzying argument falls apart, however, because Silicon’s
letter acknowledging default and granting peaceful possession cannot
conceivably form the basis of an agency relationship. Under Colorado law,
“[a]gency is the fiduciary relation which results from the manifestation of
consent by one person to another that the other shall act on his behalf and
subject to his control, and consent by the other so to act.” Stortroen v.
Beneficial Fin. Co. of Colo., 736 P.2d 391, 395 (Colo. 1987) (quoting
Restatement (Second) of Agency § 1(1) (1957)). Needless to say, granting the LV
Defendants the right to dispose of Silicon’s assets “in their best discretion” and
“in such manner and in such order as the Secured Parties may determine in
their sole and absolute discretion” does not suggest that the LV Defendants
acted subject to Silicon’s control.
Finally, MemoryTen claims “entitle[ment] to a declaration that [the LV
Defendants] waived [their] rights under such loan documents in favor of
Plaintiff’s contractual rights under the Subscription Agreement.” (Compl.
¶ 75). While the Court “may declare the rights and other legal relations of any
interested party seeking such declaration,” 28 U.S.C. § 2201, it is clear from
the preceding discussion that the LV Defendants did not waive their rights, and
thus that no declaratory relief (in favor of Plaintiff, at least) is appropriate.
Accordingly, summary judgment is granted as to all of Plaintiff MemoryTen’s
claims against the LV Defendants.
WayTech’s Motion to Dismiss Is Granted
When considering a motion to dismiss for failure to state a claim, a court
should “draw all reasonable inferences in Plaintiff[’s] favor, assume all wellpleaded factual allegations to be true, and determine whether they plausibly
give rise to an entitlement to relief.” Faber v. Metro. Life Ins. Co., 648 F.3d 98,
104 (2d Cir. 2011) (internal quotation marks omitted); see also Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). A plaintiff is entitled to relief if it alleges
“enough facts to state a claim to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also In re Elevator Antitrust
Litig., 502 F.3d 47, 50 (2d Cir. 2007) (“While Twombly does not require
heightened fact pleading of specifics, it does require enough facts to ‘nudge
[plaintiff’s] claims across the line from conceivable to plausible.’” (quoting
Twombly, 550 U.S. at 570)). “Where a complaint pleads facts that are ‘merely
consistent with’ a defendant’s liability, it ‘stops short of the line between
possibility and plausibility of entitlement to relief.’” Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 557).
“In considering a motion to dismiss for failure to state a claim pursuant
to Rule 12(b)(6), a district court may consider the facts alleged in the
complaint, documents attached to the complaint as exhibits, and documents
incorporated by reference in the complaint.” DiFolco v. MSNBC Cable LLC, 622
F.3d 104, 111 (2d Cir. 2010). “Even where a document is not incorporated by
reference, the court may nevertheless consider it where the complaint ‘relies
heavily upon its terms and effect,’ which renders the document ‘integral’ to the
complaint.” Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002)
(quoting Int’l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d
Cir. 1995) (per curiam)). “[A] plaintiff’s reliance on the terms and effects of a
document in drafting the complaint is a necessary prerequisite to the court’s
consideration of the document on a dismissal motion; mere notice or
possession is not enough.” Id. (emphasis in original). Here, MemoryTen’s
Complaint does not attach any exhibits, but MemoryTen relies upon and thus
incorporates by reference the Loan Documents between Silicon and the LV
Defendants as well as the Subscription Agreement between and among
MemoryTen, Silicon, and the LV Defendants.
Plaintiff’s Claims Against WayTech Fail
Plaintiff’s Complaint states claims against Defendant WayTech for unjust
enrichment, injunctive relief, and alter-ego liability. Each of these claims fails
as a matter of law.
“In Colorado, a plaintiff seeking recovery for unjust enrichment must
prove: [i] at plaintiff’s expense [ii] defendant received a benefit [iii] under
circumstances that would make it unjust for defendant to retain the benefit
without paying.” Salzman v. Bachrach, 996 P.2d 1263, 1265-66 (Colo. 2000).
Here, too, MemoryTen’s arguments on the first and third prongs of the test
depend on the Court accepting its interpretation of the Subscription
Agreement; if MemoryTen’s contractual rights were not violated, then any
benefit gained by WayTech did not come at MemoryTen’s expense, and it would
not be unjust for WayTech to retain the benefit. Because the Court has found
that the unambiguous language of the contract disables MemoryTen’s right to
acquire in the event of an Article 9 foreclosure (see supra at Discussion A.2.a),
MemoryTen’s rights have not been violated. Accordingly, the claim for unjust
enrichment must fail.
A plaintiff seeking a permanent injunction must demonstrate:
[i] that it has suffered an irreparable injury; [ii] that
remedies available at law, such as monetary damages,
are inadequate to compensate for that injury; [iii] that,
considering the balance of hardships between the
plaintiff and defendant, a remedy in equity is
warranted; and [iv] that the public interest would not be
disserved by a permanent injunction.
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). Even if the
damages claimed by MemoryTen were the sort of noneconomic damages for
which an injunction is generally reserved — a questionable proposition, see
Marblegate Asset Mgmt. v. Educ. Mgmt. Corp., No. 14 Civ. 8584 (KPF), 2014 WL
7399041, at *12 (S.D.N.Y. Dec. 30, 2014) (“It is settled law that when an injury
is compensable through money damages there is no irreparable harm.”
(internal citation and alteration omitted)) — the absence of any breach of
MemoryTen’s contractual rights defeats its claim of any injury, let alone an
irreparable one. Accordingly, Plaintiff cannot obtain injunctive relief.
Plaintiff’s final claim against WayTech is that it operates as the alter ego
of Silicon. Although MemoryTen does not elaborate, presumably under this
theory it seeks to incorporate all its claims against Silicon (namely, breach of
contract, unfair competition, and declaratory relief) against WayTech. Even
assuming that Silicon operates as the alter ego of WayTech, or vice versa, the
claims for breach of contract and declaratory relief fail because, as discussed at
length, MemoryTen’s contractual rights have not been violated. Incorporating
Plaintiff’s claim of unfair competition against Silicon, the Complaint alleges
only that “[t]he acts and conduct of [the LV Defendants] and Defendant Silicon
as alleged above constitute unfair competition in Colorado at common law.”
(Compl. ¶ 63).
Colorado has recognized the common law tort of unfair competition,
citing for the existence of the cause of action International News Service v.
Associated Press, 248 U.S. 215 (1918), and for its elements KMLA Broadcasting
Corp. v. Twentieth Century Cigarette Vendors Corp., 264 F. Supp. 35, 44 (C.D.
Cal. 1967) (“Under INS unfair competition is found to exist when the acts of a
defendant amount to interference and diversion of profit at the point where
plaintiff’s profit is to be made.”). See Am. Television & Commc’ns Corp. v.
Manning, 651 P.2d 440, 444 (Colo. App. 1982). Though this cause of action is
exceedingly broad, it unquestionably requires the identification of a wrong done
to the plaintiff — the deprivation of some profit to which it is entitled. The
Court in International News Service characterized the wrong done in that case
Stripped of all disguises, the process amounts to an
unauthorized interference with the normal operation of
complainant’s legitimate business precisely at the point
where the profit is to be reaped, in order to divert a
material portion of the profit from those who have
earned it to those who have not; with special advantage
to defendant in the competition because of the fact that
it is not burdened with any part of the expense of
gathering the news. The transaction speaks for itself
and a court of equity ought not to hesitate long in
characterizing it as unfair competition in business.
248 U.S. at 240. MemoryTen sees the parallel plainly: it invested in Silicon in
order to acquire a right to purchase it or its Distribution Business, and at just
the point where profit was to be reaped from the investment, WayTech
purchased Silicon instead (or, under the alter ego theory, Silicon was sold to
WayTech instead). However, MemoryTen’s claims fail once again on the
grounds that there has been no violation of its contractual rights. Because
MemoryTen did not, in fact, maintain a right to acquire Silicon or its
Distribution Business after Silicon’s assets were seized by the LV Defendants,
it had not earned any right to acquire such business that was usurped by
WayTech. The LV Defendants owned Silicon free and clear following their
foreclosure, and its ensuing sale to the highest bidder is the fairest sort of
Plaintiff’s Request to Amend Its Pleadings Is Denied
Finally, MemoryTen asks that, if the Court finds its pleadings deficient, it
be given leave to amend its pleadings. (Pl. MTD Opp. 15). “When determining
whether to grant leave to amend, district courts consider: (i) whether the party
seeking the amendment has unduly delayed; (ii) whether that party is acting in
good faith; (iii) whether the opposing party will be prejudiced; and (iv) whether
the amendment will be futile.” Gorman v. Covidien Sales, LLC, No. 13 Civ. 6486
(KPF), 2014 WL 7404071, at *2 (S.D.N.Y. Dec. 31, 2014) (citing Foman v. Davis,
371 U.S. 178, 182 (1962)). 10 Due to the unusually tortuous history of this
litigation, MemoryTen’s desire for a third amendment of its complaint (nearly
three years after the filing of its original complaint) might be neither unduly
Because MemoryTen’s request to amend its pleadings fails on the grounds of futility,
the Court need not consider whether the District of Colorado’s previous scheduling
order (see Dkt. #43) means that the stricter “good cause” standard of Federal Rule of
Civil Procedure 16(b) should apply. See Gorman, 2014 WL 7404071, at *2.
delayed nor in bad faith, coming as it does on the heels of a motion to dismiss.
Yet these factors are insufficient to overcome the fact that amendment would
be futile. See Hunt v. Alliance N. Am. Gov’t Income Trust, Inc., 159 F.3d 723,
728 (2d Cir. 1998) (noting that it remains “proper to deny leave to replead
where there is no merit in the proposed amendments or amendment would be
Here, Plaintiff’s claims arise entirely from its interpretation of Paragraphs
8.1 and 8.2 of the Subscription Agreement — an interpretation the Court has
conclusively rejected. Plaintiff’s claims do not fail due to a simple
misstatement or technical defect. Contra Gormin v. Hubregsen, No. 08 Civ.
7674 (PGG), 2009 WL 35020, at *1 (S.D.N.Y. Jan. 6, 2009). Rather, Plaintiff’s
claims fail because “the underlying facts or circumstances relied upon” by
MemoryTen are not “a proper subject of relief.” Foman, 371 U.S. at 182.
Accordingly, Plaintiff’s request for leave to amend is denied as futile.
For the reasons set forth in this Opinion, the LV Defendants’ motion for
summary judgment is GRANTED, and Defendant WayTech’s motion to dismiss
is GRANTED. Plaintiff MemoryTen’s claims against these Defendants are
DISMISSED WITH PREJUDICE.
Neither Silicon (Silicon Mountain Holdings, Inc.) nor SMM (Silicon
Mountain Memory, LLC) has appeared in this litigation or moved for summary
judgment or to dismiss the case. However, it is the Court’s understanding both
that these companies have ceased to have independent legal existence and that
the reasoning of this Opinion necessarily disposes of whatever claims might lie
against these Defendants. Accordingly, the Clerk of Court is directed to
terminate all pending motions, adjourn all remaining dates, and close this
case; provided, however, that within thirty (30) days of the date of this Opinion,
Plaintiff MemoryTen may submit to the Court a letter explaining why it believes
that a cause of action set out in the Complaint remains against Silicon or
SMM. This Opinion shall be deemed a final dismissal of the claims against
Silicon and SMM in thirty (30) days absent such a request.
March 16, 2015
New York, New York
KATHERINE POLK FAILLA
United States District Judge
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