Antarctica Star I, LP et al v. Gibbs International, Inc.

Filing 100

OPINION & ORDER re: 70 MOTION to Dismiss Gibbs International, Inc.'s Counterclaim and Third-Party Complaint 54 . filed by Chandra Patel, Antarctica Star I, LP, Acre, LLC, Antarctica Star, LLC. This dispute arises out of a failed multi-billion dollar property transaction with the State of California. The crux of the dispute is whether Gibbs International, Inc. ("Gibbs") is entitled to, inter alia, some portion of a settlement related to this failed trans action. Ultimately, this Court finds the agreements unambiguous and not supportive of Gibbs's claims. (As further set forth in this Order.) For the reasons set forth above, Antarctica's motion to dismiss Gibbs's amended counterclaims and third-party complaint, converted to a motion for judgment on the pleadings, is GRANTED. The Clerk of Court is directed to close the motions at ECF Nos. 70, 73, 79, 82, and 86. (Signed by Judge Katherine B. Forrest on 2/14/2017) (cf)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------------------X
:
ANTARTICA STAR I, LP, et al.,
:
:
:
Plaintiffs and Counterclaim Defendants,
:
-v:
:
GIBBS INTERNATIONAL, INC,
:
:
Defendant and Counterclaim/Third-Party
:
Plaintiff,
:
:
-v:
:
:
ACRE, LLC, et al.,
:
Third-Party Defendants.
:
------------------------------------------------------------------------X
KATHERINE B. FORREST, District Judge:

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: February 14, 2017

15-cv-2630 (KBF)

OPINION & ORDER

This dispute arises out of a failed multi-billion dollar property transaction
with the State of California. The crux of the dispute is whether Gibbs
International, Inc. (“Gibbs”) is entitled to, inter alia, some portion of a settlement
related to this failed transaction.
In an agreement signed in the fall of 2010 (the “Funding Agreement”),
plaintiffs and counterclaim defendants, Antarctica Star I, LP and Antarctica Star,
LLC (jointly, “Antarctica”), agreed to pay Gibbs a fee in exchange for its assistance
in securing funding for the purchase of eleven properties owned by the State of
California (the “State”). The State ultimately abandoned the transaction and
litigation between it and Antarctica-related entities ensued. Not to be left high and
dry, Gibbs demanded that Antarctica pay it for services already provided under the

Funding Agreement. Antarctica refused, maintaining that the State’s
abandonment of the transaction terminated any obligation under the Funding
Agreement to pay Gibbs. Instead of litigating this dispute immediately, however,
the parties decided to toll their claims against each other while the suit against the
State unfolded. They entered into an agreement (the “Settlement Agreement”) that
included, inter alia, a provision whereby Gibbs would be paid a portion of any
proceeds that resulted from that litigation. That agreement also provided for a
right to terminate after a certain period of time. In 2015, when it became clear that
the litigation with the State would settle, Antarctica terminated the Settlement
Agreement. Termination did not end Antarctica’s dispute with Gibbs, however:
Gibbs continued to press for payment.
In 2015, Antarctica brought a declaratory judgment and breach of contract
action against Gibbs. Gibbs counterclaimed against Antarctica and brought a thirdparty complaint against ACRE, LLC (“ACRE”) and Chandra Patel. 1 All claims are
based on the question of whether Antarctica owes Gibbs payment under the
Settlement Agreement or the Funding Agreement. Antarctica has moved to dismiss
Gibbs’s counterclaims and third-party complaint. 2
Ultimately, this Court finds the agreements unambiguous and not supportive
of Gibbs’s claims. For the reasons stated below, Antarctica’s motion is GRANTED.

For convenience, the Court will refer collectively to counter- and third-party defendants as
“Antarctica,” unless it is necessary to specify.
2 The Court converted this motion to one for judgment on the pleadings pursuant to Federal Rule of
Civil Procedure 12(c).
1

2

I.

FACTUAL AND PROCEDURAL BACKGROUND 3
A.

Procedural History

Antarctica Star I, LP and Antarctica Star, LLC commenced this action on
April 3, 2015 and filed an amended complaint ten days later. (Compl., ECF No. 2;
Am. Compl., ECF No. 4.) On May 10, 2016, Gibbs filed the operative counterclaims
against plaintiffs and a third-party complaint against ACRE and Patel. Gibbs
brings claims for a declaratory judgment (Count One); breach of contract (Count
Two); breach of the implied covenant of good faith and fair dealing (Count Three);
unjust enrichment (Count Four); promissory estoppel (Count Five); breach of a
third-party beneficiary contract (Count Six); alter ego and/or single enterprise and
general partnership liability (Count Seven); fraudulent conduct (Count Eight);
tortious interference (Count Nine); and civil conspiracy (Count Ten). (Am.
Countercl. & Third-Party Compl. (“Am. CC & TPC”) ¶¶ 39-107, ECF No. 76.)
On May 31, 2016, Antarctica moved to dismiss both the amended
counterclaims and third-party complaint. (Mot. Dismiss, ECF No. 79.) That motion
was fully submitted as of June 27, 2016. (Reply, ECF No. 85.) On November 22,
2016, this case was transferred from the Honorable Analisa Torres to the
undersigned. On December 6, 2016, the Court informed the parties that it intended
to resolve the motion to dismiss as a motion for judgment on the pleadings pursuant
to Federal Rule of Civil Procedure 12(c). (Order, ECF No. 95.) Pursuant to that

3 The following facts are taken from Gibbs’s amended counterclaims and third-party complaint, along
with the various agreements referenced by and incorporated therein. See L-7 Designs, Inc. v. Old
Navy, LLC, 647 F.3d 419, 422 (2d Cir. 2011). The Court here recounts only those facts relevant to
resolving the pending motion.

3

order, the parties filed supplemental briefs. (Antarctica Suppl. Br., ECF No. 96;
Gibbs Suppl. Br., ECF No. 97.)
B.

Factual History

In an attempt to reduce the State’s budget shortfall, California’s Department
of General Services (“CDGS”) contracted to sell to and lease back from California
First, LP and California First, LLC (collectively, “California First” or the “California
First entities”) eleven state-owned properties for $2.33 billion (the “Golden State
transaction” or “transaction”). (Am. CC & TPC ¶¶ 8, 9.) The California First
entities, which are controlled by ACRE and Patel, were created for the purpose of
acquiring the state-owned properties. (Id. ¶ 10.) Antarctica Star I, LP and its
general partner, Antarctica Star, LLC, were responsible for implementing the
Golden State transaction. (Id.) California First and CDGS entered into a Purchase
and Sale Agreement (“PSA”) on November 15, 2010. (Id. ¶ 9; Sherman Decl. Ex. 2,
ECF No. 80-2.)

i.

The Funding Agreement

Antarctica contracted with Gibbs to help fund the Golden State transaction
(the “Funding Agreement”). (Am. CC & TPC ¶¶ 14-15, 20, 22.) The terms of the
Funding Agreement are contained in a letter agreement between Antarctica and
Gibbs dated November 3, 2010, (Sherman Decl. Ex. 1 (“Funding Agreement”), ECF
No. 80-1), which was amended on November 29, 2010, (id. Ex. 3 (“Funding
Agreement Amendment”), ECF No. 80-3). Under the Funding Agreement, Gibbs
agreed to (i) provide two deposits of $5 million each, (ii) provide $1.2 million in
4

working capital, the availability of which was subject to a November 15, 2010
“Working Capital Letter,” 4 (iii) use its best efforts to procure funding for the
transaction, and (iv) provide any other services that may be agreed upon. (Am. CC
& TPC ¶¶ 14, 20; Funding Agreement § 2; Funding Agreement Amendment 1.) In
the event Gibbs provided these services, Antarctica agreed to pay Gibbs “no later
than one business day” following the Golden State transaction’s closing an amount
equal to (i) Gibbs’s deposits, (ii) a $6 million fee, (iii) the amount of working capital
Gibbs advanced, and (iv) two times the amount of working capital provided by Gibbs
(with the sum of the amounts in (ii) and (iv) constituting Gibbs’s “fee”), along with a
membership interest in Antarctica Star, LLC. (Funding Agreement § 3; Funding
Agreement Amendment 2; Am. CC & TPC ¶¶ 15, 22.)
The Funding Agreement also included a termination provision. Pursuant to
this provision, the Agreement would terminate automatically “on the later of” (i) the
closing of the Golden State transaction and the payment of Gibbs’s fee, (ii) the
abandonment of the Golden State transaction by Antarctica or the State, “and (iii)
one year from the date hereof.” (Funding Agreement § 9.) The California First
entities are not party to the Funding Agreement.

The Working Capital Letter provides that, “[n]otwithstanding the terms and conditions of the
[Funding] Agreement or otherwise, in the event the Golden State Transaction is terminated for any
reason; (a) [Antarctica] will be obligated to Gibbs for the prompt return of, and shall return, all
amounts of Working Capital previously released by Gibbs to, or to any third party on behalf of,
[Antarctica] and (b) with respect to any Working Capital funds remaining in any accounts controlled
by [Antarctica] at the time of such termination, [Antarctica] will have no right or title to such
remaining Working Capital funds and such remaining Working Capital Funds shall be immediately
returned to Gibbs by wire transfer.” (Boozer Decl. Ex. 6 (“Working Capital Letter”), ECF No. 41-6;
see also Am. CC & TPC ¶ 18.)
4

5

On or about November 3, 2010, Gibbs wired the first $5 million deposit. (Am.
CC & TPC ¶ 16.) On or about November 17, 2010, Gibbs wired $500,000 in working
capital. (Id. ¶ 19.) Gibbs requested additional information and documentation for
additional expenses before it provided the balance of the working capital, but
Antarctica refused to comply with the request. (Id.) On or about November 29,
2010, Gibbs wired the second $5 million deposit. (Id. ¶ 21.)

ii.

California First Litigation

On or about February 9, 2011, the State gave notice that it would not proceed
with the Golden State transaction. (Id. ¶ 24.) On March 3, 2011, California First,
ACRE, and Patel entered into an agreement (the “Facilitation Agreement”)
pursuant to which they agreed to cooperate in suing CDGS over its decision to
terminate the transaction. (Id. ¶¶ 25, 26; Sherman Decl. Ex. 6 (“Facilitation
Agreement”), ECF No. 80-6.) The Facilitation Agreement provided that, should
“ACRE or any of its affiliates . . . provide proof of funds in the amount of $1 billion,”
and the litigation resulted in settlement or specific performance by the State,
California First would pay ACRE $2 million and certain expenses. (Facilitation
Agreement §§ 6, 8; see also Am. CC & TPC ¶ 26.) On or about March 10, 2011,
California First filed a lawsuit seeking to compel CDGS to go through with the
Golden State transaction (the “California First litigation”). (Am. CC & TPC ¶ 27.)

iii.

The Settlement Agreement

At some point, Gibbs made a demand for payment, including but not limited
to the $500,000 in working capital Gibbs had provided; Antarctica refused its
6

demand. (Id. ¶ 28.) Instead of immediately litigating their dispute, however, the
parties entered into an agreement dated November 23, 2011 to toll the statute of
limitations on claims against each other (the “Settlement Agreement”). 5 (Id. ¶ 29;
Sherman Decl. Ex. 5 (“Settlement Agreement”), ECF No. 80-5.)
The Settlement Agreement states that Gibbs had asserted, and Antarctica
had disputed, that it “[was] entitled to a share of proceeds that may arise from” the
California First litigation. (Settlement Agreement at Background.) The parties
agreed to resolve these disagreements by automatically releasing any claims
against each other, including those related to their prior agreements and the
California First litigation, (id. § 2(c), (d)), should Gibbs receive $500,000 or more
pursuant to the terms of a concurrently executed Escrow Agreement, (id. § 2). If,
however, Gibbs was not paid and the mutual releases did not become effective by
December 31, 2012, then either party could “void” the Settlement Agreement
through written notice. (Id.)
The Escrow Agreement—entered into by Gibbs, Antarctica Star I, LP, ACRE,
and Patel—provided that proceeds from a settlement that would otherwise be
payable to ACRE under the Facilitation Agreement would instead be paid to an
escrow agent, who would then disburse a certain percentage of those proceeds to
Gibbs under a “waterfall payment formula.” (Id. § 1(a); id. Annex A (“Escrow
Agreement”) §§ 1(c), 4; id. Annex C (“Amended Facilitation Agreement”); Am. CC &

5 The parties defined as “Antarctica” in the Settlement Agreement include Antarctica Star I, LP,
Patel, and ACRE.

7

TPC ¶ 46.) The Escrow Agreement, the Facilitation Agreement, and the
amendment to the Facilitation Agreement that identified the escrow account into
which any amounts payable to ACRE would be deposited were all attached as
annexes to the Settlement Agreement. None contains terms purporting to alter the
termination provision in the Settlement Agreement; and none contains terms
purporting to require payment to Gibbs in the event of the Settlement Agreement’s
termination.

iv.

Settlement

When it became clear that the California First litigation would settle,
Antarctica purported to terminate the Settlement Agreement. (Am. CC & TPC
¶¶ 35, 84, 88.) This occurred before June 19, 2015. On or about June 19, 2015, the
California First litigation was dismissed, CDGS paid California First $24 million,
and part of that payment went to Antarctica. (Id. ¶ 35.) None of those proceeds has
been deposited into the escrow account, and Gibbs has not received any portion of
the settlement. (Id. ¶¶ 30, 35.)
By this point, approximately two-and-a-half years had passed since the
termination provision of the Settlement Agreement became effective. Indeed, Gibbs
had been on notice since January 1, 2013 that Antarctica could terminate the
agreement at any time, and there is no evidence to suggest that Gibbs had tried to
renegotiate this provision.

8

II.

LEGAL PRINCIPLES
“The standard for granting a Rule 12(c) motion for judgment on the pleadings

is identical to that of a Rule 12(b)(6) motion for failure to state a claim.” Patel v.

Contemporary Classics of Beverly Hills, 259 F.3d 123, 126 (2d Cir. 2001). The court
must accept as true all factual allegations contained in the complaint and draw all
reasonable inferences in the non-moving party’s favor. Bank of New York v. First

Millennium, Inc., 607 F.3d 905, 922 (2d Cir. 2010). “To survive a Rule 12(c) motion,
the complaint ‘must contain sufficient factual matter, accepted as true, to state a
claim to relief that is plausible on its face.’” Id. (quoting Hayden v. Paterson, 594
F.3d 150, 160 (2d Cir. 2010)). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
“On a 12(c) motion, the court considers ‘the complaint, the answer, any
written documents attached to them, and any matter of which the court can take
judicial notice for the factual background of the case.’” L-7 Designs, Inc., 647 F.3d
at 422 (quoting Roberts v. Babkiewicz, 582 F.3d 418, 419 (2d Cir. 2009)). A
complaint is “deemed to include any written instrument attached to it as an exhibit,
materials incorporated in it by reference, and documents that, although not
incorporated by reference, are ‘integral’ to the complaint.” Id. (quoting Sira v.

Morton, 380 F.3d 57, 67 (2d Cir. 2004)).

9

III.

ANALYSIS
Gibbs has brought a number of claims against Antarctica, all turning on the

essential contention that Antarctica has improperly withheld proceeds from the
settlement to which Gibbs is entitled. For the reasons stated below, Gibbs’s claims
fail.
A.

Count Two: Breach of Contract

In order to state a claim for breach of contract under New York law, a
plaintiff must allege: “(1) the existence of a contract; (2) a breach of that contract;
and (3) damages resulting from the breach.” Nat’l Mkt. Share, Inc. v. Sterling Nat’l
Bank, 392 F.3d 520, 525 (2d Cir. 2004). Here, the parties do not dispute that the
Funding and Settlement Agreements were valid contracts. The question is whether
either was breached.

i.

Funding Agreement

In Count Two, Gibbs alleges that, pursuant to the Settlement Agreement and
the related documents, it was entitled to a portion of the settlement proceeds from
the California First litigation. Thus, as an initial matter, although it recites the
facts and circumstances underlying the Funding Agreement, Gibbs has not actually
pleaded—including in the proposed Second Amended Counterclaims and ThirdParty Complaint attached to its supplemental brief, (see Gibbs Suppl. Br. Ex. A,
ECF No. 97-1)—that Antarctica breached the Funding Agreement. Even if it had,
however, that claim would fail.

10

The Funding Agreement clearly contemplated that Gibbs would be paid only
if the Golden State transaction went through. Section 3 states that, in the event
Gibbs provided the required services, Antarctica would pay Gibbs “no later than one
business day following the Closing.” (Funding Agreement § 3.) The “Closing Date”
was defined as the date on which California First “consummates the Transaction,”
and the “Transaction” was defined as the “acquisition” of the CDGS-owned
properties. (Id. § 1, Introduction.) The Funding Agreement clearly assumed that
the closing of the Transaction would trigger payment to Gibbs; there is no dispute
that no such closing occurred.
Even if the “no later than” language did not mean that Gibbs was to be paid

only if there was a closing, the Funding Agreement is no longer operative. The
termination provision provides that the Agreement terminates automatically “on
the later of (i) the Closing and the payment of the Fee, (ii) the abandonment of the
Transaction by [Antarctica] and its affiliates or the State, and (iii) one year from the
date hereof.” (Id. § 9.) Again, it is undisputed that the closing never occurred.
Instead, the Golden State transaction was abandoned by the State in February
2011. (Am. CC & TPC ¶ 24.) And, finally, since the Funding Agreement was
executed on November 3, 2010, the one-year period expired on November 3, 2011.
When the parties entered into the Settlement Agreement on November 23, 2011,

11

the Funding Agreement had already expired by its own terms. 6 Accordingly, the
Funding Agreement terminated prior to the triggering of any payment event. Thus,
Antarctica did not breach the Funding Agreement by not paying Gibbs. 7

ii.

Settlement Agreement

In Count Two, Gibbs has alleged that Antarctica breached the Settlement
Agreement. That agreement, read in concert with the Escrow and amended
Facilitation Agreements, required Antarctica to distribute to Gibbs proceeds from
the $24 million settlement with CDGS. (Am. CC & TPC ¶¶ 44-48.) This claim,
however, must also be dismissed: Antarctica was entitled to, and did, terminate the
Settlement Agreement prior to a payment obligation attaching.
Gibbs alleges that, when it became clear that the California First litigation
would settle, Antarctica purported to terminate the Settlement Agreement. 8 (See,

e.g., id. ¶ 88 (“Plaintiffs/Third-Party Defendants consummated their fraudulent
conduct when they purported to terminate the November 23, 2011 Settlement
Agreement as soon as Plaintiffs/Third-Party Defendants learned that the California
First Litigation would most likely result in a settlement without specific

Although the parties contracted for several sections of the Funding Agreement to survive its
termination, the provision that addressed Gibbs’s compensation—Section 3—was not one of them.
(Funding Agreement § 9.)
7 The Court also notes that Gibbs has not alleged that Antarctica breached the November 15, 2010
Working Capital Letter, which provided that, “[n]otwithstanding the terms and conditions of the
[Funding] Agreement or otherwise, in the event the Golden State Transaction is terminated for any
reason . . . [Antarctica] will be obligated to Gibbs for the prompt return of, and shall return, all
amounts of Working Capital previously released by Gibbs to, or to any third party on behalf of,
[Antarctica].” (Working Capital Letter 1-2.)
8 Gibbs does not include in its amended counterclaims and third-party complaint the precise date
Antarctica purportedly terminated the Settlement Agreement. However, it is clear from the
allegations that Gibbs is alleging that it occurred at some point prior to when CDGS paid California
First $24 million.
6

12

performance.”).) On or about June 19, 2015, CDGS paid California First $24
million, and part of that payment went to Antarctica. (Id. ¶ 35.) Gibbs has not
received any portion of the settlement. (Id. ¶¶ 30, 35.)
The breach of contract claim with respect to the Settlement Agreement comes
down to whether Gibbs was entitled to proceeds from the settlement when the State
and California First agreed to its terms, as Gibbs argues, or only once Gibbs was
paid, as Antarctica contends. This issue is resolved by the plain language of the
Settlement Agreement. By its terms, the mutual releases of the Settlement
Agreement became operational only when Gibbs received distributions, and not
when any right to payment accrued. (Settlement Agreement § 2 (“The releases and
covenants not to sue . . . will become effective automatically without the need for
further action immediately upon [Gibbs] receiving distributions of $500,000 or
more.” (emphasis added)).) If Gibbs did not receive any distributions by December
31, 2012—and it is undisputed that it did not—any party could automatically void
the Agreement by giving written notice. (Id.) Although the Escrow Agreement does
not contain a termination provision, it was executed “[i]n accordance with the
Settlement Agreement,” (Escrow Agreement 1), and does not instill in Gibbs any
rights above and beyond the Settlement Agreement. Further, Gibbs admits that
“[t]he sole purpose of the Amendment [to the Facilitation Agreement] was to put
into effect the Settlement and Escrow Agreements, obligating California First to
pay any proceeds from the Litigation that would otherwise be payable to a Patel
entity to the escrow agent named in the Escrow Agreement for distribution to
13

Gibbs.” (Resp. Opp’n 8, ECF No. 83.) Any payment to Gibbs under the amended
Facilitation Agreement, therefore, was also dependent on its rights under the
Settlement Agreement.
Gibbs alleges that Antarctica terminated the Settlement Agreement after
December 31, 2012 but before CDGS paid California First $24 million. (See, e.g.,
Am. CC & TPC ¶ 88.) Accordingly, the termination was within the contract’s
parameters. Indeed, beginning January 1, 2013, Gibbs was on notice that
Antarctica could have terminated the Settlement Agreement at any time, just as
Gibbs could have. If this arrangement was not to Gibbs’s liking, it could have used
any leverage it possessed during the approximately two-and-a-half years before
Antarctica took action to renegotiate this provision.
Antarctica’s motion to dismiss Gibbs’s breach of contract claim is granted.
B.

Count Three: Breach of the Implied Covenant of Good Faith and Fair
Dealing

Generally, under New York law, a cause of action alleging breach of the
implied covenant of good faith and fair dealing is duplicative of a cause of action
alleging breach of contract. See Deutsche Bank Nat’l Trust Co. v. Quicken Loans

Inc., 810 F.3d 861, 869 (2d Cir. 2015). “[A] claim for breach of the implied covenant
can survive a motion to dismiss only ‘if it is based on allegations different than
those underlying the accompanying breach of contract claim’ and if the relief sought
is not ‘intrinsically tied to the damages allegedly resulting from
the breach of contract.’” In re Refco Inc. Secur. Litig., 826 F. Supp. 2d 478, 496
(S.D.N.Y. 2011) (quoting Ari and Co., Inc. v. Regent Int’l Corp., 273 F. Supp. 2d 518,
14

521-22 (S.D.N.Y. 2003)). Furthermore, “the implied covenant of good faith cannot
create duties that negate explicit rights under a contract.” LJL 33rd St. Assocs.,

LLC v. Pitcairn Props. Inc., 725 F.3d 184, 195 (2d Cir. 2013); see also Murphy v.
Am. Home Prods. Corp., 448 N.E.2d 86, 91 (N.Y. 1983) (“No obligation [of good faith
and fair dealing] can be implied, however, which would be inconsistent with other
terms of the contractual relationship.”).
Gibbs alleges that Antarctica’s termination of the Settlement Agreement was
a violation of the covenant of good faith and fair dealing. 9 Antarctica and Gibbs,
sophisticated parties who consulted with counsel regarding the legal effect of the
Settlement Agreement, (see Settlement Agreement § 2(h)), specifically agreed that
either party could automatically terminate the Agreement by written notice if Gibbs
was not paid and the mutual releases did not become effective by December 31,
2012, (id. § 2). The language of the termination clause is unqualified. Accordingly,
to imply an obligation of good faith and fair dealing would directly contradict the
flexibility the parties contracted for themselves. As stated above, Gibbs had almost
a year and a half before Antarctica invoked the termination provision during which
it could have sought to renegotiate the Settlement Agreement. Antarctica’s actions
may have been sharp business practices, but they were not a breach of the covenant
of good faith and fair dealing. Antarctica’s motion to dismiss this claim is granted.

Although Gibbs’s amended counterclaims and third-party complaint do not specify what Antarctica
did to violate the covenant, Gibbs’s arguments in its opposition brief relate only to the termination of
the Settlement Agreement. (Resp. Opp’n 11, 13-14.)

9

15

C.

Count Four: Unjust Enrichment

Under New York law, a plaintiff seeking damages
for unjust enrichment must allege (1) that the defendants were enriched or
benefitted, (2) at plaintiff’s expense, and (3) that equity and good conscience require
restitution. Golden Pac. Bancorp v. F.D.I.C., 273 F.3d 509, 519 (2d Cir. 2001). “The
‘essence’ of such a claim ‘is that one party has received money or a benefit at the
expense of another.’” Kaye v. Grossman, 202 F.3d 611, 616 (2d Cir.
2000) (quoting City of Syracuse v. R.A.C. Holding, Inc., 685 N.Y.S.2d 381, 381 (N.Y.
App. Div. 1999)). “An unjust enrichment claim is not available where it simply
duplicates, or replaces, a conventional contract or tort claim.” Corsello v. Verizon

N.Y., Inc., 967 N.E.2d 1177, 1185 (N.Y. 2012).
As an alternative to its contractual claims, Gibbs alleges that Antarctica was
unjustly enriched by its failure to distribute a portion of the California First
litigation settlement proceeds to Gibbs. (Am. CC & TPC ¶¶ 58-60.) This claim is
duplicative of Gibbs’s breach of contract claim, which similarly alleges that
Antarctica breached the Settlement Agreement by failing to distribute to Gibbs a
portion of the $24 million it received from CDGS. Gibbs’s unjust enrichment claim
“cannot remedy the defects” of its breach of contract claim. Corsello, 967 N.E.2d at
1185. Accordingly, it is dismissed.
D.

Count Five: Promissory Estoppel

Also as an alternative to its contractual claims, Gibbs brings a claim for
promissory estoppel. (Am. CC & TPC ¶ 65.) In particular, Gibbs claims that,
16

despite its promise to pay, Antarctica has refused Gibbs a portion of the settlement
proceeds from CDGS. (Id. ¶¶ 66-69.)
“A cause of action for promissory estoppel under New York law requires the
plaintiff to prove three elements: 1) a clear and unambiguous promise; 2) reasonable
and foreseeable reliance on that promise; and 3) injury to the relying party as a
result of the reliance.” Kaye, 202 F.3d at 615. As a quasi-contractual claim,
“promissory estoppel generally applies only in the absence of a valid and enforceable
contract.” Kwon v. Yun, 606 F. Supp. 2d 344, 368 (S.D.N.Y. 2009). There is no
dispute that the Funding and Settlement Agreements are valid and enforceable
contracts; Gibbs only disputes whether they were terminated properly. 10
Accordingly, Antarctica’s motion to dismiss this claim is granted.
E.

Count Six: Breach of Third-Party Beneficiary Contract

Gibbs alleges that it was a third-party beneficiary of the Facilitation
Agreement, as amended to reflect the Escrow and Settlement Agreements, and
therefore is entitled to receive a portion of the settlement proceeds. (Am. CC & TPC
¶¶ 73, 74.) Under the Facilitation Agreement, California First, ACRE, and Patel
agreed to cooperate to sue CDGS over its decision to terminate the Golden State
transaction. The Facilitation Agreement as it was originally signed provided that
California First would pay ACRE $2 million if the litigation resulted in settlement

In its opposition brief, Gibbs argues that there is a dispute over the scope of the Facilitation
Agreement, entitling it to plead quasi-contract claims. (Resp. Opp’n 17-18.) But in its promissory
estoppel claim, Gibbs’s only mentions its entitlement to any proceeds under the Settlement
Agreement. This makes sense; as the Court will discuss in further detail, the Facilitation
Agreement’s purpose was to outline the cooperation among California First, ACRE, and Patel for the
California First litigation.
10

17

or specific performance by the State. (Facilitation Agreement § 6.) It was amended
on November 28, 2011 to reflect that any amounts payable to ACRE would be
disbursed to the account identified in the Escrow Agreement. (Amended
Facilitation Agreement § 2.) Gibbs is nowhere mentioned in the Facilitation
Agreement or the amendment thereto.
Under New York law, a party asserting rights as a third-party beneficiary
must establish: “(1) the existence of a valid and binding contract between other
parties, (2) that the contract was intended for his benefit and (3) that the benefit to
him is sufficiently immediate, rather than incidental, to indicate the assumption by
the contracting parties of a duty to compensate him if the benefit is lost.” State of

Cal. Pub. Emps.’ Ret. Sys. v. Shearman & Sterling, 741 N.E.2d 101, 104 (N.Y. 2000).
“To create a third party right to enforce a contract, ‘the language of the contract’
must ‘clearly evidence[ ] an intent to permit enforcement by the third party[.]’”

Consol. Edison, Inc. v. Ne. Utils., 426 F.3d 524, 528 (2d Cir. 2005) (alterations in
original) (quoting Fourth Ocean Putnam Corp. v. Interstate Wrecking Co., 485
N.E.2d 208, 212 (N.Y. 1985)).
Here, Gibbs has not plausibly alleged that it was an intended third-party
beneficiary of the Facilitation Agreement. The primary purpose of the Facilitation
Agreement was to define the cooperation between California First, ACRE, and Patel
in the lawsuit against CDGS. This in itself establishes that any benefit to Gibbs
under the Facilitation Agreement was, at most, incidental. See Mademoiselle

Knitwear, Inc. v. Liz Claiborne, Inc., No. 98 Civ. 3252, 1999 WL 377853, at *10
18

(S.D.N.Y. June 9, 1999) (“To the extent that the two agreements may have
guaranteed the plaintiff certain levels of production—and perhaps profits—
[plaintiff] was no more than an incidental beneficiary of these agreements and has
no ability to enforce them.”). Furthermore, as Antarctica points out, the
amendment to the Facilitation Agreement was solely a mechanism for effectuating
the Settlement Agreement and the related Escrow Agreement. Indeed, for Gibbs to
accrue any benefits under the amended Facilitation Agreement, it would first have
to be entitled to compensation under the Settlement and Escrow Agreements, which
the Court already has determined were properly terminated. (Am. CC & TPC
¶ 74(A)-(E); Escrow Agreement 1 (“In accordance with the Settlement Agreement,
Gibbs and Antarctica desire for Escrow Agent to receive, hold, and disburse certain
funds and property in accordance with this Agreement.” (emphasis added)).) The
fact that any benefit accorded to Gibbs under the amended Facilitation Agreement
was conditional supports the Court’s finding that Gibbs was, at most, an incidental
beneficiary. Accordingly, because the Facilitation Agreement as amended “does not
contain an express provision identifying [counterclaimant] as an intended thirdparty beneficiary” or “otherwise reveal a specific intent to confer a benefit upon
[counterclaimant] or permit [counterclaimant] to enforce the contract terms,”
Gibbs’s claim for breach of a third-party beneficiary contract is dismissed. Conklin

v. City of Saratoga Springs, 699 N.Y.S.2d 820, 821 (N.Y. App. Div. 1999).

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F.

Count Eight: Fraudulent Conduct

Gibbs alleges that Antarctica fraudulently lured it into signing the
Settlement Agreement in an attempt to keep Gibbs from bringing suit when, in fact,
Antarctica had no intention of performing its responsibilities under the Settlement
Agreement. (Am. CC & TPC ¶¶ 87, 88, 89; see also id. ¶ 84.) In particular, Gibbs
alleges that Antarctica only executed the Settlement Agreement to keep Gibbs from
suing and to prevent Gibbs from “derailing” the California First litigation, (id.
¶¶ 84, 89, 91), and that Antarctica intended to terminate the Settlement Agreement
as soon as it became clear the litigation most likely would settle, (id. ¶¶ 84, 88).
To state a claim for fraud under New York law, a party must allege material
misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance,
justifiable reliance by the plaintiff, and damages. See Eurycleia Partners, LP v.

Seward & Kissel, LLP, 910 N.E.2d 976, 979 (N.Y. 2009). “It is black letter law in
New York that a claim for common law fraud will not lie if the claim is duplicative
of a claim for breach of contract.” EQT Infrastructure Ltd. v. Smith, 861 F. Supp.
2d 220, 233 (S.D.N.Y. 2012). To maintain a separate claim for fraud that does not
merge with a breach of contract claim, a party must “(1) demonstrate[] a legal duty
separate from the duty to perform under the contract; (2) point[] to a fraudulent
misrepresentation that is collateral or extraneous to the contract; or (3) seek[]
special damages that are unrecoverable as contract damages.” Merrill Lynch & Co.

v. Allegheny Energy, Inc., 500 F.3d 171, 183 (2d Cir. 2007). With respect to
collateral or extraneous fraudulent misrepresentations, “New York distinguishes
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between a promissory statement of what will be done in the future that gives rise
only to a breach of contract cause of action and a misrepresentation of a present fact
that gives rise to a separate cause of action for fraudulent inducement.” Id. at 184.
Gibbs’s fraud claim merges with its breach of contract claim. First, Gibbs
does not allege that Gibbs had any legal duty apart from those under the
agreements. Second, even if they met the heightened pleading requirements of
Federal Rule of Civil Procedure 9(b), which they do not, Gibbs’s allegations that
Antarctica made fraudulent misrepresentations when it agreed that Gibbs would
partake in any proceeds resulting from the California First litigation, and when it
omitted that its underlying intentions were to thwart Gibbs’s efforts to enforce its
rights under the Funding Agreement, constituted promissory statements of what
would be done in the future that are not collateral or extraneous to the contract.
Third, Gibbs has not sought “special damages that are unrecoverable as contract
damages,” since “[a] general request for punitive damages is not enough to
differentiate the damages recoverable for fraud from those sought for breach of
contract.” Russell Publ’g Grp., Ltd. v. Brown Printing Co., No. 13 Civ. 5193, 2014
WL 1329144, at *3 (S.D.N.Y. Apr. 3, 2014) (first quoting Merrill Lynch & Co. v.

Allegheny Energy, Inc., 500 F.3d 171, 183 (2d Cir. 2007), and then quoting Sekisui
Am. Corp. v. Hart, No. 12 Civ. 3479, 2012 WL 5039682, at *3 (S.D.N.Y. Oct. 17,
2012)); see also Krantz v. Chateau Stores of Canada Ltd., 683 N.Y.S.2d 24, 25 (N.Y.
App. Div. 1998).

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In all events, the language of the Settlement Agreement itself precludes
Gibbs’s argument that Antarctica lied. First, the Settlement Agreement explicitly
stated that Antarctica disputed Gibbs’s rights to any proceeds from the California
First litigation. (Settlement Agreement at Background (“Certain disagreements
have arisen between Gibbs and Antarctica Star with respect to the Prior
Agreements [e.g., the Funding Agreement] . . . , including the assertion by Gibbs,

which Antarctica disputes in its entirety, that Gibbs is entitled to a share of
proceeds that may arise from certain litigation relating to the Golden State
Transaction.” (emphasis added)).) Second, the parties explicitly provided they
“desire[d] to resolve the disagreements between them” by executing an agreement
that, by its terms, prevents either party from suing the other until 2013. (Id.)
Having signed the Settlement Agreement and acknowledged that it received
independent legal advice from counsel, (id. § 2(h)), Gibbs cannot plausibly argue
that it was unaware that (i) Antarctica disputed Gibbs’s rights to the settlement
proceeds, (ii) the explicit purpose of the Settlement Agreement was to toll any
claims that Gibbs was threatening to litigate, and, importantly, (iii) either party
could terminate the Agreement after 2012, see Paraco Gas Corp. v. Travelers Cas.

and Sur. Co. of Am., 51 F. Supp. 3d 379, 393 (S.D.N.Y. 2014) (A party “cannot claim
reliance on a misrepresentation when he or she could have discovered the truth
with due diligence.”). Finally, in terms of damages, Gibbs has not explained how it
was harmed by its inability to “pursue prompt payment from Antarctica under the
Funding Agreement.” (Resp. Opp’n 28.) Its entitlement to any proceeds from the
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California First litigation always was contested by Antarctica, and it has not lost its
opportunity to sue to enforce the Funding Agreement. Accordingly, Gibbs’s fraud
claim is dismissed.
G.

Count Nine: Tortious Interference

Under Count Nine, Gibbs alleges that Antarctica Star I, LP and Antarctica
Star, LLC intentionally and improperly caused ACRE, Patel, and California First to
not pay Gibbs the agreed portion of the proceeds from the settlement and, therefore,
to breach the Facilitation Agreement, as amended. (Am. CC & TPC ¶ 101.) Under
New York law, this claim requires “the existence of [a] valid contract with a third
party, defendant’s knowledge of that contract, defendant’s intentional and improper
procuring of a breach, and damages.” White Plains Coat & Apron Co. v. Cintas

Corp., 867 N.E.2d 381, 383 (N.Y. 2007). The Court already has established that
Gibbs was not entitled to any portion of the settlement proceeds. Accordingly,
Count Nine is dismissed.
H.

Counts Seven and Ten: Alter Ego and/or Single Enterprise Liability,
and Civil Conspiracy

Gibbs’s claims for alter ego liability (Count Seven), and civil conspiracy
(Count Ten) are contingent on other claims surviving. (See Am. CC & TPC ¶ 82
(“Each of the Plaintiffs/Third-Party Defendants is also liable for the conduct
described in this complaint based on alter ego and/or single enterprise liability, as
well as general partnership liability as referenced herein.”); id. ¶ 104 (alleging that
the parties worked together to avoid paying Gibbs the money to which it was
entitled).) As the Court has determined than none of Gibbs’s other claims survives
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Antarctica’s motion for judgment on the pleadings, Gibbs’s alter ego and civil
conspiracy counts so too fail. See, e.g., Network Enters., Inc. v. Reality Racing, Inc.,
No. 09 Civ. 4664, 2010 WL 3529237, at *4 (S.D.N.Y. Aug. 24, 2010) (“Under New
York law, the alter ego doctrine is not recognized as an independent cause of
action.”); Hebrew Inst. for Deaf & Exceptional Children v. Kahana, 870 N.Y.S.2d 85,
86 (N.Y. App. Div. 2008) (“New York does not recognize civil conspiracy to commit a
tort as an independent cause of action; rather, such a claim stands or falls with the
underlying tort.” (internal citation omitted)). Accordingly, Counts Seven and Ten
are dismissed.
I.

Count One: Declaratory Judgment

Gibbs seeks a declaratory judgment that (1) Antarctica is not entitled to any
recovery from Gibbs, and (2) Gibbs is entitled to recover under its other counterand third-party claims. (Am. CC & TPC ¶ 41.) The Second Circuit has held that,
in order to decide whether to entertain an action for declaratory judgment, a
District Court must ask: “(1) whether the judgment will serve a useful purpose in
clarifying or settling the legal issues involved; and (2) whether a judgment would
finalize the controversy and offer relief from uncertainty.” Duane Reade Inc. v. St.

Paul Fire and Marine Ins. Co., 411 F.3d 384, 389 (2d Cir. 2005). Whether to
exercise declaratory jurisdiction is within the district court’s broad discretion. See

Chiste v. Hotels.com L.P., 756 F. Supp. 2d 382, 407 (S.D.N.Y. 2010).
For the reasons stated above, the Court already has found that Gibbs is not
entitled to recover under its other claims. In terms of a declaratory judgment
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regarding whether Antarctica is entitled to recover from Gibbs, Gibbs has not
alleged sufficient facts that would allow the Court to make a determination on this
issue at this time. (See Resp. Opp’n 6; Am. CC & TPC ¶¶ 16, 19, 21.) Accordingly,
the Court declines to exercise its declaratory jurisdiction. Gibbs’s first cause of
action is dismissed.
IV.

CONCLUSION
For the reasons set forth above, Antarctica’s motion to dismiss Gibbs’s

amended counterclaims and third-party complaint, converted to a motion for
judgment on the pleadings, is GRANTED.
The Clerk of Court is directed to close the motions at ECF Nos. 70, 73, 79, 82,
and 86. 11
SO ORDERED.
Dated:

New York, New York
February 14, 2017

_________________________________________
KATHERINE B. FORREST
United States District Judge

11 Antarctica’s motion to dismiss Gibbs’s counterclaim and third-party complaint, and its letter
motion requesting oral argument on that motion, were mooted by Gibbs’s amended counterclaims
and third-party complaint. (ECF Nos. 70, 73.) Gibbs’s motion to compel, (ECF No. 82), was resolved
by the Honorable Henry B. Pitman.

25