Jefferies Strategic Investments, LLC et al v. Weiss

Filing 41

OPINION AND ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT re: 24 MOTION for Summary Judgment. filed by George Weiss, 29 MOTION for Summary Judgment . file d by Leucadia Asset Management Holdings LLC. Based on the foregoing, I grant Plaintiffs' motion for summary judgment and deny Defendant's cross-motion. The Clerk of Court shall enter final judgment in favor of Plaintiffs and tax costs. She shall also terminate ECF Nos. 24 and 29, and close this case. SO ORDERED. (Signed by Judge Alvin K. Hellerstein on 3/12/2025) (ar) Transmission to Orders and Judgments Clerk for processing.

UNITED STATES DISTRICT COURT
SOUTHER.1'1 DISTRICT OF NEW YORK
JEFFERIES STRATEGIC INVESTMENTS, LLC
and LEUCADIA ASSET MANAGEMENT
HOLDINGS LLC,
Plaintiffs,
-against-

OPINION AND ORDER
GRAi"ITING PLAINTIFFS'
MOTION FOR SUMMARY
,JUDGMENT AND DENYING
DEFENDANT'S l\1OTION FOR
SUMMARY JUDGMENT

GEORGE WEISS,
24 Civ. 4369 (AKH)
Defendant.

-------------------------------------------------------------- X
ALVIN K. HELLERSTEIN, U.S.D.J.:
Plaintiffs Jefferies Strategic Investments, LLC ("JSI") and Leucadia Asset Management
Holdings LLC ("Leucadia") move for summary judgment against Defendant George Weiss,
arguing that he is personally liable for a guarantee contained in a forbearance agreement
executed between the parties. Simultaneously, Defendant moves for summary judgment against
Plaintifis, contending that this case should be dismissed. For the reasons that follow, I grant
Plaintiffs' motion for summary judgment, and I deny Defendant's cross-motion.
BACKGROUND

Defendant George Weiss is the founder of a constellation of hedge funds, !mown
collectively as the "Weiss Companies." Defendant's Statement ofUndispnted Facts ("Def.
SUF") ,r,r 1-2. On May 1, 2018, Plaintiff Leucadia entered into a Strategic Relationship
Agreement (the "SRA") with the Weiss Companies, in which it agreed to provide financing
through promissory notes. Id. i)fi 6-7. In December 2019 and September 2022, PlaintiffJSI
agreed to purchase $53 million in notes issued by the Weiss Companies under two note purchase
agreements (the "NPAs"). ECF No. 31, ,ri[ 14-21.

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The Weiss Companies did not pay their obligations. To postpone the debt, on Febrnmy
12, 2024, Defendant signed a forbem·ance agreement (the "Forbearance Agreement"), in both his
personal capacity, and on behalf of the Weiss Companies. Def. SUF ,r,r 35-38; ECF No. 28-3.
The Forbearance Agreement provides that the Weiss Companies, with the exception ofGWA,
LLC, "irrevocably and unconditionally gum·antees to [Plaintiffs] ... the prompt and complete
payment and performance by GWA and each other Weiss Pmiy when due ... of the Guaranteed
Obligations," which is defined to encompass obligations "arising under any Note Purchase
Agreement, the Notes, the SR Agreement, and this Agreement." ECF No. 28-3, § 3(a). And
while the Forbearance Agreement provides that Defendant George Weiss is a patiy "for purposes
of Section S(a), 9 and l0(c) hereof," Section 9 states that he "unconditionally and irrevocably
personally guarantees to the Jefferies Entities the accuracy of the representations made by, and
the performance of the agreements of, the Weiss Parties hereunder." Id. § 9. 1
After signing the Forbearance Agreement, the Weiss Companies failed to make payment
of the monies owed under the SRA, notes, and NP As. On April 29, 2024, the Weiss Companies
filed for bankruptcy under Chapter 11 of the Bankruptcy Code. See In re Weiss Multi-Strategy

1 Section S(a) of the Forbearance Agreement provides that:

Each Weiss Party and Weiss hereby represents and warrants that (x) this Agreement has been duly
executed and delivered by such Weiss Party and Weiss and (y) this Agreement is the legal, valid and
binding obligation of such Weiss Party and Weiss, and is enforceable against each such Weiss Party and
Weiss, in accordance with its terms, except as enforceability may be limited by applicable bankrnptcy,
insolvency or similar laws affecting the enforcement of creditors' rights generally and by equitable
principles relating to enforceability.
Section IO(c) of the Forbearance Agreement provides that:
Each Weiss Party and Weiss acknowledges and agrees that it is receiving a direct benefit from the
transactions contemplated by this Agreement, and the terms of this Agreement, including the guaranty
provided herein and the security interests granted herein, constitute reasonably equivalent value for the
benefit it is receiving from enteiing into this Agreement. Each Weiss Party and Weiss agrees that it shall
not, nor shall it cause, directly or indirectly, any person controlled by, or under common control with, it, to
take any action inconsistent with the terms of this Agreement. Each party represents and warrants that it has
full power and authority to enter into and perfonn this Agreement, and that the person executing this
Agreement on behalf of that party has been properly authorized and empowered to enter into this
Agreement and to bind that paiiy hereto.

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Advisers LLC, 24 BK 10743 (MG) (Banlcr. S.D.N.Y.). Simultaneously, in relation to this
bankruptcy case, the Weiss Companies filed an adversaty proceeding against Plaintiffs. See

GWA, LLC, et al. v. Jefferies Strategic Investments, LLC, et al., 24 AP 1350 (MG) (Banlcr.
S.D.N.Y.). The Weiss Companies sought to hold the Forbemance Agreement unenforceable as a
preferential transfer, and contended that Defendant did not commit to gumanteeing any payment
owed by the Weiss Companies to Plaintiffs under the Forbearance Agreement. Id. at Dl<ts. 20-21.
The bankruptcy comt rejected this argument, holding that "a strict construction of the 2024
Forbearance Agreement, even in Weiss's favor, makes clear that Weiss's performance guarantee
was also a guarantee of payment." GWA, LLC v. Jefferies Strategic Investments, LLC, 664 B.R.
492,531 (Bankr. S.D.N.Y. 2024).
On May 6, 2024, Plaintiffs filed suit against Defendant in New York state comt, seeking
to enforce the Forbearance Agreement as to Defendant's guarantee of payment for the SRA,
notes, and NP As. ECF No. 1. Defendant removed the action to this Court on June 7, 2024. Id. At
the initial pre-trial conference, on October 11, 2024, I pe1mitted the patties to cross-file motions
for summary judgment on the issue of Defendant's liability for his guarantee. See ECF No. 20.

LEGAL STANDARD
Summaty judgment may be granted only when there "is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ, P. 56(a);

Celotex Corp. v. Catrett, 477 U.S. 317,322 (1986). A genuine issue of material fact exists "if the
evidence is such that a reasonable jmy could return a verdict for the nonmoving party." Anderson

v. Liberty Lobby, Inc., 477 U.S. 242,248 (1986). In considering cross-motions for summaty
judgment, "the court must evaluate each party's motion on its own merits, taking care in each
instance to draw all reasonable inferences against the patty whose motion is under

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consideration." Bronx Household of Faith v. Board of Educ., 492 F.3d 89, 96 (2d Cir. 2007)
(citation omitted).
DISCUSSION

Viewing the evidence in the light most favorable to Defendant, I hold that the
Forbearance Agreement included a personal payment guarantee by Defendant to Plaintiffs of the
Weiss Companies' corporate debt, and that it is valid and enforceable as to Defendant.

A. Payment Guarantee
Defendant contends he did not personally guarantee payment of the Weiss Companies'
debt to Plaintiffs under the terms of the Forbearance Agreement. I disagree.
Under New York law, a "guaranty is a contract," and in conducting interpretation, comis
"look first to the words the pmiies used." Louis Dreyfi1s Energy Corp. v. MG Ref & Mktg., Inc.,
2 N.Y.3d 495, 500 (N.Y. 2004). When determining the meaning of contractual language, comis
must consider the entirety of the contract and interpret all of its provisions in harmony. Bombay
Realty Corp. v. Magna Carta, Inc., 100 N.Y.2d 124, 127 (N.Y. 2003). Fmiher, "a contract must

be construed in a manner which gives effect to each and every pa1i, so as not to render any
provision meaningless or without force or effect." Nomura Home Equity Loan, Inc., Series 2006FM2 v. Nomura Credit & Capital, Inc., 30 N.Y.3d 572, 581 (N.Y. 2017) (citation omitted).

Applying these principles of contract interpretation, and viewing the evidence in the light
most favorable to Defendant, I hold that Defendant's performance guarantee contained within
the Forbearance Agreement was also a personal payment guarantee. Here, under the clear,
unambiguous text of the Forbearance Agreement, Defendant "unconditionally and irrevocably
personally guarantee[d] to" Plaintiffs "the accmacy of the representations made by, and the
performance of the agreements of, the Weiss Parties hereunder." ECF No. 28-3, § 9 (emphasis

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added). The "agreements of the Weiss Parties hereunder" plainly includes their guarantee to
make "prompt and complete payment and performance ... of the Guaranteed Obligations,"
which, in turn, is defined to encompass obligations "arising under any Note Purchase Agreement,
the Notes, the SR Agreement, and this Agreement." ECF No. 28-3, § 3(a). Thus, reading the
contract in harmony, in its entirety, to give effect to each of its provisions, I conclude that
Defendant's performance guarantee of the Weiss Companies' agreements with Plaintiffs is also a
payment guarantee by Defendant personally as to the SRA, notes, and NP As. See, e.g., Am.
Trading Co. v. Fish, 42 N.Y.2d 20, 27-28 (N.Y. 1977) ("Since defendant guaranteed

performance of the terms and conditions of the agreement, which in this respect required
payment by means of trade acceptances, the guarantee must be interpreted as including payment
according to and as provided in the agreement."); Merchant Cash & Capital, LLC v. Haute Soc'y
Fashion, Inc., 16 Civ. 2696 (ILG), 2017 WL 2912452, at *3 (E.D.N.Y. July 6, 2017) (constrning

personal performance guarantee of contractual terms as personal guarantee of payment); Prof'/
Merch. Advance Capital, LLC v. McEachern, 13 Civ. 7323 (JS), 2015 WL 8665447, at *3

(E.D.N.Y. Dec. 11, 2015) (same).
"[W]here, as here, a creditor seeks summaiy judgment upon a written guaranty, the
creditor need prove no more than an absolute and unconditional guaranty, the underlying debt,
and the guarantor's failure to perform under the guarantee." HSH Nordbank AG v. Street, 421 F.
App'x 70, 72 (2d Cir. 2011) (quoting Kensington House Co. v. Oram, 293 A.D.2d 304,305
(N.Y. App. Div. 1st Dep't 2002)). Here, Plaintiffs have proven all three elements, and thus, they
have established their prima facie entitlement to summaiy judgment against Defendant as to his
guarantee.

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B. Defenses

In his answer, Defendant pleads various affirmative defenses to the validity and
enforcement of the Forbearance Agreement. See ECF No. 21. But they all lack merit.
Accordingly, viewing the evidence in the light most favorable to Defendant, I hold that the
Forbearance Agreement is a valid and enforceable contract as to Defendant. See Kasowitz,
Benson, Torres & Friedman, LLP v. Duane Reade, 98 A.D.3d 403, 404 (N.Y. App. Div. 1st

Dep't 2012), ajf'd 20 N.Y.3d 1082 (N.Y. 2013) ("To establish the existence of an enforceable
agreement, a plaintiff must establish an offer, acceptance of the offer, consideration, mutual
assent, and an intent to be bound.").
Defendant's contentions that the Forbearance Agreement lacked consideration as to his
guarantee fail. Consideration "consists of either a benefit to the promisor or a detriment to the
promisee," including a forbearance by a party. Weiner v. McGraw-Hill, 57 N.Y.2d 458, 464
(N.Y. 1982). "Under New York law, forbearance of any length can constitute valid
consideration." MM Ariz. Holdings LLC v. Bonanno, 658 F. Supp. 2d 589, 593 (S.D.N.Y. 2009).
The fact that in the Forbearance Agreement, Defendant served as a guarantor to his hedge funds'
debts does not change the outcome here since "a benefit flowing to a third person or legal entity
constitutes a sufficient consideration for the promise of another." Mencher v. Weiss, 306 N.Y. 1,
8 (N.Y. 1953); see also Sun Oil Co. v. Heller, 248 N.Y. 28, 32-33 (N.Y. 1928) (guarantee in
exchange for consideration provided to a third party constitutes consideration as to the guarantor
himself).
Nor do his arguments that the Forbearance Agreement lacked mutual assent pass muster.
"To form a binding contract under New York law ... there must be a 'meeting of the minds,"'
or, in other words, "an objective manifestation of mutual assent, through either words or conduct,

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to the essential terms comprising the agreement." Wu v. Uber Techs., 2024 WL 4874383, at *5
(N.Y. Nov. 25, 2024). "Under New York law, a contract need not be signed by either or both
parties in order to be enforceable." Asesores y Consejeros Aconsec CIA, S.A. v. Global Emerging

Mias. N Am., Inc., 841 F. Supp. 2d 762, 766 (S.D.N.Y. 2012). Rather, courts must consider:
(1) whether there has been an express reservation of the right not to be bound in the
absence of a writing; (2) whether there has been partial performance of the contract; (3)
whether all of the terms of the alleged contract have been agreed upon; and (4) whether
the agreement at issue is the type of contract that is usually committed to writing.

Winston v. Mediafare Entertainment Corp., 777 F.2d 78, 80 (2d Cir. 1985). Here, the fact that
only Defendant signed the Forbearance Agreement-both on his personal behalf, as well as on
behalf of the various Weiss Companies-and Plaintiffs did not, does not constitute a lack of
mutual assent. Indeed, there is no language in the Forbearance Agreement that explicitly requires
full execution before the contract takes effect. Moreover, Plaintiffs performed their obligations
under the Forbearance Agreement, there were no material disputes between the parties as to the
terms of the contract, and Plaintiffs took objective actions to evince their intent to be bound by
filing a financing statement to perfect the security interest granted under the Forbearance
Agreement. See ECF No. 30-1, at 131.
Finally, Defendant argues that the Forbearance Agreement is voidable as to him because
Plaintiffs' CEO and outside counsel allegedly called him, accused him of committing securities
fraud, stated "there would be a public news article that would destroy [Defendant's] reputation,"
and threatened to sue Defendant personally, ifhe did not sign the Forbearance Agreement. Def.
SUF ,i,i 24-29; ECF No. 27 i!i!l 7-18 (Def. Deel.). "A contract may be voided on the ground of
economic duress where the complaining party was compelled to agree to its terms by means of a
wrongful threat which precluded the exercise of its free will." Muller Constr. Co. v. NY Tel.
Ca., 40 N.Y.2d 955,956 (N.Y. 1976). This doctrine is "reserved for extreme and extraordinary

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cases," Adler v. Lehman Bros. Holdings, 855 F.3d 459,477 (2d Cir. 2017), and seldom applies to
negotiated agreements between sophisticated parties. See Davis & Assocs. v. Health Mgmt.

Servs., 168 F. Supp. 2d 109, 114 (S.D.N.Y. 2001). Under New York law, a threat to sue for
outstanding debt if a party does not agree to sign a contract does not constitute economic duress.

Friends Lumber v. Cornell Dev. Corp., 243 A.D.2d 886, 888 (N.Y. App. Div. 3d Dep't 1997).
Nor do "threats to smear [a party's] reputation" constitute economic duress. Finserv Computer

Corp. v. Bibliographic Retrieval Services, Inc., 125 A.D.2d 765, 767 (N.Y. App. Div. 3d Dep't
1986). Here, Defendant is a sophisticated and experienced businessman, see ECF No. 27 il~ 4-5,
and was represented by counsel in reviewing and executing the Forbearance Agreement, see ECF
No. 28 ~~ 18, 24 (Defendant's attorney reviewed the draft Forbearance Agreement and deleted
provisions thereof). See Nat 'I Sch. Reporting Servs. v. Nat'/ Schs., 924 F. Supp. 21, 24 (S.D.N.Y.
1996) (rejecting duress argument where parties were represented by counsel, even though
counsel did not negotiate the terms of the contract). Viewing the evidence in the light most
favorable to Defendant, I cannot say that Plaintiffs' alleged conduct constitutes duress.
The remaining affirmative defenses listed in boilerplate fashion in Defendant's Answerfailure to state a cause of action upon which relief may be granted, Plaintiffs' "inequitable
conduct," "breaches of any of the purported agreement," failure to mitigate damages, "unclean
hands," and equitable estoppel-are purely conclusory and lack any factual basis, let alone
sufficient specificity to provide notice to Plaintiffs. See GEOMC Co. v. Ca/mare Therapeutics

Inc., 918 F.3d 92, 98 (2d Cir. 2019) (applying Twombly's plausibility standard to the pleading of
affomative defenses). Accordingly, I strike Defendant's First, Fifth, Sixth, Seventh, Eight, and
Ninth Affirmative Defenses. See Brooklyn Union Gas Co. v. Exxon Mobil Corp., 478 F. Supp. 3d
417, 435 (E.D.N.Y. 2020) (striking affirmative defenses where defendant failed to plead them

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with sufficient specificity to provide plaintiff notice); Trs. of the NY. City Dist. Council v. MCF

Assocs., 530 F. Supp. 3d 460,468 (S.D.N.Y. 2021) (same). I also strike Defendant's Tenth
Affirmative Defense, which is not an affirmative defense, but rather a reservation of rights "to
modify or supplement these affirmative defenses." See Fed. R. Civ. P. 12(fJ.
CONCLUSION

Based on the foregoing, I grant Plaintiffs' motion for summary judgment and deny
Defendant's cross-motion.
The Clerk of Coutt shall enter final judgment in favor of Plaintiffs and tax costs. She
shall also terminate ECF Nos. 24 and 29, and close this case.
SO ORDERED.
Dated:

March / t,;'2025
New York, New York

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