Narayanan v. Sutherland Global Holdings Inc.
Filing
126
ORDER denying 120 Motion for Reconsideration. Signed by Hon. Michael A. Telesca on 8/8/2018. (JMC)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
________________________________________
MUTHU NARAYANAN,
Plaintiff,
15-CV-6165 T
DECISION AND ORDER
v.
SUTHERLAND GLOBAL HOLDINGS, INC.,
Defendant.
________________________________________
INTRODUCTION
Plaintiff Muthu Narayanan (“Plaintiff”) commenced the instant
action on March 25, 2015, alleging claims for breach of contract
and unjust enrichment against defendant Sutherland Global Holdings,
Inc. (“Defendant”), a corporation of which Plaintiff is a former
director.
Docket No. 1.
On June 15, 2015, Defendant filed an
answer to Plaintiff’s complaint in which it asserted a counterclaim
for breach of fiduciary duty against Plaintiff.
Docket No. 12.
Following discovery, Defendant filed a motion for partial
summary judgment (Docket No. 67) and Plaintiff filed a motion for
summary judgment (Docket No. 73). On May 16, 2018, the Court
entered a Decision and Order (the “May 16th Decision”) (Docket
No. 116) granting in part and denying in part each of these
motions.
In particular, the Court granted summary judgment to
Plaintiff with respect to Defendant’s counterclaim for breach of
fiduciary duty and with respect to his claims for breach of the
Redemption Agreement1 and the 30% Net Exercise Agreement, and
1
Capitalized terms and names used herein and not otherwise defined shall
have the same meanings as in the May 16th Decision, familiarity with which is
assumed for purposes of this Decision and Order.
granted summary judgment to Defendant with respect to Plaintiff’s
claim for unjust enrichment and breach of the 100% Net Exercise
Amendment.
Id. at 52.
Plaintiff has now filed a motion for reconsideration pursuant
to Federal Rule of Civil Procedure 59(e), asking the Court to
revisit its grant of summary judgment to Defendant on Plaintiff’s
claim for breach of the 100% Net-Exercise Agreement. For the
reasons set forth below, Plaintiff’s motion for reconsideration
(Docket No. 120) is denied.
DISCUSSION
I.
Legal Standard
“There are four basic grounds upon which a Rule 59(e) motion
may be granted. First, the movant may demonstrate that the motion
is necessary to correct manifest errors of law or fact upon which
the judgment is based.... Second, the motion may be granted so that
the
moving
unavailable
party
may
evidence.
present
Third,
newly
the
discovered
motion
will
or
be
previously
granted
if
necessary to prevent manifest injustice.... Fourth, a Rule 59(e)
motion may be justified by an intervening change in controlling
law.”
11
Fed.
Prac.
&
Proc.
Civ.,
Grounds
for
Amendment
or
Alteration of Judgment, § 2810.1 (3d ed.) (footnotes omitted). “The
standard for granting ... a motion [for reconsideration] is strict,
and reconsideration will generally be denied unless the moving
party can point to controlling decisions or data that the court
overlooked – matters, in other words, that might reasonably be
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expected to alter the conclusion reached by the court.” Shrader v.
CSX Transp., 70 F.3d 255, 256 (2d Cir. 1995).
II.
The Court Did Not Make a Manifest Error of Law or Fact
In this case, Plaintiff contends that relief under Rule 59(e)
is warranted because the Court “misinterpreted a few key documents”
and relied on a “mistaken premise” in granting Defendant summary
judgment with respect to Plaintiff’s claim for breach of the 100%
Net Exercise Amendment.
Plaintiff
argues
that
Docket No. 120-1 at 4.
the
Court
misinterpreted
In particular,
the
Plan
and
erroneously concluded that the Board had the sole discretion to
authorize the repurchase of Plaintiff’s shares.
Plaintiff further
argues that, because of this purported error, the Court failed to
appropriately
consider
whether
Russo
had
the
authority,
as
Defendant’s Chief Financial Officer, to bind Defendant to the 100%
Net Exercise Amendment.
The Court finds these arguments without
merit.
The Court thoroughly considered and analyzed the terms of the
Plan, the Stock Option Agreement, the 30% Net Exercise Agreement,
and the
Decision.
100%
Net
Exercise
Amendment in
issuing
the
May 16th
As the Court explained therein, the Plan provides that
it shall be administered by the Board, and further provides that
the Administrator (i.e. Board) may “in its sole discretion . . .
provide that the Company may repurchase Shares acquired upon
exercise of an Option.”
No. 70-2 at 10)).
See Docket 116 at 45 (quoting Docket
The Court further explained that the Stock
Option Agreement, the 30% Net Exercise Agreement, and the 100% Net
Page -3-
Exercise Amendment were subject to the Plan, and that accordingly,
“[t]he plain language of the parties’ agreements . . . compels the
conclusion that any repurchase of Plaintiff’s shares was in the
sole discretion of the Board and required its authorization.”
Id.
at 45-46.
Plaintiff argues that the Court misinterpreted the language of
the parties’ agreements and that the Plan did not govern the sale
of
Plaintiff’s
shares
to
Defendant.
Specifically,
Plaintiff
contends that, under the Plan, “the sole authority of the Board to
approve a repurchase of Shares obtained upon the exercise of a
participant’s
Option
is
expressly
limited
indisputably are not present here.”
Plaintiff
argues
that
the
Board’s
to
scenarios
that
Docket No. 120-1 at 10-11.
authority
is
limited
to
situations in which repurchase occurs “upon the occurrence of
certain specified events, including, without limitation, a Holder’s
termination
as
a
service
provider,
divorce,
bankruptcy,
or
insolvency” and where the “repurchase right . . . [is] set forth in
the
applicable
Option
Agreement
or
Restricted
Stock
purchase
agreement or in another agreement referred to in such agreement.”
Id. at 12-13 (internal quotation omitted).
Plaintiff further
contends that these conditions were not met in this case and that,
accordingly, the Court erred in finding that the Board had the sole
authority to authorize the repurchase of Plaintiff’s shares.
Plaintiff has failed to demonstrate a manifest error of law or
fact by the Court.
First, Plaintiff’s argument ignores the many
other provisions of the Plan that confirm that the Board had the
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sole authority to enter into the 100% Net Exercise Amendment.
For
example, the Plan provides that the Board has the sole discretion
to permit an option holder to satisfy its tax obligations by
allowing Defendant to withhold shares. See Docket 70-2 at 2 (only
the Administrator may “allow Holders to satisfy tax and other
obligations by electing to have the Company withhold from the
Shares to be issued upon exercise of an Option or Stock Purchase
right that number of Shares having a Fair Market Value equal to the
minimum amount required to be withheld or paid”).
In this case,
the 100% Net Exercise Amendment indisputably permitted Plaintiff to
satisfy
his
tax
withholding
obligation
by
having
Defendant
“withhold from the issuance [thereunder] that number of Shares
having a Fair Market Value equal to the sum of the Total Exercise
Price and the minimum statutory withholding obligations due. . . .”
Docket No. 70-27 at 35.
The
Plan
also
provides
that
the
Administrator
has
the
authority to determine “[t]he consideration to be paid for the
Shares to be issued upon exercise of an Option,” and that such
consideration may, “with the consent of the Administrator,” consist
of “surrendered shares then issuable upon exercise of the Option
having a Fair Market Value on the date of the exercise equal to the
aggregate
thereof.”
exercise
price
of
the
Option
or
exercised
Docket No. 70-2 at 3 (emphasis added).
portion
The 100% Net
Exercise permitted Plaintiff to surrender a portion of his shares
as consideration for the shares he obtained upon exercise of his
option.
The 100% Net Exercise Amendment therefore contained terms
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that only the Board, in its role as Administrator, was authorized
to agree to under the plain language of the Plan.
Plaintiff’s
contention that the 100% Net Exercise Amendment did not require
Board
approval
is
inconsistent
with
these
additional
Plan
provisions.
Moreover, with respect to the specific conditions identified
by Plaintiff, the 100% Net Exercise Amendment (which contains the
contested repurchase provision) satisfies them.
Exercise
Amendment
provides
it
is
The 100% Net
“conditioned
upon
the
consummation of the transactions contemplated by the Stock Purchase
Agreement.”
Docket No. 70-27 at 34.
As such, the repurchase
provision at issue was conditioned on the occurrence of a specified
event.
The repurchase provision at issue was also contained in an
agreement referred to in the Stock Option Agreement. Specifically,
the Stock Option Agreement provides that Plaintiff’s option is
exercisable only pursuant to the terms of the Notice attached
thereto as Exhibit A.
Docket No. 73-21 at 3.
The Notice in turn
provides that the parties shall “execute such further instruments
. . . as may be reasonably necessary to carry out the purposes and
intent of [the Stock Option Agreement].”
Id. at 11.
The 100% Net
Exercise Amendment falls within this definition, and thus qualifies
as an agreement referred to in the Stock Option Agreement.
Accordingly, and as the Court determined in its May 16th
Decision, the plain language of the parties’ various agreements
required Board approval of the 100% Net Exercise Amendment, which
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was never given.
This express requirement of Board approval moots
Plaintiff’s contention that Russo verbally bound Defendant to the
100% Net Exercise Amendment - again, as the Court determined in its
May 16th Decision. The Court therefore finds no merit in Plaintiff’s
contentions that it misinterpreted the Plan or that it failed to
consider Russo’s position with Defendant or the extent of his
authority.
The Court further notes that the Stock Option Agreement
provides that Plaintiff agrees to “accept as binding, conclusive
and final all decisions or interpretations of the Administrator
upon any questions arising under the Plan or this Option.”
No.
73-21
at
6.
Accordingly,
Defendant’s
Board,
Docket
as
the
Administrator, had the express authority under the plain language
of the Stock Option Agreement to determine whether Russo could
verbally
agree
to
repurchase
100%
of
Plaintiff’s
shares.
Plaintiff’s argument fails to acknowledge or discuss this provision
of the Stock Option Agreement, which again makes it clear that all
ultimate decision-making related thereto lies within the Board’s
discretion.
For the reasons set forth above, the Court finds that it did
not commit a manifest error of fact or law in the May 16th Decision,
nor has Plaintiff demonstrated that reconsideration is warranted on
any
other
ground.
Plaintiff’s
disagreement
with
the
Court’s
conclusions is not an appropriate basis for a reconsideration
motion.
See Becnel v. Deutsche Bank AG, 838 F. Supp. 2d 168, 171
n.16 (S.D.N.Y. 2011) (“Mere disagreement with [the Court’s] opinion
Page -7-
. . . is not a basis for reconsideration.”).
Accordingly, the
Court denies Plaintiff’s motion for reconsideration.
CONCLUSION
For the reasons set forth above, Plaintiff’s motion for
reconsideration (Docket No. 120) is denied.
ALL OF THE ABOVE IS SO ORDERED.
s/Michael A. Telesca
MICHAEL A. TELESCA
United States District Judge
DATED:
Rochester, New York
August 8, 2018
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