Meijer et al v. Thompson

Filing 66

MEMORANDUM OPINION Re: the Parties' cross-motions for summary judgment and the pltfs motion to dismiss the deft's indemnity counterclaim and corresponding defenses. Signed by District Judge Leonie M. Brinkema on 09/04/09. (pmil)

IN THE UNITED STATES DISTRICT COURT FOR T
EASTERN DISTRICT OF VIRGINIA

Alexandria Division
ELZE T. Trustees MEIJER and MARCEL WINDT, in Bankruptcy for ) ) ) ) ) ) )
l:08cv673

solely in their capacity as KPNQwest, N.V., a Dutch corporation, and Global Telesystems Europe Holdings, a Dutch corporation,

CLERK, U.S. DISTRICT COURT
ALEXANDRIA. VIRGINIA

(LMB/TRJ)

B.V.,

Plaintiffs,
v. H. BRIAN THOMPSON

) ) )
)

)
)

Defendant.

) )
MEMORANDUM OPINION"

Plaintiffs Elze T.

Meijer and Marcel Windt,

in their

capacity as bankruptcy trustees, defendant H.
note.

have brought this action against

Brian Thompson,

seeking collection of a promissory
cross-motions for
the

Before the Court are the parties'

summary judgment and the plaintiffs' defendant's For

motion to dismiss

indemnity counterclaim and corresponding defenses. discussed below, plaintiffs' motions will be

the reasons

granted,

defendant's motion will be denied,
favor.
I. Background

and judgment will be

entered in the plaintiffs'

A.

The Note.

On April
a resident

1,

1999,

defendant H.
Virginia, to serve as

Brian Thompson

("Thompson"),

of Alexandria,

entered into a contract Chairman and CEO of Global

("Employment Agreement")

TeleSystems

Group,

Inc.

("GTS").

As part

of

the Employment

Agreement,

Thompson agreed to enter into a separate contract

to

purchase $20 million of stock in GTS.

Thompson paid half of

the

$20 million to GTS in cash.

The other half of

the stock purchase

was covered by a full recourse1 promissory note
amount of $10 million from Thompson to GTS.

{"Note")

in the

Thompson executed

the Note on April

6,

1999.

It was secured by the shares Thompson Note f 7. Thompson never

purchased with the loan proceeds.

actually received the shares of stock,
security pending his repayment of

which were held as

the loan.

The Note required that
accrued and unpaid interest,

the principaT,
be paid on the

together withTaTiT
"Termination Date,"

defined as

the earliest of

(1)

Thompson's

"Date of Termination"

from GTS,2

(2)

the occurrence of certain acceleration

conditions,3 or
executed, i.e..

(3)

six years from the date the Note was
6, 2005. Id. I 1. The Note is governed by

April

Employment Agreement described the Note as "full recourse," Emp. Agr. § 5(d)(ii), and the Note itself contains no

restrictions on GTS's ability to collect when payment is due. Thompson also testified that he understood that the Note was full
recourse. Thompson Dep. 75:11-13, 80:13-20.

actual termination. Emp. Agr. f 1(m). "Termination Date" refers to the earliest of three possible maturity dates for the Note, one of which is the "Date of Termination." Note 3[ 1.

2"Date of Termination" is defined as the date of Thompson's

to make an interest payment, followed by failure to cure such lack of payment within 5 business days of written notice. Note 9[
3 (a) .
-2-

3These conditions included,

among others, Thompson's failure

Virginia law.

Id.

SI

20.

The Note also mandated that no waiver
"unless set

or modification of the Note would be valid or binding

forth in a writing specifically referring to
by a duly authorized officer of extent
B.

this Note and signed

[GTS],

and then only to the Id. 5 12.

specifically set

forth therein."

The General Release and Severance Agreement.

Both Thompson and GTS anticipated that

the value of GTS's

stock would increase in value.
2000, GTS's stock plummeted.

However,
In the fall

throughout the year
of 2000, GTS decided to

terminate Thompson.

On September 18,

2000,

Thompson and GTS

entered into an agreement his employment was

("Preliminary Agreement")

under which 2000,

terminated immediately.

On December 4,

Thompson and GTS
Agreement

entered into a General
which

Release and Severance
"supercede[d] all prior

("Severance Agreement"),

agreements between the matter," relevant except to this

Parties with respect

to

the subject

for certain matters litigation. Sev.

regarding stock options not Agr. S[ 10. The Severance

Agreement,

which is governed by Delaware law,

id.

f 24,

terminated Thompson's
id. g[ 1.

employment,

effective September 18,

2000,

A number of provisions of

the Severance Agreement are

relevant to this case.
Loan Secured by Stock"),

These include Paragraph 5,

("Repayment of

which specifically mandated

[t]hat certain Promissory Note made April
payable to the order of the Company by
-3-

6,

1999

and
. . .

[Thompson]

shall continue (a)

to be enforceable terms except

in all that

respects

in to

accordance with its

[GTS]

agrees

waive any provision of such Note that requires

[Thompson] to repay such Note solely by virtue and at the time of his termination of employment with [GTS] hereunder and (b) postpone the due date of the interest payment otherwise due on April 6, 2000 until December
1, 2000[,]

and Paragraph 9

("Release of Claims by the Company"),

which

released Thompson from

any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever . . . which [GTS] has or
may have had against [Thompson] claims . . including without of limitation any and all arising out

[Thompson's]

employment with

[GTS]

or

the

termination

thereof provided, or with respect status at any time as a holder of
[GTS].

to [Thompson's] any securities of

This release bound GTS and any of entities. Id. SI 9. Paragraph 9
types

its past,

present,

or future

specifically excluded from the
claims relating to or

above release only two

of claims:

arising from criminal
assumed under

activity by Thompson,

and

"any obligation
Id.

this Agreement by any Party hereto."

Under Paragraphs

6 and 7,

Thompson agreed to provide

services a

to GTS pursuant to two separate incorporated agreements, and an "Investment Banking Agreement."
Thompson agreed to provide

"Consulting Agreement"

Under the Consulting Agreement,

certain consulting services

to GTS,

which agreed to compensate

him in an amount equal

to

"the interest payments due under the

-4-

xNote'

(as defined in the

[Severance Agreement])'' until April 6,

2005.

Cons. Agr.

f 3.

Under the Investment Banking Agreement,

the parties agreed that if GTS entered into a "strategic
transaction," such as a sale, merger, buyout, or similar

transaction,

within two years of Thompson's

termination,

it would

pay Thompson $3.5 million plus $300,000 for each dollar by which

the per-share price of GTS's stock exceeded $12 at the time of
the strategic transaction. Inv. Bank. Agr. g[S[ 3 (a), 5.

Thompson's compensation from the Investment Banking Agreement would be applied "to reduce any balance of principal outstanding

on the

'Note'

(as defined in the Severance Agreement)" with any Id. f 5. Obviously, if the per-

remainder to be paid in cash.

share price of GTS's stock were high enough,
Note could be reduced to nothing.

the balance of the

Lastly,

Paragraph 20 of

the Severance Agreement stated that

there were "no representations, promises,
[GTS] and [Thompson]

or agreements between

other than those expressly set forth

herein," and that Thompson "had an adequate opportunity to consult with competent legal counsel of his choosing" while

negotiating and executing the Severance Agreement.
20.

Sev. Agr. SI

C.

Bankruptcy of GTS and Acquisition of Note. GTS was about to declare bankruptcy. On

By November 2001,

November 11,

2001,

GTS sold the Note and the right of repayment

-5-

to Global TeleSystems
Dutch company, for

Europe Holdings N.V.
All of

("GTS Holdings"),
shares of GTS

a

$5.4 million.

the

Holdings were later acquired by KPNQwest N.V.
another Dutch company.
bankruptcy. KPNQwest

("KPNQwest")/
GTS filed for

On November
and GTS

14,

2001,

Holdings were

declared bankrupt on

May 31,

2002

and August

2,

2002,

respectively.

The plaintiffs,

Elze Meijer and Marcel Windt
bankruptcy trustees

("the Trustees"),

were appointed as

for KPNQwest and GTS Holdings.

On July 28,
Thompson,

2003,

counsel

for the Trustees sent a notice to

informing him that because he had defaulted by failing

to pay any interest on the Noter~Łn~~2TODTO,
the Note's acceleration clause, he was

2001,ancT20~CF2,

under

required to pay the

principal

and all accrued interest.
28, 2003

Thompson objected to
"the

the

demand on August

by a letter arguing that

predicates satisfied

for

.

.

.

acceleration and demand have not been the claims of Mr. Thompson under the Agreement

[because]

Consulting Agreement and the

[Investment Banking]

became an integral part of

the Note

.

.

.

and have satisfied any
2008, the Trustees

amounts accruing or due hereunder."

On May 7,

sent Thompson a second notice of default.4

4After the initial exchange of letters in 2003,

the Trustees

sent two follow-up letters on December 18, 2 003 and February 19, 2004, and the parties had some limited conversations during that

time frame. See Def.'s Mot. S.J. Exs. 42, 43. The record is silent as to any other communications until 2008.

-6-

On June 30,

2008,

the Trustees

filed this

lawsuit5

for

breach of promissory note,

demanding damages of not less than

$6.5 million, plus interest and attorneys'

fees.6

The Trustees

have since conceded that they are owed at most

$6.5 million in

principal,

and that they are not entitled to any interest before
April 6, 2005.7 See PL's Mem. S.J. 30.

the Note's due date,

Thompson filed a Motion to Dismiss for Failure to State a Claim,

which was denied

(Dkt.

No.

21),

and a motion to add a
which was granted {Dkt

counterclaim and defense for indemnity, No. 40).

Both parties have now moved for summary judgment on and the Trustees have

whether Thompson is liable under the Note,

moved to dismiss Thompson's indemnity counterclaim and defense.
II.
A.

Cross-Motions for Summary judgment.

Standard of Review.

Summary judgment is appropriate when,

on the basis of the

jurisdiction,

5The matter is in federal court under diversity
as the amount in controversy well
are diverse

exceeds $75,000,
from the

and the plaintiffs, Dutch citizens, defendant, a citizen of Virginia.

including reasonable attorney's fees,
amounts . . . when due." Note f 8.

6The Note requires Thompson to pay all collection costs,
if he

"fails to pay any

reduction of the principal owed on the Note by the minimum amount specified in the Investment Banking Agreement, $3.5 million. See Pis.' Mem. S.J. 3. They also concluded that Thompson satisfied his obligations under the Consulting Agreement, which entitled him to payments equivalent to any interest on the Note until it
became due. See id. n. 2.

qualified as a "strategic transaction" that resulted in the

7The Trustees concluded that the sale of GTS in bankruptcy

-7-

pleadings and evidence,

there is no genuine issue of material
entitled to a judgment as a matter

fact and the moving party is

of law.
U.S. most Co. 317,

See Fed.
322-23

R.

Civ.

P.

56(c);

Celotex Corp.

v.

Catrett,

477

(1986).

Evidence must be viewed in the light Matsushita Elec. 587 (1986). Indus.

favorable v.

to the nonmoving party. 475 U.S. 574,

Zenith Radio Corp..

The party

opposing summary judgment may not rely on mere allegations or
denials in its pleadings. "by to Fed. [its] R. Civ. P. 56(e). Rather, the

nonmoving party must, depositions,
designate

own affidavits,

or by the on file,
issue

answers

interrogatories,
showing that

and admissions
is a genuine

specific

facts

there

for trial." colorable" or

Celotex.

477 U.S.

at 324.

Evidence is

that is

"merely to

"not significantly probative"

insufficient

overcome a summary judgment motion.
Inc.. 477 U.S. 242, 249-50 (1986).

Anderson v.

Liberty Lobby,

B.

Discussion.

The Note at

issue obligates Thompson to pay the principal which has indisputably passed. The

upon the Termination Date,

only issues,

therefore,

are whether any of Thompson's

defenses to

payment have merit. Thompson has argued, barred, personal that alternatively, that the Note is time-

the Severance Agreement released him from any repay the Note, that the Note is void for

obligation to

a

failure of consideration,

and that the Trustees

cannot enforce

-8-

the Note because they materially breached their own obligations.

All of these arguments are affirmative defenses.
Answer 5-8; see also Fed. R. Civ. P. 8(c)(1)

See Def.'s Am.

(listing statute of

limitations,
defenses);
697, 715-16

release,

and failure of consideration as affirmative
v. Acstar Ins. Co.. 448 F. Supp. 2d

Centex Constr.
(E.D. Va.

2006)

{describing material breach as an

affirmative defense).
prove them.

Accordingly,

Thompson bears the burden to
Mom't Servs.. 628 S.E.2d

See Monahan v.

Obici Med.

330,

336

{Va.

2006).

For the reasons discussed below,

the Court

finds that Thompson has failed to meet that burden for any affirmative defense,
obligation,

and that the Note remains a vaTTd
Accordingly, summary

enforceable against Thompson.

judgment will be granted to the Trustees.
1. Rule of Construction.

The parties agree that the two key documents underlying this

dispute are the Note and the Severance Agreement.
argues that

Thompson
in the

the Court should construe any ambiguities favor pursuant

Severance Agreement in his

to the canon of contra

proferentem.

under which ambiguous contractual terms are
the drafter.
423

construed against
States. 513

Maersk Line.
2008).

Ltd.

v.

United

F.3d 418,

(4th Cir.

The Trustees correctly argue that the rule of contra
proferentem is inapplicable here. When an agreement is

negotiated and drafted by both parties,

this rule does not apply.

-9-

See Silicon Image.
2d 840, 850 (E.D.

Inc.
Va.

v.

Genesis Microchip,

Inc..

271

F.

Supp.

2003).

Although the evidence in the record

indicates

that GTS's

lawyers were responsible for drafting the
and integrating any mutually agreed-upon

Severance Agreement

modifications,
Brown,

it also shows that Thompson and his

counsel,

Alvin

the head of the Executive Compensation Department at

Simpson Thacher & Bartlett LLP,

were involved in revising the
starting from

drafts and negotiating changes over three months,
Thompson's termination in September 2000 until

the Severance

Agreement was

finalized in December.

See Brown Dep.

39:24-40:25.

During this period,

the parties exchanged at least seven drafts,

and numerous changes were proposed and made to GTS's proposed language. See id. Finally, in signing the Severance Agreement, "had an adequate

Thompson expressly represented that he

opportunity to consult with competent legal counsel of his
choosing." Sev. Agr. f 20.

In short,

Thompson was an experienced businessman,

represented by an experienced lawyer.

He

"[did]

not suffer from

lack of legal sophistication or a relative lack of bargaining power, and ... it is clear that [the Severance Agreement] AIU Ins. Co. v. was

actually negotiated and jointly drafted."

Superior Court.
the Court

799 P.2d 1253,

1265

(Cal.

1990).

Accordingly,
from

"need not go so far in protecting

[Thompson]

ambiguous or highly technical drafting."

id.

Thompson cannot

-10-

claim shelter in the protection of a rule designed to protect an
unsuspecting party who plays
a contract.

little or no

role

in the drafting of

2.

Statute of Limitations.

Although Thompson has

argued that

the Note is unenforceable

because it

is

time-barred, 6, 2005,

the Court finds

that the Note did not

mature until April regardless

and accordingly is not time-barred, characterized as a negotiable

of whether it is

instrument or as a written contract.
i. The Note is Governing Statute of Limitations. subject to one of two possible statutes of

limitation.
Trustees, due date.

If it is a negotiable instrument,
limitations § runs

as argued by the
from the

the statute of See Va.

for six years If it

Code Ann.

8.3A-118{a).

is not a

negotiable instrument,

as Thompson asserts,

it

is

subject to the which

five year statute of limitations

for written contracts,

begins
Ann. §

to run when the cause of action accrues.
8.01-246(2). The complaint in this

See Va.

Code

action was

filed on

June 30,

2008.

Thus,

for the Note to survive a statute of

limitations defense,
30, 2003

it must have been due no earlier than June
and no earlier than June 30, 2002

if it is a contract,

if it is a negotiable instrument.
matured in 2000, when he was

Thompson argues

that the Note

terminated.

Under that position,

the Trustees'

action would be time-barred under either statute of

-11-

limitations.

The Trustees

argue

that

the Note became due on

April

6,

2005,

which would place the filing of

this

complaint

well within either limitations period.
ii. Contract Language.

The Note specified that it was due on the earliest of

three

alternative dates: GTS; April (2) 6,

(1)

the date of Thompson's

termination from or (3)

the occurrence of an acceleration condition; 2005. Note 1 1. Thompson's
18, 2000.

effective date of
If the Note had matured on time-barred. However,

termination was that date, this

September

complaint would now be

under Paragraph 5

of

the Severance Agreement,

"[GTS]

agree[d] to

to

waive any provision of such Note that requires

[Thompson]

repay such Note solely by virtue and at the time of his
termination of employment with [GTS]."

The parties dispute

the effect

of Paragraph 5.

The Trustees

argue that it modified the Note such that it was no longer due on

the date of Thompson's
of

termination,

i.e..

it eliminated the first

the three alternative dates of the Note's maturity.
Thompson argues its right that under Paragraph 5, GTS only

Conversely, nwaive[d]"

to collect payment

on the date of Thompson's

termination,
meaning that

but did not actually amend the maturity date,
the Note matured,
on September 18,

and the statute of
2000.

limitations

began running,

The Trustees'

argument

is persuasive.

Notwithstanding the

-12-

word "waive," Paragraph 5 modified the Note.

A waiver of a right

to payment under a note is distinguishable from a modification or

amendment of that note in that a waiver is a unilateral act, not require consideration,
party's pleasure,

does

and can be withdrawn at the waiving

whereas a modification is a bilateral act,

requires consideration,

and is binding.

See David V.

Snyder,

The

Law of Contract and the Concept of Chancre:
Attempts to Regulate Modification. Waiver,

Public and Private
and Estoppel, 1999

Wis.

L.

Rev.

607,

626-27

(1999).

Paragraph 5 was part of a each of whom undertook
GTS was not

bilateral contract signed by both parties,
numerous obligations as consideration.

Accordingly, rather,

free to withdraw the "waiver" at any time; binding modification to the Note,
GTS.

it was a

and not a unilateral act by

Thompson's position relies primarily on the use of the word

"waive," arguing that when a term has a definite legal significance, See Smith v. it is Smith. to be construed according to that meaning. 423 S.E.2d 851, 853 (Va. Ct. App. 1992)

(citing Nve v.

Lovitt.

24 S.E.

345,

346

(Va.

1896).

However,

this argument ignores the factors identified above that clearly indicate that this was not a waiver,
Thompson's reliance on Carter v. 1890), is misplaced. In Carter,

but a modification.
Noland. 10 S.E. 605 (Va.

which has been cited in Virginia

-13-

courts demand,

only once,8 the payee of a bond that was payable on and had already been partially collected, endorsed the

bond with a promise not to demand any further payment until a

certain marble quarry was operating successfully.
Supreme Court held that this did not
for the maturity of
a defense of waiver.

The Virginia

"change or alter the period

the bond,"
Carter,

but merely provided the payor with
10 S.E. at 605-06.

Carter

is

distinguishable. id. at 605,
the

The bond at

issue

in Carter was

payable on demand,
immediately.

and therefore became due
endorsement was a unilateral

In addition,

promise, that

signed^onTy~by the payee.

AccbrdingTyT

the court held the bond had the obligee to and

the payee's promise, was merely

necessarily made after

matured,

"an engagement on the part of

postpone or defer the exercise of a right already accrued,"

did not change

the bond's maturity date.

Id.

at

605.

The Note

Thompson signed had not matured because when Thompson was

terminated on September 18,

2000,

the parties entered into a under which GTS agreed to

bilateral Preliminary Agreement,
"waive[] right

to repayment of $10M note on Date of Termination."
under the Severance Agreement (which

Three months

later,

superseded the Preliminary Agreement), consideration, again agreed to postpone

GTS,

in exchange for At

the Note's due date.

"See Nottingham v.
(citing,

Ackiss.

57 S.E.

592,

593

(Va.

1907)

and distinguishing,

Carter).
-14-

no

time had GTS's right to repayment ever

"accrued."

Moreover,

the Severance Agreement was a binding obligation on both parties,
not a mere promise by GTS. Finally, the holding in Carter

concerned the plaintiff's pleading requirements;
address,
For
case

it did not
limitations.
the

in any way,
of

the running of a statute of
Carter

all

the above reasons,

is not dispositive of

at bar.

Finally,

Thompson argues,

citing Union Cent.

Life Ins.

Co.

v.

Wilson.

161 S.E.

237,

239
a

(Va.

1931),

that the Severance
waiver of a

Agreement does not manifest

"clear and distinct"

statute of limitations
Under Paragraph 5, GTS,

defense.

This argument misses

the point.

which otherwise would have been entitled

to demand immediate payment of the Note due to Thompson's

termination,

agreed to postpone the due date.

Obviously,

the It

running of the statute of limitations was postponed as well.
was not necessary for the parties to make a second explicit

agreement under which Thompson would waive a statute of

limitations defense,

because he had no such defense available to

him until the Note itself would mature.
iii. Extrinsic Evidence.

Although the Court has
Paragraph 5 establishes

found that the plain language of
right to

that GTS did not waive its

enforce the Note,

the Court has also considered Thompson's

arguments based on extrinsic evidence.

-15-

Citing a draft that GTS
note

term sheet that included language stating

"[w]aives right to Termination Date repayment of $10M
note due in 6 years as per its terms)," Def.'s Mot.

(i.e.

S.J. is

Ex.

14,

Thompson argues that the final

that

the rejection of

this

language

evidence

Severance Agreement

did not modify the

Note's due date.

This

argument

is

entirely speculative because the final

there is absolutely no evidence
language in

that the choice of

the Severance Agreement reflected a substantive

rejection of the proposed draft
In fact,

language.
to the contrary. GTS's former

the only evidence is Grier Raclin,

General Counsel,

who was^involved in drafting and

negotiating Thompson's

Severance Agreement,

testified simply that

his co-counsel
proposed draft

"didn't

think that change
was necessary."

[i.e.,

using the

language]

Raclin Dep.

99:17-100:5.

The draft language can just as

easily be

interpreted as evidence that the final version of Paragraph 5 was intended to embody the statement in the draft that the Note would be "due in 6 years as per its terms." This latter interpretation

is supported by Raclin's express testimony that the intent of the
language was to modify the Note's maturity date, and that the

word "waive" was used to be concise and to eliminate the need to

reissue the Note.

See id.

167:23-68:10

("It was just easier to
. . .

do it in a paragraph here rather than issue a new note

waiving it accomplished the same thing

.

.

.

with a phrase rather

-16-

than a paragraph that goes into paragraph X,

Y,

Z of the note is

hereby replaced and restated with the following or whatever.").
In contrast, there is absolutely no testimony from either

Thompson or his attorney regarding their understanding as to the

intent or meaning of the term "waive" at the time the Severance
Agreement was signed.9

Thompson also argues that the Severance Agreement did not

modify the Note because the Note was never formally revised and
restated. However, the Note expressly provided for modification

by "a writing specifically referring to this Note," Note S[ 12,

and^Paragraph^5 of^the Severance Agreement clearly saEis"fies~tEis
requirement.
necessary.

Accordingly,

no formal revision of the Note was

In short,

even if the "waive"

language in the Severance

Agreement were ambiguous,

Thompson has provided no evidence to

support his argument that the Severance Agreement did not alter the Note's maturity date. On the other hand, the extrinsic

evidence fully supports the Trustees' position.

Accordingly,

the

9r

Thompson now advocates.

that the Note is time-barred. Thompson Dep. 206:20-22. This testimony is irrelevant; the only relevant issue is the parties' intent when the Severance Agreement was signed. Indeed, given Thompson's extensive testimony regarding his contemporaneous understanding of other aspects of the Note and Severance Agreement, discussed infra, the lack of such testimony regarding the "waiver" provision further indicates that neither party intended for this provision to have the strained meaning that

9Thompson has testified only that it is his current belief

-17-

Court rejects Thompson's argument that the statute of limitations
on the Note began to run on September 18, 2000. Rather, the

evidence shows

that it began to run on April

6,

2005,

when the

Note matured on the last of the three original alternative due
dates.10
2008,

Because the Trustees

filed their complaint on June 30,
later, the action is not barred of limitations.

a little over the

three years

by either of
3.

two possible statutes

Thompson's Personal Obligation to Repay the Note.
raised an affirmative defense of release,

Thompson has

arguing that even if
Agreement Note,

the Note is not time-barred,
from any personal debt

the Severance

released him

obligation to repay the full-recourse to a

effectively converting his

from a

non-recourse obligation.
the contract language or

This

argument is unsupported,
evidence.

either by

the extrinsic

i.
Paragraphs 5,

Contract Language.
6, and 7 of the Severance Agreement control

this issue.
be

Paragraph 5 states that the Note
in all respects

"shall continue to
its terms

enforceable

in accordance with

except"

for the

"waiver"

of Thompson's
termination,

requirement to repay the
and the 6,

Note on the date of his postponement of 2000 until

discussed supra,

the date of one interest payment 1, 2000. Paragraphs 6 and 7

from April

December

incorporate the

10Both parties agree that the Note did not become due based
on the second alternative, condition. the occurrence of an acceleration

-18-

Consulting and Investment Banking Agreements,

which impose

certain obligations on Thompson and tie his compensation directly
to "the interest payments due under the 'Note' and "any balance

of principal outstanding on the
these three paragraphs is

xNote.'"

The clear import of
"enforceable

that the Note would remain

in all respects" with only the two exceptions described in
Paragraph 5, and that Thompson, if he complied with the terms of

the Consulting Agreement and the Investment Banking Agreement,
would be entitled to certain offsets
interest.

to the principal

and

Thompson argues

that the Note is no longer enforceable

against him personally as a result of the releases in Paragraph
9, which provides a general release of GTS's claims against
for all

Thompson

claims,

debts,

demands,

accounts,

judgments,
damages,

rights,
costs,

causes of action,

equitable relief,

charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever . . . including without limitation any and all claims . . . with respect to [Thompson's]
status at any time as
[GTS].

a holder of any securities

of

Sev.

Agr.

I 9.

It excludes

from the release two specific

categories:

claims related to criminal activity by Thompson and

"any obligation assumed under this Agreement by any Party
hereto." id.

Thompson argues that the release encompassed his personal

-19-

obligation under the Note because the Note was a debt "with
respect to [Thompson's] status . . . as a holder of any

securities of

[GTS]," and it was a preexisting obligation that

was not "assumed" under the Severance Agreement and therefore was

not excluded from the general release.

In sum,

Thompson argues

that when Paragraphs 5,

6,

7,

and 9 are read together,

they which

release him from any personal obligation to pay the Note,

remained enforceable only against the shares of GTS stock pledged
as security and his obligations under the Consulting and
Investment Banking Agreements. Thompson also maintains that the

incorporation of the Consulting and Investment "Banking Agreements
into the Severance Agreement establishes that these agreements
replaced his personal obligation to repay the Note.

Thompson's reading of the Severance Agreement is
unreasonable. First, it is a basic canon of contract law that

specific language is given greater weight than general

provisions.
498 (4th Cir.

See Burain v.
1997).

Office of Pers. Mamt..

120 F.3d 494,

Paragraph 5 explicitly addresses the Note,

affirming that it would "continue to be enforceable in all
respects" but two, neither of which removes Thompson's personal

obligation to pay.

Paragraphs 6 and 7 incorporate the Consulting

and Investment Banking Agreements, which explicitly tie
Thompson's compensation to payments due on the Note. Paragraph

9,

conversely,

is a general release that contains no explicit

-20-

reference to the Note.

Paragraphs 5,

6,

and 7

therefore control

over the general language in Paragraph 9,

which would effectively

nullify these provisions if it released Thompson from the Note
completely. See O'Brien v. Progressive N. Ins. Co.. 785 A.2d

281,

287

(Del.

2001)

("Contracts are to be interpreted in a way

that does not render any provisions
Second,

"illusory or meaningless.'").

the Note cannot be modified by a general release.

The Note provides

that

K[n]o waiver or modification of any of the

terms of this Note shall be valid or binding unless set forth in

a writing specifically referring to this Note
to the extent specifically set forth therein."

.

.

.

and then only
This

Note 3 12.

language makes clear that the Note cannot be modified,
conversion from full recourse to non-recourse,

such as by

unless done

explicitly.

Paragraph 5 meets

this requirement by specifically
on the other hand, does not

referencing the Note. mention the Note.11

Paragraph 9,

Third,

Thompson's debt under the Note was excluded from the
assumed

release in Paragraph 9 because it was an "obligationf]

references
respect

"Thompson's argument that Paragraph 9 specifically
to [Thompson's] status . . . as a holder of any

the Note by releasing Thompson from any claims

"with

securities of [GTS]" is unpersuasive. Given the Severance Agreement's clear references to the Note in Paragraph 5, had the parties intended to reference the Note in Paragraph 9, they could have done so explicitly. Moreover, the Note itself, although it was incurred so that Thompson could purchase stock in GTS, was not an obligation "with respect to [Thompson's] status ... as a holder of any securities of [GTS];" it was a personal obligation
to pay $10 million.

-21-

under

[the Severance]

Agreement."

Although the Note pre-dated

the Severance Agreement,

Paragraph 5 of the Severance Agreement

explicitly reaffirmed the Note and modified its conditions.

It

was accordingly excepted from the general release in Paragraph 9.
Thompson's assertion that his obligations under the

Consulting and Investment Banking Agreements replaced his
personal liability on the Note is meritless.
agreements suggests that Thompson's personal

Nothing in those
obligations were

released.

To the contrary,

they show that his obligations

remained.

Had Thompson been released from personal liability,

there would have been no reason to expressly link his
compensation under the Consulting and Investment Banking
Agreements to the remaining payments due on the Note. Rather,

the Note's continued enforceability served both as a meaningful
guarantee that Thompson would perform his obligations under these

agreements,

and in the case of the Investment Banking Agreement,

as an incentive for him to find a buyer for GTS.

Moreover,

Thompson's new duties under these agreements did not replace his

liability on the Note in a financial sense,

because his
to his

compensation under the agreements was not identical

obligations under the Note.

His compensation from the Consulting

Agreement mirrored the Note's interest payments only until April
6, 2005, the Note's new due date, but not beyond. His

compensation from the Investment Banking Agreement was not the

-22-

Note's

entire principal,

but

only $3.5 million plus

$300,000

for

each dollar by which the sale price of GTS's

shares would exceed

$12,

and only if GTS was sold within two years.
had GTS been sold within two years

Under the right
for a high

circumstances, enough price,
Thompson's

rather than the bankruptcy that actually occurred,
the Note could have been completely

obligations under

satisfied as a result of Severance Agreement Finally,

the Severance Agreement.

But

the

certainly did not guarantee that outcome. "non-recourse"
the parties

the phrase
If

appears nowhere in the

Severance Agreement.

had truly intended to cancel

Thompson's personal
recourse note,
but

liability on what was unambiguously a full"
few simple words,

they could have done so with a

they did not.

Accordingly,
Agreement left

the Court finds

that the text of

the Severance
It

the Note fully enforceable against Thompson.

provided Thompson with a postponement of the due date and a means

of earning off all pre-default
of principal.
obligation.

interest and a considerable amount
the Note into a non-recourse

It did not convert

ii.

Extrinsic Evidence.

This interpretation of the plain meaning of the Note and
Severance Agreement is
developed in the case.

consistent with the extrinsic evidence

a.

Prior Versions and Negotiations

of the

Severance Agreement.

-23-

Both parties have cited to prior drafts and revisions of the
Severance Agreement to support their interpretations of the

agreement. the final

None of

this evidence

is probative of there is

the meaning of

Severance Agreement because

simply no evidence or were not,

in the record as

to why specific revisions were,

made.12
Thompson has also argued that because he believed that he

was not required to

repay the Note at

all,

he would not have

agreed to any severance agreement
such an obligation..

that would have left him with
belies this argument.

The evidence^ however,

As Thompson and GTS negotiated the outlines
agreement,

of a severance
to repay the

Thompson maintained that he did not have

Note,

which was
he

to become immediately due upon his

termination.

Rather,

told Raclin

that when he negotiated and signed the

original

Employment Agreement and Note in 1999,

one of GTS's

board members,

Adam Solomon,

had told him that he would not have
stock declined.

to repay the Note if

the value of GTS's

12This conclusion applies with considerable force to
Thompson's assertions regarding the phrase in Paragraph 9, "[claims] with respect to the Executive's status at any time as a holder of any securities of the Company." Citing evidence that

this phrase was added to the release shortly before the agreement
was executed, Thompson argues refers to the Note, which was that this shows that the phrase a contentious issue during the

negotiations. See Def.'s Mem. S.J. 8. Such a conclusion is purely speculative and cannot overcome the much simpler point that had the parties meant to include the Note in the release,
they could have done so explicitly as
-24-

they did in Paragraph 5.

According to Raclin,

Solomon adamantly denied Thompson's

contention,

see Raclin Dep.

88:20-23,13 and Robert Amman,

a GTS

board member who later succeeded Thompson as CEO,

testified that

Solomon would have lacked the authority to make such a representation. See Amman Dep. 43:2-43:11.

Regardless of whether Solomon made such a representation in

1999,

Thompson maintained in 2000 that he was not required to
See PL's Mot. S.J. Ex. 7 ("Brian thinks that

repay the Note.

was

the deal

[that he would not have to repay the loan if the and Adam [Solomon] says it wasn't.").

stock price declined] Conversely,
the Note in

GTS's position was
full.

that Thompson was required to pay

Thompson claims the Note, he was

that because he adamantly opposed repaying

he never would have agreed to a resolution under which He has cited extrinsic evidence

still personally liable.

of his negotiating position,

particularly contemporaneous,
stating that Thompson wanted

handwritten notes by GTS's counsel, the Note to be forgiven,
"won't move more"

including one note stating that Thompson
See Def.'s Mot. S.J. Ex. 26.

on the subject.

These notes,

however,

only indicate that Thompson took a

particular negotiating posture.

Moreover,

other notes indicate

that GTS's counsel considered Thompson's position to be "weak"

this

action.

"Solomon is now deceased and therefore was not deposed for
-25-

and contain the outlines what was
S.J. Ex.

of a compromise on the Note similar to See Pi.'s Mot.

contained in the Severance Agreement.
7.

In fact,

the evidence of

the parties'

negotiating positions

undermines Thompson's argument. terminate him, written, Thompson's

As GTS was preparing to

only defense to an unambiguously a supposed uncorroborated side
as GTS recognized at the time,

full-recourse Note was

agreement with Solomon.
Thompson's position that tantamount

Moreover,

the Note would not have fraud.

to be repaid was As CEO of GTS,

to an admission of securities

Thompson had signed GTS's SEC filings,
for 1999,

including GTS's Form XO-K

which stated explicitly that he had purchased

securities of

"using the proceeds [GTS],"

of a loan in the principal the "loan" had a

amount

$10 Million from

and that

"maturity

of six years."
state,

PL's Mot.

S.J.

Ex.
that

6.

Nowhere did the Form 10-K
to be

or give any indication,

the Note would not have

repaid if GTS's

stock declined in value,

a condition that clearly

would have had an impact on the Note's value as an asset and should have been disclosed. As Raclin recognized at the time, if

Thompson had held steadfast in his position that have to be repaid, he could have faced potential

the Note did not liability for

securities

fraud.

See PL's Mot.

S.J.

Ex.

7.

In light of the relative positions
Thompson began their negotiations of

from which GTS and
the

the Severance Agreement,

-26-

compromise that Thompson claims was reached,

one that would have

left him with absolutely no liability on the Note,

is completely

implausible.
was reached,

Conversely,

the compromise that the Trustees assert

and the one consistent with the text of the
makes complete sense. Under the Severance relief; the

Severance Agreement, Agreement,

Thompson received some,

but not complete,

Note's due date was postponed to 2005,

and Thompson would be

forgiven for all of the interest through the maturity date,
could avoid paying some or all of the principal,

and

if he performed

his obligations under the Consulting and Investment Banking Agreemenfs~e~ffectfiveIy. Accordingly, the extrinsic evidence

cited by both parties only reinforces the Trustees'
weakens Thompson's affirmative defense.
b. The Parties'

claim and

Actions Following the

Severance Agreement.

Actions by both GTS and Thompson after they signed the
Severance Agreement provide additional support for the Trustees'

position that the Note remained enforceable against Thompson, undermine Thompson's argument that the Severance Agreement
released him from personal liability. In April 2001,

and

only four

months after the Severance Agreement was signed,

GTS made its 10-

K filing for 2000,

in which it continued to describe the Note as

a "loan" of $10 million provided to Thompson to purchase stock.

See PL's Mot.

S.J.

Ex.

17.

The 10-K described the Consulting

and Investment Banking Agreements,
-27-

stated that the Severance

Agreement

"amended"

the

terms

of

the loan,

and made

it clear

that

the amended,

interest-bearing loan was

due on April

6,

2005.

id.

Finally,

GTS later sold the Note,

and the right of repayment,

to

GTS Holdings for $5.4 million.
clear,

All of these actions manifest a
least from the

contemporaneous understanding that at

perspective of GTS,
against Thompson,
In addition,

the Note had value and was

fully enforceable
position.
Carl

consistent with the Trustees'

according to Thompson's accountant,

Hildebrand,
signed,

in late 2001,

well after the Severance Agreement was

Thompson contacted Hildebrand to inform him that GTS was

considering forgiving the Note,
tax implications if it did so.

and to asKThim about the relevant^
Hildebrand Dep. 40-41.14

Hildebrand's uncontroverted testimony is evidence that even
Thompson understood that the Severance Agreement had not forgiven

his personal obligation under the Note;
2001,

rather,

even in late

the matter was merely something GTS was considering.
c. Deposition Testimony.

Finally,

deposition testimony by attorneys and principals
Raclin, GTS's former General

refutes Thompson's position.

"Hildebrand responded with a memorandum opening with a
statement that the Note was "payable in a lump-sum payment in 2006," and describing the relevant issue as, "If. the company forgives the note ... is this ordinary income to [Thompson] as

discharge of indebtedness income?" Pi.'s Mot. S.J. Ex. 19 (emphasis added). There is no evidence that Thompson ever told Hildebrand that his personal obligation had already been
forgiven.

-28-

Counsel,

who supervised the drafting of the Severance Agreement,

Jed Brickner,
as CEO,

its outside counsel,
GTS's

Amman,

who succeeded Thompson

Robert Schriesheim, GTS's

former CFO and a board member, for

and Arnold Dean,

former Deputy General Counsel

securities

filings,

have all testified,

unequivocally,

that GTS

never intended to release Thompson from his obligations under the
Note. Indeed, Raclin testified that Paragraph 5 was put in the
that the Note

Severance Agreement

specifically to make it clear

was

enforceable because of Thompson's
see Raclin Dep. 71:1-7,

claim that he did not have
and that the general release

to repay it,

in Paragraph 9 was not 121:21-123:7, Thompson's 171:4-15.

intended to incTude~the Note, It

see id.

is also noteworthy that Alvin Brown, drafted, after

lawyer when the Severance Agreement was

being deposed for two and a half hours,
8:6, provided no

see Tr.

S.J.

Hr'g 7:21understanding

testimony whatsoever regarding his

of the Severance Agreement.15
The most compelling extrinsic evidence in this action comes

from Thompson himself,
that

who effectively admitted in his

deposition

the Severance Agreement did not

relieve him of personal

liability under the Note.

In Thompson's

own words,

15Brown testified that he "attempted to clarify in
discussions with [Raclin] and [Brickner]

[his]

that the Note would not

have to be repaid by Mr. Thompson." Brown Dep. 42:10-13. However, the record contains no testimony by Brown regarding his understanding of Paragraphs 5 and 9 of the Severance Agreement, and a number of questions to Brown were apparently objected to by the defendant on privilege grounds. See Tr. S.J. Hr'g 8:4-6.
-29-

The original

agreement

for

the treatment

of

the note at

the

time of my departure was

that

rather than my being

responsible for paying back the note, which was called for under the terms of the note at the time of my

termination, that the substitute for my responsibility would be incorporated in two agreements, one of which was an Investment Banking Agreement and the other which was a Consulting Agreement. The note was to have been
. . . expunged by the value of the shares that were

held in custody, the terms of the Investment Banking Agreement and the terms of the Consulting Agreement. If there were any overages or underages, if that occurred and when that occurred, that it would be the
the be company's responsibility working with me to assure

-

that the transaction expunged the note. forgiven.
24:12-25:7 (emphasis added).

The note would

Thompson Dep.

Similarly,

Thompson

testified,
[T]he understanding when I left the company was that . . . the credits for the note would come from three sources so that company [sic] could take the note off its books. The first was whatever the value was of the Investment Banking Agreement . . . and it could have been the full amount or less, the actual shares themselves that were held, and the interest payments that would come from ... a Consulting Agreement. . . · It was also anticipated that any transaction that fell short of the 10 million that the company and I
would work together to make of sure that the purchasing party forgave the balance those notes.

Id.

114:6-115:2

(emphasis added).
testimony clearly establishes
an agreement that

What Thompson's

is

that

the

Severance Agreement was not

forgave Thompson's

debt or converted it

to non-recourse.

Rather,

it shows

that he

and GTS

"anticipated"

that they "would work together"

in the
"would be

future to ensure that any remaining balance of the Note forgiven" if the total value of

the Consulting and Investment

-30-

Banking Agreements, than $10 million.
hoped that GTS's

plus

the value of Thompson's the parties, as

shares,

was

less

Apparently,

they did in 1999,
that the company

stock would attain a value

such

could be sold at

a price

that would allow the Note's balance to

be significantly offset, remaining differences.
and the parties Unfortunately,

and then anticipated working out any But an anticipation is not a contract,
to forgive Thompson's realized, debt. and GTS

had no contract the parties'

hopes were not

ultimately went bankrupt.
trustees,

The Note's

current owners,

bankruptcy
"work

are fiduciaries who are under no

obligation to

together" with Thompson to forgive the Note.
giving Thompson every benefit of the doubt,

Accordingly,
neither

even

the intrinsic

nor extrinsic evidence supports his position,
overwhelming evidence, supports the Trustees' including Thompson's position.

and the

own testimony,

4.

Failure of Consideration and Material Breach.
remaining arguments merit little attention. His

Thompson's

claim that

the Note is not enforceable for failure of

consideration because he never actually received the shares of
stock, and was never able to trade or sell them before they were

cancelled when GTS went

into bankruptcy,

is meritless.

Thompson

never took possession of the actual shares because they were
pledged as
a

security for the Note,

in accordance with

the terms
See

of

Pledge and Security Agreement

signed by

the parties.

-31-

Def.'s Mot.

S.J.

Ex.

10 5151

2,

9.

The restrictions

on Thompson's

ability to trade or sell agreement.
shares

the shares were also part of

this to the

See id.

% 7.

That Thompson had fewer rights

than one who owns not mean

stock free and clear of a security there was a failure of consideration. in
that

interest does

that

Thompson received value,
exchange for his

albeit with certain restrictions,
to repay the Note. Moreover,

obligation

the shares became almost worthless and were ultimately cancelled
in bankruptcy purchaser of is irrelevant. If that this argument prevailed, any

corporate stock

eventually became worthless

could attempt consideration.

to void the original purchase for failure of That the shares ultimately became worthless
at the time Thompson

does

not make them retroactively worthless
purchased them.

Thompson also argues

that

the plaintiffs materially breached

their obligations under the Consulting and Investment Banking
Agreements and therefore cannot enforce the Note. The alleged

breaches occurred when GTS Holdings,

and later

the Trustees,

failed to credit Thompson for his work under these agreements by reducing the amount of interest and principal owed on the Note.16
Although a party that materially breaches a contract cannot

16As evidence,

Thompson cites the failure of GTS Holdings

and the Trustees to send him "1099" tax forms for his earnings, as well as the Trustees' initial demand for $10 million plus

interest, which ignored the offsets that Thompson had earned under the Consulting and Investment Banking Agreements.
-32-

later attempt 200, 203 (Va.

to

enforce this

it,

see Horton v. not

Horton, bar the

487

S.E.2d from

1997),

doctrine does

trustees

collecting on the Note.

First,

the Note is

separate and distinct
and there

from the Consulting and Investment Banking Agreements, is no evidence that the plaintiffs or

their predecessors-in-

interest
Note.

failed to

fulfill

any of

their obligations under the
either the A material breach to the
an

Second,

there was no material breach of

Consulting or Investment Banking Agreements. is "a failure to do something that
that the failure

is

so

fundamental

contract

to perform that

obligation defeats

essential purpose of

the contract. "

Id.

at 2(T4T.

ThlTlnere

failure of GTS Holdings and the Trustees to credit Thompson in
their internal books, Thompson was not to under a compensation arrangement where but only offsets an essential

receive any actual payments would not "defeat[]

to what he owed on the Note, purpose of the contract."

The only possible damages Thompson has

suffered are any expenses he has

incurred to prove

that he

fulfilled his obligations under the Consulting and Investment
Banking Agreements. damages, His remedy for such expenses would be Moreover, the Trustees

and not excuse from performance.

have since recognized that Thompson's

liability should be reduced

by $3.5 million,
pursuant to the

because a "strategic transaction" occurred
Investment Banking Agreement, and that he owes no

pre-default

interest,

pursuant

to the Consulting Agreement,

and

-33-

the Trustees

therefore now seek only

$6.5 million plus post-

default interest.
under
under

Accordingly,

the plaintiffs

are not barred

the material breach doctrine
the Note.

from pursuing their claims

III. Motion to Dismiss Counterclaim for Indemnity.

Plaintiffs have moved to dismiss Thompson's which he alleges
balance of

counterclaim,

in

that even if he is personally liable for the
the Trustees' claim is subject to a

the Note,

provision of his original Employment Agreement under which GTS agreed to indemnify him for certain claims concerning his
purchase of
A.

the company's

stock.

Standard of Review.

To survive a Motion to Dismiss a pleading
true,

for Failure to State a Claim, factual matter, accepted as
face."

"must contain sufficient

to state a claim to relief

that

is plausible on its

Ashcroft v.

Iabal.

129

S.Ct.

1937,

1949

(2009).

A party meets

this burden "when
court

[it]

pleads factual content that allows
that the defendant

the
is

to draw the reasonable inference

liable for the misconduct alleged."

Id.

Thus,

a complaint or that the

counterclaim must raise "more than a sheer possibility"

party is liable, consistent with a

and go beyond pleading facts that are "merely [party's] liability." Id. When the pleading

contains well-pleaded factual allegations,

"a court should assume

their veracity and then determine whether they plausibly give

-34-

rise to an entitlement to relief."
hand, allegations

Id.

at 1950.

On the other

that merely recite elements of a cause of

action are not assumed to be true.
" [determining whether a complaint

Id.

at 1949.

Ultimately,
states a

[or counterclaim]

plausible claim for relief
that requires

.

.

.

[is]

a context-specific task
judicial

the reviewing court to draw on its Id. at 1950.

experience and common sense."
B. Discussion.

Thompson's

indemnity counterclaim relies primarily on

Section 5{d)(ii)

of his original Employment Agreement,

which

references a separate contract to purchase $20 million in GTS
stock. Referring to that separate contract, which is governed by Delaware law, the Employment stated:

Agreement,

Such contract shall also provide that [GTS] shall agree to indemnify and hold [Thompson] harmless from all costs, charges and expenses ... of any action, suit, proceeding or other claim {other than the Executive's

income or other tax liability relating to his purchase

with the sale by [GTS] to [Thompson] of the Purchased Stock, except to the extent such indemnity is
prohibited by law.

or sale of

the Purchase Stock)

arising in connection

Thompson argues that this provision applies
effort to collect on the Note.

to the Trustees'

Under Delaware law,

it is illegal

for a company to

prospectively indemnify an employee against
the right of the corporation." Del.

"an action by or in
tit. 8 § 145(a).

Code Ann.

Similarly,

Delaware law states that "no indemnification shall be

-35-

made in respect of any claim,
corporate officer, director,

issue or matter as to which
or employee] shall have been

[a

adjudged liable to the corporation."
prohibition in § 145(b)

IcL. § 145(b).

Although the

contains an exception allowing indemnity

if a court determines
such person is

"in view of all the circumstances

[that]
this

fairly and reasonably entitled to indemnity,"

exception only applies if the defendant is sued "by reason of the fact that the person is or was a director,
agent of the corporation."

officer,

employee or

When a corporate officer is sued for

a debt on a promissory note to the corporation,

such a debt is a See Strirel^Fin."a

personart debt and-this- exception does--not applyr^
Corp. v. Cochran. 809 A.2d 555, 562 (Del. 2002)

(noting that

conclusion

[allowing indemnity in such a case]

would render the

officer's duty to perform his side of a contract in many ways

illusory").

Thus,

the Employment Agreement,

which explicitly

barred any indemnity prohibited by law,

could not provide a basis

for indemnification of Thompson against claims on the Note by GTS
or its successors.

Moreover,

Thompson's suggested reading of the indemnity

clause is simply not 1949.

"plausible on its face." labal.

129 S.Ct. at

The section of the Employment Agreement that contains the

indemnity provision,
Thompson's

§ 5{d)(ii),

also explicitly references
Thompson's suggested

"full recourse promissory note."

interpretation of the indemnity clause would render this

-36-

provision,

and the Note,

"illusory or meaningless," O'Brien,

785

A.2d at 287,

and must therefore be rejected as implausible.17

Finally, Thompson has also cited Section 21 of the Severance
Agreement, which indemnified him "for liability for claims or

acts arising out

[of]

his services as a director or officer of

[GTS]."

This provision also does not apply to Thompson's debt
as in Stifel,18 Thompson's obligation to

under the Note because,

pay back the Note was a personal one and did not arise out of his
work for GTS in an official capacity.
IV. Conclusion.

For the~above reasons,

the"plaintiffs"'

Motion for~ Summary

Judgment and Motion to Dismiss Defendant's Indemnity Counterclaim
and Corresponding Defenses will be granted, and the defendant's

1999), a case cited by Thompson in which the Virginia Supreme Court appeared to give effect to a circular interpretation of an indemnity clause such as the one Thompson advocates, is not on point because the Employment Agreement is governed by Delaware, not Virginia, law, and because Coadv concerned indemnity for
attorney's fees, not for the entire underlying obligation.

17Coadv v. Strategic Resources,

Inc..

515 S.E.2d 273

(Va.

Thompson also cites to a memorandum written by Raclin, expressing concern that the indemnity provision "could be read"

Note.

memo is in no way dispositive of the provision's actual meaning. To the contrary, this memorandum reflects a concern by Raclin that a court might erroneously read the clause to include the

to encompass

the Note.

Def.'s Opp.

Mot.

to Dismiss Ex.

C.

This

authority.

governed by Delaware law,

18The Severance Agreement, like the Employment Agreement,
and Stifel is therefore binding

is

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Motion for Summary Judgment will be denied,
issued with this Memorandum Opinion.

by an Order to be

Entered this _L_ day of September,

2009.

Alexandria,

Virginia

United States District Judge

LeonieM.Briakema

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