AXA Investment Managers UK Ltd. v. Endeavor Capital Management LLC
2012 U.S. Dist. LEXIS 124459
| S.D.N.Y. | 2012Background
- May 12, 2009, AXA and Endeavor entered two put-option agreements for CAP shares with Buffa signing a personal guaranty.
- July 29, 2010, AXA notified exercise of options; Endeavor unable to purchase stock and defaulted.
- December 21, 2010, new Amended and Restated Put Option Agreements included Buffa guaranty provisions.
- February 9, 2011, parties signed new agreements extending exercise date; 25% default-interest rate provision added.
- February 25, 2011, AXA elected to exercise, Endeavor failed to pay by extended deadline; March 30, 2011, notices of default sent; May 12, 2011, AXA filed suit.
- March 2012, AXA mitigated damages by selling CAP stock; court addresses whether Buffa liable and whether 25% interest is enforceable
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Buffa guaranty validity based on consideration | Buffa guaranty supported by bargained-for consideration. | Buffa guaranty lacks consideration independent of AXA benefits. | Guaranty upheld; adequate consideration shown as part of the overall contract exchange. |
| Enforceability of 25% default interest as liquidated damages | Rate is a bargained-for term offsetting anticipated losses from delayed payment. | Rate is a punitive penalty and unenforceable. | Provision enforced; rate not a penalty given sophistication of parties and contract context. |
| Buffa's personal liability in the February 2011 agreements | Buffa’s personal guaranty is explicit and binding as absolute and unconditional. | Buffa lacks enforceable personal obligation due to lack of direct benefit or other defects. | Buffa personally liable; guaranty deemed absolute and enforceable. |
| Damages framework and scope of relief | Request extends to difference between contracted price and eventual sale price plus default interest. | Limitation to amount attributable to Endeavor only; no broader punitive damages. | Summary judgment for full damages requested, including default interest. |
Key Cases Cited
- H Holt v. Feigenbaum, 52 N.Y.2d 291 (N.Y. 1981) (consideration for guaranty where promisor induced detriment to another)
- White Rose Food v. Saleh, 99 N.Y.2d 589 (N.Y. 2003) (strict construction of guaranty language; clarify effect of modifications)
- Dunkin’ Donuts of Am., Inc. v. Liberatore, 138 A.D.2d 559, 526 N.Y.S.2d 141 (2d Dep’t 1988) (guaranty supported by consideration in exchange for promise)
- South Side Hous., LLC v. City of New York, 470 B.R. 659 (Bankr E.D.N.Y. 2012) (absolute guaranties and enforceability in context of contract terms)
- Addressing Sys. & Prods., Inc. v. Friedman, 59 A.D.3d 359 (1st Dep’t 2009) (litigated liquidated damages under contract; scale and enforceability factors)
- Cruden v. Bank of N.Y., 957 F.2d 961 (2d Cir. 1992) (contract terms control interpretation; merger and parol evidence considerations)