Broadbill Investment Corp. v. Washington Mutual, Inc. (In Re Washington Mutual, Inc.)
442 B.R. 308
Bankr. D. Del.2011Background
- Anchor & Dime Bancorp merged on July 6, 1994; Anchor sued the government over supervisory goodwill changes.
- DBI issued litigation tracking warrants (LTWs) on Dec 22, 2000 tied to the Anchor Litigation.
- DBI merged into WMI on Jan 4, 2002; Amended Warrant Agreement (2003) shifted control to WMB and provided LTWs could convert to WMI stock upon a trigger.
- The Anchor Litigation returned a $356 million award by the Court of Federal Claims (Jul 17, 2008) with CAFC remand for damages; potential adjustments discussed.
- OTS seized WMB on Sep 25, 2008; FDIC became receiver and sold assets to JPMorgan Chase; WMI commenced Chapter 11 on Sep 26, 2008.
- In 2010, Broadbill filed an adversary proceeding; Nantahala and Blackwell intervened; WMI moved for summary judgment, which the Court denied after considering external and parol evidence and discovery issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Amended Warrant Agreement unambiguously grants LTWs an equity interest or a property option. | LTW Holders contend the agreement conveys a property-right option, not mere stock rights. | WMI maintains the language unambiguously gives LTWs a right to receive WMI common stock upon a trigger. | Genuine issues of material fact exist; summary judgment denied. |
| Whether external evidence is necessary to interpret the Amended Warrant Agreement. | Evidence of intent from related documents and counsel is needed parol evidence. | Agreement is unambiguous; external sources are not necessary. | Discovery and trial on merits required; summary judgment denied. |
| Whether Sections 4.2 and 4.3 permit LTWs to receive property rather than stock upon certain events. | LTWs may be entitled to property under 4.2/4.3 when DBI shareholders could take cash or stock. | The operative provisions focus on stock, with control retained by WMI. | Material facts unresolved; not decided on summary judgment. |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment standard; credible evidence required to defeat a motion)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (burden shifting to show absence of genuine issue of material fact)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (severe burden on the non-movant in proving genuine issues of material fact)
- In re IT Group, Inc., 377 B.R. 471 (Bankr.D.Del. 2007) (Article: bankruptcy summary judgment standards and evidentiary considerations)
- Bristol Inv. Fund, Inc. v. Carnegie Int'l Corp., 310 F. Supp. 2d 556 (S.D.N.Y. 2003) (contract interpretation; plain and unambiguous language for contract interpretation)