GMG Capital Investments, LLC v. Athenian Venture Partners I
36 A.3d 776
| Del. | 2012Background
- GMG and Athenian funded Alloptic; GMG held ~60%, Athenian ~10%
- Athenian pledged Alloptic stock in exchange for a $6,000,000 Note; securities held in escrow
- Note required monthly Mandatory Payments of $15,000 after a triggering event
- Event of Default occurred when GMG failed to pay; Athenian sought money damages and/or Pledged Securities remedies
- Pledge Agreement Section 1(g) designates Pledged Securities as a sole remedy for secured obligations, with carve-outs
- Term Sheet and Letter Agreement create potential multiple remedies; conflict among documents left unresolved
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Remedies for breach—sole remedy vs. multiple remedies | Athenian: Note carve-out permits money damages beyond Pledged Securities | GMG: Section 1(g) makes Pledged Securities the sole remedy for breaches | Ambiguous remedies; both interpretations reasonable; summary judgment improper |
| Is the Agreement ambiguous about remedies? | Ambiguity supports extrinsic evidence to interpret remedies | Agreement language is unambiguous about sole remedy | Agreement is ambiguous; extrinsic evidence may resolve remedy interpretation |
| Was summary judgment proper on Athenian’s money-damages claim? | Court should interpret remedies to allow damages | Ambiguity precludes granting summary judgment | Summary judgment improper; must be resolved at trial with extrinsic evidence |
| Impact of fee award if judgment is reversed | Fees tied to enforcement of Term Sheet; reversal requires remand | Fees should stand or be reconsidered after reversal | Remand of attorney’s fees required |
Key Cases Cited
- Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228 (Del.1997) (ambiguity; extrinsic evidence may be used in interpretation)
- Motorola, Inc. v. Amkor Technology, Inc., 958 A.2d 852 (Del.2008) (summary judgment inappropriate where contract language is ambiguous)
- United Rentals, Inc. v. RAM Holdings, Inc., 937 A.2d 810 (Del.Ch.2007) (contract interpretation; ambiguity governs whether summary judgment is proper)
- Paul v. Deloitte & Touche, LLP, 974 A.2d 140 (Del.2009) (citing contract-interpretation standards and summary judgment)