Highland Capital Management, L.P. v. Bank of America, 698 F.3d 202

Background

Highland appeals district court 12(b)(6) dismissal of breach of contract and promissory estoppel claims against Bank of America.
Dec. 3, 2009 oral discussions allegedly created binding terms for the Regency Loan sale at 93.5% of par; later emails stated the deal was “subject to appropriate consents and documentation.”
Highland alleges the deal was governed by LSTA standard terms, which purportedly bound the parties to the material terms and to be legally bound upon reaching agreement.
Bank of America allegedly demanded non-industry terms after the oral agreement, contrary to the LSTA terms, leading Highland to sue July 27, 2010.
District court dismissed promissory estoppel claim and breach of contract claim; Highland appeals challenging both dismissals.
Court concludes promissory estoppel dismissal was proper, but breach of contract dismissal was improper and reverses/remands.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an oral contract was formed on December 3, 2009.	Highland asserts binding oral agreement on material terms, plus LSTA terms foreclosing non-industry terms.	BoA argues subject-to-consents/documentation shows no binding contract absent a writing.	Breach of contract claim survives; issue of intent to be bound is factual and cannot be resolved at this stage.
Whether Highland adequately pleaded promissory estoppel.	Highland relied reasonably on BoA’s promise to settle per telephonic/email confirmations.	No clear, unambiguous promise or adequate alleged reliance.	Promissory estoppel claim properly dismissed.
Impact of ‘subject to’ language on contract formation.	Subject-to language does not negate an intent to be bound where LSTA terms and past dealings indicate binding agreement.	Subject-to language signals future consents/documentation and lack of binding contract.	Rejects outright reliance on emails alone; intent remains ambiguous, but not dispositive at 12(b)(6).

Key Cases Cited

Four Seasons Hotels Ltd. v. Vinnik, 515 N.Y.S.2d 1 (N.Y. App. Div. 1987) (determines contract formation and intent for oral agreements under New York law)
Winston v. Mediafare Entm’t Corp., 777 F.2d 78 (2d Cir. 1985) (oral contracts may be binding when parties intend to be bound)
Powell v. Omnicom, 497 F.3d 124 (2d Cir. 2007) (test for binding intent when writing may not be required)
R.G. Grp., Inc. v. Horn & Hardart Co., 751 F.2d 69 (2d Cir. 1984) (interpretation of contracts where terms left for future agreement)
Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568 (2d Cir. 1993) (intent to be bound generally a question of fact; extrinsic evidence needed)
Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan, 7 F.3d 1091 (2d Cir. 1993) (meeting of minds and contract formation issues)
Seiden Assocs. v. ANC Holdings, Inc., 959 F.2d 425 (2d Cir. 1992) (ambiguity in communications requires fact-finder evaluation)
Har-Zvi v. City of New York, 932 N.Y.S.2d 217 (N.Y. App. Div. 2011) (intent may require totality of circumstances; not clearly negated by writings)
Metro. Life Ins. Co. v. RJR Nabisco Inc., 906 F.2d 884 (2d Cir. 1990) (unambiguous contract construction; reliance on extrinsic evidence varies by stage)
Red Oak Fund, L.P. v. MacKenzie Partners, Inc., 934 N.Y.S.2d 401 (N.Y. App. Div. 2011) (meeting of the minds cannot be resolved on pleadings alone)
Sabre v. Citigroup Global Mkts., Inc., 944 N.Y.S.2d 42 (N.Y. App. Div. 2012) (promissory estoppel and contract interplay; reliance elements)