Matsumura Ex Rel. Cutler v. Benihana National Corp.
465 F. App'x 23
2d Cir.2012Background
- Matsumura and Milner founded Haru; Haru later acquired by BNC with 80%/20% split, and put option retained by plaintiffs.
- SHA provided Put Price formula based on Consolidated Cash Flow and Debt, with GAAP for calculation; merger clauses in SPA and SHA.
- BNC shifted the Haru acquisition costs onto Haru as interdepartmental debt; plaintiffs disputed the treatment in 2005–2006.
- Plaintiffs exercised put option in 2005; BNC calculated about $3.718 million due, but shares were not tendered due to dispute.
- District Court granted partial summary judgment to BNC on contract and fiduciary claims, denied prejudgment interest; case appealed.
- Appellate court affirmed in part, vacated in part, and remanded for further proceedings consistent with its order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether push-down of the acquisition price breached the SPA | Matsumura argues purchase price was not debt; inclusion breached 11.1. | BNC contends SHA allows push-down of indebtedness, including purchase price, to Haru. | Purchase price push-down supported; no breach under SPA 11.1. |
| Whether including ordinary-course accounts payable as interdepartmental debt breached the SHA | Accounts payable in ordinary course should be excluded from debt under SHA. | SHA contemplated intercompany debt including certain items; inclusion appropriate. | Remanded to determine if ordinary-course payables were canceled by upstream revenue; not decided. |
| Whether plaintiffs’ implied covenant claim is duplicative of contract/fiduciary claims | Good faith/fair dealing implied covenant breached by BNC’s conduct. | No separate claim; contract claim suffices. | Duplicative; properly dismissed. |
| Whether BNC breached fiduciary duty to Haru’s minority shareholders | Push-down harmed minority shareholders to benefit BNC. | Under Delaware law, contract obligations foreclose fiduciary claims arising from same facts. | Breach of fiduciary duty foreclosed; claim dismissed. |
| Whether prejudgment interest should be awarded | Put Price breach entitled to prejudgment interest as a matter of right. | Put Price due only upon closing after mutual determination; no prejudgment interest. | Prejudgment interest denied. |
Key Cases Cited
- Nemec v. Shrader, 991 A.2d 1120 (Del. 2010) (contract-based fiduciary duties foreclosed by contract terms)
- Blue Chip Capital Fund II Ltd. P’ship v. Tubergen, 906 A.2d 827 (Del. Ch. 2006) (implied covenant duties duplicative of contract claims)
- Adkins v. Gen. Motors Corp., 170 F. App’x 184 (2d Cir. 2006) (summary order; implied covenant under NY law)
- Walton v. Morgan Stanley & Co., 623 F.2d 796 (2d Cir. 1980) (choice of law in fiduciary-duty context)
- New England Ins. Co. v. Healthcare Underwriters Mut. Ins. Co., 352 F.3d 599 (2d Cir. 2003) (prejudgment interest as matter of right under NY law)
- Spodek v. Park Prop. Dev. Assocs., 96 N.Y.2d 577 (2001) (prejudgment interest availability under CPLR 5001)