Olson v. UBAE, S.P.A.
703 F. App'x 46
| 2d Cir. | 2017Background
- Plaintiffs (Olson et al.) and UBAE entered a settlement releasing UBAE from liability "arising out of or related to the Plaintiffs’ Direct Claims against UBAE" and limiting any future claims regarding the Remaining Assets to "turnover only."
- The Direct Claims targeted approximately $250 million in assets transferred to UBAE; plaintiffs later asserted fraudulent conveyance claims seeking to unwind a larger set of transfers involving roughly $1.68 billion (and related transfers totaling $4.627 billion).
- The district court held the settlement unambiguously barred plaintiffs’ fraudulent conveyance claims, dismissed those claims, and awarded UBAE attorneys’ fees under the agreement’s fee-shifting provision for enforcement actions.
- Plaintiffs appealed the dismissal and fee award; UBAE cross-appealed the judgment. The Second Circuit reviewed whether the settlement unambiguously foreclosed the fraudulent conveyance claims.
- The Second Circuit found the settlement ambiguous in two respects (the scope of "turnover" and the meaning of "related to the Plaintiffs’ Direct Claims") and vacated the district court’s judgment, remanding for consideration of extrinsic evidence. UBAE’s cross-appeal was dismissed as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs’ fraudulent conveyance claims are preserved by the agreement’s limitation to "turnover only" | "Turnover" should be read to include fraudulent conveyance claims (so claims preserved) | "Turnover" excludes fraudulent conveyance claims; those claims were waived | Ambiguous: agreement’s text and surrounding law do not clearly resolve whether "turnover" encompasses fraudulent conveyance claims; remand for extrinsic evidence |
| Whether claims are barred as "related to the Plaintiffs' Direct Claims against UBAE" | "Related to" should be read narrowly to mean claims seeking the same $250M assets, so fraudulent conveyance claims are not barred | "Related to" should be read broadly to cover claims seeking recovery of any portion of the larger transfers (including the asserted fraudulent conveyance claims) | Ambiguous: "related to" is susceptible to competing reasonable interpretations; remand for extrinsic evidence |
Key Cases Cited
- Law Debenture Trust Co. of N.Y. v. Maverick Tube Corp., 595 F.3d 458 (2d Cir. 2010) (contract ambiguity standard and use of extrinsic evidence to resolve ambiguity)
- Mitchell v. Garrison Protective Servs., Inc., 819 F.3d 636 (2d Cir. 2016) (describing turnover proceedings as a mechanism to attack fraudulent conveyances under CPLR provisions)
- In re Peltz, 263 B.R. 721 (S.D.N.Y. 2001) (distinguishing turnover claims from fraudulent conveyance claims in bankruptcy context)
- Bank Markazi v. Peterson, 136 S. Ct. 1310 (2016) (procedural history relevant to the underlying actions resolved by the settlement)