289 F. Supp. 3d 446
S.D. Ill.2018Background
- The parties entered a settlement (so-ordered May 15, 2017) resolving a civil forfeiture action arising from alleged proceeds of a Russian tax-fraud scheme; Prevezon agreed to pay $5.9 million as part of the settlement.
- The Amended Protective Order included a €~3 million receivable owed to Prevezon by AFI Europe N.V. (the "AFI Europe Debt"), which U.S. authorities had asked the Netherlands to restrain (the "US Restraint").
- The Settlement Agreement required the U.S. to inform the Netherlands of the settlement, withdraw its request to restrain the AFI Europe Debt, and request that the Netherlands lift the restraint; it made Prevezon’s $5.9 million payment due within 15 business days of the AFI Europe Debt’s "release by the Government of the Netherlands."
- The U.S. informed the Netherlands and requested lifting of the US Restraint; on October 10, 2017, the Netherlands lifted the US Restraint but immediately seized the same asset under its own investigation, so the AFI Europe Debt remained frozen under Dutch restraint.
- The Government contends it satisfied its obligations when the Netherlands lifted the US Restraint; Prevezon refused to pay, arguing the asset was never truly "released" because it remained encumbered by the Netherlands’ new restraint.
- Court held the Settlement Agreement unambiguous: "release" referred only to the lifting of the US Restraint (which occurred), granted the Government’s motion to enforce, denied Prevezon’s discovery request, and awarded prejudgment interest from October 31, 2017.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "release by the Government of the Netherlands of the AFI Europe Debt" required the asset to be free of all restraints before Prevezon’s payment obligation triggered | "Release" must mean the AFI Debt be fully free and accessible (no third‑party or Dutch restraint) before payment is due | "Release" means the Netherlands lift the restraint imposed at the U.S. request (the US Restraint); U.S. satisfied that obligation | Court: unambiguous that "release" refers only to removal of the US Restraint; payment obligation triggered after Netherlands lifted the US Restraint |
| Whether extrinsic evidence or negotiation history may be used to interpret the settlement | Prevezon: consider business purpose and risk allocation (avoid paying if asset remains encumbered) | Government: contract is unambiguous; no extrinsic evidence needed | Court: contract unambiguous; read clauses together; no need for extrinsic evidence |
| Whether Government acted in bad faith or obstructed release (warranting discovery into breach of covenant of good faith) | Prevezon: Government cooperated with Dutch authorities and may have helped engineer a Dutch re‑seizure to frustrate settlement | Government: cooperation was routine, provided non‑confidential info, and had no duty to disclose investigative cooperation; officials presumed to act in good faith | Court: allegations are speculative; insufficient clear and convincing evidence of bad faith; discovery denied |
| Whether prejudgment interest accrues and from what date | — | Government: interest from date payment became due (October 31, 2017) | Court: award prejudgment interest under New York law at 9% p.a., computed from October 31, 2017 |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (federal courts may enforce settlement agreements as contracts)
- Hendrickson v. United States, 791 F.3d 354 (settlement‑enforcement treated as contract‑breach claim)
- Lockheed Martin Corp. v. Retail Holdings, N.V., 639 F.3d 63 (contract interpretation — ambiguity is a question of law)
- Topps Co., Inc. v. Cadbury Stani S.A.I.C., 526 F.3d 63 (ambiguity: objectively reasonable alternative meaning required)
- Chesapeake Energy Corp. v. Bank of N.Y. Mellon Trust Co., N.A., 773 F.3d 110 (definition of unambiguous contract language)