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State Court finds that Private Placement Memorandum does not Warrant Summary Judgment

28 Jul 2011
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By Lewis Tesser, Partner, and Timothy Nolen, Associate, of Tesser, Ryan & Rochman, LLP

A recent New York County Supreme Court decision demonstrates the high threshold a plaintiff must meet to obtain summary judgment based on a “written instrument for the payment of money.” The litigation concerned issues of business law and civil procedure.

The case, Scheck v. Barbarian Films, LLC, 2011 N.Y. Misc. LEXIS 3282, No. 103918-2010 (Sup. Ct. N.Y. County, July 1, 2011), involved a private placement memorandum which the plaintiff argued reflected an unconditional obligation to pay money. However, the memorandum stated that, “[i]f the Redemption Amount… is or would be less than $500,000, the Manager in the Manager’s sole discretion may reject the Redemption Notice.” Because of this language, Justice James found that the memorandum and the emails modifying it were not an “unconditional instrument evidencing an obligation to pay a sum at a certain time.”

Scheck reflects the manner in which New York courts closely examine the language of such documents when parties move for summary judgment. There, a close reading of the memorandum shows that the Manager’s reservation of discretion undermined the “unconditional” nature of the instrument.

The attorneys at Tesser, Ryan & Rochman have years of experience handling business and shareholder disputes. Our experience allows us to advise clients concerning effective litigation strategy.

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About Post Author

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Lewis Tesser is a senior partner in the New York law firm of Tesser, Ryan & Rochman, LLP, concentrating his practice in litigation and mediation, representing licensed professionals and professional practices, administrative law and commercial law. Lew Tesser is Vice-President of the New York County Lawyers’ Association and Director of its Ethics Institute. Prior to private practice, Mr. Tesser was an Assistant United States Attorney in the Eastern District of New York. In that capacity, he represented various agencies of the United States government in litigation in the United States District Court and United States Court of Appeals. Mr. Tesser also served as a Judge Advocate in the United States Army where he prosecuted and defended criminal cases and was the chief legal advisor to the Commanding General of the U.S. Army War College, Carlisle, Pennsylvania. He also has served as an Arbitrator for the American Arbitration Association, New York City Civil Court, a Judge for the Environmental Control Board of the City of New York and a lecturer for various Bar Associations and New York area law schools. Mr. Tesser, who was admitted to practice in 1971, is a 1970 Honors graduate from the National Law Center, George Washington University, a Masters graduate from the Wharton Business School, University of Pennsylvania (l974) and a graduate of the Harvard Law School Program of Instruction for Lawyers. He is a past President of Congregation Sons of Israel, Nyack, NY. Publications and Speaking Engagements Editor-In-Chief, “The New York Rules of Professional Conduct Annotated”, Oxford University Press, New York, 2010. A complete list of Mr. Tesser’s speaking engagements and publications is available if you would like to learn more about Mr. Tesser’s work. Representative Cases In Re Zhang, 376 Fed. Appx. 104 (2d Cir. 2010) Continental Casualty Co. v. JBS Construct. Mgmt., 2010 U.S. Dist. LEXIS 85467 (S.D.N.Y. 2010)

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Tesser, Ryan, & Rochman Blog

At Tesser, Ryan, & Rochman we are committed to keeping current, former, and future clients up to date. Here on our blog we will have news regarding our firm, as well as business analysis, various cases, case studies, and legal findings for the benefit of our clients.