13‐2346‐cv(L) Bild v. Weider v. Konig

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

1 At a stated term of the United States Court of Appeals for the Second 2 Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley 3 Square, in the City of New York, on the 23rd day of May, two thousand fourteen. 4 5 PRESENT: AMALYA L. KEARSE, 6 RAYMOND J. LOHIER, JR., 7 SUSAN L. CARNEY, 8 Circuit Judges. 9 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 10 RAFAEL BILD, 11 12 Plaintiff‐Appellee‐Cross‐Appellant‐ 13 Cross‐Appellee, 14 15 v. Nos. 13‐2346‐cv(L); 13‐2718 16 ‐cv(CON); 13‐2511‐cv(XAP); 17 13‐2778‐cv(XAP); 13‐2990‐cv 18 (XAP) 19 ABRAHAM WEIDER, 20 21 Defendant‐Cross‐Defendant‐ 22 Appellant, 23 24 v. 25 26 MICHAEL KONIG, 1 2 Defendant‐Cross‐Claimant‐ 3 Cross‐Appellee‐Cross‐Appellant.* 4 5 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 6 7 FOR APPELLEE‐CROSS‐ 8 APPELLANT‐CROSS‐ 9 APPELLEE BILD: JONATHAN E. MINSKER, Sarmad M. 10 Khojasteh, Kasowitz, Benson, Torres & 11 Friedman LLP, New York, NY (Daniel K. 12 Bandklayder, Miami, FL, on the brief). 13 14 FOR APPELLANT 15 WEIDER: SUSAN GAIL KELLMAN, ESQ., Brooklyn, NY 16 (Joseph Zelmanovitz, Stahl & Zelmanovitz, 17 New York, NY, on the brief). 18 19 FOR CROSS‐APPELLEE‐ 20 CROSS‐APPELLANT 21 KONIG: SETH EISENBERGER, ESQ., Brooklyn, NY 22 (Frederick R. Gruen, Gruen & Goldstein, 23 Union, NJ, on the brief). 24 25 Appeals from a judgment of the United States District Court for the 26 Eastern District of New York (Allyne R. Ross, Judge). 27 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, 28 AND DECREED that the judgment of the District Court is AFFIRMED in part 29 and VACATED and REMANDED in part. 30 Appellant Abraham Weider appeals from (1) a May 15, 2013 opinion and 31 order in which the District Court concluded that equitable estoppel prevented 32 Weider from asserting a statute of limitations defense to Rafael Bild’s claims

The Clerk of the Court is directed to amend the caption of this case as set forth *

above. 2 1 stemming from a 1998 loan from Bild to Weider, and (2) a June 20, 2013 opinion 2 and order holding that Bild was entitled to annual interest payments following 3 acceleration of the debt as well as prejudgment interest on those interest 4 payments. Appellee‐cross‐appellant‐cross‐appellee Bild appeals from the 5 District Court’s February 25, 2013 grant of summary judgment in favor of 6 defendant Michael Konig, in which the District Court held that no reasonable 7 factfinder could conclude that Bild learned of a March 2007 agreement between 8 Weider and Konig before it was superseded by a May 2007 agreement. In his 9 conditional cross‐appeal, Konig argues that Bild was not a third‐party 10 beneficiary of the March 2007 agreement. We assume the parties’ familiarity 11 with the facts and record of the prior proceedings, to which we refer only as 12 necessary to explain our decision to affirm in part and vacate and remand in 13 part. 14 1. Weider’s Appeal 15 Weider contends that he should not be equitably estopped from arguing 16 that Bild’s claims with respect to the 1998 loan are time barred. “Under New 17 York law, the elements of equitable estoppel are with respect to the party 18 estopped: (1) conduct which amounts to a false representation or concealment of 19 material facts; (2) intention that such conduct will be acted upon by the other 20 party; and (3) knowledge of the real facts. The parties asserting estoppel must 21 show with respect to themselves: (1) lack of knowledge and of the means of 22 knowledge of the true facts; (2) reliance upon the conduct of the party to be 23 estopped; and (3) prejudicial changes in their positions.” In re Vebeliunas, 332

, 93‐94 (2d Cir. 2003). In advancing this argument Weider challenges the 25 District Court’s detailed factual findings, made after a two‐day bench trial, that 26 Weider intentionally and repeatedly made false statements reassuring Bild that

3 1 the loan would be repaid in order to dissuade Bild from commencing legal 2 action, and that Bild relied on those statements. We are not allowed to second‐ 3 guess the factfinder’s credibility assessments, and “[w]here there are two 4 permissible views of the evidence, the factfinder’s choice between them cannot 5 be clearly erroneous.” Anderson v. Bessemer City,

, 573‐74 (1985). 6 We identify no clear error with respect to those findings. We also agree with the 7 District Court that the “unclean hands” doctrine does not bar the application of 8 equitable estoppel because Bild’s alleged “unconscionable act” of tax avoidance 9 did not injure Weider. See PenneCom B.V. v. Merrill Lynch & Co., Inc.,

(2d Cir. 2004). 11 Weider also attacks the ruling after trial by arguing that the District Court 12 abused its discretion in denying Weider’s speculative discovery request for Bild’s 13 post‐1999 tax records and in precluding privileged testimony from Bild’s 14 attorney. We reject these arguments for substantially the reasons set forth in the 15 District Court’s order dated April 6, 2012 and its ruling on motions in limine at 16 the April 10, 2013 hearing. 17 Weider next argues that the District Court erred in awarding Bild interest 18 payments after the debt’s acceleration in 2003 and in awarding prejudgment 19 interest on those payments. Weider’s arguments are foreclosed by NML Capital 20 v. Republic of Argentina,

(2011), in which the New York Court of 21 Appeals held that language in a contract establishing specific dates for 22 continuing interest payments until the loan is repaid provides the lender a right 23 to interest payments post‐acceleration as well as the corresponding prejudgment 24 interest on those payments.

. 25 Accordingly, we affirm the District Court’s judgment with respect to 26 Weider.

4 1 2. Bild’s Cross‐Appeal 2 On cross‐appeal, Bild argues that the District Court erred in granting 3 summary judgment in Konig’s favor. We agree. The District Court held that no 4 reasonable factfinder could conclude that Bild learned of a March 2007 5 agreement between Weider and Konig prior to a superseding May 2007 6 agreement. On appeal, both parties embrace the general legal principle, reflected 7 in the Restatement [Second] of Contracts, that the power to “discharge or 8 modify” an agreement “terminates when the beneficiary, before he receives 9 notification of the discharge or modification, materially changes his position in 10 justifiable reliance on the promise or brings suit on it or manifests assent to it at 11 the request of the promisor or promisee.” Restatement [Second] of Contracts 12 §§ 311(2), (3). It is true that during his deposition in discovery Bild initially 13 testified that he could not remember the year in which he learned of the March 14 2007 agreement. But after being shown the agreement, Bild testified that he 15 learned of the agreement “near” March 2007. Drawing all factual inferences in 16 favor of Bild, Steel Inst. of New York v. City of New York,

(2d Cir. 17 2013), a reasonable factfinder could credit Bild’s testimony and also find that the 18 term “near” means fewer than seven weeks (and therefore before the May 2007 19 agreement). “A factfinder of course would not be required to draw inferences 20 favorable to [Bild]; however, where . . . the factfinder would be permitted to do 21 so, this Court in reviewing summary judgment must do so,” Stern v. Trustees of 22 Columbia Univ.,

, 313‐14 (2d Cir. 1997), as must the District Court in 23 ruling on a summary judgment motion, see

. In opposing Bild’s cross‐ 24 appeal, Konig argues that we may nevertheless affirm on the ground that the 25 March 2007 agreement was unenforceable because Weider never signed it. The 26 record prevents us from affirming on that basis. Abraham Roth, an arbitrator,

5 1 testified that he received signed copies of the agreement from both Weider and 2 Konig. If credited, his testimony would support a reasonable factfinder’s 3 conclusion that Weider and Konig entered into the March 2007 agreement. See 4 Rule v. Brine, Inc.,

(2d Cir. 1996). 5 3. Konig’s Conditional Cross‐Appeal 6 As part of his conditional cross‐appeal, Konig also argues that Bild was not 7 a third‐party beneficiary of the March 2007 agreement. The March 2007 8 agreement states: “W[ei]der and Konig both acknowledge the outstanding loan 9 given by [Bild] . . . for [$3 million]. . . . Konig agrees to fully satisfy the [$3 10 million] outstanding loan.” Ordinarily, such a “contractual requirement that the 11 promisor render performance directly to the third party shows an intent to 12 benefit the third party.” Subaru Distributors Corp. v. Subaru of Am., Inc., 425

(2d Cir. 2005). Konig has cited no authority to support his 14 arguments that the incorporation of a confidentiality clause or the existence of an 15 inurement clause alone operates to preclude third‐party beneficiary status in 16 these circumstances. See Bayerische Landesbank, N.Y. Branch v. Aladdin Capital 17 Mgmt. LLC,

, 53‐55 (2d Cir. 2012) (concluding that parties to a 18 contract requiring defendant to manage funds in favor of noteholders plausibly 19 intended that the contract benefit the third‐party noteholders where the 20 beneficiaries clause did not “unambiguously exclude[] any intent to benefit the 21 [n]oteholders”). Konig is free to make such an argument, citing authority, in the 22 proceedings on remand. 23 Accordingly, we vacate the District Court’s judgment with respect to 24 Konig and remand for proceedings consistent with this order. This order does 25 not foreclose the possibility that the District Court may grant summary judgment 26 in favor of Konig on a basis other than failure to adduce any proof of reliance.

6 1 We have considered the remaining arguments by Weider and Konig on 2 appeal and conclude that they are without merit. For the foregoing reasons, the 3 judgment of the District Court is AFFIRMED with respect to Weider and 4 VACATED and REMANDED with respect to the grant of summary judgment in 5 Konig’s favor. Costs are awarded to Bild against Weider on the appeals by 6 Weider. As to the cross‐appeal by Bild and the conditional cross‐appeal by 7 Konig, no costs are awarded at this time. Following adjudication of the merits of 8 Bild’s claim against Konig, the District Court may award the prevailing party the 9 costs of these cross‐appeals. 10 11 FOR THE COURT: 12 Catherine O=Hagan Wolfe, Clerk of Court 13

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