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Mediation/settlement talks take place simultaneously with the advancement of litigation.
Yet another false assertion you have made.
My “pump” for the day. GDSI close at .0170.
GL
“A granting of any one of Rontan's MSJ's will end the litigation.” (Quoted from your post)
This is 100% incorrect. Only a granting of one specific MSJ would end the litigation. None of the others would achieve this outcome. The Partial MSJ would not. And neither would any of the MSJ filed by Rontan/Bolzan’s.
While I have not read every word of all the MSJs including the one by GDSI (motions only present one side of an argument). I would be very surprised if any of them carry enough legal weight to end the litigation completely.
Judge will hear the motion with its responses and move ( make a ruling).
Just like the motion to seal. Rontans MSJs appear to cite a good deal of case law that is not relevant or germane to this litigation. We shall see how that turn out when the Judge moves ( issues a ruling/order) on these motions.
It’s rubbish because ;
Rontan cites case law that is not germane to this litigation.
And I can cherry pick depositions all day to support whichever side I want. Lots of Depositions are shown to be factually incorrect when subjected to cross examination.
What are you talking about??
I didn’t say anything about GDSIs MSJ.
This is pure rubbish.
Those are not facts. A motion is an argument based on what you think is relevant. It’s only one side of the issue. The judge will look at both the motion and the response and make a ruling that settles the facts.
MOTIONS ARE NOT FACTS!
This is all rubbish with zero basis in fact or law.
The only part correct here is that we have no idea how the judge will rule on motions.
It’s a jury(trial begins first week of Dec) or Mediation/settlement scheduled for Nov 7th that will decide.
There is obviously settlement talks going on or there would have been no reason to get an extension for the mediation date. They would have simply told the judge that mediation had failed and moved on to the trial.
Incorrect. Only a granting of the MSJ by “Rontan” would end the litigation.
The ones filled by individuals and the partial MSJ would only limit their exposure to the litigation not end it.
Settlements or judgements can vary greatly.
I have seen judgements for as little as $1.
As far as this case goes the best I can do is calculate that each $6m of settlement would represent about .009-.01 in share price.
If you search through the board you will find estimates range from $3.5m- $150m
The short version is that GDSI (purchaser) is suing Rontan (seller) for failure to perform under a Purchase Agreement. There are several links to the complaint throughout the board and in the “stickie” section at the top of this forum.
GL
For the trial yes. I don’t recall any changes to the Dec trial date.
On the other hand the date for Mediation was moved from Oct 10th to Nov 7th.
It’s been stated that there is some false claim regarding the MSJ. So let’s examine what effect that might have on the overall picture here
First claim; MSJ was denied “at this time” without prejudice.
This claim also notes that the actions required to fix the issues with the MSJ were indeed fixed and that the MSJ then survives.
Short version. MSJ continues as though the motion had never been “denied without prejudice” in the first place. No change to the case at all.
Second claim; MSJ was not denied without prejudice.
Same outcome. No changes to the case at all.
This being said. I’m done discussing the MSJ until such time as a new ruling is made on the matter.
Hope this puts this in perspective for everyone. It’s hard to do a so called “P&D” when there is literally no effect to the proceeding either way you read the ruling.
It’s going to move around. This particular equity appears to be very tightly held so small transaction have a big effect on its pps.
GL
What “false claims”?
DE (114) with the complete ruling by the Judge explicitly refutes your assertion. The Motion to seal is directly relevant to the MSJ. Motion to seal does not exist but for the MSJ. Your interpretation is in error.
Correct. They presented the required exhibits that the judge instructed them to submit in the time frame he ordered them to present them when he issued the order that included a denial “at this time”
without prejudice.
Exact same ruling “without Prejudice” as he ruled on Rontans MTD. Issues were fixed.
In the case of the MTD there was an amended statements of claim along with the complete original complaint to “fix” the issue.
In the case of the motion to seal/MSJ. If they had not “fixed” the issue of no exhibits being attached with the motion, which is expressly discussed in the judges ruling to deny without prejudice. (114 9/27/2019). The motion to seal is denied without prejudice. Unless the parties come to some agreement on the exhibits not submitted on 9/30/2019 that will allow the judge to move ( make a ruling) this motion will not survive. (114 9/27/2019)
The motion to seal is germane to the MSJ. The MSJ could not move forward without the exhibits that Rontan was trying to seal. This is clearly stated in the ruling (114). In the paragraph that begins ..... “On September 12, Defendants filed a motion for Partial Summary Judgement (94) defendants did not attach any of the exhibits referenced...........” (there, the MSJ “words” are in the ruling) Also in the paragraph immediately following are the “words” “at this time I will deny the Motion” ( your claim that these words are not found in the ruling is false) and then further defines the issues and remedies to “fix” the issues associated with the motion to Seal (109) and the subject matter of the motion to seal—the partial summary judgement motion (94)
Judges do not insert other motions into ruling unless they are Germane to each other. His comments and ruling clearly state the relation of the Motion to seal and the motion for partial summary judgement by extension a denial of the motion to seal denies the MSJ “at this time” the judge even reiterated the connection in the final paragraph of his ruling and then again by Order @ 4.
You claim a pump and dump here, I am asking you what it is since you keep bringing it up. What is your evidence?
What is the “Pump” you keep talking about?
I never typed the information you are using as a quote from me.
.......MSJ denied “at this time”..... Is what I posted.
Not “MSJ denied at this time”.
So it’s logical that something I didn’t say would not be found in a document I did not quote as such.
The short version is that because the MSJ like the original complaint by GDSI, now referenced as the FAC, Were fixed. They Survive because the issues raised by the judge in his ruling “without prejudice “were fixed. The exhibits referenced in the motion to seal are not in the filing. Which is correct and as instructed by the judge.
Basically the issues go forward as if nothing has happened.
Motion to seal denied 114 has the following information.
Motion for sealing documents denied without prejudice. MSJ denied “at this time”. Rontan was instructed to file their exhibits in support of the MSJ by 9/30/2019 without the 3 documents that are the subject of the motion to seal.
Rontan fulfilled the obligation under the denial without prejudice with the filing of exhibits on 9/30/2019.
As was the case with the MTD and FAC ( the complaint), The MSJ moves on and will be decided later.
GLOBAL DIGITAL SOLUTIONS, INC.,
Plaintiff, vs.
GRUPO RONTAN ELECTRO METALURGICA, S.A., JOAO ALBERTO BOLZAN, and
JOSE CARLOS BOLZAN,
Defendants.
/
______________________________________________
PLAINTIFF’S MEMORANDUM OF LAW IN OPPOSITION TO MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE ISSUE OF LIQUIDATED DAMAGES UNDER COUNT I AND MOTION FOR SUMMARY JUDGMENT ON COUNT II FOR SPECIFIC PERFORMANCE
Plaintiff Global Digital Solutions, Inc. (“GDSI”) submits this memorandum of law in opposition to the Defendants’ “Motion for Partial Summary Judgment on the Issue of Liquidated Damages under Count I and Motion for Summary Judgment on Count II for Specific Performance” (“Motion”).
INTRODUCTION
The Motion widely misses the mark with respect to both of the grounds upon which it seeks summary judgment. First, the assertion that the Break-Up Fee in the Stock Purchase Agreement (“SPA”)1 constitutes an impermissible liquidated damages clause ignores the very nature of the provision. Unlike a liquidated damages clause—which by definition requires a breach of contract by the party against which the liquidated damages will be assessed—a breakup fee provision such as the
one in the SPA comes into play only in defined circumstances where a party walks away from an agreement without otherwise breaching it.
The Break-Up Fee was negotiated at arms’ length to address losses (such as opportunity costs) resulting from such a walk-away. It is not a liquidated damages provision and, thus, is entirely proper.
Second, the argument that the SPA cannot be specifically enforced because damages are an adequate remedy simply ignores the well-established law of Florida that, in circumstances involving closely-held corporations with no market valuation for their shares, just as is the case with Rontan, specific performance is an available remedy. That is all the more so when the stock sale at issue presented GDSI with the unique opportunity to own and operate Rontan, with the aim of increasing Rontan’s dominance into the North American market. Even more compelling is the fact that the SPA itself acknowledges that it may be subject to specific performance. Specific performance under these circumstances is unquestionably proper under Florida law.
ARGUMENT I. THE BREAK-UP FEE IS ENFORCEABLE
Defendants assert the Break-Up Fee in Section 9.2 constitutes an unlawful liquidated damages provision.
Their argument completely misses the mark.
Section 9.2. of the SPA, entitled “Effect of Termination,” provides for a “Break-Up Fee” in the following circumstances:
9.2. Effect of Termination.
9.2.1. If the Closing of the Transaction does not occur by reason of (i) the Sellers or Rontan consummating an Alternative Transaction or (ii) the Sellers terminating this Agreement without good reason, the Sellers shall, jointly and severally, on the closing date of such Alternative Transaction, pay to the Purchaser in immediately available funds an amount equal to fifteen percent (15%) of the sum of the following (a) the aggregate Purchase Price, plus (b) the Amount of Indebtedness of Rontan at the date of closing of the Alternative Transaction or termination, as the case may be, plus (c) the fair market value of the property identified in Disclosure Schedule 5.9.
It is a fundamental notion that liquidated damages are payable only in the event of breach of contract. The break-up fee in section 9.2 is not a liquidated damages provision because it is not predicated on a breach of the SPA. Instead, the break-up fee in the SPA is a traditional termination fee, which is payable even without a breach of the agreement.
Defendants build their entire argument by conflating two completely unrelated provisions of the SPA: (a) Section 9.2, which provides for payment of a termination fee even in the absence of a breach, and (b) Section 10.7, which spells the remedies out the available remedies in the event of breach. “Indeed, there is no reference in [Section 9.2] to damages, much less to liquidated damages.”
Anesthesia Healthcare Partners, Inc., v. Anesthesia Healthcare Solutions of North Florida, LLC, 2012 WL 13024036 at n.17 (N.D. Fla. 2012) (applying Georgia law).
The Defendants’ tortured reading of the SPA must be rejected and their motion for partial summary judgment denied.
A. The Break-Up Fee is not “Liquidated Damages” because it is payable where there is a “termination” without breach.
“In Florida, the law is well-settled that the parties to a contract may agree in advance on an amount to be paid or retained as liquidated damages if the contract is breached.”
Mineo v. Lakeside Village of Davie, LLC, 983 So.2d 20, 21 (Fla. 3d DCA 2008) (emphasis added) (citing Poinsettia Dairy Prods. v. Wessel Co., 123 Fla. 120, 166 So. 306, 309 (1936); S. Menhaden Co. v. How, 71 Fla. 128, 70 So. 1000, 1004 (1916)). In other words, liquidated damages are payable only in the event of a breach of contract.
Lefemine v. Baron, 573 So.2d 326, 328 (Fla. 1991)
In addition to the Break-Up Fee, the Sellers shall also pay the Purchaser’s actual costs and expenses (including reasonable legal fees) in connection with the negotiation, preparation, execution and delivery of this Agreement ....”It
is well settled that in Florida the parties to a contract may stipulate in advance to an amount to be paid or retained as liquidated damages in the event of a breach.”) (emphasis added).
While this proposition seems obvious, the necessary corollary to this rule is dispositive of the Defendants’ motion for summary judgment: A termination fee in a merger agreement is not a form of “liquidated damages” where the fee is payable without a breach. See
St. Jude Med., Inc. v. Medtronic, Inc., 536 N.W.2d 24, 28 (Minn.Ct.App.1995) (“A liquidated damages analysis is inappropriate here, however, because this case lacks the breach of contract necessary to invoke such analysis.”); see also Anesthesia Healthcare Partners, Inc., 2012 WL 13024036 at n.17 (“In this case, there is no indication, in the language of the Physician Agreement or otherwise, that the parties intended the direct service provision to provide the measure of damages for a breach of the restrictive covenants. ... In fact, by its terms, the provision contemplates there being no breach and thus no presumed damages. ... The provision simply provides the defendants an optional means by which to avoid enforcement of the restrictive covenants.”) (emphasis added).
A plain reading of the SPA indicates that the Break-Up applies only where the Sellers have not breached the contract; thus, the court must look elsewhere in the contract (or under the common law) to determine GDSI’s remedies for breach of the SPA. First, the Break-Up Fee is found in a section of the SPA entitled “Effect of Termination.” It is not in a section on remedies for breach. Remedies for breach are set forth in Section 10.7:
Injunction. ...[I]n the event of a breach of any provision of this Agreement, the aggrieved party or parties may elect to institute and prosecute proceedings in any court of competent jurisdiction to enforce specific performance or to enjoin the continuing breach of such provision without the requirement of posting a bond, as well as to obtain damages for breach of this Agreement.……consummates an Alternative Transaction, and where the Seller terminates “without good reason.” As discussed below, the trigger for “termination without good reason” means termination without a prior breach by a party to the agreement.
B. Section 9.1.2 makes it clear that the Break-Up Fee Does Not Apply where the Seller has breached
The “Effect of Termination” provision in Section 9.2 must be read in tandem with Section 9.1, entitled “Methods of Termination.” As relevant, Section 9.1 provides for termination:
9.1.1 by mutual consent of the Purchaser and Seller;
9.1.2 by the Purchaser or the Sellers if the Transaction is not consummated within twenty days of the delivery of the Opinion; {{provided that if any party has breached or defaulted with respect to its obligations under this Agreement on or before such date, such party may not terminate this Agreement pursuant to this Section}} 9.1.3, and each other party to this Agreement may at its option enforce the rights against such breaching or defaulting party and seek any remedies against such party, in either case as provided hereunder;
***
9.1.4 By the Purchaser or the Sellers, as the case may be, if any condition to closing as identified in Section 3 above is not satisfied prior to the Closing Date; or
9.1.5. By the Purchaser if the Sellers or Rontan enter into an Alternative Transaction.
SPA § 9.1.2 (emphasis added). As this section of the SPA makes explicit, the “Methods of Termination” listed in Section 9 assume that there has been no prior breach by the
3 Section 10.7 is titled “Injunction.” The SPA does not contain a boilerplate “cumulative remedies” provision.
SPA § 10.7 (emphasis added).
Second, by its terms, the Break-Up Fee is payable in two circumstances: where the Seller
consummates an Alternative Transaction, and where the Seller terminates “without good reason.” As discussed below, the trigger for “termination without good reason” means termination without a prior breach by a party to the agreement.
Payment of the Break-Up Fee under section 9.2., therefore, sets forth the “Effect of Termination” without that prior breach.
As explained in the Declaration of Matthew Kelley, this reading is consistent with the traditional “breakup fee” included in a merger or acquisition agreement involving a public company, which is designed to give the parties the option to walk away from a deal upon payment of the fee. (Ex. A; Kelley Decl at ?7.) It is typically payable in circumstances in which there has been no breach of the merger agreement. (Id. at ?7 & ?8.) In other words, it is not designed to compensate a non-breaching party for a breach by the other party and, by definition, is not a liquidated damages provision. (Id.) This was exactly the intent of the parties in negotiating the Break-Up Fee in the SPA. (Id. at ?9.)
C. The “Alternative Performance” Doctrine further supports the argument that the Break-Up Fee is payable even without a prior breach
Florida courts have recognized the doctrine of alternative performance. See, e.g., Bradley v. Health Coalition, Inc., 687 So.2d 329 (Fla. 3d DCA 1997) (superseded by statute on other grounds). Other jurisdictions are in accord. E.g., Minnick v. Clearwire U.S. LLC, 174 Wash.2d 443, 275 P.3d 1127, 1135 (2012) (en banc) (early termination fee in contract was alternative performance provisions and not liquidated damages: “In an alternative contract where one of the alternatives is a sum of money, the promisee is entitled to the sum of money even though the other alternative may be less onerous to the promisor.”). A termination without breach—but “without good reason”—would include situations in which the Sellers acted for their own convenience or changed their minds. As one court observed, payment of a Break-Up Fee is a form of alternative performance, completely unrelated to the question of breach. See St. Jude, supra.
As discussed above, the Minnesota court of appeals in St. Jude Medical refused to classify a breakup-fee clause as a liquidated damages provision. Instead, the court upheld the breakup-fee under the contractual theory of alternative performance:
the parties have agreed that either one of the two alternative performances is to be given by the promisor and received by the promisee as the agreed exchange and equivalent for the return performance rendered by the promisee .... even though one of the alternative performances is the payment of a liquidated sum of money.
D. The Break-Up Fee is Reasonable
While cases analyzing the reasonableness of the amount of “liquidated damages” recoverable are not controlling, the break-up fee under Section 9.2 is reasonable even under that analytical framework.
First, the Break-Up Fee was negotiated at arm’s length. The Letter of Intent signed in September 2015 provided for 20% breakup fee. (Ex. B; RONTAN00001.) The parties then signed an Addendum to the LOI that negotiated the fee down to 10%. (Ex. C; RONTAN00008.) The Break-Up Fee was again negotiated before the execution of the SPA. (Ex. D; GDSI- 00005832.) GDSI’s vice president of merger and acquisitions sent an email to Rontan’s transaction counsel on the eve of the execution of the SPA, in which he explicitly referenced the concession GDSI had made to complete the deal, including an adjustment to the Break-Up Fee:
Honestly, we gave you everything you asked for ..... We came down on the breakup fee from 20% down to 15%.
The St. Jude court quoted from Professor Williston on alternative performance contracts as follows: “A contract may give an option to one or both parties to either perform a specified act or make a payment. Although this form of contract cannot be used as a cover for the enforcement of a penalty, if on a true interpretation, it appears that it was intended to give a real option, that is, that it was conceived possible that at the time fixed for performance, either alternative might prove the more desirable, the contract will be enforced according to its terms.” 14 Williston on Contracts § 42:10 (4th ed.2004).
536 N.W.2d at 28.
(Ex. D; GDSI-00005832.) The fact that the Break-Up Fee was so extensively negotiated, and that it figured so prominently in the final allocation of risks and rewards under the SPA, weighs heavily in favor of its reasonableness. See Brazen v. Bell Atlantic Corp., 695 A.2d 43, 48-49 (Del. 1997) (“arms-length negotiations” weighed in favor of enforcement of $550 million termination fee).
Second, GDSI’s lost opportunities weigh in favor of enforcement if the requirements of section 9 are met. Mr. Jose Bolzan (the majority shareholder of Rontan), Mr. Maxamiliano (Rontan’s Chief Executive Officer), and Mr. Goncalves (Rontan’s former CEO), all traveled to Palm Beach over a period of nine months to negotiate GDSI’s acquisition of Rontan. (Ex. E) (DE 27-1; Declaration of Ross Trevino at ?5 through ?23.) As early as January 6, 2015, Mr. Maxamiliano wrote to GDSI’s CEO stating that “I am deeply committed to make the transaction happen...” (Ex. F; GDSI-00001256.) In deposition, Mr. Bolzan testified that Maxamiliano was not actually the CEO of Rontan, but that the Defendants deliberately held out Mr. Maxamiliano as CEO in order to “impress investors” like GDSI:
Q. Mr. Bolzan, did Maximiliano serve as the chief executive officer of Rontan?
A. Not legally. In order to be a member of the board or occupy a senior position, this would have to be formalized in our Articles of Incorporation, which it was not. He asked to insert himself into this role in order to interest clients. In Brazil, he was never legally the CEO. He simply represented himself to be such in order to impress investors.
(Ex. G; Jose Bolzan Depo. 78:14 – 78:23) (emphasis added). GDSI was impressed. It relied on those representations and negotiated with Rontan for over fourteen months, from January 2015 to March 2016, foregoing the pursuit of other opportunities.
In essence, the Defendants ask this court to create a bright-line rule that invalidates breakup fees over a certain dollar amount. As noted above, this argument ignores the distinction between liquidate damages for breach of contract and a breakup fee that is payable even in the absence of breach. But it also ignores the business realities of breakup fees in modern day acquisitions. Even where the purchase price reaches into billions of dollars, it is now common in the merger context to see termination fees as high as twenty percent. For example:
• 2011 proposed merger of AT&T and T-Mobile. According to the stock purchase agreement filed by AT&T with the SEC, AT&T agreed to acquire T- Mobile USA from Deutsche Telekom AG for a purchase price of $39 billion. In the event that AT&T did not close on the acquisition of T-Mobile, Deutsche Telekom was entitled to a breakup fee of $3 billion and certain spectrum rights. (Ex. H.)5 After encountering opposition from regulatory authorities, in December of 2011 AT&T announced that it was abandoning its bid to take over T-Mobile. AT&T said that it would “recognize a pretax accounting charge of $4 billion”— which includes the $3 billion breakup fee as well as spectrum rights worth another $1 billion. See AT&T, Inc. Form 8K (Nov. 21, 2011). (Ex. I.) In other words, the termination fee represented more than 10 percent of the $39 billion purchase price.
• 2012 Google, Inc. acquisition of mobile telephone maker, Motorola Mobility Holdings Inc. The merger closed in May 12 for $12.5 billion. However, had the transaction not closed, the merger agreement provided that Motorola was entitled to a termination fee of $2.5 billion if Google did not close, representing 20 percent of the purchase price. (Ex. J.)6
Termination fees in the amount of ten- or fifteen-percent are not limited to mergers and acquisitions. E.g., IOTC Air, LLC v. Bombardier Inc., 2012 WL 13013072 (S.D. Fla. 2012) ($4.9 million aircraft acquisition contract providing for breakup fee of 10%). Even Congress, by statute, has recognized a 15% breakup fee as reasonable for breach of a contract in connection
5 Stock Purchase Agreement by and between Deutsche Telekom AG and AT&T Inc. (Mar. 20, 2011), available at http://sec.gov/Archives/edgar/data/732717/000119312511072458/dex21.htm. 6 Agreement and Plan of Merger by and among Google Inc., RB98 Inc. and Motorola Mobility Holdings, Inc. (Aug. 15, 2011), available at http://sec.gov/Archives/edgar/data/1495569/000119312511225797/dex21.Degirmenci v. Sapphire-Fort Lauderdale, LLLP, 642 F.Supp.2d 1344, 1348-49 (S.D. Fla. 2009) (discussing a seller’s obligation under 15 U.S.C. §1703(d)(3) to provide notice of a 15% breakup in the event of breach of purchase contract). Courts also have upheld termination fees not as a percentage of the deal in question, but as a percentage of a company’s total capitalization. Brazen v. Bell Atlantic Corp., 695 A.2d 43, 48-49 (Del. 1997) ($550 million termination fee was reasonable where it represented 2% of party’s market
in the event Rontan walked away from the transaction without breaching the SPA. It is not a
liquidated damages provision which, by definition, is predicated on a breach of the agreement.
II. GDSI IS ENTITLED TO SPECIFIC PERFORMANCE
As their second argument for partial summary judgment, defendants assert that the SPA does not “fall within the narrow band of types of contracts for which the case law permits specific performance.” (Motion at 14.) Contrary to defendants’ argument, Florida law specifically allows the remedy of specific performance when the subject of the contract is the acquisition of stock in a closely-held corporation, the shares of which are not traded and do not
have a readily ascertainable value on a public market, as is the case here.
The acquisition of a company, and the concomitant right to operate the business, present a unique opportunity that is subject to specific performance. See In re IBP, Inc. Shareholders Litigation, 789 A.2d 14, 82 (Del. Chancery 2001). Thus, where the stock sale would result not just in the acquisition of a mere interest in a company, but in the acquisition of the entire business, there exists “a unique, non-replicable business opportunity” that may be enforced by equitable remedies. See, e.g., Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153, 163 (3d Cir. 1999).
The fact that Rontan owns substantial real estate that would have been acquired by way of the stock sale further compels a finding that the acquisition presented a unique opportunity for GDSI and may be enforced through the remedy of specific performance. Keathley v. Larson, 348 So.2d 382, 384 (Fla. 2d DCA 1977). Despite the Defendants’ unsupported assertion to the contrary, (Motion at ?6), the acquisition included the transfer of “all real property owned, leased, [and] utilized in the conduct of Rontan’s Business,” (SPA § 5.9.) The exact real estate that
It is not disputed that Rontan is a closely-held corporation owned by the two Bolzan
brothers. (Rontan’s SUF at ¶ 2; Kelley Decl. at ¶ 10.) It is also not disputed that its shares are not traded publicly and that no value on a public market for the shares is readily available. (Kelley Decl. at ¶ 10.) Rontan is thus precisely the type of corporation with respect to which a share sale and purchase agreement such as the SPA may be subject to specific performance.
What is more, Rontan presented an opportunity for GDSI that it could not replicate. At the time
of the SPA, Rontan was the largest company of its kind in Latin America. (Rontan’s SUF at ¶ 3;
Kelley Decl. at ¶ 11.) GDSI intended that its acquisition of Rontan would allow it to expand its
business in the United States and beyond. (Kelley Decl. at ¶ 12.) The opportunity Rontan
presented GDSI was a unique one to use the combination of both companies to become one of
the largest players in the market for specialty vehicles not only Latin America and the United
States, but beyond. In re IBP, 789 A.2d at 83 (allowing specific performance because “the target
company is unique and will yield value of an unquantifiable nature, once combined with the acquiring company.
CONCLUSION
For the foregoing reasons, Defendants’ motion for partial summary judgment should be denied.
Dated: October 4, 2019 Respectfully submitted,
BOIES SCHILLER FLEXNER LLP
By: /s/ Carlos M. Sires Carlos M. Sires, Esq.
10 Further compelling denial of the Motion is the fact that section 10.7 of the SPA provides that “in the event of a breach of any provision of this Agreement, the aggrieved party or parties may elect to institute and prosecute proceedings in any court of competent jurisdiction to enforce specific performance or to enjoin the continuing breach of such provision without the requirement of posting a bond, as well as to obtain damages for breach of this Agreement.” Qantum Communications Corp. v. Star Broadcasting, Inc., 473 F.Supp.2d 1249, 1266 (S.D. Fla. 2007) (“Plaintiff is entitled to specific performance to enforce the agreement under the plain language of the Agreement.”)
(Florida Bar No. 319333)
James M. Grippando, Esq.
(Florida Bar No. 383015)
401 East Las Olas Blvd., Suite 1200 Fort Lauderdale, Florida 33301 Telephone: (954) 356-0011 Facsimile: (954) 356-0022 csires@bsfllp.com jgrippando@bsfllp.com
William A. Isaacson, Esq. (pro hac vice to be submitted) 5301 Wisconsin Avenue, NW Suite 800
Washington, DC 20015 Telephone: (202) 237-2727 Facsimile: (202) 237-6131 wisaacson@bsfllp.com
Attorneys for Global Digital Solutions, Inc.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on October 4, 2019, a true and correct copy of the foregoing document was served via the CM/ECF System to the following counsel of record: Carlos F. Osorio, Esq., (cosorio@osorioint.com), Warren Daniel Zuffuto, Esq., (dzaffuto@osirioint.com), Evelyn Barroso, Esq., (ebarroso@osorioint.com), Osorio International, P.A., 175 S.W. 7th Street, Suite 1900, Miami, FL 33130.
By: /s/ Carlos M. Sires Carlos M. Sires, Esq.
NOTE
I removed some case studies that were not needed to understand the nature of the argument. To understand this document you should first read the MSJ filed by Rontan which is available in numerous posts.
The tax issue is not a “legal tactic” it is a discovered malfeasance of the defendant(s).
Leverage to force mediation/settlement can come in any form.
Mediation is done outside the courts and is not bound by any legal standards normally associated with litigation. It is exactly what it says, Mediation, Two sides coming to an agreement on how to resolve an issue and end their dispute. The outcome of mediation is accepted as remedy for the legal proceedings.
Most mediation details and evidences used can be kept sealed since Mediation is not a public forum. This would be very enticing to the Bolzan’s if they intend to keep their financial shenanigans private and away from the Brazilian government and the public eye.
Rontans Motion to seal the records showing the alleged tax fraud was denied. Along with it, their MSJ was denied. They were given a very short period of time to refile/submit their exhibits. They did not submit the documents detailed in the motion to seal. As instructed, they filed the exhibits referenced in their MSJ less the 3 documents in question from the motion to seal.
As is the case with all motions denied or dismissed without prejudice a remedy is afforded and once take the issues is moot (no longer legally relevant)
Motions decided without prejudice and remedied:
GDSIs original complaint:
Original complaint is retained in its entirety and contained within the First Amended complaint, ( not “tossed”) amended to resolve the issues concerning the granting of Rontans MTD without prejudice. MTD is now moot.
Rontans motion to seal and MSJ denied without prejudice:
Motion to seal has not been amended.
MSJ was submitted and exhibits were entered without the 3 crucial exhibits that were the subject of the motion to seal and noted in the judges order to deny the original MSJ that was incorporated in the ruling to deny the motion to seal. (See ruling 9/27/19)
Rontan in their MSJs rely heavily on 10.1 of the SPA which deals with amendments to the SPA. Section 3 of the SPA was never amended to eliminate GDSIs rights to waive any provision of section 3 (Conditions) as spelled out in 3.1.11. GDSI never amended the SPA it simply exercised its rights under 3.1.11.
Defendants can not prevail in justifying their action by siting information that was not know to them when they performed the alleged action. IE Rontan can’t claim they breached the contract because funding was not available to GDSI even if the claim is true because the breach occurred without that knowledge and thus is not an affirmative defense for such actions.
( I can’t claim I shot a man because he shot my neighbor if I didn’t know he shot my neighbor before I shot him)
Most if not all of Rontans MSJ and their reply/response to the FAC relies on an Affirmative defense which I think will be denied since Rontan did not know the information before acting. And section 10.1 of the SPA which I have already addressed.
IMVHO- Mediation will take place 11-7-2019. No trial. Bolzan’s can’t afford it.
Bellow is posted the complete documents and filings of Rontan with no commentary, court rulings or responses by Plaintiff.
It’s always good to have only 1/2 of a story (sarcasm intended)
It is perplexing however that the same format was not used in presenting the documents and filings of GDSI.
IMO- if you take the time to read each of the MSJs both sides are basically asking the judge to rule on the merits of the case before it goes to trial/jury. It’s not unheard of. But it is very uncommon for such a ruling to be made when both sides are presenting conflicting versions of the same information. This is why we have trials and juries that will decide cases.
I don’t see the Judge granting any of the MSJs especially when there is material documentation that is still being withheld by the defendants ( documents under consideration, motion to seal).
There is also another filing being overlooked. An affirmative decision on the “in limine” would basically eliminate most of the grounds Rontan is asserting for MSJ for damages and may even put Rontan in an even more precarious position in how it presents the financial dealings of the Bolzan Brothers.
I would also point out that Rontans own filing shows that in Mr Dagrosa deposition, GACP pointed out and noted that KPMG uncovered 300-400m Reais (Brazilian currency) ~ $100m US. in suspicious tax filings by Rontan which raised his concerns surrounding the Foreign Corrupt Practices Act.
I have spoken to 2 prominent partners of international accounting firms and asked them for their thoughts on Mr Dagrosa’s statements. One is a corporate tax auditor, the other is a forensic audit specialist. Both said the same thing. The information raises red flags for tax evasion and or embezzlement.
I believe that this is the subject and reason for the attempted “sealing” of exhibits pertaining to Rontans MSJ. I also think this will be the reason Rontan ultimately agrees to a settlement.
Maybe Rontan hits the hail-marry and is granted one of their MSJs. It’s the very best they can hope for. With the discovery of possible fraudulent tax filings, it will only go down hill for Rontan from there.
Ultimately this case is shifting. It may very well be that if there were no other circumstances such as the suspected embezzlement/tax evasion Rontan would have a fair chance of defending its self against the original complaint.
The problem for Rontan is that it’s no longer just about the SPA and who may or may not have done this or that.
The outcome here will rest on how badly the Bolzan’s wish to keep their alleged financial shenanigans out of the light of day.
Light of day, Bolzan’s have nothing to hide = Trial, 50/50 chance to prevail, because all trials are 50/50 at this point.
Cover of darkness Bolzan’s wish to conceal their finances= mediation and settlement GDSI gets paid. $1- $??m.
I encourage everyone to read the filings entirely there is a lot of information there that sheds light on issues beyond the SPA.
I’ll lay it out for everyone again.
No “stickie” required
Date 10-11-2019
Docketed motions for summary judgement filed 10-11-2019 2 (two) entry 135 and 138
Docketed motions for summary judgement filed on 10-11-2019 by Rontan 1. (one) entry 135
Docketed motions for summary judgement filed on 10-11-2019 by GDSI 1. (One) entry 138
Motions for summary judgement that will be dismissed because of mediation 0 ( zero) same number in my original post.
Hope this clears up any misread information in my earlier posts.
Except, I’m 100% correct.
Date stated in post 10-11.
Motions filed on 10-11 concerning MSJ 2.
Number of filings by GDSI concerning MSJ 1
Number of filings by Rontan concerning MSJ 1.
There is nothing in my post that says the judge would dismiss “because” of mediation.
Nov 7th is the jointly requested date for Mediation.
So I went ahead a read both motions. Rontan and GDSI have each filed MSJs submitted 10-11. ( the two MSJs are not both filed by Rontan as someone posted earlier).
They basically state the same information found in the complaint and answer. Other than referencing discovery there was no new information that I could find.
I expect the judge to dismiss both MSJs and send it over for Mediation since both parties have jointly requested and agreed to mediation.
I don’t generally read motions since you can put anything you want in them. I wait for a ruling by the judge. Rulings are all that matter.
A motion is basically one side of an argument. Can’t base a decision on an issue without having the other half of the argument.
To be fair to everyone. It is correct to say there is “no settlement” right now. The settlement will not be official till after the mediation judge signs off on it. That’s what mediation does. It brings both sides together for A settlement.
Settlement/mediation is on the table and agreed to by both parties as stated in the motion filed yesterday.
They are referring to the case in whole. Not just the MSJ or any other discovery issues.
____________________________________________/ JOINT MOTION TO ALLOW MEDIATION TO PROCEED ON NOVEMBER 7, 2019 Plaintiff Global Digital Solutions, Inc. and defendants Grupo Rontan Electro Metalurgica, S.A., Joao Alberto Bolzan, and Jose Carlos Bolzan, for an order allowing medition to proceed on November 7, 2019, and in support thereof state as follows: 1. Pursuant to the Order Setting Trial, Pretrial Scheduling Order, and Order Referring Case to Mediation [DE 24], the current mediation deadline is October 10, 2019. 2. The parties have agreed to mediate this action before Judge Herbert Stettin (Ret.). Due to scheduling issues on the part of the parties and the press of other deadlines, the parties have scheduled the mediation for November 7, 2019. (A copy of the notice of mediation is attached hereto.) 3. Holding the mediation on November 7, 2019 will not delay the progress of this action. 1 WHEREFORE, the plaintiff and defendants respectfully request leave to conduct the mediation on November 7, 2019. Dated: October 10, 2019 Respectfully
Smells like a settlement.
GL
Any settlement from this litigation will probably go directly into marketing/production of PALS. which will be great for GDSI in the long run.
This litigation is sucking up a lot of oxygen from the room. In the mean time the ground testing on PALS goes on and soon aerial and final FAA approval.
PALS will be the revenue stream for the future.
According to court documents and filings The Bolzan’s are attempting to keep certain financial dealings private (motion to seal) which in turn were part of but not all of their exhibits for the MSJ which was denied without prejudice (114 9/27/2019) due to no exhibits being filed. Several days later some but not all of the exhibits were filed (excluding the 3 exhibits/documents from the Motion to seal)
The Denied Motion to seal/MSJ and the possible exposure of the individual financial records of the Bolzan’s are in themselves a very good reason for them to entertain a settlement. It’s up to the Bolzan’s.
A) keep records private and settle
B) release the documents and take your chances with the Brazilian government. Then the MSJ and then with the Jury.
Considering their financial exposure to their own government I would say a settlement is more likely than not.
GDSI didn’t sell or manufacture a “particular type of weed killer” or flavored E-Cig oils. Might want to check under Monsanto for your class action.
Good luck.
Not sure which deadline you are asking about.
The deadline for “expert witness” and the Daubert motion were extended to Oct 11th. This may be what you are thinking of.
From what I have read Rontan Filed some supporting documents on the 30th that do not appear to include the 3 that were the subject of the motion to seal that was Denied.
It appears that they are trying to prove their case in regards to the MSJ without the 3 documents/exhibits from the motion to seal.
They can still file them any time before the deadline.
The documents submitted by Rontan in support of the MSJ (that was Denied without prejudice), do not appear to include the 3 documents that were the subject of the motion to seal.
Without the 3 documents I would predict a settlement/mediation in the next 30-45 days.
Excerpt from the order filed 9/27/2019 docket entry (114)
“OnSeptember12,2019, Defendants Filed for Partial Summary judgment (DE
94). Defendants did not attach any of the exhibits referenced in the summary judgement motion. …/
……
At this time, I will deny the Motion.….…”.
MSJ denied!
Everyone should;
Read the entire document.
Don’t base what you think you know on a journal entry or on a docket summary. Headline/headers do not tell you everything in an Order.
“Pending” is what a motion denied “without prejudice” becomes. Which supports everything I posted.
You have provided no evidence that the documents submitted are those that were denied in the motion to seal. They may be there. But you have not posted any information to support that claim. If it’s in there. Then as I posted. The MSJ will survive the ruling “denied without prejudice” just like I posted.