Global Digital Solutions Inc (GDSI)

[PhenixBleu]

MOTION FOR SUMMARY JUDGMENT ON COUNT I (DAMAGES FOR BREACH OF CONTRACT) -WITH- SUPPORTING MEMORANDUM OF LAW

Defendants, Grupo Rontan Electro Metalurgica, S.A. (“Grupo Rontan” or “Rontan”), Joao Alberto Bolzan (“Joao Bolzan”), and Jose Carlos Bolzan (“Jose Bolzan”) (collectively, the “Defendants”), pursuant to Rule 56(a) of the Federal Rules of Civil Procedure and Rule 56.1 of the Local Rules of the U.S. District Court for the Southern District of Florida, respectfully move for the entry of summary judgment as to Count I (damages for breach of contract) and, in support thereof, state as follows:

I. INTRODUCTION

Plaintiff, Global Digital Solutions, Inc. (“GDSI”), has sued to enforce a Stock Purchase Agreement (“SPA”) signed in October 2015 and governing the sale and transfer of shares in Rontan, a company based in Brazil and owned by the individual defendants. A copy of the SPA is attached hereto as Exhibit “A.”

The SPA had no closing date as it was variable and to be ten (10) days after the delivery of an Opinion by the accounting firm, KPMG. KPMG conducted months of due diligence of Portuguese language records at Rontan in Brazil, mostly of an accounting nature. Indeed, KPMG never delivered the Opinion, despite billing hundreds of thousands of dollars for the work, as discovery has shown. Only a draft report was delivered and GDSI at no time advised Rontan of such occurrence.

Other conditions precedent to closing also lapsed, such as proof of financing by the third-party financier, General American Capital Partners (“GACP”), which also was dependent on the receipt of the KPMG due diligence report—No report, no financing, and as discovery showed, GDSI had no substitute to provide funding and had no independent means to fund closing, which in effect required GDSI to pay $500,000 a month to the Rontan shareholders for 48 months. GDSI never told Rontan of the lack of funds, or of GDSI’s lack of ability to pay. GDSI instead just continued to try to force a closing they could not pay for.

Another precondition that lapsed was the renegotiation of debts of Rontan, which did not occur, as discovery has shown.
With no KPMG report and no proof of financing by GACP in GDSI, the closing on the SPA did not occur, and Rontan confirmed, in writing to GDSI, by March 2016, that the deal was “off” since these critical preconditions to closing were not satisfied and GDSI had no right to waive these conditions.

Following the non-closing, Rontan nearly collapsed as an enterprise and actually closed operations for some time. It entered into the Brazilian equivalent of a bankruptcy proceeding and is still under “judicial reorganization.” Despite the foregoing, GDSI pressed on for years after the closing was contemplated to occur, culminating in the instant suit for breach.

Plaintiff alleges in its First Amended Complaint (attached hereto as Exhibit “B”), that the Defendants have breached the SPA and that the breach has caused damages to GDSI. Plaintiff’s expert opinion provided for quantifiable money damages calling for a $21,000,000 break-up fee. A copy of the Valuation of Economic Damages Regarding Grupo Rontan Metalurgica, S.A. (“Expert Report”), May 6, 2019, is attached hereto as Exhibit “C.”

Below we articulate the reasons Plaintiff’s damages claim is subject to summary judgment on remaining Count I for breach of contract (in addition to the prior and not yet ruled upon motion for summary judgment on Count II for Specific Performance and partial summary judgment on the penalty clause). The Defendants will show that Plaintiff’s claim for breach of contract fails as a matter of law because: (1) several conditions precedent to closing failed, (2) the failure of these conditions precedent precluded GDSI from closing and recovering for breach, and (3) there was no valid waiver by GDSI as to the occurrence of any of these conditions precedent. The facts supporting these conclusions, as explained below, are not subject to dispute, and the law applying to these undisputed facts are clear.

Defendants’ position/conclusion, in a nutshell, is supported by the following:

1. The SPA provided for several specific conditions to be satisfied prior to closing. The undisputed facts show that these conditions were not satisfied. A party is not liable in an action in the contract until the prior condition is performed. Jones v. United States, 96 U.S. 24, 28 (1877). Thus, the failure of the conditions precedent precluded GDSI from recovering for breach of contract against the Defendants.

2. Where, as here, the language of the contract is clear and unambiguous, the Court will ascertain the intent of the parties from the plain and ordinary meaning of the language of the contract. Wash. Nat'l Ins. Corp. v. Ruderman, 117 So.3d 943, 948 (Fla. 2013). The undisputed facts show that the SPA required that any waiver, modification, amendment, or discharge of any part of the agreement be in writing agreed to by the Defendants. Also, the SPA required a written waiver by the other party for any failure of any party to comply with any condition provided in the SPA. Here, GDSI failed to provide to the Defendants with the Opinion and the proof of financing by GACP in GDSI, which would constitute the monies to close on the SPA deal. Accordingly, in order for a waiver to be valid, the SPA required a written waiver, by the other party, here the Defendants.

3. Discovery has shown that the Defendants did not waive any condition precedent set forth in the SPA. Moreover, although GDSI had no right to waive these conditions, discovery has shown that the Plaintiff did not waive—as it has alleged—any condition precedent.

II. STATEMENT OF UNDISPUTED MATERIAL FACTS

1. Grupo Rontan is a Brazilian company with its principal place of business in Sao Paulo, Brazil. First Am. Compl., Ex. B, ¶ 4.

2. Joao Bolzan and Jose Bolzan are citizens of and reside in Brazil. They are the sole shareholders of, and control, Grupo Rontan. First Amended Complaint, Ex. B, ¶¶ 5-7.

3. Grupo Rontan is one of the largest manufacturers in the industry. Grupo Rontan designs, manufactures, and delivers emergency equipment specifically for public safety organizations and professionals. First Am. Compl., Ex. B, ¶¶ 11-12.

4. In 2014, GDSI engaged in negotiations with Defendants to acquire Grupo Rontan. First Am. Compl., Ex. B, ¶ 13. As part of those discussions, the parties executed a Letter of Intent. Ex. B, ¶ 14.

5. The discussions culminated in the execution of the SPA dated October 8, 2015, between GDSI and Defendants. First Am. Compl., Ex. B, ¶ 15; SPA, Ex. A.

6. Section 3 of the SPA entitled “Specific Conditions Prior to Closing” set forth several “specific conditions” which were required to be satisfied prior to the closing date of the SPA, including, in relevant part:

3.1.1 [Plaintiff’s] receipt of a written limited assurance unqualified opinion of KPMG with respect to [Grupo Rontan’s] audited financial statements for the years ended December 31, 2013, and 2014 (the “Opinion”).

3.1.2 The commitment of sufficient investment, as stated in the investment agreement, by General American Capital Partners (the “Institutional Investor”) in the [Plaintiff] following receipt of the Opinion. First Am. Compl., Ex. B, ¶ 20; SPA, Ex. A, § 3.1, §§ 3.1.1-3.1.2.

7. Pursuant to the SPA, upon the satisfaction or waiver of the specific conditions set for in Section 3 of the SPA, the closing of the SPA would take place within ten (10) business days from the date of the issuance of the Opinion by KPMG. SPA, Ex. A, § 4.1.

8. KPMG was hired by GACP, the third-party financier, to conduct due diligence with respect to Rontan. A copy of the transcript of the deposition of the corporate representative of KPMG, Jean-Pierre Lionel Trouillot (“Trouillot”), is attached hereto as Exhibit “D.” Trouillot Dep. 150:19 – 150:23.

9. KPMG was not engaged to do a limited assurance unqualified opinion. Ex. D, Trouillot Dep. 207:6 – 207:23.

10. KPMG does not provide the services described in Section 3.1.1 of the SPA. Ex. D, Trouillot Dep. 209:23 – 209:25, 210:1 – 210:12; Ex. A, § 3.1, § 3.1.1.

11. KPMG has not delivered an opinion, although it billed $425,000 worth of due diligence work. Ex. D, Trouillot Dep. 107:15 – 107:25, 108:1 – 108:3.

12. On or about November 14, 2015, Joseph Dagrosa (“Dagrosa”), the corporate representative and co-owner of GACP, was already concerned with the Rontan deal based on preliminary feedback from KPMG. A copy of the transcript of Dagrosa’s deposition is attached hereto as Exhibit “E.” Dagrosa Dep. 85:19 – 85:25, 86:1 – 86:25, 87:1 – 87:2. 13. In explaining his concerns under oath, and explaining why he ultimately made the business decision to not fund the closing on the Rontan share purchase, Dagrosa testified as follows:

There were three or four areas of concern. I’ll start at a very macro level. Brazil as an economy was in my view beginning to stall and potentially go in the wrong direction as evidenced at least in part by the fact that the currency was being devalued relative to the dollar. Secondly, as also evidenced by the second point which is that the specific contracts that were supposed to be put in place were not falling into place. They were either being delayed or canceled. Third, there was concern in regards to tax issues that started out at a relatively low number. And by that I'll say call it 100 million of Reais, and I think were starting to amount to potentially three or 400 million as reported to us by KPMG. And there was concern, although no definitive proof that we may, may step into issues surrounding the Foreign Corrupt Practices Act and that was clearly a concern of mine . . .

Ex. E, Dagrosa Dep. 87:3 – 87:25, 88:1.

14. On or about December 10, 2015, KPMG issued a due diligence draft report in relation to Rontan. A copy of the KPMG due diligence draft report (“KPMG Draft Report”) will be filed as Exhibit “F”, and under seal, if necessary, since designated as confidential. There was never a final KPMG report and this was on instruction of GACP. See Trouillot Dep. 110:9 - 110:17.

15. Ross Trevino (“Trevino”), the corporate representative of GDSI, testified that GDSI did not send the Defendants a copy of the KPMG Draft Report. A copy of the transcript of Trevino’s Deposition is attached hereto as Exhibit “G.” Trevino Dep. 44:25, 45:1 – 45:2.

16. Richard Sullivan (“Sullivan”), the CEO of GDSI, testified that he had not seen a final report prepared by KPMG in relation to Rontan. A copy of the transcript of Sullivan’s deposition is attached hereto as Exhibit “H.” Sullivan Dep. 85:19 –85:21.

17. With respect to each of the specific condition set forth in Section 3 of the SPA, Plaintiff alleges that: (i) the condition was performed or satisfied by GDSI or otherwise occurred; (ii) Defendants prevented the occurrence, performance, or satisfaction of the condition and are estopped from enforcing it; or (iii) GDSI has waived the occurrence, performance, or satisfaction of the Condition as a condition to the closing of the transaction by demanding that the closing proceed without the condition being fulfilled. First Am. Comp., Ex. B, ¶ 20.

18. Section 10.1 of the SPA provides:

10.1. Amendment and Modification. This agreement may be amended, modified, and supplemented only by written agreement of all the parties hereto to any of the terms contained herein. No course of dealing between or among the parties shall be deemed effective to modify, amend, waive, or discharge any part of this Agreement or any rights or obligations of any party under or by reason of this Agreement.”

SPA, Ex. A, § 10.1.

19. Section 10.2 of the SPA provides:

10.2 Waiver of Compliance; Consents. Any failure of any party hereto to comply with any obligation, covenant, agreement or condition herein may be waived in writing by the other parties hereto . . . .Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing to be effective.

SPA, Ex. A, § 10.1.

20. On December 29, 2015, GDSI wrote a letter to the Defendants, notifying them that it was “satisfied respective to the conditions to closing required under the terms of the Purchase Agreement.” (emphasis added). A copy of the letter (“December 29, 2015 Letter”) is attached hereto as Exhibit “I.” This letter did not disclose whether GACP would fund the closing and did not state the situation with respect to KPMG’s due diligence, that is, the letter did not mention if there was completed due diligence or whether there was a final due diligence report. Despite the lack of a final due diligence report, and despite the lack of financing, the letter attempted to impose a closing date of January 4, 2016, which was a misleading attempt to induce Rontan to transfer the shares in the company without the satisfaction of conditions precedent.

21. On January 13, 2016, GDSI wrote a letter to the Defendants informing them that it was “satisfied with its due diligence review of the Company’s business and financial condition and the conditions to closing required under the terms of the Purchase Agreement.” (emphasis added). A copy of the letter (“January 13, 2016 Letter”) is attached hereto as Exhibit “J.” Like the December 29, 2015 letter, this letter also did not disclose whether GACP would fund the closing and also did not state the situation with respect to KPMG’s due diligence, that is, the letter did not mention if there was completed due diligence or whether there was a final due diligence report. Despite the lack of a final due diligence report, and despite the lack of financing, the letter attempted to impose a closing date of January 18, 2016, which was a misleading attempt to induce Rontan to transfer the shares in the company without the satisfaction of conditions precedent.

22. In February of 2016, Dagrosa called Sullivan to inform that GACP was not prepared to move forward because it was not comfortable with the results of the due diligence work and, consequently, was not going to invest in GDSI. Ex. E, Dagrosa Dep. 88:2 – 88:18.

23. According to Sullivan, GACP did not buy the stock of GDSI, which under the SPA, was the funding mechanism for the purchase of Rontan, which involved GACP providing funds to GDSI in exchange for GDSI shares, which GDSI would then use to buy the Rontan shares. Ex. H, Sullivan Dep. 108:3 –108:18; SPA, Ex. A, § 3.1.2.

24. GDSI had no ability to fund closing without GACP’s capital. GDSI had no lines of credits with banks, had no other investors (besides investors that GDSI had turned down), and had no other deals in the works to fund the Rontan transaction by way of substitution of the now eliminated funding from GACP. Ex. H, Sullivan Dep. 144:22 – 144:25, 145:1 – 145:25, 146:1 –146:25, 147:1 – 147:5.

25. At the time that GDSI allegedly was ready to close, GDSI had “probably half-a-million dollars” in the bank. Ex. H, Sullivan Dep. 146:18 – 146:22. The SPA required approximately $500,000 to be paid to the Rontan shareholders on a monthly basis for forty-eight months. GDSI, therefore, could not fund beyond one month of payments under the SPA and would have been in default by month two of the SPA, a fact not disclosed to Rontan.

26. At no time did Rontan ever accept GDSI’s attempts to unilaterally impose a closing date, by way of their December 21, 2015, December 23, 2015, December 31, 2015, and January 13, 2016 letters.

27. The various closing dates that GDSI unilaterally attempted to impose were not ten (10) days after the delivery of a final due diligence report because there never was a final due diligence report from KPMG.

28. With no KPMG report and no proof of financing by GACP in GDSI, the closing on the SPA did not occur, and the shares of Grupo Rontan were not transferred to GDSI. On March 14, 2016, Grupo Rontan sent a Rescission Letter to GDSI notifying GDSI of the termination of the SPA. A copy of the Rescission Letter is attached hereto as Exhibit “K.”

29. On March 17, 2016, GDSI sent a letter to Grupo Rontan stating that if the shares of Grupo Rontan were not transferred, the “SPA [would] be deemed to be terminated” and GDSI would seek “immediate payment of the Break-up Fee.” A copy of the Termination Letter is attached hereto as Exhibit “L.”

30. According to Sullivan, GDSI had not waived the occurrence of any condition provided in the SPA. Ex. H, Sullivan Dep. 155:1 – 155:4.

31. There was never a written communication whereby GDSI waived or gave notice of an attempted waiver of a condition, and, regardless, a waiver would have required Rontan’s consent, as per the terms of the SPA.

32. According to Trevino, GDSI had not waived the condition of the commitment of sufficient investment by GACP in GDSI. Ex. G, Trevino Dep. 48:2 – 48:22.

33. According to Daniela Bolzan (“Ms. Bolzan”), and as confirmed by Mr. Sullivan, the Defendants had not waived the occurrence of any condition provided for in the SPA. A copy of the transcript of Ms. Bolzan’s deposition is attached hereto as Exhibit “M.” Ex. M, Ms. Bolzan Dep. 83:1 – 83:25, 84:1 – 84:2; Ex. H, Sullivan Dep. 152:7 –152:25, 153:1 – 153:2.

34. Plaintiff alleges that Defendants breached the SPA and, as a result of that breach, Defendants have caused damages to GDSI for which it is seeking “compensatory damages” against Defendants. First Am. Compl., Ex. B, ¶¶ 21-24 and ad damnum clause.

35. Plaintiff is also seeking specific performance of the SPA claiming that GDSI has no adequate legal remedy for Defendants’ alleged breach of the SPA. First Am. Compl., Ex. B, ¶¶ 25-32 and ad damnum clause.

36. Plaintiff’s expert has prepared a Valuation of Economic Damages Report. The report provided for a total of $21,000,000 in break-up/penalty damages caused by the breach of contract. Expert Report, Ex. C, page 40. The break-up/penalty damages are the subject of a separate motion for summary judgment to invalidate the application of penalty-type damages prohibited by Florida law.

37. On December 20, 2018, Grupo Rontan entered into the Brazilian equivalent of a bankruptcy proceeding and is still under “Judicial Reorganization.” A copy of the approval of the “Judicial Reorganization” is attached hereto as Exhibit “N.”

III. ARGUMENT AND CITATION TO AUTHORITY

A. Standard for Summary Judgment

A district court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” if it “might affect the outcome of the suit under the governing law.” FindWhat Inv'r Grp. v. FindWhat.com, 658 F.3d 1282, 1307 (11th Cir. 2011) (citation omitted). A dispute is “genuine” if the “evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.; see also Fetchick v. Seminole Cty., 719 F. App’x 973, 974 (11th Cir. 2018) (“A genuine issue of material fact exists when ‘the evidence is such that a reasonable jury could return a verdict for the non-moving party.’”).

The party moving for summary judgment “always bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Voudy v. Sheriff of Broward Cty. Fla., 2018 WL 4922461, at *1 (S.D. Fla. Jan. 9, 2018). “Genuine disputes of fact exist when the evidence is such that a reasonable jury could render a verdict for the non-movant. Factual issues are considered genuine when they have a real basis in the record.” Melton v. Abston, 841 F.3d 1207, 1219 (11th Cir. 2016) (citation omitted). The moving party’s burden is met merely by “showing—that is, pointing out to the district court—that there is an absence of evidence to support [an essential element of] the nonmoving party’s case.” Celotex Corp., 477 U.S. at 325; Cox v. Clayton Cty. Sch. Dist., 763 F. App’x 817, 819 (11th Cir. 2019). In determining whether the moving party has met this burden, the district court must view the evidence and all factual inferences in the light most favorable to the party opposing the motion. See Davis v. Williams, 451 F.3d 759, 763 (11th Cir. 2006); State Farm Mut. Auto. Ins. Co. v. Filenger, 362 F. Supp. 3d 1246, 1252 (S.D. Fla. 2018). The movant may meet this burden by presenting evidence indicating there is no dispute of material fact or by showing that the nonmoving party has failed to present evidence to support some element of its case on which it bears the ultimate burden of proof. Celotex Corp., 477 U.S. at 322-24; Mendez v. Hemphill, 2018 WL 4503469, at *1 (M.D. Fla. Sept. 20, 2018).

After the moving party has established that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law, the burden of production shifts, and the non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). As Rule 56 explains: “If a party fails to properly support an assertion of fact or fails to properly address another party’s assertion of fact . . . the court may . . . grant summary judgment if the motion and supporting materials—including the facts considered undisputed—show that the movant is entitled to it . . . .” Fed. R. Civ. P. 56(e)(3). Therefore, the non-moving party “may not rest upon the mere allegations or denials in its pleadings,” but instead must present “specific facts showing that there is a genuine issue for trial.” Walker v. Darby, 911 F.2d 1573, 1576-77 (11th Cir. 1990); see also Turizo v. Enter. Leasing Co. of Fla., LLC, 2018 WL 6448465, at *1 (S.D. Fla. Oct. 22, 2018) (citation omitted) (“The non-moving party must come forward with ‘specific facts showing a genuine issue for trial.’”). More than a mere scintilla of evidence is necessary to survive a motion for summary judgment; “there must be a substantial conflict in evidence to support a jury question.” Flamingo S. Beach I Condo. Ass'n, Inc. v. Selective Ins. Co. of Southeast, 492 F. App’x 16, 26 (11th Cir. 2013) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)).

B. The Failure of the Conditions Precedent Set Forth in the SPA Precludes GDSI From Recovering for Breach of Contract
1. The specific conditions prior to closing were not satisfied.
A condition precedent is “a condition which calls for the performance of an act after a contract is entered into, upon the performance or happening of which its obligation to perform is made to depend.” Univ. Hous. by Dayco Corp. v. Foch, 221 So.3d 701, 704 (Fla. 3d DCA 2017), reh'g denied (June 15, 2017). It is well-settled that, where conditions are dependent and of the essence of the contract, the performance of one depends on the performance of another, thus, until the prior condition is performed, the other party is not liable to an action in the contract. Jones v. United States, 96 U.S. 24, 28 (1877). Accordingly, “a party bound to perform a condition precedent cannot sue on the contract without proof that he has performed that condition.” Id.

In the instant case, Section 3 of the SPA entitled “Specific Conditions Prior to Closing” set forth, among others, the following conditions precedent: “(1) [Plaintiff’s] receipt of a written limited assurance unqualified opinion of KPMG with respect to [Grupo Rontan’s] audited financial statements for the years ended December 31, 2013, and 2014 (the “Opinion”); (2) The commitment of sufficient investment, as stated in the investment agreement, by General American Capital Partners (the “Institutional Investor”) in the [Plaintiff] following receipt of the Opinion.” First Amended Complaint, Ex. B, ¶ 20; SPA, Ex. A, § 3.1, §§ 3.1.1-3.1.2.

These provisions are unambiguous. The receipt of an Opinion from KPMG with respect to Grupo Rontan and GDSI’s obligation to secure sufficient investment were sine qua non of the Defendants’ performance under the SPA. Indeed, neither of these conditions were satisfied. First, as to the Opinion from KPMG1, the Defendants were astonished to discover, only by way of

1 Trouillot has testified that KPMG was not engaged to do a limited assurance unqualified opinion (Mr. Trouillot’s Deposition, page 207, 6-23). Trouillot has explained that “the way that KPMG had prepared a draft Report in relation to Rontan (Ex. I, KPMG Draft Report), and were more surprised to see there was never a final report.

2 The Defendants had no knowledge whatsoever of the existence of a draft report prepared by KPMG. See Ex. G, Trevino Dep., 44:25, 45:1 – 45:2. Moreover, KPMG did not deliver a final report (or Opinion), despite having billed $425,000 worth of due diligence work to GACP after reviewing Rontan documents. See Ex. D, Trouillot Deposition 107:15 –107:25, 108:1 – 108:3; Ex. H, Sullivan Dep. 85:19 – 85:21.

Second, assuming, arguendo, that the Opinion condition was satisfied or waived, Plaintiff did not provide to the Defendants proof of financing by the third-party financier, GACP, as required by Section 3.1.2 of the SPA (Ex. A, § 3.1.2). In fact, once again, only by way of the discovery in this litigation, the Defendants found out, through the testimony of Dagrosa, that he had communicated to Sullivan, on or about February of 2016, that GACP was not moving forward with financing the transaction. See Ex. E, Dagrosa Dep. 73:22 – 73:25, 74:1 – 74:6. Moreover, as confirmed by Sullivan in his deposition, GDSI had no other sources of credit with which to pay Rontan for the transfer of shares under the SPA. See Ex. H, Sullivan Dep. 144:22 – 144:25, 145:1 – 145:25, 146:1 – 146:25, 147:1 – 147:5.

Plaintiff, knowing about all the aforementioned, and in bad faith, delivered several letters to the Defendants between December 2015 and January 2016, attempting to force a closing by imposing various, unilateral closing dates, most of them over the holidays and with no regard for the logistics surrounding an international corporate closing, although the SPA stated clearly that
3.1.1] describes what KPMG would do [] is not a service that [KPMG] provide[s] (Trouillot Dep. 209:23-25, 210:1-120) and that “whoever wrote [condition 3.1.1] doesn’t have a good knowledge of what [KPMG] do[es].” (Trouillot Dep. 211:18-20).

Trouillot confirmed that a Draft Report was delivered to GACP. Ex. H, Trouillot Dep. 40:7. the closing would be ten (10) days after the final due diligence report. The closing-related letters did not disclose the existence of a final due diligence report, or the date when same was delivered. There could be no closing to occur ten (10) days after the non-delivery of a final report since there was none.

Nor did the closing letters disclose the truth that there was no satisfaction of the financing condition by GACP, nor that there was no substitute financier to GACP. Nor did the letters disclose that GDSI lacked the financial ability to fund a closing. The letters were not prepared by, agreed upon, or executed by the Defendants, although GDSI included a signature line for the defendants, which they never signed, for good reason. See copy of letter dated December 18, 2015, attached hereto as Exhibit “O;” copy of the letter of December 21, 2015, attached hereto as Exhibit “P;” copy of the letter of December 23, 2015, attached hereto as Exhibit “Q;” copy of the letter of December 29, 2015 (Ex. I); copy of the letter of December 31, 2015, attached hereto as Exhibit “R;” and copy of the letter of January 13, 2016 (Ex. J). The letters were attempts to fraudulently induce Rontan’s shareholders to transfer ownership of Rontan knowing full well that GDSI could not pay the $500,000 per month to the Rontan shareholders for 48 months, now lacking the financing contingent, and with no substitute acceptable to sellers lined-up.

2.The specific conditions prior to closing were not waived under SPA procedures.

When interpreting a contract, the primary objective is to give effect to the intent of the parties. Whitley v. Royal Trails Prop. Owners' Ass'n, 910 So.2d 381, 383 (Fla. 5th DCA 2005); Royal Oak Landing Homeowner's Ass'n, Inc. v. Pelletier, 620 So.2d 786, 788 (Fla. 4th DCA 1993). Where the language of the contract is clear and unambiguous, the court will ascertain the intent of the parties solely from the plain and ordinary meaning of the language of the contract. Wash. Nat'l Ins. Corp. v. Ruderman, 117 So.3d 943, 948 (Fla. 2013).

In the instant case, the contracting parties are GDSI, Grupo Rontan, Jose Bolzan, and Joao Bolzan; and the Court should endeavor to determine their intent when interpreting the SPA. Section 10.1 of the SPA provided that the “agreement [could] be amended, modified, and supplemented only by written agreement of all the parties [] to any of the terms contained herein. No course of dealing between or among the parties shall be deemed effective to modify, amend, waive, or discharge any part of this Agreement or any rights or obligations of any party under or by reason of this Agreement.” SPA, Ex. A, § 10.1. Section 10.2 of the SPA provided that “[a]ny failure of any party [] to comply with any obligation, covenant, agreement or condition [could] be waived in writing by the other parties. . . .” SPA, Ex. A, § 10.2.
The language of the contract is clear and unambiguous that any waiver, modification, amendment, or discharge of any part of the agreement could only be in writing. It is also clear and unambiguous that any failure of any party to comply with any condition set forth in the SPA should be waived in writing by the other party (emphasis added). Here, the delivery of the Opinion by KPMG and the commitment of sufficient investment by GACP in GDSI were for the benefit of the Defendants. This is because GACP's commitment of investment in GDSI was in order to pay Defendants for the share purchase, and thus it is obvious that the payment of money is for Defendants’ benefit solely, and meant to induce Defendants to sell their shares. GACP’s commitment of investment in GDSI was dependent on the receipt of the Opinion—no Opinion, no financing, no closing. As these conditions were dependent on one another and for the benefit of the Defendants, a waiver would only be valid, as per the SPA, if provided in writing by the Defendants.

Moreover, assuming, arguendo, that the Opinion condition was validly waived or satisfied, the Defendants, nevertheless, were the sole beneficiaries of the commitment of sufficient
investment by GACP in GDSI, thus, only the Defendants could have waived, in writing, this condition. Discovery has clearly evidenced that the Defendants have not waived the occurrence of any condition precedent provided in the SPA.
See Ex. M, Ms. Bolzan Dep. 83:1 – 83:25, 84:1 – 84:2; Ex. H, Sullivan Dep. 152:7 – 152:25, 153:1 – 153:2.

Furthermore, although Plaintiff had no right to waive these conditions unilaterally, discovery has shown that Plaintiff nonetheless had not waived—as it alleges—any condition provided in the SPA. This is confirmed by the testimony of Sullivan3 (Ex. H, Sullivan Dep. 155:1 – 155:4), by the testimony of Trevino4 (Ex. G, Trevino Dep. 48:2 – 48:22), and by the delivery of letters from GDSI to the Defendants informing not that GDSI waived the occurrence of the conditions, but that GDSI was satisfied with respect to the conditions to closing (emphasis added).56 The letters from December 2015, or January 2016, state nothing as to waiver. Waiver was likely an argument conceived by lawyers to attempt to satisfy their Rule 11 duties to the Court, and in order to state a claim on behalf of their client. Plaintiff’s waiver argument appeared for the first time in this case post filing suit. There is no proof whatsoever that GDSI ever gave Rontan any notice of waiver, nor that GDSI could legally waive—even had they informed Rontan as to waiver—unless Rontan agreed to same in writing. Instead, the evidence has shown that, while

3 Sullivan testified that GDSI has not waived any requirement under the SPA. Ex. H, Sullivan Dep.155:1-4.

4 Trevino testified that GDSI has not waived the condition of commitment of sufficient investment by GACP in GDSI. Ex. G, Trevino Dep. 48:2-22.

5 On December 29, 2015, GDSI informed the shareholders “that it is satisfied with respect to the conditions to closing required under the terms of the Purchase Agreement. (emphasis added). See Ex. I.

6 On January 13, 2016, GDSI notified the Shareholders “that it is satisfied with its due diligence review of [Rontan’s] business and financial condition and the conditions to closing required under the terms of the Purchase Agreement.” (emphasis added). See Ex. J.
trying to induce a closing, GDSI intentionally hid from Rontan the fact that GACP decided against financing and that there was never a KPMG final report. Had Rontan known that there was no financing, Rontan would have been able to state it among its reasons for not closing in its rescission letter from March 2016. GDSI, however, intentionally withheld this information, just like it withheld the existence of the KPMG draft report and the lack of a final report.

IV.CONCLUSION

Based on all of the above, Defendants’ Motion for Summary Judgment should be granted as there are no genuine issues of material fact regarding the non-performance and non-waiver of conditions precedent, including the key financing contingency and due diligence report contingency, which could not be unilaterally waived by Plaintiff to suit their litigation strategy.

Accordingly, Defendants respectfully request the Court to enter summary judgment in their favor on Count I, Breach of Contract. Dated: October 11, 2019

Respectfully submitted,
OSORIO INTERNACIONAL, P.A.
By: /s/ Carlos F. Osorio
Carlos F. Osorio, Esq. Florida Bar No.: 597546 [e-mail] Evelyn M. Barroso, Esq. Florida Bar No.: 1007858 [e-mail] 175 S.W. 7 Street, Suite 1900 Miami, Florida 33130 Telephone: [phone] Attorneys for Defendants