United States District Court, D. Vermont
OPINION AND ORDER (DOCS. 67, 68)
Geoffrey W. Crawford, United States District Court Judge
lawsuit arises out of a failed attempt by plaintiff Top Ridge
Investments, LLC, ("Top Ridge") and counterclaim
defendants Jeffrey Tauber and Royal Heritage House, LLC
("RHH") to acquire Anichini, Inc. and related
companies (collectively "Anichini") and to hire
Anichini's principal, Susan Dollenmaier, as an executive
in the reconstituted company. (See Doc. 75 at 1.)
action was originally filed in New York Supreme Court, County
of New York, and removed to the United States District Court
for the Southern District of New York ("SDNY") on
the basis of diversity of citizenship. It was then
transferred to the District of Vermont.
Top Ridge is a single purpose entity formed by RHH and Mr.
Tauber to purchase Anichini's commercial loan from
People's United Bank, N.A. ("People's")
(Doc. 75 at 7.) The loan is in default. (Doc. 68-1
¶¶ 9, 10; Doc. 68-8 at 3.) Top Ridge seeks a
judgment for the amount due ($569, 462.00 plus interest, late
fees, and costs of collection) as well as a court order
transferring all assets of Anichini, including an assignment
of trademarks, to Top Ridge. (See Doc. 68 at 1-2;
Doc. 76-1 ¶ 10.) It also seeks to enforce a personal
guaranty against Ms. Dollenmaier. (Doc. 1-1, Complaint,
response, Anichini and Ms. Dollenmaier have filed a
counterclaim against Top Ridge and third-party claims against
RHH and Mr. Tauber for declaratory relief, breach of
contract, breach of the implied covenant of good faith and
fair dealing, fraudulent misrepresentation, tortious
interference, and breach of fiduciary duty. (Doc. 26 at 9,
Rulings by the Court
February 23, 2016, the New York Supreme Court issued an ex
parte temporary restraining order ("TRO") enjoining
Anichini from selling or otherwise transferring collateral
except in the normal course of business pending a hearing on
a motion for preliminary injunction. (Doc. 1-2.) The case was
removed to the SDNY before the state court could hold a
hearing on the preliminary injunction. The district court
extended the TRO pending a hearing on the preliminary
March 21, 2016, the SDNY granted a motion to transfer the
case to the District of Vermont. The TRO was extended to
April 1, 2016, to permit this court time to consider the
motion for a preliminary injunction.
23, 2016, this court held a hearing on the motion for a
preliminary injunction. (Doc. 41.) Top Ridge sought an order
requiring all collateral to be turned over to it by Anichini.
Doc. 1-2. In a decision dated June 15, 2016, the court denied
Top Ridge's motion for a preliminary injunction. Instead,
the court issued a limited preliminary injunction consistent
with the original TRO. The court's order enjoined
Anichini from further encumbering or selling its assets
except in the normal course of business. Anichini was also
ordered to provide a monthly financial statement to Top
Ridge. (Doc. 47.)
October 2016, the parties returned to court when Top Ridge
renewed its request for a more expansive preliminary
injunction placing it in possession of the collateral.
Following a hearing, the court concluded that little had
changed since its original decision in June 2016 and
continued the limited preliminary injunction in place. The
court repeated its order requiring monthly financial
statements. (Doc. 66.)
motions are now ripe for decision. These are Top Ridge's
motion for summary judgment on its right to enforce the
promissory note and other loan documents (Doc. 68) and RHH
and Mr. Tauber's motion to dismiss Anichini's
counterclaims (Doc. 67).
order issued on March 1, 2017, the court placed the parties
on notice that it would convert the motion to dismiss to a
motion for summary judgment and would consider the materials
submitted in connection with Top Ridge's motion for
summary judgment. Both sides were allowed additional time to
submit additional declarations or memoranda. (Doc. 77.)
Motion for Summary Judgment
is entitled to summary judgment only where "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" when, under the
substantive law, "it might affect the outcome of the
suit." Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). A dispute over a "material
fact" is "genuine" where "the evidence is
such that a reasonable jury could return a verdict for the
nonmoving party." Id.
deciding whether there is a genuine issue of material fact,
[the court] must interpret all ambiguities and draw all
factual inferences in favor of the nonmoving party."
Salahuddin v. Goord, 467 F.3d 263, 272 (2d Cir.
2006) (citing Ford v. McGinnis, 352 F.3d 582, 587
(2d Cir. 2003)). "If, as to the issue on which summary
judgment is sought, there is any evidence in the record from
which a reasonable inference could be drawn in favor of the
opposing party, summary judgment is improper."
Fischl v. Armitage, 128 F.3d 50, 56 (2d Cir. 1997)
(quoting Hetchkop v. Woodlawn at Grassmere, Inc.,
116 F.3d 28, 33 (2d Cir. 1997)). On a motion for summary
judgment, the court does not engage in credibility
assessments, nor does it choose between conflicting versions
of events or weigh the evidence; those are matters for the
jury at trial. See, e.g., Fed. R. Civ. P. 56(e) 1963
advisory committee note; Anderson, 477 U.S. at 255.
Positions of the Parties
Ridge seeks a judgment against Anichini on the promissory
note and against Ms. Dollenmaier on her personal guaranty.
(Doc. 68 at 1-2.) In its statement of undisputed material
facts, Top Ridge asserts that it purchased the loan
documents, including the promissory note, security
agreements, and personal guaranty, from People's in July
2015. (Doc. 68-1 ¶ 8.) Top Ridge states that the loan is
secured by all personal property held by Anichini, including
the rights to intangible assets, such as trademarks, trade
names and contract rights. (Id. ¶ 4.) The
security agreements contain terms preventing Anichini from
asserting any setoff or counterclaim against the collateral
as well as requiring notice of any claim against the lender.
(Id. ¶ 7). Top Ridge asserts that the
promissory note is in default and that it is entitled to
foreclose on the collateral. (Id. ¶¶9-10.)
Dollenmaier and Anichini agree that they executed a
promissory note and security agreements with Chittenden Bank
in 2005.  (Id. at 1.) Ms. Dollenmaier
agrees that she executed a personal guaranty. (Id.
at 1-2.) They do not deny that Top Ridge purchased the loan
and the lender's rights in the collateral from
Dollenmaier and Anichini assert that Top Ridge's purchase
of the loan was part of a larger transaction in which RHH
would acquire Anichini, Ms. Dollenmaier and Anichini would be
relieved of their bank debt and other obligations, and Ms.
Dollenmaier would become a well-paid employee of a newly
capitalized operation. (See Doc. 75-2 at 1-2 (citing
Doc. 75-3 ¶¶ 14-38).) They contend that it is Top
Ridge which is in breach of a contract to acquire Anichini on
terms far more favorable to Ms. Dollenmaier than foreclosing
on the collateral. They also make claims of breach of implied
covenant of good faith and fair dealing, fraudulent
misrepresentation, tortious interference with contractual
relations, and breach of fiduciary duty. (Doc. 26 at 15-19.)
Anichini and Ms. Dollenmaier argue that these defenses raise
questions of fact sufficient to defeat Top Ridge's motion
for summary judgment.
in the light most favorable to Ms. Dollenmaier and Anichini,
the non-moving parties, the facts are:
Dollenmaier founded the Anichini group of companies in New
York in 1981 for the purpose of importing and selling
high-end textiles, such as bed linens, to the luxury market.
(See Doc. 75-3 ¶ 1.) Since 1986, Anichini has
been based in Vermont, where it maintains its offices and a
small retail store in Quechee. (Doc. 75-3 ¶¶ 2,
11.) Over the years the company grew. At its peak, Anichini
employed more than 80 people and had annual sales in excess
of $18 million. (Id. ¶ 6.) Anichini was hit
hard by the recession in 2008 and has experienced financial
difficulties since then. (Id. ¶¶ 7-10.) In
2005, Anichini and Ms. Dollenmaier took out a loan for up to
$2.5 million from Chittenden Bank. (Doc. 75-2 at 1.) This
loan represented Anichini's principal debt.
December 2013, Mr. Tauber, a New York investor, contacted Ms.
Dollenmaier after visiting the Quechee store with his wife.
(Doc. 75-3 ¶ 14.) Mr. Tauber operates a business called
Royal Heritage Home, LLC, which sells consumer products to
stores like Walmart and Bed Bath and Beyond. (Id.
¶ 15.) During early conversations between Mr. Tauber and
Ms. Dollenmaier, Mr. Tauber expressed interest in acquiring
the Anichini brand as well as Ms. Dollenmaier's creative
talents. (Doc. 74 at 6.)
January 2014, Mr. Tauber and Ms. Dollenmaier met to discuss
how RHH and Anichini might be combined. (Doc. 75-3 ¶l
5.) To facilitate the potential merger or acquisition, RHH
executed a Non-Disclosure Agreement ("NDA").
(Id.) The NDA granted RHH and Mr. Tauber access to
Anichini's financial information, business plans, and
customer and supplier lists. (Id.) Anichini
furnished RHH and Mr. Tauber with the names and contact
information of Anichini customers, designers, and suppliers,
as well as the company's financial information for the
years 2009 through 2013. (Id. ¶ 16.) After the
January 2014 meeting, Anichini continued to provide RHH and
Mr. Tauber with updated financial information. (Id.)
January 17, 2014, Mr. Tauber emailed Anichini an outline of
proposed terms for a potential merger or acquisition between
RHH and Anichini. (Doc. 26-2 at 2-3.) Over the course of the
next fifteen months, representatives from Anichini and RHH
met several times to negotiate terms and work towards a final
agreement. (Doc. 75-3 at 3.) On October 3, 2014, Mr. Tauber,
on behalf of RHH, emailed Anichini a term sheet detailing
specifics of a proposed offer by RHH to acquire Anichini and
to employ Ms. Dollenmaier. (Doc. 75-9 at 2-3, 6-8.) Anichini
and RHH continued exchanging proposals concerning the terms
of their potential merger or acquisition throughout the late
winter and early spring of 2015. (Doc. 75-3 at 3; see
e.g., Doc. 26-3 at 2-5; Doc. 26-4 at 2-3.)
Tauber and Ms. Dollenmaier met on or around April 15 and 16,
2015, to discuss their negotiations to date. (Doc. 75
¶¶ 23-24; see Doc. 26-4 at 3.) Based on
the conversations that occurred at these meetings, Mr. Tauber
drafted a second term sheet which he provided to Anichini.
(Doc. 26-5 at 1, 4.) Mr. Tauber confirmed his approval of the
term sheet in an email dated April 24, 2015, which he sent to
Anichini representative Patricia Reinhardt and Ms.
Dollenmaier. (Doc. 26-5 at 2.)
April 24th term sheet proposes that in exchange for acquiring
Anichini, RHH would: (1) assume Anichini's bank debt up
to $450, 000; (2) provide $425, 000 to pay other old debt;
(3) assume $625, 000 of current accounts payable; (4) pay
$250, 000 for excess assets, such as excess inventory or
security deposits; (5) execute and deliver a Seller's
Note for $900, 000; and (6) agree to pay a 3% royalty on
certain sales. (Doc. 26-5 at 4; Doc. 75-3 ¶ 24.) In the
body of the email to which the term sheet is attached, Mr.
Tauber wrote: "As far as I'm concerned we have our
basic term sheet and concepts agreed to on the WORD doc we
created." (Doc. 26-5 at 2.) Mr. Tauber added: "I
see no reason why [Ms. Dollenmaier] and I shouldn't get
together Monday and start to prep for the final
closing." (Doc. 26-5 at 2.)
parties disagree over the nature of the term sheet attached
to the April 24, 2015 email. Ms. Dollenmaier and Anichini
argue that the term sheet contains all of the material terms
of the Agreement between the parties, and both parties agreed
to these material terms and thus, "[a]s of April 24,
2015, there existed a valid, binding, enforceable agreement
among RHH, Mr. Tauber, Ms. Dollenmaier and Anichini."
(Doc. 75 at 9.) Mr. Tauber and RHH respond that the term
sheet and April 24 email were "nothing more than an
unenforceable 'agreement to agree.'" (Doc. 67-1
Dollenmaier, Mr. Tauber, Anichini, and RHH continued to
negotiate after April 24. Ms. Dollenmaier and Anichini
supplied more financial information to Mr. Tauber and RHH.
(See, e.g., Doc. 75-5 at 35-38.) Ms. Dollenmaier
also continued to provide Mr. Tauber with information on
Anichini's suppliers, customers, and designers. Ms.
Dollenmaier introduced Mr. Tauber to Anichini contacts in
India and Italy and provided Mr. Tauber with a list of
celebrity customers. (Doc. 75-13 at 2-9.)
April and July 2015, Ms. Dollenmaier and Mr. Tauber also
continued to discuss RHH's commitment to assist with
funding for Anichini's purchase orders. On July 8, 2015,
Mr. Tauber emailed Ms. Dollenmaier and explained that he and
she could develop a funding mechanism for Anichini's
business "once the People's [United Bank loan]
transaction is complete." (Doc. 75-14 at 4.) On or
around July 23, 2015, Mr. Tauber confirmed that he and Ms.
Dollenmaier had "a clear understanding" of their
business relationship, ...