India.Com, Inc. v. Dalal

324 F. App'x 59
CourtCourt of Appeals for the Second Circuit
DecidedApril 28, 2009
DocketNo. 07-0944-cv
StatusPublished
Cited by2 cases

This text of 324 F. App'x 59 (India.Com, Inc. v. Dalal) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
India.Com, Inc. v. Dalal, 324 F. App'x 59 (2d Cir. 2009).

Opinion

SUMMARY ORDER

Sandeep Dalai, pro se, appeals from the October 10, 2006 judgment of the United States District Court for the Southern District of New York (Cote, J.) in favor of EasyLink Services Corporation (“EasyL-[60]*60ink”), and from the October 10, 2006 judgment denying Dalai’s motion to amend the judgment, or alternatively for a new trial, pursuant to Federal Rule of Civil Procedure 59(e). While we presume the parties’ general familiarity with the facts and the issues on appeal, in light of this case’s long history a brief summary of the prior proceedings are in order.

In October 2001, Dalai and EasyLink signed a broker agreement (“the Third Agreement”), which provided that Dalai, as compensation for his efforts to secure a buyer and oversee the sale of India.com, Inc. (a subsidiary of EasyLink), would be paid 12.5 percent of the consideration paid by the buyer. On the same day that agreement was signed, EasyLink also signed with the buyer a stock purchase agreement (“SPA”), which stated, in part, that as condition to closing, the buyer was required to obtain approvals from various Indian governmental agencies by November 2001. The buyer never got these approvals. And, as the district court noted in its first opinion of December 2002, this failure “was directly attributed to EasyL-ink’s failure to pay its own attorney in India ... whose assistance was necessary to complete the filing.” As a result, the deal did not close.

Dalai brought claims in distinct court1 and, in September 2003, judgment was awarded to him as a third-party beneficiary of the SPA. The district court did not consider Dalai’s other theory of recovery, which was that EasyLink had, by not paying its attorneys, breached the covenant of good faith and fair dealing on the Third Agreement and therefore breached that agreement with Dalai. On appeal, this Court, finding that the SPA barred recovery by third-party beneficiaries, reversed the judgment for Dalai. But we remanded the case to the district court for further consideration as to “whether EasyLink, in bad faith, caused the SPA not to close, for the purpose of depriving Dalai of his commission.” India.Com, Inc. v. Dalai, 412 F.3d 315, 324 (2d Cir.2005). On remand, the district court, which stated that the parties would be “confined by the trial record as it stood at the time of ... trial,” held that Dalai had not proven that “Ea-syLink breached the agreement to sell India.com for the express purpose of avoiding its duty to pay Dalai’s commission.” This appeal ensued.

In reviewing a district court’s decision in a bench trial, we examine the court’s legal conclusions de novo and its findings of fact for clear error. United States v. Coppola, 85 F.3d 1015, 1019 (2d Cir.1996). Mixed questions of law and fact are reviewed de novo. Scribner v. Simmers, 84 F.3d 554, 557 (2d Cir.1996). When a district court grants or denies a motion for reconsideration, we review for abuse of discretion. See Transaero, Inc. v. La Fuerza Aerea Boliviana, 162 F.3d 724, 729 (2d Cir.1998). “A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence.” Id. (internal quotation marks omitted).

The district court’s decision, now before us, was based primarily on its understanding that our remand had limited the legal question in the case to whether there was [61]*61“bad faith.” Although this was a perfectly reasonable interpretation of our remand order, the remand was not meant to be so narrow. In our previous decision in this case, a panel of our Court focused on the legal question of whether there could be recovery by a third-party beneficiary. In making that decision, we focused our attention on New York cases pertaining to the issue of third-party recovery, and we did not expressly consider the question of whether, given that the underlying contract (SPA) was substantially completed, Dalai could recover if the principal reason that the SPA did not ultimately close was the conduct of EasyLink. Our decision noted what was clearly true, namely that if EasyLink had acted with bad faith to deprive Dalai of a commission, then Dalai would recover. See Dalai, 412 F.3d 315. In so doing, we used language in dicta that was understandably read by the district court to require, for Dalai to recover, a finding of that sort of intent. We do not, however, think that this language was a necessary part of our prior holding, and it was therefore not necessary for the District Court to confine its legal analysis as it did.

As a general matter, a covenant of good faith and fair dealing is implicit in all contracts. See Dalton v. Educ. Testing Serv., 87 N.Y.2d 384, 389, 639 N.Y.S.2d 977, 663 N.E.2d 289 (1995). The covenant “embraces a pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” Id. (internal quotation marks omitted). In contrast, bad faith requires a degree of malice or sinister motive, which, in this instance, EasyLink argues would be shown only if it had terminated the SPA in order to deprive Dalai of his commission under the Third Agreement. See Cifarelli v. Vill. of Babylon, 93 F.3d 47, 52 (2d Cir.1996) (“New York law makes plain that bad faith requires a dishonest purpose.”); Gordon v. Nationwide Mut. Ins. Co., 30 N.Y.2d 427, 334 N.Y.S.2d 601, 609, 285 N.E.2d 849 (1972) (in breach of contract context, “bad faith requires an extraordinary showing of a disingenuous or dishonest failure to carry out a contract”).

We do not agree with EasyLink’s contention that bad faith is a necessary element that Dalai must show in order to recover. Rather, New York law holds that a seller will be deemed to have waived a elosing-of-title condition “where the sale fails of completion though the seller’s own fault,” which may be ascertained by the “reasonableness” of one’s conduct in not undertaking the agreed upon condition. Levy v. Lacey, 22 N.Y.2d 271, 276, 292 N.Y.S.2d 455, 239 N.E.2d 378 (1968). Thus, in Nuvest, S.A v. Gulf & Western Indus., Inc., 649 F.2d 943, 947 (2d Cir.1981), this Court held that a seller’s bad faith warranted recovery on a finder’s fee contract, even though no sale had been consummated. But, we also went further and reaffirmed the New York Court of Appeals’ holding in Trylon Realty Corp v. Di Martini, that “ ‘bad faith is not necessarily an essential ingredient to the finding of wrongful prevention.’ ” Id. at 949 (citing 34 N.Y.2d 899, 359 N.Y.S.2d 284, 285, 316 N.E.2d 718 (1974)).

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324 F. App'x 59, Counsel Stack Legal Research, https://law.counselstack.com/opinion/indiacom-inc-v-dalal-ca2-2009.