Sokol Holdings, Inc. v. BMB Munai, Inc.

11-698-cv
Sokol Holdings v. BMB Munai
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
S U M M A R Y O R D E R
Rulings by summary order do not have precedential effect. Citation to summary orders
filed after January 1, 2007, is permitted and is governed by this court’s Local Rule
32.1.1 and Federal Rule of Appellate Procedure 32.1. When citing a summary order in a
document filed with this court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary
order must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for
the Second Circuit, held at the Daniel Patrick Moynihan United
States Courthouse, 500 Pearl Street, in the City of New York, on
the 26th day of September, two thousand eleven.
Present: RALPH K. WINTER,
BARRINGTON D. PARKER,
DENNY CHIN,
Circuit Judges.
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SOKOL HOLDINGS, INC., BRIAN SAVAGE and THOMAS SINCLAIR,
Plaintiffs-Appellants,
v. 11-698-cv
BMB MUNAI, INC., ALEXANDRE AGAIAN, BAKHYTBEK BAISEITOV, GEORGES
BENARROCH, BORIS CHERDABAYEV, MIRGALI KUNAYEV, CREDIFINANCE
CAPITAL, INC. and CREDIFINANCE SECURITIES, LTD.,
Defendants-Appellees.
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Jerome M. Marcus, Jonathan Auerbach,
Marcus & Auerbach LLC, Jenkintown, PA,
Thomas E. L. Dewey, Dewey Pegno &
Kramarsksky, LLP, New York, NY, for
Plaintiffs-Appellants.
Robert A. O’Hare Jr., Andrew C. Levitt,
O’Hare Parnagian LLP, New York, NY,
Brent V. Manning, Sammi V. Anderson,
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James E. Ji, Manning Curtis Bradshaw &
Bednar LLC, Salt Lake City, UT, for
Defendants-Appellees.
Appeal from United States District Court for the Southern
District of New York (Wood, J.).
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of said court be and hereby is
AFFIRMED.
We assume familiarity with the underlying facts, the
procedural history, and the issues presented for review.
Appellants assert that appellees tortiously interfered with
their contract with Emir Oil. To establish a prima facie case of
tortious interference with contract under New York law,
appellants must show (i) the existence of a valid contract
between them and a third party; (ii) the "defendant's knowledge
of the contract"; (iii) the "defendant's intentional procurement
of the third-party's breach of the contract without
justification"; (iv) "actual breach of the contract"; and (v)
"damages resulting therefrom." Kirch v. Liberty Media Corp., 449
F.3d 388, 401-02 (2d Cir. 2006) (quoting Lama Holding Co. v.
Smith Barney Inc., 88 N.Y.2d 413, 424 (1996)).
The Emir-Sokol agreement would have allowed appellants to
acquire 100% of Tolmakov’s 70% interest in the ADE fields
venture. Appellants seek as damages the value of a 20% interest
in the ownership bloc that would have been acquired by them under
their contract with Emir Oil. However, it is undisputed that
appellants failed to perform their obligations under the Emir-
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Sokol contract.
The district court held that appellants could not establish
damages because they “were unable to perform.” Appellants
challenge that holding and assert that they could have performed.
However, the only evidence relied upon is a bank account
containing $700,000, which, they state, was available to be
transferred to Emir Oil. However, the evidence is clear that
this account belonged to the BM&B Defendants and was under their
exclusive control.1
Appellants nevertheless insist that they could have raised
the necessary funds to perform the Emir-Sokol agreement. Taking
them at their word, however, merely returns the issue to their
decision to not perform. If they had the ability to perform, but
did not, then they were unwilling to do so, and their tortious
interference claim fails for that reason.
Appellants argue that they were not required to perform
because Tolmakov anticipatorily repudiated the Sokol-Emir
contract when he accepted a $200,000 cash payment from Kunayev on
the same day he signed the Emir-Sokol contract. To establish an
anticipatory breach under New York law, appellants must show
either (i) "a statement by the obligor to the obligee indicating
that the obligor will commit a breach that would of itself give
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Appellants claim that they had an oral investment agreement with the BM&B
Defendants but do not assert a claim for breach of that agreement.
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the obligee a claim for damages for total breach," or (ii) "a
voluntary affirmative act which renders the obligor unable or
apparently unable to perform without such a breach." Computer
Possibilities Unlimited, Inc. v. Mobil Oil Corp., 747 N.Y.S.2d
468, 474-75 (App. Div. 1st Dep’t 2002) (citation and internal
quotation marks omitted). An anticipatory repudiation also
occurs where a party voluntarily "disable[s] itself from
complying with its contractual obligations." Id. at 475(citation and internal quotation marks omitted).
Once an anticipatory repudiation occurs, the other party
need not continue performing under the contract; however, that
party must “demonstrate that he had the willingness and ability
to perform before the repudiation and that [he] would have
rendered the agreed performance if the defendant had not
repudiated." Record Club of Am., Inc. v. United Artists Records,
Inc., 890 F.2d 1264, 1275 (2d Cir. 1989). This rule is an
application of the general principle that the plaintiff must
demonstrate the breach caused him injury; under an anticipatory
breach theory, “he must prove that he intended to and was able to
perform when his performance was due." Id. (citation and
internal quotation marks omitted); see also Ross Bicycles, Inc.
v. Citibank, N.A., 606 N.Y.S.2d 192, 193 (App. Div. 1st Dep’t
1994). Because appellants cannot demonstrate that they were able
and willing to perform, this rule bars their claim.
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Appellants rely upon case law suggesting that a party does
not need to prove a willingness and ability to perform once there
has been an anticipatory breach. See Am. List Corp. v. U.S. News
& World Report, 75 N.Y.2d 38, 44-45 (1989). However, where the
plaintiff seeks expectancy, rather than restitutionary, damages,
as is the case here, the plaintiff "must make a prima facie
showing in its moving papers [at the summary judgment stage]
that, but for the other party's anticipatory breach, it was
ready, willing and able, including financially able, to perform
its obligations under the contract." Emposimato v. CIFC
Acquisition Corp., No. 601728 2008, 2011 WL 833801, at *13 (N.Y.
Sup. Ct. Mar. 7, 2011).
Appellants cannot make such a showing. The alleged
anticipatory breach is Kunayev’s payment in April 2003.
However, appellants first learned of this alleged breach during
Kunayev’s deposition in May 2008, after this case had been
brought and five years after they failed to perform under the
Emil-Sokol contract. They cannot, therefore, show that they were
willing to perform but for the alleged anticipatory breach.
Not having performed, and now, the value of the deal having
been determined in hindsight, appellants seek by a lawsuit to
reap the benefits, without ever having incurred the risks. The
district court, therefore, did not err in dismissing the
appellants’ claim for tortious interference with contract.
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Appellants also assert a claim for unfair competition. The
measure of damages under a claim for unfair competition is "the
amount which the plaintiff would have made but for the
defendant's wrong, and not the profits received by the
defendants." Suburban Graphics Supply Corp. v. Nagle, 774
N.Y.S.2d 160, 163-64 (App. Div. 2d Dep’t 2004). Again, because
the appellants could have performed under the Emir-Sokol contract
and reaped its benefits, they are not entitled to lost profits.
The only damages to which appellants may be entitled is the value
of their work product. Appellants’ briefs paint their efforts as
critical to the final product; but, when the district court
offered to hold a trial determining the worth of those efforts,
appellants stipulated that it was too meager to justify a trial.
We need not consider this issue further, therefore.
Appellants’ claim for unjust enrichment may well be barred
by New York’s statute of frauds contained in General Obligations
Law § 5-701(a)(10). See Snyder v. Bronfman, 13 N.Y.3d 504, 506-
09 (2009) (rejecting the plaintiff’s claim for breach of an oral
agreement to form a joint venture under similar facts and holding
that the “essence” of the claim was that his efforts led to the
defendant’s deal, precisely the type of claim barred by the
statute of frauds). Even if the New York statute of frauds did
not foreclose this claim, however, the only damages appellants
would be entitled to recover is the “reasonable value of the
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services [they] rendered” to the BM&B Defendants. Collins Tuttle
& Co. v. Leucadia, Inc., 544 N.Y.S.2d 604, 605 (App. Div. 1st
Dep’t 1989). As discussed immediately supra, they have already
refused a trial on these damages.
We have considered appellants’ remaining arguments and find
them to be without merit. For the foregoing reasons, the
judgement of the district court is hereby AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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