Summary
This Appellate Division, First Department opinion reviews cross-motions for summary judgment arising from an asset purchase agreement dispute between Skyview Capital and Conduent Business Services. The court modified the lower court's order, dismissing Skyview's fraud and punitive damages claims due to contractual disclaimers and lack of justifiable reliance, while affirming the denial of summary judgment on Skyview's breach of contract claims regarding ordinary course of business and material adverse effects. The court also remanded for a hearing on Conduent's third counterclaim concerning a deferred transfer payment and affirmed the dismissal of other counterclaims without costs.
Topics
Practice areas
Questions Presented
- Whether Skyview's fraud claim should be dismissed on summary judgment.
- Whether Conduent is entitled to partial summary judgment on its counterclaims, including the $5 million set‑off limit.
- Whether Skyview's contract claims should be dismissed, particularly the ordinary‑course‑of‑business and material adverse effect defenses.
- Whether the Jamaica Deferred Transfer counterclaim should be remanded for a hearing.
Holdings
- The fraud claim and its request for punitive damages are dismissed because the parties' agreements contain explicit disclaimers and Skyview, a sophisticated party, failed to verify the forecasts.
- Conduent is granted partial summary judgment on its first and second counterclaims, setting the set‑off limit at $5 million as provided in the APA.
- The court denies Conduent's motion to dismiss Skyview's contract claims; the ordinary‑course‑of‑business and material‑adverse‑effect defenses raise genuine issues of fact.
- The court remands for a hearing on the Jamaica Deferred Transfer claim because the amount due has not been agreed upon.
Key quotations
“[s]omething which is done as a matter of corporate historical practice is, as a matter of law, done 'in the ordinary course of business'.” (224 AD2d at 365)
“failed to make use of the means of verification that were available to it” (68 AD3d at 639)
Factual background
Conduent sold certain customer‑care call center assets (the "Liberty" business) to Skyview. Skyview alleged fraud for alleged nondisclosure of workforce reductions and a Q3 reforecast, and asserted contract claims concerning ordinary‑course‑of‑business representations and material adverse effect clauses. The parties exchanged forecasts and Skyview had access to Conduent’s books for a limited period.
Procedural history
The Supreme Court, New York County entered an order granting partial summary judgment to Conduent and Skyview and denying other motions. Both parties appealed to the Appellate Division, First Department.
Remand instructions
Hold a hearing on the disputed amount for the Jamaica Deferred Transfer claim.