In the Matter of Westmoreland Coal Company v. Entech, Inc.

Summary

The New York Court of Appeals considered whether objections to asset values in a closing date certificate under a stock purchase agreement were subject to an accountant-based purchase price adjustment procedure or constituted claims for breach of representations and warranties. The court held that objections concerning accounting treatment, estimates, assumptions, or asset values common to the interim and closing financial statements were indemnification claims subject exclusively to litigation, and it reversed and remitted the matter for evaluation of the individual objections.

Holdings

1. Objections concerning accounting conventions, estimates, assumptions, or asset values common to both the interim financial statements and the closing date certificate did not fall within the purchase price adjustment procedure; they were claims for breach of representations or warranties.
2. Claims that the closing date certificate's asset values failed to comply with GAAP, consistently applied, could be pursued only through litigation under the agreement's exclusive indemnification remedy, not through the independent-accountant process.

Questions Presented

1. Whether objections to asset values in the closing date certificate based on alleged noncompliance with GAAP, consistently applied, fell within the stock purchase agreement's purchase price adjustment procedure for resolution by an independent accountant.
2. Whether those objections instead constituted claims for breach of representations or warranties subject to the agreement's exclusive indemnification and litigation provisions.

Disposition

reversed_and_remanded