DOCKET NO. 15-1122

Blackrock Capital Investment Corporation and 52nd Street Advisors LLC, Defendants Below, Petitioners

...

vs.) No.15-1122

Jeffrey Fish; William Fish; and Flora Fish, as Administratrix of the Estates of James Eugene Fish; and Jeffrey Scott Fish, Richard T. Swain, Cathy Majoris, and Megan Schlotter Swain as Co-Administrators of the Estate of Steven M. Swain, and David Scott Williams and Ruth Williams Plaintiffs Below AL Solutions, Inc.; Tygem Holdings, Inc.; Tremont Associates, LLC; Defendants Below, and Travelers Property Casualty Company of America, Intervenor Below, Respondents

UNDERLYING HANCOCK COUNTY CIVIL ACTION NO.'S 11-C-88 AND 11-C-90

OPENING BRIEF OF APPELLANTS, BLACKROCK CAPITAL INVESTMENT CORPORATION AND 52ND STREET CAPITAL ADVISORS, LLC

Jeffrey A. Holmstrand (#4893) GROVE, HOLMSTRAND & DELK, PLLC

44 Yz Fifteenth Street Wheeling, West Virginia 26003

(304) 905-1961

Steven F. Napolitano (pro hac vice pending) SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

Four Times Square New York, NY 10036-6522

Tel: (212)735-2187

TABLE OF CONTENTS

Page

ASSIGNMENTS OF ERROR 1

STATEMENT OF THE CASE 3

Procedural History of the AL Solutions' Motion 3

Substantive Issues Related to the AL Solutions' Motion 9

SUMMARY OF ARGUMENT 13

STATEMENT REGARDING ORAL ARGUMENT AND DECISION 15

ARGUMENT 15

I. THE CIRCUIT COURT ERRED AS A MATTER OF LAW WHEN IT GRANTED AL SOLUTIONS' MOTION FOR PARTIAL SUMMARY JUDGMENT ON UNCONSCIONABILITY OF CERTAIN PURPORTED CONTRACTS ("AL SOLUTIONS' MOTION") WITHOUT THE SUBMISSION OF BRIEFING OR OPPOSITION EVIDENCE BY BCIC AND 52ND STREET OR CONSIDERATION OF THEIR COMMENTS AND OBJECTIONS. 16

II. . THE LOWER COURT ERRED AS A MATTER OF LAW BY MISAPPL YING WEST VIRGINIA LAW PROCEDURAL LAW ON SUMMARY JUDGMENT BY DRAWING INFERENCES BASED ON AN INCOMPLETE RECORD IN FAVOR OF THE MOVING PARTY AND BY FAILING TO CONSIDER EVIDENCE IN THE RECORD FROM ANY SOURCE FROM WHICH A REASONABLE INFERENCE COULD HAVE BEEN DRAWN IN FAVOR OF THE NONMOVING PARTY. 19

III. THE LOWER COURT ERRED IN APPLYING WEST VIRGINIA LAW TO THE INTERPRET A TION OF CONTRACTS WHICH, BY THEIR TERMS, REQUIRED APPLICATION OF NEW YORK LAW AND THE ALLOCATION OF RISK (INCLUDING THE BURDEN TO OBTAIN INSURANCE COVERAGE) CONTAINED IN THOSE CONTRACTS WAS VALID UNDER NEW YORK LAW. 19

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IV. THE LOWER COURT ERRED BY CONCLUDING THE INDEMNIFICATION PROVISIONS AT ISSUE WERE UNENFORCEABLE AS TO BCIC AND 52ND STREET WHEN THE BASIS FOR SO HOLDING WAS THAT THE AGREEMENTS AT ISSUE WERE SIGNED BY A MEMBER OF TREMONT ASSOCIATES BOTH IN HIS CAPACITY AS A MEMBER OF TREMONT AND AS PRESIDENT OF AL SOLUTIONS, INC., AND TYGEM, INC. 23

V. TO THE EXTENT THERE WAS PROCEDURAL OR SUBSTANTIVE UNCONSCIONABILITY BASED ON THE MANNER IN WHICH THE AGREEMENTS WERE EXECUTED, THE LOWER COURT ERRED IN FAILING TO HOLD - AS AL SOLUTIONS HAD ORIGINALL Y ASKED -THAT THE AGREEMENTS WERE VOID. 23

CONCLUSION 24

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TABLE OF AUTHORITIES

Cases Page

Aetna Casualty & Surety Co. v. Federal Ins. Co. ofNY., 148 W.Va. 160, 133 S.E.2d 770 (1963) 13, 16

Armstrongv. Manzo, 380 U.S. 545, 552 (1965) 18

Cavender v. Fouty, 195 W. Va. 94,464 S.E.2d 736 (1995) 17

Chambers v. TRM Copy Centers Corp., 43 F.3d 29 (2nd Cir. 1994) 13, 16

Clinton v. Oppenheimer & Co., Inc., 824 F. Supp.2d 476 (S.D.N.Y. 2011) 20

Conradv. ARA Szabo, 198 W. Va. 362; 480 S.E.2d 801 (1996) 13, 16

Fisser v. Int'l Bank, 282 F .2d 231 (2d Cir. 1960) 21

Gantler v. Stephens, 965 A.2d 695 (Del. 2009) 22

General Elect. Co. v. Keyser, 275 S.E.2d 289 (W. Va. 1981) 19

Genesco, Inc. v. T. Kakiuchi & Co., Ltd, 815 F.2d 840 (2nd Cir. 1987) 21

Gillman v. Chase Manhattan Bank, NA., 534 N.E.2d 824 (N.Y. 1988) 20

Goldbergv. Kelly, 397 U.S. 254 (1970) 18

Grannis v. Ordean, 234 U.S. 385, 394 (1914) 18

Grant Thornton, LLP v. Kutak Rock, LLP, 228 W.Va. 226, 719 S.E.2d 394 (2011) 16

Haga v. King Coal Chevrolet Company, 151 W. Va. 125, 150 S.E.2d 599 (1966) 13, 16

Dallas Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775 (2d Cir. 2003) 20

Kalisch-Jarcho, Inc. v. City ofNew York, 58 N.Y.2d 377 (1983) 22

King v. Fox, 851 N .E.2d 1184 (2006) 20

Kurekv. Port Chester Housing Authority, 18 N.Y.2d 450 (1966) 22

Manville Personal Injury Settlement Trust v. Blankenship, 749 S.E.2d 329 (W. Va. 2013) 15, 19

111

Matter o/State o/New York v. Avco Financial Serv., 406 N.E.2d 1075, 1078 (1st Dept. 1980) 20

Mt. Lodge Ass'n -v. Crum & Forster Indem. Co., 210 W. Va. 536,558 S.E.2d 336 (2001) 19

Ngv. HSBC Mortgage Corp., 2011 U.S. Dist. LEXIS 88549 (E.D.N.Y. 2011) 20,22

Painter v. Peavy, 192 W.Va. 189,451 S.E.2d 755 (1994) 13,16

Pierce v. Ford Motor Co., 190 F.2d 910 (4th Cir. 1951) 18

Pina v. Dora Homes, Inc., 2013 U.S. Dist. LEXIS 11763 (E.D.N.Y. 2013) 21

Powderidge Unit Owners Assoc. v. Highland Properties, Ltd, 196 W.Va. 692,474 S.E.2d 872 (1996) 17

Process America, Inc. v. Cynergy Holdings, LLC, 2014 U.S. Dist. LEXIS 109069 (E.D.N.Y 2014) 22

Ragone v. Atlantic Video at Manhattan Center, 595 F.3d 115 (2d. Cir. 2010). 20

Reach Music Publishing, Inc. v. Warner/Chappell Music, Inc., 2014 U.S. Dist. LEXIS 159139 (S.D.N.Y. 2014) 20,21

Reznor v. J. Artist Mgmt., Inc., 365 F. Supp.2d 565 (S.D.N.Y. 2005) 20

Roberts v. Consolidated Rail Corp., 893 F.2d 21 (2nd Cir. 1989) 22

T.P.K Constr. Corp. v. Southern Amer. Ins. Co., 752 F. Supp. 105 (S.D.N.Y. 1990) 21,22

Whitehaven S.F., LLC v. Spangler, 2014 U.S. Dist. LEXIS 127566 (S.D.N.Y. 2014) 21

Williams v. Precision Coil, Inc., 194 W. Va. 52; 459 S.E.2d 329 (1995) 18

IV

ASSIGNMENTS OF ERROR

1bis appeal arises from the lower court's sudden decision to grant summary judgment in

favor ofone contracting party (Defendant AL Solutions, Inc.) with respect to the validity ofcertain

contractual agreements (or at least part of them) based on the manner in which those agreements

were executed. The contracts at issue involved a subsidiary (Defendant AL Solutions), a parent

company (Defendant Tygem Holdings, Inc.), two companies which held significant ownership

interests in the parent company (BlackRock Capital Investment Corporation and Tremont

Associates, LLC), and, 52nd Street Capital Advisors, LLC, the then-registered investment advisor

for BCIC (BCIC and 52nd Street are collectively referred to in this brief as the "BlackRock

Defendants" or "Appellants,,).l The primary basis for its holding was that even though the

agreements were executed pursuant to admittedly valid resolutions of the boards of directors, they

were executed on behalf of AL Solutions and Tygem by a member of Tremont Associates in his

capacity as the then-president of those entities and in his capacity as a member of Tremont. As

discussed below, this arrangement is common in the business world and not grounds for

invalidating the agreements.

This Court has repeatedly stated that summary judgment is proper only where the record

demonstrates that ''there is no genuine issue as to any material fact and that the moving party is

entitled to a judgment as a matter oflaw." Thus, a motion for summary judgment should be granted

only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the

As these parties advised the Court on March 26, 2015, BlackRock Kelso Capital Corporation changed its name to BlackRock Capital Investment Corporation. BlackRock Kelso Capital Advisors LLC has changed its name to 52nd Street Capital Advisors LLC. These parties also advised the Court that in connection with the March 6, 2015 transaction which led to these name changes, 52nd Street Capital Advisors LLC no longer serves as the investment advisor to BlackRock Capital Investment Corporation.

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facts is not desirable to clarify the application of the law. And, of course, the trial and reviewing

Court considers the evidence in the light most favorable to the nonmovant.

All of that presupposes, of course, that the lower court actually provided the non-moving

party the opportunity to submit evidence and argue and that it considered the evidence and

argument submitted. In this case, the lower court failed to follow its own briefing schedule on the

dispositive motion. Instead, based on its unannounced review ofthe motion and supporting papers

alone, the lower court directed the moving party to prepare a proposed order granting the motion.

It compounded this error when it failed to reinstate its prior briefing order and then failed even to

consider the objections of the Appellants to the proposed order submitted by movant's counsel

which included objections to both the procedure by which summary judgment was granted and to

the substantive merits of the motion which went to contractual language unquestionably governed

by New York law. Thus, without even allowing the Appellants to submit opposition evidence and

compounded by its failure to consider its opposition arguments and objections, the lower court

granted Defendant AL Solutions' summary judgment motion and certified that decision for

appellate review under Rule 54(b). With that background, the assignments of error are:

I. Whether the Circuit Court erred as a matter of law when it granted AL Solutions' Motion for Partial Summary Judgment on Unconscionability of Certain Purported Contracts ("AL Solutions' Motion") without the submission of briefing or opposition evidence by BCIC and 52nd Street or consideration of their comments and objections.

II. Wh~ther the lower court erred as a matter of law by misapplying West Virginia law procedural law on summary judgment by drawing inferences based on an incomplete record in favor of the moving party and by failing to consider evidence in the record from any source from which a reasonable inference could have been drawn in favor of the nonmoving party.

III. Whether the lower court erred in applying West Virginia law to the interpretation of contracts which, by their terms, required application of New York law and the allocation ofrisk (including the burden to obtain insurance coverage) contained in those contracts was valid under New

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York law.

N. Whether the lower court erred by concluding the indemnification provisions at issue were unenforceable as to BCIC and 52nd Street when the basis for so holding was that the agreements at issue were signed by a member of Tremont Associates both in his capacity as a member of Tremont and as President ofAL Solutions, Inc., and Tygem, Inc.

v. To the extent there was procedural or substantive unconscionability based on the manner in which the agreements were executed, whether the lower court erred in failing to hold - as AL Solutions had originally asked - that the agreements were void.

STATEMENT OF THE CASE

Because this appeal raises both procedural and substantive challenges to the lower court's

precipitous grant of summary judgment, this statement of the case will address first the odd

procedural history of the motion at issue and then address the substantive issues raised by it.

A. Procedural History of the AL Solutions' Motion

Defendant AL Solutions serviced its "Motion For Partial Summary Judgment On

Unconscionability OfCertain Purported Contracts With Incorporated Memorandum OfLaw" on

November 18, 2014. (A1598 - AI692). No hearing date was set for the Court's consideration

of that motion. On May 6, 2015, Judge Wilson by letter advised counsel that the Court was in

receipt of the AL Solutions' Motion for Partial Summary Judgment on Unconscionability of

Certain Purported Contracts and in that letter indicated that responses should be filed by June 12,

2015. (AI702-1703). Subsequently, on May 21, 2015, the Court entered an Order On Plaintiff's

Consolidated Motion To Distribute Interpleaded Insurance Policy Funds. (A 1705-1706). In that

May 21, 2015 Order, the Court noted that the BlackRock Defendants "have asked to be dismissed

for lack ofpersonal jurisdiction and it is anticipated they will receive a decision on that issue by

July 1, 2015." (A1705). The Court further stated that "If the issue of indemnification and the

validity of the agreements set forth in Count II - Complaint for Declaratory Judgment of AL

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Solutions Crossclaims filed on May 21, 2013 still remains after the Court issues its decision on

Jurisdiction, the parties must fully brief the issue by October 30, 2015." (AI705-1706) .

. Appellants stated in their June 12, 2015 Initial Response Of Defendants Blackrock

Capital Investment Corporation And 52nd Street Capital Advisors LLC To Motion For Partial

Summary Judgment, that they opposed the motion filed by AL Solutions. (AI708-1715). That

initial response further indicated the BlackRock Defendants would, as directed in the Court's

May 21,2015 Order, fully brief the AL Solutions' motion by October 30,2015 in the event the

issue remained pertinent as to them following the Court's anticipated ruling on their jurisdictional

motion. (AI710). Plaintiffs similarly filed on June 12,2015 a notice of intent to file a response

to the AL Solutions' Motion in the event the Court denied Appellants' jurisdictional motion.

(AI716-1720). Judge Wilson subsequently denied the Appellants' jurisdictional motion which

meant that, pursuant to the May 21, 2015 Order, the AL Solutions' Motion had to be briefed by

October 30, 2015.

On August 19, 2015, Judge Wilson entered an Order captioned "Order Granting

Plaintiffs' Consolidated Motion to Distribute Interpleaded Insurance Policy Funds." (AI897-

AI904). That Order was the subject of two proceedings before this Court. AL Solutions filed a

petition for writ of prohibition, Docket No. 15-0897, and Appellants filed a notice of appeal,

Docket No. 15-0942. In its writ petition, AL Solutions challenged the August 19,2015 Order

in large part because the lower court had not ruled on its motion for partial summary judgment.

(see e.g., Verified Petition For Writ of Prohibition of AL Solutions at 10). The BlackRock

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Defendants challenged the Order on a number of grounds by means of a direct appeal. (See,

Notice ofAppeal in No 15-0942).2

On October 8, 2015, during the pendency of those two proceedings before this Court,

Judge Wilson's law clerk sent an email to all counsel forwarding a letter of that same date from

the Court. (AI905-1906). That October 8, 2015 Letter indicated that the Court had reviewed the

AL Solutions' Motion and directed counsel for that party to provide it with a proposed order

containing numbered [mdings of fact and conclusions of law granting the motion by 5:00 on

October 13,2015 in Word format. (Id.). The Court's October 8, 2015 letter further indicated

that any other party desiring to file comments to the proposed findings and conclusions in the

proposed order granting the motion was directed to do so by filing the comments with the Court

by 5:00 on October 15,2015, also in Word format. (Id). Counsel for AL Solutions forwarded

its proposed order to Judge Wilson's law clerk by email on October 13,2015 at approximately

2:53 p.m. Neither the proposed order nor the forwarding email is part of the official record in

either ofthese consolidated cases. (See, Docket Sheets at A1983 and AI989).

Because the procedure and deadlines contained in the October 8, 2015 Letter conflicted

with the previously-set October 30,2015 deadline, the BlackRock Defendants filed on October

13, 2015 a motion pursuant to Rule 6( a) of the West Virginia Rules of Civil Procedure seeking

an enlargement oftime to make the deadlines on addressing the AL Solutions' motion congruent

with the previously-established briefing deadline in order to allow them to brief the motion and

submit evidence. (AI907-1920). The Request for Enlargement was hand-filed and delivered to

Judge Wilson's chambers. In addition, a copy was sent by email to Judge Wilson's law clerk

2 The BlackRock Defendants had previously challenged by writ of prohibition the lower court's order denying their jurisdictional motion. See, No. 15-0797. This Court refused to issue a rule to show cause on that petition by Order dated November 3,2015.

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and all counsel that afternoon. An auto-reply email from Judge Wilson's law clerk indicated she

would be "out of the office from October 12 through October 16 with limited access to email. If

you need immediate assistance, please contact Judge Wilson's secretary Patty Martin at (304)564­

3311 x 237. If you are attempting to schedule a hearing, please leave me an email and I will get

to your request when I return." As with the email communication from AL Solutions' counsel,

neither the forwarding email nor the Clerk's auto-reply is part of the official clerk's record. (See,

Docket Sheets at A1983 and AI989).3

Judge Wilson denied the request for enlargement oftime on October 14,2015, indicating

that he would consider comments submitted by the deadline set forth in his October 8, 2015

Letter. (A1921-1923),

On October 15,2015, counsel for the plaintiffs and counsel for one other party, Tremont

Associates, LLC, submitted comments to the Court by emails directed to Judge Wilson's law

clerk and the latter's comments and objections (AI946-1970) were subsequently filed with by

the Clerk on October 19,2015. (See Docket Sheet at AI983).

Similarly, the BlackRock Defendants submitted their comments and objections in Word

format to Judge Wilson's law clerk and the other counsel using a "reply-to-all" of the Tremont

counsel's email of the same date to the Court. That communication was sent at approximately

4:49 p.m. on that date. (See, AI974). That email was successfully transmitted because AL

Solutions' counsel replied to it at approximately 4:58 p.m. (Jd.). In addition to forwarding it by

email, the BlackRock Defendants transmitted their Comments and Objections by facsimile to the

3 The gist of these communications were contained in a letter from counsel for the BlackRock Defendants to the Honorable Rory 1. Perry, II, which, as discussed below, was submitted to this Court as part ofthe prior appellate proceedings at the suggestion ofJudge Wilson and following discussion with Mr. Perry. That letter is contained in the appendix at A1973-1975.

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Hancock County Circuit Clerk's office prior to the deadline and to counsel on the afternoon of

October 15,2015. The transmittal confirmation indicates it went through successfully and the

docket indicates it was filed as of that date. (See, Docket Sheet at AI983).4

The Comments and Objections (AI924-1945) submitted by the BlackRock Defendants

addressed both the procedural and substantive posture of the motion. This specifically included

an objection to the precipitous procedure utilized by the lower court to rule on the motion (A1925

- 1926) and included an affidavit pursuant to Rule 56(f) of the West Virginia Rules of Civil

Procedure. (A1934 - 1935). As the appellants noted, the lower court's decision to grant the

dispositive motion without the benefit offull evidentiary submissions and argument was contrary

to the rules and prevented the BlackRock Defendants from showing, among other things, that the

challenged practices were neither unreasonable nor unconscionable in light of the mores of and

business practices as they existed at the time ofthe transaction. 5 (AI935). The Comments and

4 On October 16, 2015, Judge Wilson's secretary called the office of BlackRock's counsel regarding its response. COlIDsel's assistant called Judge Wilson's secretary back that and advised that the objections and comments had been sent the day before by email to Judge Wilson's law clerk and by facsimile to the Hancock County Circuit Clerk. Counsel's assistant also forwarded to Judge Wilson's secretary the email and its attachments that had been sent the day before to Judge Wilson's law clerk. (See, AI975).

5 As noted in the Rule 56(f) Mfidavit, the BlackRock Defendants relied on the previously-set October 30, 2015 deadline to fully brief the motion. (AI934). It also set forth specifically that the procedure outlined in the Court's October 8, 2015 Letter only allowing these Defendants to "comment" on the proposed Order granting AL Solutions' motion provided inadequate time for the BlackRock Defendants to submit exhibits and other evidence in opposition to the AL Solutions' motion and to fully brief the issues prior to the Court's consideration of the motion and its determination whether to grant the motion or deny it. It also noted that the BlackRock Defendants were prepared to meet the October 30, 2015 deadline contained in the Court's May 21, 2015 Order. (AI935). Their opposition would include the submission of opposition evidence in addition to briefing the merits of the AL Solutions' motion and would demonstrate why it should be denied. (Jd.).

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Objections also challenged the substantive merits of the proposed Order submitted by AL

Solutions. (AI926-1930).

Less than 24 hours after the submission of the comments and objections by Tremont and

by the BlackRock Defendants, the Court entered its October 16, 2015 Order granting the AL

Solutions' Motion. (AI - A20). According to the Order, "The facts and legal arguments have

been adequately presented and a decision by this court on the Motion before it may also help the

Supreme Court of Appeals when it considers [the two pending writ proceedings]." The Court

indicated its decision to grant the motion was based on "one basic factual conclusion: The

contracts at issue, to the extent they purport to require AL Solutions, Inc. (ALS) and Tygem to

indemnify and hold harmless the Backwater (sic) defendants (BKC) and Tremont, are void and

unenforceable for the principal reason that Henry Goddard, as president of Tygem an ALS, at the

same time he was Managing Director of Tremont, signed the three contracts that contain the

indemnification and no liability conditions in issue." (A2). Indicating he had given "due

consideration" to "said motion, and all responsive pleadings and exhibits," the Court ruled:

To the extent [AL Solutions] seeks a determination by this Court that the indemnity and No Liability clauses contained within the contracts at issue are unconscionable and unenforceable, the Court GRANTS the Motion For Partial Summary Judgment only on the Unconscionability of Certain Purported Contracts as opposed to the entirety of these Agreements.

(A2). The order also found no just reason for delay and directed "the entry of final judgment as

to AL Solutions and Tygem." (A20).

On October 21,2015, counsel for the BlackRock Defendants received in the mail a letter

from Judge Wilson dated October 19,2015 (AI971-1972), indicating he had not considered the

objections and comments made by the BlackRock Defendants because he did not learn of them

until after he had submitted his Order regarding the AL Solutions' motion to the Supreme Court

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in accordance with a "Friday October 16, 2015 deadline recommended by their office." (AI971).

Judge Wilson indicated that he first learned of them on the afternoon of October 16,2015 after

he had entered the October 16, 2015 Order and had transmitted it to this Court. Judge Wilson

indicated in his October 19, 2015 letter that his law clerk's out-of-office message stated "she was

on vacation that week and would not be reading emails." (Jd.). As noted above, her auto-reply

message indicated only she would have limited access to emails. It did not state she would not

be reading them and, in any case, two other parties submitted their comments/objections via

emails to Judge Wilson's law clerk on October 15,2015 and the BlackRock Defendants also filed

their comments/objections via facsimile on October 15, 2015 with the Hancock County Circuit

Clerk, as reflected on the docket sheet. (See, A1983).

Judge Wilson's October 19, 2015 letter indicated the BlackRock Defendants may wish to

inform the Court of the circumstances. (AI972). He expressed his regret at not having the

opportunity to consider their objections but indicated he would not be withdrawing the Order he

entered on October 16, 2015. (A1972). Following a telephone conversation with Mr. Perry,

counsel for the BlackRock Defendants advised this Court ofthe circumstances. Subsequently, it

denied the petition for writ of prohibition filed by AL Solutions in No. 15-0797 and granted a

motion to dismiss the appeal of the August 19,2015 Order in No. 15-0942.

This appeal follows.

B. Substantive Issues Related to the AL Solutions' Motion

As noted above, the lower court's basic premise was that a member of an LLC which held

an ownership interest in Tygem, the parent company of AL Solutions, could not execute an

agreement on behalf of AL Solutions and notwithstanding that it is undisputed he was the duly­

elected President ofthose two companies. This makes between little and no sense in a world where

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businesses invest in other business all the time.6 For purposes of this appeal, only a brief

background is necessary.

BCIC is a publicly traded investment company and 52nd Street was its investment advisor.

(AI599). As AL Solutions, admits, Tygem was formed to be the holding company and owned

100% ofthe shares ofAL Solutions, which would be an operating company. (A634; AI600). The

purpose ofthese entities was to purchase substantially all ofthe assets ofa privately-held company

known as Jamegy which operated a titanium and zirconium processing plant in New Cumberland,

West Virginia. (See, e.g., A723-729 - letter of intent; AI097-1106 -December 29, 2006 Joint

Written Consent of the Boards of Directors of Tygem Holdings, Inc. and AL Solutions, Inc.

approving the purchase of the assets of AL Solutions and authorizing the officers to execute the

paperwork incident to the transactions and appoint Henry B. Goddard as President of both).

BCIC played several roles in the transaction. One of those roles was lending money to AL

Solutions. (A633). BCIC was also an equity provider to the transaction - that is it that it held an

ownership interest in Tygem, which owned the stock in AL Solutions. (A634; see generally

AI097-1106).

Also as part ofthat same December 29, 2006 Joint Written Consent, the Boards ofDirectors

of Tygem and AL Solutions authorized the Company to enter into three agreements that were at

issue in AL Solutions' Motion: a Management Services Agreement, an Advisory Services

Agreement; and a Transaction Fee Agreement. (AII03-11104). In other words, the Boards ofthe

6 Indeed, the BlackRock Defendants have designated two experts who are expected to offer testimony regarding the relationships between investment companies like BCIC, their advisors, the companies in which they invest. See, Blackrock Kelso Capital Corporation's And Blackrock Kelso Capital Advisors, LLC's Expert Witness Disclosure, filed January 20, 2015, and who would have been able to offer evidence regarding the procedure used here during the formation ofTygem and AL Solutions had the lower court followed the established deadline.

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two companies specifically authorized the "execution, delivery and performance by [Tygem] and

[AL Solutions]" ofthe three agreements. (A 1104). The terms ofthose agreements were negotiated

by the interested parties, each of whom had representation. (See, e.g., A633-634; A713-715).

Pursuant to the provisions of the Management Services Agreement, the BlackRock

Defendants and Tremont were to provide "certain agreed upon management and financial

services" for Tygem and AL Solutions. (AI657). Similarly, the Advisory Services Agreement

provided that the BlackRock Defendants and Tremont were to provide "certain advisory services"

to Tygem and AL Solutions, while the Transaction Fee Agreement required the BlackRock

Defendants and Tremont to provide "certain consulting and advisory services" to Tygem and AL

Solutions "in connection with their acquisition of assets from Jamegy[.]" (A 1667 and A1676).

All three agreements contained a provision under which Tygem and AL Solutions were

obligated to indemnify the BlackRock Defendants and Tremont for any claims arising out of the

services provided under each respective agreement. (AI659; A1669; AI677). The subject

agreements also contained a No Liability provision, which provided that the BlackRock

Defendants and Tremont would not be liable for any claim arising out of the engagement of the

BlackRock Defendants and Tremont or their performance of services under the subject

agreements. (Jd.)

The subject agreements also included choice of law provisions, mandating that the subject

agreements be construed and interpreted under New York law. (AI660; 1670; 1678).

During his September 5, 2013 deposition, Mr. Goddard, a member of Tremont, testified

that he only served as the President of Tygem and AL Solutions for approximately one month

following their formation so as to ensure that the entities became operational. (AI270). Mr.

Goddard also admitted that he essentially entered into the subject agreements as a signing party to

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two different corporations, he explained that he "d[id]n't see anything wrong with it in what [they]

were trying to accomplish," that it was "not necessarily" a bad business practice, and that he

thought it was a "pretty typical" because "[s]omeone has got to sign those documents to get the

shell set up." (A1279) Along the same vein, Mr. Kenyon, a member of the Board of Directors for

both Tygem and AL Solutions and another member of Tremont, testified during his September 4,

2013, deposition that he did not see anything improper with Mr. Goddard's signing on behalf of

different parties under the circumstances surrounding the creation, approval, and execution of the

subject agreements. (A973). In fact, Mr. Kenyon testified that such was "not atypical when [ ] a

company [is] created prior to the transaction [taking place]." (A972).

The relevant agreements each provided that as between the operating company (AL

Solutions), its parent company (Tygem), and some of the equity investors in Tygem (the

BlackRock Defendants and Tremont), the risk of loss would be placed on the operating company

and the holding company. For example, the Management Services Agreement provided:

6. Indemnification. The Company shall:

(a) Indemnify the Management Parties, each Related Person of each Management Party, and each of the partners, members, stockholders, directors, officers, employees, agents and controlling persons of each Management Party of any of its Related Persons (collectively, the "Management Related Parties"), to the fullest extent lawful, foml and against any and all losses, claims, damages and liabilities directly or indirectly caused by, related to, based upon, or arising out of the engagement of the Management Parties pursuant to this Agreement, or the rendering of any other advice or performance of any other services by any Management Related Part of the Company or any of its subsidiaries ....

(A1659).

Significantly, the Management Services Agreement also contained a provision regarding

the role of the parties in the ultimate decision-making of the operating company:

4. Decisions/Authority of Management Advisor. The Company [AL Solutions1shall make all decisions with regard to any matter upon which the

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Management Parties have rendered their advice and consultation, and there shall be no liability to the Management Parties for any such advice accepted or rejected by the Company pursuant to the provisions of this Agreement. For any Services provided hereunder, or under any other arrangement arising out of this Agreement, the Management Parties are acting as independent contractors and not as an agents of the Company and nothing in this Agreement shall be construed as creating a partnership, joint venture or similar relationship of any kind between the parties hereto, or any employer-employee relationship. The Management Parties shall have no authority to enter into any agreement or to make any representation, commitment or warranty binding upon the Company or to obtain or incur any right, obligation or liability on behalf of the Company. The Management Parties shall have complete charge of their personnel rendering advice and consultation to the Company under this Agreement.

(AI658) (emphasis added). The bolded language makes clear that any decision-making fell where

it belonged - on the operating company by the people who best knew how to operate the business.

SUMMARY OF ARGUMENT

This Court has recognized several legal concepts related to dispositive motions. First, "[a]

motion for summary judgment should be granted only when it is clear that there is no genuine

issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application

of the law." Aetna Casualty & Surety Co. v. Federallns. Co. ofN Y., 148 W.Va. 160, 133 S.E.2d

770 (1963) syllabus point 3. Second, when considering a dispositive motion:

The court must consider all exhibits and affidavits and other matters submitted by both parties 011 a motion for SunlIDary judgment under Rule 56 of the West Virginia Rules of Civil Procedure. Syi. pt. 3, Haga v. King Coal Chevrolet Company, 151 W. Va. 125, 150 S.E.2d 599 (1966). 'If, as to the issue on which summary judgment is sought, there is any evidence in the record from any source from which a reasonable inference could be drawn in favor ofthe nonmoving party, summary judgment is improper.' Chambers v. TRM Copy Centers Corp., 43 F.3d 29,37 (2nd Cir. 1994).

Conrad v. ARA Szabo, 198 W. Va. 362,374; 480 S.E.2d 801,813 (1996). Third, "[a] circuit

court's entry of summary judgment is reviewed de novo." Painter v. Peavy, 192 W.Va. 189,451

S.E.2d 755 (1994) syllabus point 1.

13

On this appeal, the BlackRock Defendants first challenge procedurally the mechanism by

which lower court concluded it would grant the AL Solutions' motion prior to the motion being

fully briefed, without consideration of the BlackRock Defendants' opposition evidence, and

without even consideration of the Comments and Objections to the proposed Order submitted by

AL Solutions notwithstanding the fact those were on file with the Circuit Clerk prior to the deadline

set by the lower court for their submission. As discussed below, the procedure followed here is

contrary to West Virginia law and violated the BlackRock Defendants' procedural and substantive

due process rights. At a minimum, this requires reversal and remand for the proper consideration

of the motion after full briefing and argument.

The BlackRock Defendants further challenge on this appeal the substantive merits of the

lower court's ruling. As set forth in the argument, these agreements were, by their terms, governed

by New York law. West Virginia has time and again recognized "the presumptive validity of a

choice ofla~ provision ...." Manville Personal Injury Settlement Trust v. Blankenship, 749 S.E.2d

329,336 (W. Va. 2013). Under New York law, there was nothing procedurally or substantively

unconscionable about a duly elected officer of a corporation from executing agreements with

companies which hold an ownership interested in that corporation's parent company.7 This

requires outright reversal of the decision below.

Finally, if the lower court were correct in its determination that the Mr. Goddard's signing

of the agreements as both duly-elected President of AL Solutions and as a member of Tremont ­

the "basic factual premise" underlying its decision that the indemnification and No Liability

provisions were void - then it erred in failing to do what AL Solutions asked for in the first place

7 And there is no reason West Virginia law should be different on this point. Companies investing in West Virginia corporations should be able to allocate risks - including the need to purchase insurance coverage - among the relevant entities.

14

and determine that the entirety of the agreements were void. This requires reversal and remand

for further proceedings.

STATEMENT REGARDING ORAL ARGUMENT AND DECISION

The lower court's procedural and substantive rulings are unprecedented. The cornerstone

of our adversarial system is notice and the opportunity to be heard. That premise is built into our

rules of civil procedure and is protected by the state and federal due process clauses. Because the

lower court's ruling trampled on those guarantees, the BlackRock Defendants request Rule 20 oral

argument on the procedural aspects ofthe lower court's decision. Likewise, because the ability of

investors to allocate risk among themselves and the companies in which they invest is critical to a

functional capital market, the BlackRock Defendants also request Rule 20 oral argument on the

substantive merits of the lower court's decision.

ARGUMENT

The lower court's decision was reached in a manner contrary to West Virginia law

regarding summary judgment and contrary to the due process rights of the BlackRock Defendants.

These errors are addressed in the first two assignments of error. The lower court's decision was

substantively wrong both because it failed to apply New York law - which supports investors

being able to enter into contracts with companies in which they hold an equity interest - and

because the contracts at issue are no unconscionable. The lower court further erred in holding the

indemnification and no liability provision of agreements tmenforceable as to the BlackRock

Defendants because they were executed by a member of another investor. Finally, if the lower

court were correct that the manner in which the agreements were executed rendered certain

provisions unconscionable and therefore void, it should have held the entire agreements void, as

asked by AL Solutions in its motion. Because this appeal arises from the lower court's grant of

15

summary judgment, the standard of review for all assignments of error is de novo. Painter v.

Peavy, 192 W.Va. 189,451 S.E.2d 755 (1994) syllabus point 1; accord Grant Thornton, LLP v.

Kutak Rock, LLP, 228 W.Va. 226,233, 719 S.E.2d 394, 401 (2011). Each of the errors below

were raised in the Comments And Objections Of Blackrock Capital Investment Corporation And

52nd Street Capital Advisors, LLC To Proposed Order Granting AI Solutions' Motion For Partial

Summary Judgment. (AI924-1945).

I. THECIRCIDTCOURTERREDASAMATTEROFLAWWHENIT GRANTED AL SOLUTIONS' MOTION FOR PARTIAL SUMMARY JUDGMENT ON UNCONSCIONABILITY OF CERTAIN PURPORTED CONTRACTS ("AL SOLUTIONS' MOTION") WITHOUT THE SUBMISSION OF BRIEFING OR OPPOSITION EVIDENCE BY BCIC AND 52ND STREET OR CONSIDERATION OF THEIR COMMENTS AND OBJECTIONS.

The procedural history standing alone is sufficient argument to warrant reversal and

remand for consideration of the AL Solutions' Motion on the merits after full briefing and

argument. This is true because "[a] motion for summary judgment should be granted only when

it is clear that there is no genuine issue of fact to be tried and inquiry conceming the facts is not

desirable to clarify the application of the law." Aetna Casualty & Surety Co. v. Federal Ins. Co.

olN.Y., 148 W.Va. 160, 133 S.E.2d 770 (1963) syllabus point 3. That inquiry cannot be had absent

the opportunity to respond which the BlackRock Defendants were denied. As this Court has held:

The court must consider all exhibits and affidavits and other matters submitted by both parties on a motion for summary judgment under Rule 56 of the West Virginia Rules of Civil Procedure. Syl. pt. 3, Raga v. King Coal Chevrolet Company, 151 W. Va. 125, 150 S.E.2d 599 (1966). 'If, as to the issue on which summary judgment is sought, there is any evidence in the record from any source from which a reasonable inference could be drawn in favor ofthe nonmoving party, summary judgment is improper.' Chambers v. TRM Copy Centers Corp., 43 F.3d 29,37 (2nd Cir. 1994).

Conradv. ARA Szabo, 198 W. Va. 362, 374; 480 S.E.2d 801,813 (1996). Moreover, the "court

must grant the nonmoving party the benefit of inferences, as credibility determinations, the

16

weighing of the evidence, and the drawing of legitimate inferences from the facts are jury

functions, not those of a judge. Cavender v. Fouty, 195 W. Va. 94,464 S.E.2d 736, 1995 W. Va.

LEXIS 184 (1995). The lower court's consideration of and decision to grant the motion based­

as its October 8, 2015 letter explicitly stated - solely on its review of the motion alone and without

the benefit of briefing and submission of by the BlackRock Defendants violates these holdings.

The BlackRock Defendants attempted to ameliorate the harm caused by the lower court's

precipitous procedural decision by seeking relief under Rule 6( a) to have the deadline for fully

briefing the motion reinstated. (AI907-1914). That request was summarily denied in one­

paragraph order which indicated the lower court had "previously informed the Clerk of the

Supreme Court ofAppeals of West Virginia that an order would be entered by Friday, October 16,

2015." (AI922). There was no reason for this deadline and it is certainly not grounds to cut short

the briefmg schedule already established. 8

After the lower court denied their request under Rule 6(a) to have the original deadline for

briefing the summary judgment motion reinstated, the BlackRock defendants submitted their

objections and comments to the proposed order submitted by email by Defendant AL Solutions.

(AI924-1945). As noted, those included an affidavit under Rule 56(f). That affidavit set forth the

procedural history of the motion, the reliance of the BlackRock Defendants on the deadline set by

the Court, and their ability to meet that deadline with evidence and argument. The affidavit,

which the lower court admitted failed to consider, met the requirements established by this Court

in syllabus point 1 of Powderidge Unit Owners Assoc. v. Highland Properties, Ltd., 196 W.Va.

8 The Court did indicate it would "consider any arguments" regarding the proposed order submitted by Defendant AL Solutions if they "are submitted by the deadline established in the court's October 8, 2015 letter." (AI922). As discussed below, the Court then failed to consider the comments and objections of the BlackRock Defendants which, as the Docket shows, were filed prior to that deadline.

17

692, 474 S.E.2d 872 (1996). Moreover, because a court considering a motion for summary

judgment "must grant the nonmoving party the benefit of inferences, as 'credibility determinations,

the weighing of the evidence, and the drawing of legitimate inferenc~s from the facts are jury

functions, not those of ajudge." Williams v. Precision Coil, Inc., 194 W. Va. 52, 59; 459 S.E.2d

329,336 (1995). The Williams court stated that "summary judgment should be denied 'even where

there is no dispute as to the evidentiary facts in the case but only as to the conclusions to be drawn

therefrom.'" 194 W. Va. at 59, 459 S.E.2d at 336 (quoting Pierce v. Ford Motor Co., 190 F.2d

910,915 (4th Cir. 1951). By failing to permit the submission of opposition evidence or consider

the BlackRock Defendants' arguments and objections, the lower court violated these rules.

In addition, the fundamental requirement of due process is the opportunity to be heard "at

a meaningful time and in a meaningful manner." Armstrong v. Manzo, 380 U.S. 545,552 (1965);

see Grannis v. Ordean, 234 U.S. 385, 394 (1914); see also, Goldbergv. Kelly, 397 U.S. 254 (1970)

(due process requires fair evidentiary hearing prior to termination of welfare benefits). In this

case, the BlackRock Defendants' due process rights were deprived at several stages. First, by

altering the established deadline for fully briefmg Defendant AL Solutions' Motion, the lower

court deprived the BlackRock Defendants of their opportunity to present opposition evidence and

arguments. Second, by determining to grant the motion solely on the basis of its review of the

motion itself, the lower court again deprived the BlackRock Defendants of their opportunity to be

heard. Third, by failing even to consider their timely-filed objections and comments to the

proposed order submitted by AL Solutions, the lower court again deprived the BlackRock

Defendants of their due process right to be heard. This requires reversal.

18

ll. THE LOWER COURT ERRED AS A MATTER OF LAW BY MISAPPLYING WEST VIRGINIA LAW PROCEDURAL LAW ON SUMMARY JUDGMENT BY DRAWING INFERENCES BASED ON AN INCOMPLETE RECORD IN FAVOR OF THE MOVING PARTY AND BY FAILING TO CONSIDER EVIDENCE IN THE RECORD FROM ANY SOURCE FROM WHICH A REASONABLE INFERENCE COULD HAVE BEEN DRAWN IN FAVOR OF THE NONMOVING PARTY.

For much the same reasons set forth above, the lower court erred by ruling on incomplete

record, by drawing inferences against the non-moving party, and by failing to consider evidence

in the record from any source. Indeed, this Court has reversed a grant summary judgment where

the record on a critical issue before the lower court was incomplete. See, Mt. Lodge Ass'n v. Crum

& Forster Indem. Co., 210 W. Va. 536, 558 S.E.2d 336, 343 (2001). Because the lower court

inexplicably altered its established procedure and decided to grant Defendant AL Solutions'

motion based solely on its review ofthat motion, it misapplied well-established West Virginia law.

ill. THE LOWER COURT ERRED IN APPLYING WEST VIRGINIA LAW TO THE INTERPRETATION OF CONTRACTS WHICH, BY THEIR TERMS, REQUIRED APPLICATION OF NEW YORK LAW AND THE ALLOCATION OF RISK (INCLUDING THE BURDEN TO OBTAIN INSURANCE COVERAGE) CONTAINED IN THOSE CONTRACTS WAS VALID UNDER NEW YORK LAW.

Each of the three agreements contained a choice of law provision which provided it would "be

governed and construed in accordance with the internal laws of the State ofNew York ..." Choice oflaw

provisions such as that included within the subject agreements "are not automatically void ..." General

Elect. Co. v. Keyser, 275 S.E.2d 289, 292 cw. Va. 1981). In fact, this Court has recognized ''the presumptive

validity of a choice of law provision ..." Manville Personal Injury Settlement Trust v. Blankenship, 749

S.E.2d 329,336 (W. Va. 2013). New York has a substantial relationship to the subject agreements' parties

or transactions given that the BlackRock Defendants are located in New York and their obligations and

duties under the subject agreements were to be carried out there.

19

"Under New York law, an unconscionable contract is one which 'is so grossly unreasonable or

unconscionable in the light of the mores and business practices of the time and place as to be

unenforceable according to its literal terms.'" Reach Music Publishing, Inc. v. Warner/Chappell Music,

Inc., 2014 U.S. Dist. LEXIS 159139, *21 (S.D.N.Y. 2014) (emphasis added) (citing Gillman v. Chase

Manhattan Bank, NA., 534 N.E.2d 824, 828 (N.Y. 1988». In order for a contract to be considered

unconscionable, "the party alleging the defect must generally show both substantive and procedural

unconscionability." Id. (emphasis added) (citing Clinton v. Oppenheimer & Co., Inc., 824 F. Supp.2d 476,

483 (S.D.N.Y. 2011». In other words, the "contract must unreasonably favor one party over the other and

the process of contract formation must have deprived the disadvantaged party of a meaningful choice." Ng

v. HSBC Mortgage Corp., 2011 U.S. Dist. LEXIS 88549, *22 (E.D.N.Y. 2011) (citing King v. Fox, 851

N.E.2d 1184 (2006».

In determining whether a contract clause is procedurally unconscionable, courts should consider

"(1) the size and commercial setting ofthe transaction; (2) whether there was a 'lack ofmeaningful choice'

by the party claiming unconscionability; (3) the 'experience and education of the party claiming

unconscionability;' and (4) whether there was 'disparity in bargaining power.'" Reach Music Publishing,

Inc. v. Warner/Chappell Music, Inc., 2014 U.S. Dist. LEXIS 159139, *21-2. (citing Dallas Aerospace, Inc.

v. CIS Air Corp., 352 F.3d 775, 787 (2d Cir. 2003». Consideration of the procedural unconscionability of

a contract clause is "not aimed at disturbance of allocation of risks because of superior bargaining

power but, instead, at the prevention of oppression and unfair surprise." Id at *22; See also, Matter

oJState oJNew York v. Avco Financial Serv., 406 N.E.2d 1075, 1078 (1st Dept. 1980); Reznor v. J. Artist

Mgmt., Inc., 365 F. Supp.2d 565, 576 (S.D.N.Y. 2005) (wherein no "lack ofbargaining power" was found

when a performer entered into a one-sided contract despite claiming that he was tricked into it). Consistent

with the immediately aforementioned proposition, the Second Circuit has rejected procedural

unconscionability claims based upon a plaintiff s failure to read or know the contents of a contract, the

contract being offered to the plaintiff on a ''take it or leave it" basis, and the plaintiff's lack of a college

education. Ragone v. Atlantic Video at Manhattan Center, 595 F.3d 115, 122 (2d. Cir. 2010). Moreover,

20

courts applying New York law have rejected procedural unconscionability claims based upon a party's

failure to seek legal advice regarding the transaction since "[m ] any agreements are entered into without

counsel on one side, the other, or both." See Reach Music Publishing, Inc. v. Warner/Chappell Music, Inc.,

2014 U.S. Dist. LEXIS 159139 (there is "no requirement in the law that consultation with a lawyer must

occur in order to render a contractual obligation enforceable").

Here, the companies which had the largest financial ownership in Tygem, the parent company of

AL Solutions, entered into contracts with those entities. The contracts were approved duly appointed board

members and their execution was specifically authorized by the boards of the two. Courts generally do not

fmd improper or disregard a separate entity's corporate form when the entity shares directors or officers

with an associated corporation so long as the entities "were formed for different purposes, neither is a

subsidiary ofthe other, their finances are not integrated, assets are not commingled, and the principals treat

the entities as separate and distinct." Pina v. Dora Homes, Inc., 2013 U.S. Dist. LEXIS 11763, *21-2

(E.D.N.Y. 2013); See also, Fisser v. Int'! Bank, 282 F.2d 231, 238 (2d Cir. 1960) (courts generally refuse

to disregard corporate form when a separate corporate structure existed at the time the transaction in

questions occurred). Thus, it was not inherently improper for Tygem and AL Solutions to have directors

who were also employees or principals of those shareholders and who then authorized the agreements at

issue.

Likewise, under New York law, "a party is bound by the provisions of a contract that he signs,

unless he can show special circumstances that would relieve him of such an obligation." TP.K Constr.

Corp. v. Southern Amer. Ins. Co., 752 F. Supp. 105, 110 (S.D.N.Y. 1990) (citing Genesco, Inc. v. T

Kakiuchi & Co., Ltd., 815 F.2d 840, 845 (2nd Cir. 1987). One way in which a party can attempt to avoid a

contractual obligation is to demonstrate that the agreement was substantively unconscionable. Claims of

substantive unconscionability "focus[ ] on the 'substance of the bargain to determine whether the terms

were unreasonably favorable to the party against whom unconscionability is urged. ", Whitehaven S.F., LLC

v. Spangler, 2014 U.s. Dist. LEXIS 127566, *38 (S.D.N.Y. 2014). Under New York law, in order to

successfully prevail on a claim of substantive unconscionability, a party must produce evidence showing

21

that the contract or agreement was one ''which no man in his senses and not under delusion would make."

Ngv. HSBC Mortgage Corp., 2011 U.S. Dist. LEXIS 88549, *26 (E.D.N.Y. 2011). That being said, "[t]here

is a presumption of conscionability when the contract is between businessmen in a commercial setting."

Process America, Inc. v. Cynergy Holdings, LLC, 2014 U.S. Dist. LEXIS 109069, *12 (E.D.N.Y 2014).

New York law explicitly provides that "parties to a contract may agree to limit the liability that the

other may recover from a breach of contract." Process America, Inc. v. Cynergy Holdings, LLC, 2014 U.S.

Dist. LEXIS 109069, *3-*4 (E.D.N.Y. 2014). "A party may later regret their assumption of the risks of

non-performance in this manner; but the courts let them lie on the bed they made" because the risk of loss

was contractually assumed. Id. at *4. Thus, although the indemnity and no liability provisions at issue herein

are, by their very own terms, broad enough to hold the BlackRock Defendants harmless for negligence in

the performance of their contractual services or even an intentional breach of the subject agreements, "such

[] are valid and binding in New York." T.P.K Constr. Corp. v. Southern Amer. Ins. Co., 752 F. Supp. 105,

110-1 (S.D.N.Y. 1990) (citing Kurek v. Port Chester Housing Authority, 18 N.Y.2d 450 (1966); Kalisch­

Jarcho, Inc. v. City ofNew York, 58 N.Y.2d 377 (1983); Roberts v. Consolidated Rail Corp., 893 F.2d 21

(2nd Cir. 1989». Moreover, because both Tygem and AL Solutions are Deleware corporations, the Court

must apply the presumption found in Delaware law for officers and directors: "that in making a business

decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that

the action taken was in the best interests of the company." Gantler v. Stephens, 965 A.2d 695, 705-6 (Del.

2009) (emphasis added). As such, the lower court erred in granting summary judgment based on its

refusal to apply New York law to the agreements and in fmding they were unconscionable.

Accordingly, reversal is warranted.

22

IV. THE LOWER COURT ERRED BY CONCLUDING THE INDEMNIFICATION PROVISIONS AT ISSUE WERE UNENFORCEABLE AS TO BCIC AND 52ND STREET WHEN THE BASIS FOR SO HOLDING WAS THAT THE AGREEMENTS AT ISSUE WERE SIGNED BY A MEMBER OF TREMONT ASSOCIATES BOTH IN IDS CAPACITY AS A MEMBER OF TREMONT AND AS PRESIDENT OF AL SOLUTIONS, INC., AND TYGEM, INC.

The lower court admitted the basis for its decision was the fact that member of Tremont

Associates, LLC executed the agreement both in his capacity as duly-appointed President of

Tygem and AL Solutions and as a member ofTremont. Even if that were grounds for invalidating

the agreements as to Tremont (which it is not), there is no basis for invalidating them as to the

BlackRock Defendants, which were completely separate entities. The lower court's order cites no

authority for that proposition and there is none.

V. TO THE EXTENT THERE WAS PROCEDURAL OR SUBSTANTIVE UNCONSCIONABILITY BASED ON THE MANNER IN wmCH THE AGREEMENTS WERE EXECUTED, THE LOWER COURT ERRED IN FAILING TO HOLD - AS AL SOLUTIONS HAD ORIGINALLY ASKED - THAT THE AGREEMENTS WERE VOID.

Here, as the lower court recognized, Defendant AL Solutions sought a determination that

the three agreements were void. (A2). Instead of granting that relief, the lower picked out only

certain parts of the agreements, leaving others apparently intact. Inasmuch as the basis for

invaliding the provisions at issue was based on the manner in which the agreements were executed

by Mr. Goddard, there was no basis for the lower court to selectively edit the agreements. If the

manner in which they were executed resulted in making certain provisions void, it should have

made all the provisions void.

23

•

CONCLUSION

The lower court erred by entering summary judgment for AL Solutions. The procedure it

used violated West Virginia law and the due process rights of the BlackRock Defendants. The

substance of its ruling was contrary to New York law, which tmambiguously applies. The hastily­

entered October 16, 2015 Order should be reversed and the case remanded.

BLACKROCK CAPITAL INVESTMENT CORPORATION and 52ND STREET CAPITAL ADVISORS LLC,

By:

Jeffrey A. Holmstrand (#4893) GROVE, HOLMSTRAND & DELK, PLLC 44 ~ Fifteenth Street Wheeling, West Virginia 26003 (304) 905-1961

Steven F. Napolitano (pro hac vice pending) SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Four Times Square New York, NY 10036-6522 Tel: (212)735-2187

24

•

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

DOCKET NO. 15-1122

Blackrock Capital Investment Corporation And 52nd Street Advisors LLC, Defendants Below, Petitioners

vs. No. 15-1122

Jeffrey Fish; William Fish; and Flora Fish, as Administratrix ofthe Estates of James Eugene Fish; and Jeffrey Scott Fish, Richard T. Swain, Cathy Majoris, and Megan Schlotter Swain as Co-Administrators of the Estate of Steven M. Swain, and David Scott Williams and Ruth Williams, Plaintiffs Below AL Solutions, Inc.; Tygem Holdings, Inc.; Tremont Associates, LLC; Defendants Below, and Travelers Property Casualty Company ofAmerica, Intervenor Below, Respondents.

CERTIFICATE OF SERVICE

Service of the foregoing OPENING BRIEF OF APPELLANTS, BLACKROCK CAPITAL INVESTMENT CORPORATION AND 52ND STREET CAPITAL ADVISORS, LCC was had upon the following by forwarding a true and complete copy thereof, via regular United States Mail, postage prepaid, this 17tIJ. day of February, 2016, as follows: .

Mark A. Colantonio, Esq. (#4238) FRANKOVITCH, ANETAKIS, COLANTONIO & SIMON

337 Penco Road Weirton, WV 26062

Robert P. Fitzsimmons, Esq. (#1212) Clayton J. Fitzsimmons, Esq. (#10823) FITZSIMMONS LAW FIRM PLLC

1609 W arwood Avenue Wheeling, WV 26003

(Counsel for Jeffrey Fish; William Fish; and Flora Fish, Administratrix of the Estates of James Eugene Fish and Jeffrey Scott Fish)

M. Eric Frankovitch, Esq. (#4747) FRANKOVITCH, ANETAKIS, COLANTONIO & SIMON

337 Penco Road Weirton, WV 26062

(Counsel for Richard T. Swain, Cathy Majoris, and Megan Schlotter Swain, Co-Administrators of the

Estate of Steven M. Swain; and David Scott Williams and Ruth Williams, husband and wife)

Tiffany R. Durst, Esq. Kala L. Sowers, Esq.

PULLIN FOWLER FLANAGAN BROWN & POE 2414 Cranberry Square

Morgantown, WV 26508 (Counsel for AL Solutions, Inc.)

Michael P. Markins, Esq. MANNION & GRAY CO., LPA

707 Virginia Street East, Suite 260 Charleston, WV 25301

(Counsel for Tygem Holdings, Inc.)

Evan R. Kime, Esq. Elisabeth A. Slater, Esq.

BOWLES RICE LLP POBox 1386

Charleston, WV 26325-1386 (Counsel for Tremont Associates, LLC)

R. Gregory McDermott, Esq. MCDERMOTT & BONENBERGER, PLLC

53 Washington Avenue Wheeling, WV 26003

(Counsel for Travelers Property Casualty Company ofAmerica, Intervenor)

Blackrock Capital Investment Corporation And 52nd Street Capital Advisors LLC,

By:

Jeffrey A. Holmstrand, Esq. (#4893) GROVE, HOLMSTRAND & DELK, PLLC 44 Y2 15th Street Wheeling, WV 26003 (304) 905-1961

2

Steven F. NapoDlitano, Esq. SKADDEN, ARPS, SLATE, :MEAGHER & FLOM, LLP Four Times Square New York, NY 10036

3