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Judge Engelmayer Shows Willingness to Preliminarily Assess Contract Dispute, to Help Foster Settlement

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It is rare for a judge to express views on the merits of a case ahead of a trial, but last week Judge Engelmayer did so, apparently at the urging of the parties who both thought that it would foster settlement. The views were set forth in an Order last week denying summary judgment in a case over escrowed funds following a corporate acquisition (see an earlier ruling here with more background). In the Order, Judge Engelmayer “took note of counsels’ observation that their attempts to resolve this matter would be assisted by some guidance from the Court as to its present assessment of certain issues in the case.”

Accordingly, ahead of a forthcoming bench trial, Judge Engelmayer essentially foreshadowed that the buyer had a strong case that the seller breached a particular warranty in the deal documents, but some risk associated with its associated theory of damages:

With the important caveats that this assessment is preliminary and a product of the summary judgment record, and that the Court’s assessment could change upon presentation of a full record and the opportunity to make credibility determinations, the Court is prepared to say the following.

1. It is likely that defendant [the buyer] . . .  will be able to establish that one or more warranties in the stock purchase agreement relating to the requirement in a collective bargaining agreement (“CBA”) that [plaintiff seller] pay prevailing wages were false.

2. It is likely that [the defendant buyer] will not be able to establish damages to the extent such are pursued on a purchase-price adjustment theory.


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