Apollo Capital Corp v. Astra Veda Corporation
- Subramanian
- 1:23-cv-09708
- U.S. District Court · Southern District of New York
- 2
In Apollo Capital v. Astra Veda, Judge Subramanian ordered supplemental briefs on whether an indemnity clause covers defense costs; he did not decide summary judgment.
Apollo Capital Corp. and Astra Veda Corporation, the parties disputing whether Astra Veda must indemnify Apollo for defense costs from the earlier lawsuit.
What happened
Apollo Capital Corp. held convertible notes issued by Astra Veda Corporation. After the parties changed the terms of the remaining notes in 2019, their agreement included an indemnity clause. Apollo seeks payment for the costs of defending a lawsuit Astra Veda filed over a 2016 note conversion; that lawsuit was dismissed.
Both parties asked for summary judgment, which is a decision without a trial when the material facts are not genuinely disputed. Their briefs focused on whether the agreement was enforceable. The court instead identified a possible issue about what the indemnity clause means.
Judge Arun Subramanian did not decide the summary-judgment motions. He ordered both parties to submit supplemental letter briefs addressing whether the clause covers claims related to the notes generally or only claims related to Apollo’s performance of obligations under the notes, and whether the contract’s wording is ambiguous enough to require a trial.
The detailed version
- Apollo Capital Corp v. Astra Veda Corporation · No. 1:23-cv-09708
- Subramanian
- June 27, 2024
Background
Apollo Capital Corp. held several convertible notes issued by Astra Veda Corporation. In 2018, Apollo converted one note and received a payout. In 2019, the parties renegotiated the terms governing the remaining notes and entered into an agreement containing an indemnification provision. The provision stated that Astra Veda would indemnify Apollo for claims “which are related to or result from the performance by [Apollo] of any of its obligations to [Astra Veda] contemplated by this Agreement or any of the transactions contemplated hereby or the Notes or any other agreement related thereto.”
In 2022, Astra Veda sued Apollo concerning the 2016 note conversion. The complaint was dismissed. Apollo now seeks indemnification for the costs of defending that lawsuit.
Issue Identified by the Court
The parties cross-moved for summary judgment, a ruling without a trial when the undisputed facts and governing law allow the court to decide the case. Their briefs primarily addressed whether the agreement was enforceable.
The court stated that it could consider a different ground for summary judgment if it first gave the parties notice and a reasonable opportunity to respond. It identified contract interpretation as a possible way to resolve the case. In particular, the court questioned whether the phrase concerning Apollo’s “performance” of its obligations applies separately to each part of the indemnification provision. Under one reading, Astra Veda might have agreed to indemnify Apollo for all claims related to the notes. Under another reading, the indemnity might cover only claims related to Apollo’s performance of obligations to Astra Veda under the notes and related agreements.
The court stated that, under the narrower reading, it had difficulty seeing how Astra Veda’s earlier lawsuit was related to Apollo’s performance of an obligation to Astra Veda.
Order
The court did not grant or deny either summary-judgment motion and did not resolve whether Apollo is entitled to indemnification. Judge Arun Subramanian ordered the parties to submit supplemental letter briefs, each no longer than eight double-spaced pages, addressing the contract-interpretation issues by July 3, 2024, at 5:00 p.m. The court also indicated that, if contract interpretation does not resolve the case, the agreement may be ambiguous enough to require a trial.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.