Jefferies Strategic Investments, LLC v. Weiss

Background

Leucadia Asset Management Holdings LLC agreed in 2018 to provide financing to the Weiss Companies through promissory notes. Jefferies Strategic Investments, LLC later agreed to purchase $53 million in notes issued by those companies under two note purchase agreements. The Weiss Companies did not pay their obligations.

On February 12, 2024, George Weiss signed a forbearance agreement both personally and on behalf of the Weiss Companies. The agreement stated that the Weiss Companies, except for GWA, LLC, guaranteed payment and performance of specified obligations. It separately stated that Weiss personally guaranteed the accuracy of the Weiss Companies’ representations and their performance of the agreement. The guaranteed obligations included obligations under the note purchase agreements, the notes, the earlier strategic relationship agreement, and the forbearance agreement.

After the Weiss Companies failed to pay, they filed for Chapter 11 bankruptcy. In a related bankruptcy proceeding, the bankruptcy court rejected the argument that Weiss’s guarantee covered performance but not payment. The plaintiffs then sued Weiss in New York state court to enforce his guarantee, and Weiss removed the case to federal court. The parties filed cross-motions for summary judgment on his liability.

Court’s Analysis

Summary judgment is appropriate when there is no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. Applying New York contract law, the court interpreted the agreement as a whole and gave effect to all of its provisions.

The court held that Weiss’s personal guarantee of the Weiss Companies’ performance also guaranteed payment of their obligations. The agreement required the Weiss Companies to make prompt and complete payment and performance of the guaranteed obligations, and Weiss personally guaranteed the Weiss Companies’ agreements under that same agreement. Reading those provisions together, the court concluded that Weiss personally guaranteed payment of the obligations under the strategic relationship agreement, the notes, and the note purchase agreements.

The court stated that the plaintiffs had established the three elements required to obtain summary judgment on a written guarantee: an absolute and unconditional guarantee, the underlying debt, and the guarantor’s failure to perform. The court therefore found that the plaintiffs had shown their entitlement to judgment on the guarantee.

The court also rejected Weiss’s defenses. It held that the agreement was supported by consideration because the plaintiffs’ forbearance from enforcing the debt could constitute consideration, and a benefit provided to the Weiss Companies could support Weiss’s promise. The court also found mutual assent even though only Weiss signed the agreement. The plaintiffs performed their obligations, the parties had no material dispute about the terms, and the plaintiffs showed an intent to be bound by filing a financing statement.

The court rejected Weiss’s economic-duress argument based on alleged threats involving accusations of securities fraud, reputational harm, and personal litigation. It concluded that, even viewing the evidence in Weiss’s favor, the alleged conduct did not constitute duress. The court noted that Weiss was an experienced businessman and had counsel review the agreement. It also struck several conclusory affirmative defenses that lacked factual support, as well as a reservation of rights that was not an affirmative defense.

Disposition

Judge Alvin K. Hellerstein granted the plaintiffs’ motion for summary judgment and denied Weiss’s cross-motion. The court directed the Clerk of Court to enter final judgment in favor of the plaintiffs and tax costs, terminate the listed motions, and close the case.