Silvertip Capital LLC v. Baraka Investment Limited

Background

Silvertip asserted breach-of-contract claims against Baraka Investment Limited and Baraka Investment Ltd. based on a promissory note, and against Jon Olafsson based on his guaranty. Silvertip had originally asserted claims against Baraka Investment (Hong Kong) Limited, but later voluntarily dismissed that defendant.

Silvertip and Baraka entered into an agreement for a $3 million loan. The Initial Note required Baraka to repay the principal plus simple interest at 5% per year, with payment due by the end of a 12-month term beginning when the funds were received. The Initial Note also contained Olafsson’s personal, unconditional, and irrevocable guaranty.

Silvertip later agreed to lend an additional $100,000 under the same terms. Because of a 4% original issue discount, Silvertip transferred $96,000, which Baraka received on March 2, 2017. The Amended Note stated that Baraka promised to repay $3.1 million plus 5% annual interest, and Olafsson again personally guaranteed payment. Silvertip made a written demand for payment on December 15, 2022. The evidence showed that neither Baraka nor Olafsson had repaid any amount due under the notes.

Procedural History and Legal Standard

Silvertip moved for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Summary judgment is appropriate when the evidence shows no genuine dispute about an important fact and the moving party is entitled to judgment under the law. Although Defendants did not oppose the motion or respond to Silvertip’s statement of undisputed facts, the court explained that it could not grant summary judgment automatically. It had to review the evidence and determine whether Silvertip met its burden.

The notes contained a choice-of-law provision selecting Icelandic law. The court nevertheless applied New York law because the parties’ litigation positions indicated agreement to use New York law, and Silvertip submitted an Icelandic attorney’s declaration stating that Icelandic law was consistent with New York law for purposes of the motion.

Analysis

For Silvertip’s claim against Baraka, the court held that the evidence established the existence of the notes, Baraka’s promises to repay, Silvertip’s transfer of the loan funds, and Baraka’s failure to make any payment. Under New York law, those facts established Silvertip’s claim for breach of the promissory note. The court noted that the precise repayment deadline did not need to be determined because Baraka had still not paid any amount due.

For Silvertip’s claim against Olafsson, the court found that Silvertip established the existence of the unconditional guaranties, the underlying debt, and Olafsson’s failure to perform under the guaranties. The evidence showed that Olafsson had not paid Silvertip and that the guaranties stated he waived defenses and any right to revoke them.

Damages and Disposition

The court stated that Baraka and Olafsson jointly and separately owed Silvertip: (1) $3.1 million in principal; (2) 5% annual interest on $3 million from December 28, 2016, through March 1, 2017; and (3) 5% annual interest on $3.1 million beginning March 2, 2017. Silvertip was also entitled to post-judgment interest at New York’s statutory rate.

Judge Mary Kay Vyskocil granted the motion for summary judgment, directed the Clerk to enter judgment in favor of Silvertip as described above, terminate the motion, and close the case.