Nemesis 2 LLC v. Paladino

Background

Nemesis 2 LLC sued Pure Brazilian Company S.L. for failing to repay a promissory note and sued Robert Paladino, Andre Rola Cabral, and Pascal Salvati for allegedly breaching their guarantees of that note. Nemesis 2 agreed to loan Pure Brazilian $400,000. The note required repayment of the loan, 15% annual interest, and a $150,000 structuring fee. The note became due on September 24, 2018, but Pure Brazilian did not pay.

Each individual defendant signed a guarantee securing Pure Brazilian’s obligations up to $600,000. Paladino’s guarantee differed from the other two because it stated that he guaranteed the debt “for so long as” he served as Pure Brazilian’s chief executive officer or was otherwise an employee or consultant of specified related entities. The guarantee also stated that it was continuing and binding until the guaranteed obligations were paid in full, required payment immediately after demand, and waived defenses other than full cash payment.

Nemesis 2 demanded payment from Paladino on November 7, 2018. Paladino resigned from his position as chief executive officer of Pure Brazilian’s subsidiary on November 15, 2018. Neither Pure Brazilian nor the guarantors paid the debt.

Procedural History

Pure Brazilian did not appear, and the court previously entered a default judgment against it for $647,783.56, representing the unpaid loan, structuring fee, and accrued interest. Rola Cabral and Salvati were not served, and the opinion states that the action was dismissed as to them without prejudice under Federal Rule of Civil Procedure 4(m).

The remaining dispute involved cross-motions for summary judgment by Nemesis 2 and Paladino. Summary judgment is a decision without a trial when there is no genuine dispute about a fact that could affect the result and the law entitles one side to judgment.

Parties’ Positions

Nemesis 2 argued that Paladino’s guarantee covered obligations that became due while he was employed, so his later resignation could not eliminate an already-triggered obligation. Paladino argued that his guarantee depended on his employment status and ended when he ceased working for Pure Brazilian, regardless of when the default occurred.

Court’s Analysis

Applying New York law, the court interpreted the guarantee according to its wording and considered the document as a whole. The court agreed that Section 2 limited when Paladino could become responsible for a default: he had to be employed or otherwise covered by the provision when the obligation was triggered. But the court concluded that Section 2 did not release him from an obligation that had already been triggered during his employment.

The court emphasized that Section 11 required immediate payment after Nemesis 2’s demand and stated that Paladino would then be directly bound as a debtor. Paladino was still employed when Nemesis 2 made its November 7 demand. Sections 3, 4, and 6 also described the guarantee as continuing, binding until payment in full, and not subject to release or defenses except as expressly allowed. Reading the guarantee as a whole, the court found it unambiguous and rejected Paladino’s argument that his resignation provided a release.

Because the guarantee was unambiguous, the court declined to consider outside evidence about the parties’ intent. The court also found no genuine dispute that Pure Brazilian owed the debt, Paladino had guaranteed it, and Paladino had not paid it.

Ruling

Judge Ronnie Abrams granted Nemesis 2’s motion for summary judgment and denied Paladino’s motion. The court held that Paladino breached his guarantee and was liable for up to $600,000 of the amount owed under the note. The Clerk was directed to terminate the pending motions and close the case.