Sagax Development Corp. v. ITrust S.A.

Background

Sagax Development Corp. provides advisory and consulting services to startup companies. ITrust S.A. is a technology company based out of Toulouse, France. In 2015, ITrust’s vice president and board member contacted Sagax’s president for financing advice and consulting services concerning ITrust’s planned expansion into the United States.

On October 9, 2015, the parties entered into an agreement under which ITrust promised Sagax a 2.5% equity stake in ITrust and/or its subsidiary in exchange for Sagax securing investments. From October 2015 through May 2016, Sagax solicited potential investors, negotiated with them, introduced them to ITrust, and advised ITrust about entering the U.S. market. The opinion states that Sagax’s efforts resulted in approximately €1,716,000 in investments from investors it solicited and introduced. The court also relied on an undisputed record stating that Sagax ultimately secured $2 million in investments for ITrust.

Sagax continued advising ITrust through the first quarter of 2017. Sagax alleged that ITrust refused to provide the promised 2.5% equity interest and did not compensate Sagax in any way. Sagax brought claims for breach of contract and unjust enrichment, but it was no longer pursuing the unjust-enrichment claim when it sought summary judgment.

Procedural history and discovery sanctions

The court previously denied ITrust’s motion to dismiss based on personal jurisdiction and failure to state a claim. After ITrust’s counsel withdrew, ITrust failed for a time to obtain replacement counsel. It later obtained counsel, and the court denied Sagax’s motion for default judgment.

ITrust then failed to provide substantive responses to Sagax’s interrogatories, repeatedly relying on French laws concerning the disclosure of information in foreign proceedings. Magistrate Judge Fox had rejected those arguments and ordered ITrust to comply with discovery. Judge Fox later granted Sagax’s sanctions motion in full and deemed established facts that included the existence of an enforceable agreement, Sagax’s performance and securing of $2 million in investments, ITrust’s failure to compensate Sagax, and ITrust’s obligation to provide 2.5% worth at least $499,221 plus statutory interest and costs.

Judge Abrams explained that Judge Fox’s sanctions ruling had effectively resolved the contract claim and could have been reviewed as a recommendation to the district court. Because neither party objected to that ruling, the usual review would have been for clear error. The court did not conduct that review, however, because it found an independent basis for deciding Sagax’s unopposed summary-judgment motion.

Summary-judgment ruling

Summary judgment is a decision without a trial when the evidence shows that no genuine dispute over an important fact exists and the moving party is entitled to judgment under the law. Even when a motion is unopposed, the court must independently determine whether the moving party meets that standard.

Under New York law, a breach-of-contract claim requires proof of a contract, performance by the plaintiff, breach by the defendant, and damages. Judge Abrams found that the undisputed evidence established each element: the parties had an agreement granting Sagax a 2.5% equity interest in exchange for securing investments; Sagax performed by securing investments; ITrust failed to compensate Sagax; and the promised equity was worth at least $499,221.

Disposition

The court granted Sagax’s motion for summary judgment. Sagax was entitled to a judgment of $499,221 plus statutory interest and costs. The court directed Sagax to file a proposed order stating the judgment award and costs by August 26, 2022, and directed the Clerk of Court to terminate the pending motion.