FILED: NEW YORK COUNTY CLERK 08/09/ :47 PM INDEX NO /2016 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 08/09/2016

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FILED: NEW YORK COUNTY CLERK 08/09/2016 03:47 PM INDEX NO. 651348/2016 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 08/09/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK MARK D ANDREA, Plaintiff, v. INCAPTURE INVESTMENTS LLC, PETER KNEZ, and INCAPTURE LP, Defendants. Index No. 651348/2016 Mot. Seq. No. 3 DEFENDANT PETER KNEZ S REPLY MEMORANDUM OF LAW IN SUPPORT OF HIS MOTION FOR LEAVE TO FILE AMENDED ANSWER MINTZ LEVIN COHN FERRIS GLOVSKY and POPEO, P.C. George Patterson, Esq. The Chrysler Center 666 Third Avenue New York, New York 10017 Tel.: (212 935-3000 H. Andrew Matzkin, Esq. 1 Financial Center Boston, Massachusetts 02111 (617 542-6000 Pro Hac Vice Admission Granted MAYNARD COOPER & GALE, LLP C. Andrew Kitchen, Esq. Transamerica Pyramid Center 600 Montgomery Street, Suite 2600 San Francisco, California 94111 (415 704-7433 Pro Hac Vice Admission Granted 1 of 9

TABLE OF CONTENTS Page TABLE OF AUTHORITIES... ii PRELIMINARY STATEMENT...1 ARGUMENT...1 I. DEFENDANT S PROPOSED NEW CLAIMS ARE MERITORIOUS...2 II. PLAINTIFF WOULD SUFFER NO PREJUDICE...5 CONCLUSION...5 - i - 2 of 9

TABLE OF AUTHORITIES Page(s State Cases Corhill Corp. v. S. D. Plants, Inc., 9 N.Y.2d 595 (N.Y. 1961...2 Edenwald Contracting Co., Inc. v. City of New York, 60 N.Y.2d 957 (1983...1, 2 Eighth Ave. Garage Corp. v. H.K.L. Realty Corp., 60 A.D.3d 404 (1st Dep t 2009...2 George Cohen Agency, Inc. v. Donald S. Perlman Agency, Inc., 51 N.Y.2d 358 (N.Y. 1980...3 Rules CPLR 3014...3 CPLR 3025(b...1 -ii- 3 of 9

Defendant Peter Knez ( Defendant or Knez, through and by his undersigned attorneys, submits this reply memorandum of law pursuant to CPLR 3025(b in further support of his motion for leave to file an Amended Verified Answer, Affirmative Defenses, and Counterclaims ( Amended Answer, which adds counterclaims against plaintiff Mark D Andrea ( Plaintiff or D Andrea. PRELIMINARY STATEMENT Plaintiff s opposition is long on condescension but short on substantive response, and wholly fails to address the arguments in Knez s motion papers. The proposed counterclaims in the Amended Answer are meritorious. Knez s proposed amendment seeks a declaration that D Andrea was obligated to pursue claims against the primary obligor, Incapture Investments LLC ( Incapture, before attempting to enforce any purported guaranty of Incapture s obligations. The language in the guarantee between Plaintiff and Knez is both plain and clear on this point. Plaintiff s opposition never counters this basis for Defendant s counterclaims in even a conclusory fashion, much less with compelling arguments. Instead, Plaintiff makes unfounded and baseless arguments for why the proposed counterclaims should be barred. Furthermore, Plaintiff takes issue with two additional proposed counterclaims for damages arising out of Plaintiff s breach of the agreement, but fails to establish that such counterclaims either lack merit or would prejudice Plaintiff in any way. Because as the parties evidently agree the Amended Answer proposes viable causes of action, fails to prejudice any party and raises a justiciable controversy, the Court should grant Defendant s motion for leave to amend. ARGUMENT Leave to amend a complaint shall be freely given upon such terms as may be just and a party may amend at any time by leave of court. CPLR 3025(b; see also Edenwald 4 of 9

Contracting Co., Inc. v. City of New York, 60 N.Y.2d 957, 959 (1983. The only circumstances under which leave to amend should not be granted is where the proposed amendment clearly lacks merit or where prejudice or surprise would result from the delay. See Edenwald, 60 N.Y.2d at 959 (trial court did not abuse its discretion in permitting amendment of answer where respondent did not show that it would suffer significant prejudice as a result; Eighth Ave. Garage Corp. v. H.K.L. Realty Corp., 60 A.D.3d 404, 405 (1st Dep t 2009 (denying leave to amend for the second time was not an improvident exercise of court s discretion where under no set of circumstances could plaintiff have made out its case. I. DEFENDANT S PROPOSED NEW CLAIMS ARE MERITORIOUS The contractual language central to all three proposed counterclaims is the provision in the personal guarantee signed by Knez (the Personal Guarantee in which Knez agrees to serve as a guarantor for fellow defendant Incapture Investments LLC if Incapture Investments LLC fails to make the payment of any Deferred Compensation (as such term is defined in the Agreement in accordance with the terms of the Agreement. (Docket No. 2 (Personal Guarantee (emphasis added. The provision in accordance with the terms of the Agreement has to be given meaning. It is a cardinal rule of construction that a court should not adopt an interpretation which will operate to leave a provision of a contract without force and effect. Corhill Corp. v. S. D. Plants, Inc., 9 N.Y.2d 595, 599 (N.Y. 1961. If this provision has any meaning at all as it must then an inquiry is absolutely necessary to determine whether D Andrea complied with the terms of the Agreement before D Andrea can proceed against Knez as guarantor. Plaintiff s complaint does not allege and indeed, nothing in Plaintiff s complaint even suggests that Plaintiff has already established that Incapture Investments LLC fail[ed] to make -2-5 of 9

the payment of deferred compensation to D Andrea in accordance with the terms of the Agreement. Even when faced with a motion turning on this specific question, Plaintiff s opposition still fails to assert, even in conclusory or indirect fashion, that Plaintiff does not need to establish that Incapture Investments LLC has indeed failed to make such payments in accordance with the terms of the Agreement before seeking recourse against Knez as guarantor. In short, there is no real opposition to Defendant s motion. The Amended Answer establishes a prima facie case for all three of Plaintiff s claims, and the underlying premise of those claims is undisputed by any party. Thus, the motion to amend should be granted. In order to obfuscate the lack of any substantive opposition, Plaintiff s opposition memo includes a series of baseless, inaccurate, and irrelevant arguments. Although meritless, Defendant will respond to each so that Plaintiff s spurious reasoning does not go unanswered. First, Plaintiff mischaracterizes the proposed claim for a declaratory judgment by stating that the claim would lead to a declaration of rights of no practical effect. (Pl. Mem. at 3. To the contrary, a favorable declaration would mean the instant action against Knez is premature, which in turn would entitle Knez to damages in the form of, inter alia, his attorneys fees. In any event, even if there were some overlap between the declaratory judgment claim and Defendant s two proposed claims for damages, alternative pleading is perfectly valid in New York courts. See CPLR 3014 ( Causes of action or defenses may be stated alternatively or hypothetically ; George Cohen Agency, Inc. v. Donald S. Perlman Agency, Inc., 51 N.Y.2d 358, 366 (N.Y. 1980 (pleadings which allege many claims in the alternative are clearly permissible. Next, Knez does not agree that any of his filings constitute a binding admission that the Personal Guarantee is a valid instrument, duly executed by the parties, and binding upon defendant Knez. (Pl. Mem. at 3. In fact, as Defendant has already noted, at least one provision -3-6 of 9

of the Personal Guarantee is clearly unenforceable as written. (See Amended Answer, Seventeenth Affirmative Defense, Counterclaims 10. Finally, regarding the counterclaims for breach of contract and breach of the covenant of good faith and fair dealing, Plaintiff makes statements that are simply false. For example, Plaintiff claims that Defendant s memorandum of law fails to specify what the breach consisted of. (Pl. Mem. at 4. To the contrary, Defendant clearly stated that D Andrea has breached the agreement by suing Knez as guarantor before first establishing that Incapture Investments LLC has fail[ed] to make the payment of any Deferred Compensation in accordance with the terms of the Agreement. (Docket No. 23 (Defendant s Memorandum of Law in Support of Motion for Leave to File an Amended Answer ( Def. Mem. at 5 (quoting the Personal Guarantee. Similarly, Plaintiff states that the Amended Answer admits that the appropriate procedural steps required under the contracts at issue, as predicates for initiating this litigation, were properly taken. (Pl. Mem. at 4. In fact, the Amended Answer says the opposite: 15. The Personal Guarantee, which was drafted by D Andrea, requires that D Andrea establish that Incapture Investments LLC fail[ed] to make the payment and any Deferred Compensation in accordance with the terms of the Agreement as a condition precedent for Knez to become liable as guarantor. 21. D Andrea has breached and repudiated the Personal Guarantee by seeking recourse from Knez as guarantor prior to meeting all the terms of the Agreement. (Amended Answer 15, 21. How Plaintiff takes those allegations to mean that Defendant admits that D Andrea took the appropriate procedural steps required under the contracts at issue is unclear, but suggests that Plaintiff is playing fast and loose with the facts. -4-7 of 9

Plaintiff does acknowledge the oddly worded attorneys fees provision in the Personal Guarantee, an issue raised by Defendant in the Amended Answer (Counterclaims 10, and Plaintiff even introduces additional issues with the language as written. (Pl. Mem. at 4-5. Such acknowledgment, however, simply cannot defeat Defendant s claim because, at a minimum, Defendant does not seek attorneys fees in this action based on this attorneys fees provision in the Personal Guarantee. To the contrary, Defendant seeks attorneys fees simply as a measure of damages. Plaintiff breached the Personal Guarantee by commencing this action against Defendant without having previously established that Incapture Investments LLC has fail[ed] to make the payment of any Deferred Compensation in accordance with the terms of the Agreement. As a direct consequence of Plaintiff s breach, Knez has had to accrue attorneys fees to defend this case. His attorneys fees are thus damages for Plaintiff s breach; they most assuredly are not the incidents of litigation as Plaintiff attempts to characterize them. II. PLAINTIFF WOULD SUFFER NO PREJUDICE As Defendant has already set forth in detail above, Plaintiff would not suffer prejudice or surprise if Defendant s motion were granted. (See Def. Mem. at 6-8. Once again, Plaintiff has been unwilling or unable to respond substantively to this critical requirement, or to argue that there would be any sort of prejudice or surprise to Plaintiff based on the present motion. Of course, there would be none, since this proceeding is still in its early stages, and the facts and documents referenced in the Amended Answer all derive from the Complaint and its exhibits. CONCLUSION The claims proposed in the Amended Answer are meritorious or, to tie in more closely to the standard Plaintiff must overcome, none of the claims are clearly without merit. Plaintiff -5-8 of 9

has not even tried to contest the factual basis of any of Defendant s claims. In addition, Plaintiff would suffer no prejudice, and Plaintiff has not argued otherwise. For the foregoing reasons, the Court should grant defendant Peter Knez s motion for leave to amend his Answer in the form shown in the proposed Amended Answer. Dated: August 9, 2016 New York, New York By:/s/ George Patterson George Patterson, Esq. MINTZ LEVIN COHN FERRIS GLOVSKY and POPEO, P.C. The Chrysler Center 666 Third Avenue New York, NY 10017 Tel.: (212 935-3000 H. Andrew Matzkin, Esq. 1 Financial Center Boston, Massachusetts 02111 (617 542-6000 Pro Hac Vice Admission Granted MAYNARD COOPER & GALE, LLP C. Andrew Kitchen, Esq. Transamerica Pyramid Center 600 Montgomery Street, Suite 2600 San Francisco, California 94111 (415 704-7433 Pro Hac Vice Admission Granted Attorneys for Defendant Peter Knez 54041800-6- 9 of 9