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Alpha Beta Capital Partners, L.P. v. Pursuit Investment Management. LLC

Appellate Court of Connecticut

October 8, 2019

ALPHA BETA CAPITAL PARTNERS, L.P.
v.
PURSUIT INVESTMENT MANAGEMENT, LLC, et al.

         Argued November 27, 2018

          Appeal From the  Superior Court, Judicial District of Stamford-Norwalk at Stamford, Genuario, J.

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          Michael S. Taylor, with whom were Brendon P. Levesque, and, on the brief, James P. Sexton, Hartford, and Megan L. Wade, for the appellants-cross appellees (named defendant et al.).

         Edward P. Dolido, pro hac vice, with whom were James C. Graham, New Haven, and, on the brief, Anthony C. Famiglietti, Bijan Amini, and Kelly McCullough, for the appellee-cross appellant (plaintiff).

         Lavine, Bright and Bishop, Js.

          OPINION

         BRIGHT, J.

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          [193 Conn.App. 388] This appeal arises out of a dispute between the plaintiff, Alpha Beta Capital Partners, L.P., and the defendants Pursuit Opportunity Fund I, L.P. (POF), Pursuit Opportunity Fund I Master Ltd. (POF Master), Pursuit Capital Management Fund I, L.P. (PCM), Pursuit Capital Master (Cayman) Ltd. (PCM Master), [193 Conn.App. 389] Pursuit Partners, LLC (Pursuit Partners),[1] Pursuit Investment Management, LLC (PIM), Northeast Capital Management, LLC (Northeast), Anthony Schepis, and Frank Canelas, Jr. The central issue of this appeal is the defendants’ claim that the court improperly interpreted the agreements between the parties to hold that certain defendants were liable for their failure to distribute to the plaintiff its share of a substantial contingent asset in which it had an interest.

         The defendants appeal, and the plaintiff cross appeals, from the judgment of the trial court, rendered after a bench trial, partially in favor of the plaintiff as to certain defendants on its complaint and in favor of the plaintiff on the defendants’ counterclaim.[2] The defendants also appeal from the orders of the trial court granting the plaintiff’s postjudgment motion to increase the amount of a previously secured prejudgment remedy, and granting the plaintiff’s motion for discovery to secure the additional prejudgment remedy attachment.

          Addressing the parties’ various contentions, we conclude that (1) the court properly interpreted the agreements between the parties in concluding that the plaintiff prevailed on its breach of contract claim, (2) the court properly rejected the defendants’ breach of contract counterclaim, (3) the court properly concluded that the plaintiff prevailed on its breach of the implied covenant of good faith and fair dealing claim, (4) the court properly concluded that the plaintiff could not prevail on its conversion claim, (5) the court properly struck the plaintiff’s Connecticut statutory causes of [193 Conn.App. 390] action, (6) the court improperly concluded that all of the defendants who had signed the settlement agreement were liable for breach of contract and for breach of the implied covenant of good faith and fair dealing, (7) the court properly determined the amount of damages awarded to the plaintiff, (8) the court properly granted the plaintiff’s motion to increase the amount of the prejudgment remedy, and (9) the defendants’ claim that the court improperly granted the plaintiff’s motion for postjudgment discovery was not properly preserved, and, thus, we decline to review it. Accordingly, we affirm in part and reverse in part the judgment of the trial court.

         The following facts, as found by the trial court, and procedural history are relevant to our resolution of this appeal. The plaintiff is a limited partnership organized under the laws of the state of Delaware. POF and PCM are both hedge funds[3] that were

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formed as Delaware limited partnerships. POF Master and PCM Master are both hedge funds that were formed as Cayman Islands limited liability companies. The vast majority of investments in POF Master were made by POF, and, likewise, the vast majority of investments in PCM Master were made by PCM. Pursuit Partners[4] and PIM are Delaware limited liability companies, each with a principal place of business in Greenwich, Connecticut. PIM provided advisory and investment management services to POF, PCM, POF Master, and PCM Master. Northeast is a limited liability company that became the general partner of PCM on February 17, 2014, which was after the prior general partner, Pursuit Capital Management, LLC (Pursuit Management), had filed for bankruptcy. Schepis and Canelas are individuals who reside in [193 Conn.App. 391] Greenwich, Connecticut, and who, together, formed, operated, and controlled all of the other defendants. At one point in time, the defendants cumulatively managed assets in excess of $600 million. During all relevant times, the plaintiff was represented by the law firm Reed Smith, and the defendants were represented by the law firm DLA Piper.

         In approximately 2007, the plaintiff invested in both POF and PCM.[5] In return, the plaintiff acquired limited partnership interests in POF and PCM, and became a signatory to both the POF and PCM limited partnership agreements. Also invested in POF and PCM at that time was the Schneider Group, which was comprised of various persons and entities, including Leslie Schneider, Lillian Schneider, Claridge Associates, LLC, and Jamus Scott, LLC. In 2007 and 2008, all of the defendants were experiencing significant financial difficulties as a result of the volatility of the global securities market. More specifically, in 2007, POF Master and PCM Master had purchased certain securities known as collateralized debt obligations (CDOs)[6] from UBS AG, or its affiliate, for substantial sums of money. Shortly thereafter, the value of the CDOs precipitously dropped and, in 2008, Pursuit Partners and PIM commenced a civil action in the Connecticut Superior Court against UBS AG and Moody’s Corporation (UBS litigation), alleging "a fraud [193 Conn.App. 392] ... committed by [UBS AG and UBS Securities, LLC], upon [POF Master and PCM Master] in connection with [those entities’] purchase of CDOs from [UBS AG and UBS Securities, LLC]." Pursuit Partners, LLC v. UBS AG, Superior Court, judicial district of Stamford-Norwalk, Complex Litigation Docket, Docket No. CV- 08-4013452-S (September 8, 2009) (48 Conn.L.Rptr. 557, 558, 2009 WL 3286011). POF Master and PCM Master were not parties to that action even though they were the actual purchasers of the CDOs from UBS AG and UBS Securities, LLC.

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          In 2009, the investors in POF and PCM were provided an opportunity to redeem their investments and to withdraw their partnership interests from POF and PCM. A majority of the investors chose to redeem. In September, 2009, the plaintiff redeemed its investment in POF, which extinguished its interest in POF except for certain holdbacks[7] to indemnify potential future expenses of POF. Nevertheless, the plaintiff, as well as the Schneider Group, chose to remain invested in PCM and, as a result, between them, they cumulatively held approximately two thirds of the equitable interest in PCM.

          On or about April 1, 2009, the plaintiff executed the "Amended and Restated Limited Partnership Agreement" (LPA) for PCM, which was drafted by one or more of the defendants under the supervision of Schepis and Canelas. The LPA did not require or contemplate any new investment; rather, the plaintiff retained its interest in PCM consistent with the terms of the LPA on the basis of its previous investment in PCM. The LPA contained certain provisions for withdrawals by and distributions to limited partners.

         In 2010, the plaintiff commenced a civil action in the Supreme Court of the state of New York (2010 New York [193 Conn.App. 393] action) against PIM, Schepis, and Canelas. Therein, the plaintiff alleged that PIM, Schepis, and Canelas were liable for substantial damages caused by their "tortious conduct involving the management of its investments in the hedge funds." Contemporaneously, the plaintiff filed a separate arbitration proceeding against POF and PCM, claiming similar losses for similar tortious conduct. In that proceeding, the plaintiff alleged, among other things, that one or more of the defendants had paid themselves compensation on the basis of a highly inflated value of the CDOs, notwithstanding their knowledge that the CDOs had little or no value.[8]

          On or about April 8, 2011, the plaintiff, PIM, Schepis, Canelas, Pursuit Management, POF, and PCM executed the "Confidential Settlement Agreement and Mutual Release" (CSA) to resolve the 2010 New York action and the arbitration proceeding. The CSA was comprised of fifteen sections and provided at the outset that "the [p]arties hereby agree as follows ...." In § § 1, 2, 5, and 6, the CSA provided that the plaintiff was to execute a dismissal with prejudice as to both the 2010 New York action and the parallel arbitration proceeding, and that the plaintiff agreed to a mutual release with PIM, Schepis, Canelas, Pursuit Management, POF, and PCM of all claims that were, or could have been, raised therein.

         As consideration for the plaintiff’s withdrawal and release, § 3 of the CSA required PIM to pay the plaintiff a settlement payment of $2.2 million and a redemption payment of $1,418,033. Pursuant to § 3 (b) (i) and (iii) [193 Conn.App. 394] of the CSA, the amount of the redemption payment represented the plaintiff’s pro rata share, approximately 32.083612 percent, of the

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net asset value (NAV) in PCM as of February 28, 2011,[9] minus a holdback of "$250,000 for the purpose of funding necessary costs ... associated with the ongoing [UBS litigation]" and minus "an additional holdback in the amount [of] $200,000 to pay legal fees and expenses with respect to which PCM has an obligation to indemnify." Section 3 (b) (ii) of the CSA provided detailed mandates regarding these holdbacks, including that PIM shall not use any prior holdbacks in connection with the UBS litigation, that the plaintiff shall "be entitled to periodic updates on the status of the holdbacks," and that the plaintiff "will be provided with the opportunity to pay additional expenses necessary for the UBS [l]itigation" if the UBS litigation holdback was insufficient.

          In addition, § 4 of the CSA secured the plaintiff’s interest in two of PCM’s contingent assets. Section 4 of the CSA provided in relevant part that "PCM owns certain contingent assets that were valued at zero ... for purposes of calculating PCM’s NAV. These contingent assets include (a) PCM’s proportionate interest in the UBS [l]itigation; and (b) PCM’s interest in a claim against Lehman Brothers International (Europe) ... in the amount of approximately $14,000,000 [ (LBIE claim) ]. Nothing herein ... shall affect in any way [the plaintiff’s] pro rata share ... of the contingent assets as of February 28, 2011. It is further understood that [the plaintiff’s] continued interest in the contingent assets shall be governed by the [LPA] ...."

         [193 Conn.App. 395] Section 7 of the CSA was a confidentiality provision in which the parties agreed, among other things, "to maintain in the strictest confidence and not disclose ... the contents and terms of [the CSA] ... [and] not to use or provide any information relating to any claim arising out of an investment in the [f]unds to any other person in connection with the initiation of any lawsuit, claim, arbitration or action related to or concerning any investment in PCM, POF or any other investment vehicle managed by PIM." Section 12 of the CSA was a choice of law provision that provided: "This [a]greement shall be construed and interpreted in accordance with the laws of the [s]tate of New York. Any disputes or litigation arising out of this [a]greement shall be governed by New York law."

          On or about April 28, 2011, PIM sent a letter to the remaining investors in PCM, notifying them that the plaintiff’s claims against PCM had been settled, that PIM was effecting a " ‘mandatory withdrawal’ " of the plaintiff’s limited partnership interest, and that the plaintiff would maintain its proportionate interest in the two contingent assets. On or about April 30, 2011, Schepis, in his capacity as the managing member of the general partner of PCM, acting on behalf of the limited partners, executed "Amendment No. 1" to the LPA. That amendment set forth certain terms governing the withdrawn investors’ continued interest in the contingent assets, the right of the general partner to be paid an incentive fee, and the right of the general partner to withhold reserves, costs, and expenses from any distribution of the proceeds of the contingent assets.

          Shortly after the CSA was signed, the LBIE claim was sold for $9,334,141.55,

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and, on June 1, 2011, those funds were received in PCM Master’s account. Nevertheless, no portion of the LBIE claim proceeds were remitted to the plaintiff until October, 2011, when the plaintiff received $1,022,022.36. Thereafter, a series of communications occurred between Reed Smith and DLA Piper [193 Conn.App. 396] regarding the distribution of the LBIE claim proceeds to the plaintiff.

          On November 9, 2011, DLA Piper sent an explanation to Reed Smith, stating that the plaintiff’s contingent interest in the LBIE claim was worth $2,691,641, which amount represented 32.08 percent of PCM’s 90 percent interest in the LBIE claim owned by PCM Master, and that a performance fee also would be subtracted from that amount. On November 16, 2011, Reed Smith sent a letter in response, asserting that the defendants had provided no documentation to support their valuation of the plaintiff’s proportionate interest in the LBIE claim, that Reed Smith had been in contact with the Schneider Group and their related entities, and that the Schneider Group was supporting the plaintiff’s demands. On November 26, 2011, DLA Piper sent another explanation to Reed Smith, stating that the plaintiff’s interest in the LBIE claim was reduced to $2,132,559 to account for the performance fee due to the defendants, and that the plaintiff’s "reserve balance in May, 2011, was adjusted upward in that amount." Neither of DLA Piper’s communications provided an explanation as to the basis for the performance fee or the balance reserve, nor the reason for which the defendants had remitted less than 48 percent of the total amount that they finally had calculated the plaintiff’s interest in the LBIE claim to be worth. The defendants did not remit any further amount of the LBIE claim at that time.

          On November 6, 2012, the court dismissed the UBS litigation for lack of subject matter jurisdiction on the ground that Pursuit Partners and PIM lacked standing to proceed against UBS AG and Moody’s Corporation. On December 4, 2012, lead counsel for Pursuit Partners in the UBS litigation sent a letter to the investors, including the plaintiff, explaining that the case had been dismissed, that he disagreed with the decision, that he had filed a motion to reargue, that the investors should not [193 Conn.App. 397] take any action that would interfere with the process, and that he was confident that they ultimately would prevail.

         In March, 2013, after having received no further communication regarding the LBIE claim and concerned about the status of its holdbacks, the plaintiff commenced a civil action in the Supreme Court of the state of New York against PIM, PCM, POF, and Pursuit Management (2013 New York action).[10] In that action, the plaintiff alleged that those defendants had breached the CSA by failing to pay the plaintiff its pro rata portion of the LBIE claim proceeds, and by failing to provide the plaintiff with periodic updates on the status of its holdbacks and contingent assets. Accordingly, the 2013 New York action did not seek the UBS litigation proceeds, as the UBS litigation had not yet been resolved; rather, the plaintiff sought an accounting and an injunction to prevent those defendants from accessing or utilizing the plaintiff’s holdbacks.

         Soon after the commencement of the 2013 New York action, the defendants, or some of them, transferred to the plaintiff

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approximately $700,000 in additional proceeds from the LBIE claim, for a total distribution of $1,722,022.36, which was approximately 81 percent of the total amount that the defendants finally had calculated the plaintiff’s interest in the LBIE claim to be worth. The transmittal of the $700,000 was not accompanied by any explanation or accounting as to how the amount was calculated, the balance of the LBIE claim proceeds, or the status of the holdbacks. Even though it mandatorily had withdrawn the plaintiff as a member of PCM in April, 2011, when the CSA was executed, on April 22, 2013, Pursuit Management sent the plaintiff a letter executing its purported right, pursuant to the LPA, [193 Conn.App. 398] to " ‘mandatorily withdraw’ " the plaintiff from PCM,[11] which allegedly terminated any interest the plaintiff had in the contingent assets. The purported basis for this second mandatory withdrawal was the initiation of the 2013 New York action.

          On July 3, 2014, the court in the UBS litigation, after reconsideration, vacated the judgment dismissing the UBS litigation and held that Pursuit Partners and PIM had standing on the basis of the unique and unitary relationship between the various entities that make up and control the hedge fund structure. In August and September, 2015, Pursuit Partners settled the UBS litigation for a total of $36 million; however, the defendants have not provided the plaintiff with any portion of the settlement proceeds.

         The plaintiff then brought the present action against the defendants seeking damages for their failure to remit to the plaintiff its proportionate share of the UBS litigation proceeds as secured under § 4 of the CSA.[12] On September 11, 2015, the plaintiff filed an application for a prejudgment remedy and a proposed summons and complaint against the defendants. The plaintiff’s operative amended substitute complaint, dated May 6, 2016, is comprised of seven counts: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) unjust enrichment, (4) conversion, (5) statutory theft under General Statutes § 52-564, (6) violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., and (7) civil conspiracy.

          On February 17, 2016, the defendants, in response, filed an application for a prejudgment remedy and a counterclaim against the plaintiff alleging, among [193 Conn.App. 399] other things, that the plaintiff is liable to the defendants for breach of contract and is not entitled to any portion of the UBS litigation proceeds. In particular, the defendants alleged that the November, 2011 letter from Reed Smith to DLA Piper referencing the plaintiff’s communication with the Schneider Group, as well as the commencement of the 2013 New York action, had breached certain provisions of both the CSA and the LPA. The defendants’ operative amended counterclaim, dated June 7, 2016, contained two counts that respectively alleged breach of the CSA and fraud.

          On May 17, 2016, the defendants filed a motion to strike all seven counts of the plaintiff’s complaint. The defendants argued in their memorandum of law in support, in relevant part, that counts five and six of the complaint, which alleged Connecticut statutory causes of action sounding in statutory theft and CUTPA, are barred by the choice of law provision in

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§ 12 of the CSA, which provided that "[a]ny disputes or litigation arising out of this [a]greement shall be governed by New York law." On June 8, 2016, the plaintiff filed a memorandum of law in opposition to the defendants’ motion to strike in which it argued, among other things, that the choice of law provision was not broad enough to preclude the Connecticut statutory causes of action.

         On June 16, 2016, after an eight day hearing,[13] the court issued a thorough memorandum of decision in which it concurrently granted the plaintiff’s application for a prejudgment remedy and denied the defendants’ application for a prejudgment remedy. The court found that there was "probable cause that the plaintiff will obtain a judgment in the amount of $4,929,582 plus interest in the amount of $492,000, for a total prejudgment remedy in the amount of $5,421,582." The defendants then filed a motion for reconsideration, [193 Conn.App. 400] and certain defendants also filed a motion to modify the prejudgment remedy, which were both summarily denied by the court. The plaintiff thereafter secured the full attachment amount.

          On June 20, 2016, the court issued an oral ruling granting the defendants’ motion to strike as to counts five and six, and denying the motion as to the remainder of the counts. The court held that although the choice of law provision in § 12 of the CSA "is not quite as broad" as compared to other similar cases, "it is still quite broad. It is difficult to see how the specific claims alleged in counts five and six being litigated in this case do not arise out of the [CSA]. Those counts have as the center of the alleged wrongful conduct of the defendants various wrongful [conduct] and schemes that would further their efforts to withhold from the [plaintiff] the amount the [plaintiff] claim[s] [is] due under the CSA. As such, while those counts do not rest on the validity, construction, and enforcement of the agreement, they do arise out of the obligations of the defendants that emanate from that agreement."

         On October 14, 2016, after seven additional days of evidence, the court issued an extensive memorandum of decision in which it rendered judgment partially in favor of the plaintiff as to certain defendants on its complaint and in favor of the plaintiff on the defendants’ counterclaim.[14] In particular, the court concluded that the defendants that were parties to the CSA— PCM, POF, PIM, Schepis, and Canelas— as well as the general partner of PCM at the time the UBS litigation proceeds were realized, Northeast, were liable for breach of contract and breach of the covenant of good faith and fair dealing for their intentional failure to remit to the plaintiff its proportionate share of the UBS litigation proceeds as secured by the CSA. The court also [193 Conn.App. 401] concluded that the remaining claims in the plaintiff’s complaint, the defendants’ special defenses, and the defendants’ counterclaim had not been proven. Consequently, the court rendered judgment in favor of the plaintiff against PCM, POF, PIM, Schepis, Canelas, and Northeast in the total amount of "$4,929,582 plus prejudgment interest at the rate of 10 percent per year from October 16, 2015, the date that the plaintiff’s interest in the UBS [litigation] proceeds should have been remitted to the plaintiff, until October 16,

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2016, in the amount of $492,958, for a total of $5,422,540." The court also rendered judgment in favor of Pursuit Partners, PCM Master, and POF Master on counts one and two of the complaint, in favor of all the defendants on counts three through seven of the complaint, and in favor of the plaintiff on the counterclaim. This appeal and cross appeal followed.

         On November 8, 2016, during the pendency of this appeal, the plaintiff, pursuant to General Statutes § 52-278k, filed a motion with the trial court seeking modification of the previously secured prejudgment remedy attachment amount to secure from PCM, POF, PIM, Schepis, Canelas, and Northeast an additional $947,731 that it anticipated would accrue during the pendency of this appeal. On the same date, the plaintiff, pursuant to Practice Book § 13-13, filed a motion with the trial court seeking supplemental asset disclosure from those defendants to assist with the securing of the additional attachment pursued by the motion to modify. On December 16, 2016, the defendants filed an opposition to the plaintiff’s motion to increase the prejudgment remedy in which they argued, among other things, that § 52-278k does not permit the upward modification of a prejudgment remedy in the present circumstances.

         On January 4, 2017, after a hearing, the court granted the plaintiff’s motion to increase the prejudgment remedy amount by $947,731 to a total of $6,369,313, holding that § 52-278k permits the modification of a prejudgment remedy " ‘at any time,’ " and that the "evidence [193 Conn.App. 402] at trial and the circumstances of the pending appeal" constituted probable cause warranting an increased modification. On the same date, the court granted the plaintiff’s motion for disclosure of assets to assist with the securing of the additional amount. The defendants thereafter filed an amended appeal to challenge these rulings. Additional facts will be set forth as necessary.

          On appeal, the defendants present a myriad of claims, which principally challenge the court’s interpretation of the CSA and the LPA. In particular, the defendants argue that the court improperly determined that certain defendants breached the CSA and the covenant of good faith and fair dealing, improperly rejected their breach of contract counterclaim, improperly held all of the defendants that had signed the CSA liable for the breach found by the court of a single provision thereof, and improperly determined the amount of damages. The defendants also claim that the court improperly granted the plaintiff’s motion to increase the amount of the prejudgment remedy and the plaintiff’s motion for discovery to assist it with securing the additional prejudgment remedy attachment. In its cross appeal, the plaintiff claims that the court improperly determined that the defendants that had not signed the CSA were not liable, improperly granted the defendants’ motion to strike its Connecticut statutory causes of action, improperly determined that the plaintiff could not prevail on its conversion claim, and improperly determined the amount of damages. We now turn to each of the parties’ claims.

          I

         The defendants first claim that the court improperly interpreted the agreements between the parties when it concluded that the plaintiff prevailed on its breach of contract claim, which alleged that the defendants had failed to pay the plaintiff its proportionate share of the proceeds from the UBS litigation. The defendants first argue that none of them could be held liable for [193 Conn.App. 403] breach of the CSA because the distribution of the proceeds from the contingent assets was governed

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by the LPA, which they contend afforded the general partner discretion to withhold or reduce payment of the contingent interests. They argue that the court misinterpreted the agreements to obligate them to remit the proceeds of the contingent assets to the plaintiff as soon as practicable. We disagree.

         We begin by setting forth the standard of review and legal principles relevant to this claim. "The standard of review for the interpretation of a contract is well established. Although ordinarily the question of contract interpretation, being a question of the parties’ intent, is a question of fact [subject to the clearly erroneous standard of review] ... [when] there is definitive contract language, the determination of what the parties intended by their ... commitments is a question of law [over which our review is plenary]." (Internal quotation marks omitted.) Joseph General Contracting, Inc. v. Couto, 317 Conn. 565, 575, 119 A.3d 570 (2015). In light of the fact that the defendants’ claim is directed at the court’s interpretation of the agreements, as opposed to the court’s factual findings, "our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record." (Internal quotation marks omitted.) Sun Val, LLC v. Commissioner of Transportation, 330 Conn. 316, 325-26, 193 A.3d 1192 (2018).

          In interpreting contracts pursuant to New York law,[15] "the intention of the parties should control. To discern the parties’ intentions, the court should construe the agreements so as to give full meaning and effect to the material provisions ...." (Citations omitted.) [193 Conn.App. 404] Excess Ins. Co. Ltd. v. Factory Mutual Ins. Co., 3 N.Y.3d 577, 582, 789 N.Y.S.2d 461, 822 N.E.2d 768 (2004). "Where ... a literal construction defeats and contravenes the purpose of the agreement, it should not be so construed ...." (Citation omitted; internal quotation marks omitted.) Currier, McCabe & Associates, Inc. v. Maher, 75 A.D.3d 889, 892, 906 N.Y.S.2d 129 (2010). "In making these determinations, [t]he court should examine the entire contract and consider the relation of the parties and the circumstances under which it was executed. Particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby. Form should not prevail over substance and a sensible meaning of words should be sought ...." (Citations omitted; internal quotation marks omitted.) Id., at 890-91, 906 N.Y.S.2d 129.[16]

          We begin our analysis with the plain language of the provision at issue. Section 4 of the CSA provided in relevant part: "PCM owns certain contingent assets that were valued at zero ... for purposes of calculating PCM’s NAV. These contingent assets include (a) PCM’s proportionate interest in the UBS [l]itigation; and (b) PCM’s interest in [the LBIE claim]. Nothing

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herein ... shall affect in any way [the plaintiff’s] pro rata share ... of the contingent assets as of February 28, 2011. It is further understood that [the plaintiff’s] continued interest in the contingent assets shall be governed by the [LPA] ...."

          The definitive language of this section demonstrates that the parties intended to preserve the plaintiff’s then existing right to receive its share of proceeds that might [193 Conn.App. 405] be realized from certain contingent assets. Prior to the execution of the CSA, these contingent assets were the property of PCM, and, thus, at the time the CSA was executed, the parties carved out these contingent assets from the redemption payment and agreed that the plaintiff would be entitled to its share of these assets if they were realized.

          There is no dispute among the parties regarding the foregoing interpretation; rather, the parties’ views diverge as to the intended meaning of the final relevant sentence of § 4 of the CSA, which directs that the LPA governs the continued interest in the contingent assets. The defendants argue that the parties intended that all of the provisions of the LPA continued to govern the contingent interests. They maintain that the contingent interests were subject to the distribution and withdrawal provisions of the LPA, which they argue granted the general partner of PCM broad discretion to reduce, reinvest, or retain a portion of the contingent assets once realized. The plaintiff argues that, because the execution of the CSA constituted a withdrawal of the plaintiff from PCM, the court properly determined that the parties intended that the payment of the contingent assets was to be governed by a specific portion of the LPA withdrawal provision. We agree with the plaintiff.

          In the present case, the court properly considered the language of § 4 of the CSA in conjunction with the other provisions of the CSA, the LPA, the relation of the parties, and the circumstances under which it was executed. The court first determined that the execution of the CSA had the effect of withdrawing the plaintiff as a limited partner from PCM. The court then determined that, because the plaintiff had been withdrawn from PCM, the parties intended that the payment of the contingent assets secured by the CSA was to be governed by § 5.01 (c) of the LPA, which mandated that "[a] withdrawal shall be effective on the applicable [w]ithdrawal [d]ate. In the case of any [l]imited [p]artner who [193 Conn.App. 406] withdraws all or any portion of its [l]imited [p]artnership [i]nterest, such withdrawing [l]imited [p]artner shall be paid the amount of its withdrawal in cash as soon as practicable following the effective date of the withdrawal, subject to certain restrictions and reserves for contingent or undetermined liabilities of [PCM]." We conclude that the court’s interpretation is legally and logically correct and supported by the facts in the record.

         The purpose of the CSA, as a whole, was to resolve the then existing disputes between the parties, and the execution of the CSA had the effect of vitiating any remaining investment the plaintiff had in PCM. The CSA provided that, in exchange for the releases of claims, PIM was to pay the plaintiff a settlement payment, as well as a redemption payment, which represented the plaintiff’s pro rata share of the NAV remaining in PCM at that time. Thus, the only financial connections between the plaintiff and PCM that existed after the execution of the CSA were the certain holdbacks and the contingent interests. The limited nature of the ongoing relationship was confirmed by PIM’s ...


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