RIMROCK HIGH INCOME PLUS MASTER FUND LTD v. AVANTI COMMUNICATIONS GROUP PLC (2018)

Order, Supreme Court, New York County (Eileen Bransten, J.), entered September 21, 2017, which granted defendants' motion to dismiss as to the first cause of action, for breach of contract, and denied the motion as to the second cause of action, for breach of the implied covenant of good faith and fair dealing, unanimously modified, on the law, to grant the motion in its entirety, and, otherwise affirmed, without costs.  The Clerk is directed to enter judgment dismissing the complaint.

Plaintiffs, holders of certain notes, claim that defendants breached an indenture issued by defendant Avanti Communications Group PLC. The indenture contains a “no action” clause, which provides that no noteholder may pursue any remedy with respect to the indenture or notes unless certain specified conditions are met.

Plaintiffs failed to comply with the no action clause, and thus lack standing to pursue their claims (Quadrant Structured Prods. Co., Ltd. v Vertin, 23 N.Y.3d 549, 560–561, 992 N.Y.S.2d 687, 16 N.E.3d 1165 [2014];  STS Partners Fund, LP v. Deutsche Bank Sec., Inc., 149 A.D.3d 667, 668, 53 N.Y.S.3d 632 [1st Dept. 2017], lv dismissed in part and denied in part 30 N.Y.3d 1009, ––– N.Y.S.3d ––––, ––– N.E.3d –––– [2017] ).

Even if plaintiffs had standing, the claims fail to state a cause of action.  The breach of contract claim is based on conclusory allegations of collusion (Bodum USA, Inc. v. Perez, 148 A.D.3d 644, 645, 49 N.Y.S.3d 292 [1st Dept 2017] ), and the claim for breach of the implied covenant of good faith and fair dealing is duplicative of the breach of contract claim.

We have considered plaintiffs' remaining contentions and find them unavailing.