NESS TECHNOLOGIES v. HNA (2019)

Order, Supreme Court, New York County (Barry R. Ostrager, J.), entered May 22, 2018, which, to the extent appealed from, denied defendant Pactera Technology International Limited's (PACL) motion to dismiss plaintiffs' breach of contract and declaratory judgment causes of action, unanimously modified, on the law, to dismiss the declaratory judgment cause of action, and otherwise affirmed, without costs.

Assuming arguendo that section 10.02(b)(ii) of the Stock Purchase Agreement creates a condition precedent, once the Outside Date of October 27, 2017 had passed, plaintiff had terminated the agreement and defendant had not obtained approval from the Committee on Foreign Investment in the United States (CFIUS) for the purchase, neither specific performance nor an injunction would have remedied defendant's breach.

The complaint sufficiently articulated specific breaches of defendant's obligation to use its “reasonable best efforts,” including delaying submission of its information to CFIUS so that its affiliate HNA Group could complete an unrelated transaction, and “knowingly providing false information inconsistent with publically-available filings and reports” (Van Valkenburgh, Nooger & Neville, Inc. v. Hayden Publishing Company, Inc, 30 N.Y.2d 34, 45–47, 330 N.Y.S.2d 329, 281 N.E.2d 142 [1972] lv denied 409 U.S. 875, 93 S.Ct. 125, 34 L.Ed.2d 128 [1972]);  Morris v. 702 E. Fifth St. HDFC, 46 A.D.3d 478, 479, 850 N.Y.S.2d 6 [1st Dept. 2007]).

However, since plaintiff has a legal remedy for breach of contract, its cause of action for declaratory judgment should have been dismissed (Cronos Group Ltd. v. XComIP, LLC, 156 A.D.3d 54, 64 N.Y.S.3d 180 [1st Dept. 2017];  Singer Asset Fin. Co., LLC v. Melvin, 33 A.D.3d 355, 358, 822 N.Y.S.2d 68 [1st Dept. 2006]).