LNG LLC v. Eni S.P.A., Defendant–Respondent. (2023)

Allerhand & Odoner LLP, New York (Joseph S. Allerhand of counsel), for appellants.

Sheppard, Mullin, Richter & Hampton LLP, New York (Helene Gogadze of counsel), for respondent.

Order, Supreme Court, New York County (Jennifer G. Schecter, J.), entered on or about January 3, 2022, which granted defendant's motion for summary judgment dismissing the complaint, unanimously affirmed, with costs.

Defendant established prima facie that it owed nothing on its guaranty of its subsidiary's performance obligations under the agreement between defendant and plaintiffs Gulf LNG Energy and Gulf LNG Pipeline, LLC (together, Gulf) (see USI Capital & Leasing v. Chertock, 172 A.D.2d 235, 236 [1st Dept 1991] ).  The guaranty was qualified with language unambiguously providing that defendant's obligation did not arise until two events occurred:  first, its subsidiary failed to timely pay the amounts assessed by Gulf as due and payable;  and second, Gulf gave defendant notice of the nonpayment.  The record shows that the subsidiary paid all accrued amounts that Gulf deemed to be due and payable.  Furthermore, the terms of the guaranty are clear and unambiguous as to defendant's obligations, and resort to the extrinsic evidence offered by Gulf – namely, the affidavit of its counsel – is unwarranted (see W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d 157, 162 [1990] ).

Contrary to Gulf's argument, the arbitration award, which relieved defendant's subsidiary of future performance under the parties' agreement, did not trigger defendant's guaranty obligations.  The arbitration tribunal declared the agreement to be terminated.  As a result, the subsidiary had no financial obligations under the agreement and there was nothing left for defendant to guaranty.