On June 21, 2022, Justice Cohen of the New York County Commercial Division issued a decision in BD Capital Partners Ltd. v. EBIX, Inc., 2022 NY Slip Op. 31951(U), dismissing a complaint for failure to observe a contract’s dispute resolution procedures, explaining:
Accepting that BD Capital submitted an EO Objection Notice, BD Capital’s claims cannot proceeding in this Court because they circumvent the dispute-resolution procedure mandated by the SP A Both causes of action in the Complaint ask the Court, or a jury, to settle a dispute about the Earnout Statement, thus supplanting the role contractually assigned to the Neutral Auditor. The First Cause of Action contests the Company’s stated Revenue and EBTIDA figures in the Earnout Statement, and seeks as damages the amount of the full Two-Year Earnout Amount (as defined in the SPA and to be calculated in accordance with the SPA), in an amount to be determined at trial. But that is not what the SPA contemplates. Any dispute about the Earnout Statement or the calculations set forth thereon – especially a dispute about Revenue and EBITDA, the main drivers of the Earnout Amount – must go through the contractually-ordered process of objection, negotiation, and submission to the Neutral Auditor. Similarly, the Second Cause of Action seeks a decree of specific performance requiring Defendants to provide an accurate Financial Statement. But again, a dispute over the accuracy of Defendants’ calculations in the Earnout Statement falls squarely within the scope of section 2.4 [e]. And because BD Capital has not alleged compliance with section 2.4 [e], its claims fail as a matter of law.
(Internal quotations and citations omitted).