This action seeks, inter alia, reformation of an indenture issued by plaintiff, Stonebridge Capital LLC (Stonebridge) (the Stonebridge Indenture), indentures of certain investors (the Investor Indentures), and related transaction documents, executed by the parties on 26 September 2007 (the Transaction) in connection with the securitization of certain collateralized loans (collectively, hereinafter, the Transaction Documents).

According to the complaint, the Transaction was structured and marketed to have two triggers (one under the Stonebridge Indenture, and one under the Investor Indentures), based on ratings issued by Moody's Investor Service, Inc. (Moody's) and Standard & Poor's (S & P). If the credit rating of the corporate bond serving as collateral for the Transaction (the "Underlying Bond") dropped below Baa3 (Moody's) or BBB- (S & P), such a "Downgrade Yield Trigger" would result in defendant Nomura International PLC (Nomura) being paid a greater amount of interest by operation of the Stonebridge Indenture. If, however, the credit rating of the Underlying Bond dropped to, or below, the level of B2 (Moody's) or B (S & P), Nomura could declare an Event of Default under the Investor Indentures, which would, in turn, allow Nomura to declare and "Issuer Event of Default" under the Stonebridge Indenture.

Stonebridge maintains that due to a drafting error on the part of one of the attorneys working for Stonebridge on the Transaction, certain additional language was added throughout drafts of the subject Indentures in the final days before the closing of the Transaction. See Stonebridge Pass-Through Trust Indenture of 26 September 2007, Notice of Motion, Exhibit A, §§ 3.3 (a) and (b) (Downgrade Yield Trigger), Annex A at 7 (Standard Definitions); see also SBRAN 1042 Investor LLC Indenture of 26 September 2007, Notice of Motion, Exhibit C, § 6.1 (a) (v) (Events of Default), and Annex A at 9 (Standard Definitions). More specifically, the Transaction Documents provide that a "Downgrade Yield Trigger"

... in respect of any Class of Notes shall have occurred if, as of any Mutual Fund [*2]Determination Date with respect to any financial guaranty insurance policy on any Underlying Bond, the related Series Indenture Trustee determines that the rating of such financial guaranty insurance policy has fallen below "Baa3" by Moody's or "BBB-" by S & P. On each Mutual Fund Payment Date in respect of the monthly period immediately preceding such Mutual Fund Payment Date in which a Downgrade Yield Trigger has occurred and is continuing, the related Series Indenture Trustee with respect to the related class shall transfer from the related Class Mutual Fund Collection Account to the related Class Protected Collection Account the Available Investor LLC Mutual Fund IR Yield with respect to such Underlying Bond, for distribution as set forth in Section 3.4(a).

Similarly, the language in the sections referring to Events of Default in the Investor Indentures was modified to state that "an Event of Default with respect to the affected Class of Notes and only such Notes [shall occur if ...] the rating with respect to any financial guaranty insurance policy related to any Underlying Bond falls below B2' by Moody's or B' by S & P." Investor Indentures, § 6.1.

Stonebridge maintains that the italicized language above, reflecting changes throughout the Stonebridge and Investor Indentures, should have referred only to "the related Underlying Bond," and not "any financial guaranty insurance policy." Stonebridge alleges that: (i) the mistake was made by its own lawyers in contravention of the clearly expressed intent of the parties; (ii) Nomura acknowledged, and planned to correct, the mistake; and (iii) as Moody's and S & P do not rate insurance policies, the language, as it stands, refers to an event that can never occur.

Stonebridge alleges that from 2005 through and including 18 September 2007, the ratings triggers in the Transaction were always based on the rating of the Underlying Bond, and marketed as such to Nomura beginning in early 2007. On or about 25 June 2007, Stonebridge sent a set of the proposed Transaction Documents to Nomura and its counsel. Nomura responded with preliminary comments to these documents on or about 6 July 2007.

Eight days before the close of the Transaction, on 18 September 2007, J.P. Morgan Securities and counsel for Nomura and Stonebridge Capital participated in a telephone conference call to discuss last-minute drafting issues. During that conference call, Nomura suggested that the triggering event should be based on the rating of uninsured utility bonds, rather than the insured Underlying Bond. Apparently, that suggestion was rejected, in a series of e-mails, by the other parties to the Transaction.

On that same date, non-party J.P. Morgan Securities, which served as the placement and structuring agent for the Transaction, sent an e-mail stating that they "[w]ant to make sure we are all on the same page. Any downgrade triggers related to the underlying bonds will consider the wrapped ^[FN1] security rating and not the underlying unwrapped bond rating .... We would be triggering the BBB- trigger at closing on some of the wrapped debt if we used the unwrapped [*3]rating." See Notice of Motion, Exhibit D.

Stonebridge, also sent an e-mail on 18 September 2007 to J.P. Morgan Securities, explaining the reasons that Nomura's requested change did not make sense. That e-mail, which J.P. Morgan Securities forwarded to Nomura, offered that "[o]n the downgrade trigger, an insured bond has its own CUSIP ^[FN2] and public rating - separate from the utility issuer. The downgrade trigger is on the Underlying Bond, which is the insured bond. The rating of the utility has no relevance, which is a separate security not owned inside the transaction. It makes no sense that [Nomura] was pushing to use the utility rating, which has no relevance." See Notice of Motion, Exhibit E. Nomura did not respond to any of these e-mails.

Nonetheless, on 19 September 2007, Stonebridge's counsel for the Transaction changed the language of the subject triggers in several places in the Transaction Documents as described above, completely altering, according to the complaint, the agreed intent of all of the parties. The Transaction Documents were redlined against the previous drafts to highlight changes, and circulated. See Notice of Motion, Exhibit G.

The parties closed the Transaction on 26 September 2007. Stonebridge received copies of the executed Transaction Documents in or about late December 2007. Allegedly, in or about January 2008, an officer of Stonebridge was reviewing the Transaction Documents, noticed the changed language, and contacted Nomura about correcting the mistakes. Stonebridge asserts that Nomura agreed to correct the mistakes in the subject language concurrently with the execution of Supplemental Indentures, but later, when adverse conditions occurred in the market in 2008, Nomura refused to do so.

On 23 June 2008, J.P. Morgan Securities called an officer of Stonebridge to advise that XL Capital, one of the insurers who had issued a financial guaranty insurance policy on one of the utility issuer's notes, had been downgraded to B2. On 26 June 2008, US Bank contacted an officer of Stonebridge Capital (via e-mail) to announce this ratings downgrade, advise Stonebridge that Nomura was aware of the downgrade, and that Nomura had suggested that the downgrade might actuate rating triggers under the Transaction Documents.

On 27 June 2008, Stonebridge contacted a representative of Nomura, to discuss the changed language in the Transaction Documents, and to determine whether Nomura would sign the Supplemental Indentures. The representative indicated that Nomura might not agree to sign the Supplemental Indentures.

In a letter dated 9 July 2008, Nomura wrote to the US Bank entities, asserting that an "Issuer Event of Default," as defined in the Stonebridge Indenture, and an "Event of Default," as defined in the Investor Indentures, had occurred. At an unspecified time after this communication, according to the complaint, an institutional investor then refused to execute a new round of indentures with Stonebridge.

Stonebridge brings this action for reformation based upon scrivener's error (first cause of [*4]action) and/or mutual mistake (second), and a declaration that no event of default, as declared by Nomura, has occurred under the Transaction Documents (third cause of action). Stonebridge also seeks recovery for trade libel and injurious falsehood (fourth cause of action), equitable estoppel (fifth), and breach of the covenant of good faith and fair dealing (sixth).

Nomura now moves, pursuant to CPLR 3211 (a) (1) & (7), to dismiss the complaint upon documentary evidence for failure to state a claim upon which relief can be granted. The motion to dismiss the complaint is granted.

Scrivener's Error and Mutual Mistake (1st and 2nd Causes of Action)

Generally, reformation of a contract based on either scrivener's error and mutual mistake requires that the intent of the parties prior to the contract be unified. See 27 Williston on Contracts § 70:93 (4th ed.) ("[i]n contract law, a scrivener's error, like a mutual mistake, occurs when the intention of the parties is identical at the time of the transaction but the written agreement does not express that intention because of that error; this permits a court acting in equity to reform an agreement") (emphasis added).

With regard to scrivener's error, it is has been established for at least a century that "[w]here there is no mistake about the agreement, and the only mistake alleged is in the reduction of that agreement to writing, such mistake of the scrivener, or of either party, no matter how it occurred, may be corrected." Born v Schrenkeisen, 110 NY 55, 59 (1888) (emphasis added); accord Hart v Blabey, 287 NY 257, 262 (1942); Nash v Kornblum, 12 NY2d 42, 47-48 (1962); see also Rosalie Estates v Colonia Ins. Co., 227 AD2d 335, 337 (1st Dept 1996) ("[a] scrivener's error constitutes a mistake solely in the reduction of an agreement to writing"), citing Harris v Uhlendorf, 24 NY2d 463, 467 (1969).

Here, the parties do not find themselves in a real and existing agreement as to basis and function of the Downgrade Yield Trigger. Instead, both parties claim that "there is a mistake as to the agreement itself on the part of [the other party.]" See Harris, 24 NY2d at 467, citing Amend v Hurley, 293 NY 587 (1944). Stonebridge claims that the Downgrade Yield Trigger was meant to refer to the Underlying Bond; Nomura claims that the term was meant to refer to the issuer of any financial guaranty insurance policy on the Underlying Bond. Under such circumstances the equitable relief of reformation on the basis of scrivener's error is unavailable. See Rosalie Estates, 227 AD2d at 337.

Stonebridge argues repeatedly that Nomura did not request that the language in the Indentures be changed to reflect a Downgrade Yield Trigger based upon ratings other than upon the Underlying Bond. However, this argument is unpersuasive: parties need not ask to have every element of a contract included within the contract. Especially among sophisticated business entities, what matters is the language of the agreement as signed. George Backer Mgt. Corp. v Acme Quilting Co., 46 NY2d 211, 219 (1978) (there is a "heavy presumption that a deliberately prepared and executed written instrument manifest[s] the true intention of the parties").

Similarly, a cause of action for reformation based upon mutual mistake requires that the parties have reached an agreement, and unbeknownst to either party, the writing in question failed to express that agreement. Chimart Assoc. v Paul, 66 NY2d 570, 573 (1986); see also Harris, 24 NY2d at 468-469; Consolidated Edison Co. of NY v General Acc. Ins. Co., 204 AD2d 164, 165 (1st Dept 1994). As a preliminary matter, Stonebridge's repeated allegations, made upon [*5]information and belief, that Nomura did not know about the mistake, are confuted by Nomura having raised the issue of the appropriate downgrade-yield-trigger mechanism in negotiations in the first place. It is inherently incredible that Nomura would offer alternatives to the agreed downgrade trigger, and then completely ignore the changes to the Transaction Documents, which were highlighted by Stonebridge.

Stonebridge submits several prior documents and e-mails indicating that parties other than Nomura, did not like Nomura's suggestion that the Downgrade Yield Trigger be modified. However, none of those documents indicate any assent on the part of Nomura. See George Backer Mgt. Corp., 46 NY2d at 219 (the proponent of reformation must "show in no uncertain terms, not only that mistake or fraud exists, but exactly what was really agreed upon between the parties"), accord Chimart Assoc., 66 NY2d at 574; Amend, 293 NY at 595 (burden is to demonstrate not the probability, but the certainty of error in the making of the contract). To allow reformation under such circumstances would be to force Nomura to engage in a bargain it never made. 27 Williston, Contracts (4th ed.), §70:23 (especially where the complaint seeks not to sever, but to continue a contractual relationship in modified form, a petitioner must show, in no uncertain terms, exactly what was really agreed upon between the parties); see also William P. Pahl Equipment Corp. v Kassis, 182 AD2d 22, 29 (1st Dept 1992).

Moreover, the final set of Transaction Documents, according to Stonebridge's own submissions, were "redlined against the previously circulated drafts" and re-circulated to all the parties. See Notice of Motion, Exhibit G. It would be egregious to accept, and act on, the excuse that sophisticated business entities - even where the changes amounted to "less than 10 words" (see Complaint, ¶49) - were not aware of changes in a document redlined to highlight such changes.

Finally, it is notable that Stonebridge's own attorneys systematically made the complained of changes. As such, they are not entitled to reformation without a high level of proof. Compare 27 Williston on Contracts § 70:93 (4th ed.) ("if one of the parties is the scrivener, then greater scrutiny is required. In such cases, a scrivener's claim of having made a unilateral mistake cannot command reformation where the other party denies that it had agreed to the challenged material"). Stonebridge cannot secure reformation by merely showing that their attorney made what appears to be a unilateral mistake. In the absence of actual fraud, the mistake shown must be one made by both parties, so that, demonstrably, the intentions of neither are expressed in it. See Salomon v North Br. & Mercantile Ins. Co. of NY, 215 NY 214, 219 (1915). The first and second causes of action seeking reformation of the Indentures are dismissed.

Trade Libel and Injurious Falsehood (4th Cause of Action)

The tort of trade libel or injurious falsehood requires the knowing publication of false and derogatory facts about the plaintiff's business of a kind calculated to prevent others from dealing with the plaintiff, to its demonstrable detriment. See Waste Distillation Tech. v Blasland & Bouck Engrs., P.C., 136 AD2d 633, 633 (2nd Dept 1988); Prosser and Keeton, Torts § 128, at 967. In addition, the facts so published must cause special damages, in the form of actual lost dealings. See SRW Assoc. v Bellport Beach Prop. Owners, 129 AD2d 328, 331(2nd Dept 1987).

Stonebridge maintains that Nomura knowingly published the false statement that an "Event of Default" and a "Downgrade Yield Trigger" had occurred under the Indentures in order to maliciously prevent others from dealing with Stonebridge. The complaint specifies that "a [*6]second round of Stonebridge Capital financing similar to the Transaction was called off by another institutional investor (not Nomura), once those investors learned of the alleged occurrence of the alleged Event of Default,' Issuer Event of Default,' and Downgrade Yield Trigger,' and, as importantly, the pendency of this litigation." Complaint, ¶ 148.

The cause of action for trade libel must be dismissed. First, the statement that there was an "Event of Default" under the Indentures was not "knowingly" false. To wit, both Nomura and Stonebridge seek declarations as to whether an Event of Default actually occurred. That there is a real controversy negates the allegation that the declaration of an Event of Default was "knowingly" false. Second, Stonebridge's own complaint states that the cause of the alleged institutional investor's decision not to deal with Stonebridge was "as importantly, the pendency of this litigation." (Emphasis added.) Stonebridge brought this litigation, and according to its own complaint the extant litigation was "as importantly" a reason not to go forward with the deal as any declaration of an "Event of Default" by Nomura. Indeed, it is not surprising that an institutional investor would want to wait to see the outcome of this litigation before signing on to a second round of financing transactions with Stonebridge, regardless of any Events of Default that may have occurred, lest that investor be haled into court next.

In any event, Stonebridge has not, as required, named the institutional investor or itemized the losses incurred. Nor is there even an allegation of communication between Nomura and the unnamed institutional investor. Stonebridge's "nonspecific conclusory allegations do not meet the stringent requirements imposed for pleading special damages." Matherson v Marchello, 100 AD2d 233, 235 (2nd Dept 1984); see also L.W.C. Agency v St. Paul Fire and Mar. Ins. Co., 125 AD2d 371 (2nd Dept 1986). Stonebridge's reliance on Harwood Pharmacal Co. v National Broadcasting Co. (9 NY2d 460 [1961]) is inapposite. That matter dealt with the publication of material that was libelous per se on a television show. Here, there is no indication or allegation that the declaration of an Event of Default is libelous per se, nor is there any potency in the allegation that the communication of an Event of Default by a noteholder to a trustee for the Transaction constitutes the type and extent of "publication" in Harwood Pharmacal Co. The fourth cause of action for trade libel is dismissed.

Equitable Estoppel (5th Cause of Action)

The purpose of the equitable doctrine of estoppel is to prevent the infliction of unconscionable injury and loss upon one who has justifiably relied upon the promise of another, and was misled into a detrimental change in position. See 4 Williston, Contracts (4th ed.) § 8:3; American Bartenders School v 105 Madison Co., 59 NY2d 716, 718 (1983); see also Nassau Trust Co. v Montrose Concrete Prods. Corp., 56 NY2d 175, 184 (1982). Thus, equitable estoppel "requires three elements on the part of the party estopped: (1) conduct which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) intent that such conduct (representation) will be acted upon; and (3) knowledge, actual or constructive, of the true facts." Health-Loom Corp. v Soho Plaza Corp., 272 AD2d 179, 181 (1st Dept 2000), quoting Holm v CMP Sheet Metal, 89 AD2d 229, 234-235 (4th Dept 1982) (internal quotation marks omitted).

According to the complaint, Nomura is "equitably estopped and absolutely excluded from declaring an Event of Default,' an Issuer Event of Default' and/or a Downgrade Yield Trigger' has occurred." Stonebridge maintains that "by and through its words, actions, inactions, [*7]representations and other conduct," Nomura induced and caused Stonebridge to believe that the subject provisions in the Transaction Documents were incorrect, and did not express the terms of the agreement previously reached by the parties.

Specifically, the complaint cites Nomura's assurances that it would sign Supplemental Indentures and simultaneously agree to modify the erroneous "Event of Default" and "Downgrade Yield Trigger" language in the Transaction Documents. As a result, Stonebridge claims, it was induced to await Nomura's execution of the Supplemental Indentures, without taking further action, during which time the credit market deteriorated substantially, creating a detrimental change in Stonebridge's position.

The cause of action for equitable estoppel must be dismissed. First, there is no indication in the complaint or accompanying documentation that Nomura conveyed the impression that the Downgrade Yield Trigger or Events of Default operated other than, or inconsistent with, its assertions herein. Nor does the complaint even allege that Nomura responded to repeated e-mails commenting on the alternative, or incorrect, interpretations of the Downgrade-Yield-Trigger mechanism. "[I]n absence of evidence that a party was misled by another's conduct or that the party significantly and justifiably relied on that conduct to its disadvantage, an essential of estoppel [i]s lacking.'" Fundamental Portfolio Advisors v Tocqueville Asset Mgt., L.P., 7 NY3d 96, 106-107 (2006), quoting Lynn v Lynn, 302 NY 193, 205, cert denied 342 US 849 (1951). In any event, Nomura's mere failure to follow through on a supposed intention or promise to execute the Supplemental Indentures cannot give rise to a waiver of their rights under the Indentures. Compare Ginsberg v Fairfield-Noble Corp., 81 AD2d 318, 321 (1st Dept 1981) (promise to enter contract cannot give rise to an estoppel of statute of limitations claims).

Nomura's failure to formally acknowledge the suggested changes in the Transaction Documents evinces that Nomura did not intentionally induce Stonebridge take any specific action. What is more, Stonebridge has not shown any reliance on the supposed conduct: Stonebridge does not state, either in the complaint, or in its memoranda, what it did, or failed to do, as a result of the alleged assurances from Nomura. Rather, Stonebridge states only that it had to "await" Nomura's decision. "No estoppel arises in any case where there has been no act done and no change of position in reliance upon an untrue representation." Wills v Investors Bankstocks Corp., 257 NY 451, 458 (1931). Stonebridge also fails to offer any indication of how it would be differently situated had it not relied upon the alleged assurances of Nomura. Water St. Leasehold LLC v Deloitte & Touche LLP, 19 AD3d 183, 185-186 (1st Dept 2005), lv denied 6 NY3d 706 (2006) (detrimental reliance must be properly adduced upon a motion to dismiss); Brooks v Citicorp, 245 AD2d 12, 12-13 (1st Dept 1997) (failure to demonstrate detrimental reliance requires grant of motion to dismiss).

In essence, Stonebridge is asking that I enforce an oral modification to the Indentures. By ordering that Nomura is not entitled to declare an Event of Default, and by enforcing the understanding that Stonebridge has of the Downgrade Yield Trigger, the contract would be modified based upon the alleged silence, or acquiescence, of Nomura in the face of Stonebridge's communications about the Indentures. However, "an oral modification is enforceable [only] if there is part performance that is unequivocally referable to the oral modification,' and a showing of equitable estoppel." B. Reitman Blacktop v Missirlian, 52 AD3d 752, 753 (2nd Dept 2008), quoting Rose v Spa Realty Assoc., 42 NY2d 338, 343, 345 (1977); see also Stonebridge [*8]Indenture, ¶ 9.1 (a) & (b) (a Supplemental Indenture must be executed "to correct or supplement any provision herein which may be defective" and requires "the prior written consent of Nomura"). Stonebridge, as stated above, points to no action, or performance made, that is referable to Nomura's alleged assurances. Moreover, any modification to the Indentures required a writing; not only is there a lack of any such writing by Nomura, Stonebridge does not demonstrate that it even requested any such writing.

While, on a motion to dismiss, the pleadings of the nonmovant are to be liberally construed (Underpinning & Found. Constructors v Chase Manhattan Bank, N.A., 46 NY2d 459, 462 [1979]), here the factual allegations of the cause of action for equitable estoppel are plainly contradicted by the documentary evidence (Robinson v Robinson, 303 AD2d 234, 235 [1st Dept 2003]). The fifth cause of action is dismissed.

Covenant of Good Faith and Fair Dealing (6th Cause of Action)

"[A]ll contracts imply a covenant of good faith and fair dealing in the course of performance." 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 153 (2002). The covenant is breached "when a party to a contract acts in a manner that, although not expressly forbidden by any contractual provision, would deprive the other party of the right to receive the benefits under their agreement." Jaffe v Paramount Communications, 222 AD2d 17, 22-23 (1st Dept 1996); see also Dalton v Educational Testing Serv., 87 NY2d 384, 389 (1995) ("neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract [internal quotation marks and citation omitted]").

Here, the complaint does not offer any indication whatsoever of which rights Nomura's alleged breach of the covenant of good faith and fair dealing destroyed. Rather, under this cause of action, Stonebridge, in its own words, "is merely trying to reform the transaction documents so that they accurately reflect the intent of the parties." There is no allegation, however, that Nomura inhibited the performance of Stonebridge, or destroyed its rights under the contract.

Nomura's right to declare an Event of Default, which is akin to a termination of the contract, cannot be circumscribed by an obligation to deal with Stonebridge fairly. Compare Sabetay v Sterling Drug, 69 NY2d 329, 335-336 (1987) (breach of good faith and fair dealing does not apply to a party's express right to terminate an employment contract); see also Stonebridge Indenture, ¶ 6.2 ("[u]pon the occurrence of an Event of Default ... the Unanimous Noteholders ... will have the right to instruct the related Series Indenture trustee(s) to declare all the related Class of Notes to be immediately due and payable"); Maxon Intl. v International Harvester, 82 AD2d 1006, 1007 (3rd Dept 1981), affd 56 NY2d 879 (1982) (where defendant does precisely what the contract expressly permits, the covenant is inapplicable). The sixth cause of action is dismissed.

Declaratory Judgment (3rd Cause of Action; 1st Cause of Action under Amended Verified Counterclaim)

As Nomura has moved to dismiss the complaint for failure to state a cause of action (CPLR 3211 [a] [7]), I will take the motion, with regard to the third cause of action, as one for a declaration in Nomura's favor. See Siegel, New York Practice, § 440 (4th ed).

According to the complaint, on or about 20 June 20 2008, XL Capital, one of the [*9]insurance companies that issued a financial guaranty insurance policy on the corporate bond securing the Series A Notes, was downgraded to "B2." In a letter dated 9 July 2008, Nomura wrote to the US Bank entities, asserting that an "Issuer Event of Default," as defined in the Stonebridge Indenture, and an "Event of Default," as defined in the Investor Indentures, had occurred.

Stonebridge argues that the "financial guaranty insurance policy" issued by XL Capital in connection with the corporate bond securing the Series A Notes was not downgraded, and that rating agencies like Moody's and S & P do not rate individual insurance policies. Based upon this argument, Stonebridge seeks a judgment declaring that no "Downgrade Yield Trigger" has occurred under Section 3.3 of the Stonebridge Indenture, no "Issuer Event of Default" has occurred under Section 6.1 (a) (ii) of the Stonebridge Indenture, and no "Event of Default" has occurred under Section 6.1 (a) (v) of the Investor Indentures, even as those provisions are now drafted. In addition, because Moody's and S & P do not rate individual insurance policies, Stonebridge seeks a declaration "that Nomura, US Bank and US Bank Trust be permanently enjoined from declaring an Event of Default,' an Issuer Event of Default' or a Downgrade Yield Trigger' based on the foregoing provisions of the Transaction Documents." Complaint, ¶ 139 (emphasis added).

In construing the Indentures, I am obligated to "avoid an interpretation that would leave contractual clauses meaningless." Two Guys from Harrison-N.Y. v SFR Realty Assoc., 63 NY2d 396, 403 (1984). The declaration that Stonebridge seeks would render several sections of the Indentures meaningless. In addition, such an interpretation would deny Nomura any possibility of ever declaring an Event of Default, leaving that provision without force or effect. Acme Supply Co., Ltd. v City of New York, 39 AD3d 331, 332 (1st Dept 2007), lv denied 12 NY3d 701 (2009), citing Corhill Corp. v S.D. Plants, 9 NY2d 595, 599 (1961) ("a court should not adopt an interpretation' which will operate to leave a provision of a contract ... without force and effect'"). Courts favor, rather, an "interpretation that gives effect to all the terms of an agreement [over] one that ignores terms or accords them an unreasonable interpretation." Ruttenberg v Davidge Data Sys. Corp., 215 AD2d 191, 196 (1st Dept 1995); see also Acme Supply Co., 39 AD3d at 332.

Here, the Indentures, and in particular, the operation of the Downgrade Yield Trigger and the Events of Default, must be harmonized. Matter of Westmoreland Coal Co. v Entech, 100 NY2d 352, 358 (2003); accord Madison Hudson Assoc. LLC v Neumann, 44 AD3d 473, 480 (1st Dept 2007). While separate writings involving different parties, serving different purposes, and not referring to each other do not form a unitary contract (National Union Fire Ins. Co. Of Pittsburgh, Pa. v Clairmont, 231 AD2d 239, 241 [1st Dept 1997], lv dismissed 92 NY2d 868 [1998]; Schonfeld v Thompson, 243 AD2d 343, 343 [1st Dept 1997]), "it is a well-established rule of contract law that all contemporaneous instruments between the same parties relating to the same subject matter are to be read together and interpreted as forming part of one and the same transaction (Nau v Vulcan Rail & Constr. Co., 286 NY 188 [1941])." Evans Products Co. v Decker, 52 AD2d 991, 992 (3rd Dept 1976).

Counsel for Stonebridge issued, contemporaneously with the Indentures, an opinion letter referencing "Certain Tax Matter Relating to Transactions in Connection with Issuance of the Notes by Stonebridge Pass-Through Trust, Series 2007-A" (the Tax Opinion). See Notice of [*10]Motion, Exhibit 3. The Tax Opinion offers, with regard to the Downgrade Yield Trigger that:

... the Stonebridge financing provides risk protections for the Issuer and the Securityholders that are anticipated to be triggered prior to any potential, subsequent default of the issuer of the financial guaranty insurance policy on the Underlying Bond. A corporate obligor's financial condition generally begins to deteriorate before it defaults on an obligation, with its financial strength gradually worsening over time. The Baa3/BBB- trigger provides additional compensation for the Issuer and the Securityholders, whereas the B2/B trigger serves as a stop-loss prior to default by the issuer of the financial guaranty insurance policy on the Underlying Bond.

Stonebridge thus designed the Downgrade Yield Trigger to respond to the early warning of a deterioration in a corporate obligor's financial condition, and a stop-loss prior to default by such obligor. The reading of the disputed language, then, in light of the contemporaneously executed instruments, relates to the rating on the issuer of the financial guaranty insurance policy, as espoused by Nomura. Any other interpretation would place undue force on single words or phrases (Matter of Westmoreland Coal Co., 100 NY2d at 358), and not be in accord with the Indentures and the Tax Opinion as a whole (see e.g. Rentways v O'Neill Milk & Cream Co., 308 NY 342, 347 [1955]; Fleischman v Furgueson, 223 NY 235, 239 [1918]; Restatement (Second) of Contracts, § 202 ["[a] writing is interpreted as a whole and all writings that are part of the same transaction are interpreted together"]).

It is worthy of note that Stonebridge drafted all the Transaction Documents, including the Tax Opinion. Were there any doubt as to the interpretation offered herein, the meaning of Stonebridge's own words should be resolved against it. Jacobson v Sassower, 66 NY2d 991, 993 (1985); Rentways, 308 NY at 348.

Integration of contextual meanings from the Tax Opinion is not in contravention of the parol evidence rule, as argued by Stonebridge, because "[w]here several instruments constitute part of the same transaction, they must be interpreted together. In the absence of anything to indicate a contrary intention, instruments executed at the same time, by the same parties, for the same purpose, and in the course of the same transaction will be read and interpreted together, it being said that they are, in the eye of the law, one instrument." BWA Corp. v Alltrans Express. U.S.A., 112 AD2d 850, 852 (1st Dept 1985), citing Nau, 286 NY at 188.; see also Engineer Co. v Herring-Hall-Marvin Safe Co., 154 App Div 123, 125 (1st Dept 1912) (contemporaneous letter must be read with the contract as constituting one instrument); Jackson ex dem. Trowbridge v Dunsbagh, 1 Johns Cas 91 (Sup Ct, NY County 1799) ("two instruments may be taken in connection, as forming together the several parts of one agreement"). The motion for a declaration in favor of Nomura is granted.

Accordingly, it is hereby

ORDERED that the motion of defendant Nomura International PLC, pursuant to CPLR 3211 (a) (1) and (7), to dismiss the complaint is granted; and it is further

ADJUDGED and DECLARED that due to the downgrade of the rating of XL Capital, as an issuer of the financial guaranty insurance policy on the Underlying Bond, to BBB- by S & P, a [*11]"Downgrade Yield Trigger" under the Stonebridge Pass-Through Trust Indenture of 26 September 2007, Section 3.3 (a) and (b) has occurred, and the subsequent downgrade of the rating of XL Capital to B2 by Moody's entitles defendant Nomura International PLC to declare an Event of Default under the Investor Indentures associated with the Transaction herein described; and it is further

ORDERED that the parties are directed to appear at a status conference set for 10:00 a.m., July 28, 2009, in Part 60.