By this motion, Defendant, MBIA Insurance Corporation ("MBIA"), moves for summary judgment denying Plaintiff's request for a declaratory judgment and dismissing the complaint, and for an award of attorneys' fees. By cross-motion, Plaintiff, Patriarch Partners XIV, LLC ("Patriarch"), moves for summary judgment on its claim for a declaratory judgment in connection with its obligations under the Collateral Management Agreement, dated January 25, 2005 (the "CMA").

Briefly, the events giving rise to this action are as follows.^[FN1]

Patriarch is the Collateral Manager of a collateralized loan obligation vehicle ("CLO") called Zohar II. In a CLO, investors receive notes in exchange for their cash, which is used by a special purpose entity (generally referred to as the "Issuer"), to buy a portfolio of assets. The cash flow from the portfolio serves both as collateral for the notes, and to pay down the interest and principal. The [*2]Collateral Manager's obligations, generally, include the selection, trading and management of the assets within the portfolio. The specific responsibilities of the Collateral Manager, with regard to Zohar II, are set forth in the CMA.

MBIA is Zohar II's insurer, guaranteeing approximately $1 billion of investors' notes. As insurer, MBIA is referred to as the "Credit Enhancer," in the CMA, and is an express third-party beneficiary of that agreement. MBIA is also considered the "Controlling Party" under the Zohar II indenture (the "Indenture"). As third-party beneficiary, MBIA possesses certain rights to information from Patriarch.

The notes insured by MBIA were initially given a rating of "Aaa" by Moody's. In February 2011, Moody's downgraded its rating from Ba1 to B3. On February 16, 2011, MBIA contacted Patriarch to request a meeting. Patriarch scheduled a meeting for May 3, 2011.

By letter dated April 20, 2011, MBIA requested "information about the transaction and the underlying Collateral in order to monitor the transaction and MBIA's exposure under the policy." (DiCicco Affirm. Ex. 4 at 1.) Citing to sections 2.2(e) and 2.2(o) of the CMA, MBIA requested that "Patriarch provide" certain information concerning some of the obligors in Zohar II, including audited financial statements, credit evaluations and rating packages, and recent valuations of company loans. (Id. at 2.) MBIA further requested that this information be delivered to its offices, and "agree[d] it will keep all such information confidential and will not disclose the information to anyone except to MBIA's directors, employees, professionals, auditors, and regulators..." (Id.)

MBIA further requested an inspection of all books and accounts relating to the Zohar II collateral (the "Collateral"), pursuant to Section 6.3(a) of the CMA, and indicated, in a footnote, that "Patriarch is also obligated under Sections 6.3(b) and (c) of the CMA to provide MBIA with certain additional information regarding the Collateral." (Id.)

By letter dated April 27, 2011, Patriarch responded that MBIA's request was "inappropriate because it is transparently aimed at obtaining materials for use in connection with MBIA's [unrelated] lawsuit against Patriarch ^[FN2] [as well as] overly broad and unreasonable in scope." (DiCicco Affirm. Ex. 5.) Patriarch further stated that it would require MBIA to execute a non-disclosure agreement before any access and asked for more information as to the specific books and records, and the purpose for which they were being sought. (Id.)

In response, by letter of the same date, MBIA asserted that Patriarch's failure to deliver the information specifically identified in the April 20 letter (hereafter, the "Requested Information") would result in Patriarch's breach of the CMA. (DiCicco Affirm. Ex. 6 at 1.) MBIA further stated that, although the CMA does not require it to enter into a confidentiality agreement, it was nonetheless "prepared to execute an appropriate non-disclosure agreement," a draft of which was attached. (Id.)

By letter dated April 28, 2011, Patriarch again questioned the purpose for which the Requested Information was being sought, and asserted that the audited financials and certain of the third-party pricing information sought by MBIA does not exist. Patriarch wrote that it would nonetheless comply with the CMA by furnishing "the requested information that actually exists . . . for [MBIA's] review at Patriarch's offices ," and stating that the CMA does not require Patriarch to release copies of these materials outside of its offices. (DiCicco Affirm. Ex. 7 at 1-2.) [*3]

By letter dated April 29, 2011, MBIA argued that Sections 2.2(e) and (o) of the CMA require Patriarch to "provide" the documents, and not merely to make them available for inspection. MBIA also attached a signed copy of its proposed non-disclosure agreement (the "NDA"), which, it asserted, Patriarch had already agreed to. (DiCicco Affirm. Ex. 8.)

On May 2, 2011, Patriarch responded with a revised draft of the proposed NDA, arguing that the signed copy attached to MBIA's previous letter did not adequately protect against the possibility of MBIA's improper disclosure of proprietary information. Patriarch further reiterated its position that the CMA requires only that it furnish certain information, and not that it provide copies to MBIA. (DiCicco Affirm. Ex. 9.)

The dispute around the requirements of the CMA and the nature of the NDA were further discussed in letters dated May 3 and May 4, 2011. Although Patriarch later contended that it subsequently executed the NDA, "effectively abandoning the additional changes it had sought earlier" (see Patriarch's 19-a Statement ^[FN3] ¶ 30), MBIA disputes the assertion that any version of the NDA represents an agreed-upon, binding contract.

Thus, unable to resolve the dispute as to the requirements of the CMA with respect to the Requested Information, Patriarch brought this action, seeking a declaratory judgment that it is in compliance with its contractual obligations, and that Sections 2.2.(e) and (o) may be satisfied by making the Requested Information available in a secure room at Patriarch's offices. MBIA has interposed a counterclaim for breach of contract, seeking specific performance, and for a declaratory judgment that Patriarch is required to deliver copies of the Requested Information.^[FN4]

On this motion and cross-motion for summary judgment, the parties agree that the primary issue is whether the CMA requires Patriarch to give MBIA copies of the Requested Information, or whether it merely obligates Patriarch to make the information available for MBIA's review. ^[FN5] In order to determine whose interpretation is correct, I must examine the language of the CMA.

I turn, first, to Article II, which sets forth the general duties of the Collateral Manager. Pursuant to § 2.2(e), the Collateral Manager shall "provide the Rating Agencies, the Trustee and the Credit Enhancer with any information reasonably requested ... in connection with ... each Rating Agency's, the Trustee's, or the Credit Enhancer's monitoring of the acquisition, management and disposition of the Collateral." (CMA at 5.^[FN6]) Section 2.2(o) requires the Collateral Manager to "provide the Credit Enhancer with any information reasonably requested by it in connection with the Credit Enhancer's duties and responsibilities." (Id. at 7.)

Article VI sets forth the Manager's "Additional Agreements," and § 6.3 sets forth the Manager's obligations with regard to "Records." (Id. at 21-22.) Under § 6.3(a), the Collateral Manager is required to maintain certain books and records, which "shall be accessible for inspection [*4]by . . . the Credit Enhancher . . . at a mutually agreed time." (Id. at 22-23, emphasis added.) However, upon receipt of notice of its removal, the Collateral Manager shall "promptly provide to the prospective successor collateral manager copies of the books and records." (Id. at 22, emphasis added.)

Section 6.3(b) requires the Collateral Manager, upon request, to "provide the Credit Enhancer with any calculations, and copies of documents and other relevant data and information in the possession of the Collateral Manager"; and § 6.3(c) directs the Collateral Manager, upon acquisition of any Collateral Debt Obligation or Unrestricted Collateral Debt Obligation,^[FN7] to "provide to the Credit Enhancer a copy of the credit template prepared" with respect thereto. (CMA at 23, emphasis added.)

Patriarch contends that it is not obligated to give MBIA copies of the information requested pursuant to §§ 2.2(e) and (o). First, Patriarch argues, the plain meaning of the word "provide" is "to make available." (See Patriarch Cross-Motion Supp. Mem.^[FN8] at 8, offering definitions from eight dictionaries.) Moreover, Patriarch argues, the express use of the word "copies" in §§ 6.3(a) - (c), and its omission from §§ 2.2(e) and (o), demonstrate that the parties drafting the CMA intentionally chose to distinguish those situations where Patriarch was required to give copies of information from situations where it was required merely to give access to the information.

Patriarch has offered to make the Requested Information available for MBIA to review, at Patriarch's offices, and has offered to allow MBIA to bring in its own laptop computers in order to facilitate any analysis of the information. (See Tilton Aff.^[FN9] ¶ 10.) Patriarch asserts that this satisfies its obligations under the CMA and also serves to safeguard the information against improper dissemination. (See id. at ¶¶ 11-12.)

MBIA, however, argues that the definition of "provide" also includes "to supply" and "to furnish." (See MBIA Supp. Mem.^[FN10] at 10, MBIA Reply Mem.^[FN11] at 11.) MBIA further argues that the CMA distinguishes between those situations where Patriarch must "provide . . . information" (§§ 2.2 (e) and (o)), from those situations where the Collateral Manager is merely obligated to make information "accessible for inspection" (§ 6.3(a)). MBIA contends that Patriarch's offer to permit it to review the requested information in Patriarch's offices amounts only to making the information accessible for inspection, in violation of §§ 2.2 (e) and (o). MBIA contends that bringing in its own laptop computers to analyze or manually copy the Requested Information is not a sufficient alternative to being furnished with copies, first, because of time constraints, and also, because of the [*5]potential for error associated with manually entering the information. MBIA further points out that an interpretation of the CMA that would permit the manual input of information, but not the removal of copies, is "literally ridiculous" and must be rejected. (MBIA Supp. Mem. at 13.)

It is well-settled that the interpretation of an unambiguous contract is a question of law to be resolved by the court. See, e.g., 805 Third Ave. Co. v. M.W. Realty Associates, 58 NY2d 447, 451 (1983). With regard to questions of contractual interpretation, it is likewise well-settled that an agreement must be read in such a way as to give meaning to all of its provisions, and the Court should avoid any interpretation that would effectively render meaningless any part thereof. Helmsley-Spear, Inc. v. New York Blood Center, 257 AD2d 64, 69 (1st Dep't 1999); Two Guys from Harrison-N.Y., Inc. v. S.F.R. Realty Associates, 63 NY2d 396, 403 (1984).

There is no dispute that the CMA is unambiguous, and the language of the CMA, quoted above, clearly demonstrates that the obligation to provide copies is specifically set forth in Article VI, and not in Article II. If I read Article II's directive "to provide" as requiring Plaintiff to provide copies, it would render meaningless Article VI's express requirement that the Collateral Manager provide copies of information in certain circumstances. I therefore conclude that the express terms of Article II of the CMA do not obligate Patriarch to provide copies of the Requested Information to MBIA.

However, just as reading the word "copies" into §§ 2.2 (e) and (o) would render meaningless the requirement to "provide . . . copies" set forth in §§ 6.3(a), (b) and (c), I cannot conclude that the drafters of the CMA intended the §§ 2.2 (e) and (o) directives to "provide . . . information" to mean the same thing as the § 6.3(a) directive to make information "accessible for inspection." Patriarch cannot satisfy its obligations under the CMA merely by permitting MBIA to enter its offices to inspect the Requested Information. It may be that Patriarch is not contractually bound to provide copies to MBIA, at its own expense, but I can see no reason that MBIA cannot bring in whatever resources are necessary to scan or otherwise make its own copies of the original documents. The CMA contains no prohibition against the Credit Enhancer's possession of copies of the original documents, and Patriarch's concerns about improper dissemination do not justify my reading such a prohibition into the parties' negotiated agreement.

Since the basis of Patriarch's objection to MBIA's possession of copies of the original documents appears to be its concern over the continued confidentiality of the information, and since both parties have an interest in ensuring that the Requested Information is protected and used only for the express purposes set forth in the CMA, I am conditioning this Order upon the execution of an appropriate non-disclosure agreement. Since both parties agreed that I have the authority to require them to enter into such an agreement (see Hr'g Tr.9, 19-20, June 15, 2011), I decline to reach any conclusion as to the enforceability of the proposed NDA (various iterations of which are annexed to the parties' letters, discussed above). Rather, before MBIA is permitted to access and copy the Requested Information, the parties are to submit a stipulated, proposed non-disclosure order. In the event the parties are unable to agree, they shall submit their competing proposals for my review. I will then enter the order I deem appropriate.

Accordingly, it is

ORDERED that MBIA's motion for summary judgment (Seq. No.001) is DENIED; and it is further [*6]

ORDERED that Patriarch's cross-motion for summary judgment is GRANTED insofar as it seeks a judicial declaration that it has not breached the CMA, and it is otherwise DENIED; and it is further

ORDERED that MBIA's inspection, review and copying of the Requested Information will not take place until after the entry of an appropriate non-disclosure order; and it is further

ORDERED that the parties shall submit to the Court, within ten business days of the date of service of this Order with notice of entry, a stipulated proposed non-disclosure order; and it is further

ORDERED that if the parties are unable to agree upon a proposed order, then they shall each submit, within fifteen business days of the date of service of this Order with notice of entry, a draft proposed order for my review; and it is further

ADJUDGED that Patriarch's obligations under Sections 2.2(e) and (o) of the CMA may be satisfied by its making the Requested Information available for MBIA to inspect, review, and copy, at a secured location at Patriarch's offices (or those of its counsel), at an agreed-upon time;^[FN12] and it is further

ADJUDGED that MBIA's counterclaims are dismissed.^[FN13]

DATE: June 27, 2011

ENTER:

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J.S.C.