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PPM FINANCE, INC. v. NORANDAL USA

January 20, 2004.

PPM FINANCE, INC., in its capacity as agent for JACKSON NATIONAL LIFE INSURANCE COMPANY, Plaintiff,
v.
NORANDAL USA, INC., Defendant NORANDAL USA, INC., Counter-Plaintiff, PPM FINANCE, INC., in its capacity as agent for JACKSON NATIONAL LIFE INSURANCE COMPANY, PPM AMERICA SPECIAL INVESTMENTS CBO II, L.P. AND PPM SPECIAL INVESTMENTS FUND, L.P., Counter-Defendants



The opinion of the court was delivered by: AMY J. ST. EVE, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff PPM Finance, Inc., in its capacity as agent for Jackson Mutual Life Insurance Company ("Jackson"), filed a two count complaint against Defendant Norandal USA, Inc. ("Norandal") alleging breach of contract and breach of fiduciary duty. (R. 36-1, Am. Compl.) Specifically, Jackson alleged that Norandal failed to remit to Jackson certain payments that their common debtor, Scottsboro Aluminum, L.L.C. and Scottsboro Properties, L.L.C. (collectively, Page 2 "Scottsboro"), paid to Norandal in violation of a Subordination Agreement between Norandal and Jackson.

Norandal filed a three count counterclaim against PPM America Special Investment Fund, L.P. ("PPM Fund"), PPM America Special Investment CBO II, L.P. ("PPM CBO II") (collectively, the "PPM Entities"), and PPM Finance in its capacity as agent for Jackson.*fn1 (R. 35-1, Norandal's First Am. Countercl.) In Count I, Norandal seeks a declaratory judgment that Jackson and the PPM Entities have no right to recover the payments at issue. In the alternative, in Count II, Norandal alleges that Jackson and the PPM Entities are equitably estopped from recovering the payments. In Count III, Norandal alleges that its right of recoupment defeats Jackson's and the PPM Entities' claims to an affirmative recovery.

  Jackson moved for summary judgment in its favor on its amended complaint and against Norandal on Norandal's amended counterclaims. Norandal moved for summary judgment in its favor on its amended counterclaims. For the reasons stated herein, Jackson's motions for summary judgment on its amended complaint and Norandal's amended counterclaims are granted, and Norandal's motion for summary judgment on its amended counterclaims is denied.

  LEGAL STANDARDS

  Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine issue of triable fact exists only if "the evidence Page 3 is such that a reasonable jury could return a verdict for the nonmoving party." Pugh v. City of Attica, 259 F.3d 619, 625 (7th Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986)). The party seeking summary judgment has the burden of establishing the lack of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552 (1986). A party will successfully oppose summary judgment only if it presents "definite, competent evidence to rebut the motion." Equal Employment Opportunity Comm'n v. Roebuck & Co., 233 F.3d 432, 437 (7th Cir. 2000). The Court "considers the evidentiary record in the light most favorable to the non-moving party, and draws all reasonable inferences in his favor." Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002).

  BACKGROUND

 I. The Credit Agreement

  On February 26, 1999, Norandal agreed to sell its Alabama aluminum processing plant and related assets (the "Plant") to Scottsboro for a total purchase price of approximately $92 million (the "Scottsboro Acquisition"). (R. 49-2, Jackson's Local Rule 56.1(a) Statement of Undisputed Facts Submitted in Supp. of Jackson's Mot. for Summ. J. on its Am. Compl. and Norandal's Affirmative Defenses and Jackson and the PPM Funds' Mot. for Summ. J. on Norandal's Am. Countercl. ("Jackson's Rule 56.1(a)(3) Statement") ¶¶ 7, 13; R. 62-1, Def.'s Resp. to Pl. and Counterdefs.' Local Rule 56.1 Statement of Uncontested Facts and Statement of Genuine Issues and Statement of Add'l Facts That Require Denial of Pl. and Counterdefs.' Mots. for Summ. J. ("Norandal's Rule 56.1(b)(3)(A) Response") and ("Norandal's Rule 56.1(b)(3)(B) Statement of Additional Facts") ¶¶ 7, 13.) Scottsboro entered into a Credit Agreement with Page 4 Jackson and its agent PPM Finance to obtain funds to purchase the Plant. (Id. ¶¶ 7, 11.) Under the Credit Agreement, Jackson agreed to make certain loans and other extensions of credit to Scottsboro of up to $125 million. (Id. ¶ 8.) Jackson loaned Scottsboro approximately $69 million and PPM Fund loaned Scottsboro $7.5 million. (Id. ¶ 14.)

  Jackson, a lender under the Credit Agreement, is a life insurance company organized under the laws of, and with its principal place of business in, Michigan. (Id. ¶ 1.) Norandal, the seller of the Plant, is a Delaware corporation with its principal place of business in Tennessee. (Id. ¶ 4.) It operates aluminum rolling mills in Tennessee, North Carolina, and Alabama. (Id.) Counter-defendants PPM Fund and PPM CBO II are both Delaware limited partnerships with their principal places of business in Illinois. (Id. ¶¶ 2-3.)

 II. The Subordinated Note

  For the remainder of the purchase price, Scottsboro executed a promissory note in Norandal's favor (the "Subordinated Note") for approximately $7.8 million. (Id. ¶ 23.) The seller, Norandal, thereby became a second creditor of the buyer, Scottsboro. (Id.) Under the Subordinated Note, Scottsboro agreed to pay Norandal equal, consecutive monthly installments of $215,925.64 on the principal amount (plus accrued unpaid interest) beginning on March 31, 1999 and continuing through February 28, 2002. (Id. ¶ 64.) Between November 1, 1999 and January 18, 2001, Norandal received fifteen scheduled monthly payments from Scottsboro under the Subordinated Note, totaling over $3.7 million. (Id. ¶ 65.) The Subordinated Note is explicitly subject to the Subordination Agreement. (Id. ¶ 24.)

  Through the Credit Agreement and the Subordinated Note, Norandal received a total of $84,277,195.00 as a result of the funding and closing of the Scottsboro Acquisition. (Id. ¶ 12.) Page 5

 III. The Subordination Agreement

  On February 26, 1999, the same day the parties executed the Credit Agreement, Scottsboro, the PPM Entities, and PPM Finance in its capacity as agent for Jackson executed a Subordination Agreement. (Id. ¶ 29.) Jackson and the PPM Entities are "Senior Creditors" under the Subordination Agreement. (R. 52-1, Jackson's Index of Exs., Ex. 9, Subordinated Note at 3.) The Subordination Agreement governs the relative priority of the Senior Creditors' and Norandal's security interests in Scottsboro's assets. (R. 49-2, Jackson's Rule 56.1(a)(3) Statement ¶ 29; R. 62-1, Norandal's Rule 56.1(b)(3)(A) Response ¶ 29.) The Subordination Agreement gives Jackson and the PPM Entities senior security interests in Scottsboro's assets, and Norandal a junior security interest in substantially the same assets.*fn2 (Id. ¶¶ 19, 29, 31.) The parties executed the Subordination Agreement "[a]s an inducement to and as one of the conditions precedent to" Jackson's extension of credit to Scottsboro under the Credit Agreement. (Id. ¶ 59.) The Subordination Agreement is governed by Illinois law. (Id. ¶ 30.)

  Thompson, Hine & Flory ("Thompson") represented Norandal in the Scottsboro Acquisition. (Id. ¶ 27.) Thomspon reviewed a draft of the Subordination Agreement*fn3 and suggested changes to the draft, including the addition of a provision that would require Jackson to provide Norandal with notice of any default by Scottsboro under the Credit Agreement. (Id. ¶¶ 35, 38.) Latham & Watkins, counsel to Jackson and the PPM Entities, refused to include the Page 6 senior notice default provision. (Id. ¶¶ 38, 41.) Norandal nevertheless executed the Subordination Agreement. (Id. ¶ 60.)

  The Subordination Agreement contains a definition of "Senior Default Notice."*fn4 (Id. ¶ 42.) The language in the definition of "Senior Default Notice" specifically refers to Scottsboro. (Id. ¶ 44.) The term "Senior Default Notice" does not appear anywhere else in the Subordination Agreement, and it is not employed in any substantive paragraph. (R. 49-2, Jackson's Rule 56.1(a)(3) Statement ¶¶ 44, 45.) The Subordination Agreement also defines "Subordinated Default Notice." (R. 49-2, Jackson's Rule 56.1(a)(3) Statement ¶ 45; R. 62-1, Norandal's Rule 56.1(b)(3)(A) Response ¶ 45.) In contrast to the term "Senior Default Notice," the term "Subordinated Default Notice" appears elsewhere in the Subordination Agreement, and requires Nordanal to notify Jackson of any Scottsboro default under the Subordinated Note. (Id.)

 IV. Scottsboro's Defaults Under the Credit Agreement

  John Krupinski, the former Chief Financial Officer ("CFO") of Scottsboro from October 1999 through Scottsboro's bankruptcy proceedings, served as Jackson's Rule 30(b)(6) witness on several topics, including the Events of Default under the Credit Agreement. (Id. ¶ 71.) Krupinski testified that beginning in October 1999 (the "Default Date") and until at least August 1, 2001, Scottsboro defaulted on several of its Senior Debt obligations to Jackson, with each breach resulting in an Event of Default under Section 8. l (b) of the Credit Agreement. (R. 49-2, Jackson's Rule 56.1(a)(3) Statement ¶¶ 75-89.) Specifically, Krupinski testified that these Page 7 defaults included defaults regarding financial covenants, affiliate transactions, payments, a labor strike, audited financial statements, tax distributions to equity holders, and net borrowing availability. (Id. ¶¶ 71-88.)

  Jackson first notified Scottsboro of a Senior Default on December 13, 2000 — over one year after the first alleged default date. (R. 62-1, Norandal's Rule 56.1(b)(3)(B) Statement of Additional Facts ¶ 31; R. 74-1, Jackson and the PPM Funds' Reply to Norandal's Local Rule 56.1 Statement of Additional Facts That Require The Denial of Pl. and Counterdefs.' Mots. for Summ. J. ("Jackson's Rule 56.1(a)(3) Reply") ¶ 31.) Jackson first notified Norandal of a Senior Default by letter dated July 27, 2001. (Id. ¶ 9.)

 V. The Limited Waiver Letter

  Jeff Podwika, the PPM Finance loan officer responsible for the Scottsboro loan from February 1999 through January 2001, sent Scottsboro a letter dated December 31, 1999 (the "Limited Waiver Letter"). (R. 49-2, Jackson's Rule 56.1(a)(3) Statement ¶ 90; R. 62-1, Norandal's Rule 56. l(b)(3)(A) Response ¶ 90.) The Limited Waiver Letter provides in relevant part:
During the period from the date hereof through May 31, 2000, Jackson and Agent hereby waive the minimum Net Borrowing Availability restriction . . . solely to the extent such restriction would prohibit (1) the making of scheduled payments of interest and principal on an unaccelerated basis with respect to the [Subordinated Note]. . . . This Limited Waiver shall be limited precisely as written and shall not be deemed or otherwise construed to waive or amend any provision of the Credit Agreement.
(Id. 91.) The Limited Waiver Letter was sent only to Scottsboro, not to Norandal or any other party. (Id. 93.) Page 8

 VI. The April 26, 2000 Amendment

  On April 26, 2000, Jackson loaned Scottsboro an additional $5.25 million. (R. 62-1, Norandal's Rule 56.1(b)(3)(B) Statement of Additional Facts ¶ 30; R. 74-1, Jackson's Rule 56.1(a)(3) Reply ¶ 30.) In connection with the loan, Scottsboro, Jackson, and PPM Finance executed a "Consent and Amendment to the Credit Agreement" (the "April 26, 2000 Amendment"). (R. 49-2, Jackson's Rule 56.1(a)(3) Statement ¶ 94; R. 62-1, Norandal's Rule 56.1(b)(3)(A) Response ¶ 94.) Section 6 of the April 26, 2000 Amendment, entitled "Limited Waiver," pertains to a waiver of certain financial covenants for the fiscal year ending December 31, 1999. (R. 49-2, Jackson's Rule 56.1(a)(3) Statement ¶ 95.) Section 6 of the April 26, 2000 Amendment provides, in relevant part:
Agent and Lender hereby waive the existing Events of Default under Section 8.1(b) of the Credit Agreement arising solely due to Borrowers' failure to comply with paragraphs (a), (b), (c), and (d) of Annex G (Financial Covenants to the Credit Agreement) for the testing periods ending on December 31, 1999; provided, that such waiver shall be conditional and shall be deemed void ab initio and of no force and effect (and Agent and Lenders shall be entitled to exercise all rights and remedies under the Loan Documents or otherwise as a result of such Events of Default, all of which rights and remedies are hereby expressly reserved in the event such waiver is deemed void) if Agent shall determine that: Capital Expenditures made by Borrowers and their Subsidiaries on a combined basis from the Closing Date through the last day of Fiscal Year 1999 exceeded $5,298,000 . . .
(R. 49-2, Jackson's Rule 56.1(a)(3) Statement ¶ 98; R. 62-1, Norandal's Rule 56.1(b)(3)(A) Response ¶ 98.) To avoid nullfying ab initio the conditional waiver, "Capital Expenditures made by [the Scottsboro Entities] and their Subsidiaries on a combined basis from [February 26, 1999] through [December 31, 1999] [could not] exceed $5,298,000." (Id, ¶ 99.) Upon audit, Scottsboro's Capital Expenditures for the 1999 fiscal year (i.e., the time frame referenced in Page 9 Section 6 of the April 26, 2000 Amendment) were above $6 million, and therefore failed to meet one of the conditions for the effectiveness of the conditional waiver. (Id. ¶ 100.)

 VII. Scottsboro's Bankruptcy Proceedings

  Jackson and the PPM Entities filed involuntary petitions for relief under Chapter 11 of the Bankruptcy Code against Scottsboro on August 1, 2001 in the United States Bankruptcy Court for the Northern District of Illinois. (Id. ¶ 103.) As of the bankruptcy filing date, the outstanding aggregate amount that Scottsboro owed Jackson under the Credit Agreement exceeded $55 million, and the amount that Scottsboro owed the PPM Entities under the relevant loan agreements exceeded $14 million. (Id. ¶¶ 105, 106.) On August 14, 2001, the Bankruptcy Court entered orders for relief. (Id. ¶ 107.) The Bankruptcy Court found that Jackson held a first priority security interest in substantially all of Scottsboro's assets. (Id. ¶ 109.)

  On November 5, 2002, Jackson filed this complaint against Norandal. (Id. ¶ 124.) On January 15, 2003, Norandal filed in both the Bankruptcy Court and this Court identical Motions to Enforce Settlement Agreement and supporting papers, in which Norandal asserted that Jackson's attorney Forrest B. Lammiman confirmed in writing on September 19, 2002 that Jackson agreed to the proposed terms of a global settlement and that two of Norandal's attorneys confirmed certain terms of a settlement agreement with Lammiman over the telephone on September 25, 2002. (Id. ¶ 126.) In his September 19, 2002 letter, Lammiman states in pertinent part that "we are prepared to settle upon the basis of the economic terms set forth therein, subject to definitive documentation" (Id. ¶ 127 (emphasis added).) In an email dated September 27, 2002, Lammiman notified Norandal's attorney John S. Delnero that "I also need to talk to my client rep., who is not in the office this week, as it turns out. In any event, pl. be advised that I Page 10 doubt that Jackson will be able or willing to give the general release you and Gerald requested in our telephone conversation." (Id. ¶ 129.)

  On February 27, 2003, Chief Bankruptcy Judge Wedoff orally denied Norandal's Motion to Enforce Settlement. (Id. ¶ 134.) Judge Wedoff stated: "I believe that there is not a binding settlement. The parties had anticipated that there would be a written document that would specify the terms of a release. No such written document ever came into existence." (Id.)

  ANALYSIS

  The primary issue in this case is whether the Subordination Agreement requires Norandal to remit to Jackson payments that Scottsboro made to Norandal while Scottsboro defaulted under the Credit Agreement, where Jackson did not promptly notify Norandal of any default. This raises an issue of contract interpretation and the parties' respective obligations under the terms of their contracts.

  Contract interpretation, including the preliminary question of whether a contract is ambiguous, is a question of law. ECHO, Inc. v. Whitson Co., Inc., 52 F.3d 702, 705 (7th Cir. 1995). "[C]ontract interpretation is particularly suited for disposition on summary judgment." United States v. 4500 Audek Model No. 5601 AM/FM Clock Radios, 220 F.3d 539, 543 (7th Cir. 2000).

  The primary objective in construing a contract is to give effect to the parties' intent. Home Ins. Co. v. Chicago & Northwestern Transp. Co., 56 F.3d 763, 767 (7th Cir. 1995). "[I]f a contract is clear on its face and the text contains no clue that the contract might mean something different from what it says, then the inquiry is over — no evidence outside of the contract may be considered." Id. at 767. Thus, the threshold inquiry is whether the contract is ambiguous on its Page 11 face. Bourke v. Dun & Bradstreet Corp., 159 F.3d 1032, 1036 (7Ih Cir. 1998). A contract is intrinsically ambiguous if the contract language is reasonably susceptible to more than one meaning. Id. A contract is not ambiguous simply because the parties do not agree on the meaning of its terms. Id.

  "The parties to a subordination agreement normally consist of a `common debtor' who owes a debt to two creditors or two groups of creditors, a creditor known as the `junior creditor' that agrees to subordinate its debt to the debt of another creditor, and a `senior creditor' that benefits from the subordination agreement and acquires priority over the junior creditor. Such agreements are routinely entered into by one creditor to induce another to extend additional credit to the debtor." In re Chicago, South Shore and South Bend R.R., 146 B.R. 421, 426 (Bankr. N.D. Ill. 1992) (citation omitted). "A subordination agreement' . . . is nothing more than a contractual modification of lien priorities and must be construed according to the expressed intention of the parties and its terms.'" Id. (citation omitted).

  The parties dispute the meaning of Sections 2.3 and 2.5 of the Subordination Agreement. Section 2.3 of the Subordination Agreement provides:

  Notwithstanding any provision of any Subordinated Debt Document to the contrary, no Obligor [Scottsboro] may make, and no Subordinated Creditor [Norandal] may receive, accept or retain any payment of principal, interest or any other amount with respect to the Subordinated Debt [the Subordinated Note] until the Senior Debt is paid in full in cash and all commitments to make loans and issue letters of credit under the Senior Debt Documents [the Credit Agreement] are terminated, except that, (i) subject to Section 2.2 above, [Scottsboro] may make, and Subordinated Creditors may receive scheduled payments of principal and interest (at the applicable rate in the absence of a Subordinated Default) under the Subordinated Note on an unaccelerated basis so long as no Senior Default shall have occurred and be continuing or would result therefrom and (ii) Subordinated Creditors may receive proceeds of any sale of Spare Parts in a Proceeding as provided in Section 2.2. Page 12

 (R. 49-2, Jackson's Rule 56.1(a)(3) Statement ¶ 39; R. 62-1, Norandal's Rule 56.1(b)(3)(A) Response ¶ 39 (emphases added).) Section 2.5 of the Subordination Agreement provides:
If any payment or distribution on account of the [Subordinated Note] not permitted to be made by any Obligor [Scottsboro] or received by any Subordinated Creditor [Norandal] under this Agreement is received by any Subordinated Creditor before all Senior Debt is paid in full in cash, such payment or distribution shall not be commingled with any assets of Subordinated Creditor, shall be held in trust by such Subordinated Creditor for the benefit of the Senior Creditors [Jackson, PPM Fund and PPM CBO II] and shall be promptly paid over to the Senior Creditors, or their representatives, for application on a pro rata basis (subject to the terms of any intercreditor agreement among the Senior Creditors) to the payment of the Senior Debt then remaining unpaid, until all of the Senior Debt is paid in full in cash.
(Id. ¶ 54 (emphases added).)

 I. The Subordinated Agreement Unambiguously Requires Norandal To Remit To Jackson Payments That Scottsboro Made To Norandal While Scottsboro Was In Default On Its Senior Debt Obligations

  A. Payments Are "Permitted To Be Made . . . Or Received" If They Are Permitted "Under The Agreement"

  The parties agree that Section 2.5 of the Subordination Agreement applies only to payments that were "not permitted to be made." The parties disagree, however, as to who or what may serve as the source of that permission. Norandal argues that a payment may be "permitted" by Jackson's words or actions. Jackson argues that a payment may be "permitted" only if it complies with the terms of the Subordination Agreement. At issue is the language of Section 2.5 regarding "payment[s] . . . not permitted to be made by any Obligor or received by any Subordinated Creditor under this Agreement," and whether the phrase "under this Agreement" modifies "any Subordinated Creditor" or "payment . . . not permitted to be made."

  Norandal argues that "under this Agreement" modifies "any Subordinated Creditor" to Page 13 make clear that "the party receiving an `incorrect' payment need not be Norandal, but can be `any Subordinated Creditor under this Agreement.'" (R. 63-1, Norandal's Mem. of Law in Opp. to Mots, for Summ. J. ("Norandal's Opp. Mem.") at 10 n.5.) Norandal urges that the last antecedent rule of contract interpretation requires this interpretation, because "any Subordinated Creditor" immediately precedes "under this Agreement." Thus, under Norandal's interpretation, the source of permission for a "payment . . . permitted to be made" is Jackson. It is undisputed that Jackson continued to loan Scottsboro funds after the Default Date and that Scottsboro used those funds to make the payments at issue to Norandal. Norandal contends that Jackson thereby "specifically authorized" those payments, rendering them "permitted" under Section 2.5 and thus rightfully belonging to Norandal.

  Jackson argues that "under this Agreement" modifies "payment . . . permitted to be made." Jackson contends that the plain language of Section 2.5 makes clear that payments are "permitted to be made" only if they do violate the "Agreement," specifically, Section 2.3 of the Subordination Agreement. Section 2.3 governs the circumstances under which Norandal may "accept, receive, or retain" payments. Thus, Jackson argues, the source of permission for payments that are "permitted to be made" is the Subordination Agreement itself, not Jackson. The Court agrees.

  Norandal attempts to create an ambiguity in Section 2.5 where none exists. First, it is unclear why Norandal thinks it would be necessary to distinguish Subordinated Creditors "under this Agreement" from some other subordinated creditors not mentioned in the Agreement. The term "Subordinated Creditor" is specifically defined elsewhere in the Subordination Agreement as including not only Norandal but also "all subsequent holders of the Subordinated Debt." (R. Page 14 52-1, Jackson's Index of Exs., Ex. 9, Subordinated Note at 3.) Thus, the phrase "under this Agreement" is redundant and rendered meaningless by applying it to modify a term that is already specifically defined. See Carroll v. Acme-Cleveland Corp., 955 F.2d 1107, 1112 (7th Cir. 1992). Moreover, the Subordination Agreement uses the term "Subordinated Creditor" more than sixty times throughout the document without specifying that such reference is being made to Subordinated Creditors "under this Agreement." Finally, Norandal's reliance on the "last antecedent rule" is not persuasive. The last antecedent rule is merely a general canon of contract interpretation. The Court need not apply the rule mechanically, as urged by Norandal, where "there is something in the instrument requiring a different conclusion." Forty-Eight Insulations, Inc. v. Acevedo, 140 Ill. App.3d 107, 115, 487 N.E.2d 1206, 211 (Ill.App. Ct. 1986) (citation omitted).

  Sections 2.3 and 2.5 are susceptible to only one meaning. Section 2.5 applies when Norandal has received a payment on the Subordinated Note "not permitted to be made by [Scottsboro] or received by [Norandal] under this Agreement. . . ." Payments not permitted to be made "under this Agreement" are payments that are made or received in violation of Section 2.3. Under Section 2.3, Norandal cannot "receive, accept, or retain" any payment made by Scottsboro under the Subordinated Note when a Senior Default has occurred and is continuing. Thus, under the unambiguous language of Sections 2.3 and 2.5, a "payment . . . not permitted to be made . . . or received" is a payment that Scottsboro made to Norandal while Scottsboro was in default on its obligations to Jackson under the Credit Agreement and while the Senior Debt remained unpaid. Page 15

  B. The Subordination Agreement Does Not Require Jackson Or The PPM Entities To Notify Norandal Of Any Senior Default

  Norandal argues that the Subordination Agreement requires Jackson to notify it in the event that Norandal received a payment from Scottsboro that was not "permitted to be made . . . or received," and that Jackson is not entitled to recover the payments because it failed to notify Norandal of any Senior Defaults until July 27, 2001.*fn5

  Jackson contends that the unambiguous language of the Subordination Agreement places no restrictions or limitations on Jackson's ability to recover payments from Norandal that Scottsboro made while it was in default under the Credit Agreement and the Senior Debt remained unpaid. Essentially, Jackson argues that the existence of a default, rather than Norandal's actual ...


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