Icahn Loses Bid to Restore Lawsuit Over Bond Offering
The suit was dismissed in June 2011 by Justice Eileen Bransten of New York State Supreme Court. Her decision was affirmed today by a state appeals court.
Icahn claimed in the 2010 suit that Raynor, his R2 Investments LDC and others interfered with a $2 billion bond offering by Icahn Enterprises LP and other Icahn companies. The case included claims of tortious interference with a contract, libel and abuse of process.
“Icahn has thrown frivolous lawsuits and filings at us each step of the way in a blatant attempt to derail our legitimate claims against him,” Scott McCarty, a partner at Raynor’s Q Investments in Fort Worth, Texas, said in a statement. “He has lost each of these lawsuits while each of our lawsuits against him has been upheld. It is a shame that he continues to waste valuable court time and resources on these baseless endeavors.”
Icahn Enterprises is reviewing today’s decision and declined immediate further comment, general counsel Keith Schaitkin said in an e-mail.
Raynor and Icahn formed a partnership in 2001 to acquire debt securities issued by the auto-parts supplier Federal-Mogul Corp. (FDML), which was reorganizing in bankruptcy at the time, according to Bransten’s decision. After a dispute over the right to purchase some Federal-Mogul stock, Raynor made a securities filing in January 2010 disclosing a suit begun the same day by Raynor-affiliated Nineteen Eighty-Nine LLC seeking to impose a “constructive trust” on the shares, Bransten said.
Icahn said the timing of the regulatory filing and suit lowered demand for the bond offering. He sued Raynor, R2, Nineteen Eighty-Nine and five other defendants.
The appellate ruling published today said the filing was required by the U.S. Securities and Exchange Commission and was “kicked into gear” by the commencement of the offering.
Icahn claimed the Raynor defendants “abused the legal process by filing the 2010 lawsuit with malicious intent,” Justice Luis A. Gonzalez wrote for the appellate panel. “Such a claim cannot stand,” he wrote.
The appeals court also affirmed a January 2011 ruling by Bransten denying a motion to dismiss two remaining breach-of- contract claims in a Nineteen Eighty-Nine suit against Icahn, saying the securities filing was made because of the litigation.
“The filing of the Schedule 13D amendment was incidental to the lawsuit, and thus protected, even if, as the Icahn plaintiffs argue, the 13D was only a glorified press release meant to frighten away investors, and even if the Raynor defendants would have been ‘better advised to have refrained,’” Gonzalez wrote.
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