!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO.

500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF KINGS , COMMERCIAL DIVISION

EMERGING MARKETS INTRINSIC

CAYMAN, LTD., SLACK TIDE LLC, AND
BULENT TOROS,

Plaintiffs, Index No. 500262/2019

-against-

KADENA LLC, KADENA PUBLIC LLC,

STUART POPEJOY, AND WILLIAM
MARTINO,

Defendants.

REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF DEFENDANTS

KADENA LLC, KADENA PUBLIC LLC, STUART POPEJOY, AND WILLIAM
MARTINO'S MOTION TO DISMISS PLAINTIFFS' COMPLAINT

MORVILLO ABRAMOWITZ GRAND

IASON & ANELLO P.C.

Attorneys for Defendants Kadena LLC, Kadena

Public LLC, Stuart Popejoy, and William Martino

565 Fifth Avenue

New York, New York 10017
(212) 856-9600

1 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

TABLE OF CONTENTS

PRELIMINARY STATEMENT ................................................................... 1

ARGUMENT .... . ..... . ................................................................................ 3

I. Plaintiffs' Breach of Contract Claims Fail Because No Meeting of the

Minds Occurred to Amend the CSA .............. ..................................................... 3

A. Plaintiffs Never Accepted Kadena's Offers to Amend

the CSA, and Failed to Satisfy the Condition Incorporated in
Those Offers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

B. Plaintiffs Have Not Stated and Cannot State a Viable

Breach of Contract Claim ......................................................... 9

C. Even if Plaintiffs Could State a Viable Breach of

Contract Claim, Their Damages Would Be Limited to 300,000
Coins . . ..... . ..... . ..... . ............................................................ 11

II. Unable to State a Viable Breach of Contract Claim, Plaintiffs'

Quantum Meruit, Fraud, and Declaratory Judgement Claims
Necessarily Fail. . ..... . ......................................................................................... 13

III. Plaintiffs Cannot State a Claim Relating to Six Swiss Because the
Meeting EMI Arranged With Six Swiss Did Not Qualify as an Initial
Meeting ..................................................................................... 13

CONCLUSION . . ..... . ............................................................................. 14

2 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

TABLE OF AUTHORITIES
Page(s)

Cases

Cole v. Mandell Food Stores, Inc. ,

710 N.E. 2d 244 (N.Y. 1999) .................................................................................................... 13

ELBT Realty, LLC v. Mineola Garden City Co. , Ltd. ,

42 N.Y.S.3d 304 (2nd Dep't 2016) ........................................................................................... 12

Moxey v. Payne,
89 N.Y.S.3d 251 (2nd Dep't 2018) ............................................................................................. 9

Naldi v. Grunberg,
908 N.Y.S.2d 639 (1st Dep't 2010) ............................................................................................. 9

Silber v. NY. Life Ins. Co.,

938 N.Y.S.2d 46 (1st Dep't 2012) ........................................................................................... 6, 9

Transit Funding Assoc. LLC v. Capital One Equip Fin Corp.,

48 N.Y.S.3d 110 (1st Dep't 2017) ............................................................................................. 12

Vandenberg Inc. v. Townhouse 84, LLC,

No. 103018/2010, 2011 WL 5903736 (N.Y. Sup. Mar. 24, 2011) ............................................ 11

11

3 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

PRELIMINARY STATEMENT

During the approximately seven months that EMI 1 and Kadena operated under the CSA,

EMI requested changes to the CSA four times. The first three times, those changes were

memorialized in formal, hand-signed amendments that were negotiated by the parties' lawyers.

The fourth set of changes concerned core issues of compensation under the CSA: EMI wanted to

amend the CSA (1) to treat Kadena' s execution of non-binding, Preliminary POC Agreements

with Qualified Prospects (under which Kadena would receive little or no value) as "triggering

events" pursuant to which EMI would receive significant compensation, and (2) to extend EMI' s

deadline to meet certain benchmarks that would entitle it to even more compensation.

Notwithstanding the parties' consistent prior practice of formally documenting and hand-signing

all amendments to the CSA, Plaintiffs' entire case is premised on their assertion that a meeting of

the minds supposedly occurred between EMI and Kadena on this fourth set of changes to the

CSA in November 2018 through three informal emails that Stuart Popejoy sent to Eric Maass on

November 5, 17 and 18. Mr. Popejoy' s emails, however, cannot plausibly be construed as

memorializing binding agreements to amend the CSA. Rather, the emails reflect continuing

discussions between Messrs. Popejoy and Maass over potential changes to the CSA. At most,

the emails conveyed offers by Kadena that had to be accepted by EMI before there could be a

binding agreement to amend the CSA. Not only did EMI not accept the offers, but on November

19, it countered them by proposing more changes to the CSA, including a new requirement of a

$4.95 million payment to EMI.

Mr. Popejoy's emails also included a condition- continued performance by EMI under

the CSA- that had to be satisfied before there could be a meeting of the minds as to any further

1
Initial capitalized terms herein have the same meaning as in Defendants' opening brief.

4 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

amendments to the CSA. That condition was not satisfied. EMI's failure to respond to Mr.

Popejoy' s emails with an acceptance or to meet the condition of continued performance are

independent grounds requiring dismissal of Plaintiffs' breach of contract claims. Plaintiffs'

remaining claims, for quantum meruit, fraud and declaratory judgment, are entirely derivative of

their breach of contract claims, and therefore also should be dismissed.

In response to these dispositive points, Plaintiffs resort to arguing that there are disputed

issues of fact that preclude dismissal. There are not. Although Plaintiffs assert that the three

emails contained "crystal-clear ... commitments" to amend the CSA, that assertion is

contradicted by the emails' plain text. The emails cannot plausibly be construed as conveying

anything beyond offers to amend the CSA. Moreover, it is undisputed that Plaintiffs did not

respond to any of the emails with an acceptance. Nor did the parties hand sign any fourth

amendment to the CSA.

Plaintiffs also assert that the emails did not include any conditions. But that assertion

also is contradicted by the emails' plain text. On their face, the emails conveyed offers that were

premised on EMI continuing to perform its long-term obligations under the CSA. Within days of

the emails being sent, however, EMI both threatened to stop performing under the CSA, and in

fact stopped performing. The facts underlying Defendants' arguments are beyond dispute and

require dismissal of Plaintiffs' claims.

5 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

ARGUMENT

I. Plaintiffs' Breach of Contract Claims Fail Because No Meeting of the Minds

Occurred to Amend the CSA

A. Plaintiffs Never Accepted Kadena's Offers to Amend the CSA, and Failed to
Satis the Condition Inco orated in Those Offers

Plaintiffs ' breach of contract claims fail because, based on the facts set forth below,

Plaintiffs cannot establish that Mr. Popejoy' s emails of November 5, 17 and 18, 2018

memorialized binding agreements to amend the CSA. Although Plaintiffs claim that

Defendants' arguments for dismissal are based on "disputed issues of fact," Opp'n 1; see id. at

11 ,2 the key facts- which are set forth below- either are undisputed or, based on the face of the

cited documents, cannot plausibly be disputed.

Under the CSA, (1) Kadena bargained for and obtained "absolute discretion" regarding

whether to (a) enter into a POC Agreement with a Qualified Prospect, Ex.Cat SOW ,is, or (b)

amend the CSA, Ex. C i/19(v); and (2) EMI agreed to undertake a number oflong-term

obligations that were to continue into 2020, Ex. C i/7 .1; Ex. B ,is, including to "help[] Kadena

fmd, select and staff ... subject matter experts," like BEi, to facilitate Kadena's entry into POC

Agreements with Qualified Prospects, Ex. T ,i1.

During the first five months of the CSA, both Kadena and EMI sought to have Qualified

Prospects sign a single, defmitive POC Agreement with a "use case." Ex.Vat 180-81. In

October 2018, however, at EMI's urging (after EMI had not been successful in arranging

definitive POC Agreements with any Qualified Prospects), the parties switched to a two-step

approach for pursuing POC Agreements with Qualified Prospects: the parties first sought to

2
Citations to "Opp'n _ " refer to Plaintiffs ' opposition brief. Citations to "Ex. _ " and "Br. _ "
refer to the exhibits submitted with Defendants' opening brief and Defendants' opening brief,
respectively.

6 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

have Qualified Prospects sign non-binding, Preliminary POC Agreements that did not include a

use case, with the hope that, once signed, the Preliminary POC Agreements would lead to the

execution of definitive POC Agreements that did include a use case. Id.; Ex. B fl 9-10. The

Preliminary POC Agreements were, on their face, of little or no value to Kadena, as they did not

identify any work for Kadena to perform using its blockchain technology and were expressly

non-binding on the Qualified Prospect until a definitive POC Agreement was executed. Br. 8 &

n. 3 (discussing Exs. W, X).

Prior to November 2018, the parties had amended the CSA three times through formal,

hand-signed addenda that were negotiated by the parties' lawyers. Exs. B 113, D, E, T.

Contrary to this consistent prior practice, Plaintiffs' breach of contract claims are premised on

their assertion that, through three informal emails that Mr. Popejoy sent to Mr. Maass on

November 5, 17 and 18, Kadena agreed to amend the CSA in two material ways: (1) to treat the

execution of a Preliminary POC Agreement as a POC Agreement Triggering Event, and (2) to

extend the Final Amendment deadline. Ex. A 1157-76.

On their face, however, Mr. Popejoy's November 5 and 17 emails on which Plaintiffs

base their assertion that Defendants agreed to amend the CSA to extend the Final Amendment

deadline cannot plausibly be read as reflecting such an agreement. In the November 5 email, Mr.

Popejoy merely responded "[y}ep receive(!' to an email in which Mr. Maass wrote, "Stu - please

confirm receipt[J As discussed, if press is best put out staggered further than 12-31 to serve the

capital raising agenda, the agreement (CSA) will need to be amended." Ex. II (emphasis added).

Mr. Popejoy's response reflects nothing more than Mr. Popejoy doing what was asked ofhim-

"confirm[ing] receipt" of the email. Even if Mr. Popejoy's response could be construed as

reflecting something more, however, at most it would reflect a willingness on the part of Kadena

7 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

to amend the CSA in the future- if the stated factual scenario came to pass (that is, if "press

[was] best put out staggered further than 12-31 to serve [Kadena's] capital raising agenda"). Id.

Mr. Maass ' email did not seek to effectuate an immediate amendment of the CSA, or an

amendment that would apply beyond the stated factual scenario. Nor can Mr. Popejoy's "[y]ep

received" response plausibly be construed as Kadena's agreement to such an amendment.

Plaintiffs' assertion to the contrary, Opp'n 7, is untenable.

Similarly, in his November 17 email Mr. Popejoy conveyed, at most, an offer to amend

the CSA to extend the Final Agreement deadline as a way to resolve the parties' dispute

regarding the Preliminary POC Agreements. Ex. Z. Specifically, immediately after informing

Plaintiffs that Kadena would not agree to treat the execution of a Preliminary POC Agreement as

a POC Agreement Triggering Event, Mr. Popejoy stated, "Let me also say up front that if the

deadline is the concern, we are willing to adjust that immediately in order to ensure we all have

time to get these to POC agreement signing." Id. (emphasis added). Mr. Popejoy's stated

"willing[ness]" to adjust the deadline is not a binding agreement to do so, however, and no such

agreement was ever reached. Notably, after expressing his "willing[ness]" to adjust the deadline,

Mr. Popejoy suggested an alternative approach to resolving the parties' dispute:

Also, we can definitely discuss triggering the agreement based on something equally
tangible as a POC agreement, for example the partnership that's been proposed to sell
Kadena in MEI/Africa ....

Id. Mr. Popejoy's November 17 email cannot plausibly be construed as conveying anything

beyond offers to amend the CSA. Plaintiffs' reading of the email as containing a binding

"commit[ment]," Opp'n 8, is contrary to the email's plain text. Moreover, like all offers, any

offers in this email required an acceptance (and agreement on all material terms) before there

8 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

could be a binding agreement. See, e.g. , Silber v. N. Y. Life Ins. Co., 938 N.Y.S.2d 46, 50 (1st

Dep't 2012). Here, it is undisputed there was no acceptance.

Mr. Popejoy' s November 18 email on which Plaintiffs base their assertion that

Defendants agreed to amend the CSA to treat the execution of a Preliminary POC Agreement as

a POC Agreement Triggering Event also cannot plausibly be read as conveying anything beyond

an offer to amend the CSA (made in the context of continuing discussions between Messrs.

Popejoy and Maass about possible changes to the CSA). Ex. BB. Mr. Popejoy sent this email

the day after his November 17 email, and like the November 17 email, this email reflected, at

most, an offer meant to resolve the parties' dispute regarding the Preliminary POC Agreements.

The offer had three elements: (1) Kadena would "agree" to treat the execution of Preliminary

POC Agreements with five specific Qualified Prospects as POC Agreement Triggering Events;

(2) the parties would "accelerat[ e] on all ... fronts" with those Prospects and continue to work

towards "further shared achievements"; and (3) the parties would "revisit" the Preliminary POC

Agreements with "the remaining [P]rospects ... [to] ensure the language meets [Kadena' s]

intent for what constitutes further triggering events under the CSA." Id. Approximately 30

minutes after Mr. Popejoy sent this email, Mr. Maass responded by stating, "As discussed I will

speak to [Mr. Toros] ... and return to you when we have reached afinn decision." Id.

(emphasis added). Mr. Maass ' response confirms the parties were still discussing potential

changes to the CSA and that Mr. Popejoy's email reflected, at most, an offer to amend the CSA.

Plaintiffs never accepted this offer, however, as their next communication to Defendants was Mr.

Maass' November 19 email in which he continued the parties' negotiations by making a counter-

offer pursuant to which Plaintiffs sought, by their own admission, to "w[ind] down the parties'

relationship." Opp'n 9; see Ex. CC at 98-99.

9 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

Moreover, as Plaintiffs acknowledge, the offer in Mr. Popejoy's November 18 email

presupposed that EMI would continue to provide the long-term assistance to Kadena to which it

had agreed under the CSA. Opp ' n 14 ("Popejoy's email says[] that Kadena will continue to

need EMI's help going forward, just as the CSA and CSA Amendments contemplate."); see Ex.

BB. Any offers in Mr. Popejoy's November 17 email also were premised on Kadena's

expectation that EMI would continue to perform its obligations under the CSA. Br. 11 ; Ex. Z.

The day after Mr. Popejoy sent his November 18 email, however, Plaintiffs made clear, through

Mr. Maass ' November 19 response, that this bedrock expectation was incorrect.

At the outset of his November 19 response, Mr. Maass stated,

I have further discussed with [Mr. Toros] today about a way forward with Kadena....
While we want to see Kadena succeed, we do not think it serves either of our interests to
have EMI serve the same role in trying to achieve that going forward.

Ex. CC at 98 (emphasis added). Mr. Maass further proposed that, as part of the "way forward,"

Kadena pay EMI $4.95 million, id. at 98-99, notwithstanding that EMI had no right to obtain any

cash from Kadena under the CSA, Ex.Cat SOW ,rs. Thus, rather than accepting Mr. Popejoy' s

November 18 offer, Plaintiffs rejected it by making a counter-offer pursuant to which the CSA

would be amended to change EMI's "role ... going forward," Ex. CC at 98, provide for a $4.95

million payment to EMI, id. , and "w[ind] down the parties' relationship," Opp'n 9. Notably, Mr.

Maass concluded his November 19 email by stating, "We would like to have [an agreement on

Plaintiffs' counter-offer] documented and executed by the first week of December," Ex. CC at 99

(emphasis added), thus confirming Plaintiffs' then understanding (as distinct from their current

litigating position) that amendments to the CSA would be memorialized in formal, hand-signed

addenda.

10 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

Over the next two days, through two emails and a letter, Plaintiffs made clear that, unless

Defendants agreed to Plaintiffs' counter-offer, there would be litigation between the parties and

EMI would stop performing under the CSA. In the first email, which Mr. Maass sent to Mr.

Popejoy on November 20, he inquired, "Where does Kadena stand regarding EMI's email if

there is a path forward," id. at 95 (emphasis added), thus confirming that ifKadena rejected

Plaintiffs' November 19 counter-offer, there would be no path forward. In the second email,

which Mr. Maass sent to Mr. Popejoy later in the day on November 20 (nine minutes after Mr.

Popejoy had communicated Kadena's rejection of Plaintiffs' counter-offer), Mr. Maass cut off

communications between the parties and signaled that litigation was imminent. He wrote, "[Mr.

Toros] and I will circle back to discuss[,] however, we will be in touch through [our lawyer]. ...

[W]e have put our best foot forward with no luck." Id. at 94-95 (emphasis added).

Finally, in a November 21 letter to Defendants' counsel, Plaintiffs' counsel stated that

Plaintiffs would "commence legal action" unless Defendants agreed to resolve "all ... matters

among Kadena and EMI" to Plaintiffs' satisfaction. Ex. DD at 1, 4. Importantly, Plaintiffs'

counsel added that "unless an agreement is quickly reached, EM/ will cancel next week's

activities with Hotek and Isbank." Id. at 4 (emphasis added). EMI had arranged the referenced

activities as part of its continuing obligations under the CSA. Exs. Z at 1691 , CC at 96-97; see

Ex. T ,r1. These are the same activities- along with an event with BEi- that, in an email on

November 19, Mr. Maass had told Mr. Popejoy would "proceed regardless" of how Defendants

responded to Plaintiffs' November 19 counter-offer. Ex. CC at 96-97. Through their

November 21 letter, however, Plaintiffs reversed course and made clear that, absent Defendants'

prompt acquiescence to their demands, Plaintiffs would repudiate the CSA. 3 Shortly thereafter

3
Plaintiffs' assertion that "when prompted by Kadena, EMI explicitly confirmed that it would
continue to perform," Opp 'n 14, is thus misleading.

11 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

(by early December 2018), Plaintiffs followed through on their threat and repudiated the CSA,

including by cancelling the BEI event and cutting off funding to BEL Ex. GG at 1804-07.

Notably, Plaintiffs conveyed their intent to repudiate the CSA a week before Defendants'

counsel sent his November 28 letter that Plaintiffs baselessly assert constituted a "repudiation of

the CSA." Opp ' n 15. On its face, Defendants' counsel's November 28 letter does not repudiate

anything; to the contrary, it conveys another offer intended to resolve the parties' disputes. Ex.

EE at 714-15. Plaintiffs rejected this offer too. Ex. FF.

B. Plaintiffs Have Not Stated and Cannot State a Viable Breach

of Contract Claim

On the record summarized above, Plaintiffs cannot possibly state a viable breach of

contract claim. At most, Mr. Popejoy' s November 5, 17 and 18 emails conveyed offers to amend

the CSA that Plaintiffs never accepted. Plaintiffs' non-acceptance itself is fatal to their breach of

contract claims. See, e.g., Silber, 938 N.Y.S.2d at 50. Moreover, EMI' s failure to satisfy the

condition underlying the offers- continued performance under the CSA- is also fatal to

Plaintiffs' claims, as it confirms there was no meeting of the minds to amend the CSA. See, e.g.,

Naldi v. Grunberg, 908 N.Y.S.2d 639, 647-48 (1st Dep't 2010). On this record, Plaintiffs have

no plausible breach of contract claim, thus entitling Defendants to judgment under the standard

that applies if the Court considers documents extrinsic to the Complaint. See Moxey v. Payne, 89

N.Y.S.3d 251 , 253 (2nd Dep't 2018).

The Court need not consider extrinsic documents, however, because based on the

documents referenced in the Complaint, Plaintiffs have not stated a claim for breach of contract.

See id. Those documents include the parties' November 2018 correspondence, Ex. A ,,37-51,

which alone establishes that Mr. Popejoy's emails were part of a continuing negotiation and, at

12 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

most, conveyed offers that (1) Plaintiffs never accepted, and (2) were premised on a condition

that Plaintiffs failed to satisfy.

Plaintiffs' arguments to the contrary are without merit. As an initial matter, Plaintiffs'

assertion that Mr. Popejoy's emails reflect "crystal-clear ... commitments [to] amend[] the

CSA," Opp ' n 16, is untenable based on the plain text of those emails and the parties' related

correspondence, as discussed above.

Similarly, Plaintiffs' argument that Mr. Popejoy's emails and Mr. Maass ' November 19

response were not part of the same, continuing negotiation, id. , is contradicted by the plain text

of those emails. Approximately thirty minutes after receiving Mr. Popejoy's November 18

email, Mr. Maass wrote, "As discussed I will speak to [Mr. Toros] ... and return to you when

we have reached a firm decision." Ex. BB. In his next communication with Mr. Popejoy, less

than 24 hours later, Mr. Maass wrote, "As I said I would, I have further discussed with [Mr.

Toros] today about a way forward with Kadena .... " Ex. CC at 98. The emails are indisputably

part of the same negotiation, pursuant to which Mr. Popejoy conveyed (at most) offers that

Plaintiffs never accepted and, in fact, rejected by their November 19 counter-offer.

Plaintiffs are also wrong in arguing that the offers in Mr. Popejoy's emails were not

"conditioned on anything," Opp 'n 14, and that Plaintiffs never "sa[id], or even impl[ied], that

EMI will cease to perform under the CSA," id. Again, the plain text of the parties' November

2018 correspondence contradicts those arguments, as shown above. Even if the arguments had

merit, however, Defendants would still be entitled to judgment on Plaintiffs' breach of contract

claims, as Mr. Popejoy's emails would still convey (at most) offers that Plaintiffs never accepted.

Furthermore, Plaintiffs' observation that the CSA did not specify that amendments had to

be hand-signed, id. at 12-13, is immaterial. Given the parties' consistent prior practice of

13 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

amending the CSA only through hand-signed, formal addenda and the fact that the new changes

sought by EMI went to core issues, Plaintiffs' position that there was a meeting of the minds to

amend the CSA through Mr. Popejoy' s informal emails is implausible.

Plaintiffs ' fmal argument- that the absence of an agreement in the November 5 and 17

emails on a new date for the Final Amendment deadline is not itself fatal to their claim that those

emails amended the Final Amendment deadline, Opp'n 16-17- is irrelevant. At most, the emails

conveyed offers that were never accepted, and Plaintiffs' failure to accept those offers, or to

satisfy the condition incorporated in the offers, is fatal.

C. Even if Plaintiffs Could State a Viable Breach of Contract Claim. Their Damages
Would Be Limited to 300.000 Coins

Even if the CSA had been amended in the ways Plaintiffs assert, Plaintiffs' damages

would be limited to 300,000 Coins because, as an exercise of its bargained for, "absolute

discretion," Kadena entered into Preliminary POC Agreements with only two Qualified

Prospects.

Plaintiffs do not dispute that if Kadena entered into Preliminary POC Agreements with

only two Qualified Prospects, Plaintiffs would only be entitled to 300,000 Coins. Instead, they

assert that Defendants' sworn representation that Kadena executed only two Preliminary POC

Agreements is a disputed fact "contradict[ed by] the allegations in the Complaint." Opp'n 18.

Plaintiffs do not cite any allegations in the Complaint, however, to support this argument, and

none exist. Although the Complaint alleges that three Qualified Prospects executed Preliminary

POC Agreements, Ex. A 153, nowhere does it allege that Kadena countersigned those

Agreements. Thus, Defendants' sworn representation that Kadena executed only two of the

Agreements is an undisputed fact. Vandenberg Inc. v. Townhouse 84, LLC, No. 103018/2010,

2011 WL 5903736, at *1 (N.Y. Sup. Mar. 24, 2011) (court may rely on facts presented by

11

14 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

moving defendant where "the evidence demonstrates the absence of any significant dispute

regarding those facts").

Plaintiffs also argue that they should receive more than 300,000 Coins because Kadena's

decision to stop executing Preliminary POC Agreements was in "bad faith." Opp 'n 19. As an

initial matter, however, where, as here, the parties to a contract are sophisticated and counseled

and one party bargains at arm's length for the right to decide an issue in its "absolute discretion,"

that party's subsequent exercise of its absolute discretion cannot form the basis of a breach of

contract claim. See Transit Funding Assoc. UC v. Capital One Equip Fin Corp. , 48 N.Y.S.3d

110, 114-15 (1st Dep't 2017); ELBT Realty, LLC v. Mineola Garden City Co., Ltd. , 42 N.Y.S.3d

304, 306 (2nd Dep't 2016). This is particularly true where, as here, the parties to the contract

placed limits on the exercise of discretion as to some matters, but not the matter at issue, thus

confirming their intent to confer absolute discretion as to that matter. See Transit Funding, 48

N.Y.S.3d at 115; Ex.Cat SOW ,r 5 (affording Kadena "absolute discretion" to enter into POC

Agreements while imposing a reasonableness limitation on its ability to "withhold its approval"

to issuing press releases).

Plaintiffs ' attempt to distinguish Transit Funding and ELBT Reality is unavailing. The

fact that the "absolute discretion" provisions in those cases also included additional language

stating that the defendants could take the challenged action "for any reason," Opp'n 21-22, is a

distinction without effect. Moreover, the fact that the plaintiffs in those cases "had not ... [yet]

performed [their] side of the bargain," id. , is also irrelevant. Having agreed to allow Kadena to

take the challenged action in its "absolute discretion" as part of an arm's length negotiation,

Plaintiffs cannot now complain they were harmed by Kadena's exercise of its bargained-for

discretion.

12

15 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

In any event, even if (as Plaintiffs argue) Kadena's "absolute discretion" was limited by a

requirement that it not have been exercised arbitrarily, irrationally or otherwise in bad faith,

Opp 'n 20, under the circumstances of this case, Kadena's exercise of its absolute discretion

cannot plausibly be characterized as the product of bad faith. As discussed above, (1) the

execution of a Preliminary POC Agreement was an interim step that provided little or no value to

Kadena and was non-binding on the Qualified Prospect; (2) at the time the parties entered into

the CSA and agreed that EMI would receive Coins for each executed POC Agreement, this

interim step did not exist; (3) it was Plaintiffs who pushed to implement this interim step and

who, shortly thereafter, tried to take advantage of it by claiming that its completion constituted a

Coin-earning triggering event; and (4) soon after that, Plaintiffs threatened to repudiate and in

fact repudiated the CSA. Under these circumstances, Kadena's exercise of its absolute discretion

to stop signing the Preliminary POC Agreements cannot plausibly be viewed as in bad faith.

II. Unable to State a Viable Breach of Contract Claim, Plaintiffs' Quantum Meruit,
Fraud, and Declaratory Judgment Claims Necessarily Fail

Plaintiffs ' quantum meruit, fraud, and declaratory judgment claims fail because they are

premised on Plaintiffs ' (incorrect) assertion that Defendants agreed to amend the CSA in the

ways Plaintiffs assert and then backtracked on their purported agreements. Opp'n 23-24; Ex. A

,r,r 77-100. Because there were no such agreements, supra Part I, these claims necessarily fail.

III. Plaintiffs Cannot State a Claim Relating to Six Swiss Because the Meeting EMI
Arranged With Six Swiss Did Not Qualify as an Initial Meeting

In arguing that EMI is entitled to Coins for setting up an Initial Meeting with Six Swiss,

Plaintiffs continue to ignore that the Complaint does not assert any claims relating to Six Swiss.

Plaintiffs' (purported) claim as to Six Swiss fails for this reason alone. See Cole v. Mandell

Food Stores, Inc., 710 N.E. 2d 244, 246 (N.Y. 1999).

13

16 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

In any event, EMI is not entitled to any Coins for the meeting it arranged with Six Swiss.

Plaintiffs' assertion that "the CSA specifically defined Six Swiss as a 'Qualified Prospect,"'

Opp 'n 18, is beside the point. Under the CSA, EMI was entitled to Coins for setting up a

meeting with a "Qualified Prospect" only if the meeting qualified as an "Initial Meeting." Ex. C

at SOW ,rs. For a meeting to qualify as an Initial Meeting, the Qualified Prospect had to be

interested in "discuss[ing] a possible business relationship" with Kadena. Id. ,r1. Here, it is

undisputed that Six Swiss did not have such an interest. Exs. B ,r17, CC at 95. Therefore, EMI

is not entitled to any Coins for any meeting it arranged with Six Swiss.

CONCLUSION

Plaintiffs' claims should therefore be dismissed.

Dated: New York, New York

May 23, 2019

MORVILLO ABRAMOWITZ GRAND

IASON &ANELLOP.C.

By: /s Christopher B. Harwood

Robert J. Anello
Christopher B. Harwood
Marina Indenbaum
565 Fifth Avenue
New York, New York 10017
(212) 856-9600 Telephone
(212) 854-9494 Facsimile
ranello@maglaw.com
charwood@maglaw.com
mindenbaum@maglaw.com

Attorneys for Defendants Kadena LLC, Kadena

Public LLC, Stuart Popejoy and William Martino

14

17 of 18
!FILED: KINGS COUNTY CLERK 05/23/2019 09:18 PM) INDEX NO. 500262/2019
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 05/23/2019

CERTIFICATE OF WORD COUNT

Pursuant to 22 CRR-NY 202.70, Rule 17, I certify that the accompanying Reply

Memorandum of Law in Support of Defendants Kadena LLC, Kadena Public LLC, Stuart

Popejoy and William Martino ' s Motion to Dismiss Plaintiffs' Complaint contains 4, 197 words,

excluding the caption, table of contents, table of authorities, and signature block herein. This

certificate was prepared in reliance on the word-count function of the word-processing system

(Microsoft Word) used to prepare the document.

Dated: New York, New York

May 23 , 2019

MORVILLO ABRAMOWITZ GRAND

IASON &ANELLOP.C.

By: /s Christopher B. Harwood

Robert J. Anello
Christopher B. Harwood
Marina Indenbaum
565 Fifth Avenue
New York, New York 10017
(212) 856-9600 Telephone
(212) 854-9494 Facsimile
ranello@maglaw.com
charwood@maglaw.com
mindenbaum@maglaw.com

Attorneys for Defendants Kadena LLC, Kadena

Public LLC, Stuart Popejoy and William Martino

15

18 of 18