S&C Obtains Dismissal of M&A-Related Lawsuit Against Goldman Sachs

Goldman Sachs obtained the dismissal of litigation alleging scattershot contract and tort claims stemming from an abandoned joint sale transaction between NKSFB, a subsidiary of Focus Financial Partners, and KSFB Management, a company that provides management services to NKSFB.

The suit arose from a complex series of transactions. In 2018, Nigro Karlin Segal Feldstein & Bolno LLC, which managed business affairs for high-net-worth clients, sold the assets of their company to Focus, and those assets became a Focus subsidiary called NKSFB. The principals of Nigro Karlin then formed a separate firm (KSFB) to manage NKSFB in exchange for a fee. Four years later, KSFB and Focus considered a joint sale of KSFB and NKSFB, with Goldman Sachs advising both parties. After learning that Goldman Sachs was already negotiating a $7 billion take-private transaction for Focus's indirect parent company, a deal that did not include KSFB, KSFB broke off the joint sale process and initiated litigation against Goldman Sachs, Focus, and two individuals for breach of contract, breach of fiduciary duty, fraud, tortious interference, and unjust enrichment.

In a complete win for the defendants, Justice Margaret Chan of the New York Supreme Court, Commercial Division, dismissed the complaint in its entirety. Justice Chan dismissed plaintiff's fraud claim, noting that it was precluded by the "plain terms" of the parties' engagement letter, which included "specific and unambiguous" disclaimers of the alleged misrepresentations. Justice Chan similarly dismissed plaintiff's fiduciary duty claim because the parties' engagement letter "expressly stated" that plaintiff waived any fiduciary duty or relationship with Goldman Sachs, and also because plaintiff's "bald and unsupported assertion[s]" were insufficient to allege a fiduciary relationship. Finally, Justice Chan found that the plaintiff's breach of contract claim was "fundamental[ly] flaw[ed]" and based on a "clear" misinterpretation of the parties' contract.

The S&C team representing Goldman Sachs included Robert Giuffra, Jr., Jonathan Carter, Alex Gross, Joe Calder and Lisa Wang.