On September 02, 2022 a
EXHIBIT(S) - 70 (Motion #013) - Exhibit 70- Order on Motion to Dismiss dated May 8, 2023
was filed
involving a dispute between
Redhill Biopharma Ltd.,
and
Kukbo Co., Ltd.,
for Commercial - Contract - Commercial Division
in the District Court of New York County.
Preview
FILED: NEW YORK COUNTY CLERK 05/28/2024 10:27 PM INDEX NO. 653200/2022
NYSCEF DOC. NO. 295 RECEIVED NYSCEF: 05/28/2024
EXHIBIT 70
FILED: NEW YORK COUNTY CLERK 05/28/2024 10:27 PM INDEX NO.
INDEX NO. 653200/2022
653200/2022
NYSCEF DOC.
NYSCEF DOC. NO.
NO. 295
87 RECEIVED NYSCEF:
RECEIVED NYSCEF: 05/28/2024
05/08/2023
SUPREME COURT OF THE STATE OF NEW
YORK NEW YORK COUNTY
PRESENT: HON. BARRY R. OSTRAGER PART IAS MOTION 61EFM
Justice
---------------------------------------------------------------------------------X
INDEX NO. 653200/2022
REDHILL BIOPHARMA LTD.,
MOTION DATE
Plaintiff and Counterclaim Defendant,
-v- MOTION SEQ. NO. 004
KUKBO CO., LTD.,
Defendant and Counterclaim Plaintiff. DECISION + ORDER ON MOTION
---------------------------------------------------------------------------------X
HON. BARRY R. OSTRAGER
The Court heard oral argument on May 8, 2023 via Microsoft Teams on the motion by
plaintiff and counterclaim defendant RedHill Biopharma Ltd. (“RedHill”) for an Order, pursuant
to CPLR 3211(a)(1) and (a)(7), dismissing the counterclaims of defendant and counterclaim
plaintiff Kukbo Co., Ltd., ("Kukbo") against RedHill. In accordance with the May 8, 2023,
transcript of proceedings, the motion is granted in part and denied in part.
RedHill is a specialty pharmaceutical company organized under the laws of Israel that is
working to develop and commercialize drugs. Kukbo is a logistics provider organized under the
laws of the Republic of Korea seeking to enter the pharmaceutical market as a distributor. The
parties entered into a series of agreements: the October 25, 2021 Subscription Agreement
(NYSCEF Doc. No. 40), the March 14, 2022 Exclusive License Agreement (NYSCEF Doc. No.
41, the “ELA”), and the June 8, 2022 Letter Acknowledgement and Undertaking of Payment
under Subscription and License Agreements (NYSCEF Doc. No. 42). These documents related
to the anticipated regulatory approval and commercialization of “Opaganib”, a Covid-19
medication that has yet to be approved for licensing in any jurisdiction.
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FILED: NEW YORK COUNTY CLERK 05/28/2024 10:27 PM INDEX NO.
INDEX NO. 653200/2022
653200/2022
NYSCEF DOC.
NYSCEF DOC. NO.
NO. 295
87 RECEIVED NYSCEF:
RECEIVED NYSCEF: 05/28/2024
05/08/2023
Each party claims that the other failed to perform its contractual obligations. In its
Answer (NYSCEF Doc. No. 40), Kukbo asserted ten counterclaims. RedHill has moved to
dismiss all the counterclaims. In accordance with the May 8, 2023, transcript of proceedings, the
motion is determined as follows.
The Court grants dismissal of the First and Second Counterclaims seeking rescission of
the Exclusive License Agreement and the Subscription Agreement. Defendant’s allegations fail
to support the requisite elements of lack of consideration or an inability to perform the contract.
The Court declines to dismiss the Eighth and Ninth Counterclaims alleging breach of the
Exclusive License Agreement and breach of the Subscription Agreement. In light of defendant’s
claim of anticipatory breach, the Court denies dismissal at the pleading stage. Accepting the
allegations in the counterclaims as true and giving the counterclaim plaintiff the benefit of every
favorable inference, the Court finds that the breach of contract claims have been adequately
stated and that the documentary evidence fails to conclusively establish a defense to the asserted
claims as a matter of law. See Leon v Martinez, 84 NY2d 83 (1994).
The Court also declines to dismiss the Third Counterclaim for anticipatory repudiation,
applying the same analysis as applied to the breach of contract counterclaims. The Court
observes that the agreements expressly terminate if Opaganib fails to secure regulatory approval
in the relative near term.
The Court grants dismissal of the Tenth Counterclaim, sounding in breach of the implied
covenant of good faith and fair dealing. That counterclaim is duplicative of the contract claims.
The Court declines to dismiss the Fourth and Fifth Counterclaims alleging fraudulent
inducement to enter into the Subscription Agreement and the Exclusive License Agreement and
also declines to dismiss the Sixth Counterclaim sounding in fraudulent misrepresentation.
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FILED: NEW YORK COUNTY CLERK 05/28/2024 10:27 PM INDEX NO.
INDEX NO. 653200/2022
653200/2022
NYSCEF DOC.
NYSCEF DOC. NO.
NO. 295
87 RECEIVED NYSCEF:
RECEIVED NYSCEF: 05/28/2024
05/08/2023
Applying the previously discussed standard applicable to pre-Answer motions to dismiss, the
Court denies dismissal at the pleading stage. Issues exist regarding the import of the contractual
disclaimers and whether defendant’s reliance on plaintiff’s representation was reasonable under
all the circumstances. The documentary evidence does not establish plaintiff’s ratification claim
as a matter of law at this early stage in the litigation.
The Court grants dismissal of the Seventh Counterclaim for negligent misrepresentation.
The transaction at issue is an arms-length commercial transaction between two sophisticated
parties. Defendant has failed to plead facts to support the existence of the requisite special or
privity-like relationship imposing a duty on RedHill to impart more information than it did.
RedHill had no specialized expertise, nor a position of confidence and trust, to support a special
relationship.
RedHill is directed to Reply to the remaining counterclaims by May 30, 2023. The parties
have a preliminary conference order in place with a Note of Issue deadline of March 29, 2024. A
Status Conference is scheduled for September 28, 2023 at 11:00 a.m. via a dial-in number to be
provided in a letter efiled by August 28, 2023.
Dated: May 8, 2023
"'
BA R. OSTRAGE, J.S.C.
CHECK ONE: CASE DISPOSED X NON-FINAL DISPOSITION
GRANTED DENIED X GRANTED IN PART OTHER
APPLICATION: SETTLE ORDER SUBMIT ORDER
CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE
3
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Document Filed Date
May 28, 2024
Case Filing Date
September 02, 2022
Category
Commercial - Contract - Commercial Division
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FILED: NEW YORK COUNTY CLERK 05/28/2024 10:27 PM INDEX NO. 653200/2022 NYSCEF DOC. NO. 295 RECEIVED NYSCEF: 05/28/2024 EXHIBIT 70 FILED: NEW YORK COUNTY CLERK 05/28/2024 10:27 PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 295 87 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 05/08/2023 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. BARRY R. OSTRAGER PART IAS MOTION 61EFM Justice ---------------------------------------------------------------------------------X INDEX NO. 653200/2022 REDHILL BIOPHARMA LTD., MOTION DATE Plaintiff and Counterclaim Defendant, -v- MOTION SEQ. NO. 004 KUKBO CO., LTD., Defendant and Counterclaim Plaintiff. DECISION + ORDER ON MOTION ---------------------------------------------------------------------------------X HON. BARRY R. OSTRAGER The Court heard oral argument on May 8, 2023 via Microsoft Teams on the motion by plaintiff and counterclaim defendant RedHill Biopharma Ltd. (“RedHill”) for an Order, pursuant to CPLR 3211(a)(1) and (a)(7), dismissing the counterclaims of defendant and counterclaim plaintiff Kukbo Co., Ltd., ("Kukbo") against RedHill. In accordance with the May 8, 2023, transcript of proceedings, the motion is granted in part and denied in part. RedHill is a specialty pharmaceutical company organized under the laws of Israel that is working to develop and commercialize drugs. Kukbo is a logistics provider organized under the laws of the Republic of Korea seeking to enter the pharmaceutical market as a distributor. The parties entered into a series of agreements: the October 25, 2021 Subscription Agreement (NYSCEF Doc. No. 40), the March 14, 2022 Exclusive License Agreement (NYSCEF Doc. No. 41, the “ELA”), and the June 8, 2022 Letter Acknowledgement and Undertaking of Payment under Subscription and License Agreements (NYSCEF Doc. No. 42). These documents related to the anticipated regulatory approval and commercialization of “Opaganib”, a Covid-19 medication that has yet to be approved for licensing in any jurisdiction. 1 of 3 FILED: NEW YORK COUNTY CLERK 05/28/2024 10:27 PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 295 87 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 05/08/2023 Each party claims that the other failed to perform its contractual obligations. In its Answer (NYSCEF Doc. No. 40), Kukbo asserted ten counterclaims. RedHill has moved to dismiss all the counterclaims. In accordance with the May 8, 2023, transcript of proceedings, the motion is determined as follows. The Court grants dismissal of the First and Second Counterclaims seeking rescission of the Exclusive License Agreement and the Subscription Agreement. Defendant’s allegations fail to support the requisite elements of lack of consideration or an inability to perform the contract. The Court declines to dismiss the Eighth and Ninth Counterclaims alleging breach of the Exclusive License Agreement and breach of the Subscription Agreement. In light of defendant’s claim of anticipatory breach, the Court denies dismissal at the pleading stage. Accepting the allegations in the counterclaims as true and giving the counterclaim plaintiff the benefit of every favorable inference, the Court finds that the breach of contract claims have been adequately stated and that the documentary evidence fails to conclusively establish a defense to the asserted claims as a matter of law. See Leon v Martinez, 84 NY2d 83 (1994). The Court also declines to dismiss the Third Counterclaim for anticipatory repudiation, applying the same analysis as applied to the breach of contract counterclaims. The Court observes that the agreements expressly terminate if Opaganib fails to secure regulatory approval in the relative near term. The Court grants dismissal of the Tenth Counterclaim, sounding in breach of the implied covenant of good faith and fair dealing. That counterclaim is duplicative of the contract claims. The Court declines to dismiss the Fourth and Fifth Counterclaims alleging fraudulent inducement to enter into the Subscription Agreement and the Exclusive License Agreement and also declines to dismiss the Sixth Counterclaim sounding in fraudulent misrepresentation. 2 2 of 3 FILED: NEW YORK COUNTY CLERK 05/28/2024 10:27 PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 295 87 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 05/08/2023 Applying the previously discussed standard applicable to pre-Answer motions to dismiss, the Court denies dismissal at the pleading stage. Issues exist regarding the import of the contractual disclaimers and whether defendant’s reliance on plaintiff’s representation was reasonable under all the circumstances. The documentary evidence does not establish plaintiff’s ratification claim as a matter of law at this early stage in the litigation. The Court grants dismissal of the Seventh Counterclaim for negligent misrepresentation. The transaction at issue is an arms-length commercial transaction between two sophisticated parties. Defendant has failed to plead facts to support the existence of the requisite special or privity-like relationship imposing a duty on RedHill to impart more information than it did. RedHill had no specialized expertise, nor a position of confidence and trust, to support a special relationship. RedHill is directed to Reply to the remaining counterclaims by May 30, 2023. The parties have a preliminary conference order in place with a Note of Issue deadline of March 29, 2024. A Status Conference is scheduled for September 28, 2023 at 11:00 a.m. via a dial-in number to be provided in a letter efiled by August 28, 2023. Dated: May 8, 2023 "' BA R. OSTRAGE, J.S.C. CHECK ONE: CASE DISPOSED X NON-FINAL DISPOSITION GRANTED DENIED X GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE 3 3 of 3