08-5668 | Omnilex

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08-5668-CV
Law Debenture Trust
Co. of New York v.
Maverick Tube Corp.

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

August Term, 2009

(Argued: November 20, 2009 Decided: February 19, 2010)

Docket No. 08-5668-CV

LAW DEBENTURE TRUST CO. OF NEW YORK,

Plaintiff-Appellant,

\- V. -
MAVERICK TUBE CORP. and TENARIS S.A.,

Defendants-Appellees.

Before: KEARSE, KATZMANN, and LIVINGSTON, Circuit Judges.

Appeal from a judgment of the United States District
Court for the Southern District of New York, Richard J. Sullivan,
Judge, dismissing action brought on behalf of holders of certain
notes, issued by defendant Maverick Tube Corp., for breach of
contract, unjust enrichment, and tortious interference with
contract with respect to Maverick's refusal to allow the
noteholders to convert their notes to cash and stock following the
acquisition of Maverick by defendant Tenaris S.A.

Affirmed.

PHILIP C. KOROLOGOS, New York, New York (Eric
Brenner, Boies, Schiller & Flexner, New
York, New York, on the brief), for
Plaintiff-Appellant.

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RICHARD J. UROWSKY, New York, New York (Sergio
J. Galvis, Stephanie G. Wheeler, Sullivan &
Cromwell, New York, New York, on the
brief) , for Defendants-Appellees.

KEARSE, Circuit Judge:

The present litigation concerns the conversion rights of
certain holders of convertible notes issued by defendant Maverick
Tube Corp. ("Maverick" or the "Company") pursuant to an indenture
agreement. Plaintiff Law Debenture Trust Co. of New York, which
succeeded original plaintiff Bank of New York as the indenture
trustee (collectively the "Trustee"), appeals from a judgment of
the United States District Court for the Southern District of New
York, Richard J. Sullivan, Judge, dismissing its claim against
Maverick for breach of contract in refusing to allow the
noteholders to convert their notes to cash and stock following the
acquisition of Maverick by defendant Tenaris S.A. ( "Tenaris"), and
dismissing its claims against Tenaris for tortious interference
with contract and unjust enrichment. The district court granted
summary judgment in favor of defendants on the ground that the
conversion rights that would have arisen upon the acquisition of
Maverick by a company whose common stock is traded on a United
States national securities exchange were not triggered by
Maverick's acquisition by Tenaris, which has only American
Depositary Shares (or "ADSs") traded on the New York Stock
Exchange (or "NYSE"). On appeal, the Trustee contends principally
that the district court erred in ruling as a matter of law that

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the trading of Tenaris ADSs is not the trading of its common stock
within the meaning of the indenture. For the reasons that follow,
3 we affirm.

# I. BACKGROUND

The facts are largely undisputed. The following
description is drawn principally from the parties' statements of
material facts filed pursuant to the district court's Local
Rule 56.1 and from the contract documents themselves -- to wit, the
notes and the indenture -- whose language is not in dispute.

A. The Maverick Notes and Indenture; the Tenaris Acquisition
In 2003, Maverick, a United States manufacturer of tubing
used in the oil and gas industry, raised capital by issuing debt
securities (the "'03 Notes"). In 2004, Maverick solicited holders
of the '03 Notes to exchange them for new convertible debt
securities denominated "2004 4.00% Convertible Senior Subordinated
Notes due 2033" (the "New Notes" or the " '04 Convertible Notes")
to be issued pursuant to an indenture agreement (the "Indenture") .
The New Notes provide that, " [s]ubject to the procedures set forth
in the Indenture, a Holder may convert Notes into cash and, if
applicable, shares of Common Stock
after the occurrence of a

Public Acquirer Change of Control."
('04 Convertible Notes

1 10 (g) .)
The terms used in this provision are defined in the
23 Indenture.

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" ' Common Stock' means the common stock, par value $. 01
per share, of the Company" (Indenture § 1.01, at 3), the
" ' Company'" being defined as "Maverick" (id. ).
"Public
Acquirer, " to the extent pertinent here,

means a Person who (i) acquires the Company or all or
substantially all of the Company's assets in a
consolidation, merger, share exchange, sale of all or
substantially all of the Company's assets or other
similar transaction and (ii) has a class of common
stock traded on a United States national securities
exchange

(Id. at 10 (emphasis added) .) The term "Public Acquirer Change of
Control" is defined as "any Non-Stock Change of Control involving
a Public Acquirer." (Id. ) "Non-Stock Change of Control" is
defined to include any merger, sale, or other transfer of all or
substantially all of Maverick's assets in exchange for
consideration "other than" common stock traded on a United States
national securities exchange. (Id. at 8.) After there has been a
Public Acquirer Change of Control, any right that the noteholder
had to convert his notes into cash and Common Stock of Maverick
becomes a right to convert the notes into cash and the acquirer's
common stock referred to in the Public Acquirer definition. (See
Indenture §§ 7.06 (f), 1.01, at 10.)

Tenaris is a joint stock corporation organized under the
laws of Luxembourg. It issues "ordinary shares," which are
common stock. In 2002, Tenaris entered into an agreement with a
United States bank ( "Bank" or "Depositary Bank") pursuant to which
Tenaris deposited a number of its ordinary shares with the Bank,
and the Bank issued American Depositary Receipts ( "ADRs"), with

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each ADR evidencing an American Depositary Share. That agreement
provided that each ADS represented the right to receive a
specified number of ordinary Tenaris shares and a pro rata share
of any other property or securities deposited with the Bank.
Tenaris ADSs are traded on the New York Stock Exchange.

In June 2006, Maverick and Tenaris announced that they had
entered into a merger agreement pursuant to which Tenaris would
acquire all of Maverick's common stock for $65 per share in cash.
With respect to whether the anticipated merger would trigger the
conversion rights of holders of the '04 Convertible Notes under
the Indenture's Public Acquirer Change of Control provision ( "PACC
Provision"), Maverick filed a report with the Securities and
Exchange Commission ("SEC") stating that Maverick did "not believe
that Tenaris qualifie [d] as a Public Acquirer for such purposes
because Tenaris common stock is not traded on a United States
national securities exchange." Following the October 2006
consummation of the merger, some holders of the '04 Convertible
Notes nonetheless tendered their notes for conversion pursuant to
the PACC Provision. Although Maverick notified noteholders that
they were entitled, until the close of business on December 14,
2006, to convert their notes into cash at the rate of $2,226.79
per $1,000 principal amount pursuant to a different provision, it
refused to convert notes under the PACC Provision.

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B. The Present Action

In December 2006, the Trustee commenced the present action
on behalf of holders of the '04 Convertible Notes against Maverick
and Tenaris, seeking a declaratory judgment that the acquisition
constituted a Public Acquirer Change of Control, damages from
Maverick for breach of the Indenture, and damages from Tenaris for
tortious interference with contract and unjust enrichment. The
Trustee moved for partial summary judgment with respect to its
request for a declaratory judgment on its breach-of-contract
claim; Maverick and Tenaris moved for, inter alia, summary
judgment dismissing all of the Trustee's claims.

In a Memorandum and Order dated October 15, 2008
("District Court Opinion"), the district court denied the
Trustee's motion for partial summary judgment and granted the
motion of Maverick and Tenaris for summary judgment dismissing the
complaint in its entirety. With respect to the contract claim,
the court noted that " [t]he parties have each moved for summary
judgment on the declaratory judgment and breach of contract
claims, and each contends that there are no material issues of
fact. The Court agrees that there are no material disputed issues
21 of fact . . . . " District Court Opinion at 11.

As to the merits of the contract claim, the court found
the relevant terms of the Indenture to be unambiguous and hence
appropriate for interpretation as a matter of law, stating as
25 follows :

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The question before the Court is whether Tenaris
is a "Public Acquirer" for purposes of the PACC

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Provision in the Indenture. In turn, the question of
whether Tenaris is a "Public Acquirer" turns on
whether Tenaris "has a class of common stock traded
on a United States national securities exchange
. . . " (Defs.' 56.1 | 11.) Only if Tenaris is
deemed to be a Public Acquirer is the PACC Provision
triggered and the holders of the Notes entitled to
the benefits of that provision. Plaintiffs argue
that because Tenaris trades its stock in the form of
ADSs on the NYSE, Tenaris has a class of common stock
listed on a United States stock exchange and is thus
a Public Acquirer. Defendants assert that Tenaris is
not a Public Acquirer precisely because it is not
listed on the NYSE but instead trades in the form of
ADSs.

For purposes of background, the Court notes
that in order for a foreign corporation to trade on
the American stock exchange without listing its
ordinary shares on the exchange, the foreign
corporation must issue and deposit American
Depositary Shares or ADSs with an American financial
institution. See Kingdom 5-KR-41, Ltd. v. Star
Cruises PLC, Nos. 01 Civ. 2946 (DLC) et al., 2004 WL
1944457, at *1 n.1 (S.D.N.Y. Aug. 31, 2004). The
depositary institution then issues American
Depositary Receipts or ADRs to the beneficial owners
of the ADSs, who are then free to sell the ADSs on
American securities exchanges. Id. The listing of
ADSs on an American exchange "makes trading an ADR
simpler and more secure for American investors than
trading in the underlying security in the foreign
market. " In re Nat'l Australia Bank Sec. Litig., No.
03 Civ. 6537 (BSJ), 2006 WL 3844465, at *1 n.3
(S.D.N.Y. Oct. 25, 2006) (quoting Pinker v. Roche
Holdings Ltd., 292 F.3d 361, 367 (3d Cir. 2002) ).

ADSs share several of the same characteristics
as ordinary shares. For example, "ADRs are tradeable
in the same manner as any other registered American
security, may be listed on any of the major
exchanges in the United States or traded over the
counter, and are subject to the [federal securities
laws.]" Id., at *1 n.3. However, there are
important differences between ADSs and ordinary
shares. A holder of an ADS "is not the title owner
of the underlying shares; the title owner of those
shares is either the depositary, the custodian, or
their agent." Id. Similarly, an ADS "represents an
ownership interest in a foreign deposited security, "
whereas "a share of stock represents an ownership
interest in a corporation, that has been deposited

with a depository, such as a United States bank or
trust company." In re Vivendi Universal, S.A., 381
F. Supp. 2d 158, 171 (S.D.N.Y. 2003) (citing SEC,
American Depository Receipts, 1991 WL 294145, at *2
(S.E.C. May 23, 1991) ) .

The Court finds that the unambiguous terms of
the contract demonstrate that ADSs are not included
in the definition of "common stock" for purposes of
the Public Acquirer definition. First, the Court
finds that the term "common stock" is unambiguous.
The Indenture defines common stock as "the common
stock, par value $.01 per share, of the Company
[Maverick Tube] " and does not include ADSs. Second,
the Court also finds that common stock means the same
thing as "ordinary shares" -- in fact, Plaintiff itself
admits that Tenaris's "ordinary shares" are the same
as "common stock. " (Pl. 's 56.1 [ 27.) The Indenture
clearly differentiates between "ordinary shares" and
ADSs. For example, the term "Capital Stock" is
defined in the Indenture to include "any and all
shares (including ordinary shares or American
depositary shares) . . . . " (Wheeler Decl. Ex. A
§ 1.01.) Finally, it is clear that, had the drafters
wanted to include ADSs in the definition of common
stock, they could have. The definition of the term
"Fundamental Change" in the Indenture (see id. )
includes the phrase "Capital Stock traded on a
national securities exchange, " which suggests that
the drafters understood the difference between the
implications of that phrase, which would include
ADSs, and the phrase "common stock traded on a United
States national securities exchange, " which would not
include ADSs. Thus, while it may be true that ADSs
are treated similarly to common stock as Plaintiff
contends, the Court finds that, based on the
unambiguous terms of the Indenture, they are two
different terms with different meanings, describing
different types of securities. Accordingly, the
Court finds that Tenaris does not have a class of
common stock traded on a United States national
securities exchange, and is thus not a Public
Acquirer for purposes of the Indenture.

District Court Opinion at 11-13 (emphasis and brackets in
original) . Accordingly, the court concluded that defendants were
entitled to summary judgment dismissing the Trustee's breach-of-
contract claim.

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The district court also dismissed the Trustee's claims
against Tenaris. With respect to the claim of tortious
interference with contract, the court noted that in order to
recover on such a claim a plaintiff must establish, inter alia,
an actual breach of the contract. Having ruled that Maverick did
not breach the Indenture, the court concluded that the Trustee
could not prevail on its tortious-interference-with-contract
claim. See id. at 13. The court dismissed the Trustee's unjust
enrichment claim against Tenaris on the grounds (a) that "a claim
for unjust enrichment, even against a third party, cannot proceed
when there is an express agreement between two parties governing
the subject matter of the dispute, " and (b) that, there having
been no breach by Maverick, Tenaris's causing, aiding, or abetting
Maverick's refusal to convert the New Notes did not enrich Tenaris
unjustly. Id. at 14.

Judgment was entered in favor of defendants, and this
appeal followed.

## II. DISCUSSION

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On appeal, the Trustee contends the district court erred
in dismissing its contract and tortious-interference-with-contract
claims. It makes no argument with regard to its claim for unjust
enrichment, and we thus regard any challenge to the dismissal of
that claim as waived. See generally Otero v. Bridgeport Housing
Authority, 297 F.3d 142, 144 (2d Cir. 2002) ; Day v. Morgenthau,

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909 F.2d 75, 76 (2d Cir. 1990). As to the contract claim, the
Trustee contends that it was entitled to partial summary judgment,
arguing principally that "The Undisputed Evidence Shows, and the
District Court Found, That Tenaris Has 'a Class of Common Stock
Traded on a United States National Securities Exchange'"
(Trustee's brief on appeal at 23), and that in granting summary
judgment in favor of defendants the district court adopted an
interpretation of the Public Acquirer definition that disregarded
custom and usage evidence and was commercially unreasonable (see,
e.g., id. at 18). The Trustee's contention that the dismissal of
its tortious-interference-with-contract claim was erroneous rests,
explicitly, on its premise that the dismissal of its contract
claim was erroneous. (See id. at 51-52.) For the reasons that
follow, we reject all of the Trustee's contentions.

## A. Contract and Summary Judgment Principles

Under New York law, which the parties agree is controlling
here, the initial question for the court on a motion for summary
judgment with respect to a contract claim is "whether the contract
is unambiguous with respect to the question disputed by the
parties." International Multifoods Corp. v. Commercial Union
Insurance Co., 309 F.3d 76, 83 (2d Cir. 2002) ("International
Multifoods") ; see, e.g., Beth Medrash Eeyun Hatalmud v. Spellings,
505 F.3d 139, 146 (2d Cir. 2007) ( "Beth Medrash" ) ; Walk-In Medical
Centers, Inc. v. Breuer Capital Corp., 818 F.2d 260, 263 (2d Cir.
1987) . The matter of whether the contract is ambiguous is a

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question of law

for the court.

See, e.g.,

International

Multifoods, 309 F.3d

at 83; Bailey v.

Fish & Neave,

8 N. Y.3d 523,

528, 837 N.Y.S.2d

600, 603 (2007)

("Bailey") ;

Greenfield v.

Philles Records,

Inc., 98 N.Y.2d 562,

569, 750

N.Y.S.2d 565, 569

(2002) ( "Greenfield" ) ; W. W. W. Associates, Inc. v.

Giancontieri, 77

N. Y.2d 157,

162,

565 N.Y.S.2d

440, 443

(1990) ("W.W.W.

Associates") .

An ambiguity exists where the terms of the contract "could
suggest more than one meaning when viewed objectively by a
reasonably intelligent person who has examined the context of the
entire integrated agreement and who is cognizant of the customs,
practices, usages and terminology as generally understood in the
particular trade or business." International Multifoods, 309 F.3d
at 83 (internal quotation marks omitted). Evidence as to such
custom and usage is to be considered by the court where necessary
to understand the context in which the parties have used terms
that are specialized. See, e.g., Fox Film Corp. v. Springer, 273
N. Y. 434, 8 N.E.2d 23 (1937) . When the parties have used contract
terms which are "in common use in a business or art" and have "a
definite meaning understood by those who use them, " but which
"convey no meaning to [t]hose who are not initiated into the
mysteries of the craft, " the parties, in order to have the court
construe their contracts, "must furnish [the court] with the
dictionaries they have used." Id. at 436, 8 N.E.2d at 24. In
such circumstances, the court "must be informed of the meaning of
the language as generally understood in that business, in the

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light of the customs and practices of the business." Id. at 437,
8 N.E.2d at 24.

Proof of custom and usage does not mean proof of the
parties' subjective intent, for "[e]xtrinsic evidence of the
parties' intent may be considered only if the agreement is
ambiguous," Greenfield, 98 N.Y.2d at 569, 750 N.Y.S.2d at 569;
see, e.g., Bailey, 8 N. Y.3d at 528, 837 N.Y.S.2d at 603. Rather,
proof of custom and usage consists of proof that the language in
question "is 'fixed and invariable' in the industry in question. "
Hutner v. Greene, 734 F.2d 896, 900 (2d Cir. 1984) (quoting
Belasco Theatre Corp. v. Jelin Productions, Inc., 270 A.D. 202,
205, 59 N. Y.S.2d 42, 45 (1st Dep't 1945) ) .

The trade usage must be "so well settled, so
uniformly acted upon, and so long continued as to
raise a fair presumption that it was known to both
contracting parties and that they contracted in
reference thereto."

British International Insurance Co. v. Seguros La Republica, S.A.,
342 F.3d 78, 84 (2d Cir. 2003) (quoting Reuters Ltd. v. Dow Jones
Telerate, Inc., 231 A.D.2d 337, 343-44, 662 N.Y.S.2d 450, 454 (1st
Dep't 1997) ) . Thus, the proffered custom or usage must establish
that the meaning of the term in question "was general, uniform and
unvarying. " Belasco Theatre Corp. v. Jelin Productions, Inc., 270
A.D. at 206, 59 N.Y.S.2d at 45.

A custom, in order to become a part of a contract,
must be so far established and so far known to the
parties, that it must be supposed that their contract
was made in reference to it. For this purpose the
custom must be established, and not casual, uniform
and not varying, general and not personal, and known
to the parties.

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Id., 59 N. Y.S.2d at 46 (internal quotation marks omitted)
(emphases added) .

In sum, "[e]vidence outside the four corners of the
document as to what was really intended but unstated or misstated
is generally inadmissible to add to or vary the writing, " W. W. W.
Associates, 77 N.Y.2d at 162, 565 N.Y.S.2d at 443; evidence as to
custom and usage is considered, as needed, to show what the
parties' specialized language is " 'fair [ly] presum [ed] '" to have
meant, British International Insurance Co. v. Seguros La
Republica, S.A., 342 F.3d at 84 (quoting Reuters Ltd. v. Dow Jones
Telerate, Inc., 231 A.D.2d at 344, 662 N.Y.S.2d at 454) .

No ambiguity exists where the contract language has "'a
definite and precise meaning, unattended by danger of
misconception in the purport of the [contract] itself, and
concerning which there is no reasonable basis for a difference of
opinion. '" Hunt Ltd. v. Lifschultz Fast Freight, Inc., 889 F.2d
1274, 1277 (2d Cir. 1989) ("Hunt") (quoting Breed v. Insurance Co.
of North America, 46 N.Y.2d 351, 355, 413 N.Y.S.2d 352, 355
(1978) ). "Language whose meaning is otherwise plain does not
become ambiguous merely because the parties urge different
interpretations in the litigation, " Hunt, 889 F.2d at 1277, unless
each is a "reasonable" interpretation, Seiden Associates, Inc. v.
ANC Holdings, Inc., 959 F.2d 425, 428 (2d Cir. 1992) ( "Seiden") ;
see, e.g., K. Bell & Associates v. Lloyd's Underwriters, 97 F. 3d
632, 637 (2d Cir. 1996) ; Readco, Inc. v. Marine Midland Bank, 81
F.3d 295, 299 (2d Cir. 1996) ("no ambiguity exists where the

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alternative construction would be unreasonable") . Thus, the court
should not find the contract ambiguous where the interpretation
urged by one party would "strain [] the contract language beyond
its reasonable and ordinary meaning." Bethlehem Steel Co. v.
Turner Construction Co., 2 N.Y.2d 456, 459, 161 N.Y.S.2d 90, 93
(1957) .

Where the parties dispute the meaning of particular
contract clauses, the task of the court "is to determine whether
such clauses are ambiguous when 'read in the context of the entire
agreement, '" Sayers v. Rochester Telephone Corp. Supplemental
Management Pension Plan, 7 F.3d 1091, 1095 (2d Cir. 1993) (quoting
W.W.W. Associates, 77 N.Y.2d at 163, 565 N. Y. S.2d at 443) ; and
"where consideration of the contract as a whole will remove the
ambiguity created by a particular clause, there is no ambiguity, "
Readco, Inc. v. Marine Midland Bank, 81 F.3d at 300; see, e.g.,
Hudson-Port Ewen Associates, L.P. v. Kuo, 78 N.Y.2d 944, 945, 573
N. Y. S.2d 637, 637 (1991) . For example, in W.W.W. Associates,
which involved a dispute as to whether a sales contract provision
stating that either the purchaser or the seller could terminate
the contract at a certain time conferred that right only on the
purchaser, the New York Court of Appeals noted that the contract,
negotiated by sophisticated businessmen, contained other
provisions that expressly bestowed certain options on the
purchaser alone. The Court concluded that any ambiguity in the
disputed provision was resolved by consideration of the contract
in its entirety and recognition of the contrasting provisions

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adopted by the parties. See 77 N.Y.2d at 162-63, 565 N.Y.S.2d
2 at 443-44.

"As a general matter, the objective of contract
interpretation is to give effect to the expressed intentions of
the parties, " Hunt, 889 F.2d at 1277 (emphasis added) ; " [t]he best
evidence of what parties to a written agreement intend is what
they say in their writing," Greenfield, 98 N.Y.2d at 569, 750
N. Y. S.2d at 569 (internal quotation marks omitted) . "Thus, a
written agreement that is complete, clear and unambiguous on its
face must be [interpreted] according to the plain meaning of its
terms," id., "without the aid of extrinsic evidence, "
International Multifoods, 309 F.3d at 83 (internal quotation marks
omitted) ; see, e.g., Network Publishing Corp. v. Shapiro, 895 F.2d
97, 99 (2d Cir. 1990) (" [w]e must consider the words [of a
contract] themselves for they are always the most important
evidence of the parties' intention" (internal quotation marks
omitted) ) ; Bailey, 8 N.Y.3d at 528, 837 N.Y.S.2d at 603 (" [w] here
the language is clear, unequivocal and unambiguous, the contract
is to be interpreted by its own language" (internal quotation
marks omitted) ) .

The court should read the integrated contract "as a whole
to ensure that undue emphasis is not placed upon particular words
and phrases," Bailey, 8 N.Y.3d at 528, 837 N.Y.S.2d at 603, and
"to safeguard against adopting an interpretation that would render
any individual provision superfluous, " International Multifoods,
309 F.3d at 86 (internal quotation marks omitted). Further, the

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"courts may not by construction add or excise terms, nor distort
the meaning of those used and thereby make a new contract for the
parties under the guise of interpreting the writing. " Bailey,
8 N. Y.3d at 528, 837 N.Y.S.2d at 603 (internal quotation marks
omitted). " [I]f the agreement on its face is reasonably
susceptible of only one meaning, a court is not free to alter the
contract to reflect its personal notions of fairness and equity."
Greenfield, 98 N.Y.2d at 569-70, 750 N.Y.S.2d at 570; see, e.q.,

Breed v. Insurance Co. of North America, 46 N.Y.2d at 355, 413
N. Y. S. 2d at 355 ("court [s] may not make or vary the contract
to accomplish [their] notions of abstract justice or moral
obligation") .

We review de novo both the district court's determination
of whether a contract is ambiguous, see, e.g., Beth Medrash, 505
F.3d at 145; Seiden, 959 F.2d at 428; Walk-In Medical Centers,
Inc. v. Breuer Capital Corp., 818 F.2d at 263, and, as to an
unambiguous contract, the district court's interpretation of its
terms, see, e.g., Beth Medrash, 505 F.3d at 145; Seiden, 959 F.2d
at 429; Network Publishing Corp. v. Shapiro, 895 F.2d at 99.

We also review de novo the grant or the denial of a motion
for summary judgment, drawing all reasonable factual inferences in
favor of the party against which summary judgment is sought. See,
e.q., SR International Business Insurance Co. v. World Trade
Center Properties, LLC, 467 F.3d 107, 118 (2d Cir. 2006) ; British
International Insurance Co. v. Seguros La Republica, S.A., 342
F.3d at 81; International Multifoods, 309 F.3d at 82. When both

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sides have moved for summary judgment, "each party's motion must
be examined on its own merits, and in each case all reasonable
inferences must be drawn against the party whose motion is under
consideration." Morales v. Quintel Entertainment, Inc., 249 F.3d
115, 121 (2d Cir. 2001); see, e.g., Schwabenbauer v. Board of
Education, 667 F.2d 305, 314 (2d Cir. 1981) .

## B. The Provisions of the Maverick Indenture

Within the above legal framework, we see no error in the
district court's determinations that the PACC Provision of the
Indenture is unambiguous, and that, although the Tenaris "ordinary
shares" are, undisputedly, the same as common stock, Tenaris was
not a Public Acquirer within the meaning of the Indenture because
the Tenaris securities that are traded on the New York Stock
Exchange are not the Tenaris ordinary shares.

Preliminarily, we note that the Trustee's assertion that
"the District Court Found [] That Tenaris Has 'a Class of Common
Stock Traded on a United States National Securities Exchange'"
(Trustee's brief on appeal at 23) is squarely contradicted by the
district court's opinion itself. Although the quoted language
appears in passages of the court's opinion that describe the
Public Acquirer definition or the Trustee's contention, the
Trustee provides no citation for its assertion that the court so
" [f]ound." Indeed, the court's ruling stated quite plainly that
"the Court finds that Tenaris does not have a class of common
stock traded on a United States national securities exchange, and

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is thus not a Public Acquirer for purposes of the Indenture, "
District Court Opinion at 13 (emphasis added) .

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Our de novo review of the record persuades us that the
district court correctly determined that the phrase "common stock
traded on a United States national securities exchange" in the
Indenture's Public Acquirer definition, when read in the context
of the Indenture as a whole, unambiguously does not include
American Depositary Shares traded on such an exchange. The
Indenture's sole definition of "common stock" does not mention
ADSs. It states only that " 'Common Stock' means the common stock,
par value $.01 per share, of the Company [defined as Maverick] "
(Indenture § 1.01, at 3). The Indenture does not provide a
definition of common stock in general.

The Indenture does, however, contain direct and indirect
references to American Depositary Shares in other provisions. The
most pertinent provisions are those dealing with "Fundamental
Change [s] " prior to June 15, 2011, that would entitle a noteholder
to require Maverick to purchase his notes for cash (see id.
§ 4.01) . A "Fundamental Change" is defined to include
"consummation of any . . . merger of the Company pursuant to which
[its] Common Stock will be converted into cash, securities or
other property" (id. § 1.01, at 5), but to exclude a merger in
which "at least 90% of the consideration . . . consists of shares
of Capital Stock traded on a national securities exchange" (id. at
6 (emphasis added) ) . The Indenture's definition of Capital Stock

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expressly includes ADSs, and indeed refers to ADSs and ordinary
shares in the disjunctive:

"Capital Stock" of any Person means any and all
shares (including ordinary shares or American
depositary shares), interests, participations or
other equivalents however designated of corporate
stock or other equity participations . . . of such
Person

(Id. at 2 (emphases added) .)

The parties could easily have included in the Indenture a
definition of common stock in general with a parenthetical phrase
expressly including ADSs, such as the parenthetical in the
definition of "Capital Stock"; or they could have included such a
parenthetical after "common stock" in the "a class of common stock
traded on a United States national securities exchange" clause of
the Public Acquirer definition. They did neither. Given that the
parties defined more than 100 terms in the Indenture and made
explicit reference to ADSs in the "Capital Stock" definition that
informs the rights of noteholders to require Maverick to purchase
their notes, the Indenture as a whole does not suggest that the
undefined term "common stock," in the Public Acquirer definition
that informs noteholders' conversion rights, includes ADSs
implicitly.

The Trustee argues that the undefined and unadorned phrase
"common stock traded on a United States national securities
exchange" in the Public Acquirer definition should be deemed to
include American Depositary Shares that trade on such an exchange
because, as a matter of custom and usage, the trading of ADSs is a
form of trading common stock. But the evidence proffered by the

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Trustee falls well short of showing any "uniform and unvarying, "
"general and not personal" custom so well established that the
parties must be presumed to have meant the term "common stock" in
the Public Acquirer definition to include ADSs. Although the
Trustee, quoting SEC, American Depositary Receipts, Securities Act
Release No. 6894, Exchange Act Release No. 29226, 56 Fed. Reg.
24420 (May 30, 1991) ("SEC Release") -- which uses the term "ADR" to
"refer to either the physical certificate or the security
evidenced by such certificate, " id. at 22421 n.5 -- states that
" [t]he SEC considers ADRs to be 'the most common form in which
foreign securities trade in the United States'" (Trustee's brief
on appeal at 13), the SEC Release itself does not support the
proposition that a contractual reference to common stock must be
presumed to encompass a reference to ADSs. The SEC Release
states, inter alia, that a foreign security is owned "through" the
ownership of an ADS, SEC Release at 24428, and that "an ADS is the
security that represents an ownership interest in deposited
securities, " id. at 24421 n.5; but " [f]or purposes of the
Securities Act, ADRs and deposited securities are considered
separate securities, " id. at 24426, and in order for ADRs to be
publicly traded, "both the ADRs and the deposited securities must
be registered, " id. Indeed, the SEC notes that "listed ADRs are
not the securities of the foreign issuer but rather of the legal
entity created by the depositary," id. at 24431 (emphasis
added) .

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For example, the owner of an ADS may not have the same
voting rights as an owner of shares of the issuer, for, absent an
agreement between the depositary and the issuer imposing a
notification duty, see id. at 24422-23, " [t]he depositary is not
obligated to notify ADR holders about any meeting of holders of
the deposited securities or to distribute to ADR holders the proxy
information, annual reports or other materials it receives from
the issuer of the deposited securities, " id. at 24429. Similarly,
" [d]epositaries generally have complete discretion, " when they
receive non-cash distributions from the issuer, not to pass the
distribution immediately to the ADS holders but instead to "retain
for the benefit of ADR holders the securities or property
received." Id. Thus, ADSs may represent more than merely an
interest in the issuer's underlying securities. Indeed, although
the Trustee contends "that market participants have a uniform
understanding that ADSs are nothing more than" "a 'form' through
which" a foreign issuer's shares trade on the New York Stock
Exchange (Trustee's brief on appeal at 17), the SEC notes that, in
light of the fact that some depositaries are established through
agreement with the issuer of the deposited securities (i.e., are
"sponsored") and some are established independently of the issuer
(i.e., are "unsponsored"), it is possible that even with respect
to a particular underlying security, the ADSs themselves might not
be fungible. See SEC Release at 24431 ("In light of the sharp
disagreement among ADR market participants, comment is requested
regarding whether a sponsored facility and an unsponsored facility

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for the same deposited security would inherently result in
non-fungible securities . . . . ") .

Further the price at which an ADS is traded is not simply
a function of the value of the foreign issuer's underlying
security. "The ADR trading price is also a function of, " inter
alia, "foreign currency exchange rates," the risks of fluctuation
in those rates, the administrative costs of establishing,
maintaining, and operating the depositary, and "inefficient market
dissemination of news about the issuer of the deposited
securities." SEC Release at 24424. Thus, an ADS may sell "at a
premium to the deposited security" or "at a discount to the
deposited security." Id. In sum, the SEC's descriptions of ADSs
reveal that ADSs are not merely common stock in a different form.

The Trustee also cites what it refers to as "the SEC's own
clear recognition that 'Tenaris's stock trades on the New York
Stock Exchange'" (Trustee's brief on appeal at 18 (emphasis in
brief) ) ; but what is quoted is a complaint filed by the SEC in a
lawsuit alleging that various individual investors engaged in
insider trading. Industry custom and usage is not necessarily
shown by a litigation position taken by a government agency for
regulatory and law enforcement purposes in general, or by the
SEC's position that ADSs are securities within the scope of
statutory prohibitions against insider trading. And an allegation
by a regulatory agency in a lawsuit does not establish what the
parties meant by a particular term in their unrelated, previously

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negotiated contract.

The Trustee further attempts to show that custom and usage
supports its interpretation of "common stock" as including ADSs by
stating that

[i]n its SEC filings, Tenaris has repeatedly
acknowledged that its ordinary shares (which, as
noted above, Tenaris also admits are a class of
common stock, (A-1234 at (27) ) are "traded on the
NYSE." (A-1335 (2003 Form 20-F) ; A-1516 (2004 Form
20-F) ; A-614 (2005 Form 20-F) . ) Tenaris accordingly
acknowledges that the NYSE quotes for its ADSs
reflect "quoted prices for the Company's shares."
(Id. (emphasis added) .)

(Trustee's brief on appeal at 13.) We have several difficulties
with the suggestion that Tenaris's filings constitute proof that
references to common stock in the Indenture encompassed ADSs as a
matter of custom and usage "so far known to the parties, that it
must be supposed that their contract was made in reference to it, "
Belasco Theatre Corp. v. Jelin Productions, Inc., 270 A.D.
at 206, 59 N.Y.S.2d at 46 (internal quotation marks omitted) .
First, Tenaris -- which agreed to acquire Maverick in 2006 -- was not
a party to the Indenture agreement, and any suggestion that
Maverick, the Trustee, or the noteholders had Tenaris or its
filings in mind when the Indenture contract was entered into in
2004 is unsupported and seems fanciful. Second, so-called
admissions by a company in its SEC filings as to the trading and
market prices of its own securities are hardly "general and not
personal, " id. Such individual statements cannot be deemed to
establish an industry custom that other persons must be presumed
to adopt in their contracts.

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Further, even if an individual company's SEC filings could
establish custom and usage, the sentence fragments quoted by the
Trustee from the above filings of Tenaris do not establish that
the Tenaris ordinary shares themselves are traded on a United
States exchange or even that Tenaris so regarded them. Rather,
the first page of each of the cited Tenaris reports states that

[o]rdinary shares of Tenaris S.A. are not listed for
trading but only in connection with the registration
of American Depositary Shares which are evidenced by
American Depositary Receipts.

(Tenaris 2003, 2004, and 2005 SEC Form 20-F reports, first page
n .* (emphasis added) . )

Finally, although the Trustee also argues that "common
stock" in the PACC Provision should be interpreted to include ADSs
because the contrary interpretation is commercially unreasonable,
as "there was never any intention to exclude foreign issuers as
'Public Acquirers'" (Trustee's brief on appeal at 24; see also id.
at 18, 35), this argument poses a false dichotomy between foreign
and domestic companies. Foreign companies may trade their shares
on a United States national stock exchange directly rather than
through ADSs, and hundreds do. See, e.q., SEC Release at 24422 &
n.15. Indeed, the Trustee concedes that "the Public Acquirer
change of control provision includes those foreign issuers whose
ordinary shares are directly traded on [a] United States exchange"
(Trustee's brief on appeal at 37). Given that concession, the
Trustee urges us to conclude that the parties to the Indenture
did not "intend [] to distinguish between different categories of
foreign issuers for the purposes of the Public Acquirer definition

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depending solely on the decision an issuer made about" whether to
list its common stock or to list ADSs, arguing that such a
distinction would have served "no possible commercial purpose"
4 (Trustee's Brief on Appeal at 38). Any suggestion that the
Indenture should be read to accomplish what the Trustee views as
"commercial [ly] " "reasonable" (id. at 18) essentially asks us to
rewrite the Indenture's Public Acquirer definition. Instead, we
are required to give effect to the intentions expressed in the
agreement's own language. Given the pains taken by the parties to
have the Indenture set out detailed definitions of numerous terms
and to have its definition of Capital Stock make explicit
reference to ADSs -- a reference we are not entitled to regard as
superfluous -- we conclude that the district court properly declined
to read ADSs into the undefined term "common stock, " as used in
the clause "common stock traded on a United States national
securities exchange" without elaboration.

In sum, the district court did not err in dismissing the
Trustee's contract claims. And as the Trustee's challenge to the
dismissal of its contract claims fails, so does its challenge to
the dismissal of its claim for tortious interference with
contract.

# CONCLUSION

We have considered all of the Trustee's arguments on this
appeal and have found them to be without merit. The judgment of
the district court dismissing the complaint is affirmed.

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Law Debenture Trust Co. of New York v. Maverick Tube Corp.

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