1023-00002 · Ironside Capital Management LP · Pleadings

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Filed Subject to the Court's Permission Pursuant to Commercial Division Rule 2(b)

SUPREME COURT OF THE STATE OF NEW YORK COMMERCIAL DIVISION, NEW YORK COUNTY

PLAINTIFF'S SUR-REPLY LETTER BRIEF IN FURTHER OPPOSITION TO DEFENDANT'S MOTION TO DISMISS

CALDERWOOD & HARKNESS LLP 51 West 52nd Street, 40th Floor New York, New York 10019 Tel: (212) 558-4000

Fax: (212) 558-3588

April 9, 2025

Hon. Richard Torrance, J.S.C. Supreme Court of the State of New York Commercial Division, New York County 60 Centre Street, Room 238 New York, New York 10007

Re: Ironside Capital Management LP v. Vantor Holdings Corp., Index No. 650312/2025 — Plaintiff's Sur-Reply Letter Brief in Further Opposition to Defendant's Motion to Dismiss

Dear Justice Torrance:

We respectfully write on behalf of Plaintiff Ironside Capital Management LP ("Ironside" or "Plaintiff"), and respectfully request the Court's permission to submit this sur-reply letter brief in response to new arguments raised for the first time in the reply brief dated April 4, 2025 (the "Reply"), filed by Defendant Vantor Holdings Corp. ("Vantor" or "Defendant") through its counsel, Whitfield, Dane & Corcoran LLP (Gregory Dane, lead counsel). Specifically, Vantor's Reply introduces a previously unraised argument that the Martin Act, N.Y. Gen. Bus. Law Art. 23-A, §§ 352–359-h, preempts Ironside's common-law fraud and fraudulent concealment claims — the First and Second Causes of Action, respectively, of the Verified Complaint filed January 21, 2025 (the "Complaint"). This argument appeared nowhere in Vantor's original Motion to Dismiss filed February 28, 2025, nor in any prior correspondence or submission to this Court, and Ironside has had no opportunity to respond to it through the ordinary briefing schedule.

Oral argument on Vantor's Motion to Dismiss is currently scheduled for April 14, 2025. Ironside submits this letter brief to ensure that the Court has the full benefit of Ironside's position on this newly injected issue in advance of that hearing, and to avoid any prejudice that would result from permitting a significant legal argument to go unanswered.

By way of procedural background: Vantor filed its Motion to Dismiss the Complaint on February 28, 2025, pursuant to CPLR § 3211(a)(1) and (a)(7). Ironside filed its Memorandum of Law in Opposition on March 21, 2025, accompanied by the Affirmation of Yuki Nakamura, with fourteen (14) supporting exhibits. Vantor then filed its Reply on April 4, 2025. It was only in the Reply — for the first time in this litigation — that Vantor advanced the contention that the Martin Act preempts Ironside's common-law fraud and fraudulent concealment claims. This argument was not raised in Vantor's initial moving papers, was not foreshadowed in Vantor's pre-motion conference letter, and was not the subject of any prior correspondence with the Court or with Ironside's counsel. Ironside was therefore deprived of the ability to address this argument in its opposition briefing.

For the reasons set forth below, Vantor's Martin Act preemption argument is both procedurally improper and substantively meritless, and it provides no basis for dismissal of any of Ironside's claims.

I. Vantor's Martin Act Argument Was Improperly Raised for the First Time in Reply and Should Be Disregarded

As a threshold matter, the Court should decline to consider Vantor's Martin Act preemption argument because it was raised for the first time in Vantor's Reply and, consequently, is not properly before the Court.

Vantor's Motion to Dismiss, filed February 28, 2025, pursuant to CPLR § 3211(a)(1) and (a)(7), advanced five specific grounds for dismissal:

(i) Ironside's fraud claims are duplicative of its contract claims and fail to satisfy the heightened pleading requirements of CPLR § 3016(b);

(ii) The breach of fiduciary duty claim fails because Vantor, as a fund administrator and service provider, owed no fiduciary duties to Ironside;

(iii) The liability cap set forth in Section 9.3 of the Master Fund Administration Agreement dated June 15, 2017 (the "FAA," Ref. No. VHC-ICM-2017-0615) limits Ironside's recoverable damages to $2.98 million;

(iv) Ironside's unjust enrichment claim is precluded by the existence of an express contract governing the same subject matter; and

(v) The economic loss doctrine bars Ironside's tort claims where the alleged losses are purely economic and arise from a contractual relationship.

Not one of these five arguments invoked the Martin Act or suggested that the Martin Act has any preemptive effect on Ironside's claims. The Martin Act was not mentioned in Vantor's Memorandum of Law in Support of the Motion to Dismiss. It was not referenced in Vantor's pre-motion conference letter. It was not raised at the pre-motion conference before this Court. In short, Vantor's counsel made a strategic decision to omit this argument from their moving papers, and they should not be permitted to inject it into the case through a reply brief that Ironside has no procedural right to answer (absent the Court's permission to file this sur-reply).

It is well-established law in this Department that arguments raised for the first time in reply papers are not properly before the court and should not be considered. The Appellate Division, First Department, has repeatedly held that "[a]rguments advanced for the first time in reply papers are entitled to no consideration" because "the opposing party has no opportunity to respond." Lumbermens Mut. Cas. Co. v. Morse Shoe Co., 218 A.D.2d 624, 626 (1st Dep't 1995); see also Ritt v. Lenox Hill Hosp., 182 A.D.2d 560, 562 (1st Dep't 1992) ("Arguments raised for the first time in a reply brief need not be considered."); Azzopardi v. Am. Blower Corp., 192 A.D.2d 453, 454 (1st Dep't 1993) (declining to consider arguments "improperly raised for the first time in reply"). This principle applies with equal force in the Commercial Division, where orderly briefing and the opportunity to be heard on dispositive motions are of paramount importance. See Commercial Division Rule 2(b) (governing procedures for letter briefing and sur-reply requests); see also Mandarin Trading Ltd. v. Wildenstein, 65 A.D.3d 448, 454 (1st Dep't 2009) (affirming that movant may not "raise new issues or theories in reply" on a motion to dismiss).

The rationale for this rule is self-evident: permitting new arguments in reply deprives the opposing party of the opportunity to respond in the ordinary course of briefing, circumvents the motion practice rules that ensure both sides are heard, and risks a decision on issues that have not been fully vetted by the parties. These concerns are especially acute here, where the new argument involves a complex and evolving area of New York law — Martin Act preemption — that warrants full adversarial briefing rather than summary treatment in a reply letter.

Accordingly, Ironside respectfully requests that the Court decline to consider Vantor's Martin Act preemption argument on procedural grounds alone.

Nevertheless, in the event the Court determines that it will consider Vantor's argument notwithstanding its untimely presentation, Ironside addresses it on the merits below and demonstrates that it is entirely without merit.

II. The Martin Act Does Not Preempt Ironside's Common-Law Fraud Claims

A. Overview of the Martin Act Framework

The Martin Act, codified at N.Y. General Business Law Article 23-A, §§ 352–359-h, is a powerful regulatory statute that grants the New York Attorney General broad enforcement authority to investigate and combat fraudulent practices in connection with the issuance, exchange, purchase, sale, promotion, negotiation, advertisement, investment advice, and distribution of securities and commodities. Since its enactment in 1921, the Martin Act has served as a cornerstone of New York's securities-regulation framework, providing the Attorney General with investigative tools — including the power to issue subpoenas and compel testimony — and enforcement mechanisms that are considerably broader than those available under common law or federal securities law.

Critically, and central to the question before this Court, the Martin Act does not require proof of scienter. The Attorney General may pursue enforcement actions based on representations or omissions that are merely misleading, deceptive, or based on inadequate information, without demonstrating that the defendant acted with fraudulent intent. See People v. Federated Radio Corp., 244 N.Y. 33, 38–39 (1926); State v. Rachmani Corp., 71 N.Y.2d 718, 726 (1988). This reduced scienter standard distinguishes Martin Act claims from traditional common-law fraud, which requires proof of intentional misrepresentation or knowledge of falsity.

Equally important, the Martin Act does not create a private right of action. Only the New York Attorney General is authorized to bring claims under the statute. See CPC Int'l Inc. v. Westmark Holdings., 70 N.Y.2d 268, 276 (1987). Private plaintiffs who wish to bring fraud claims in the securities context must rely upon common-law causes of action and satisfy their more demanding elements — including, most relevantly, scienter and justifiable reliance.

The preemption question that Vantor now raises is whether, notwithstanding the absence of a private right of action, the Martin Act displaces common-law fraud claims brought by private plaintiffs when those claims touch upon subject matter that could also be addressed by the Attorney General under the Martin Act. As discussed below, the New York Court of Appeals has definitively answered this question: it does not.

B. The Governing Standard: The Post-*Assured Guaranty* Landscape

The development of the Martin Act preemption doctrine has undergone a significant evolution in New York jurisprudence, culminating in a series of Court of Appeals decisions that have clarified and narrowed the scope of any preemptive effect the statute may have on common-law claims.

The question of preemption first received sustained judicial attention in Kerusa Co. LLC v. W10Z/515 Real Estate Ltd. Partnership, 12 N.Y.3d 236 (2009), in which the Court of Appeals held that the plaintiff's common-law fraud claims were not preempted by the Martin Act where the plaintiff alleged the traditional elements of fraud, including scienter. The Court reasoned that the Martin Act was designed to supplement, not supplant, existing common-law remedies. Id. at 244. The Court emphasized that the common law of fraud long predated the Martin Act and that the Legislature, in enacting the statute, did not indicate an intention to eliminate private fraud claims that satisfy the traditional elements.

Critically, the Court of Appeals reinforced this holding in Assured Guaranty (U.K.) Ltd. v. Thackeray Asset Management, 18 N.Y.3d 341 (2011), a decision that directly governs the question presented here. In Assured Guaranty, the Court of Appeals held that the Martin Act does not entirely preempt common-law causes of action. Id. at 353. The Court explained that where a plaintiff "brings a common-law claim — based on the same facts that could support a Martin Act case — and that claim has traditionally been cognizable at common law, ... a private litigant may maintain the action." Id. The Court reasoned that holding otherwise would create an "anomalous" gap in the law: sophisticated parties who could demonstrate all of the traditional elements of common-law fraud, including scienter and reliance, would be left without any remedy simply because their claims happened to involve securities, even though the Martin Act itself provides them with no private right of action. Id. at 352–53.

The Appellate Division, First Department, has consistently applied the Assured Guaranty framework in subsequent decisions. See, e.g., Basis Yield Alpha Fund (Master) v. Dunmore Group, 115 A.D.3d 128, 135–37 (1st Dep't 2014) (holding that plaintiff's common-law fraud claims were not preempted where complaint adequately alleged scienter and justifiable reliance); Caboara v. Babylon Cove Dev., LLC, 54 A.D.3d 79, 84–85 (2d Dep't 2008) (recognizing that common-law fraud claims survive Martin Act preemption where traditional elements are alleged). The governing principle is clear: a private plaintiff may maintain common-law fraud and fraudulent concealment claims, even in a securities-adjacent context, provided the plaintiff alleges and can establish the traditional elements of those claims — elements that go beyond what the Martin Act itself requires.

The cases in which Martin Act preemption has been applied are a narrow subset of the doctrine and are readily distinguishable from this action. In those cases, plaintiffs sought to impose liability based on disclosure standards drawn from or mirroring the Martin Act's regulatory prohibitions, without satisfying the more stringent elements of common-law fraud — particularly scienter and justifiable reliance. See, e.g., Caboara, 54 A.D.3d at 84 (preemption found where claim essentially "enforce[d] the Martin Act by private means" without independent common-law basis). The concern in such cases was that private litigants would effectively end-run the Attorney General's exclusive enforcement authority by bootstrapping the Martin Act's lower-scienter standard into common-law claims. That concern is wholly absent here, for the reasons explained below.

C. Ironside's Claims Are Classic Common-Law Fraud Claims, Not Martin Act Surrogates

Ironside's First Cause of Action (fraud) and Second Cause of Action (fraudulent concealment) are paradigmatic common-law claims. They are grounded firmly in the traditional elements of fraud that have been recognized under New York law for well over a century: (1) a material misrepresentation of fact; (2) made with knowledge of its falsity (scienter); (3) for the purpose of inducing reliance; (4) justifiable reliance by the plaintiff; and (5) resulting damages. See Eurycleia Partners, LP v. Padilla & Severin LLP, 12 N.Y.3d 553, 559 (2009); Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 421 (1996).

The Verified Complaint, which spans eighty-seven (87) detailed paragraphs and was filed on January 21, 2025, alleges each of these elements with the particularity required by CPLR § 3016(b). The allegations, which must be accepted as true for purposes of this motion, see Leon v. Martinez, 84 N.Y.2d 83, 87–88 (1994), establish the following:

Material Misrepresentation. The Complaint alleges that Vantor's valuation team, supervised by Nathan Orris (Senior Vice President, Valuation Services) and Deepa Rajaram (Vice President, Client Valuation Operations), systematically employed stale broker quotes — ranging from six (6) to twelve (12) months old — to value Ironside's illiquid credit and structured-product positions, without disclosing to Ironside the staleness of those quotes or their deviation from current market conditions. In addition, Vantor applied internally generated "model adjustments" to the valuations that inflated marks by an average of 14.3% above observable market inputs, without disclosing the existence or magnitude of these adjustments to Ironside. Vantor further failed to apply the contractually required waterfall valuation procedures specified in FAA § 4.2, which mandated a hierarchical approach beginning with independent third-party pricing sources and progressing to broker quotes and, only as a last resort, to internally modeled values — with each departure from higher-level sources to be documented and disclosed. Vantor's monthly and quarterly NAV reports, delivered to Ironside as required under FAA § 3.1, represented the reported valuations as having been derived in accordance with these contractual procedures when, in fact, they had not been.

Scienter. The Complaint alleges scienter based on Vantor's internal communications, which are referenced in the Complaint and were obtained through pre-litigation document preservation demands. These internal communications demonstrate that Vantor's personnel, including Mr. Orris and Ms. Rajaram, were actually aware that the valuations being reported to Ironside were inflated and did not conform to the agreed-upon methodology. For example, the Complaint alleges (at ¶¶ 42–48) that internal emails between Mr. Orris and members of the Vantor valuation team explicitly discussed the fact that certain CLO tranche marks were "significantly above" observable market levels, that the continued use of stale broker quotes was "not defensible," and that the model adjustments were being applied to "bridge the gap" between Vantor's internally preferred marks and what independent sources would support. These are not allegations of mere negligence or inadvertence; they are allegations of deliberate, knowing misrepresentation.

Justifiable Reliance. The Complaint alleges that Ironside retained Vantor precisely because it required an independent, third-party valuation agent whose marks could be relied upon for critical fund operations, including net asset value reporting to investors, capital account calculations, performance fee computations, and regulatory filings with the Securities and Exchange Commission (Form PF and Form ADV). Ironside relied on Vantor's valuations as accurate and compliant with the agreed methodology, and had no reason to suspect — until a routine internal audit in October 2023 revealed anomalies — that Vantor's marks were systematically inflated.

Damages. The misvaluation spanned eleven (11) quarters, from the first quarter of 2021 (Q1 2021) through the third quarter of 2023 (Q3 2023), and affected a total of forty-seven (47) illiquid credit and structured-product positions held across three feeder funds: Ironside Credit Opportunities Fund LP ("Fund I"), Ironside Structured Alpha Fund LP ("Fund II"), and Ironside Special Situations Fund LP ("Fund III"). The aggregate overvaluation is alleged to be approximately $287 million, broken down as follows: $156.4 million attributable to Fund I, $88.7 million attributable to Fund II, and $41.9 million attributable to Fund III. These inflated marks resulted in, among other things, overstated performance fees charged to investors, inaccurate capital accounts, misleading NAV reporting, and regulatory filings that did not accurately reflect the funds' financial condition.

Nothing about these claims depends on, derives from, or seeks to enforce any regulatory prohibition unique to the Martin Act. Ironside does not invoke the Martin Act's disclosure standards or its no-scienter liability framework. To the contrary, Ironside alleges — and is prepared to prove — each of the traditional common-law elements that the Martin Act does not require: intentional fraud, knowing concealment, actual knowledge of falsity, and justifiable reliance. These are precisely the kinds of common-law claims that the Court of Appeals in Assured Guaranty held survive any preemptive effect of the Martin Act.

D. This Dispute Does Not Arise in a Securities-Transaction Context

Even apart from the well-established principle that common-law fraud claims satisfying the traditional elements are not preempted, Vantor's Martin Act preemption argument fails for a more fundamental reason: this dispute does not arise in a securities-transaction context, and the Martin Act is therefore inapplicable by its own terms.

The Martin Act's scope, as defined by the statute itself, covers fraudulent practices in connection with "the issuance, exchange, purchase, sale, promotion, negotiation, advertisement, investment advice or distribution within or from this state of any stocks, bonds, notes, evidences of interest or indebtedness or other securities." N.Y. Gen. Bus. Law § 352-c(1)(a). The statute is directed at conduct occurring in connection with securities transactions — the offering, sale, and distribution of securities to investors and market participants.

The relationship between Ironside and Vantor is not a securities-transaction relationship. It is a contractual fund administration relationship, governed entirely by the FAA. Under the FAA, Vantor was engaged to provide a suite of back-office services: NAV calculation, investor accounting, regulatory reporting support, and independent pricing and valuation services. Vantor was compensated through a fixed quarterly administration fee, not through commissions, spreads, or any transaction-based compensation. Vantor did not sell, issue, promote, distribute, underwrite, or offer any securities to Ironside. Vantor did not provide investment advice to Ironside. Vantor was not acting as a broker-dealer, an investment adviser, an issuer, an underwriter, or a seller of securities. Vantor is, and at all relevant times was, a fund administrator — a back-office service provider whose role was to accurately calculate and report portfolio valuations in accordance with contractually specified procedures.

The alleged fraud concerns Vantor's performance (or, more precisely, its deliberate non-performance) of its contractual valuation obligations under FAA §§ 3.1 and 4.2. It concerns the accuracy and integrity of NAV reports delivered by a service provider to its client under a service agreement. It does not concern any transaction in securities. No security was bought, sold, offered, exchanged, promoted, or distributed in connection with the alleged fraud. Ironside is not suing Vantor because Vantor induced Ironside to purchase or sell a security; Ironside is suing Vantor because Vantor fraudulently performed its contractual obligation to value securities that Ironside already held in its fund portfolios.

The distinction is dispositive. Every reported decision in which Martin Act preemption has been applied involved claims arising directly from the purchase, sale, or offering of securities — that is, claims by investors or counterparties against securities sellers, promoters, underwriters, or investment advisers in connection with a securities transaction. See, e.g., Assured Guaranty, 18 N.Y.3d at 349–50 (claims arising from investment management of securities portfolio); Kerusa, 12 N.Y.3d at 242 (claims arising from offering of interests in real estate securities); CPC Int'l, 70 N.Y.2d at 275 (claims arising from securities tender offer). No court has ever applied Martin Act preemption to a dispute between a fund and its fund administrator over the accuracy of back-office valuation services provided under a service agreement. Vantor's attempt to shoehorn a fund-administration dispute into the Martin Act framework is unsupported by any authority cited in its Reply and contradicts the plain statutory text of § 352-c.

E. Vantor's Cited Authorities Are Distinguishable

To the extent Vantor's Reply cites authorities in support of its Martin Act preemption argument, those authorities are distinguishable on their facts and do not support the proposition for which Vantor invokes them.

The cases in which New York courts have applied Martin Act preemption share common features that are entirely absent here. In those cases: (1) the defendant was a market participant — typically a broker-dealer, underwriter, issuer, or investment adviser — engaged in the offer, sale, or promotion of securities; (2) the plaintiff's claims arose directly from a securities transaction — i.e., the plaintiff alleged that the defendant induced the plaintiff to purchase, sell, or retain securities through misrepresentations or omissions; and (3) the plaintiff's theory of liability depended on disclosure or conduct standards that derived from or paralleled the Martin Act's regulatory prohibitions, rather than from the traditional common-law elements of fraud. Under those circumstances, courts have concluded that permitting the private claim would effectively allow the plaintiff to enforce the Martin Act indirectly, circumventing the Legislature's decision to vest exclusive enforcement authority in the Attorney General.

None of those features is present here:

First, Vantor is not a securities market participant. It is a fund administrator — a back-office service provider that provides NAV calculation, accounting, and valuation services. It did not sell, promote, issue, or distribute any securities.

Second, Ironside's claims do not arise from any securities transaction. They arise from Vantor's fraudulent performance of its contractual valuation obligations under a service agreement. No security was bought, sold, offered, or exchanged in connection with the alleged misconduct.

Third, Ironside's theory of liability does not depend on any disclosure standard unique to the Martin Act. Ironside's fraud claims are grounded in the centuries-old common-law elements of intentional misrepresentation, scienter, justifiable reliance, and damages. Ironside does not need the Martin Act — and does not invoke it — to state a claim.

The policy rationale that has animated judicial application of Martin Act preemption is simply inapplicable to this case. That rationale, as the Court of Appeals has explained, is the concern that private litigants would seek to circumvent the Attorney General's exclusive enforcement authority under the Martin Act by bringing claims based on the Act's broader, no-scienter standard while purporting to label them as common-law fraud claims. See Assured Guaranty, 18 N.Y.3d at 352. Here, Ironside has affirmatively alleged — and the Complaint pleads with particularity — that Vantor acted with actual knowledge and fraudulent intent. Ironside is not attempting to lower the bar for fraud liability; it is clearing the higher bar that the common law demands. There is no risk whatsoever that Ironside's claims will undermine the Attorney General's enforcement authority or allow a private plaintiff to enforce the Martin Act through the back door.

Vantor is, in essence, asking this Court to extend Martin Act preemption far beyond any boundary recognized by the Court of Appeals or the Appellate Division — to a factual context in which the Martin Act has no application and in which its preemptive rationale has no force. The Court should decline the invitation.

III. Even if the Martin Act Had Any Relevance, It Would Not Bar All of Ironside's Tort Claims

Even assuming, arguendo, that the Martin Act had some bearing on this dispute — which it does not — its preemptive effect, even under the broadest reading adopted by any New York court, would not reach the entirety of Ironside's tort claims.

No court has held that the Martin Act preempts claims for negligent misrepresentation arising from a contractual relationship in which the defendant owed a professional duty of care to the plaintiff. Ironside's Third Cause of Action sounds in negligent misrepresentation and is grounded in the "special relationship" between Ironside and Vantor — a relationship in which Vantor undertook a professional obligation to provide accurate and independent valuations, possessed superior knowledge and expertise in portfolio valuation, and knew that Ironside would rely upon those valuations for critical operational, financial, and regulatory purposes, including NAV reporting to investors, capital account calculations, performance fee computations, and filings with the Securities and Exchange Commission (Form PF and Form ADV). The elements of negligent misrepresentation — (1) an awareness by the defendant that the information is to be used for a particular purpose; (2) reliance by a known party on the information in furtherance of that purpose; and (3) some conduct by the defendant linking it to the relying party and evincing its understanding of that reliance, see Kimmell v. Schaefer, 89 N.Y.2d 257, 263 (1996) — are fully alleged in the Complaint and are wholly independent of the Martin Act.

Furthermore, Ironside's remaining causes of action are entirely unaffected by any Martin Act analysis. The Fourth Cause of Action for breach of contract is a straightforward claim that Vantor breached the express terms of the FAA, including §§ 3.1 and 4.2, by failing to perform its valuation obligations in accordance with the agreed-upon methodology. The Fifth Cause of Action for breach of fiduciary duty is predicated on Vantor's assumption of fiduciary obligations through its role as a trusted valuation agent upon whom Ironside and its investors depended. The Sixth Cause of Action for aiding and abetting fraud alleges that certain Vantor personnel knowingly assisted in the perpetration of the valuation fraud. The Seventh Cause of Action for unjust enrichment alleges that Vantor was unjustly enriched by continuing to collect administration fees while failing to perform its contractual obligations. None of these claims implicates the Martin Act in any respect, and Vantor has not argued otherwise.

Thus, even if the Court were to conclude — contrary to the weight of authority and the facts alleged — that the Martin Act somehow preempted Ironside's First and Second Causes of Action, the balance of the Complaint would remain fully intact, and Vantor's Motion to Dismiss would fail with respect to the Third through Seventh Causes of Action.

IV. Conclusion and Request for Relief

For the foregoing reasons, Vantor's Martin Act preemption argument is both procedurally improper and substantively meritless, and it provides no basis for dismissal of any of Ironside's claims.

Procedurally, the argument was raised for the first time in Vantor's April 4, 2025 Reply, having appeared nowhere in Vantor's original Motion to Dismiss filed February 28, 2025, and should be disregarded as improperly raised new matter in reply. See Lumbermens Mut. Cas. Co., 218 A.D.2d at 626; Ritt, 182 A.D.2d at 562.

Substantively, the Martin Act does not preempt Ironside's common-law fraud and fraudulent concealment claims because:

(a) This dispute does not arise from a securities transaction; it arises from a fund administrator's fraudulent performance of its contractual valuation obligations under a service agreement;

(b) Vantor is a fund administrator and back-office service provider, not a securities market participant, and the Martin Act's regulatory framework is directed at conduct in connection with the offer, sale, and distribution of securities;

(c) Ironside's fraud claims are grounded in the traditional common-law elements of intentional misrepresentation, scienter, justifiable reliance, and damages — elements that go beyond what the Martin Act requires and that the Court of Appeals has held survive any preemptive effect of the statute; and

(d) The policy rationale for Martin Act preemption — preventing private litigants from circumventing the Attorney General's exclusive enforcement authority by pursuing claims based on the Martin Act's no-scienter standard — is wholly inapplicable where, as here, the plaintiff has affirmatively alleged intentional fraud with particularized scienter.

Ironside respectfully requests that the Court deny Vantor's Motion to Dismiss in its entirety, consistent with the arguments set forth in Ironside's Memorandum of Law in Opposition filed March 21, 2025, the Affirmation of Yuki Nakamura filed March 21, 2025 (with fourteen (14) exhibits), and the arguments set forth in this sur-reply letter brief.

Ironside further respectfully requests that oral argument proceed as scheduled on April 14, 2025, and that Ironside be afforded the opportunity to address the Martin Act preemption issue at argument should the Court deem the issue properly before it.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Yuki Nakamura Samuel Eklund, Responsible Partner Carlos Espinoza, Working Associate

51 West 52nd Street, 40th Floor New York, New York 10019 Tel: (212) 558-4000

Fax: (212) 558-3588

Attorneys for Plaintiff Ironside Capital Management LP, on behalf of itself and Ironside Credit Opportunities Fund LP, Ironside Structured Alpha Fund LP, and Ironside Special Situations Fund LP

CERTIFICATE OF SERVICE

I, Yuki Nakamura, hereby certify that on April 9, 2025, a true and correct copy of the foregoing Plaintiff's Sur-Reply Letter Brief in Further Opposition to Defendant's Motion to Dismiss was filed and served via the New York State Courts Electronic Filing system (NYSCEF), and a courtesy copy was served by electronic mail upon:

Gregory Dane, Esq. Allison Breck, Esq. Jordan Mayhew, Esq. WHITFIELD, DANE & CORCORAN LLP 200 South Biscayne Boulevard, Suite 3600 Miami, Florida 33131 Counsel for Defendant Vantor Holdings Corp.

Dated: April 9, 2025 New York, New York

________________________________________

Yuki Nakamura CALDERWOOD & HARKNESS LLP 51 West 52nd Street, 40th Floor New York, New York 10019

IRONSIDE CAPITAL MANAGEMENT LP, on behalf of itself and IRONSIDE CREDIT OPPORTUNITIES FUND LP, IRONSIDE STRUCTURED ALPHA FUND LP, and IRONSIDE SPECIAL SITUATIONS FUND LP,

Index No. 650312/2025

Plaintiff,

Assigned Justice:

-against-

VANTOR HOLDINGS CORP.,

Defendant.

Filed Subject to the Court's Permission Pursuant to Commercial Division Rule 2(b)
SUPREME COURT OF THE STATE OF NEW YORK COMMERCIAL DIVISION, NEW YORK COUNTY
PLAINTIFF'S SUR-REPLY LETTER BRIEF IN FURTHER OPPOSITION TO DEFENDANT'S MOTION TO DISMISS
CALDERWOOD & HARKNESS LLP 51 West 52nd Street, 40th Floor New York, New York 10019 Tel: (212) 558-4000
Fax: (212) 558-3588
April 9, 2025
Hon. Richard Torrance, J.S.C. Supreme Court of the State of New York Commercial Division, New York County 60 Centre Street, Room 238 New York, New York 10007
Re: Ironside Capital Management LP v. Vantor Holdings Corp., Index No. 650312/2025 — Plaintiff's Sur-Reply Letter Brief in Further Opposition to Defendant's Motion to Dismiss
Dear Justice Torrance:
We respectfully write on behalf of Plaintiff Ironside Capital Management LP ("Ironside" or "Plaintiff"), and respectfully request the Court's permission to submit this sur-reply letter brief in response to new arguments raised for the first time in the reply brief dated April 4, 2025 (the "Reply"), filed by Defendant Vantor Holdings Corp. ("Vantor" or "Defendant") through its counsel, Whitfield, Dane & Corcoran LLP (Gregory Dane, lead counsel). Specifically, Vantor's Reply introduces a previously unraised argument that the Martin Act, N.Y. Gen. Bus. Law Art. 23-A, §§ 352–359-h, preempts Ironside's common-law fraud and fraudulent concealment claims — the First and Second Causes of Action, respectively, of the Verified Complaint filed January 21, 2025 (the "Complaint"). This argument appeared nowhere in Vantor's original Motion to Dismiss filed February 28, 2025, nor in any prior correspondence or submission to this Court, and Ironside has had no opportunity to respond to it through the ordinary briefing schedule.
Oral argument on Vantor's Motion to Dismiss is currently scheduled for April 14, 2025. Ironside submits this letter brief to ensure that the Court has the full benefit of Ironside's position on this newly injected issue in advance of that hearing, and to avoid any prejudice that would result from permitting a significant legal argument to go unanswered.
By way of procedural background: Vantor filed its Motion to Dismiss the Complaint on February 28, 2025, pursuant to CPLR § 3211(a)(1) and (a)(7). Ironside filed its Memorandum of Law in Opposition on March 21, 2025, accompanied by the Affirmation of Yuki Nakamura, with fourteen (14) supporting exhibits. Vantor then filed its Reply on April 4, 2025. It was only in the Reply — for the first time in this litigation — that Vantor advanced the contention that the Martin Act preempts Ironside's common-law fraud and fraudulent concealment claims. This argument was not raised in Vantor's initial moving papers, was not foreshadowed in Vantor's pre-motion conference letter, and was not the subject of any prior correspondence with the Court or with Ironside's counsel. Ironside was therefore deprived of the ability to address this argument in its opposition briefing.
For the reasons set forth below, Vantor's Martin Act preemption argument is both procedurally improper and substantively meritless, and it provides no basis for dismissal of any of Ironside's claims.
I. Vantor's Martin Act Argument Was Improperly Raised for the First Time in Reply and Should Be Disregarded
As a threshold matter, the Court should decline to consider Vantor's Martin Act preemption argument because it was raised for the first time in Vantor's Reply and, consequently, is not properly before the Court.
Vantor's Motion to Dismiss, filed February 28, 2025, pursuant to CPLR § 3211(a)(1) and (a)(7), advanced five specific grounds for dismissal:
(i) Ironside's fraud claims are duplicative of its contract claims and fail to satisfy the heightened pleading requirements of CPLR § 3016(b);
(ii) The breach of fiduciary duty claim fails because Vantor, as a fund administrator and service provider, owed no fiduciary duties to Ironside;
(iii) The liability cap set forth in Section 9.3 of the Master Fund Administration Agreement dated June 15, 2017 (the "FAA," Ref. No. VHC-ICM-2017-0615) limits Ironside's recoverable damages to $2.98 million;
(iv) Ironside's unjust enrichment claim is precluded by the existence of an express contract governing the same subject matter; and
(v) The economic loss doctrine bars Ironside's tort claims where the alleged losses are purely economic and arise from a contractual relationship.
Not one of these five arguments invoked the Martin Act or suggested that the Martin Act has any preemptive effect on Ironside's claims. The Martin Act was not mentioned in Vantor's Memorandum of Law in Support of the Motion to Dismiss. It was not referenced in Vantor's pre-motion conference letter. It was not raised at the pre-motion conference before this Court. In short, Vantor's counsel made a strategic decision to omit this argument from their moving papers, and they should not be permitted to inject it into the case through a reply brief that Ironside has no procedural right to answer (absent the Court's permission to file this sur-reply).
It is well-established law in this Department that arguments raised for the first time in reply papers are not properly before the court and should not be considered. The Appellate Division, First Department, has repeatedly held that "[a]rguments advanced for the first time in reply papers are entitled to no consideration" because "the opposing party has no opportunity to respond." Lumbermens Mut. Cas. Co. v. Morse Shoe Co., 218 A.D.2d 624, 626 (1st Dep't 1995); see also Ritt v. Lenox Hill Hosp., 182 A.D.2d 560, 562 (1st Dep't 1992) ("Arguments raised for the first time in a reply brief need not be considered."); Azzopardi v. Am. Blower Corp., 192 A.D.2d 453, 454 (1st Dep't 1993) (declining to consider arguments "improperly raised for the first time in reply"). This principle applies with equal force in the Commercial Division, where orderly briefing and the opportunity to be heard on dispositive motions are of paramount importance. See Commercial Division Rule 2(b) (governing procedures for letter briefing and sur-reply requests); see also Mandarin Trading Ltd. v. Wildenstein, 65 A.D.3d 448, 454 (1st Dep't 2009) (affirming that movant may not "raise new issues or theories in reply" on a motion to dismiss).
The rationale for this rule is self-evident: permitting new arguments in reply deprives the opposing party of the opportunity to respond in the ordinary course of briefing, circumvents the motion practice rules that ensure both sides are heard, and risks a decision on issues that have not been fully vetted by the parties. These concerns are especially acute here, where the new argument involves a complex and evolving area of New York law — Martin Act preemption — that warrants full adversarial briefing rather than summary treatment in a reply letter.
Accordingly, Ironside respectfully requests that the Court decline to consider Vantor's Martin Act preemption argument on procedural grounds alone.
Nevertheless, in the event the Court determines that it will consider Vantor's argument notwithstanding its untimely presentation, Ironside addresses it on the merits below and demonstrates that it is entirely without merit.
II. The Martin Act Does Not Preempt Ironside's Common-Law Fraud Claims
A. Overview of the Martin Act Framework
The Martin Act, codified at N.Y. General Business Law Article 23-A, §§ 352–359-h, is a powerful regulatory statute that grants the New York Attorney General broad enforcement authority to investigate and combat fraudulent practices in connection with the issuance, exchange, purchase, sale, promotion, negotiation, advertisement, investment advice, and distribution of securities and commodities. Since its enactment in 1921, the Martin Act has served as a cornerstone of New York's securities-regulation framework, providing the Attorney General with investigative tools — including the power to issue subpoenas and compel testimony — and enforcement mechanisms that are considerably broader than those available under common law or federal securities law.
Critically, and central to the question before this Court, the Martin Act does not require proof of scienter. The Attorney General may pursue enforcement actions based on representations or omissions that are merely misleading, deceptive, or based on inadequate information, without demonstrating that the defendant acted with fraudulent intent. See People v. Federated Radio Corp., 244 N.Y. 33, 38–39 (1926); State v. Rachmani Corp., 71 N.Y.2d 718, 726 (1988). This reduced scienter standard distinguishes Martin Act claims from traditional common-law fraud, which requires proof of intentional misrepresentation or knowledge of falsity.
Equally important, the Martin Act does not create a private right of action. Only the New York Attorney General is authorized to bring claims under the statute. See CPC Int'l Inc. v. Westmark Holdings., 70 N.Y.2d 268, 276 (1987). Private plaintiffs who wish to bring fraud claims in the securities context must rely upon common-law causes of action and satisfy their more demanding elements — including, most relevantly, scienter and justifiable reliance.
The preemption question that Vantor now raises is whether, notwithstanding the absence of a private right of action, the Martin Act displaces common-law fraud claims brought by private plaintiffs when those claims touch upon subject matter that could also be addressed by the Attorney General under the Martin Act. As discussed below, the New York Court of Appeals has definitively answered this question: it does not.
B. The Governing Standard: The Post-*Assured Guaranty* Landscape
The development of the Martin Act preemption doctrine has undergone a significant evolution in New York jurisprudence, culminating in a series of Court of Appeals decisions that have clarified and narrowed the scope of any preemptive effect the statute may have on common-law claims.
The question of preemption first received sustained judicial attention in Kerusa Co. LLC v. W10Z/515 Real Estate Ltd. Partnership, 12 N.Y.3d 236 (2009), in which the Court of Appeals held that the plaintiff's common-law fraud claims were not preempted by the Martin Act where the plaintiff alleged the traditional elements of fraud, including scienter. The Court reasoned that the Martin Act was designed to supplement, not supplant, existing common-law remedies. Id. at 244. The Court emphasized that the common law of fraud long predated the Martin Act and that the Legislature, in enacting the statute, did not indicate an intention to eliminate private fraud claims that satisfy the traditional elements.
Critically, the Court of Appeals reinforced this holding in Assured Guaranty (U.K.) Ltd. v. Thackeray Asset Management, 18 N.Y.3d 341 (2011), a decision that directly governs the question presented here. In Assured Guaranty, the Court of Appeals held that the Martin Act does not entirely preempt common-law causes of action. Id. at 353. The Court explained that where a plaintiff "brings a common-law claim — based on the same facts that could support a Martin Act case — and that claim has traditionally been cognizable at common law, ... a private litigant may maintain the action." Id. The Court reasoned that holding otherwise would create an "anomalous" gap in the law: sophisticated parties who could demonstrate all of the traditional elements of common-law fraud, including scienter and reliance, would be left without any remedy simply because their claims happened to involve securities, even though the Martin Act itself provides them with no private right of action. Id. at 352–53.
The Appellate Division, First Department, has consistently applied the Assured Guaranty framework in subsequent decisions. See, e.g., Basis Yield Alpha Fund (Master) v. Dunmore Group, 115 A.D.3d 128, 135–37 (1st Dep't 2014) (holding that plaintiff's common-law fraud claims were not preempted where complaint adequately alleged scienter and justifiable reliance); Caboara v. Babylon Cove Dev., LLC, 54 A.D.3d 79, 84–85 (2d Dep't 2008) (recognizing that common-law fraud claims survive Martin Act preemption where traditional elements are alleged). The governing principle is clear: a private plaintiff may maintain common-law fraud and fraudulent concealment claims, even in a securities-adjacent context, provided the plaintiff alleges and can establish the traditional elements of those claims — elements that go beyond what the Martin Act itself requires.
The cases in which Martin Act preemption has been applied are a narrow subset of the doctrine and are readily distinguishable from this action. In those cases, plaintiffs sought to impose liability based on disclosure standards drawn from or mirroring the Martin Act's regulatory prohibitions, without satisfying the more stringent elements of common-law fraud — particularly scienter and justifiable reliance. See, e.g., Caboara, 54 A.D.3d at 84 (preemption found where claim essentially "enforce[d] the Martin Act by private means" without independent common-law basis). The concern in such cases was that private litigants would effectively end-run the Attorney General's exclusive enforcement authority by bootstrapping the Martin Act's lower-scienter standard into common-law claims. That concern is wholly absent here, for the reasons explained below.
C. Ironside's Claims Are Classic Common-Law Fraud Claims, Not Martin Act Surrogates
Ironside's First Cause of Action (fraud) and Second Cause of Action (fraudulent concealment) are paradigmatic common-law claims. They are grounded firmly in the traditional elements of fraud that have been recognized under New York law for well over a century: (1) a material misrepresentation of fact; (2) made with knowledge of its falsity (scienter); (3) for the purpose of inducing reliance; (4) justifiable reliance by the plaintiff; and (5) resulting damages. See Eurycleia Partners, LP v. Padilla & Severin LLP, 12 N.Y.3d 553, 559 (2009); Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 421 (1996).
The Verified Complaint, which spans eighty-seven (87) detailed paragraphs and was filed on January 21, 2025, alleges each of these elements with the particularity required by CPLR § 3016(b). The allegations, which must be accepted as true for purposes of this motion, see Leon v. Martinez, 84 N.Y.2d 83, 87–88 (1994), establish the following:
Material Misrepresentation. The Complaint alleges that Vantor's valuation team, supervised by Nathan Orris (Senior Vice President, Valuation Services) and Deepa Rajaram (Vice President, Client Valuation Operations), systematically employed stale broker quotes — ranging from six (6) to twelve (12) months old — to value Ironside's illiquid credit and structured-product positions, without disclosing to Ironside the staleness of those quotes or their deviation from current market conditions. In addition, Vantor applied internally generated "model adjustments" to the valuations that inflated marks by an average of 14.3% above observable market inputs, without disclosing the existence or magnitude of these adjustments to Ironside. Vantor further failed to apply the contractually required waterfall valuation procedures specified in FAA § 4.2, which mandated a hierarchical approach beginning with independent third-party pricing sources and progressing to broker quotes and, only as a last resort, to internally modeled values — with each departure from higher-level sources to be documented and disclosed. Vantor's monthly and quarterly NAV reports, delivered to Ironside as required under FAA § 3.1, represented the reported valuations as having been derived in accordance with these contractual procedures when, in fact, they had not been.
Scienter. The Complaint alleges scienter based on Vantor's internal communications, which are referenced in the Complaint and were obtained through pre-litigation document preservation demands. These internal communications demonstrate that Vantor's personnel, including Mr. Orris and Ms. Rajaram, were actually aware that the valuations being reported to Ironside were inflated and did not conform to the agreed-upon methodology. For example, the Complaint alleges (at ¶¶ 42–48) that internal emails between Mr. Orris and members of the Vantor valuation team explicitly discussed the fact that certain CLO tranche marks were "significantly above" observable market levels, that the continued use of stale broker quotes was "not defensible," and that the model adjustments were being applied to "bridge the gap" between Vantor's internally preferred marks and what independent sources would support. These are not allegations of mere negligence or inadvertence; they are allegations of deliberate, knowing misrepresentation.
Justifiable Reliance. The Complaint alleges that Ironside retained Vantor precisely because it required an independent, third-party valuation agent whose marks could be relied upon for critical fund operations, including net asset value reporting to investors, capital account calculations, performance fee computations, and regulatory filings with the Securities and Exchange Commission (Form PF and Form ADV). Ironside relied on Vantor's valuations as accurate and compliant with the agreed methodology, and had no reason to suspect — until a routine internal audit in October 2023 revealed anomalies — that Vantor's marks were systematically inflated.
Damages. The misvaluation spanned eleven (11) quarters, from the first quarter of 2021 (Q1 2021) through the third quarter of 2023 (Q3 2023), and affected a total of forty-seven (47) illiquid credit and structured-product positions held across three feeder funds: Ironside Credit Opportunities Fund LP ("Fund I"), Ironside Structured Alpha Fund LP ("Fund II"), and Ironside Special Situations Fund LP ("Fund III"). The aggregate overvaluation is alleged to be approximately $287 million, broken down as follows: $156.4 million attributable to Fund I, $88.7 million attributable to Fund II, and $41.9 million attributable to Fund III. These inflated marks resulted in, among other things, overstated performance fees charged to investors, inaccurate capital accounts, misleading NAV reporting, and regulatory filings that did not accurately reflect the funds' financial condition.
Nothing about these claims depends on, derives from, or seeks to enforce any regulatory prohibition unique to the Martin Act. Ironside does not invoke the Martin Act's disclosure standards or its no-scienter liability framework. To the contrary, Ironside alleges — and is prepared to prove — each of the traditional common-law elements that the Martin Act does not require: intentional fraud, knowing concealment, actual knowledge of falsity, and justifiable reliance. These are precisely the kinds of common-law claims that the Court of Appeals in Assured Guaranty held survive any preemptive effect of the Martin Act.
D. This Dispute Does Not Arise in a Securities-Transaction Context
Even apart from the well-established principle that common-law fraud claims satisfying the traditional elements are not preempted, Vantor's Martin Act preemption argument fails for a more fundamental reason: this dispute does not arise in a securities-transaction context, and the Martin Act is therefore inapplicable by its own terms.
The Martin Act's scope, as defined by the statute itself, covers fraudulent practices in connection with "the issuance, exchange, purchase, sale, promotion, negotiation, advertisement, investment advice or distribution within or from this state of any stocks, bonds, notes, evidences of interest or indebtedness or other securities." N.Y. Gen. Bus. Law § 352-c(1)(a). The statute is directed at conduct occurring in connection with securities transactions — the offering, sale, and distribution of securities to investors and market participants.
The relationship between Ironside and Vantor is not a securities-transaction relationship. It is a contractual fund administration relationship, governed entirely by the FAA. Under the FAA, Vantor was engaged to provide a suite of back-office services: NAV calculation, investor accounting, regulatory reporting support, and independent pricing and valuation services. Vantor was compensated through a fixed quarterly administration fee, not through commissions, spreads, or any transaction-based compensation. Vantor did not sell, issue, promote, distribute, underwrite, or offer any securities to Ironside. Vantor did not provide investment advice to Ironside. Vantor was not acting as a broker-dealer, an investment adviser, an issuer, an underwriter, or a seller of securities. Vantor is, and at all relevant times was, a fund administrator — a back-office service provider whose role was to accurately calculate and report portfolio valuations in accordance with contractually specified procedures.
The alleged fraud concerns Vantor's performance (or, more precisely, its deliberate non-performance) of its contractual valuation obligations under FAA §§ 3.1 and 4.2. It concerns the accuracy and integrity of NAV reports delivered by a service provider to its client under a service agreement. It does not concern any transaction in securities. No security was bought, sold, offered, exchanged, promoted, or distributed in connection with the alleged fraud. Ironside is not suing Vantor because Vantor induced Ironside to purchase or sell a security; Ironside is suing Vantor because Vantor fraudulently performed its contractual obligation to value securities that Ironside already held in its fund portfolios.
The distinction is dispositive. Every reported decision in which Martin Act preemption has been applied involved claims arising directly from the purchase, sale, or offering of securities — that is, claims by investors or counterparties against securities sellers, promoters, underwriters, or investment advisers in connection with a securities transaction. See, e.g., Assured Guaranty, 18 N.Y.3d at 349–50 (claims arising from investment management of securities portfolio); Kerusa, 12 N.Y.3d at 242 (claims arising from offering of interests in real estate securities); CPC Int'l, 70 N.Y.2d at 275 (claims arising from securities tender offer). No court has ever applied Martin Act preemption to a dispute between a fund and its fund administrator over the accuracy of back-office valuation services provided under a service agreement. Vantor's attempt to shoehorn a fund-administration dispute into the Martin Act framework is unsupported by any authority cited in its Reply and contradicts the plain statutory text of § 352-c.
E. Vantor's Cited Authorities Are Distinguishable
To the extent Vantor's Reply cites authorities in support of its Martin Act preemption argument, those authorities are distinguishable on their facts and do not support the proposition for which Vantor invokes them.
The cases in which New York courts have applied Martin Act preemption share common features that are entirely absent here. In those cases: (1) the defendant was a market participant — typically a broker-dealer, underwriter, issuer, or investment adviser — engaged in the offer, sale, or promotion of securities; (2) the plaintiff's claims arose directly from a securities transaction — i.e., the plaintiff alleged that the defendant induced the plaintiff to purchase, sell, or retain securities through misrepresentations or omissions; and (3) the plaintiff's theory of liability depended on disclosure or conduct standards that derived from or paralleled the Martin Act's regulatory prohibitions, rather than from the traditional common-law elements of fraud. Under those circumstances, courts have concluded that permitting the private claim would effectively allow the plaintiff to enforce the Martin Act indirectly, circumventing the Legislature's decision to vest exclusive enforcement authority in the Attorney General.
None of those features is present here:
First, Vantor is not a securities market participant. It is a fund administrator — a back-office service provider that provides NAV calculation, accounting, and valuation services. It did not sell, promote, issue, or distribute any securities.
Second, Ironside's claims do not arise from any securities transaction. They arise from Vantor's fraudulent performance of its contractual valuation obligations under a service agreement. No security was bought, sold, offered, or exchanged in connection with the alleged misconduct.
Third, Ironside's theory of liability does not depend on any disclosure standard unique to the Martin Act. Ironside's fraud claims are grounded in the centuries-old common-law elements of intentional misrepresentation, scienter, justifiable reliance, and damages. Ironside does not need the Martin Act — and does not invoke it — to state a claim.
The policy rationale that has animated judicial application of Martin Act preemption is simply inapplicable to this case. That rationale, as the Court of Appeals has explained, is the concern that private litigants would seek to circumvent the Attorney General's exclusive enforcement authority under the Martin Act by bringing claims based on the Act's broader, no-scienter standard while purporting to label them as common-law fraud claims. See Assured Guaranty, 18 N.Y.3d at 352. Here, Ironside has affirmatively alleged — and the Complaint pleads with particularity — that Vantor acted with actual knowledge and fraudulent intent. Ironside is not attempting to lower the bar for fraud liability; it is clearing the higher bar that the common law demands. There is no risk whatsoever that Ironside's claims will undermine the Attorney General's enforcement authority or allow a private plaintiff to enforce the Martin Act through the back door.
Vantor is, in essence, asking this Court to extend Martin Act preemption far beyond any boundary recognized by the Court of Appeals or the Appellate Division — to a factual context in which the Martin Act has no application and in which its preemptive rationale has no force. The Court should decline the invitation.
III. Even if the Martin Act Had Any Relevance, It Would Not Bar All of Ironside's Tort Claims
Even assuming, arguendo, that the Martin Act had some bearing on this dispute — which it does not — its preemptive effect, even under the broadest reading adopted by any New York court, would not reach the entirety of Ironside's tort claims.
No court has held that the Martin Act preempts claims for negligent misrepresentation arising from a contractual relationship in which the defendant owed a professional duty of care to the plaintiff. Ironside's Third Cause of Action sounds in negligent misrepresentation and is grounded in the "special relationship" between Ironside and Vantor — a relationship in which Vantor undertook a professional obligation to provide accurate and independent valuations, possessed superior knowledge and expertise in portfolio valuation, and knew that Ironside would rely upon those valuations for critical operational, financial, and regulatory purposes, including NAV reporting to investors, capital account calculations, performance fee computations, and filings with the Securities and Exchange Commission (Form PF and Form ADV). The elements of negligent misrepresentation — (1) an awareness by the defendant that the information is to be used for a particular purpose; (2) reliance by a known party on the information in furtherance of that purpose; and (3) some conduct by the defendant linking it to the relying party and evincing its understanding of that reliance, see Kimmell v. Schaefer, 89 N.Y.2d 257, 263 (1996) — are fully alleged in the Complaint and are wholly independent of the Martin Act.
Furthermore, Ironside's remaining causes of action are entirely unaffected by any Martin Act analysis. The Fourth Cause of Action for breach of contract is a straightforward claim that Vantor breached the express terms of the FAA, including §§ 3.1 and 4.2, by failing to perform its valuation obligations in accordance with the agreed-upon methodology. The Fifth Cause of Action for breach of fiduciary duty is predicated on Vantor's assumption of fiduciary obligations through its role as a trusted valuation agent upon whom Ironside and its investors depended. The Sixth Cause of Action for aiding and abetting fraud alleges that certain Vantor personnel knowingly assisted in the perpetration of the valuation fraud. The Seventh Cause of Action for unjust enrichment alleges that Vantor was unjustly enriched by continuing to collect administration fees while failing to perform its contractual obligations. None of these claims implicates the Martin Act in any respect, and Vantor has not argued otherwise.
Thus, even if the Court were to conclude — contrary to the weight of authority and the facts alleged — that the Martin Act somehow preempted Ironside's First and Second Causes of Action, the balance of the Complaint would remain fully intact, and Vantor's Motion to Dismiss would fail with respect to the Third through Seventh Causes of Action.
IV. Conclusion and Request for Relief
For the foregoing reasons, Vantor's Martin Act preemption argument is both procedurally improper and substantively meritless, and it provides no basis for dismissal of any of Ironside's claims.
Procedurally, the argument was raised for the first time in Vantor's April 4, 2025 Reply, having appeared nowhere in Vantor's original Motion to Dismiss filed February 28, 2025, and should be disregarded as improperly raised new matter in reply. See Lumbermens Mut. Cas. Co., 218 A.D.2d at 626; Ritt, 182 A.D.2d at 562.
Substantively, the Martin Act does not preempt Ironside's common-law fraud and fraudulent concealment claims because:
(a) This dispute does not arise from a securities transaction; it arises from a fund administrator's fraudulent performance of its contractual valuation obligations under a service agreement;
(b) Vantor is a fund administrator and back-office service provider, not a securities market participant, and the Martin Act's regulatory framework is directed at conduct in connection with the offer, sale, and distribution of securities;
(c) Ironside's fraud claims are grounded in the traditional common-law elements of intentional misrepresentation, scienter, justifiable reliance, and damages — elements that go beyond what the Martin Act requires and that the Court of Appeals has held survive any preemptive effect of the statute; and
(d) The policy rationale for Martin Act preemption — preventing private litigants from circumventing the Attorney General's exclusive enforcement authority by pursuing claims based on the Martin Act's no-scienter standard — is wholly inapplicable where, as here, the plaintiff has affirmatively alleged intentional fraud with particularized scienter.
Ironside respectfully requests that the Court deny Vantor's Motion to Dismiss in its entirety, consistent with the arguments set forth in Ironside's Memorandum of Law in Opposition filed March 21, 2025, the Affirmation of Yuki Nakamura filed March 21, 2025 (with fourteen (14) exhibits), and the arguments set forth in this sur-reply letter brief.
Ironside further respectfully requests that oral argument proceed as scheduled on April 14, 2025, and that Ironside be afforded the opportunity to address the Martin Act preemption issue at argument should the Court deem the issue properly before it.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Yuki Nakamura Samuel Eklund, Responsible Partner Carlos Espinoza, Working Associate
51 West 52nd Street, 40th Floor New York, New York 10019 Tel: (212) 558-4000
Fax: (212) 558-3588
Attorneys for Plaintiff Ironside Capital Management LP, on behalf of itself and Ironside Credit Opportunities Fund LP, Ironside Structured Alpha Fund LP, and Ironside Special Situations Fund LP
CERTIFICATE OF SERVICE
I, Yuki Nakamura, hereby certify that on April 9, 2025, a true and correct copy of the foregoing Plaintiff's Sur-Reply Letter Brief in Further Opposition to Defendant's Motion to Dismiss was filed and served via the New York State Courts Electronic Filing system (NYSCEF), and a courtesy copy was served by electronic mail upon:
Gregory Dane, Esq. Allison Breck, Esq. Jordan Mayhew, Esq. WHITFIELD, DANE & CORCORAN LLP 200 South Biscayne Boulevard, Suite 3600 Miami, Florida 33131 Counsel for Defendant Vantor Holdings Corp.
Dated: April 9, 2025 New York, New York
________________________________________
Yuki Nakamura CALDERWOOD & HARKNESS LLP 51 West 52nd Street, 40th Floor New York, New York 10019
IRONSIDE CAPITAL MANAGEMENT LP, on behalf of itself and IRONSIDE CREDIT OPPORTUNITIES FUND LP, IRONSIDE STRUCTURED ALPHA FUND LP, and IRONSIDE SPECIAL SITUATIONS FUND LP,
Index No. 650312/2025
Plaintiff,
Assigned Justice:
-against- | Hon. Richard Torrance, J.S.C.
VANTOR HOLDINGS CORP.,
Defendant.

Filed Subject to the Court's Permission Pursuant to Commercial Division Rule 2(b)

SUPREME COURT OF THE STATE OF NEW YORK COMMERCIAL DIVISION, NEW YORK COUNTY

CALDERWOOD & HARKNESS LLP

CERTIFICATE OF SERVICE

VANTOR HOLDINGS CORP.,

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