PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT THIS MEMORANDUM IS PROTECTED BY THE ATTORNEY-CLIENT PRIVILEGE AND THE WORK PRODUCT DOCTRINE. IT IS PREPARED IN ANTICIPATION OF LITIGATION AND FOR THE PURPOSE OF PROVIDING LEGAL ADVICE. DO NOT DISTRIBUTE OR DISCLOSE WITHOUT PRIOR AUTHORIZATION FROM THE RESPONSIBLE PARTNER.
INTERNAL MEMORANDUM
FROM: Hannah Brinkley, Associate, Calderwood & Harkness LLP
TO: Carlos Espinoza, Lead Associate; Linda Osei, Responsible Partner
DATE: February 18, 2025
RE: Deposition Preparation — Joanna Reeves (Vice President, Special Assets Group, Belmont Ridge Bank NA) — Deposition Scheduled February 25, 2025
MATTER: Belmont Ridge Bank NA v. Triton Harbor Industries, LLC, Marcus J. Kappel, and Elaine D. Kappel, Index No. 654871/2024, New York Supreme Court, New York County, Commercial Division, before Hon. Althea Marchetti
C&H MATTER NO.: 1022-00005
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I. Purpose and Executive Summary
The purpose of this memorandum is to outline a comprehensive preparation framework for the upcoming deposition of Joanna Reeves, Vice President in the Special Assets Group ("SAG") of Belmont Ridge Bank NA ("BRB" or the "Bank"), scheduled for February 25, 2025, at the offices of Calderwood & Harkness LLP, 600 Lexington Avenue, 30th Floor, New York, NY 10022. The deposition will be taken by counsel for defendants and counterclaim-plaintiffs Triton Harbor Industries, LLC ("Triton Harbor"), Marcus J. Kappel, and Elaine D. Kappel (collectively, the "Kappels" or "Defendants/Counterclaim-Plaintiffs"). Examining counsel will be Theodore "Ted" Huang, Partner, and Natasha Orlov, Senior Associate, of Kestrel Voss & Huang LLP, 780 Third Avenue, 24th Floor, New York, NY 10017.
Joanna Reeves is a critical witness for both sides in this litigation. She served as the day-to-day relationship manager on the Triton Harbor account from the time of the March 2023 credit downgrade through the April 2024 acceleration and is the author of several communications that lie at the heart of the counterclaim allegations. Most significantly, Reeves authored the September 18, 2023 email to Marcus Kappel containing the now-controversial statement that BRB was "optimistic about a path forward" and believed "this forbearance sets the stage for a renewed credit relationship." She also authored the September 29, 2023 internal email to Derek Whitmore in which she forwarded a draft term sheet for a potential $6.5 million revolving credit facility, marked "for discussion purposes only — not approved."
The central litigation risk posed by Reeves' deposition is that opposing counsel will attempt to establish, through her testimony, that BRB affirmatively represented a renewed credit relationship to Triton Harbor and the Kappels in order to induce them to sign the Forbearance and Modification Agreement dated October 6, 2023 (the "Forbearance Agreement"). The stakes of this issue are substantial. As part of the Forbearance Agreement, the Kappels agreed to significantly expand their personal exposure to BRB: Marcus Kappel's personal guaranty was amended from a limited guaranty capped at $4,500,000 to an unlimited personal guaranty; Elaine Kappel executed a new unlimited personal guaranty; the Kappels pledged additional collateral consisting of equipment leases valued at approximately $2,300,000 and a mortgage on the Kappel residence at 14 Birchmont Lane, Westport, Connecticut 06880, appraised at $3,100,000. Defendants' counterclaims allege that these concessions were fraudulently induced by BRB's representations — including representations made by or through Reeves — that BRB intended to extend new credit to Triton Harbor after the forbearance period, when in reality BRB's internal strategy, as articulated in the August 22, 2023 memorandum from Chief Credit Officer Philip Aaronson (the "Aaronson Memorandum"), was to pursue a structured exit from the Triton Harbor relationship.
This memorandum also incorporates observations and preliminary lessons learned from the completed deposition of Derek Whitmore, SVP and Head of the Special Assets Group, which took place earlier today, February 18, 2025. While a full transcript is not yet available, initial impressions from that deposition session inform several of the preparation recommendations set forth below, particularly with respect to the September 12, 2023 in-person meeting and Whitmore's characterization of the internal draft term sheet process.
II. Witness Background and Role
A. Professional Background
Joanna Reeves is 36 years old and currently holds the title of Vice President in the Special Assets Group of Belmont Ridge Bank NA. Her office is located at 1200 Avenue of the Americas, 38th Floor, New York, NY 10036, which serves as BRB's principal New York office. Reeves reports directly to Derek Whitmore, Senior Vice President and Head of the Special Assets Group.
Reeves joined BRB approximately eight years ago and spent her first several years in the Bank's commercial lending group before transferring to the Special Assets Group in 2021. Since joining SAG, she has served as the relationship manager on multiple distressed credit workouts and has participated in the negotiation and execution of numerous forbearance, modification, and restructuring agreements. Her experience in SAG is relevant to the examination because opposing counsel may attempt to characterize her as sufficiently experienced to have understood the implications of the language she used in the September 18, 2023 email and to have known BRB's internal disposition strategy at the time.
Reeves was assigned as the day-to-day relationship manager for the Triton Harbor account following the March 8, 2023 credit downgrade of the Triton Harbor loan from a "Pass" rating to a "Substandard" designation (Risk Rating 7 under BRB's internal credit classification system). This downgrade triggered the transfer of the account from BRB's Relationship Management division to the Special Assets Group, consistent with the Bank's standard credit administration policy for adversely classified credits. Upon assignment, Reeves assumed responsibility for managing all day-to-day communications with Triton Harbor's principals and advisors, monitoring financial reporting and covenant compliance, and coordinating with BRB's legal and credit functions on the workout strategy.
B. Involvement in Key Events
Reeves was directly involved in all significant meetings and communications with Triton Harbor's principals during the critical March 2023 through April 2024 period. Her involvement in the key events at issue in this litigation may be summarized as follows:
1. March 8, 2023 — Credit Downgrade and Account Transfer. The Triton Harbor loan was downgraded from "Pass" to "Substandard" (Risk Rating 7) and transferred from Relationship Management to the Special Assets Group. Reeves was assigned as the day-to-day relationship manager for the account.
2. March 2023 through September 2023 — Ongoing Communications. Reeves managed ongoing communications with Marcus Kappel (CEO of Triton Harbor), Elaine Kappel (CFO of Triton Harbor), and their restructuring advisor, Mercer Tidwell & Associates LLC (Raymond Mercer, Managing Director), regarding the status of the loan, Triton Harbor's financial condition, and potential workout options.
3. September 12, 2023 — In-Person Meeting at BRB Offices. Reeves attended an in-person meeting at BRB's offices with Derek Whitmore, Marcus Kappel, and Elaine Kappel. The substance of this meeting is sharply disputed and is the subject of significant counterclaim allegations.
4. September 18, 2023 — Email to Marcus Kappel. Reeves authored and sent the email containing the "optimistic about a path forward" and "renewed credit relationship" language that is central to the counterclaim allegations.
5. September 29, 2023 — Internal Email to Derek Whitmore. Reeves forwarded an internal draft term sheet for a potential $6.5 million revolving credit facility to Whitmore, with the notation "for discussion purposes only — not approved."
6. September – October 2023 — Forbearance Negotiation and Documentation. Reeves participated in the negotiation and documentation of the Forbearance and Modification Agreement, which was ultimately executed on October 6, 2023.
7. October 2023 through April 2024 — Forbearance Period Monitoring. Reeves monitored Triton Harbor's monthly financial reporting and debt service payments of $125,000 per month during the 180-day forbearance period running from October 6, 2023 through April 3, 2024.
8. April 2024 — Covenant Failure, Default, and Acceleration. Reeves was involved in the assessment of Triton Harbor's failure to satisfy the fixed charge coverage ratio ("FCCR") covenant and the issuance of the April 15, 2024 Notice of Default and Acceleration.
C. Prior Testimony and Statements
Joanna Reeves has not provided any prior sworn testimony in this matter, whether by deposition, affidavit, or otherwise. The February 25, 2025 deposition will be her first formal testimony.
It should be noted that Derek Whitmore, Reeves' direct supervisor and co-attendee at the September 12, 2023 meeting, was deposed earlier today, February 18, 2025. A full transcript of Whitmore's deposition has been ordered on an expedited basis and should be available for review before the first preparation session with Reeves on February 20, 2025. In the interim, the team members who attended Whitmore's deposition can provide a preliminary summary of the areas explored and Whitmore's key responses.
Reeves should be made aware of the general areas explored during Whitmore's deposition so that she is not surprised by lines of questioning at her own deposition. However, it is essential that Reeves testify based on her own independent recollection of events, not based on what she learns about Whitmore's testimony. During the preparation sessions, we should explicitly instruct Reeves that her obligation is to testify truthfully based on her own memory and knowledge, and that she should not attempt to conform her testimony to Whitmore's or to any other source.
III. Anticipated Lines of Examination by Opposing Counsel
Based on the counterclaim allegations, the document production in this case, the interrogatory responses served by the Defendants/Counterclaim-Plaintiffs, and our assessment of opposing counsel's likely strategy, we anticipate that Theodore Huang and Natasha Orlov will pursue the following principal lines of examination at Reeves' deposition.
A. The September 18, 2023 Email to Marcus Kappel
This email is, without question, the single most important document for Reeves' deposition and will almost certainly occupy a significant portion of the examination. The operative language, which will be parsed word by word by opposing counsel, reads:
"We are optimistic about a path forward and believe this forbearance sets the stage for a renewed credit relationship."
Opposing counsel will argue that this language constitutes an affirmative misrepresentation by BRB, through its agent Reeves, that the Bank intended to extend new credit to Triton Harbor following the completion of the forbearance period. The Defendants' counterclaims allege that this representation was made to induce the Kappels to enter into the Forbearance Agreement, including the expanded personal guaranties and additional collateral pledge, and that BRB had no genuine intention of extending new credit at the time the statement was made.
We expect opposing counsel to pursue the following specific questions and sub-topics in connection with this email:
• Meaning of "renewed credit relationship." Opposing counsel will ask Reeves to explain what she meant by "renewed credit relationship." They will press her to admit that a reasonable borrower would interpret this phrase as a reference to new or extended credit facilities. Reeves should be prepared to explain that the term was used in a general sense, referring to the possibility of a continued banking relationship on mutually acceptable terms — not as a specific commitment or promise to extend new credit.
• Authorization. Counsel will ask whether Reeves was authorized to make such a statement and, if so, by whom. They will explore whether Whitmore, Aaronson, or any other senior BRB officer reviewed or approved the email before it was sent. If the email was sent without prior review or approval, counsel may argue that Reeves was freelancing and that BRB is responsible for her unauthorized representations under agency principles. Alternatively, if the email was reviewed, counsel will argue it reflects a deliberate BRB strategy.
• Pre-sending discussions. Opposing counsel will ask whether Reeves discussed the language of the email with Whitmore or Aaronson before sending it. They will also ask whether she discussed the email with anyone else within the Bank.
• Awareness of the Aaronson Memorandum. This is the critical intersection between this email and the internal disposition strategy. Counsel will ask whether Reeves was aware, at the time she sent the September 18 email, of the August 22, 2023 Aaronson Memorandum, which recommended a "structured exit from the Triton Harbor relationship within 120 days" and stated that "further extensions of credit are not contemplated under any workout scenario." If Reeves was aware of the memorandum's directive, counsel will argue that her email was a knowing misrepresentation of BRB's actual intentions.
• Reconciliation. Counsel will ask Reeves to reconcile the "optimistic about a path forward" and "renewed credit relationship" language with BRB's internal disposition strategy. This is the most dangerous line of questioning, because any answer that acknowledges a tension between the email and the internal strategy will be exploited.
B. The September 29, 2023 Internal Email to Whitmore (Draft Term Sheet)
The September 29, 2023 internal email is the second most significant document for Reeves' deposition. In this email, Reeves forwarded to Whitmore a draft term sheet for a potential new $6.5 million revolving credit facility for Triton Harbor, with the notation "for discussion purposes only — not approved."
We expect the following lines of questioning:
• Authorship and origin of the draft term sheet. Counsel will ask who drafted the term sheet — whether it was Reeves herself, another member of the SAG team, or someone else within BRB. They will explore when the drafting began and what prompted it.
• Purpose and rationale. Counsel will ask why a draft term sheet was prepared if, as the Aaronson Memorandum directed, further extensions of credit to Triton Harbor were "not contemplated under any workout scenario." This question is designed to suggest that the Aaronson Memorandum's directive was either being ignored or had not been communicated to Reeves.
• External circulation. Counsel will ask whether the draft term sheet was ever shared with Triton Harbor, the Kappels, or Mercer Tidwell & Associates. The answer should be that it was not.
• Internal circulation beyond Whitmore. Counsel will ask whether the draft term sheet was submitted to BRB's credit committee or to Philip Aaronson for review or approval.
• Whitmore's response. Counsel will ask what Whitmore said or did in response to the forwarded draft. Did he direct Reeves to develop it further? Did he reject it? Did he discuss it with Aaronson? The nature of Whitmore's response is significant because it may indicate whether senior BRB management was actively considering new credit or whether the exercise was purely analytical.
• Initiative. Counsel will ask whether the draft term sheet was created at Whitmore's direction or on Reeves' own initiative. If it was created at Whitmore's direction, counsel will argue that SAG was actively developing a new credit proposal, undermining BRB's position that credit extensions were never contemplated. If it was Reeves' own initiative, counsel may argue she believed new credit was a realistic possibility.
C. The September 12, 2023 In-Person Meeting
The September 12, 2023 in-person meeting at BRB's offices is the subject of sharply conflicting factual accounts and will be a major focus of the examination. Meeting attendees were Derek Whitmore, Joanna Reeves, Marcus Kappel, and Elaine Kappel. No outside counsel or restructuring advisors were present.
According to Triton Harbor's counterclaims, Whitmore made the following statements during the meeting:
(i) BRB was "committed to the long-term relationship" with Triton Harbor;
(ii) If Triton Harbor successfully completed the forbearance milestones, BRB would "seriously consider" a new $6.5 million revolving facility; and
(iii) The additional collateral requested by BRB was "a formality to satisfy regulators."
We expect the following questions to Reeves regarding this meeting:
• Was she present for the entirety of the meeting, from beginning to end?
• Does she recall Whitmore making each of the three specific statements attributed to him by the Kappels?
• Did she take notes at the meeting, either contemporaneous handwritten notes or any form of written record? If so, do those notes still exist, and where are they?
• Did she prepare a meeting summary or internal memorandum following the meeting?
• Did she herself make any representations to the Kappels during the meeting regarding the possibility of new credit, the purpose of the additional collateral, or BRB's future intentions?
• Did the Kappels ask specifically about the possibility of new credit, and if so, how did Whitmore and/or Reeves respond?
• Was the concept of a $6.5 million revolving facility discussed at the meeting? If so, in what terms?
• Did anyone at the meeting reference the Aaronson Memorandum or BRB's internal disposition strategy?
Reeves' testimony about this meeting will be compared directly against Whitmore's deposition testimony from earlier today and against the Kappels' account as set forth in the counterclaims and their anticipated depositions. Any inconsistency between Reeves and Whitmore will be exploited by opposing counsel to undermine BRB's credibility.
D. Knowledge of the Aaronson Memorandum
The August 22, 2023 memorandum from Philip Aaronson (Executive Vice President and Chief Credit Officer) to Derek Whitmore, with a copy to Margaret Linden (Senior Vice President and General Counsel), is the internal document that most directly contradicts any suggestion that BRB intended to extend new credit to Triton Harbor. The memorandum directed SAG to "pursue a structured exit from the Triton Harbor relationship within 120 days" and stated unequivocally that "further extensions of credit are not contemplated under any workout scenario."
Reeves was not a named recipient of, nor was she copied on, the Aaronson Memorandum. This is a potentially significant fact. Opposing counsel will probe the following:
• When did Reeves first see or learn of the Aaronson Memorandum? Did she see the actual document, or was she told about its general substance?
• Was she copied on the memorandum in any way not reflected on the face of the document (e.g., was it forwarded to her by Whitmore, or was she blind-copied)?
• Did Whitmore discuss the memorandum with her? If so, when — before or after the September 12 meeting? Before or after Reeves sent the September 18 email?
• Did Whitmore share the substance or direction of the memorandum (i.e., the structured exit strategy and the directive that further credit extensions were not contemplated) with Reeves at any time before the Forbearance Agreement was executed on October 6, 2023?
• What did Reeves understand to be BRB's internal strategy regarding the Triton Harbor relationship during the September through October 2023 period? Did she believe new credit was a possibility? Did she believe a structured exit was the plan?
The answers to these questions bear directly on the scienter element of the fraudulent inducement counterclaim. If Reeves was unaware of the Aaronson Memorandum and its directive at the time she sent the September 18 email, BRB can argue that her email was not a knowing misrepresentation. If she was aware, the defense becomes significantly more difficult, though not impossible — BRB could still argue that the email's language was aspirational and non-binding regardless of internal strategy.
E. The Forbearance Negotiations and Agreement Execution
Opposing counsel will explore Reeves' role in the negotiation and documentation of the Forbearance and Modification Agreement executed on October 6, 2023. Expected questions include:
• What was Reeves' specific role in the negotiation of the Forbearance Agreement? Did she participate in drafting any of the terms?
• Was she involved in the decision to include Section 9(c), the "No Commitment to Extend Credit" disclaimer? Did she participate in drafting Section 9(c), or was it included by BRB's legal counsel?
• Did Reeves explain Section 9(c) to the Kappels? Did she have any conversation with Marcus or Elaine Kappel about the meaning or significance of Section 9(c)?
• Did the Kappels ask Reeves about the significance of Section 9(c)? If so, what did she say?
• Did Reeves discuss the integration clause (Section 12(a)) with the Kappels?
• Was Reeves involved in the decision to require the expansion of Marcus Kappel's personal guaranty from a limited guaranty of $4,500,000 to an unlimited personal guaranty? Was she involved in the decision to require Elaine Kappel to execute a new unlimited personal guaranty?
• Was Reeves involved in requiring the pledge of additional collateral, specifically the equipment leases valued at $2,300,000 and the mortgage on the Kappel residence at 14 Birchmont Lane, Westport, Connecticut 06880, appraised at $3,100,000?
• Did Reeves understand the purpose of the additional collateral requirements and the expanded guaranties in the context of BRB's workout strategy?
F. Communications with Mercer Tidwell & Associates LLC
Triton Harbor retained Mercer Tidwell & Associates LLC ("Mercer Tidwell"), with Raymond Mercer serving as Managing Director, as its restructuring advisor beginning in mid-2023. Mercer Tidwell served as an intermediary between Triton Harbor and BRB during the forbearance negotiation period and continued to advise Triton Harbor during the forbearance period itself.
Opposing counsel is likely to explore the following:
• What communications did Reeves have with Raymond Mercer or other Mercer Tidwell personnel regarding BRB's willingness to extend future credit to Triton Harbor?
• Did Reeves make any representations to Mercer Tidwell about BRB's intentions with respect to new credit, a renewed credit relationship, or the future of the banking relationship?
• Did Mercer Tidwell ask Reeves about BRB's willingness to consider new credit facilities after the forbearance period?
• Was Mercer Tidwell involved in the negotiation of Section 9(c) of the Forbearance Agreement, and did Reeves have any discussions with Mercer Tidwell about the significance of that provision?
The nature of Reeves' communications with Mercer Tidwell is relevant both to the issue of justifiable reliance (if Mercer Tidwell, as a sophisticated restructuring advisor, understood that BRB was not committing to new credit, the Kappels' reliance claim is weakened) and to the issue of whether BRB's representations extended beyond the September 18 email.
G. Post-Forbearance Period and Acceleration
During the 180-day forbearance period, Triton Harbor made all six monthly debt service payments of $125,000, for a total of $750,000. However, at the end of the forbearance period, Triton Harbor's financial performance failed to meet the covenant requirements set forth in the Forbearance Agreement. Specifically, Triton Harbor's fixed charge coverage ratio ("FCCR") for the twelve months ending March 31, 2024 was 0.94x, which fell below the 1.20x covenant minimum required for a successful cure. The forbearance period expired on April 3, 2024, and BRB issued a Notice of Default and Acceleration on April 15, 2024.
Opposing counsel is expected to explore the following:
• What was Reeves' role in monitoring Triton Harbor's compliance during the forbearance period? Did she review the monthly financial reports? Did she track the FCCR calculation?
• What was her involvement in the assessment that led to the determination that the FCCR covenant was not satisfied?
• Was she involved in the decision to issue the Notice of Default and Acceleration? Did she recommend acceleration, or was that decision made by others?
• Did Reeves communicate with the Kappels or with Mercer Tidwell about the impending acceleration? If so, when and what did she say?
• Did the Kappels or Mercer Tidwell contact Reeves to request additional time or to discuss alternatives to acceleration?
• Was there any internal discussion at BRB about whether to grant additional forbearance or to explore alternative workout options rather than accelerating? If so, why was acceleration chosen?
These questions go to the Defendants' argument that BRB acted in bad faith by accelerating the loan at the earliest possible opportunity, consistent with the structured exit strategy articulated in the Aaronson Memorandum, rather than honoring the alleged commitment to a "renewed credit relationship."
IV. Document-by-Document Analysis of Key Reeves Communications
This section provides a detailed analysis of each key document that is expected to feature prominently in Reeves' deposition, together with recommended testimony guidance for each.
Document 1: September 18, 2023 Email — Reeves to Marcus Kappel
Bates Number: To be confirmed from the production log; estimated to fall within the BRB-00XXXX range. The precise Bates number should be confirmed and provided to Reeves before the preparation session.
Date: September 18, 2023
From: Joanna Reeves, Vice President, Special Assets Group, Belmont Ridge Bank NA
To: Marcus J. Kappel, Chief Executive Officer, Triton Harbor Industries, LLC
Key Language: "We are optimistic about a path forward and believe this forbearance sets the stage for a renewed credit relationship."
Context. This email was sent six days after the September 12, 2023 in-person meeting at BRB's offices and approximately four weeks before the Forbearance Agreement was executed on October 6, 2023. The email was sent during the active negotiation phase, at a time when BRB was seeking to secure the Kappels' agreement to expanded personal guaranties and additional collateral.
Analysis. This email is the single most problematic document for BRB's defense of the fraudulent inducement counterclaims. The phrase "renewed credit relationship" could be interpreted by a finder of fact as a representation that BRB intended to extend new credit to Triton Harbor upon the successful completion of the forbearance period. The word "renewed" implies something more than a continuation of the existing distressed relationship — it suggests a fresh start, with new credit extending beyond the existing facilities. Combined with the word "optimistic" and the phrase "sets the stage for," the sentence could be read as BRB expressing a present intention to extend new credit, conditioned only on the completion of the forbearance.
However, the email does not contain any specific commitment or binding promise. The word "optimistic" is inherently aspirational and expresses a sentiment, not a definitive plan. The phrase "sets the stage for" is forward-looking and conditional — it does not state that BRB will extend new credit, only that the forbearance could lead to a renewed relationship. The email does not specify the terms of any new credit, does not reference a specific dollar amount, and does not commit BRB to any particular course of action.
The defense should characterize this email as general encouragement of the type routinely used by workout officers to maintain borrower cooperation during difficult negotiations. In the context of a forbearance negotiation, banks have a practical interest in keeping borrowers engaged and cooperative, and the use of encouraging language serves that purpose without creating binding obligations. The Forbearance Agreement's Section 9(c) disclaimer, which explicitly negated any commitment to extend additional credit, was designed precisely to ensure that any pre-agreement expressions of optimism or encouragement did not ripen into enforceable commitments.
Recommended Testimony Guidance. During the preparation sessions, Reeves should be counseled to explain the September 18 email in the following manner:
• SAG officers routinely use encouraging and cooperative language in communications with borrowers during workout negotiations. The purpose of such language is to maintain a productive working relationship and to encourage the borrower to cooperate with the workout process. This is standard practice in the commercial banking industry.
• The email did not promise or commit BRB to extending any new credit to Triton Harbor. The words used — "optimistic," "path forward," "sets the stage for" — are aspirational and forward-looking, not definitive or binding.
• The term "renewed credit relationship" was used in a general, non-binding sense to convey BRB's willingness to continue working with Triton Harbor and to explore the possibility of a constructive outcome. It was not intended as a specific commitment to any particular credit facility or extension of credit.
• The Forbearance Agreement, which was executed less than three weeks after this email, contained Section 9(c), an explicit disclaimer that nothing in the agreement constituted a commitment to extend additional credit. This disclaimer superseded any pre-agreement expressions of optimism.
• Reeves should avoid characterizing the email as a "promise," a "commitment," or a "guarantee." She should use language such as "expression of optimism," "general encouragement," and "aspiration" to describe the email's intent.
Document 2: September 29, 2023 Internal Email — Reeves to Whitmore
Date: September 29, 2023
From: Joanna Reeves, Vice President, Special Assets Group
To: Derek Whitmore, Senior Vice President, Head of Special Assets Group
Subject/Content: Reeves forwarded an internal draft term sheet for a potential new $6.5 million revolving credit facility for Triton Harbor, with the notation "for discussion purposes only — not approved."
Analysis. This email is an internal BRB communication that was never shared with Triton Harbor, the Kappels, or Mercer Tidwell & Associates. Triton Harbor's counterclaims assert that the existence of this draft term sheet demonstrates that BRB "held out the prospect of new credit to extract additional collateral" from the Kappels. However, the defense position is strong on several fronts:
(i) The draft term sheet was never approved by BRB's credit committee, by Philip Aaronson, or by any senior credit officer. It remained in draft form and was never finalized.
(ii) The draft term sheet was never circulated externally — not to Triton Harbor, not to the Kappels, and not to Mercer Tidwell.
(iii) The draft was explicitly labeled by Reeves as "for discussion purposes only — not approved," demonstrating that she understood the distinction between internal analytical exercises and external commitments.
(iv) The internal exploration of potential options — including options that may ultimately not be pursued — is standard practice within bank Special Assets Groups. SAG officers routinely prepare internal analyses of a range of potential workout scenarios, including scenarios involving new credit, debt restructuring, collateral liquidation, and borrower exit, in order to evaluate the bank's options and present recommendations to senior management. The preparation of a draft term sheet in this context does not constitute an external representation or commitment.
Risk Assessment. Opposing counsel will likely attempt to use this document in conjunction with the September 18 email to construct a narrative that BRB was actively developing a new credit facility for Triton Harbor and was communicating that intention to the Kappels through Reeves' September 18 email. The argument would be that the draft term sheet shows the "renewed credit relationship" language was more than mere encouragement — it reflected actual internal activity directed at extending new credit. Reeves should be prepared to counter this narrative by emphasizing the "for discussion purposes only — not approved" caveat, the internal nature of the document, and the fact that exploring hypothetical scenarios internally is qualitatively different from making external commitments.
Recommended Testimony Guidance. Reeves should be counseled as follows:
• Preparing and circulating internal draft analyses is standard operating procedure within BRB's Special Assets Group. SAG officers routinely develop a range of potential workout scenarios for internal consideration and discussion with senior management.
• Reeves included the "for discussion purposes only — not approved" caveat specifically because no credit decision had been made and because she understood that the draft was a preliminary internal document, not a commitment or an approved proposal.
• Reeves was providing Whitmore with one of several potential options for internal discussion and evaluation. The draft term sheet represented one possible path among several that were being considered internally.
• The draft term sheet was never provided to Triton Harbor, the Kappels, or Mercer Tidwell & Associates. It was never submitted to BRB's credit committee or to Philip Aaronson for formal review or approval.
Document 3: September 12, 2023 Meeting
Date: September 12, 2023
Location: BRB offices, 1200 Avenue of the Americas, 38th Floor, New York, NY 10036
Attendees: Derek Whitmore (SVP, SAG), Joanna Reeves (VP, SAG), Marcus Kappel (CEO, Triton Harbor), Elaine Kappel (CFO, Triton Harbor)
Disputed Statements. According to Triton Harbor's counterclaims, Whitmore made the following statements during this meeting:
(i) BRB was "committed to the long-term relationship" with Triton Harbor;
(ii) If Triton Harbor successfully completed the forbearance milestones, BRB would "seriously consider" a new $6.5 million revolving credit facility; and
(iii) The additional collateral being requested by BRB was "a formality to satisfy regulators."
Analysis. No contemporaneous written notes from Reeves regarding this meeting have been identified to date in the document collection. This absence is itself a potential issue — opposing counsel may suggest that Reeves deliberately refrained from memorializing statements that she knew were problematic, or alternatively, that she prepared notes that were not preserved in compliance with the litigation hold. During the preparation session, we need to determine whether Reeves took any notes, whether she prepared a meeting summary, and if so, what happened to those documents.
Reeves' testimony about what was and was not said at this meeting will be critical. She is the only BRB witness other than Whitmore who was present, and the Kappels will present their own account of the meeting in their depositions. If Reeves can corroborate Whitmore's expected testimony that no specific commitments to extend new credit were made, BRB's position is strengthened. If Reeves' recollection diverges from Whitmore's in any material respect, opposing counsel will exploit the inconsistency.
Cross-Reference to Whitmore Deposition. Whitmore was deposed earlier today, February 18, 2025. We need to review the transcript promptly for any specific characterizations Whitmore provided regarding the September 12 meeting — including his account of what he said, what Reeves said, and what the Kappels said. Any areas where Reeves' recollection may diverge from Whitmore's testimony should be identified and addressed during the preparation sessions.
Recommended Testimony Guidance. Reeves should testify truthfully about what she recalls from the September 12 meeting. She should not be coached to provide a specific version of events; rather, she should be prepared to:
• Distinguish between expressions of general interest in continuing a banking relationship (which are non-actionable and commonplace in workout discussions) and specific commitments to extend credit (which, BRB maintains, were not made).
• Emphasize that any discussion of potential future credit was expressly conditioned and hypothetical — that no one at the meeting promised or guaranteed that new credit would be extended.
• If she does not recall specific words being used, she should say so honestly rather than speculating about the precise language.
• If asked whether she recalls the specific statements attributed to Whitmore by the Kappels (e.g., "committed to the long-term relationship," "seriously consider," "formality to satisfy regulators"), she should answer based on her genuine recollection. If she recalls different language being used, she should describe what she actually remembers.
Document 4: Aaronson Memorandum — August 22, 2023
Date: August 22, 2023
From: Philip Aaronson, Executive Vice President and Chief Credit Officer, Belmont Ridge Bank NA
To: Derek Whitmore, Senior Vice President, Head of Special Assets Group
CC: Margaret Linden, Senior Vice President and General Counsel
Subject: "Triton Harbor — Recommended Disposition Strategy"
Key Language: "pursue a structured exit from the Triton Harbor relationship within 120 days"; "further extensions of credit are not contemplated under any workout scenario"
Analysis for Reeves Preparation. Reeves was not a named recipient of, nor was she copied on, the Aaronson Memorandum. This is a critical fact. The key question for Reeves' deposition — and one that opposing counsel will pursue aggressively — is whether Whitmore shared the contents or direction of the memorandum with Reeves, and if so, when relative to the September 12 meeting and the September 18 email.
The timing matters enormously:
• If Reeves was unaware of the Aaronson Memorandum's directive at the time she sent the September 18, 2023 email, this supports BRB's argument that her email was not a knowing misrepresentation. She cannot have intended to deceive the Kappels about BRB's internal strategy if she did not know what that strategy was.
• If Reeves was aware of the Aaronson Memorandum before sending the September 18 email, opposing counsel will argue that she knowingly misled the Kappels by using the "renewed credit relationship" language while knowing that BRB had already determined to exit the relationship and was not contemplating new credit.
Privilege Status. The Aaronson Memorandum is currently logged on BRB's privilege log. BRB is asserting attorney-client privilege on the basis that the memorandum was copied to Margaret Linden in her capacity as General Counsel and that it was prepared in connection with legal advice regarding the disposition of the Triton Harbor credit. Triton Harbor has challenged this privilege assertion, and the dispute may result in an in camera review by the Court. If the memorandum is ultimately ordered produced, Reeves' testimony about her awareness of its contents becomes even more critical, because the memorandum's language will be available for comparison against the September 18 email.
Recommended Testimony Guidance. Reeves should be prepared to testify truthfully about whether and when she became aware of the Aaronson Memorandum. During the preparation sessions, we must determine her actual state of knowledge:
• If she was not aware of the memorandum at the time of the September 18 email, she should state so clearly and unequivocally.
• If she was generally aware that BRB was considering some form of exit strategy but had not seen the specific memorandum, she should explain the distinction between general awareness and specific knowledge of the memorandum's directives.
• If she became aware of the memorandum at some later point, she should be prepared to identify when and how she learned of it.
• She should not speculate about the memorandum's contents if she did not see it. She should not volunteer information about the memorandum if she was not asked about it.
Additionally, if opposing counsel attempts to question Reeves about the substance of the Aaronson Memorandum itself, we may need to assert privilege objections to the extent the memorandum remains on the privilege log. Linda Osei should be prepared to make these objections in real time during the deposition. Reeves should be instructed that if counsel objects and instructs her not to answer a question on privilege grounds, she should comply with that instruction.
Document 5: Forbearance and Modification Agreement — October 6, 2023
The Forbearance and Modification Agreement is the central transactional document in this case. The following provisions are most relevant to Reeves' anticipated testimony:
Section 4(a) — Monthly Debt Service Payments. Triton Harbor was required to make monthly debt service payments of $125,000 during the 180-day forbearance period commencing October 6, 2023 and expiring April 3, 2024.
Section 9(c) — No Commitment to Extend Credit. This provision states: "Nothing herein shall constitute or be deemed to constitute a commitment, agreement, or obligation on the part of Lender to extend additional credit, modify existing facilities, or renew any credit facility." This is BRB's single strongest contractual defense against the counterclaim allegations.
Section 12(a) — Integration/Merger Clause. The Forbearance Agreement contains a standard integration or merger clause providing that the agreement constitutes the entire understanding between the parties with respect to its subject matter, superseding all prior oral and written communications.
Additional Collateral. The Forbearance Agreement required Triton Harbor and the Kappels to pledge additional collateral consisting of: (a) an assignment of two equipment leases with an appraised value of $2,300,000; and (b) a mortgage on the Kappel residence at 14 Birchmont Lane, Westport, Connecticut 06880, with an appraised value of $3,100,000.
Guaranty Amendments. Marcus Kappel's personal guaranty was amended from a limited guaranty capped at $4,500,000 to an unlimited personal guaranty. Elaine Kappel executed a new unlimited personal guaranty in favor of BRB.
Forbearance Fee. The Kappels paid a forbearance fee of $87,500, calculated as 0.50% of the $17,500,000 outstanding principal balance at execution.
Analysis. The presence of Section 9(c) is BRB's strongest defense against the claim that Reeves' September 18 email — or any other pre-agreement communication — constituted a misrepresentation that induced the Kappels to enter into the Forbearance Agreement. The Kappels signed an integrated agreement that explicitly and unambiguously disclaimed any commitment by BRB to extend additional credit. Under New York law, this disclaimer should, in most circumstances, preclude the Kappels from claiming justifiable reliance on pre-agreement oral or written statements to the contrary, particularly where (as here) the Kappels were sophisticated commercial parties represented by a restructuring advisor.
Recommended Testimony Guidance. Reeves should be prepared to testify as follows regarding the Forbearance Agreement:
• She should confirm the existence and purpose of Section 9(c), explaining that it was included in the Forbearance Agreement precisely to make clear that BRB was not committing to extend new credit to Triton Harbor. The provision was intended to set clear expectations for both parties.
• She should be prepared to testify that the Forbearance Agreement was the product of a negotiated process between BRB and Triton Harbor, with Triton Harbor represented and advised by its restructuring advisor, Mercer Tidwell & Associates LLC, and its own legal counsel.
• If asked whether Section 9(c) was inserted specifically to contradict the September 18 email, Reeves should explain that Section 9(c) is a standard provision included in BRB's forbearance agreements and was not inserted in response to any specific communication.
• Reeves should not volunteer opinions about the fairness or appropriateness of the expanded guaranty requirements or the additional collateral pledge. If asked, she should describe the terms as the product of negotiation between the parties.
Document 6: Reeves Emails During Forbearance Period (October 2023 – April 2024)
A thorough review of all of Reeves' email communications with Marcus Kappel, Elaine Kappel, and Raymond Mercer of Mercer Tidwell & Associates during the forbearance period (October 6, 2023 through April 3, 2024) must be completed before the preparation session. This review should focus on identifying:
• Any statements by Reeves that could be characterized as reinforcing or repeating the "renewed credit relationship" language from the September 18 email.
• Any statements regarding BRB's willingness to consider new credit facilities after the forbearance period.
• Any communications regarding Triton Harbor's financial performance, the FCCR trajectory, or the likelihood of a successful covenant cure.
• Any communications that discuss or reference BRB's internal disposition strategy or the Aaronson Memorandum's directive.
• Any communications with Mercer Tidwell regarding BRB's future intentions with respect to the Triton Harbor credit.
Any post-Forbearance-Agreement emails that reference future credit should be specifically identified, tabbed, and prepared for detailed examination during the preparation sessions. These emails may be used by opposing counsel to argue that BRB continued to hold out the prospect of new credit even after the Forbearance Agreement was signed, or alternatively, they may support BRB's position that all communications were consistent with the Forbearance Agreement's terms and the Section 9(c) disclaimer.
Document 7: Reeves Email to Margaret Linden (Inadvertently Produced / Clawback Document)
Bates Number: BRB-012847
Nature: Internal SAG email from Joanna Reeves to Margaret Linden (Senior Vice President and General Counsel) discussing potential litigation exposure in connection with the Triton Harbor workout.