1045-00004 · Client 1045 · Discovery/Document Production

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

BELMONT RIDGE BANK NA,

Plaintiff/Counterclaim Defendant,

— against —

TRITON HARBOR INDUSTRIES, LLC, MARCUS J. KAPPEL, and ELAINE D. KAPPEL,

Defendants/Counterclaim Plaintiffs.

Index No. 654871/2024

Assigned Justice: Hon. Althea Marchetti

Matter No.: 1022-00005

DEFENDANT/COUNTERCLAIM DEFENDANT BELMONT RIDGE BANK NA'S RESPONSES AND OBJECTIONS TO COUNTERCLAIM PLAINTIFFS' FIRST SET OF DOCUMENT REQUESTS (NOS. 1 THROUGH 87)

January 15, 2025

Serving Party:

Belmont Ridge Bank NA, by its attorneys, Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, NY 10022 Tel: (212) 555-7800

Fax: (212) 555-7801

Linda Osei, Partner Priya Anand, Partner Carlos Espinoza, Associate Hannah Brinkley, Associate

Propounding Party:

Triton Harbor Industries, LLC, Marcus J. Kappel, and Elaine D. Kappel, by their attorneys, Kestrel Voss & Huang LLP 780 Third Avenue, 24th Floor New York, NY 10017 Tel: (212) 555-4200

Fax: (212) 555-4201

Theodore "Ted" Huang, Partner Natasha Orlov, Associate

PRELIMINARY STATEMENT

Defendant/Counterclaim Defendant Belmont Ridge Bank NA ("BRB" or the "Bank") hereby submits these Responses and Objections to the First Set of Document Requests (Nos. 1 through 87) served by Triton Harbor Industries, LLC ("Triton Harbor"), Marcus J. Kappel, and Elaine D. Kappel (collectively, "Counterclaim Plaintiffs") on or about November 25, 2024.

BRB submits these Responses and Objections in accordance with Article 31 of the New York Civil Practice Law and Rules ("CPLR"), including but not limited to CPLR §§ 3101, 3120, and 3122, and in further accordance with the Stipulated discovery Schedule and Preliminary Conference Order entered by this Court (Marchetti, J.) on December 6, 2024, which established the deadline for responses to the first round of document requests as January 15, 2025.

BRB's production of documents responsive to these Requests is made subject to and in accordance with the Stipulated Confidentiality and Protective Order ("Protective Order") entered by this Court on December 20, 2024, which governs the designation, handling, and use of materials designated as "Confidential" or "Highly Confidential — Attorneys' Eyes Only" in this action. BRB reserves the right to designate responsive documents under the appropriate tier of protection under the Protective Order at the time of production and to re-designate documents at any time as permitted by the Protective Order.

In preparing these Responses and Objections, BRB has undertaken a reasonable and proportionate search of its files, records, and electronically stored information ("ESI"). This search has encompassed the files of BRB's Special Assets Group, Credit Department, Office of the General Counsel, and the files of relevant individual custodians, including but not limited to Derek Whitmore (SVP, Head of Special Assets Group), Joanna Reeves (VP, Special Assets Group), Philip Aaronson (EVP & Chief Credit Officer), Margaret Linden (SVP & General Counsel), and Thomas Hargreaves (VP & Associate General Counsel). The search has identified approximately 34,000 documents currently under review for privilege, responsiveness, and confidentiality designations. BRB's document review is being conducted using a combination of technology-assisted review and manual attorney review, consistent with the guidelines outlined in the Preliminary Conference Order.

BRB's production of documents is ongoing. BRB reserves the right to supplement, amend, or correct these Responses and Objections as its document review progresses and as additional responsive, non-privileged materials are identified. The fact that BRB has not yet completed its review does not constitute a waiver of any objection, and BRB expressly preserves all such objections pending the completion of its review.

These Responses and Objections are made without waiver of any objection, privilege, protection, right, or defense, including but not limited to any and all affirmative defenses asserted in BRB's Answer to Counterclaims filed with this Court on November 22, 2024. BRB's agreement to produce any document or category of documents in response to a particular Request shall not be construed as a concession that such document or category is relevant, admissible, or properly discoverable, nor shall it constitute a waiver of any objection to the use of such document at trial or in any other proceeding.

GENERAL OBJECTIONS

BRB makes the following General Objections, each of which is incorporated by reference into each specific response set forth below as if fully restated therein, whether or not specifically referenced in any particular response.

General Objection No. 1: Attorney-Client Privilege. BRB objects to each and every Request to the extent it calls for the production of documents or communications protected by the attorney-client privilege. This objection applies, without limitation, to communications between BRB personnel and BRB's in-house legal department, including Margaret Linden, SVP & General Counsel, and Thomas Hargreaves, VP & Associate General Counsel; communications between BRB and its prior outside litigation counsel, Blakemore & Stern LLP, and specifically David Blakemore, Esq., partner, who represented BRB through November 4, 2024; communications between BRB and its current outside litigation counsel, Calderwood & Harkness LLP; and communications between BRB and its coverage counsel, Crane, Alcott & Shire LLP, and specifically Robert Alcott, Esq., partner, regarding directors' and officers' liability insurance coverage in connection with this action. Documents withheld on the basis of the attorney-client privilege will be identified on a privilege log in compliance with CPLR § 3122 and served contemporaneously with or within a reasonable time following these Responses.

General Objection No. 2: Work Product Doctrine. BRB objects to each and every Request to the extent it calls for the production of documents, memoranda, analyses, or other materials prepared by or at the direction of counsel in anticipation of litigation or for trial. This objection encompasses materials prepared by Blakemore & Stern LLP in connection with BRB's evaluation of its enforcement options, the filing of the original complaint on August 12, 2024, and the defense of the counterclaims; materials prepared by Calderwood & Harkness LLP since its retention on November 4, 2024; and materials prepared by BRB personnel at the direction of or for the purpose of providing information to counsel in anticipation of litigation. Such materials constitute attorney work product protected from disclosure under CPLR § 3101(c) (attorney work product) and CPLR § 3101(d) (materials prepared in anticipation of litigation), and the federal common law of work product as articulated in Hickman v. Taylor, 329 U.S. 495 (1947), and its progeny.

General Objection No. 3: Bank Examination Privilege. BRB objects to each and every Request to the extent it seeks the production of documents, reports, or communications constituting, reflecting, or prepared in connection with examinations, supervisory reviews, or confidential supervisory activities of the Office of the Comptroller of the Currency ("OCC") or any other federal or state banking regulator with respect to BRB. Such materials constitute confidential supervisory information protected by the bank examination privilege, 12 U.S.C. § 1820(e), and applicable federal regulations, including but not limited to 12 C.F.R. Part 4, Subpart C, which prohibits the disclosure of OCC confidential supervisory information without the prior written consent of the OCC. BRB is not at liberty to produce such materials and directs Counterclaim Plaintiffs to the OCC or other relevant regulatory authority should they seek to obtain such documents.

General Objection No. 4: Overbreadth and Undue Burden. BRB objects to each and every Request to the extent it is overbroad in temporal scope, subject-matter scope, or both; unduly burdensome; or disproportionate to the needs of this case in light of the importance of the issues at stake, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. This objection applies, without limitation, to Requests that are not limited to a reasonable time period, that seek "all documents" without meaningful limitation as to subject matter or custodian, or that encompass broad categories of documents having no demonstrable relevance to the specific claims or defenses in this action.

General Objection No. 5: Relevance. BRB objects to each and every Request to the extent it seeks the production of documents that are neither relevant to the claims or defenses of any party in this action nor reasonably calculated to lead to the discovery of admissible evidence, as required by CPLR § 3101(a). BRB interprets each Request as limited to documents that are relevant to the specific claims and defenses at issue, including the counterclaims for fraudulent inducement, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, and economic duress, and the affirmative defenses asserted in BRB's Answer to Counterclaims.

General Objection No. 6: Vagueness and Ambiguity. BRB objects to each and every Request to the extent the terms used therein are vague, ambiguous, undefined, or susceptible to multiple interpretations. Where BRB has responded to such Requests, it has construed the terms used therein in a reasonable manner consistent with the overall context of the Requests and the claims and defenses at issue. BRB reserves the right to challenge the meaning of any term in any Request at a later point in this litigation and does not concede that its interpretation of any ambiguous term is the only reasonable interpretation.

General Objection No. 7: Third-Party Privacy and Confidentiality. BRB objects to each and every Request to the extent it seeks the production of documents containing confidential financial information, personally identifiable information, trade secrets, or proprietary business information of third parties not involved in this action, including but not limited to other BRB borrowers, customers, counterparties, and vendors. BRB has obligations of confidentiality to its customers and counterparties, both under applicable law and contractual arrangements, and the production of such materials, if any is required, will be made subject to and in accordance with the Stipulated Confidentiality/Protective Order entered by this Court on December 20, 2024, with appropriate redactions to protect the identities and confidential information of non-parties.

General Objection No. 8: Documents Equally Available. BRB objects to each and every Request to the extent it seeks the production of documents that are in the possession, custody, or control of Counterclaim Plaintiffs or their agents, officers, directors, employees, representatives, or counsel, or that are publicly available from government agencies, courts, or other public sources. Such documents are equally available to the requesting parties, and BRB should not be required to bear the burden and expense of collecting, reviewing, and producing documents that Counterclaim Plaintiffs already possess or can readily obtain from other sources.

General Objection No. 9: Expert Materials. BRB objects to each and every Request to the extent it seeks documents, reports, analyses, or other materials prepared by, for, or in connection with BRB's retention of experts or consultants in anticipation of litigation or for trial, including but not limited to Wentworth Risk Advisors LLC and its principal, Dr. Gerald Stokes. Such materials are protected as attorney work product and/or as expert materials prepared in anticipation of litigation under CPLR § 3101(d). Information regarding BRB's expert witnesses will be disclosed at the time and in the manner required by the Preliminary Conference Order and applicable provisions of the CPLR.

General Objection No. 10: Ongoing Review Reservation. BRB's document review encompasses approximately 34,000 documents, including electronic mail communications, internal memoranda, credit files, loan documentation, committee minutes, financial reports, and other records. The review of these documents for privilege, responsiveness, and confidentiality designations is ongoing and is expected to continue for several weeks following the service of these Responses. BRB reserves the right to supplement, amend, or correct these Responses and Objections as additional responsive documents are identified, as its privilege review is completed, and as new information becomes available. BRB further reserves the right to produce additional documents and to identify additional privileged documents on supplemental privilege logs, as necessary, throughout the course of discovery.

General Objection No. 11: Incorporation of General Objections. Each of the foregoing General Objections (Nos. 1 through 10) is hereby incorporated by reference into each and every specific response set forth below as if fully restated therein, whether or not any specific General Objection is expressly referenced in a particular response. The failure to restate or specifically reference a General Objection in any particular response shall not constitute a waiver of that General Objection as to that Request or any other Request.

SPECIFIC RESPONSES AND OBJECTIONS

Subject to and without waiving the foregoing General Objections, BRB responds to each of the Counterclaim Plaintiffs' Document Requests as follows:

REQUEST NO. 1

Request: All documents relating to the origination of the Credit Agreement dated June 15, 2021, between BRB and Triton Harbor Industries, LLC, including but not limited to credit applications, underwriting memoranda, credit approval packages, and term sheets.

Objections: BRB objects to this Request to the extent it is overbroad in seeking "all documents" relating to the origination without meaningful temporal or subject-matter limitation, and to the extent it seeks documents that predate the workout period and bear no relevance to the counterclaims, which concern the forbearance negotiations and alleged misrepresentations occurring in 2023 and 2024. BRB further objects on the grounds of attorney-client privilege to the extent this Request calls for the production of communications with in-house or outside counsel during the origination process, and on the grounds of the bank examination privilege to the extent any origination documents reflect or incorporate confidential supervisory information.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged documents in its possession, custody, or control relating to the origination of the Credit Agreement dated June 15, 2021. Such documents will include, but are not limited to, the fully executed Credit Agreement; term sheets and commitment letters; credit approval memoranda; and the origination appraisal prepared by Ridgeline Appraisal Group, Inc. in June 2021, which appraised the value of Triton Harbor's marine terminal equipment and real property at $18,700,000. The production will include documents reflecting the original facility structure, consisting of Term Loan A in the principal amount of $14,000,000 (84-month term, bearing interest at SOFR plus 275 basis points) and a Revolving Credit Facility with a commitment amount of $8,000,000 (bearing interest at SOFR plus 250 basis points, with a maturity date of June 15, 2026). Documents relating to the original limited personal guaranty of Marcus J. Kappel in the amount of $4,500,000 will also be produced. In addition, documents reflecting the financial covenants set forth in the Credit Agreement — specifically, the Minimum Fixed Charge Coverage Ratio of 1.20x, the Maximum Total Leverage Ratio of 3.50x, and the Minimum Liquidity requirement of $2,000,000 — will be included in the production. Privileged documents will be identified on the privilege log.

REQUEST NO. 2

Request: All documents relating to the personal guaranty executed by Marcus J. Kappel in connection with the Credit Agreement dated June 15, 2021.

Objections: Subject to the General Objections incorporated herein.

Response: Subject to and without waiving the General Objections, BRB will produce the fully executed limited personal guaranty of Marcus J. Kappel dated June 15, 2021, in the amount of $4,500,000, together with any related schedules, amendments, or ancillary documentation executed in connection therewith at the time of origination.

REQUEST NO. 3

Request: All documents relating to BRB's monitoring, analysis, and review of Triton Harbor's financial condition and covenant compliance from January 1, 2022 through the present.

Objections: BRB objects to this Request as overbroad and unduly burdensome to the extent it encompasses all internal monitoring, analysis, and review documents generated over a period of more than three years, including documents having no relevance to the counterclaims. BRB further objects on the grounds of attorney-client privilege and work product protection to the extent this Request calls for the production of documents prepared in anticipation of litigation from approximately mid-2024 forward, following BRB's determination to accelerate the Triton Harbor obligations and commence enforcement proceedings. BRB also objects on the grounds of the bank examination privilege to the extent any monitoring or review documents incorporate, reflect, or were prepared in response to confidential supervisory information or regulatory examination findings.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged periodic financial reports submitted by Triton Harbor in the ordinary course of the lending relationship, covenant compliance certificates, and internal credit review analyses prepared by BRB's Credit Department and Special Assets Group for the period January 1, 2022 through October 6, 2023 (the date of the Forbearance and Modification Agreement). The documents to be produced will reflect Triton Harbor's financial performance during fiscal year 2022, including reported revenue of approximately $68,000,000 and adjusted EBITDA of approximately $9,400,000, as well as the deterioration reflected in the first quarter of 2023, at which time trailing twelve-month EBITDA had declined to approximately $5,100,000, the Fixed Charge Coverage Ratio had fallen to 0.87x (below the 1.20x covenant minimum), and the Total Leverage Ratio had risen to 4.92x (in excess of the 3.50x covenant maximum). BRB will also produce post-forbearance compliance monitoring documents for the period through April 15, 2024, to the extent such documents are non-privileged and do not reflect legal advice from counsel. Privileged documents will be withheld and identified on the privilege log.

REQUEST NO. 4

Request: All documents relating to the downgrade of the Triton Harbor credits on or about March 8, 2023, including internal credit review committee minutes, risk rating analyses, and communications regarding the transfer of the account to BRB's Special Assets Group.

Objections: BRB objects on the grounds of attorney-client privilege to the extent this Request calls for the production of communications with in-house counsel (Margaret Linden, SVP & General Counsel, and Thomas Hargreaves, VP & Associate General Counsel) or outside counsel regarding the downgrade decision and the legal implications thereof. BRB further objects on the grounds of the bank examination privilege to the extent any communications, directives, or findings of OCC examiners or other banking regulators influenced, prompted, or are reflected in the risk-rating determination or the decision to transfer the Triton Harbor account to the Special Assets Group.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged credit review committee minutes and risk-rating memoranda reflecting the downgrade of the Triton Harbor credits from "Pass" (Risk Rating 4) to "Substandard" (Risk Rating 7) on or about March 8, 2023, and the contemporaneous transfer of the account from BRB's Relationship Management division to the Special Assets Group. The documents to be produced will reflect that, as of the date of the transfer, the outstanding balances on the Triton Harbor facilities were as follows: Term Loan A, $11,375,000 outstanding principal; Revolving Credit Facility, $6,200,000 outstanding, for a total outstanding indebtedness of approximately $17,575,000. Communications with in-house or outside counsel regarding the downgrade or transfer that are protected by the attorney-client privilege or work product doctrine will be withheld and identified on the privilege log.

REQUEST NO. 5

Request: All documents relating to Triton Harbor's loss of the Port of Bridgehaven municipal contract and the Newark Bay maintenance contract in 2023.

Objections: BRB objects to this Request on the ground that the documents sought are equally available to Counterclaim Plaintiffs, who are the principals of Triton Harbor and are in possession of Triton Harbor's own business records regarding these contracts. BRB's possession of documents relating to the loss of these contracts is limited to information received from Triton Harbor in the ordinary course of the lending relationship and the borrower's compliance reporting obligations.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce such non-privileged documents as are in its possession, custody, or control relating to the loss of the Port of Bridgehaven municipal contract and the Newark Bay maintenance contract. BRB's files contain primarily borrower-provided financial reports, correspondence, and borrower updates discussing the loss of the Bridgehaven contract (representing approximately $12,000,000 per year in revenue) and the Newark Bay maintenance contract (representing approximately $7,500,000 per year in revenue), as well as BRB's internal analysis of the impact of these losses on Triton Harbor's annualized revenue run-rate, which declined to approximately $48,000,000 following the loss of these contracts. BRB notes that Counterclaim Plaintiffs, as principals and officers of Triton Harbor, have direct access to the underlying contracts and correspondence with the relevant counterparties, which BRB does not possess.

REQUEST NO. 6

Request: All documents and communications between Derek Whitmore and any BRB employee, officer, or director relating to Triton Harbor from March 1, 2023 through the present.

Objections: BRB objects to this Request as overbroad and unduly burdensome to the extent it seeks all internal communications to and from the Head of the Special Assets Group relating to the Triton Harbor account over a period of nearly two years, without limitation as to custodian, subject matter, or content. Given the volume of internal communications generated in connection with a distressed credit of this magnitude, collecting and reviewing all such communications would impose an undue burden on BRB disproportionate to the needs of the case. BRB further objects on the grounds of attorney-client privilege to the extent this Request calls for the production of communications in which Derek Whitmore communicated with, received advice from, or forwarded information to Margaret Linden (SVP & General Counsel), Thomas Hargreaves (VP & Associate General Counsel), David Blakemore of Blakemore & Stern LLP, or attorneys at Calderwood & Harkness LLP. BRB also objects on the grounds of work product protection to the extent this Request seeks documents prepared in anticipation of litigation.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged internal communications to and from Derek Whitmore (SVP, Head of Special Assets Group) relating to the Triton Harbor relationship for the period March 1, 2023 through October 6, 2023 (the date of execution of the Forbearance and Modification Agreement) and for the period April 1, 2024 through April 15, 2024 (the period surrounding the expiration of the forbearance period and the issuance of the Notice of Default and Acceleration). Communications with in-house or outside counsel, and communications prepared in anticipation of litigation, will be withheld and identified on the privilege log.

REQUEST NO. 7

Request: All documents and communications between Joanna Reeves and any BRB employee, officer, or director relating to Triton Harbor from March 1, 2023 through the present.

Objections: BRB asserts the same objections set forth in response to Request No. 6, which are incorporated herein by reference. This Request is overbroad and unduly burdensome for the same reasons stated above, and is subject to the same privilege and work product objections.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged internal communications to and from Joanna Reeves (VP, Special Assets Group) relating to the Triton Harbor relationship for the same time periods identified in BRB's response to Request No. 6, namely March 1, 2023 through October 6, 2023 and April 1, 2024 through April 15, 2024. The documents to be produced include, among other things, the September 29, 2023 internal email from Joanna Reeves to Derek Whitmore forwarding a draft term sheet for a potential $6,500,000 revolving credit facility, which email was expressly marked "for discussion purposes only — not approved." Communications with in-house or outside counsel, and communications prepared in anticipation of litigation, will be withheld and identified on the privilege log.

REQUEST NO. 8

Request: All documents and communications between Derek Whitmore and/or Joanna Reeves, on the one hand, and Marcus J. Kappel, Elaine D. Kappel, Triton Harbor Industries, LLC, and/or Mercer Tidwell & Associates LLC, on the other hand, from March 1, 2023 through the present.

Objections: BRB objects to this Request as overbroad to the extent it extends beyond the relevant workout negotiation period and seeks communications through the present date, including communications that post-date the commencement of this litigation and that may be protected by the attorney-client privilege or work product doctrine.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged communications between BRB's Special Assets Group personnel (Derek Whitmore and Joanna Reeves) and the Counterclaim Plaintiffs (Marcus J. Kappel and Elaine D. Kappel) and Mercer Tidwell & Associates LLC (Raymond Mercer, Managing Director) for the period March 1, 2023 through April 15, 2024. The documents to be produced include, among other things, the September 18, 2023 email from Joanna Reeves to Marcus Kappel in which Ms. Reeves stated, "We are optimistic about a path forward and believe this forbearance sets the stage for a renewed credit relationship." BRB notes that many of the documents responsive to this Request are communications that are in the equal possession, custody, or control of Counterclaim Plaintiffs or their financial advisor, Mercer Tidwell & Associates LLC. BRB is producing such documents without conceding any obligation to do so.

REQUEST NO. 9

Request: All documents relating to the meeting that took place on or about September 12, 2023, at BRB's offices at 1200 Avenue of the Americas, 38th Floor, New York, NY 10036, including but not limited to agendas, notes, presentations, internal memoranda, and all communications before and after the meeting referencing or relating to the meeting.

Objections: BRB objects on the grounds of attorney-client privilege to the extent any pre-meeting or post-meeting communications involved in-house counsel (Margaret Linden or Thomas Hargreaves) or outside counsel, or were made for the purpose of seeking or providing legal advice in connection with the September 12, 2023 meeting. BRB further objects on the grounds of the work product doctrine to the extent any post-meeting internal memoranda or analyses were prepared in anticipation of litigation or at the direction of counsel.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged documents relating to the meeting held on or about September 12, 2023, at BRB's offices between Derek Whitmore (SVP, Head of Special Assets Group), Joanna Reeves (VP, Special Assets Group), Marcus J. Kappel, and Elaine D. Kappel. BRB will produce any meeting agendas, meeting notes, presentations, or internal post-meeting memoranda that are not protected by the attorney-client privilege or work product doctrine. BRB notes that certain post-meeting communications involving Margaret Linden (SVP & General Counsel) or Thomas Hargreaves (VP & Associate General Counsel), or reflecting legal analysis or advice, may be withheld on privilege grounds. All withheld documents will be identified on the privilege log.

REQUEST NO. 10

Request: All documents relating to any representations, statements, or communications made by Derek Whitmore, Joanna Reeves, or any other BRB officer or employee to Marcus J. Kappel, Elaine D. Kappel, or Triton Harbor regarding BRB's willingness, intent, or plans to extend new credit, renew existing credit facilities, or provide additional financing to Triton Harbor.

Objections: BRB objects to this Request on the grounds that the terms "representations, statements, or communications" are vague and ambiguous, and that the Request is overbroad in its scope and lacks any temporal limitation. BRB further objects to this Request to the extent it assumes facts not in evidence and not admitted, namely that any actionable representations regarding the extension of new credit were made by BRB or any of its officers or employees. BRB denies that any binding commitment, promise, or representation to extend new credit, renew existing facilities, or provide additional financing was ever made to Counterclaim Plaintiffs or any of them, and BRB's response to this Request shall not be construed as an admission to the contrary. BRB also objects on the grounds of attorney-client privilege and work product protection to the extent any responsive documents involve communications with counsel.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged documents responsive to this Request, to the extent they exist in BRB's files. BRB draws the attention of Counterclaim Plaintiffs and the Court to the Forbearance and Modification Agreement dated October 6, 2023, at Section 9(c), which expressly provides:

"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. Any future credit decisions shall be made in Lender's sole and absolute discretion based on Lender's then-applicable credit standards, policies, and procedures."

BRB denies that any binding commitment to extend new credit was made, and further notes that any such commitment, if it existed, would be required to be in writing under the applicable statute of frauds. BRB will produce responsive, non-privileged documents, if any, identified in the course of its document review.

REQUEST NO. 11

Request: The memorandum dated on or about August 22, 2023, authored by Philip Aaronson, EVP & Chief Credit Officer, to Derek Whitmore, SVP, Special Assets Group, regarding the recommended disposition strategy for the Triton Harbor relationship (the "Aaronson Memorandum").

Objections: BRB objects to this Request in its entirety on the grounds of attorney-client privilege and work product protection. The memorandum at issue was authored by Philip Aaronson, EVP & Chief Credit Officer of BRB, and directed to Derek Whitmore, SVP, Head of the Special Assets Group, with a copy to Margaret Linden, SVP & General Counsel of BRB. The inclusion of the General Counsel on this communication is not incidental; the communication was made for the purpose of seeking and/or providing legal advice from in-house counsel regarding the recommended disposition strategy for the Triton Harbor relationship, including an assessment of the legal risks associated with various workout alternatives, the enforceability of the credit documents, and the potential for borrower claims in the event of acceleration or foreclosure. The document reflects the involvement of the General Counsel's office in evaluating the legal implications of BRB's strategic options and is therefore protected by the attorney-client privilege under New York law. See Spectrum Sys. Int'l Corp. v. Granite Harbor Securities, 78 N.Y.2d 371, 377 (1991).

BRB further objects on the grounds of the work product doctrine to the extent the Aaronson Memorandum was prepared in anticipation of litigation that was reasonably foreseeable at the time of its creation. By August 2023, the Triton Harbor credit had been downgraded to Substandard, the account had been transferred to the Special Assets Group, Triton Harbor had suffered the loss of two major contracts, and the prospect of default, acceleration, and enforcement proceedings — with attendant borrower counterclaims — was reasonably foreseeable. The memorandum was prepared in this context and reflects the mental impressions, conclusions, and legal theories of BRB's officers and counsel regarding the disposition of the Triton Harbor relationship.

Response: BRB withholds this document in its entirety on the grounds of attorney-client privilege and work product protection. The document is identified on BRB's Privilege Log with the following information:

• Date: August 22, 2023

• Author: Philip Aaronson, EVP & Chief Credit Officer

• Recipients: Derek Whitmore, SVP, Head of Special Assets Group

• CC: Margaret Linden, SVP & General Counsel

• Subject: "Triton Harbor — Recommended Disposition Strategy"

• Privilege Basis: Attorney-client privilege (communication directed to and copied to in-house counsel for the purpose of obtaining legal advice regarding disposition strategy and associated legal risks) and work product (prepared in anticipation of reasonably foreseeable litigation)

BRB is prepared to submit this document for in camera review by the Court should Counterclaim Plaintiffs challenge the privilege designation.

REQUEST NO. 12

Request: All documents relating to or reflecting BRB's internal strategy, plan, or decision to exit, terminate, wind down, or accelerate the Triton Harbor credit relationship.

Objections: BRB objects to this Request as overbroad to the extent it seeks "all documents" relating to BRB's internal credit strategy without meaningful temporal or subject-matter limitation. BRB further objects on the grounds of attorney-client privilege, as many documents reflecting BRB's internal disposition strategy involve communications with in-house counsel (Margaret Linden, Thomas Hargreaves) and/or outside counsel (Blakemore & Stern LLP, Calderwood & Harkness LLP) and were created for the purpose of seeking or providing legal advice regarding BRB's legal rights, enforcement options, and litigation exposure. BRB also objects on the grounds of the work product doctrine, as many such documents were prepared in anticipation of litigation. Finally, BRB objects on the grounds of the bank examination privilege to the extent any regulatory directives, examiner communications, or supervisory findings influenced or are reflected in BRB's disposition strategy for the Triton Harbor relationship.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged business records reflecting the credit administration of the Triton Harbor relationship, including credit committee minutes and business memoranda to the extent they do not contain or reflect privileged legal advice or confidential supervisory information. Documents reflecting legal strategy, litigation risk assessments, or communications with in-house or outside counsel regarding the disposition, wind-down, or acceleration of the Triton Harbor relationship will be withheld and identified on the privilege log.

REQUEST NO. 13

Request: All internal term sheets, draft credit proposals, draft facility agreements, or similar documents relating to any proposed new credit facility for Triton Harbor, including but not limited to the draft term sheet for a proposed $6.5 million revolving credit facility.

Objections: BRB objects to the characterization of internal working drafts as "proposals" to the extent such characterization implies or presupposes that these documents constituted offers, commitments, or binding agreements on the part of BRB. BRB further objects to the extent this Request calls for the production of documents protected by the attorney-client privilege or work product doctrine.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce the internal draft term sheet referenced in Joanna Reeves' September 29, 2023 email to Derek Whitmore, which outlined a potential $6,500,000 revolving credit facility and which was expressly marked "for discussion purposes only — not approved." BRB will also produce any other non-privileged internal draft credit documents relating to Triton Harbor identified in the course of its document review, to the extent such documents exist in BRB's files. BRB notes for the record that no new credit facility for Triton Harbor was ever approved by BRB's credit committee, committed to by any authorized officer of BRB, or offered to Triton Harbor or any Counterclaim Plaintiff. The production of internal working drafts is made without any concession that such documents evidence a commitment, offer, or binding obligation of any kind.

REQUEST NO. 14

Request: All documents relating to the Forbearance and Modification Agreement dated October 6, 2023, including all drafts, redlines, negotiation correspondence, internal approvals, and communications between BRB and Triton Harbor regarding the terms thereof.

Objections: BRB objects on the grounds of attorney-client privilege to the extent this Request seeks drafts, redlines, and internal communications involving Blakemore & Stern LLP (BRB's prior outside counsel, which assisted in the negotiation and drafting of the Forbearance Agreement), Margaret Linden, or Thomas Hargreaves. BRB further objects on the grounds of the work product doctrine to the extent any litigation risk analysis, enforcement strategy memoranda, or other materials were prepared by or at the direction of counsel in connection with the forbearance negotiation and in anticipation of potential litigation in the event the forbearance was unsuccessful.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce the fully executed Forbearance and Modification Agreement dated October 6, 2023, together with non-privileged drafts, redlines, and negotiation correspondence exchanged between BRB and Triton Harbor and/or their respective representatives. The executed agreement reflected, among other material terms, the following:

(a) A 180-day forbearance period, commencing October 6, 2023 and expiring April 3, 2024;

(b) Minimum monthly debt service payments of $125,000 during the forbearance period (Section 4(a));

(c) Additional collateral pledges consisting of two equipment leases with an appraised value of $2,300,000 and the personal residence of Marcus J. Kappel and Elaine D. Kappel located at 14 Birchmont Lane, Westport, CT 06880, with an appraised value of $3,100,000;

(d) Amendment of Marcus J. Kappel's personal guaranty from a limited guaranty in the amount of $4,500,000 to an unlimited personal guaranty;

(e) Execution of a new unlimited personal guaranty by Elaine D. Kappel;

(f) Payment of a forbearance fee of $87,500, calculated as 0.50% of the $17,500,000 in outstanding obligations as of the date of execution;

(g) Engagement of Mercer Tidwell & Associates LLC as an independent financial advisor, at Triton Harbor's expense;

(h) The Section 9(c) "No Commitment to Extend Credit" disclaimer; and

(i) The Section 12(a) integration clause, providing that the Forbearance Agreement constitutes the complete and exclusive statement of the terms agreed upon between the parties and supersedes all prior oral and written communications.

Internal credit approval memoranda and committee materials relating to BRB's approval of the forbearance terms will be produced to the extent non-privileged. Documents involving legal advice from counsel will be withheld and logged.

REQUEST NO. 15

Request: All documents relating to the updated collateral appraisal conducted in or about September 2023 by Ridgeline Appraisal Group, Inc.

Objections: Subject to the General Objections incorporated herein.

Response: Subject to and without waiving the General Objections, BRB will produce the September 2023 collateral appraisal report prepared by Ridgeline Appraisal Group, Inc. (312 Elm Street, Stamford, CT 06902), which appraised Triton Harbor's marine terminal equipment and real property at a value of $11,200,000. This valuation reflected a decline of $7,500,000, or approximately 40.1%, from the origination appraisal value of $18,700,000 as of June 2021. BRB will also produce related correspondence between BRB and Ridgeline Appraisal Group, Inc. in connection with the commissioning and delivery of the updated appraisal.

REQUEST NO. 16

Request: All documents relating to the original collateral appraisal conducted in or about June 2021 by Ridgeline Appraisal Group, Inc. in connection with the origination of the Credit Agreement.

Objections: Subject to the General Objections incorporated herein.

Response: Subject to and without waiving the General Objections, BRB will produce the June 2021 origination appraisal report prepared by Ridgeline Appraisal Group, Inc., which appraised the collateral consisting of Triton Harbor's marine terminal equipment and real property at a value of $18,700,000. Related correspondence and engagement documentation will also be produced to the extent in BRB's possession.

REQUEST NO. 17

Request: All documents relating to Triton Harbor's compliance with the terms and conditions of the Forbearance and Modification Agreement, including monthly financial reports, payment records, and covenant compliance analyses.

Objections: BRB objects on the ground that many of the documents sought, including Triton Harbor's own financial reports, are equally available to Counterclaim Plaintiffs, who generated and submitted such reports. BRB further objects on the grounds of attorney-client privilege to the extent internal covenant compliance analyses were prepared in connection with or incorporate legal advice from in-house or outside counsel.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged documents reflecting Triton Harbor's compliance performance during the 180-day forbearance period (October 6, 2023 through April 3, 2024). The production will include records reflecting that Triton Harbor made the six monthly payments of $125,000 each as required under Section 4(a) of the Forbearance Agreement (total payments: $750,000), monthly financial reports submitted by Triton Harbor, and non-privileged covenant compliance analyses prepared by BRB's Special Assets Group. The documents to be produced will reflect that, as of March 31, 2024, Triton Harbor's Fixed Charge Coverage Ratio stood at 0.94x, which failed to achieve the covenant cure milestone requiring a minimum of 1.20x, constituting a material condition that was not satisfied prior to the expiration of the forbearance period. Privileged documents will be withheld and logged.

REQUEST NO. 18

Request: All documents relating to BRB's decision to issue the Notice of Default and Acceleration on or about April 15, 2024.

Objections: BRB objects on the grounds of attorney-client privilege, as the decision to accelerate the Triton Harbor obligations involved extensive legal advice from Blakemore & Stern LLP and from BRB's in-house legal department, including analysis of the legal bases for acceleration, the enforceability of the acceleration clause, and the potential defenses and counterclaims that Triton Harbor and the Kappels might assert. BRB further objects on the grounds of the work product doctrine, as the acceleration decision was made in the context of reasonably anticipated litigation and many of the documents reflecting the decision-making process were prepared in anticipation thereof.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce the Notice of Default and Acceleration dated April 15, 2024, which declared the entire outstanding balance of $17,456,212 immediately due and payable. The total accelerated amount comprised the following:

• Term Loan A outstanding principal: $10,625,000

• Revolving Credit Facility outstanding principal: $6,200,000

• Accrued and unpaid interest: $487,322

• Late fees and default interest: $143,890

• Total: $17,456,212

BRB will produce non-privileged internal credit committee minutes or business memoranda supporting or reflecting the acceleration decision, to the extent such documents do not contain or reflect legal advice from counsel. Communications with Blakemore & Stern LLP and Margaret Linden regarding the legal basis, timing, and procedural requirements for acceleration will be withheld as privileged and identified on the privilege log.

REQUEST NO. 19

Request: All documents relating to BRB's commencement of foreclosure proceedings on the Long Island City terminal facility located at 50-22 Borden Avenue, Long Island City, NY 11101.

Objections: BRB objects on the grounds of attorney-client privilege to the extent this Request seeks communications with counsel regarding the commencement and prosecution of the foreclosure proceedings. BRB further objects on the ground that the publicly filed foreclosure documents are equally available to Counterclaim Plaintiffs.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged documents relating to the foreclosure commenced on or about May 20, 2024 on the Long Island City terminal facility, including the foreclosure notice and related filings to the extent not already in Counterclaim Plaintiffs' possession or publicly available. Communications with counsel regarding the foreclosure will be withheld and logged.

REQUEST NO. 20

Request: All documents relating to the title insurance policy issued by Harborview Title & Escrow Co. on the Long Island City terminal facility.

Objections: Subject to the General Objections incorporated herein. BRB further objects on the grounds of relevance to the extent the title insurance policy and related documents are not relevant to any of the counterclaims asserted by Counterclaim Plaintiffs.

Response: Subject to and without waiving the foregoing objections, BRB will produce the title insurance policy (Policy No. HT-NYC-2021-04553) issued by Harborview Title & Escrow Co. (233 Broadway, Suite 1600, New York, NY 10279), to the extent it is responsive and non-privileged.

REQUEST NO. 21

Request: All documents relating to the personal guaranty executed by Elaine D. Kappel in connection with the Forbearance and Modification Agreement dated October 6, 2023.

Objections: Subject to the General Objections incorporated herein.

Response: Subject to and without waiving the General Objections, BRB will produce the unlimited personal guaranty executed by Elaine D. Kappel, dated October 6, 2023, together with any related schedules, ancillary documentation, and correspondence relating to the negotiation and execution thereof.

REQUEST NO. 22

Request: All documents relating to the amendment of Marcus J. Kappel's personal guaranty from a limited guaranty ($4,500,000) to an unlimited personal guaranty in connection with the Forbearance and Modification Agreement.

Objections: Subject to the General Objections incorporated herein.

Response: Subject to and without waiving the General Objections, BRB will produce the amended unlimited personal guaranty executed by Marcus J. Kappel, dated October 6, 2023, together with the original limited personal guaranty dated June 15, 2021, in the amount of $4,500,000, and related documentation reflecting the amendment of the guaranty from limited to unlimited in connection with the Forbearance and Modification Agreement.

REQUEST NO. 23

Request: All documents relating to the appraisal of the personal residence of Marcus J. Kappel and Elaine D. Kappel located at 14 Birchmont Lane, Westport, CT 06880, pledged as additional collateral under the Forbearance Agreement.

Objections: Subject to the General Objections incorporated herein. BRB further objects on the grounds of third-party privacy to the extent such documents contain personal financial information of the Kappels not already known to them or their counsel.

Response: Subject to and without waiving the foregoing objections, and subject to the Stipulated Confidentiality/Protective Order, BRB will produce the appraisal of the Kappel residence at 14 Birchmont Lane, Westport, CT 06880, reflecting an appraised value of $3,100,000, to the extent such documentation is in BRB's possession, custody, or control.

REQUEST NO. 24

Request: All documents relating to the two equipment leases assigned as additional collateral under the Forbearance Agreement.

Objections: Subject to the General Objections incorporated herein.

Response: Subject to and without waiving the General Objections, BRB will produce documentation relating to the assignment of the two equipment leases pledged as additional collateral under the Forbearance and Modification Agreement, including the lease agreements, assignment instruments, and the appraisal reflecting an appraised value of $2,300,000 for the equipment subject to the leases.

REQUEST NO. 25

Request: All credit committee minutes, memoranda, or reports relating to the Triton Harbor credit relationship from January 1, 2021 through the present.

Objections: BRB objects to this Request as overbroad in its temporal scope, as it seeks credit committee materials spanning over four years, including periods well before the events giving rise to the counterclaims. BRB further objects on the grounds of attorney-client privilege to the extent credit committee discussions incorporated legal advice from in-house counsel (Margaret Linden or Thomas Hargreaves) or outside counsel, which is a common and expected practice in credit committee deliberations involving distressed credits. BRB also objects on the grounds of the bank examination privilege to the extent credit committee materials reflect, reference, or incorporate confidential supervisory information, regulatory examination findings, or supervisory directives of the OCC or other banking regulators.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged credit committee minutes and related memoranda for the Triton Harbor credit relationship. Materials reflecting legal advice from in-house or outside counsel, or incorporating confidential supervisory information, will be withheld and identified on the privilege log. The materials to be produced will include, to the extent they are not subject to privilege, the credit committee's approval of the original credit facility in June 2021, the committee's consideration and approval of the risk-rating downgrade to Risk Rating 7 (Substandard) on or about March 8, 2023, and the committee's consideration and approval of the terms of the Forbearance and Modification Agreement executed October 6, 2023.

REQUEST NO. 26

Request: All communications between Philip Aaronson and Derek Whitmore relating to Triton Harbor from January 1, 2023 through the present.

Objections: BRB objects to this Request as overbroad. BRB further objects on the grounds of attorney-client privilege, as many communications between the Chief Credit Officer and the Head of the Special Assets Group regarding a distressed credit involved discussion of legal risk, litigation strategy, enforcement options, and communications with in-house and outside counsel, and were made for the purpose of seeking or providing legal advice or conveying information necessary for the rendering of legal advice. BRB also objects on the grounds of the work product doctrine to the extent such communications were made in anticipation of litigation.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged communications between Philip Aaronson (EVP, Chief Credit Officer) and Derek Whitmore (SVP, Head of Special Assets Group) relating to the Triton Harbor credit relationship. Communications that are privileged, including those copying or discussing advice from Margaret Linden, Thomas Hargreaves, or outside counsel, and those reflecting litigation strategy or legal analysis, will be withheld and identified on the privilege log.

REQUEST NO. 27

Request: All communications between Philip Aaronson and Margaret Linden relating to Triton Harbor from January 1, 2023 through the present.

Objections: BRB objects to this Request in its entirety on the grounds of attorney-client privilege. All responsive communications between Philip Aaronson (EVP & Chief Credit Officer) and Margaret Linden (SVP & General Counsel) relating to the Triton Harbor credit relationship are protected by the attorney-client privilege. These communications were made between a senior business officer and the Bank's chief legal officer for the purpose of seeking and providing legal advice regarding BRB's legal rights, obligations, enforcement options, and litigation exposure in connection with the Triton Harbor credits, the forbearance negotiations, the acceleration decision, and the subsequent commencement of this action. The involvement of the General Counsel in these communications was in her capacity as legal advisor, and these communications are entitled to the full protection of the attorney-client privilege under New York law.

Response: All responsive documents are withheld in their entirety on the grounds of attorney-client privilege and will be identified on BRB's privilege log.

REQUEST NO. 28

Request: All communications between any BRB officer or employee and Blakemore & Stern LLP relating to Triton Harbor from January 1, 2023 through November 4, 2024.

Objections: BRB objects to this Request in its entirety on the grounds of attorney-client privilege and the work product doctrine. All communications between BRB and Blakemore & Stern LLP (David Blakemore, Esq., partner; 120 Broadway, Suite 3500, New York, NY 10271), BRB's prior outside litigation counsel in this matter, are protected by the attorney-client privilege and/or the work product doctrine. Blakemore & Stern LLP was retained by BRB to provide legal advice regarding the enforcement of BRB's rights under the Credit Agreement, the Forbearance and Modification Agreement, and the personal guaranties, and subsequently prepared, filed, and prosecuted the original complaint in this action on August 12, 2024. Blakemore & Stern LLP continued to represent BRB through November 4, 2024, when counsel was changed to Calderwood & Harkness LLP. All communications during the period of representation were made for the purpose of seeking and obtaining legal advice and constitute privileged attorney-client communications. Additionally, many such communications constitute or contain attorney work product prepared in anticipation of or in connection with this litigation.

Response: All responsive documents are withheld in their entirety on the grounds of attorney-client privilege and work product protection and will be identified on BRB's privilege log.

REQUEST NO. 29

Request: All communications between any BRB officer or employee and Calderwood & Harkness LLP relating to Triton Harbor.

Objections: BRB objects to this Request in its entirety on the grounds of attorney-client privilege and the work product doctrine. All communications between BRB and Calderwood & Harkness LLP, BRB's current litigation counsel (retained November 4, 2024), are protected by the attorney-client privilege and the work product doctrine. These communications were made for the purpose of seeking and obtaining legal advice and in connection with the defense of BRB's interests in this litigation.

Response: All responsive documents are withheld in their entirety and will be identified on BRB's privilege log.

REQUEST NO. 30

Request: All documents relating to BRB's engagement of Mercer Tidwell & Associates LLC or any communications between BRB and Mercer Tidwell & Associates LLC (Raymond Mercer, Managing Director) relating to Triton Harbor.

Objections: BRB objects on the ground that documents relating to the engagement of Mercer Tidwell & Associates LLC are equally available to Counterclaim Plaintiffs, who retained Mercer Tidwell as their financial advisor pursuant to the terms of the Forbearance and Modification Agreement. BRB further objects on the grounds of attorney-client privilege and work product protection to the extent any communications with Mercer Tidwell were made in connection with, at the direction of, or for the purpose of transmitting information to or from counsel in connection with the provision of legal advice or in anticipation of litigation.

Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged communications between BRB's Special Assets Group and Mercer Tidwell & Associates LLC (245 Park Avenue, 28th Floor, New York, NY 10167; Raymond Mercer, Managing Director) relating to the Triton Harbor workout and forbearance negotiations. Privileged communications will be withheld and logged.

REQUEST NO. 31

Request: All documents relating to the Forbearance Fee of $87,500 paid by Triton Harbor in connection with the Forbearance Agreement.

Objections: Subject to the General Objections incorporated herein.

Response: Subject to and without waiving the General Objections, BRB will produce documentation relating to the forbearance fee of $87,500, which was calculated as 0.50% of the $17,500,000 in outstanding obligations at the time of execution of the Forbearance and Modification Agreement on October 6, 2023. The production will include payment records, wire transfer confirmations, and any related correspondence reflecting the calculation and payment of the fee.

REQUEST NO. 32

Request: All documents relating to BRB's policies, procedures, manuals, or guidelines governing the Special Assets Group, workout negotiations, forbearance agreements, and/or acceleration decisions.

Objections: BRB objects to this Request as overbroad to the extent it seeks all of BRB's institutional policies, procedures, manuals, and gu

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — COMMERCIAL DIVISION
BELMONT RIDGE BANK NA,
Plaintiff/Counterclaim Defendant,
— against —
TRITON HARBOR INDUSTRIES, LLC, MARCUS J. KAPPEL, and ELAINE D. KAPPEL,
Defendants/Counterclaim Plaintiffs.
Index No. 654871/2024
Assigned Justice: Hon. Althea Marchetti
Matter No.: 1022-00005
DEFENDANT/COUNTERCLAIM DEFENDANT BELMONT RIDGE BANK NA'S RESPONSES AND OBJECTIONS TO COUNTERCLAIM PLAINTIFFS' FIRST SET OF DOCUMENT REQUESTS (NOS. 1 THROUGH 87)
January 15, 2025
Serving Party:
Belmont Ridge Bank NA, by its attorneys, Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, NY 10022 Tel: (212) 555-7800
Fax: (212) 555-7801
Linda Osei, Partner Priya Anand, Partner Carlos Espinoza, Associate Hannah Brinkley, Associate
Propounding Party:
Triton Harbor Industries, LLC, Marcus J. Kappel, and Elaine D. Kappel, by their attorneys, Kestrel Voss & Huang LLP 780 Third Avenue, 24th Floor New York, NY 10017 Tel: (212) 555-4200
Fax: (212) 555-4201
Theodore "Ted" Huang, Partner Natasha Orlov, Associate
PRELIMINARY STATEMENT
Defendant/Counterclaim Defendant Belmont Ridge Bank NA ("BRB" or the "Bank") hereby submits these Responses and Objections to the First Set of Document Requests (Nos. 1 through 87) served by Triton Harbor Industries, LLC ("Triton Harbor"), Marcus J. Kappel, and Elaine D. Kappel (collectively, "Counterclaim Plaintiffs") on or about November 25, 2024.
BRB submits these Responses and Objections in accordance with Article 31 of the New York Civil Practice Law and Rules ("CPLR"), including but not limited to CPLR §§ 3101, 3120, and 3122, and in further accordance with the Stipulated discovery Schedule and Preliminary Conference Order entered by this Court (Marchetti, J.) on December 6, 2024, which established the deadline for responses to the first round of document requests as January 15, 2025.
BRB's production of documents responsive to these Requests is made subject to and in accordance with the Stipulated Confidentiality and Protective Order ("Protective Order") entered by this Court on December 20, 2024, which governs the designation, handling, and use of materials designated as "Confidential" or "Highly Confidential — Attorneys' Eyes Only" in this action. BRB reserves the right to designate responsive documents under the appropriate tier of protection under the Protective Order at the time of production and to re-designate documents at any time as permitted by the Protective Order.
In preparing these Responses and Objections, BRB has undertaken a reasonable and proportionate search of its files, records, and electronically stored information ("ESI"). This search has encompassed the files of BRB's Special Assets Group, Credit Department, Office of the General Counsel, and the files of relevant individual custodians, including but not limited to Derek Whitmore (SVP, Head of Special Assets Group), Joanna Reeves (VP, Special Assets Group), Philip Aaronson (EVP & Chief Credit Officer), Margaret Linden (SVP & General Counsel), and Thomas Hargreaves (VP & Associate General Counsel). The search has identified approximately 34,000 documents currently under review for privilege, responsiveness, and confidentiality designations. BRB's document review is being conducted using a combination of technology-assisted review and manual attorney review, consistent with the guidelines outlined in the Preliminary Conference Order.
BRB's production of documents is ongoing. BRB reserves the right to supplement, amend, or correct these Responses and Objections as its document review progresses and as additional responsive, non-privileged materials are identified. The fact that BRB has not yet completed its review does not constitute a waiver of any objection, and BRB expressly preserves all such objections pending the completion of its review.
These Responses and Objections are made without waiver of any objection, privilege, protection, right, or defense, including but not limited to any and all affirmative defenses asserted in BRB's Answer to Counterclaims filed with this Court on November 22, 2024. BRB's agreement to produce any document or category of documents in response to a particular Request shall not be construed as a concession that such document or category is relevant, admissible, or properly discoverable, nor shall it constitute a waiver of any objection to the use of such document at trial or in any other proceeding.
GENERAL OBJECTIONS
BRB makes the following General Objections, each of which is incorporated by reference into each specific response set forth below as if fully restated therein, whether or not specifically referenced in any particular response.
General Objection No. 1: Attorney-Client Privilege. BRB objects to each and every Request to the extent it calls for the production of documents or communications protected by the attorney-client privilege. This objection applies, without limitation, to communications between BRB personnel and BRB's in-house legal department, including Margaret Linden, SVP & General Counsel, and Thomas Hargreaves, VP & Associate General Counsel; communications between BRB and its prior outside litigation counsel, Blakemore & Stern LLP, and specifically David Blakemore, Esq., partner, who represented BRB through November 4, 2024; communications between BRB and its current outside litigation counsel, Calderwood & Harkness LLP; and communications between BRB and its coverage counsel, Crane, Alcott & Shire LLP, and specifically Robert Alcott, Esq., partner, regarding directors' and officers' liability insurance coverage in connection with this action. Documents withheld on the basis of the attorney-client privilege will be identified on a privilege log in compliance with CPLR § 3122 and served contemporaneously with or within a reasonable time following these Responses.
General Objection No. 2: Work Product Doctrine. BRB objects to each and every Request to the extent it calls for the production of documents, memoranda, analyses, or other materials prepared by or at the direction of counsel in anticipation of litigation or for trial. This objection encompasses materials prepared by Blakemore & Stern LLP in connection with BRB's evaluation of its enforcement options, the filing of the original complaint on August 12, 2024, and the defense of the counterclaims; materials prepared by Calderwood & Harkness LLP since its retention on November 4, 2024; and materials prepared by BRB personnel at the direction of or for the purpose of providing information to counsel in anticipation of litigation. Such materials constitute attorney work product protected from disclosure under CPLR § 3101(c) (attorney work product) and CPLR § 3101(d) (materials prepared in anticipation of litigation), and the federal common law of work product as articulated in Hickman v. Taylor, 329 U.S. 495 (1947), and its progeny.
General Objection No. 3: Bank Examination Privilege. BRB objects to each and every Request to the extent it seeks the production of documents, reports, or communications constituting, reflecting, or prepared in connection with examinations, supervisory reviews, or confidential supervisory activities of the Office of the Comptroller of the Currency ("OCC") or any other federal or state banking regulator with respect to BRB. Such materials constitute confidential supervisory information protected by the bank examination privilege, 12 U.S.C. § 1820(e), and applicable federal regulations, including but not limited to 12 C.F.R. Part 4, Subpart C, which prohibits the disclosure of OCC confidential supervisory information without the prior written consent of the OCC. BRB is not at liberty to produce such materials and directs Counterclaim Plaintiffs to the OCC or other relevant regulatory authority should they seek to obtain such documents.
General Objection No. 4: Overbreadth and Undue Burden. BRB objects to each and every Request to the extent it is overbroad in temporal scope, subject-matter scope, or both; unduly burdensome; or disproportionate to the needs of this case in light of the importance of the issues at stake, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. This objection applies, without limitation, to Requests that are not limited to a reasonable time period, that seek "all documents" without meaningful limitation as to subject matter or custodian, or that encompass broad categories of documents having no demonstrable relevance to the specific claims or defenses in this action.
General Objection No. 5: Relevance. BRB objects to each and every Request to the extent it seeks the production of documents that are neither relevant to the claims or defenses of any party in this action nor reasonably calculated to lead to the discovery of admissible evidence, as required by CPLR § 3101(a). BRB interprets each Request as limited to documents that are relevant to the specific claims and defenses at issue, including the counterclaims for fraudulent inducement, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, and economic duress, and the affirmative defenses asserted in BRB's Answer to Counterclaims.
General Objection No. 6: Vagueness and Ambiguity. BRB objects to each and every Request to the extent the terms used therein are vague, ambiguous, undefined, or susceptible to multiple interpretations. Where BRB has responded to such Requests, it has construed the terms used therein in a reasonable manner consistent with the overall context of the Requests and the claims and defenses at issue. BRB reserves the right to challenge the meaning of any term in any Request at a later point in this litigation and does not concede that its interpretation of any ambiguous term is the only reasonable interpretation.
General Objection No. 7: Third-Party Privacy and Confidentiality. BRB objects to each and every Request to the extent it seeks the production of documents containing confidential financial information, personally identifiable information, trade secrets, or proprietary business information of third parties not involved in this action, including but not limited to other BRB borrowers, customers, counterparties, and vendors. BRB has obligations of confidentiality to its customers and counterparties, both under applicable law and contractual arrangements, and the production of such materials, if any is required, will be made subject to and in accordance with the Stipulated Confidentiality/Protective Order entered by this Court on December 20, 2024, with appropriate redactions to protect the identities and confidential information of non-parties.
General Objection No. 8: Documents Equally Available. BRB objects to each and every Request to the extent it seeks the production of documents that are in the possession, custody, or control of Counterclaim Plaintiffs or their agents, officers, directors, employees, representatives, or counsel, or that are publicly available from government agencies, courts, or other public sources. Such documents are equally available to the requesting parties, and BRB should not be required to bear the burden and expense of collecting, reviewing, and producing documents that Counterclaim Plaintiffs already possess or can readily obtain from other sources.
General Objection No. 9: Expert Materials. BRB objects to each and every Request to the extent it seeks documents, reports, analyses, or other materials prepared by, for, or in connection with BRB's retention of experts or consultants in anticipation of litigation or for trial, including but not limited to Wentworth Risk Advisors LLC and its principal, Dr. Gerald Stokes. Such materials are protected as attorney work product and/or as expert materials prepared in anticipation of litigation under CPLR § 3101(d). Information regarding BRB's expert witnesses will be disclosed at the time and in the manner required by the Preliminary Conference Order and applicable provisions of the CPLR.
General Objection No. 10: Ongoing Review Reservation. BRB's document review encompasses approximately 34,000 documents, including electronic mail communications, internal memoranda, credit files, loan documentation, committee minutes, financial reports, and other records. The review of these documents for privilege, responsiveness, and confidentiality designations is ongoing and is expected to continue for several weeks following the service of these Responses. BRB reserves the right to supplement, amend, or correct these Responses and Objections as additional responsive documents are identified, as its privilege review is completed, and as new information becomes available. BRB further reserves the right to produce additional documents and to identify additional privileged documents on supplemental privilege logs, as necessary, throughout the course of discovery.
General Objection No. 11: Incorporation of General Objections. Each of the foregoing General Objections (Nos. 1 through 10) is hereby incorporated by reference into each and every specific response set forth below as if fully restated therein, whether or not any specific General Objection is expressly referenced in a particular response. The failure to restate or specifically reference a General Objection in any particular response shall not constitute a waiver of that General Objection as to that Request or any other Request.
SPECIFIC RESPONSES AND OBJECTIONS
Subject to and without waiving the foregoing General Objections, BRB responds to each of the Counterclaim Plaintiffs' Document Requests as follows:
REQUEST NO. 1
Request: All documents relating to the origination of the Credit Agreement dated June 15, 2021, between BRB and Triton Harbor Industries, LLC, including but not limited to credit applications, underwriting memoranda, credit approval packages, and term sheets.
Objections: BRB objects to this Request to the extent it is overbroad in seeking "all documents" relating to the origination without meaningful temporal or subject-matter limitation, and to the extent it seeks documents that predate the workout period and bear no relevance to the counterclaims, which concern the forbearance negotiations and alleged misrepresentations occurring in 2023 and 2024. BRB further objects on the grounds of attorney-client privilege to the extent this Request calls for the production of communications with in-house or outside counsel during the origination process, and on the grounds of the bank examination privilege to the extent any origination documents reflect or incorporate confidential supervisory information.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged documents in its possession, custody, or control relating to the origination of the Credit Agreement dated June 15, 2021. Such documents will include, but are not limited to, the fully executed Credit Agreement; term sheets and commitment letters; credit approval memoranda; and the origination appraisal prepared by Ridgeline Appraisal Group, Inc. in June 2021, which appraised the value of Triton Harbor's marine terminal equipment and real property at $18,700,000. The production will include documents reflecting the original facility structure, consisting of Term Loan A in the principal amount of $14,000,000 (84-month term, bearing interest at SOFR plus 275 basis points) and a Revolving Credit Facility with a commitment amount of $8,000,000 (bearing interest at SOFR plus 250 basis points, with a maturity date of June 15, 2026). Documents relating to the original limited personal guaranty of Marcus J. Kappel in the amount of $4,500,000 will also be produced. In addition, documents reflecting the financial covenants set forth in the Credit Agreement — specifically, the Minimum Fixed Charge Coverage Ratio of 1.20x, the Maximum Total Leverage Ratio of 3.50x, and the Minimum Liquidity requirement of $2,000,000 — will be included in the production. Privileged documents will be identified on the privilege log.
REQUEST NO. 2
Request: All documents relating to the personal guaranty executed by Marcus J. Kappel in connection with the Credit Agreement dated June 15, 2021.
Objections: Subject to the General Objections incorporated herein.
Response: Subject to and without waiving the General Objections, BRB will produce the fully executed limited personal guaranty of Marcus J. Kappel dated June 15, 2021, in the amount of $4,500,000, together with any related schedules, amendments, or ancillary documentation executed in connection therewith at the time of origination.
REQUEST NO. 3
Request: All documents relating to BRB's monitoring, analysis, and review of Triton Harbor's financial condition and covenant compliance from January 1, 2022 through the present.
Objections: BRB objects to this Request as overbroad and unduly burdensome to the extent it encompasses all internal monitoring, analysis, and review documents generated over a period of more than three years, including documents having no relevance to the counterclaims. BRB further objects on the grounds of attorney-client privilege and work product protection to the extent this Request calls for the production of documents prepared in anticipation of litigation from approximately mid-2024 forward, following BRB's determination to accelerate the Triton Harbor obligations and commence enforcement proceedings. BRB also objects on the grounds of the bank examination privilege to the extent any monitoring or review documents incorporate, reflect, or were prepared in response to confidential supervisory information or regulatory examination findings.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged periodic financial reports submitted by Triton Harbor in the ordinary course of the lending relationship, covenant compliance certificates, and internal credit review analyses prepared by BRB's Credit Department and Special Assets Group for the period January 1, 2022 through October 6, 2023 (the date of the Forbearance and Modification Agreement). The documents to be produced will reflect Triton Harbor's financial performance during fiscal year 2022, including reported revenue of approximately $68,000,000 and adjusted EBITDA of approximately $9,400,000, as well as the deterioration reflected in the first quarter of 2023, at which time trailing twelve-month EBITDA had declined to approximately $5,100,000, the Fixed Charge Coverage Ratio had fallen to 0.87x (below the 1.20x covenant minimum), and the Total Leverage Ratio had risen to 4.92x (in excess of the 3.50x covenant maximum). BRB will also produce post-forbearance compliance monitoring documents for the period through April 15, 2024, to the extent such documents are non-privileged and do not reflect legal advice from counsel. Privileged documents will be withheld and identified on the privilege log.
REQUEST NO. 4
Request: All documents relating to the downgrade of the Triton Harbor credits on or about March 8, 2023, including internal credit review committee minutes, risk rating analyses, and communications regarding the transfer of the account to BRB's Special Assets Group.
Objections: BRB objects on the grounds of attorney-client privilege to the extent this Request calls for the production of communications with in-house counsel (Margaret Linden, SVP & General Counsel, and Thomas Hargreaves, VP & Associate General Counsel) or outside counsel regarding the downgrade decision and the legal implications thereof. BRB further objects on the grounds of the bank examination privilege to the extent any communications, directives, or findings of OCC examiners or other banking regulators influenced, prompted, or are reflected in the risk-rating determination or the decision to transfer the Triton Harbor account to the Special Assets Group.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged credit review committee minutes and risk-rating memoranda reflecting the downgrade of the Triton Harbor credits from "Pass" (Risk Rating 4) to "Substandard" (Risk Rating 7) on or about March 8, 2023, and the contemporaneous transfer of the account from BRB's Relationship Management division to the Special Assets Group. The documents to be produced will reflect that, as of the date of the transfer, the outstanding balances on the Triton Harbor facilities were as follows: Term Loan A, $11,375,000 outstanding principal; Revolving Credit Facility, $6,200,000 outstanding, for a total outstanding indebtedness of approximately $17,575,000. Communications with in-house or outside counsel regarding the downgrade or transfer that are protected by the attorney-client privilege or work product doctrine will be withheld and identified on the privilege log.
REQUEST NO. 5
Request: All documents relating to Triton Harbor's loss of the Port of Bridgehaven municipal contract and the Newark Bay maintenance contract in 2023.
Objections: BRB objects to this Request on the ground that the documents sought are equally available to Counterclaim Plaintiffs, who are the principals of Triton Harbor and are in possession of Triton Harbor's own business records regarding these contracts. BRB's possession of documents relating to the loss of these contracts is limited to information received from Triton Harbor in the ordinary course of the lending relationship and the borrower's compliance reporting obligations.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce such non-privileged documents as are in its possession, custody, or control relating to the loss of the Port of Bridgehaven municipal contract and the Newark Bay maintenance contract. BRB's files contain primarily borrower-provided financial reports, correspondence, and borrower updates discussing the loss of the Bridgehaven contract (representing approximately $12,000,000 per year in revenue) and the Newark Bay maintenance contract (representing approximately $7,500,000 per year in revenue), as well as BRB's internal analysis of the impact of these losses on Triton Harbor's annualized revenue run-rate, which declined to approximately $48,000,000 following the loss of these contracts. BRB notes that Counterclaim Plaintiffs, as principals and officers of Triton Harbor, have direct access to the underlying contracts and correspondence with the relevant counterparties, which BRB does not possess.
REQUEST NO. 6
Request: All documents and communications between Derek Whitmore and any BRB employee, officer, or director relating to Triton Harbor from March 1, 2023 through the present.
Objections: BRB objects to this Request as overbroad and unduly burdensome to the extent it seeks all internal communications to and from the Head of the Special Assets Group relating to the Triton Harbor account over a period of nearly two years, without limitation as to custodian, subject matter, or content. Given the volume of internal communications generated in connection with a distressed credit of this magnitude, collecting and reviewing all such communications would impose an undue burden on BRB disproportionate to the needs of the case. BRB further objects on the grounds of attorney-client privilege to the extent this Request calls for the production of communications in which Derek Whitmore communicated with, received advice from, or forwarded information to Margaret Linden (SVP & General Counsel), Thomas Hargreaves (VP & Associate General Counsel), David Blakemore of Blakemore & Stern LLP, or attorneys at Calderwood & Harkness LLP. BRB also objects on the grounds of work product protection to the extent this Request seeks documents prepared in anticipation of litigation.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged internal communications to and from Derek Whitmore (SVP, Head of Special Assets Group) relating to the Triton Harbor relationship for the period March 1, 2023 through October 6, 2023 (the date of execution of the Forbearance and Modification Agreement) and for the period April 1, 2024 through April 15, 2024 (the period surrounding the expiration of the forbearance period and the issuance of the Notice of Default and Acceleration). Communications with in-house or outside counsel, and communications prepared in anticipation of litigation, will be withheld and identified on the privilege log.
REQUEST NO. 7
Request: All documents and communications between Joanna Reeves and any BRB employee, officer, or director relating to Triton Harbor from March 1, 2023 through the present.
Objections: BRB asserts the same objections set forth in response to Request No. 6, which are incorporated herein by reference. This Request is overbroad and unduly burdensome for the same reasons stated above, and is subject to the same privilege and work product objections.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged internal communications to and from Joanna Reeves (VP, Special Assets Group) relating to the Triton Harbor relationship for the same time periods identified in BRB's response to Request No. 6, namely March 1, 2023 through October 6, 2023 and April 1, 2024 through April 15, 2024. The documents to be produced include, among other things, the September 29, 2023 internal email from Joanna Reeves to Derek Whitmore forwarding a draft term sheet for a potential $6,500,000 revolving credit facility, which email was expressly marked "for discussion purposes only — not approved." Communications with in-house or outside counsel, and communications prepared in anticipation of litigation, will be withheld and identified on the privilege log.
REQUEST NO. 8
Request: All documents and communications between Derek Whitmore and/or Joanna Reeves, on the one hand, and Marcus J. Kappel, Elaine D. Kappel, Triton Harbor Industries, LLC, and/or Mercer Tidwell & Associates LLC, on the other hand, from March 1, 2023 through the present.
Objections: BRB objects to this Request as overbroad to the extent it extends beyond the relevant workout negotiation period and seeks communications through the present date, including communications that post-date the commencement of this litigation and that may be protected by the attorney-client privilege or work product doctrine.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged communications between BRB's Special Assets Group personnel (Derek Whitmore and Joanna Reeves) and the Counterclaim Plaintiffs (Marcus J. Kappel and Elaine D. Kappel) and Mercer Tidwell & Associates LLC (Raymond Mercer, Managing Director) for the period March 1, 2023 through April 15, 2024. The documents to be produced include, among other things, the September 18, 2023 email from Joanna Reeves to Marcus Kappel in which Ms. Reeves stated, "We are optimistic about a path forward and believe this forbearance sets the stage for a renewed credit relationship." BRB notes that many of the documents responsive to this Request are communications that are in the equal possession, custody, or control of Counterclaim Plaintiffs or their financial advisor, Mercer Tidwell & Associates LLC. BRB is producing such documents without conceding any obligation to do so.
REQUEST NO. 9
Request: All documents relating to the meeting that took place on or about September 12, 2023, at BRB's offices at 1200 Avenue of the Americas, 38th Floor, New York, NY 10036, including but not limited to agendas, notes, presentations, internal memoranda, and all communications before and after the meeting referencing or relating to the meeting.
Objections: BRB objects on the grounds of attorney-client privilege to the extent any pre-meeting or post-meeting communications involved in-house counsel (Margaret Linden or Thomas Hargreaves) or outside counsel, or were made for the purpose of seeking or providing legal advice in connection with the September 12, 2023 meeting. BRB further objects on the grounds of the work product doctrine to the extent any post-meeting internal memoranda or analyses were prepared in anticipation of litigation or at the direction of counsel.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged documents relating to the meeting held on or about September 12, 2023, at BRB's offices between Derek Whitmore (SVP, Head of Special Assets Group), Joanna Reeves (VP, Special Assets Group), Marcus J. Kappel, and Elaine D. Kappel. BRB will produce any meeting agendas, meeting notes, presentations, or internal post-meeting memoranda that are not protected by the attorney-client privilege or work product doctrine. BRB notes that certain post-meeting communications involving Margaret Linden (SVP & General Counsel) or Thomas Hargreaves (VP & Associate General Counsel), or reflecting legal analysis or advice, may be withheld on privilege grounds. All withheld documents will be identified on the privilege log.
REQUEST NO. 10
Request: All documents relating to any representations, statements, or communications made by Derek Whitmore, Joanna Reeves, or any other BRB officer or employee to Marcus J. Kappel, Elaine D. Kappel, or Triton Harbor regarding BRB's willingness, intent, or plans to extend new credit, renew existing credit facilities, or provide additional financing to Triton Harbor.
Objections: BRB objects to this Request on the grounds that the terms "representations, statements, or communications" are vague and ambiguous, and that the Request is overbroad in its scope and lacks any temporal limitation. BRB further objects to this Request to the extent it assumes facts not in evidence and not admitted, namely that any actionable representations regarding the extension of new credit were made by BRB or any of its officers or employees. BRB denies that any binding commitment, promise, or representation to extend new credit, renew existing facilities, or provide additional financing was ever made to Counterclaim Plaintiffs or any of them, and BRB's response to this Request shall not be construed as an admission to the contrary. BRB also objects on the grounds of attorney-client privilege and work product protection to the extent any responsive documents involve communications with counsel.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged documents responsive to this Request, to the extent they exist in BRB's files. BRB draws the attention of Counterclaim Plaintiffs and the Court to the Forbearance and Modification Agreement dated October 6, 2023, at Section 9(c), which expressly provides:
"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. Any future credit decisions shall be made in Lender's sole and absolute discretion based on Lender's then-applicable credit standards, policies, and procedures."
BRB denies that any binding commitment to extend new credit was made, and further notes that any such commitment, if it existed, would be required to be in writing under the applicable statute of frauds. BRB will produce responsive, non-privileged documents, if any, identified in the course of its document review.
REQUEST NO. 11
Request: The memorandum dated on or about August 22, 2023, authored by Philip Aaronson, EVP & Chief Credit Officer, to Derek Whitmore, SVP, Special Assets Group, regarding the recommended disposition strategy for the Triton Harbor relationship (the "Aaronson Memorandum").
Objections: BRB objects to this Request in its entirety on the grounds of attorney-client privilege and work product protection. The memorandum at issue was authored by Philip Aaronson, EVP & Chief Credit Officer of BRB, and directed to Derek Whitmore, SVP, Head of the Special Assets Group, with a copy to Margaret Linden, SVP & General Counsel of BRB. The inclusion of the General Counsel on this communication is not incidental; the communication was made for the purpose of seeking and/or providing legal advice from in-house counsel regarding the recommended disposition strategy for the Triton Harbor relationship, including an assessment of the legal risks associated with various workout alternatives, the enforceability of the credit documents, and the potential for borrower claims in the event of acceleration or foreclosure. The document reflects the involvement of the General Counsel's office in evaluating the legal implications of BRB's strategic options and is therefore protected by the attorney-client privilege under New York law. See Spectrum Sys. Int'l Corp. v. Granite Harbor Securities, 78 N.Y.2d 371, 377 (1991).
BRB further objects on the grounds of the work product doctrine to the extent the Aaronson Memorandum was prepared in anticipation of litigation that was reasonably foreseeable at the time of its creation. By August 2023, the Triton Harbor credit had been downgraded to Substandard, the account had been transferred to the Special Assets Group, Triton Harbor had suffered the loss of two major contracts, and the prospect of default, acceleration, and enforcement proceedings — with attendant borrower counterclaims — was reasonably foreseeable. The memorandum was prepared in this context and reflects the mental impressions, conclusions, and legal theories of BRB's officers and counsel regarding the disposition of the Triton Harbor relationship.
Response: BRB withholds this document in its entirety on the grounds of attorney-client privilege and work product protection. The document is identified on BRB's Privilege Log with the following information:
• Date: August 22, 2023
• Author: Philip Aaronson, EVP & Chief Credit Officer
• Recipients: Derek Whitmore, SVP, Head of Special Assets Group
• CC: Margaret Linden, SVP & General Counsel
• Subject: "Triton Harbor — Recommended Disposition Strategy"
• Privilege Basis: Attorney-client privilege (communication directed to and copied to in-house counsel for the purpose of obtaining legal advice regarding disposition strategy and associated legal risks) and work product (prepared in anticipation of reasonably foreseeable litigation)
BRB is prepared to submit this document for in camera review by the Court should Counterclaim Plaintiffs challenge the privilege designation.
REQUEST NO. 12
Request: All documents relating to or reflecting BRB's internal strategy, plan, or decision to exit, terminate, wind down, or accelerate the Triton Harbor credit relationship.
Objections: BRB objects to this Request as overbroad to the extent it seeks "all documents" relating to BRB's internal credit strategy without meaningful temporal or subject-matter limitation. BRB further objects on the grounds of attorney-client privilege, as many documents reflecting BRB's internal disposition strategy involve communications with in-house counsel (Margaret Linden, Thomas Hargreaves) and/or outside counsel (Blakemore & Stern LLP, Calderwood & Harkness LLP) and were created for the purpose of seeking or providing legal advice regarding BRB's legal rights, enforcement options, and litigation exposure. BRB also objects on the grounds of the work product doctrine, as many such documents were prepared in anticipation of litigation. Finally, BRB objects on the grounds of the bank examination privilege to the extent any regulatory directives, examiner communications, or supervisory findings influenced or are reflected in BRB's disposition strategy for the Triton Harbor relationship.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged business records reflecting the credit administration of the Triton Harbor relationship, including credit committee minutes and business memoranda to the extent they do not contain or reflect privileged legal advice or confidential supervisory information. Documents reflecting legal strategy, litigation risk assessments, or communications with in-house or outside counsel regarding the disposition, wind-down, or acceleration of the Triton Harbor relationship will be withheld and identified on the privilege log.
REQUEST NO. 13
Request: All internal term sheets, draft credit proposals, draft facility agreements, or similar documents relating to any proposed new credit facility for Triton Harbor, including but not limited to the draft term sheet for a proposed $6.5 million revolving credit facility.
Objections: BRB objects to the characterization of internal working drafts as "proposals" to the extent such characterization implies or presupposes that these documents constituted offers, commitments, or binding agreements on the part of BRB. BRB further objects to the extent this Request calls for the production of documents protected by the attorney-client privilege or work product doctrine.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce the internal draft term sheet referenced in Joanna Reeves' September 29, 2023 email to Derek Whitmore, which outlined a potential $6,500,000 revolving credit facility and which was expressly marked "for discussion purposes only — not approved." BRB will also produce any other non-privileged internal draft credit documents relating to Triton Harbor identified in the course of its document review, to the extent such documents exist in BRB's files. BRB notes for the record that no new credit facility for Triton Harbor was ever approved by BRB's credit committee, committed to by any authorized officer of BRB, or offered to Triton Harbor or any Counterclaim Plaintiff. The production of internal working drafts is made without any concession that such documents evidence a commitment, offer, or binding obligation of any kind.
REQUEST NO. 14
Request: All documents relating to the Forbearance and Modification Agreement dated October 6, 2023, including all drafts, redlines, negotiation correspondence, internal approvals, and communications between BRB and Triton Harbor regarding the terms thereof.
Objections: BRB objects on the grounds of attorney-client privilege to the extent this Request seeks drafts, redlines, and internal communications involving Blakemore & Stern LLP (BRB's prior outside counsel, which assisted in the negotiation and drafting of the Forbearance Agreement), Margaret Linden, or Thomas Hargreaves. BRB further objects on the grounds of the work product doctrine to the extent any litigation risk analysis, enforcement strategy memoranda, or other materials were prepared by or at the direction of counsel in connection with the forbearance negotiation and in anticipation of potential litigation in the event the forbearance was unsuccessful.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce the fully executed Forbearance and Modification Agreement dated October 6, 2023, together with non-privileged drafts, redlines, and negotiation correspondence exchanged between BRB and Triton Harbor and/or their respective representatives. The executed agreement reflected, among other material terms, the following:
(a) A 180-day forbearance period, commencing October 6, 2023 and expiring April 3, 2024;
(b) Minimum monthly debt service payments of $125,000 during the forbearance period (Section 4(a));
(c) Additional collateral pledges consisting of two equipment leases with an appraised value of $2,300,000 and the personal residence of Marcus J. Kappel and Elaine D. Kappel located at 14 Birchmont Lane, Westport, CT 06880, with an appraised value of $3,100,000;
(d) Amendment of Marcus J. Kappel's personal guaranty from a limited guaranty in the amount of $4,500,000 to an unlimited personal guaranty;
(e) Execution of a new unlimited personal guaranty by Elaine D. Kappel;
(f) Payment of a forbearance fee of $87,500, calculated as 0.50% of the $17,500,000 in outstanding obligations as of the date of execution;
(g) Engagement of Mercer Tidwell & Associates LLC as an independent financial advisor, at Triton Harbor's expense;
(h) The Section 9(c) "No Commitment to Extend Credit" disclaimer; and
(i) The Section 12(a) integration clause, providing that the Forbearance Agreement constitutes the complete and exclusive statement of the terms agreed upon between the parties and supersedes all prior oral and written communications.
Internal credit approval memoranda and committee materials relating to BRB's approval of the forbearance terms will be produced to the extent non-privileged. Documents involving legal advice from counsel will be withheld and logged.
REQUEST NO. 15
Request: All documents relating to the updated collateral appraisal conducted in or about September 2023 by Ridgeline Appraisal Group, Inc.
Objections: Subject to the General Objections incorporated herein.
Response: Subject to and without waiving the General Objections, BRB will produce the September 2023 collateral appraisal report prepared by Ridgeline Appraisal Group, Inc. (312 Elm Street, Stamford, CT 06902), which appraised Triton Harbor's marine terminal equipment and real property at a value of $11,200,000. This valuation reflected a decline of $7,500,000, or approximately 40.1%, from the origination appraisal value of $18,700,000 as of June 2021. BRB will also produce related correspondence between BRB and Ridgeline Appraisal Group, Inc. in connection with the commissioning and delivery of the updated appraisal.
REQUEST NO. 16
Request: All documents relating to the original collateral appraisal conducted in or about June 2021 by Ridgeline Appraisal Group, Inc. in connection with the origination of the Credit Agreement.
Objections: Subject to the General Objections incorporated herein.
Response: Subject to and without waiving the General Objections, BRB will produce the June 2021 origination appraisal report prepared by Ridgeline Appraisal Group, Inc., which appraised the collateral consisting of Triton Harbor's marine terminal equipment and real property at a value of $18,700,000. Related correspondence and engagement documentation will also be produced to the extent in BRB's possession.
REQUEST NO. 17
Request: All documents relating to Triton Harbor's compliance with the terms and conditions of the Forbearance and Modification Agreement, including monthly financial reports, payment records, and covenant compliance analyses.
Objections: BRB objects on the ground that many of the documents sought, including Triton Harbor's own financial reports, are equally available to Counterclaim Plaintiffs, who generated and submitted such reports. BRB further objects on the grounds of attorney-client privilege to the extent internal covenant compliance analyses were prepared in connection with or incorporate legal advice from in-house or outside counsel.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged documents reflecting Triton Harbor's compliance performance during the 180-day forbearance period (October 6, 2023 through April 3, 2024). The production will include records reflecting that Triton Harbor made the six monthly payments of $125,000 each as required under Section 4(a) of the Forbearance Agreement (total payments: $750,000), monthly financial reports submitted by Triton Harbor, and non-privileged covenant compliance analyses prepared by BRB's Special Assets Group. The documents to be produced will reflect that, as of March 31, 2024, Triton Harbor's Fixed Charge Coverage Ratio stood at 0.94x, which failed to achieve the covenant cure milestone requiring a minimum of 1.20x, constituting a material condition that was not satisfied prior to the expiration of the forbearance period. Privileged documents will be withheld and logged.
REQUEST NO. 18
Request: All documents relating to BRB's decision to issue the Notice of Default and Acceleration on or about April 15, 2024.
Objections: BRB objects on the grounds of attorney-client privilege, as the decision to accelerate the Triton Harbor obligations involved extensive legal advice from Blakemore & Stern LLP and from BRB's in-house legal department, including analysis of the legal bases for acceleration, the enforceability of the acceleration clause, and the potential defenses and counterclaims that Triton Harbor and the Kappels might assert. BRB further objects on the grounds of the work product doctrine, as the acceleration decision was made in the context of reasonably anticipated litigation and many of the documents reflecting the decision-making process were prepared in anticipation thereof.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce the Notice of Default and Acceleration dated April 15, 2024, which declared the entire outstanding balance of $17,456,212 immediately due and payable. The total accelerated amount comprised the following:
• Term Loan A outstanding principal: $10,625,000
• Revolving Credit Facility outstanding principal: $6,200,000
• Accrued and unpaid interest: $487,322
• Late fees and default interest: $143,890
• Total: $17,456,212
BRB will produce non-privileged internal credit committee minutes or business memoranda supporting or reflecting the acceleration decision, to the extent such documents do not contain or reflect legal advice from counsel. Communications with Blakemore & Stern LLP and Margaret Linden regarding the legal basis, timing, and procedural requirements for acceleration will be withheld as privileged and identified on the privilege log.
REQUEST NO. 19
Request: All documents relating to BRB's commencement of foreclosure proceedings on the Long Island City terminal facility located at 50-22 Borden Avenue, Long Island City, NY 11101.
Objections: BRB objects on the grounds of attorney-client privilege to the extent this Request seeks communications with counsel regarding the commencement and prosecution of the foreclosure proceedings. BRB further objects on the ground that the publicly filed foreclosure documents are equally available to Counterclaim Plaintiffs.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged documents relating to the foreclosure commenced on or about May 20, 2024 on the Long Island City terminal facility, including the foreclosure notice and related filings to the extent not already in Counterclaim Plaintiffs' possession or publicly available. Communications with counsel regarding the foreclosure will be withheld and logged.
REQUEST NO. 20
Request: All documents relating to the title insurance policy issued by Harborview Title & Escrow Co. on the Long Island City terminal facility.
Objections: Subject to the General Objections incorporated herein. BRB further objects on the grounds of relevance to the extent the title insurance policy and related documents are not relevant to any of the counterclaims asserted by Counterclaim Plaintiffs.
Response: Subject to and without waiving the foregoing objections, BRB will produce the title insurance policy (Policy No. HT-NYC-2021-04553) issued by Harborview Title & Escrow Co. (233 Broadway, Suite 1600, New York, NY 10279), to the extent it is responsive and non-privileged.
REQUEST NO. 21
Request: All documents relating to the personal guaranty executed by Elaine D. Kappel in connection with the Forbearance and Modification Agreement dated October 6, 2023.
Objections: Subject to the General Objections incorporated herein.
Response: Subject to and without waiving the General Objections, BRB will produce the unlimited personal guaranty executed by Elaine D. Kappel, dated October 6, 2023, together with any related schedules, ancillary documentation, and correspondence relating to the negotiation and execution thereof.
REQUEST NO. 22
Request: All documents relating to the amendment of Marcus J. Kappel's personal guaranty from a limited guaranty ($4,500,000) to an unlimited personal guaranty in connection with the Forbearance and Modification Agreement.
Objections: Subject to the General Objections incorporated herein.
Response: Subject to and without waiving the General Objections, BRB will produce the amended unlimited personal guaranty executed by Marcus J. Kappel, dated October 6, 2023, together with the original limited personal guaranty dated June 15, 2021, in the amount of $4,500,000, and related documentation reflecting the amendment of the guaranty from limited to unlimited in connection with the Forbearance and Modification Agreement.
REQUEST NO. 23
Request: All documents relating to the appraisal of the personal residence of Marcus J. Kappel and Elaine D. Kappel located at 14 Birchmont Lane, Westport, CT 06880, pledged as additional collateral under the Forbearance Agreement.
Objections: Subject to the General Objections incorporated herein. BRB further objects on the grounds of third-party privacy to the extent such documents contain personal financial information of the Kappels not already known to them or their counsel.
Response: Subject to and without waiving the foregoing objections, and subject to the Stipulated Confidentiality/Protective Order, BRB will produce the appraisal of the Kappel residence at 14 Birchmont Lane, Westport, CT 06880, reflecting an appraised value of $3,100,000, to the extent such documentation is in BRB's possession, custody, or control.
REQUEST NO. 24
Request: All documents relating to the two equipment leases assigned as additional collateral under the Forbearance Agreement.
Objections: Subject to the General Objections incorporated herein.
Response: Subject to and without waiving the General Objections, BRB will produce documentation relating to the assignment of the two equipment leases pledged as additional collateral under the Forbearance and Modification Agreement, including the lease agreements, assignment instruments, and the appraisal reflecting an appraised value of $2,300,000 for the equipment subject to the leases.
REQUEST NO. 25
Request: All credit committee minutes, memoranda, or reports relating to the Triton Harbor credit relationship from January 1, 2021 through the present.
Objections: BRB objects to this Request as overbroad in its temporal scope, as it seeks credit committee materials spanning over four years, including periods well before the events giving rise to the counterclaims. BRB further objects on the grounds of attorney-client privilege to the extent credit committee discussions incorporated legal advice from in-house counsel (Margaret Linden or Thomas Hargreaves) or outside counsel, which is a common and expected practice in credit committee deliberations involving distressed credits. BRB also objects on the grounds of the bank examination privilege to the extent credit committee materials reflect, reference, or incorporate confidential supervisory information, regulatory examination findings, or supervisory directives of the OCC or other banking regulators.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged credit committee minutes and related memoranda for the Triton Harbor credit relationship. Materials reflecting legal advice from in-house or outside counsel, or incorporating confidential supervisory information, will be withheld and identified on the privilege log. The materials to be produced will include, to the extent they are not subject to privilege, the credit committee's approval of the original credit facility in June 2021, the committee's consideration and approval of the risk-rating downgrade to Risk Rating 7 (Substandard) on or about March 8, 2023, and the committee's consideration and approval of the terms of the Forbearance and Modification Agreement executed October 6, 2023.
REQUEST NO. 26
Request: All communications between Philip Aaronson and Derek Whitmore relating to Triton Harbor from January 1, 2023 through the present.
Objections: BRB objects to this Request as overbroad. BRB further objects on the grounds of attorney-client privilege, as many communications between the Chief Credit Officer and the Head of the Special Assets Group regarding a distressed credit involved discussion of legal risk, litigation strategy, enforcement options, and communications with in-house and outside counsel, and were made for the purpose of seeking or providing legal advice or conveying information necessary for the rendering of legal advice. BRB also objects on the grounds of the work product doctrine to the extent such communications were made in anticipation of litigation.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged communications between Philip Aaronson (EVP, Chief Credit Officer) and Derek Whitmore (SVP, Head of Special Assets Group) relating to the Triton Harbor credit relationship. Communications that are privileged, including those copying or discussing advice from Margaret Linden, Thomas Hargreaves, or outside counsel, and those reflecting litigation strategy or legal analysis, will be withheld and identified on the privilege log.
REQUEST NO. 27
Request: All communications between Philip Aaronson and Margaret Linden relating to Triton Harbor from January 1, 2023 through the present.
Objections: BRB objects to this Request in its entirety on the grounds of attorney-client privilege. All responsive communications between Philip Aaronson (EVP & Chief Credit Officer) and Margaret Linden (SVP & General Counsel) relating to the Triton Harbor credit relationship are protected by the attorney-client privilege. These communications were made between a senior business officer and the Bank's chief legal officer for the purpose of seeking and providing legal advice regarding BRB's legal rights, obligations, enforcement options, and litigation exposure in connection with the Triton Harbor credits, the forbearance negotiations, the acceleration decision, and the subsequent commencement of this action. The involvement of the General Counsel in these communications was in her capacity as legal advisor, and these communications are entitled to the full protection of the attorney-client privilege under New York law.
Response: All responsive documents are withheld in their entirety on the grounds of attorney-client privilege and will be identified on BRB's privilege log.
REQUEST NO. 28
Request: All communications between any BRB officer or employee and Blakemore & Stern LLP relating to Triton Harbor from January 1, 2023 through November 4, 2024.
Objections: BRB objects to this Request in its entirety on the grounds of attorney-client privilege and the work product doctrine. All communications between BRB and Blakemore & Stern LLP (David Blakemore, Esq., partner; 120 Broadway, Suite 3500, New York, NY 10271), BRB's prior outside litigation counsel in this matter, are protected by the attorney-client privilege and/or the work product doctrine. Blakemore & Stern LLP was retained by BRB to provide legal advice regarding the enforcement of BRB's rights under the Credit Agreement, the Forbearance and Modification Agreement, and the personal guaranties, and subsequently prepared, filed, and prosecuted the original complaint in this action on August 12, 2024. Blakemore & Stern LLP continued to represent BRB through November 4, 2024, when counsel was changed to Calderwood & Harkness LLP. All communications during the period of representation were made for the purpose of seeking and obtaining legal advice and constitute privileged attorney-client communications. Additionally, many such communications constitute or contain attorney work product prepared in anticipation of or in connection with this litigation.
Response: All responsive documents are withheld in their entirety on the grounds of attorney-client privilege and work product protection and will be identified on BRB's privilege log.
REQUEST NO. 29
Request: All communications between any BRB officer or employee and Calderwood & Harkness LLP relating to Triton Harbor.
Objections: BRB objects to this Request in its entirety on the grounds of attorney-client privilege and the work product doctrine. All communications between BRB and Calderwood & Harkness LLP, BRB's current litigation counsel (retained November 4, 2024), are protected by the attorney-client privilege and the work product doctrine. These communications were made for the purpose of seeking and obtaining legal advice and in connection with the defense of BRB's interests in this litigation.
Response: All responsive documents are withheld in their entirety and will be identified on BRB's privilege log.
REQUEST NO. 30
Request: All documents relating to BRB's engagement of Mercer Tidwell & Associates LLC or any communications between BRB and Mercer Tidwell & Associates LLC (Raymond Mercer, Managing Director) relating to Triton Harbor.
Objections: BRB objects on the ground that documents relating to the engagement of Mercer Tidwell & Associates LLC are equally available to Counterclaim Plaintiffs, who retained Mercer Tidwell as their financial advisor pursuant to the terms of the Forbearance and Modification Agreement. BRB further objects on the grounds of attorney-client privilege and work product protection to the extent any communications with Mercer Tidwell were made in connection with, at the direction of, or for the purpose of transmitting information to or from counsel in connection with the provision of legal advice or in anticipation of litigation.
Response: Subject to and without waiving the foregoing objections or the General Objections incorporated herein, BRB will produce non-privileged communications between BRB's Special Assets Group and Mercer Tidwell & Associates LLC (245 Park Avenue, 28th Floor, New York, NY 10167; Raymond Mercer, Managing Director) relating to the Triton Harbor workout and forbearance negotiations. Privileged communications will be withheld and logged.
REQUEST NO. 31
Request: All documents relating to the Forbearance Fee of $87,500 paid by Triton Harbor in connection with the Forbearance Agreement.
Objections: Subject to the General Objections incorporated herein.
Response: Subject to and without waiving the General Objections, BRB will produce documentation relating to the forbearance fee of $87,500, which was calculated as 0.50% of the $17,500,000 in outstanding obligations at the time of execution of the Forbearance and Modification Agreement on October 6, 2023. The production will include payment records, wire transfer confirmations, and any related correspondence reflecting the calculation and payment of the fee.
REQUEST NO. 32
Request: All documents relating to BRB's policies, procedures, manuals, or guidelines governing the Special Assets Group, workout negotiations, forbearance agreements, and/or acceleration decisions.
Objections: BRB objects to this Request as overbroad to the extent it seeks all of BRB's institutional policies, procedures, manuals, and gu

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

BELMONT RIDGE BANK NA,

PRELIMINARY STATEMENT

GENERAL OBJECTIONS

SPECIFIC RESPONSES AND OBJECTIONS

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