NEW YORK SUPREME COURT COUNTY OF NEW YORK COMMERCIAL DIVISION
BELMONT RIDGE BANK NA,
Plaintiff/Counterclaim Defendant,
— against —
Index No. 654871/2024
IAS Part 49
Hon. Althea Marchetti
TRITON HARBOR INDUSTRIES, LLC, MARCUS J. KAPPEL, and ELAINE D. KAPPEL,
Defendants/Counterclaim Plaintiffs.
COUNTERCLAIM DEFENDANT BELMONT RIDGE BANK NA'S RESPONSES AND OBJECTIONS TO COUNTERCLAIM PLAINTIFFS' FIRST SET OF INTERROGATORIES
January 15, 2025
Propounding Parties: Triton Harbor Industries, LLC, Marcus J. Kappel, and Elaine D. Kappel (collectively, "Counterclaim Plaintiffs"), through their counsel of record, Kestrel Voss & Huang LLP, 780 Third Avenue, 24th Floor, New York, NY 10017 (Theodore "Ted" Huang, Esq., Lead Counsel; Natasha Orlov, Esq., Senior Associate).
Responding Party: Belmont Ridge Bank NA ("BRB"), through its counsel of record, Calderwood & Harkness LLP, 600 Lexington Avenue, 30th Floor, New York, NY 10022 (Linda Osei, Responsible Partner; Priya Anand, Billing Partner; Carlos Espinoza, Lead Associate; Hannah Brinkley, Working Associate).
Matter No.: 1022-00005
PRELIMINARY STATEMENT
Counterclaim Defendant Belmont Ridge Bank NA ("BRB" or the "Bank") hereby responds and objects to the First Set of Interrogatories (Nos. 1 through 14) propounded by Counterclaim Plaintiffs Triton Harbor Industries, LLC ("Triton Harbor" or "THI"), Marcus J. Kappel, and Elaine D. Kappel (collectively, "Counterclaim Plaintiffs"), dated December 16, 2024, and received by counsel for BRB on December 17, 2024, pursuant to CPLR 3130 and 3133.
BRB's responses are made without waiver of, and are expressly subject to, all objections as to competency, relevancy, materiality, privilege, and admissibility that may be raised at or before any hearing or trial of this action or any proceeding related thereto. BRB does not, by providing any response herein, concede the relevance, materiality, or admissibility of any information contained in these responses, nor does it concede that any such information may properly be offered in evidence at any stage of this or any other proceeding.
BRB's investigation and discovery in this matter are ongoing. These responses are based upon information reasonably available to BRB and its counsel as of the date hereof, and BRB expressly reserves the right to supplement, amend, or correct these responses as additional information becomes available through the continued investigation of the facts, the completion of document review and production, the taking of depositions, and the completion of expert analysis, all consistent with the requirements of CPLR 3101 and the Stipulated discovery Schedule and Preliminary Conference Order entered by Justice Marchetti on December 6, 2024 (the "Preliminary Conference Order").
BRB incorporates by reference herein all General Objections set forth below into each of its specific responses to the individual interrogatories. BRB's assertion of specific objections to any individual interrogatory shall not be construed as a waiver of any General Objection, nor shall the failure to assert a specific objection to any individual interrogatory be construed as a waiver of any General Objection or any other objection that may be applicable.
No response or objection set forth herein shall be construed as a waiver of any applicable privilege, including, without limitation, the attorney-client privilege, the work product protection afforded by CPLR 3101(c) and (d), or the bank examination privilege. BRB has conducted a reasonable search for responsive information, but the provision of any response herein does not constitute an acknowledgment that all responsive information has been located or identified, particularly in light of the scope and volume of BRB's records and the ongoing nature of its document review.
BRB's responses are provided subject to, and without waiver of any rights under, the Stipulated Confidentiality and Protective Order entered by the Court on December 20, 2024 (the "Protective Order"). To the extent any response herein contains information designated as "Confidential" or "Highly Confidential — Attorneys' Eyes Only" under the Protective Order, such designations are preserved and Counterclaim Plaintiffs and their counsel are bound by the terms of the Protective Order with respect to the use, disclosure, and handling of such information.
DEFINITIONS AND INSTRUCTIONS
BRB adopts the definitions and instructions as stated in Counterclaim Plaintiffs' First Set of Interrogatories to the extent they are reasonable and not otherwise objectionable, but objects to any definitions or instructions that are overbroad, vague, ambiguous, or that purport to impose obligations on BRB beyond those required by the CPLR or the Preliminary Conference Order, or that seek information protected by any applicable privilege. In addition to the definitions set forth in Counterclaim Plaintiffs' interrogatories, BRB uses the following terms in these responses:
"Forbearance Agreement" means the Forbearance and Modification Agreement dated October 6, 2023, among BRB, Triton Harbor Industries, LLC, Marcus J. Kappel, and Elaine D. Kappel, together with all exhibits, schedules, annexes, and ancillary documents executed in connection therewith.
"Original Credit Agreement" means the Credit Agreement dated June 15, 2021, between BRB (as Lender) and Triton Harbor Industries, LLC (as Borrower), together with all amendments, supplements, and modifications thereto prior to the Forbearance Agreement.
"SAG" means BRB's Special Assets Group, an internal division of BRB responsible for the management, workout, and resolution of classified and criticized credit relationships.
"Credit Review Committee" or "CRC" means BRB's internal committee responsible for the review and approval of credit decisions, including origination, modification, classification, and disposition of credit facilities.
"Preliminary Conference Order" means the Stipulated discovery Schedule and Preliminary Conference Order entered by Justice Marchetti on December 6, 2024, which established, among other things, the fact discovery cut-off of April 30, 2025 and the expert discovery cut-off of June 30, 2025.
"Protective Order" means the Stipulated Confidentiality and Protective Order entered by the Court on December 20, 2024.
GENERAL OBJECTIONS
BRB asserts the following General Objections, each of which is incorporated by reference into every specific response set forth herein. The assertion of these General Objections does not constitute an acknowledgment that any particular interrogatory implicates the concerns described below; rather, they are asserted out of an abundance of caution to preserve BRB's rights.
1. Privilege. BRB objects to each interrogatory to the extent it calls for, seeks, or would require the disclosure of information, communications, documents, or materials protected by the attorney-client privilege, the work product doctrine, or any other applicable privilege or protection recognized under federal or New York law. Without limitation, this objection extends to communications between BRB personnel and attorneys at Blakemore & Stern LLP (BRB's prior outside counsel in this matter), Calderwood & Harkness LLP (BRB's current outside counsel in this matter), Crane, Alcott & Shire LLP (BRB's coverage counsel), and BRB's in-house legal department, including Margaret Linden, Senior Vice President and General Counsel, and Thomas Hargreaves, Vice President and Associate General Counsel. This objection also extends to internal memoranda, analyses, and communications prepared by or at the direction of any of the foregoing attorneys in anticipation of litigation or for the purpose of providing or obtaining legal advice. BRB will identify privileged documents withheld from production on its Privilege Log, as required by the Preliminary Conference Order.
2. Overbreadth and Burden. BRB objects to each interrogatory to the extent it is overly broad, unduly burdensome, or not proportional to the needs of this case, considering the importance of the issues at stake, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. BRB is a national banking association chartered under the laws of the United States with approximately $47.3 billion in total assets as of December 31, 2024, and 214 branch locations across the northeastern United States. Interrogatories that are not reasonably limited in scope, time period, or subject matter impose an unreasonable burden on BRB and its personnel and counsel, particularly given the voluminous nature of BRB's records relating to its lending operations.
3. Vagueness and Ambiguity. BRB objects to each interrogatory, and to any definition or instruction contained therein, that employs terms that are vague, ambiguous, undefined, or susceptible to multiple reasonable interpretations. Where BRB has elected to respond to an interrogatory notwithstanding an objection on this ground, BRB has construed the interrogatory in the manner that appears most reasonable under the circumstances, and BRB's response should not be construed as an acceptance of any broader or different interpretation that Counterclaim Plaintiffs may propose.
4. Bank Examination Privilege. BRB objects to each interrogatory to the extent it seeks information, communications, documents, or materials that are subject to the bank examination privilege, including, without limitation, communications with or reports, correspondence, examination materials, or supervisory guidance prepared by or for the Office of the Comptroller of the Currency ("OCC"), or prepared by BRB personnel in connection with or in response to OCC examinations, supervisory activities, or regulatory inquiries. The bank examination privilege is a qualified privilege that protects the confidentiality of the supervisory relationship between a national bank and its primary federal regulator, and BRB asserts this privilege to the fullest extent permitted by law.
5. Premature Expert discovery. BRB objects to each interrogatory to the extent it prematurely seeks expert opinions, expert analysis, the identity of consulting (as opposed to testifying) experts, or facts known or opinions held by persons retained by BRB or its counsel in anticipation of litigation or in preparation for trial, pursuant to CPLR 3101(d). Under the Preliminary Conference Order, expert discovery does not close until June 30, 2025, and BRB is not required at this time to provide the detailed expert disclosures contemplated by the discovery schedule.
6. Third-Party Confidential Information. BRB objects to each interrogatory to the extent it seeks confidential, proprietary, or commercially sensitive business information of third parties who are not parties to this litigation, including, without limitation, information concerning other BRB borrowers, credit relationships, or internal policies and procedures that are not specific to the Triton Harbor credit relationship. To the extent any responsive information implicates third-party confidential information, BRB's response is subject to the terms of the Protective Order.
7. Contention Interrogatories. BRB objects to each interrogatory to the extent it constitutes a contention interrogatory — that is, an interrogatory that seeks the factual or legal basis for BRB's claims, defenses, or contentions — and is premature given the current stage of discovery. BRB reserves the right to supplement its responses to contention interrogatories following the close of fact discovery on April 30, 2025, and following the completion of expert discovery on June 30, 2025, in accordance with the Preliminary Conference Order and the applicable provisions of the CPLR.
8. Document-Referral Reservation. Where responsive information is contained in documents that have been or will be produced in BRB's document production in this action (which currently encompasses approximately 34,000 documents, Bates-stamped BRB-000001 through BRB-034000, with additional productions anticipated), BRB reserves the right to refer to such documents in lieu of a narrative response, pursuant to CPLR 3133(c), where the information sought is derived from or contained in the business records of BRB and the burden of deriving or ascertaining the answer from such records is substantially the same for the propounding party as for the responding party.
SPECIFIC INTERROGATORY RESPONSES
INTERROGATORY NO. 1
Full Text of Interrogatory: Identify all BRB personnel who were involved in, had responsibility for, or participated in any aspect of the management, servicing, workout, or disposition of the Triton Harbor credit relationship from January 1, 2023 to the present, including each such person's full name, title, department, and a description of such person's role and responsibilities with respect to the Triton Harbor credit relationship.
Objections: BRB objects to this interrogatory to the extent the phrase "any aspect" is undefined and potentially encompasses purely ministerial, administrative, or clerical functions that bear no substantive relationship to the issues in this action. Construed literally, this interrogatory could require identification of every administrative assistant, paralegal, mail clerk, or information technology specialist who may have handled a piece of paper or electronic communication mentioning Triton Harbor, which would impose an unreasonable burden and yield information of no relevance to the claims or defenses in this case. BRB further objects to this interrogatory to the extent it seeks the identification of individuals whose involvement in the Triton Harbor matter was limited solely to the provision or receipt of legal advice or the preparation of materials in anticipation of litigation, the disclosure of which would implicate the attorney-client privilege and/or work product protection. Subject to these objections, BRB will identify those individuals who had substantive involvement in the Triton Harbor credit relationship.
Response: Subject to and without waiving the foregoing objections or any General Objection, BRB identifies the following individuals who had substantive involvement in the management, servicing, workout, or disposition of the Triton Harbor credit relationship during the period January 1, 2023 to the present:
• Derek Whitmore, Senior Vice President, Head of Special Assets Group. Mr. Whitmore assumed primary management responsibility for the Triton Harbor credit relationship following the March 8, 2023 credit downgrade from "Pass" to "Substandard" (Risk Rating 7) and the concurrent transfer of the Triton Harbor account from BRB's Relationship Management division to the Special Assets Group. In that capacity, Mr. Whitmore led the workout and restructuring negotiations with Triton Harbor and its representatives, oversaw the development of the forbearance proposal, presented the Triton Harbor matter to BRB's Credit Review Committee, and participated in the September 12, 2023 meeting with the borrower principals, Marcus J. Kappel and Elaine D. Kappel, at BRB's offices. Mr. Whitmore also oversaw the preparation of the April 15, 2024 Notice of Default and Acceleration.
• Joanna Reeves, Vice President, Special Assets Group. Ms. Reeves served as the day-to-day relationship manager for the Triton Harbor account within SAG, reporting to Derek Whitmore. Ms. Reeves was responsible for monitoring Triton Harbor's financial performance, maintaining regular communication with the borrower and its principals, coordinating with Triton Harbor's financial advisor (Mercer Tidwell & Associates LLC), reviewing monthly financial reports, managing collateral appraisal processes, and preparing internal memoranda and credit analyses concerning the Triton Harbor relationship. Ms. Reeves participated in meetings and communications with Marcus J. Kappel, Elaine D. Kappel, and their advisors throughout the relevant period.
• Philip Aaronson, Executive Vice President, Chief Credit Officer. Mr. Aaronson serves as the Chair of BRB's Credit Review Committee. In that capacity, Mr. Aaronson approved the original Triton Harbor credit facility at origination on June 15, 2021. During the relevant period, Mr. Aaronson approved the March 8, 2023 credit downgrade from "Pass" to "Substandard" (Risk Rating 7), approved the material terms of the October 6, 2023 Forbearance and Modification Agreement as the senior credit officer responsible for the transaction, and approved the April 15, 2024 Notice of Default and Acceleration.
• Margaret Linden, Senior Vice President, General Counsel. Ms. Linden provided legal advice and counsel to BRB management in connection with the Triton Harbor credit relationship, the negotiation of the Forbearance Agreement, and the subsequent default and acceleration proceedings. BRB objects to providing further detail regarding the nature, substance, or scope of Ms. Linden's involvement to the extent such information is protected by the attorney-client privilege. Ms. Linden's communications with BRB management were made for the purpose of providing legal advice, and BRB asserts the attorney-client privilege with respect to the substance of those communications.
• Thomas Hargreaves, Vice President, Associate General Counsel. Mr. Hargreaves assisted Ms. Linden in connection with the Triton Harbor matter throughout the relevant period. BRB asserts the same privilege objection as set forth above with respect to the nature and substance of Mr. Hargreaves' involvement.
BRB further states that, prior to the March 8, 2023 transfer to SAG, the Triton Harbor credit relationship was managed by BRB's Relationship Management group. BRB is conducting a reasonable investigation to confirm the identities, titles, and roles of Relationship Management personnel who had substantive involvement in the Triton Harbor account during the period January 1, 2023 through March 8, 2023, and will supplement this response with such information upon completion of its investigation.
BRB expressly reserves the right to supplement this response as discovery continues and as additional individuals with substantive involvement in the Triton Harbor credit relationship are identified.
INTERROGATORY NO. 2
Full Text of Interrogatory: Identify and describe the role of each member of BRB's internal credit review committee or any similar body that reviewed, voted on, or approved any decision concerning the Triton Harbor credit facilities, including but not limited to the March 2023 credit downgrade, the October 2023 forbearance terms, and the April 2024 acceleration. For each such person, state the person's name, title, department, role on the committee, and the specific decisions in which the person participated.
Objections: BRB objects to this interrogatory to the extent it seeks information about the general composition, membership, procedures, and functioning of BRB's Credit Review Committee beyond the specific matters involving Triton Harbor. The organizational structure and internal governance of BRB's credit committees are confidential and proprietary to BRB and are not relevant to the claims or defenses in this action except insofar as they pertain to the specific Triton Harbor credit decisions at issue. BRB further objects to the extent that the internal deliberations of the Credit Review Committee may be protected by a deliberative process or self-evaluative privilege, or to the extent that any such deliberations involved the provision of or reliance upon legal advice from BRB's in-house or outside counsel, which would implicate the attorney-client privilege. BRB also objects to the term "any similar body" as vague and undefined.
Response: Subject to and without waiving the foregoing objections or any General Objection, BRB states that the following individuals participated in Credit Review Committee deliberations concerning the Triton Harbor credit facilities during the relevant period:
• Philip Aaronson, Executive Vice President, Chief Credit Officer. Mr. Aaronson served as the Chair of the Credit Review Committee and was the senior credit officer responsible for approving credit decisions relating to the Triton Harbor facilities. Mr. Aaronson participated in, and approved, the decisions identified in this interrogatory.
• Derek Whitmore, Senior Vice President, Head of Special Assets Group. Mr. Whitmore presented the Triton Harbor matter to the Credit Review Committee beginning in March 2023, following the transfer of the relationship to SAG. Mr. Whitmore presented analyses, recommendations, and proposals to the Committee concerning the credit downgrade, the forbearance terms, and the acceleration.
BRB is aware that additional members of the Credit Review Committee participated in the deliberations concerning the Triton Harbor credit facilities but is conducting a reasonable investigation to confirm the identities, titles, and specific roles of those additional members. BRB will supplement this response upon completion of its investigation.
With respect to the specific decisions at issue, BRB states as follows:
The Credit Review Committee reviewed and approved the March 8, 2023 credit downgrade of the Triton Harbor credit facilities from a risk classification of "Pass" to "Substandard" (Risk Rating 7), based upon deterioration in Triton Harbor's financial performance, covenant breaches, and concern regarding the adequacy of collateral coverage. The Committee concurrently approved the transfer of the Triton Harbor relationship from Relationship Management to the Special Assets Group.
The Credit Review Committee reviewed and approved the material terms of the October 6, 2023 Forbearance and Modification Agreement, including the following principal terms: (a) a forbearance period of one hundred eighty (180) days, commencing on October 6, 2023 and expiring on April 3, 2024; (b) required minimum monthly debt service payments by Triton Harbor in the amount of $125,000 per month during the forbearance period; (c) a forbearance fee in the amount of $87,500, calculated as 0.50% of the approximately $17,500,000 in total outstanding obligations at execution; (d) the pledge of additional collateral by Triton Harbor and the Kappels, including two equipment leases valued at approximately $2,300,000 and the Kappel personal residence located at 14 Birchmont Lane, Westport, Connecticut 06880, valued at approximately $3,100,000; (e) the expansion of the Marcus J. Kappel personal guaranty from a limited guaranty in the amount of $4,500,000 to an unlimited personal guaranty; (f) the execution of a new unlimited personal guaranty by Elaine D. Kappel; (g) the requirement that Triton Harbor engage a qualified financial advisor and provide monthly financial reports to BRB; and (h) the inclusion of Section 9(c) of the Forbearance Agreement, expressly disclaiming any commitment, agreement, or obligation on the part of BRB to extend additional credit, and Section 12(a), the full integration clause.
The Credit Review Committee also reviewed and approved the issuance of the April 15, 2024 Notice of Default and Acceleration, based upon the expiration of the forbearance period and Triton Harbor's failure to achieve the covenant-cure milestone as of March 31, 2024.
INTERROGATORY NO. 3
Full Text of Interrogatory: Identify and describe in detail the substance of all communications (oral and written) between any BRB employee and Marcus J. Kappel or Elaine D. Kappel during the period September 1, 2023 through October 31, 2023, including the date, participants, medium (e.g., telephone, email, in-person meeting, letter), location (if applicable), and substance of each such communication.
Objections: BRB objects to this interrogatory as overly broad, unduly burdensome, and disproportionate to the needs of this case to the extent it requests that BRB identify and describe in detail the "substance" of every communication — including routine, logistical, and administrative exchanges — between any BRB employee and the individual Counterclaim Plaintiffs over a two-month period, without any limitation as to subject matter. The request for a comprehensive narrative recounting of the "substance" of each communication would require the expenditure of hundreds of hours of attorney and client time, far exceeding the likely benefit of such a narrative in light of the fact that the documentary record of these communications is far more complete and accurate than any after-the-fact narrative summary.
BRB further objects to this interrogatory to the extent it constitutes a thinly veiled document request improperly framed as an interrogatory. The substance of the written communications between BRB and the Kappels during this period is more completely and accurately reflected in the emails, letters, and other documents that have been or will be produced in BRB's document production (Bates Nos. BRB-000001 et seq.), and BRB refers Counterclaim Plaintiffs to those documents pursuant to CPLR 3133(c). BRB objects to the extent this interrogatory seeks the substance of any communications between BRB personnel and BRB's in-house or outside legal counsel, which are protected by the attorney-client privilege and/or work product doctrine.
Response: Subject to and without waiving the foregoing objections or any General Objection, and without undertaking to provide an exhaustive recitation of every communication during the identified two-month period, BRB provides the following summary of the principal communications between BRB personnel and Marcus J. Kappel and/or Elaine D. Kappel during the period September 1, 2023 through October 31, 2023:
September 12, 2023 — In-person meeting. Derek Whitmore (SVP, Head of SAG) and Joanna Reeves (VP, SAG) met with Marcus J. Kappel and Elaine D. Kappel at BRB's offices located at 1200 Avenue of the Americas, 38th Floor, New York, NY 10036. The meeting lasted approximately two hours and concerned the current status of the Triton Harbor credit facilities, including the outstanding principal balances and accrued interest, Triton Harbor's recent financial performance, the March 2023 credit downgrade and transfer to SAG, and the general parameters of a potential forbearance arrangement. BRB's representatives discussed the framework for a forbearance proposal, including the anticipated requirement that Triton Harbor provide additional collateral and that the individual Kappel guaranties be expanded. The meeting also addressed the need for Triton Harbor to engage a financial advisor to assist in developing a credible turnaround plan. BRB specifically denies that any binding commitment, promise, agreement, or representation was made at this meeting regarding the extension of new credit to Triton Harbor, including any new revolving credit facility. To the extent Counterclaim Plaintiffs contend otherwise, BRB refers to the terms of the Forbearance and Modification Agreement subsequently executed on October 6, 2023, specifically Section 9(c) ("No Commitment to Extend Credit") and Section 12(a) (Integration Clause), both of which were freely negotiated and agreed to by all parties.
September 18, 2023 — Email from Joanna Reeves to Marcus J. Kappel. Ms. Reeves sent an email to Marcus Kappel following the September 12, 2023 meeting. The email addressed various follow-up items from the meeting and stated, among other things, "We are optimistic about a path forward and believe this forbearance sets the stage for a renewed credit relationship." BRB states that this statement expressed a general sentiment of optimism regarding the ongoing forbearance discussions, as is customary in workout negotiations. It does not constitute a representation, commitment, promise, or agreement to extend new credit or to renew any credit facility. The statement must be read in the context of the subsequently executed Forbearance Agreement, which contained the express disclaimer at Section 9(c) and the integration clause at Section 12(a), both of which supersede any prior expression of general sentiment or aspiration. BRB will produce this email in its document production to the extent it has not already been produced.
Various dates, September through October 2023 — Telephone calls and emails. During the period from mid-September through October 2023, Joanna Reeves engaged in multiple telephone calls and email exchanges with Marcus J. Kappel and, on certain occasions, Elaine D. Kappel, concerning logistical and documentary matters related to the negotiation and execution of the Forbearance Agreement. These communications addressed, among other things: the engagement of Mercer Tidwell & Associates LLC (Raymond Mercer, Managing Director) as Triton Harbor's financial advisor; the delivery by Triton Harbor of financial statements, tax returns, and operational reports requested by BRB; the scheduling of updated collateral appraisals by Ridgeline Appraisal Group, Inc.; the exchange of draft term sheets and documentation related to the forbearance; and the coordination of the execution of the Forbearance Agreement, the expanded Kappel guaranties, and the additional collateral pledge documents.
October 6, 2023 — Execution of the Forbearance and Modification Agreement. The Forbearance and Modification Agreement was executed by all parties on or about October 6, 2023. BRB refers to the executed Forbearance Agreement and all ancillary documents — including the amended and restated Marcus J. Kappel Guaranty, the Elaine D. Kappel Guaranty, the Collateral Assignment of Equipment Leases, and the Mortgage and Security Agreement on the Kappel residence — for the complete and definitive terms of the parties' agreement.
BRB refers Counterclaim Plaintiffs to the documents produced and to be produced in BRB's initial document production (Bates Nos. BRB-000001 et seq.) for the most complete and accurate record of communications during this period.
INTERROGATORY NO. 4
Full Text of Interrogatory: State whether, at any time during the period March 1, 2023 through October 6, 2023, any BRB employee represented to Marcus J. Kappel, Elaine D. Kappel, or any representative of Triton Harbor Industries, LLC that BRB would, or intended to, extend a new revolving credit facility or any other new credit to Triton Harbor, and if so, identify the person who made each such representation, the date, manner (oral or written), and substance thereof.
Objections: BRB objects to the term "represented" as vague and ambiguous, insofar as it fails to distinguish between (a) a binding contractual commitment or agreement, (b) a statement of present intention or future expectation, (c) a general expression of optimism or aspiration, and (d) an internal discussion or preliminary evaluation. BRB further objects to the extent this interrogatory calls for a legal conclusion regarding what constitutes a "representation" under applicable law, including the law of fraud, estoppel, and contract formation. BRB construes this interrogatory as asking whether any BRB employee made a binding commitment or promise to extend new credit, and responds on that basis.
Response: Subject to and without waiving the foregoing objections or any General Objection, BRB states that no BRB employee made any binding commitment, promise, or agreement — whether oral or written — to extend new credit to Triton Harbor Industries, LLC at any time during the period March 1, 2023 through October 6, 2023. BRB's position on this point is unequivocal.
To the extent any BRB employee discussed the possibility of future credit in general or exploratory terms — as may occur in the ordinary course of workout negotiations between a lender and a borrower — any such discussion was preliminary, non-binding, conditional, and expressly subject to BRB's internal credit approval processes, which were never initiated, completed, or approved with respect to any new credit facility for Triton Harbor. BRB specifically notes the following:
Any internal discussion of a potential new revolving credit facility for Triton Harbor was exploratory in nature and limited to internal BRB personnel. A draft term sheet for a potential $6,500,000 revolving credit facility was prepared internally by Joanna Reeves (VP, SAG) and forwarded to Derek Whitmore (SVP, Head of SAG) by email on September 29, 2023. The draft was marked "for discussion purposes only — not approved" on its face. This draft term sheet was never presented to, shared with, delivered to, or approved for distribution to Triton Harbor, Marcus J. Kappel, Elaine D. Kappel, or any representative or advisor of Triton Harbor, including Mercer Tidwell & Associates LLC. The draft was never reviewed, considered, or approved by BRB's Credit Review Committee, Philip Aaronson (EVP, Chief Credit Officer), or any other authorized credit officer of BRB. It remained an internal working document at all times.
BRB further notes that the Forbearance and Modification Agreement executed by all parties on October 6, 2023 — one week after the preparation of the internal draft term sheet — contains an express disclaimer of any commitment to extend credit. Section 9(c) of the Forbearance Agreement 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." Each of the Counterclaim Plaintiffs — including Marcus J. Kappel and Elaine D. Kappel — executed the Forbearance Agreement containing this provision, with the assistance and advice of their own legal counsel and their financial advisor, Mercer Tidwell & Associates LLC.
The Forbearance Agreement also contains an integration clause at Section 12(a), which provides that the Forbearance Agreement "constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, understandings, negotiations, and discussions, whether oral or written, of the parties." This integration clause precludes reliance on any alleged prior oral representation concerning future credit.
INTERROGATORY NO. 5
Full Text of Interrogatory: Identify and describe the substance of any internal BRB memoranda, emails, reports, or other documents created between March 1, 2023 and April 15, 2024 concerning BRB's strategy, plan, or recommendation for the disposition or resolution of the Triton Harbor credit relationship, including any recommendation to accelerate, liquidate, foreclose upon, or exit the relationship.
Objections: BRB objects to this interrogatory as overly broad and unduly burdensome. The interrogatory requests that BRB identify and describe the substance of every internal memorandum, email, report, or other document created over a period of more than thirteen months concerning a broad range of topics — "strategy, plan, or recommendation for the disposition or resolution" — without any reasonable limitation. This interrogatory is, in substance, a document request improperly framed as an interrogatory, and the responsive information is more completely and accurately contained in the documents themselves rather than in a narrative summary prepared by counsel.
BRB further objects to this interrogatory to the extent it seeks information protected by the attorney-client privilege and/or the work product doctrine. Specifically, BRB objects to the extent this interrogatory seeks the substance of communications between BRB management personnel and BRB's in-house legal department (Margaret Linden, SVP & General Counsel; Thomas Hargreaves, VP & Associate General Counsel) and/or BRB's outside counsel (Blakemore & Stern LLP and Calderwood & Harkness LLP), made for the purpose of obtaining or providing legal advice or in anticipation of litigation. Many of the internal memoranda and communications sought by this interrogatory were prepared at the direction of counsel, for the purpose of providing legal advice to BRB management, or in anticipation of the litigation that was, as of mid-2023, reasonably foreseeable given the trajectory of the Triton Harbor workout. BRB asserts attorney-client privilege and work product protection with respect to such documents.
BRB also objects to the extent this interrogatory seeks information or documents subject to the bank examination privilege, including internal memoranda, credit analyses, or reports prepared in connection with or in response to OCC examinations, supervisory activities, or regulatory inquiries regarding the classification or treatment of the Triton Harbor credit facilities.
Response: Subject to and without waiving the foregoing objections or any General Objection, BRB states that it has produced, or will produce in the ordinary course of its document production, all non-privileged documents responsive to this interrogatory. BRB refers Counterclaim Plaintiffs to its document production (Bates Nos. BRB-000001 et seq.) for the complete documentary record of non-privileged internal memoranda, emails, reports, and other documents created during the relevant period concerning BRB's strategy, plan, or recommendation for the disposition or resolution of the Triton Harbor credit relationship.
BRB has withheld certain documents on the basis of attorney-client privilege and/or work product protection, as identified in BRB's Privilege Log dated January 15, 2025, which has been served concurrently herewith. BRB's position regarding each document identified on the Privilege Log, including the basis for the asserted privilege, is set forth therein. To the extent Counterclaim Plaintiffs dispute BRB's privilege designations, the parties should meet and confer in good faith pursuant to the Preliminary Conference Order before seeking intervention by the Court.
Without waiving any privilege or protection, BRB generally states that, in the ordinary course of its Special Assets Group operations, BRB personnel — including Derek Whitmore and Joanna Reeves — prepared internal memoranda, credit analyses, collateral valuation summaries, workout proposals, and disposition strategy recommendations concerning the Triton Harbor relationship during the relevant period. These documents reflect the good-faith deliberative processes of BRB's SAG and Credit Review Committee in evaluating the Triton Harbor credit relationship and determining the appropriate course of action to protect BRB's interests as a secured lender.
INTERROGATORY NO. 6
Full Text of Interrogatory: State the factual basis for BRB's decision to issue the Notice of Default and Acceleration dated April 15, 2024, including all facts, circumstances, financial metrics, and considerations that BRB contends supported the acceleration of the Triton Harbor indebtedness.
Objections: BRB objects to this interrogatory to the extent it constitutes a contention interrogatory seeking the complete factual and legal basis for BRB's position on a central issue in this case. BRB's investigation and discovery are ongoing, and BRB reserves the right to supplement this response following the close of fact discovery on April 30, 2025 and expert discovery on June 30, 2025. Notwithstanding this objection, BRB provides the following response based on information currently available.
Response: Subject to and without waiving the foregoing objections or any General Objection, BRB states that its decision to issue the Notice of Default and Acceleration dated April 15, 2024 was based upon the following facts and circumstances:
Expiration of the Forbearance Period. The Forbearance and Modification Agreement, executed on October 6, 2023, provided for a forbearance period of one hundred eighty (180) days, commencing on October 6, 2023 and expiring on April 3, 2024. The forbearance period expired by its own terms on April 3, 2024 without extension or renewal.
Failure to Achieve the Covenant-Cure Milestone. Section 4(b) of the Forbearance Agreement required Triton Harbor to achieve specified financial covenant milestones by the expiration of the forbearance period as a condition to the continued forbearance by BRB and any discussion of a renewal or extension. As of March 31, 2024, based on Triton Harbor's financial statements delivered to BRB pursuant to the monthly reporting requirements of the Forbearance Agreement, Triton Harbor's Fixed Charge Coverage Ratio was 0.94x, which remained materially below the covenant minimum of 1.20x specified in Section 6.01(a) of the Original Credit Agreement and Section 4(b)(i) of the Forbearance Agreement. Additionally, Triton Harbor's Total Leverage Ratio remained in breach of the maximum permitted level of 3.50x set forth in Section 6.01(b) of the Original Credit Agreement and Section 4(b)(ii) of the Forbearance Agreement.
Event of Default. The failure to achieve the covenant-cure milestone as of the expiration of the forbearance period constituted a Specified Event of Default under Section 5(a)(ii) of the Forbearance Agreement and an Event of Default under Section 7.01 of the underlying Original Credit Agreement, each of which entitled BRB to exercise all remedies available under the Forbearance Agreement, the Original Credit Agreement, the related loan documents, and applicable law, including acceleration of the outstanding indebtedness.
Outstanding Obligations at Acceleration. As of the date of acceleration, April 15, 2024, the total outstanding obligations of Triton Harbor to BRB were as follows:
The Term Loan A principal balance of $10,625,000 reflected a reduction of $750,000 from the pre-forbearance balance of $11,375,000, attributable to six monthly forbearance payments of $125,000 each made by Triton Harbor during the forbearance period (October 2023 through March 2024). The Revolving Credit Facility principal balance of $6,200,000 remained unchanged during the forbearance period, as the Forbearance Agreement did not require any paydown of the revolving facility.
Collateral Deterioration. The updated collateral appraisal conducted by Ridgeline Appraisal Group, Inc. in September 2023 valued BRB's original collateral — consisting of real property, marine terminal equipment, accounts receivable, and inventory at 50-22 Borden Avenue, Long Island City, NY 11101 — at $11,200,000. This represented a decline of $7,500,000, or approximately 40.1%, from the origination appraisal value of $18,700,000 in June 2021. The significant deterioration in collateral value indicated that BRB's secured position had materially weakened during the term of the credit relationship.
Total Estimated Collateral Coverage. Taking into account the additional collateral pledged under the Forbearance Agreement, BRB estimated the total collateral value as follows:
The estimated collateral value of $16,600,000 was less than the total accelerated amount of $17,456,212, resulting in an estimated deficiency of $856,212 before accounting for costs of sale, broker commissions, additional interest accrual at the default rate, attorneys' fees, and other enforcement costs, all of which would further increase the deficiency.
Contractual Rights. BRB exercised its contractual rights under the Forbearance Agreement and the Original Credit Agreement. The acceleration was undertaken in good faith, in the exercise of BRB's reasonable business judgment, and in accordance with the express terms of the governing agreements, to which all Counterclaim Plaintiffs had voluntarily agreed.
BRB reserves the right to supplement this response as discovery continues.
INTERROGATORY NO. 7
Full Text of Interrogatory: State whether BRB, at any time prior to October 6, 2023, made an internal decision or adopted an internal recommendation that no further extensions of credit to Triton Harbor would be made under any circumstances, and if so, identify the date of such decision or recommendation, the person(s) who made or approved such decision or recommendation, and all documents reflecting or memorializing such decision or recommendation.
Objections: BRB objects to the phrase "under any circumstances" as overly broad, vague, and susceptible to multiple interpretations. Lending decisions are inherently conditional and fact-specific, and BRB's internal credit processes involve the continuous evaluation of borrower performance, collateral adequacy, market conditions, and risk appetite. A question framed in absolute terms — "under any circumstances" — does not accurately reflect the manner in which credit decisions are made in practice.
BRB further objects to this interrogatory to the extent it seeks the substance of internal deliberative communications that are protected by the attorney-client privilege and/or work product doctrine, including any memoranda or communications directed to, from, or involving Margaret Linden (SVP & General Counsel) or Thomas Hargreaves (VP & Associate General Counsel), or reflecting legal advice provided to or sought by BRB management in connection with the Triton Harbor credit relationship. BRB also objects to the extent responsive documents have been withheld on privilege grounds, as identified in BRB's Privilege Log dated January 15, 2025.
Response: Subject to and without waiving the foregoing objections or any General Objection, BRB states that, in the ordinary course of managing distressed and classified credits, BRB's Special Assets Group and Credit Review Committee evaluate and consider various disposition and resolution strategies for each credit relationship within the SAG portfolio. These strategies may include, without limitation, continued forbearance, workout and restructuring, refinancing, sale of the credit to a third party, orderly exit, acceleration, or foreclosure. The evaluation of such strategies is an ongoing, iterative process that takes into account the borrower's financial performance and trajectory, the borrower's cooperation and good faith, the adequacy and trend of collateral coverage, market conditions, regulatory considerations, and the lender's overall risk profile and portfolio management objectives.
These internal deliberations reflect the good-faith exercise of BRB's business judgment and its obligations to its shareholders, depositors, regulators, and other stakeholders. The existence or content of any internal assessment, evaluation, or recommendation regarding a particular disposition strategy for the Triton Harbor credit relationship does not constitute a commitment, promise, or agreement to any particular course of action, and cannot be construed as inconsistent with BRB's subsequent exercise of its contractual rights under the governing loan documents.
BRB refers Counterclaim Plaintiffs to the non-privileged documents produced and to be produced in BRB's initial document production (Bates Nos. BRB-000001 et seq.) and to BRB's Privilege Log dated January 15, 2025 for documents responsive to this interrogatory.
BRB further notes that, regardless of any internal assessment or recommendation that may or may not have existed at any point during the relevant period, the Forbearance and Modification Agreement executed on October 6, 2023 expressly disclaimed any commitment to extend credit at Section 9(c), and Counterclaim Plaintiffs agreed to and are bound by this provision. The Counterclaim Plaintiffs cannot claim reliance on alleged internal BRB deliberations — to which they were not privy — when the executed agreement contains an explicit disclaimer and an integration clause (Section 12(a)) that supersedes all prior agreements, representations, and understandings.
INTERROGATORY NO. 8
Full Text of Interrogatory: Describe in detail the authorization process by which the terms of the Forbearance and Modification Agreement dated October 6, 2023 were approved within BRB, including the identity of each person who approved or authorized the terms, the dates of such approvals, and any conditions or limitations imposed by BRB on the authorization.
Objections: BRB objects to this interrogatory to the extent it seeks information regarding BRB's internal deliberative processes that are protected by the attorney-client privilege and/or work product doctrine, including any legal advice sought or provided by BRB's in-house or outside counsel in connection with the development, negotiation, or approval of the Forbearance Agreement terms. BRB also objects to this interrogatory to the extent it seeks a comprehensive description of BRB's general corporate governance framework, credit approval procedures, and delegation-of-authority policies beyond the specific authorization process for the Triton Harbor Forbearance Agreement, as such information is confidential, proprietary, and not relevant to the claims or defenses in this action.
Response: Subject to and without waiving the foregoing objections or any General Objection, BRB states as follows regarding the authorization process for the Forbearance and Modification Agreement:
The material terms of the Forbearance Agreement were developed by Derek Whitmore (SVP, Head of SAG) and Joanna Reeves (VP, SAG), based on their assessment of the Triton Harbor credit relationship, the borrower's financial condition and prospects, the collateral position, and the objectives of the workout process. Mr. Whitmore and Ms. Reeves also consulted with BRB's in-house legal department in the development of the proposed terms; to the extent of such consultation, BRB asserts the attorney-client privilege and declines to provide further detail regarding the substance of those communications.
The proposed terms were presented by Mr. Whitmore to BRB's Credit Review Committee for review and approval. Philip Aaronson (EVP, Chief Credit Officer), as the Chair of the Credit Review Committee and the senior credit officer with delegated approval authority for transactions of this size and risk profile, was responsible for the final credit approval of the Forbearance Agreement terms. BRB is conducting a reasonable investigation to determine the precise date(s) on which the Credit Review Committee convened to consider the Triton Harbor forbearance proposal and will supplement this response accordingly.
The terms approved by the Credit Review Committee included the following principal elements:
(a) A forbearance period of one hundred eighty (180) days, commencing on October 6, 2023 and expiring on April 3, 2024;
(b) Required minimum monthly debt service payments by Triton Harbor in the amount of $125,000 per month during the forbearance period;
(c) A forbearance fee in the amount of $87,500, calculated as 0.50% of the approximately $17,500,000 in total outstanding obligations at execution, payable at closing;
(d) The pledge of additional collateral, consisting of (i) the assignment of two equipment leases with a combined estimated value of $2,300,000 and (ii) a first-priority mortgage on the personal residence of Marcus J. Kappel and Elaine D. Kappel located at 14 Birchmont Lane, Westport, Connecticut 06880, with an estimated value of $3,100,000;
(e) The expansion of the Marcus J. Kappel personal guaranty from a limited recourse guaranty in the principal amount of $4,500,000 to a full unlimited recourse personal guaranty;
(f) The execution of a new unlimited recourse personal guaranty by Elaine D. Kappel, who had not previously been a guarantor of the Triton Harbor obligations;
(g) The engagement by Triton Harbor of a qualified financial advisor acceptable to BRB and the delivery of monthly financial reports to BRB during the forbearance period;
(h) The inclusion of Section 9(c) of the Forbearance Agreement, expressly providing that "[n]othing 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"; and
(i) The inclusion of a full integration clause at Section 12(a), providing that the Forbearance Agreement constitutes the entire agreement among the parties with respect to its subject matter and supersedes all prior and contemporaneous agreements, representations, understandings, negotiations, and discussions, whether oral or written.
BRB will provide further supplementation to the extent non-privileged information is identified in the course of its ongoing investigation and discovery.
INTERROGATORY NO. 9
Full Text of Interrogatory: Identify all appraisals, valuations, or assessments of the collateral securing the Triton Harbor credit facilities that were conducted, commissioned, or received by BRB from January 1, 2021 to the present, including the date of each appraisal, the appraiser or appraisal firm, the property or assets appraised, and the appraised value.
Objections: BRB interposes no specific objections to this interrogatory beyond its General Objections.
Response: Subject to BRB's General Objections, BRB identifies the following appraisals, valuations, and assessments of collateral securing the Triton Harbor credit facilities:
1. June 2021 — Origination Appraisal. Ridgeline Appraisal Group, Inc. (312 Elm Street, Stamford, CT 06902; appraiser: Gerald Montoya, MAI, MRICS) conducted a comprehensive appraisal of the collateral package securing the Triton Harbor credit facilities in connection with the origination of the Original Credit Agreement dated June 15, 2021. The collateral appraised consisted of Triton Harbor's marine terminal equipment, accounts receivable, inventory, and the real property located at 50-22 Borden Avenue, Long Island City, NY 11101 (the "Terminal Facility"). The aggregate appraised value as of June 2021 was $18,700,000. This appraisal supported the origination of the Triton Harbor credit facilities, which consisted of a $14,000,000 Term Loan A and an $8,000,000 Revolving Credit Facility, for total committed facilities of $22,000,000, resulting in an initial loan-to-value ratio of approximately 85%.
2. September 2023 — Updated Appraisal. Ridgeline Appraisal Group, Inc. (same office and appraiser as above) conducted an updated appraisal of the same collateral — the Terminal Facility real property, marine terminal equipment, accounts receivable, and inventory — reflecting deteriorated market conditions in the marine industrial services sector and the borrower's reduced operations and revenue. The aggregate appraised value as of September 2023 was $11,200,000. This represented a decline of $7,500,000, or approximately 40.1%, from the June 2021 origination appraisal. The decline was attributed to a combination of factors, including reduced utilization of the Terminal Facility, deferred maintenance and capital expenditures, softening in the marine terminal equipment market, and a decline in the value of accounts receivable and inventory commensurate with Triton Harbor's reduced revenue. This updated appraisal informed the terms of the Forbearance and Modification Agreement, including the requirement for additional collateral to supplement BRB's weakened collateral position.
3. September–October 2023 — Additional Collateral Appraisals. Separate appraisals and valuations of the additional collateral pledged under the Forbearance Agreement were obtained in connection with the closing of the Forbearance Agreement. These included: (a) a valuation of two equipment leases assigned to BRB as additional collateral, with a combined estimated value of $2,300,000; and (b) an appraisal of the personal residence of Marcus J. Kappel and Elaine D. Kappel located at 14 Birchmont Lane, Westport, Connecticut 06880, with an appraised value of $3,100,000. BRB is conducting a reasonable investigation to confirm the identity of the appraiser(s), the precise dates, and the specific methodology used for each of these additional collateral appraisals, and will supplement this response and produce the appraisal reports in its document production.
BRB notes that Harborview Title & Escrow Co. (233 Broadway, Suite 1600, New York, NY 10279) issued title insurance in connection with BRB's mortgage on the Terminal Facility at origination (Policy No. HT-NYC-2021-04553), and a separate title policy was obtained in connection with the mortgage on the Kappel residence under the Forbearance Agreement. BRB does not believe that title insurance policies constitute "appraisals, valuations, or assessments" within the meaning of this interrogatory, and provides this information solely for completeness.
INTERROGATORY NO. 10
Full Text of Interrogatory: State whether any BRB employee communicated to any third party (including any regulator, auditor, financial advisor, or appraiser) between March 1, 2023 and April 15, 2024 that BRB intended to exit, terminate, accelerate, or liquidate the Triton Harbor credit relationship, and if so, identify the date, the BRB employee who made the communication, the third party to whom the communication was made, and the substance of the communication.
Objections: BRB objects to this interrogatory as overly broad and unduly burdensome to the extent it encompasses all communications with any "third party" — a term of essentially unlimited scope — without any reasonable limitation as to the identity of the third party, the subject matter of the communication, or the context in which the communication was made.
BRB specifically objects to the extent this interrogatory seeks communications between BRB personnel and federal or state banking regulators, including, without limitation, the Office of the Comptroller of the Currency ("OCC"). Communications between BRB and its primary federal regulator concerning the classification, treatment, risk assessment, or disposition of classified credits, including the Triton Harbor credit relationship, are protected by the bank examination privilege. The bank examination privilege protects the confidentiality necessary to the frank exchange of information between a regulated bank and its supervisory authority, and BRB asserts this privilege to the fullest extent permitted by law.
BRB also objects to the extent this interrogatory seeks communications between BRB and BRB's external auditors, Tavrenis & Hatch CPAs LLP (1301 Avenue of the Americas, 42nd Floor, New York, NY 10019), to the extent such communications involve the provision of or reliance upon legal advice from BRB's in-house or outside counsel, or are otherwise protected by applicable privileges. BRB further objects to the extent this interrogatory seeks communications between BRB and its outside counsel at Blakemore & Stern LLP or Calderwood & Harkness LLP, which are protected by the attorney-client privilege and/or work product doctrine.
Response: Subject to and without waiving the foregoing objections or any General Objection, BRB states as follows:
BRB communicated with Ridgeline Appraisal Group, Inc. in connection with the engagement for the September 2023 updated collateral appraisal. The nature of these communications was limited to the engagement of appraisal services, the provision of property descriptions, access arrangements, and financial data necessary for the appraisal. Based on the information currently available to BRB and its counsel, BRB does not believe that these communications included specific statements that BRB intended to exit, terminate, accelerate, or liquidate the Triton Harbor credit relationship.
BRB communicated with Mercer Tidwell & Associates LLC (Raymond Mercer, Managing Director, 245 Park Avenue, 28th Floor, New York, NY 10167), the financial advisor retained by Triton Harbor, in the ordinary course of the workout negotiations during the period identified. These communications concerned Triton Harbor's financial performance, the development of Triton Harbor's turnaround plan, the terms of the proposed forbearance, the borrower's progress toward meeting the covenant-cure mile