## Facts

- Superior Well Services, Inc. issued a series of preferred stock that carried no voting rights but granted holders contractual protections, including a right to require Superior to repurchase the preferred shares at $1,000 per share plus accrued dividends upon a defined “fundamental change.”
- The parties’ rights were governed by a certificate of designations that defined “fundamental change” through several scenarios, including:
  - A change-of-control trigger keyed to a person or group becoming the beneficial owner of more than 50% of Superior’s voting power, subject to a carve-out for certain merger transactions.
  - A merger/consolidation trigger, except for a merger or transaction in which Superior was “the surviving entity.”
- In 2010, Superior entered into a merger agreement with Nabors Industries Ltd. and Nabors’ wholly owned acquisition subsidiary formed to complete the acquisition.
- The transaction was structured as a reverse triangular merger: the acquisition subsidiary merged into Superior, Superior remained the legally surviving corporation, and Superior became an indirect subsidiary of Nabors.
- Superior’s common shareholders were cashed out; preferred holders (including Whitebox) were not cashed out and Superior did not repurchase the preferred shares.
- Whitebox (preferred holders) sued seeking a declaration that the transaction constituted a “fundamental change” requiring repurchase under the certificate.

## Issues

1. Whether the certificate’s “fundamental change” provisions unambiguously excluded the reverse triangular merger from triggering the preferred holders’ repurchase right, permitting dismissal under CPLR 3211(a)(1) and (7).
2. Whether Superior’s designation as the “surviving entity” in the merger documentation conclusively placed the transaction within the certificate’s merger exception as a matter of law.
3. Whether documentary evidence “utterly refuted” the preferred holders’ allegations so as to conclusively establish a defense at the pleading stage.

## Decision

- The Court of Appeals reversed the Appellate Division and reinstated the complaint.
- The court held that, viewing allegations and documents in plaintiffs’ favor, dismissal was not warranted because the certificate was ambiguous as applied to the transaction.
- The court rejected treating the merger agreement’s “surviving entity” label as automatically dispositive for purposes of the certificate’s exceptions.
- The case was remitted for further proceedings; the court did not finally construe the certificate’s provisions on the merits.

## Legal Principles

- On a CPLR 3211(a)(1) motion, documentary evidence must conclusively establish a defense as a matter of law; it must “utterly refute” the complaint’s factual allegations.
- Contract-based claims should not be dismissed where the governing instrument is reasonably susceptible to more than one interpretation on the pleaded facts.
- A merger’s formal characterization (including “surviving entity” terminology) does not necessarily resolve whether change-of-control or “fundamental change” protections are triggered where the operative contract language, read as a whole, is unclear in the transaction context.

## Conclusion

Because the preferred stock certificate’s “fundamental change” provisions were ambiguous when applied to a reverse triangular merger that left Superior as the surviving corporation but transferred control to an acquirer, Superior was not entitled to dismissal at the pleading stage, and the preferred holders’ declaratory claim was reinstated.


Whitebox Concentrated Convertible Arbitrage Partners, L.P. v. Superior Well Services, Inc., 20 N.Y.3d 59 (N.Y. 2012)