Judge Allows $100M Contract Breach Case Against Real Estate Firm to Proceed
An AI-driven real estate firm faces a contract clash over a disputed stock warrant, with key breach claims surviving a federal judge’s scrutiny.
Published on
In December 2022, artificial intelligence-powered homebuying platform reAlpha Tech Corp. signed a share purchase agreement with Gem Yield Bahamas Ltd. (GYBL), an investment affiliate of Luxembourg-based GEM Global Yield LLC SCS. Under the agreement, GYBL committed to purchasing up to $100 million in reAlpha stock. A critical element of the deal included a warrant entitling GYBL to purchase up to 1.7 million reAlpha shares at a set price, with terms allowing for future adjustments.
reAlpha executed the warrant in October 2023. However, according to the complaint, the company later told GYBL it would not honor the warrant and failed to reserve the corresponding shares, as the agreement required. In response, reAlpha initiated its own lawsuit seeking to rescind the warrant, which U.S. District Judge Lewis A. Kaplan dismissed in March 2025. GYBL followed with the current breach of contract action.
The Breach Claims
reAlpha moved to dismiss the suit, claiming that GYBL failed to identify specific breaches of the warrant or establish any related damages. However, Judge Kaplan rejected this argument in a memorandum opinion issued on August 22. He found that GYBL’s amended complaint "alleges clearly" that reAlpha failed to fulfill its contractual obligations by not reserving the required shares and refusing to honor the warrant.
The court emphasized that reAlpha's conduct—namely filing a rescission suit and directly communicating its refusal to comply with the agreement—constituted an anticipatory breach. “GYBL alleges that, in addition to the rescission action, reAlpha expressed its intent not to perform in other communications,” Kaplan wrote. “GYBL alleges that reAlpha already has breached the warrant by failing to reserve shares as required.”
Judge Kaplan concluded that the company's alleged breach had already occurred, and did not merely rely on anticipated repudiation.
The Damages Argument
reAlpha also challenged the sufficiency of GYBL’s damages claim, asserting that the investment firm had not demonstrated actual harm stemming from the lack of share reservation. Again, the court disagreed.
Kaplan noted that reAlpha’s failure to reserve the shares rendered it "impossible" for GYBL to exercise the warrant and complete the transaction. “Even if GYBL did not suffer any damages caused by the share reservation breach,” the judge wrote, “reAlpha does not dispute that its anticipatory repudiation of the provision requiring it to sell shares to GYBL at a set price has caused GYBL to suffer damages.”
The judge held that GYBL had plausibly alleged it was harmed by reAlpha’s nonperformance and that its claims of resulting damages were sufficient to survive dismissal.
The Declaratory Judgment Claim
While Judge Kaplan allowed the breach of contract and damages claims to proceed, he dismissed GYBL’s request for a declaratory judgment. GYBL sought a ruling declaring the warrant enforceable beyond the scope of the rescission action. The court found that such a declaration would serve no practical purpose, given that adequate remedies were available through the breach claims already before the court.
“GYBL does not explain what other legal issue regarding the enforceability of the warrant requires clarification,” the opinion stated. The judge added that the court need not issue a declaratory judgment when alternative, coercive relief is available.
The Firms Involved
Gem Yield Bahamas Ltd. is represented by Eversheds Sutherland LLP attorneys Alexander P. Fuchs, Francis X. Nolan IV, and William T. O'Brien.
reAlpha Tech Corp. is represented by The Basile Law Firm PC attorneys Alyssa Feldman and Mark Basile.
Case Information
The case is GEM Yield Bahamas Limited v. ReAlpha Tech Corp., case number 1:25-cv-02271, before the U.S. District Court for the Southern District of New York.
