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September 28, 1984

DIMITROIS D. SIRINAKIS, Plaintiff, against COLONIAL BANK, Defendant.

The opinion of the court was delivered by: LOWE



 Plaintiff Dimitrios D. Sirinakis ("Sirinakis") commenced this maritime and diversity action against defendant Colonial Bank ("Colonial" on "the bank"), seeking to recover compensatory and punitive damages up to $96,000,000 for breach of contract and intentional tortious conduct designed to destroy plaintiff's business and deprive plaintiff of ;his revenue-earning property, i.e., three ocean-going vessels.

 Before the Court is a motion for dismissal by Colonial brought pursuant to Rule 12(b)(6). Both parties have relied on facts and documentary proof outside the pleadings, *fn1" therefore, the Court will treat this motion as a motion for summary judgment. Fed. R. Civ. P. Rule 12(b). *fn2"



 Plaintiff Sirinakis, a Greek citizen, was at all times relevant hereto the president of three shipping companies ("shipping companies"): Gave Shipping, Incorporated, a Panamanian corporation, which owned the vessel Margareta, Ademodea Shipping Company, a Greek corporation which owned the vessel Anemodea, and Thalassarchis Shipping Company, a Liberian corporation which owned the vessel Paralos.Sirinakis is principle shareholder in Anemodea and Gave. He is 50% shareholder in Thalassarchis, the remaining 50% of the shares being owned by Vassilios Fassoulis, a Greek national.

 In February 1981, Anemodea Company and Gave Company borrowed $2,400,000 from Colonial. *fn3" This loan was secured by, among other things, a mortgage on the Paralos. Fassoulis and Sirinakis each guaranteed Thalassarchis' obligation to Colonial. The loan agreements contained an acceleration clause which entitled Colonial to demand payment of the entire outstanding indebtedness of the loan in the event that the borrower failed to pay the principle of interest when due.

 On or about February 19, 1982, a semiannual payment of $686,080 was due Colonial from Gave and Anemodea pursuant to the February 17, 1981 loan agreement. The shipping companies did not make this payment. Elwim Aff. P8; Sirinakis Aff. P11. On February 23, 1982, Colonial informed Gave and Ademodea of its intention to accelerate the debt and demanded payment in full of the February 17, 1981 loan in the total amount of $2,137,923.50.

 The Letter Agreement

 On February 24, 1982, the parties began negotiations in New York City respecting the shipping companies' defaults. Among those present at the February 24, 1982 meeting were Mr. Martin Northcutt, on behalf of Colonial, Mr. Sirinakis, and Sirinakis' attorneys, Messrs. Joseph Smith and John Osborne. During the negotiations, Sirinakis requested, on behalf of the ship-owning companies, a moratorium on principal and interest payments in order to allow time for the shipping market to rebound and to put the companies in a position to be able to repay the debt. Sirinakis Aff. P12.

 The result of the negotiations was a letter in which Colonial specified certain conditions under which it was "prepared to postpone taking any action to enforce its security in accordance with the . . . [Aug. 28, 1981 and Feb. 17, 1981] Loan Agreement." See February 25, 1982 letter, Defendants' Exhibit 2. Included in these conditions were the following:

 (1) On or before March 12, 1982, an agreement for the sale of the Anemodea was to be completed; this sale was subject to Colonial's prior approval of the purchaser and financial assistance.

 (2) By March 26, 1982, the Paralos was to be delivered or fixed for delivery within 14 days thereafter into a time charter for a period of not less than 12 months.

 The letter stipulated that if these conditions were met and if no creditors had taken any legal steps against any of the vessels, Colonial would renegotiate the terms of hte loan agreements so that the shipping companies' future obligations under the renegotiated agreements could be met out of the shipping companies' existing cash flow. At that point, the notice of demand would be withdrawn by Colonial. *fn4"

 The letter further indicated that, to protect its security, Colonial might have to make further cash advances. Although Colonial was "not in any way obliged to make any such advances, . . . it would be prepared to give favorable consideration to such advances being made so as to enable . . . [Sirinakis] to perform the agreement contained . . . [therein]."

 Although the letter specified that Colonial was not obliged to make any further advances, Sirinakis alleges that at the February 24, 1982 meeting, Mr. Northcutt assured him orally that Colonial would be willing to advance funds to allow the contiued operation of the vessels. Sirinakis alleges that Northcutt agreed to provide $35,000 to bunker the Margareta. In addition, Sirinakis claims that Northcutt agreed that if the Paralos were to put into Malta, Colonial would provide the necessary money to arrange for crew changes and supply necessary fuels and supplies. *fn5"

 Sirinakis further alleges that he took steps to satisy the condition in the letter agreement that he sell the Anemodea, but that Colonial's actions hindered this attempt. He alleges that on or about February 25, 1982, he advised Colonial that he had a potential buyer willing to pay $1,000,000 for the Anemodea. On March 3, 1983, he advised Colonial that the buyer was a corporation controlled by a Mr. E. Geronimakis. He indicated that if Mr. Geronimakis were not acceptable, another potential buyer would be available. On March 4, 1982, Colonial telexed that Mr. Geronimakis was, in principle, an acceptable buyer. However, on March 5, Colonial advised Sirinakis that it had no knowledge of Geronimakis and was unabale to determine whether he was acceptable.

 The Arrest of the Ships

 The Anemodea

 During the week of March 1, 1982, the Anemodea was formally arrested in Avonmouth, England. One of the arresting companies was Hellarabia, a fuel supplier, which asserted a statutory maritime lien for unpaid bunker bills in excess of $130,000. On March 3, 1982, Sirinakis wired Colonial requesting that Colonial transfer $157,000 in order to avoid "disastrous situations". Colonial did not send this money.

 On March 16, 1982, Colonial separately effected an arrest of the vessel, by process issued in an action seeking foreclosure of its mortgage, commenced in the Admiralty Court of the Queen's Bench Division of the High Court of Justice in London (the "London Admiralty Court").

 By order of the London Admiralty Court dated March 22, 1982, the Anemodea was sold pendente lite. By final decree and judgment dated April 6, 1982, the London Admiralty Court: (i) "pronounced for the force and validity of the Greek mortgage Deed herein dated 21st February 1981", and (ii) rendered judgment in favor of Colonial in the amount of $2,061,308.40, the amount adjudged to be outstanding owing to Colonial under the ...

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