The opinion of the court was delivered by: GLASSER
GLASSER, United States District Judge:
In 1974, defendant Roberto Arguello Tefel ("Mr. Arguello") borrowed $300,000 from Bank of Boston Trust Company (Bahamas), Ltd. ("BBTC") pursuant to a loan agreement and promissory note. Defendant Matilde Osorio de Arguello ("Mrs. Arguello") was also a signatory to the loan agreement. The defendants defaulted on the loan by failing to make the required payment of principal and interest on January 15, 1979. No payments have been made since that date. In November 1979, the loan agreement and promissory note were assigned by BBTC to plaintiff Bank of Boston International of Miami ("BBIM"). In March 1984, this suit was instituted against defendants, who now reside in the New York area, seeking $125,000 in unpaid principal and the accrued interest from January 15, 1979. Plaintiff now seeks summary judgment on its action on the promissory note and moves to dismiss defendants' counterclaim for failure to state a claim upon which relief can be granted. For the reasons stated below, plaintiff's motion will be granted in full.
I. Plaintiff's Motion for Summary Judgment
It is undisputed that the amount of debt sought to be recovered by plaintiff has not been paid by the defendants. Defendants, however, have asserted twenty-four affirmative defenses which, they argue, bar recovery against one or both of them. The Court will consider these defenses seriatim.
1. Defendants argue that BBIM is not the real party in interest in this suit. This suit was originally instituted by BBTC. Defendants moved to dismiss the suit for lack of subject matter jurisdiction, observing that, as then constituted, neither party was a United States citizen. In response, BBIM, relying on the 1979 assignment, moved to be substituted as party plaintiff. Defendants opposed this substitution, arguing that the assignment was a collusive effort to create diversity jurisdiction in violation of 28 U.S.C. § 1359. In a Memorandum and Order dated October 9th, 1984, the Court rejected this argument, denying defendants' motion to dismiss and allowing the substitution of BBIM. Because the Court has already found defendants' first affirmative defense to be without merit, it cannot be a bar to plaintiff's motion for summary judgment.
2. Defendants argue that BBTC is a necessary party under Fed. R. Civ. P. 19 whose joinder would divest the Court of jurisdiction. BBIM has conceded that it "stands in the shoes of" BBTC and thus that any defense available to defendants against BBTC may be asserted against it. Because "complete relief [can] be accorded among those already parties," Fed. R. Civ. P. 19(a), BBTC is neither a necessary nor indispensable party to this action.
3. Defendants argue that the action is barred by the doctrine of collateral estoppel. With the proceeds of the loan at issue in this case, Mr. Arguello and four other Nicaraguan businessmen purchased a controlling interest in Textiles Fabricato de Nicaragua, S.A. ("Fabritex"), a Nicaraguan corporation. The purchased shares of the corporation became collateral for the loan. In 1979, after the revolution in Nicaragua, the new Nicaraguan government expropriated the property of the Arguellos, including these shares. In the fall of 1979, BBIM attempted to offset the corporate funds of Fabritex, which were on deposit, to recover some of the unpaid debt. Fabritex sued BBIM in Florida federal court, arguing that BBIM could not use corporate funds to offset purely personal debts. BBIM counterclaimed on the theory that, through Fabritex, it was suing the Nicaraguan government on a tort theory for the diminished value of its collateral. According to counsel for BBIM, it was determined that Nicaragua could not be sued through Fabritex because the Nicaraguan government had not expropriated Fabritex itself but only the shares owned by Mr. Arguello and the other businessmen. The suit was settled with the counterclaim being dropped and the offset funds returned to Fabritex.
The defendants' claim that this litigation should be given preclusive effect seems to rest on the fact that during the course of the litigation, BBIM opposed the characterization of Mr. Arguello and the other debtors as necessary and indispensable parties. This claim is without merit. As a matter of issue preclusion, nothing was decided in the earlier proceeding that could bar the relief sought here. Collateral estoppel has no application to issues that merely could have been decided. Although claim preclusion may operate to prevent litigation of a matter that could have been raised in a prior suit between the same parties, the defendants have cited no authority for the proposition that plaintiff's assertion of a counterclaim against Fabritex obligated it to assert its claims against defendants in the same litigation.
4. Defendants argue that they are excused from performance by the doctrine of illegality. In 1978, the Nicaraguan government decreed certain currency restrictions that barred defendants from repaying the debt in United States dollars as provided for in the loan agreement. Two observations are in order with respect to this defense. First, insofar as no currency restrictions were in effect when the agreement was made, the contract itself is not illegal and the issue is really one of impossibility of performance. Second, insofar as the doctrine of impossibility is implicated, the impossibility was only temporary; defendants have lived in the United States, unhindered by the currency restrictions, since 1979. See infra, p. 7.
5. Defendants argue that enforcement of their obligations would violate the act of state doctrine. As recently explained by the Second Circuit Court of Appeals, "[t]he act of state doctrine operates to confer presumptive validity on certain acts of foreign sovereigns by rendering non-justiciable claims that challenge such acts." Allied Bank International v. Banco Credito Agricola de Cartago, 757 F.2d 516, 520 (2d Cir. 1985). With this understanding of the doctrine in mind, it is apparent that defendants' invocation of it is unavailing because plaintiff's claim does not challenge the validity of any act of the Nicaraguan government. First, plaintiff's maintenance of this action in no way conflicts with that government's expropriation of defendants' property. Defendants can make no plausible argument that the expropriation was intended to have any effect on, much less to extinguish, the debt on which this action is based.
Second, this action does not call into question the validity of Nicaragua's currency restrictions. While it may well be the case that were defendants still living in Nicaragua, an American court might be barred from requiring defendants to violate these restrictions by ordering that the debt be repaid in American dollars, because the Arguellos are now residents of the United States, those restrictions are irrelevant to this case.
6. Defendants argue that their obligations have been nullified by the doctrine of frustration of purpose. In invoking this defense, defendants point to the loss of their holdings in Fabritex. This defense is also without merit. Put simply, defendants' purpose in entering into this transaction with plaintiff was to borrow money. That purpose was fulfilled when defendants received the loan proceeds from plaintiff and is unaffected by subsequent events.
7. Citing §§ 1-201(19), 1-203 and 2-103 of the Uniform Commercial Code, defendants argue that plaintiff failed to act in good faith and in a commercially reasonable manner. According to defendants, plaintiff's lack of good faith is evidenced by its settlement of the suit against Fabritex, its failure to seek recourse against the Nicaraguan government and its refusal to accept non-U.S. currency. The Court finds that this defense presents no bar to a grant of summary judgment. Although defendants argue that the issue of good faith typically involves questions of fact, their memorandum of law is wholly devoid of any legal argument as to how these actions constitute bad faith sufficient to relieve them of their obligations under the loan agreement. With respect to the first two cited items, the plaintiff did attempt to recoup some of its money in its suit against Fabritex. Had the lawsuit been successful, defendants would have benefited. That it ended without success should not cause plaintiff ...