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FASOLINO FOODS v. BANCA NAZIONALE DEL

March 20, 1991

FASOLINO FOODS CO., INC., PLAINTIFF,
v.
BANCA NAZIONALE DEL LAVORO, DEFENDANT. BANCA NAZIONALE DEL LAVORO, THIRD-PARTY PLAINTIFF, V. ANTONIO FASOLINO, THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Cannella, District Judge:

  MEMORANDUM AND ORDER

After a bench trial on plaintiff's claims, the Court finds in favor of defendant/third-party plaintiff.

BACKGROUND

This bifurcated action was tried by the Court without a jury. Having heard and carefully considered all the evidence in this matter, the Court makes the following findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

FINDINGS OF FACT

(1) Plaintiff Fasolino Foods Company, Inc. ["Fasolino Foods"] is a New Jersey corporation engaged in the business of importing and distributing food products from Italy.

(2) Defendant and third-party plaintiff Banca Nazionale del Lavoro ["BNL" or the "Bank"] is a foreign corporation organized and existing under the laws of Italy and does business in the State of New York. BNL is a commercial bank licensed to engage in all types of banking.

(3) Third-party defendant Antonio Fasolino ["Fasolino"] is the president and sole shareholder of Fasolino Foods and a resident of the State of New Jersey.

The Establishment of a Banking Relationship with BNL

(4) In November or December 1988, Fasolino met with Francesco Ingargiola, an account officer at BNL, and Stephano Felicori, the head of the commercial credit department at BNL, to establish a credit facility for his importing business.

(5) Fasolino next met with Ingargiola and Felicori on January 9, 1989 to discuss Fasolino's request for a $4 million credit facility that would be used by Fasolino Foods to purchase goods from Italy for delivery in the United States to a wholly-owned subsidiary of Kraft, Inc. ["Kraft"].

(6) Fasolino proposed that the requested $4 million line of credit would be secured by a $4 million "back up" letter of credit issued for the benefit of BNL by a suitable bank acting on behalf of Kraft, the intended purchaser.

(7) At the January 9 meeting, Ingargiola and Felicori informed Fasolino that additional financial information from Fasolino and Fasolino Foods was needed in order to determine the propriety of a $4 million line of credit.

(8) At the January 9 meeting, there were no discussions between the parties concerning a $5 million credit facility related to non-Kraft business.

(9) Thomas DeLuca, in-house counsel to Fasolino Foods, sent a letter to Ingargiola on January 9, 1989 confirming Fasolino's meeting earlier in the day with Ingargiola and Felicori. With respect to the proposed $4 million credit facility for Fasolino Foods' importation of olive oil from Italy for distribution to Kraft, DeLuca states, "We have structured the transaction to be risk free for all parties, especially the bank." Defendant's Trial Exhibit ["Dx"] A, at 1.

(10) On January 14, 1989, Fasolino telecopied to BNL the requested financial information, including his personal guaranty, Fasolino Foods' corporate financial information and Fasolino Foods' corporate resolution.

(11) The financial statements of Fasolino Foods received by BNL were unaudited and, therefore, BNL requested that Fasolino attest to the accuracy of the financial information. As part of its investigation, BNL also ordered a Dun & Bradstreet report reflecting the estimated financial strength of Fasolino Foods.

(12) Upon receipt of Fasolino Foods' letter of credit agreement and Fasolino's personal guaranty, BNL notified Fasolino that the Bank would extend Fasolino Foods a credit facility for the opening of letters of credit in connection with the Kraft transaction if certain conditions were satisfied. See Dx H, I. As revised, the conditions included (i) that the Kraft back up letter of credit comply with BNL's lending guidelines, (ii) that BNL receive a copy of the sale contract between Fasolino Foods and Kraft and (iii) that BNL's New York branch Credit Committee approve the credit proposal. See Dx H.

(13) Defendant's exhibits H and I do not constitute a formal commitment by BNL to extend a credit facility to Fasolino Foods. Rather, the letters indicate that the Bank would undertake such a facility if the conditions listed therein were satisfied.

The Letter of Credit Agreement

(14) On January 14, 1989, Fasolino executed and delivered to BNL, on behalf of Fasolino Foods, a Letter of Credit Agreement [the "LOC Agreement"].

(15) The LOC Agreement sets forth the terms and conditions that govern all applications by Fasolino Foods to BNL for letters of credit and all letters of credit issued by BNL to Fasolino Foods.

(16) Section 4 of the LOC Agreement defines an event of default to include, among other things, failure by Fasolino Foods to perform any of its obligations to BNL under the terms of the LOC Agreement and default by Fasolino Foods under any evidence of indebtedness issued, assumed or guaranteed by Fasolino Foods. Upon any event of default by Fasolino Foods, all of Fasolino Foods' obligations "shall become due and payable without presentment, demand, protest or other notice of any kind, all of which we [Fasolino Foods] hereby expressly waive." Dx O.

The Guaranty Agreement

(17) On January 14, Fasolino also executed and delivered to BNL a personal guaranty agreement [the "Guaranty"].

(18) Pursuant to the Guaranty, Fasolino guaranteed to BNL "the payment of any and all such bills, notes, checks, drafts and other debts or liabilities either made, endorsed, or contracted by [Fasolino Foods]. . . ." Dx F.

(19) In addition, under the Guaranty Fasolino agreed to pay "cost of protest and all expenses (including reasonable attorney's fees) of or for collection or for realization upon any underlying collateral or upon this guaranty." Id.

BNL Credit Facility Procedures

(20) BNL's New York branch Credit Committee had authority to extend credit facilities for the issuance of letters of credit up to a maximum amount of $1 million.

(21) BNL's Regional Credit Committee for the New York geographical area had authority to extend credit facilities for the issuance of letters of credit in excess of $1 million but less than $5 million.

(22) BNL's international headquarters in Rome, Italy had sole authority to extend credit facilities for the issuance of letters of credit in excess of $5 million.

(23) The New York branch Credit Committee consisted of the branch manager, Carlo Vecchi, and the head of the commercial division, Felicori.

(24) Claudio Ciampi was the vice president of the BNL New York branch.

(25) Thomas Badolato was the manager of BNL's letter of credit department. As such, he was responsible for the technical or mechanical aspects in the issuance of letters of credit. However, contrary to Fasolino's testimony, Badolato had no authority to ...


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