they were to involve, the Alleged Agreement was one to which its parties would not intend to be bound until all the relevant documents had been properly executed. See Reprosystem, 727 F.2d at 262-63. This finding also is supported by the prior dealings between Frutico and Bankers Trust involving the three Short-Term Loans, each of which was an executed written agreement.
In light of these factual considerations and New York's policy of avoiding the recognition of oral contracts involving "substantial and complex dealings," 751 F.2d at 75, it is held that the intentions of the parties to the Alleged Agreement had not ripened to the point where they intended to be bound by any draft agreement, including the final unexecuted December 22 Draft of the Alleged Agreement, and that the Alleged Agreement is not a enforceable contract which Bankers Trust could have breached by its failure to loan Frutico $ 2,265,000. Therefore, Bankers Trust is entitled to summary judgment on the Plaintiffs' breach of contract claim.
2. Promissory Estoppel
The Plaintiffs assert a promissory estoppel claim on the ground that "Frutico substantially and reasonably relied [to its detriment] on Defendants' promise to loan funds . . ." Am. Compl. at P 27. Under New York law, a promissory estoppel claim requires "a clear and unambiguous promise; a reasonable and foreseeable reliance by the party to whom the promise is made; and an injury sustained by the party asserting the estoppel by reason of his reliance." R.G. Group, 751 F.2d at 78 (quoting Ripple's of Clearview, Inc. v. Le Havre Assocs., 88 A.D.2d 120, 452 N.Y.S.2d 447, 449 (1982) (2d Dep't 1982)).
There was not the requisite "clear and unambiguous promise" by Bankers Trust to the Plaintiffs because the entire history of the parties negotiations made it plain that any promise or agreement at any time during the negotiations, up to and including the discussions centering on the December 22 Draft, was conditional upon the execution and delivery of a written contract. See R.G. Group, 751 F.2d at 79; Reprosystem, 727 F.2d at 265. Without such a promise, the Plaintiffs' promissory estoppel claim necessarily falls in the face of Bankers Trust's Rule 56 motion.
The Plaintiffs allege that Bankers Trust defrauded them by knowingly making false statements upon which they relied. However, the record fails to support this allegation.
"It is well settled that a cause of action for fraud will not arise when the only fraud charged relates to a breach of contract." Trusthouse Forte (Garden City) Mgmt. Inc. v. Garden City Hotel, Inc., 106 A.D.2d 271, 483 N.Y.S.2d 216, 218 (1st Dep't 1984); accord Paper Corp. of U.S. v. Schoeller Technical Papers, Inc., 759 F. Supp. 1039, 1044 (S.D.N.Y. 1991). The recognized exception to this rule arises when a party makes a contractual promise with the "undisclosed intention not to perform," and in that situation, a party can be held liable for fraud. Sabo v. Delman, 3 N.Y.2d 155, 162, 164 N.Y.S.2d 714, 718, 143 N.E.2d 906 (1957).
There is no evidence on the record of this motion to support the claim that Bankers Trust perpetrated either an actual or constructive fraud on the Plaintiffs. The explicit provisions in the various versions of the draft agreements that the transactions were conditioned on "duly executed and delivered documents," undercuts the assertion that Bankers Trust made a false promise to make $ 2,265,000 available to Frutico.
The Plaintiffs' conclusory allegations of intent do not present a triable claim for fraud. A plaintiff's claim for fraud must be supported by "clear and convincing evidence." See Orderline Wholesale Distrib., Inc. v. Gibbons, Green, Van Amerongen, Ltd., 675 F. Supp. 122, 129 (S.D.N.Y. 1987); Edelmann v. National Patent Dev. Corp., 656 F. Supp. 1073, 1077 (S.D.N.Y. 1987). This is not the case here.
Finally, Bankers Trust is entitled to summary judgment on this claim because the Plaintiffs have failed to proffer any evidence that they relied on the allegedly false statements. Under New York law, for a party to be deceived, it must have reasonably relied on the false statement. See Lanzi v. Brooks, 54 A.D.2d 1057, 388 N.Y.S.2d 946, 948 (3d Dep't 1976), aff'd, 43 N.Y.2d 778, 402 N.Y.S.2d 384, 373 N.E.2d 278 (1977). Only then can the party sustain a claim for fraud. However, the Plaintiffs are unable to show reasonable reliance on Bankers Trust's statements because the numerous draft agreements specifically stated that the parties were not to be bound until they were duly executed and delivered, see Reprosystem, 727 F.2d at 265, and Valentine acknowledged in writing as late as December 8, 1988 that he did not have a commitment from Bankers Trust regarding the $ 2,265,000.
Therefore, the Defendants are entitled to summary judgment against the Plaintiffs' claim for fraud.
4. Negligent Misrepresentation
The Plaintiffs assert a claim for negligent misrepresentation by contending that "the contractual relationship, joint venture, and general course of dealings between Plaintiffs and Defendants gave rise to a duty on the part of Defendants to impart accurate information to the Plaintiffs." Am. Compl. at P 29. The Plaintiffs contend that this alleged duty was breached when the Defendants represented that a loan for the expansion of Frutico would be forthcoming and then failed to perform as promised.
In order to state a claim for negligent misrepresentation, Bankers Trust must have misrepresented a fact. See Pappas v. Harrow Stores, Inc., 140 A.D.2d 501, 528 N.Y.S.2d 404, 407 (2d Dep't 1988). Because a negligent promissory misrepresentation is not a misrepresentation of fact, a special relationship must exist between the parties in order for a promissory misrepresentation to give rise to a justiciable claim. See Durante Bros. & Sons, Inc. v. Flushing Nat'l Bank, 755 F.2d 239, 252-53 (2d Cir.), cert. denied, 473 U.S. 906 (1985).
Again, the record on this motion does not support the conclusion that the Alleged Agreement ever become binding on the parties. Thus, because there was no enforceable contract, either oral or written, pursuant to which Bankers Trust was to loan the Plaintiffs $ 2,265,000, there was no misrepresentation on Banker Trust's part regarding the loan.
The Plaintiffs also have failed to proffer any evidence to establish that the requisite special relationship existed between the Plaintiffs and Bankers Trust to assert a claim for negligent promissory misrepresentation. See id. at 252 ("the usual relationship of bank and customer is that of debtor and creditor").
In light of the explicit statements on the draft agreements regarding the condition precedent of execution and delivery by the parties before a validly binding agreement would be reached regarding the loan in question, there was no misrepresentation about the time at which the Plaintiffs would have an enforceable commitment from Bankers Trust to proceed with the transactions and make the money in question available to them. Therefore, Bankers Trusts' motion for summary judgment as to the negligent misrepresentation claim is granted.
5. Special Relationship
The Plaintiffs also assert that Bankers Trust breached a duty of good faith and fair dealing in its decision to terminate the Alleged Agreement. However, this claim necessarily fails because it is derivative of the Plaintiffs' cause of action for breach of contract. Under New York law, while an implied covenant of good faith and fair dealing is inherent to every contract, see Grad v. Roberts, 14 N.Y.2d 70, 75, 248 N.Y.S.2d 633, 637, 198 N.E.2d 26 (1964); see also Lowell v. Twin Disc, Inc., 527 F.2d 767, 770 (2d Cir. 1975), the duty of good faith and fair dealing cannot be used to create new contractual rights between the parties, see Don King, 742 F. Supp. at 767.
While parties can bind themselves to an incomplete preliminary agreement by accepting a mutual commitment to negotiate in good faith to reach a final agreement, see Arcadian, 884 F.2d at 71, when no agreement exists, either in principle or in fact, there is no duty to negotiate in good that can be enforced against a party to the negotiations, see Reprosystem, 727 F.2d at 264; Ogden Martin, 734 F. Supp. at 1071.
The Plaintiffs have failed to demonstrate that Bankers Trust was bound by any agreement that gave rise to a duty of good faith and fair dealing in negotiating the Alleged Agreement or performing under it. No agreement was reached, and the parties did not owe each other this alleged duty. See Broad v. Rockwell Int'l Corp., 642 F.2d 929, 957 (5th Cir.), cert. denied, 454 U.S. 965 (1981) (applying New York law to a claim regarding an implied covenant of good faith and fair dealing). Therefore, Bankers Trust is entitled to summary judgement as to this claim.
6. Breach Of Fiduciary Duty
The Plaintiffs allege that:
The history is the transactions between Defendants and Plaintiffs, including but not limited to the Defendants' steps to acquire an equity position in Frutico and to become a joint venturer with Frutico, also gave rise to a fiduciary duty from Defendants to Plaintiffs.