1, cl. 2(c); Penny Aff., P 7.) The Facility irrevocably authorized NCB to pay amounts demanded from it in connection with the duty deferment guarantee, required AMUK to indemnify NCB for any amounts paid, and authorized NCB to debit to AMUK's account any amounts payable under the indemnity. (Pl.'s Ex. 1, cl. 2(d).)
As security for the loans contemplated by the Facility, the Parties entered into the Debenture, by which AMUK granted NCB a security interest in all of AMUK's assets (Pl.'s Ex. 2, cl. 3.01), the right to appoint a receiver in the event of AMUK's default, (Pl.'s Ex. 2, cls. 8.01, 8.02) and provided that AMUK's failure "to pay or to discharge any of its Secured Obligations or . . . to comply with any term or condition" of the Debenture would constitute a default. (Pl.'s Ex. 2, Schedule 3, P 1.) Schedule 2 to the Debenture set forth the receiver's powers, which included selling the secured assets at a public or private sale. (Pl.'s Ex. 2, Schedule 2, cl. 4.) The parties agreed that the Debenture would be governed and interpreted in accordance with English law. (Pl.'s Ex. 2, cl. 16.01.)
As a condition of the Facility, defendants
executed separate guarantees (the "1990 Guarantees" or "Guarantees") of AMUK's obligations. (Pl.'s Exs. 3 and 4; Penny Aff., PP 10-12.) Both Guarantees provided that defendants "unconditionally and irrevocably" guaranteed payment of AMUK's obligations to NCB when due. Defendants waived all rights of objection and defenses other than fraud or "NCB's willful misconduct causing defendants material harm." (Pl.'s Exs. 3 and 4, cl. 2.1.) NCB could renew, vary, determine or increase any accommodation or credit given to AMUK without affecting defendants' liability under the Guarantees. (Pl.'s Exs. 3 and 4, cl. 6(a).) The Guarantees provided that New York law would govern the Guarantees. (Pl.'s Ex. 3, cl. 14; Pl.'s Ex. 4, cl. 15.)
2. The Side Letter Extension
The Facility expired by its terms on June 30, 1991. (Pl.'s Ex. 1, cl. 8.) In late May 1991, AMUK requested that NCB extend the Facility for an additional year, increase the maximum amount to $: 1,250,000, and provide an additional term loan of $: 250,000. (Pl.'s Ex. 6; Penny Aff. P 14.) After reviewing the Facility, Julie Jones, NCB's account officer on the Facility, and Simon Penny, Head of Corporate Banking, decided not to renew or increase it. (Pl.'s Ex. 7; Penny Aff. P 15.) The Credit Committee agreed and granted AMUK a limited extension. The extension allowed AMUK to borrow funds only through September 30, 1991 and required AMUK to repay all funds by December 31, 1991. (Pl.'s Ex. 8; Penny Aff. P 16.) NCB and AMUK entered into a "Side Letter" to the Facility, which set forth the terms of the extension. (Pl.'s Ex. 9; Penny Aff. P 17.)
3. Declaration of Default and Demand for Payment
On September 13, 1991, AMUK's management informed Simon Penny that AMUK would be unable to pay an invoice from H.M. Customs and Excise in the amount of $: 19,963.82. (Penny Aff. P 20; Pl.'s Ex. 10.) NCB paid the invoice and demanded reimbursement, but AMUK failed to repay NCB. (Penny Aff. P 20.)
NCB notified AMUK and defendants by letter dated September 18, 1991 that AMUK's failure to reimburse NCB constituted a default under the Debenture and that NCB was under no further obligation under the Facility. (Pl.'s Ex. 11; Penny Aff. PP 22-23.) AMUK nonetheless continued to request additional funds from NCB. (Pl.'s Ex. 12, P 18; Penny Aff. P 24.) NCB's Credit Committee approved a $: 50,000 advance but informed AMUK that future requests would be denied unless AMUK agreed to certain conditions. (Pl.'s Ex. 13; Penny Aff. P 25.) NCB also paid AMUK's tax bill at the request of AMUK's controller. (Pl.'s Exs. 14 and 15; Penny Aff. PP 26-27.) In mid-October 1991, AMUK made another request for funds, which NCB denied after AMUK advised that it was unable to provide additional security. (Penny Aff. PP 27-28; Pl.'s Ex. 16.)
By letter to AMUK dated October 31, 1991, NCB demanded payment of $: 554,299.58, the amount outstanding under the Facility. (Pl.'s Ex. 30; Penny Aff. P 30.) That same day, NCB notified defendants that the amounts under the Facility had become due and demanded payment. (Pl.'s Ex. 31; Penny Aff. P 31.) To date, neither AMUK nor defendants has paid NCB. (Penny Aff. P 32.)
4. Receivership Sale
NCB appointed Gareth Hughes and Margaret Mills, partners in the accounting firm Ernst & Young, as joint administrative receivers of AMUK on November 1, 1991. (Penny Aff. P 33; Pl.'s Ex. 20.) They concluded that if AMUK was sold as a going concern within a month its value could be maximized and the deterioration of its business halted. (Wollaston Aff. P 16; Pl.'s Ex. 39.) Mr. Hughes' memorandum to NCB explained that the financial difficulties being experienced by A.M. Diagnostics ("AMD"), AMUK's 100% parent company, might impede the receivers' ability to achieve a going concern sale, and identified potential purchasers, including AMUK's London management and AMD. (Pl.'s Ex. 39, PP 1(b), 3.)
The receivers' advertisement appeared in the Financial Times of London on November 5. (Pl.'s Ex. 40.) The receivers also prepared a sales memorandum for potential purchasers. (Wollaston Aff. P 18; Pl.'s Ex. 41.) Andrew Wollaston, who worked under Mr. Hughes on the AMUK sale, (Wollaston Aff. PP 1-2), personally responded to and followed up on all inquiries, (Wollaston Aff. P 37), recording his efforts on a contemporaneous log. (Wollaston Aff. P 29; Pl.'s Ex. 42.) The receivers met with Mark Maten, Vice President and Chief Financial Officer of AMD, to determine whether AMD would be interested in bidding for AMUK, but AMD did not bid. (Wollaston Aff. PP 23-24; Pl.'s Ex. 45.)
AMUK's London management, who formed Monitor Bioscience Limited ("MBL") for the purpose of bidding for AMUK's assets, made the only offer for AMUK. (Wollaston Aff. P 20.) MBL initially offered $: 80,000. (Pl.'s Ex. 43.) After negotiating with the receivers, MBL raised its offer. (Wollaston Aff. P 21; Pl.'s Ex. 44.) The receivers concluded that they could not hope to receive a higher offer, and on December 4, 1991 they sold most of AMUK's assets to MBL for $: 120,000. (Wollaston Aff. P 26; Pl.'s Ex. 47.)
1. Summary Judgment
Summary judgment is appropriate "only if the evidence, viewed in the light most favorable to the party opposing the motion, presents no genuine issue of material fact." Cable Science Corp. v. Rochdale Village, Inc., 920 F.2d 147, 151 (2d Cir. 1990). Conclusory allegations are not enough to defeat a motion for summary judgment. The nonmoving party must offer "concrete evidence from which a reasonable juror could return a verdict in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S. Ct. 2505, 2514, 91 L. Ed. 2d 202 (1986).
Defendants do not contest the elements of plaintiff's prima facie case: they concede that AMUK owes the debt, that defendants guaranteed payment of the debt, and that neither AMUK nor defendants has paid to date.
See Chemical Bank v. Haseotes, 13 F.3d 569, 573 (2d Cir. 1994) (listing elements of guarantee claim). To defeat plaintiff's motion, defendants must show that a triable issue of fact remains with respect to one of their defenses.
2. Waiver of Defenses
The 1990 Guarantees contained clauses waiving all defenses to enforcement except "fraud, or willful misconduct by NCB which the Guarantor has demonstrated has caused it material harm." (Pl.'s Exs. 3 and 4, cl. 2.1.) New York law
permits a guarantor to waive contractually all defenses except fraud and certain violations of the Uniform Commercial Code. E.g., Barclays Bank v. Heady Elec. Co., 174 A.D.2d 963, 571 N.Y.S.2d 650, 653 (3rd Dep't), appeal dismissed, 78 N.Y.2d 1072, 576 N.Y.S.2d 221, 582 N.E.2d 604 (1991). Thus, defendants' waivers are enforceable except to the extent they purport to waive the defense of commercial unreasonableness.
3. Fraudulent Inducement
Defendants argue they were fraudulently induced to enter into both the 1990 Guarantees and the 1991 extensions. On plaintiff's motion for summary judgment, defendants must come forward with evidence that would allow a reasonable jury to find, by clear and convincing evidence, that each of the elements of fraud has been satisfied. The Sample Inc. v. Pendleton Woolen Mills, Inc., 704 F. Supp. 498, 505 (S.D.N.Y. 1989).
a. 1990 Guarantees
Defendants contend they would not have entered into the 1990 Guarantees if Julie Jones had not fraudulently misrepresented the nature of the Facility to Eugene Schuster. (Defs' Mem. at 1, 8.) Specifically, defendants assert Ms. Jones orally represented that AMUK was "the sort of business NCB was looking for" and that the Facility would be a "bridge" loan leading to permanent financing. (Schuster Aff. PP 7-8.) Although he knew the Facility expired by its terms after one year, Schuster believed the "bridge" language meant NCB would renew the Facility until AMUK obtained permanent financing. (Schuster Dep. at 47-48, 243-46; Defs.' Mem. at 1.)
Plaintiff denies Ms. Jones ever made the statements Schuster attributes to her and argues that the Facility documents flatly contradict Schuster's testimony. Even if Ms. Jones made the representations claimed by Schuster, the fraud claim fails as a matter of law.
Under New York law, the elements of fraud are "(1) that [the defendant] made a misrepresentation (2) as to a material fact (3) which was false (4) and known to be false by [the defendant] (5) that was made for the purpose of inducing [the plaintiff] to rely upon it (6) that [the plaintiff] rightfully did so rely (7) in ignorance of its falsity (8) to his injury." Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994) (quoting Murray v. Xerox Corp., 811 F.2d 118, 121 (2d Cir. 1987)) (internal quotations omitted). Where, as here, the alleged misrepresentation concerns future conduct, the defrauded party must allege specific facts showing that the promisor intended not to honor her obligations at the time she made the statement. National Westminster Bank v. Ross, 130 Bankr. 656, 664 (S.D.N.Y. 1991), aff'd sub nom. Yaeger v. National Westminster, 962 F.2d 1 (2d Cir. 1992). The defrauded party may not satisfy this requirement simply by showing that the future event never occurred. Id.
Defendants fail to allege any facts from which one might infer that at the time Julie Jones told Schuster the Facility was a "bridge" loan NCB did not intend to continue the relationship with AMUK. Indeed, defendants' explanation for NCB's change of heart regarding AMUK and the Facility--NCB's involvement in the BCCI banking scandal--suggests the opposite. (See Defs.' Mem. at 2; Schuster Aff. P 13.) Further, a statement of opinion is not fraudulent under New York law unless it is not honestly held at the time it was made. Mann v. Levy, 776 F. Supp. 808, 813 (S.D.N.Y. 1991). Defendants have not proffered any facts tending to show that Ms. Jones did not believe her alleged statement that "AMUK is the kind of business NCB is looking for."
b. Side Letter