The opinion of the court was delivered by: KEVIN THOMAS DUFFY
KEVIN THOMAS DUFFY, D.J.:
The amended complaint alleges seven causes of action. The first three counts are predicated upon breach of contract. Counts four and five allege fraud based on material misrepresentations and material omissions, while counts six and seven allege "waiver" and "estoppel," respectively.
Plaintiffs originally brought this action in New Jersey Superior Court. On the basis of diversity of citizenship, 28 U.S.C. § 1331, Defendants removed the case to the United States District Court for the District of New Jersey, which then issued a consent order transferring it to this court on December 2, 1993. Defendants next moved to dismiss the complaint for failure to state a claim upon which relief may be granted, pursuant to Fed. R. Civ. P. 12(b)(6). Defendants also moved to dismiss counts four and five for failure to plead fraud with sufficient particularity, pursuant to Fed. R. Civ. P. 9(b). Both parties submitted matters outside the pleadings in support of their respective positions, including affirmations, copies of letters, and copies of contracts between various parties. Deeming it necessary to consider these additional materials along with the pleadings, I chose to treat the motion as one for summary judgment under Fed. R. Civ. P. 56. I issued an order to this effect on January 31, 1995, which instructed the parties to submit any additional affidavits or other supporting documentation within twenty days of the date thereof. The parties have submitted a number of additional affirmations and documents.
Summary judgment is appropriate only where the moving party demonstrates that there exists no genuine issue of material fact, and that the moving party is entitled to summary judgment as a matter of law. See Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In determining whether a genuine issue of material fact exists, the evidence must be construed and all inferences drawn in favor of the non-moving party. Cable Science Corp. v. Rochdale Village, Inc., 920 F.2d 147, 151 (2d Cir. 1990); Williams v. Smith, 781 F.2d 319, 323 (2d Cir. 1986).
The moving party bears the initial responsibility of demonstrating the absence of a genuine issue of material fact. Williams v. Smith, 781 F.2d at 323. A non-moving party can defeat a properly asserted summary judgment motion by demonstrating the existence of a material issue of fact necessitating a trial on the merits. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Williams, 781 F.2d at 323. To sustain this burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986); Williams, 781 F.2d at 323 ("Mere conclusory allegations or denials will not suffice.") In turn, the moving party may discharge its burden by "pointing out to the district court -- that there is an absence of evidence to support the non-moving party's case." Celotex, 477 U.S. at 325. Even where evidence is offered, summary judgment may still be granted if that evidence is not significantly probative. Anderson, 477 U.S. at 249-50.
In the end, however, the inquiry on a summary judgment motion is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52.
At some time prior to June 21, 1991, Plaintiff Readco, Inc., entered into loan agreements with Defendant Marine Midland Bank, N.A., ("Marine"). Readco sought the loan in order to finance the purchase of land for and construction of a residential condominium building. Plaintiff Antonio Reale, who is a shareholder and president of Readco, along with the other shareholders of Readco, individually guaranteed the loans, while Plaintiffs Readco and R.D.P. Associates ("RDP") cross-guaranteed them. On June 21, 1991, Marine and its affiliate Eagle Rock Holding, Inc., ("Eagle Rock") entered into a forbearance agreement with the guarantors extending the maturity date of the loans. On June 10, 1992, after the expiration of the forbearance agreement, the parties executed a settlement agreement (the "Settlement Agreement").
According to the Settlement Agreement, Readco would convey to Defendants the land purchased with the loan funds. In exchange, Marine agreed not to sue Readco for the unpaid loans and to release the shareholders from their individual guarantees, and Eagle Rock assumed various liabilities regarding the land conveyed.
Meanwhile, Reale and co-Plaintiff Lan XII were also jointly obligated on a $ 3,000,000 letter of credit issued by Chase Manhattan Bank, N.A. ("Chase"). The Settlement Agreement provided for Marine to repay this debt to Chase on behalf of Reale and Lan XII:
Upon the joint written request of Chase and Antonio Reale, made within six (6) months of the Closing Date and accompanied by the duly executed agreement of Chase, . . . that, subject to the payment of $ 1,250,000 . . . all obligations of Antonio Reale and affiliate thereof to Chase in connection with the Chase Letter of Credit and Lender's drawing of $ 3,000,000 thereunder are paid and discharged in full, Lender [Marine] agrees to promptly make such payment of $ 1,250,000 to Chase . . .
(Compl. P15). However, Marine's obligation to make the payment to Chase could be partially or completely offset by the results of an audit which was to be performed on the books and records of Readco and RDP. The Settlement Agreement provided that if the audit revealed that Readco and RDP had used more than $ 1,980,000 of the loans issued to Readco by Marine for purposes not expressly permitted by the loan agreement or consented to by Marine in writing, Marine could reduce its payment to Chase by the amount by which the non-permitted uses exceeded $ 1,980,000.
The audit determining any applicable offset was also mentioned in an earlier paragraph of the Settlement Agreement which identified conditions precedent:
Neither the Lender [Marine] or Buyer [Eagle Rock] shall have any obligation to execute or deliver any document (other than this Agreement) . . . or make any payment or take any other action under Section 2 of this Agreement unless on or prior to the Closing Date the following conditions shall have been satisfied in full or waived in writing by the party or parties for whose benefit the condition exists: