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April 10, 1996


The opinion of the court was delivered by: HAIGHT

 HAIGHT, Senior District Judge:

 In these consolidated actions, the Federal Deposit Insurance Corporation ("FDIC"), as receiver for First New York Bank for Business ("FNY"), moves for summary judgment on five promissory notes signed by defendant Wrapwell Corporation and guaranteed by the other defendants. The defendants oppose the motion, asserting numerous defenses to the claims on the notes. The FDIC also moves to be named the successor party in interest in this matter, pursuant to Fed.R.Civ.P. 25(c).


 These consolidated actions arise out of a series of loan agreements, promissory notes, and guarantees.

 FNY and Wrapwell entered into a credit agreement ("Credit Agreement") on March 29, 1990 which provided for FNY to make loans to Wrapwell to finance Wrapwell's Christmas wrapping paper business. Affidavit of Linda Walker-Scharer ("W-S Aff."), Exh. A at 1. Under the terms of the Credit Agreement, FNY agreed to make available to defendants a line of credit of up to $ 3,000,000. The advances on this line of credit took the form of promissory notes.

 Two promissory notes were executed on March 29, 1990. The first note was for the principal amount of $ 1,070,000.00 ("Note A"); the second note was for the principal amount of $ 730,000.00 ("Note B"). W-S Aff., Exh. B & C. Both notes were payable in sixty consecutive monthly installments, commencing April 30, 1990. The defendants allege that they reached "an understanding" with FNY that, given the seasonal nature of the Christmas wrapping paper business, all sums due in a given year would be payable in December of that year. Silberstein Aff. in 93 Civ. 859 ("Silberstein Aff.[1]") at P 5. Two lump sum payments were made in December, 1990 and December, 1991. Id.

 The parties describe the events of April 1992 differently. Plaintiff states that "despite its obligations under Notes C and D, and despite due demand, Wrapwell . . . failed to pay" any part of the principal balance and accrued interest due on Note C, or the remaining principal balance of $ 1,140,556.00 and accrued interest on Note D. W-S Aff., P 10. Notes A and B and the Credit Agreement provide that upon "event of default," FNY may declare the entire unpaid principal amount of Notes A and B, and all unpaid accrued interest, to be immediately due and payable. W-S Aff., P 11. Accordingly, after Wrapwell's defaults on Notes C and D, FNY made such declaration by a letter dated May 1, 1992, which letter is not in the Court's record. According to the FDIC, Wrapwell made no further payments to FNY, and still owes the FDIC, as FNY's successor party in interest, $ 3,323,556.00. *fn1"

 According to defendants, in April 1992,

the bank departed from this custom and practice [of December payments] and demanded immediate payment of all outstanding amounts. Upon being advised that the Defendants could not suddenly make such payment without being afforded a reasonable opportunity to collect its [sic] own receivables, the bank agreed to enter into modification agreements in April, 1992, and October, 1992.
Unbeknownst to the Defendants, also in April 1992, the bank proceeded to send demands upon the Defendant's customers for payment of outstanding receivables to be paid directly to the bank.

 Silberstein Aff.[1], PP 7-8 (exhibit citations omitted). However, nothing in the record supports defendants' allegation that FNY made such demands in April 1992. Additionally, the "modification agreements" referred to by defendants are simply Promissory Notes C, D, and E--an additional note described infra. Defendants assert that the Bank then "refused to extend the promissory notes of $ 1,800,000 which were due April 30, 1992, which had always been extended as a matter of course." Silberstein Affidavit in 94 Civ. 5574 ("Silberstein Aff.[2]") at P 12. Defendants provide no documentation that this was the "matter of course."

 The defendants provided FNY with numerous guarantees of its loans. Before any of the notes at issue in this case were executed, defendants Louis and Herman Silberstein executed and delivered to FNY an unconditional guaranty of any and all of Wrapwell's liabilities. W-S Aff., Exh. F. On March 29, 1990, the execution date of Notes A and B, defendants Aaron Silberstein and H.A.L. Holding Company executed and delivered unconditional guarantees of any and all of Wrapwell's liabilities. The unconditional guarantees state that the guarantors

irrevocably, absolutely and unconditionally guarantee to the Bank payment when due, whether by acceleration or otherwise, of any and all liabilities of the Borrower to the Bank, together with all interest thereon and all attorney's fees, costs and expenses of collection incurred by the Bank in enforcing any of such liabilities.

 W-S Aff., Exhs. F-H at 1.

 On June 6, 1991, defendants Armin Silberstein and 94 Ninth Street Co., Ltd. executed and delivered limited guarantees of Wrapwell's liabilities. Under these agreements, the defendants

absolutely and unconditionally guarantee to the Bank payment when due, whether by acceleration or otherwise, of any and all liabilities of the Borrower to the Bank to any principal amount not exceeding $ 800,000 in the aggregate at any one time outstanding, plus and in addition to such amounts, all interest thereon and all attorney's fees, disbursements and expenses and all other costs and expenses of collection incurred by the Bank in connection with any of such liabilities . . . .

 W-S Aff., Exhs. I-J at 1.

 In June, 1992, the action underlying 93 Civ. 859 was brought in New York State Supreme Court. That action was removed to this Court in February, 1993 pursuant to 12 U.S.C. § 1819(b)(2), which extends federal jurisdiction to all civil suits to which the FDIC is a party. W-S Aff., P3.

 On October 27, 1992, FNY made a final loan to defendant Wrapwell, which executed a final promissory note for the principal amount of $ 300,000 ("Note E"). Silberstein Aff[1]., Exh. C.

 On or about November 13, 1992, FNY was declared unsound and unsafe, and the FDIC was appointed the bank's receiver. W-S Aff., P2. Wrapwell closed its doors in January, 1993.

 The FDIC filed its second action on the remaining promissory note on August 19, 1994.


 1. FDIC is the Real Party In Interest

 Federal Rule of Civil Procedure 25(c) provides that in case of any transfer of interest, the Court may, upon motion, direct the person to whom the interest is transferred to be substituted in the action in the place of the original party. Fed.R.Civ.P. 25(c).

 The FDIC, as receiver of FNY, succeeds to "all rights, titles, powers, and privileges" of FNY, and may take over all assets of FNY and collect all money and obligations due FNY. 12 U.S.C. § 1821(d)(2)(A)-(B). Given these rights and responsibilities, and noting that defendants state no opposition to plaintiff's Rule 25(c) motion, I hold that the FDIC is the true party in interest in this action, and order that it be substituted as plaintiff into the consolidated action.

 2. FDIC's Summary Judgment Motion

 Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Issues that are genuine are those which "have a real basis in the record before the court, and most significantly, must be 'material to the outcome of the litigation.'" Litton Industries, Inc. v. Lehman Brothers Kuhn Loeb, Inc., 709 F. Supp. 438, 442 (S.D.N.Y. 1989) (quoting Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 11 (2d Cir. 1986), citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986)). In the absence of disputed, genuine issues, summary judgment is appropriate in the context of an action on a promissory note. Royal Bank of Canada v. Mahrle, 818 F. Supp. 60 (S.D.N.Y. 1993); Seward & Kissel v. Smith Wilson Co., Inc., 814 F. Supp. 370 (S.D.N.Y. 1993); Crumbliss v. Swerdlow, 551 N.Y.S.2d 265, 265 (A.D. 2d Dept. 1990).

 The defendants in this consolidated action do not dispute the validity of the Credit Agreement, the promissory notes, or the guarantees. However, the defendants oppose plaintiff's summary judgment motion with several affirmative defenses: that FNY's conduct breached the parties' contract and their implied covenant of good faith and fair dealing, was commercially unreasonable under N.Y.U.C.C. § 9-207 and 9-504(3), and impaired the value of their collateral under N.Y.U.C.C. § 3-606.

 A. Defendants' U.C.C. Defenses

 Defendants' defenses can be synthesized into one basic assertion: that FNY and FDIC unfairly impaired the value of Wrapwell's collateral--its accounts receivable--by making commercially unreasonable efforts to collect those accounts.

 Defendants rely upon three U.C.C. provisions in asserting this defense.

 First, the defendants point to N.Y.U.C.C. § 9-207(1): "A secured party must use reasonable care in the custody and preservation of collateral in his possession."

 Second, the defendants rely upon N.Y.U.C.C. § 9-504:

(1) A secured party after default may sell, lease or otherwise dispose of any or all of the collateral in its then condition or following any commercially reasonable preparation or processing. . . .
(3) Sale or other disposition may be as a unit or in parcels and at any time and place and on any terms but every aspect of the disposition including the method, manner, time, place and terms must be commercially reasonable.

 Third, the defendants rely upon N.Y.U.C.C. § 3-606(1): "The holder [of a negotiable instrument] discharges any party to the instrument to the extent that without such party's consent the holder . . . (b) unjustifiably impairs any collateral for the instrument given by or on behalf of the party or any person against whom he has a right of recourse."

 Plaintiff opposes these defenses on numerous grounds, each of which is addressed below.

 1. Jurisdiction

 Plaintiff's first objection to defendants' proffered defenses is jurisdictional. The FDIC argues that defendants' defenses are barred by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), which provides that:

Except as otherwise provided in this subsection, no court shall have jurisdiction over--(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any depository institution ...

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