with respect to, the terms of the INA bonds." Id. at 7.
Alternatively, INA argues that if the Bonds were ambiguous, and extrinsic evidence was therefore admissible, plaintiff still would not be entitled to summary judgment. Id. at 9. INA states that under Second Circuit case law, "summary judgment is precluded where the agreement to be construed is fairly capable of more than one reasonable interpretation and extrinsic evidence must be evaluated to discern the parties' true intent." Id. Thus, defendant claims that if this Court concludes that there is some ambiguity in the Bonds which requires resort to extrinsic evidence, such as the January 1981 Letter, there are triable issues of fact regarding the extrinsic evidence that render summary judgment on plaintiff's claim inappropriate. Id. at 15.
INA also dismisses plaintiff's "last-gasp" equitable estoppel argument. Id. at 16. INA explains that "the principle of estoppel permits recovery only when a representation of fact made to a party who relies thereon with the right to so rely may not be denied by the party making the representation if such denial would result in injury or damage to the relying party." Id. According to INA, the representations upon which plaintiff claims to have relied to its detriment were opinions, not facts, and therefore are legally precluded from serving as the basis for relief under the doctrine of equitable estoppel. Id. at 17-18. Moreover, defendant claims that plaintiffs have failed to submit competent evidence either that plaintiff relied on the aforementioned representations, or that its alleged reliance was justifiable. Id. at 16-17. Finally, INA contends that "plaintiff's own contemporaneously created documents" belie plaintiff's reliance claims. Id. at 18. INA quotes a May 5, 1981, letter from GASC's Legal Consultant and Project Manager which "makes clear that it was not INA's letter on which plaintiff relied, but on AID's opinion of that letter" which states that the bonds were "accepted due to the legal opinion of AID." Id.
Finally, defendant insists that the issue whether AEG breached the Contract is not properly before this Court. Id. at 19. Defendant explains that "plaintiff's complaint is limited to one claim--that INA's bonds are forfeiture bonds which entitle plaintiff to payment on demand." Id. According to INA, "[a] court has no jurisdiction to decide, on a motion for summary judgment, claims for relief which are not asserted in the complaint." Id. Thus, INA maintains that this Court lacks jurisdiction to entertain plaintiff's motion for summary judgment on the issue whether AEG breached the Contract. Id.
Defendant finally contests plaintiff's request for prejudgment interest. Id. at 21. INA states that "Article 9.2 of the underlying contract provides that any advance payment under the bonds has to be returned to AEG if an arbitration panel subsequently finds that the payment was 'unjustified.'" Id. Thus, if this Court ordered INA to make any payment made to GASC at this time, AEG "would be entitled to seek return of the $ 1.8 million on ground that the payment was unjustified." Id. Because plaintiff's right to the funds thus depends on resolution of the issue whether AEG breached the Contract, INA argues that any award of funds at this time would be premature. Id. at 21-22.
As the parties concede, the sole issue pending before this Court is whether the Bonds are forfeiture bonds that entitle GASC to payment on demand from INA regardless of whether AEG breached the Contract. See (Deft.'s Memo at 3, 21); (Deft.'s Reply at 18); (Complaint PP 5-12); (Pltf.'s Memo at 14.) Despite the variety of theories that the parties have advanced regarding this issue, this Court notes that they all arise under the same legal principles--those of basic contract law. Accordingly, this Court will examine the law of contracts as it applies to the facts of the instant case in order to resolve the parties' cross-motions for summary judgment.
Pursuant to Rule 56, summary judgement is appropriate where "the pleadings, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). A party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact, Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970); Scottish Air Int'l, Inc. v. British Caledonian Group, PLC., 867 F. Supp. 262, 265 (S.D.N.Y. 1994), and the party may discharge this burden by demonstrating to the Court that there is an absence of evidence to support the non-moving party's case on which that party would have the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).
The existence of a genuine issue of material fact depends on both the genuineness and the materiality of the issues raised by the motion. See Scottish Air, 867 F. Supp. at 266. To evaluate a fact's materiality, "it is the substantive law's identification of which facts are critical and which facts are irrelevant that governs." Anderson v. Liberty Lobby, 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). As the Second Circuit has noted, "all ambiguities and inferences to be drawn from the underlying facts should be resolved in favor of the party opposing the motion, and all doubts as to the existence of a genuine issue for trial should be resolved against the moving party." Brady v. Town of Colchester, 863 F.2d 205, 210 (2d Cir. 1988); see also Celotex, 477 U.S. at 330 n.2.
The Second Circuit's standards for considering a summary judgment motion in a contract dispute are firmly established. "In a contract dispute, summary judgment may be granted only where the language of the contract is unambiguous." Nowak v. Ironworkers Local Pension Fund, 81 F.3d 1182, 1192 (2d Cir. 1996) (citation omitted). Under New York law, whether a written contract is unambiguous is a question of law for the trial court whose determinations will be reviewed de novo." Id. (citing W.W.W. Assoc. Inc. v. Giancontieri, 77 N.Y.2d 157, 163, 565 N.Y.S.2d 440, 566 N.E.2d 639 (1990)). Contract terms are ambiguous if they are
capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.
Nowak, 81 F.3d at 1192 (citation omitted). Conversely, "no ambiguity exists when contract language has 'a definite and precise meaning, unattended by danger of misconception in the purport of the [contract] itself, and concerning which there is no reasonable basis for a difference in opinion.'" Sayers v. Rochester Tel. Corp. Supplemental Mgt. Pension Plan, 7 F.3d 1091, 1095 (2d Cir. 1993) (quoting Breed v. Ins. Co. of N. America, 46 N.Y.2d 351, 355, 413 N.Y.S.2d 352, 385 N.E.2d 1280 (1978)).
Even when parties dispute the meaning of specific contract clauses, a Court's task is "to determine whether such clauses are ambiguous when 'read in the context of the entire agreement.'" Sayers, 7 F.3d at 1095 (quoting W.W.W. Assocs., 77 N.Y.2d at 163, 565 N.Y.S.2d 440, 566 N.E.2d 639); see also Williams Press, Inc. v. New York, 37 N.Y.2d 434, 440, 373 N.Y.S.2d 72, 335 N.E.2d 299 (N.Y. 1975). By examining the entire contract, courts "safeguard against adopting an interpretation that would render any individual provision superfluous." Sayers, 7 F.3d at 1095 (citing Two Guys from Harrison-N.Y., Inc. v. S.F.R. Realty Assocs., 63 N.Y.2d 396, 403, 482 N.Y.S.2d 465, 472 N.E.2d 315 (N.Y. 1985); see also Rothenberg v. Lincoln Farm Camp, Inc., 755 F.2d 1017, 1019 (2d Cir. 1985). However, "parties to a contract may not create an ambiguity merely by urging conflicting interpretations of their agreement." Sayers, 7 F.3d at 1095 (citations omitted).
"The interpretation of a contract of suretyship is governed by the standards which govern the interpretation of contracts in general." General Phoenix Corp. v. Cabot, 300 N.Y. 87, 92, 89 N.E.2d 238 (N.Y. 1949); Restatement, Surety § 88. A surety is "one who undertakes to pay money or to do any other act in event that his principal fails therein." Blacks' Law Dictionary 1293 (5th ed. 1979). Correspondingly, a contract of suretyship is "[a] contract whereby one person engages to be answerable for the debt, default, or miscarriage of another." Id. The basic standard governing the interpretation of contracts of surety long ago was set out by the New York Court of Appeals:
No citation of authorities is needed to show that the contracts of sureties are to be construed like other contracts so as to give effect to the intention of the parties. In ascertaining that intention, we are to read the language used by the parties in light of the circumstances surrounding the execution of the instrument, and, when we have thus ascertained their meaning, we are to give it effect; but when the meaning of the language used has been thus ascertained, the responsibility of the surety is not to be extended or enlarged by implication or construction, and is strictissimi juris.
People v. Backus, 117 N.Y. 196, 201, 22 N.E. 759 (N.Y. 1889); see Davis Acoustical Group v. Hanover Ins. Co., 22 A.D.2d 843, 843, 254 N.Y.S.2d 14 (N.Y. App. Div. 1964).
Thus, "the surety bonds attaches to the principal contract and must be construed with it." Carrols Equities Corp. v. Villnave, 57 A.D.2d 1044, 1045, 395 N.Y.S.2d 800 (N.Y. App. Div. 1977). "Where no interpretation of the language is required to ascertain its meaning 'a surety's obligation is construed strictissimi juris in the surety's favor.'" Mendel-Mesick-Cohen-Architects v. Peerless Ins. Co., 74 A.D.2d 712, 713, 426 N.Y.S.2d 124 (N.Y. App. Div. 1980). Moreover, "the liability of a surety cannot be extended beyond the plain and explicit language of the contract." Id. at 712.
Applying New York law to the facts of the instant dispute, this Court finds that the language of the Contract and the Bonds unambiguously establishes that INA's obligation to GASC is that of a surety, and that as a result, INA owes GASC no payment unless and until GASC establishes that AEG failed to perform on the underlying Contract. As an initial matter, this Court notes that the Bonds underwritten by INA are acceptable performance guarantees under the terms of Article 9.1 of the Contract. Throughout plaintiff's papers, plaintiff suggests to this Court that a surety bond is not an acceptable type of performance guarantee under Article 9 of the Contract. See (Pltf.'s Memo at 12-13); (Pltf.'s Reply at 1-4.) As defendant correctly highlights, however, Article 9 of the Contract specifically provides that "the Contractor shall submit to GASC a one (1) year with automatic renewal clause performance guarantee, for each category, in the form of a certified check, irrevocable letter of credit, bank bond, or surety bond acceptable to GASC and A.I.D. . . . ." (Contract, Art. 9.1 (emphasis added).) The parties do not dispute that the Bonds at issue in the instant case are surety bonds. See, e.g., (Pltf.'s Memo at 9-10, 15-16); (Dft.'s Memo at 3, 9-10, 12.) Thus, this Court finds that all of plaintiff's arguments premised on the idea that surety bonds were not acceptable performance guarantees for the Contract are factually unsupported and should be dismissed.
Moreover, the basic definition of the term "surety" undercuts plaintiff's assertions that the Bonds are forfeiture bonds that entitle plaintiff to payment from INA on demand regardless of AEG's performance. As stated earlier, the leading legal dictionary--which plaintiff itself cites in its papers to this Court, (Pltf.'s Reply at 15)--defines "contract of suretyship" as "[a] contract whereby a one person engages to be answerable for the debt, default, or miscarriage of another." Blacks' Law Dictionary 1293 (5th ed. 1979). The Bonds, as surety bonds, do not render INA liable for AEG's obligations under the Contract unless AEG fails to perform or otherwise defaults on those obligations, and thus are not forfeiture bonds that entitle GASC to payment regardless of AEG's performance under the Contract.
The texts of both Article 9 of the Contract and the Bonds themselves reflect INA's role as surety in the instant case. Throughout the text of both Bonds, INA is identified and referred to as "Surety." (Performance Bond between Principal American Export Group and Surety Insurance Company of North America, 67 HF 4552 (Feb. 26, 1980)); (Performance Bond between Principal American Export Group and Surety Insurance Company of North America, 67 HF 4553 (Feb. 26, 1980).) The text of the Bonds themselves are silent regarding the terms of INA's obligation to GASC. Under New York law, however, "the surety bond attaches to the principal contract and must be construed with it." Villnave, 57 A.D.2d at 1045. Consequently, this Court looks to Article 9.1 of the Contract for these terms.
As previously quoted, Article 9.1 states that
the Contractor shall submit to GASC a one (1) year with automatic renewal clause performance guarantee, . . . fully protecting GASC against loss incurred by GASC as a result of Contractor's failure to perform any obligations under this Contract. This performance guarantee will be held by GASC on the conditions and subject to the stipulations herein contained, as a final guarantee for the due execution and proper performance of the Contract and the recovery of any penalties or their sums for which the Contractor may become liable to GASC under the Contract. It shall be valid until the fulfillment by the Contractor of all his obligations and guarantees under the Contract. The GASC may, at any time on giving prior notice to the Contractor, deduct from the amount of the said performance guarantee any sums for which the Contractor may become liable to the GASC under this Contract and which are not paid by him within thirty (30) days of receipt of written claims stating all evidence. If the Contractor has not so paid, the GASC shall be entitled on his first demand to the immediate payment by the Bank or surety up to the full amount of the performance guarantee, not withstanding any contestation by the Contractor or any third party.
(Contract, Art. 9.1 (emphasis added).) As the emphasized portions of Article 9.1 establish, the purposes of the performance bonds are to guarantee AEG's performance under the Contract and to protect GASC against AEG's failure to perform. Moreover, Article 9.1 conditions GASC's power to collect from the performance bonds on AEG incurring liability to GASC for AEG's failure to perform, to wit : GASC may demand immediate payment from INA if AEG fails to pay "any sum for which [AEG] may become liable to GASC under this Contract" only "as a result of Contractor's failure to perform obligations under this Contract." Id.
It is plain from the text of the Contract that a contract of suretyship was an authorized form of performance guarantee for the GASC/AEG Contract. It is further evident from both the language used in the Bonds and the terms of the Contract that the performance guarantee required for the Contract contemplated payment by INA to GASC only in the event that AEG failed to properly perform under the Contract. As the New York Court of Appeals long ago made clear "when the meaning of the language used has been thus ascertained, the responsibility of the surety is not to be extended or enlarged by implication or construction, and is strictissimi juris." Backus, 117 N.Y. at 201, 22 N.E. 759 (N.Y. 1889); see also Davis Acoustical, 22 A.D.2d at 843; Mendel-Mesick-Cohen-Architects, 74 A.D.2d at 713, 426. Because "the liability of a surety cannot be extended beyond the plain and explicit language of the contract," Mendel-Mesick-Cohen-Architects, 74 A.D.2d at 712, this Court finds that INA's obligation to GASC is that of a surety only, and that as a result, INA owes GASC no payment unless and until GASC establishes that AEG failed to perform on the underlying Contract. Accordingly, this Court finds that GASC's claim for payment on demand is meritless, and consequently, that its motion for summary judgment should be denied.
GASC's arguments to the contrary do not require a different result. For instance, plaintiff's reliance on treatises in support of its claims is misplaced. As quoted earlier, these treatises express general, scholarly opinions about the benefits of using unconditional guarantees and forfeiture bonds for large construction contracts performed abroad, and the frequency with which such bonds and guarantees are used. See (Pltf.'s Memo at 13.) Moreover, neither of plaintiff's quoted excerpts from these treatises are based on, or refer to, the particular facts of the instant dispute. See id. Because plaintiff's cited authorities neither address the facts underlying the instant motions nor express any specific opinion about the dispute at bar, this Court finds that plaintiff's reliance upon them to support plaintiff's claims that the Bonds are forfeiture bonds is misplaced.
Similarly misguided is plaintiff's argument regarding the January 1981 Letter. To reiterate, plaintiffs argue that because the obligations of parties to a facially unambiguous contract are determined solely by the terms of the contract itself rather than by reference to extrinsic evidence, "this Court should construe the terms expressed in the instrument itself (the INA letter dated January 5, 1981) and ignore INA's proffer of extrinsic evidence meant to demonstrate INA's unexpressed intent." Id. As defendant correctly states, this "pretense is absurd, if not disingenuous. . . ." Id. at 6-7.
Although it is true that extrinsic evidence is inadmissible to determine the obligations of parties to a facially unambiguous contract, there is no question that the contract at issue in this dispute is the GASC/AEG Contract signed November 20, 1979, not the January 1981 Letter. Plaintiff, through its submissions to this Court, actually highlights this fact: (1) plaintiff's Complaint refers only to the Contract, not the January 1981 Letter, see, generally, (Complaint); (2) plaintiff's memorandum of law specifically concedes that the relevant contract is the GASC/AEG Contract dated November 20, 1979, (Pltf.'s Memo at 9-10); and (3) plaintiff does not even suggest that the January 1981 Letter is the relevant contract until its Reply Memorandum. See, generally, id. (containing no suggestion that the January 1981 Letter is the relevant contract); see (Pltf.'s Reply at 14-19.) The January 1981 Letter, on the other hand, is precisely the type of extrinsic document the review of which is beyond this Court's scope of examination under relevant New York contract law. This Court thus finds that plaintiff's claims regarding the January 1981 Letter are meritless, disingenuous, and wholly unsupported in law.
Plaintiff's equitable estoppel claim is equally untenable. The law is clear that "the principle of estoppel permits recovery only when 'a representation of fact made to a party who relies thereon with the right to so rely may not be denied by the party making the representation if such denial would result in injury or damage to the relying party." Donnelly v. Bank of New York Co., Inc. 801 F. Supp. 1247, 1253 (S.D.N.Y. 1992) (internal citations omitted); 1 Williston on Contracts § 139, at 600 (3d ed. 1957); see also, Travellers Int'l AG v. Trans World Airlines, Inc., 722 F. Supp. 1087, 1099 (S.D.N.Y. 1989).
Plaintiff's estoppel claims fail to meet this standard. Plaintiff submits no competent evidence that it relied on any correspondence regarding the Bonds as a basis for proceeding with the Contract. Plaintiff's only offerings on this issue are affidavits from Dr. Ahmed Abdel Ghaffar ("Ghaffar"), see (Pltf.'s Reply at 20-22 (citing only affidavits of Dr. Ahmed Abdel Ghaffar in support of its reliance claim)), an employee of the Egyptian government. Federal Rule of Procedure 56(e) states that affidavits submitted either in support of or opposition to a motion for summary judgment "shall be made on personal knowledge." Fed. R. Civ. P. 56(e). This Court finds that Ghaffar's Affidavits violate this Rule.
For instance, although Ghaffar states that he "presently" is Chairman of the Egyptian Ministry of Agriculture and "has occupied positions of responsibility in the Egyptian Government since 1979, (Reply Affidavit of Dr. Ahmed Abdel Ghaffar, General Auth. for Supply Commodities, Cairo, Egypt v. Insurance Co. of North America, 89 Civ. 6046 ("Ghaffar Reply") P 2 (Oct. 27, 1993)), he does not state that he occupied a position of responsibility in either the Ministry of Agriculture or the GASC during the time that either the Contract or the Bonds were executed. Id. ; (Affidavit of Dr. Ahmed Abdel Ghaffar, General Auth. for Supply Commodities, Cairo, Egypt v. Insurance Co. of North America, 89 Civ. 6046 ("Ghaffar Aff." (Sept. 14, 1992).) He further makes no representation that he participated in GASC's decisions to go forward with the Contract and accept the Bonds, that he personally relied on any representations by defendant on behalf of GASC, or even that he has direct, first-hand knowledge of any of the events underlying the instant dispute. See, generally, (Ghaffar Aff.); (Ghaffar Reply.)
Moreover, plaintiff's own contemporaneously created documents undercut plaintiff's reliance claims. For instance, the May 5, 1981, letter from GASC's Legal Consultant and Project Manager M.A. El Saadany ("Saadany") makes clear that GASC did not rely on INA's representations regarding the Bonds' compliance with Article 9 of the Contract. (Letter from M.A. El Saadany, Legal Consultant and Project Manager, General Auth. for Supply Commodities, to J. Wess Tribble, Assistant Director Industry and Trade, C.S. Agency for International Development, Cairo, A.R.E. ("Saadany Letter") (May 5, 1981).) On the contrary, the May 1981 Letter reveals that plaintiff relied on AID's opinion of INA's representations. In the May 1981 Letter, Saadany states as follows:
On receiving [the January 1981 Letter] we requested the opinion of U.S. AID and we received a letter from Mr. M. Haggar [sic], Legal Advisor of U.S. AID in Cairo.
The letter of Mr. Hagar dated Jan. 19, 1981 clearly indicated that the bonds, by their express terms, were conditional bonds which are not in compliance with the contract, and then Mr. Hagar said:
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