false promise directly incorporated into a written agreement. First, Graubard is not the most recent New York Court of Appeals decision addressing the possibility of redundant fraud and contract claims. See NYU, 87 N.Y.2d 308, 662 N.E.2d 763, 639 N.Y.S.2d 283. In NYU, the Court considered whether plaintiff could sue a defendant insurance company on the basis of allegations that defendant fraudulently induced plaintiff to maintain an insurance policy by falsely representing that it would evaluate plaintiff's claims in good faith. Reasoning that a covenant of good faith and fair dealing is "implicit in every contract," the Court dismissed plaintiff's fraud claim as "nothing more than a breach of contract." Id. at 318. In another post-Graubard decision, the Second Circuit, also adhering to the collateral promise rule, rejected a claim of fraud premised upon a defendant's alleged misrepresentations that it intended to honor its payment obligations under a collection agreement in force between the parties. Bridgestone, 98 F.3d at 19. Decisions such as NYU and Bridgestone demonstrate that neither the New York Court of Appeals nor the Second Circuit understands Graubard to have supplanted the collateral promise rule.
In other recent decisions, courts have evaluated the Graubard decision, and have demonstrated that it is consistent -- on its facts -- with the collateral promise rule. See, e.g., Papa's-June, 921 F. Supp. 1154 at 1161-62 ("The recent decision [in Graubard ] does not change the law in this area . . . . apart from the contract, the former partner owed his firm a fiduciary duty not to solicit clients . . . . Moreover, the oral representations that were the basis of the fraud claim were collateral to the provisions of the retirement agreement."); Big Apple Car, Inc. v. City of New York, 234 A.D.2d 136, 650 N.Y.S.2d 730, 732 (1st Dep't 1996) ("Graubard is not to the contrary. In that case, there were allegations of misrepresentation and fraud extraneous to the resignation agreement sued on by plaintiff.").
For assorted reasons, then, any confusion amongst the New York courts concerning the scope and applicability of the collateral promise rule must give way to the majority view -- an overwhelming majority view -- that a false promise, whenever made, cannot give rise to a fraud claim where that promise is directly incorporated into a written contract between the parties. See PI, Inc., 907 F. Supp. at 761 ("the numerous decisions of Appellate Division are persuasive authority of the law in New York which this Court must follow.") (collecting cases); Best Western International, Inc. v. CSI International Corp., 1994 U.S. Dist. LEXIS 11815, 1994 WL 465905, *4-5 (S.D.N.Y. Aug. 23, 1994) ("The majority of courts, including the Appellate Division, have held that simply dressing up a breach of contract claim by further alleging that the promisor had no intention, at the time of the contract's making, to perform its obligations thereunder, is insufficient to state an independent tort claim . . . . this Court adopts the reasoning employed by the Appellate Division . . . since that is presumably the reasoning which would be applied to Plaintiff's claim if it were brought in New York State Supreme Court.").
Finally, the "collateral promise" rule, as it has been understood and applied by the vast majority of courts, reflects sound policy. Indeed, to rule in plaintiff's favor in this action would be to undermine the predictability that is essential to contracting, the predictability which permits sophisticated entities to enter into transactions understanding both their responsibilities and the potential scope of their liabilities. In this case, plaintiff plainly recognized the risks and benefits of dealing with CRIL, and it contracted accordingly. Skeptical of CRIL's representations of exclusivity, plaintiff secured an agreement pursuant to which CRIL bound itself to those representations and exposed itself to the potential for $ 10,000,000 in liquidated damages in the event of a breach. Now that a breach apparently has occurred, CableTel must make due with the terms of the agreement that it negotiated, and with the sizeable sum that it secured for itself in the event of precisely the sort of misconduct which lies at the heart of its complaint in this action.
B. Plaintiff Fails To Identify Any False Statements As To Collateral Matters
As explained, plaintiff cannot proceed with its claim that defendant committed fraud by falsely representing that it intended to negotiate exclusively with plaintiff. Although it is this claim that lies at the core of the complaint, plaintiff urges the Court that this action can proceed on the basis of "several representations that went beyond [defendant's] contractual promise." (Opp. at 10.) In particular, in advance of securing the Heads, defendant allegedly represented to CableTel that it was "tired of negotiating" with BCM, that it was "unhappy with BCM's negotiating tactics," and that it "had no intention of pursuing a deal" with BCM. (Opp. at 10-11.)
Plaintiff is correct that the first two representations which it identifies in its Opposition were not merely expressions by CRIL that it would honor its obligations under the Heads. Rather, those statements were representations by defendant concerning the status of its relationship with BCM up to the time that it entered into discussions with CableTel. Strictly speaking, then, these statements did not concern CRIL's obligations under the Heads and they were therefore collateral to that agreement. The problem for plaintiff, however, is that there is no suggestion in the Complaint that these statements by defendant were false. Quite the contrary; this action is premised upon the notion that defendant lured CableTel into negotiations precisely because defendant was unhappy with BCM's negotiating tactics.
According to the Complaint, negotiations had broken down between CRIL and BCM, and this break down occurred specifically because CRIL was frustrated that BCM would not make a reasonable offer to purchase Videotron in the absence of perceived competition from another interested party. Indeed, plaintiff alleges that CRIL entered into discussions with CableTel specifically in the hopes that it might "eventually" lure BCM back into negotiations that -- in the absence of a competitor -- had been disappointing and had concluded unsuccessfully. (Comp. P 25.) Thus, in whatever way plaintiff might try to dress up its allegations to avoid the ugly treatment of unfavorable case law, CableTel cannot avoid that the allegedly false statements lying at the heart of its complaint involved CRIL's promise to honor its obligations under the Heads.
As to the remaining statement identified in the Opposition -- i.e., defendant's alleged misrepresentation concerning its "intent" not to negotiate with BCM -- this merely restates, in the negative, those alleged misrepresentations which the Court has already dismissed as noncollateral statements of future intent. In other words, just as plaintiff cannot claim fraud based upon CRIL's alleged promise to negotiate only with plaintiff; plaintiff cannot claim fraud based upon CRIL's alleged promise not to negotiate with BCM. Indeed, given the circumstances which led to the Heads, it would be most disingenuous for plaintiff to argue that defendant's promise not to negotiate with BCM was somehow different from its promise to negotiate exclusively with CableTel. It was, after all, the specter of negotiations between CRIL and BCM that prompted CableTel to demand the exclusivity provision set forth in the Heads. In claiming that it would avoid negotiations with BCM, CRIL was -- in so many words -- simply expressing its intent to honor its contractual obligations.
In sum, fraud in the inducement can be supported by a false statement of present fact, or by a false statement of future intent which concerns a matter collateral to a contract between the parties. The crux of plaintiff's complaint is that defendant made false representations concerning its intention to negotiate exclusively with plaintiff. These statements, because they were the central concern of the Heads, cannot support a claim for fraudulent inducement. Moreover, plaintiff is unable to salvage its claims by identifying any alleged false statements apart from those concerning defendant's contractual obligations.
II. Unjust Enrichment
CableTel seeks to recover $ 84 million from CRIL arguing that CRIL was unjustly enriched in this amount on account of its "stalking horse" scheme. For similar reasons as those already discussed, this claim cannot survive. Specifically, a valid contract governing a particular matter precludes a recovery in quasi-contract for events arising out of the same subject matter. See StandardBred Owners Association, Inc. v. Yonkers Racing Corp., 209 A.D.2d 507, 619 N.Y.S.2d 613 (2d Dep't 1994) (plaintiff "seeks recovery in quasi contract on the doctrine of unjust enrichment. However, the record indicates that the purported quasi contract arises 'out of the same subject matter' governed by an enforceable written contract between the same parties . . . . Under these circumstances, the . . . cause of action . . . was properly dismissed.") (citations omitted); see also Pennsylvania Engineering Corp. v. Islip Resource Recovery Agency, 710 F. Supp. 456, 465 (E.D.N.Y. 1989) ("Where an express contract exists between the parties, there can be no recovery under a claim of quantum meruit.").
For the reasons set forth above, defendants' motion to dismiss is GRANTED. The Clerk of the Court is directed to enter judgment dismissing this action in its entirety.
Dated: New York, New York
September 19, 1997