2505 (1986); see also Holt, 95 F.3d at 129.
B. Fraudulent Concealment Claims
Plaintiffs claim against defendant for fraudulent concealment. To prove common law fraud under New York law, a plaintiff must show that (1) the defendant made a material false representation, with knowledge of its falsity; (2) the defendant intended to defraud the plaintiff; (3) the plaintiff reasonably relied upon the representation; and (4) the plaintiff suffered damage as a result of this reliance. See Banque Arabe et Internationale v. Md. Nat. Bank, 57 F.3d 146, 153 (2d Cir. 1995); see also Kregos v. Associated Press, 3 F.3d 656, 665 (2d Cir. 1993). To prove fraudulent concealment, a plaintiff also must establish that the defendant had a duty to disclose the material information. See Banque Arabe, 57 F.3d 146 at 153. Under New York law, each element of a fraud claim must be proven by clear and convincing evidence. See id.
1. The Oundjian Transaction
Zaloom contends that SCB had a duty to disclose that the 1988 Policy mandated that SCB cease lending to the oriental rug industry, that SCB failed to disclose this lending policy prior to financing Zaloom's purchase of certain of OI's assets, and that Zaloom relied on the lack of such a policy in entering into the Oundjian transaction. See Complaint at PP 34-36. Defendant moves for summary judgment on the grounds that the 1988 Policy did not prohibit lending to the oriental rug industry. Defendant also claims that any reliance by Zaloom on an implied promise to continue financing its inventory purchases was unreasonable as a matter of law.
Plaintiff offers no admissible evidence upon which a reasonable juror could conclude that the 1988 Policy banned further lending to the oriental rug industry. On its face, the 1988 Policy contains no such prohibition. See Ex. 2 to Def.'s App. Moreover, the 1988 Policy was in effect when SCB and Zaloom first agreed to establish a credit facility for Zaloom at SCB. See, supra, at 4. Finally, defendant offers the testimony of a number of its employees, all of whom deny the existence of any such prohibition. See, e.g., Wahl Aff. at P 10 ("During 1989, neither the 1988 Policy nor any other policy precluded lending to members of the oriental rug industry."); Deposition of Paul Bridges at 197, annexed as Exhibit F to Def.'s App.; Chait Aff. at P 4 ("No such policy was ever in effect.")
While the Court must reserve any genuine issue of material fact for a jury, Zaloom offers no admissible evidence that would create a genuine fact issue. The only admissible evidence Zaloom offers in support of its position is the Wahl Memo, which begins, "Our revised North American credit policy necessitates the formulation of an exit strategy for the oriental rug industry, which no longer qualifies for financing." Wahl Memo. Wahl then explains that SCB must cease lending to businesses in the oriental rug industry due to changes in market conditions occurring since the second half of 1989. In short, the memorandum shows only that SCB had decided by late 1990 that, due to changes in the relevant market over the previous fifteen months, continued lending to the oriental rug industry would violate the principles set forth in the 1988 Policy. The document as a whole cannot support a reasonable conclusion that the 1988 Policy itself prohibited loans to the oriental rug industry, nor that any such prohibition existed when Zaloom entered into the Oundjian transaction in May of 1989.
The Court concludes based on the evidence presented by defendant, and the lack of evidence from Zaloom, that no reasonable juror could conclude that, in May of 1989, SCB had enacted a policy against extending credit to businesses in the oriental rug industry. As defendant offers uncontradicted evidence demonstrating that there was no SCB policy against lending to the oriental rug industry as of May of 1989, Zaloom cannot establish one of the essential elements of its fraudulent concealment claim: a material false representation. Accordingly, the Court must grant defendant's motion for summary judgment as to Zaloom's claim for fraudulent concealment in connection with the Oundjian transaction.
Even if Zaloom could establish that there exists a genuine issue of fact with regard to the existence of such a policy, Zaloom's claim would fail because it cannot demonstrate reasonable reliance. To succeed on its claim, Zaloom also must show that it reasonably relied on the belief that SCB would extend Zaloom credit for an extended period of time. However, any such belief would have been unreasonable in light of the clear and unambiguous language of the Letter Agreement, which plainly stated that Zaloom's credit facility at SCB would expire on August 31, 1989. See Ex. 3 to Def.'s App.
Thus, even if SCB had concealed that it would not continue lending to the oriental rug industry, the plain language of the Letter Agreement dictates that as of May of 1989, Zaloom could not reasonably have believed that SCB was committed to extending Zaloom's credit facility beyond August 31, 1989. Plaintiff's inability to prove reasonable reliance provides an alternative basis for the Court's decision to grant summary judgment on Zaloom's claim for fraudulent concealment in connection with the Oundjian transaction.
2. The Par-Inco Transaction
Bruchman also claims against SCB for fraudulent concealment, in connection with the Par-Inco transaction. Bruchman alleges that SCB concealed in the fall of 1990 that it had a policy against lending to the oriental rug industry, and that in entering into the Par-Inco transaction, Bruchman relied on the belief that there was no such policy. See Complaint at PP 37-39.
Defendant is entitled to summary judgment on this claim as well, because Bruchman cannot demonstrate reasonable reliance. In light of the Ferrise Letter, Bruchman could not reasonably have relied in entering into the Par-Inco transaction on SCB's extending Par-Inco credit. It is hard to imagine how SCB could have stated more explicitly than it did in the Ferrise Letter that SCB was not committed to extending Par-Inco credit. See, supra, at 9. Bruchman admits to having read the Ferrise Letter immediately prior to closing the Par-Inco transaction. See, supra, at 9-10. Therefore, he cannot claim that in consummating the deal he reasonably relied on SCB's extending credit to Par-Inco. Accordingly, it is immaterial whether SCB had a policy prohibiting future loans to the oriental rug industry. As Bruchman cannot prove reasonable reliance, SCB is entitled to summary judgment on the claim that it engaged in fraudulent concealment in connection with the Par-Inco transaction.
B. Documentary Drafts
In the Complaint, Zaloom cites eight instances in which it claims that SCB failed to pay authorized documentary drafts in a timely manner. See Complaint at P 27. In connection with these alleged failures, Zaloom asserts a claim under U.C.C. § 4-103(5), which provides:
The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount which could not have been realized by the use of ordinary care, and where there is bad faith it includes other damages, if any, suffered by the party as a proximate consequence.