where alternative interpretation "would violate the principle
that meaning and effect should be given to all terms of a
contract"); Norwest Financial, Inc. v. Fernandez, No. 98 Civ.
6635, 1999 WL 946786, at *4 (S.D.N.Y. Oct. 19, 1999).
The third and final step is to ask whether, applying the clear
contractual terms, Wayland has alleged a breach of the written
contract. See Investors Ins. Co., 917 F.2d at 104-05. Wayland
alleges that each of the contested interest payments "was made on
the Accreted Value of the Exchange Notes," precisely as mandated
by the terms of the Exchange Notes and the Indenture. Second Am.
Compl. ¶¶ 20-21. Instead, Wayland complains that these payments
were "not on the principal amount at maturity of the Exchange
Notes, as required to provide a yield to maturity of 12¾%,"
id., and that the Millenium's failure to comply with the
acceleration provisions upon notice of this default constituted a
breach of contract, see id. ¶ 33. However, this claim fails for
two reasons. First, to the extent Wayland alleges that
Millenium's default triggered the accelerations provisions, these
allegations explicitly concede that the interest payments made by
Millenium comported with the clear and unambiguous language of
the integrated written agreement between the parties. Second, to
the extent Wayland alleges these payments were governed by a
separate, earlier contract whose terms are evidenced by the
Offering Circular and the Prospectus, the parol evidence rule
bars consideration of such contradictory evidence and the earlier
contract would be unenforceable. See Mizuna, Ltd. v. Crossland
Fed. Sav. Bank, 90 F.3d 650, 659-61 (2d Cir. 1996); Braten, 60
N Y2d at 161-63, 456 N.E.2d at 805, 468 N.Y.S.2d at 864.
In response, Wayland points to authority for the proposition
that the parol evidence rule does not apply in cases of fraud or
mutual mistake. See, e.g., Marine Midland Bank-Southern v.
Thurlow, 53 N.Y.2d 381, 387, 425 N.E.2d 805, 807, 442 N.Y.S.2d 417,
419 (1981). Wayland contends that because the parties had
agreed that interest would be paid according to the terms of the
Offering Circular and the Prospectus, and because a contrary
provision was included in the Exchange Notes only by mutual
mistake of the parties, the allegation of mutual mistake renders
the parol evidence rule inapplicable. However, "it is hornbook
law that parties cannot alter or contradict the express terms of
one specific provision of an integrated contract in writing . . .
by pointing to parole evidence of [fraud or mutual mistake],
where the party . . . does not dispute other relevant provisions
of the contract and in effect concedes their validity." Raine,
1998 WL 655545, at *16 (footnote omitted) (citing Adler &
Shaykin, 721 F. Supp. at 480); see Meinrath v. Singer,
482 F. Supp. 457, 460-61 (S.D.N.Y. 1979).
The most basic reason for this result is that breach of
contract and mutual mistake are separate causes of action, the
latter of which originated in equity precisely in order to remedy
those situations in which an action at law for breach of contract
afforded no relief. See George Backer Management Corp. v. Acme
Quilting Co., 46 N.Y.2d 211, 218-19, 385 N.E.2d 1062, 1066,
413 N.Y.S.2d 135, 139 (1978). As a consequence, if a party asserts
causes of action for both breach of contract and mutual mistake,
courts will dismiss the breach of contract claim based on the
clear language of the contract before even considering whether
extrinsic evidence of mutual mistake might be admissible to
reform the terms of the contract. See Investors Ins. Co., 917
F.2d at 103-06; Gerard v. Almouli, 746 F.2d 936, 938-39 (2d
Cir. 1984); Liberty Mut. Ins. Co. v. York Hunter, Inc.,
945 F. Supp. 742, 746-48 (S.D.N.Y. 1996); Bell v. Marine Midland
Banks, Inc., 230 A.D.2d 758, 758-59, 646 N.Y.S.2d 366, 367 (2d
Dep't 1996), leave denied, 89 N.Y.2d 808, 678 N.E.2d 501,
655 N.Y.S.2d 888 (1997); Hi Tor Indus. Park, Inc. v. Chemical
Bank, 114 A.D.2d 838, 839-40, 494 N.Y.S.2d 751, 752 (2d Dep't
1985); Schmidt, 97 A.D.2d at 156-59, 468 N.Y.S.2d at 653-55;
Katz v. American Technical Indus., Inc., 96 A.D.2d 932, 932-33,
466 N.Y.S.2d 378, 380-81 (2d Dep't 1983).
In the present case, Wayland has alleged a separate claim of
mutual mistake and remains free to pursue reformation of the
contract on the basis of that claim. See George Backer
Management Corp., 46 N.Y.2d at 219-20, 385 N.E.2d at 1066, 413
N YS.2d at 139; Nash v. Kornblum, 12 N.Y.2d 42, 46-47,
186 N.E.2d 551, 553, 234 N.Y.S.2d 697, 700 (1962). The breach of
contract claim, however, should be dismissed.
For the reasons stated above, Millenium's motion is granted,
and the breach of contract claim is hereby dismissed.
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