175 A.D.2d 227 | N.Y. App. Div. | 1991
— In an action, inter alia, to recover damages for breach of contract and fraudulent misrepresentation, (1) the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Suffolk County (Copertino, J.), dated October 3, 1989, as granted those branches of the motion of the defendant European American Bank and Trust Company which were to (a) dismiss the first,
Ordered that the order is modified, on the law, by (1) deleting from the first decretal paragraph thereof the words "first” and "second” and (2) deleting the second decretal paragraph thereof and substituting therefor a provision (a) granting those branches of the motion of the defendant European American Bank and Trust Company which were to dismiss the first, second, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth and thirteenth causes of action insofar as they are asserted on behalf of Edward Bonlarron, (b) granting those branches of the motion which were to dismiss the first, second, and fourth causes of action insofar as they are asserted on behalf of the plaintiff Paula Bonlarron, and (c) denying the remaining branches of the motion; as so modified, the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.
On May 2, 1984, the corporate plaintiff, Components Direct, Inc., by its president, Edward Bonlarron, entered into a revolving credit agreement, known as an Assigned Account Loan Agreement, with defendant European American Bank and Trust Company (hereinafter EAB). Under the agreement EAB agreed to extend a line of credit to the corporate plaintiff for its day-to-day business operations of up to 75% of certain eligible accounts assigned by it to EAB. To secure payment of the funds to be advanced, the plaintiffs Edward Bonlarron and Paula Bonlarron, in their individual capacities, executed a guarantee dated May 2, 1984, which is the same date as the loan agreement. In order to further secure payment, Mr. Bonlarron executed a series of security agreements in his capacity as president of the plaintiff corporation and as president of two other corporations not involved in this action.
Pursuant to the credit agreement, EAB advanced considerable funds to the corporate plaintiff, which subsequently de
The plaintiffs commenced this action by service of a summons and complaint containing 16 causes of action. The first through thirteenth causes of action were asserted against EAB, and the fourteenth, fifteenth and sixteenth causes of action were asserted against Brout.
The first and second causes of action alleged that EAB breached its obligation of good faith when it terminated credit to the corporate plaintiff without notice. The Supreme Court dismissed the two causes of action to the extent they were asserted on behalf of the corporate plaintiff on the ground that, under the loan agreement, funds were to be advanced to the corporate plaintiff "in the sole discretion” of the bank, that there was no provision for notice concerning the exercise of that discretion, and that notice did not go to the heart of the loan agreement. We disagree.
Implicit in all contracts is an implied covenant of fair dealing and good faith (see, Van Valkenburgh Nooger & Neville v Hayden Publ. Co., 30 NY2d 34; Kirke La Shelle Co. v Armstrong Co., 263 NY 79), and "the application of principles of good faith and sound commercial practice normally call for such notification of the termination of a going contract relationship as will give the other party reasonable time to seek a substitute arrangement” (UCC 2-309, Comment 8). The allegations in the complaint indicate that the corporate plaintiff depended on the funds available under the credit agreement for its existence. Indeed, it is alleged that the corporate plaintiff ceased to exist when EAB terminated credit. EAB
The Supreme Court also sustained the causes of action designated third, fifth, sixth, seventh, eighth, ninth, tenth and thirteenth to the extent they asserted claims on behalf of the individual plaintiffs. It reasoned that although an exculpatory clause in the loan agreement is binding on the corporate plaintiff, and precludes it from maintaining the above-mentioned causes of action, it is not clear that the individual plaintiffs, in their capacity as guarantors, had agreed to be bound by the clause. We agree with the Supreme Court, for reasons stated in its memorandum decision, that the exculpatory clause is valid and enforceable and precludes the corporate plaintiff from maintaining the third through the tenth causes of action and the thirteenth cause of action against EAB. Further, contrary to the Supreme Court, we find that the exculpatory clause is also binding on the plaintiff Edward Bonlarron.
The guarantee executed by the individual plaintiffs is a separate instrument, and does not incorporate the provisions of the exculpatory clause found in the loan agreement. While a guarantee is a separate, independent contract between the guarantor and the creditor-obligee and is collateral to the contractual obligation between the creditor-obligee and the principal-obligor (see, American Trading Co. v Fish, 42 NY2d 20; Fehr Bros. v Scheinman, 121 AD2d 13), a guarantee in
We now turn to issues raised by Brout. Brout contends that the Supreme Court erred by denying dismissal of the fourteenth and sixteenth causes of action. Brout had sought dismissal of these causes of action pursuant to CPLR 3013 and CPLR 3211 (a) (7). We conclude that these causes of action were properly sustained by the Supreme Court.
The complaint alleges that Brout negligently advised the corporate plaintiff to pay an outstanding tax liability. In his affidavit in opposition to Brout’s motion, Edward Bonlarron stated that the overdraft on the line of credit was the result of Brout’s advice, that such an overdraft would not have occurred if Brout had properly advised that a corporation expecting net operating loss carrybacks could seek an extension in the payment of its tax liability, that the Internal Revenue Service ultimately refunded the full amount of the tax paid, and that EAB terminated the corporate plaintiff’s line of credit as a result of the overdraft. "A complaint should not be dismissed on a pleading motion so long as, when the plaintiff’s allegations are given the benefit of every possible inference, a cause of action exists” (Sanbar Projects v Gruzen Partnership, 148 AD2d 316, 318).
We have considered the parties’ other contentions and find them without merit. Thompson, J. P., Eiber, Balletta and Ritter, JJ., concur.