Havell Capital Enhanced Mun. Income Fund v. Citibank

• Decision Date: 17 May 2011
• Citation: 84 A.D.3d 588,2011 N.Y. Slip Op. 04101,923 N.Y.S.2d 479
• Parties: HAVELL CAPITAL ENHANCED MUNICIPAL INCOME FUND, L.P., Plaintiff–Appellant,v.CITIBANK, N.A., Defendant–Respondent.
• Court: New York Supreme Court — Appellate Division

84 A.D.3d 588

923 N.Y.S.2d 479

2011 N.Y. Slip Op. 04101

HAVELL CAPITAL ENHANCED MUNICIPAL INCOME FUND, L.P., Plaintiff–Appellant,

v.CITIBANK, N.A., Defendant–Respondent.

Supreme Court, Appellate Division, First Department, New York.

May 17, 2011.

McCausland Keen & Buckman, New York (Glenn S. Gitomer of counsel), for appellant.Freshfields Bruckhaus Deringer U.S. LLP, New York (Marshall H. Fishman of counsel), for respondent.MAZZARELLI, J.P., SWEENY, ACOSTA, RENWICK, DeGRASSE, JJ.

Order, Supreme Court, New York County (Charles E. Ramos, J.), entered December 14, 2010, which granted defendant's motion for summary judgment dismissing the amended complaint, unanimously affirmed, with costs.

Plaintiff had purchased positions in municipal bonds on margin, and secured its debt to defendant with cash and the bonds pursuant to an International Swaps and Derivatives Association agreement and related agreements. When plaintiff defaulted under the governing agreements, rather than invoke its remedies upon default, defendant offered to purchase plaintiff's bond collateral. Although plaintiff's principal complained that defendant's bid purchase prices were too low, she signed the letter “settlement agreement” that defendant proffered, which indicated the prices and the resulting shortfall in payment of the margin loan debt as a result of the declined value of the bond collateral.

Under the circumstances, the letter agreement barred plaintiff's claim for breach of obligations in the earlier agreements to act in a commercially reasonable manner and to obtain the highest obtainable prices under prevailing market conditions in liquidating plaintiff's interests. The reservation of rights in the letter agreement relied on by plaintiff did not reserve its right to challenge defendant's bond purchase prices, since such interpretation would have negated the main purpose of the letter agreement and rendered it meaningless ( see Beal Sav. Bank v. Sommer, 8 N.Y.3d 318, 324, 834 N.Y.S.2d 44, 865 N.E.2d 1210 [2007] ).

The claim for breach of the implied covenant of good faith, which arose from the same facts and sought identical damages, was duplicative of the contract claim ( see Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce, 70 A.D.3d 423, 426, 894 N.Y.S.2d 47 [2010], lv. denied 15 N.Y.3d 704, 907 N.Y.S.2d 752, 934 N.E.2d 321 [2010] ). Moreover, the duty of good faith cannot imply obligations inconsistent with the express terms of the letter agreement ( see Murphy v. American Home Prods. Corp., 58 N.Y.2d 293, 304, 461 N.Y.S.2d 232, 448 N.E.2d 86 [1983] ).

Similarly, the fraud claim, which arose from the same facts, sought identical damages and did not allege a breach of any duty collateral to or independent of the parties' agreements, was redundant of the contract claim ( see Financial Structures Ltd. v....