Kidder, Peabody & Co. v. Iag Intern. Accept. Group, 94 Civ. 4725(CSH).
| Decision Date | 17 November 1998 |
| Docket Number | No. 94 Civ. 4725(CSH).,94 Civ. 4725(CSH). |
| Citation | 28 F.Supp.2d 126 |
| Parties | KIDDER, PEABODY & CO. INCORPORATED, Plaintiff, v. IAG INTERNATIONAL ACCEPTANCE GROUP N.V., Defendant. |
| Court | U.S. District Court — Southern District of New York |
Morrison & Foerster, LLP, New York City, for plaintiff; Carl H. Loewenson, Jr., of counsel.
Curtis Mallet-Prevost, Colt & Mosle, New York City, for defendant; Sam Rosenthal, of counsel.
This case, arising from a failed financing deal, has been the subject of numerous opinions by this Court and the supervising Magistrate Judge, familiarity with which is assumed. A previous opinion dismissed the complaint which alleged that the defendant IAG International Acceptance Group N.V. ("IAG" or "IAG N.V.") breached a contract with plaintiff Kidder, Peabody & Co. Incorporated ("Kidder") requiring Kidder to provide IAG a three-year $100 million revolving line of credit (a "warehouse facility") to finance the purchase of auto loans and granting Kidder the exclusive right to underwrite securities backed by those loans. Dismissal of the complaint did not dispose of this action because IAG has asserted six counterclaims against Kidder alleging that it has been damaged by Kidder's alleged fraudulent or negligent misrepresentations in connection with the financing contract and Kidder's commencement of this action and procurement of an ex parte order of attachment in this Court. Jury trial on the counterclaims is scheduled to begin January 4, 1999.
Kidder, whose only role now is that of counterclaim defendant, has moved for summary judgment seeking (1) dismissal of Count Four of the Amended Counterclaim alleging wrongful attachment under N.Y. CPLR 6212(e), (2) dismissal of Count Five of the Amended Counterclaim insofar as it alleges tortious interference with contractual relations with CS First Boston ("First Boston"), (3) to preclude the recovery of damages derived by IAG from a contract Kidder alleges to be illegal, and (4) to preclude the recovery of damages from lost future profits in respect of that contract. IAG both opposes that motion and affirmatively moves to have it stricken in its entirety, or alternatively, to have numerous exhibits upon which it relies stricken, for failure of the supporting evidence to comply with the authenticity and admissibility requirements of Fed.R.Civ.P. 56(e).
For the reasons explained below, IAG's motion to strike is denied and Kidder's motion for summary judgment is granted insofar as it seeks preclusion of lost future profits damages and dismissal of the wrongful attachment counterclaim. It is denied in all other respects.
Because the factual background of this case has been previously described by this Court, the facts relevant to this opinion will be repeated only briefly. Unless otherwise noted, the facts described are uncontested.
IAG was incorporated in November, 1993 to engage in the business of acquiring, securitizing, and selling auto and light truck loans. Auto Marketing Network, Inc. ("AMN") during the pertinent times engaged in the origination and purchase of loans to sub-prime (that is, less than fully creditworthy) borrowers, secured by automobiles and light trucks. IAG alleges that its principals entered into an agreement with AMN in late 1993 pursuant to which IAG was given the exclusive right to purchase AMN loans and engage in sales of securities backed by pools of such loans. Prior to execution of the contract, which also required IAG to obtain a revolving line of credit to finance the purchase of AMN loans, AMN's origination of loans had been partially financed by Memorial Bank, an Oklahoma commercial bank whose CEO, H. Buchanan Howard, was involved in the establishment of IAG. Prior to 1994, AMN's loans had been securitized through Daiwa Financial Corp.
As the AMN contract contemplated, IAG sought the desired financing and in January 1994, IAG and Kidder entered into a contract requiring Kidder to provide IAG a $100 million warehouse facility for a three-year period to finance the purchase of AMN loan receivables. This contract also provided that Kidder would serve as IAG's exclusive underwriter in connection with the issuance of securities backed by the receivables. The warehouse facility was not, however, effectuated immediately. Various obstacles arose to the implementation of the terms of the contract, the details of which the parties contest and are not relevant here. Apparently as a result of these complications, between April and June of 1994, Kidder and IAG negotiated the terms of a proposed securitization of a pool of AMN loans. IAG alleges that when it became apparent by June 22, 1994 that neither the securitization transaction nor the warehouse facility would be consummated by June 30, 1994, AMN and IAG entered into discussions with First Boston for the purchase of AMN loans in order to effect the timely removal of those loans from Memorial Bank's books. IAG alleges that First Boston agreed on June 24, 1994 to purchase from AMN the loans that were to be the subject of the proposed Kidder securitization in a whole loan purchase transaction (that is, a straight sale, not a securitization, of the loans). IAG contends that the parties agreed that IAG would be paid a 2% annual structuring fee for this transaction by First Boston together with a 1% up-front fee by AMN.
After learning of the imminent First Boston transaction, Kidder initiated this lawsuit on June 27, 1994,1 by filing a complaint alleging breach of contract by IAG. On June 28, Kidder obtained an ex parte order of attachment from this Court to secure any assets of or indebtedness owed to IAG, and furnished copies of the order on that same day to First Boston, AMN and Memorial Bank. AMN closed the whole loan sale with First Boston on June 30, 1994, without the involvement of IAG.
After First Boston advised the United States Marshal for this District that it held no property of or indebtedness to IAG, Kidder consented to a vacatur of the order on August 10, 1994. IAG subsequently filed an Amended Counterclaim alleging that Kidder's commencement of the lawsuit and procurement of the order of attachment caused AMN and First Boston to cease doing business with it on the June 30 whole loan sale and any future transaction. IAG further claims that as a result of the lawsuit and the order of attachment, Kidder prevented IAG from doing business with any other entity in connection with the sale or securitization of AMN loans.
The principles governing the grant or denial of summary judgment are well established. "[S]ummary judgment is appropriate where there exists no genuine issue of material fact and, based on the undisputed facts, the moving party is entitled to judgment as a matter of law." D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir.), cert. den., ___ U.S. ____, 118 S.Ct. 2075, 141 L.Ed.2d 151 (1998). In addressing a motion for summary judgment, "[t]he court must view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in his favor." L.B. Foster Co. v. America Piles, Inc., 138 F.3d 81, 87 (2d Cir.1998) (citing Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). The party seeking summary judgment bears the initial burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Once such a showing is made, the party opposing the motion must come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). In so doing, the "non-moving party may not rely on conclusory allegations or unsubstantiated speculation." Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir.1998). Moreover, while the party resisting summary judgment must show a dispute of fact, it must also be a material fact in light of the substantive law. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). However, "[t]he mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient" to defeat a properly supported motion for summary judgment. Anderson, 477 U.S. at 252, 106 S.Ct. 2505. Instead, the nonmovant must offer "concrete evidence from which a reasonable juror could return a verdict in his favor." Id. at 256, 106 S.Ct. 2505. Summary judgment should only be granted if no rational factfinder could find in favor of the non-moving party. Heilweil v. Mount Sinai Hospital, 32 F.3d 718, 721 (2d Cir. 1994).
Before reaching the merits of Kidder's summary judgment motion, I must first consider IAG's motion to strike Kidder's motion on the basis that it relies on a multitude of documents that were not properly authenticated in violation of Fed.R.Civ.P. 56(e).
While a party may challenge documentary evidence submitted in support of a summary judgment motion on the ground that it constitutes unauthenticated or inadmissible material, see Moore et al., Moore's Federal Practice ¶ 56.14[4][a] (3d ed.1997), it is also true that "[t]he court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits." Fed.R.Civ.P. 56(c) (emphasis added). In response to IAG's motion to strike, Kidder submitted numerous additional affidavits purporting to authenticate the materials challenged by IAG. Although Kidder did not seek the Court's permission to augment the documentary materials in this manner, I do not regard that omission as fatal. Rule 56(e) grants me the discretion to permit the filing of such...
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