By this motion, Defendant, First American Entertainment Bank ("FAIB"), seeks to dismiss Plaintiff's Complaint in its entirety, pursuant to CPLR § 3211(a)(7). Plaintiff, Fairway Prime Estate Management, LLC ("Fairway"), cross-moves for leave to serve an Amended [*2]Complaint. In its opposition to the cross-motion, Defendant has challenged the sufficiency of the Proposed Amended Complaint on the merits. At oral argument, Defendant stated no objection to my permitting the Proposed Amended Complaint to be filed, and to my consideration of Defendant's motion a motion to dismiss the Amended Complaint. (Hr'g Tr. 4-5, January 25, 2011.)

The events giving rise to this lawsuit are as follows. On August 27, 2008, Defendant issued to Plaintiff a commitment letter (the "Commitment"), pursuant to which Defendant agreed to extend to Plaintiff a loan in the amount of $10,000,000 for a two-year term.^[FN1] The loan was made for the purpose of financing Plaintiff's construction and development of a condominium building in Flushing, Queens (the "Property" or the "Premises"). The Commitment was expressly "conditioned upon the absence of any material adverse change in the financial condition . . . of the Borrower and/or the Guarantor(s)," and to several other terms, including "a satisfactory appraisal report from an appraiser acceptable to [FAIB] indicating the value of the newly built' Premises of an amount of at least $25,100,000 as Gross Sell Out Market Value, and $22,400,000 as Discounted Net Sell Out Value, which appraisal is reasonably satisfactory to [FAIB]." (Commitment at 1, 6; emphasis in the original.)

The Commitment further provided that the entire agreement ^[FN2] with respect to the $10,000,000 loan was contained within, and that FAIB may terminate it "at its sole option on giving written notice" if "any adverse change shall occur with respect to the Premises . . ." or "if any of the conditions precedent specified in this commitment are not fulfilled as and when required." (Commitment at 9-10.)

An appraisal report, commissioned by United Commercial Bank, a participating lender, determined that the discounted net sellout value of the Property, at completion, would be $22.4 million. (Amended Compl. ¶ 9; see also Man Affirm.^[FN3] ¶ 7.)

Under the terms of the Commitment, the loan was scheduled to close within 45 days of August 27, 2008. (Id. at 8.) On October 8, 2008, however, at Plaintiff's request, FAIB agreed, in writing, to extend the deadline for closing on the loan for six months, until March 31, 2009 (the "First Extension"). The reason for the extension was to give Plaintiff time to apply to the New York Board of Standards and Appeals for a zoning variance, and to complete construction of the foundation of the Premises. (See Amended Compl. ¶¶ 14-20; see also the First Extension, annexed to the Amended Complaint at Exhibit C.) All other terms and conditions of the Commitment remained in effect.

On January 27, 2009, the Board of Standards and Appeals granted Plaintiff's variance. Plaintiff immediately notified Defendant, and, on February 23, 2009, Plaintiff wrote to Defendant [*3]and requested that the closing of the loan be scheduled. (Amended Compl. ¶ 24.) On March 3, 2009, Defendant's counsel, by e-mail to Plaintiff's counsel, confirmed receipt of Plaintiff's request, and enclosed a "checklist of remaining matters, most of which had already been completed or were about to be completed." (Id. ¶ 28.)

Plaintiff contends that Defendant's counsel subsequently "became increasingly evasive and refused to schedule a closing, claiming that she had not received authority from defendant Bank to do so." (Id. ¶ 29.)

Thereafter, on March 23, 2009, FAIB issued a second extension of the loan commitment (the "Second Extension"), which extended the deadline for closing of the loan until June 30, 2009, for the purpose of permitting FAIB to order and receive a new appraisal on the Property "because it has been more than six months since the last appraisal." (Second Extension, annexed to the Amended Complaint as Exhibit D.) The Second Extension further provided that FAIB would update the credit memo upon receipt of the new appraisal in order to reflect the new appraisal value and any other changes, that United Commercial Bank would participate in the loan to the extent of its pre-existing land loan, that the interest rate would be changed to 8.25%, and that all other terms and conditions remained unchanged. (See Amended Compl. ¶ 31.)

An appraisal report dated April 30, 2009 determined that the discounted net sellout value of the completed Property had declined to $21,300,000. (Id. ¶ 42.) Plaintiff contends that this appraisal report was a " restrictive appraisal report,' which does not include discussions of the data, reasoning and analysis used in the appraisal process." (Id. ¶ 41.)

Defendant then issued a second commitment letter, dated June 10, 2009 (the "Second Commitment"), pursuant to which Defendant agreed to lend only $8,380,000, and Plaintiff was required to satisfy several new conditions in advance of the closing, which was to be held within 45 days. (The Second Commitment is annexed to the Amended Compl. At Exhibit E.) Those new conditions included proof, by Plaintiff, of an additional $2 million bank balance to be used for the Project, closing of certain outstanding sales contracts on another of Plaintiff's projects, proof of an escrow account to cover interest on the loan for 2 years, and provision, within the General Contractor's contract, for a personal completion guaranty and a requirement to finish the contract free of liens. (Second Commitment at 8.)

Plaintiff asserts that these conditions were imposed by Defendant in violation of the original Commitment, that Defendant knew that they would destroy the commercial viability of the financing, and that they would be impossible for Plaintiff to obtain, agree to or perform within the 45-day deadline. (Amended Compl.¶ 45.)

Plaintiff further alleges that, since it had not agreed to the terms of the Second Commitment within a 10-day deadline, Defendant "then told Plaintiff it would not even lend $8,380,000," and that, as a result of Defendant's "illegal, intentional, knowing, malicious and unjustified tactics and delay," it would be "extremely difficult and likely impossible under the current lending climate" for Plaintiff to obtain alternative funding. (Id. ¶¶ 49-50.)

Plaintiff also alleges that Defendant provided no written notice of termination. (Id. ¶ 56.)

By this action, Plaintiff asserts causes of action for breach of contract, seeking specific performance and, in the alternative, monetary damages, and for fraud, seeking consequential, special and punitive damages. [*4]

In its motion to dismiss, Defendant argues that the Amended Complaint fails to state a claim upon which relief can be granted because there is no contract, or, if there is a contract, there has been no breach. Defendant further argues that Plaintiff cannot allege damages, because specific performance is unavailable here, and because the monetary damages alleged by Plaintiff are too speculative as to give rise to relief. Defendant also asserts that the fraud claim is duplicative of the contract claim, and thus cannot stand.

I begin with the fraud claim. "It is well-settled that a cause of action to recover damages for fraud may not be maintained when the only fraud charged relates to a breach of contract." Alamo Contract Builders, Inc. v. CTF Hotel Co., 242 AD2d 643, 644 (1st Dep't 1997). A "viable claim of fraud concerning a contract must allege misrepresentations of present facts (rather than merely of future intent) that were collateral to the contract and which induced the allegedly defrauded party to enter into the contract." Orix Credit Alliance, Inc. v. R.E. Hable Co., 256 AD2d 114, 115 (1st Dep't 1998). To support a claim for fraud, a plaintiff must allege a breach of duty owed to it by defendant which is independent of the contract relationship. See Leonard v. Gateway II, LLC, 68 AD3d 408, 409 (1st Dep't 2009).

It is clear that, in this case, the allegations giving rise to the claim for fraud are nothing more that a restatement of the contract claim. Plaintiff alleges that Defendant "made repeated and [sic] materially false representations and concealed material facts regarding its intention to actually finance the construction and development of the Property." (Amended Compl. ¶ 75.) Plaintiff further alleges that Defendant "represented" that it would "provide financing for development of the Property in accordance with . . . the Loan Agreement" (id. ¶ 76); that Defendant was "proceeding with and committed to the Loan Agreement when, in fact . . . [D]efendant intended and desired to avoid those obligations and was working toward that end" (id. ¶ 77); and that Defendant made misrepresentations "regarding the change in it's [sic] true intentions sometime after the Loan Agreement" and "failed to reveal its true purpose of avoiding financing under the Loan Agreement" (id. ¶ 78).

Although Plaintiff further alleges that it relied on Defendant's misrepresentations to its detriment, and that it has suffered damages as a result, there is nothing contained within these allegations that sets forth a breach of any duty by Defendant that is independent of the contractual relationship. Nor is there any allegation of a misrepresentation of present facts that were collateral to the contract. Rather, the sole basis for Plaintiff's fraud claim is Defendant's alleged intent not to perform under the agreement between the parties. The fraud claim is therefore dismissed. Orix Credit Alliance, 256 AD2d at 115(citing New York University v. Continental Insurance Co., 87 NY2d 308, 318 (1995) ("Allegations that a party entered into a contract without intent to perform do not state a cause of action for fraud.")

Turning, now, to the breach of contract claim, Defendant argues that the Amended Complaint fails to state a claim for several reasons. First, Defendant argues that no contract was formed because Plaintiff did not satisfy a condition precedent expressly set forth in the Commitment, namely, the receipt of a satisfactory appraisal report indicating the value of the completed Property to be $22.4 million. Moreover, since FAIB's obligation under the Commitment was expressly conditioned upon the absence of any material adverse change, and since the $1.1 million decline in the value of the Property amounts to a material adverse change, there was no agreement between the parties. Next, Defendant argues that, even if the [*5]Commitment does represent a contract between the parties, Plaintiff cannot state a claim for breach because Plaintiff did not get the required appraisal, and thus, Plaintiff failed to perform. Similarly, Defendant argues that Plaintiff cannot allege Defendant's failure to perform, since the change in the Property's value constituted a material adverse change, giving Defendant the right to terminate the agreement. Finally, Defendant argues that Plaintiff has not pled any damages, since specific performance is not available, and the Amended Complaint sets forth only speculative damages.

Plaintiff argues that Defendant breached the agreement when it refused to schedule the loan closing after Plaintiff informed it that it had obtained its zoning variance and was ready to proceed. Plaintiff further argues that the Commitment was never terminated because Defendant never provided written notice of such termination. With regard to damages, Plaintiff argues, first, that specific performance is appropriate here because of the unique nature of the construction and development project, and moreover, that the damages alleged in the Amended Complaint are not merely speculative.

On a motion to dismiss, the allegations of a complaint are generally presumed to be true, and the plaintiff is accorded every favorable inference. See, e.g., Morone v. Morone, 50 NY2d 481, 484 (1980). Such presumption and favorable inference will not be accorded, however, where the factual allegations or legal conclusions are contradicted by the documentary evidence. Biondi v. Beekman Hill House Apartment Corp., 257 AD2d 76, 81 (1st Dep't 1999). By annexing the Commitment, First Extension and Second Extension to its Amended Complaint, Plaintiff has incorporated those documents into its pleadings, and their "provisions establish the rights of the parties and prevail over conclusory allegations of the complaint." 805 Third Ave. Co. v. M.W. Realty Associates, 58 NY2d 447, 451 (1983).

Upon review of the Commitment, First Extension and Second Extension, it is clear that Plaintiff cannot state a claim for breach of contract. The Commitment expressly provides that "[t]he commitment to provide the Loan is conditioned upon certain terms and conditions," including certain "Additional Conditions Precedent." (Commitment at 1, 6.) Included in these expressly identified conditions precedent is "a satisfactory appraisal report from an appraiser acceptable to the Bank indicating" a discounted net sellout value of $22.4 million, "which appraisal is reasonably satisfactory to the Bank." (Commitment at 6.) The First Extension provided that the interest rate and origination fees were subject to change, but that all other terms and conditions set forth in the Commitment remained in effect. By the terms of the Second Extension, the interest rate was changed and an extension fee was assessed, but all other terms set forth in the Commitment remained unchanged. In other words, although the purpose of the Second Extension was to give FAIB a chance to have the Property appraised, nothing contained in either the First or Second Extension did away with the condition precedent set forth in the Commitment, that such appraisal indicate the discounted net sellout value of the Property to be $22.4 million, and that such appraisal be reasonably satisfactory to FAIB.

This requirement that the appraisal be reasonably satisfactory to FAIB renders Plaintiff's contention that Defendant breached by refusing to close on the loan a nullity. The Second Extension expressly stated that FAIB was ordering a new appraisal "because it has been more than six months since the last appraisal." This language indicates that the old appraisal was no [*6]longer reasonably satisfactory, and the Commitment gives FAIB the express right to reject it and to require a new one.

A condition precedent is "an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises." MHR Capital Partners LP v. Presstek, Inc., 12 NY3d 640, 645 (2009) (quoting Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 NY2d 685 [1995]). There can be no dispute that the reasonably satisfactory appraisal report constitutes a condition precedent, and there is no dispute that this condition was not satisfied. Therefore, FAIB's obligation to fund the loan did not arise, and Plaintiff cannot allege that FAIB breached its obligations. Plaintiff thus cannot state a claim for breach of contract, and this cause of action is also dismissed.

In light of this conclusion, there is no need to address the question of whether Defendant properly terminated the Commitment, nor is there need to discuss the availability of the remedy of specific performance.

Accordingly, it is

ORDERED that Defendant's Motion to Dismiss (Motion Sequence No. 001) is GRANTED; and it is further

ORDERED that the Amended Complaint is dismissed in its entirety.

Dated:

ENTER:

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J.S.C.