Plaintiff, J. Remora Maintenance LLC and Remora Maintenance LLC (together "Remora"), moves for summary judgment against defendant, German Efromovich, to enforce a guaranty pursuant to CPLR § 3212, and to dismiss defendant's affirmative defenses and counterclaim pursuant to CPLR § 3211.

On September 22, 2010, Remora entered into a Purchase Agreement (the "Purchase Agreement"), with HJDK Aerospacial Inc. ("HJDK"), pursuant to which HJDK acquired Remora's interest in a Brazilian company, Segurasa Participaç es [*2]Ltda ("Segurasa"), which, itself, owns 75% of the issued and outstanding equity of Digex Aircraft Maintenance S.A. ("Digex"). HJDK agreed to make a $10 million cash payment to Remora, by wire transfer, on or before March 31, 2011. At the same time as the Purchase Agreement was executed, Efromovich signed and executed a Guaranty (the "Guaranty") for the purchase.^[FN1] Under the Guaranty, Efromovich agreed to pay the purchase price to Remora upon two conditions; (1) HJDK's failure to pay in full the purchase price at the time and in the manner specified in the Purchase Agreement; and, (2) Remora's serving Efromovich with a written Performance Demand (the "Performance Demand") calling upon Efromovich to pay the purchase price. (See Guaranty at 2.) The Guaranty explicitly stated that "these conditions comprise the totality of the conditions required for the Guarantor's obligation to become due," and that, "[Efromovich] shall, within 5 days after receipt of a performance demand, pay the amount due . . . " under the Guaranty. (Id.) More specific to the dispute at hand, the Guaranty, under a section entitled "Governing Law," explicitly states that the Guarantor "waives, and agrees not to assert any defense in this action, suit or proceeding for the interpretation of this Guaranty . . . that this Guaranty or any related document may not be enforced in or by" this court. (Id. at 6.)

On March 22, 2011, Remora provided HJDK with notice of the designated account to which to wire the transfer on or before March 31st, 2011, but HJDK failed to make the required payment. On April 1, 2011, Remora served the Performance Demand to Efromovich, in compliance with the terms of the Guaranty. The Performance Demand provided that HJDK failed to pay the purchase price, and demanded payment of the purchase price from Efromovich on or before April 6th, 2011. Efromovich failed to pay the purchase price, and Remora brought suit. In response to Remora's suit, Efromovich has asserted affirmative defenses of fraudulent inducement and failure of consideration, and he has also interposed a counterclaim for fraudulent inducement. At issue in this case is whether the waiver language included in the Guaranty bars Efromovich from asserting any substantive defenses, or merely bars jurisdictional and choice of law defenses.

On a motion for summary judgment, the moving party must "make a prima facie showing of entitlement to judgment as a matter of law," showing "sufficient evidence to demonstrate the absence of material fact." Alvarez v. Prospect Hospital, 68 NY2d 320, 324 (1986). Once this showing has been made, "the burden shifts to the party opposing the motion . . . to produce evidentiary proof . . . sufficient to establish the existence of material issues of fact . . ." Id. In the case of a guaranty, a plaintiff is entitled to summary judgment when he or she shows "undisputed evidence of default . . ." Fortress Credit Corp. v. Hudson Yards, LLC, 78 AD3d 577, 577 (1st Dep't 2010).

Remora has shown, and Efromovich has not disputed, that the two conditions [*3]required for Efromovich's obligations under the Guaranty to become due, took place: (1) that HJDK failed to pay the purchase price in full; and, (2) that Remora served a Performance Demand to Efromovich. Therefore, Remora has "made a prima facie showing of entitlement to judgment as a matter of law . . . demonstrat[ing] an absence of material fact" as to whether the Guaranty obligation became due. Alvarez, 68 NY2d at 324. At issue, however, is whether Efromovich has produced "evidentiary proof . . . sufficient to establish the existence of material issues of fact," namely, whether he can assert valid affirmative defenses of fraudulent inducement and failure of consideration.

Remora argues that the waiver in the Guaranty was an express waiver, which precludes Efromovich from asserting any and all defenses regarding the enforcement of the Guaranty, including the affirmative defenses of failure of consideration and fraudulent inducement. Remora argues that the waiver language is sufficiently specific to bar substantive defenses and, therefore, is covered by Citibank v. Plapinger, 66 NY2d 90 (1985), where the Court of Appeals held that an "absolute and unconditional" waiver of defenses precluded the defendant's assertion of affirmative defenses, including fraudulent inducement, even when there was sufficient evidence to render a triable issue of material fact regarding the defense of fraudulent inducement. Plapinger held that a guaranty which claimed to be "absolute and unconditional irrespective of any lack of validity or enforceability of the guarantee, or any other circumstance which might otherwise constitute a defense available to a guarantor in respect of the guarantee," barred the defendant from asserting the affirmative defense of fraudulent inducement. Plapinger, 66 NY2d at 91. Although the guarantee in that case did not explicitly disclaim that the defendant did not rely on oral representations in signing the guarantee, the Court reasoned that the sophisticated nature of the parties and the negotiation process, as well as the guarantee's statement that it was "absolute and unconditional," precluded the necessity of the guarantee specifically waiving reliance on any representations. See id. at 95.

Defendant, here, contends that the waiver clause in the Guaranty does not waive all substantive defenses because the waiver does not contain the language "absolute and unconditional" as did the waiver in Plapinger. Because, he argues, guarantees should be construed narrowly, Defendant claims that the general language in the waiver clause of the Guaranty should not be read to bar substantive defenses. Moreover, Defendant argues that the waiver's inclusion in a section of the Guaranty entitled "Governing Law," evidences that the waiver clause only applies to defenses regarding jurisdiction, and is inapplicable to substantive defenses.

Despite Defendant's contention to the contrary, the Guaranty language precludes his assertion of substantive defenses against the enforceability of the Guaranty. Although the waiver does not contain the language "absolute and unconditional," neither Plapinger nor any other New York decision requires that language to be present in order to effectively waive substantive defenses. Instead, the Court in Plapinger focused on the "extended negotiations of sophisticated [*4]businesspeople" which resulted in a "multi-million dollar personal guaranty," which contained a general waver. Id. at 95. Given the nature of the transaction, the Court concluded that "[i]t is unrealistic in such circumstances to expect an express stipulation" that the guarantor did not rely on oral representations in signing the guarantee. Id.

Likewise, Remora and Efromovich are sophisticated businesspeople who drafted a complex guaranty, which specifically stated that Defendant "waiv[ed], and agree[d] not to assert any defense in any action, suit or proceeding for the interpretation or enforcement of this Guaranty." (Guaranty at 6, emphasis added). There is no basis to conclude that this waiver of "any" defense does not also apply to substantive defenses.

Defendant's claim that the waiver only applies to the ability to challenge the jurisdiction of the court is unpersuasive. The Guaranty explicitly states, "captions in this Guaranty have been inserted for convenience only and shall be given no substantive meaning or significance whatsoever in construing the terms and provisions of this Guaranty." (Id. at 6.) Therefore, the fact that the waiver appears in a section entitled "Governing Law" does not compel a different conclusion.

Since Efromovich has waived his ability to assert substantive defenses to the enforcement of the Guaranty, Plaintiff's motion for summary judgment is granted.

Plaintiff also moves to dismiss Efromovich's counterclaim of fraudulent inducement for failure to state a cause of action. On a motion to dismiss for failure to state a cause of action, a court must assume the facts as alleged to be true, and "determine only whether the facts as alleged fit within any cognizable legal theory." Leon v. Martinez, 84 NY2d 83, 87-88 (1994). In contrast, "[a]llegations consisting of bare legal conclusions . . . are not presumed to be true and [are not] accorded every favorable inference." Biondi v. Beekman Hill House Apt. Corp., 257 AD2d 76, 81 (1st Dep't 1988).

Moreover, pursuant to CPLR § 3016(b), a cause of action based on misrepresentation or fraud must "state in detail the circumstances constituting the wrong.'" Bank Leumi Trust Company of New York v. D'Evori International, Inc., 163 AD2d 26, 31-32 (1st Dep't 1990) (quoting CPLR 3016(b)). Conclusory allegations of fraud are "wholly insufficient." Id.

Here, Efromovich asserts that he was given a written booklet that showed the projected value of the company, as well as several parties listed as "current clients" of the security. (See Answer and Counterclaims ¶ 5.) He alleges that he relied on these representations in signing the Guaranty. (Id.) He further alleges that, "notwithstanding the representations concerning the existence of [the current clients] as customers of Digex at the time Defendant signed the Guaranty, Digex had defaulted in contractual arrangements with those entities." (Id. § 7.)

Even construing all of Efromovich's assertions of fact to be true, they amount to nothing more than "[a]llegations consisting of bare legal conclusions," and fail to "state in detail the circumstances constituting the wrong." Here, Efromovich has failed to allege why the default in contractual arrangements amounted to [*5]misrepresentation — that is, why default on contracts affected the parties' status as "current clients." He further does not sufficiently allege facts supporting a conclusion that he"justifiably relied" on this alleged misrepresentation, or how such misrepresentation was material. When a party "does not explain how he relied to his detriment" on the asserted misrepresentation . . . "it is not for [the court] to interject our supposition into plaintiff's pleading." Nicosia v. Bd. of Managers of the Weber House Condominium, 77 AD3d 455, 456 (1st Dep't 2010).

Since Efromovich has failed to state in detail the circumstances constituting the wrong,' as required by CPLR § 3016(b), his counterclaim for fraudulent inducement is dismissed.

Accordingly, it is

ORDERED that Plaintiff's motion for summary judgment is GRANTED, with respect to liability and the sum of $10,000,000;and it is further

ORDERED that Defendant's Counterclaim is DISMISSED; and it is further

ORDERED that the issue of costs and expenses, including reasonable attorneys' fees incurred in connection with Plaintiff's efforts to collect the purchase price pursuant to the Guaranty, is hereby referred to a Special Referee to hear and report with recommendations, except that, in the event of and upon the filing of a stipulation of the parties, as permitted by CPLR § 4317, the Special Referee, or another person designated by the parties to serve as referee, shall determine the aforesaid issue; and it is further

ORDERED that a copy of this order with notice of entry shall be served on the Special Referee Clerk (Room 119) to arrange a date for the reference to a Special Referee.

DATED: January 4, 2012

E N T E R :

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J.S.C.