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FARASH & ROBBINS, INC. v. FLEET NATIONAL BANK

December 16, 2005.

FARASH & ROBBINS, INC., Plaintiff,
v.
FLEET NATIONAL BANK, as successor of SUMMIT BANK, Defendant. FLEET CAPITAL CORPORATION, Counterclaim and Third Party Plaintiff, v. FARASH & ROBBINS, INC., Counterclaim-Defendant, and ISIDOR FARASH, Third Party Defendant.



The opinion of the court was delivered by: DENNIS CAVANAUGH, District Judge

OPINION

This matter comes before the Court upon motions filed by Defendant Fleet Capital Corporation ("Fleet") and by Plaintiff Farash & Robbins, Inc. ("Plaintiff"). Fleet moves for summary judgment on its counterclaims against Plaintiff for breach of contract 2) Isidor Farash ("Farash") for breach of contract and 3) Plaintiff and Farash for conversion. Plaintiff moves to dismiss all Fleet's counterclaims. Defendant moves and Plaintiff cross-moves for summary judgment on Plaintiff's claims against Fleet for breach of contract, breach of the covenant of good faith and fair dealing, and violation of the New Jersey Consumer Fraud Act ("CFA").

No oral argument was heard pursuant to Federal Rule of Civil Procedure 78. After carefully considering the submissions of all parties and for the following reasons, Fleet's motion for summary judgment, Plaintiff's motions for summary judgment, and Fleet's motion to dismiss are denied. Fleet's motion to dismiss with regard to Plaintiff's CFA claim is granted.

  I. BACKGROUND

  Plaintiff originally brought this action in the New Jersey Superior Court, Law Division, Bergen County. Fleet removed the action to federal court on January 1, 2003 on the basis of diversity jurisdiction. On June 10, 2003, Fleet filed counterclaims against Plaintiff for breach of contract and conversion, and a third-party complaint against Isidor Farash ("Farash") for breach of contract. On February 13, 2004, this Court denied Fleet's motion to dismiss Plaintiff's claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of the Consumer Fraud Act, and granted Fleet's motion to dismiss as to Plaintiff's claims for common law fraud, negligent misrepresentation, and punitive damages.

  The parties are in agreement as to the following facts. Plaintiff is a vendor of watch assortments and is wholly owned by Farash. Pl's Opp. Br. at 5; Def. Mov. Br. at 8. In 1998, Plaintiff and Fleet's predecessor Summit Bank entered into a Loan and Security Agreement ("Loan Agreement"), to provide working capital to Plaintiff. Id. Plaintiff's availability under the credit facility was determined under a borrowing base formula consisting of a percentage of Plaintiff's eligible accounts receivable and eligible inventory. Id. Throughout the relevant period, that financial information was provided to Summit Bank (and subsequently to Fleet) in borrowing base certificates (`BBCs"). Id. The BBCs were prepared by Plaintiff. Id.

  Plaintiff's credit facility was modified twice, pursuant to Loan Modification Agreements, dated October 13, 1998 ("First Modification Agreement") and March 27, 2000 ("Second Modification Agreement"). Id. The Second Modification, inter alia, increased the maximum principal amount of the credit facility to $1,500,000.00, and modified the borrowing base to up to 80% of Borrower's Eligible Accounts Receivable under 90 days from the original invoice date, plus up to 50% of the value of Borrower's eligible inventory on hand up to a maximum amount of $1,250,000.00. Pl's Opp. Br. at 6; Def. Mov. Br. at 8.

  II. DISCUSSION

  A. Standard of Review

  1. Summary Judgment

  Summary judgment is granted only if all probative materials of record, viewed with all inferences in favor of the non-moving party, demonstrate that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986). The moving party bears the burden of showing that there is no genuine issue of fact and it must prevail as a matter of law, or that the non-moving party has not shown facts relating to an essential element of the issue for which he bears the burden. Celotex, 477 U.S. at 331. If either showing is made then the burden shifts to the non-moving party, who must demonstrate facts which support each element for which he bears the burden and must establish the existence of genuine issues of material fact. Id. The non-moving party "may not rest upon the mere allegations or denials of his pleading" to satisfy this burden, Fed.R.Civ.P. 56(e), but must produce sufficient evidence to support a jury verdict in his favor. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).

  2. Dismissal

  In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), all allegations in the complaint must be taken as true and must be viewed in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc., v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998). In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court may consider only the complaint, exhibits attached to the complaint, matters of public record, and undisputedly authentic documents if the plaintiff's claims are based upon those documents. See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993). If, after viewing the allegations in the complaint in the light most favorable to the plaintiff, it appears beyond doubt that no relief ...


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