Opinion ID: 771983
Heading Depth: 3
Heading Rank: 2

Heading: The BOI Action

Text: 9 Trendi is a corporation organized under the laws of New York with its principal place of business in New York City. It is a wholesale importer of garments from India and the Far East for sale in the United States. BOI is a banking corporation incorporated in India with its principal place of business in Bombay, India, and is licensed to do business in New York. 2 10 In December 1985, BOI and Trendi entered into an agreement whereby BOI would extend credit facilities in the form of letters of credit and import trust receipts to Trendi in connection with Trendi's importation of merchandise from India and the Far East into the United States. Initially, credit facilities were established for the maximum amount of $500,000, but BOI would enhance the limits of Trendi's credit facilities from time to time. In connection with the extension of these credit facilities, Trendi executed a Demand Promissory Note (the Note) and a General Security Agreement on December 5, 1985, both in the amount of $500,000. 11 At some point in 1987, Indu Craft contracted with Trendi to supply Trendi with garments for shipment to the United States. 3 However, beginning in May 1987, Indu Craft supplied those goods late or failed to supply any goods due to its difficulties with Baroda. As a result, Trendi was unable to import garments it had ordered, rendering it unable to meet its projected sales, and forcing it to sell the garments received late at a reduced price. BOI, however, continued to make payments on the credit facilities extended on Trendi's behalf during the period December 1987 to September 1988. After repeated requests for repayment had been ignored by Trendi over the next several months, in a letter dated July 17, 1989, BOI finally demanded immediate payment on all of the outstanding credit facilities. Trendi was unable to meet the demand. 12 On September 8, 1989, BOI commenced a diversity action in the United States District Court for the Southern District of New York against Trendi (the BOI Action), alleging two claims for relief: first, BOI sought payment on the Note in the amount of $500,000, plus interest; and second, BOI demanded recovery in the amount of $1,844,895.19, plus interest, for Trendi's default on other credit facilities extended by BOI. The case was assigned to the Honorable John S. Martin, Jr. 13 After filing its Answer on May 4, 1990, 4 Trendi brought a third-party action on May 14, 1990 against Indu Craft, alleging that in May 1987, Indu Craft breached its contract to supply goods to Trendi by failing to deliver, or delivering goods late to Trendi, resulting in significant losses for Trendi. Count I of the third-party complaint asserted that [i]f Trendi is adjudged liable to plaintiff Bank of India in this action, it will have suffered damages, as a direct and proximate result of Indu Craft's breach of contract equal to the amount of such judgment . . . . In Count II, Trendi sought lost profit damages in the amount of $2,818,640.66, and in Count III it sought recovery in the amount of $2,300,000.00 for loss of its business reputation and goodwill, both of which were a direct and proximate result of Indu Craft's breach of contract. 14 Subsequently, Indu Craft filed a fourth-party complaint against Baroda on June 21, 1990. All four counts in that complaint sought indemnity damages against Baroda if Indu Craft was adjudged liable to Trendi. Specifically, Count I sought indemnity damages as a result of Baroda's tortious interference with the contract in which Baroda wrongfully, maliciously, without justification and/or in bad faith curtailed, limited, abridged and/or terminated certain credit privileges which Indu Craft had established over a period of years with Baroda and upon the continuation of which Indu Craft justifiably relied in placing orders with overseas manufacturers for goods ordered from Indu Craft by Trendi and of which . . . Baroda had actual or constructive knowledge. Count II sought indemnity damages for Baroda's breach of its contract with Indu Craft. Count III sought indemnity damages if Indu Craft was adjudged liable to Trendi for lost profits. Count IV sought indemnity if Indu Craft was adjudged liable to Trendi for loss of its business reputation and goodwill as a direct and proximate result of Baroda's conduct. 5