Opinion ID: 681303
Heading Depth: 2
Heading Rank: 2

Heading: East's Cross-Appeal

Text: 61 East contends on cross-appeal that the district court erred in granting summary judgment on its fraud and punitive damages claims. We review a grant of summary judgment de novo, viewing all evidence in the light most favorable to the party which opposed the motion. Prunier v. City of Watertown, 936 F.2d 677, 679 (2d Cir.1991). Our review is confined to an examination of the materials before the trial court at the time the ruling was made, and neither the evidence offered subsequently at trial nor the verdict is relevant. United States v. Hardage, 982 F.2d 1436, 1444 (10th Cir.1992); Voutour v. Vitale, 761 F.2d 812, 817 (1st Cir.1985), cert. denied sub nom. Saugus v. Voutour, 474 U.S. 1100, 106 S.Ct. 879, 88 L.Ed.2d 916 (1986). 62 The district court granted summary judgment on the ground that East, in support of its fraud claim, had adduced no evidence beyond those facts supporting its claim for breach of contract--i.e., that West failed to pay East according to the terms of the alleged oral agreement between the two. To withstand the summary judgment motion, the court concluded, East would have to present evidence of action on West's part going beyond nonperformance of contractual duties, as well as evidence of damages stemming from an injury other than the breach of contract. The court concluded that East failed to present such evidence. We concur. 63 East relies on Channel Master Corp. v. Aluminum Ltd. Sales, 4 N.Y.2d 403, 176 N.Y.S.2d 259, 151 N.E.2d 833 (1958), in which the New York Court of Appeals held that an action based on fraudulent misrepresentation may be maintained against one who represents falsely that he intends to perform a contract, while actually intending not to perform. Accord Stewart v. Jackson & Nash, 976 F.2d 86 (2d Cir.1992); Deerfield Communications Corp. v. Chesebrough-Ponds, Inc., 68 N.Y.2d 954, 510 N.Y.S.2d 88, 502 N.E.2d 1003 (1986); Sabo v. Delman, 3 N.Y.2d 155, 160, 164 N.Y.S.2d 714, 716, 143 N.E.2d 906, 908 (1957) (While '[m]ere promissory statements as to what will be done in the future are not actionable', ... if a promise was actually made with a preconceived and undisclosed intention of not performing it, an action for fraudulent inducement may lie) (citations omitted). 64 West responds by citing a line of cases in which the New York Appellate Division, First Department, has stated that fraud claims of this sort will be dismissed when 'the only fraud charged relates to a breach of contract.'  Vista Co. v. Columbia Pictures Inds., 725 F.Supp. 1286, 1294 (S.D.N.Y.1989) (citing Trusthouse Forte v. Garden City Hotel, Inc., 106 A.D.2d 271, 483 N.Y.S.2d 216, 218 (1st Dept.1984)) (other citations omitted); see also Mastropieri v. Solmar Construction Co., 159 A.D.2d 698, 700, 553 N.Y.S.2d 187, 189 (1st Dept.1990) (fraud claim must be dismissed where plaintiff fails to assert the breach of a duty extraneous to or distinct from the contract); Metropolitan Transp. Auth. v. Triumph Advertising Prods., Inc., 116 A.D.2d 526, 527, 497 N.Y.S.2d 673, 675 (1st Dept.1986) (cause of action for fraud does not arise when the only alleged fraud relates to a breach of contract). 65 In an attempt to establish that the New York Court of Appeals has endorsed this line of cases, West cites a Court of Appeals case which concerned a claim for negligence, not fraud, arising out of a contract. See Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382, 521 N.Y.S.2d 653, 656-57, 516 N.E.2d 190, 193-94 (1987) (It is a well-established principle that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated. This legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract) (emphasis added & citations omitted). 66 We need not, however, resolve whether East's evidence supports a conclusion that West violated a legal duty independent of the contract itself, or indeed whether such evidence is required to uphold East's fraud claim. See Kenevan v. Empire Blue Cross and Blue Shield, 791 F.Supp. 75, 80 (S.D.N.Y.1992) (concluding that New York case law is split on this issue). We conclude that summary judgment was properly granted because nothing in the affidavits and documents submitted by East in opposition to West's summary judgment motion supports the conclusion that West acted with fraudulent intent. 67 East's exhibits consist almost entirely of West internal memoranda drafted in the wake of the January 1987 meeting between West and East representatives in Denver. They record statements made by West representatives after West's alleged promise of payment at the Denver meeting, on the subject of future accommodations with Telefacs and East. While these statements are certainly relevant to the issue of West's performance or nonperformance of its contractual and quasi-contractual obligations, East has identified nothing in them from which a reasonable jury could conclude that West acted with fraudulent intent. These documents, at most, express West's intention to phase out Telefacs and East after lining up replacement subcontractors. An intention to phase out East does not, however, constitute the fraud which East alleges in its complaint--i.e., that West fraudulently induced East to continue working through false promises that it would get paid. See Amended Complaint p 9. 68 No reasonable jury could conclude from these documents that West extended promises of payment to East with a preconceived and undisclosed intention of not performing, Sabo, 3 N.Y.2d at 160, 164 N.Y.S.2d at 716, 143 N.E.2d at 908. Accordingly, we conclude that East failed to sustain its burden in opposition to West's summary judgment motion, and we affirm the grant of summary judgment.