Opinion ID: 655296
Heading Depth: 2
Heading Rank: 2

Heading: The Remaining Counterclaims

Text: 38 Yanakas's fourth and fifth affirmative defenses and counterclaims, which center on his April 1988 proposal to restructure ARM's debt by having MHT purchase NatWest's security interest, asserted that MHT's rejection of, and failure to respond promptly to, his proposal constituted a breach of MHT's fiduciary duty. His challenge to the district court's dismissal of these claims is without merit. 39 Under New York law, the usual relationship of bank and customer is that of debtor and creditor, Aaron Ferer & Sons Ltd. v. Chase Manhattan Bank, N.A., 731 F.2d 112, 122 (2d Cir.1984); see Bank Leumi Trust Co. v. Block 3102 Corp., 180 A.D.2d at 589, 580 N.Y.S.2d at 301, and does not create a fiduciary relationship between the bank and its borrower or its guarantors, id. Though in unusual circumstances, a fiduciary relationship may arise even between a bank and a customer if there is either a confidence reposed which invests the person trusted with an advantage in treating with the person so confiding, Fisher v. Bishop, 108 N.Y. 25, 28, 15 N.E. 331, 332 (1888), or an assumption of control and responsibility, see, e.g., Gordon v. Bialystoker Center & Bikur Cholim, Inc., 45 N.Y.2d 692, 698, 412 N.Y.S.2d 593, 596, 385 N.E.2d 285, 287-88 (1978), the mere fact that a corporation has borrowed money from the same bank for several years is insufficient to transform the relationship into one in which the bank is a fiduciary, see Aaron Ferer & Sons Ltd. v. Chase Manhattan Bank, N.A., 731 F.2d at 122. 40 Seeking to avoid the application of this well-established principle, Yanakas relies on K.M.C. Co. v. Irving Trust Co., 757 F.2d 752 (6th Cir.1985) (K.M.C.). His reliance is misplaced. K.M.C. involved an agreement by Irving Trust Co. (Irving) to extend the debtor a $3.5 million line of credit, in consideration of which the debtor assigned all of its business receipts to an account to which only Irving had access. Thus, the debtor had an express agreement for a certain sum of credit, and Irving had control over assets of the debtor, impeding the debtor from seeking new financing. The Sixth Circuit held that, in these circumstances, Irving's termination of the line of credit without advance notice breached an implied covenant of good faith. This Court has held that the fiduciary obligation found in K.M.C. is not present where a bank has never represented that credit of a certain amount would be provided, and [the borrower] had no reasonable expectation of continued, much less expanded, credit. Fasolino Foods Co. v. Banca Nazionale del Lavoro, 961 F.2d 1052, 1058 (2d Cir.1992). 41 Yanakas's answer did not allege any facts sufficient either to convert MHT's position from that of creditor into that of fiduciary or to liken his circumstances to those in K.M.C. The answer did not allege that MHT controlled the assets or operations of ARM or that MHT otherwise exercised powers beyond those of a typical lender-creditor. Yanakas did not allege that MHT had agreed to provide ARM with any certain amount of financing. He did not allege any agreement by MHT to Yanakas's proposed restructuring of ARM's debt, nor any representations by MHT suggesting that it would agree to that proposal. Though Yanakas alleged that ARM was unable to find financing elsewhere, there was no allegation that ARM's agreements with MHT precluded ARM from making a search for such financing or that the Bank failed to give proper notice of its decision to cease providing financing. We agree with the district court that Yanakas failed to allege any facts showing a fiduciary duty on the part of the Bank.CONCLUSION 42 We have considered all of the contentions of the parties in support of their respective positions on this appeal and, except as indicated above, have found them to be without merit. We vacate so much of the judgment of the district court as dismissed Yanakas's first three affirmative defenses and counterclaims and granted judgment in favor of MHT; we affirm so much of the judgment as dismissed the fourth and fifth affirmative defenses and counterclaims; and we remand to the district court for further proceedings not inconsistent with the foregoing. 43 No costs are awarded at this time. In the event that Yanakas ultimately prevails on any of his affirmative defenses or counterclaims, the district court may award him the costs of the present appeal.