Court Opinion

ID: 68711
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:36:25+00
Date Added: 2024-06-11T14:59:00.337948
License: Public Domain

[DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS
                                                                               FILED
                            FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
                              ________________________ ELEVENTH CIRCUIT
                                                                         AUGUST 5, 2009
                                    No. 08-14401                        THOMAS K. KAHN
                              ________________________                      CLERK

                        D. C. Docket No. 06-02752-CV-WSD-1

CURTIS INVESTMENT COMPANY, LLC,

                                                                        Plaintiff-Appellant,

                                           versus

BAYERISCHE HYPO-UND VEREINSBANK, AG,
CHENERY ASSOCIATES, et al.,

                                                                     Defendants-Appellees.

                              ________________________

                      Appeal from the United States District Court
                         for the Northern District of Georgia
                           _________________________

                                      (August 5, 2009)

Before BLACK and MARCUS, Circuit Judges, and BUCKLEW,* District Judge.

       *
         Honorable Susan C. Bucklew, United States District Judge for the Middle District of
Florida, sitting by designation.
PER CURIAM:

      Appellant Curtis Investment Company (“Curtis”) brought this suit against

eighteen defendants, including appellees Sidley Austin Brown & Wood; Raymond

J. Ruble; Bayersiche Hypo-und Vereinsbank, AG and HVB U.S. Finance, Inc.

(collectively “HVB”); LeBoeuf Lamb Greene & McRae, LLP; and Dominick

DeGiorgio, alleging that Curtis detrimentally relied on a series of fraudulent

misrepresentations that led Curtis to enter into a failed loan transaction.    In

particular, Curtis claimed violations of the federal Racketeer Influenced and

Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (“RICO”) and the Georgia

Racketeer Influenced and Corrupt Organizations Act, Ga. Code Ann. § 16-14-1 et

seq. (“Georgia RICO”), as well as common law fraud and a breach of an implied

duty of good faith and fair dealing.

      The district court dismissed Curtis’s complaint in its entirety. Curtis now

appeals only the dismissal of its Georgia RICO, common law fraud, and breach of

the duty of good faith and fair dealing claims. After thorough review, we affirm

the judgment of the district court.

                                       I.

      The factual and procedural history of this case are straightforward. In its

amended complaint filed in the United States District Court for the Northern

                                       2
District of Georgia, Curtis has alleged that it sought to shelter a $29 million capital

gain from taxes and to reinvest the money beneficially through a loan-based tax

shelter transaction created by the defendants and known as a Custom Adjustable

Rate Debt Structure (“CARDS”). Curtis says that it entered into this transaction

because the defendants continuously represented that the CARDS transaction

would be a thirty-year loan at a favorable interest rate that would, among other

things, offset Curtis’s capital gain and provide tax-advantaged capital for

reinvestment elsewhere. However, HVB, which held the CARDS loan, demanded

full repayment of the loan after only one year and Curtis complied with that

request. Curtis now says that it was injured by having to repay the loan after only a

single year, because it had planned on amortizing the costs of the loan over a long-

term period. Moreover, Curtis alleges, HVB’s recall of the loan forced Curtis “to

scramble” to find a last-minute replacement for its CARDS loan on terms less

favorable than HVB’s financing, (Am. Compl. ¶ 66), and, therefore, the Internal

Revenue Service (“IRS”) required Curtis to pay back taxes, interest, and penalties

for the year 2000.

      The gravamen of Curtis’s amended complaint is that it was fraudulently

induced by the defendants to enter into the CARDS transaction, because they

knowingly misrepresented to Curtis that the transaction would be a long-term

                                           3
arrangement when in truth and in fact the defendants intended that the arrangement

would last only for a single year. Despite the fact that the Credit Agreement

specifically reserved to HVB the right to demand repayment annually, Curtis also

claimed the “Defendants persuaded [Curtis] that HVB would not demand

prepayment of the [CARDS] Loan,” and “repeatedly represented to [Curtis] that

CARDS was a 30-year commercial financing transaction and that Defendant HVB

had no intention of demanding prepayment.”              (Id. at ¶ 53).   The amended

complaint also avers that Curtis would not have entered into the transaction at all if

it had known the loan would not be held by HVB for the entire thirty-year term.

      The CARDS transaction unfolded in three steps. First, on December 14,

2000, Brondesbury Financial Services, LLC (“Brondesbury”) received a loan from

HVB that was subject to a lending agreement (the “Credit Agreement”).             The

Credit Agreement, among other things, explicitly authorized HVB, in its sole

discretion, to demand repayment of the entire loan balance at the end of each year.

Moreover, the Credit Agreement contained a merger clause expressly providing

that the Credit Agreement embodied the “entire agreement between the parties,”

and a no-reliance clause that said the borrower did not rely upon the opinions of

any other parties to the agreement or their advisors.

      Then, Curtis purchased a portion of the loan collateral and assumed joint

                                          4
liability for the balance of the loan through the execution of an Assumption

Agreement on December 27, 2000.             Under the terms of that agreement, Curtis

expressly assumed all of the obligations of the Credit Agreement, promised to pay

the annual interest on the loan, and agreed to pay the loan principal upon maturity.

Finally, Curtis sold the loan collateral to a “tax neutral third party” and reported the

entire value of the loan as its basis for the sale of the collateral, giving it a paper

loss equal to the difference between the value of the loan and the value of the

collateral that largely offset its $29 million capital gain.

       On November 13, 2001, HVB exercised its right under the Credit Agreement

to demand repayment of the entire loan on its first anniversary date. On December

14, 2001, Curtis repaid the loan in full.

       Some time later in May 2005, the IRS disallowed the nearly $29 million

short-term capital loss Curtis had claimed from the CARDS transaction, and

assessed tax adjustments and penalties for incorrect and inadequate tax reporting.

The IRS determined that Curtis had “no legitimate business purpose” for entering

into the CARDS transaction, that the CARDS transaction was a fraudulent tax

shelter scheme, and that all of the parties to the transaction, including Curtis, knew

that the transaction was intended to be unwound after one year.

       The government determined that the CARDS transactions and the

                                             5
accompanying tax shelters were illegal, at least where, as here, the loan was

unwound after only one year. The IRS said that unwinding the transaction after

only one year was a part of a plan that was well-understood by all of the

participants. Soon thereafter, HVB entered into a Deferred Prosecution Agreement

(the “DPA”) with the Justice Department. The DPA asserted that both HVB and

the appellant knew that the CARDS transaction involved a loan issued to generate

fraudulent tax benefits for Curtis that would become due in full after

approximately one year.

      The appellee-defendants moved to dismiss the amended complaint for

failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). Sidley Austin Brown

& Wood (“Sidley”) and LeBoeuf Lamb Greene & McRae, LLP (“LeBouef”) also

moved to dismiss the amended complaint, pursuant to Fed. R. Civ. P. 12(b)(2), for

lack of personal jurisdiction.

      The district court dismissed Curtis’s amended complaint in its entirety.

Curtis’s federal RICO claim was dismissed, the trial court found, because it was

barred by the merger doctrine, barred by the statute of limitations, and also because

it failed to allege the predicate acts of fraud with sufficient particularity pursuant to

Fed. R. Civ. P. 9(b). The district court also dismissed the Georgia RICO claim

because it was barred by the merger doctrine and because the predicate acts of

                                            6
fraud were not plead with the required particularity. The court went on to dismiss

the common law fraud claim again because of the merger doctrine, because it was

barred by the statute of limitations, and because it failed to allege the fraud with

sufficient particularity. The claimed breach of an implied duty of good faith and

fair dealing was dismissed because it was “not sustainable in the face of the Credit

Agreement.” Finally, the district court dismissed all of the claims leveled against

LeBoeuf for a lack of personal jurisdiction.

      This timely appeal ensued.

                                          II.

      Curtis appeals only the dismissal of its Georgia RICO, common law fraud,

and breach of an implied duty of good faith and fair dealing claims. We review

each in turn under a de novo standard, Doe v. Pryor, 344 F.3d 1282, 1284 (11th

Cir. 2003), “accept[ing] all well-pleaded factual allegations as true and

constru[ing] the facts in the light most favorable to the plaintiff,” Cottone v. Jenne,

326 F.3d 1352, 1357 (11th Cir. 2003). Generally, to survive a motion to dismiss, a

complaint “does not need detailed factual allegations,” but it must provide the

defendant with fair notice of what the claim is about and the grounds upon which it

rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007). But, where the claim

is grounded in fraud, such as Curtis’s Georgia RICO and common law fraud

                                           7
charges, the complaint must comply with Fed. R. Civ. P. 9(b)’s requirement that

“[i]n alleging fraud or mistake, a party must state with particularity the

circumstances constituting fraud or mistake.”

A.     Georgia RICO

       To begin with, the district court properly dismissed the Georgia RICO claim,

both because it was barred by the merger doctrine and because the predicate acts of

mail and wire fraud were not plead with the particularity required by Rule 9(b).

Under Georgia law, “[w]here a conflict exists between oral and written

representations . . . if the parties have reduced their agreement to writing, all oral

representations made antecedent to execution of the written contract are merged

into and extinguished by the contract and are not binding upon the parties.” First

Data POS, Inc. v. Willis, 546 S.E.2d 781, 784 (Ga. 2001); see also Ainsworth v.

Perreault, 563 S.E.2d 135, 139 (Ga. Ct. App. 2002) (“[R]ecent decisions of [the

Georgia Court of Appeals] mandate that a merger or entire agreement clause bars

purchasers from asserting reliance on the alleged misrepresentation not contained

within the contract.”) (quotation marks and citations omitted).1 Put differently:

       1
          New York law, which governs the interpretation of the Credit and Assumption
Agreements according to their terms, is similar. See Gen. Bank v. Mark II Imports, Inc., 741
N.Y.S.2d 201, 202 (N.Y. App. Div. 2002) (“The guarantors’ claim that they were fraudulently
induced to enter into the subject lending relationship by plaintiff’s promise to eliminate the
‘borrowing cap’ on advances to the borrower is, as a matter of law, foreclosed by an integration
clause . . . .”); Coutts Bank (Switzerland) Ltd. v. Anatian, 691 N.Y.S.2d 409, 410 (N.Y. App.
Div. 1999) (holding that reliance on alleged prior oral representations related to a loan agreement

                                                 8
       In written contracts containing a merger clause, prior or
       contemporaneous representations that contradict the written contract
       cannot be used to vary the terms of a valid written agreement
       purporting to contain the entire agreement of the parties, nor would
       the violation of any such alleged oral agreement amount to actionable
       fraud.

First Data POS, Inc., 546 S.E.2d at 784 (footnote and quotation marks omitted);

see also Donchi, Inc. v. Robdol, LLC, 640 S.E.2d 719, 722 (Ga. Ct. App. 2007)

(“In cases where the allegedly defrauded party affirms a contract which contains a

merger or disclaimer provision and retains the benefits, he is estopped from

asserting that he relied upon the other party’s misrepresentation and his action for

fraud must fail.”) (quoting Authentic Architectural Millworks, Inc. v. SCM Group

USA, Inc., 586 S.E.2d 726 (Ga. Ct. App. 2003)). Quite simply, Curtis’s Georgia

RICO claim is barred by the merger clause found in the Credit Agreement.

       First, the Credit Agreement contains a valid and unambiguous merger

clause. It states that “[t]his Agreement . . . contains the entire agreement between

the parties with respect to the subject matter hereof and supercedes all oral

statements and prior writings with respect hereto.”2 (Credit Agreement § 10.19).

is unreasonable where those prior representations conflict with the express provisions of the
credit agreement and cannot support allegations of fraud in the inducement).
       2
         Even though the Credit Agreement was not attached to the amended complaint, it was
proper for the district court, and is proper for this Court to consider it because the agreement is a
document to which Curtis referred in its amended complaint and it is integral to the claims
presented. See Brooks v. Blue Cross and Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th
Cir. 1997).

                                                  9
The Credit Agreement also contains a no-reliance clause, which plainly says that

the borrower did not enter into the contract based “upon any view expressed by any

other party or other Credit Documents or any advisor to any such other party,” and

that the borrower “is a sophisticated and informed person that has a full

understanding of all the terms, conditions and risks . . . .” (Credit Agreement §

5.17(b)-(c)).

      There can be no dispute that Curtis became a party to the Credit Agreement

when it entered into the Assumption Agreement, which expressly provided that

Curtis will “comply with each of the covenants and agreements of the Borrower

contained in the Credit Agreement on a joint and several basis with the Borrower

as if the references therein to the Borrower were references to [it].” (Assumption

Agreement ¶ 1). Thus, Curtis is bound by all of the terms of the Credit Agreement,

including its merger clause. See Walls, Inc. v. Atl. Realty Co., 367 S.E.2d 278,

280 (Ga. Ct. App. 1988) (“As a matter of contract law, incorporation by reference

is generally effective to accomplish its intended purpose where . . . the provision to

which reference is made has a reasonably clear and ascertainable meaning.”)

(citation and quotation marks omitted).

      Second, the predicate acts upon which Curtis’s Georgia RICO claim is

grounded -- mail and wire fraud -- are based upon claimed misrepresentations

                                          10
made about the longevity of the CARDS transaction before Curtis entered into the

Assumption and Credit Agreements. Curtis argues that it signed the Assumption

Agreement only after the appellee-defendants represented that the CARDS

transaction was a long-term arrangement. But, the Credit Agreement explicitly

gave HVB the right to demand repayment of the loan in full on each anniversary of

the loan origination date, and contained a merger clause that explicitly said that its

terms superseded and replaced any prior representations made to Curtis about the

transaction.     The district court properly concluded that the predicate acts

underlying the Georgia RICO claim were barred by the merger doctrine.3

       Finally, Curtis’s suggestion that the merger clause cannot bar claims asserted

against the appellee-defendants other than HVB because HVB was the only

signatory to the Credit Agreement is unpersuasive. The Credit Agreement contains

a no-reliance clause that states with clarity that Curtis did not rely “upon any view

       3
          Curtis’s suggestion that it can maintain a claim for fraudulent inducement even if the
merger doctrine is implicated is unpersuasive. Georgia law is clear that “a party alleging
fraudulent inducement to enter a contract has two options: (1) affirm the contract and sue for
damages from the fraud or breach; or (2) promptly rescind the contract and sue in tort for fraud.”
Ainsworth, 563 S.E.2d at 137. Curtis has never alleged that it sought to rescind the Assumption
or Credit Agreements. Indeed, it continued to engage in a CARDS-style transaction by making
alternative financing arrangements after HVB called in the loan, and the amended complaint
does not make a claim for rescission. Curtis has elected to affirm the agreements and seek
damages. Where a plaintiff “elects to affirm a purchase agreement which contains a merger or
entire agreement clause, he or she is precluded from recovering for the seller’s alleged fraudulent
inducement based on misrepresentations made outside the contract.” Id. at 138 (quoting Herman
Homes, Inc. v. Smith, 547 S.E.2d 591, 593 (Ga. Ct. App. 2001)).

                                                11
expressed by any other party to this Agreement or any other Credit Documents or

any advisor to any such other party,” and that its decision was wholly based on its

own professional judgment.       (Credit Agreement § 5.17(b)) (emphasis added).

Curtis    contractually   disclaimed   any    reliance   on   the   appellee-defendants’

statements. Moreover, the Credit Agreement’s merger clause does not apply just to

the parties to the contract. Cf. First Data POS, Inc., 546 S.E.2d at 784 (stating that

when a merger clause is in place “all prior negotiations, understandings, and

agreements on the same subject are merged into the final contract, and are

accordingly extinguished”) (emphasis added).         In short, Curtis’s Georgia RICO

claim is barred by the merger doctrine and was properly dismissed.              See id.

(holding that a merger clause forecloses RICO claims that are based upon allegedly

fraudulent conduct).

         Curtis’s Georgia RICO claim also must be dismissed for a wholly

independent reason -- because it was not plead with the particularity required by

Rule 9(b) of the Federal Rules of Civil Procedure. The particularity requirement

for fraud applies to fraud-based state RICO claims, such as the instant one, brought

in a federal court. See Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1064

(11th Cir. 2007); Durham v. Bus. Mgmt. Assoc., 847 F.2d 1505, 1511-12 (11th

Cir. 1988).    Thus, under controlling law, Curtis’s amended complaint must set

                                             12
forth:

         (1) precisely what statements were made in what documents . . . , (2)
         the time and place of each such statement and the person responsible
         for making [them], and (3) the content of such statements and the
         manner in which they misled the plaintiff, and (4) what the defendants
         obtained as a consequence of the fraud.

Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1371 (11th Cir.

1997) (citations and quotation marks omitted). “Because fair notice is perhaps the

most basic consideration underlying Rule 9(b), the plaintiff who pleads fraud must

reasonably notify the defendants of their purported role in the scheme.” Id. at 1381

(quotation marks, brackets, and citations omitted). “[I]n a case involving multiple

defendants . . . the complaint should inform each defendant of the nature of his

alleged participation in the fraud.” Id. (quotation marks omitted).

         The problem here is that the amended complaint did not identify the time or

place of the alleged fraudulent misrepresentations, nor did it aver who made the

misrepresentations or to whom they were made. Instead, the amended complaint

alleged only this much: “During either late November or early December, 2000,

Defendants Hahn and Chenery Associates, Inc. transmitted a PowerPoint

presentation to [Curtis] by interstate mail . . . [stating] that the CARDS transaction

provided economic and other advantages,” including Curtis’s ability to “appl[y] the

Loan proceeds to an investment/business with the reasonable expectation of

                                          13
earning a greater return than the all-in cost of the Loan.” (Id. at ¶¶ 42, 85(a)). And,

in October 2000, Sidley forwarded a legal opinion stating “CARDS would ‘more-

likely-than not’ provide the favorable tax treatment described by Hahn.” (Id. at ¶¶

44, 82(b)). Hahn and Sidley represented “[t]hrough oral and written materials” that

the CARDS transaction would have a term and maturity date of thirty years. (Id. at

¶ 45(a)).

      Hahn and Chenery Associates “represented that CARDS would provide

[Curtis] with working capital for its investment business at a very favorable

interest rate, such that [Curtis] could reasonably expect to generate a greater return

than the all-in cost of the Loan.”      (Id. at ¶ 46).   “HVB, Hahn, and Chenery

Associates repeatedly represented to [Curtis] that CARDS was a 30-year

commercial financing transaction and that Defendant HVB had no intention of

demanding prepayment.” (Id. at ¶ 53). “Defendants sold CARDS to [Curtis] by

fraudulently promoting it as a 30-year financing transaction, knowing full well that

no Defendant intended the financing to continue past the end of December 2001.”

(Id. at ¶ 73). “As a part of their conspiracy, each of the Defendants acted in

concert with each of the other Defendants as part of a planned and prearranged

common scheme to induce [Curtis] to pay millions of dollars in fees and charges in

order for [Curtis] to participate in the CARDS transaction . . . .” (Id. at ¶¶ 88, 98).

                                          14
And, finally, “Defendants conspired to represent that Defendant HVB had a

present intent to provide the 30-year loan term financing on which the CARDS

transaction was predicated and which was permitted by the CARDS transaction

documents.” (Id. at ¶ 105).

       In that list of allegations, Curtis has not identified a single specific

representation made by any appellee-defendant that HVB would not demand

repayment of the loan in full after one year of the loan origination date, or that it

would agree to maintain the life of the loan for thirty years notwithstanding the

clear terms of the Credit Agreement to the contrary; nor has Curtis alleged the

details of which individual appellee-defendant made what particular statement to

whom, and when.      Curtis’s allegations are too vague and general to meet the

requirements of Rule 9(b), and, therefore cannot support claims for a predicate act

of mail or wire fraud. Curtis’s amended complaint was properly dismissed by the

district court.

B.     Common law fraud

       The district court likewise properly dismissed Curtis’s claim for common

law fraud, because that claim was barred by the statute of limitations and by the

merger doctrine. Nor was it plead with particularity. Under Georgia law, a four

year statute of limitations applies to fraud claims.    Ga. Code. Ann. § 9-3-31;

                                         15
Shapiro v. S. Can Co., 365 S.E.2d 518, 519 (Ga. Ct. App. 1988) (statute of

limitations for fraud with economic loss is the same as for the recovery of personal

property). This limitations period begins to run at the time the plaintiff sustains

actual damages from the fraud. Green v. White, 494 S.E.2d 681, 685 (Ga. Ct. App.

1997). Accordingly, the clock begins to tick at the time the first bit of injury

arises; indeed “[t]he cause of action arises . . . before the client sustains all, or even

the greater part, of the damages . . . .” Jankowski v. Taylor, Bishop & Lee, 273
S.E.2d 16, 17-18 (Ga. 1980).

      In the absence of any Georgia law on the point, we turn for guidance to

several of our sister Circuits that have found that the statute of limitations begins to

run on an investment fraud claim, based on state law and arising from pre-

contractual representations about the characteristics of that investment, when the

plaintiff signs a contract that contains terms contrary to those representations. As

the Fifth Circuit has explained:

      Courts recognize that financial investment involves attendant risks.
      The investor who seeks to blame his investment loss on fraud or
      misrepresentation must himself exercise due diligence to learn the
      nature of his investment and the associated risks. As several courts
      have recognized, the party claiming fraud and/or misrepresentation
      must exercise due diligence to discover the alleged fraud and cannot
      close his eyes and simply wait for facts supporting such a claim to
      come to his attention.

Martinez Tapia v. Chase Manhattan Bank, N.A., 149 F.3d 404, 409 (5th Cir. 1998).

                                           16
Thus, the Fifth Circuit has concluded that the statute of limitations begins to run

when the plaintiff receives and signs a contract that contains terms “so contrary to

[the plaintiff’s] alleged understanding of the deal that upon review of the

document, [the plaintiff] would have been put on notice of [the defendant’s]

alleged fraud.” McGill v. Goff, 17 F.3d 729, 733 (5th Cir. 1994), overruled on

other grounds by Kansa Reinsurance Co. v. Congressional Mortg. Corp. Of Tx., 20
F.3d 1362 (5th Cir. 1994).

      The Second Circuit, in a case where the plaintiff commenced a New York

common law fraud claim against her financial advisor for misrepresenting that

risky securities were good investments, similarly held that the statute of limitations

began to run when the plaintiff received a prospectus for those securities before

purchase that contained terms and warnings that “were sufficient to put a

reasonable investor of ordinary intelligence on notice of . . . the risk, and the

illiquidity of these investments.” Dodds v. Cigna Sec. Inc., 12 F.3d 346, 351 (2d

Cir. 1993); see also Brumbaugh v. Princeton Partners, 985 F.2d 157, 162 (4th Cir.

1993) (finding a claim that a plaintiff was fraudulently induced through the

promise of a legitimate tax shelter to purchase commercial property was time-

barred, because the document marketing the investment “contained a host of prior

warnings making it plain that [the plaintiff] was purchasing, to put it mildly, a

                                         17
highly speculative investment”).

        The statute of limitations began to run in this case on December 27, 2000,

when Curtis signed the Assumption Agreement, and thus assumed the terms and

obligations of the Credit Agreement, including the explicit provision allowing

HVB to demand repayment of the entire loan after a single year -- a term that

Curtis itself alleges is wholly inconsistent with the appellee-defendants’ prior

representations and its understanding of the deal. The statute of limitations expired

on December 27, 2004; Curtis did not file its claims, however, until November 9,

2006.

        Indeed, at the very latest, the statute of limitations must have begun to run

nearly five years before Curtis filed its suit on December 14, 2001, the date when

Curtis was required to repay the CARDS loan in its entirety. As the district court

noted, once Curtis was notified by HVB that it was demanding repayment of the

loan in full after only one year, the difference between the alleged representations

made by defendants and the terms of the Credit Agreement could not have been

more explicit, and any reasonable party would have been prompted to investigate

both the possibility of fraud and conspiracy.

        Therefore, Curtis’s fraud claim could survive only if the statute of

limitations was somehow tolled. Under Georgia law, the statute of limitations on a

                                          18
fraud claim may be tolled only if the defendant conceals the fraud in a way that

“debars or deters” the plaintiff from filing suit. Ga. Code Ann. § 9-3-96. Where,

as here, actual fraud is the gravamen of the cause of action, the statute of

limitations period is tolled “until such fraud is discovered, or could have been

discovered by the exercise of ordinary care and diligence.” Hunter, Maclean, Exley

& Dunn, P.C. v. Frame, 507 S.E.2d 411, 413 (Ga. 1998) (quoting Shipman v.

Horizon Corp., 267 S.E.2d 244, 246 (Ga. 1980)). As the district court observed,

however, Curtis did not plead facts sufficient to show that the appellee-defendants

“debarred” or “deterred” it from discovering the fraud.

      On December 14, 2001, when HVB demanded and received full repayment

of the loan from Curtis, Curtis unmistakably knew that HVB would maintain the

CARDS loan for only one year.       Plainly, Curtis then knew that any purported

representations the appellee-defendants had made about the long-term nature of the

transaction were false. That claimed misrepresentation is at the core of Curtis’s

complaint and there is no suggestion that the appellee-defendants did anything to

prevent Curtis from investigating and discovering the facts supporting the fraud

claim at that time.

      Curtis argues, however, that it could not have brought its suit earlier

because: (1) the IRS did not begin pursuing Curtis for unpaid taxes until 2005; (2)

                                         19
HVB did not enter into the DPA until 2006; and (3) HVB allegedly told Curtis that

it was demanding repayment because of the events of September 11, 2001. But,

none of this changes Curtis’s actual knowledge on December 14, 2001 that HVB

had demanded full repayment of the loan after only one year. Nor does it change

Curtis’s actual knowledge on the date it signed the Credit Agreement that the

contract contained terms utterly contrary to the alleged earlier representations.

That the IRS did not prosecute the impropriety of Curtis’s $29 million CARDS-

based capital loss deduction until 2005 does not in any way obviate Curtis’s

knowledge of the basic facts.     Similarly, HVB’s DPA (which also said, in its

statement of fact, that “all parties involved, including the clients/‘borrowers,’ knew

that the transactions would be unwound in approximately one year in order to

generate the phony tax benefits sought by the client participants”) and HVB’s

explanation for the repayment demand do not alter Curtis’s understanding in

December 2001 that the CARDS transaction would not be long-term.

      Moreover, Curtis’s common law fraud claim is also barred by the merger

doctrine. As we have already explained, Georgia law is clear that when a party

“affirms a contract which contains a merger or disclaimer provision and retains the

[benefit of the contract], [it] is estopped from asserting that [it] relied upon the

seller’s misrepresentation,” and its “action for fraud must fail.”     Markowitz v.

                                          20
Weiland, 532 S.E.2d 705, 708 (Ga. Ct. App. 2000); Estate of Sam Farkas, Inc. v.

Clark, 517 S.E.2d 826, 828-29 (Ga. Ct. App. 1999).

      Finally, and independently, as we have already detailed, Curtis’s allegations

of fraud -- which formed the basis for the mail and wire fraud allegations

underlying the Georgia RICO claim and for the common law fraud claim -- were

not plead with the particularity required by Rule 9(b). In short, the district court

properly dismissed the common law fraud charge too.

C.    Implied duty of good faith and fair dealing

      As for the last of the claims, it is undisputed that the Credit Agreement, by

its express terms, is governed by New York law. Under New York law, “[i]t is

well settled that in every contract there exists an implied covenant of good faith

and fair dealing.” Outback/Empire I, LP v. Kamitis, Inc., 825 N.Y.S.2d 747, 747

(N.Y. App. Div. 2006) (quotation marks and citation omitted). This obligation

arises even if the express terms of the contract have not been breached where one

party has effectively deprived the other of the bargained for benefits of the

contract. See Greenwich Village Assoc. v. Salle, 493 N.Y.S.2d 461, 464 (N.Y.

App. Div. 1985); see also Fasolino Foods Co. v. Banca Nazionale del Lavoro, 961
F.2d 1052, 1056 (2d Cir. 1992) (“Under New York law, parties to an express

contract are bound by an implied duty of good faith, but breach of that duty is

                                        21
merely a breach of the underlying contract.”) (quotation marks and citation

omitted).

      But, the covenant of good faith and fair dealing will be implied only where it

would be “consistent with other mutually agreed upon terms in the contract.”

Sabetary v. Sterling Drug, Inc., 69 N.Y.2d 329, 335 (N.Y. 1987); Chrysler Credit

Corp. v. Dioguardi Jeep Eagle, Inc., 596 N.Y.S.2d 230, 231 (N.Y. App. Div. 1993)

(“Although an obligation of good faith and fair dealing is implied in every

contract, that obligation may not be implied when it would be inconsistent with

other terms of the contract between the parties.”) (citation omitted). The covenant

“is breached only when one party seeks to prevent the contract’s performance or to

withhold its benefits.” Met. Life Ins. Co. v. RJR Nabisco, Inc., 716 F. Supp. 1504,

1517 (S.D.N.Y. 1989); Collard v. Incorporated Village of Flower Hill, 427
N.Y.S.2d 301, 302 (N.Y. App. Div. 1980).          Thus, under New York law, “[a]

financing institution does not act in bad faith when it exercises its contractual right

to terminate financing.” Chrysler Credit Corp., 596 N.Y.S.2d at 232.

      Here, there has been no breach of the parties’ bargained-for contractual

rights. HVB acted in a manner wholly consistent with the express rights it was

granted by Curtis; again, the Credit Agreement is clear that HVB had the unilateral

right to demand repayment of the loan in full on an annual basis. Indeed, Curtis

                                          22
has made no argument that HVB exercised its contractual right arbitrarily or

irrationally.   Instead, it has only claimed that HVB could not exercise this

contractual right for thirty years without violating an implied duty of good faith

and fair dealing. The theory is untenable, because imposing an implied covenant

of good faith and fair dealing in this way would permit Curtis to add wholly new

and unbargained for advantageous terms to its contract that are at war with the

express terms of the agreement. Put differently, the implied covenant of good faith

and fair dealing would not fulfill the express terms of the Credit Agreement, nor

would it give any meaning to an ambiguous term. Accordingly, the district court

properly dismissed this claim as well.

       AFFIRMED.

                                         23