O. PETER SHERWOOD, J.

This action stems from events engaged in by plaintiff Amaranth, LLC (the "Fund") and its trading advisor, plaintiff Amaranth Advisors LLC ("Advisors"), to stem billions of dollars in losses that threatened the Fund's very survival by seeking to transfer its high-risk positions associated with its natural gas portfolio to other funds or banks. The Fund claims that a potential deal with Citadel Investment Group LLC ("Citadel"), by which Citadel would have received $1.85 billion as a concession for taking on most of the Fund's remaining risk and the Fund would have absorbed two-thirds of the losses from that day's trading, collapsed due to certain statements which were allegedly made by senior executives of JP Morgan Chase & Co ("JPMC") to Citadel's representative Ken Griffith.

Before the court is JPMC's motion for summary judgment dismissing the only remaining cause of action alleged in the complaint, namely, one asserted on behalf of the Fund against JPMC for tortious interference with potential contractual relations. On April 12, 2011, the Court heard oral argument on the motion. Upon review of the motion papers and the arguments of the parties' respective attorneys, the motion is granted and the complaint is dismissed.

Factual Background

The undisputed facts of this matter are set forth in a decision of the Appellate Division, First Department on the parties' cross appeals from a decision and order of Justice Lowe of this Court which, inter alia, granted JPMC's CPLR 3211 (a) (7) motion to dismiss to the extent of dismissing the Fund's and Advisor's claims for tortious interference with prospective economic advantage and denied the motion of JPMC, the parent company of defendant JP Morgan Futures Inc. ("JPMFI"), the Fund's clearing broker, and defendant JP Morgan Chase Bank, N.A. ("JPMB") to dismiss the breach of contract claim against JPMFI (see Amaranth LLC v J.P. Morgan Chase & Co., 71 A.D.3d 40, 42 et seq.[1st Dept 2009], lv to app dismissed in part, denied in part 14 N.Y.3d 736 [2010]). Such facts, as condensed for purposes of this decision, are as follows:

To protect themselves from further losses, the plaintiffs sought to transfer the risk associated with the Fund's natural gas portfolio to other banks or funds. On Saturday, September 16th, the Fund reached a deal under which Merrill Lynch ("Merrill") would assume about a quarter of the Fund's open natural gas positions. These trades were cleared through JPMFI the next business day, Monday, September 18th, without incident.

At the same time, the Fund was negotiating with Goldman Sachs ("Goldman") to transfer most of its remaining open positions. On Sunday, September 17th, the Fund reached a deal with Goldman under which Goldman would accept a payment of $1.85 billion to assume most of the remaining risk in the Fund's portfolio. Unlike the Merrill deal, Goldman required this payment in advance. The Fund had little unencumbered cash on hand, and the Goldman deal would have necessarily required the release of margin funds to complete the deal.

The proposed trade was discussed in a conference call the next morning, Monday, September 18th, among officials from Advisors, Goldman, JPMFI, and the New York Mercantile Exchange ("NYMEX"). Despite the endorsement of the NYMEX officials, JPMFI refused to release the necessary $1.85 billion from the Fund's margin account. As a result, the deal with Goldman fell through.

Later that Monday, Advisors was contacted by Citadel Investment Group LLC ("Citadel"). Negotiations with Citadel led to a similar deal, in which Citadel would receive $1.85 billion as a concession for taking on most of the Fund's remaining risk. The only differences were that Citadel would accept payment after the trade was executed and that the Fund would absorb two-thirds of the losses from Monday's trading.

However, the plaintiffs allege that, on Tuesday, September 19, 2006, two executives for JPMC, Steve Black and Bill Winters, called Citadel and told them that "Amaranth is not as solvent as they are telling you they are."1 Plaintiffs further allege that JPMC was displeased that the Fund was negotiating with other firms instead of JPMC, and that in making the false statement, Mr. Black and Mr. Winters intentionally and maliciously sought to derail the trade between the Fund and Citadel. Citadel declined to pursue the deal with the Fund. The Fund claims that as a result it sustained over $1 billion in losses and Advisors claims that it suffered severe losses as well. Following the collapse of the Citadel deal, the Fund reached an agreement for JPMC to take on the risky positions in exchange for a payment of $2.5 billion.

On November 13, 2007, the Fund and Advisors commenced this action against JPMC and its subsidiaries, JPMFI and JPMB, alleging breach of contract against JPMFI for failure to release the margin funds (first cause of action), tortious interference with prospective economic advantage by the Fund against JPMC (second cause of action) and a similar claim by Advisers against JPMC (fourth cause of action), unfair trade practices by the Fund against JPMC (third cause of action) and a similar claim by Advisers (fifth cause of action) and unjust enrichment (sixth cause of action).

In lieu of answering, JPMC moved pursuant to CPLR § 3211 (a) (1) and (7) to dismiss the complaint. Justice Lowe dismissed both claims for tortious interference and the unfair trade claims (second, third, fourth, fifth and sixth causes of action), but denied the motion to dismiss with respect to the breach of contract claim (first cause of action). The Appellate Division affirmed in part and modified in part by dismissing the breach of contract claim, finding that pursuant to a provision of the Client Agreement between JPMFI and the Fund, plaintiffs had no contractual right to demand that JPMFI increase its risk, and by reinstating the Fund's claim for tortious interference (second cause of action). The Appellate Division did not reinstate Advisors' tortious interference claim (fourth cause of action) on the ground that no sufficient business relationship existed between Advisers and JPMC as to support a tortious interference claim. Thus, the only remaining cause of action is the second cause of action by the Fund against JPMC alleging tortious interference with prospective economic advantage.

In its answer responding to the remaining cause of action, JPMC asserted thirteen (13) affirmative defenses including that the tortious interference claim is barred as the alleged statements are protected by the First Amendment, are true, constitute a statement of opinion, Mr. Griffin did not actually or justifiably rely on the alleged statement, and plaintiffs did not adequately allege malice on the part of JPMC.

Parties' Contentions

JPMC moves to dismiss the second cause of action claiming that: (1) the deposition testimony of Mr. Black, Mr. Winters and Mr. Griffin demonstrates that the alleged defamatory statement was never made and that the Fund's claim is based upon baseless speculation as to what might have been said during a call in which it did not participate; (2) even if, contrary to the evidence, the statement had been made, the claim fails because the Fund cannot show that "but for" such statement the proposed transaction would have gone through; (3) any statement by JPMC regarding the Fund's solvency was a non-actionable, forward-looking statement of opinion, Citadel had independent access to all relevant information regarding the Fund's financial status; and the only facts related by JPMC were true; and (4) the Fund cannot prove that JPMC acted with the requisite level of malice.

In opposition, the Fund contends that JPMC admitted the alleged defamatory statement in a supplementary interrogatory response, dated March 1, 2010. Specifically, the Fund refers to Exhibit "A", page 4, annexed to the affirmation of its attorney, which is JPMC's response to the Fund's interrogatory No. 1 asking for a description of statements made by JPMC to Citadel concerning the Fund's financial condition and its potential effect on the potential transaction between the Fund and Citadel. It provides as follows:

The Fund contends that JPMC's third attempt to amend this interrogatory (see Affirmation of Daniel J. Toal in Support of Motion, Ex. "41"), so as to evade such interrogatory response as superseded, is inadmissible and may not be considered on this motion or at trial. In addition, the Fund contends that further evidence of JPMC's effort to distance itself from its interrogatory response is its repeated references in its brief that Mr. Griffin "testified that he was highly confident' that neither Mr. Winters nor Mr. Black said anything to him about preference risk, fraudulent conveyance risk or other bankruptcy-related risk on September 18" (JPMC brief pp. 10, 14; see also pp. 2, n. 2, 14-15, 16).

The Fund further argues that: (1) JPMC's interrogatory response is "highly analogous to the statement Amaranth is not as solvent as they are telling you they are.'" and that such statement, which impugns the Fund's creditworthiness and which "imported insolvency", is defamatory and actionable; (2) JPMC has furnished no supporting evidence to demonstrate that the statement was true, either by showing that the Fund presented a preference risk or showing any other solvency or preference analysis performed which would indicate that JPMC was concerned about the Fund's preference risk; (3) the evidence indicates that an issue of fact exists on the "but for" causation as it shows that JPMC's statement caused Citadel to withdraw from the trade agreed upon earlier in the day; (4) the Fund need not prove actual malice as the record does not support a finding that the Fund is a public figure with respect to any particular controversy; and (5) even if the Fund were a public figure, the evidence supports a finding that JPMC acted with "actual malice", which requires no showing of ill will, when Mr. Winters made the subject statement having no idea whether JPMC had considered a bridge loan or whether JPMC had evaluated the preference risk for such loan.

In reply, JPMC argues that despite the Fund's claim to the contrary, the record does not support a finding that the Fund and Citadel had reached an oral agreement and that Citadel was "about to sign" a "Transaction Confirmation" when Mr. Griffin spoke to Mr. Winter on September 18th. Rather, Mr. Griffin testified at his deposition that Citadel never reached an oral agreement with the Fund, the negotiations between Citadel and the Fund were not completed, and numerous issues regarding the proposed transaction remained unresolved.

JPMC also avers that the Fund in its opposition has changed its position and is now attempting to base its tortious interference claim not on the purportedly defamatory statement alleged in the complaint, but upon the superseded interrogatory response. JPMC claims that the Fund is bound by the statement in the complaint and cannot base its claim on an entirely different and unpleaded statement. JPMC challenges the Fund's characterization of the interrogatory response as "highly analogous" to the pleaded statement claiming that unlike the pleaded statement, the interrogatory response constitutes JPMC's forward-looking opinion about certain legal risks that could arise in the event of the Fund's bankruptcy and says nothing about the Fund's current solvency, whether the Fund accurately described its financial condition to Citadel, or the likelihood that the Fund would become insolvent.

JPMC states that no evidence exists that the unpleaded statement was ever published to a third party. In this regard, JPMC notes that in his deposition testimony, Mr. Griffin stated that he did not recall Mr. Winters discussing issues around preferences or bankruptcy in the September 18th phone call and that such deposition testimony is consistent with JPMC's amended interrogatory response.

JPMC contends that the evidence also shows that on September 18, the Fund was in severe financial distress and at risk of a total loss of its investors. Indeed, JPMC notes that the Fund itself concedes that as of the morning of September 18, it needed a bridge loan and a couple million dollars just to stay in business. JPMC contends that such facts indicate that the statement was true and was not made with actual malice. Moreover, the evidence demonstrates that the Fund was one of the largest hedge funds in the world and the subject of widespread news coverage and general interest such that it qualifies as a public figure.

Discussion

The standards for summary judgment are well settled. Summary judgment is a drastic remedy which will be granted only when the party seeking summary judgment has established that there are no triable issues of fact (see, CPLR § 3212 [b]; Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986]; Sillman v Twentieth Century-Fox Film Corporation, 3 N.Y.2d 395 [1957]). To prevail, the party seeking summary judgment must make a prima facie showing of entitlement to judgment as a matter of law tendering evidentiary proof in admissible form, which may include deposition transcripts and other proof annexed to an attorney's affirmation (see, Alvarez, 68 NY2d at 325; Olan v Farrell Lines, 64 N.Y.2d 1092 [1985]; Zuckerman v City of New York, 49 N.Y.2d 557 [1980]). Absent a sufficient showing, the court should deny the motion without regard to the strength of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851 [1985]).

Once the initial showing has been made, the burden shifts to the party opposing the motion for summary judgment to rebut the prima facie showing by producing evidentiary proof in admissible form sufficient to require a trial of material issues of fact (see, Kaufman v Silver, 90 N.Y.2d 204,208 [1997]). Although the court must carefully scrutinize the motion papers in a light most favorable to the party opposing the motion and must give that party the benefit of every favorable inference (see, Negri v Stop & Shop, Inc., 65 N.Y.2d 625 [1985]) and summary judgment should be denied where there is any doubt as to the existence of a triable issue of fact (see, Rotuba Extruders, Inc. v Ceppos, 46 N.Y.2d 223, 231 [1978]), bald, conclusory assertions or speculation and "a shadowy semblance of an issue" are insufficient to defeat a summary judgment motion (S.J. Capalin Assoc. v Globe Mfg. Corp., 34 N.Y.2d 338 [1974]; see, Zuckerman v City of New York, supra; Ehrlich v American Moninga Greenhouse Manufacturing Corp., 26 N.Y.2d 255, 259 [1970]).

"To prevail on a claim for tortious interference with business relations in New York, a party must prove 1) that it had a business relationship with a third party; 2) that the defendant knew of that relationship and intentionally interfered with it; 3) that the defendant acted solely out of malice or used improper or illegal means that amounted to a crime or independent tort; and 4) that the defendant's interference caused injury to the relationship with the third party [internal citations omitted]" (Amaranth LLC, 71 AD3d at 47). The predicate act for a tortious interference claim is defamation (id. citing Stapleton Studios LLC v City of New York, 26 A.D.3d 236 [1st Dept 2006]). "It is well settled that where a statement impugns the basic integrity or creditworthiness of a business, an action lies and injury is conclusively presumed" (id. at 48 citing John Langenbacher Co. v Tolksdorf, 199 A.D.2d 64 [1st Dept 1993]). However, such a defamation claim is defeated by a showing that the published statement is substantially true (see Newport Service & Leasing v Meadowbrook Distributing Co., 18 A.D.3d 454 [2d Dept 2005]) or that when read in context the alleged defamatory statement would be perceived by a reasonable person to be nothing more than a matter of personal opinion (see Immuno AG v Moor-Jankowski, 77 N.Y.2d 235 [1991]). The actual defamatory words must be pleaded with particularity as required by CPLR 3016 (a) and the plaintiff must demonstrate the requisite publication of the defamatory statement and cannot rely solely on hearsay or conclusory allegations that such defamatory statement was made (see Snyder v Sony Music Entertainment, Inc., 252 A.D.2d 294, 298 [1st Dept 1999]). The plaintiff must also establish that "but for" the defendant's intentional and wrongful conduct plaintiff would have entered into an economic relationship (see Vigoda v DCA Productions Plus Inc., 293 A.D.2d 265, 266 [1st Dept 2002]; Snyder, 252 AD2d at 300). Such proof is lacking in this record.

In the instant matter, JPMC, through the deposition testimony of Mr. Griffin, Mr. Winter and Mr. Black, has met its burden of proving prima facie that the alleged defamatory statement pleaded in the complaint was not even made; that even if it was made, JPMC has furnished substantial evidentiary proof that the "but for" element of causation is not established by the record inasmuch as Citadel conducted its own research in connection with the proposed transaction with the Fund, evidence of the tenuousness of the Fund's financial condition was readily available, and the available evidence of the Fund's shaky financial position at the time the statement was made appears to establish the defense of truth.

Moreover, actual malice on the part of JPMC is not supported by the record. The Fund's effort to expand its arguments to include non-pleaded defamatory statements should be unavailing. Although the Court has discretion to permit plaintiff to amend the complaint to include the statement alleged in the supplemental interrogatory response, such amendment would not further the Fund's position on this motion as the statement considered as a whole constitutes nothing more than non-actionable opinion as to the Fund's financial condition. In sum and substance, the Fund has failed to rebut JPMC's prima facie showing since it has not refuted JPMC's proof that the defamatory statement was not made by submitting non-hearsay proof from someone who actually heard the alleged defamatory statement nor has it submitted evidentiary proof in admissible form that but for the alleged defamatory statement Citadel would have proceeded with the transaction. Accordingly, the second cause of action alleged in the complaint is dismissed.

Conclusion

Based upon the foregoing, it is

ORDERED that defendants' motion for summary judgment dismissing the second cause of action is granted and the complaint is dismissed with costs and disbursements to the defendants as taxed by the Clerk upon submission of an appropriate bill of costs; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly.