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FPG Maiden Lane, LLC v. Bank Leumi USA
Citation: 2022 NY Slip Op 07150Docket: Index No. 653584/20 Appeal No. 16909 & M-4418 Case No. 2021-01115
Court: Appellate Division of the Supreme Court of the State of New York; December 14, 2022; New York; State Appellate Court
Original Court Document: View Document
In FPG Maiden Lane, LLC v Bank Leumi USA, the Appellate Division modified a lower court's order that denied defendants' motions to dismiss the complaint. The court granted dismissal for the first three causes of action but upheld claims for breach of contract. The fraud claim regarding the temporary certificate of occupancy (TCO) deadline was dismissed because it contradicted the contract's terms, indicating that reliance on the representation was unjustified. Similarly, the fraud claim concerning funding requests was deemed duplicative of the breach of contract claim. The court also dismissed the civil conspiracy claim, as it was contingent on the fraud claim. The negligent misrepresentation claim failed due to the lack of a special relationship between the parties. The breach of contract claims were supported by allegations that FPG had submitted requests for advances prior to the TCO default, and the lenders could not benefit from a default they caused. Defendants' reliance on section 1.3(d)(iii) of the building loan agreement, which requires BLUSA to reasonably determine the feasibility of timely and lien-free construction, is examined in relation to the implied covenant of good faith and fair dealing. This covenant mandates that BLUSA exercise discretion in a manner that is not arbitrary or irrational. The lenders' motion to dismiss the sixth through eighth causes of action, based on the assertion that the guaranties are absolute and unconditional with broad waivers of defenses, is found to lack merit. The court notes that the guaranties did not explicitly waive all claims, only counterclaims, offsets, and defenses, highlighting the reluctance to interpret agreements as implying exclusions not clearly stated. Furthermore, the claim that the absolute nature of the guaranties negates plaintiffs' allegations of wrongful conduct by the lenders post-execution is rejected. The dismissal of the first and second causes of action renders the personal jurisdiction arguments regarding defendants Bank Leumi le-Israel BM and Harel Insurance Investments and Financial Services Ltd. moot. The motion to dismiss the appeal is denied, with the decision and order issued by the Supreme Court, Appellate Division, First Department, on December 15, 2022.