NEW YORK, NY — Carter Ledyard & Milburn LLP is pleased to announce a complete victory on behalf of its clients, World Business Lenders and Axos Bank, in the New York Supreme Court, Appellate Division, Second Judicial Department. In a decision issued today, the Appellate Division unanimously affirmed the dismissal of all claims brought against the firm’s clients.
The case, Michael Gangi Plumbing and Heating Contractors, Inc. v. World Business Lenders, arose from a commercial lending dispute in which the plaintiff Josephine Theisen alleged violations of New York General Business Law § 349 and fraud in connection with a business loan. Carter Ledyard moved to dismiss the complaint pursuant to CPLR 3211(a)(7), and the Supreme Court, Kings County granted the motion in full. The Appellate Division has now affirmed that ruling.
The Appellate Division agreed with Carter Ledyard’s arguments on both counts. As to the General Business Law § 349 claim, the court held that the plaintiff’s allegations amounted to a private contract dispute unique to the parties, and did not constitute consumer-oriented conduct actionable under the statute. As to the fraud claim, the court held that the plaintiff could not establish reasonable reliance on an alleged misrepresentation about prepayment penalties, because the signed mortgage agreement itself contradicted the purported representation — a fact that reasonable due diligence would have revealed.
Alexander G. Malyshev and Jacob H. Nemon led the Carter Ledyard team representing World Business Lenders and Axos Bank.
“We are very pleased with this outcome for our clients,” said Alexander G. Malyshev. “The court’s decision reinforces important principles regarding the scope of consumer protection statutes and the duty of parties to exercise due diligence before entering into commercial transactions.”
The decision is a significant win for lenders operating in the New York commercial lending market.
Since the publishing of this Decision, the consumer-oriented requirement has been removed even for private rights of action for deceptive conduct. This is under the NY FAIR Act which went into effect earlier this year. It has no retroactive effect, but the law will be different going forward.”