Federal Resources Corp. v. Bt Commercial Corp.

190 A.D.2d 613, 594 N.Y.S.2d 3, 1993 N.Y. App. Div. LEXIS 1650

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: February 23, 1993
• Status: Published

Opinion

— Order, Supreme Court, New York County (Diane A. Lebedeff, J.), entered April 27, 1992 which granted defendant’s motion for summary judgment dismissing the first three causes of action and denied the motion with respect to the fourth cause of action, and the order of the same court entered July 31, 1992, which denied plaintiffs’ motion for renewal with respect to the motion granting dismissal of the first three causes of action, unanimously affirmed, without costs.

We agree with the IAS Court that defendant is merely a commercial lender and accordingly owed no duty to the corporate plaintiff under the terms of the credit facility agreement to investigate the creditworthiness of the company which plaintiff subsidiary was about to purchase. We note in this regard that plaintiff employed outside accounting services to analyze the acquired company’s financial status.

Further, we agree that a question of fact exists as to the meaning and purpose of the term "and its subsidiaries” in the guarantees so as to require further proceedings with respect to the cause of action seeking reformation.

We additionally note that the IAS Court will have before it the issue of the enforceability of the limited guaranty in the separate action brought by defendant on the guaranty and, per force, the intent and meaning of the term "and its subsidiaries”.

Accordingly, dismissal of the cause of action seeking reformation is not warranted at this juncture. Concur — Sullivan, J. P., Rosenberger, Wallach and Ross, JJ.