MARINE MIDLAND BANK v. Hudson Rondout Corp., Appellant. (1999)

Order, Supreme Court, New York County (Charles Ramos, J.), entered April 8, 1998, which denied the motion of defendants to amend their answer to assert counterclaims and denied the motion of nonparty Hudson Rondout Corp., purportedly for leave to interpose counterclaims against plaintiff, unanimously affirmed, with costs.

On the prior appeal in this matter (209 A.D.2d 288, 631 N.Y.S.2d 1, lv. denied 85 N.Y.2d 1029, 631 N.Y.S.2d 285, 655 N.E.2d 398), in the course of affirming the IAS court's dismissal of defendants' counterclaim for breach of an alleged oral agreement for plaintiff to extend a loan of $2 million to defendants, we expressly rejected defendants' claim that plaintiff was estopped from asserting the Statute of Frauds as a defense to the counterclaim.   We held in this connection, “[n]or would defendants be able to show the necessary element of justifiable reliance, the individual defendant as the IAS Court aptly noted, being a sophisticated real estate investor who could not have believed that plaintiff would extend a $2 million loan ‘on a word and a handshake’ while requiring a complicated set of writings for loans in far smaller amounts” (id.).   Defendants and nonparty Rondout now seek to interpose counterclaims for fraud and negligent misrepresentation premised upon the identical alleged misrepresentation by plaintiff, namely, that plaintiff would extend defendants a $2 million loan.   Inasmuch as we have previously held that defendants' reliance on the alleged misrepresentation could not have been justifiable, the proposed counterclaims of defendants and nonparty Rondout, each of which entails an allegation of reasonable or justifiable reliance upon plaintiff's alleged oral promise of a $2 million loan, are not viable (see, First Natl. Bank of New Jersey v. Irving Trust Co., 91 A.D.2d 543, 544, 457 N.Y.S.2d 17, affd. 59 N.Y.2d 991, 466 N.Y.S.2d 682, 453 N.E.2d 1099) and, accordingly, leave to amend was properly denied (see, Hauptman v. New York City Health and Hosp. Corp., 162 A.D.2d 588, 589, 556 N.Y.S.2d 929).

MEMORANDUM DECISION.