Mark
Andrew v. GMAC Commercial Mortgage Corp.
Recently, the United States District
Court for the Southern District of New York granted ZEK’s
motion for summary judgment dismissing a $160,000,000 lender
liability action against our client, GMAC Commercial Mortgage
Corp., brought by a commercial developer seeking to finance
and develop a luxury continuing care retirement community
in Florida. Based on arguments advanced by ZEK, in Mark
Andrew of the Palm Beaches, Ltd. v. GMAC Commercial Mortgage
Corp., 2003 WL 21537745, __ F.Supp.3d __ (S.D.N.Y. 2003),
the Court held that under the Florida Banker’s Statute
of Frauds, a lender may be bound by an alleged promise to
lend money only if such promise or commitment is in writing
or if the lender actually funds the loan. The Court upheld
this important proposition in the face of sworn testimony
of oral promises to lend notwithstanding the absence of a
formal commitment letter and despite making certain inferences
in plaintiffs’ favor (required on such a motion -- even
if not ultimately proven), namely that the lender’s
loan credit committee had approved the proposed loan and had
even signed certain closing documents.
This case is important because
it stands for the proposition that a borrower who relies on
oral representations by a commercial lender without the issuance
of a written commitment letter accepts the risk that the lender
may at any time and for any reason decline to fund the proposed
loan. It also highlights the need for an application letter
or term sheet to contain clear and unequivocal protective
language that disclaims any commitment or agreement to lend
and the importance of such language as an effective bar to
such lender liability lawsuits.
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