Defended a married couple, domiciled in the State of Minnesota who were sued for $7.2 million in New York Supreme Court by a commercial lender.
The borrower on the original loan with commercial lender defaulted. The lender obtained a judgment against the borrower in Minnesota State Court. Foreclosed on the property the subject of the loan provided by the lender to the borrower. There then remained a deficiency dollar amount owed on the original loan between the lender and borrower.
The lender sued the two defendants in New York Supreme Court pursuant to guaranty agreements signed by the defendants contemporaneously with the loan agreement between the lender and borrower. Lender alleged that the defendants were liable to the lender for a deficiency judgment of $7.2 million.
We represented the defendants in New York Supreme Court, Commercial Division. Upon a careful review of the loan agreement we discovered that the key terms were not incorporated from the loan agreement to the guaranty agreements. These terms included a late payment fee and default interest rate which the plaintiff alleged made up the $7.2 million owed by the defendants. Even if these terms were properly incorporated into the guaranty agreements they are penalty terms under New York Law that are void and unenforceable.
We immediately filed affirmative defenses and counter claims that resulted in the plaintiff having to significantly amend their claim. Plaintiff made no attempt to dismiss Defendants’ affirmative defenses and counter claims.
We raised specific discovery demands to prove defendants’ affirmative defenses and counter claims. Plaintiff failed to provide all responsive documents to respond to defendants’ discovery demands.
Following defendants’ discovery demands and their insistence that plaintiff provide a proper document production and responses, plaintiff reached out to the defendants to settle the case for substantially less then claimed in their lawsuit.
We saved the defendants from having a judgment of $7.2 million against them both individually.