165 A.D.2d 710 | N.Y. App. Div. | 1990
Order and judgment of the Supreme Court, New York County (David H. Edwards, Jr., J.), entered April 24 and 27, 1989, respectively, denying defendants’ motion for a stay and granting the plaintiffs cross motion for summary judgment, unanimously affirmed, with costs and disbursements.
This is an action to recover the principal and interest due on a promissory note, and to foreclose on an assignment and security agreement executed by the defendants in favor of the plaintiff First City National Bank and Trust Company (the Bank). In December 1986, defendants borrowed $72,000 from the Bank to invest in a limited partnership (hereafter Broodmare). In a two-page "borrower’s letter”, in which the defen
The instant action was commenced when defendants defaulted on the note. In their answer, defendants raised an affirmative defense that their investment in Broodmare was induced by fraudulent misrepresentations on the part of Broodmare’s principals. Defendants had previously commenced an action in the United States District Court against Broodmare and, after commencement of the instant action, added the Bank as a defendant in the Federal action, alleging, in direct contradiction to their specific acknowledgment to the Bank, that on information and belief the Bank knew that the Broodmare defendants had made material misrepresentations in their private placement memorandum.
Defendants moved to stay this action pursuant to CPLR 2201 pending determination of the Federal action. The Bank cross-moved for summary judgment, setting forth that it had never possessed, examined or analyzed the Broodmare private placement memorandum and that it had no direct contact with Broodmare, but rather dealt with an independent broker whom defendants had authorized to acquire financing on their behalf. Defendants responded with an affidavit from their accountant presuming that the Bank had investigated Broodmare and its general partner, and suggesting that "discovery may reveal evidence” to show a relationship between the Bank and Broodmare implicating the Bank in Broodmare’s fraudulent scheme.
[See, 165 AD2d 665.]