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In Banque Indosuez, one bank provided another with a deceptive letter of reference indicating that a $4 million overdraft was under review, notwithstanding the fact that on that very day, the defendant bank demanded repayment of the overdraft.
Summary of this case from China Trust Bank of N.Y. v. Standard Chartered BankOpinion
March 5, 1992
Appeal from the Supreme Court, New York County (Myriam J. Altman, J.).
Plaintiff alleges that defendant induced it through fraudulent and negligent misrepresentations to extend a loan to nonparty Cuyahoga Wrecking Corporation. We agree with the IAS court that plaintiff has a cause of action for fraud based on the letter of reference, dated July 15, 1989, requested by plaintiff, in which defendant's loan officer indicated that a certain $4 million overdraft regarding the Cuyahoga account was "under review" on July 15, 1989, when by another letter signed by the same loan officer on the same date, defendant demanded repayment of the overdraft. Accordingly, a jury could decide that the statement that the overdraft was "under review" was an affirmative misrepresentation or a "half-truth", and therefore fraudulent (see, Sheridan Drive-In v State of New York, 16 A.D.2d 400, 408; see also, Noved Realty Corp. v A.A.P. Co., 250 App. Div. 1, 5-6). While defendant argues that "causation" has not been demonstrated, a jury could reasonably find that the alleged misrepresentations were a "substantial factor" in inducing the loan (see, Matthews v Schusheim, 42 A.D.2d 217, 221, affd 35 N.Y.2d 686). With respect to the claim for negligent misrepresentation, although plaintiff did not "hire" defendant to provide it with credit information concerning Cuyahoga, the claim is nonetheless viable because of the special relationship that existed between the parties (see, Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 N.Y.2d 417; Credit Alliance Corp. v Andersen Co., 65 N.Y.2d 536, 551). However, the claim for punitive damages should have been dismissed. Punitive damages are only available in actions where there has been a public wrong, or where the parties are in a fiduciary or confidential relationship (see, Belco Petroleum Corp. v AIG Oil Rig, 164 A.D.2d 583, 587, n 3). Here, a public wrong has not been sufficiently alleged, and the parties' relationships were not confidential or fiduciary in nature. We have considered the other arguments and find them to be without merit.
Concur — Sullivan, J.P., Rosenberger, Ellerin, Asch and Rubin, JJ.