Lawsuit for Failure to Advise Regarding a Loan in New York
In Ableco Fin. LLC v. Hilson (109 A.D.3d 438, 970 N.Y.S.2d 775 [1st Dept 2013]), plaintiff was in "the business of making commercial loans."
Plaintiff loaned a business funds to be used to purchase assets from the bankruptcy estate of a retail clothing chain, and defendants represented plaintiff in the transaction.
Plaintiff subsequently filed an action alleging that defendants failed to advise plaintiff that the loan it made was collateralized by only a portion of retail clothing chain's inventory, rather than the entire inventory and failed to advise plaintiff that it was not getting a first priority lien on the entire inventory.
Plaintiff alleged that it would not have made the loan had it known that the loan was only collateralized by a portion of the inventory.
The court found that documentary evidence of an underlying related bankruptcy proceeding press release defeated plaintiff's "pivotal claim" that it made the loan without knowing that it was not getting a first priority lien (id. at 439).
Accordingly, the court dismissed the legal malpractice claim (id.)