Wiener v. Lazard Freres & Co.

672 N.Y.S.2d 8 (1998)

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Nature of the Case

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Facts

Ps owned an office building at 1500 Broadway. In the spring of 1994, Ps defaulted on the building's mortgage held by Crossland Federal Savings Bank and filed for bankruptcy pursuant to chapter 11. Ps and Crossland entered into an agreement by which Crossland would release Ps from the limited personal guaranty executed in connection with the mortgage in exchange for certain payments as well as Ps' cooperation in transferring the property to the bank. Two months later, a reorganization plan was approved in the bankruptcy proceeding, whereby the property was to be transferred to Crossland or its designee. Ps were engaged in an effort to raise sufficient funds to enable them to settle with Crossland and retain ownership of the building. Ps made preliminary arrangements with Credit Lyonnais for a first mortgage in the amount of up to $30 million; they then initiated contact with D to secure a second mortgage for the balance of the purchase price. P and D executed a commitment letter to which D, as lender, agreed to provide $45 million as interim financing for the purchase or refinancing of the Crossland mortgage, in return for a $300,000 application fee. D was given the exclusive right to provide the financing during an 'exclusive period,' as defined in the letter unless it elected earlier not to proceed with the loan. D indicated that it was prepared to go ahead with the interim financing described and asked Ps to sign an 'agreement to proceed' under which they would pay a $400,000 deposit by December 1, 1994. Crossland would not agree to a transaction at the price specified in the commitment letter. Anthony Meyer, a D executive, took over the negotiations with Crossland on behalf of Ps. Ps believed that D was actively negotiating with Crossland on their behalf to affect the purchase of the property, with the financing to be provided by a D affiliate and/or Credit Lyonnais. Ps went ahead and reached an agreement with Crossland on the reorganization plan, by which 1500 Realty would transfer the property to Crossland or its designee in exchange for the settlement of Ps' personal guaranty. Secretly, D decided not to proceed with the plan contemplated in the commitment letter and instead entered into a relationship with defendant Zapco that culminated in Zapco's acquisition of the property from Crossland on terms similar to those D was ostensibly negotiating on behalf of Ps. D also shared with Zapco the confidential information Ps had provided regarding the property's operation, thus enabling Zapco to make an offer that would be acceptable to Crossland--and one that was comparable to Ps' intended offer. Ps sued for unjust enrichment and breach of fiduciary duty. D moved to dismiss. The court concluded that Ps had failed to state a cause of action against D or Zapco and dismissed the complaint. P appealed.