Stutman v. Chemical Bank

95 N.Y.2d 24, 731 N.E.2d 608, 709 N.Y.S.2d 892 (2000)

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Stutman v. Chemical Bank

New York Court of Appeals
95 N.Y.2d 24, 731 N.E.2d 608, 709 N.Y.S.2d 892 (2000)

  • Written by Sharon Feldman, JD

Facts

Michael Stutman and his wife, Jeanette Rodriguez (the Stutmans) (plaintiffs) borrowed money from Chemical Bank (Chemical) (defendant) to purchase a cooperative apartment. Chemical held the cooperative shares as collateral. The loan note permitted the Stutmans to prepay the principal at any time without a prepayment charge. The Stutmans wanted to refinance with Citibank, but Chemical would not release the collateral without repayment, and Citibank would not release funds without collateral. The Stutmans reluctantly agreed to pay Chemical a $275 “attorney’s fee” for the simultaneous exchange of the collateral and funds. The Stutmans sued Chemical, alleging that the fee violated New York General Business Law (GBL) § 349, which made deceptive acts or practices in conducting business unlawful. The Stutmans claimed that the Chemical note was deceptive because it promised there would be no prepayment charge and the $275 fee was a prepayment charge. The Stutmans also alleged they were charged an excessive fee for a delivery person’s services. The court denied Chemical’s motion to dismiss the § 349 claim. The New York Appellate Division reversed because the Stutmans had not shown justifiable reliance. The Stutmans appealed the dismissal of their § 349 claim.

Rule of Law

Issue

Holding and Reasoning (Kaye, C.J.)

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