Casual Reassurances By Lenders Don't Guarantee Payment

Saturday, April 04, 2009 05:21 pm

Casual Reassurances By Lenders Don't Guarantee Payment

Intentional misrepresentation
Martik Brothers, Inc. v. Huntington National Bank
U.S.District Court for the Western District of Pennsylvania 2009 U.S.Dist.Lexis 2785(Jan.14, 2009)

A lender's repeated statements that a project owner had sufficient funds to pay a contractor were not enough to show intentional misrepresentation, even though the contractor ran out of money a few months later.

Martik Brothers, Inc. (Martik), agreed to provide general contracting services to Kiebler Slippery Rock, L.L.C. (Kiebler), which owned the"Slippery Rock Quadrangle" project.Martik agreed to construct 23 buildings and a clubhouse.During the course of the project, Martik invoiced Kiebler for approximately $14 million.Kiebler funded the project's construction through a loan agreement with Huntington National Bank (HNB).Martik was not a party to the loan agreement.Martik alleged that it completed the scope of all work in a workmanlike and timely manner, but was not paid more than $2 million for this work.Martik sued both Kiebler and HNB to recover this sum.HNB moved for summaryjudgment, which the court granted.

Martik argued that HNB engaged in intentional misrepresentation.To prove the tort of intentional misrepresentation, a plaintiff must show that the defendant made a material representation"falsely, with knowledge of its falsity or recklessness as to whether it is true or false"to intentionally mislead another into relying on that representation, leading to the plaintiff'sjustifiable reliance and proximately causing injury. Bortz v. Noon, 729 A.2d 555(Pa.1999).

Martik argued that Dick Dexter, an HNB representative, knowingly made false statements about whether K[...]