By: Daily Record Staff//December 18, 2013
By: Daily Record Staff//December 18, 2013//
U.S. Court of Appeals for the Second Circuit
Contract — Default
Ambiguity — Contrary Clauses
Karmely v. Wertheimer
Judges Newman, Winter and Droney
Background: The appellants challenge the dismissal of their complaint challenging the foreclosure of collateral for the nonpayment of a loan. The lender issued the agreement to himself and his partner. They challenge that a default occurred permitting foreclosure.
Ruling: The Second Circuit reversed and remanded. The court found that the terms of the agreement were ambiguous. The court noted a contractual clause that prohibits a payment and then provides a turnover requirement in the event payment is made contrary to the prohibition. It was unclear if this negated of the payment prohibition.
David A. Pellegrino of Phillips Nizer for the appellants; Stephen R. DiPrima for the appellees