News Brief

Despotakis Wins Unanimous Appellate Decision on Behalf of a Major National Bank

January 3, 2012

Constantine Despotakis (Partner-White Plains) won a unanimous decision by the Appellate Division, Second Department on behalf of their client, a major U.S. bank. This decision overturned a lower court’s decision to deny Wilson Elser’s summary judgment motion.

The plaintiff, who was married to her husband for 40 years, alleged that her husband, who was her longtime attorney-in-fact under a New York durable power of attorney, defrauded her by draining all funds from her pension account at one bank before obtaining a home equity line of credit for approximately $193,000, secured by a second mortgage on the marital home from another bank, the firm’s client, and then vanishing with his alleged paramour.

The power of attorney at the time of the loan closing was admittedly unrevoked and in full force and effect. By the time plaintiff discovered the alleged fraud, the first mortgagee had foreclosed and evicted her from the home. The plaintiff's claim was that the defendant’s lien and other obligations arising out of the promissory note deprived her of equity and a means to access liquid funds to stave off foreclosure and eviction. The plaintiff alleged that the condition of the loan documents and the attendant circumstances at the execution of those documents at closing, including the alleged failure of the defendant bank to obtain an actual copy of the power of attorney in question, gave it notice that the plaintiff's husband was entering into a fraudulent transaction purportedly without her authority.

The Wilson Elser team asserted numerous legal and factual defenses not limited solely to the power of attorney issue. Despite the greatly sympathetic plaintiff, the Second Department's reversal of the lower court's denial of summary judgment motion was based on the finding that the bank acted properly as a matter of law in relying upon the unrevoked power of attorney in closing the loan with the attorney-in-fact. In light of that threshold determination, the court did not reach the other points in our appeal.

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