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Counterclaims Asserted by Borrower Not a Defense to Guarantors’ Liability

Counterclaims Asserted by Borrower Not a Defense to Guarantors' Liability

In Capital One Taxi Medallion Fin. v Corrigan, 147 A.D.3d 677, 2017 N.Y. App. Div. LEXIS 1470, the court was asked to decide whether guarantors could use issues raised by the borrower in a separate action as a defense to the lender’s summary judgment motion against them. The loan financed taxi medallions. The borrower alleged that the lender breached its obligations by not approving approve loan advances and withdrawing from financing taxi medallions. The court held that the guarantors remained liable under the guaranties and that the alleged violations of the loan agreement asserted by the borrower were counterclaims against the lender, not defenses to payment of the outstanding obligations. Because the guarantors had guaranteed the payment of the borrower’s obligations, the court ruled that there was no issue of fact regarding the lender’s summary judgment motion.

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