Arnold Constable Corp. v. Chase Manhattan Mortg. and Realty Trust

• Decision Date: 06 October 1977
• Citation: 59 A.D.2d 666,398 N.Y.S.2d 422
• Parties: ARNOLD CONSTABLE CORPORATION et ano., Plaintiffs-Respondents, v. CHASE MANHATTAN MORTGAGE AND REALTY TRUST, Defendant-Appellant, and Staten Island Mall et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 422

398 N.Y.S.2d 422

59 A.D.2d 666

ARNOLD CONSTABLE CORPORATION et ano., Plaintiffs-Respondents, v. CHASE MANHATTAN MORTGAGE AND REALTY TRUST, Defendant-Appellant and Staten Island Mall et al., Defendants.

Supreme Court, Appellate Division, First Department.

Oct. 6, 1977.

E. L. Skolnik, New York City, for plaintiffs-respondents.

R. A. Machleder, New York City, for defendant-appellant.

Before KUPFERMAN, J. P., and LUPIANO, EVANS and LANE, JJ.

MEMORANDUM BY THE COURT.

Order, Supreme Court, New York County, entered November 16, 1976, which, inter alia, granted the motion of plaintiffs to strike Interrogatory No. 6 propounded by defendant Chase Manhattan Mortgage and Realty Trust, unanimously reversed to the extent appealed from, on the law, with $40 costs and disbursements of this appeal to appellant, and the plaintiffs' motion denied.

Plaintiffs Arnold Constable Corporation and No Name Stores, Inc. are, respectively, the original tenant and its assignee. They seek recission of a lease on the ground that the tenant was induced to sign the lease for floor space located in a shopping center in reliance on fraudulent representations made by the renting agent for the property, defendant Feist & Feist, Inc. Defendant Chase Manhattan Mortgage and Realty Trust ("Chase Trust"), the construction lender and holder of the first mortgages on the shopping center, is now the operator of the center pursuant to a mortgagee-in-possession agreement. Chase Trust in Interrogatory No. 6 seeks the following: "State whether Constable employed legal counsel in connection with the negotiation of the Lease and, if so, identify such counsel, state the date when such counsel first became involved in the lease negotiations, and identify all correspondence between Constable and counsel relating to the Lease and to the premises." Plaintiffs' claim that this interrogatory violates the attorney-client privilege is, on this record, without merit.

Clearly, plaintiffs have the burden of establishing the essential elements of fraud, including justifiable reliance on the allegedly false representations. In this respect it is noted that a fraud claim will not be sustained where the party making such claim relied on an independent investigation of its own lawyer (See, Zuyder Zee Land Corp. v. Broadman Bldg. Co., Sup., 86 N.Y.S.2d 827, aff'd 276 App.Div. 751, 92 N.Y.S.2d 607 (1st Dept. 1949), lv. app. den. 276 App.Div. 834, 93 N.Y.S.2d 729; Sowinski v. Cortelle Corporation, 44 A.D.2d 838, 355 N.Y.S.2d 471 (2nd Dept. 1974); Charid Properties, Inc. v. Berger, 37 A.D.2d 987, 327 N.Y.S.2d 821 (2nd Dept. 1971), aff'd 32 N.Y.2d 667, 343 N.Y.S.2d 132, 295 N.E.2d 798 (1973); see, also, New York Merchandise Co., Inc. v. 23rd Street Properties, 49 A.D.2d 849, 373 N.Y.S.2d 867 (1st Dept. 1975), mot. lv. app. den. 38 N.Y.2d 707, 382 N.Y.S.2d 1026, 345 N.E.2d 603 (1975)). Evaluating Interrogatory No. 6 in the context of the substantive issues raised in this lawsuit, it is clear that privileged information is not demanded. It is noted...