The notes secured by two mortgages, and a note secured by other collateral, afforded the borrower, Plaintiff Mosdot Shuva Israel (“MSI”), the opportunity between November 17, 2013 and January 31, 2014 to extend the maturity date for each note from their original maturity date of March 17, 2014 for five years. MSI alleged that in early 2013 it and Defendant Signature Bank’s Chairman and its Director of Real Estate, also Defendants, purportedly orally agreed to the terms of an early exercise of the option to extend the loans. The Defendants sent MSI a Term Sheet stating that they were “willing to consider [the] request to modify and extend” the loans if certain conditions were met and that “this letter is not a commitment by [the lender] or an agreement to approve the subject loan”. After MSI made payments on the loans, the Defendants allegedly orally stated that documents extending the loans would be sent for signature. MSI did not receive the loan documents and the loans were not extended.

Signature Bank then sold the loans to a third party, the Plaintiff failed to pay the notes on their original maturity date, and the assignee obtained a judgment of foreclosure. The Plaintiff sued Signature Bank, its Chairman and its Director of Real Estate, asserting claims of fraudulent inducement, promissory and equitable estoppel, breach of contract and breach of the implied covenant of good faith and fair dealing. The Supreme Court, New York County, granted the Defendants’ motion to dismiss the complaint.

The claim for breach of contract was held to not be legally cognizable; the Plaintiff could not demonstrate that there was a binding oral contract to extend the loans. The notes stated that they could be modified only by a written agreement, and an oral modification of mortgages is barred by the statute of frauds. In addition, “the express terms [of the Term Sheet] demonstrate that any discussions prior to its execution constituted nothing more than preliminary negotiations regarding the maturity dates and interest rates, rather than a meeting of the minds and an agreement to be bound". The claim that there was a breach of the implied covenants of good faith and fair dealing duplicated the breach of contract claim. Israel v. Signature Bank, 2018 NY Slip Op 31370, decided June 26, 2018, is posted at http://www.nycourts.gov/reporter/pdfs/2018/2018_31370.pdf.