On December 15, 2022, the First Department issued a decision in FPG Maiden Lane, LLC v. Bank Leumi USA, 2022 NY Slip Op. 07150, holding that a party may not rely on the failure of a condition precedent to occur when it was responsible for that failure, explaining:
The complaint states claims for breach of contract (fourth and fifth causes of action). Contrary to defendants’ contention, the complaint alleges that FPG submitted requests for advances before June 2020, i.e., before the TCO default. Furthermore, if an event of default was created by the lenders’ refusal to lend, they cannot rely on it to their benefit. As for defendants’ arguments based on section 1.3(d)(iii) of the building loan agreement, that section requires BLUSA to make a reasonable determination that construction would not be timely completed or would not be completed lien-free and within budget. Given BLUSA’s discretion, the implied covenant of good faith and fair dealing obligated it to exercise such discretion in good faith, not arbitrarily or irrationally.
(Internal quotations and citations omitted).