On October 13, 2022, the First Department issued a decision in Tantallon Austin Hotel, LLC v. Wilmington Trust, N.A., 2022 NY Slip Op. 05778, refusing to dismiss a claim based on a voluntary payment defense because of questions of fact regarding the plaintiff’s knowledge of the relevant facts, explaining:
Nor have defendants established that the voluntary payment doctrine served as an absolute bar to plaintiff’s breach of contract claims. Plaintiff was not a party to the PSA and was allegedly unaware of the factors triggering a liquidation fee, a penalty that was lumped in with various other costs and fees that plaintiff was required to pay in connection with defaulting on the loan. Further, the timing and circumstances of the sale, which required the loan to be fully paid off before the sale could go through, meant that time was of the essence, and thus plaintiff, even if it was aware that it was being charged an improper liquidation fee, had a limited time to discern the issue before closing. Finally, the disclaimer in the preliminary payoff quotes stated that all overages would be subject to a refund. Given that there remain factual issues whether plaintiff paid the liquidation fee with full knowledge of the facts or that it perceived that an improper demand for money before paying the amount due, the breach of contract claim should not have been dismissed based on this doctrine.
(Internal quotations and citations omitted).