Key Points

  • The Appellate Division, First Department, unanimously affirmed Justice Andrew Borrok's order granting summary judgment to RBL Bank Limited against Veria Lifestyle Inc. and its guarantor on a roughly $10 million loan made in November 2017.
  • The court held that the bank's occasional and sporadic business dealings in New York did not constitute doing business under Business Corporation Law Sections 103 or 1312, so the registration requirement for foreign corporations did not apply and the Section 103 exception was irrelevant.
  • The court held that Banking Law Section 200's mortgage-security requirement did not bar the suit because the defendants failed to deliver the no objection certificate that would have secured the loan and exempted the bank.
  • The court held that the defendants waived the Banking Law defense by failing to plead it initially and failing to appeal the denial of the motion to amend to add it.
  • The court upheld dismissal of the counterclaims for breach of the Facility Agreement and breach of the covenant of good faith and fair dealing because they rested on terms not in the contract and the defendants were in breach.

A New York appeals court on Thursday ruled that a foreign bank could sue a borrower and its guarantor in the state's courts over a roughly $10 million loan that went unpaid. The court rejected the defendants' arguments that the bank lacked the legal right to bring the case and that a state banking statute barred the suit.

A five-justice panel of the Appellate Division, First Department, unanimously affirmed an order by Justice Andrew Borrok of Supreme Court, New York County, that granted summary judgment to RBL Bank Limited against Veria Lifestyle Inc. and the loan's guarantor. Justice Manzanet-Daniels presided over the panel, which also included Justices Shulman, Rodriguez, Higgitt and Rosado.

The panel rested its ruling on three separate grounds. It held that the bank's limited activity in New York did not trigger the state's registration requirement for foreign corporations. It also held that Veria and the guarantor could not rely on a Banking Law mortgage requirement after their own failure left the loan unsecured, and that they had waived the Banking Law defense in any event. The panel upheld the dismissal of the defendants' counterclaims and affirmed with costs.

According to the decision, the bank loaned approximately $10 million to Veria in November 2017 under the parties' Facility Agreement. Veria and the guarantor defaulted on repayment, and the bank then commenced the action. Borrok's order granting the bank's motion for summary judgment was entered on or about April 24, 2025, and the defendants appealed it to the extent their briefs challenged it.

On appeal, the defendants argued that the bank, which the panel described as a foreign banking corporation, lacked capacity to sue. The panel held that the argument "was properly rejected."

The panel agreed with the trial court's reading of the bank's New York activity. "As Supreme Court correctly found, plaintiff's occasional and sporadic business dealings in New York did not constitute 'doing business' for purposes of Business Corporation Law §§ 103 or 1312," the court wrote. For that conclusion it cited two of its own earlier decisions, AirTran N.Y., LLC v. Midwest Air Group, Inc., from 2007, and Intermar Overseas v. Argocean, from 1986.

That finding decided the registration question. The decision explained that Section 1312 requires foreign corporations "doing business" in New York to "register with the state before being permitted to maintain any action or special proceeding in the state." Because the bank's dealings fell short of doing business, the panel held, the registration requirement "does not apply."

The same finding disposed of a second statutory question. Section 103 of the Business Corporation Law sets out an exception to the registration rule, and the panel addressed whether the bank's eligibility for it mattered. "Because it does not apply, whether plaintiff met the exception to it as set out in Business Corporation Law § 103 — including whether the foreign corporation engages in lawful business under the Banking Law — is irrelevant," the court wrote.

The panel then turned to Banking Law Section 200, which the decision described as a "requirement that a debt be secured by a mortgage." The court held that the provision "does not prevent plaintiff from bringing this action."

The panel's reasoning on that point rested on an undisputed fact. Veria and the guarantor had failed to give the bank a no objection certificate, which the parties' agreement required them to provide. According to the decision, the certificate "would have rendered the loan secured by a mortgage and would have additionally exempted plaintiff from the Banking Law's requirement."

The defendants' own failure therefore defeated their defense. "Because defendants brought about the inability to qualify for this exception, they cannot rely on it to defeat plaintiff's suit," the panel wrote.

The court added a separate procedural reason to reject the Banking Law argument. The defendants left the defense out of their initial pleading, and the trial court denied a motion to amend to add it. The defendants did not appeal that denial. The panel held that "defendants waived the Banking Law defense by failing to plead it initially, then failing to appeal the court's denial of the motion to amend to add the defense," citing its 2015 decision in U.S. Bank, N.A. v. Bernabel.

Veria and the guarantor had also filed counterclaims against the bank. One alleged breach of the Facility Agreement. The other alleged breach of the covenant of good faith and fair dealing.

The panel held that the trial court properly dismissed both counterclaims "as they were based on terms not in the contract, and defendants were in breach." It cited its 2023 decision in CORE Group Mktg. LLC v. MIP One Wall St. Acquisition LLC.

The decision and order runs five paragraphs and is unsigned. It lists the five justices on the panel without identifying an author, and it contains no dissent or concurring opinion. The ruling appears as 2026 NY Slip Op 06033 under Appeal No. 7259.

Lawyers for the bank included Casey D. Laffey of Reed Smith LLP. Veria and the guarantor were represented by Thomas J. Sottile of Mark L. Lubelsky and Associates.

The affirmance, with costs, leaves in place Borrok's April 2025 order granting summary judgment to the bank. According to a notice from the New York State Law Reporting Bureau printed with the decision, the text is uncorrected and subject to revision before publication in the Official Reports.