Legal Question in Banking Law in Pennsylvania

Re: Lender Liability

You asked about lender liability for a loan commitment on which the lender backed out.

Lawyers and law firms are like other businesses in that lawyers need to see a potential return that justifies the case. Few and far between are cases where lawyers can afford to take a case just to make a point.

The question in your case is what are your damages and to what extent are they the cause of the bank's actions. The law usually does not allow a recovery just because a party acted badly. There must be a harm associated with that action (causation). In your circumstance how was the school harmed? Has it made commitments that it must breach? Were those commitments made with the knowledge of the lender or only on the assumption that the lender would follow through on its commitment?

The analysis must also include what is the benefit of bringing suit? Can the school find a new lender? Will the school have to pay a higher rate of interest (which would mean loss of the bargain)? Or would the school realize a better interest rate because the lender backed out? (Here the harm might be mitigated.)

Any attorney would need to investigate the circumstances surrounding the situation including all written agreements and any commitments made verbally or otherwise. The case itself would cost a fair bit of money which would not necessarily be recoverable in a suit. Can the school afford to be involved in litigation? Will such litigation prevent the school from getting another lender to take on the school's project?

I hope this helps you analyze your situation. None of this is meant to dissuade you from proceeding but it should help you realize that a lot of thought must go in to pursuing this matter. I would be happy to speak with you about this matter.

Regards,

Roger