Phoenix Light SF Ltd. v Credit Suisse AG

Phoenix Light SF Ltd. v Credit Suisse AG 2016 NY Slip Op 07757 Decided on November 17, 2016 Appellate Division, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on November 17, 2016
Acosta, J.P., Renwick, Moskowitz, Feinman, Kahn, JJ.
653123/13 -652986/13 2229 2228 2227

[*1]Phoenix Light SF Limited, et al., Plaintiffs-Appellants,

v

Credit Suisse AG, et al., Defendants-Respondents. Phoenix Light SF Limited, et al., Plaintiffs-Appellants, Morgan Stanley, et al., Defendants-Respondents.

Robbins Geller Rudman & Dowd LLP, San Diego, CA (Nathan R. Lindell of the bar of the State of California, admitted pro hac vice, of counsel), for appellants.

Cravath, Swaine & Moore LLP, New York (Richard W. Clary of counsel), for Credit Suisse AG, Credit Suisse Securities (USA) LLC, DLJ Mortgage Capital, Inc., Credit Suisse First Boston Mortgage Securities Corp. and Asset Backed Securities Corp., respondents.

Davis Polk & Wardwell LLP, New York (James P. Rouhandeh of counsel), for Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley ABS Capital I, Inc., Morgan Stanley Capital I, Inc., Saxon Capital, Inc., Saxon Funding Management LLC and Saxon Asset Securities Company, respondents.

Judgment, Supreme Court, New York County (Charles E. Ramos, J.), entered May 6, 2015, in index No. 653123/13, to the extent appealed from as limited by the briefs, dismissing the common-law fraud, fraudulent inducement, and aiding and abetting fraud claims, unanimously reversed, on the law, with costs, and those claims reinstated. Appeal from order, same court and Justice, entered on or about April 23, 2015, to the extent it granted defendants' CPLR 3211(a)(7) motion to dismiss the aforesaid claims, unanimously dismissed, without costs, as subsumed in the appeal from the judgment. Order, same court and Justice, entered on or about April 23, 2015, in index No. 652986/13, which, to the extent appealed from as limited by the briefs, granted defendants' CPLR 3211(a)(7) motion to dismiss the common-law fraud, fraudulent inducement, and aiding and abetting fraud claims, unanimously reversed, on the law, with costs, and the motion denied.

The allegations that with respect to their purchase of residential mortgaged-back securities plaintiffs relied on misrepresentations and omissions made by defendants in the offering documents are sufficient to state the justifiable reliance element of the fraud claims; plaintiffs are not required to allege that they requested from defendants the actual loan files or due diligence reports or that they obtained representations and warranties made directly by defendants about the quality of the loans, as opposed to those made to defendants by other parties with direct access to the relevant information (see IKB Intl. S.A. v Morgan Stanley, 142 AD3d 447, 449-450 [1st Dept 2016]; Basis Yield Alpha Fund Master v Morgan Stanley, 136 AD3d 136, 142-143 [1st Dept 2015]; CIFG Assur. N. Am., Inc. v Goldman, Sachs & Co., 106 AD3d [*2]437 [1st Dept 2013]). We find that the remaining elements of the fraud claims are also sufficiently alleged (see IKB Intl., 142 AD3d 447; MBIA Ins. Corp. v Countrywide Home Loans, Inc., 87 AD3d 287, 294-296 [1st Dept 2011]).

We see no basis for reassignment to a different justice.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: NOVEMBER 17, 2016

CLERK