Aurora Loan Servs., LLC v Cambridge Home Capital, LLC
Annotate this CaseDecided on January 31, 2006
Supreme Court, Nassau County
Aurora Loan Services, LLC, and Lehman Brothers Bank FSB, Plaintiffs,
against
Cambridge Home Capital, LLC, Defendant.
10591/05
Ute Wolff Lally, J.
Upon the foregoing papers, it is ordered that this motion by plaintiffs for an order pursuant to CPLR 3211(a)(7) dismissing the defendant's first and second counterclaims is granted. Defendant's cross-motion for an order dismissing the claims of plaintiff Lehman Brothers pursuant to CPLR 3211(a)(3), dismissing the second cause of action pursuant to CPLR 3211 (a)(7) and dismissing the first and third causes of action pursuant to CPLR 3211(a)(5) and/or CPLR 3211 (a)(7) is granted only to the extent that the second cause of action is dismissed.
Plaintiffs are engaged in the secondary mortgage market. Plaintiff Aurora is an LLC whose sole member is plaintiff Lehman Brothers. On April 13, 2000, plaintiff Aurora and defendant entered into an agreement whereby plaintiff agreed to buy and defendant agreed to sell certain loans made by defendant and secured by residential mortgages. On May 6, 2004 plaintiff Lehman Brothers and defendant entered into a second similar agreement. The loans were to meet certain minimum standards so as to be marketable in the secondary mortgage market. The agreement provided that if defendant breached the agreement plaintiff was to provide written notice and that under certain circumstances defendant would be obligated to repurchase the [*2]loans.
On February 21, 2005 plaintiff Aurora gave notice to defendant that twelve loans purchased pursuant to the agreements allegedly did not meet the contracted for standards and requested defendant repurchase them. By letter dated March 17, 2005 defendant declined to do so, setting forth its belief that defendant was not in breach of the contracts. Plaintiffs then commenced this action in July, 2005 alleging that defendant is in breach of the parties' agreements regarding seven of the loans previously identified by plaintiffs. On or about September 1, 2005 defendant served its answer containing two counterclaims, the first seeking counsel fees and the second seeking what defense counsel characterizes as "exemplary or punitive damages" due to the plaintiffs' "culpable conduct."
In determining a motion to dismiss pursuant to CPLR 3211(a)(7) the pleadings are to be liberally construed (New York Civil Liberties Union v. State, 4 NY3d 175). The court must determine whether, accepting as true the factual allegations of the complaint (Kevin Spence & Sons, Inc. v. Boar's Head Provisions Company, 5 AD3d 352), and according the plaintiff the benefit of all favorable inferences which may be drawn therefrom, the plaintiff can succeed upon any reasonable view of the facts stated. The issue is whether the proponent of the pleading has a cause of action, not whether he or she has stated one (Rochdale Village, Inc. v. Zimmerman, 2 AD3d 827; Montes Corp. v. Charles Freihofer Baking Co., Inc., 791 N.Y.S.2d 834, 2005 NY Slip Op. 02632 [NYAD 2 Dept. Apr 04, 2005]) The Court must therefore determine whether the facts alleged in the complaint fit within some cognizable legal theory upon which recovery may be had (P.T. Bank Central Asia v. ABN AMRO Bank N.V., 301 AD2d 373) In assessing a motion under CPLR 3211(a)(7), the court may consider affidavits submitted by the plaintiff to remedy any defects in the complaint (Leon v. Martinez, 84 NY2d 83). Unlike a motion for summary judgment, on a motion to dismiss, the plaintiff has no obligation to demonstrate evidentiary facts to support the allegations contained in the complaint (Stuart Realty Co. v. Rye Country Store, Inc., 296 AD2d 455).
Applying these principles first to the plaintiff's motion it is clear that the counterclaims must be dismissed. The first counterclaim seeks counsel fees. Generally speaking, the rule in this jurisdiction is that, absent a specific statute or contractual agreement to the contrary, a successful litigant may not recover his legal fees (Mighty Midgets, Inc., v. Centennial Insurance Company, 47 NY2d 12). Defendant responds that it relies upon 22 NYCRR §130 and two cases out of the First Department, Sanders v. Copley (194 AD2d 85) and William P. Pahl Equipment Corp. v. Kassis, 182 AD2d 22).
The language of the rule does not support defendant's claim. 22 NYCRR 130-1.1(d) provides: An award of costs or the imposition of sanctions may be made either upon motion in compliance with CPLR 2214 or 2215 or upon the court's own initiative, after a reasonable opportunity to be heard. The form of the hearing shall depend upon the nature of the conduct and the circumstances of the case.[*3]
The very language of the rule contemplates a motion made in the context of a pending action and not an independent cause of action. This view seems to be shared by other Courts which have addressed this issue (See Yankee Trails, Inc. v. Jardine Ins. Brokers, Inc., 145 Misc 2d 282; Jaliman v. Selendy, 7 Misc 3d 1007(A); Murphy v. Smith, 4 Misc 3d 1029(A); Entertainment Partners Group, Inc. v. Davis, 155 Misc 2d 894). In addition, the cases cited by defendant do not support its position in that both cases involved applications made in the course of pending litigation and did not involve a separate cause of action. Accordingly, the first counterclaim is dismissed.
The second cause of action seeking "exemplary damages" as a result of plaintiff's "culpable conduct" does not set forth any cognizable cause of action. To establish a cause of action for malicious prosecution defendant must allege that the action terminated favorably which, obviously defendant herein can not do. (Curiano v. Suozzi, 63 NY2d 113) Neither may the mere bringing of an action with a malicious intent support an action for abuse of process in the absence of an allegation that the process was somehow perverted after its issuance (Curiano v. Suozzi, supra). Finally, a cause of action for prima facie tort must also fail because there is no allegation of special damages (Lynch v. McQueen, 309 AD2d 790) and because an action for prima facie tort may not be premised upon a prior action maliciously instituted (Curiano v. Suozzi, supra). Defense counsel's reply that the claim merely seeks exemplary damages for plaintiff's conduct is of no avail as it is well settled that a cause of action for punitive or exemplary damages may not stand alone as a separate cause of action (Weir Metro Ambu-Service, Inc. v. Turner, 57 NY2d 911).
Turning to the defendant's cross-motion, the Court finds that the first and third causes of action are adequately pled. The elements of a breach of contract are the existence of a contract, plaintiff's performance under the contract, defendants' breach of that contract, and resulting damages (Furia v. Furia, 116 AD2d 694; Ashley MRI Management Corp. v. Perkes, 10 Misc 3d 1068[A]). These are all pled. Defendant's argument that the pleading is inadequate because it fails to allege that the defendant's breach "materially and adversely affected the value of the mortgage loans" as set forth in the agreements is also without merit. Paragraph 26 of the complaint alleges that plaintiffs have incurred "substantial losses and damages as a result of Cambridge's above referenced breaches, omissions, and other improper actions." Defendant's application to dismiss the complaint based upon documentary evidence is likewise denied as the documents submitted only establish some of the terms of the contract but do not address the issue of the defendant's breach. The application to dismiss Lehman Brother's claim for lack of standing is denied as the responding papers allege that Lehman did in fact purchase one of the loans at issue.
The Court agrees however with defendant that the second cause of action sounding in unjust enrichment should be dismissed. It is clear from the moving papers that defendant does not dispute either the existence or the validity of the agreements which are the subject of the complaint, but only denies the allegations that plaintiff is in compliance with those agreements and that defendant has breached them. Accordingly, in the face of defendant's concession that the [*4]contracts are valid and binding, the cause of action sounding in unjust enrichment must fall (Clark-Fitzpatrick, Inc. v. Long Island R. Co., 70 NY2d 382; Goldman v. Metropolitan Life Ins. Co., 2005 WL 3091088, 2005 NY Slip Op. 08846, [NY Nov 21, 2005]; EBC I, Inc. v. Goldman Sachs & Co., 5 NY3d 11).
Accordingly, plaintiffs' motion is granted and the first and second counterclaims contained in defendant's answer are dismissed. Defendant's motion is granted to the extent that the second cause of action is dismissed and is denied in all other respects.
Dated: January 31, 2006 _______________________________
J.S.C.
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