Beschel v Countrywide Home Loans, Inc.

[*1] Beschel v Countrywide Home Loans, Inc. 2008 NY Slip Op 52397(U) [21 Misc 3d 1136(A)] Decided on November 26, 2008 Supreme Court, Nassau County Austin, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through December 10, 2008; it will not be published in the printed Official Reports.

Decided on November 26, 2008
Supreme Court, Nassau County

Jared W. Beschel and Jared W. Beschel & Associates, P.C., Plaintiff,

against

Countrywide Home Loans, Inc., d/b/a American Wholesale Lender, Countrywide Financial Corporation, Countrywide Bank, NA, Countrywide Bank, FSB, Debra Grippo, Larissa Elsner and Mary Lou DiPalo, Defendants.



14182-08



COUNSEL FOR PLAINTIFF

Meyer, Suozzi, English & Klein, P.C.

990 Stewart Avenue

P.O. Box 9194

Garden City, New York 11530-9194

COUNSEL FOR DEFENDANT

Zeichner, Ellman & Krause, LLP

575 Lexington Avenue

New York, New York 10022

Leonard B. Austin, J.

Defendants, Countrywide Home Loans, Inc. d/b/a America's Wholesale Lender, Countrywide Financial Corporation, Countrywide Bank, NA, Countrywide Bank, FSB (hereinafter collectively referred to as "Countrywide"), Debra Grippo ("Grippo"), Larissa Elsner ("Elsner") and Mary Lou DiPalo ("DiPalo"), move to dismiss the complaint pursuant to CPLR 3211(a)(7) for failure to state a cause of action.

BACKGROUND

Plaintiff, Jared W. Beschel ("Beschel"), is an attorney admitted to practice law in the courts of the State of New York. His firm is Plaintiff, Jared W. Beschel & Associates, P.C. ("PC"), a domestic professional legal corporation. The PC's practice is devoted principally to the representation of institutional mortgagees, real estate sellers and purchasers, title insurance carriers and agencies, mortgage brokers and real estate brokers.

Countrywide is a mortgage lender. Grippo is a branch manager and mortgage loan application underwriter at Countrywide's Uniondale office. DiPalo and Elsner are also mortgage loan application underwriters in that same office.

Beschel and PC were on Countrywide's list of approved legal counsel and also had dealings with Countrywide as legal counsel representing sellers and purchasers of real estate. Plaintiffs allege that their relationship with Defendants was on good terms until "Defendants, without reason or excuse, suddenly then embarked on a secret, evil, malicious, wicked, culpable, actionable, despicable and wholly unjustified course of wrongful conduct cruelly designed to injure plaintiffs in plaintiffs' trade and profession." (Complaint ¶ 20). Plaintiffs assert that Defendants began to publish directly or indirectly to clients that Plaintiffs were shady practitioners', "participate in fraudulent loans'" and that dealing with Plaintiffs is "bad business". (Complaint ¶ 21). Thereafter, Defendants repeatedly stated that anyone doing business with Plaintiffs will not be approved to do business with Defendants and that any loan application connected to Plaintiffs would be rejected.

Plaintiffs commenced this action alleging the following causes of action: (1) permanent injunction on Defendants' conduct; (2) mandatory injunction requiring Defendants to take action to remedy the damage caused; (3) defamation; (4) tortious interference with contract; and (5) tortious interference with business relations.

Defendants argue that the defamation claim is not pled with particularity; their statements are protected speech as opinion statements and not fact and are thus not actionable; the causes of action for injunctions are unconstitutional; and the tortious interference causes of action fail to state a claim.

In opposition to the motion and in support of Plaintiffs' application for the motion to be converted to a CPLR 3212 motion in his favor (see footnote 2, infra) Beschel maintains that, in early 2005, he was contacted by DiPalo concerning a transaction involving the sale of property, located at 94-22 32nd Avenue, East Elmhurst, New York, in which the PC had represented Countrywide as the lender. The borrower on that transaction, Mario Lazo ("Lazo"), purchased a home for another party without Plaintiffs' knowledge and Lazo assigned the home to that other person after the closing.

Plaintiffs maintain that they had no knowledge of this scheme. During a telephone conversation between Beschel and DiPalo concerning the Lazo file, DiPalo [*2]informed Beschel that Plaintiffs would not be representing Countrywide in the future. In an attempt to rectify the situation, Beschel called Lazo's attorney who arranged to have title transferred back to Lazo. Upon receipt of the title documents confirming that Lazo was again the title owner to the property, Beschel forwarded the documents to Countrywide. Despite Plaintiffs' efforts, Plaintiffs were barred from representing Countrywide after the Lazo incident.

In July 2008, Plaintiffs, during the course of representing two buyers of cooperative apartments, for which Countrywide was to provide the funding, found out that Countrywide had established a policy excluding them from representing any parties involved in a Countrywide-funded real estate transaction. On July 22, 2008, an employee of the PC, Marie Rogers ("Rogers"), received an email from the mortgage broker who was involved with both deals, Antonio Gagliardi ("Gagliardi"), asking for her to call him. Gagliardi informed Rogers that Countrywide refused to close on either co-op transaction as long as Plaintiffs represented the buyers. Plaintiffs, through Gagliardi's staff, were informed that Countrywide's position was that Beschel was no longer approved as a settlement agent or to work on any of Countrywide's loan in any capacity. Supposedly this directive came from Grippo. Given the situation, Plaintiffs withdrew as attorney of record for both purchasers since Countrywide would not provide the funds for either loan if Plaintiffs remained counsel for either of the buyers.

On July 24, 2008, Beschel called Grippo and recorded the conversation. Grippo informed Beschel that Diaz had given the direction not to use Plaintiffs and that no loans would be closed if Plaintiffs were involved in the deal.

Following the conversation with Grippo, Beschel contacted Diaz and recorded that conversation as well. Diaz confirmed that Countrywide's policy was that "we essentially can choose whom to [do] business with and whom not to and we're simply choosing not to do any type of business relationships or continue a business relationship with you with the company." When specifically asked about situations in which he would represent a buyer in a real estate transaction funded by Countrywide, he was informed that, based on past transactions, Countrywide would not engage in any further transactions involving Plaintiffs in any capacity.

Plaintiffs argue that since the Long Island mortgage lending business is controlled by a small group of mortgage brokers and Countrywide is the principal lender in the region that Countrywide's "notice" to brokers that it will not do business with Plaintiffs can effectively put Plaintiffs out of business. Plaintiffs opine that "the clearly-implied message is that (Plaintiffs) have done something so horrible and unprofessional that Countrywide fear harm just by doing business with our clients."

In reply, Defendants raise the argument that the individual Defendants, Grippo, Elsner and DiPalo, should be dismissed from this suit as Plaintiffs make no allegations that any of these three individuals committed a tort against the Plaintiffs [FN1]. They also argue that Plaintiffs' purported cross-motion seeking to convert Defendants' notice of a [*3]CPLR 3211 motion into a CPLR 3212 motion in favor of Plaintiffs is inappropriate for Plaintiffs' failure to serve a notice of cross-motion and that issue has yet to be joined [FN2].

Defendants also note that with respect to the Lazo closing, Countrywide disbursed funds to Plaintiffs' special mortgage trust account in the amount of $426,308.80 on December 14, 2004. These funds were reimbursed to Countrywide on December 30, 2004 by Plaintiffs. An additional reimbursement in the same amount was made by Plaintiffs to Countrywide. On February 11, 2005, DiPalo inquired of Plaintiffs about the status of the Lazo closing and was informed that Lazo borrowed money from Continental Capital and not Countrywide. Eventually Beschel called DiPalo to state that he had disbursed the Countrywide funds on Lazo's behalf to purchase the East Elmhurst property and that any return of the funds to Countrywide was an error. In response, Countrywide transferred $426,308.80 back to Plaintiffs.

DISCUSSION

A.Standard Motion to Dismiss

CPLR 3211(a)(7) permits the court to dismiss a complaint that fails to state a cause of action. When deciding such a motion, the court must determine whether the plaintiff has a legally cognizable cause of action and not whether the action has been properly pled. Guggenheimer v. Ginzburg, 43 NY2d 268 (1977); Rovello v. Orofino Realty Co., 40 NY2d 633 (1976); Well v. Yeshiva Rambam, 300 AD2d 580 (2nd Dept. 2002); and Frank v. DaimlerChrysler Corp., 292 AD2d 118 (1st Dept. 2002). The complaint must be liberally construed and plaintiff given the benefit of every favorable inference. Leon v. Martinez, 84 NY2d 83 (1994); Mitchell v. TAM Equities, Inc., 27 AD3d 703 (2nd Dept. 2006);and Paterno v. CYC, LLC, 8 AD2d 544 (2nd Dept. 2002). The court must also accept as true all of the facts alleged in the complaint and any factual submissions made in opposition to the motion. Norman v. City of New York, 9 NY3d 825 (2007); 511 West 232rd Street Owners Corp. v. Jennifer Realty Co., 98 NY2d 144 (2002); Sokoloff v. Harriman Estates Development Corp., 96 NY2d 409 (2001); and Also Enterprises, Ltd. v Premier Lincoln-Mercury, Inc., 11 AD3d 493 (2nd Dept. 2004).

If from the facts alleged in the complaint and the inferences which can be drawn from the facts, the court determines that the pleader has a cognizable cause of action, the motion must be denied. Sokoloff v. Harriman Estates Development Corp., supra; and Stucklen v. Kabro Assocs., 18 AD3d 461 (2nd Dept. 2005).

While factual allegations contained in the complaint are deemed true, legal conclusions and facts contradicted on the record are not entitled to a presumption of [*4]truth. In re Loukoumi, Inc., 285 AD2d 595 (2nd Dept. 2001); and Doria v. Masucci, 230 AD2d 764 (2nd Dept. 1996).

B.Injunctive Relief - First and Second Causes of Action

"A permanent injunction is a drastic remedy which may be granted only where the plaintiff demonstrates that it will suffer irreparable harm absent the injunction." Icy Splash Food & Beverage, Inc., v. Henckel, 14 AD3d 595, 596 (2nd Dept. 2005).

Plaintiffs' first and second causes of action seek to prohibit Defendants from engaging in conduct which includes, inter alia, repeatedly making defamatory statements, and to compel Defendants to take steps to remedy the damage caused by their statements. In the course of pleading both causes of action, Plaintiffs assert that they will sustain "immediate and ongoing and substantial and irreparable further damages." (Complaint ¶ ¶ 27, 30).

Defendants argue that Plaintiffs' causes of action seeking injunctive relief violate the First Amendment. Near v. Minnesota, 283 US 697, 716 (1931). See also, Pacific Gas & Electric Co. v. Pacific Utilities Commission of California., 475 US 1, 11 (1986); ("There is necessarily...a concomitant freedom not to speak"). and Vance v. Universal Amusement Co., Inc., 445 U.S. 308, 317 (1980)("any systems of prior restraints of expression comes to this Court bearing a heavy presumption against its constitutional validity").

Plaintiffs respond that these causes of action do not violate the Constitution in that "while equity will not intervene to restrain the publication of words on a mere showing of falsity, it may intervene where restraint becomes essential to the preservation of a business or other property rights threatened by tortious conduct in which the words are merely an instrument of and incidental to the conduct." Trojan Electric & Machine Co. v. Heusinger, 162 AD2d 859, 860 (3rd Dept. 1990). "An injunction will lie to restrain libel when the publication is made as part and parcel of a course of conduct deliberately carried on to further a fraudulent or unlawful purpose." Id. See also, Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty, 27 AD3d 420 (2nd Dept. 2006); and Ansonia Assoc. Ltd. Partnership v. Ansonia Tenants' Coalition, 253 AD2d 706 (1st Dept. 1998).

First Amendment rights protecting freedom of expression must be balanced against other private and governmental interests and in certain instances restriction of those rights will be appropriate. See, Huntingdon Life Sciences, Inc. v. Win Animal Rights, 2007 WL 2175613 at *7 (Sup. Ct. NY Co. April 9, 2007). "(N)ot all injunctions which may incidentally affect expression are impermissible prior restraints and narrowly tailored, reasonable time, place and manner regulations may be imposed to further significant government interests when they do not regulate the content of speech and leave open alternate means of communication." Lambert v. Williams, 218 AD2d 618, 621 (1st Dept. 1995) (internal citations omitted).

As the motion before the Court is one to dismiss the complaint and only the sufficiency of the pleadings is being addressed, the cases cited by Defendants with regard to the first and second causes of action are distinguishable and, therefore, are not applicable. See e.g., Vance v. Universal Amusement Co., Inc., supra (involving a Texas nuisance statute authorizing enjoining the exhibition of certain motion pictures on [*5]the ground of obscenity); Organization for a Better Austin v. Keefe, 402 U.S. 415 (1971)(where an injunction enjoining defendants from distributing pamphlets had been granted); Bihari v. Gross, 119 F. Supp. 2d 309 (S.D.NY 2000)(denial of plaintiff's motion for a preliminary injunction); and Rosenberg Diamond Development Corp. v. Appel, 290 AD2d 239 (1st Dept. 2002)(a temporary restraining order had been issued which enjoined any type of verbal communication or dissemination of materials).

With respect to Defendants' additional argument that Plaintiffs' second cause of action must fail since the remedy for defamation is monetary damages citing Matherson v. Marchello, 100 AD2d 233 (2nd Dept. 1984), allegations involving slander per se, which involves those addressing a person's business, trade or profession, do not require that special damages be pled or proven. Shapiro v. Pagan, 50 AD3d 664, 665 (2nd Dept. 2008). Thus, it is not at all clear that, under the circumstances, presented that money damages alone will suffice.

In light of the foregoing, Defendants' motion to dismiss Plaintiffs' first two causes of action must be denied.

C.Defamation- Third Cause of Action

The elements for a cause of action for defamation "are a false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard, and it must either cause special harm or constitute defamation per se." Salvatore v. Kumar, 45 AD3d 560, 563 (2nd Dept. 2007) citing Dillon v. City of New York, 261 AD2d 34 (1st Dept. 1999).

"The essence of the tort of libel is the publication of a statement about an individual that is both false and defamatory". Brian v. Richardson, 87 NY2d 46, 50-51 (1995). A defamatory statement is libelous per se if the statement "tends to expose the plaintiff to public contempt, ridicule, aversion or disgrace, or induce an evil opinion of him in the minds of right-thinking persons, and to deprive him of their friendly intercourse in society." Rinaldi v. Holt, Rinehart & Winston, 42 NY2d 369, 379, cert. den., 434 U.S. 969 (1977). "Additionally, a defamatory statement is libelous per se if it imputes fraud, dishonesty, misconduct, or unfitness in conducting one's profession". Matovcik v. Times Beacon Record Newspapers, 46 AD3d 636, 637 (2nd Dept. 2007).See also, Liberman v. Gelstein, 80 N.Y.2d 429, 435 (1992); Kotowski v. Hadley, 38 AD3d 499, 500 (2nd Dept. 2007); Gjonlekaj v. Sot, 308 AD2d 471, 473-474 (2nd Dept. 2003); and Wasserman v. Haller, 216 AD2d 289 (2nd Dept. 1995).

"An expression of pure opinion is not actionable... (w)hen, however, the statement of opinion implies that it is based upon facts which justify the opinion but are unknown to those reading or hearing it, it is a mixed opinion' and is actionable." Steinhilber v. Alphonse, 68 NY2d 283, 289 (1986).

CPLR 3016(a) requires that for libel or slander actions, "the particular words complained of shall be set forth in the complaint, but their application to the plaintiff may be stated generally."

Defendants argue that the third cause of action alleging defamation should be dismissed for Plaintiffs' failure to plead with particularity pursuant to CPLR 3016(a); to wit. Plaintiffs make allegations that Defendants' statements were made to "colleagues" and "agencies" and Plaintiffs do not identify who made these statements. Defendants [*6]cite Cole v. Mandell Food Stores, 93 NY2d 34 (1999) for the proposition that the purpose of pleadings is to prevent surprise and apprise the defending party of the nature of the claims against him or her.

Defendants also argue that the supposed statements are not actionable since they are statements of opinion and not fact.

In response, Plaintiffs argue that discovery should be allowed immediate discovery on this issue pursuant to CPLR 3211(d) since facts, which are in the sole possession of Defendants, exist which cannot be stated at this point by Plaintiffs. Furthermore, they assert that the statements made were "mixed opinion" which are actionable.

Plaintiffs have, to some extent, failed to particularize their defamation claim. Discovery will enable the parties to gain a greater focus on this cause of action. This is especially true since any facts supporting this cause of action would be in the Defendants' possession. The statements alleged to have been made to a mortgage broker (Gagliardi) are sufficient, at this stage, to sustain the cause of action. Furthermore, it appears that the alleged statements would be ones based on facts and would, therefore, fall into the category of "mixed opinion". Consequently, such statements are actionable.

D.Tortious Interference with Contract- Fourth Cause of Action

In order to state a cause of action for tortious interference with contractual relations, it must be alleged that (1) a contract existed between the plaintiff and a third party; (2) that the defendant knew of the contract; (3) that the defendant intentionally induced the third party to breach or otherwise made performance impossible; and (4) that the plaintiff suffered damages as a result. Bayside Carting, Inc. v. Chic Cleaners, 240 AD2d 687, 688 (2nd Dept. 1997).

Plaintiffs have sufficiently pled a tortious inference with contractual relations cause of action given the fact that on at least two occasions Countrywide was aware of a contract between Plaintiffs and their client-buyer and intentionally induced the client-buyer to breach their contract for legal services with the Plaintiffs resulting in Plaintiffs' loss of legal fees. Since Plaintiffs have not pled that they represented the buyers on a contingency fee basis, which would mean that a fee was not due and earned until the case was completed, Plaintiffs arguably have a claim for the quantum meruit value of the services provided prior to the buyers were allegedly induced to breach their contract with plaintiffs as well as the fee which would have been earned but for Defendants' interference. See e.g., Realuyo v. Diaz, 2000 WL 307407 (S.D.NY) (Plaintiff-attorney's complaint for tortious interference with a contingency fee contract was dismissed).

Therefore, Defendants' motion to dismiss Plaintiffs' fourth cause of action must be denied.

E.Tortious Interference with Business Relations-Fifth Cause of Action

To be actionable, interference with business relations must be effected by unlawful means or, under the theory of prima facie tort, by lawful means without justification. See, Wolf v. National Council of Young Israel, 264 AD2d 416 (2nd Dept. 1999); Quail Ridge Assocs. v. Chemical Bank, 162 AD2d 917, 919 (3rd Dept. 1990); and Mandelblatt v. Devon Stores, 132 AD2d 162, 168 (1st Dept. 1987). Accordingly, there must be allegations that unlawful means were used to interfere with the relationship [*7]between plaintiff and third parties, or that the alleged acts of interference, though lawful, were prompted solely by malice or ill will. See, Wolf v. National Council of Young Israel, supra; Quail Ridge Assocs. v. Chemical Bank, supra; and Mandelblatt v. Devon Stores, supra.

Plaintiffs allege that Defendants have interfered with their business relationships with not only clients but also with mortgage brokers and that same was done maliciously without any basis or justification. Consequently, Defendants' motion to dismiss Plaintiffs' fifth cause of action must be denied.

Accordingly, it is,

ORDERED, that Defendants' motion to dismiss Plaintiffs' complaint is denied.

This constitutes the decision and Order of this Court.

Dated: Mineola, NY

November 26, 2008

____________________________Hon. Leonard B. Austin, J.S.C. Footnotes

Footnote 1: This argument is raised for the first time in the reply. Given the fact that Plaintiffs did not have an opportunity to address this argument, the Court will not consider this argument as a ground for dismissing the complaint.

Footnote 2: Plaintiffs did not serve a notice of cross-motion seeking summary judgment on their first and fourth causes of action. Consequently, Plaintiffs' request that Defendants' CPLR 3211 motion in Defendants' favor be converted into a CPLR 3212 motion in Plaintiffs' favor is denied. With respect to converting a CPLR 3211 motion into a CPLR 3212 motion pursuant to CPLR 3211(c), the conversion is not proper unless the court gives notice to the party "moved against" that the motion is being treated as one for summary judgment. Mihlovan v. Grozavu, 72 NY2d 506 (1988). In this situation, the Court has declined to give such notice. Consequently, any arguments of the parties regarding Plaintiffs' request for summary judgment on their first and fourth causes of action will be addressed in the context of the motion now before the Court.