Wells Fargo Bank, N.A. v Robinson

[*1] Wells Fargo Bank, N.A. v Robinson 2009 NY Slip Op 52029(U) [25 Misc 3d 1211(A)] Decided on October 7, 2009 Supreme Court, Queens County Markey, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on October 7, 2009
Supreme Court, Queens County

Wells Fargo Bank, N.A., etc.

against

Allen Robinson, et al.



1779/2008



For the Plaintiff:

Farrell Fritz, P.C., by Bruce N. Roberts, Esq., 1320 Rex Corp Plaza, Uniondale, NY 11556-1320

For Defendant Richard Irish:

Paul A. Walters, Esq., 3400 Tiemann Ave., Bronx, NY 10469

For PROPOSED Intervenors Lucius Dorsey and Wanda Dorsey:

Joseph C. Krummel, Esq., for the SHIELD PROGRAM, Self Help Information and Legal Defense, Association of the bar of the City of New York Fund, Inc., 42 West 44th St., New York, NY 10036

Charles J. Markey, J.

Nonparties Lucius Dorsey and Wanda Dorsey (the Dorseys), by order to show cause, move to permit the Dorseys to intervene as defendants, to vacate the judgment of foreclosure and sale, to stay the summary proceeding in the Housing Court of the Civil Court of the City of New York, Queens County, Index No. 083611/08, to, and to direct that all rental income for the subject property currently being tendered to Richard Irish and/or Allen Robinson by the New York City Housing Authority Section 8 Leased Housing Program, and the named tenant of record, Latisha Roberts, and/or other tenant(s) residing at the subject property, be deposited with the Court until the motion is determined.

On January 22, 2008, plaintiff Wells Fargo Bank, N.A., commenced this action to foreclose a mortgage on real property located at 167-08 144th Drive, Jamaica, New York (the premises), obtained a default judgment of foreclosure and sale, dated June 4, 2008, and public auction of the premises was scheduled for August 15, 2008. The Dorseys then brought, via order to show cause dated December 11, 2008, and upon the foregoing papers, a motion to intervene as defendants and to vacate the default judgment of foreclosure and sale. Pending the hearing of this motion, a temporary restraining order was issued that, in effect, stays the sale of the mortgaged premises.

The Dorseys and plaintiff subsequently executed a stipulation, So Ordered by the Court on January 9, 2009 (the stipulation), in which plaintiff agreed to (1) the Dorseys' intervention, (2) the Dorseys' filing an answer by January 29, 2009, (3) the Dorseys' amending their order to show cause, substituting "the New York State Department of Housing and Community Renewal" in place of "the New York City Housing Authority," and (4) not proceed with the foreclosure sale of the premises until determination of the issues raised in the instant order to show cause. The Dorseys, for their part, consented to this Court's jurisdiction, and agreed that the judgment of [*2]foreclosure and sale would stand as security. As it appears the Dorseys have not filed an answer to the complaint or submitted evidence that one was served, the court will deem the instant motion to be one to vacate their default in answering, as well as to vacate the judgment of foreclosure and sale.

Since the Dorseys have already consented to this Court's jurisdiction, the instant motion to vacate the default judgment can proceed grounded only on "excusable default" (see CPLR 5015[a][1]). The Dorseys must demonstrate a justifiable excuse for the default and a meritorious defense to the action (see NYCTL 1996-1 Trust v. Jellerette, 48 AD3d 769, 770 [2nd Dept. 2008]).

At the outset, the Dorseys claim that plaintiff lacked standing to commence this action, stating that plaintiff's attorney verified the complaint one day before the note and mortgage were assigned to plaintiff by the original lender. An action, however, is commenced by filing the summons and complaint (CPLR 304). Since both the assignment and commencement took place on January 22, 2008, plaintiff had standing to bring this action (see Federal Natl. Mtge. Assn. v. Youkelsone, 303 AD2d 546 [2nd Dept. 2003]).

In support of the motion, the Dorseys submitted an affidavit from Mr. Dorsey, stating that Robinson and Irish, as part of a "foreclosure rescue scam" and a "criminal conspiracy," fraudulently induced the Dorseys to sign a deed to the premises over to Robinson (the Robinson deed). As potential defenses, the Dorseys claim that the Robinson deed was void ab initio, and that they were fraudulently induced into giving it. They also wish to cross-claim against Robinson and Irish for fraud and violation of General Business Law section 349 (hereinafter "the State Deceptive Practices Act"; see e.g. Council v. Better Homes Depot, Inc., 2007 WL 680768 [EDNY 2007]; Harris v. Jamaica Auto Repair, Inc., 2005 WL 1861730 [EDNY 2005]), and against the Mortgage Electronic Registration Systems, Inc., as Nominee for Fremont Investment & Loan (now Freemont Reorganizing Corp.) for negligent underwriting. Lastly, the Dorseys wish to bring third-party claims against broker Eugene Tucker and attorneys Shane Dwight Scott, Esq., and Cassandra Natasha Cean, Esq., for fraud, conversion, and violation of the State Deceptive Practices Act.

The Dorseys, however, fail to plead their defenses and claims at all, much less with the requisite particularity (see CPLR 3016[b]). "A deed based on forgery or obtained by false pretenses is void ab initio" (GMAC Mtge. Corp. v. Chan, 56 AD3d 521, 522 [2nd Dept. 2008]). The Dorseys make no claim that the Robinson deed was forged. On the issue of whether it was obtained under false pretenses (i.e., fraud in the factum), Mr. Dorsey states in his affidavit that "I do not remember what I signed because I have very poor eyesight." First, there is nothing in the record to indicate that Ms. Wanda Dorsey did not understand that what she was signing a deed. Second, the Dorseys do not contend that they were denied a reasonable opportunity to learn that what they were signing was a deed (see First Natl. Bank of Odessa v. Fazzari, 10 NY2d 394, 397 [1961]; Cash v. Titan Fin. Servs., Inc., 58 AD3d 785, 788 [2nd Dept. 2009]; Dalessio v. Kressler, 6 AD3d 57, 61 [2nd Dept. 2004]). Third, Mr. Lucius Dorsey's contention regarding his failing [*3]eyesight must fail as a matter of law. Compare Albany Med. Ctr. v. Armlin, 146 AD2d 866, 867 [3rd Dept. 1989] ["Although defendant stated that the document was not read to him, he did not allege that he requested such assistance."] with Woodworth v. Rice Bros. Co., 110 Misc. 158, 179 NYS 722 [Sup Ct Orleans County 1920] [denying defense motion for a new trial, court allowed issue of fraud to be tried by jury where plaintiff, "by reason of defective eyesight," was unable to read "the fine print" and asked that it be read to him, and defendant's agent, in so doing, falsely assured him as to its contents], aff'd, 193 App Div 971 [4th Dept. 1920], aff'd, 233 NY 577 [1922]. The contention that the Robinson deed was void ab initio thus is without merit.

A defense of fraudulent inducement would have been cut off by the assignment of the note and mortgage to plaintiff, if plaintiff was "a purchaser or incumbrancer for a valuable consideration [who lacked] previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor" (Real Property Law § 266; see Mathurin v. Lost & Found Recovery, LLC, ___ AD3d ____, 2009 WL 2516872 [2nd Dept. 2009]; Fischer v. Sadov Realty Corp., 34 AD3d 630 [2nd Dept. 2006]; Miner v. Edwards, 221 AD2d 934 [4th Dept. 1995]; Wells Fargo Bank v. Edsall, 2009 WL 175029, 2009 NY Slip Op 50112[U] [Sup Ct Suffolk County 2009]).

In Mathurin, the alleged victim of a foreclosure rescue scheme brought an action against the lender and mortgage holder to rescind the mortgage note and to recover damages for negligence and gross negligence. The Second Department sustained the action based upon a supplemental affidavit from the plaintiff, stating that the lender and mortgage holder were on notice of facts "that would lead a reasonable, prudent lender to make inquiries of the circumstances of the transaction at issue and that should have alerted them to the fraud allegedly being perpetrated by the defendants" (2009 WL 2516872 [internal quotation marks omitted]).

Here, in contrast, there is nothing in the record to indicate plaintiff was on notice of facts that should have led it to inquire into the circumstances attending the Robinson deed and his application for a mortgage loan. The Dorseys have therefore failed to make a prima facie showing of a meritorious defense required for vacatur of the default judgment of foreclosure and sale (see CPLR 5015[a][1]; Rivera v. 999 Realty Mgmt., 246 AD2d 637, 638 [2nd Dept. 1998]).

The Dorseys have failed to show that the claim of fraud has merit. "The elements of a cause of action sounding in fraudulent inducement are representation of a material existing fact, falsity, scienter, deception and injury'" (Dalessio, supra , 6 AD3d at 61, quoting Channel Master Corp. v. Aluminum Ltd. Sales, 4 NY2d 403, 407 [1958]). The only representations that the Dorseys set forth are the allegations in Mr. Dorsey's affidavit that: "my wife and I were led to believe that we were renegotiating the financing of our home mortgage," "Eugene Tucker promised us that he could reduce our future monthly mortgage payments, and . . . would be able to eliminate the growing debt we already owed to the bank in missed payments," and the attorney provided to them at closing "told us that we would receive a check in the mail," a check which never came. These allegations, however, are insufficient because "[r]epresentations that are mere expressions of opinion of present or future expectations are not to be considered promises when [*4]examining the issue of fraud in the inducement" (Crossland Sav., F.S.B. v. SOI Dev. Corp., 166 AD2d 495 [2nd Dept. 1990]). The Dorseys failed to allege or submit evidence of "facts sufficient to show that at the time the promissory representation was made, the party never intended to honor or act on the statement" (see G & F Assoc. Co. v. Brookhaven Beach Health Related Facility, 249 AD2d 441, 443 [2nd Dept.], lv. to appeal denied, 92 NY2d 807 [1998]).

To establish a cause of action under the State Deceptive Practices Act, the Dorseys had to allege (1) a deceptive consumer-oriented act or practice which is misleading in a material respect, and (2) injury resulting from such act (Andre Strishak & Assoc., P.C. v. Hewlett Packard Co., 300 AD2d 608, 609 [2nd Dept. 2002]). The Dorseys, however, failed to "charge conduct . . . that is consumer-oriented" (Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 NY2d 20, 25 [1995]). They also failed to allege specific misrepresentations that caused them to be misled and suffer damages (see Gale v. IBM Corp., 9 AD3d 446 [2nd Dept. 2004]). The Dorseys' reliance on the State Deceptive Practices Act is thus misplaced.

This Court's independent legal research has uncovered one compelling case where a court denied a defense motion to dismiss third-party claims in a mortgage foreclosure action. In M & T Mortgage Corp. v. Miller (323 F Supp 2d 405 [EDNY 2004]), Judge Gershon, in a well-reasoned opinion, sustained claims predicated on fraud, criminal conspiracy, and the State Deceptive Practices Act. In that case, the third-parties made a detailed factual showing that they were specifically targeted for the scheme because they were part of a vulnerable racial minority who would be susceptible to manipulative practices, the private defendants' use of a straw man to disguise the fact that they were flipping houses, steering the third parties "to a corrupt attorney," the defendants' tactic of asking the third parties to sign an application in blank, the use of a highly questionable two-contract period as "a high pressure tactic" designed to prevent the victims from realizing and discovering their "financial peril," and the charging of a 60% premium that the "Private Defendants knew (as demonstrated by their misrepresentations in the mortgage insurance application) the Millers could not afford and which the Millers immediately defaulted on."

In the present case, unlike the facts of M & T Mortgage Corp., the Dorseys, faced by mounting financial debt, sought out the help of defendants. Second, the alleged circumstances depicted by Joseph C. Krummel, Esq., the Dorseys' attorney, are troubling, but do not rise to the tsunami of fraud contained in the M & T Mortgage Corp. opinion (see also Mathurin v. Lost & Found Recovery, LLC, ___ AD3d ____, 2009 WL 2516872 [2nd Dept. 2009] [vendor stated a cause of action to rescind a mortgage note]; Altegra Credit Co. v. Tin Chu, 29 AD3d 718 [2nd Dept. 2006] [upholding grant of summary judgment in favor of victims of mortgage fraud based on criminal conviction and application of collateral estoppel]; HSBC Bank, USA v. Picarelli, 2009 WL 1585773, 2009 NY Slip Op 51107[U] [Sup Ct Queens County 2009] [decision by the undersigned sustaining defense of misrepresentation in violation of the federal Truth in Lending Act, 15 USC § 1638(a)(4)]).

The Dorseys also cannot assert a cause of action for conversion, because "[a]n action [*5]sounding in conversion does not lie where the property involved is real property" (Garelick v. Carmel, 141 AD2d 501, 502 [2nd Dept. 1988]).

In light of the foregoing, the parties' remaining issues need not be addressed.

Accordingly, as the Court has already granted, in the stipulation, that portion of the Dorseys' motion seeking to intervene, the caption is hereby amended to read:

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF QUEENS

 1;x

Wells Fargo Bank, N.A., as Trustee for the Certificate

Holders Of Carrington Mortgage Loan Trust Series

2007-FRE1 Asset Backed Pass Through Certificates,

Plaintiff(s),Index No. 1779/2008

- against -

Allen Robinson; Richard D. Irish; Millard H. Hall;

Econnergy Energy Company, Inc.; Criminal Court

of the City of New York; United States of America

Department of the Treasury Internal Revenue

Service; City of New York Department of Finance

Parking Violations Bureau Payment and

Adjudication Center of Queens; City of New York

Transit Adjudication Bureau; City Of New York

Environmental Control Board; "John Doe" & "Jane

Doe"; Lucius Dorsey & Wanda Dorsey,

Defendant(s).

 1;x

The remainder of the Dorseys' motion is denied.

The foregoing constitutes the decision and order of the Court.

Hon. Charles J. MarkeyJustice, Supreme Court, Queens County

Dated: October 7, 2009

Long Island City, New York

Appearances:

Other Defendants have not appeared.