People v Empire Prop. Solutions, LLC
2012 NY Slip Op 31035(U)
April 10, 2012
Supreme Court, Nassau County
Docket Number: 09-017767
Judge: Steven M. Jaeger
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C.:
SHORT FORM ORDER
SUPREME COURT - STATE OF NEW YORK
Present: .
HON. STEVEN M. JAEGER,
Acting Supreme Court Justice
PEOPLE OF THE STATE OF NEW YORK by
ANDREW M. CUOMO , Attorney General of
the State of New York
Plaintiff
TRIAL/lAS , PART 41
NASSAU COUNTY
INDEX NO. : 09- 017767
MOTION SUBMISSION
DATE: 3-
-againstMOTION SEQUENCE
EMPIRE PROPERTY SOLUTIONS , LLC , et aI.
NO. 006
Defendants.
The following papers read on this motion:
Notice of Motion , Affirmation , and Exhibits
Memorandum of Law in Opposition
Motion by the attorney for defendants Zornberg & Hirsch , Barry Zornberg,
Nancy Hirsch , and H&R Abstract , Inc. (the Zornberg defendants) for an order
pursuant to CPLR 2221 for leave to reargue their motion to dismiss the complaint is
granted , and upon reargument the court adheres to its decision dated November 15
2011 denying the application to dismiss the complaint pursuant to CPLR 3211(a)(7)
and CPLR 3016(b) against the Zornberg defendants.
It is well settled that a motion for reargument is addressed to the sound
discretion of the court , and may be granted upon a showing that the court overlooked
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or misapprehended the relevant facts or misapplied any controlling principle of law
Goldman 261 AD2d 593 , 594). It is not designed , however , to provide
(see McGill
an unsuccessful party with successive opportunities to reargue issues previously
decided
(McGil
, or to present arguments different from those originally presented
Goldman
, supra; Pahl Equip. Corp.
Kassis 182 AD2d 22 27).
The complaint and pleadings allege the Zornberg defendants facilitated the
closings of the real estate transactions and cloaked them with an air of legitimacy,
thereby aiding in the fraudulent scheme of the co- defendants. The pleadings also
allege that the Zornberg defendants engaged in a persistent fraud by permitting the
transactions to go forward despite alleged obvious irregularities , disbursements of the
loan proceeds in a manner not authorized by the lenders , and then misrepresenting the
terms of the transaction to the lenders.
Although the strict pleading requirements of CPLR 30 16(b) apply to common
law fraud claims , the general notice pleading requirement ofCPLR 3013 apply to
63(12) claims. The strict pleading requirements for causes of action
Executive Law
sounding in common law fraud (CPLR 3016) do not apply to causes of action
alleging violation of Executive Law 63(12).
AD2d 531.
People
See Joannou
Blue Ridge Ins. Co. , 289
Wells Fargo Ins. Services Inc. , 62 AD3d 404 is the only case
cited by defendants in support of their argument that a claim under Executive Law
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63(12) must meet the pleading requirements ofCPLR 3016(b). Contrary to
defendants ' assertion , that case does not so hold. While the court did state that the
fraud claim was not stated with sufficient particularity, the court' s reasoning was
based entirely on the fact that the complaint failed to state " wrongdoing within the
meaning of Law (Executive ~ 63(12J).
People
Wells Fargo Ins. Services , Inc.
supra p. 495. The court never stated that it was applying CPLR 3016(b), and in
affirming the case , the Court of Appeals never applied the standards of CPLR
30 16(b), nor suggested , in any way that they applied.
People
Wells Fargo Ins.
Service , Inc. 16 NY3d 166.
The claim for fraud under Executive Law
63(12) is not based solely on
omissions or a failure to act. The complaint alleges that the Zornberg defendants and
H&Z Abstract defendants reached an agreement with the other defendants that the
Zornberg defendants would act as attorneys for the lenders in the transaction , and the
H&Z Abstract defendants would act as the title company (Verified Complaint
61).
Both the Zomberg and H&Z defendants acted affirmatively in their roles as attorneys
and as the title company, even though they allegedly had knowledge of the fraudulent
nature of the transactions , and thus enabled the fraud to be consummated. It is
alleged that when representing consumers , the attorney defendants , including the
Zomberg defendants , advised their clients or caused their clients to initial statements
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on the lease agreements that the attorneys knew were false , and advised or caused
their clients to sign the lease agreements. (Verified Complaint
~ 66).
In
their role as
attorneys for the lenders , the Zornberg defendants knowingly prepared HU-
Settlement Statements containing material misrepresentations and omissions of
material fact (Verified Complaint ~~ 69- 71), and in their role as attorneys for the
buyers or sellers , caused their clients to sign the HU- 1 s , even though they knew
they were inaccurate. (Verified Complaint
70).
Contrary to defendants ' argument , the fraud claim does not merely allege that
the Zornberg defendants made false representations to parties they did not represent.
Instead , it specifically alleges , for example , that they defrauded the sellers when
acting in their role as attorneys for the sellers by knowingly preparing materially
misleading documents and causing their clients to sign documents that they knew to
be false and misleading (Verified Complaint ~~ 66- 70). For example , when the
Zornberg defendants prepared the HU- 1 Settlement Statement , it is alleged they
intentionally omitted the names of the title company used in the transactions in order
to minimize the risk the lenders would detect the relationship between the lender
attorneys and their title company, and the fact that H&Z was wholly owned by the
lender attorneys ,
the Zornberg defendants (Verified Complaint ~ 69). The complaint
also alleges that the Zornberg defendants and H&Z Abstract defendants wrongfully
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profited from the fraud by sharing in the proceeds of the closing, and
misappropriating funds that rightfully belonged to the consumers. (Verified
Complaint , Prelim. Statement ~~ 46 , 70 , 105- 06).
Movants ' assertion that any title company would have done the same or that the
transactions were " single , shot private contract disputes unique to the parties " rather
than " a series of transactions " involving common players and common fraudulent
practices is speculative and conclusory, not sufficient to oppose a motion to dismiss
for failure to state a cause of action pursuant to CPLR 3211. A motion to dismiss
pursuant to CPLR 3211(a)(7) wil fail if taking all facts alleged as true and according
them every possible inference favorable to the plaintiff, the complaint states in some
Sheroff
recognizable form any cause of action known to the law.
Dreyfus Corp. ,
50
AD3d 877.
The complaint and accompanying pleadings set forth with specificity the names
of consumers allegedly wronged. Moreover , the court recognizes that " sale-andlease- back agreements " are not inherently ilegal , fraudulent or deceptive.
Counsel for movants relies on
National Westminster
Weksel , 124
Bank USA
AD2d 144 , a case where the attorneys to the transaction only discovered the allegedly
fraudulent transaction at a subsequent time.
fraudulent acts existed from the inception
In
the within action it is alleged the
the allegation that
ab initio
counsel
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failed to comply with the reporting requirements when completing the HUMovants
National Westminster
' reliance on
Weksel , supra for the
Bank USA
proposition that " there is no case where mere inaction by a defendant has been held
sufficient to support aider and abettor liability for fraud" is overly broad , and
Vereins- Und Westbank
, AG
specifically criticized in
Carter 691 F. Supp. 704 at pp.
704- 716. Under New York law , a defendant may be charged with substantially
assisting in advancing the commission of the fraud when a defendant affirmatively
assists or helps conceal or fails to act when required to do so thereby enabling the
fraud
Supp. 2d 452
Oster
Siegel , 592
See Nathan
, which is what is alleged in the within action.
Kirschner 77 AD3d 51.
A claim under GBL Section 349 must as a threshold matter charge conduct of
the defendant that is consumer-oriented. It is conduct that potentially affects
similarly situated consumers.
Midland Bank, N.
Oswego Laborers
' Local
214
prima facie
85 NY2d 20. To make out a
Marine
Pension Fund
case under GBL
Section 349 , a plaintiff must demonstrate that (1) the defendant' s deceptive acts were
directed at consumers , (2) the acts are misleading in a material way, and (3) the
plaintiff has been injured as a result.
Maurizio
Goldsmith
230 F.3d 518
521.
Deceptive acts " are defined objectively " as acts that are likely to mislead a
reasonable consumer acting reasonably under the circumstances.
Id.
(internal
,"
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q1Jotations omitted).
Although contacts unique to the parties are not covered by GBL
Section 349 plaintiff. . . need not show that the defendant committed the
complained-of acts repeatedly -
either to the
same plaintiff or to other consumers-
hut instead must demonstrate that the acts or practices have a broader impact on
consumers at large.
Oswego Laborers
' Local
214
Pension Fund
Marine Midland
Bank, NA. , supra at p. 25. The allegations adequately support the claim that the
actions of the movants affected the public interest in New York. GBL Section 349
covers real estate transactions and principals of the companies that undertake the
Polenetsky
deceptive practice.
Better Home Depot, Inc. 97 NY2d 46 , 53- 55. It is
not a " single-shot" transaction that is unique to the parties as asserted by the Zornberg
defendants but rather a complaint that sets forth allegations involving consumerOswego Laborers ' Local 214
oriented behavior as defined by New York courts.
Pension Fund
Marine Midland Bank, NA. , supra at p. 25. BCL ~ 349 prohibits
acts or practices (that) have a broader impact on consumers at large. " BCL9 349 "
a remedial statute " that requires " a liberal construction and application.
Public Interest Research Group, Inc.
New York
Insurance Information Institute 140 Misc 2d
920 (Supreme Court New York County
1988),
aff'
161 AD2d 504. The plaintiff has
alleged that the homeowners were the victims of a deceptive act or practice; that the
Zornberg defendants knew of the deceptive practices; that they lent substantial
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assistance to the co- defendants by structuring the closing so as to hinder the ability of
the buyers and sellers to timely review the documents.
A review of the movant' s submissions establishes that the instant application
for reargument is , in substance , founded upon the same theory which this court
already considered and rejected in connection with the original application. None of
the movant' s presently asserted allegations warrants a result different from that
reached by the court in its order dated November 5 2011. Accordingly, and inasmuch
as the movant' s papers fail to establish that the court misapprehended or overlooked
relevant facts or misapplied any controlling principle of law with respect to his
claims , the motion must be denied.
The foregoing constitutes the decision and order of this Court.
Dated: April 10 ,
2012
ENT
AP 18 112
cou
ACE
