Cruz v HSBC Bank, N.A.

[*1] Cruz v HSBC Bank, N.A. 2008 NY Slip Op 52484(U) [21 Misc 3d 1143(A)] Decided on November 12, 2008 Supreme Court, Richmond County McMahon, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through December 19, 2008; it will not be published in the printed Official Reports.

Decided on November 12, 2008
Supreme Court, Richmond County

Samuel Cruz, Plaintiff(s),

against

HSBC Bank, N.A., AS TRUSTEE FOR HOME EQUITY LOAN TRUST SERIES ACE 2005-HE5; FREMONT INVESTMENT & LOAN CORPORATION, BEST HOME PROPERTIES, INC; TAL GOLDSTEIN; SFG MORTGAGE CORPORATION; O'NEILL & O'NEILL, WILLIAM J. O'NEILL; RYAN ABSTRACT; PILAR NOLLEZ; JOHN DOE 1; JANE DOE 1; JOHN DOE 2; JANE DOE 2, the last four names being fictitious and the last two parties being individuals, if any, having or claiming interest in, or lien upon, the premises described herein, XYZ-1 CORP., and XYZ-2 CORP., the last two names being fictitious, it being plaintiff's intention to designate any corporation having a legal interest in the premises described herein, Defendant(s).



100629/2008

Judith N. McMahon, J.

This action was commenced by the plaintiff seeking, inter alia, to cancel two mortgages given by defendant Fremont Investment & Loan Corporation [hereinafter "Fremont"] and defendant HSBC Bank based on the defendants alleged failure to, inter alia, comply with General Business Law § 349 and Real Estate Settlement Procedures Act [FN1]. It is undisputed that the plaintiff, through defendant mortgage broker SFG Mortgage Corporation [hereinafter SFG], applied for financing to purchase property located at 64 Faber Street, Staten Island, New York. Defendant Fremont provided the plaintiff financing in the form of two mortgages in the amount of $254,400.00 and $63,600.00. The closing took place on or about May 2, 2005. After plaintiff and his family moved into the home, he alleges that several code violations resulted in the electricity being turned off, water damage and flooding in the basement and eventually the plaintiff could not afford making payments on the first loan. The first mortgage commenced a foreclosure proceeding that was subsequently dismissed.

The plaintiff thereafter commenced this action alleging he was the victim of a predatory lending and property flipping scheme, including allegations in his complaint of fraud, conspiracy [*2]and aiding and abetting by the defendants. Specifically, the plaintiff, in his complaint, alleges, inter alia, that defendant Fremont engaged in inducing the plaintiff to accept mortgages where the payments were unaffordable to him; misrepresenting the plaintiff's income and assets, failing to disclose all the risks of the loan and concealing major defects and illegalities in the homes structure. The Court notes that no discovery has yet to take place. At present, defendant Fremont is moving to dismiss the complaint, pursuant to CPLR §§ 3211(a)(1) and 3211(a)(7), on the ground that the plaintiff fails to state several causes of action and based upon documentary evidence.

Pursuant to CPLR § 3211 (a)(1), "a party may move for judgment dismissing one or more causes of action asserted against him on the ground that a defense is founded upon documentary evidence" (CPLR § 3211 [a][1]). Further, "a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" and "resolves all factual issues" (City Line Rent a Car, Inc. v. Alfess Realty, 33 AD3d 835, 835 [2d Dept. 2006][finding that where issues are not conclusively resolved by the evidence the matter should not be dismissed]; Kupersmith v. Winged Foot Golf Club, 38 AD3d 847, 848 [2d Dept. 2007]; New York Community Bank v. Snug Harbor Square Venture, 299 AD2d 329, 329-30 [2d Dept. 2002]).

Further, it is well settled that "[i]n considering a motion to dismiss for failure to state a cause of action pursuant to CPLR 3211(a)(7), the pleaded facts are accepted as true and given every favorable inference . . . [t]he court must determine whether the factual allegations taken from the four corners of the complaint manifest any cognizable cause of action (Klepetko v. Reisman, 2007 NY Slip Op 5231, 1 [2d Dept., 2007]; Gershon v. Goldberg, 30 AD3d 372, 273 [2d Dept., 2006]). Additionally, all "facts pleaded are to be presumed to be true and are to be accorded every favorable inference, although bare legal conclusions as well as factual claims flatly contradicted by the record are not entitled to any such consideration (Gershon v. Goldberg, 30 AD3d at 373; Dinerman v. Jewish Bd. of Family and Children's Services, Inc., __ AD3d ___, NY Slip Op 7610, [2d Dept., 2008]). "The sole criterion is whether from the complaint's four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law" (Gershon v. Goldberg, 30 AD3d 372, 373 [2d Dept. 2006]; Danna v. Malco Realty, Inc., 51 AD3d 621, 621 [2d Dept., 2008]). I.Plaintiff's First Cause of Action: General Business Law § 349

General Business Law § 349 provides protection to consumers from any deceptive or unlawful practices involving commerce. Claims premised under GBL § 349, while correctly characterized as similar to fraud, do not necessarily rise to that level (Gaidon v. Guardian Life Ins. Co. Of Am., 94 NY2d 300, 344 [1999]). In order to plead a cause of action predicated on GBL § 349 the plaintiff must establish (1) that the claims are consumer orientated; (2) that the defendant has engaged in practice that is deceptive or misleading and (3) that the plaintiff was injured by this practice (id.; Corcino v. Filstein, 32 AD3d 201, 202 [1st Dept., 2006]).

Here, the defendant Fremont only challenges the plaintiff's failure to plead that defendant engaged in deceptive or misleading practice. At present, taking into account all [*3]documentary evidence and pleadings as liberally in favor of the plaintiff, it is clear the plaintiff has successfully stated a cause of action against defendant Fremont on GBL § 349 (City Line Rent a Car, Inc. v. Alfess Realty, 33 AD3d 835, 835 [2d Dept. 2006]; Kupersmith v. Winged Foot Golf Club, 38 AD3d 847, 848 [2d Dept. 2007]; Gershon v. Goldberg, 30 AD3d at 373; Dinerman v. Jewish Bd. of Family and Children's Services, Inc., __ AD3d ___, NY Slip Op 7610, [2d Dept., 2008]).

The documentary evidence submitted by the defendants does not resolve all factual issues in the matter, as required for dismissal under CPLR § 3211(a)(1) (New York Community Bank v. Snug Harbor Square Venture, 299 AD2d 329, 329-30 [2d Dept. 2002]). Further, without any depositions or discovery taking place at this juncture no testimony regarding the alleged deceptive practices is available, and as a result, all allegations in the complaint must be construed liberally in favor of the plaintiff which does not warrant dismissal (Gershon v. Goldberg, 30 AD3d at 373; Dinerman v. Jewish Bd. of Family and Children's Services, Inc., __ AD3d ___, NY Slip Op 7610, [2d Dept., 2008]).

II.Plaintiff's Second Cause of Action: Fraud

In bringing a cause of action for fraud the plaintiff "must prove a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury" (Lama Holding Co. v. Smith Barney Inc., 88 NY2d 413, 421[1996]; Tenenbaum v. Gibbs, 27 AD2d 722, 723 [2d Dept., 2006]).

Here, the plaintiff alleges similar inducements by the defendant Fremont in their fraud causes of action and again, without any discovery, construing the pleadings liberally, plaintiff has successfully established claims for fraud against defendant Fremont (Gershon v. Goldberg, 30 AD3d 372, 373 [2d Dept. 2006]; Tenenbaum v. Gibbs, 27 AD2d 722, 723 [2d Dept., 2006]). Defendant Fremont has failed to present sufficient documentary evidence to resolve all issues or establish a conclusive defense as a matter of law and as a result dismissal for failure to state a cause of action or based upon documentary evidence is inappropriate (New York Community Bank v. Snug Harbor Square Venture, 299 AD2d 329, 329-30 [2d Dept. 2002]; Gershon v. Goldberg, 30 AD3d 372, 373 [2d Dept. 2006]).

III.Plaintiff's Third and Fourth Causes of Action: Civil Conspiracy to Commit Fraud and Aiding and Abetting Fraud

It is well settled that civil conspiracy to commit a tort is not recognized as an independent cause of action in New York State if the underlying cause of action falls (Walters v. Pennon Assos., 188 AD3d 596, 596 [2d Dept., 1992]; Crispino v. Greenpoint Mortgage Corp., 2 AD3d 478, 480 [2d Dept., 2003][holding that conspiracy to commit fraud is never itself a cause of action where the fraud cause of action is dismissed]; Romano v. Romano, 2 AD3d 430, 431 [2d Dept. 2003]). The causes of action for conspiracy to commit fraud and aiding and abetting fraud do not fail, as the underlying fraud cause of action has not failed.

IV.Plaintiff's Fifth Cause of Action: Unjust Enrichment [*4]