Chase Home Fin. LLC v Islam
Annotate this CaseDecided on October 3, 2012
Supreme Court, Queens County
Chase Home Finance LLC AS WHOLLY OWNED SUBSIDIARY OF AND ON BEHALF OF JP MORGAN CHASE BANK, N.A., Plaintiff,
against
Mohibul Islam, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY PARKING VIOLATIONS BUREAU, NEW YORK CITY TRANSIT ADJUDICATIONS BUREAU, AND JOHN DOE No.1 THROUGH JOHN DOE #10, MOHIBUL ISLAM, Third-Party Plaintiff NICOLO MANGIARACINA, FINANCIAL SOURCE FUNDING, INC., SEBY MORTGAGE INC., ANTONIETTA RUSSO, ESQ., AAN SERVICES, INC., MOHAMMED N. CHOWDHURY, GLADIATOR ABSTRACT INC., FIRST AMERICAN TITLE INSURANCE COMPANY, as successor in interest to UNITED GENERAL TITLE INSURANCE COMPANY and BERTRAM BROWN, Third-Party, Defendants.
3622/2010
Robert J. McDonald, J.
[*2]The following papers numbered 1 to 22 read on this pre-answer motion by third-party defendant, FIRST AMERICAN TITLE INSURANCE COMPANY, as successor in interest to UNITED GENERAL TITLE INSURANCE COMPANY, pursuant to CPLR 3211(a)(1) and CPLR 3211(a)(7) to dismiss the third-party complaint against said defendant on the ground that the complaint fails to state a cause of action for fraud in the inducement:
Papers
Numbered
Notice of Motion-Affidavits-Exhibits-Memo.........1-9
Affirmation in Opposition-Exhibits-Memo...........10-15
Reply Affidavits-Memo.............................16-22
In the main action, Chase Home Finance LLC filed a summons and complaint on February 16, 2010 against defendant, MOHIBUL ISLAM, to foreclose on a mortgage in the principal amount of $680,000.00 securing the plaintiff's interest in the property located at 87-11 150th Street, Jamaica, New York 11435.
On February 14, 2012, the defendant, Mohibul Islam commenced a third-party action against the above-named third-party defendants seeking a judgment against them in the total amount of the judgment of foreclosure which the plaintiff may obtain and for punitive damages in the amount of two million dollars. The gravamen of the third-party action is that Islam was fraudulently induced to take title to two separate lots with separate mortgages totaling approximately 1.2 million dollars. Specifically, the complaint as well as Islam's affidavit annexed to the affirmation in opposition to the motion, alleges that Islam acquired title to the two premises in question by deeds from third-party defendant Mohammed N. Chowdhury dated November 30, 2007 and recorded in the New York City Register's Office on September 25, 2009.
In connection with the acquisition of the premises, Islam obtained a mortgage from Chase Home Finance LLC in the amount of $680,000. Islam states that Chowdhury was a real estate agent who showed him the property located at 87-11 150th Street which consisted of one lot improved with two two-family houses. Chowdhury told Islam that the owner accepted his offer of $680,000 for which Islam paid a cash deposit of $36,000 and signed a contract. He stated, however, that Chowdhury then created two false contracts with forged signatures for each of the two lots separately. He states that he never signed either contract that was submitted with the mortgage applications. He went to a closing on November 30, 2007. He states that Chowdhury recommended a disbarred attorney, Bertram Brown, to represent him at the closing. He states that Brown and Chowdhury represented that a representative of the title company at the closing would give him a deed and title insurance. The attorney representing Chase at the closing was Antonietta Russo. Islam also states that he did not know that he was also giving a mortgage to IndyMac Bank for a second lot because the properties had been subdivided prior to his purchase without his knowledge and sold separately. He states he was unaware of the subdivision of the properties and believed that he was only buying one property. The next day, he was told the [*3]property did not close because of building code violations on the properties and therefore he would not get a title policy. He states that he later learned that third-party defendants, Chowdhury, Brown, Russo and Mangiaracina worked together to conceal from him that title to two lots had been transferred to him and he was liable for two separate mortgages in the amount of 1.2 million dollars. He also states that Gladiator Abstract, the title agent, held the deeds to both lots until the final subdivision by the Department of Finance. He states that United General Title had issued a title report but no insurance. Islam also contends that Gladiator Abstract, which was the agent for United General now American Title, retained the deeds for each of the lots and prevented them from being recorded with the city until September 2009.
Islam alleges that he believes that Gladiator Abstract intentionally held back the deeds at the instruction of Chowdhury, Mangiaracina, and Russo. He states that he believes that Gladiator deliberately conspired with Chowdhury and others to conceal his proof of ownership until the subdivision of the original lot was complete. Islam states that United General/First American Title is responsible for the improper acts of Gladiator in intentionally not recording the documents. He states that because the documents were not recorded he was not aware that the mortgage and deed were in his name. He states that United/First American bears responsibility for his being subject to foreclosure because they participated in the concealment of the closing and the agreement to hold his deed and mortgage in escrow for an indefinite period of time.
The third-party complaint contains one cause of action against all of the defendants for fraud in the inducement. The complaint alleges that Chowdhury and Mangiaracina planned to divide the lot into two parcels in order to obtain financing for twice the value of the premises. Islam however thought he was purchasing the entire property as one parcel for $680,000. The complaint alleges that thereafter Mangiaracina and Chowdhury forged Islam's name on contracts for two parcels. He states that neither Mangiaracina, Chowdhury, Russo nor Brown disclosed to Islam at the closing that he was taking title to two separate lots with separate mortgages totaling nearly 1.2 million dollars. It is alleged that some of the mortgage proceeds were disbursed by Russo to another party and $100,000 was disbursed to Chowdhury. The only paragraph in the complaint that refers to America Title's role in the scheme is paragraph 59 which states,
"Upon information and belief, Gladiator Abstract, Inc., the closing agent for United General Title Insurance Company withheld the deeds and mortgages from recording with the New York City Register for more than twenty-one months until September 2009, pending instructions from Mangiaracina and Russo that the subdivision was completed."
In support of the motion to dismiss, First American asserts that other than the allegation in paragraph 59 with respect to Gladiator Abstract (First American's agent) not recording the deeds, the third-party complaint makes no other allegation against First American. Counsel asserts that Islam's claim against First American must be dismissed as Islam has failed to plead the elements of fraud with any particularity as against First American, including facts which would establish that Islam justifiably relied on a particular false statement made by First American. Counsel contends that First American is not alleged in the complaint to have made [*4]any material misrepresentations to Islam as part of the fraudulent scheme. The complaint alleges that all of the misrepresentations were made by Mangiaracina, Chowdhury, Ross and Brown. The only allegation against First American is that its agent, Gladiator Abstract, purposely withheld certain documents from recording. It is not alleged that any representations made by First America induced Islam to enter into the deeds or mortgage transactions.
In addition, First American submits a copy of its July 6, 2006 contract with Gladiator Abstract. Counsel asserts that pursuant to the terms of the contract, the parties agency relationship was contractually limited to providing title insurance related services only and did not include closing related services such as the recording of title documents. First American asserts, therefore, that any fraud by Gladiator Abstract falls completely outside the scope of the agency relationship with First American. Counsel claims that First American is responsible for the acts of fraud committed by an agent only where the agent is acting within the scope of the activities authorized by the agreement. In that regard, counsel claims that the Courts have held that agency agreements between title insurers and its agents do not cover recording of documents (citing Nechadim Corp. v C.J.P. Abstract, LLC, 67 AD3d 656 67 AD3d 656 [2d Dept, 2009]). Thus, counsel argues that because Gladiator's omissions cannot be attributed to First American under the agency agreement, First American cannot be held liable for any damages sustained by Islam.
In reply, Islam asserts that Gladiator Abstract as the agent for First American acted in concert in a conspiracy with Mangiaracina and Russo to withholdthe deeds and mortgages until the property subdivision was approved. Islam contends that his cause of action against First American does not arise from a direct misrepresentation but rather from concealment of material facts by Gladiator in furtherance of a conspiracy with Chowdhury, Russo and Mangiaracina. He states that the title agent at the instruction of the other parties agreed to hold the deed and mortgages in escrow until the subdivision was approved thereby making the deeds and mortgages recordable. Islam asserts that Gladiator was acting on First American's behalf in arranging the intentional withholding of deed and mortgages.
American responds by stating that the third-party complaint nor the affidavit is sufficient to allege a cause of action that First American intentionally participated in a conspiracy with Gladiator and the third-party merely because Gladiator failed to record the deed and mortgage documents in a timely manner.
On a motion to dismiss pursuant to CPLR 3211(a)(7), a court must accept as true the allegations of the complaint and give the plaintiff every favorable inference to determine if the allegations fit within a cognizable legal theory (see Leon v Martinez, 84 NY2d 83 [1994]; Konidaris v Aeneas Capital Mgt., LP, 8 AD3d 244 [2004]). To plead a cause of action for fraud in the inducement, a plaintiff must plead 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, as well as justifiable reliance of the other party on the misrepresentation or material omission and injury caused as a result of that reliance (see Orchid Constr. Corp. v Gottbetter, 89 AD3d 708 [2d Dept. 2011]; Northeast Steel Prods., Inc. v John Little Designs, Inc., 80 AD3d [*5]585 [2d Dept. 2011]; Hense v Baxter, 79 AD3d 814 [2d Dept. 2010]).
Here, the third-party plaintiff has failed to state a cause of action for fraud in the inducement against third -party defendant American Title Insurance Company. Neither the third-party complaint nor the affidavit of Islam states that there was a material misrepresentation made by American Title or its agent Gladiator Abstract made to induce the third-party plaintiff to enter into the scheme whereby Islam was allegedly induced to enter into real estate transactions and mortgages for which he had not bargained. The complaint alleges that the misrepresentations relied upon by Islam which induced him to purchase the premises were made by Chowdhury, Mangiaracina, Brown and Russo. Thus the third-party complaint does not plead any factual allegations that support the element of misrepresentation and justifiable reliance by American Title (CPLR 3016[b]; see High Tides, LLC v DeMichele, 88 AD3d 954 [2d Dept. 2011]; Nikitovich v O'Neal, 40 AD3d 300 [1st Dept. 2007]; Kline v Taukpoint Realty Corp., 302 AD2d 433 [2d Dept. 2003]). The only allegation against American Title is that its agent Gladiator intentionally failed to record the deeds and mortgages and speculative claims that American Title was involved in a conspiracy with American Gladiator and the other third-party defendants However, Islam has failed to support its conspiracy theory with factual averments and further conspiracy to commit fraud is not recognized as a cause of action in this state and stands or falls with the underlying tort (see Ferrandino & Son, Inc. v Wheaton Bldrs., Inc., LLC, 82 AD3d 1035 [2d Dept.2011]; Salvatore v Kumar, 45 AD3d 560 [2d Dept. 2006]; Ward v City of New York, 15 AD3d 392 [2d Dept. 2005]). Therefore, taking the allegations of the complaint as true, and according the third-party plaintiff the benefit of every favorable inference, the allegations, even as amplified by the affidavit of Islam, fail to state a cause of action as against the defendant American Title to recover damages for fraud in the inducement.
"Under CPLR 3211(a)(1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Matter of Chin, 79 AD3d 867[ 2d Dept. 2010] citing Leon v Martinez, 84 NY2d 83 [1994]). Here this court finds that the complaint alleges that Gladiator Abstract, who was present at the closing as the agent for American Title, is the entity which is accused of wrongdoing because it's alleged failure to record the deed and mortgages in a timely manner. However, American Title has submitted its contract with Gladiator which demonstrates that the recording of the deed and mortgage was outside the scope of its contractual relationship with American Title. The contract indicates that Gladiator was appointed by American Title as its agent for the purpose of providing title related services and expressly states that providing closing related services such as recording mortgages falls outside its agency agreement. The agency agreement between First American and Gladiator does not cover the recording of mortgages. Accordingly American Title has provided sufficient documentary evidence to show that it has a defense to the third-party complaint as a matter of law (see Nechadim Corp. v C.J.P. Abstract, LLC, 67 AD3d 656 [2d Dept. 2009]; Lucas v. Kensington Abstract LLC, 2008 NY Slip Op 51734U [Sup. Ct. Nassau Co.2008]; Crupi v. Newell & Talarico Tit. Agency, Inc., 14 Misc 3d 1225A [Sup. Ct., Richmond Co. 2007]).
Accordingly, for all of the above stated reasons, it is hereby,
ORDERED, that the defendant FIRST AMERICAN TITLE INSURANCE COMPANY's motion to dismiss pursuant to CPLR 3211(a)(1) and CPLR 3211(a)(7) is granted and the complaint is dismissed against said defendant.
Dated: Long Island City, NY
October 3, 2012
______________________________
ROBERT J. MCDONALD
J.S.C.
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