Opinion
Index No. 16343 2012 Motion Cal No. 33 Motion Seq. No. 1
07-25-2013
DEUTSCHE BANK NATIONAL TRUST COMPANY, etc., Plaintiff, v. FAY RUSSELL, et al., Defendants.
Short Form Order Present: HONORABLE
Justice
The following papers numbered 1 to 8 read on this motion by plaintiff for an order dismissing defendant Oswald Russell's counterclaims, with prejudice, pursuant to CPLR 3211(a)(1) and (7), and awarding costs and attorney's fees.
+-----------------------------------------------+ ¦ ¦Papers ¦ ¦ ¦ ¦ ¦ ¦Numbered¦ +--------------------------------------+--------¦ ¦Notice of Motion-Affirmations-Exhibits¦1-4 ¦ +--------------------------------------+--------¦ ¦Opposing Affirmation ¦5-7 ¦ +--------------------------------------+--------¦ ¦Reply Affirmation ¦8-10 ¦ +-----------------------------------------------+
Upon the foregoing papers the motion is determined as follows:
Plaintiff, in this action pursuant to RPAPL Article 15, seeks a declaration that the mortgage on the premises known as 218-19 134th Road, Springfield Gardens, New York 11413 (Block 13012, Lot 7) dated November 11, 2004 and recorded on December 21, 2004, given by Fay Russell and Oswald Russell, is valid, nunc pro tunc; and to expunge the satisfaction of the mortgage recorded on December 16, 2009 and reinstate said mortgage.
Defendant Oswald Russell in his verified answer asserted nine affirmative defenses and two counterclaims. Although not denominated as counterclaims, the seventh affirmative defense alleges a violation of TILA and seeks to recover damages, and the eight affirmative defense alleges a violation of General Business Law § 349 and seeks to recover damages and attorneys fees. The ninth affirmative defense and first counterclaim alleges a violation of Banking Law §595-a(1)(a) and seeks to enjoin the foreclosure and sale of the subject real property; and the second counterclaim asserts a claim for fraud.
Plaintiff seeks dismissal of the seventh and eight affirmative defenses, to the extent that the seek relief, as well as the two counterclaims on the grounds of documentary evidence, statute of limitations, and failure to state a cause of action. The defense of statute of limitations was properly preserved in plaintiff's reply to the counterclaims.
It is well established that on a motion to dismiss pursuant to CPLR 3211(a)(7), "the court must afford the pleadings a liberal construction, accept the allegations of the complaint as true and provide plaintiff the benefit of every possible favorable inference" (AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 591 [2005]; see Goshen v Mutual Life Ins. Co. Of N.Y., 98 NY2d 314, 326 [2002]; Leon v Martinez, 84 NY2d 83, 87-88 [1994]). The court's "sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law, a motion for dismissal will fail" (Polonetsky v Better Homes Depot, Inc., 97 NY2d 46, 54 [2001], quoting Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]; see also Sokoloff v Harriman Estates Dev. Corp., 96 NY2d 409, 414 [2001]; Leon v Martinez, 84 NY2d at 87-88; Tom Winter Assoc., Inc. v Sawyer, 72 AD3d 803 [2010]; Uzzle v Nunzie Court Homeowners Assn. Inc. 70 AD3d 928 [2010]; Feldman v Finkelstein & Partners, LLP, 76 AD3d 703[2010]). The 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 (see Morone v Morone, 50 NY2d 481 [1980]; Gertler v Goodgold, 107 AD2d 481 [1985], affirmed, 66 NY2d 946 [1985]).
When evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one (Guggenheimer v Ginzburg, 43 NY2d 268, 275, supra). This entails an inquiry into whether or not a material fact claimed by the pleader is a fact at all and whether a significant dispute exists regarding it (see, id.; accord, Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3211:25, at 39)" (Gershon v Goldberg, 30 AD3d 372 [2006]; Hispanic Aids Forum v Estate of Bruno, 16 AD3d 294, 295 [2005]; Sesti v N. Bellmore Union Free Sch. Dist., 304 AD2d 551, 551-552 [2003]; Mohan v Hollander, 303 AD2d 473, 474 [2003]; Doria v Masucci, 230 AD2d 764, 765 [1996], lv. to appeal denied, 89 NY2d 811 [1997]; Rattenni v Cerreta, 285 AD2d 636, 637 [2001]; Kantrowitz & Goldhamer v Geller, 265 AD2d 529 [1999]; Mayer v Sanders, 264 AD2d 827, 828 [1999]; Sotomayor v Kaufman, Malchman, Kirby & Squire, 252 AD2d 554 [1998]).
On a motion to dismiss a claim on the grounds of statute of limitations grounds, the moving party must establish, prima facie, that the time in which to commence the action has expired. The burden then shifts to the claimant to raise an issue of fact as to whether the statute of limitations is tolled or is otherwise inapplicable (see Vilsack v Meyer, 96 AD3d 827 [ 2d Dept 2012]: Zaborowski v Local 75, Serv. Empls. Int. Union, AFL-CIO, 91 AD3d 768, 768-769 [2d Dept 2012]; Baptiste v Harding-Marin, 88 AD3d 752 [2d Dept 2011]).
Here, defendant's seventh affirmative defense alleges a violation of the Truth in Lending Act (TILA) and seeks to recover damages. Claims for damages under TILA are limited to those brought "within one year from the date of the occurrence of the violation" (15 USC §1640(e); Midouin v Downey Sav. & Loan Assn, F.A., 843 F Supp 2d 95, 108 [EDNY 2011]). This claim is time-barred as the alleged violation occurred no later than November 11, 2004, and defendant did not assert the within claim until January 2013. "Where a damages claim under TILA is time-barred, the Court is prohibited from even reaching the question of whether the defendant had violated TILA" (Fiorenza v Freemont Investment & Loan, 2008 U.S. Dist LEXIS 47831, 2008 WL 2517139 [US Dist Ct, SD NY 2008]; Laskin v Bank of Am. NA, 2009 N.Y. Misc. LEXIS 2574 [Nassau County, Supreme Court, [2009]). Finally, although "counterclaims to recover damages under TILA are timely to the extent that such damages might offset any damages award or deficiency judgment that might be made in favor of the plaintiff...."(Delta Funding Corp. v Murdaugh, 6 AD3d 571 [2d Dept 2004]; 15 USC § 1640 [e]), this is not a mortgage foreclosure action and plaintiff is not seeking to recover damages or a deficiency judgment in this action. Therefore, to the extent that the seventh affirmative defense also seeks to recover damages, this claim for damages is dismissed with prejudice.
Defendant's eighth affirmative defense alleges a violation of General Business Law § 349, and also seeks to recover damages. Claims for violations of Section 349 are governed by a three year statue of limitations (CPLR 214[2]; Gaidon v Guardian Life Ins. Co. Of Am., 96 NY2d 201, 211-212 [2001]). Here, the three year statute of limitations began to run at the time defendant allegedly relied upon the claimed deceptive acts, which occurred no later than November 11, 2004 when the loan and mortgage were entered into, and expired in November 2007. As this claim was not interposed until January 2013, it is time barred (see Corsello v Verizon NY Inc., 18 NY3d 777[2012]) . Therefore, to the extent that the eighth affirmative defense also seeks to recover damages, this claim is dismissed with prejudice.
Defendant's first counterclaim seeks injunctive relief based upon a violation of Banking Law §595-a. Banking Law § 595-a authorizing the Superintendent to impose fines for violations of the Banking Law, and does not provide for a private right of action based upon a violation of Section 595-a (see Grimes v Fremont Gen. Corp., 2013 U.S. Dist. LEXIS 40748 [US Dist Ct, SD NY 2013]). Defendant's first counterclaim therefore is dismissed with prejudice.
Defendant, in asserting a counterclaim for fraud, is required to allege "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 [1996]; see also Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 178 [ 2011]; Channel Master Corp. v Aluminum Ltd. Sales, 4 NY2d 403, 406-407 [1958]). Furthermore, where a cause of action is based in fraud, "the circumstances constituting the wrong shall be stated in detail" (CPLR 3016 [b]).
In his second counterclaim, defendant alleges that promises were made to him by mortgage brokers, inducing him to enter into the loan, and that the mortgage brokers were agents of the plaintiff or its predecessor in interest plaintiff's predecessor in interest. Defendant allegesthat plaintiff and its predecessor in interest "acted intentionally and with an intent to defraud him", causing him damages of $200,000.00. All of the alleged promises and misrepresentations are alleged to have been made prior to defendant's execution of the November 11, 2004 mortgage.
Plaintiff, in its complaint, alleges that it was assigned the mortgage on May 7, 2012 and that prior to said assignment the mortgage had been previously assignment at least three times. Plaintiff's assignor was not the original lender, and it asserts it made no promises to the defendant with respect to the mortgage and loan. Defendant's counsel, in opposition, states in his affidavit that the alleged promises were made by plaintiff's assignor.
This court know of no case and defendant has cited none, holding that the assignee of a loan is liable for fraudulent statements made to the borrower by the original lender or its agent. Although fraud in the inducement can be asserted as an affirmative defense in a foreclosure action, the alleged misrepresentations do not support an independent claim for common law fraud against the assignee, absent any allegation that the assignee knew about or authorized the fraud (see Stephenson v Terron-Carrera, 2012 N.Y. Misc. LEXIS 2915 [ Supreme Court, Suffolk County 2012]; Karamath v United States Bank, 2012 U.S. Dist. LEXIS 135038[US Dist Ct ED NY 2012]). Defendant's second counterclaim for fraud therefore fails to state a cause of action.
In addition, this counterclaim is time barred. A fraud action must be commenced "the greater of six years from the date the cause of action accrued or two years from the time the plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with reasonable diligence have discovered it." (CPLR 213(8); see Sargiss v Magarelli, 12 NY3d 527, 532 [2009]). Defendant's fraud allegations are based upon events which occurred prior to November11, 2004, and therefore pursuant to CPLR § 213 (8), his fraud claims had to be commenced no later than November 2010. Defendant interposed this counterclaim in January 2012, more than six years after the alleged fraud. Plaintiff, thus, has established, prima facie, that this counterclaim is barred by the statute of limitations, and defendant does not assert that the statute of limitations is tolled or is otherwise inapplicable. The second counterclaim, therefore, is dismissed with prejudice.
In view of the foregoing, plaintiff's motion to dismiss with prejudice those portions of the seventh and eight affirmative defenses that assert claims for damages, and to dismiss the first and second counterclaims, is granted. Plaintiff's request for an award of costs and attorney's fees is denied.
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J.S.C.