Opinion
February 15, 1996
Appeal from the Supreme Court, New York County (Diane Lebedeff, J.).
Plaintiff must allege that defendant's alleged negligence in failing to investigate the mortgage borrowers' fraudulent misrepresentations was a proximate cause of its loss ( see, Franklin v. Winard, 199 A.D.2d 220, 221). Since the Second Circuit dismissed the plaintiff's Racketeer Influenced and Corrupt Organizations Act ([RICO] 18 U.S.C. § 1962 [c], [d]) and State law claims against the mortgage borrowers for failure to plead proximate cause and injury ( First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, cert denied ___ US ___, 115 S Ct 728), plaintiff is collaterally estopped from litigating the issue of whether there is a causal connection between defendant's alleged negligence and the injury it sustained ( see, Schwartz v. Public Adm'r of County of Bronx, 24 N.Y.2d 65, 71). That the specific loans alleged in the instant action had not been foreclosed at the time of the Federal action is immaterial, since the Second Circuit's holding clearly applies to all of the loans on which plaintiff premised its RICO and State law causes of action. Similarly, it is immaterial that the misrepresentations alleged in this action differ from those alleged in the Federal action, since both relate to plaintiff's overvaluation of the properties, which the Federal court found was not a proximate cause of plaintiff's loss.
Concur — Murphy, P.J., Wallach, Ross, Nardelli and Tom, JJ.