Opinion
Index No. 716376/2023 M 1 2 3
09-13-2024
MAN LING CHAN LAM, Plaintiff, v. QING YUN XIAO, ET AL., Defendants
Unpublished Opinion
Motion Date: March 4, 2024, July 29, 2024.
Present: HONORABLE CARMEN R. VELASQUEZ, Justice.
SHORT FORM ORDER
HONORABLE CARMEN R. VELASQUEZ, Justice.
The following numbered papers read on the motion by defendants First Central Savings Bank. ("FCSB") (Mot. Seq. #1) for an order dismissing the complaint pursuant to CPLR 3211(a) (7) and CPLR 3016(b), or in the alternative, for leave to file an answer to the initial complaint; the motion by Kim Marie Defrancisci ("Defrancisci") (Mot. Seq. #2) for an order dismissing the complaint pursuant to CPLR 3211(a)(1), CPLR 3211(a)(7) and CPLR 3016(b); and the motion by Prime Title &Settlement ("Prime Title") (Mot. Seq. #3) for an order dismissing the complaint pursuant to CPLR 3211(a) (7) and CPLR 3016(b); and on the cross-motions by plaintiff seeking to amend the summons and complaint pursuant to CPLR 3025 (b) .
Papers Numbered
Motion Seq #1
Notice of Motion - Seq 1 - Affidavits - Exhibits....EF 10-12
Notice of Cross Motion - Opp - Seq 1 - Aff - Ex.....EF 25-35
Opposition to Cross Motion - Seq 1 - Exhibits.......EF 37-38
Reply in support of Cross Motion Seq 1............. EF 61-62
Motion Seq #2
Notice of Motion - Seq 2 - Affidavits - Exhibits....EF 17-22
Notice of Cross Motion - Opp - Seq 2 - Aff - Ex ...EF 43-58
Opposition to Cross Motion and Reply - Seq 2 - Ex...EF 59
Reply Affirmation in further Support of - Seq 2.....EF 60
Motion Seq #3
Notice of Motion - Seq 3 - Affidavits - Exhibits....EF 65-69
Notice of Cross Motion - Opp - Seq 3 - Aff - Ex.....EF 71-81
Opposition to Cross Motion - Seq 3 - Exhibits.......EF 82 Reply - Seq 3......................................EF 83
Upon the foregoing papers it is ordered that motion Sequences #1, #2 and #3 and cross-motions are jointly determined as follows:
This action arises out of an alleged "fraudulent conveyance" and an alleged fraudulent mortgage, in the amount of $520,000, encumbering plaintiff's property known as 139-41 85th Drive, Jamaica, New York ("the subject property"). Plaintiff, Man Ling Chan Lam ("Lam"), alleges that defendants Qing Yun Xiao ("Xiao") and Zu Zeng Liang ("Liang") defrauded her into providing them her personal information and documents, and that defendants fraudulently conveyed half of plaintiff's interest in the subject property to Liang and used plaintiff's information to obtain a mortgage using the subject property as collateral. Plaintiff further alleges defendants FCSB, Prime Title and Defrancisci, the title closer, all knew and perpetuated the fraud in the conveyance and the mortgage, causing damage to the plaintiff. Plaintiff alleges that she never knew and never intended to convey her property or encumber it with a mortgage. In the complaint, plaintiff brings two causes of action, one for "fraudulent conveyance", and the other for an order declaring the conveyance of the property to be void and annulling, voiding and cancelling the mortgage. It is noted that plaintiff alleges fraud in the conveyance of the property and not "fraudulent conveyance" within the meaning of the Debtor Creditor Law § 273, 274 and 276. Plaintiff alleged Liang absconded with the funds, claims that are also being investigated by the Office of the District Attorney, presumably of Queens County.
In her original complaint, plaintiff sought an order voiding the conveyance and the mortgage. FCSB moves to dismiss the complaint pursuant to CPLR 3211(a)(7) and CPLR 3016(b), alleging the complaint contains only two faint, conclusory allegations specific to FCSB and should be dismissed for lack of particularity. Defrancisci moves to dismiss the complaint, pursuant to CPLR 3211(a)(1), CPLR 3211(a)(7) and CPLR 3016(b) alleging that the complaint lacks specificity as to the fraud claims. Finally, Prime Title moves to dismiss the complaint, pursuant to CPLR 3211(a) (7) and CPLR 3016(b) alleging that the complaint lacks specificity as to the fraud claims made against it. Plaintiff opposes all three motions and cross-moves pursuant to CPLR 3025(b), seeking leave to amend the complaint to add more specificity and additional causes of action, namely aiding and abetting the alleged fraud and negligence of FCSB, Prime Title and Defrancisci. Although the Rules of this Part state opposition papers and cross-motions are not to be filed together, in a single document, the court, in the interest of judicial economy and interest in deciding motions on the merits, will consider the cross-motions filed herein.
The court will first address plaintiff's cross-motion seeking leave to amend the complaint inasmuch as, if granted, it will supersede the claims in the original complaint to amend her claims and add claims against FCSB, Defrancisci and Prime Title for allegedly aiding and abetting the fraud and negligence. CPLR 3025(b) provides that leave to amend pleadings "shall be freely given upon such terms as may be just." (CPLR 3025 [b]; Ricca v Valenti, 24 A.D.3d 647, 648 [2d Dept 2005]). Further, "[n]o evidentiary showing of merit is required under CPLR 3025(b)." (Chaudhari v Chaudhari, 220 A.D.3d 835, 838 [2d Dept 2023]; quoting First National Bank of Long Island v Four Keys Realty, LLC, 213 A.D.3d 639, 641 [2d Dept 2023]; citing Lucido v Mancuso, 49 A.D.3d 220 [2d Dept 2008]). "In the absence of prejudice or surprise to the opposing party, leave to amend a pleading should be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit" (Betz v Blatt, 160 A.D.3d 689, 693 [2d Dept 2018]; see Garafolo v Ning Inc. Specialty Trades, 139 A.D.3d 793 [2d Dept 2016]; see CPLR 3025 [b]) . "Prejudice is more than the mere exposure of the [party] to greater liability. Rather, there must be some indication that the [party] has been hindered in the preparation of [the party's] case or has been prevented from taking some measure in support of [its] position. The burden of establishing prejudice is on the party opposing the amendment" (Betz v Blatt, 160 A.D.3d at 693; citing Kimso Apts., LLC v Ganghi, 24 N.Y.3d 403, 411 [2014]; see also Garafolo v Ning Inc. Specialty Trades, 139 A.D.3d at 794). Whether to grant leave to amend is within the discretion of the motion court, the exercise of which will not be lightly disturbed (see Pergament v Roach, 41 A.D.3d 569, 572 [2d Dept 2007]; see also AFTB-II, LLC v Country Village of Mooney Pond, Inc., 21 A.D.3d 972 [2d Dept 2005]).
In order to recover for alleged aiding and abetting, the plaintiff must plead the existence of an underlying fraud, knowledge of the fraud by the aider and abettor, and substantial assistance by the aider and abettor in achievement of the fraud (see Betz, 160 A.D.3d at 689; see also Fox Paine & Co., LLC v Houston Cas. Co., 153 A.D.3d 673 [2d Dept 2017])." 'Substantial assistance' requires an affirmative act of the defendant's part'" (Betz, 160 A.D.3d at 700; see also Baron v Galasso, 83 A.D.3d 626 [2d Dept 2011]) . Further, "the mere inaction of an alleged aider and abettor constitutes substantial assistance only if the defendant owes a fiduciary duty directly to the plaintiff" (Markowits v Friedman, 144 A.D.3d 993 [2d Dept 2016]; see also Monaghan v Ford Motor Co., 71 A.D.3d 848 [2d Dept 2010]). Lastly, "allegations that the purported aider and abettor merely performed ordinary business functions are insufficient to establish substantial assistance" Karipaparambil v Polus, 195 A.D.3d 515, 516 [1st Dept 2021]; McBride v KPMG Intern., 135 A.D.3d 576, 579 [1st Dept 2016]).
Here, as to defendant FCSB, the proposed amended complaint makes only conclusory allegations that FCSB knew that plaintiff was not at the closing, that plaintiff was not the person that signed the closing or mortgage documents and knew that Liang was attempting to transfer the property. The proposed amended complaint further alleges that FCSB provided the paperwork, processed all the papers with the fraudulent signatures and granted a mortgage against plaintiff's property. Plaintiff makes these allegations based on further conclusory statements that FCSB managers were friends of defendants Liang and Xiao. These conclusory allegations without any facts as to how FCSB "knew" and "substantially assisted" beyond their normal business practices make the proposed amendment palpably insufficient and patently devoid of merit (Oppedisano v D'Agostino, 196 A.D.3d 497 [2d Dept 2021]; Swartz v Swartz, 145 A.D.3d 818 [2d Dept 2016]).
Similarly, plaintiff seeks leave to amend the complaint to add aiding and abetting the said fraud as against Defrancisci, the title closer. As an initial matter, Defrancisci's argument that the proposed amendment is procedurally defective is without merit. CPLR 3025 (b) requires that the supplemental pleading must "clearly" show the changes or additions to be made to the pleading but does not require the pleading to be a "red line" version (CPLR 3025[b]). Here, the proposed amended complaint alleges Defrancisci aided and abetted because she knew plaintiff was not at the closing and was not the person that signed the mortgage paperwork or any other papers at the closing. However, plaintiff fails to substantiate these alleged conclusory statements with facts. Defrancisci argues she was hired by Prime Title and received the paperwork for the closing the day before and also recalls reviewing the plaintiff's identification before notarizing the signatures on the day of the closing. Plaintiff fails to rebut this with non-conclusory statements or any evidence. As such, the proposed amended complaint as to Defrancisci is palpably insufficient and patently devoid of merit (see Bashian & Farber, LLP v Syms, 167 A.D.3d 561 [2d Dept 2018]).
As to the proposed amended complaint seeking leave to add the claim of aiding and abetting fraud as against Prime Title, the court finds the proposed amended complaint similarly alleges conclusory statements that Prime Title knew that Liang and Xiao were lying when they stated plaintiff wanted to transfer her property to Liang and apply for a mortgage, that Prime Title knew that plaintiff was not the person at the closing and that she was not the person who sought a mortgage with FCSB. Plaintiff merely alleges Prime Title did so because "its members are friends of Liang and Xiao" without any facts to substantiate these conclusory allegations. The court therefore finds the proposed amended complaint to be palpably insufficient and devoid of merit (HSBC Bank USA, N.A. v Cross, 205 A.D.3d 779 [2d Dept 2022]; Land v Forgione, 177 A.D.3d 862 [2d Dept 2019]). As such the court denies plaintiffs cross-motion seeking leave to amend the complaint to add aiding and abetting the fraud as against FCSB, Defrancisi and Prime.
Plaintiff next seeks to amend the complaint to add a cause of action of negligence as against FCSB, Defrancisci and Prime Title. "To prevail on a negligence cause of action, a plaintiff must establish the existence of a legal duty, proximate causation, and damages. 'Absent a duty of care, there is no breach, and without breach there can be no liability' "(PNC Bank, N.A. v Steinhardt, 159 A.D.3d 999, 1000 [2d Dept 2018]; see also MVB Collision, Inc. v Allstate Ins. Co., 129 A.D.3d 1041 [2d Dept 2015]).
Here, plaintiff argues FCSB owed a duty to plaintiff inasmuch as the paperwork for the mortgage listed plaintiff as applying for the mortgage and thus made the plaintiff a bank customer. However, the general rule is that a lender, absent a special relationship with a borrower, does not owe a duty to verify the identity of an imposter who obtains a loan in a plaintiff's name (see Landino v Bank of Am., 52 A.D.3d 571 [2d Dept 2008]; see also Beckford v Northeastern Mtge. Inv. Corp., 262 A.D.2d 436 [2d Dept 1999]). With nothing further in the proposed amended complaint, the plaintiff has failed to establish any fiduciary duty owed by FCSB to plaintiff as required for a negligence claim (JP Morgan Chase Bank, N.A. v Hall, 122 A.D.3d 576 [2d Dept 2014]; Burger v Singh, 28 A.D.3d 695 ). As such, plaintiff's cross-motion seeking leave to amend the complaint to add negligence as a cause of action against FCSB is also denied.
The branch of the motion seeking leave to amend the complaint to add negligence as against Defrancisci is also denied, as plaintiff has failed to establish any fiduciary duty owed by Defrancisci to plaintiff. Defrancisci did not owe plaintiff a duty of care to ascertain the accuracy of the information provided (Burger v Singh, 28 A.D.3d at 697; Beckford v Northeastern Mtge. Inv. Corp., 262 A.D.2d at 437; Chemical Bank v Bowers, 228 A.D.2d 407 [2D Dept 1996]). "[F]ailure to realize that the person who appeared at the closing purporting to be the buyer was actually an imposter does not give rise to a cause of action to recover damages for negligence" (Burger, 28 A.D.3d 695). Therefore, plaintiff's cross- motion seeking leave to amend the complaint to add a negligence claim as to Defrancisci is denied.
As to the portion of the cross-motion seeking leave to amend the complaint to add negligence as a claim against Prime Title, the court again finds plaintiff has failed to state a duty owed by Prime Title to plaintiff. "Absent evidence of fraud, collusion or other special circumstances, a title company hired by one party generally is not subject to suit for negligent performance by one other than the party who contracted for its services" (Lebhar v National City Bank, 25 Misc.3d 58, 60 [App Term, 2d Dept, 2nd, 11th &13th Jud Dists 2009]; citing Calamari v Grace, 98 A.D.2d, 83 [2d Dept 1983]). Therefore, plaintiff's cross-motion seeking leave to amend the complaint to add negligence as a cause of action against Prime Title is denied.
The court will now address the pending motions to dismiss filed by FCSB, Defrancisci and Prime Title. The original complaint alleges two causes of action against all defendants in a group pleading. The first cause of action seeks to void the fraudulent conveyance whereby plaintiff alleges "defendants were aware that the conveyance and loan were a fraudulent transaction and were made without the consent or knowledge of the plaintiff". The second cause of action seeks to void the fraudulent mortgage and alleges a mortgage in the amount of $520,000 was made by fraud and without the knowledge or consent of plaintiff as she was not aware of the closing and never signed any paperwork for it.
In considering the respective motions by FCSB, Defrancisci and Prime Title to dismiss the original complaint, this court has already determined that no duty was owed by either party defendant. Moreover, the original complaint lacks specificity as to the fraud claims as reguired by CPLR 3016 (b) and group pleadings against multiple defendants without specificity of claims as to each one is impermissible (.Ramos v Ramirez, 31 A.D.3d 294 [1st Dept 2006]; Aetna Cas. & Sur. Co. v Merchants Mut. Ins. Co., 84 A.D.2d 736 [1st Dept 1981]) .
Accordingly, the cross-motions by plaintiff seeking to add the causes of action of aiding and abetting fraud and of negligence against FCSB, Defrancisci and Prime Title, are denied and the respective motions to dismiss the original complaint by defendants FCSB, Defrancisci and Prime Title are all granted.