Opinion
11-17-2016
PHOENIX LIGHT SF LIMITED, et al., Plaintiffs–Appellants, v. CREDIT SUISSE AG, et al., Defendants–Respondents. Phoenix Light SF Limited, et al., Plaintiffs–Appellants, v. Morgan Stanley, et al., Defendants–Respondents.
Robbins Geller Rudman & Dowd LLP, San Diego, CA (Nathan R. Lindell of the bar of the State of California, admitted pro hac vice, of counsel), for appellants. Cravath, Swaine & Moore LLP, New York (Richard W. Clary of counsel), for Credit Suisse AG, Credit Suisse Securities (USA) LLC, DLJ Mortgage Capital, Inc., Credit Suisse First Boston Mortgage Securities Corp. and Asset Backed Securities Corp., respondents. Davis Polk & Wardwell LLP, New York (James P. Rouhandeh of counsel), for Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley ABS Capital I, Inc., Morgan Stanley Capital I, Inc., Saxon Capital, Inc., Saxon Funding Management LLC and Saxon Asset Securities Company, respondents.
Robbins Geller Rudman & Dowd LLP, San Diego, CA (Nathan R. Lindell of the bar of the State of California, admitted pro hac vice, of counsel), for appellants.
Cravath, Swaine & Moore LLP, New York (Richard W. Clary of counsel), for Credit Suisse AG, Credit Suisse Securities (USA) LLC, DLJ Mortgage Capital, Inc., Credit Suisse First Boston Mortgage Securities Corp. and Asset Backed Securities Corp., respondents.
Davis Polk & Wardwell LLP, New York (James P. Rouhandeh of counsel), for Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Mortgage Capital Holdings LLC, Morgan Stanley ABS Capital I, Inc., Morgan Stanley Capital I, Inc., Saxon Capital, Inc., Saxon Funding Management LLC and Saxon Asset Securities Company, respondents.
Judgment, Supreme Court, New York County (Charles E. Ramos, J.), entered May 6, 2015, in index No. 653123/13, to the extent appealed from as limited by the briefs, dismissing the common-law fraud, fraudulent inducement, and aiding and abetting fraud claims, unanimously reversed, on the law, with costs, and those claims reinstated. Appeal from order, same court and Justice, entered on or about April 23, 2015, to the extent it granted defendants' CPLR 3211(a)(7) motion to dismiss the aforesaid claims, unanimously dismissed, without costs, as subsumed in the appeal from the judgment. Order, same court and Justice, entered on or about April 23, 2015, in index No. 652986/13, which, to the extent appealed from as limited by the briefs, granted defendants' CPLR 3211(a)(7) motion to dismiss the common-law fraud, fraudulent inducement, and aiding and abetting fraud claims, unanimously reversed, on the law, with costs, and the motion denied.
The allegations that with respect to their purchase of residential mortgaged-back securities plaintiffs relied on misrepresentations and omissions made by defendants in the offering documents are sufficient to state the justifiable reliance element of the fraud claims; plaintiffs are not required to allege that they requested from defendants the actual loan files or due diligence reports or that they obtained representations and warranties made directly by defendants about the quality of the loans, as opposed to those made to defendants by other parties with direct access to the relevant information (see IKB Intl. S.A. v. Morgan Stanley, 142 A.D.3d 447, 449–450, 36 N.Y.S.3d 452 [1st Dept.2016] ; Basis Yield Alpha Fund Master v. Morgan Stanley, 136 A.D.3d 136, 142–143, 23 N.Y.S.3d 50 [1st Dept.2015] ; CIFG Assur. N. Am., Inc. v. Goldman, Sachs & Co., 106 A.D.3d 437, 966 N.Y.S.2d 369 [1st Dept.2013] ). We find that the remaining elements of the fraud claims are also sufficiently alleged (see IKB Intl., 142 A.D.3d 447, 36 N.Y.S.3d 452 ; MBIA Ins. Corp. v. Countrywide Home Loans, Inc., 87 A.D.3d 287, 294–296, 928 N.Y.S.2d 229 [1st Dept.2011] ). We see no basis for reassignment to a different justice.
ACOSTA, J.P., RENWICK, MOSKOWITZ, FEINMAN, KAHN, JJ., concur.