| Cash v Titan Fin. Servs., Inc. |
| 2009 NY Slip Op 00493 [58 AD3d 785] |
| January 27, 2009 |
| Appellate Division, Second Department |
| Candice Cash et al., Appellants-Respondents, v TitanFinancial Services, Inc., et al., Defendants, Fremont Investment & Loan, Respondent, andStephen J. Caputo et al., Respondents-Appellants. |
—[*1] David M. Namm, Garden City, N.Y. (William Yurus of counsel), for respondents-appellants. Solomon & Siris, P.C., Uniondale, N.Y. (Bill Tsevis and Stuart Siris of counsel), forrespondent.
In an action, inter alia, to recover damages for fraud, the plaintiffs appeal, as limited by theirbrief, from so much of an order of the Supreme Court, Queens County (Dollard, J.), datedNovember 9, 2007, as granted those branches of the motion of the defendant Fremont Investment& Loan which were for summary judgment dismissing the causes of action alleging fraud,conspiracy to defraud, and violation of General Business Law § 349 insofar as assertedagainst it, and granted that branch of the separate motion of the defendants Stephen J. Caputoand Stephen J. Caputo, P.C., which was for summary judgment dismissing the cause of actionalleging violation of General Business Law § 349 insofar as asserted against them, and thedefendants Stephen J. Caputo and Stephen J. Caputo, P.C., cross-appeal from so much of thesame order as denied those branches of their motion which were for summary judgmentdismissing the causes of action alleging fraud, conspiracy to defraud, conversion, and breach offiduciary duty insofar as asserted against them.
Ordered that the order is modified, on the law, by deleting the provisions thereof denyingthose branches of the motion of the defendants Stephen J. Caputo and Stephen J. Caputo, P.C.,which were for summary judgment dismissing the causes of action alleging fraud, conspiracy to[*2]defraud, and conversion insofar as asserted against them andsubstituting therefor a provision granting those branches of the motion; as so modified, the orderis affirmed insofar as appealed and cross-appealed from, with costs to the defendant FremontInvestment & Loan payable by the plaintiffs.
The plaintiffs commenced this action, inter alia, to recover damages for fraud and to setaside the deed to certain property, claiming, in essence, that the defendants acted together tofraudulently procure the deed by, among other things, misrepresenting to them that, in signingcertain papers, they were refinancing their mortgages with respect to the property when, in fact,they were selling the property to the defendant John Doe, also known as Guy Sessions, alsoknown as Neil Greenberg (hereinafter Sessions). According to the plaintiffs, as a result of thedefendants' fraudulent scheme, the plaintiffs lost their property as well as the equity that they hadbuilt up in the property. The plaintiffs asserted causes of action alleging, inter alia, fraud,conspiracy to defraud, conversion, and breach of fiduciary duty, as well as one alleging violationof General Business Law § 349 (deceptive trade practices).
The defendant Fremont Investment & Loan (hereinafter Fremont), which funded the loan toSessions as buyer of the property in exchange for a mortgage on the property, moved, amongother things, for summary judgment dismissing the complaint insofar as asserted against it, andthe Supreme Court granted that branch of Fremont's motion. The defendants Stephen J. Caputoand Stephen J. Caputo, P.C. (hereinafter together the Caputo defendants), who acted asFremont's attorney with respect to the subject transaction, and also as the settlement agent withrespect to the transaction, separately moved for summary judgment dismissing the complaintinsofar as asserted against them. The Supreme Court granted that branch of the Caputodefendants' motion which was for summary judgment dismissing the cause of action allegingviolation of General Business Law § 349, and denied those branches of the Caputodefendants' motion which were for summary judgment dismissing the causes of action allegingfraud, conspiracy to defraud, conversion, and breach of fiduciary duty.
The Supreme Court should have granted that branch of the Caputo defendants' motion whichwas for summary judgment dismissing the plaintiffs' cause of action alleging conspiracy todefraud insofar as asserted against them, since "a mere conspiracy to commit a [tort] is never ofitself a cause of action" (Alexander & Alexander of N.Y. v Fritzen, 68 NY2d 968, 969[1986] [internal quotation marks and citation omitted]). Rather, "[a]llegations of conspiracy arepermitted only to connect the actions of separate defendants with an otherwise actionable tort"(id.). The Supreme Court properly granted that branch of Fremont's motion which wasfor summary judgment dismissing the cause of action alleging conspiracy to defraud insofar asasserted against it.
The Supreme Court also should have granted that branch of the Caputo defendants' motionwhich was for summary judgment dismissing the cause of action alleging fraud insofar asasserted against them. In essence, the plaintiffs alleged that the Caputo defendants and Fremontaided and abetted the other defendants in committing a fraud against them. However, in order toestablish that the Caputo defendants and Fremont aided and abetted the other defendants incommitting the fraud, the plaintiffs must establish, inter alia, that a fraud in fact was committed(see National Westminster Bank v Weksel, 124 AD2d 144, 149 [1987]). "In order toestablish a prima facie case of fraud, the plaintiff must establish (1) that the defendant madematerial representations that were false, (2) that the defendant knew the representations werefalse and made them with the intent to deceive the plaintiff, (3) that the plaintiff justifiably reliedon the defendant's representations, and (4) that the plaintiff was injured as a result of thedefendant's representations" (Giurdanella v Giurdanella, 226 AD2d [*3]342, 343 [1996]). Here, the plaintiffs' cause of action alleging fraudappears to be one of fraud in the factum rather than fraud in the inducement, since they areclaiming they were misled by the defendants to sign certain documents which turned out to be ofan entirely different nature and character from what they thought they were signing (see FirstNatl. Bank of Odessa v Fazzari, 10 NY2d 394, 397 [1961]; Whitehead v Town House Equities,Ltd., 8 AD3d 367, 368 [2004]; Dalessio v Kressler, 6 AD3d 57, 61 [2004]; Mix v Neff, 99AD2d 180, 182 [1984]; Gallinger v Commercial Cas. Ins. Co., 224 App Div 631, 633[1928]).
However, "[a] party is under an obligation to read a document before he or she signs it, and aparty cannot generally avoid the effect of a [document] on the ground that he or she did not readit or know its contents" (Martino v Kaschak, 208 AD2d 698, 698 [1994]; see Lavi vHamedani, 234 AD2d 428 [1996]; Humble Oil & Ref. Co. v Jaybert Esso Serv. Sta.,30 AD2d 952 [1968]). While it is true that "there are situations where an instrument will bedeemed void because the signer was unaware of the nature of the instrument he or she wassigning" (Green Point Sav. Bank v Placid Life, 272 AD2d 441, 441 [2000]), such aswhere "the signer is illiterate, or blind, or ignorant of the alien language of the writing, and thecontents thereof are misread or misrepresented to him by the other party, or even by a stranger"(Pimpinello v Swift & Co., 253 NY 159, 163 [1930]), here, the Caputo defendantsestablished their prima facie entitlement to judgment as a matter of law dismissing the cause ofaction alleging fraud insofar as asserted against them by submitting excerpts from the depositiontestimony of the plaintiff Candice Cash, who was present at the closing on behalf of bothplaintiffs. Cash testified that she has an eleventh grade education, that she can read and writeEnglish, that she was neither prevented from reading the closing documents, nor told not to readthem, or forced to sign them, that she was not suffering from any mental or physical disability atthe time of the closing that prevented her from reading the documents prior to signing them, butthat she nonetheless signed all of the closing documents without reading them.
In opposition to the Caputo defendants' prima facie showing, the plaintiffs failed to raise atriable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).Accordingly, the Supreme Court should have granted that branch of the Caputo defendants'motion which was for summary judgment dismissing the cause of action alleging fraud insofar asasserted against them. In that regard, because the plaintiffs predicated their cause of actionalleging fraud insofar as asserted against Fremont on the theory that the Caputo defendants'allegedly fraudulent conduct should be imputed to Fremont under traditional agency principles,the Supreme Court properly granted that branch of Fremont's motion which was for summaryjudgment dismissing the cause of action alleging fraud insofar as asserted against it.
The Supreme Court also should have granted that branch of the Caputo defendants' motionwhich was for summary judgment dismissing the plaintiffs' cause of action alleging conversioninsofar as asserted against them. Proof of a demand for the return of the subject property "is anessential ingredient in a conversion action" (Tache-Haddad Enters. v Melohn, 224 AD2d213, 213 [1996]; see Apex Ribbon Co. v Knitwear Supplies, 22 AD2d 766, 767 [1964]).Here, the Caputo defendants established their prima facie entitlement to judgment as a matter oflaw dismissing the cause of action alleging conversion insofar as asserted against them bysubmitting excerpts of Cash's deposition testimony, in which she expressly admitted that shenever asked Stephen J. Caputo for the loan proceeds from the subject transaction that form thebasis of the cause of action alleging conversion insofar as asserted against the Caputodefendants. In opposition to the Caputo defendants' prima facie showing, the plaintiffs failed toraise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d at 324).Accordingly, the Supreme Court should have granted that the branch of the Caputo defendants'motion which was for summary judgment [*4]dismissing thecause of action alleging conversion insofar as asserted against them.
However, the Supreme Court properly denied that branch of the Caputo defendants' motionwhich was for summary judgment dismissing the cause of action alleging breach of fiduciaryduty insofar as asserted against them. "An escrow agent . . . becomes a trustee ofanyone with a beneficial interest in the trust with the duty not to deliver the escrow to anyoneexcept upon strict compliance with the conditions imposed. Thus, an escrow agent can be heldliable for . . . breach of fiduciary duty as escrowee" (Takayama v Schaefer,240 AD2d 21, 25 [1998] [internal quotation marks and citations omitted]).
Here, the Caputo defendants acted as the settlement agent with respect to the subjecttransaction and, in that capacity, were responsible for the distribution of the loan proceeds. TheCaputo defendants established their prima facie entitlement to judgment as a matter of lawdismissing the cause of action alleging breach of fiduciary duty insofar as asserted against thembased upon Stephen J. Caputo's averment, in his supporting affidavit, that he disbursed all of theloan proceeds in accordance with the plaintiffs' direction and with their authorization. However,in opposition to the Caputo defendants' prima facie showing, the plaintiffs raised a triable issueof fact as to whether Stephen J. Caputo breached his fiduciary duty as escrowee based uponCash's averment, in her opposing affidavit, that she never authorized him to distributeapproximately $77,000 of the loan proceeds to the defendant USA Equities & Investment Corp.rather than to the plaintiffs.
The plaintiffs' remaining contentions are without merit. Rivera, J.P., Santucci, Carni andDickerson, JJ., concur.