| Deutsche Bank Natl. Trust Co. v Sinclair |
| 2009 NY Slip Op 09419 [68 AD3d 914] |
| December 15, 2009 |
| Appellate Division, Second Department |
| Deutsche Bank National Trust Company, as Trustee,Plaintiff, v Millicent Sinclair et al., Defendants and Third-Party Plaintiffs-Respondents,et al., Defendants. Contour Mortgage Corporation et al., Third-PartyDefendants-Appellants. |
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In an action to foreclose a mortgage, the third-party defendant Contour MortgageCorporation appeals, as limited by its brief, from so much of an order of the Supreme Court,Queens County (Golia, J.), entered October 17, 2008, as denied that branch of its motion, madejointly with the defendant Richard A. Pregiato, which was pursuant to CPLR 3211 (a) (1) and (7)to dismiss the third-party complaint insofar as asserted against it, and the third-party defendantRichard A. Pregiato also appeals from the same order.
Ordered that the appeal by the third-party defendant Richard A. Pregiato is dismissed asabandoned (see 22 NYCRR 670.8 [e]); and it is further,
Ordered that the order is reversed insofar as appealed from by the third-party defendantContour Mortgage Corporation, on the law, with costs, and that branch of the motion which wasto dismiss the third-party complaint insofar as asserted against Contour Mortgage Corporation isgranted.
The defendants and third-party plaintiffs Millicent Sinclair and Eugene Sinclair (hereinafterthe Sinclairs) own a house in Cambria Heights, Queens. During a period of approximately oneyear, between October 11, 2003 and October 21, 2004, the Sinclairs refinanced their existingmortgages three times with the assistance of mortgage broker Contour Mortgage Corporation(hereinafter Contour). Three years later, in November 2007 the Sinclairs allegedly defaulted ontheir payment obligations under the mortgage executed October 21, 2004 and the plaintiff bankcommenced this foreclosure action against them. The Sinclairs thereafter commenced athird-party action against Contour and its principal Richard Pregiato (hereinafter together thethird-party defendants), alleging, inter alia, that the third-party defendants had defrauded theminto refinancing three times in just one year in order to generate substantial fees. The Sinclairsalleged that the third-party defendants accomplished their fraudulent scheme by misrepresentingthe benefits of refinancing, including the amount of money they would net as a result of eachloan transaction, [*2]and the amount of the reduction in theirtotal mortgage payments. The Sinclairs further averred that in order to procure mortgage loansfor which they did not qualify, the third-party defendants misrepresented the amount of MillicentSinclair's income to the lenders involved in the transactions. The third-party defendants movedpursuant to CPLR 3211 (a) (1) and (7) to dismiss the third-party complaint, and the SupremeCourt denied their motion. We reverse the order insofar as appealed from by Contour.
On a motion to dismiss pursuant to CPLR 3211 (a) (7) for failure to state a cause of action,the court must accept the facts alleged in the pleading as true, accord the plaintiff the benefit ofevery possible inference, and determine only whether the facts as alleged fit within anycognizable legal theory (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326[2002]; Leon v Martinez, 84 NY2d 83, 87 [1994]; Etzion v Etzion, 62 AD3d646, 650 [2009]; McGovern v Nassau County Dept. of Social Servs., 60 AD3d 1016,1017 [2009]). However, factual allegations which are flatly contradicted by the record are notpresumed to be true and, "[i]f the documentary proof disproves an essential allegation of thecomplaint, dismissal pursuant to CPLR 3211 (a) (7) is warranted even if the allegations, standingalone, could withstand a motion to dismiss for failure to state a cause of action" (Peter F.Gaito Architecture, LLC v Simone Dev. Corp., 46 AD3d 530, 530 [2007]; see Daub vFuture Tech Enter., Inc., 65 AD3d 1004 [2009]; Dinerman v Jewish Bd. of Family &Children's Servs., Inc., 55 AD3d 530, 531 [2008]; Paolino v Paolino, 51 AD3d 886,887 [2008]). Further, "where the documentary evidence utterly refutes plaintiff's factualallegations" and conclusively establishes a defense to the asserted claims as a matter of law, thecomplaint may be dismissed (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d at 326;see Leon v Martinez, 84 NY2d at 88; Etzion v Etzion, 62 AD3d at 650;McMorrow v Dime Sav. Bank of Williamsburgh, 48 AD3d 646, 647 [2008]).
Applying these principles here, that branch of the motion which was pursuant to CPLR 3211(a) (1) and (7) to dismiss the third-party complaint insofar as asserted against Contour must begranted. The essential elements of a cause of action sounding in fraud are a misrepresentation ora material omission of fact which was false and known to be false by the defendant, made for thepurpose of inducing the other party to rely upon it, justifiable reliance of the other party on themisrepresentation or material omission, and injury (see Lama Holding Co. v Smith Barney,88 NY2d 413, 421 [1996]; Spector v Wendy, 63 AD3d 820, 821 [2009]; Orlandov Kukielka, 40 AD3d 829 [2007]; Ozelkan v Tyree Bros. Envtl. Servs., Inc., 29AD3d 877, 878 [2006]). Furthermore, a fraud claim must be based upon a misrepresentation ofan existing fact rather than upon an expression of future expectations (see Foot LockerStores, Inc. v Pyramid Mgt. Group, Inc., 45 AD3d 1447, 1448 [2007]; International OilField Supply Servs. Corp. v Fadeyi, 35 AD3d 372, 375 [2006]; Transit Mgt., LLC vWatson Indus., Inc., 23 AD3d 1152, 1155 [2005]; Naturopathic Labs. Intl., Inc. v SSLAms., Inc., 18 AD3d 404 [2005]). The Sinclairs' allegation that Contour procured loans ontheir behalf by misrepresenting Millicent Sinclair's income to the lenders involved in thetransactions does not state a viable cause of action alleging fraud because suchmisrepresentations were not made to the Sinclairs for the purpose of inducing their reliance. Inany event, the Sinclairs' assertion that they were unaware that Millicent Sinclair's incomeallegedly had been overstated was contradicted by the loan applications and borrower'scertifications which they signed. Furthermore, to the extent that the Sinclairs' claim is predicatedupon Contour's alleged misrepresentations concerning the benefits of refinancing, suchmisrepresentations are not actionable in fraud because they constitute expressions of futureexpectations (see Foot Locker Stores, Inc. v Pyramid Mgt. Group, Inc., 45 AD3d at1448; International Oil Field Supply Servs. Corp. v Fadeyi, 35 AD3d at 375; TransitMgt., LLC v Watson Indus., Inc., 23 AD3d at 1155; Naturopathic Labs. Intl., Inc.,18 AD3d at 404). In any event, the Sinclairs could not have justifiably relied upon any oralmisrepresentations concerning the benefits of refinancing which may have been made byContour employees because the record demonstrates that the Sinclairs were provided, inter alia,with truth-in-lending disclosure statements which apprised them of what their paymentobligations would be, and with written notice of their right to cancel the loan transactions withinthree business days (see McMorrow v Dime Sav. Bank of Williamsburgh, 48 AD3d 646,647-648 [2008]). In addition, the Sinclairs signed "Pre-Application Disclosure andFee-Arrangement" forms disclosing the fees which Contour was charging for its services.
The third-party complaint also fails to state a cause of action alleging conversion [*3]insofar as asserted against Contour (see Daub v Future TechEnter., Inc., 65 AD3d 1004 [2009]; Batsidis v Batsidis, 9 AD3d 342, 343 [2004]).Fisher, J.P., Angiolillo, Eng and Lott, JJ., concur.