| Thomas v LaSalle Bank N.A. |
| 2010 NY Slip Op 09500 [79 AD3d 1015] |
| December 21, 2010 |
| Appellate Division, Second Department |
| Rosalie Thomas, Respondent, v LaSalle Bank NationalAssociation et al., Appellants, et al., Defendants. |
—[*1] Warren S. Hecht, Forest Hills, N.Y., for respondent.
In an action, inter alia, for rescission of all agreements made between the plaintiff and thedefendants, the defendants LaSalle Bank National Association, as trustee for First Franklin MortgageLoan Trust 2006-FF 18, Mortgage Loan Asset-Backed Certificates Series 2006-FF 18, andMortgage Electronic Registration Systems, Inc., as nominee for First Franklin, a division of NationalCity Bank, appeal from an order of the Supreme Court, Nassau County (Brandveen, J.), enteredJanuary 19, 2010, which denied their motion pursuant to CPLR 3211 (a) (1) and (7) to dismiss thecomplaint insofar as asserted against them.
Ordered that the order is modified, on the law, by deleting the provision thereof denying thosebranches of the motion which were pursuant to CPLR 3211 (a) (1) and (7) to dismiss the causes ofaction sounding in negligence and fraud, and substituting therefor a provision granting those branches ofthe motion; as so modified, the order is affirmed, with costs to the respondent.
The plaintiff homeowner alleges that when she was unable to make her mortgage payments andwas facing foreclosure, she was the victim of a scheme to defraud, in which certain defendants, whilefalsely claiming to help her, induced her to sign documents conveying her home to the defendant FrankM. Luscavage, a "straw" buyer. New mortgage loans were issued to Luscavage to pay off the plaintiff'sexisting mortgage, Luscavage later defaulted, and a foreclosure action was commenced againstLuscavage (see LaSalle Bank N.A. v Luscavage, Sup Ct, Nassau County, index No.13484/08).
The plaintiff commenced the instant action seeking, inter alia, rescission of all agreements she madewith the defendants during the course of the alleged scheme to defraud. The appellants, the mortgageeon the transaction with Luscavage and the assignee of the mortgagee, moved to dismiss the complaintinsofar as asserted against them, submitting the closing documents and other evidence in support of theircontention that the plaintiff has no cognizable claim against them. In opposition, the plaintiff submitted anaffidavit and exhibits, including the complaint in an action commenced by the Attorney General of theState of New York alleging the scheme to defraud (see State of New York v Empire Prop.Solutions, LLC, Sup Ct, Nassau County, index No. 017767/09). The exhibits also included an[*2]order issued in that action temporarily staying, inter alia, theforeclosure action against Luscavage in LaSalle Bank N.A. v Luscavage pending a hearing onthe Attorney General's motion for a preliminary injunction.
On a motion to dismiss, the complaint is to be afforded a liberal construction, the facts alleged arepresumed to be true, the plaintiff is afforded the benefit of every favorable inference, and the court is todetermine only whether the facts as alleged fit within any cognizable legal theory (see Leon vMartinez, 84 NY2d 83, 87-88 [1994]; Scoyni v Chabowski, 72 AD3d 792, 793 [2010]; Lucia v Goldman, 68 AD3d 1064,1066 [2009]). When evidentiary material is adduced in support of the motion, the court must determinewhether the proponent of the pleading has a cause of action, not whether the proponent has stated one(see Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]; Scoyni v Chabowski, 72AD3d at 793; Peter F. Gaito Architecture,LLC v Simone Dev. Corp., 46 AD3d 530 [2007]).
Considering the complaint and all evidentiary material submitted, including the closing documents,the plaintiff has a cause of action for rescission of the subject mortgage transactions on a theory that theappellants are not bona fide encumbrancers for value. A mortgagee's interest in the property isprotected unless it has notice of a previous fraud affecting the title of its grantor (see RealProperty Law § 266; Mathurin v Lost& Found Recovery, LLC, 65 AD3d 617, 618 [2009]; LaSalle Bank Natl. Assn. v Ally, 39 AD3d 597, 599-600 [2007]). "[A]mortgagee is under a duty to make an inquiry where it is aware of facts 'that would lead a reasonable,prudent lender to make inquiries of the circumstances of the transaction at issue' " (Stracham v Bresnick, 76 AD3d 1009,1010 [2010], quoting LaSalle Bank Natl. Assn. v Ally, 39 AD3d at 600). "A mortgagee whofails to make such an inquiry is not a bona fide encumbrancer for value" (Booth v Ameriquest Mtge. Co., 63 AD3d769, 769 [2009]).
Here, the documentary evidence establishes circumstances which would lead a reasonable, prudentlender to make inquiries concerning the transaction. Thus, under the first cause of action alleged in thecomplaint, the plaintiff has a cause of action against the appellants for rescission of the subjectmortgages (see Lucia v Goldman, 68 AD3d at 1065-1066; Mathurin v Lost & FoundRecovery, LLC, 65 AD3d at 618; LaSalle Bank Natl. Assn. v Ally, 39 AD3d at 600).
The appellants correctly contend, however, that the complaint does not state a cause of actionagainst them sounding in fraud premised on a theory that the attorney at the closing was their agent, andthat his fraud should be imputed to them (cf.Greenpoint Mtge. Funding, Inc. v Stewart Tit. Ins. Co., 49 AD3d 687, 691 [2008];Fidelity Natl. Tit. Ins. Co. of N.Y. v Consumer Home Mtge., 272 AD2d 512, 514 [2000];Hatton v Quad Realty Corp., 100 AD2d 609, 610 [1984]). Similarly, the complaint does notstate a cause of action against the appellants sounding in negligence. Under the circumstances allegedhere, a mortgagee does not owe a duty to the seller of real estate, in effect, to prevent a fraudulentconveyance (see Mathurin v Lost & Found Recovery, LLC, 65 AD3d at 617-618; Harris v Adejumo, 36 AD3d 855,856-857 [2007]; Tenenbaum v Gibbs,27 AD3d 722, 723 [2006]).
Finally, the appellants contend that the second cause of action to recover damages for waste andfor an accounting should be dismissed insofar as asserted against them. We note, however, that theplaintiff does not name the appellants in that cause of action, but seeks that relief only against the otherdefendants.
Accordingly, the first cause of action adequately states a cause of action for rescission against theappellants on the theory that they are not bona fide encumbrancers for value, and the Supreme Courtproperly denied the appellants' motion to dismiss the complaint insofar as asserted against them.Covello, J.P., Angiolillo, Dickerson and Belen, JJ., concur.