| Pirrelli v OCWEN Loan Servicing, LLC |
| 2015 NY Slip Op 04625 [129 AD3d 689] |
| June 3, 2015 |
| Appellate Division, Second Department |
[*1]
| Ronald Pirrelli et al., Respondents, v OCWENLoan Servicing, LLC, et al., Appellants, et al., Defendants. |
Houser & Allison, APC, New York, N.Y. (Lijue T. Philip of counsel), forappellants OCWEN Loan Servicing, LLC, US Bank, N.A., as Trustee for the RegisteredHolders of MASTR Asset Backed Securities Trust 2005-WMC1, MortgagePass-Through Securities, Scott Anderson, Doris Chapman, Noemi Morales, UBSSecurities, MERSCORP, Inc., and Mortgage Electronic Registration Systems, Inc.
Shapiro, DiCaro & Barak, LLC, Rochester, N.Y. (Ellis M. Oster and John A.DiCaro of counsel), for appellants Shapiro & DiCaro, LLP, and Julie Doyle.
Law Office of James D. Reddy, P.C., Lindenhurst, N.Y., for respondents.
In an action, inter alia, pursuant to RPAPL article 15 and to recover damages underGeneral Business Law § 349, the defendants OCWEN Loan Servicing,LLC, US Bank, N.A., as Trustee for the Registered Holders of MASTR Asset BackedSecurities Trust 2005-WMC1, Mortgage Pass-Through Securities, Scott Anderson, DorisChapman, Noemi Morales, UBS Securities, MERSCORP, Inc., and Mortgage ElectronicRegistration Systems, Inc., appeal, as limited by their brief, from so much of an order ofthe Supreme Court, Suffolk County (Molia, J.) dated April 22, 2013, as denied theirmotion pursuant to CPLR 3211 (a) to dismiss the complaint insofar as asserted againstthem, and the defendants Shapiro & DiCaro, LLP, and Julie Doyle separatelyappeal, as limited by their brief, from so much of the same order as denied that branch oftheir separate motion which was pursuant to CPLR 3211 (a) to dismiss the complaintinsofar as asserted against them.
Ordered that the order is modified, on the law, (1) by deleting the provisions thereofdenying those branches of the motion of the defendants OCWEN Loan Servicing, LLC,US Bank, N.A., as Trustee for the Registered Holders of MASTR Asset BackedSecurities Trust 2005-WMC1, Mortgage Pass-Through Securities, Scott Anderson, DorisChapman, Noemi Morales, UBS Securities, MERSCORP, Inc., and Mortgage ElectronicRegistration Systems which were pursuant to CPLR 3211 (a) to dismiss the causes ofaction to recover damages for negligent infliction of emotional distress, intentionalinfliction of emotional distress, violations of the Racketeer Influenced and CorruptOrganizations Act (18 USC § 1961 et seq.), and violations of theFederal Fair Debt Collection Practices Act (15 USC § 1692 et seq.)insofar as asserted against them, and substituting therefor provisions granting thosebranches of the motion, and (2) by deleting the provision thereof denying that branch ofthe motion of the defendants Shapiro & DiCaro, LLP, and Julie Doyle which waspursuant to CPLR 3211 (a) to dismiss the complaint insofar as asserted against them, andsubstituting therefor a provision granting that branch of the motion; as so modified, theorder is [*2]affirmed insofar as appealed from, with onebill of costs payable by the plaintiffs to the defendants Shapiro & DiCaro, LLP, andJulie Doyle.
The instant action involves an allegedly fraudulent mortgage loan transaction.Beginning in approximately 1987, the plaintiffs became the owners of a house in SagHarbor. The subject property was titled in the plaintiffs' names until 2004, when theyapplied for a mortgage refinancing loan. The plaintiffs asserted in their complaint that amortgage broker, the defendant Michael Lupo, suggested that they "add" a third partynamed Dexter Dick to the loan application. Dick applied for and was approved for twomortgage loans from WCM Mortgage (hereinafter WCM). A closing was conducted onor about December 22, 2004. The complaint alleged that, after the closing, the plaintiffsmade payments on the loan to WCM and/or to its servicer, the defendant OCWEN LoanServicing, LLC (hereinafter OCWEN), until approximately August 2005. The plaintiffsalleged that, in August 2005, they discovered that Dick had become the sole titled ownerof the subject property, pursuant to a deed executed in late 2004 purporting to transferthe property from the plaintiffs to Dick. The plaintiffs claimed that they did not sign thedeed, or that they did not know that they signed a document that purported to be a deed.The complaint alleged that the plaintiffs ceased making loan payments in August 2005,based on their discovery of the deed purporting to transfer, to Dick, sole title to thesubject property.
In 2005, the plaintiffs commenced an action pursuant to RPAPL article 15 againstDick and others to quiet title to the subject property. In early 2006, the subject mortgageswere purportedly assigned by the defendant Mortgage Electronic Registration Systems,Inc. (hereinafter MERS), as nominee for WCM, to the defendant US Bank, N.A. USBank, N.A., then intervened in the 2005 action to quiet title. In early 2006, US Bank,N.A., commenced two foreclosure actions against, among others, Dick and the plaintiffs.Those actions were stayed by order of the Supreme Court dated March 10, 2008.
In the instant action, the plaintiffs alleged, inter alia, that OCWEN, US Bank, N.A.,as Trustee for the Registered Holders of MASTR Asset Backed Securities Trust2005-WMC1, Mortgage Pass-Through Securities, Scott Anderson, Doris Chapman,Noemi Morales, UBS Securities, MERSCORP, Inc., and MERS (hereinafter collectivelythe OCWEN defendants) committed improper acts related to the foreclosure actions. Theplaintiffs also alleged, inter alia, that the defendants Shapiro & DiCaro, LLP, andJulie Doyle (hereinafter together the attorney defendants) engaged in improper conductin representing US Bank, N.A., in the foreclosure actions. The plaintiffs alleged that thesubject mortgages are invalid as a result of the fraudulent deed. The plaintiffs furtheralleged that MERS, as nominee for WCM, purported to assign the mortgage to US Bank,N.A., by means of a fraudulent transaction and that, in the foreclosure actions, US Bank,N.A., knowingly relied on that fraudulent assignment. The plaintiffs asserted that theydid not learn of the alleged forgery or fraud until early 2012 when, during the discoveryprocess in the action to quiet title, they found out that, in addition to the assignment ofmortgage that was recorded in 2006, there existed multiple "versions" of the purportedassignment of mortgage, some of which were allegedly fraudulently "back-dated."
In considering a motion to dismiss a complaint for failure to state a cause of actionpursuant to CPLR 3211 (a) (7), the sole criterion is whether, from the complaint's "fourcorners factual allegations are discerned which taken together manifest any cause ofaction cognizable at law" (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977];see Country Pointe at Dix HillsHome Owners Assn., Inc. v Beechwood Org., 80 AD3d 643, 649 [2011]; Fishberger v Voss, 51 AD3d627 [2008]). For purposes of a CPLR 3211 (a) (7) motion, the facts pleaded arepresumed to be true and are to be accorded every favorable inference (see Gershon v Goldberg, 30AD3d 372 [2006]).
Here, as the OCWEN defendants correctly assert, the complaint fails to state a causeof action to recover damages for negligent or intentional infliction of emotional distressas against them. The relationship between the plaintiffs and those defendants "does notgive rise to a duty which could furnish a basis for tort liability" in negligence (Baumann v Hanover CommunityBank, 100 AD3d 814, 816 [2012]). Further, the plaintiffs did not allege thattheir "physical safety" was endangered or that they were caused to fear for their physicalsafety, which is generally an element [*3]of a cause ofaction based on negligent infliction of emotional distress (Santana v Leith, 117 AD3d711, 712 [2014]; see SheilaC. v Povich, 11 AD3d 120, 130 [2004]). Moreover, the conduct complained ofis not sufficiently extreme and outrageous to support the cause of action to recover fordamages for intentional infliction of emotional distress (see Curtis-Shanley v Bank ofAm., 109 AD3d 634, 635 [2013]; Baumann v Hanover CommunityBank, 100 AD3d at 816).
The complaint also fails to state a cause of action to recover damages for a violationof the Racketeer Influenced and Corrupt Organizations Act (18 USC§ 1961 et seq. [hereinafter RICO]) as against the OCWENdefendants, as the plaintiffs failed to assert that those defendants engaged in a "pattern ofracketeering" (18 USC § 1962 [c]; see Becher v Feller, 64 AD3d 672, 677 [2009]; see alsoVicom, Inc. v Harbridge Merchant Servs., Inc., 20 F3d 771, 781 [7th Cir1994]; Thompson v Paasche, 950 F2d 306, 310 [6th Cir 1991]). The plaintiffsalso failed to state a cause of action for relief under the federal Fair Debt CollectionPractices Act (15 USC § 1692 et seq. [hereinafter the FDCPA]) asagainst the OCWEN defendants. The FDCPA does not apply to a creditor, such as thedefendant US Bank, N.A., that seeks to enforce a debt owed directly to it (see 15USC § 1692a [6] [B]), and the plaintiffs do not allege that any exceptions tothat general rule pertain here (see Cavalry Portfolio Servs., LLC v Renne, 27 Misc 3d129[A], 2010 NY Slip Op 50615[U] [App Term, 2d Dept, 2d, 11th & 13th JudDists 2010]; Sydney Realty,LLC v Desiderio, 17 Misc 3d 137[A], 2007 NY Slip Op 52302[U] [App Term,2d Dept, 9th &10th Jud Dists 2007]). In any event, OCWEN began servicing theloan prior to the occurrence of the default. Therefore, it may not be deemed a "debtcollector" within meaning of the FDCPA (15 USC § 1692a [6] [F]) that issubject to the restrictions imposed by that statute. The plaintiff also did not sufficientlyallege that any of the remaining defendants was a "debt collector" within the meaning ofthat statute (id.).
However, contrary to the contention of the OCWEN defendants, the plaintiffs do notlack standing to assert a cause of action to quiet title to the subject property, and thecomplaint pleads a viable cause of action to quiet title (see RPAPL 1501 [1]).The Supreme Court did not err in declining to dismiss, as duplicative of claims in theprior action to quiet title, the cause of action to quiet title asserted against the OCWENdefendants in the instant action (see CPLR 3211 [a] [4]; Jadron v 10 Leonard St., LLC,124 AD3d 842 [2015]; A.F.Rockland Plumbing Supply Corp. v Hudson Shore Associated Ltd. Partnership, 96AD3d 885, 886 [2012]). Accordingly, the Supreme Court did not err in denying thatbranch of the OCWEN defendants' motion which was pursuant to CPLR 3211 (a) todismiss the cause of action to quiet title insofar as asserted against them.
The plaintiffs alleged that the OCWEN defendants affirmatively concealed theexistence of facts showing the allegedly deceptive business practices until January 2012.The complaint was filed in February 2012. Under these circumstances, the OCWENdefendants failed to show that the cause of action to recover damages under GeneralBusiness Law § 349 was time-barred (see CPLR 214 [2];Ostrower v Metropolitan Life Ins. Co., 286 AD2d 720 [2001]; Gaidon vGuardian Life Ins. Co. of Am., 272 AD2d 60, 61 [2000], affd 96 NY2d 201[2001]). Moreover, the complaint sufficiently alleged that the OCWEN defendants wereengaged in deceptive "consumer-oriented" conduct, and sufficiently pleaded damagesunder General Business Law § 349 (see Oswego Laborers' Local 214Pension Fund v Marine Midland Bank, 85 NY2d 20, 25 [1995]; North State Autobahn, Inc. vProgressive Ins. Group Co., 102 AD3d 5, 12 [2012]; Ural v Encompass Ins. Co. ofAm., 97 AD3d 562, 564-565 [2012]). Further, there is no merit to the OCWENdefendants' contention that the plaintiffs lacked standing to challenge the assignment ofthe mortgage (see generallyBank of N.Y. v Silverberg, 86 AD3d 274 [2011]). Consequently, the SupremeCourt did not err in denying that branch of the OCWEN defendants' motion which waspursuant to CPLR 3211 (a) to dismiss the General Business Law § 349cause of action insofar as asserted against them.
The Supreme Court erred, however, in denying the motion of the attorney defendantsto dismiss the complaint insofar as asserted against them. The plaintiffs failed to state acause of action to quiet title as against the attorney defendants, as the complaint did notallege that these defendants have or claim to have an interest in the subject property thatis adverse to plaintiffs' claimed interest (see RPAPL 1501 [1]). The plaintiffsfailed to state a cause of action to recover damages for negligent infliction of emotionaldistress as against the attorney defendants, as they did not allege conduct that endangeredtheir safety or that placed them in fear for their safety (see [*4]Santana v Leith, 117 AD3d 711, 712 [2014]; Sheila C. v Povich, 11 AD3d120, 130 [2004]). The complaint does not state a cause of action based onintentional infliction of emotional distress against the attorney defendants, as it failed toallege conduct by those defendants that is sufficiently extreme and outrageous so as tosustain that cause of action (see Curtis-Shanley v Bank of Am., 109 AD3d at 635;Baumann v Hanover Community Bank, 100 AD3d at 816). Additionally, theplaintiffs failed to allege that the attorney defendants engaged in "consumer-oriented"conduct, a required element of the General Business Law § 349 cause ofaction; the plaintiffs did not allege a "standard or routine practice that . . .'potentially affect[s] similarly situated consumers,' " with respect to thesedefendants (Valentine v QuincyMut. Fire Ins. Co., 123 AD3d 1011, 1015 [2014], quoting Oswego Laborers'Local 214 Pension Fund v Marine Midland Bank, 85 NY2d at 27; see JP Morgan Chase Bank, N.A. vHall, 122 AD3d 576, 581 [2014]; Flax v Lincoln Natl. Life Ins. Co., 54 AD3d 992, 995[2008]; Brooks v Key Trust Co.N.A., 26 AD3d 628, 630-631 [2006]). The plaintiffs also failed to state a causeof action to recover damages for a violation of RICO as against the attorney defendants,as no "pattern of racketeering" was alleged (see Becher v Feller, 64 AD3d at 677;see also Vicom, Inc. v Harbridge Merchant Servs., Inc., 20 F3d at 781;Thompson v Paasche, 950 F2d at 310). Lastly, the plaintiffs failed to state a causeof action against the attorney defendants under the FDCPA, as they did not allege thatthe attorney defendants acted as "debt collectors" within the meaning of the FDCPA (15USC § 1692a [6]).
Accordingly, the Supreme Court should have directed the dismissal of the complaintinsofar as asserted against the attorney defendants. Skelos, J.P., Chambers, Maltese andDuffy, JJ., concur.