Germain v. M & T Bank Corp.

Decision Date19 June 2015
Docket NumberNo. 13–CV–7273 (KMK).,13–CV–7273 (KMK).
Citation111 F.Supp.3d 506
Parties David GERMAIN, et al., Plaintiffs, v. M & T BANK CORPORATION, et al., Defendants.
CourtU.S. District Court — Southern District of New York

Nichelle Aniece Johnson, Esq., Law Offices of Nichelle A. Johnson, PLLC, New Rochelle, NY, for Plaintiffs David Germain, Lexington Capital Associates LLC, and the Zherka Family Irrevocable Trust.

Peter Howard Tilem, Esq., Tilem & Campbell, LLP, White Plains, NY, for Plaintiffs.

Cathy Ann Fleming, Esq., Selyn Hong, Esq., Hodgson Russ, LLP, New York, NY, for Defendants.

Jillian Marie Searles, Esq., Robert Scharger, Esq., Hodgson Russ, LLP, New York, NY, for Defendants M & T Bank Corporation and M & T Bank. Corporation Internal Loan Approval Committee Members 1–20.

Brian Todd Belowich, Esq., Belowich & Walsh, LLP, White Plains, NY, for Defendant Mark Walz.


KENNETH M. KARAS, District Judge.

Plaintiffs David Germain ("Germain"), Selim Zherka ("Zherka"), Lexington Capital Associates, LLC ("Lexington Capital"), Silas Investments, LLC ("Silas Investments"), and the Zherka Family Irrevocable Trust (the "Zherka Trust") (collectively "Plaintiffs") filed the instant Amended Complaint against M & T Bank Corporation ("M & T Bank"), Mark Walz ("Walz"), and M & T Bank Corporation Internal Loan Approval Committee Members 1–20 (the "Committee Members") (collectively "Defendants"), alleging that Defendants engaged in discriminatory practices in violation of the Equal Credit Opportunity Act, 15 U.S.C. § 1691 (the "ECOA"), the Fair Housing Act of 1968, as amended by the Fair Housing Amendments Act of 1988, 42 U.S.C. § 3603 et seq. (the "FHA"), and Article 15 of the New York State Human Rights Law, New York Executive Law § 290 et seq. ("NYHRL"). Plaintiffs also allege that Defendants violated the notification provisions of the ECOA, conspired to interfere with Plaintiffs' civil rights in violation of 42 U.S.C. § 1985, and that Walz engaged in slander per se against Zherka. Before the Court is Defendants' Motion To Dismiss the Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (See First Mot. To Dismiss ("Mot.") (Dkt. No. 36).) For the following reasons, Defendants' Motion is granted in part and denied in part.

I. Background
A. Factual Background
1. The Parties

The following facts are drawn from Plaintiffs' Amended Complaint and are taken as true for the purpose of resolving the instant Motion. Zherka is a "United States citizen of Muslim and Albanian descent." (Amended Complaint ("Am. Compi.") ¶ 6 (Dkt. No. 26).) Germain is a mortgage banker in the business of commercial and residential mortgages and is the managing member of Lexington Capital. (Id. ¶ 7.) Lexington Capital is a limited liability company organized and existing under the laws of the State of New York and is involved in the business of commercial and residential mortgages with its principal place of business in New Rochelle, New York. (Id. ¶ 8.) Silas Investments is a limited liability company organized and existing under the laws of the State of Connecticut and is involved in the business of commercial and residential real estate, with its principal place of business in Wethersfield, Connecticut. (Id. ¶ 9.) The Zherka Trust is a trust that was created and exists under the laws of the State of New York, with assets that include commercial and residential real estate. (Id. ¶ 10.)

M & T Bank is a corporation organized and existing under the laws of the State of New York, with its principal place of business in Buffalo, New York, (Id. ¶ 11.) M & T Bank is a full service bank that provides commercial retail banking services to individuals, corporations, and other businesses and institutions, and has over 700 domestic banking offices and over 2,000 ATMs in New York, Pennsylvania, Maryland, Virginia, West Virginia, and the District of Columbia. (Id. ) M & T Bank's commercial real estate segment offers commercial real estate loans secured by various types of multi-family residential and commercial real estate properties. (Id. ) Walz is employed as Vice President and Team Leader of M & T Bank's Commercial Real Estate Department. (Id. ¶ 12.) Walz "is responsible for facilitating commercial mortgage loans and selling ancillary services to real estate owners and developers who own property in the northern suburbs of New York." (Id. ¶ 31.) Walz is involved in loan transactions concerning investment properties, specifically, properties where the mortgage will be paid from the rents received from non-owner occupied tenants, known as "multi-family properties." (Id. ¶ 32.) The Committee Members are responsible for making lending decisions for M & T Bank. (Id. ¶ 13.)

2. Plaintiffs' Loan Inquiries

In late October of 2011, Zherka, acting as an agent on behalf of Silas Investments and the Zherka Trust, was interested in arranging for substantial real estate financing. (Id. ¶ 27.) To arrange for such financing, Zherka contacted Germain, who informed him that M & T Bank had competitive rates and that Zherka, Silas Investments, and the Zherka Trust should do business with M & T Bank. (Id. ¶ 28.) Germain also informed Zherka that M & T Bank was comprised of lending experts who focus their efforts on lending transactions for the purposes of financing multi-family properties. (Id. 29.)1 An employee of Lexington Capital contacted Walz on behalf of Zherka, Silas Investments, and the Zherka Trust, requesting a meeting regarding loans. (Id. ¶ 30.)

Initially, Walz agreed to meet with Germain to "discuss information on a package of buildings sent to M & T Bank regarding loans [Germain] was seeking on behalf of other clients, as well as loans he was seeking on behalf of ... Silas Investments and the [Zherka Trust]." (Id. ¶ 33.) Before the meeting, scheduled for October 19, 2011, Walz was not aware that one of Germain's clients was Zherka. (Id. ¶ 34.) The day of the meeting, Walz "abruptly cancelled the meeting upon discovering ... Germain's association with ... Zherka." (Id. ) Plaintiffs allege that "[u]pon information and belief, had ... Germain not disclosed his association with ... Zherka ... the meeting would have taken place as scheduled." (Id. ) Walz never agreed to another meeting with Germain or Zherka, despite Germain's and Zherka's repeated attempts to discuss loans with M & T Bank. (Id. ¶ 35.) Accordingly, Plaintiffs never had an opportunity to discuss financing opportunities for multi-family properties with Walz, nor were Plaintiffs permitted to complete the loan process. (Id. )

As part of the application process, Germain submitted information on the proposed purchase by Silas Investments of a 37–unit residential apartment building in Westchester County. (Id. ¶ 36.)2 Plaintiffs were discouraged and prevented from submitting additional information relating to that transaction and others. (Id. )3

On March 26, 2013, Walz was deposed in an unrelated matter. (Id. ¶ 37.)4 During the deposition, Walz testified that Zherka was interested in meeting with him to discuss lending opportunities with M & T Bank. (Id. ) Walz testified that he declined to meet with Zherka "because he had completed a brief google search" and the results yielded controversial headlines about Zherka that would prevent M & T Bank from approving any of Zherka's loan transactions or entertaining any loan applications made on his behalf. (Id. ¶ 38.) Walz also explained that M & T Bank's procedure in evaluating a potential loan applicant included meeting with a potential borrower to understand the requested loan transaction and evaluating the location of the property securing the loan, the rent roll generated by the property, tenancy, market position, cash flow generation, and the amount of excess income over the proposed debt service. (Id. ¶ 39.) Waltz "stated that this process applied to all potential borrowers," (Id. (emphasis omitted).)

M & T never evaluated Plaintiffs' application because such an evaluation was foreclosed by Walz's refusal to communicate with Germain and Zherka. (Id. ¶ 40.) According to Plaintiffs, Walz made a "preconceived judgment" that led him to cancel the scheduled meeting with Germain and Zherka. (Id. ¶ 41.) During the above-referenced deposition, Waiz stated that he was under the impression that Zherka was "no good," despite not knowing anything about Zherka's real estate portfolio or that of the other Plaintiffs. (Id. ) Walz testified that he characterized Zherka as an "Albanian with ties to the Albanian mob," specifically referring to Zherka as "a scary looking Albanian, who is a very large and intimidating man." (Id. ¶ 42.) Plaintiffs note that when Walz was asked during his deposition whether he ever told anyone that Zherka had a criminal history, Walz "made a nervous facial expression [,] testifying ‘I don't recall ever purporting that Sam Zherka had a criminal history outside of ... I don't ever recall purporting that.’ " (Id. ¶ 43.) Walz could not identify another potential borrower besides Zherka that he denied meeting with as a result of an Internet search or a perception that a potential borrower "was a scary, intimidating looking Albanian man." (Id. ¶ 44.)

Janice Senior ("Senior"), an employee in the commercial lending department at M & T Bank, allegedly informed Zherka that she was astonished at how Zherka was treated and that such behavior was outrageous, particularly in light of M & T Bank's interest in financing multi-family properties. (Id. ¶ 45.) Armin Quinn Shaw ("Shaw"), another employee in the commercial lending department of M & T Bank, testified at a deposition on March 26, 2013 about the procedure that M & T Bank typically followed when engaging with a potential borrower interested in financing multi-family commercial properties. (Id. ¶ 46.)5 Shaw stated that M & T Bank's procedure is to ask for the location of the property, rent rolls, and historical financial statements on the property, as well as to visit the property for which financing was sought. (Id. ...

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