Mauro v. Countrywide Home Loans, Inc.
| Decision Date | 22 July 2010 |
| Docket Number | No. 07-CV-1268 (JFB)(WDW),07-CV-1268 (JFB)(WDW) |
| Parties | Maria MAURO, Plaintiff, v. COUNTRYWIDE HOME LOANS, INC., Mortgage Electronic Registration Systems, Inc., Peter J. Dawson, BMG Advisory Services, Ltd., Victoria S. Kaplan, and Victoria S. Kaplan, P.C., Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Scott A. Rosenberg and Kenneth A. Pagliughi, Scott A. Rosenberg, P.C., Garden City, NY, John R. Sordi, of Counsel to Scott A. Rosenberg, P.C., Westbury, NY, for plaintiff.
Steven S. Rand, Zeichner Ellman & Krause, New York, NY, for Countrywide.
Marian C. Rice, Scott E. Kossove, and Daniel M. Maunz, of L'Abbate, Balkan, Colavita & Contini, LLP, Garden City, NY, for the Kaplan defendants.
Peter J. Tomao, Law Office of Peter J. Tomao, Garden City, NY, for Peter J. Dawson.
Plaintiff Maria Mauro (hereinafter "plaintiff" or "Mauro") brings this action against defendants Countrywide Home Loans, Inc. (hereinafter "Countrywide"), Mortgage Electronic Registration Systems, Inc. (hereinafter "MERS"), Peter J. Dawson (hereinafter "Dawson"), BMG Advisory Services, Ltd. (hereinafter "BMG"), and Victoria S. Kaplan and Victoria S. Kaplan, P.C. (hereinafter the "Kaplan defendants"). Plaintiff asserts a federal claim under the Truth in Lending Act ("TILA"), as well as several state law claims, in connection with two mortgage loans obtained by plaintiff, the proceeds of which were allegedly misappropriated by defendant Dawson. Before the Court are motions for summary judgment filed by Countrywide and the Kaplan defendants (hereinafter the "moving defendants"), requesting summary judgment on all of plaintiff's claims. In the alternative, Countrywide moves for summary judgment on its cross-claims against Dawson, BMG, and the Kaplan defendants. The Kaplan defendants likewise move for summary judgment on Countrywide's cross-claims. For the reasons set forth below, the Court grants the moving defendants' motions for summary judgment on plaintiff's Truth in Lending Act claim, plaintiff's only federal claim in this action. Specifically, based upon the uncontroverted facts in the record-namely, that (1) plaintiffintended to give the loan proceeds directly to Dawson so that Dawson could invest the money for her and (2) plaintiff secured the loans with investment rental properties-and the fact that plaintiff points to no evidence showing any personal purpose for the loans, the Court concludes that the loans were obtained for business purposes and, therefore, TILA is inapplicable in this case. Additionally, the Court concludes that TILA is inapplicable to plaintiff's claim against the Kaplan defendants because plaintiff points to no evidence that the Kaplan defendants, as attorneys for Countrywide, regularly extend credit within the meaning of the statute. The Court declines to exercise supplemental jurisdiction over plaintiff's remaining state law claims. All cross-claims by Countrywide and the Kaplan defendants are dismissed as moot.
The Court has taken the facts described below from the parties' depositions, affidavits, and exhibits, and from defendants' Rule 56.1 statements of facts.1 Upon consideration of a motion for summary judgment, the Court shall construe the facts in the light most favorable to the non-moving party. See Capobianco v. City of N.Y., 422 F.3d 47, 50 n. 1 (2d Cir.2005).
Plaintiff Maria Mauro has resided at 20 Elm Street in Westbury, New York since 1973. (Mauro Dep. at 11-12.) In addition to her residence at 20 Elm Street, Mauro owns other property in Westbury at 168 Grand Street and 213 Fulton Street. (Mauro Dep. at 12.) Mauro collects rent on those two properties and considers them to be "investment properties." (Mauro Dep. at 13.)
Plaintiff alleges that defendant Peter Dawson was, at all times relevant to this action, a licensed investment advisor who, through his company, BMG Advisory Services, provided financial and investment advice. (Am. Compl. ¶¶ 9-10, 14.) 2 Mauro began using Dawson's services in about 2000. (Countrywide 56.1 ¶ 2.) Mauro knew Dawson through her husband, who died in 2002. (Mauro Dep. at 19-20.) Dawson gave plaintiff investment advice over the years. (Countrywide 56.1 ¶ 2.)
In 2006, Dawson suggested that plaintiff obtain a mortgage on the Fulton Street and Grant Street properties. According to the amended complaint, Dawson advised plaintiff that her ownership of investment properties that were not encumbered by mortgages could "raise tax related issues" with the federal and state governments. (Am. Compl. ¶ 15.) Plaintiff further alleges that Dawson said he would "put the mortgage proceeds into investments that would generate sufficient returns to service the mortgages and provide income to her." (Am. Compl. ¶ 16.) Plaintiff accepted Dawson's recommendation and, with Dawson's assistance, applied for loans on the Fulton Street and Grant Street properties. (Am. Compl. ¶ 17.) Plaintiff also consulted with her children. (Kaplan Defs.' 56.1 ¶ 23.)
Countrywide retained the services of Victoria S. Kaplan, P.C. to represent it as its attorney during the closing. (Countrywide 56.1 ¶ 8.) Kaplan executed written agreements with Countrywide regarding the conditions to be followed in connection with the closing. (Countrywide 56.1 ¶ 9.)
Countrywide subsequently approved plaintiff's applications for a $340,000 loan on the Fulton Street property and a $175,000 loan on the Grant Street property. (Am. Compl. ¶ 18; Kaplan Aff. ¶ 2.) The closing on the mortgages took place on May 30, 2006 at Dawson's office with Dawson present. (Kaplan Defs.' 56.1 ¶ 22.) Plaintiff believed that Dawson was an attorney and was acting as her attorney at the closing. (Countrywide 56.1 ¶ 11.) Plaintiff's two children and another individual she knew assisted plaintiff at the closing. (Kaplan Defs.' 56.1 ¶ 25.) The Kaplan defendants were present at the closing representing Countrywide. ( See Kaplan Aff. ¶ 3.)
At the closing, plaintiff signed a number of documents related to both properties. These included (1) a mortgage for each property; (2) a note for each property; and (3) a HUD-1 settlement statement and Truth in Lending Disclosure Statement for each property. (Countrywide 56.1 ¶¶ 12-13.) Plaintiff also signed documents authorizing the disbursement of the loan proceeds from the mortgages on the Grant Street and Fulton Street properties to BMG, Dawson's business. (Countrywide 56.1 ¶¶ 16-17.)
Defendants assert that plaintiff gave the relevant loan disclosure documents to Dawson, who promised to provide her with copies in two to three days. (Countrywide 56.1 ¶ 18; Kaplan Defs.' 56.1 ¶ 33.) Plaintiff states that she did not receive any checks or documents at the closing, nor did she receive anything from "the bank" after the closing.3 (Mauro Decl. ¶¶ 13, 15.)
After the closing, plaintiff did not make any mortgage payments because Dawson "was supposed to take care of them." (Kaplan Defs.' 56.1 ¶ 36.) Dawson apparently made the mortgage payments on behalf of plaintiff for several months. (Countrywide 56.1 ¶ 20.) Plaintiff also received statements of account from Dawson indicating that the loan proceeds were deposited into a trust account in the name of BMG for plaintiff's benefit. (Countrywide 56.1 ¶ 21.) Several months after the closing, a Countrywide representative called plaintiff and asked about her mortgagepayments. At this point, plaintiff attempted to obtain copies of the loan documents from Dawson and inquired about the status of the loan proceeds. (Countrywide 56.1 ¶ 22; Kaplan Defs.' 56.1 ¶ ¶ 34-35.)
In or about November 2006, the Nassau County police raided BMG's offices and arrested Dawson. (Countrywide 56.1 ¶ 23.) Thereafter, Mauro filed a complaint with the Nassau County Police and Nassau County District Attorney's office regarding Dawson's conduct in connection with her Countrywide loans. (Countrywide 56.1 ¶¶ 24-25.) Mauro told investigators that Dawson had advised her to: take the loans; authorize payment to BMG; and allow Dawson to manage and invest the proceeds and make Mauro's mortgage payments. (Countrywide 56.1 ¶ 25-26.) Dawson has since been charged with and convicted of, inter alia, multiple counts of grand larceny. (Countrywide 56.1 ¶ 27.) Mauro has been in payment default on the Grant Street and Fulton Street mortgages since February 1, 2007, although Countywide has not commenced foreclosure proceedings. (Countrywide 56.1 ¶ 28.)
Plaintiff commenced this action on February 8, 2007 by filing a complaint in New York State Supreme Court, Nassau County. The initial complaint named Countrywide, MERS, Peter Dawson, and BMG as defendants. Countrywide and MERS subsequently removed the case to this Court. By stipulation dated May 7, 2007, defendant MERS was dismissed from this action. On May 25, 2007, defendant Dawson requested that the Court stay the proceedings in this action pending resolution of criminal proceedings against him. By Memorandum and Order dated August 27, 2007, 2007 WL 2462677, the Court granted Dawson's request. By Order dated December 14, 2007, the Court lifted the stay and directed the parties to proceed with discovery.
On May 6, 2008, plaintiff filed a motion on consent to add additional parties, specifically, the Kaplan defendants. The Court granted plaintiff's motion on May 28, 2008. On June 19, 2008, plaintiff filed an amended complaint naming Countrywide, BMG, Dawson, Victoria S. Kaplan, and Victoria S. Kaplan, P.C. as defendants.4 The amended complaint asserts claims for: (1) a declaratory judgment that defendants (except BMG) have failed to comply with the Truth in Lending Act and Real Estate Settlement Procedures Act (RESPA); 5 (2) breach of fiduciary duty, apparently against all defendants; 6 (3) breach of contract against Countrywide and MERS; (4 and 5) declaratory andinjunctive relief related to the mortgages and notes on the Grant and Fulton Street properties; (6) breach of...
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