Iannuzzi v. Am. Mortg. Network, Inc.

727 F.Supp.2d 125

Anthony IANNUZZI and Theresa Iannuzzi, Plaintiffs,

v.AMERICAN MORTGAGE NETWORK, INC., d/b/a AmNet Mortgage, Mortgage Electronic Registration Systems, Inc., Custom Capital Corp., Peter J. Dawson, BMG Advisory Services, Ltd., and Brash Management Group, Ltd., Defendants.

No. 07-CV-964 (JFB)(WDW).

United States District Court, E.D. New York.

July 22, 2010.

Scott A. Rosenberg, Kevin R. Toole, and Kenneth J. Pagliughi, Scott A. Rosenberg, P.C., Garden City Park, NY, for plaintiffs.

Peter A. Ragone and John P. Foudy, of Rosner Nocera & Ragone, LLP, New York, NY, for defendants AmNet and MERS.

Scott E. Kossove and Daniel M. Maunz, of L'Abbate, Balkan, Colavita & Contini, LLP, Garden City, NY, for defendant CCC.

memorandum and order

JOSEPH F. BIANCO, District Judge:

Plaintiffs Anthony Iannuzzi and Theresa Iannuzzi (hereinafter "plaintiffs" or the "Iannuzzis") bring this action against defendants American Mortgage Network, Inc. (hereinafter "AmNet"), Mortgage Electronic Registration Systems, Inc. (hereinafter "MERS"), Custom Capital Corp. (hereinafter "CCC"), Peter J. Dawson (hereinafter "Dawson"), BMG Advisory Services, Ltd. (hereinafter "BMG"), and Brash Management Group, Ltd. (hereinafter "Brash"). Plaintiffs allege violations of the federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., as well as various state law claims,¹ in connection with a mortgage loan obtained by plaintiffs, the proceeds of which were allegedly misappropriated by defendant Dawson. Before the Court are motions for summary judgment by AmNet and CCC, seeking summary judgment on all of plaintiff's claims. In the alternative, AmNet and CCC cross-move for summary judgment on AmNet's claims for indemnification and contribution against CCC. For the reasons set forth below, the Court denies AmNet's motion for summary judgment on plaintiffs' TILA claim. The Court grants both AmNet's and CCC's motions for summary judgment on plaintiffs' respective breach of fiduciary duty claims. The Court denies both of the cross-motions for summary judgment on AmNet's indemnification claim. CCC's motion for summary judgment on AmNet's claim for contribution is granted.

I. Background

A. Factual Background

The Court has taken the facts described below from the parties' depositions, affidavits, and exhibits, and from defendants' Rule 56.1 statements of facts.² They are not findings of fact by the Court, but rather are assumed to be true for the purposes of deciding this motion. 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). Unless otherwise noted, where a party's 56.1 statement or deposition is cited, that fact is undisputed or the opposing partyhas pointed to no evidence in the record to contradict it.

Plaintiffs Anthony and Theresa Iannuzzi are husband and wife who reside at 209 Fulton Street in Westbury, New York. (Am. Compl. ¶ 1.) ³ Defendant Peter J. Dawson was employed by plaintiffs for about 15 years to prepare their tax returns. (AmNet 56.1 ¶ 1.) In about 2000, plaintiffs began turning monies over to Dawson for investment purposes. (AmNet 56.1 ¶ 2.) Plaintiffs allege that, in early 2006, Dawson discussed with them the possibility of obtaining a reverse mortgage on their home. (CCC 56.1 ¶ 9.) ⁴ Plaintiffs allege that they were interested in such a reverse mortgage. (CCC 56.1 ¶ 11.) Plaintiffs allege that Dawson represented to them that he would handle the application process for them. (CCC 56.1 ¶ 12.)

Plaintiffs allege that Dawson introduced Anthony Iannuzzi to Michael Laucella (hereinafter "Laucella"), who was a mortgage broker associated with CCC. (CCC 56.1 ¶ 13.) At some point, Anthony Iannuzzi met with Laucella and Dawson in Laucella's office in connection with plaintiffs' loan application. (Dawson Dep. at 153.)

In early May 2006,⁵ CCC submitted a mortgage loan application to AmNet ⁶ on behalf of plaintiffs (hereinafter "loan application"). (AmNet 56.1 ¶ 6; AmNet Ex. 1.) AmNet is a mortgage lender duly authorized to transact business in the State of New York. (AmNet 56.1 ¶ 4.) On the loan application, a box was checked indicating that plaintiffs were applying for a "conventional" mortgage loan in the amount of $300,000. (AmNet 56.1 ¶ 7.) Plaintiffs assert that they did not fill out such an application or assist anyone else in filling out the application; plaintiffs also assert that their signatures on the application were forged. (A. Iannuzzi Aff. ¶ 9; T. Iannuzzi Aff. ¶ 9.)

AmNet asserts that it delivered a "Loan Disclosure Package" directly to Anthony Iannuzzi on May 5, 2006. (Dries Decl. ¶ 6.) The Loan Disclosure Package contained various documents, including a "Good Faith Estimate" and an "Initial Truth in Lending Disclosure." (Dries Decl. ¶ 6; AmNet Ex. 2.) A cover letter was included, which stated, in part:

Dear Loan Applicant

Your mortgage broker, [Custom Capital Corp.] has submitted your mortgage loan application to us for consideration[.] We look forward to providing excellent customer service. However, your principal contact in connection with this loan application will be your mortgage broker, CUSTOM CAPITAL CORP ....

(AmNet Ex. 2.) Plaintiffs assert that they did not receive any such disclosures prior to the closing. (T. Iannuzzi Aff. ¶ 12 ("No loan disclosure package was delivered tous at our residence or at any other location at any time. We never saw any loan disclosure documents prior to the Closing.").)

The Iannuzzi mortgage loan closed on May 16, 2006. (AmNet 56.1 ¶ 8.) Plaintiffs attended the closing with Peter Dawson. (AmNet 56.1 ¶ 9.) AmNet's closing attorney was Orlando Morales, Esq. (AmNet 56.1 ¶ 11.) Michael Laucella of CCC was also present. (Dawson Dep. at 167.) ⁷ It is undisputed that plaintiffs signed several documents at the closing. ( See T. Iannuzzi Aff. ¶¶ 12, 14.) Specifically, plaintiffs signed: (1) the final loan application (AmNet Ex. 3); (2) a $300,000 promissory note (AmNet Ex. 4); (3) a mortgage securing plaintiff's obligation to repay the $300,000 loan (AmNet Ex. 5); (4) a three day "Notice of Right to Cancel" (AmNet Ex. 6); (5) a Truth in Lending Act disclosure statement (AmNet Ex. 7); (6) a RESPA servicing disclosure (AmNet Ex. 8); (7) a monthly payment disclosure (AmNet Ex. 9); (8) a HUD-1 settlement statement (AmNet Ex. 10); and (9) a New York commitment letter (AmNet Ex. 11). (AmNet 56.1 ¶ 10.) AmNet asserts that plaintiffs were given the requisite copies of these documents. (Morales Aff. ¶¶ 7-8.) Plaintiffs assert that they did not receive copies of any of the documents they signed at the closing. (T. Iannuzzi Aff. ¶¶ 13-14.)

On May 22, 2006, AmNet wire transferred the Iannuzzi mortgage proceeds into the escrow account of AmNet's closing attorney. (AmNet 56.1 ¶ 11.) On May 22, 2006, the net balance of the Iannuzzi loan proceeds, $284,225.73, was wire transferred directly into plaintiffs' own personal checking account at North Fork Bank. (AmNet 56.1 ¶ 12.) A sum equal to the net loan proceeds, $284,225.73, was subsequently disbursed from the Iannuzzis' account via three checks dated May 18, 2006, May 23, 2006, and July 21, 2006, all made payable to defendant BMG Advisory Services, Dawson's company. (AmNet 56.1 ¶ 13.) The three checks were signed by plaintiffs. (AmNet 56.1 ¶ 14.) ⁸ Dawson has since pled guilty to grand larceny in connection with a Ponzi scheme orchestrated by Dawson in which he deceived dozens of his clients. (CCC 56.1 ¶ 38.)

B. Procedural History

Plaintiffs commenced this action by filing a summons and complaint in New York Supreme Court, Nassau County on February 5, 2007. Defendants Washington Mutual Bank and MERS ⁹ removed this action to federal court on March 6, 2007. Plaintiffs filed an amended complaint on June 10, 2008, asserting claims for: (1) declaratory relief under TILA; ¹⁰ (2) breach offiduciary duty against AmNet, MERS, and CCC; (3) injunctive relief related to the alleged breach of fiduciary duty and violations of TILA; (4) declaratory relief related to the alleged breach of fiduciary duty; (5) declaratory relief related to the rescission of the underlying transaction; (6) breach of contract against Dawson, BMG, and Brash; (7) misappropriation and conversion against Dawson, BMG, and Brash; (8) fraud and misrepresentation against Dawson, BMG, and Brash; and (9) breach of fiduciary duty against Dawson, BMG, and Brash; and (10) a claim for accounting against Dawson, BMG, and Brash.

By Memorandum and Order dated August 21, 2008, the Court granted in part and denied in part defendant CCC's motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure.¹¹ Iannuzzi v. Washington Mut. Bank, No. 07-cv-964 (JFB)(WDW), 2008 WL 3978189 (E.D.N.Y. Aug. 21, 2008). Specifically, the Court granted CCC's motion with respect to plaintiffs' TILA claims against CCC on the ground that CCC was not a creditor within the meaning of the statute. The Court denied CCC's motion with respect to plaintiffs' breach of fiduciary duty claim, as well as AmNet's cross-claims for indemnification and contribution.

On February 16, 2010, AmNet moved for summary judgment on all of plaintiffs' claims. AmNet also moved for summary judgment on its cross-claim for indemnification against CCC.¹² CCC moved for summary judgment on plaintiffs' only remaining claim against CCC-breach of fiduciary duty. CCC also cross-moved for summary judgment on AmNet's cross-claims for indemnification and contribution. Plaintiffs filed their opposition to defendants' motions on March 16, 17, and 18, 2010. AmNet and CCC filed replies in support of their motions on April 5, 2010. Oral argument was held on July 19, 2010. This matter is fully submitted.

II. Standard of Review

The standards for summary judgment are well settled. Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment is appropriate only if "the pleadings, the...