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SUPREME COURT OF TIIE STATE OF NEW YORK
COUNTY OF RICMMOND
__..._.........--- . .......... X
WELLS FARCO BANK. N.A., AlSO KNOWN
AS WACHOVlA MORTGAGE A DIVISION OF Index No. 131609/10
WACHOVIA BANK, N.A., FORMERLY KNOWN
AS WACHOVIA MORTGAGE, FSB. FORMERLY
KNOWN AS WORLD SAVINGS BANK, FSB,
Plaintiff,
-against-
BONNIE TADROUS, SAAD LABlB TADROUS,
NEW YORK CITY ENVIRONMENTAL CONTROL
BOARD. RAB PERFORMANCE RECOVERIES, LLC.,
CITlBANK, ASSET ACCEPTANCE, LLC . "JOHN d
DOE 1 TO JOHN DOE 25", said narnes fictitious
being
the persons or parties mtended the persons
being
parties corporatiom or entities, ifany, or
having
claiming an interest in or lien upon the mortgaged
premises desenbed irithe compliant,
Defendank.
PLAINTIFF WELLS FARGQ BANK, N.A/s MEMORANDUM
OF LAW IN SUPPORT OFPLAINTIFFS
MOTION FOR SUMMARY [UDGMENT AND OTHER RELIEF
ROSNER NOCERA & RAGONE, LLP
Attorneys for Plaintiff
Wens Fargo Bank, N.A.
110 WalIStreet. 23d Hoor
New York, New York 10005
Of Counsel
Gerald M. lacobs
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PRELIMTNARY STATEMENT
This Memorandum of Law is respectfully submitted on behalf of plaintiff Wells
Fargo"
Fargo Bank, N.A., ("Wells or "Plaintiff") in support of Wetts Fargo's rnotion for:
(1) Summary ]udgment in favor of Wells Fargo and against defendants Bonnie Tadrous
and Saad Labib Tadrous; (2) Default Judgment in favor of Wells Fargo and against
defendants New York City Environmental Control Board, RAB Perforrnance
Recoveries, LLC, Citibank, Asset Acceptance, LLC, Semso Pelinkov ic,Conrad Tadrous,
Ian Tadrous and Miriam Tadrous; (3) a referee to compute the amounts due
Appointing
to Wells Fargo; (4) the caption to substitute Semso Pelinkovic, Conrad
Changing
1" 25,"
Tadrous, lan Tadrous and Miriam Tadrous in place of "John Doe to "John Doe
(5) For attomey's fees, costs and disbursements; and (6) For such other, further and
different relief as the Court may deem just and proper.
STATEMENT OF FACTS
The Court is referred to the accom Affidavit of Michael ].
respectfully panying
Dolan sworn to December 19, 2012 and the Affirmations of Gerald M. Jacobs, Esq. dated
December 2(L 2012 submitted in support of Wells Fargo's motion, together with the
documents annexed as Exhibits thereto for a f ull rendition of the relevant facts.
However, the pertinent facts are as follows:
A. The Loan Transaction
On or about
February 14, 2008, Defendant Bonnie Tadrous borrowed the sum of
$325,000.00 from Wachovia Mortgage, FSB as evidenced a certain
("Wachovia") by
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secured Adjustable Rate Mortgage Note (the "Note") dated February 14, 2008 in the
principal sum of $325,000.00. The Note was secured a Mortgage dated 14,
by February
2008 in the principal sum of S325,000.00 from defendant Bonnie Tadrous ("Tadrous") to
Wachovia.
On or about April 29, 2009, Bonnie Tadrous entered into a Modification
Agreement with Wachovia dated April 29, 2009 which modified and
significantly
Tadrous'
lowered Bonnie indebtedness to Plaintiff including, but not limited to, the
Tadrous'
waiving of interest and fees and the interest rate on home loan.
reducing
Thereafter, Bonnie Tadrous defaulted on her loan obligations to Plaintiff by, among
other things, to make the loan payment of S1,022.31 which became due
failing monthly
on September 15, 2009, and to make the loan payments due thereafter.
failing monthly
in connection with the of the loan on 14, 2008, defendant Bonnie
closing February
Tadrous also received and executed the
following
kmn documents and loan disclosules
(along with other documents):
i. Truth in Disclosure Statement (Exhibit "4");
Lending
ii. Three Notice of Right to Cancel (Exhibit "5");
day
iii. Settlement Statement (Exhibit "6"); and
(HUD-1)
iv. Acknowledgment Iætter (Exhibit "7").
The TlLA Disclosure Statement (Ex. "4"), disclosed the annual percentage rate of
the loan, the total payments, and set forth a schedule of payments. The Three (3) Day
Notice of Right Cancel (Ex. "5"), provided Bonnie Tadrous with notice of her right to
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rescind the transaction within three business days of closing. The HUD-1 (Ex. "6"),
provided Bonnie Tadrous with a final
accounting
of her loan transaction. And as set
forth in the Acknowledgement latter, (Ex. Exhibit "7"), Tadrous acknowledged receipt
of, among
other things, the TILA disclosure, Good Faith Estimate and the HUD
Settlement Costs Guide.
B. The Litigation
This action was commenced the of Plaintiff's Verified Complaint on
by filing
October 12, 2010. On or about Novernber D, 2010, defendants Bonnie Tadrous and
Saad Labib Tadrous ("Defendants") served their Answer to Plaintiff's Complaint.
Defendants'
Answer alleges two affirmative defenses and four counterclaims.
Defendants'
first affirmative defense and first counterclairn allege that Wachovia
violated the Truth [n Act the Finance Charge or the Prepaid
Lending by understating
Finance Charge in the TILA Disclosure Statement (Ex. more then
appearing "4") by
$35 00. And although Defendants allege that Bonnie Tadrous was not provided with a
of the HUD-1 with her papers, Todrous testified at a deposition that she
copy closing
signed the HUD-1 which HUD-1 also contains her certification that she received a copy.
As dernonstrated in Plaintiff's Affidavit and Affirmation of
supporting Counsel,
Wachovia overstated the Prepaid Finance Charge in accordance with the Truth
actually
In Lending Act. Moreover, Defendants inflated their calculation of the Prepaid Finance
Charge items excluded law as a Prepaid Finance Charge. in
by including by addition,
"8"
Plaintiff annexed a Loan Amortization Schedule as Exhibit to the instant motion
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&
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that the total Finance Charge disclosed in the TILA Disclosure
demonstrating
Statement was calculated correctly.
Defendants'
second affirmative defense, second counterclaim, third counterclaim
and fourth counterclaim allege that Wachovia misled Bonnie Tadrous to believe that
she could afford to repay the subject loan and inserted false income information in her
loan application. In fact, Bonnie Tadrous confirmed that she signed the loan application
wherein she acknowledged and agreed that the statements made therein were true and
correct.
Bonnie Tadrous also qualified for a Quick Loan and acknowledged
Qualifying
in the Mortgage that Wachovia could on the statements of fact she made to
rely
Wachovia so that Wachovia would approve her loan quickly. Tadrous also testified at
her deposition that she had been misled her mortgage broker and not Wachovia.
by
Tadrous testified further that she could not recall ever with Wachovia prior to
speaking
her kmn being approved.
Defendants allege in the Answer that a Tom Cacciola filled in the false income
information in the loan application and identified him as a Wachovia
erroneously
employee. In fact, Cacciola was employed NSP First Financial Mortgage ("NSP")
by
and not Wachovia. Cacciola and NSP were independent mortgage brokers and
Wachovia did not have contract or other agreement with Cacciola and/or
any agency
N$P nor did
they have any to bind or enter into mortgage loan
authority any
agreements on behalf of Wachovia.
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For all the reasons described below itis submitted that plaintiff
respectfully
Wells Fargo has demonstrated its prima facie right to surnmary judgment, and as a
result, itis requested that Wells Fargo's instant motion be granted in all
respectfully
respects, with other appropriate relief.
along
ARGUMENT
POINTI
PLAINTIFF'S TlLA DISCWSURE WAS ACCURATE
The Truth In
lending
Act (TILA), 15 USC 1601 et.seq., was enacted on
May 29,
1968, as Title I of the Consumer Credit Protection Act. The T1LA, implemented
by
Regulation Z (12 C.F.R. 226), became affective July 1, 1%9.
Defendants allege that Wachov ia violated 15 U.5.C. 1635 and Reg. Z, 12 C.F.R.
226.23 the Finance Charge or the Prepaid Finance Charge 535 which
by understating by
Tadrous'
gives Defendants the right to rescind Bonnie loan with Wells
purportedly
Fargo. Section 1635 states, in pertinent part, that "the disclosure of the finance
(i)(2)
charge and other disdosures affected finance charge shall be treated as
by any being
accurate for purposes of this action if the amount disclosed as the finance charge does
not vary from the actual finance charge rnore than $35 or is ereater than the amount
by
subchapter."
required to be disclosed under this (Emphasis added}.
Similarly, 12 C.F.R. Section 226.23 provides as follows:
(h)(2)
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(2} Tolerance for disclosures. After the initiation of foreclosure on the
consumer's principal that secures the credit obligation, the
dwelling
finance charge and other disdosures affected by the finance charge
(such as the amount financed and the annual percentage rate) shall be
considered accurate for purposes of this section ifthe disclosed finance
charge:
(i) is understated by no more than S35; or
(ii) is greater than the amount required to be disclosed.
As demonstrated in the Dolan Affidavit (¶ 20-25), the Prepaid Finance Charge
in the TILA Disdosure Statement, namely $10,117.52, was overstated
appearing by
Wachovia in the amount of $1,222.72 as the actual Prepaid Fmance Charge paid by
Tadrous'
Bonnie Tadrous was $8,894.80. Defendants allege, however, that actual
Prepaid Finance Charge was $11,229.80. That amount, however was inflated by
Defendants by $2,335.00 to include items that are excluded under 12 C.F.R. 226(4) as a
Prepaid Finance Charge.
The items were included Defendants as Prepaid
following erroneously by
Finance Charges
Appraisal/Property Evaluation S 425.00
Application Fee 310.00
Document/Preparation Fee 250.00
EPL Waiver/ Title Endorsement 100.00
Recording Fee 425.00
Tax/ Municipal/ Department Searches 825.00
TOTAL $2,335.00
Appraisals/ Property Evaluations are excluded under 12 C.F.R. 226.4(c)(7)(iv) as
a appraisal fee. Application Fees are excluded under 12 C.F.R. to all
property 226.4(c)(1}
applicants for credit, whether or not credit is extended. Document Preparation
actually
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Fees are excluded under 12 C.F.R. 226.4 (c)(7)(ii)as a fee for loan documents
preparing
such as deeds and mortgages. EPL Waiver/Title Endorsement is excluded under 12
C.F.R. 226.4 (6)(7)(i) as a fee for titleexamination, abstract of title and title insurance.
Recording Fees are excluded under 12 C.F.R. 226.4(e)(1) as taxes and fees prescribed by
law that actually are or will be paid to public officials for the existence of
determining
or for perfecting, releasing, or a interest. Finall y,
satisfying security
Tax/Municipal/ Departmental Searches are excluded under 12 CF.R. 226.4(c)(7)(i) as a
fee for titleexamination and abstract of title.
"8"
The Loan Amortization Schedule annexed as Exhibit to the Dolan Affidavit
demonstrates that the total Finance Charge of $695,799.30 in the TTLA
appearing
Disclosure Statement (Ex. "4") was calculated correctly. Accordingly, Wachovia
complied with all TILA disclosure requirements and defendants have offered no
evidence that is contrary. Bonnie Tadrous signed the HUD-1 and certified therein that
she received a of the HUD-1.
copy
Thus, there can be no dispute that Wachovia never violated the Truth in
Landing
Act and Defendants had no basis to attempt to rescind the subject loan with Wachovia.
Defendants'
affirrnative defenses and counterclaims violations of TILA are
alleging
misguided and wrong-
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POINT H
WACHOVIA DID NOT VIOLATE
NEW YORK'S DECElmVE PRACflCES ACT
Defendants second counterclaim alleges that Wachovia violated General
Business law Section 349. It isclear, bowever, from the loan documents and Dolan
Affidavit that Bonnie Tad rous was never deceived at all
Defendants'
The crux of allegation is that Wachovia made the loan to Bonnie
Tadrous'
without consideration for her income and based the loan on the value of the
mortgaged premises only. As stated in the Dolan Affidavit, however, Wachovia
rous'
reviewed Tad loan application, her stated income and expenses, credit score and
history, employment status and property appraisal in accordance with Wachovia's
underwriting procedures. (Dolan Aff. at ¶ 30).
Moreover, Bonnie Tadrous participated in Wachovia's Quick Loan
Qualifying
Program and acknowledged in the Mortgage that"I qualified for this loan by making
rapidly."
statements of fact which were relied upon Lender to approve the loan
by
Tadrous knew from the outset that Wachovia would on the statements of fact that
mly
she made her income in the loan application in order to approve her loan
regarding
quickly.
In Emigrant Mortgage Company, Inc. v. Fitzpatrick, 95 A.D.2d 1169, 945
N.Y.S.2d 697 (2nd Dept 2012), the Court held that there was no violation of General
Business Law Section 349 where "the plaintiffs evidence established that (Borrower)
8
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was presented with clearly written dw uments describing the terms of the subject loan
income."
and alerting her to the tact that plaintiff would not independentiv verify her
[d. at 701 in the case at bar, radrous acknowledged all the required TILA
receietng
fulh-
disclosure documents which described the terms of the subject loan In addition,
Bonnie Tadrous knew that as a participant in Wachovia's Quick Loan
Qualifying
Prograrn, Wachona would
rely on her stated mcorne in the loan application.
The Iaw is well settled that "(u)nder General Business Law Section 349(h), a
prima facie case requires a that the defendant engaged in a consumer-oriented
showing
act or practice that was "deceptive or in a rnaterial and that the plaintiff
misleading way
thereof."
has been injured reason ]ones v. Bank of America National Association, 97
by
A.D.3d 639, 949 N.Y 52d 78 (2nd Dept 2m2).
70, In the caw at bar, not have
only
Defendants tailed to prove that Wachovia's acts or practices were "deceptive or
'
rnisleading Bonnie Tadrous testified at her deposition that she had been misled her
by
mortgage broker and not Wachovia This clearly estabbshes that Wachovia did not
violate General Bureau Law Section 349(h) [h.. Ladino v. Bank of America, 52 A D.3d
571, 861 N.YS 2d 683 (2M Dept 20tm)].
In [P Morgan Chase Bank v. S.I. Wood l-urniture Corp., 34 Misc 3d 9%
1214(A),
NT S 2d 67. 2012 WI. 203483 (N.Y bup). (Su p. O.. Kings Cty. 2012), the defendant
known"
argued that the plaintiff bartk Chase "knew or should have Ibat the defendant
was not sound and the plaintiff bank should not have made the loan. The
financially
Court held that "(t)his argument is unavailing. applied for and accepted the
(Borrower)
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benefits of the loan
by
Chase for
nearly five years. A challenge defendants of their
by
own creditworthiness is thus an improper basis for denial of Chase's motion for
judgment."
summary ld at 2012 WL 203483 at 10.
in the case at bar, Defendants argue that Wachovia should have known
similarly
that Bonnie Tadrous lacked the financial to her loan. It isundisputed,
ability repay
however, that since the consumation of the Wachovia loan on 14, 2008, Bonnie
February
Tadrous has enjoyed the benefits of the loan that she received and accepted the benefits
of the loan Wachovia for five years. It isundisputed that Bonnie Tadrous
by nearly
signed the Wachovia loan application and acknowledged and agreed that Wachovia
could on her statements of fact her stated income. Accordingly, as a
rely including
matter of law, Plaintiff is entitled to judgment against Defendants.
summary
POINT III
NO CLAIM FOR FRAUDULENT INDUCEMENT
CAN LIE AS AGAINST WACHOVIA
In opposition to the instant motion for judgment, Defendants must
summary
"submit adequate proof of an nature to substantiate allegations that
evidentiary [her]
note."
[she was] induced into the RVC Associates
fraudu.lently executing promissory
v. Farkas, 261 A.D,2d 383, 383, 689 N.YS.2d 514, 514-515 (2d see also,
Dep't1999);
Doby's Delicatessen v. Brunkard, 202 A.D,2d 626, 609 N.Y.S.2d 305 (2d Dep't1994).
Defendants'
claim of an alleged fraudulent inducement Wachovia is
by legally
indistinguishable from the claims made the defendant in Friends Lumber Inc. v.
by
Cornell Development Corp. 243 A.D.2d 886, 887488, 663 N.Y.S.2d 329 (3rd Dept.
327,
10
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1997) which the Appellate Division described as f ollows: "he was induced
fraudulently
into the notes based upon oral representations Plaintiff s officers and
executing by
enforced."
agents that the one-year term would not be The Court held that such a claim
was "inconsistent with the unambiguous terrns of the notes themselves and
prornissory
"
therefore is barred the parol evidence rule (citing, Falco v. Thorne, 225 A.D.2d 582,
by
639 N.Y.S.2d 106 (2d Dep't 1992); DH Cattle Holdings Co. v. Reno, 196 A.D.2d 670, 673,
601 N.Y.S.2d 714 (3d Dep't 1993); National Bank of N.Y. City of ESI Group, 167 A.D.2d
453, 454, 562 N.Y.S.2d 136 (2d Dep't 1990); Benderson Dev. Co, v. Hallaway Props., 115
A.D.2d 495 (46
339. N.Y.S.2d 820 Dep't 1985), a_Jffd67 N.Y.2d 963, 502 N.Y.S.2d 1001,
494 N.E.2d 106).
Defendants'
The allegations made in Answer, allege that Bonnie Tadrous
falsely
was induced into the Wachovia loan transaction. Defendants allege that
entering baldly
information."
Wachovia induced Tadrous or rnaterial
by "misrepresenting withholding
And yet, the specific misrepresentation alleged Defendants is that Bonnie
o_nly by
Tadrous'
income was overstated on her loan application. However, even ifsuch were
to constitute a rnisrepresentation, such misrepresentations would have been made
by
Bonnie Tadrous to Wachovia, not the other around. Further, Tadrous testified at
way
her deposition that she was misled her rnortgage brokers and not Wachovia.
by by
It isalso undisputed that although Bonnie Tadrous signed both loan applications
Wachovia's loan application and certified to Wachovia that the factual
including
statements contained therein were true and accurate, Defendants now contend that
I1
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Tadrous'
Wachovia should have known that Bonnie income information in the loan
application was false.
"[A]llegations that the lender should have known that information provided in
the application was false are not sufficient to state a claim for relieL.'[t]he lender
income'
should have known 1 was about Is not a
lying my particularly convincing
argument... A lender has the right to presume the borrower is not lying
on his
application."
In re Ridley, 453 B.R. 58, 68 (Bkrtcy.E.D.N.Y. 2011).
Itis well settled that to establish a prima facie case of fraud, a rnust
party
establish (1) that the defendant made material representations that were false, (2) that
the defendant knew the representations were false and made them with the intent to
deceive the plaintiff, that the plaintiff relied on the defendant's
(3) justifiably
representations, and (4) that the plaintiff was injured as a result of the defendant's
representations. Giurdanella v. Giurdanella, 226 A.D.2d 342, 343 (2d Dep't 19%); CA
v. Titan Financial Services, Inc., 58 A.D3d 785, 788(2d De p't 2009).
Defendants'
Consequently, allegations that Wachovia should have known that
Yadrous'
Bonnie income was less than the amounts stated on her loan application,
while untrue, are insufficient as a matter of law to Plaintiff's motion for
deny summary
judgment. has ended in this case, and Defendants have produced no
Discovery
evidence whatsoever their claim of fraudulent inducement as against
corroborating
Wachovia. Rather, the evidence provided Plaintiff establishes that Bonnie Tadrous
by
was provided with allrequired disclosures, and Defendants have admitted that Bonnie
I2
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Tadrous signed the Note, the Mortgage, and the TILA Disclosures, allof which
Defendants'
accurately reflect Wachovia's loan transaction. also admitted in the
Answer that Bonnie Tadrous failed to make her loan payments to Wachovia. It is
Defendants'
submitted that claim of alleged fraudulent inducement has no
respectfully
merit and should be dismissed.
POINT IV
DEFENDANTS'
LOAN UNDERWRITING
CLAIMS ARE PREEMPTED BY HOLA
At the tirne the Wachovia loan transaction was entered into with Bonnie
Tadrous, Wachovia was a Federal Savings Bank, regulated the Office of Thrift
by
Supervision. Accordingl y, all state law claims Wachovia's k an
regarding underwriting
practices, such as its determination of who to lend to,
Preview
FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 SUPREME COURT OF TIIE STATE OF NEW YORK COUNTY OF RICMMOND __..._.........--- . .......... X WELLS FARCO BANK. N.A., AlSO KNOWN AS WACHOVlA MORTGAGE A DIVISION OF Index No. 131609/10 WACHOVIA BANK, N.A., FORMERLY KNOWN AS WACHOVIA MORTGAGE, FSB. FORMERLY KNOWN AS WORLD SAVINGS BANK, FSB, Plaintiff, -against- BONNIE TADROUS, SAAD LABlB TADROUS, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD. RAB PERFORMANCE RECOVERIES, LLC., CITlBANK, ASSET ACCEPTANCE, LLC . "JOHN d DOE 1 TO JOHN DOE 25", said narnes fictitious being the persons or parties mtended the persons being parties corporatiom or entities, ifany, or having claiming an interest in or lien upon the mortgaged premises desenbed irithe compliant, Defendank. PLAINTIFF WELLS FARGQ BANK, N.A/s MEMORANDUM OF LAW IN SUPPORT OFPLAINTIFFS MOTION FOR SUMMARY [UDGMENT AND OTHER RELIEF ROSNER NOCERA & RAGONE, LLP Attorneys for Plaintiff Wens Fargo Bank, N.A. 110 WalIStreet. 23d Hoor New York, New York 10005 Of Counsel Gerald M. lacobs 1 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 PRELIMTNARY STATEMENT This Memorandum of Law is respectfully submitted on behalf of plaintiff Wells Fargo" Fargo Bank, N.A., ("Wells or "Plaintiff") in support of Wetts Fargo's rnotion for: (1) Summary ]udgment in favor of Wells Fargo and against defendants Bonnie Tadrous and Saad Labib Tadrous; (2) Default Judgment in favor of Wells Fargo and against defendants New York City Environmental Control Board, RAB Perforrnance Recoveries, LLC, Citibank, Asset Acceptance, LLC, Semso Pelinkov ic,Conrad Tadrous, Ian Tadrous and Miriam Tadrous; (3) a referee to compute the amounts due Appointing to Wells Fargo; (4) the caption to substitute Semso Pelinkovic, Conrad Changing 1" 25," Tadrous, lan Tadrous and Miriam Tadrous in place of "John Doe to "John Doe (5) For attomey's fees, costs and disbursements; and (6) For such other, further and different relief as the Court may deem just and proper. STATEMENT OF FACTS The Court is referred to the accom Affidavit of Michael ]. respectfully panying Dolan sworn to December 19, 2012 and the Affirmations of Gerald M. Jacobs, Esq. dated December 2(L 2012 submitted in support of Wells Fargo's motion, together with the documents annexed as Exhibits thereto for a f ull rendition of the relevant facts. However, the pertinent facts are as follows: A. The Loan Transaction On or about February 14, 2008, Defendant Bonnie Tadrous borrowed the sum of $325,000.00 from Wachovia Mortgage, FSB as evidenced a certain ("Wachovia") by 2 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 secured Adjustable Rate Mortgage Note (the "Note") dated February 14, 2008 in the principal sum of $325,000.00. The Note was secured a Mortgage dated 14, by February 2008 in the principal sum of S325,000.00 from defendant Bonnie Tadrous ("Tadrous") to Wachovia. On or about April 29, 2009, Bonnie Tadrous entered into a Modification Agreement with Wachovia dated April 29, 2009 which modified and significantly Tadrous' lowered Bonnie indebtedness to Plaintiff including, but not limited to, the Tadrous' waiving of interest and fees and the interest rate on home loan. reducing Thereafter, Bonnie Tadrous defaulted on her loan obligations to Plaintiff by, among other things, to make the loan payment of S1,022.31 which became due failing monthly on September 15, 2009, and to make the loan payments due thereafter. failing monthly in connection with the of the loan on 14, 2008, defendant Bonnie closing February Tadrous also received and executed the following kmn documents and loan disclosules (along with other documents): i. Truth in Disclosure Statement (Exhibit "4"); Lending ii. Three Notice of Right to Cancel (Exhibit "5"); day iii. Settlement Statement (Exhibit "6"); and (HUD-1) iv. Acknowledgment Iætter (Exhibit "7"). The TlLA Disclosure Statement (Ex. "4"), disclosed the annual percentage rate of the loan, the total payments, and set forth a schedule of payments. The Three (3) Day Notice of Right Cancel (Ex. "5"), provided Bonnie Tadrous with notice of her right to 3 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 rescind the transaction within three business days of closing. The HUD-1 (Ex. "6"), provided Bonnie Tadrous with a final accounting of her loan transaction. And as set forth in the Acknowledgement latter, (Ex. Exhibit "7"), Tadrous acknowledged receipt of, among other things, the TILA disclosure, Good Faith Estimate and the HUD Settlement Costs Guide. B. The Litigation This action was commenced the of Plaintiff's Verified Complaint on by filing October 12, 2010. On or about Novernber D, 2010, defendants Bonnie Tadrous and Saad Labib Tadrous ("Defendants") served their Answer to Plaintiff's Complaint. Defendants' Answer alleges two affirmative defenses and four counterclaims. Defendants' first affirmative defense and first counterclairn allege that Wachovia violated the Truth [n Act the Finance Charge or the Prepaid Lending by understating Finance Charge in the TILA Disclosure Statement (Ex. more then appearing "4") by $35 00. And although Defendants allege that Bonnie Tadrous was not provided with a of the HUD-1 with her papers, Todrous testified at a deposition that she copy closing signed the HUD-1 which HUD-1 also contains her certification that she received a copy. As dernonstrated in Plaintiff's Affidavit and Affirmation of supporting Counsel, Wachovia overstated the Prepaid Finance Charge in accordance with the Truth actually In Lending Act. Moreover, Defendants inflated their calculation of the Prepaid Finance Charge items excluded law as a Prepaid Finance Charge. in by including by addition, "8" Plaintiff annexed a Loan Amortization Schedule as Exhibit to the instant motion 3 & 4 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 that the total Finance Charge disclosed in the TILA Disclosure demonstrating Statement was calculated correctly. Defendants' second affirmative defense, second counterclaim, third counterclaim and fourth counterclaim allege that Wachovia misled Bonnie Tadrous to believe that she could afford to repay the subject loan and inserted false income information in her loan application. In fact, Bonnie Tadrous confirmed that she signed the loan application wherein she acknowledged and agreed that the statements made therein were true and correct. Bonnie Tadrous also qualified for a Quick Loan and acknowledged Qualifying in the Mortgage that Wachovia could on the statements of fact she made to rely Wachovia so that Wachovia would approve her loan quickly. Tadrous also testified at her deposition that she had been misled her mortgage broker and not Wachovia. by Tadrous testified further that she could not recall ever with Wachovia prior to speaking her kmn being approved. Defendants allege in the Answer that a Tom Cacciola filled in the false income information in the loan application and identified him as a Wachovia erroneously employee. In fact, Cacciola was employed NSP First Financial Mortgage ("NSP") by and not Wachovia. Cacciola and NSP were independent mortgage brokers and Wachovia did not have contract or other agreement with Cacciola and/or any agency N$P nor did they have any to bind or enter into mortgage loan authority any agreements on behalf of Wachovia. 5 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 For all the reasons described below itis submitted that plaintiff respectfully Wells Fargo has demonstrated its prima facie right to surnmary judgment, and as a result, itis requested that Wells Fargo's instant motion be granted in all respectfully respects, with other appropriate relief. along ARGUMENT POINTI PLAINTIFF'S TlLA DISCWSURE WAS ACCURATE The Truth In lending Act (TILA), 15 USC 1601 et.seq., was enacted on May 29, 1968, as Title I of the Consumer Credit Protection Act. The T1LA, implemented by Regulation Z (12 C.F.R. 226), became affective July 1, 1%9. Defendants allege that Wachov ia violated 15 U.5.C. 1635 and Reg. Z, 12 C.F.R. 226.23 the Finance Charge or the Prepaid Finance Charge 535 which by understating by Tadrous' gives Defendants the right to rescind Bonnie loan with Wells purportedly Fargo. Section 1635 states, in pertinent part, that "the disclosure of the finance (i)(2) charge and other disdosures affected finance charge shall be treated as by any being accurate for purposes of this action if the amount disclosed as the finance charge does not vary from the actual finance charge rnore than $35 or is ereater than the amount by subchapter." required to be disclosed under this (Emphasis added}. Similarly, 12 C.F.R. Section 226.23 provides as follows: (h)(2) 6 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 (2} Tolerance for disclosures. After the initiation of foreclosure on the consumer's principal that secures the credit obligation, the dwelling finance charge and other disdosures affected by the finance charge (such as the amount financed and the annual percentage rate) shall be considered accurate for purposes of this section ifthe disclosed finance charge: (i) is understated by no more than S35; or (ii) is greater than the amount required to be disclosed. As demonstrated in the Dolan Affidavit (¶ 20-25), the Prepaid Finance Charge in the TILA Disdosure Statement, namely $10,117.52, was overstated appearing by Wachovia in the amount of $1,222.72 as the actual Prepaid Fmance Charge paid by Tadrous' Bonnie Tadrous was $8,894.80. Defendants allege, however, that actual Prepaid Finance Charge was $11,229.80. That amount, however was inflated by Defendants by $2,335.00 to include items that are excluded under 12 C.F.R. 226(4) as a Prepaid Finance Charge. The items were included Defendants as Prepaid following erroneously by Finance Charges Appraisal/Property Evaluation S 425.00 Application Fee 310.00 Document/Preparation Fee 250.00 EPL Waiver/ Title Endorsement 100.00 Recording Fee 425.00 Tax/ Municipal/ Department Searches 825.00 TOTAL $2,335.00 Appraisals/ Property Evaluations are excluded under 12 C.F.R. 226.4(c)(7)(iv) as a appraisal fee. Application Fees are excluded under 12 C.F.R. to all property 226.4(c)(1} applicants for credit, whether or not credit is extended. Document Preparation actually 6 7 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 Fees are excluded under 12 C.F.R. 226.4 (c)(7)(ii)as a fee for loan documents preparing such as deeds and mortgages. EPL Waiver/Title Endorsement is excluded under 12 C.F.R. 226.4 (6)(7)(i) as a fee for titleexamination, abstract of title and title insurance. Recording Fees are excluded under 12 C.F.R. 226.4(e)(1) as taxes and fees prescribed by law that actually are or will be paid to public officials for the existence of determining or for perfecting, releasing, or a interest. Finall y, satisfying security Tax/Municipal/ Departmental Searches are excluded under 12 CF.R. 226.4(c)(7)(i) as a fee for titleexamination and abstract of title. "8" The Loan Amortization Schedule annexed as Exhibit to the Dolan Affidavit demonstrates that the total Finance Charge of $695,799.30 in the TTLA appearing Disclosure Statement (Ex. "4") was calculated correctly. Accordingly, Wachovia complied with all TILA disclosure requirements and defendants have offered no evidence that is contrary. Bonnie Tadrous signed the HUD-1 and certified therein that she received a of the HUD-1. copy Thus, there can be no dispute that Wachovia never violated the Truth in Landing Act and Defendants had no basis to attempt to rescind the subject loan with Wachovia. Defendants' affirrnative defenses and counterclaims violations of TILA are alleging misguided and wrong- 7 8 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 POINT H WACHOVIA DID NOT VIOLATE NEW YORK'S DECElmVE PRACflCES ACT Defendants second counterclaim alleges that Wachovia violated General Business law Section 349. It isclear, bowever, from the loan documents and Dolan Affidavit that Bonnie Tad rous was never deceived at all Defendants' The crux of allegation is that Wachovia made the loan to Bonnie Tadrous' without consideration for her income and based the loan on the value of the mortgaged premises only. As stated in the Dolan Affidavit, however, Wachovia rous' reviewed Tad loan application, her stated income and expenses, credit score and history, employment status and property appraisal in accordance with Wachovia's underwriting procedures. (Dolan Aff. at ¶ 30). Moreover, Bonnie Tadrous participated in Wachovia's Quick Loan Qualifying Program and acknowledged in the Mortgage that"I qualified for this loan by making rapidly." statements of fact which were relied upon Lender to approve the loan by Tadrous knew from the outset that Wachovia would on the statements of fact that mly she made her income in the loan application in order to approve her loan regarding quickly. In Emigrant Mortgage Company, Inc. v. Fitzpatrick, 95 A.D.2d 1169, 945 N.Y.S.2d 697 (2nd Dept 2012), the Court held that there was no violation of General Business Law Section 349 where "the plaintiffs evidence established that (Borrower) 8 9 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 was presented with clearly written dw uments describing the terms of the subject loan income." and alerting her to the tact that plaintiff would not independentiv verify her [d. at 701 in the case at bar, radrous acknowledged all the required TILA receietng fulh- disclosure documents which described the terms of the subject loan In addition, Bonnie Tadrous knew that as a participant in Wachovia's Quick Loan Qualifying Prograrn, Wachona would rely on her stated mcorne in the loan application. The Iaw is well settled that "(u)nder General Business Law Section 349(h), a prima facie case requires a that the defendant engaged in a consumer-oriented showing act or practice that was "deceptive or in a rnaterial and that the plaintiff misleading way thereof." has been injured reason ]ones v. Bank of America National Association, 97 by A.D.3d 639, 949 N.Y 52d 78 (2nd Dept 2m2). 70, In the caw at bar, not have only Defendants tailed to prove that Wachovia's acts or practices were "deceptive or ' rnisleading Bonnie Tadrous testified at her deposition that she had been misled her by mortgage broker and not Wachovia This clearly estabbshes that Wachovia did not violate General Bureau Law Section 349(h) [h.. Ladino v. Bank of America, 52 A D.3d 571, 861 N.YS 2d 683 (2M Dept 20tm)]. In [P Morgan Chase Bank v. S.I. Wood l-urniture Corp., 34 Misc 3d 9% 1214(A), NT S 2d 67. 2012 WI. 203483 (N.Y bup). (Su p. O.. Kings Cty. 2012), the defendant known" argued that the plaintiff bartk Chase "knew or should have Ibat the defendant was not sound and the plaintiff bank should not have made the loan. The financially Court held that "(t)his argument is unavailing. applied for and accepted the (Borrower) 10 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 benefits of the loan by Chase for nearly five years. A challenge defendants of their by own creditworthiness is thus an improper basis for denial of Chase's motion for judgment." summary ld at 2012 WL 203483 at 10. in the case at bar, Defendants argue that Wachovia should have known similarly that Bonnie Tadrous lacked the financial to her loan. It isundisputed, ability repay however, that since the consumation of the Wachovia loan on 14, 2008, Bonnie February Tadrous has enjoyed the benefits of the loan that she received and accepted the benefits of the loan Wachovia for five years. It isundisputed that Bonnie Tadrous by nearly signed the Wachovia loan application and acknowledged and agreed that Wachovia could on her statements of fact her stated income. Accordingly, as a rely including matter of law, Plaintiff is entitled to judgment against Defendants. summary POINT III NO CLAIM FOR FRAUDULENT INDUCEMENT CAN LIE AS AGAINST WACHOVIA In opposition to the instant motion for judgment, Defendants must summary "submit adequate proof of an nature to substantiate allegations that evidentiary [her] note." [she was] induced into the RVC Associates fraudu.lently executing promissory v. Farkas, 261 A.D,2d 383, 383, 689 N.YS.2d 514, 514-515 (2d see also, Dep't1999); Doby's Delicatessen v. Brunkard, 202 A.D,2d 626, 609 N.Y.S.2d 305 (2d Dep't1994). Defendants' claim of an alleged fraudulent inducement Wachovia is by legally indistinguishable from the claims made the defendant in Friends Lumber Inc. v. by Cornell Development Corp. 243 A.D.2d 886, 887488, 663 N.Y.S.2d 329 (3rd Dept. 327, 10 11 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 1997) which the Appellate Division described as f ollows: "he was induced fraudulently into the notes based upon oral representations Plaintiff s officers and executing by enforced." agents that the one-year term would not be The Court held that such a claim was "inconsistent with the unambiguous terrns of the notes themselves and prornissory " therefore is barred the parol evidence rule (citing, Falco v. Thorne, 225 A.D.2d 582, by 639 N.Y.S.2d 106 (2d Dep't 1992); DH Cattle Holdings Co. v. Reno, 196 A.D.2d 670, 673, 601 N.Y.S.2d 714 (3d Dep't 1993); National Bank of N.Y. City of ESI Group, 167 A.D.2d 453, 454, 562 N.Y.S.2d 136 (2d Dep't 1990); Benderson Dev. Co, v. Hallaway Props., 115 A.D.2d 495 (46 339. N.Y.S.2d 820 Dep't 1985), a_Jffd67 N.Y.2d 963, 502 N.Y.S.2d 1001, 494 N.E.2d 106). Defendants' The allegations made in Answer, allege that Bonnie Tadrous falsely was induced into the Wachovia loan transaction. Defendants allege that entering baldly information." Wachovia induced Tadrous or rnaterial by "misrepresenting withholding And yet, the specific misrepresentation alleged Defendants is that Bonnie o_nly by Tadrous' income was overstated on her loan application. However, even ifsuch were to constitute a rnisrepresentation, such misrepresentations would have been made by Bonnie Tadrous to Wachovia, not the other around. Further, Tadrous testified at way her deposition that she was misled her rnortgage brokers and not Wachovia. by by It isalso undisputed that although Bonnie Tadrous signed both loan applications Wachovia's loan application and certified to Wachovia that the factual including statements contained therein were true and accurate, Defendants now contend that I1 12 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 Tadrous' Wachovia should have known that Bonnie income information in the loan application was false. "[A]llegations that the lender should have known that information provided in the application was false are not sufficient to state a claim for relieL.'[t]he lender income' should have known 1 was about Is not a lying my particularly convincing argument... A lender has the right to presume the borrower is not lying on his application." In re Ridley, 453 B.R. 58, 68 (Bkrtcy.E.D.N.Y. 2011). Itis well settled that to establish a prima facie case of fraud, a rnust party establish (1) that the defendant made material representations that were false, (2) that the defendant knew the representations were false and made them with the intent to deceive the plaintiff, that the plaintiff relied on the defendant's (3) justifiably representations, and (4) that the plaintiff was injured as a result of the defendant's representations. Giurdanella v. Giurdanella, 226 A.D.2d 342, 343 (2d Dep't 19%); CA v. Titan Financial Services, Inc., 58 A.D3d 785, 788(2d De p't 2009). Defendants' Consequently, allegations that Wachovia should have known that Yadrous' Bonnie income was less than the amounts stated on her loan application, while untrue, are insufficient as a matter of law to Plaintiff's motion for deny summary judgment. has ended in this case, and Defendants have produced no Discovery evidence whatsoever their claim of fraudulent inducement as against corroborating Wachovia. Rather, the evidence provided Plaintiff establishes that Bonnie Tadrous by was provided with allrequired disclosures, and Defendants have admitted that Bonnie I2 13 of 18 FILED: RICHMOND COUNTY CLERK 07/02/2020 12:40 PM INDEX NO. 131609/2010 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 07/02/2020 Tadrous signed the Note, the Mortgage, and the TILA Disclosures, allof which Defendants' accurately reflect Wachovia's loan transaction. also admitted in the Answer that Bonnie Tadrous failed to make her loan payments to Wachovia. It is Defendants' submitted that claim of alleged fraudulent inducement has no respectfully merit and should be dismissed. POINT IV DEFENDANTS' LOAN UNDERWRITING CLAIMS ARE PREEMPTED BY HOLA At the tirne the Wachovia loan transaction was entered into with Bonnie Tadrous, Wachovia was a Federal Savings Bank, regulated the Office of Thrift by Supervision. Accordingl y, all state law claims Wachovia's k an regarding underwriting practices, such as its determination of who to lend to,