Purchase of Property Encumbered by an Unsatisfied Mortgage Gave Rise to Negligence, Negligent Misrepresentation, Fraud, and Civil Conspiracy Causes of Action Against Title Insurance Company

Third-party plaintiff, Drummond, purchased property that was encumbered by an unsatisfied mortgage held by plaintiff bank. Drummond sued the title company, third-party defendant New York Land, as well as the company from which she procured her mortgage, Residential, and the bank to which the mortgage was transferred, Wells Fargo.  The third-party defendants brought CPLR 3211 motions to dismiss. The Second Department determined the causes of action against New York Land for negligence and negligent misrepresentation properly survived a motion to dismiss because the relationship between Drummond and New York Title was “so close as to approach privity,” but no such relationship was demonstrated with Residential and Wells Fargo.  The Second Department further determined the fraud and civil conspiracy causes of action against New York Land should not have been dismissed, explaining the pleading requirements. In addition, the Second Department determined that the suit was not “consumer-related” and therefore the General Business Law 349 cause of action was properly dismissed:

Although there was no contract between Drummond and New York Land, affording the pleadings a liberal construction and accepting all facts alleged as true …, the third-party complaint supports Drummond’s contention that the relationship between these two parties was so close as to approach privity .. . Indeed, the pleading alleges that New York Land was aware that the abstract and title report that it prepared were to be used for the specific purpose of facilitating a sale or mortgage of the property, that New York Land knew that Drummond was a member of a definable class who would rely on the certification in furtherance of that purpose, and that there was conduct between New York Land and Drummond evincing New York Land’s understanding of Drummond’s reliance … . Accordingly, the Supreme Court properly denied those branches of New York Land’s motion which were to dismiss, for failure to state a cause of action, the third-party causes of action alleging negligence and negligent misrepresentation insofar as asserted against it. * * *

“The elements of a cause of action sounding in fraud are a material misrepresentation of an existing fact, made with knowledge of the falsity, an intent to induce reliance thereon, justifiable reliance upon the misrepresentation, and damages” … . “All of the elements of a fraud claim must be supported by factual allegations containing the details constituting the wrong’ in order to satisfy the pleading requirements of CPLR 3016(b)” … . In certain circumstances, however, it may be “almost impossible to state in detail the circumstances constituting a fraud where those circumstances are peculiarly within the knowledge of [an adverse] party” … . “Under such circumstances, the heightened pleading requirements of CPLR 3016(b) may be met when the material facts alleged in the complaint, in light of the surrounding circumstances, are sufficient to permit a reasonable inference of the alleged conduct’ including the adverse party’s knowledge of, or participation in, the fraudulent scheme” … . Here, accepting all facts alleged as true … , the third-party complaint contains sufficient allegations of fact from which it can be inferred that New York Land was aware of the alleged fraudulent scheme and intended to aid in the commission thereof … . * * *

“Although New York does not recognize civil conspiracy to commit a tort . . . as an independent cause of action, a plaintiff may plead the existence of a conspiracy in order to connect the actions of the individual defendants with an actionable, underlying tort and establish that those actions were part of a common scheme” … . Again, affording the third-party complaint a liberal construction, Drummond alleged sufficient facts from which it may be inferred that New York Land knowingly participated, with certain other third-party defendants, in the alleged fraudulent scheme … . * * *

General Business Law § 349 is a broad consumer protection statute, which declares “deceptive acts or practices in the conduct of any business, trade or commerce” to be unlawful (General Business Law § 349[a]…). A party claiming the benefit of General Business Law § 349 must, as a threshold matter, ” charge conduct that is consumer oriented'” … . “The single shot transaction, which is tailored to meet the purchaser’s wishes and requirements, does not, without more, constitute consumer-oriented conduct for the purposes of this statute” … . Rather, the defendant’s acts or practices “must have a broad impact on consumers at large” … . Here, Drummond’s General Business Law § 349 cause of action is predicated upon allegations that the third-party defendants fraudulently induced her to purchase the subject property and finance it with a mortgage loan from [Residential]. As the Supreme Court properly concluded, these factual allegations do not amount to conduct that has an impact on the public at large and, as such, do not state a cause of action for violation of General Business Law § 349 … . JP Morgan Chase Bank NA v Hall, 2014 NY Slip Op 07475, 2nd Dept 11-5-14