Hutter v. PNC Bank, N.A.

Appeal from an order of the Supreme Court, Westchester County (William J. Giacomo, J.), entered April 17, 2015. The order, insofar as appealed from, granted those branches of the separate motions of the defendant PNC Bank, N.A., doing business as National City Bank, the defendants Evolution Mortgage, Inc., and Joseph Sciacca, and the defendants Watermark Capital, Inc., and Nicholas Joutz, which were for summary judgment dismissing the complaint insofar as asserted against each of them, and granted that branch of the motion of the defendant PNC Bank, N.A., doing business as National City Bank, which was for an award of an attorney’s fee.

Ordered that the order is modified, on the law, (1) by deleting the provision thereof granting that branch of the motion of the defendant PNC Bank, N.A., doing business as National City Bank, which was for an award of an attorney’s fee, and substituting therefor a provision denying that branch of the motion, and (2) by deleting the provision thereof granting that branch of the motion of the defendants Watermark Capital, Inc., and Nicholas Joutz which was for summary judgment dismissing the fourth cause of action insofar as asserted against the defendant Watermark Capital, Inc., and substituting therefor a provision denying that branch of the motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

In October 2006, the plaintiffs husband, Gerhard P. Hutter, began having discussions with an individual named Todd Matthews about obtaining a home equity line of credit (hereinafter HELOC) on property owned by the plaintiff in Bedford. According to Hutter, Matthews told Hutter that he was employed by the defendant Watermark Capital, Inc. (hereinafter Watermark). Since Matthews was not licensed to perform broker services in New York, he allegedly contacted Charles Dragna, who held the title of “corporate secretary” at Watermark, to handle the transaction. Watermark also was not licensed to perform broker services in New York, so Dragna, in turn, referred the plaintiff’s HELOC to the defendant Joseph Sciacca, a loan officer at the defendant Evolution Mortgage, Inc. (hereinafter Evolution). It is undisputed that Matthews “gathered and prepared the documents” for the plaintiff’s HELOC, and that Dragna acted “as a facilitator in terms of getting the package from Todd Matthews to Evolution.”

In July 2010, the plaintiff commenced this action against PNC, Evolution, Sciacca, Watermark, and Nicholas Joutz (hereinafter collectively the defendants), alleging, among other things, that the defendants fraudulently induced her to obtain the HELOC. She also alleged that although Evolution was listed as the broker of record, it was Watermark that solicited, negotiated, and processed her HELOC in violation of Banking Law § 590 (2) (b). The plaintiff further alleged that Joutz, who allegedly was an officer of Watermark, “formulated the company policies and participated in,” among other things, “Watermark’s arranging the [PNC] credit line for [the plaintiff] .” The plaintiff sought damages but did not seek rescission of the HELOC.

PNC, Evolution and Sciacca, and Watermark and Joutz, separately moved, inter alia, for summary judgment dismissing the complaint insofar as asserted against each of them. PNC also moved for an award of an attorney’s fee pursuant to the terms of the Equity Reserve Agreement and the Credit Line Mortgage. In an order entered April 17, 2015, the Supreme Court awarded summary judgment in favor of each of the defendants and determined that PNC was entitled to an award of an attorney’s fee “[p]ursuant to the language of the loan documents.” The plaintiff appeals, arguing that the defendants’ summary judgment motions should have been denied as untimely, that PNC was not entitled to an award of an attorney’s fee under the Equity Reserve Agreement or the Credit Line Mortgage, and that triable issues of fact existed as to whether Watermark and Joutz violated Banking Law § 590 (2) (b).

We agree with the plaintiff that the Supreme Court erred in granting that branch of PNC’s motion which was for an award of an attorney’s fee under the terms of the Equity Reserve

Here, not only did PNC fail to assert a counterclaim against the plaintiff seeking an attorney’s fee under the terms of the Equity Reserve Agreement and the Credit Line Mortgage (see Buxton v Streany, 68 AD3d 1036 , 1038 [2009]), but PNC also failed to demonstrate, prima facie, that it was entitled to that relief in connection with this action (see Gampero v Mathai, 105 AD3d 995 , 998 [2013]; Masi v Kir Munsey Park 020 LLC, 76 AD3d 514 [2010]; Adesso Café Bar & Grill, Inc. v Burton, 74 AD3d 1253 , 1254 [2010]). There is no evidence in the record that PNC took any steps to “protect [ ] its security interest in the Property,” that “the [plaintiff’s] loan [was] referred for collection to an attorney who is not a salaried employee of [PNC],” or that PNC hired independent counsel. Accordingly, the Supreme Court erred in granting that branch of PNC’s motion which was for an award of an attorney’s fee under the Equity Reserve Agreement and the Credit Line Mortgage.

Moreover, the Supreme Court erred in granting that branch of the motion of Watermark and Joutz which was for summary judgment dismissing the fourth cause of action, alleging a violation of Banking Law § 590 (2) (b), insofar as asserted against Watermark (see Hutter v Countrywide Bank, N.A., 2015 WL 5439086 , 2015 US Dist LEXIS 122882 [SD NY, Sept. 14, 2015, No. 09-cv-10092 (NSR)]). Banking Law § 590 (2) (b), wliich is contained in Banking Law article 12-D, requires entities and individuals that “engage in the business of soliciting, processing, placing or negotiating a mortgage loan” to register as “a mortgage broker” with the superintendent of the New York State Banking Department. Here, Watermark and Joutz made

In opposition, however, the plaintiff raised a triable issue of fact as to whether Watermark “engage [d] in the business of soliciting, processing, placing or negotiating a mortgage loan” in violation of Banking Law § 590 (2) (b). In particular, although Watermark and Joutz insist that Matthews was not an employee of Watermark, the plaintiff submitted documentary evidence indicating that Matthews was employed by Watermark during the relevant time period, including a facsimile sent by Matthews to the plaintiff on Watermark’s letterhead, and a document on which the name “Watermark Home Loans” appears directly below Matthews’s signature line. In addition, in light of Dragna’s deposition testimony that he endorsed the check he received from Evolution to Watermark and deposited the funds into Watermark’s operating account, a question of fact exists as to whether Dragna provided broker services in connection with the plaintiff’s HELOC in his individual capacity or in his capacity as an employee of Watermark.

Nevertheless, in opposition to the prima facie showing that Joutz did not violate Banking Law § 590 (2) (b), the plaintiff failed to raise a triable issue of fact concerning whether Joutz personally participated in “soliciting, processing, placing or negotiating” her HELOC (Banking Law § 590 [2] [b]). “A corporate officer may be held personally liable for a fraudulent act committed in his or her capacity as a corporate officer provided that the officer personally participated in the misrepresentation or had actual knowledge of it” (YDRA, LLC v Mitchell, 123 AD3d 1113 , 1114 [2014]). Here, the record is bereft of any evidence that Joutz had any involvement in the instant transaction (see Hutter v Countrywide Bank, N.A., 41 F Supp 3d 363 , 373-374 [SD NY 2014]).

Accordingly, the Supreme Court properly granted that branch of the motion of Watermark and Joutz which was for summary judgment dismissing the fourth cause of action insofar as asserted against Joutz, but it erred in granting that branch of the motion which was for summary judgment dismissing that cause of action insofar as asserted against Watermark.

The plaintiff’s remaining contention is not properly before us

Rivera, J.R, Chambers, Duffy and Iannacci, JJ., concur.