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Alberto Parejas v. General Electric Capital Services

July 5, 2010


The opinion of the court was delivered by: Dora L. Irizarry, United States District Judge:


Plaintiff Alberto Parejas initiated this action*fn1 against defendants General Electric Capital Services, Inc. ("GE"), United Home Funding Group Corp. ("United"),*fn2 Chase Home Finance, LLC ("Chase"), and several unnamed successors in interest*fn3 to the named defendants. The gravamen of plaintiff's complaint is that he was the victim of predatory lending practices when he secured two mortgages to purchase his home located in College Point, New York ("premises"). The complaint alleges violations of three federal statutes: the Federal Truth in Lending Act ("TILA"), the Federal Equal Credit Opportunity Act ("ECOA"), and the Federal Fair Housing Act ("FHA"). Plaintiff also alleges various causes of action arising under New York law. Before the court is a motion to dismiss filed by GE and a motion for judgment on the pleadings filed by Chase.

For the reasons set forth below, GE's motion to dismiss and Chase's motion for judgment on the pleadings are granted. Plaintiff's claims against GE and Chase are dismissed with prejudice. The Complaint is dismissed without prejudice as against United for lack of service. (Docket Entry 26.)


I. Standard of Review

Rule 12(b)(6) of the Federal Rules of Civil Procedure states that a defendant may move, in lieu of an answer, for dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). To determine whether dismissal is appropriate, "a court must accept as true all [factual] allegations contained in a complaint" but need not accept "legal conclusions." Ashcroft v. Iqbal , 129 S. Ct. 1937, 1949 (2009). For this reason, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to insulate a claim against dismissal. Id. Moreover, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570 (2007)). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint . . . has not shown that the pleader is entitled to relief." Id. at 1950 (internal citations and quotation marks omitted).

II. GE's 12(b)(6) Motion to Dismiss Claim of Dominion over WMC

According to the Complaint, WMC Mortgage Corp. ("WMC"), was the company that provided plaintiff with the mortgages on the premises. (Compl. ¶ 2.) The Complaint further alleges that WMC "was owned by [GE], and made up [GE's] U.S. mortgage business at the time" the mortgages were entered into, and thus, GE is liable for the acts of WMC during the time of the transactions in question. (Id. "It is a general principle of corporate law that a parent corporation . . . is not liable for the acts of its subsidiaries." U.S. v. Bestfoods , 524 U.S. 51, 52 (1998). Under New York law, "two elements must be shown in order to pierce the corporate veil: (i) that the owner exercised complete dominion over the corporation with respect to the transaction at issue; and (ii) that such domination was used to commit a fraud or wrong that injured the party seeking to pierce the veil." McAnaney v. Astoria Fin. Corp. , 665 F. Supp. 2d 132, 143 (E.D.N.Y. 2009) (citations and internal quotation marks omitted). Courts look at a number of non-exclusive factors to determine whether the necessary dominion and control exists for the court to pierce the corporate veil, including:

(1) disregard of corporate formalities; (2) inadequate capitalization; (3) intermingling of funds; (4) overlap in ownership, officers directors, and personnel; (5) common office space, address and telephone numbers of corporate entities; (6) the degree of discretion shown by the allegedly dominated corporation; (7) whether the dealings between the entities are at arms length; (8) whether the corporations are treated as independent profit centers; (9) payment or guarantee of the corporation's debts by the dominating entity, and (10) intermingling of property between the entities.

IMG Fragrance Brands, LLC v. Houbigant, Inc. , 679 F. Supp. 2d 395, 404 (S.D.N.Y. 2009). In applying these factors, "there is a presumption of separateness . . . which is entitled to substantial weight." McAnaney , 665 F. Supp. 2d at 143 (quoting Am. Protein Corp. v. AB Volvo , 844 F.2d 56, 60 (2d Cir. 1988)).

The extent of plaintiff's allegations in this regard is that: based upon [GE's] SEC form 10-Q for the period [ended] September 30, 2009, WMC Mortgage Corp. ("WMC Mortgage"), the company which provided [plaintiff] with the mortgage on the premises . . . , was owned by [GE], and made up [GE's] U.S. mortgage business at the time of the transaction in question. [GE] is, thus, liable for the acts and/or omissions of WMC Mortgage during the time of the transaction in question. (Compl. ¶ 2.) Thus, in attempting to plead dominion, plaintiff alleges little more than the ownership of a parent over its subsidiary. It is well settled that such an allegation is insufficient to pierce the corporate veil. See McAnaney , 665 F. Supp. 2d at 145 (citing cases and holding that "controlling ownership interest in subsidiaries, reporting of consolidated results of such subsidiaries in public filings, and overlapping directors and officers between parent and subsidiary corporations-are commonplace as generally-accepted corporate form, and are insufficient without more, as a matter of law, to eviscerate the presumption of corporate separateness"). None of the other factors considered by courts that tend to show domination are alleged in the Complaint. Thus, the Complaint fails to allege sufficient facts which, if true, plausibly demonstrate that GE dominated WMC Mortgage at all, let alone with complete domination over the transaction at issue. Accordingly, GE's motion to dismiss is granted.

III. Chase's Motion for Judgment on the Pleadings

a. TILA Claim

TILA provides that "[a]ny action under this section may be brought . . . within one year from the date of the occurrence of the violation." 15 U.S.C. ยง 1640(e); see, e.g. , Council v. Better Homes Depot, Inc. , 2006 WL 2376381, at *9 (E.D.N.Y. Aug. 16, 2006). "In cases involving 'closed-end' credit transactions such as mortgages, the 'occurrence of the violation' typically refers to the date on which a plaintiff enters into a loan agreement." Barkley v. Olympia Mortg. Co. , 2007 WL 2437810, at * 17 (E.D.N.Y. Aug. 22, 2007) (citations omitted). The record clearly demonstrates that, with regard to the transaction at issue, plaintiff entered the loan agreement on April 7, 2006-more than one year prior to the filing of the ...

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