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Raymond Ng v. Hsbc Mortgage Corp.

August 10, 2011

RAYMOND NG, PLAINTIFF,
v.
HSBC MORTGAGE CORP., HSBC USA INC., QI ZHAO, AND DATIUS WONG, DEFENDANTS.



The opinion of the court was delivered by: Mauskopf, United States District Judge:

MEMORANDUM AND ORDER

Plaintiff Raymond Ng ("Ng" or "plaintiff") brings this action against defendants HSBC Mortgage Corp. and HSBC USA (collectively "HSBC"), and individual bank employee defendants Qi Zhao ("Zhao") and Datius Wong ("Wong") (collectively "defendants") in connection with a home mortgage transaction. Plaintiff has asserted various state and federal claims against defendants, including claims for alleged non-disclosures, false statements, discrimination, fraud, usury, and violations of the banking law. Currently before the Court is defendants' motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure as to the remaining claims in this action.*fn1 For the reasons stated below, defendants' motion for summary judgment is DENIED as to Ng's claim based on 15 U.S.C. § 1638(b), and GRANTED as to all other claims.

BACKGROUND*fn2

I.Factual Background

This action concerns Ng's acquisition of a residential property located at 2041 79th Street in Bay Ridge, Brooklyn (the "Property"). (Defs.' 56.1 Stmt. ¶ 4; Compl. ¶ 13.) In or around November 2006, plaintiff applied to HSBC in order to obtain financing for the Property, which cost $555,000. (Defs.' 56.1 Stmt. ¶ 5.) He anticipated paying a $56,000 down payment, and sought a loan in the amount of $499,000. (Defs.' 56.1 Stmt. ¶ 6; Compl. ¶ 15.) To that end, he arranged a meeting with Zhao, an HSBC employee.

Ng alleges that Zhao informed him that he could arrange two loans: one for $417,000 at an interest rate of 6.125% (the "First Mortgage"), and one for $82,500 at a fixed interest rate of 8.5% (the "Second Mortgage").*fn3 (Compl. ¶¶ 17-18.) HSBC sent plaintiff a letter of commitment for the First Mortgage in the amount discussed. (Defs.' 56.1 Stmt. ¶ 13.) It is undisputed that nothing was immediately memorialized with respect to the figures allegedly discussed for the Second Mortgage, and that plaintiff did not submit an application for a Second Mortgage in the amount allegedly discussed. (Id. ¶ 15.)

Plaintiff subsequently signed a Home Equity Line Agreement with HSBC in connection with the Second Mortgage, which stated that the Second Mortgage would have a principal loan amount of $82,500, and that it would be an adjustable rate mortgage ("ARM"). (Id. ¶¶ 22-23, 33-34; see also Pl.'s Aff. re: Mot. for Summ. J. Ex. 3 (Request for Admissions ("RFA")*fn4 ) (Doc. No. 98-3).) Indeed, Ng has conceded that he was aware of those very terms at the closing. (Defs.' 56.1 Stmt. ¶¶ 22-23; Compl. ¶¶ 19, 50.) Plaintiff's attorney, Norman Lau Kee, reviewed the loan documents signed by Ng, and signed the First Mortgage as a witness to his execution, which was then notarized by a notary public. (Defs.' 56.1 Stmt. ¶¶ 18-19; Decl. re: Mot. for Summ. J. ("Liew Decl.") (Doc. 99) Ex. A.)However, in deposition testimony, Ng contends that he is unable to tell whether or not the signatures on the mortgage documents are his own. (Defs.' 56.1 Stmt. ¶ 7.)

Subsequent to the execution of the loan documents relating to the First and Second Mortgages and the sale of the Property, Ng noticed that his monthly invoices for the Second Mortgage were higher than he anticipated, and that his monthly payments were not fixed. (Compl. ¶¶ 17, 21-22.) He called HSBC, where a service department employee informed him that he agreed to those terms in writing and would have to speak with a loan officer if he desired a fixed rate mortgage. (Id. ¶ 24.) Ng was subsequently told by HSBC's Special Loans Department that his interest rate was 9.75%, rather than the original 8.5%, because his "Loan-to Value (LTV) Ratio" was 95.8%.*fn5 (Id. ¶ 25.)

Ng contacted Wong, an employee in HSBC's Chinese Mortgage Department Head Office, who informed him that since he signed the agreements at the closing it was too late to adjust the rate. (Id. ¶¶ 29-30.) Ng noticed another disparity on a document shown to him by Wong entitled "Funding Detail," which listed the Property's purchase price as $521,250.00 instead of $555,000. (Id. ¶¶ 31-32; Pl.'s 56.1 Cntrstmt. ¶ 10.) Ng subsequently spoke with an HSBC underwriter, who informed him that he signed a Home Equity Line of Credit ("HELOC") Application on December 3, 2006, which listed the loan amount for the second mortgage as $82,500, and incorrectly listed the purchase price as $521,250.00. (Compl. ¶¶ 33-38.)

In response to plaintiff's complaints, HSBC modified the interest rate on the Second Mortgage, fixing it at 8.5% and granted him a refund. (Defs.' 56.1 Stmt. ¶ 49.) Plaintiff has not made any payments on the Second Mortgage since 2007. (Id. ¶¶ 18-19.)

II.Procedural Background

On December 15, 2009, Magistrate Judge Pohorelsky issued a Report and Recommendation ("R&R") (Doc. No. 73), recommending that the Court grant the majority of defendants' motion for judgment on the pleadings. The R&R recommended that plaintiff's fourteen causes of action be dismissed, with two exceptions: plaintiff's claim under New York General Business Law ("GBL") § 349 and plaintiff's claim alleging unconscionability. (R&R at 27, 36.) This Court adopted Judge Pohorelsky's R&R by Memorandum and Order dated March 10, 2010 (Doc. No. 79). However, the Court clarified that, to the extent plaintiff had expressly stated a cause of action based on subsections apart from 15 U.S.C. § 1635 of TILA, such claims also survived defendants' motion for judgment on the pleadings. (Doc. No. 79, at 3-4.) Currently before the Court is the defendants' motion for summary judgment with respect to the unconscionability, GBL, and TILA claims.

STANDARD OF REVIEW

Summary judgment is appropriate when the pleadings, depositions, interrogatories, admissions, and affidavits demonstrate that there are no genuine issues of material fact in dispute and that one party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 248 (1986).

In deciding a summary judgment motion, a district court must draw all reasonable inferences in favor of the nonmoving party. See id. at 249 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970)); Castle Rock Entm't, Inc. v. Carol Publ'g Grp., Inc., 150 F.3d 132, 137 (2d Cir. 1998). The court must not "weigh the evidence but is instead required to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments." Amnesty Am. v. Town of W. Hartford, 361 F.3d 113, 122 (2d Cir. 2007) (quoting Weyant v. Okst, 101 F.3d 845, 854 (2d Cir. 1996)). Any evidence in the record of any material fact from which an inference could be drawn in favor of the non-moving party precludes summary judgment. See Castle Rock Entm't, 150 F.3d at 137.

Once the movant has demonstrated that no genuine issue of material fact exists, then "the nonmoving party must come forward with 'specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56(e)) (emphasis in original). However, there must exist more than mere "metaphysical doubt as to the material facts" to defeat a summary judgment motion. Id. at 586. Instead, the non-moving party must present "concrete evidence from which a reasonable juror could return a verdict in his favor." Anderson,477 U.S. at 256. Only disputes over material facts "that might affect the outcome of the suit under the governing law" will properly preclude the entry of summary judgment. Id. at 248; see also Matsushita, 475 U.S. at 586.

DISCUSSION

I.Requests for Admission

Before turning to the merits of defendants' motion, the Court must address the status of the summary judgment records, specifically, plaintiff's request to withdraw certain admissions upon which defendants rely in making this motion. It is undisputed that plaintiff failed to submit a timely response to defendants' Request for Admissions ("RFA"). Under Federal Rule of Civil Procedure 36(a), a matter set forth in an RFA is deemed admitted unless, within thirty days of service of the requests, the party requesting admission receives an answer or objection to the request. As a result, Judge Pohorelsky found that: "[t]he matters in the defendants' Request for Admissions are therefore 'conclusively established' for purposes of this action unless and until a motion is granted permitting withdrawal." (Order Granting in Part and Denying in Part Mot. for Discovery (Doc. No. 47) at 7.)

However, Rule 36(b) of the Federal Rules of Civil Procedure provides that a court: may permit the withdrawal or amendment [of a Rule 36(a) admission] when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice that party in maintaining the action or defense on the merits.

The language of the rule is permissive. Thus, even if a party satisfies the two criteria described by the rule, the decision whether to permit withdrawal remains within the sound discretion of the court. Donovan v. Carls Drug Co., 703 F.2d 650, 652 (2d Cir. 1983); Local Union No. 38 Sheet Metal Workers' Int'l Ass'n v. Tripodi, 913 F. Supp. 290, 294 (S.D.N.Y. 1996). The Second Circuit has noted that, in making this determination, a trial court should be cognizant of the ...


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