Citation Numbers: 117 Misc. 2d 203, 458 N.Y.S.2d 126, 1982 N.Y. Misc. LEXIS 4040
Judges: Wolin
Filed Date: 11/29/1982
Status: Precedential
Modified Date: 10/19/2024
OPINION OF THE COURT
The Attorney-General has instituted this proceeding pursuant to subdivision 12 of section 63 of the Executive Law seeking permanent injunctive relief as well as an order directing respondents to make restitution to their customers.
The facts, as alleged in the petition, may be briefly stated. Robert Baretz is the president .and principal shareholder of Midland Equities of New York, Inc. (Midland). His spouse, Shirley Baretz also known as Shirley Dorf, holds the position of vice-president and secretary of the corporation. Midland was organized under the laws of New York in November, 1979 and was engaged as a mortgage consulting firm until it ceased operation in July, 1981. Specifically Midland as well as Baretz and Dorf held themselves out to be specialists in obtaining additional financ
Those who responded were interviewed by Dorf who stressed the ability of respondents to obtain additional financing for beleaguered homeowners; no mention was made of an eventual and inevitable
(a) obtaining a loan commitment.
(b) obtaining a purchaser for the client’s home with a repurchase option for the client.
(c) obtaining and retaining counsel to renegotiate the mortgage.
(d) obtaining counsel to file a wage earner plan.
The contract also contained a disclaimer of any warranty or representation by Midland, as well as a clause indicating that the terms and conditions of the document had been knowingly and intelligently explained to the client”. Apart from these sections the bulk of the contract was concerned with details of the potential loan. As to compensation, the printed form indicated that the fee for Midland’s services was $1,000, however the supporting affidavits indicate that this fee was regularly discounted and that the fee actually charged by respondents ranged from a low of $350
The Attorney-General has alleged that the representations of Midland, Baretz and Dorf with regard to their ability to obtain financing to stop the foreclosure actions were fraudulent and designed to induce distraught consumers into entering into a contract and paying a fee to
At this point, the court notes that the investigation into the activities of respondents was undertaken not only upon the complaints of numerous former clients
The remainder of the Baretz affidavit attempts to establish triable issues with regard to the nature and quality of the services provided by respondents; appended thereto are copies of unsworn letters and indorsements from presumably satisfied customers. However respondents have failed to establish, by proof of an evidentiary nature, the existence of a triable issue. The affidavit of Baretz is conclusory, self-serving and in fact avoids the central issues raised by the petition. Respondents have been charged with the unauthorized practice of law and the operation of an improper legal referral service. In response Baretz argues that many of his clients were satisfied and that the loss of some homes in foreclosure proceedings was actually the fault of Salzman, Ingber and Winer and not respondents. The existence of satisfied customers in no way excuses violations of the Judiciary Law; similarly respondents may not insulate themselves from liability by charging someone else with incompetence. The papers, affidavits and documents submitted in support of the petition clearly establish that behind the facade of a mortgage consulting service respondents operated an improper referral service and received fees far in excess of the value of the “service” provided. (Matter of Lefkowitz v Peska Assoc., 90 Misc 2d 59; People v Schneider, 20 AD2d 408; People v Meola, 193 App Div 487.) In essence respondents acted in the capacity
The failure of respondents to meet their evidentiary burden thus warrants a summary determination and the granting of a judgment in favor of the petition. (CPLR 409, subd [b]; State of New York v Princess Prestige Co., 42 NY2d 104, supra; Matter of State of New York v Daro Chartours, supra.) As was indicated by the Court of Appeals in the Princess Prestige case, the court in Special Term may, in its discretion, direct the restitution of money to the affected consumers. The court is convinced that such an order should issue in this case. While the issue of the value of services rendered may ordinarily present an issue of fact, here the fees were generated by conduct and activity violative of the Judiciary Law; the “service” provided by respondents was one which is available free of charge to consumers from local Bar Associations, advertising, and word of mouth. Thus the court finds the services rendered by respondents to be valueless and directs that full restitution be made to the affected consumers. Respondents have admitted to receiving in excess of $170,000 from clients; this money shall be used to reimburse the clients. The judgment to be settled hereon shall provide for the creation of a fund to insure repayment to the clients of respondents. If so advised, petitioner may move for the appointment of a receiver for Midland and to administer this fund.
Accordingly, the petition of the State of New York is granted and petitioner shall have judgment permanently enjoining respondents Midland Equities of New York, Inc., Robert Baretz and Shirley Baretz also known as Shirley Dorf from engaging in the business of mortgage foreclosure consultation, from offering legal advice to consumers and from soliciting business for attorneys. Respondents are also directed to make restitution to their clients in accordance with this decision. Petitioner shall also recover costs in the amount of $2,000 from respondents. (CPLR 8303, subd [a], par 6; Matter of State of New York v Daro Char-
. Subsequent to submission and while the petition was sub judice the Attorney-General entered into a settlement with the law firm of Salzman, Ingber and Winer and the members thereof. Pursuant to the terms of the settlement the action as to the law firm was severed and a consent judgment was entered into discontinuing the action as against those respondents; the caption has been amended to reflect the effect of this settlement.
. In approximately 19 months of operation for some 275 clients, respondents obtained a loan for only one client.
. The consumer affidavits annexed to the petition make it clear that the respondents exclusively used the term “consumer specialist” when referring to the attorneys involved.
. The Attorney-General has annexed affidavits and transcripts from 37 clients complaining of the activities of respondent. This number certainly satisfies any numerosity requirement. (State of New York v Princess Prestige Co., 42 NY2d 104.)