FTF Lending, LLC v Mavrides, Moyal, Packman &

Sadkin, LLP

2024 NY Slip Op 33115(U)

September 6, 2024

Supreme Court, New York County

Docket Number: Index No. 153620/2020

Judge: Margaret A. Chan

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.
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SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF NEW YORK: PART 49M 

---------------------X 

FTF LENDING, LLC, 

Plaintiff, 

- V -

MAVRIDES, MOYAL, PACK.MAN & SADKIN, LLP 

and MATTHEW WEINBERGER, 

Defendants. 

----------------------X 

MA VRIDES, MOY AL, PACKMAN & SADKIN, LLP and 

MATTHEW WEINBERGER 

Third-Party Plaintiffs, 

-againstROBERT THONY LAW, PLLC and ROBERT THONY, 

Third-Party Defendants. 

--------------------X 

HON. MARGARET A. CHAN: 

INDEX NO. 153620/2020 

MOTION DATE 03/18/2024 

MOTION SEQ. NO. 006 

DECISION+ ORDER ON 

MOTION 

Third-Party 

Index No. 595619/2020 

The following e-filed documents, listed by NYSCEF document number (MS006) 103, 104, 105, 106, 

107,108,109,110,111,112,113,114,115,116,117,118,119,120,121,122,123,124,125,126,127, 

128, 129, 130, 131, 132, 133, 134,135,136, 137,138,139, 140, 141, 142, 143, 144, 145,146,147, 148, 

149, 150, 151, 152, 153, 154 

were read on this motion to/for JUDGMENT - SUMMARY 

Plaintiff FTF Lending, LLC (FTF) brings this action against defendants Mavrides, 

Moyal, Packman & Sadkin, LLP (MMPS) and Matthew Weinberger (Weinberger together 

with MMPS, defendants), asserting a claim for legal malpractice arising out of defendants' 

representation of FTF in a loan transaction (the Loan Transaction) (NYSCEF # 1) .1 Before 

the court are (1) FTF's motion, pursuant CPLR 3212, for summary judgment on its legal 

malpractice claim, and (2) defendants' cross motion for summary judgment dismissing 

FTF' s claim (NYSCEF #s 103, 130-131). For the following .reasons, both motions are denied. 

1 On October 23, 2023, this action was consolidated with a related action, captioned FTF Lending, 

LLC v. 2330 DutchBroa.dwa.y LLC et a.1, Index No. 655765/2019 (NYSCEF # 102). 

153620/2020 FTF LENDING, LLC vs. MAVRIDES, MOYAL, PACKMAN & SADKIN LLP 

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Background 

The following facts are drawn from the parties' Rule 19-a statements and the 

accompanying affidavits and exhibits submitted in connection with the parties' motions. 

They are undisputed unless otherwise noted. 

The Loan Transaction and Post·ClosingDiscoverv of Fraud 

FTF is a real estate and financial services company that provides short-term capital 

to real estate developers and investors who purchase and renovate residential properties 

(NYSCEF # 126 - Pltf 19-a iJ 1; NYSCEF # 133 - Defts 19-a iJ 86; NYSCEF # 104 - Rodak 

aff i] 3; NYSCEF # 136-Draudt tr 9:22-10:5). As explained by FTF's Senior Vice President 

of Operations, Christopher Draudt, FTF considers itself a "hard money lender" and "lend[s] 

money based on the hard asset, or collateral real estate" securing a given loan (Draudt tr 

9:21-10:9; seealsoDefts 19-a ,i,i 63, 80). 

On May 26, 2018, FTF and Dwayne A. Samuels executed a term sheet outlining the 

terms of a loan by FTF to Samuels's company, 2330 Dutch Broadway, LLC (2330 Dutch, 

and together with Samuels, Borrowers) (Pltf 19-a ,i 2; NYSCEF # 145 -Term Sheet at 1). 

The Term Sheet contemplated a $375,000 loan (the Loan) in connection with a first· 

mortgage financing for a property located at 2330 Dutch Broadway, Elmont, NY 11003 (the 

Property) (Pltf 19-a ,i 2; Rodak aff ,i,i 4-5; NYSCEF # 145 Term Sheet at 1). According to 

FTF's Chief Executive Officer, Matthew Rodak, FTF's financing was contingent on (1) 

Samuels transferring title to the Property to 233 Dutch, (2) the securing of a title insurance 

policy, (3) a closing protection letter, and (4) a first-mortgage lien on the Property (Pltf 19-a 

,i 10; Rodak aff ,i,i 6·7). Consequently, as part of the Term Sheet, Samuels "acknowledge[d] 

that [FTF] must perform [its] 'Due Diligence' before a closing [could] occur" on the Loan 

(Term Sheet at 3-4; see also Defts 19-a ,i 86; NYSCEF # 143 - Packman aff ,r,r 8-9). 

Samuels also authorized FTF to "obtain a Consumer Credit Report and/or a Background 

Report" (Term Sheet at 6). 

On or about May 30, 2018, although there was no formal engagement agreem,ent, 

FTF retained MMPS to represent FTF in connection with the closing of the Loan (see Pltf 

19-a ,i,r 3-4; Rodak aff ,r,i 8-9; Packman aff ,r 5; NYSCEF # 105 at 1-2). That same day, 

FTF's Loan Coordinator, Laurie Ferrante, explained to Samuels's counsel, Robert Thony, 

that FTF was the lender working with Samuels on the financing of his investment real 

estate transaction," and she further introduced Weinberger, an associate practicing in 

MMPS's real estate practice group, as FTF's legal counsel (see Pltf 19-a ,r 15; Rodak aff ,r,r 

10-11; NYSCEF # 105 at FTF00218·219). Also copied on this email was MMPS employee 

· Alexandrea Lapka, who confirmed that MMPS would be "representing [FTF] in the above 

referenced transaction" and circulated MMPS's "opening checklist of items needed prior to 

closing" (see Pltf 19-a ,r 11; Rodak aff ,r 11; NYSCEF # 105 at 1 ·2). The checklist was 

prepared by MMPS and contained a list of seven "Legal Related Outstanding Items" to 

complete prior to closing, including various "Title Related Matters" (Pltf 19-a ,r 12·13; 

NYSCEF # 105 at 3; NYSCEF # 113- Packman tr 51:14-15). 

Scott Packman, a member of MMPS, testified that "Lapka and potentially 0 

Weinberger" were responsible for "ensuring that each of [the checklist's] outstanding items 

[were] satisfied prior to the closing" (Packman tr 51:16-52:6; see also Pltf 19-a ,r 14). 

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Packman further testified that Lapka, who was a law clerk pending admission, (1) "handled 

the closing," (2) "drafted the loan documents," including the promissory note, mortgage, and 

guarantee, and (3) "performed D due diligence," including "reviewing the title report" 

(Packman tr 14:3-4, 37:3-20, 42:7-43:6, 57:13-16). Packman also stated that Lapka would 

have, in general, been supervised by various attorneys at MMPS, including Weinberger and 

himself (see id tr 33:7-19, 34:21-35:3). Weinberger largely confirmed the same, although he 

noted his role in the Loan Transaction "was limited in some way to only answering 

questions" (see NYSCEF # 112- Weinberger tr 20:12-21:2, 37:3-24). 

On June 8, 2018, Samuels provided to Thony a copy of an unmarked title report 

allegedly prepared by Fidelity National Title Insurance Company (Fidelity) (see Pltf 19-a ,r 

24, Defts 19·a ,r 44; Rodak aff ,r 19; Packman aff ,r,r 14-15; NYSCEF # 147; NYSCEF # 107). 

Two days later, on June 10, 2018, Thony circulated to Lapka a copy of a purported markedup title report and closing protection letter (Pltf 19·a ,r 25; Defts 19·a ,r 45; Rodak aff ,r20; 

Packman aff ,r 14; NYSCEF # 146; NYSCEF # 108). Both the unmarked title report and 

marked·up title report (together, the Title Reports) contained a recorded deed evidencing 

Samuels's purported transfer of the Property to 2330 Dutch (Pltf 19·a ,r 26; Defts 19-a ,r 46; 

NYSCEF # 107 at FTF000599·600; NYSCEF # 108 at FTF000619-620). 

By June 12, 2018, the Loan closed at MMPS's New York City Office, and 2330 Dutch 

executed a promissory note in an amount of $375,000 (Pltf 19·a ,r 27; Rodak aff ,r 22; 

NYSCEF # 109). Samuels, in turn, executed a personal guarantee of the promissory note 

(Defts 19·a ,r 61; NYSCEF # 137 at FTF000675·682; see also Rodak aff ,r 23). FTF then 

disbursed a total of $340,000 to 2330 Dutch, which represented approximately 60% of the 

value of the Property (see Defts 19-a ,r 65; NYSCEF # 106 at 2; see also Draudt tr 41 :6• 12). 

Thereafter, on August 31, 2018, Thony provided a copy of a purportedly recorded mortgage 

(Defts 19-a ,r 47). 

Borrowers ultimately failed to make any payments that were due under the Loan's 

terms and, as a result, defaulted on the Loan (see Pltf 19-a ,r 28; Defts 19·a ,r 60; Rodak aff 

,r 23). Anticipating a potential foreclosure action, on June 30, 2019, FTF conducted a title 

search through Stewart Title (Rodak aff ,r 24; NYSCEF # 110). Based on that search, FTF 

determined that the Title Reports were fraudulent (Pltf 19·a ,r 31; Defts 19-a ,r 48; Rodak 

aff,r 24; NYSCEF # 110). Specifically, FTF learned that, contrary to Borrowers' 

representations, (1) the Property was encumbered by numerous liens and judgments and 

was the subject of a pending foreclosure action in Nassau County; (2) Samuels had never 

transferred the Property to 2330 Dutch; (3) the "recorded" mortgage was never recorded 

with the Nassau County Clerk's Office; and (4) Borrowers never secured title insurance 

from Fidelity (see Pltf 19-a ,r 25; Defts 19·a ,r,r 49·52; NYSCEF # 110 at FTF000419·432). 

FTF's decision to lend to 2330 Dutch was premised on the security it thought it had 

in the Property (Pltf 19·a ,r 39; Rodak aff ,r 18; NYSCEF # 115-Kuclo tr 110:13-112:5). 

Had FTF known that 2330 Dutch was not the owner of the Property or that FTF would not 

have a first-priority mortgage on the Property after the closing, it would not have issued the 

Loan (Rodak aff ,r 28). Such an interest, as Packman testified, would have given FTF the 

ability to foreclose on the Property upon Borrowers' default (Packman tr 49:4-9)_ But 

instead, given Borrowers' fraud, FTF was left without any security for the Loan (see Pltf 19· 

a ,r 41). 

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The Purported Issues with the Title Reports 

A review of Title Reports reveals that there were numerous errors establishing their 

fraudulent nature ahead of the Loan's closing (see Pltf 19-a ,r 35; Defts 19·a ,r 48). 

According to FTF's expert, Anita Delshad, the deed included in the Title Reports contained 

the following discrepancies: (a) the "Endorsement Cover Page" included three inconsistent 

recording "page" numbers; (b) the Deed was given three legally distinct names (i.e., Deed, 

Indenture, and Quit Claim Deed); (c) the deed, if legitimate, would have been a "Quit Claim 

Deed" indicating that Samuels had transferred all of his rights, title, and interest in the 

Property, without any warranties, to 2330 Dutch, yet it did not include the required quit 

claim language; (d) the deed did not include reference to a prior deed; and (e) the deed was 

to be "returned by mail to The Law Center" rather than 2330 Dutch's attorney's offices 

(NYSCEF # 117 Delshad aff ,r,r 16, 24 & exhs B & C; Pltf 19-a ,r 36). Delshad further 

observed additional anomalies with the Loan Transaction, namely that no one from Fidelity 

was involved in the Loan Transaction or attended the closing (Delshad aff ,r,r 18·20). 

Instead, Thony apparently acted as title closer by representing himself as an agent attorney 

for Fidelity (id ,r 22). 

In Delshad's opinion, given the importance of title reports in real estate 

transactions, defendants should have identified the discrepancies in the Title Reports after 

a judicious review (see Delshad aff ,r,r 12, 14, 17, 24). She further opines that defendants 

should have been in communication with Fidelity and should not have allowed Thony to act 

as title closer or otherwise have trusted him to record the mortgage or deliver the loan 

policy (see id ,r,r 18· 19, 21 ·26). Separately, Delshad avers, defendants failed to adequately 

supervise Lapka, who was managing the Loan Transaction (see id ,r,r 28·33). 

Packman retorts that the information provided to MMPS gave the appearance of an 

ordinary real estate closing transaction, and thus, there was no reason to suspect anything 

fraudulent (Packman aff ,r 16).2 Nevertheless, Weinberger testified that Lapka, in her 

review of the title report, "should have noticed" the discrepancies in the Title Reports 

(Weinberger tr 76:5• 11). 

Scope of Responsibilities in Connection with the Loan Transaction 

The parties disagree as to whose responsibility it was to assess the validity of the 

information contained in the Title Reports. In support of FTF's position, Rodak affirms that 

FTF understood and expected that MMPS, in representing FTF in connection with the 

Loan's closing, would draft and review all documents necessary to effectuate the closing and 

ensure (by, among other things, ;reviewing the Title Reports) that 2330 Dutch owned the 

Property and that FTF was secured by a first·priority mortgage on the Property (Rodak aff 

,r,r 14·16, 21). This understanding was corroborated by FTF employee Peter Kuclo, who 

testified that his "understanding [was] that MMPS was engaged or hired to represent FTF 

as a lender in the closing of' the Loan, "to ensure [FTF] had a secured first lien position," 

and to "review all of the documents related to the loan transaction" (Kuclo tr 24:13-23, 

125:3•126=18). MMPS's engagement encompassed "the title work and the review of title," 

2 Packman also ascribes blame to Thony, who did not "make any attempt to assure or identify the 

accuracy or authenticity of any of the documents" that were provided to MMPS (Defts 19·a ,r,r 72·73; 

Packman aff,i 16; seealsoThony tr 32:5-36:12, 42:4-14). 

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which Kuclo described as "[t]he most important piece" of MMPS's representation (see id at 

31=17·22, 33:8-14). Ferrante similarly understood MMPS's role in the Loan Transaction was 

to "protect □ FTF's interest," "ensure that FTF had a first lien position," and provide "color 

or detail if ... any D documents did not meet [MMPS's] standards and D requirements for 

FTF" (seeNYSCEF # 116- Ferrante tr 60:15-63:18). 

FTF also points to the depositions of Packman and Weinberger in support of its 

position. Packman, for example, testified that he understood MMPS's legal duty was to 

"properly produce enforceable, recordable, and useful loan documents, to review the title 

report ... and to make sure that all documents to record a first-mortgage lien against the 

subject property were handed to a title company for recording" (see Packman tr 39:14-23, 

86:12·18). Weinberger similarly testified that FTF typically sent MMPS deals in which FTF 

sought to acquire a "first-priority interest" mortgage (see Weinberger tr 22:13-21, 40:2-15). 

Conversely, defendants maintain that MMPS had no duty to investigate, detect, 

eliminate, or rectify fraudulent activity for FTF (see Defts 19-a 11 14, 16, 54; Packman aff 

1111·12). Instead, defendants aver, any information gathering about Borrowers, as well as 

any corresponding review of public records and reports, would have been performed by FTF 

(seeDefts 19·a 11 54, 56[!]; see alsoNYSCEF # 149-Rodak Reply aff 116·10; Kuclo tr 

32:4-24). Defendants, in turn, point to various information that they claim were available to 

FTF regarding Samuels's financial history, his checkered criminal history, and potential 

liens on the Property (see Defts 19·a 11 55-56, 87-88). For its part, FTF does not dispute 

that, prior to closing, it identified certain details regarding Samuels through a Trans Union 

credit report and background check, including (i) the existence of a prior lien on the 

Property with a notice of pendency dated as of April 27, 2017, and a recording date of April 

21, 2017, (ii) Samuels's credit score of 536 out of 800, and (iii) various delinquent accounts 

and foreclosures (seeDefts 19-a 1156[A], [D]-[E], 57; Rodak Reply aff116·10). FTF does, 

however, dispute that it knew of Samuels's criminal history prior the Loan's closing given 

the lack of any disclosure in either Samuels's credit report or background check (Rodak 

Reply aff 11 4·5, 9·10; NYSCEF # 151). 

In further support of their position, defendants offer the expert report of John J. 

Hughes, Jr., Esq. (Hughes) (NYSCEF # 135 - Hughes Report). Hughes opines that MMPS's 

duties with regard to its review of the title report were limited to "verify[ing] the lender's 

name, loan amount, property address, borrower's name, dates, exceptions, violations, 

check[ing] that tax searches do not show violations, and D confirm[ing] that the title is what 

is seen in the transaction to be recorded" (see id 11 22-26, 28·29). These duties notably 

included "produc[ing] enforceable, recordable and useful loan documents" and "reviewhng] 

the title report, to make sure that all documents to record a first-mortgage lien against the 

subject property were handed to a title company for recording'' and had "no blemishes such 

as violations or judgments" (see id 11 22, 28). Hughes separately opines that FTF "failed to 

meet the standards of an ordinary prudent lender" by disregarding its own underwriting 

requirements in the due diligence process (id,, 13-18 & Ex. U). Those requirements 

included "declin[ing] to offer funding" to a borrower that did not meet certain 

"qualifications" such as having a "clean criminal background" and "a clear credit report 

with no major delinquencies, bankruptcies, foreclosures or other negative indicators" (see 

id. at Ex. U). 

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Procedural History 

On October 2, 2019, FTF commenced an action before the New York State Supreme 

Court, New York County, against Borrowers and Thony alleging various causes of action 

related to the alleged misrepresentations made during the Loan Transaction (see FTF 

Lending, LLC v 2330 Dutch Broadway LLC et al., Index No. 655765/2019 - the First 

Action). Then, on May 29, 2020, FTF commenced this action against MMPS and 

Weinberger in relation to its representation of FTF in the Loan Transaction (see NYSCEF # 

1 the Second Action). MMPS subsequentlyfiled a third-party complaint against Thony 

and his firm seeking contribution and indemnification if FTF recovered damages against 

MMPS (NYSCEF # 9). 

On September 20, 2020, FTF obtained a default judgment against Borrowers in the 

First Action (see NYSCEF # 102). On November 30, 2021, after the Note of Issue was filed 

in the First Action, the court denied FTF's motion for summary judgment against Thony 

(id.). Meanwhile, in the Second Action, defendants moved to dismiss the complaint, while 

Thony and his firm moved to dismiss the third-party complaint (see NYSCEF #s 14, 19). On 

May 4, 2021, the court denied in part and granted in part both motions, dismissing FTF's 

claims for breach of contract, negligence, and disgorgement/restitution, and dismissing 

defendants' third-party claims for common law indemnification (NYSCEF #s 41·42). The 

First Department affirmed this decision on May 3, 2022 (NYSCEF # 76). 

On October 23, 2023, the First and Second Actions were consolidated under the 

Second Action's index number, and on October 31, 2023, FTF filed a Note of Issue in the 

Second Action (NYSCEF #s 101-102). FTF then moved for summary judgment on December 

28, 2023, and defendants cross moved on January 16, 2024 (NYSCEF #s 103, 130). 

Discussion 

A party moving for summary judgment must make a prima facie showing that it is 

entitled to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 

[1986]). Once that showing is made, the burden shifts to the party opposing the motion to 

produce evidentiary proof, in admissible form, sufficient to establish the existence of 

material issues of fact which require a trial of the action (see Zuckerman v City of New 

York, 49 NY2d 557, 562 [1980]). On a motion for summary judgment, facts must be viewed 

in the light most favorable to the non·moving party (see Vega v Restani Constr. Corp, 18 

NY3d 499, 503 [2012]). 

In its motion, FTF argues that it established its entitlement to summary judgment 

on.its legal malpractice claim (NYSCEF # 127 -MOL at 8·20; NYSCEF # 153 -Reply at 2· 

13). FTF first contends that MMPS had a duty to ensure that FTF was secured by a first· 

lien mortgage in the Loan Transaction, including by reviewing the Title Reports (see MOL 

at 8-10; Reply at 2·5). MMPS, in turn, breached that duty by failing to notice fraudulent 

nature of the deed in the Title Reports and, as a result, that 2330 Dutch did not own the 

Property (MOL at 10·17; Reply at 2·6). FTF next contends that defendants' negligence is 

the proximate cause of its damages because it would not have agreed to the Loan if it was 

aware that 2330 Dutch was not the owner of the Property (see MOL at 17·20; Reply at 6·8). 

FTF continues that it only extended the Loan because it believed it would have a security 

interest in the Property, which defendants admittedly failed to ensure (see id). 

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Defendants oppose FTF's motion and cross move for summary judgment dismissing 

FTF's legal malpractice claim. In support, defendants primarily aver that they had no duty 

to investigate Samuels or detect any fraud during the Loan Transaction (NYSCEF # 132 

Opp at 9-12). Rather, defendants assert, any due diligence of Borrowers should have been 

performed by FTF, and, at any rate, FTF fails to present any admissible evidence indicating 

that defendants had reason to believe there was potential fraud to investigate (see id at 11-

12). Defendants next contend that FTF failed to establish proximate causation because (1) 

FTF's damages arise from Borrowers' failure to repay the Loan rather than any purported 

failure to identify fraud, and (2) FTF bore the responsibility of reviewing the Title Reports 

and, as part of its business decision to extend the Loan, it ultimately approved the Loan 

with prior knowledge ofissues with Borrowers and the Property (id at 12-16). 

In an action for legal malpractice, a plaintiff must establish "(l) that the attorney 

was negligent; (2) that such negligence was a proximate cause of plaintiff's losses; and (3) 

proof of actual damages" (Global Bus. Inst. v Rivkin Radler LLP, 101 AD3d 651, 651 [1st 

Dept 2012], quoting Brooks v Lewin, 21 AD3d 731, 734 [1st Dept 2005]). Conversely, a 

defendant seeking to dismiss a legal malpractice claim on summary judgment has the 

"burden to demonstrate that the plaintiff would be unable to prove one of the essential 

elements of Hts] claim" (Aur v Manhattan Greenpoint Ltd, 132 AD3d 595, 595-596 [1st 

Dept 2015]). 

To satisfy the first element, a plaintiff must establish that the attorney's conduct 

"fell below the ordinary and reasonable skill and knowledge commonly possessed by a 

member of the profession" (Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1st Dept 

1990]). As for the second element, proximate causation, a plaintiff must establish that "'but 

for' the attorney's negligence," it would not have sustained damages (Nomura Asset Capital 

Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40, 49-50 [2015]; Ulico Cas. Co. v 

Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 10 [1st Dept 2008] [plaintiff must 

establish that "'but for' the attorney's negligence' the plaintiff would have prevailed in the 

matter or would have avoided damages"]). And for the third element, a plaintiff must 

demonstrate that it "sustained some ascertainable damages" (see Russo v Feder, Kaszovitz, 

Isaacson, Weber, Skala & Bass, LLP, 301 AD2d 63, 67 [1st Dept 2002]). 

Here, FTF has established the first element of its legal malpractice claim. At the 

outset, FTF has marshalled sufficient evident establishing that FTF had a duty to properly 

review the title report as part of its representation of FTF in the Loan Transaction. For 

example, FTF's employees had understood and expected that MMPS would (1) draft and 

review all documents necessary to effectuate the Loan's closing, including the Title Reports, 

(2) ensure that 2330 Dutch owned the Property, and (3) ensure that FTF was secured by a 

first-priority mortgage on the Property (see Rodak aff,r,r 14-16, 21; Kuclo tr 24:13-23, 

31:17-22, 33:8-14, 125:3-126:18; Ferrante tr so:15-52:12). Packman and Weinberger,s 

3 Defendants contend that Weinberger's deposition testimony cannot be used against MMPS because 

there is no evidence that he was authorized to speak on MMPS' s behalf (see Opp at 18· 19). This 

objection is without merit. Weinberger was, at all relevant times, an associate of MMPS performing 

legal services on behalf of MMPS as part of the Loan Transaction (see Packman aff ,r 17; NYSCEF # 

118 ,r 4; NYSCEF # 119 ,r 1). Furthermore, not only is Weinberger a named defendant, but at the 

time of his deposition, Weinberger was a partner at MMPS and thus an agent of the firm (see 

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effectively corroborated FTF's understanding by testifying that the responsibility oflender's 

counsel was to "properly produce enforceable, recordable, and useful loan documents" and 

"to review the title report" (seePackman tr 39:14-23, 42:7-43:6, 57:13·16, 86:12-18; 

Weinberger tr 22=13·21, 40:2•15). 

FTF has further demonstrated that defendants breached that duty through their 

negligent conduct. As the record makes clear, the Title Reports were riddled with indicia of 

fraud-a fact that was only discovered by FTF after the Loan's closing (see Pltf 19-a 11 25, 

31; Defts 19-a 11 48·52; Rodak aff ,i,i 24-25). According to FTF's expert, these 

discrepancies, as well as other anomalies with the Loan Transaction in general, should 

have, at minimum, caused defendants to have suspicion as to veracity of the documents 

that had been provided Borrowers and, in turn, triggered additional review, particularly 

given the importance of the title report in a typical real estate transaction (see Delshad aff 

11 12, 14, 17, 16, 18·24 & exhs B & C). Yet neither defendants nor their legal staff · 

identified or flagged any issues with the Title Report to FTF prior to the Loan's closing (see 

e.g., Packman aff 1 16). This failure to identify issues in the Title Report was seemingly 

accentuated by defendants' lack of supervision over Lapka in her management of the Loan 

Transaction. Indeed, as Weinberger testified, she "should have noticed" the discrepancies in 

the Title Reports (see Weinberger tr 76:5-11). All told, these facts, considered in their 

totality, provide a sufficient basis to conclude that defendants' representation of FTF fell 

below the ordinary and reasonable skill and knowledge commonly possessed by members of 

the profession (see Benitez v United Homes of N. Y., LLC, 142 AD3d 867, 867 [1st Dept 

2016] [plaintiff made a prima facie showing of negligence where defendant "fail[ed] to 

advise that the subject property lacked a certificate of occupancy, fail[ed] to advise of the 

risk of funding the loan under these circumstances, and faiHed] to confirm that plaintiff' 

met a condition of the loanD. 

In opposition, defendants fail to demonstrate the existence of material issues of fact 

on the issue of negligence or that FTF cannot otherwise meet this element of its claim. 

Defendants' primary contention is that it had no duty to investigate, detect, eliminate, or 

rectify fraudulent activity or to otherwise be a guarantor of any particular result for FTF 

(seeDefts 19-a ,i114, 16, 30, 54; Packman aff 1,i 11-12). Defendants' self-serving attempt 

to narrow the scope of their duties are, however, belied by essentially unrefuted testimony 

in the record establishing that defendants were, in fact, responsible for ensuring FTF's 

first-priority interest in the Property by, among other things, reviewing the title report (see 

Kuclo tr 24=13·23, 125:3-126=18; Packman tr 39:14-23, 86:12-18). The opinions set forth in 

the Hughes Report regarding defendants' purported duties do not alter this conclusion. In 

fact, the Hughes Report seemingly corroborates the above conclusions by opining, based on 

his review of the record, that defendants had an obligation to "produce enforceable, 

recordable and useful loan documents" and "to review the title report" (see Hughes Report ,, 22, 28). 

Turning to the issue of proximate causation, FTF has made prima facie showing that 

defendants' negligence was the "but for" cause of FTF's damages. As various FTF employees 

have affirmed and/or testified, FTF's decision to lend to Borrowers hinged on the security it 

felt it had in extending the Loan (see Pltf 19-a ,i 39; Rodak aff 11 18, 28; Kuclo tr 110: 13-

Weinberger tr 12:12-15). It was therefore appropriate for FTF to rely on Weinberger's deposition 

testimony in support of its motion (see CPLR 3 l 12[aJ). 

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112:5; seealsoPackman tr 49:4-13). However, because the Loan Transaction did not, in 

fact, result in FTF obtaining a first-priority interest the Property, FTF was left without 

security for the Loan (Pltf 19-a ,r,r 25, 41; Defts 19-a ir,r 49·52; Rodak aff ,r 25; Packman tr 

49:10-13). This was, of course, the precise security interest that both parties understood 

that defendants were working to secure through their review and approval of the Loan 

Transaction's documents (see Rodak aff,r,r 14·16, 21; Ferrante tr 60:15-62:12; Packman tr 

39:14-23, 86:12-18). Yet, despite the obvious errors in the Title Reports, defendants' review 

failed to uncover any issues with the Title Reports or otherwise result in reasonable 

assurances that FTF would be protected in the event of a default following the Loan's 

closing (see Delshad aff ,rir 12·27; Packman aff ,r 16). A trier of fact, when presented with 

this evidence, could reasonably conclude that "but for" defendants' failure to identify and 

advise on these issues, FTF would have avoided entering into the Loan or otherwise haven 

taken remedial steps to protect itself in extending the Loan. 

Nevertheless, summary judgment in FTF's favor is not warranted. 4 The record 

undoubtedly supports a conclusion that defendants had a duty to properly review the Title 

Reports and ensure FTF's security interest in the Property. But there is also evidence in 

the record that FTF had its own due diligence obligations as part of the Loan Transaction 

(see Term Sheet at 3-4; Defts 19·a ,r 86; Packman aff ,r,r 8·9). It was through this diligence 

that FTF seemingly obtained the credit reports and background checks identifying certain 

details about Samuels's checkered financial history and potential liens/foreclosure actions 

on the Property (see Defts 19-a ,r,r 56[A], [D]-[E], 57; Rodak Reply aff ,r,r 6·10). Yet, despite 

being on notice of these issues-which seemingly conflicted with its own underwriting 

requirements for approving borrowers (see Hughes Report Ex. U)-FTF nevertheless 

approved the Loan. Presented with this evidence and testimony, a trier of fact could 

determine that, notwithstanding defendants' negligent conduct, the proximate cause of 

FTF's losses following Borrowers' default was its own deficient diligence efforts (cf Garten 

v Shearman & Sterling LLP, 102 AD3d 436, 437 [1st Dept 2013] [affirming dismissal of 

complaint on summary judgment where defendant established that plaintiffs losses were 

caused by a borrower's "poor financial condition" and plaintiffs "misjudgment of risk," 

rather than defendant's failure to prepare and procure documents necessary to provide 

plaintiff with a first-priority security interest]). As a result, although a close call, 

defendants proffered just enough evidence in admissible form to create a material issue of 

fact as to proximate causation. 

In sum, although FTF has established defendants' negligence, material issues of fact 

on the issue of proximate causation preclude summary judgment. Accordingly, both motions 

are denied. 

As to defendants' remaining bases for dismissing FTF's claims (Defts' Opp at 3·9, 19· 

23), defendants' contentions are without merit and are dismissed. First, defendants' 

argument that plaintiffs claims are time-barred ignores that the three-year statute of 

limitation period begins to run when the alleged malpractice occurs (see Shumsky v 

Eisenstein, 96 NY2d 164, 166 [2001]). Here, the alleged malpractice action accrued on June 

12, 2018, i.e., the Loan's closing date, and thus FTF had to file its action by no later than 

June 12, 2021 (Defts 19-a ,r 27). This action was commenced on May 29, 2020. Second, 

defendants contend that FTF's claim against Weinberger must be dismissed under the 

4 And there is likewise no basis to grant defendants' cross motion for summary judgment. 

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principle of respondeat superior. The record, however, is clear that Weinberger was the 

supervising attorney for the Loan Transaction (NYSCEF # 114 Lapka tr 54:25-55:2; 

Packman tr 33:7-19, 34:21-35:3). Furthermore, as FTF notes, its claim is not premised on a 

theory vicarious liability, and, regardless this court has already determined that 

Weinberger can be subject to personal liability to the extent he acted negligently while 

representing FTF (see NYSCEF #s 41, 70; see also FTF Lending, LLC v Mavrides, Moya], 

Packman & Sadkin, LLP, 205 AD3d 414, 415 [1st Dept 2022] [holding that plaintiffs could 

maintain malpractice claim against Weinberger and that dismissal was not warranted 

under "the common-law doctrine of respondeat superior"]). Finally, defendants aver that 

FTF failed to mitigate damages. This issue, however, presents a question of fact regarding 

damages that should not be resolved until the issue liability is resolved. 

Qmclueion 

For the foregoing reasons, it is hereby 

ORDERED that plaintiff's motion for summary judgment and defendants' cross 

motion for summary judgment are both denied; and it is further 

ORDERED that this case is referred to the Alternative Dispute Resolution Program 

and the parties are to contact the ADR office at adr· ljd@nycourts.gov, with notice to this 

court by letter, within twenty days of the date of this order; and it is further 

ORDERED that defendants shall serve a copy of this order with notice of entry upon 

plaintiff and the Clerk of the Court within ten days of the date of this order. 

This constitutes the Decision and Order of the court. 

09/06/2024 

DATE 

CHECK ONE: 

APPLICATION: 

CHECK IF APPROPRIATE: ~ CASE DISPOSED 

GRANTED 0 DENIED 

SETTLE ORDER 

INCLUDES TRANSFER/REASSIGN 

NON-FINAL DISPOSITION 

GRANTED IN PART 

SUBMIT ORDER 

FIDUCIARY APPOINTMENT 

153620/2020 FTF LENDING, LLC vs. MAVRIDES, MOYAL, PACKMAN & SADKIN LLP 

Motion No. 006 

□ OTHER 

0 REFERENCE 

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