111 F. Supp. 3d 506
S.D.N.Y.2015Background
- Plaintiffs (Germain, Zherka, Lexington Capital, Silas Investments, Zherka Trust) allege M&T Bank, loan officer Mark Walz, and internal committee refused to consider multi‑family loan requests because of Zherka’s Albanian ethnicity and Muslim background; Walz canceled a scheduled meeting and told others he would not do business with “Sam Zherka” and alluded to mob ties.
- Plaintiffs say Germain/lexington sought meetings and submitted a package for a 37‑unit apartment building; M&T never processed or evaluated loans because Walz refused further contact.
- Plaintiffs assert claims under the Fair Housing Act (FHA), Equal Credit Opportunity Act (ECOA), New York Human Rights Law (NYHRL), 42 U.S.C. §1985 conspiracy, and slander per se against Walz.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(1) and 12(b)(6). The court accepted plaintiffs’ factual allegations for the motion but evaluated statutory/pleading defects.
- Court dismissed FHA claims (transactional scope issue), dismissed some plaintiffs’ ECOA/NYHRL claims for lack of statutory standing or for failure to plead a prima facie case, allowed Zherka’s ECOA notice claim and slander claim to proceed, and dismissed §1985 conspiracy claim. Plaintiffs were granted leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FHA applicability | Plaintiffs: seeking loans for multi‑family residential buildings triggers FHA protections for housing‑related lending | Defendants: transaction was commercial (owner‑investor), not a protected "residential real estate‑related transaction" under §3605 | Court: FHA claim dismissed — Plaintiffs alleged commercial lending to non‑owner‑occupied property, no allegations about discrimination against prospective residents, so §3605 does not apply |
| ECOA statutory standing (who is an "applicant") | Plaintiffs: Germain, Lexington, Zherka, Trust and Silas participated in loan requests/meetings and were applicants | Defendants: Only Silas (the purchaser) was a true applicant; Germain/Lexington are brokers/agents and lack ECOA standing | Court: Germain and Lexington lack statutory standing; Zherka and the Trust may be applicants — standing question folded into merits; Silas, Zherka, Trust claims survive standing review for now |
| ECOA disparate‑treatment prima facie case | Plaintiffs: Walz refused to meet and denied loans because of religion/national origin | Defendants: Plaintiffs failed to plead they applied, were qualified, were denied, or that similarly situated non‑members received loans | Held: Plaintiffs alleged an application/inquiry and verbal denial for Zherka (application element satisfied) but failed to plead factual allegations showing they were qualified and that similarly situated non‑protected applicants were treated better; discrimination claims dismissed without prejudice |
| ECOA notification requirement | Plaintiffs: Walz verbally told Zherka his application was denied and M&T gave no written adverse action notice | Defendants: Oral communications insufficient or plaintiffs lack standing | Held: Zherka adequately pleaded he was an applicant, was orally denied, and received no written adverse action — ECOA notice claim against M&T survives |
| Slander per se against Walz | Plaintiffs: Walz falsely implied criminal/mob ties, harming reputation and business | Defendants: Statements were non‑actionable opinion, insufficiently particular, or elicited by a private investigator (consent) | Held: Court found the "no good" comment could be a mixed opinion implying undisclosed facts (actionable); pleading met federal notice requirements; consent defense (private investigator) raises factual issues for later stages — slander claim survives |
| 42 U.S.C. §1985 conspiracy | Plaintiffs: Defendants conspired to deprive civil rights based on class‑based animus | Defendants: Intracorporate‑conspiracy doctrine and lack of meeting‑of‑minds fatal | Held: §1985 claim dismissed — plaintiffs pleaded only conclusory conspiracy allegations without factual basis showing an agreement or meeting of the minds |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard governs Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (apply Twombly framework; courts draw on judicial experience and common sense)
- McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) (burden‑shifting framework for disparate‑treatment claims)
- Lakeside Resort Enters., L.P. v. Bd. of Sup’rs of Palmyra Twp., 455 F.3d 154 (3d Cir. 2006) (test for whether facility is a "dwelling" under FHA: intended long‑term occupancy and viewed as place to return)
- United States v. Columbus Country Club, 915 F.2d 877 (3d Cir. 1990) (definition of "residence" / dwelling considered in FHA context)
- Schwarz v. City of Treasure Island, 544 F.3d 1201 (11th Cir. 2008) (factors to determine if building is a dwelling under FHA)
- Sleepy’s LLC v. Select Comfort Wholesale Corp., 779 F.3d 191 (2d Cir. 2015) (consent defense in defamation: extent plaintiff elicited statements he expected to be defamatory affects whether consent bars claim)