MICHALCZYK v. HSBC BANK USA (2026)

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Michael A. Gajdos Jr., J.), dated November 2, 2020.  The order granted the defendant's motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed, with costs.

In July 2005, the plaintiff, Mildred J. Michalczyk, executed a note in favor of HSBC Mortgage Corporation (USA), which was secured by a mortgage (hereinafter the first mortgage) on certain residential property located in East Farmingdale (hereinafter the premises).  In May 2007, Michalczyk executed a home equity line of credit agreement (hereinafter HELOC), which was secured by a second mortgage on the premises.  In 2013, both loans were assigned to the defendant, HSBC Bank USA, N.A. (hereinafter HSBC).

In 2014, HSBC commenced an action against, among others, Michalczyk to foreclose the HELOC (hereinafter the HELOC action).  Michalczyk interposed an answer and asserted various counterclaims.  Subsequently, HSBC moved, inter alia, for summary judgment on the complaint insofar as asserted against Michalczyk and dismissing Michalczyk's answer and counterclaims and for an order of reference.  In an order dated December 20, 2017, the Supreme Court granted the motion.

In June 2015, HSBC commenced an action against, among others, Michalczyk to foreclose the first mortgage (hereinafter the mortgage foreclosure action).  Michalczyk interposed an answer, generally denying the allegations in the complaint and asserting various affirmative defenses, counterclaims, and cross-claims.  Thereafter, HSBC moved, among other things, for leave to discontinue the mortgage foreclosure action.  Michalczyk opposed the motion and cross-moved, inter alia, to sever her counterclaims.  In an order dated January 8, 2019, the Supreme Court, among other things, granted Michalczyk's cross-motion to the extent of severing her counterclaims and directed her to obtain a new index number and to file a request for judicial intervention.

Michalczyk subsequently commenced this action by filing her answer in connection with the mortgage foreclosure action.  As such, her causes of action are denominated as counterclaims and cross-claims.  In October 2019, HSBC moved for summary judgment dismissing the complaint.  Michalczyk opposed the motion.  In an order dated November 2, 2020, the Supreme Court granted the motion.  Michalczyk appeals.

The Supreme Court properly granted that branch of HSBC's motion which was for summary judgment dismissing Michalczyk's first cause of action, denominated as her first counterclaim, to recover damages for breach of contract.  “The essential elements of a breach of contract cause of action are the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of his or her contractual obligations, and damages resulting from the breach” (Shapiro v. John T. Mather Hosp. of Port Jefferson, N.Y., Inc., 208 A.D.3d 913, 914, 174 N.Y.S.3d 702 [internal quotation marks omitted];  see Gounder v. Melrose Credit Union, 241 A.D.3d 882, 883, 241 N.Y.S.3d 376).  Here, HSBC established, prima facie, that Michalczyk's allegations failed to identify any specific contractual provision that allegedly was breached.  In opposition, Michalczyk failed to raise a triable issue of fact.  To the extent that Michalczyk contends that her allegations state a cause of action to recover damages for breach of the implied covenant of good faith and fair dealing, Michalczyk's broad allegations made in opposition to HSBC's summary judgment motion failed to raise a triable issue of fact as to whether HSBC engaged in any improper conduct, outside of commencing a foreclosure action, that deprived Michalczyk of the benefits under the mortgage agreement.  Moreover, any dispute as to billing errors or the amount owed under the mortgage agreement did not form the basis for a breach of contract cause of action, but rather merely amounted to an issue for a referee to determine in the mortgage foreclosure action (see generally Excel Capital Group Corp. v 225 Ross St. Realty, Inc., 165 AD3d 1233, 1235, 87 N.Y.S.3d 604).

The Supreme Court also properly granted that branch of HSBC's motion which was for summary judgment dismissing Michalczyk's second cause of action, denominated as her second counterclaim, to recover damages for violation of the Fair Debt Collection Practices Act (15 USC § 1692 et seq.).  HSBC established, prima facie, that it is not a “debt collector” as defined by that statute (15 USC § 1692a[6];  see HSBC Bank USA, N.A. v. Lien Thi Ngo, 197 A.D.3d 1102, 1103, 153 N.Y.S.3d 485;  Citibank [S.D.] N.A. v. Sablic, 55 A.D.3d 651, 653, 865 N.Y.S.2d 649).  In opposition, Michalczyk failed to raise a triable issue of fact.

The Supreme Court also properly granted that branch of HSBC's motion which was for summary judgment dismissing Michalczyk's third cause of action, denominated as her third counterclaim, to rescind the mortgage loan and to recover damages under the Federal Truth in Lending Act (15 USC § 1601 et seq.), as time-barred (see 15 USC § 1640[e];  HSBC Bank USA, N.A. v. Lien Thi Ngo, 197 A.D.3d at 1104, 153 N.Y.S.3d 485;  Karakus v. Wells Fargo Bank, N.A., 941 F Supp 2d 318, 326).  Michalczyk's fourth cause of action, denominated as her fourth counterclaim, to recover damages for trespass, is likewise time-barred (see Lucchesi v. Perfetto, 72 A.D.3d 909, 912, 899 N.Y.S.2d 341).

Contrary to Michalczyk's contentions, the Supreme Court properly granted those branches of HSBC's motion which were for summary judgment dismissing Michalczyk's causes of action denominated as cross-claims as barred by the doctrines of res judicata and collateral estoppel (see L.T. Motors Auto Sales, Inc. v. Kaplon–Belo Assoc., Inc., 230 A.D.3d 1309, 1311, 217 N.Y.S.3d 229;  Gregg v. Lan Zhen Chen, 220 A.D.3d 697, 698, 197 N.Y.S.3d 285).  Here, Michalczyk's causes of action denominated as cross-claims are duplicative of her previously asserted counterclaims in the HELOC action.  Under the circumstances, the court's determination in the HELOC action set forth in the order dated December 20, 2017, granting HSBC's motion for summary judgment on the complaint and dismissing Michalczyk's answer and counterclaims and for an order of reference therein, constituted a final judgment on the merits for purposes of res judicata (see Wymara Ltd. v Gansevoort Hotel Group, LLC, 243 A.D.3d 744, 745–746, 244 N.Y.S.3d 733).  Moreover, Michalczyk does not contend that she lacked a full and fair opportunity to litigate the issues raised in her causes of action denominated as cross-claims in the HELOC action (see Grossman v. Federal Natl. Mtge. Assn., 213 A.D.3d 811, 812, 184 N.Y.S.3d 799).  In opposition, Michalczyk failed to raise a triable issue of fact.

Michalczyk's remaining contentions are without merit.

Accordingly, the Supreme Court properly granted HSBC's motion for summary judgment dismissing the complaint.

BARROS, J.P., BRATHWAITE NELSON, WARHIT and GOLDBERG VELAZQUEZ, JJ., concur.