839 Cliffside Ave. LLC v. Deutsche Bank Nat'l Trust Co., 15-CV-4516 (SIL)
| Decision Date | 23 September 2016 |
| Docket Number | 15-CV-4516 (SIL) |
| Parties | 839 CLIFFSIDE AVE. LLC, Plaintiff, v. DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for First Franklin Mortgage Loan Trust 2006-FF3, Mortgage Pass-Through Certificates, Series 2006-FF3, Defendant. DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for First Franklin Mortgage Loan Trust 2006-FF3, Mortgage Pass-Through Certificates, Series 2006-FF3, Third-Party Plaintiff, v. ELMAR POLATOV, Third-Party Defendant. |
| Court | U.S. District Court — Eastern District of New York |
By way of Complaint dated August 3, 2015, Plaintiff 839 Cliffside Ave. LLC ("Plaintiff" or "839 Cliffside") commenced this action against Defendant/Third-Party Plaintiff Deutsche Bank National Trust Company, as Trustee for First Franklin Mortgage Loan Trust 2006-FF3, Mortgage Pass-Through Certificates, Series 2006-FF3 ("Defendant" or "Deutsche Bank"), seeking to cancel and discharge the mortgage lien encumbering the property located at 839 Cliffside Avenue, Valley Stream, New York (the "Subject Property"). See Docket Entry ("DE") [1]. In its Answer to the Complaint, Deutsche Bank asserted various affirmative defenses, as well as counterclaims against 839 Cliffside for unjust enrichment and equitable mortgage. See DE [18]. Defendant also commenced a third-party action against Third-Party Defendant Elmar Polatov ("Polatov"), alleging a cause of action for unjust enrichment. Id. Presently before the Court is Plaintiff's motion to: (i) strike Deutsche Bank's Third-Party Complaint against Polatov pursuant to Fed. R. Civ. P. 14; (ii) dismiss Deutsche Bank's counterclaims against 839 Cliffside for unjust enrichment and equitable mortgage pursuant to Fed. R. Civ. P. 12(b)(6); and (iii) strike certain of Deutsche Bank's affirmative defenses pursuant to Fed. R. Civ. P. 12(f). See DE [25]. For the reasons set forth herein, Plaintiff's motion is granted in part and denied in part.
Unless otherwise noted, the following facts are drawn from Plaintiff's Complaint and Defendant's Third-Party Complaint.
On November 9, 2005, Polatov executed and delivered a note to First Franklin, a Division of National City Bank of Indiana ("First Franklin") in the amount of $750,000, with interest to be paid on the unpaid balance (the "Note"). See Compl. ¶ 5. As security for payment under the Note, Polatov also executed and delivered a mortgage lien to First Franklin encumbering the Subject Property (the "Mortgage"). Id. at ¶ 6. The Mortgage was recorded in the Nassau County Clerk's Office on December 22, 2005 in Liber 29871 at Pages 739-57. Id. On March 7, 2006, FirstFranklin assigned the Mortgage to non-party First Franklin Financial Corporation ("FFFC"), and on February 1, 2008, FFFC assigned the Mortgage to Defendant Deutsche Bank.1 Id. at ¶¶ 7, 8. Both the assignment to FFFC and Deutsche Bank were duly recorded in the Nassau County Clerk's Office on April 10, 2006 and May 20, 2008, respectively. Id.
By way of summons and complaint dated July 1, 2008, Defendant commenced a foreclosure action against Polatov in the Supreme Court of the State of New York, Nassau County, bearing the caption Deutsche Bank National Trust Company, as Trustee for FFML Trust 2006-FF3, Mortgage Pass-Through Certificates 2006-FF3 v. Elmar Polatov, et al., Index No. 12067/2008 (the "Foreclosure Action"). Id. at ¶ 10. In the Foreclosure Action, Deutsche Bank alleged that Polatov failed to comply with the conditions of the Mortgage and Note by failing and omitting to pay amounts that came due and payable. Id. Accordingly, Defendant accelerated the Note, electing to call due the entire amount payable thereunder. Id. According to 839 Cliffside, because Deutsche Bank elected to call due the entire amount under the Note, the six-year statute of limitations to bring an action to foreclose on the Mortgage pursuant to N.Y. C.P.L.R. 213(4) began to run on July 1, 2008. Id. at ¶ 11.
In the Foreclosure Action, Polatov denied signing any loan documents and claimed that non-party Alex Lukov forged his signature, thereby committing fraud against Polatov and First Franklin. Id. at ¶ 13. Lukov was subsequently indicted for this fraud in the United States District Courts for the both the Eastern and Southern Districts of New York. Id. On December 20, 2010, the Honorable Thomas A. Adams of the Supreme Court of the State of New York, Nassau County, vacated a previously entered judgment of foreclosure and sale and dismissed the Foreclosure Action without prejudice on the grounds that the court lacked jurisdiction pursuant to N.Y. C.P.L.R. 3211(a)(8). Id. at ¶ 12; see also Short Form Order Dismissing Foreclosure Action ("Foreclosure Action Order"), DE [10-13], at 1. The court further observed that Polatov "provided proof that the procuring of the subject mortgage which defendant . . . denies execution, by [Lukov], formed a part of a federal indictment and conviction of Mr. Lukov." See Foreclosure Action Order at 1. Since dismissal of the Foreclosure Action, Deutsche Bank has not commenced any new action seeking to foreclose on the Mortgage. See Compl. ¶ 15.
By way of summons and complaint dated August 12, 2014, Polatov commenced an action seeking to discharge the Mortgage on the Subject Property in the Supreme Court of the State of New York, Nassau County, bearing the caption Elmar Polatov v. Deutsche Bank National Trust Company, as Trustee for First Franklin Mortgage Loan Trust 2006-FF3, Mortgage Pass-Through Certificates, Series 2006-FF3, Index No. 604178/2014 (the "State Discharge Action"). See Declaration of Brian P. Scibetta,Esq. ("Scibetta Decl."), DE [25-5], Ex. 1. In the State Discharge Action, Polatov sought identical relief to that which 839 Cliffside now seeks, including discharge and cancellation of the Mortgage and all assignments thereof. Id. According to Polatov, because Deutsche Bank elected to accelerate the Note on July 1, 2008, the statute of limitations to commence a foreclosure action pursuant to N.Y. C.P.L.R. 213(4) had expired, and Polatov was therefore entitled to a discharge of the Mortgage. Id. at ¶¶ 8, 9.
On April 1, 2015, Polatov filed a motion for summary judgment in the State Discharge Action. See Notice of Motion for Summary Judgment, Polatov, No. 604178/2014 (Doc. No. 6). In a July 7, 2015 Decision and Order, the Honorable Karen V. Murray denied Polatov's motion for summary judgment, holding that Polatov "failed to establish his prima facie entitlement to summary judgment as a matter of law." See Short Form Order at 3, Polatov, No. 604178/2014 (Doc. No. 41). Thereafter, on July 13, 2015, Polatov filed a motion to discontinue the State Discharge Action on the grounds that he had sold the Subject Property to 839 Cliffside on March 31, 2015, and therefore no longer had an interest in the Subject Property sufficient to maintain the litigation. See Notice of Motion for Voluntary Discontinuance, Polatov, No. 604178/2014 (Doc. No. 44). According to Deutsche Bank, Polatov did not disclose his sale of the Subject Property until after his motion for summary judgment was denied. See Defendant's Memorandum of Law in Opposition to Plaintiff's Motion to Discontinue the Action at 1, Polatov, No. 604178/2014 (Doc. No. 54). Indeed, in a September 23, 2015 Decision and Order, Judge Murray observed that,"[u]nbeknownst to the Court at the time the previous summary judgment motion was pending is the fact that plaintiff conveyed the real property that is subject to the mortgage to 839 Cliffside Ave, LLC, on March 31, 2015." See Short Form Order at 2, Polatov, No. 604178/2014 (Doc. No. 61). Nevertheless, the court granted Polatov's motion for voluntary discontinuance and dismissed the State Discharge Action. Id.
By way of Complaint dated August 3, 2015, 839 Cliffside commenced this action against Deutsche Bank, seeking to discharge and cancel the Mortgage on the Subject Property pursuant to N.Y. Real Prop. Acts. Law § 1501(4). See DE [1]. Similar to Polatov's allegations in the State Discharge Action, here 839 Cliffside alleges that because Deutsche Bank accelerated the Note on July 1, 2008 the six-year statute of limitations to commence a foreclosure action pursuant to N.Y. C.P.L.R. 213(4) expired on July 1, 2014. See Compl. ¶¶ 11-16. After Deutsche Bank failed to answer or otherwise respond to the Complaint, the Clerk of Court noted Deutsche Bank's default on August 31, 2015. See DE [9]. That same day, Plaintiff filed a motion seeking a default judgment against Deutsche Bank, which Deutsche Bank opposed. See DE [10], [14]. At an October 19, 2015 hearing, 839 Cliffside withdrew its motion for default judgment. See DE [16].
On November 2, 2015, Deutsche Bank filed its Answer, Counterclaim, and Third-Party Complaint, in which it invokes various affirmative defenses and denies that Plaintiff is entitled to a judgment cancelling the Mortgage on the Subject Property. See DE [18]. Defendant also asserts: (i) counterclaims against 839Cliffside for unjust enrichment and equitable mortgage, and (ii) a third-party claim against Polatov for unjust enrichment. See Countercl. ¶¶ 14-25. According to Deutsche Bank, as of the date on which it filed its Answer, it had made payments totaling $179,818.31 for "the purpose of payment of taxes, assessments, water rates, escrow, insurance premiums, and/or any other charges, in order to protect its interests in the Subject Property." Id. at ¶ 11. Defendant further alleges that "additional costs continue to accrue for which [Deutsche Bank] intends to make further payments." Id.
On January 12, 2016, Plaintiff filed the instant fully briefed motion, in which it seeks an Order: (i) striking Defendant's Third-Party Complaint against Polatov pursuant to Fed. R. Civ. P. 14; (ii) dismissing Defendant's counterclaims against 839 Cliffside...
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