Bernard v. Citibank, N.A.

• Court: New York Supreme Court — Appellate Division
• Citation: Bernard v. Citibank, N.A., 195 A.D.3d 783, 151 N.Y.S.3d 87 (N.Y. App. Div. 2021)
• Decision Date: 16 June 2021
• Docket Number: Index No. 513884/17,2018-08728
• Parties: Jude BERNARD, appellant, v. CITIBANK, N.A., et al., respondents, et al., defendants.

195 A.D.3d 783

151 N.Y.S.3d 87

Jude BERNARD, appellant,

v.CITIBANK, N.A., et al., respondents, et al., defendants.

2018-08728

Index No. 513884/17

Supreme Court, Appellate Division, Second Department, New York.

Argued—April 8, 2021

June 16, 2021

Richard Gresio, Great Neck, NY, for appellant.

Butler Fitzgerald Fiveson & McCarthy, P.C., New York, N.Y. (David K. Fiveson, Julie A. Levine, and Akerman, LLP [Sherry Xia and Jordan M. Smith ], of counsel), for respondent Citibank, N.A.

Lydecker Diaz, Melville, New York (Robert J. Pariser and Louis Brett Goldman of counsel), for respondent Sutton Alliance, LLC.

HECTOR D. LASALLE, P.J., MARK C. DILLON, ROBERT J. MILLER, FRANCESCA E. CONNOLLY, JJ.

DECISION & ORDER

In an action, in effect, pursuant to RPAPL article 15 to quiet title to real property and for declaratory relief, the plaintiff appeals from an order of the Supreme Court, Kings County (Karen B. Rothenberg, J.), dated May 17, 2018. The order granted the separate motions of the defendant Citibank, N.A., and the defendant Sutton Alliance, LLC, pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against each of them.

ORDERED that the order is affirmed, with one bill of costs, and the matter is remitted to the Supreme Court, Kings County, for the entry of a judgment, inter alia, declaring that the plaintiff is equitably estopped from denying the validity of the subject mortgage.

The plaintiff commenced this action against, among others, Citibank, N.A. (hereinafter Citibank), and Sutton Alliance, LLC (hereinafter Sutton; hereinafter together the defendants). The complaint alleged that the plaintiff was "the fee owner" of certain real property located at 182 Washington Avenue in Brooklyn (hereinafter the subject property).

The complaint alleged that on June 22, 2007, Citibank "offered to lend and [the plaintiff] offered to accept a loan secured by a mortgage on the [subject] property for $1,000,000." On that same date, Citibank "presented certain loan documents on the property for [the plaintiff] to sign to secure a certain loan." The complaint alleged that on that date, Sutton "was an agent of [Citibank]," and that "the closing was attended by ... a ... notary public provided for and supplied by [Citibank] and Sutton." The complaint further alleged that a mortgage purportedly securing the loan was not recorded until January 2, 2008, that "the recorded mortgage fails to bear [the plaintiff's] signature," and that "without a valid signature ... the mortgage is defective and unenforceable."

As relevant here, the complaint asserted four causes of action against the defendants. All four causes of action were based on the allegation that the mortgage that was recorded on January 2, 2008 (hereinafter the recorded mortgage), was defective because it did not include the plaintiff's signature.

The first cause of action sought to quiet title to the subject property. The first cause of action alleged that because the recorded mortgage was defective, Citibank had "no interest in the [subject] property." The second cause of action sought to recover damages for negligent misrepresentation. The third cause of action sought to recover damages for "fraud and conspiracy to commit fraud." The second and third causes of action independently alleged that, as a result of the defendants' actions, the plaintiff "has been unable to sell, market, renovate, or refinance the [subject] property and [was] induced to improperly pay [Citibank] on the invalid mortgage and ... Sutton ... [on the] costs for title insurance, searches, and pick up fees as well as recording and other fees." The fourth cause of action sought a "declaratory judgment to clear the mortgage off of the [subject] property."

The "wherefore" clause of the complaint requested vacatur of the recorded mortgage. The plaintiff also requested "a judgment in the amount equal to all closing costs paid to Defendants with any payments to [Citibank] since June 22, 2007." Notably, the complaint did not seek to rescind the loan agreement, and the plaintiff did not allege that he failed to receive the proceeds of the $1,000,000 loan identified in the complaint.

Citibank subsequently moved pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against it. In support of its motion Citibank submitted, among other things, a copy of the June 22, 2007, loan agreement (hereinafter the loan agreement).

The loan agreement granted the plaintiff an "equity source" line of credit up to the amount of $1,000,000. The plaintiff "promise[d] to pay to Citibank ... all Loan Advances" in accordance with the loan agreement. The loan agreement identified the subject property by its street address, and stated that "[a]s security for the [loan] Agreement, you are giving Citibank a security interest in the [subject] Property ... which ... secures all of your obligations under this [loan] Agreement and the Mortgage." The loan agreement stated that "the Mortgage" would be "sign[ed]" by the plaintiff "along with th[e] [loan] Agreement." In addition to other remedies, the loan agreement provided that "Citibank shall have ... the right to bring an action against you and the right to bring a foreclosure action against the [subject] Property." The loan agreement included a signature purporting to be the plaintiff's on a line above the plaintiff's pre-printed name and to the left of the pre-printed date of "06/22/2007."

In support of its motion pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against it, Citibank argued that the plaintiff had ratified the loan agreement and should be precluded from denying the validity of the recorded mortgage. Citibank contended that the plaintiff's own banking statements demonstrated that he had accepted and retained loan advances in the total sum of $996,648.85, which were deposited into his account pursuant to the loan agreement on June 27, 2007. Citibank asserted that since the plaintiff had retained the benefits of the loan agreement, even after he had gained knowledge of the alleged defect in the recorded mortgage, he should be precluded from contesting the validity of the recorded mortgage.

Citibank also contended that the action was barred by the doctrine of res judicata. In this regard, Citibank noted that it had commenced an action to foreclose the mortgage in 2009 (hereinafter the 2009 action), after the plaintiff allegedly defaulted under the terms of the loan agreement. Citibank noted that the plaintiff had made the same allegations of a forgery in the 2009 action, and the issue had been decided against him in an order granting Citibank's motion for summary judgment on the complaint in the 2009 action.

Citibank asserted that the 2009 action was discontinued by a stipulation of the parties, pursuant to which the plaintiff had agreed to make payments to "cure[ ] his default and reinstate[ ] his loan." Citibank alleged that the plaintiff had continued to make sporadic payments towards his loan, most recently making a payment of $14,866.47 in October 2017.

Sutton separately moved pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against it. Sutton contended that the first and fourth causes of action must be dismissed insofar as asserted against it because it did not assert any ownership interest in the subject property. Sutton contended, among other things, that the second and third causes of action failed to state a cause of action and were barred by the doctrine of res judicata.

The plaintiff opposed Citibank's motion to dismiss, contending, among other things, that his own "receipt of the proceeds is irrelevant" to this action. The plaintiff similarly opposed Sutton's separate motion to dismiss, contending, as relevant here, that Sutton "makes arguments in equity that Plaintiff['s] receipt of the proceeds of the mortgage somehow absolves Defendants of their liability [for] fraud and ratifies the mortgage." The plaintiff continued: "A vacated mortgage does not reflexively preclude payment on the Note or in equity and a mortgagor's receipt of the proceeds is irrelevant on the within issue."

In an order dated May 17, 2018, the Supreme Court granted the separate motions of Citibank and Sutton pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against each of them. The court concluded that dismissal was warranted "on the grounds of res judicata, collateral estoppel and ratification." The plaintiff appeals. We affirm, albeit on slightly different grounds (see e.g. Matter of Westchester Joint Water Works v. Assessor of the City of Rye, 27 N.Y.3d 566, 572, 27 N.Y.3d 566, 56 N.E.3d 197 ; Scozzafava v. State of New York, 174 A.D.3d 1109, 1110, 105 N.Y.S.3d 170 ).

"When a court rules on a CPLR 3211 motion to dismiss, it must accept as true the facts as alleged in the complaint and submissions in opposition to the motion, accord plaintiffs the benefit of every possible favorable inference and determine only whether the facts as alleged fit within any cognizable legal theory" ( Whitebox Concentrated Convertible Arbitrage Partners, L.P. v. Superior Well Servs., Inc., 20 N.Y.3d 59, 63, 956 N.Y.S.2d 439, 980 N.E.2d 487 [internal quotation marks omitted]; see Sokoloff v. Harriman Estates Dev. Corp., 96 N.Y.2d 409, 414, 729 N.Y.S.2d 425, 754 N.E.2d 184 ). "Under CPLR 3211(a)(1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" ( Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ; see Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 ). "One example of such proof is an unambiguous contract that indisputably undermines the asserted causes of action" ( Whitebox Concentrated Convertible Arbitrage Partners, L.P. v. Superior Well Servs., Inc., 20 N.Y.3d at 63, 956 N.Y.S.2d 439, 980 N.E.2d 487, citing Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569–570, 750 N.Y.S.2d...