East Coast Athletic Club, Inc. v. Chicago Title Ins. Co.

• Decision Date: 03 April 2007
• Docket Number: 2005-08985.,2005-08039.
• Citation: 833 N.Y.S.2d 585,2007 NY Slip Op 02878,39 A.D.3d 461
• Parties: EAST COAST ATHLETIC CLUB, INC., et al., Appellants, v. CHICAGO TITLE INSURANCE COMPANY, Respondent.
• Court: New York Supreme Court — Appellate Division

39 A.D.3d 461

833 N.Y.S.2d 585

2007 NY Slip Op 02878

EAST COAST ATHLETIC CLUB, INC., et al., Appellants, v. CHICAGO TITLE INSURANCE COMPANY, Respondent.

2005-08039.

2005-08985.

Appellate Division of the Supreme Court of the State of New York, Second Department.

Decided April 3, 2007.

In an action to recover damages for breach of contract and breach of fiduciary duty, (1) the plaintiffs appeal, as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Warshawsky, J.), dated June 21, 2005, as granted that branch of the defendant's motion which was to dismiss the complaint pursuant to CPLR 3211 (a) (7) for failure to state a cause of action, and (2) the plaintiffs and nonparty Paul A. Batista, the attorney for the plaintiffs, appeal from an order of the same court dated August 23, 2005, which granted that branch of the defendant's motion which was to impose sanctions on the plaintiff Arnold Marshel and nonparty Paul A. Batista pursuant to 22 NYCRR 130-1.1.

Ordered that the appeal by the plaintiff East Coast Athletic Club, Inc., from the order dated August 23, 2005, is dismissed, as it is not aggrieved by that order; and it is further,

Ordered that the order dated June 21, 2005 is affirmed insofar as appealed from; and it is further,

Ordered that the order dated August 23, 2005 is affirmed; and it is further,

Ordered that one bill of costs is awarded to the defendant; and it is further,

Ordered that on the Court's own motion, counsel for the parties to this appeal are directed to show cause why an order should or should not be made and entered imposing such sanctions and/or costs, if any, against the appellants and/or their counsel, pursuant to 22 NYCRR 130-1.1 (c) as this Court may deem appropriate, by each filing an original and four copies of an affirmation or affidavit on that issue with the Clerk of this Court and serving one copy on the other party on or before May 3, 2007; and it is further,

Ordered that the Clerk of this Court, or his designee, is directed to serve counsel for the respective parties with a copy of this decision and order by regular mail.

The plaintiff Arnold Marshel, the sole owner and shareholder of the plaintiff East Coast Athletic Club, Inc. (hereinafter East Coast), entered into a mortgage agreement (hereinafter the Dime Mortgage) with the Dime Savings Bank of New York FSB (hereinafter Dime) on July 14, 1998. Dime loaned Marshel the sum of $3,250,000, and in return received a security interest in his health club located at 3 Harbor Drive in Port Washington (hereinafter the property). The Dime Mortgage was not recorded. The defendant Chicago Title Insurance Company (hereinafter Chicago Title) issued a title insurance policy to Dime on the same date. Neither Marshel nor East Coast was a party to the title insurance policy, and Chicago Title notified Marshel that the policy did not provide him with coverage.

Marshel later sold the property and obtained other mortgages on the property, which appeared to be unencumbered due to the unrecorded Dime Mortgage. In a prior action, inter alia, to foreclose the Dime Mortgage and the subsequent mortgages, the Supreme Court, Nassau County (Warshawsky, J.), in an order dated September 17, 2003, determined that it had been Marshel's duty to record the Dime Mortgage. This Court affirmed that order on September 12, 2005 (see Marshel v Farley, 21 AD3d 935 [2005]).

On June 10, 2004 the plaintiffs commenced the instant action against Chicago...