Fin. Assistance, Inc. v. Graham

• Decision Date: 24 February 2021
• Docket Number: Index No. 506702/18,2019-05798
• Citation: 143 N.Y.S.3d 380,191 A.D.3d 952
• Parties: FINANCIAL ASSISTANCE, INC., etc., respondent, v. Vilma GRAHAM, etc., et al., defendants, 1247 M & F Management, LLC, et al., appellants.
• Court: New York Supreme Court — Appellate Division

191 A.D.3d 952

143 N.Y.S.3d 380

FINANCIAL ASSISTANCE, INC., etc., respondent,

v. Vilma GRAHAM, etc., et al., defendants,1247 M & F Management, LLC, et al., appellants.

2019-05798

Index No. 506702/18

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

Argued—December 1, 2020

February 24, 2021

Belowich & Walsh LLP, White Plains, N.Y. (Joanna Sandolo of counsel), for appellants.

Jasne & Florio, LLP, White Plains, N.Y. (Daniel F. Florio, Jr., and Diane L. Klein of counsel), for respondent.

MARK C. DILLON, J.P., SYLVIA O. HINDS–RADIX, ROBERT J. MILLER, LINDA CHRISTOPHER, JJ.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract and to set aside alleged fraudulent conveyances pursuant to Debtor and Creditor Law article 10, the defendants 1247 M & F Management, LLC, and Popular Bank appeal from an order of the Supreme Court, Kings County (Kathy J. King, J.), dated March 25, 2019. The order, insofar as appealed from, granted the plaintiff's motion pursuant to CPLR 5015(a)(1) to vacate an order of the same court dated September 19, 2018, granting the motion of the defendant 1247 M & F Management, LLC, pursuant to CPLR 3211(a), in effect, to dismiss the amended complaint insofar as asserted against it, upon the plaintiff's failure to appear at a calendar call on the motion, and denied the motion of the defendant Popular Bank pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against it.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the plaintiff's motion to vacate the order dated September 19, 2018, is denied, and the motion of the defendant Popular Bank pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against it is granted.

The plaintiff, Financial Assistance, Inc., is the assignee of a judgment entered against a judgment debtor, Noel Graham, who formerly owned certain real property. Prior to the docketing of that judgment in 2009 (hereinafter the 2009 judgment), the judgment debtor conveyed the subject property to his daughter, the defendant Vilma Graham. In 2014, Vilma Graham conveyed the property to the defendant 1247–1253 Investors, LLC. In conjunction with that transaction, 1247–1253 Investors, LLC, gave a mortgage to Vilma Graham (hereinafter the 2014 mortgage). A rider to that mortgage provided, inter alia, that in the event that Vilma Graham failed to satisfy certain obligations related to the property, including the 2009 judgment, 1247–1253 Investors, LLC, "may" satisfy those obligations, and deduct from amounts owed to Vilma Graham the sums it paid to satisfy those obligations.

In 2016, 1247–1253 Investors, LLC, sold the property to the defendant 1247 M & F Management, LLC (hereinafter M & F). In conjunction with that transaction, Vilma Graham assigned the existing mortgage to the defendant Popular Bank. In addition, in conjunction with its purchase of the property, M & F gave four mortgages to Popular Bank, including a mortgage that secured a building loan.

The plaintiff commenced this action against Vilma Graham, 1247–1253 Investors, LLC, and the appellants, M & F and Popular Bank. The plaintiff seeks, inter alia, to enforce the 2009 judgment as against the appellants, and to set aside the conveyances of the property beginning with the conveyance from Noel Graham to Vilma Graham. The plaintiff also asserts causes of action to recover damages for breach of contract and for relief based on a theory of unjust enrichment, as against the appellants.

On or about June 5, 2018, M & F moved pursuant to CPLR 3211(a), in effect, to dismiss the amended complaint insofar as asserted against it. The plaintiff did not appear at a calendar call on that motion. By order dated September 19, 2018, the Supreme Court granted the motion upon the plaintiff's default. Subsequently, the plaintiff moved pursuant to CPLR 5015(a)(1) to vacate its default in failing to appear at the calendar call on the motion, and to restore the action to the calendar as against M & F.

On or about September 21, 2018, Popular Bank moved pursuant to CPLR 3211(a)(1), (5), and (7) to dismiss the amended complaint insofar as asserted against it.

By order dated March 25, 2019, the Supreme Court granted the plaintiff's motion pursuant to CPLR 5015(a)(1) to vacate its default in failing to appear at the calendar call on M & F's motion and, in effect, restored the action to the calendar as against M & F. In the same order, the court, inter alia, denied Popular Bank's motion to dismiss the amended complaint insofar as asserted against it.

In assessing a motion pursuant to CPLR 3211(a)(7) to dismiss a complaint, a court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" ( Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ).

A motion to dismiss a complaint pursuant to CPLR 3211(a)(1) on the ground that a defense is founded on documentary evidence may be appropriately granted only where the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law (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 ; Ralex Servs., Inc. v. Southwest Mar. & Gen. Ins. Co., 155 A.D.3d 800, 801, 65 N.Y.S.3d 49 ). In this context, "to be considered ‘documentary,’ evidence must be unambiguous and of undisputed authenticity" ( Fontanetta v. John Doe 1, 73 A.D.3d 78, 86, 898 N.Y.S.2d 569 ; see Cives Corp. v. George A. Fuller Co., Inc., 97 A.D.3d 713, 714, 948 N.Y.S.2d 658 ).

Here, Popular Bank established its entitlement to dismissal of the amended complaint insofar as asserted against it. The documentary evidence submitted with Popular Bank's motion, including deeds and mortgages, are properly considered "documentary evidence" for purposes of the motion ( Ralex Servs., Inc. v. Southwest Mar. & Gen. Ins. Co., 155 A.D.3d at 802, 65 N.Y.S.3d 49 [internal quotation marks omitted]; see Cives Corp. v. George A. Fuller Co., Inc., 97 A.D.3d at 714, 948 N.Y.S.2d 658 ). That documentary evidence showed that the 2009 judgment was not recorded until after the judgment debtor, Noel Graham, conveyed the property to Vilma Graham. Consequently, the 2009 judgment was not a valid lien on the subject property (see CPLR 5203[a] ; Leonardo v. Siegal, 150 A.D.2d 760, 760, 542 N.Y.S.2d 25 ; Barringer v. European Am. Bank & Trust Co., 138 A.D.2d 437, 438, 526 N.Y.S.2d 16 ; see also Matter of Smith v. Ralph Dinapoli Landscaping, Inc., 111 A.D.3d 841, 842, 977 N.Y.S.2d 663 ; We Buy Now, LLC v. Cadlerock Joint Venture, LP, 46 A.D.3d 549, 550, 848 N.Y.S.2d 211 ).

Furthermore, contrary to the plaintiff's contention, it failed to, in effect, state a cause of action based on a theory that the appellants and/or their predecessors acquired their interests in the property subject to the 2009 judgment based on the language of the mortgage rider to the 2014 mortgage. The language of the mortgage rider did not specifically obligate either party to satisfy the judgment; rather, the rider merely allocated responsibility for that debt between the purchaser/mortgagor and the seller/mortgagee. Moreover, while two of the mortgages given by M & F to Popular Bank expressly provided that they were subordinate to the preceding mortgages, including the 2014 mortgage, contrary to the plaintiff's contention, the subordination clauses established only the priority of the mortgages (see generally Great Homes Group, LLC v. GMAC Mtge., LLC, 180 A.D.3d 1013, 1014, 120 N.Y.S.3d 397 ; JP Morgan Chase Bank, NA v. Levin, 161 A.D.3d 966, 967, 77 N.Y.S.3d 437 ).

Moreover, the recording of the 2014 mortgage and subsequent mortgages did not render enforceable the provision of the 2014 mortgage relating to repayment of the underlying judgment. "Article 9 of the Real Property Law provides that a properly recorded mortgage is superior to subsequently recorded mortgages" ( Gletzer v. Harris, 12 N.Y.3d 468, 473, 882 N.Y.S.2d 386, 909 N.E.2d 1224 ; see Real Property Law §§ 290, 291 ). However, the recording of the subject mortgages did not, by itself, render enforceable the provision in the 2014 mortgage regarding repayment of a collateral debt owed by the former owner of the property (see generally Real Property Law §§ 290, 291 ).

Furthermore, Popular Bank showed that the fraudulent conveyance causes of action were time-barred, to the extent that those causes of action are asserted against it. Contrary to the plaintiff's contention, Popular Bank had standing to assert the statute of limitations as a defense to those causes of action (see Transland Assets, Inc. v. Davis, 29 A.D.3d 679, 679, 813 N.Y.S.2d 675 ; see also Menorah Home & Hosp. for Aged & Infirm v. Jelks, 61 A.D.3d 648, 649–650, 876 N.Y.S.2d 502 ). The plaintiff did not demonstrate that Popular Bank should be equitably estopped from asserting a defense based on the statute of limitations, as the plaintiff failed to allege any "affirmative wrongdoing, fraud, deception or misrepresentations which induced the plaintiff to refrain from filing a timely action" ( Santo B. v. Roman Catholic Archdiocese of N.Y., 51 A.D.3d 956, 958, 861 N.Y.S.2d 674 ). The fraudulent conveyance causes of action were shown to be time-barred, as they were asserted more than six years after the allegedly fraudulent conveyance or the time that such alleged fraud was discovered or could have been discovered, with reasonable diligence (see CPLR 213[8] ; Island Holding v. O'Brien, 6 A.D.3d 498, 500, 775 N.Y.S.2d 72 ). Further, the tolling provision set forth in General Obligations Law § 17–101 expressly applies only to contract actions, and is inapplicable to a fraud claim (see generally Nationstar Mtge. LLC v. Dorsin, 180 A.D.3d 1054, 1056, 119 N.Y.S.3d 435 ).

The plaintiff failed to state a viable...