NJ Lenders Corp. v. Cosentino

• Decision Date: 26 November 2010
• Citation: NJ Lenders Corp. v. Cosentino, 914 N.Y.S.2d 851, 30 Misc.3d 11 (N.Y. App. Term 2010)
• Parties: NJ LENDERS CORP., Plaintiff-Appellant-Cross-Respondent, v. Robert E. COSENTINO, Esq., O'Connor, McGuiness, Conte, Doyle and Oleson, and Pamela McNally, Defendants-Respondents-Cross-Appellants, and Oscar Valencia, Defendant-Respondent.
• Court: New York Supreme Court — Appellate Term

914 N.Y.S.2d 851

30 Misc.3d 11

NJ LENDERS CORP., Plaintiff-Appellant-Cross-Respondent,

v. Robert E. COSENTINO, Esq., O'Connor, McGuiness, Conte, Doyle and Oleson, and Pamela McNally, Defendants-Respondents-Cross-Appellants,andOscar Valencia, Defendant-Respondent.

Supreme Court, Appellate Term, New York. First Department.

Nov. 26, 2010.

Goodman & Leopold, L.L.P., New York City, for appellant-respondent.

Wilens & Baker, P.C., New York City, for Oscar Valencia, respondent.

Present: McKEON, P.J., SCHOENFELD, SHULMAN, JJ.

PER CURIAM.

Order (Cynthia S. Kern, J.), entered March 28, 2008, modified, upon search of the record, to grant defendant Cosentino and defendant law firm O'Connor, McGuiness, Conte, Doyle and Oleson summary judgment dismissing the complaint as against them; as modified, order affirmed, without costs.

Defendants McNally and Valencia sought to purchase a plot of land in Red Hook, New York and construct a home on that land. Plaintiff alleges that it agreed to make a $60,000 bridge loan to McNally and Valencia in connection with that real estate purchase, and that McNally's New Jersey property was to serve as security for the loan. McNally claims that Valencia alone procured the bridge loan, that McNally was unaware of the bridge loan, and that she never agreed to accept or repay the loan.

It is undisputed that prior to the closing on the Red Hook property, McNally executed a power of attorney appointing Valencia and defendant Cosentino, her attorney, as her agents. Under the plain terms of the power of attorney, Valencia and Cosentino were required to act together to take effective action as McNally's agents. At the closing, which McNally did not attend, Valencia executed-in both his individual capacity and as McNally's agent-a note and mortgage acknowledging the bridge loan from plaintiff, requiring McNally and Valencia to repay the loan under specified terms, and encumbering McNally's New Jersey property. Critically, Cosentino did not execute the note or mortgage on McNally's behalf or otherwise. The loan proceeds were subsequently transferred to Cosentino, who disbursed the proceeds to the sellers of the Red Hook property. Neither the note nor the mortgage (which Cosentino claims to have sent to both McNally and Valencia) was recorded, and McNally subsequently sold her New Jersey property to a nonparty entity. The bridge loan was never repaid despite the maturity of the debt and plaintiff's written demand to McNally and Valencia.

This action ensued, with plaintiff asserting causes of action for breach of contract, fraud/misrepresentation, conversion and unjust enrichment against McNally and Valencia, and breach of fiduciary duty, breach of contract and negligence against Cosentino and his law firm, based upon those defendants' failure to record the note and mortgage securing the bridge loan. Cosentino and his firm asserted crossclaims against McNally and Valencia for common law indemnification.

Valencia failed to answer the complaint and a default judgment was entered in favor of plaintiff against him. McNally answered, and subsequently moved for summary judgment dismissing the complaint and the cross claim as against her. Plaintiff cross-moved for summary judgment on the complaint against McNally. Civil Court granted those branches of McNally'smotion seeking summary judgment dismissing the causes of action for breach of contract, fraud/ misrepresentation and conversion, and denied that branch of the motion seeking dismissal of the claim for unjust enrichment. The court also granted that branch of McNally's motion seeking dismissal of the cross claim of Cosentino and the law firm for common law indemnification. Plaintiff's cross motion was denied in its entirety. This appeal by plaintiff and cross appeals by McNally and Cosentino and the law firm ensued.

Civil Court correctly determined that McNally was entitled to summary judgment dismissing plaintiff's breach of contract cause of action, since no contractual relationship was shown to exist between McNally and plaintiff ( see Grinnell v. Ultimate Realty, LLC, 38 A.D.3d 600, 832 N.Y.S.2d 244 [2007] ). As discussed above, the power of attorney executed by McNally required Valencia and Cosentino to act together as McNally's agents. It being undisputed that only Valencia executed the note and mortgage as McNally's agent, McNally was not bound by those documents ( see HSBC Bank USA, N.A. v. Decaudin, 49 A.D.3d 694, 854 N.Y.S.2d 184 [2008]; see also Unterberg v. Elder, 211 N.Y. 499, 105 N.E. 834 [1914] ). Nor was a triable issue raised as to whether Valencia acted with implied or apparent authority to bind McNally; plaintiff submitted no evidence tending to show that McNally engaged in misleading conduct giving rise to...