Opinion
25882/10
02-14-2012
Mew Equity LLC, MARTIN WYDRA, and EDWARD WYDRA, Plaintiffs, v. Sutton Land Services, L.L.C. d/b/a SUTTON LAND TITLE, SUTTON ALLIANCE, LLC d/b/a SUTTON LAND TITLE, MENDEL BRACH, MOSHE ROTH A/K/A MOZES ROTH, 222 SKILLMAN LLC, 652 PARK, LLC, 519 MARCY LLC A/K/A 519 MARCY AVENUE, LLC, B & R PARTNERS LLC, SHLOMO USA LLC, RAIZY MOSKOVITS, MARTIN SILVERSTEIN, MARCY TOWERS LLC, JP MORGAN CHASE BANK NATIONAL ASSOCIATION, as successor in interest to WASHINGTON MUTUAL BANK, Defendants.
Plaintiffs Mew Equity LLC, Martin Wydra, and Edward Wydra were represented by Kenneth J. Pagliughi, Esq. and Scott A. Rosenberg of Scott A. Rosenberg, P.C. Defendant Marcy Towers, LLC was represented by Amy Katcherian, Esq. of Fidelity National Law Group, the Law Division of Fidelity National Title Group, Inc. Defendant JP Morgan Chase Bank National Association was represented by David M. Satnick, Esq. and Sandra J. White-Hall, Esq. of Loeb & Loeb LLP. Defendants Sutton Land Services, LLC d/b/a Sutton Land Title, Sutton Alliance d/b/a Sutton Land Title, Raizy Moskowitz, and Martin Silverstein were represented by Jonathan A. Stein, Esq. of Jonathan A. Stein, P.C.
Plaintiffs Mew Equity LLC, Martin Wydra, and Edward Wydra were represented by Kenneth J. Pagliughi, Esq. and Scott A. Rosenberg of Scott A. Rosenberg, P.C.
Defendant Marcy Towers, LLC was represented by Amy Katcherian, Esq. of Fidelity National Law Group, the Law Division of Fidelity National Title Group, Inc.
Defendant JP Morgan Chase Bank National Association was represented by David M. Satnick, Esq. and Sandra J. White-Hall, Esq. of Loeb & Loeb LLP.
Defendants Sutton Land Services, LLC d/b/a Sutton Land Title, Sutton Alliance d/b/a Sutton Land Title, Raizy Moskowitz, and Martin Silverstein were represented by Jonathan A. Stein, Esq. of Jonathan A. Stein, P.C.
Jack M. Battaglia, J.
Recitation in accordance with CPLR 2219(a) of the papers submitted on the motion of defendant JP Morgan Chase Bank National Association for an order, pursuant to CPLR 3211 (a) (1) and (7) and RPL §266, "dismissing the sixth' cause of action alleged in the verified complaint" (No. 16); Plaintiffs' motion for an order, pursuant to CPLR 3211 (a) (5) and (7), "dismissing the counterclaims against the Wydras asserted by defendants Mendel Brach and Moshe Roth" (No. 17); Plaintiffs' motion for an order, pursuant to CPLR 3024, "striking the seventh affirmative defense interposed by" the "Sutton Defendants" (No. 18); the motion of defendant Marcy Tower LLC for an order, pursuant to RPL §§266 and 291 and CPLR 3211 (a) (7), dismissing the Verified Complaint as against it (No. 19); and Plaintiffs' cross-motion for an order, pursuant to CPLR 3025 (c), granting leave to amend the Verified Complaint (No. 20):
-Notice of Motion (No. 16)
Affirmation of David M. Satnick in Support of Motion to Dismiss
Exhibits 1-10
-Notice of Motion (No. 17)
Affirmation of Kenneth J. Pagliughi
Exhibits 1-9
-Notice of Motion to Strike Defendants' Affirmative Defenses (No. 18)
Affirmation in Support of Plaintiffs' Motion to Strike Defendants' AffirmativeDefense
Exhibits 1-2
-Notice of Motion (No. 19)
Affirmation in Support of Motion to Dismiss Pursuant to CPLR 3211 (a) (7) or, Alternatively, Pursuant to CPLR 3211 (c)
Exhibits A-G
-Notice of Cross-Motion (No. 20)
Attorney Affirmation in Support of Plaintiffs' Cross-Motion to Amend Complaint
Exhibits A-I
-Plaintiffs' Opposition to Defendant JP Morgan Chase Bank NA's Motion to Dismiss Sixth Cause of Action
Exhibits A-I
-Reply Memorandum in Further Support of the Bank's Motion to Dismiss
-Plaintiffs' Surreply in Opposition to Defendant JP Morgan Chase Bank NA's Motion to Dismiss Sixth Cause of Action
Exhibits A-S
-Memorandum of Law in Response to Plaintiffs' Sur-Reply
Affidavit of Lawrence I. Droth
-Affirmation in Opposition
-Plaintiffs' Opposition to Defendant Marcy Tower, LLC's Motion to Dismiss
Exhibits A-L
-Reply Affirmation in Further Support of Motion to Dismiss or for Summary judgment
Exhibits A-B
-Affirmation of David M. Satnick in Opposition to Plaintiffs' Cross-Motion for Leave to Amend Their Complaint
-Attorney Affirmation in Reply to Opposition of Chase to Plaintiffs' Cross-Motion to Amend Complaint
-Attorney Affirmation in Reply to Opposition of Marcy Tower LLC to Plaintiffs' Cross-Motion to Amend Complaint
Plaintiffs Mew Equity LLC, Martin Wydra, and Edward Wydra were represented by Kenneth J. Pagliughi, Esq. and Scott A. Rosenberg of Scott A. Rosenberg, P.C. Defendant Marcy Towers, LLC was represented by Amy Katcherian, Esq. of Fidelity National Law Group, the Law Division of Fidelity National Title Group, Inc. Defendant JP Morgan Chase Bank National Association was represented by David M. Satnick, Esq. and Sandra J. White-Hall, Esq. of Loeb & Loeb LLP. Defendants Sutton Land Services, LLC d/b/a Sutton Land Title, Sutton Alliance d/b/a Sutton Land Title, Raizy Moskowitz, and Martin Silverstein were represented by Jonathan A. Stein, Esq. of Jonathan A. Stein, P.C.
In their Verified Complaint, plaintiffs Mew Equity LLC, Martin Wydra, and Edward Wydra allege eight causes of action against 13 named defendants, including Mendel Brach, Moshe Roth a/k/a Mozes Roth, Sutton Land Services, L.L.C. d/b/a Sutton Land Title, and Sutton Alliance, LLC d/b/a Sutton Land Title. As alleged, "[t]his action arises from a sophisticated fraud upon Plaintiff [sic] orchestrated by Brach, Roth and their title company of choice, Sutton." (Verified Complaint ¶ 18.)
Specifically, the action relates initially to a 2003 loan for $1.8 million secured by a mortgage on several parcels of real property including property located at 519 Marcy Avenue, Brooklyn. Allegedly, at some time or times, defendants 519 Marcy LLC a/k/a 519 Marcy Avenue, LLC, 222 Skillman LLC, 652 Park, LLC, directly or indirectly owned an interest in the property at 519 Marcy Avenue, and those entities were owned or controlled by defendant Brach, defendant Roth, or both. In 2005, title to 519 Marcy Avenue was transferred to defendant Marcy Tower LLC, and mortgages on the property were given to the predecessor in interest of defendant JP Morgan Chase Bank National Association.
Plaintiffs Edward Wydra and Martin Wydra, and defendants Mendel Brach and Moshe Roth a/k/a Mozes Roth, together with some number of juridical entities controlled by at least one of them, are parties to an arbitration, commenced prior to this action, and still pending before The Beth Din Kollel HaRabbonim Rabbinical Court. The arbitration yielded a Decision of the Bais Din "dated as of September 22, 2010" that is the subject of a special proceeding pursuant to CPLR Article 75 commenced by Plaintiffs and 10 juridical entities, against defendants Brach, Roth and 21 juridical entities, including defendants 519 Marcy LLC a/k/a 519 Marcy Avenue, LLC, 222 Skillman LLC, and 652 Park, LLC.
With a Decision and Order dated September 21, 2011, this Court vacated the arbitration award represented by the Decision of the Bais Din, and remitted the matter to The Beth Din Kollel HaRabbonim Rabbinical Court for rehearing on issues raised in the Decision and Order, including clarification as to which disputes and juridical entities were subject to the beth din's determination. (See Matter of Wydra [Brach], 34 Misc 3d 1241 [A], 2011 NY Slip Op 51664 [U] [Sup Ct, Kings County 2011].)
Notwithstanding the pendency of the beth din proceeding, which was commenced at the instance of plaintiff Martin Wydra, Plaintiffs commenced this action, and have served three of the five pending motions. Plaintiffs have moved for an order, pursuant to CPLR 3211 (a) (5) and (7), "dismissing the counterclaims against the Wydras asserted by defendants Mendel Brach and Moshe Roth" (Notice of Motion dated January 10, 2011); an order, pursuant to CPLR 3024, "striking the seventh affirmative defense interposed by [the Sutton Defendant] which seeks to disqualify Scott Rosenberg and any attorney in his firm from representing the Plaintiffs in this action" (Notice of Motion to Strike Defendants' Affirmative Defenses dated January 17, 2011); and an order, pursuant to CPLR 3025 (c) granting leave to serve a "Verified Amended Complaint" (see Notice of Cross-Motion dated May 24, 2011.)
Defendant JP Morgan Chase Bank National Association has moved, pursuant to CPLR 3211 (a) (1) and (7) and RPL §§266, for an order "dismissing the sixth' cause of action alleged in the verified complaint as against the Bank" (Notice of Motion dated December 17, 2010); and defendant Marcy Tower LLC has moved for an order, pursuant to RPL §§266 and 291 and CPLR 3211 (a) (7), dismissing the Verified Complaint as against it (see Notice of Motion dated March 4, 2011.)
Looking, first, at Plaintiffs' motion to dismiss the Brach and Roth counterclaims, it is at least arguable that all disputes between Plaintiffs and defendants Brach and Roth are subject to the pending beth din arbitration. Indeed, Plaintiffs contend that "all of the counterclaims are barred by the principles of collateral estoppel and res judicata" (Notice of Motion dated January 10, 2011) by reason of the beth din award that has now been vacated. It is clear that Plaintiffs' motion should be denied, pending final resolution of the beth din proceeding. Moreover, to the extent that the Brach and Roth counterclaims and Plaintiffs' alleged Causes of Action - - namely, the First, Second, Seventh, and Eighth - - relate to disputes between Martin and Edward Wydra, on the one hand, and defendants Brach and Roth, on the other, this action should be stayed pending final resolution of the beth din arbitration. (See CPLR 2201.)
With respect to Plaintiffs' motion to strike the affirmative defense based upon disqualification of Plaintiffs' counsel, on the return date for the motion Plaintiffs' counsel advised the Court that the motion was resolved by stipulation (a copy of which was to be forwarded to the Court, but to date has not been.) The Court deems the motion withdrawn, noting, in any event, that the Defendants that asserted the defense have acknowledged that disqualification of Plaintiffs' counsel "is not a proper subject of an affirmative defense, and it is willingly withdrawn in such capacity" (Affirmation in Opposition ¶ 3.)
Although the property at 519 Marcy Avenue may ultimately be the subject of a confirmed beth din award (again, defendants 222 Skillman LLC, 625 Park, LLC and 519 Marcy LLC a/k/a 519 Marcy Avenue, LLC were named respondents in the CPLR Article 75 proceeding), it does not appear that the respective interests of defendant Marcy Tower LLC, the current owner of the property, or defendant JP Morgan Chase Bank National Association, as mortgagee, will be affected. To the extent, therefore, that this action would determine those interests as they relate to any interests of Plaintiffs, or any co-defendant for that matter, there seems no reason to stay the action pending final resolution of the beth din arbitration.
As to Plaintiffs' alleged claims against defendants JP Morgan Chase and Marcy Tower, many of the essential facts are not disputed on these motions. On August 23, 2003, plaintiff Mew Equity, LLC, a limited liability company of which plaintiffs Martin and Edward Wydra are members, loaned $1.8 million to 519 Marcy LLC a/k/a 519 Marcy Avenue, LLC ("519 Marcy LLC") and several other entities, all allegedly owned or controlled by defendants Brach and Roth. Repayment of the loan was secured by a Mortgage of that date on properties owned by the respective borrowers, including 519 Marcy Avenue, Brooklyn (the "Mew Mortgage").
Defendants Sutton Land Services, L.L.C. d/b/a Sutton Land Title and Sutton Alliance, LLC d/b/a Sutton Land Title (collectively, "Sutton Title") assisted with title services on the loan and mortgage transaction. Sutton Title was to record the mortgage with the Office of the City Register, Kings County, as to those mortgaged properties located in Brooklyn, which was not done until June 1, 2005. Moreover, the Mew Mortgage "was not indexed against . . . 519 Marcy Avenue, as it should have been" (Verified Complaint ¶ 49.)
Prior to the Mew Mortgage transaction, on February 11, 2003, 519 Marcy LLC was merged into defendant 222 Skillman LLC, and on July 29, 2003, 222 Skillman LLC purportedly transferred title to the 519 Marcy Avenue property to defendant 652 Park, LLC. Allegedly, 222 Skillman LLC and 652 Park, LLC are owned or controlled by defendants Brach and Roth, and Plaintiffs knew nothing of these events when the Mew Mortgage transaction was consummated.
On June 13, 2005, a deed was recorded transferring the property at 519 Marcy Avenue from 652 Park, LLC to defendant Marcy Tower LLC. The deed is dated March 28, 2005, and followed a contract of sale dated January 28, 2004.
Subsequently, Marcy Tower LLC gave two mortgages on 519 Marcy Avenue to defendant JP Morgan Chase's predecessor to secure payment of loans totaling approximately $8.0 million. Those mortgages were recorded on January 27, 2006.
On November 15, 2006, Plaintiffs recorded against 519 Marcy Avenue four Mortgage Modification Extension and Spreader Agreements (the "Spreader Agreements"), each dated May 10, 2006, which secured payment of the principal amount of the Mew Mortgage, i.e., $1.8 million, together with accrued interest of approximately $189,000, as well as other loans totaling $4.35 million. The Spreader Agreements were executed on behalf of various entities, including 519 Marcy LLC and 222 Skillman LLC.
On November 29, 2007, JP Morgan Chase's predecessor recorded against 519 Marcy Avenue a consolidated mortgage securing repayment of the two prior loans and a new loan for a total of $11.5 million.
In their Sixth Cause of Action, Plaintiffs allege that the deed transferring the property at 519 Marcy Avenue from 652 Park, LLC, which was signed on behalf of the grantor by defendant Mendel Brach, was defective, because Brach was not a member of the limited liability company (allegedly the members were defendants B & R Partners LLC and Shlomo USA LLC). As a result, Plaintiffs allege, they are entitled to priority to foreclosure on their mortgages on 519 Marcy Avenue over the mortgages now held by Chase on the property. They seek a declaration that the deed of the property to defendant Marcy Tower LLC is invalid, and that the Mew Mortgage has priority over all of the Chase mortgages.
JP Morgan Chase moves (apparently pre-answer, since none is included among its papers) for dismissal of the Sixth Cause of Action pursuant to CPLR 3211 (a) (1), based upon "a defense . . . founded upon documentary evidence"; CPLR 3211 (a) (7), on the ground that "the pleading fails to state a cause of action"; and Real Property Law §266, which provides, "This article does not in any manner affect or impair the title of a purchaser or encumbrancer for a valuable consideration, unless it appears that he had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor."
Marcy Tower moves post-answer for dismissal of the Sixth Cause of Action on similar grounds, adding Real Property Law §291, which gives priority to a conveyance of an interest in real property "first duly recorded," so long as the interest is acquired "in good faith and for a valuable consideration."
"A motion to dismiss a declaratory judgment action prior to the service of an answer presents for consideration only the issue of whether a cause of action for declaratory relief is set forth, not the question of whether the plaintiff is entitled to a favorable declaration." (State Farm Mut. Auto. Ins. Co. v Anikeyeva, 89 AD3d 1009, 1010-11 [2d Dept 2011] [quoting Staver Co. v Skrobisch, 144 AD2d 449, 450 (2d Dept 1988)].) "Accordingly, where a cause of action is sufficient to invoke the court's power to render a declaratory judgment . . . as to the rights and other legal relations of the parties to a justiciable controversy' (CPLR 3001; see CPLR 3017 [b]), a motion to dismiss that cause of action should be denied." (Id. at 1011.)
The motion of defendant JP Morgan Chase must, therefore, be denied, since the Verified Complaint clearly presents a judiciable controversy.
"Pursuant to Real Property Law §266, a bona fide purchaser or encumbrancer for value is protected in his or her title unless he or she had previous notice of the alleged prior fraud by the seller." (Fisher v Sadov Realty Corp., 34 AD3d 630, 631 [2d Dept 2006] [quoting Karan v Hoskins, 22 AD3d 638, 638-39 (2d Dept 2005)].) "[I]f a purchaser or encumbrancer knows facts that would excite the suspicion of an ordinarily prudent person and fails to investigate, the purchaser or encumbrancer will be chargeable with that knowledge which a reasonable inquiry, as suggested by the facts, would have revealed." (Booth v Ameriquest Mtge. Co., 63 AD3d 769, 769 [2d Dept 2009] [internal quotation marks and citations omitted]; see also Anderson v Blood, 152 NY 285, 293 [1897]; Fisher v Sadov Realty Corp., 34 AD3d at 631.) "A mortgagee is under a duty to make an inquiry where it is aware of facts that would lead a reasonable, prudent lender to make inquiries of the circumstances of the transaction at issue." (JP Morgan Chase Bank v Munoz, 85 AD3d 1124, 1126 [2d Dept 2011] [internal quotation marks, brackets, and citations omitted].) "A mortgagee who fails to make such inquiry is not a bona fide encumbrancer for value." (Id. [internal quotation marks and citations omitted].)
Likewise, under Real Property Law §291, "an unrecorded conveyance of an interest in real property is deemed void as against a subsequent good faith purchaser for value who acquires his interest without actual or constructive notice of the prior conveyance." (Andy Assoc. v Bankers Trust Co., 49 NY2d 13, 16 [1979] [footnote omitted]; see also Alliance Funding Co. v Taboada, 39 AD3d 784, 784 [2d Dept 2007].) "Where a purchaser has knowledge of any fact, sufficient to put him or her on inquiry as to the existence of some right or title in conflict with that he or she is about to purchase, he or she is presumed either to have made the inquiry, and ascertain the extent of such prior right, or to have been guilty of a degree of negligence equally fatal to his or her claim, to be considered as a bona fide purchaser." (Stracham v Bresnick, 76 AD3d 1009, 1010 [2d Dept 2010] [internal quotation marks, brackets, and citations omitted]; see also Williamson v Brown, 15 NY 354, 362 [1857].) "Similarly, a mortgagee is under a duty to make an inquiry where it is aware of facts that would lead a reasonable prudent lender to make inquiries of the circumstances of the transaction at issue." (Stracham v Bresnick, 76 AD3d at 1010-11 [internal quotation marks and citations omitted.)
"A motion to dismiss a complaint pursuant to CPLR 3211 (a) (1) may be granted only if the documentary evidence submitted by the moving party utterly refutes the factual allegations of the complaint and conclusively establishes a defense to the claims as a matter of law." (Kopelowitz v Mann, 83 AD3d 793, 796 [2d Dept 2011].) "In order for evidence to qualify as documentary, it must be unambiguous, authentic, and undeniable." (Id. [internal quotation marks and citations omitted]; see also Fontanetta v John Doe 1, 73 AD3d 78, 86 [2d Dept 2010].) Deeds, mortgages, and notes can qualify as "documentary evidence" for the purpose of CPLR 3211 (a) (1) (see Forbes v Aaron, 81 AD3d 876, 877 [2d Dept 2011]), but affidavits, deposition testimony, and letters cannot (see Integrated Constr. Servs., Inc. v Scottsdale Ins. Co., 82 AD3d 1160, 1163 [2d Dept 2011]; Fontanetta v John Doe 1, 73 AD3d at 86.)
Neither defendant JP Morgan Chase nor defendant Marcy Tower submits any documentary evidence that establishes prima facie that it (or, in the case of JP Morgan Chase, its predecessor) took its interest in 519 Marcy Avenue without notice of any unrecorded interest of Plaintiffs or anyone else. If Plaintiffs' Verified Complaint alleged such notice on the part of either the purchaser of the property or the mortgagee, the respective motions would be denied to the extent grounded on CPLR 3211 (a) (1) "documentary evidence." (See Lucia v Goldman, 68 AD3d 1064, 1065-66 [2d Dept 2009].)
But the Verified Complaint contains no allegation that either Marcy Tower or JP Morgan Chase or its predecessor was not a bona fide purchaser or encumbrancer for value. (See Todd v Krolick, 62 NY2d 836, 838 [1984]; Merritt v Merritt, 47 AD3d 689, 689 [2d Dept 2008]; see also Mathurin v Lost & Found Recovery, LLC, 65 AD3d 617, 618-19 [2d Dept 2009].) Rather, Plaintiffs allege that the conveyance of 519 Marcy Avenue from 652 Park, LLC to Marcy Tower LLC was "invalid and void" (Verified Complaint ¶ 113). Plaintiffs rely on the principle that "a person cannot be a bona fide purchaser or encumbrancer for value through a forged deed, as such a deed is void and conveys no title" (see Karan v Hoskins, 22 AD3d at 639; see also LaSalle Bank Natl. Assn. v Ally, 39 AD3d 597, 600 [2d Dept 2007]; Public Adm'r of Kings County v Samerson, 298 AD2d 512, 513 [2d Dept 2007]), contending further that a deed executed by a person who is not authorized to do so is similarly void and ineffective for this purpose (see Lido Realty LLC v 67-79 LLC, 27 Misc 3d 1238 [A], 2010 NY Slip Op 51096 [U] [Supt Ct, Bronx County 2010]; see also LaSalle Bank Natl. Assn. v Ally, 39 AD3d at 600; Second St. Matthew Baptist Church v Robinson-Traore, 2009 NY Slip Op 31404 [U], * 24- * 25 [Sup Ct, NY County 2009].)
In their respective motion papers, neither JP Morgan Chase nor Marcy Tower challenges Plaintiffs on this view of the law. Rather, they challenge Plaintiffs' "standing" to challenge the deed to Marcy Towers, and submit documents that the moving Defendants' counsel assert were "presented to" JP Morgan Chase's predecessor and Marcy Tower in connection with the material transactions. The "standing" challenge is easily disposed of. The one authority cited in support (see Capital Nat'l Bank of NY v McDonald's Corp., 625 FSupp 874, 882-83 [SDNY 1986]) is inapposite, because Plaintiffs are not asserting any right or claim based upon the deed; indeed, quite the contrary.
JP Morgan Chase and Marcy Tower include among their respective moving papers copies of an undated Operating Agreement of 652 park [sic] LLC, bearing what purport to be the signatures of Mendel Brach and Moshe Oknin, and a Consent dated March 1, 2005, also bearing the purported signatures of Messrs. Brach and Oknin. These documents are not acknowledged or otherwise authenticated (see Prince, Richardson on Evidence §9-101 et seq. [Farrell 11th Ed]; Cheul Soo Kang v Violante, 60 AD3d 991, 991 [2d Dept 2009]; John Deere Ins. Co. v GBE/Alasia Corp., 57 AD3d 620, 621-22 [2d Dept 2008]; NYCTL 1998-2 Trust v Santiago, 30 AD3d 572, 573 [2d Dept 2006]). Attachment to an attorney's affirmation does not suffice (see IRB-Brasil Resseguros S.A. v Portobello International Limited, 84 AD3d 637, 637-38 [1st Dept 2011].) The documents cannot serve as "documentary evidence" for purpose of CPLR 3211 (a) (1).
Although not pertinent on this point, an attorney's affirmation as to what documents were or were not "presented to" the attorney's client (see Affirmation of David M. Satnick in Support of Motion to Dismiss ¶¶ 18-19; Affirmation in Support of Motion to Dismiss Pursuant to CPLR 3211 (a) (7) or, Alternatively, Pursuant to CPLR 3211 (c) ¶ 23) is "without evidentiary value" (see Zuckerman v New York, 49 NY2d 557, 563 [1980]; Wolfson v Rockledge Scaffolding Corp., 67 AD3d 1001, 1002 [2d Dept 2009].)
"On a motion to dismiss the complaint pursuant to CPLR 3211 (a) (7) for failure to state a cause of action, the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory." (Young v Campbell, 87 AD3d 692, 693-94 [2d Dept 2011] [internal quotation marks and citations omitted].) "Evidence submitted by a defendant in support of a motion pursuant to CPLR 3211 (a) (7) does not warrant dismissal unless it conclusively' establishes that the plaintiff has no cause of action." (Id. at 694 [internal quotation marks and citations omitted].)
The discussion so far should be sufficient to resolve this aspect of the dismissal motions. Neither movant argues that, even if Plaintiffs' allegations are true, Plaintiffs cannot claim priority of the mortgage(s) for all or part of the amount allegedly owed by their borrower(s). As to the documents included with the motion papers, even if admissible, they would not "conclusively" establish a defense, if for no other reason than that the Operating Agreement for 652 Park, LLC is undated.
Neither JP Morgan Chase nor Marcy Tower LLC has established prima facie that it is entitled to dismissal pursuant to either CPLR 3211 (a) (1) or (a) (7). Marcy Tower makes no showing that conversion of its motion to one for summary judgment pursuant to CPLR 3211 (c) would be appropriate, and the Court sees no basis to do so.
Finally, there is Plaintiffs' motion for leave to serve an amended complaint, purportedly made pursuant to CPLR 3025 (c). Since there has been no trial, the appropriate provision is CPLR 3025 (b), which states, "Leave shall be freely given upon such terms as may be just including the granting of costs and continuances." Plaintiffs include among their motion papers a proposed Verified Amended Complaint, which would add allegations concerning the membership of 652 Park, LLC and transfer of the property at 519 Marcy Avenue, and allegations as to notice to JP Morgan Chase's predecessor and Marcy Tower of the Mew Mortgage and Spreader Agreements. Plaintiffs contend that the amendment would reflect results of disclosure.
"Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit." (Sinistaj v Maeir, 82 AD3d 868, 869 [2d Dept 2011].) The new allegations cannot fairly be claimed to cause prejudice or surprise, since they elaborate more conclusory allegations found in the Verified Complaint, or address an issue that was the focus of the motions to dismiss. And, although there may be questions as to Plaintiffs' ultimate success on the effectiveness of the purported transfer of 652 Park, LLC or notice to JP Morgan Chase's predecessor or Marcy Tower of Plaintiffs' mortgages, the new allegations are not shown to be so insufficient or devoid of merit that they are appropriately addressed on a motion to amend a pleading at this stage of the action.
In sum, the respective motions to dismiss of defendant JP Morgan Chase Bank National Association (No. 16) and Marcy Towers LLC (No. 19) are denied.
Plaintiffs' motion to dismiss counterclaims asserted by defendants Brach and Roth (No. 17) is denied.
Plaintiffs' motion to dismiss an affirmative defense asserted by the "Sutton Defendants" (No. 18) is deemed withdrawn.
Plaintiffs' motion for leave to amend their Verified Complaint (No. 20) is granted to the extent that, within twenty (20) days after the date of this order, Plaintiffs may file and serve an Amended Verified Complaint in the form of the document included as Exhibit I among their motion papers.
This action is stayed as to the First, Second, Seventh, and Eighth Causes of Action, and as to any counterclaim asserted against Plaintiffs by defendants Brach and Roth, pending further order of this Court.
___________________
Jack M. Battaglia
Justice, Supreme Court