Wang v. Hon

Full title: ROUG KANG WANG, STELLA WANG, and WANG REAL PROPERTY LLC, Plaintiff, v…

Court: NEW YORK SUPREME COURT - QUEENS COUNTY IA PART 2

Date published: Oct 23, 2018

2018 N.Y. Slip Op. 32686 (N.Y. Sup. Ct. 2018)

Opinion

Index Number: 12353/17

10-23-2018

ROUG KANG WANG, STELLA WANG, and WANG REAL PROPERTY LLC, Plaintiff, v. JOHN HON, JULIE HON, JOHN HON, D.O., P.C., D/B/A ELMHURST AVENUE MEDICAL ASSOCIATES D/B/A FLUSHING MEDICAL ASSOCIATES, 41ST ROAD PROPERTIES LLC, JOSEPH ARONAUER, EMIGRANT BANK, and JOSEPH FUCITO, Defendants.

HONORABLE ALLAN B. WEISS

Short Form Order Present: HONORABLE ALLAN B. WEISS Motion Date: 6/2/7/18 Motion Seq. No. 4 The following papers numbered 1 to 5 read on this motion by defendant John Hon, defendant Julie Hon, defendant John Hon, DO, PC,d/b/a Elmhurst Avenue Medical Associates, defendant 41^st Road Properties, LLC and defendant Joseph Aronauer, Esq. for, inter alia, an order pursuant to CPLR 3211(a)(1),(5), and (7) dismissing the second through eleventh causes of action

	PapersNumbered
Notice of Motion - Affidavits - Exhibits	1
Answering Affidavits - Exhibits	2
Reply Affidavits	3
Memoranda of Law	4-5

Upon the foregoing papers it is ordered that the branch of the motion which is for an order pursuant to CPLR 3211(a)(1),(5), and (7) dismissing the second through eleventh causes of action is granted as to the second through tenth causes of action and granted as to the eleventh cause of action as to wrongs committed three years before the commencement of the instant action. The branch of the motion which is for an order cancelling the notices of pendency is denied without prejudice to renewal after the time to appeal has expired.

I. Background

Much of the relevant factual and procedural background concerning the dispute between the parties was clearly and concisely stated by the Honorable Salvatore J. Modica in a decision and order dated July 5, 2018 rendered on a motion made by Roug Kang Wang and Stella Wang in Wang v. Lin, a related case pending in the New York State Supreme Court, County of Queens under Index Number 11000/05:

" On April 1, 2003, Roug Kang Wang and Stella Wamg (collectively the Wangs or the Wang plaintiffs), as purchasers, entered into a contract for the purchase of property known as 132-05 41^st Road, Flushing, New York (the subject property) from Prince Development Co. LLC at a price of $2,000,000. In 2005, the Wangs began the instant action in the New York State Supreme Court, County of Queens, for, inter alia the specific performance of the contract of sale (Wang v.Chien-Tsang Lin, Index No. 11000/05), and pursuant to an order dated April 10, 2013, the Wangs were granted specific performance against Prince. The subject property was conveyed to the Wangs by a sheriff's deed dated May 3, 2013.

John Hon, Julie Hon, and John Hon, D.O., PC., (collectively the Hons), who own real property known as 135-07 41^st Road, Flushing, New York, adjacent to the subject property, are judgment creditors who have a judgment lien on the subject property . The Hons obtained their judgment in the New York State Supreme Court, New York County, in an action captioned Hon v. Prince Development Company, LLC., Index No. 602236/04. The Hons filed their judgment in Queens County on January 30, 2009, and the filing of the judgment created a lien on real property owned by any judgment debtor in Queens County as of that date.

Prince Development Co., LLC (Prince) still owned the subject property at the time of the filing of the lien in Queens County on January 30, 2009. Pursuant to a deed dated May 3, 2013, the sheriff conveyed the subject property to the Wangs, the plaintiffs in the instant action, The Wang plaintiffs transferred the subject property to Wang Real Property LLC (Wang Property), the current owner, by deed dated June 17, 2013,

In or about December, 2014, the Wangs and Wang Property began a special proceeding in the New York State Supreme Court, County of Queens, against the Hons, among others, pursuant to CPLR 5239 for a judgment declaring that the Hons did not have a judgment lien against the subject property (Wang Real Property LLC v; Prince Development Company LLC, Index No. 18415/14) ( the adverse claims proceeding).. Pursuant to a decision and order dated July 8, 2015, the Honorable Diccia T.Pineda Kirwan found, inter alia, that " upon conveyance of the subject property pursuant to the Sheriff's deed, the Wangs took title to it subject to the Hon's judgment lien." The court dismissed the petition brought by the Wangs. Neither the Wangs nor Wang Property appealed the order.

In 2014, the Emigrant Bank began an action to foreclose on a mortgage on the subject property, and in or about June, 2015, 41^st Road Properties LLC purchased the mortgage. The Wangs and Wang Property successfully offered money toward the payment of the debt, and they obtained and recorded a satisfaction of mortgage.

After the satisfaction of the mortgage, the Hons pressed the sale of the subject property to obtain the payment of their judgment lien, and the Sheriff noticed a sale for October 11, 2017. The Wangs and Wang Property made a motion in the New York County action for an "order of protection" prohibiting the Sheriff's sale, but by order dated October 6, 2017, the court denied the motion, relying on the decision and order rendered by Justice Pineda-Kirwan.

On March 7, 2018, the Wangs submitted a motion in Wang v. Chien Tsang Lin for an order staying the sale of the subject property, but by decision and order dated July 5, 2018, the Honorable Salvatore J. Modica denied the motion., finding, inter alia, that the judgment rendered by Justice Pineda-Kirwan was a decision on the merits..

The Wangs began the instant action on December 26,2017 by the filing of a summons and a complaint. The lawsuit purports to be " a real property action for enforcement of the plaintiffs' right of redemption among other cause[s] of action in premises located at 132-05 and 132-03 41^st Road, Flushing, NY ***." (Complaint ¶ 1.)

On January 15, 2018, the Wangs submitted a motion in the instant action for a preliminary injunction prohibiting the defendants from selling the subject property. Pursuant to a decision and order dated March 16, 2018, this court denied the motion, finding, inter alia, "[t]he plaintiffs have failed to demonstrate any likelihood of success on the merits."

II. Recent Appellate Division Activity

Judge Dufficy signed a judgment of foreclosure and sale entered on April 19, 2017. The Wangs appealed, but in a decision rendered by the Appellate Division, Second Department on August 1, 2018, several orders issued by Judge Dufficy were affirmed. (41st Road Properties, LLC v. Wang Real Property, LLC, [2^nd Dept. 2018].) The appellate court held, inter alia, "Upon 41st Road's submission of proof that Emigrant had assigned it the mortgage and the note, the Supreme Court providently exercised its discretion in granting 41st Road's motion to be substituted as the plaintiff and to amend the caption accordingly ***," (41st Rd. Properties, LLC v. Wang Real Prop., LLC, supra.) The Appellate Division stated further: "The Wang defendants failed to establish any proper ground under CPLR 5015(a) for vacating the order entered September 29, 2015, which, inter alia, granted Emigrant's motion, among other things, for summary judgment on the complaint insofar as asserted against them. Their conclusory allegations of fraud rested on mere speculation." ( 41st Rd. Properties, LLC v. Wang Real Prop., LLC, supra ,455 .) ( Emphasis added.)

The Wangs also separately appealed an order of Judge Dufficy, entered November 30, 2016 which granted Emigrant's motion to confirm a referee's report and for a judgment of foreclosure and sale, and denied the Wang's cross motion, inter alia, to disaffirm the referee's report. (41st Rd. Properties, LLC v. Wang Real Prop., LLC, 164 AD3d 459, [2^nd Dept.. 2018].) The appellate court, affirming Judge Dufficy's order, stated merely that the issues raised by the Wang's had been considered on the other appeal.

II. The Standards

A party moving for judgment dismissing one or more causes of action asserted against him pursuant to CPLR 3211(a)(1) on the ground that a defense is founded on documentary evidence must show that the documentary evidence submitted is " such that it resolves all the factual issues as a matter of law and conclusively and definitively disposes of the plaintiff's claim***." ( Fernandez v. Cigna Property and Casualty Insurance Company, 188 AD2d 700,702; see, Galvan v. 9519 Third Avenue Restaurant Corp,74 AD3d 743; Fontanetta v. Doe, 73 AD3d 78; Vanderminden v.Vanderminden, 226 AD2d 1037; Bronxville Knolls, Inc. v.Webster Town Center Partnership, 221 AD2d 248.)

A party may move pursuant to CPLR 3211(a)(5) for judgment dismissing one or more causes of action asserted against him on the ground of collateral estoppel. "The doctrine of collateral estoppel, a narrower species of res judicata, precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same ***." ( Ryan v. New York Telephone Co., 62 NY2d 494, 500 [1984]; Parker v. Blauvelt Volunteer Fire Co., Inc., 93 NY2d 343 [1999]; Altegra Credit Co. v. Tin Chu, 29 AD3d 718 [29 AD3d 718 [2^nd Dept., 2006].)

In determining a motion brought pursuant to CPLR 3211(a)(7), " 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 favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory ***." ( Antoine v. Kalandrishvili, 150 AD3d 941,941[ 2d Dept. 2017]; 1455 Washington Ave. Assocs. v. Rose & Kiernan, 260 AD2d 770, 770-771 [ 3d Dept. 1999]..) " Dismissal of the complaint is warranted if the plaintiff fails to assert facts in support of an element of the claim, or if the factual allegations and inferences to be drawn from them do not allow for an enforceable right of recovery ***." (Connaughton v. Chipotle Mexican Grill, Inc., 29 NY3d 137, 142 [2017].) "While typically the pleaded facts will be presumed to be true and accorded a favorable inference, 'allegations consisting of bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted by documentary evidence [will] not [be] entitled to such consideration' ***." (Marraccini v. Bertelsmann Music Group Inc., 221 AD2d 95, 98 [3d Department, 1996] quoting Roberts v. Pollack, 92 AD2d 440, 44.)

III. Discussion

A. Bankruptcy of Plaintiff Wang Real Property, LLC

The court notes initially that it has received a letter from Joseph Aronauer, Esq., the attorney for some of the defendants in this case, stating that plaintiff Wang Real Property, LLC has filed for bankruptcy. The filing does not stay a determination of the instant motion brought by defendants in this case. The automatic stay provisions of 11 U.S.C. § 362(a) do not apply to suits brought by the bankrupt (Kuntz v. Lake Placid Olympic Organizing Committee of 1980, Inc., 148 Misc.2d 649, [(Sup..Ct.1990;] Martin-Trigona v. Champion Federal Savings and Loan Ass'n., 892 F.2d 575 [7^th Cir. 1989]; Berry Estates, Inc. v. State of New York, 812 F.2d 67[ 2^nd 1987]), and 11 U.S.C. § 362(a) does not bar a defendant in an action brought by the bankrupt from seeking the dismissal of that action.. ( Martin-Trigona v. Champion Federal Savings and Loan Ass'n., supra; Kuntz v. Lake Placid Olympic Organizing Committee of 1980, Inc., supra.)

The automatic stay provisions of 11 U.S.C. § 362(a) operate in favor of a defendant who has filed a petition in bankruptcy, and it does not extend to other defendants (Katz v. Mount Vernon Dialysis, LLC, 121 AD3d 856, 857 [2^nd Dept 2014]) except in unusual circumstances (Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Oxford Venture Partners, LLC, 13 AD3d 89, 786 [ 1^st Dept.2004].) A petition filed for bankruptcy operates as a stay against the continuation of judicial proceedings against the debtor ( Parry v. Mohawk Motors of Michigan, Inc., 236 F3d 299, 314 [6th Cir. 2000]), and it also. automatically stays the commencement of a judicial proceeding to recover a claim against the debtor that arose before the commencement of the bankruptcy proceeding. (Levant v. Nat'l Car Rental, Inc., 33 AD3d 367, [ 1^st Dept. 2006].)

B. The Second Cause of Action

Turning to the merits of the instant motion, the second cause of action read together with the rest of the complaint alleges the following: Emigrant Bank held a mortgage on the subject premises (apparently from 2003), and the bank began an action in 2014 to foreclose on the mortgage. Emigrant obtained a judgment in the amount of approximately $964,265.76. After Emigrant obtained the judgment, John Hon and Julie Hon organized 41^st Road Properties, LLC for the purpose of purchasing the mortgage from Emigrant. The bank assigned the mortgage to "the Hon defendants for $10 on or about June 4, 2015," On December 15, 2016, Plaintiffs paid the Hon defendants $964,265,26 in full satisfaction of the mortgage. Defendant 41^st Road is the alter ego of the Hon defendants, and the Hons formed the company " as fraud upon the Court and the Plaintiffs that the purchaser of the mortgage is not a judgment creditor."The Hons formed defendant 41^st Road to "circumvent the preclusive laws applicable to mortgagees." "Due to the Hon Defendants' actions, the Plaintiffs suffered the loss of the benefit of redeeming the property for the discounted amount that the Hon Defendants tendered Emigrant." "The assignment of the mortgage from Defendant Emigrant to the Hon defendants was fraudulent."

The defendants raise collateral estoppel as a defense to the second cause of action, and the defense has merit .41st Road moved to be substituted as the plaintiff in the foreclosure action after receiving an assignment of the mortgage from Emigrant, and the Wangs moved for leave to renew their motion for summary judgment. The Wangs argued , inter alia, that Emigrant had fraudulently conveyed the note and mortgage to 41^st Road. By a decision and order dated April 29, 2016 (one paper), the Honorable Timothy J. Dufficy rejected the argument, denied the motion for leave to renew, and granted the motion for an order of substitution. Judge Dufficy stated: " The claims of the Wang defendants are unsupported misstatements of law and fact insinuating that the assignment of the mortgage and the associated chose in action is somehow 'secret', improper, or that it justifies a retread of issues already litigated." A reading of an affirmation submitted by the attorney for the Wangs (William R. Stolz) dated January 19, 2016 shows that the matter of an allegedly fraudulent conveyance was raised before Justice Dufficy. For example, Stolz alleged that even $400,000 was not a fair consideration for the mortgage, citing Bank of Commc'ns v. Ocean Dev. Am., Inc., 904 F. Supp. 2d 356[S.D.N.Y. 2012], a case concerning an alleged fraudulent conveyance. The court notes that the Hon defendants submitted documentary evidence showing that they paid $450,000 in consideration for an assignment of the mortgage, and in a companion motion defendant Emigrant has offered proof that the it assigned the note and mortgage to 41^st Road for $450,000.

The issues raised by the second cause of action have already been litigated before Judge Dufficy and the Appellate Division, and the doctrine of collateral estoppel bars the Wangs from relitigating them here.

C. The Third Cause of Action

The third cause of action, which is duplicative of the second cause of action, is dismissable for the same reasons. The court also notes the following: First, neither the complaint nor the plaintiffs' opposition papers identify which statute or case prohibits a judgment creditor from purchasing a mortgage. Second, the complaint erroneously alleges that the Hons paid only ten dollars in consideration of an assignment of the mortgage. Although the assignment gives the consideration as ten dollars and "other good and valuable consideration," this was merely boilerplate language The Hons submitted documentary evidence, i.e., a check dated June 4, 2015 payable to Emigrant Mortgage Company, Inc. in the amount of $450,000.as documentary evidence that they paid that sum for an assignment of the mortgage. The Wangs' allegation that even $450,000 is not fair consideration for the mortgage is unsubstantiated. The third cause of action is dismissable (1) pursuant to CPLR 3211(a)(1) because the Hons have produced documentary evidence which is dispositve, (2) pursuant to CPLR 3211(a)(5) because the Wangs are attempting to relitigate issues already decided by Judge Dufficy and the Appellate Divsion, and (3) pursuant to CPLR 3211(a)(7) because their conclusory, unsubstantiated allegations are contradicted by documentary evidence.

D. The Fourth Cause of Action

The plaintiffs brought the fourth cause of action pursuant to Judiciary Law § 487 which makes an attorney liable when he is " guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party." ( See, Jean v. Chinitz, 163 AD3d 497 [ 1^st Dept.. 2018].) The Wangs allege that attorney Aronauer advised the Hons to form 41^st Road to conceal the fact that the purchaser of the mortgage was not a judgment creditor and to " circumvent the preclusive laws applicable to mortgagees," However, Justice Dufficy rejected the arguments raised by the Wangs concerning the propriety of the assignment of the mortgage, and the doctrine of collateral estoppel precludes the Wangs from attempting to relitigate decided issues here. Because the allegations concerning the propriety of the assignment have been found to be without, the Wangs' cause of action based on Judiciary Law § 487 is not viable. (See, Stone v. Curran, 245 AD2d 285.) Moreover,, insofar as the fourth cause of action also alleges that attorney Aronauer violated Judiciary Law §487 by waiting to execute on the Hons' judgment until after the Wangs paid the mortgage, " the alleged deceit forming the basis of such a cause of action, if it is not directed at a court, must occur during the course of a 'pending judicial proceeding'." (Costalas v. Amalfitano, 305 AD2d 202, 204 [ 1^st Dept. 2003].) The complaint does not contain sufficient allegations in that regard.

E, The Fifth Cause of Action

The fifth cause of action alleges essentially that when the Wangs paid the mortgage, they exercised a "right of redemption" and that the Hons frustrated this right by seeking the sale of the subject property to obtain the payment of their judgment lien, However, pursuant to a decision and order dated July 8, 2015, Justice Pineda Kirwan found, inter alia, that " upon conveyance of the subject property pursuant to the Sheriff's deed, the Wangs took title to it subject to the Hon's judgment lien." On December 15, 2016, the Wangs paid the Hons $964,275,76 in full satisfaction of the mortgage. The Wangs did not successfully demonstrate on this motion that, pursuant to any statute or case, the payment of the mortgage altered the priority established by Justice Pineda-Kirwan. The mortgage is a separate matter from the judgment lien. As this court found in its decision rendered on March 6, 2018: "The fact that the plaintiffs redeemed the property merely abates the foreclosure action and leaves all subsequent liens, including the Hons' judgment lien, unaffected." The Hons have a right to enforce their judgment lien despite its impact on the Wangs' redemption of the property from foreclosure, a separate creditor-debtor matter.

F. The Sixth Cause of Action

The sixth cause of action alleges: " 105. Plaintiffs do not want a discharge of the mortgage. 106. Instead, Plaintiffs want an assignment of the mortgage." The plaintiffs do not have a cause of action. The mortgage only requires the mortgagee to provide a satisfaction, and the Wangs have already accepted the satisfaction of the mortgage. Moreover, Real Property Law § 275, "Certificate of discharge of mortgage required," neither confers nor implies the right of a mortgagor to obtain an assignment upon the payment of a mortgage debt. (767 Third Avenue LLC v. Orix Capital Markets, LLC, 26 AD3d 216 [1^st Dept. 2006] [owners of commercial properties who refinanced and prepaid their mortgage loans were not entitled to an assignment of their mortgage rather than a satisfaction piece]..)

G. The Seventh Cause of Action

The seventh cause of action alleges that CPLR 5236 and RPAPL 1301 prohibit the Hons from selling the subject property. The Wangs' reliance on those two statutes is misplaced. CPLR 5236 provides in relevant part;"(b) Sale of mortgaged property. Real property mortgaged shall not be sold pursuant to an execution issued upon a judgment recovered for all or part of the mortgage debt." While this provision of the statute may at first be puzzling, the basis of the statute is that "the mortgagor has a right of redemption on formal foreclosure of the mortgage (see Article 13 of the Real Property Actions and Proceedings Law), not applicable in the enforcement of an ordinary money judgment under Article 52 of the CPLR.." ( Reilly, Practice Commentaries, McKinney's Cons. L. of NY, C5236:3.) However, the Hons did not recover a judgment based on a mortgage debt. Insofar as RPAPL 1301 is concerned, the statue in effect provides for an election of remedies where a mortgage debt is concerned, and the statute has no relevance to the case at bar. The Hons' judgment lien was not obtained by a mortgagee in a foreclosure action.

H. The Eighth Cause of Action

The eighth cause of action, alleges that defendant Joseph Fucito, the Sheriff of the City of New York, is in possession of an execution from the Hon defendants and that he levied against the property in or about September, 2017. The eighth cause of action seeks " a determination that the Plaintiffs' claims to the property is superior to all the Defendants." Pursuant to the orders of Justice Pineda-Kirwan and Justice Freed, the eighth cause of action is barred on collateral estoppel grounds and for reasons stated above.

I. The Ninth Cause of Action

The ninth cause of action purports to be a claim for, fraudulent conveyance and unjust enrichment on the ground that while the Wangs paid off the full amount of the mortgage, the Hons allegedly only paid ten dollars to Emigrant. The documentary evidence in this case shows that the Hons paid $450,000 to Emigrant, and the Wangs did not allege sufficient facts showing that this was not fair consideration.

J. The Tenth Cause of Action

The Wangs, alleging that the prior adverse claims proceeding was "a nullity because it was premature," brought the tenth cause of action pursuant to CPLR 5239 to again determine adverse claims to the subject property. The Wangs allege that the prior adverse claim proceeding was premature because the sheriff had not yet levied against the subject property. The tenth cause of action is barred by the doctrine of collateral estoppel, and the Wangs cannot once again litigate the issue of whether the Hons' judgment lien is superior to their interest in the property.

K. The Eleventh Cause of Action

The eleventh cause of action, which is for nuisance, alleges that the Hons own the property adjacent to the subject property which is still owned by Wang Real Property, and that the Hons have "abandoned their property." The Hons' failure to maintain their property has allegedly allowed homeless people to use it, creating garbage and human waste. A homeless person allegedly attacked one of the Wangs' employees with a knife. The elements of a cause of action for a private nuisance are: (1) an interference substantial in nature with the private use and enjoyment of property, (2) intentional, negligent, or reckless in origin, (3) unreasonable in character, and (4) caused by another's conduct." ( See, Copart Indus. v. Consolidated Edison Co., 41 NY2d 564 [ 1977]; Mangusi v. Town of Mount Pleasant, 19 AD3d 656 [2d Dept 2005].) The Hons do not dispute that the eleventh cause of action is sufficiently stated, but they do raise the statute of limitations. The applicable statute of limitations is CPLR 214(4), a three year statute (see, Pilatich v. Town of New Baltimore, 100 AD3d 1248,[3d Dept.2012]; Kearney v. Atl. Cement Co., 33 AD2d 848 [3d Dept. 1969]), and those wrongs committed three years prior to the commence of the instant action are time barred.

L, The Notices of Pendency

The plaintiffs filed two notices of pendency. They filed their first notice of pendency against property owned by Julie Hon known as 132-07 41^st Road, Flushing, New York, which is not the subject of any dispute between the parties. They filed their second notice of pendency against the subject property. CPLR 6514 provides for the cancellation of a notice of pendency on mandatory grounds set forth in section (a) and on discretionary grounds set forth in section (b). CPLR 6514(a) provides in pertinent part that any aggrieved person may move for cancellation of a notice of pendency if the time to appeal from a final judgment against the plaintiff has expired. CPLR 6514(b) provides in pertinent part that a notice of pendency may be cancelled on discretionary grounds " if the plaintiff has not commenced or prosecuted the action in good faith." Under all of the circumstances of this case, the court declines to speculate on the plaintiffs' good faith. The defendants may renew this branch of the motion after the time to appeal has expired. Dated: October 23, 2018

/s/_________

J.S.C.