| Berman v Christ Apostolic Church Intl. Miracle Ctr., Inc. |
| 2011 NY Slip Op 06815 [87 AD3d 1094] |
| September 27, 2011 |
| Appellate Division, Second Department |
| Cindy Berman, Appellant, v Christ Apostolic ChurchInternational Miracle Center, Inc., et al., Respondents, et al.,Defendants. |
—[*1] Auciello Law Group, P.C., Brooklyn, N.Y. (Anthony J. Auciello of counsel), for respondentChrist Apostolic Church International Miracle Center, Inc. Helfand & Helfand, New York, N.Y. (Aaron Weissberg of counsel), for respondent JPMorgan Chase Bank, N.A.
In an action, inter alia, to foreclose a mortgage, the plaintiff appeals, as limited by her brief,from so much of an order of the Supreme Court, Kings County (Vaughan, J.), dated February 17,2010, as granted those branches of the cross motion of the defendants Christ Apostolic ChurchInternational Miracle Center, Inc., and Joseph Ayeni and those branches of the separate crossmotion of the defendant JP Morgan Chase Bank, N.A., which were pursuant to CPLR 3211 (a) todismiss the amended complaint insofar as asserted against each of them.
Ordered that the order is modified, on the law, by deleting the provision thereof grantingthose branches of the cross motion of the defendants Christ Apostolic Church InternationalMiracle Center, Inc., and Joseph Ayeni which were pursuant to CPLR 3211 (a) to dismiss thesecond and third causes of action of the amended complaint insofar as asserted against them, andsubstituting therefor a provision denying those branches of the cross motion; as so modified, theorder is affirmed insofar as appealed from, with one bill of costs payable by the plaintiff to thedefendant JP Morgan Chase Bank, N.A.
In 1996 the plaintiff loaned the defendant Christ Apostolic Church International MiracleCenter, Inc. (hereinafter the Church), the sum of $259,000, secured by a mortgage on theChurch's property. On May 20, 2004, the Church executed an amended mortgage note in thesame amount. The same day, the plaintiff executed a power of attorney appointing Jack Berman(hereinafter Berman) as her attorney-in-fact for matters of real estate transactions, bankingtransactions, and tax matters, limited to "any and all matters related to the mortgage andfinancing for [the Church's] property . . . and specifically including the refinancingof the mortgage for said property on May 20, 2004."[*2]
In June 2007 the Church requested the payoff amountfrom the plaintiff. In response, the plaintiff's counsel notified the Church of the payoff amount,with instructions that payment be made payable to Berman. On August 24, 2007, the Churchrefinanced its mortgage with the defendant JP Morgan Chase Bank, N.A. (hereinafter Chase).Berman sent Chase a letter with a final payoff amount of $147,547.19 for the plaintiff'smortgage, as amended. Chase issued a check payable to the plaintiff for that amount. Althoughthe facts surrounding the plaintiff's alleged actual receipt of this check are in dispute, it isundisputed that the check was thereafter redeposited into a Church account. Moreover, on May 3,2008, Berman entered into an agreement with the Church (hereinafter the certificate of depositagreement), stating:
"It is mutually agreed that Jack Berman now and forever is the sole owner of the sum of$147,547.19 which is being loaned to the [Church] for the purpose of buying a Certificate ofDeposit which will pay interest at the rate of 5.31% annually and have a maturity date of seven(7) months.
"Upon maturity, the principal sum is to be returned to Jack Berman and all accrued interest tobe divided equally between Jack Berman and the [Church]. Maturity date is November, 2008."
In February 2009 the plaintiff commenced this action against the Church, Chase, and severalnominal defendants, seeking, inter alia, to foreclose the amended mortgage. The plaintiffsubsequently amended the complaint to add Joseph Ayeni as a defendant and to add causes ofaction to recover damages for fraud and conversion related to the certificate of depositagreement. The amended complaint alleged that the Church never had any intention ofcomplying with the certificate of deposit agreement, and that Ayeni closed the certificate ofdeposit before maturity and fled to Africa without returning the principal funds or the interest duethereon.
The plaintiff then moved pursuant to CPLR 3025 for leave to serve a second amendedcomplaint, submitting an affidavit by Berman intended to correct certain factual allegations in theamended complaint. In his affidavit, Berman further asserted that he executed the certificate ofdeposit agreement only because of unspecified threats made by the Church, an allegation herepeated in a later affidavit. Chase cross-moved, inter alia, pursuant to CPLR 3211 (a) to dismissthe amended complaint insofar as asserted against it. The Church and Ayeni likewisecross-moved, among other things, pursuant to CPLR 3211 (a) to dismiss the amended complaintinsofar as asserted against them. The Supreme Court denied the plaintiff's motion and grantedthose branches of the cross motions of Chase, the Church, and Ayeni (hereinafter collectively thedefendants) which were pursuant to CPLR 3211 (a) to dismiss the amended complaint insofar asasserted against each of them. The plaintiff appeals from so much of the order as granted thosebranches of the cross motions which were to dismiss the amended complaint insofar as assertedagainst each of the defendants.
On a motion to dismiss for failure to state a cause of action, the pleading is to be afforded aliberal construction (see CPLR 3026). "The facts pleaded are presumed to be true and areto be accorded every favorable inference, although bare legal conclusions as well as factualclaims flatly contradicted by the record are not entitled to any such consideration" (Mayer vSanders, 264 AD2d 827, 828 [1999]; see Arnav Indus., Inc. Retirement Trust v Brown,Raysman, Millstein, Felder & Steiner, 96 NY2d 300, 303 [2001]).
The Supreme Court properly held that the first cause of action to foreclose the amendedmortgage should be dismissed, with prejudice, as it is clear from the face of the complaint thatthe amended mortgage was satisfied by Berman's receipt of the payoff check (see Laxer v Edelman, 75 AD3d584 [2010]; Chan Ming v Chui Pak Hoi, 163 AD2d 268, 269 [1990]). Pursuant tothe power of attorney, Berman had the authority to accept a payoff of the amended mortgage onthe plaintiff's behalf. Once Berman accepted the payoff, thus satisfying the plaintiff's mortgage,the certificate of deposit agreement could not serve to give the plaintiff's interest in the Church'sproperty priority over the rights of Chase (see Bogert v Bliss, 148 NY 194, 200 [1896];Truscott v King, 6 NY 147, 162 [1852]; cf. State Bank of Albany v Fioravanti, 51NY2d 638 [1980]; Norstar Bank v Morabito, 201 AD2d 545, 547 [1994]; [*3]Skaneateles Sav. Bank v Herold, 50 AD2d 85, 88 [1975],affd 40 NY2d 999 [1976]; Bank of New York v Cerasaro, 98 AD2d 902, 903[1983]).
The second and third causes of action in the amended complaint sought to recover damagesfor fraud and conversion related to the certificate of deposit agreement. On a motion to dismissfor failure to state a cause of action, affidavits are not to be examined for the purpose ofdetermining whether there is evidentiary support for the pleading (see Kempf v Magida, 37 AD3d763 [2007]), but " 'a court may freely consider affidavits submitted by the plaintiff to remedyany defects in the complaint' " (McGuirev Sterling Doubleday Enters., L.P., 19 AD3d 660, 661 [2005], quoting Leon vMartinez, 84 NY2d 83, 88 [1994]; see Rovello v Orofino Realty Co., 40 NY2d 633,635 [1976]). Amplified by the affidavits submitted by the plaintiff, the amended complaintalleged that Berman executed the certificate of deposit agreement under duress. It further allegedthat Ayeni closed the certificate of deposit before maturity and fled to Africa, without tenderingany interest or the principal to the plaintiff. Since these allegations adequately support causes ofaction for conversion and fraud, the Supreme Court erred in granting those branches of the crossmotion of the Church and Ayeni which were pursuant to CPLR 3211 (a) to dismiss these causesof action insofar as asserted against them.
Contrary to the Church's further contention, the plaintiff has standing to assert her claimsdespite the language of the certificate of deposit agreement declaring Berman to be the soleowner of the subject funds. The plaintiff alleged that she was the actual owner of those funds andthat the Church knew she was the owner when it entered into the certificate of deposit agreement.Accordingly, the plaintiff stated causes of action and has standing to recover for conversion ofthe check and funds against the Church and Ayeni (see generally Thyroff v Nationwide Mut. Ins. Co., 8 NY3d 283[2007]), and to impose a constructive trust upon the funds on the ground of fraud (seeSimonds v Simonds, 45 NY2d 233, 241 [1978]). Alternatively, if Berman executed thecertificate of deposit agreement on the plaintiff's behalf, she stated causes of action to rescind thecontract on the ground of duress and to recover damages for breach of contract.
Since the second and third causes of action concern a new loan to the Church, and not theamended mortgage, which was extinguished, they are not barred by the election of remediesprovisions of RPAPL 1301. Finally, Berman is not a necessary party to this action (seeCPLR 1001 [a]).
The Church's remaining contention is without merit (see CPLR 5520 [c]; cf. Copp v Ramirez, 62 AD3d 23,27-28 [2009]). Mastro, J.P., Dillon, Angiolillo and Balkin, JJ., concur.