| Wells Fargo Bank N.A. v E & G Dev. Corp. |
| 2016 NY Slip Op 02988 [138 AD3d 986] |
| April 20, 2016 |
| Appellate Division, Second Department |
[*1]
| Wells Fargo Bank N.A., as Trustee for CarringtonMortgage Loan Trust, Series 2006-NC3 Asset-Backed Pass-Through Certificates,Respondent, v E & G Development Corp. et al., Appellants, et al.,Defendants. |
Miller, Rosado & Algios, LLP, Garden City, NY (Neil A. Miller of counsel), forappellants.
Knuckles Komosinski & Elliott, LLP, Elmsford, NY (John E. Brigandi ofcounsel), for respondent.
In an action to foreclose a mortgage and to cancel and vacate a satisfaction ofmortgage, the defendants E & G Development Corp., Washington Equity &Funding Corp., and Metropolitan Homes, Inc., Profit Sharing Plan appeal from an orderof the Supreme Court, Queens County (Raffaele, J.), dated May 12, 2015, which deniedtheir motion pursuant to CPLR 3211 (a) (1) and (7) to dismiss the complaint insofar asasserted against them and granted the plaintiff's cross motion for leave to amend thecomplaint.
Ordered that the order is affirmed, with costs.
The plaintiff commenced this action to foreclose the subject mortgage and to canceland vacate a satisfaction of mortgage against, among others, the defendants E & GDevelopment Corp., Washington Equity & Funding Corp., and MetropolitanHomes, Inc., Profit Sharing Plan (hereinafter collectively the defendants). Thedefendants moved pursuant to CPLR 3211 (a) (1) and (7) to dismiss the complaintinsofar as asserted against them, arguing that they were good faithpurchasers/encumbrancers for value who acquired their respective interests in the subjectproperty in reliance on a duly recorded satisfaction of mortgage. The plaintiff opposedthe motion and cross-moved for leave to amend the complaint. The Supreme Courtdenied the defendants' motion and granted the plaintiff's cross motion. The defendantsappeal, and we affirm.
In considering a motion to dismiss a complaint pursuant to CPLR 3211 (a) (7), thecourt must accept the facts as alleged in the complaint as true, accord the plaintiff thebenefit of every possible favorable inference, and determine only whether the facts asalleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83,88 [1994]). A court may consider evidentiary material submitted by a defendant insupport of a motion to dismiss pursuant to CPLR 3211 (a) (7) (see CPLR 3211[c]; Sokol v Leader, 74AD3d 1180, 1181 [2010]). When evidentiary material is considered on a motion todismiss a complaint pursuant to CPLR 3211 (a) (7), and the motion has not beenconverted to one for summary judgment, the criterion is whether the plaintiff has a causeof action, not whether he or she has stated one, and, unless it has been shown that amaterial fact as claimed [*2]by the plaintiff to be one isnot a fact at all and unless it can be said that no significant dispute exists regarding it,dismissal should not eventuate (see Guggenheimer v Ginzburg, 43 NY2d 268,275 [1977]).
"To succeed on a motion to dismiss based upon documentary evidence pursuant toCPLR 3211 (a) (1), the documentary evidence must utterly refute the plaintiff's factualallegations, conclusively establishing a defense as a matter of law" (Gould v Decolator, 121 AD3d845, 847 [2014]; see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314,326 [2002]).
"A mortgagee may have an erroneous discharge of mortgage, without concomitantsatisfaction of the underlying mortgage debt, set aside, and have the mortgage reinstatedwhere there has not been detrimental reliance on the erroneous recording" (New York Community Bank vVermonty, 68 AD3d 1074, 1076 [2009]; see Beltway Capital, LLC v Soleil, 104 AD3d 628, 631[2013]; Citibank, N.A. vKenney, 17 AD3d 305, 308 [2005]). "Only bona fide purchasers and lenders forvalue are entitled to protection from an erroneous discharge of a mortgage based upontheir detrimental reliance thereon" (Beltway Capital, LLC v Soleil, 104 AD3d at631).
Accepting the facts as alleged in the complaint as true, and according the plaintiff thebenefit of every possible favorable inference, the complaint adequately stated causes ofaction to foreclose a mortgage and to cancel and vacate a satisfaction of mortgage(see CPLR 3211 [a] [7]; Mortgage Elec. Registration Sys., Inc. v Smith, 111 AD3d804, 806 [2013]). Specifically, the complaint's factual allegations, i.e., that theplaintiff was the holder and owner of the subject note and mortgage, that the satisfactionof mortgage was erroneously executed and recorded, that the mortgage had not beensatisfied, that the original mortgagor defaulted on the note and mortgage, and that thebalance due under the note remained outstanding, were sufficient to set forth viablecauses of action to foreclose the mortgage and to cancel and vacate the satisfaction ofmortgage (see CPLR 3211 [a] [7]; Mortgage Elec. Registration Sys., Inc. vSmith, 111 AD3d at 806). Furthermore, construed liberally, the complaint alleged (1)that a satisfaction of mortgage was erroneously issued on August 9, 2009, (2) aforeclosure action relating to the subject property was commenced in 2010, which theplaintiff intended to consolidate with this action, (3) the satisfaction of mortgage waserroneously recorded on October 23, 2012, and (4) the defendants acquired theirrespective interests in the property on August 20, 2013. According all favorableinferences to the plaintiff, it can be inferred from the allegations in the complaint that thedefendants were put on notice that the satisfaction of mortgage should not be reasonablyrelied on, since the satisfaction of mortgage was issued in 2009, but a foreclosure actionrelating to the subject property was commenced in 2010 (see Deutsche Bank Trust Co., Ams.v Stathakis, 90 AD3d 983, 984 [2011]; cf. Regions Bank v Campbell,291 AD2d 437 [2002]).
The evidence submitted by the defendants in support of their motion did not showthat a material fact as claimed by the plaintiff was not a fact at all (see CPLR3211 [a] [7]; see Guggenheimer v Ginzburg, 43 NY2d at 275), and did not utterlyrefute the plaintiff's factual allegations, conclusively establishing a defense as a matter oflaw (see CPLR 3211 [a] [1]; Goshen v Mutual Life Ins. Co. of N.Y., 98NY2d at 326). Accordingly, the Supreme Court properly denied the defendants' motionpursuant to CPLR 3211 (a) (1) and (7) to dismiss the complaint insofar as assertedagainst them.
The Supreme Court also providently exercised its discretion in granting the plaintiff'scross motion for leave to amend the complaint. The proposed amendment was neitherpalpably insufficient nor patently devoid of merit, and there was no evidence that theamendment would prejudice or surprise the defendants (see Fitzgerald v City of NewYork, 119 AD3d 520, 521 [2014]). Mastro, J.P., Dickerson, Hall and Sgroi, JJ.,concur.