Metro. Lofts of NY v. JZ Capital Partners

1

2022 NY Slip Op 33737(U)

METROPOLITAN LOFTS OF NY LLC, Plaintiff, v. JZ CAPITAL PARTNERS, BEN BERNSTEIN, BEN STOKES, REDSKY JZ ROEBLING LLC, ROEBLING INVESTORS, LLC, ROEBLING HOLDINGS, LLC, REDSKY CAPITAL LLC, FIRST AMERICAN TITLE INSURANCE COMPANY, U.S. REAL ESTATE CREDIT HOLDINGS III-A, LP and U.S. REAL ESTATE CREDIT HOLDINGS III-A GP LIMITED, Defendants.

Index No. 521103/2020

Supreme Court, Kings County

November 1, 2022

Unpublished Opinion

MOTION DECISION

Richard Velasquez, Judge

The following e-filed papers read herein: NYSCEF Nos.:

Notice of Motion/Order to Show Cause/ Petition/Cross Motion and

Affidavits (Affirmations) Annexed ____3-4,14-15,30,34,48-49,56-57 85-86,92,115

Opposing Affidavits (Affirmations) ___129-132,144-145

Affidavits/Affirmations in Support ____36,91,94, 108-11, 117, 129-132

Upon the foregoing papers, defendants U.S. Real Estate Credit Holdings III-A, LP (USRECH LP) and U.S. Real Estate Credit Holdings III-A OP Limited (USRECH OP) (collectively, USRECH) move (in motion [mot.] sequence [seq.] number [no.] 1) for an order, pursuant to CPLR 3211 (a) (7), dismissing with prejudice the sixth and eighth causes of action in the complaint of plaintiff Metropolitan Lofts of NY, LLC as against USRECH. Defendant First American Title Insurance Company (First American) moves (in mot. seq. no. 2) for an order pursuant to CPLR 3211 (a) (1), (5), and (7), dismissing with prejudice the sixth and seventh causes of action in plaintiffs complaint as against First American. Lonuzzi &amp Woodland, LLP move by order to show cause (in mot. seq. no 3) for an order, pursuant to CPLR 321 (b) (2), permitting it to withdraw as counsel for plaintiff and retain a charging lien against the file pursuant to Judiciary Law 9 475 for legal services performed to date, as well as allowable disbursements. First American moves (in mot. seq. no. 4) for an order, pursuant to CPLR 3211 (a) (1), (5), and (7), dismissing with prejudice plaintiffs amended complaint as against First American. USRECH moves (in mot. seq. no. 5) for an order, (a) pursuant to CPLR 3211 (a) (7), dismissing with prejudice the sixth and eighth causes of action alleged against USRECH in plaintiffs amended complain,, (b) pursuant to CPLR 3211 (a) (7) dismissing with prejudice the ninth cause of action against USRECH GP and (c) pursuant to 22 NYCRR 9 130-1.1, sanctioning plaintiff and its attorneys for filing a frivolous amended complaint. USRECH moves (in mot. seq. no. 6) for an order, pursuant to CPLR 321t (a) (1), (5) and (7), dismissing with prejudice the ninth cause of action in the amended complaint. Plaintiff moves (in mot. seq. no. 7) for an order granting a default judgment against defendants RedSky Capital, LLC (RedSky Capital), RedSky JZ Roebling, LLC, (RedSky Roebling) JZ Capital Partners (JZCP), and Roebling Investors, LLC^[1] and imposing a constructive trust on the subject property. Defendants Benjamin Bernstein (Bernstein), Benjamin Stokes (Stokes), RedSky Roebling, Roebling Investors, LLC, Roebling Holdings, LLC^[2] and RedSky Capital (collectively, "RedSky defendants") and JZCP move (in mot. seq. no. 8) for an order, pursuant to CPLR 3211 (a) (1), (5), (7), and (8) and CPLR 306-b, dismissing the amended complaint as against the RedSky defendants and JZCP. The RedSky defendants cross-move (in mot. seq. no. 9) for an order, pursuant to CPLR 2004, 2215 and 3012 (d), compelling plaintiff to accept the RedSky defendants' and JZCP's motion to dismiss and/or extending the RedSky defendants' and JZCP's time to appear.

Factual Background

Plaintiff commenced this action seeking damages in relation to the sale and conveyance of the subject property at 143-157 Roebling Street in Brooklyn. The property was formerly owned by Metroeb Realty 1 LLC (Metroeb). On May 4, 2012, plaintiff entered into a contract with Metroeb to purchase the property for $30 million. After Metroeb entered into the contract with the plaintiff, Metroeb entered into another contract to sell the subject property to RedSky Capital for an increased purchase price, resulting in a lawsuit by plaintiff against Metroeb and RedSky Capital (Metropolitan Lofts of NY, LLC v Metroeb Realty 1, LLC, et ano., Kings County index No. 503441/12) (2012 action). In the 2012 action, a bench trial was held whereby the court (Hon. Ann T. Pfau) issued a decision determining that plaintiff and Metroeb had not come to a sufficient meeting of the minds to create a binding contract. Accordingly, by judgment dated June 6, 2014, the court (Hon. Lawrence Knipel, J.) dismissed the complaint and declared that the May 4, 2012 contract between the plaintiff and Metroeb was not valid and enforceable. Plaintiff thereafter appealed the decision and judgment to the Appellate Division, Second Department. Plaintiff was denied requests to stay the decision and judgment pending appeal from both the trial court and the Appellate Division. Consequently, RedSky Capital assigned the contract of sale to RedSky Roebling,^[3] and by deed dated July 30, 2014, Metroeb conveyed the property to RedSky Roebling. First American issued a title insurance policy in conjunction with the closing.

By order dated April 4, 2018, the Appellate Division, Second Department reversed the decision and judgment and remitted the matter to Supreme Court for further proceedings (Metropolitan Lofts of NY, LLC v Metroeb Realty 1, LLC, 160 A.D.3d 632 [2d Dept 2018]). On or about April 24, 2018, plaintiff moved in the 2012 action for leave to amend its complaint to add RedSky Roebling as a defendant and add a claim for a judgment declaring that the deed to RedSky Roebling is null and void and restoring title to Metroeb so that plaintiffs specific performance claim may be enforced. Plaintiffs motion to amend the complaint in the 2012 action was granted by order dated December 12,2018. Metroeb subsequently moved to dismiss the amended complaint. In a decision and order dated May 22, 2019, Metroeb's motion to dismiss the amended complaint was granted to the extent of the claims seeking to void the deed to RedSky Roebling. Following the appeals of the December 12,2018 and May 22, 2019 orders, the Appellate Division Second Department reversed the December 18, 2018 order granting leave to amend the complaint (Metropolitan Lofts of NY, LLC v Metroeb Realty 1, LLC, 189 A.D.3d 1024 [2d Dept 2020]) and dismissed the appeal of the May 22, 2019 order dismissing the amended complaint as academic (Metropolitan Lofts of NY, LLC v Metroeb Realty 1, LLC, 189 A.D.3d 1026 [2d Dept 2020]). The Appellate Division stated:

"Here, the proposed causes of action the plaintiff sought to add were palpably insufficient and patently devoid of merit since RedSky [Capital] was a good faith purchaser of the property and entitled to the protections afforded by CPLR 5523. RedSky [Capital] paid valuable consideration for the property and justifiably relied on the judgment of the Supreme Court declaring that the May 4, 2012 contract between the plaintiff and Metroeb was not valid and enforceable and directing that Metroeb convey the property to RedSky [Capital] within 90 days. Notwithstanding this Court's decision and order on the prior appeal, the plaintiff cannot now avail itself of the remedy of specific performance and must content itself with other potential remedies" (Metropolitan Lofts of NY, LLC, 189 A.D.3d at 1025-1026 [internal citations omitted]).

On or about August 30, 2019, while the aforesaid appeals were pending, USRECH LP issued a refinancing loan to RedSky Roebling, which in turn executed a consolidated mortgage against the property in favor of USRECH LP. In conjunction with the mortgage loan transaction, First American issued a title insurance policy to USRECH LP.

On October 29, 2020, plaintiff commenced the instant action against the RedSky defendants, JZCP, USRECH and First American. In the original complaint, plaintiff set forth causes of action against the RedSky defendants and JZCP for tortious interference with a contract, against all defendants for conspiracy to tortiously interfere with a contract and against First American and USRECH for aiding and abetting tortious interference with a contract. 0n May 7, 2021, after the CPLR 3211 dismissal motions were filed by USRECH and First American (mo.. seq. no, 1 & 2), plaintiff filed an amended complaint which added allegations of conversations between plaintiffs agent and Metroeb regarding the contract with RedSky Capital, as well as a new cause of action seeking the imposition of a constructive trust on the property.

Discussion

As a preliminary matter, "a motion to dismiss which is addressed to the merits may not be defeated by an amended pleading (Livadiotakis v Tzitzikalakis, 302 A.D.2d 369, 370 [2d Dept 2003]; see Treano v Fine, 17 A.D.3d 449 [2d Dept 2005]). A defendant -whose motion is addressed to the merits of the original pleading retains the option of applying the motion to the amended pleading, which supersedes the original pleading (see Rodriguez v Dickard Widder Indus., 150 A.D.3d 1169, 1170 [2d Dept 2017]; Sobel v Ansanelli, 98 A.D.3d 1020 1022 [2d Dept 2012]; Sage Realty Corp. v Proskauer Rose, 251 A.D.2d 35 revd on other grounds, 91 N.Y.2d 30 [1997]; DiPasquaee v Security Mut. Life Ins. Co. of NY, 293 A.D.2d 394 [1st Dept 2002]). As USRECH and First American brought new dismissal motions (mot. seq. nos. 4, 5 & 6) directed toward the amended complaint, mot. seq. nos. 1 & 2 will be applied to the amended complaint.

In considering a motion to dismiss a complaint pursuant to CPLR 3211 (a) (7), the court must accept the facts as alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable...