U.S. Bank Nat'l Ass'n v. Kahn Prop. Owner, LLC

206 A.D.3d 855

172 N.Y.S.3d 124

U.S. BANK NATIONAL ASSOCIATION, etc., plaintiff-respondent,

v.KAHN PROPERTY OWNER, LLC, et al., defendants third-party plaintiffs-appellants, et al., defendants;

LNR Partners, LLC, third-party defendants-respondents, et al., third-party defendants.

2019–11669

Index No. 609493/16

Supreme Court, Appellate Division, Second Department, New York.

Argued—March 24, 2022

June 15, 2022

Law Offices of Joshua L. Dratel, P.C., New York, NY (Pollack Pollack Isaac & DeCicco, LLP [Brian J. Isaac ], of counsel), for defendants third-party plaintiffs-appellants.

Venable LLP, New York, NY (Rishi Kapoor and Gregory A. Cross of counsel), for plaintiff-respondent and third-party defendants-respondents.

VALERIE BRATHWAITE NELSON, J.P., ANGELA G. IANNACCI, PAUL WOOTEN, JOSEPH A. ZAYAS, JJ.

DECISION & ORDER

In an action, inter alia, to foreclose a mortgage, the defendants third-party plaintiffs, Kahn Property Owner, LLC, Gary Melius, Oheka Catering I, LLC, and Oheka Management, LLC, appeal from an order of the Supreme Court, Suffolk County (Elizabeth H. Emerson, J.), dated September 4, 2019. The order, insofar as appealed from, granted those branches of the motion of the plaintiff and the third-party defendants LNR Partners, LLC, and Starwood Capital Group, LLC, which were pursuant to CPLR 3211(a) to dismiss the counterclaims asserted against the plaintiff and the third-party causes of action sounding in tortious interference with contract, breach of fiduciary duty, and conversion insofar as asserted against the third-party defendants LNR Partners, LLC, and Starwood Capital Group, LLC.

ORDERED that the order is affirmed insofar as appealed from, with costs.

The underlying facts of the main mortgage foreclosure action are summarized in a related appeal decided herewith (see U.S. Bank Natl. Assn. v. Kahn Prop. Owner, LLC, 206 A.D.3d 850, 168 N.Y.S.3d 349 [Appellate Division Docket No. 2019–05698 ; decided herewith]), and the underlying facts pertinent to the third-party action are summarized in a second related appeal, also decided herewith (see U.S. Bank Natl. Assn. v. Kahn Prop. Owner, LLC, 206 A.D.3d 851, 172 N.Y.S.3d 25 [Appellate Division Docket No. 2019–11613 ; decided herewith]).

The defendants third-party plaintiffs, Kahn Property Owner, LLC, Gary Melius, Oheka Catering I, LLC, and Oheka Management, LLC, asserted counterclaims against the plaintiff and third-party causes of action against the plaintiff's loan servicer, the third-party defendant LNR Partners, LLC, and the alleged parent company of LNR Partners, LLC, the third-party defendant Starwood Capital Group, LLC (hereinafter together the LNR defendants), among others. The plaintiff and the LNR defendants moved, among other things, pursuant to CPLR 3211(a)(1) and (7) to dismiss the counterclaims asserted against the plaintiff and the third-party causes of action sounding in, inter alia, tortious interference with contract, breach of fiduciary duty, and conversion insofar as asserted against the LNR defendants. The defendants third-party plaintiffs opposed the motion. In an order dated September 4, 2019, the Supreme Court, among other things, granted those branches of the motion, and the defendants third-party plaintiffs appeal.

Dismissal of a complaint based upon a defense founded upon documentary evidence pursuant to CPLR 3211(a)(1) may be granted only where the documentary evidence utterly refutes the plaintiff's factual allegations conclusively establishing a defense as a matter of law (see Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 ; Giambrone v. Arnone, Lowth, Wilson, Leibowitz, Adriano & Greco, 197 A.D.3d 459, 461, 152 N.Y.S.3d 688 ; Bonavita v. Government Empls. Ins. Co., 185 A.D.3d 892, 893, 127 N.Y.S.3d 577 ). "To be considered documentary, evidence must be unambiguous and of undisputed authenticity, that is, it must be essentially unassailable" ( Bath & Twenty, LLC v. Federal Sav. Bank, 198 A.D.3d 855, 855–856, 156 N.Y.S.3d 316 ; see Cives Corp. v. George A. Fuller Co., Inc., 97 A.D.3d 713, 714, 948 N.Y.S.2d 658 ). "Judicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable, would qualify as documentary evidence in the proper case" ( Bath & Twenty, LLC v. Federal Sav. Bank, 198 A.D.3d at 856, 156 N.Y.S.3d 316 [internal quotation marks omitted]; see JPMorgan Chase Bank, N.A. v. Klein, 178 A.D.3d 788, 790, 113 N.Y.S.3d 741 ). "Affidavits, deposition testimony, and letters are not considered documentary evidence within the intendment of CPLR 3211(a)(1)" ( Bonavita v. Government Empls. Ins. Co., 185 A.D.3d at 893, 127 N.Y.S.3d 577 ; see Rodolico v. Rubin & Licatesi, P.C., 114 A.D.3d 923, 925, 981 N.Y.S.2d 144 ).

Here, the Supreme Court correctly granted that branch of the motion which was pursuant to CPLR 3211(a)(1) to dismiss the counterclaims asserted against the plaintiff, because the right to assert counterclaims in any mortgage foreclosure action was explicitly waived in the mortgage agreement (see Weiss v. Phillips, 157 A.D.3d 1, 10, 65 N.Y.S.3d 147 ; KeyBank N.A. v. Chapman Steamer Collective, LLC, 117 A.D.3d 991, 992, 986 N.Y.S.2d 598 ; Mishal v. Fiduciary Holdings, LLC, 109 A.D.3d 885, 971 N.Y.S.2d 334 ). While the waiver provision exempts compulsory counterclaims, contrary to the defendants third-party plaintiffs’ contention, that exemption does not apply here. "[B]ecause New York does not have a compulsory counterclaim rule, a defendant who fails to assert a counterclaim is not barred by the doctrine of res judicata from subsequently commencing a new action on that claim unless the claim would impair the rights or interests established in the first action" ( Wax v. 716 Realty, LLC, 151 A.D.3d 902, 904, 58 N.Y.S.3d 83 ; see Pace v. Perk, 81 A.D.2d 444, 460, 440 N.Y.S.2d 710 ). Here, the defendants third-party plaintiffs failed to establish that any rights or interests established in this action would be impaired by a subsequent action on their counterclaims.

In assessing a motion pursuant to CPLR 3211(a)(7) to dismiss a complaint, a court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" ( Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ).

"A tortious interference with contract claim cannot be maintained against a defendant which is a party to the contract at issue" ( Sutton v. Houllou, 191 A.D.3d 1031, 1034, 141 N.Y.S.3d 501 ). Here, the LNR defendants were not a stranger to the mortgage loan agreements at issue (see id. at 1034, 141 N.Y.S.3d 501 ; XpresSpa Holdings, LLC v. Cordial Endeavor Concessions of...