September 5, 2013
Emigrant Bank f/k/a EMIGRANT SAVINGS BANK and EMIGRANT MORTGAGE COMPANY, INC., Plaintiffs,
Eugene Boleslawski, Defendant.
Plaintiff: Belkin Burden Wenig & Goldman, LLP.
Defendant: Keith Cornell, Esq.
DORIS LING-COHAN, J.
Plaintiff's motion to amend the complaint to add defendant's counsel as an additional defendant is denied, for the reasons stated below.
The complaint herein alleges, inter alia, that defendant intentionally defrauded plaintiff-lenders by concealing the fact that a mortgage held by defendant was already satisfied, when plaintiffs paid defendant $750, 000 to satisfy a mortgage on the same property. Defendant denies plaintiff's allegations.
Defendant held two separate mortgages on undeveloped property at Perrins Peak, in Stony Point, New York, one for $383, 000 and one for $500, 000. The fee owners and debtors in each case were nonparties John B. Quattrocchi and Ann M. Quattrocchi.
Defendant also held a mortgage for $366, 000 on premises at 100 Bucksberg Road, Tomkins Cove, New York, also owned and mortgaged by the Quattrocchis. The Quattrochis, it appears, wanted the defendant out of the picture as a creditor, and sought to refinance all of their debt, that was held by the defendant. The sum of all of the mortgage loans totaled $1, 249, 000.
Subsequently, defendant received payment of $724, 942.11 from plaintiffs, and a day later received a payoff from IndyMac Bank, in the sum of $495, 961.43, in exchange for which he authorized his attorney to deliver a satisfaction on the Perrins Peak property to both lenders. Plaintiffs maintain that if they had known that another payment and satisfaction had been given on the Perrins Peak property, they never would have agreed to the loan and paid off the Quattrocchis' obligation. The two payments made by plaintiffs, to the Quattrocchis totaled $1, 220, 903.54. According to defendant, this sum, short of the $1, 249, 000 owed to defendant, when supplemented by an additional payment coming from a Quattrocchi family member, paid off all of the Quottrocchi obligations, on all three properties, in accord with defendant's expectations.
The instant motion seeks leave to file and serve a supplemental summons and an amended complaint to add as defendants, Ned Kopald and Kopald and Kopald, P.C., the former being defendant's attorney, and the latter being defendant's attorney's law firm. Plaintiffs' application is based on its allegation that defendant could not have accomplished the fraud perpetrated on them, without the active participation of defendant's lawyer and his firm, in his failure to disclose to plaintiffs that another payment had been received and another mortgage satisfaction already issued. Defendant opposes the motion.
"Motions to amend pleadings are to be liberally granted (CPLR 3025 [b]), absent prejudice or surprise, but such leave should not be granted upon mere request, without appropriate substantiation'". Guzman v. Mike's Pipe Yard, 35A.D.3d 266 (1st Dept. 2006) (citation omitted). Here, substantiation is lacking, in that nearly all of the allegations in plaintiffs' supporting papers are conclusory with regard to Kopald's fault, in that they assume that defendant is at fault and, therefore, that Kopald must have conspired with him.
Defendant expected to receive payment of approximately $1, 250, 000 from the satisfaction of three mortgages that defendant held on two properties. That, in fact was the final result, and it is not apparent that defendant or Kopald could derive anything that they were not clearly entitled to, as a product of the alleged conspiracy. It is not made clear in the submissions, whether plaintiffs' difficulties are the result of learning that their security in the Quattrocchi property is subordinate to another creditor. If such is the difficulty, it may have more to do with plaintiffs' failure to record the mortgage on Perrins Peak until about 10 months after the date of execution, rather than any alleged conspiracy by defendant and Kopald. See Ned Kopald's affidavit sworn to February 19, 2013.
Further, the moving papers are deficient in that they fail to contain an affidavit of merit to support the new allegations in the proposed amended complaint and the addition of defendant's attorney as a party, as required. See Nab-Tem Construction v. City of New York, 123 A.D.2d 571 (1st Dept 1986); Gair Co., Inc. v. Cambridge Carpet, Ltd., 160 A.D.2d 371 (1st Dept 1990); De Rosa v. Benedetto, 86 A.D.2d 648 (1982); Bonanni v. Straight Arrow Publishers, Inc., 133 A.D.2d 585 (1st Dept 1987).
Moreover, it is likely that significant prejudice may result from the obvious conflict of interest arising from defendant and his attorney, if defendant's attorney is named as a party, in the same suit; the potential for violation of attorney-client confidentiality is clear. It is not unlikely that nearly every question that could be put to Kopald in trial testimony or deposition would be challenged, as impacting on attorney- client privilege. Resolution of the dispute between plaintiffs and defendant alone will likely be dispositive in that, if defendant has no liability, than Kopald would have none for conspiring with his client. This would be the favored course to promote judicial economy. See Sokoliw, Dunaud, Mercadier & Carreras v. Lacher, 299 A.D.2d 64, 74 (1st Dept 2002).
There is sufficient indication of lack of merit, prejudice, and unnecessarily pro-tracted litigation if this motion were to be granted. Accordingly, the motion is denied without prejudice to plaintiffs right to commence a separate plenary cause of action against Ned Kopald and Kopald and Kopald, P. C. in any court of competent jurisdiction, upon appropriate grounds.
Accordingly, it is
ORDERED that the plaintiffs' motion to amend the pleadings to name Ned Kopald and the firm of Kopald and Kopald P.C. as defendants is denied in all respects; and it is further
ORDERED that, within 30 days of entry of this order, defendant shall serve a copy upon all parties, with notice of entry.