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Adam Plotch LLC v. World Savings Bank, FSB

United States District Court, E.D. New York

January 8, 2018

ADAM PLOTCH LLC, Plaintiff,
v.
WORLD SAVINGS BANK, FSB, WELLS FARGO BANK, N.A., Defendants.

          For Plaintiff: THOMAS J. FINN Law Offices of Thomas J. Finn, Esq.

          For Defendants: JACQUELINE DELLA CHIESA LISA M. CONFUSIONE Stagg, Terenzi, Confusione & Wabnik LLP CHRISTOPHER P. KOHN Frenkel Lambert Weiss Weisman & Gordon, LLP

          MEMORANDUM AND ORDER

          FREDERIC BLOCK Senior United States District Judge

         Adam Plotch LLC (“APL”) sued Wells Fargo Bank, N.A. (“Wells Fargo”) and World Savings Bank, FSB(“WSB”) (coll ectively, “Wells Fargo”) under New York State property law seeking a declaration of its interest in a condominium unit and to cancel a mortgage held by WSB and its successor in interest, Wells Fargo. Wells Fargo moves to dismiss the Amended Complaint under Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1), arguing that its mortgage has priority over APL's interest in the unit and is not subject to cancellation. Wells Fargo also argues that APL lacks standing to challenge the mortgage and that its claims do not satisfy the amount-in-controversy requirement to invoke federal diversity jurisdiction. Although Wells Fargo's arguments regarding the amount in controversy and standing are without merit, the Court agrees with its remaining contentions. The motion to dismiss is granted.

         I.

         On a motion to dismiss under Rule 12(b)(6) and 12(b)(1), the Court accepts factual allegations in the complaint as true and draws all reasonable inferences in the plaintiff's favor. See Town of Babylon v. Fed. Hous. Fin. Agency, 699 F.3d 221, 227 (2d Cir. 2012). However, the requirement to accept factual allegations as true is “inapplicable to legal conclusions, ” Krys v. Pigott, 749 F.3d 117, 128 (2d Cir. 2014, and to matters that are “contradicted by more specific allegations or documentary evidence, ” L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 422 (2d Cir. 2011). The Court limits its consideration “to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken.” Leonard F. v. Israel Disc. Bank of New York, 199 F.3d 99, 107 (2d Cir. 1999). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

         In its Amended Complaint, APL alleged as follows. APL is a New York limited liability company with its principal place of business in New York. Defendant Wells Fargo has its principal place of business in San Francisco, CA. It acquired WSB in 2006. See Am. Compl. at ¶¶ 4-5.

         APL owns condominium unit 32-2 at Mirador Estates Condominium I in Staten Island, NY (“the Property”). See Id. at ¶¶ 8, 27-30.[1] The Property includes an undivided interest in the common areas of the condominium buildings and land. See Am. Compl. Ex. A (Legal Description of Property). Each condominium owner at Mirador Estates covenants to pay monthly “common charges” to a Board of Managers of Mirador (“the Board”). Id. ¶¶ 12-19. The Board may file a lien and foreclose against a unit if the owner fails to pay the common charges. Id.

         From 1992 to 2009, non-party Kauser Khan (“Khan”) owned the Property. Id. ¶ 9. By 2003, he had fallen behind in common charge payments, and, on June 2, 2003, the Board recorded a lien (the “2003 Common Charge Lien”) on the Property. Id. ¶ 19.

         In July 2003, Khan granted a mortgage to WSB for $135, 000. Id. ¶ 21. That mortgage was satisfied in April 2006. Id. ¶ 31. In March 2006, Khan granted WSB a second mortgage for $195, 000 (“2006 Mortgage”). Id. ¶¶ 22-23; Id. Ex. D. The first paragraph of the property description attached to the 2006 Mortgage read as follows:

THE REAL PROPERTY ABOVE DESCRIBED IS A UNIT(S) SHOWN ON THE PLAN OF A CONDOMINIUM PREPARED AND CERTIFIED BY EDWARD LURIA, A.I.A./ AND FILED IN THE OFFICE OF REGISTER OF THE BOROUGH OF STATEN ISLAND, RICHMOND COUNTY IN THE 23RD DAY OF JULY, 1984, AS FILE NO. C-54 AS DEFINED IN THE DECLARATION OF CONDOMINIUM ENTITLED MIRADOR ESTATES CONDOMINIUM I MADE BY AMOUR ESTATES, INC. UNDER ARTICLE 9-B OF THE NEW YORK REAL PROPERTY LAW DATED MAY 31, 1984, AND RECORDED IN THE OFFICE OF THE REGISTER OF RICHMOND COUNTY, ON THE 23RD DAY OF JULY, 1984, IN REEL 29 AT PAGE 9586 COVERING THE PROPERTY THEREIN DESCRIBED.

Am. Compl. Ex. D at 19 (Ex. A to 2006 Mortgage). The remainder of the description specified the Property in metes and bounds using terms nearly identical to those contained in the Legal Description attached to APL's Amended Complaint.[2] Compare Am. Compl. Ex. A with Am. Compl. Ex. D at 19-20. The property description in the 2006 Mortgage concluded with the following: “BEING THE SAME PROPERTY CONVEYED TO KAUSAR KHAN BY DEED FROM GUL ZAMIN AND KAUSAR KHAN RECORDED 11/03/2003 IN DEED BOOK 16325 PAGE 266, RECORDED IN THE RICHMOND COUNTY, NEW YORK.” Am. Compl. Ex. D at 20. The 2006 Mortgage was recorded in April 2006. See Am. Compl. Ex. D (Recording and Endorsement Cover Page).

         In 2007, the Board initiated foreclosure proceedings against Khan, resulting in a state court Judgment of Foreclosure entered on July 1, 2009. See Am. Compl. ¶ 28. WSB was not a party to the foreclosure proceedings, nor was Wells Fargo. See Am. Compl. at ¶¶ 32-34, Ex. E. APL purchased the Property at public auction in September 2009 for $16, 000. See Am. Compl. ¶ 30, Ex. F.

         APL claims that the 2006 Mortgage is fraudulent, void, and unrecordable under N.Y. Real Property Law (“RPL”) § 329 because its legal description of the Property contradicted public records by omitting the condominium common elements. Am. Compl. ¶¶ 24-26, 47-53. APL further claims that, because WSB was not named as a defendant in the state foreclosure action, the 2006 Mortgage is subject to reforeclosure under N.Y. Real Property Actions and Proceedings Law (“RPAPL”) §§ 1503, 1505, 1521, 1523, 1531, and 1541. Am. Compl. ¶¶ 32-36, 54-59. APL seeks: (1) a declaration that the 2006 Mortgage is subject to cancellation and removal from public record; (2) an order canceling and removing the 2006 Mortgage from the public record; (3) a declaration that the Defendants have a valid interest in the property resulting from the 2006 Mortgage; (4) an order fixing a time ...


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