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Plotch v. Wells Fargo Bank, N.A.

United States District Court, E.D. New York

August 1, 2018

ADAM PLOTCH, Plaintiff,
WELLS FARGO BANK, N.A., Defendant.

          OPINION & ORDER


         On January 8, 2018, I issued an Opinion and Order (the "January Order") dismissing plaintiff Adam Plotch's complaint seeking invalidation of mortgages and loan agreements connected to real property located at 387 Adelphi Street in Brooklyn ("the property"), and declaratory judgements that his rights to the property are superior to those of defendant Wells Fargo Bank, N.A. ("Wells Fargo"). Plotch now moves, pursuant to Federal Rule of Civil Procedure 15(a)(2), to amend his complaint to add claims for invalidation of a 2005 Consolidated, Extension, and Modification Agreement ("2005 CEMA") and a 2005 Consolidated Mortgage on the property that the previous owner Philip McKenzie ("McKenzie") executed in favor of Wells Fargo. Wells Fargo opposes the motion on the ground that plaintiffs Proposed Amended Complaint ("PAC") would be futile as it fails to state a claim. For the reasons set forth below, plaintiffs motion is denied.

         I. Background

         The factual allegations of the original complaint are set forth in the January Order, familiarity with which is presumed. The January Order concluded that "the 2005 Consolidated Mortgage supersedes the prior mortgages and is the mortgage critical to the rights of the parties." January Order, at 7. As plaintiff had not challenged the validity of the 2005 Consolidated Mortgage in his original complaint, I granted defendant's motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim.

         Plaintiff now moves to amend his complaint to add claims concerning the 2005 CEMA and 2005 Consolidated Mortgage. As to both, plaintiff argues that, because McKenzie's signatures on the recorded copies of those documents were "not properly witnessed, notarized, or acknowledged," those documents "[do] not meet the requirements for recording in [the] Kings County land records," and therefore cannot be enforced against him. PAC at ¶¶ 74, 84.

         Plaintiffs PAC refers to the 2005 CEMA, the 2005 Consolidated Mortgage, and an "Affidavit under Section 255 Tax Law" ("Tax Affidavit"), which is annexed to the 2005 Consolidated Mortgage in the land records. Id. at ¶50. Although none of the documents is included as an enclosure to the PAC, the PAC discusses the documents in detail, referencing specific pages by page number and describing their form, execution, and recording. Defendant included with its opposition papers copies of the documents, both as recorded and as maintained on file with defendant.[1] At oral argument, the parties agreed that defendant's Exhibit C to the Declaration of Andrew B. Messite accurately reflects the documents as available on the public registry. Transcript of Oral Argument, July 23, 2018 at 7:2-16. Plaintiff also acknowledged that the 2005 CEMA, the 2005 Consolidated Mortgage, and the Tax Affidavit were executed contemporaneously. Id. at 8:2-16.

         II. Leave to Amend Standard

         Courts "should freely give leave [to amend a complaint] when justice so requires." Fed.R.Civ.P. 15(a)(2). A request to amend should be denied only in the face of undue delay, bad faith, undue prejudice, or futility of the amendment. See Cox v. Blackberry Limited, 660 Fed.Appx. 23, 25 (2d Cir. 2016). An amendment would be futile if it would not "withstand a motion to dismiss." Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 244 (2d Cir. 2007). This standard requires that the proposed amendment plead sufficient facts to "state a claim to relief that is plausible on its face." Bell Atl Corp. v. Twombly, 550 U.S. 544, 570 (2007). In considering a motion to dismiss, a district court may consider the facts alleged in the complaint, "documents attached to the complaint as an exhibit," and documents incorporated by reference in the complaint. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002).

         In determining whether an amendment is futile, the court must accept plaintiffs factual allegations as true. Medina v. Tremor Video, Inc., 640 Fed.Appx. 45, 47 (2d Cir. 2016). A court is however "not bound to accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). Additionally, if the allegations of a proposed amended complaint are contradicted by documents made a part thereof, the document controls and the court need not accept the allegations as true. See Barnum v. Millbrook Care Ltd. P'ship, 850 F.Supp. 1227, 1232-33 (S.D.N.Y. 1994), aff'd, 43 F.3d 1458 (2d Cir. 1994) (table decision). "The non-movant bears the burden of demonstrating that the proposed amendment would be prejudicial or futile." Zucker v. Porteck Global Servs., Inc., 2015 WL 6442414, at *4 (E.D.N.Y. Oct. 23, 2015).

         III. Discussion

         For the purposes of this motion, I consider the facts as alleged in the PAC and defendant's Exhibit C. The plaintiff references the Exhibit C documents in his PAC and acknowledges their authenticity. I do not consider the copies of the documents maintained on file with defendant because the PAC does not reference those documents.

         New York Real Property Law § 291 provides that a conveyance of real property, within the state, may be recorded "on being duly acknowledged by the person executing the same, . . . and such acknowledgment or proof duly certified when required by this chapter." N.Y. Real Prop. Law § 291. Section 298 of the same chapter provides that acknowledgment or proof of a conveyance of real property may be made by a notary public. Id. at § 298. When read together, the condition relevant here is that a conveyance of real property may be recorded when signed by the party executing the conveyance and acknowledged by a notary public.

         The central assertion in the PAC is that the 2005 CEMA and the 2005 Consolidated Mortgage are invalid as to plaintiff although they were recorded in the public registry and plaintiff actually reviewed them prior to his purchase of the property. Plaintiff advances two arguments in this regard.

         First, he argues that he did not have proper notice of the 2005 CEMA and 2005 Consolidated Mortgage because the versions of the documents viewable by him in the public record did not show the identifying information of the notary public who acknowledged McKenzie's signature. While a scribbled signature appears in the notary blocks on the 2005 CEMA and 2005 Consolidated Mortgage, the notary's printed name, notary number, county of qualification, and date of commission expiration do not appear. Plaintiff pointedly declines to make a claim that there is anything wrong with the notarizations on the underlying documents.[2]Rather, the allegation is that, because plaintiff could not ...

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