Upon the foregoing papers, plaintiff Castleton Holding Corp. (Castleton) moves for an order: (1) granting summary judgment for the failure of defendants David Forde and Integrity Home Sales, LLC. (Integrity), to answer;^[FN1] (2) appointing a referee to compute the sum due and owing to it; and (3) amending the caption to strike "John Doe" and "Jane Doe."

Plaintiff commended this action seeking to foreclose on the mortgage given by it to Forde on property located at 185 Remsen Avenue in Brooklyn. More specifically, on October 4, 2002, Castleton advanced the sum of $271,000 to Forde. In order to secure repayment, defendant executed a note and a mortgage on the subject property, which was duly recorded on November 15, 2002. Pursuant to the terms of the mortgage, Forde agreed to make monthly payments commencing on November 1, 2002, with a final balloon payment due on January 4, 2003. Forde failed to make the final payment, so that the sum of $271,000, plus interest from October 4, 2002, is due and owing to plaintiff.

In its answer, dated September 28, 2006, Integrity interposed four affirmative defenses: (1) the culpable conduct and comparative and contributory negligence of plaintiff and others caused the liability and damages alleged herein; (2) the action is barred by the Statute of Frauds; (3) the action is barred by the doctrine of unclean hands; and (4) a defense is founded upon documentary evidence. Integrity also interposed five counterclaims. Therein, Integrity alleges that in October 2002, it sold an 80% interest in the subject property to Forde for valuable consideration. Sharon Chin Quee allegedly acted as the attorney for all parties at the closing, as well as acting as the title closer; Integrity claims that Chin Quee is not admitted to the bar of the State of New York. Castleton, a private lender, provided [*2]Forde with financing for 80% of the sales price, while Integrity was to hold a second mortgage and retain a 20% interest. Further, Chin Quee allegedly advised the parties that it would be in their best interests to transfer back the 20% interest by means of a second deed. Chin Quee, however, failed to advise the lender of the second deed and failed to record both deeds at the same time, recording the Integrity deed on April 17, 2003, several months after recording the mortgage in favor of Castleton. Based upon these alleged facts, Integrity claims that Chin Quee's conduct was improper and involved a conflict of interest, so that the transaction is both criminal and fraudulent. Integrity contends that these improprieties entitle it to a judgment voiding the mortgage, vacating the deeds, partitioning the subject property and/or dividing the proceeds of any sale of the property pro rata between Integrity and plaintiff.^[FN2]

By third-party summons and complaint filed on October 3, 2007, Integrity commenced an action sounding in fraud against Chin Quee, New World Abstract, Inc., and Fidelity National Financial, Inc. (Kings Co Sup Ct, Index No 75930/06). Therein, Integrity stated the facts as alleged in its counterclaims against Castleton. In a letter annexed to that complaint, Chin Quee states that she is the president of a title company; that the title company facilitated a closing between Forde and Integrity; that she was the closing agent and notary, but did not [*3]represent either party or collect any fees; a 20% interest in the subject property was conveyed back to Integrity because Forde did not have the funds needed to pay the principal to Integrity; and she notarized that deed.

In support of this branch of its motion, plaintiff annexes copies of an affidavit of service that establishes that Forde was served by affixing a copy of the summons and complaint to his door at 1240 East 85th Street in Brooklyn on July 5, 2005 and mailing a copy of the documents to him at that address on July 13, 2005. To date, Forde has not appeared or submitted an answer to the complaint. Further, plaintiff has made a prima facie showing of entitlement to summary judgment by establishing the existence of the mortgage, ownership of the mortgage, and defendants' default in payment (see e.g. Campaign v Barba, 23 AD3d 327 [2005]; Household Fin. Realty v Winn, 19 AD3d 544 [2005]; Ocwen Fed. Bank FSB v Miller, 18 AD3d 527 [2005], appeal dismissed 5 NY3d 824 [2005]).

The court agrees that plaintiff has established entitlement to a judgment against Forde on default.

In support of its motion, plaintiff argues that the above facts establish its prima facie right of entitlement to summary judgment.

In opposition, Integrity argues that Castleton's motion should be denied because Integrity is not a signatory to the note or the mortgage that plaintiff seeks to foreclose. Integrity further avers that the transaction is "questionable, at best" in that plaintiff's moving affidavit is notarized by Chin Quee, who also notarized the closing documents at issue herein.

The Law

As a general rule, "[i]n an action to foreclose a mortgage, all parties having an interest, including persons holding title to the subject premises, must be made a party defendant to the action'" (Home Sav. v Gkanios, 233 AD2d 422 [1996], citing RPAPL 1311[1]; Polish Natl. Alliance v White Eagle Hall Co., 98 AD2d 400, 403 [1983]; accord Capital Resources Co. v Prewitt, 266 AD2d 176, 176 [1999] [a party having a co-tenancy ownership interest in the property being foreclosed is a necessary party to a foreclosure action]; see generally Real Property Actions and Proceedings Law § 1311). In this regard, "[t]he rights, interests and equities of all of the parties claiming an interest in the mortgaged premises, and the respective priority of their liens thereon, should be settled and determined before any judgment of foreclosure and sale is entered" (Quinlan v Olson Constr. Co., 153 App Div 140, 142 [1912], citing Commercial[*5] Trust Co. v Peck, 135 App Div 732 [1909]; Metropolitan Trust Co. v Tonawanda, 43 Hun 521 [1887], affd 106 6 NY 673 [1887]).

As is also relevant to the instant dispute, it is well established that a co-owner can encumber his or her interest in property without the consent of the other co-owners (see e.g. Kwang Hee Lee v Adjmi 936 Realty Assoc., 34 AD3d 646, 648-649 [2006], citing Northgate Elec. Profit Sharing Plan v Hayes, 210 AD2d 384 [1994]; V.R.W. v Klein, 68 NY2d 560 [1986]. In addressing the issue of the validity of a mortgage executed by a co-owner of property, it has been held that:

"the fact that [the co-owner] did not sign the mortgage would not render the mortgage itself a nullity. As the Court of Appeals has noted, nothing in New York law prevents one of the co-owners from mortgaging or making an effective conveyance of his or her own interest in the tenancy. To the contrary, each tenant may sell, mortgage or otherwise encumber his or her rights in the property, subject to the continuing rights of the other' (V.R.W., Inc. v Klein, 68 NY2d 560, 565 [1986]). Accordingly, a mortgage given by one of several parties with an interest in the mortgaged property is not invalid; it gives the mortgagee security, but only up to the interest of the mortgagor (see id.)."

(CitiFinancial Co. v McKinney, 27 AD3d 224, 226-227 [2006]).

Further, "[i]t is elementary that the lien of a mortgage is extinguished upon the sale of the real property affected thereby unless the purchaser has knowledge, either actual or constructive, of the existence of the mortgage" (see Real Property Law, § 291; Baccari v De Santi, 70 AD2d 198, 201 [1979], citing Todd v Eighmie, 10 App Div 142 [1986]; Williamson [*6]v Brown, 15 NY 354 [1857]). It is equally clear that in order for a grantee to be held liable for the assumption of a mortgage debt, the grantee must execute and acknowledge a statement indicating his or her agreement to pay the mortgage debt prior to or at the time of conveyance (see General Obligations Law § 5-705).^[FN3] As is also relevant to Integrity's arguments herein, "where a grantee has not assumed personal responsibility for a mortgage debt, the grantee is still liable to the extent that the property itself is primarily liable to satisfy the mortgage payment" (Northeast Sav. v Bailey, 143 AD2d 474, 475 [1988], citing 3A Warren's Weed, New York Real Property, Mortgages, § 12.04 [4th ed]; Kmetz v De Ronde, 231 NY 641 [1921]).

Discussion

Inasmuch as plaintiff has sustained its burden of making a prima facie showing of entitlement to summary judgment, as discussed above, the burden shifts to defendants to raise a triable issue of fact (see e.g. Fleet Natl. Bank v Olasov, 16 AD3d 374 [2005], lv dismissed 5 NY3d 849 [2005]; US Bank Trust Natl. Assn. Turnauer v Butti, 16 AD3d 408 [2005]; Republic Natl. Bank v O'Kane, 308 AD2d 482 [2003]). Integrity has failed to sustain this burden.

As a threshold issue, it must be noted that Integrity is attacking the validity of plaintiff's mortgage, while at the same time arguing that the mortgage is not enforceable as against it because it did not sign either the mortgage or the note. In this regard, it has been held that one who is not a party to a mortgage has no standing to challenge its validity (see generally Marine Midland Bank-Eastern Natl. Assn. v Haufler Assocs., 55 AD2d 803, 804 [1976]). Accordingly, Integrity's challenge to the foreclosure action should be denied on this ground. Moreover, even if the court were to address Integrity's affirmative defenses and counterclaims, they are lacking in merit.

More specifically, in opposition to plaintiff's motion, Integrity argues that at the time that Forde executed plaintiff's mortgage, it took a second mortgage and a 20% interest in the property was conveyed back to it, apparently because Forde did not have sufficient funds [*7]and/or financing to purchase the property. Hence, the facts, as alleged by Integrity, establish that it had knowledge of the mortgage at issue herein when the loan was given and when the 20% interest in the property was conveyed to it. Thus, if Integrity is characterized as a co-owner of the subject property, it can be held liable on the mortgage, to the extent of its interest in the property, premised upon its consent to the transaction. In the alternative, if Integrity is characterized as a grantee of the property, it is liable on the mortgage, to the extent of its interest in the property, having taken title with actual knowledge of the mortgage. In this regard, as the above discussion of law makes clear, although the Statute of Frauds is a bar to a finding of personal liability on Integrity's part, no writing is required to hold Integrity liable on the mortgage to the extent of the value of the property, as either the co-owner or grantee of the property. Moreover, Integrity offers no documentary evidence in opposition to plaintiff's motion, apart from a copy of the deed transferring an 80% interest of the property to Forde, which deed does not raise any issue of fact sufficient to refute plaintiff's prima facie showing of entitlement to summary judgment.

Further, to the extent that Integrity's claims are based upon breach of an agreement between it and Forde, Integrity and/or Chin Quee, it is well settled that a cause of action alleging fraud will not lie where the only claim of fraud relates to a breach of contract (see e.g. Mendelovitz v Cohen, ___ AD3d ___, 2007 NY Slip Op 1529, 2 [2007]; Tiffany At Westbury Condominium by Its Bd. of Mgrs. v Marelli Dev., 34 AD3d 787 [2006]; Pfeiffer v Jacobowitz, 29 AD3d 661 [2006]). Similarly, with respect to Integrity's defenses of contributory and comparative negligence, "well-settled principles of law . . . expressly preclude a plaintiff's culpable conduct from being asserted as a defense in a breach of contract action" (American Express Equip. Fin. v Mercado, 34 AD3d 880, 882-883 [2006], citing Nastro Contr. v Agusta, 217 AD2d 874, 875 [1995]; accord Viacom Intl. v Midtown Realty Co., 235 AD2d 332, 332-333 [1997] [negligence is not a defense to a cause of action for breach of contract]). Moreover, Integrity fails to allege any details sufficient to raise an issue of fact with regard to whether plaintiff was negligent in any way.

In addition, Integrity's allegations of fraud are insufficient to defeat plaintiff's motion. In this regard, it is well settled that the elements of a cause of action alleging fraud are a representation of fact, which is either untrue and known to be untrue or recklessly made, and which is offered to deceive the other party and to induce them to act upon it, causing injury (see e.g. Dong Sheng Lu v Equitable Co., 6 AD3d 650, 651 [2004], citing Jo Ann Homes at Bellmore v Dworetz, 25 NY2d 112, 119 [1969]). Pursuant to CPLR 3016 (b), "[w]here a cause of action or defense is based upon misrepresentation, fraud, mistake, wilful default, breach of trust or undue influence, the circumstances constituting the wrong shall be stated in detail." Herein, Integrity's conclusory and unsubstantiated allegations that plaintiff behaved in a fraudulent and collusive manner are insufficient to create a triable issue of fact (see e.g. M & T Mortg. v Ethridge, 300 AD2d 286, 287 [2002], citing Marine Midland Bank v Renck, 208 AD2d 688, 689 [1984]; LBV Prop. v Greenport Dev. Co., 188 AD2d 588, 589 [1992]). [*8]

Integrity also fails to make a prima facie showing that Chin Quee acted the agent and/or attorney for Castleton, so that Integrity's claim that plaintiff made any misrepresentations to it is also without merit. Significantly, Integrity does not annex a copy of retainer agreement or any other evidence tending to establish that Chin Quee so acted. To the contrary, taken in the light most favorable to Integrity, and assuming that Chin Quee was acting as plaintiff's agent, an assertion denied by her, Chin Quee misinformed Integrity with regard to the legal effect of transferring an interest in the property back to Integrity. There is, therefore, no allegation that any fraudulent representations were made with regard to the subject mortgage or relied upon by it, nor does Integrity claim that an interest in the property was not conveyed to it or that no money was transferred to Forde. Further, having failed to make a prima facie showing that Chin Quee acted on behalf of plaintiff, Integrity's claim that plaintiff acted with unclean hands in that she did not inform plaintiff of the details surrounding the transaction also must fail. Moreover, Integrity fails to demonstrate that the plaintiff's conduct was immoral or unconscionable, as is also necessary to support a claim of unclean hands (see generally Citibank v Walker, 12 AD3d 480, 481 [2004]).

Finally, assuming, arguendo, that Chin Quee did practice law without a license, as alleged, such conduct may be prosecuted as a misdemeanor in accordance with Judiciary Law § 485. Plaintiff offers no authority, however, to support its allegation that providing legal advise to any party without a license would have the effect of rendering the underlying transactions and/or documents void or voidable. In this regard, it is also noted that since an attorney representing a mortgagee does not owe any duty to the mortgagor at a closing, there can be no support for the assertion that Chin Quee owed a duty to Forde, so that a claim that she owed any duty to Integrity is even more tenuous (see generally Chemical Bank v Bowers, 228 AD2d 407, 408 [1996], citing Banque Nationale de Paris v 1567 Broadway Ownership Assocs., 214 AD2d 359 [1995]).

Accordingly, plaintiff's motion for an order granting summary judgment appointing a referee to compute the sum due and owing to it is granted.

That branch of plaintiff's motion seeking to amend the caption to delete John Doe and Jane Doe, without prejudice, is granted without opposition.

Plaintiff's motion for summary judgment is granted. The caption shall be deemed amended to delete John Doe and Jane Doe, without prejudice. The matter is referred to a referee to ascertain and compute the amount due to plaintiff.

Settle order on notice.

E N T E R,

J. S. C.