5 Boros Lender LLC (5 Boros), as assignee of defendant Astoria Federal Savings and Loan (Astoria), moves pursuant to CPLR 3211 (a) (1) to dismiss the complaint.^[FN1] Besides opposing the motion, plaintiffs Joseph Mochkin (Joseph) and 513 Properties Inc. (513) separately move for a default judgment against Astoria, arguing that the time for Astoria to answer or otherwise respond to the complaint has passed.^[FN2]

As stated in the complaint, plaintiffs seek fee simple title of property located at 838-848 Montgomery Street, Brooklyn, New York, free and clear of a mortgage encumbering the property held by Astoria. The mortgage secures payment of a loan in the aggregate principal amount of $1,575,000. The property is a mixed use building containing residential units and commercial space. 513 is the owner of the property. Plaintiffs allege that: (i) Joseph and Juda Mochkin [*2](Juda) are each 50% shareholders in 513; (ii) Juda, the president of 513, did not have the authority to grant the mortgage to Astoria on behalf of 513 without authorization from Joseph; and (iii) such authorization was never obtained.

For the following reasons the motion to dismiss the complaint is granted; plaintiffs' motion for a default judgment is denied.

I.Background

A.The Astoria Mortgage

513 acquired title to the property by deed dated April 3, 1985 and recorded April 12, 1985. See affidavit of Seth Miller, sworn to April 3, 2013 (Miller aff.), Ex. A. By an assumption, consolidation, extension and modification agreement (CEMA) dated June 5, 1998 and recorded August 14, 1998 between 513 and Marine Midland Bank, three existing mortgages and loans on the property (Mortgages 1-3) were consolidated to form a single lien for $510,000. Id., Ex. B. HSBC Bank USA, f/k/a Marine Midland Bank, assigned the consolidated loans and Mortgages 1-3 to Astoria by assignment dated April 30, 2002 and recorded May 23, 2002. Id., Ex. C.

On May 1, 2002, 513 granted a mortgage to Astoria to secure a loan in the amount of $818,881.69, which mortgage was recorded May 23, 2002 (Mortgage 4). Id., Ex. D. The liens of Mortgages 1-4, were consolidated to form a single lien for $1,250,000 by a CEMA dated May 1, 2002 and recorded May 23, 2002 between 513 and Astoria. Id., Ex. E. By certification dated May 1, 2002 and executed by Juda, 513 confirmed a resolution of the board of directors of 513 to grant Astoria a mortgage on the property in the amount of $1,250,000. Id., Ex. F.

On September 16, 2003, 513 granted a mortgage to Astoria to secure a loan in the

amount of $349,210.51, which mortgage was recorded November 25, 2003 (Mortgage 5). Id., Ex. G. By the terms of Mortgage 5, the liens of Mortgages 1-4 were combined with the lien of Mortgage 5, forming a single lien for $1,575,000 (the Astoria Mortgage or Mortgage). Id.

Corporate minutes, dated September 16, 2003, certify 513's resolution to grant the Astoria Mortgage as well as Juda's authority to sign all loan documents on behalf of 513. Id., Ex. H ("Juda Mockin as president is authorized to sign all loan documents"). In addition, the certification provides that: "[t]his certificate is made and delivered in order to induce [Astoria] to make the loan and accept the [Mortgage] . . .." Id.

Subsequently, Astoria assigned the Mortgage and notes secured by the Mortgage to 5 Boros by assignment dated February 11, 2013 and recorded February 28, 2013. Id., Ex. I. Mortgages 1-5 were all executed by Juda as president of 513 and bear corporate acknowledgments.

The loan secured by the Mortgage has been in default since February 1, 2012 and the amount due and owing currently exceeds $1.6 million. Id., ¶ 14.

B.The Related Action

There is, as acknowledged in the complaint, another action pending that is closely related to this action, captioned Joseph Mochkin and 513 Properties, Inc. v Juda Mochkin, Kings County Index No. 36459/2006 (the 2006 Action). The 2006 Action is a dispute between family members Juda and his son Joseph concerning ownership and control of the property. See reply aff., Ex. B.

On July 25, 2011, the parties to the 2006 Action entered into a settlement agreement (the Settlement Agreement or Agreement). See affirmation of Jennifer F. Beltrami, dated April 4, [*3]2013 (moving aff.), Ex. B. The Settlement Agreement, provides, among other things, that Judah shall pay $700,000 to Joseph on or before July 25, 2012 in full settlement of any and all claims (including Joseph's claim of an ownership interest in 513). Id. If Juda does not make that payment, the Settlement Agreement provides that Joseph "shall have the right to buy [Juda's] interests in 513 Properties Inc. for $200,000 within six months after [Juda's failure to pay]." Id.

In April 2012, prior to the expiration of the July 25, 2012 deadline by which Juda was to pay the full settlement amount, plaintiffs filed the instant action as well as an amended notice of pendency, dated April 17, 2102 (the Notice of Pendency). Plaintiffs' counsel agreed to extend the time by which Astoria must answer or otherwise respond to the complaint up to and including April 5, 2013. See affirmation of Edward N. Gewirtz, dated April 30, 2012 (opp. aff.), Ex. A.

The filing of the instant action and the associated Notice of Pendency sparked several rounds of motion practice in the 2006 Action. First, on July 9, 2012, Juda filed a motion by order to show cause seeking an order directing Joseph to cancel the Notice of Pendency filed in connection with this action. Then, on August 8, 2012, Juda filed another motion by order to show cause seeking an order allowing him to intervene in this action, cancelling the Notice of Pendency, and consolidating this action with the 2006 Action.

In his two motions, Juda alleged that Joseph filed this action and the Notice of

Pendency for the express purpose of frustrating the Settlement Agreement. Specifically, Juda alleged that, due to the Notice of Pendency, he was unable to obtain financing on the property needed to make the required $700,000 payment under the Agreement.

By order dated July 12, 2012, this court amended the Settlement Agreement by extending the deadline for Juda to pay the settlement amount to August 24, 2012. See moving aff., Ex. B. The court further indicated that the new deadline was "subject to [Juda]'s right to seek a further extension if necessary due to [Joseph]'s conduct." Id.

By order dated August 14, 2012, this court granted Juda's motion to intervene and merge this action with the 2006 Action. Id., Ex. D. Additionally, the August 14, 2012 order directed plaintiff to immediately cancel the lis pendens and to discontinue this action with prejudice, subject to Juda's payment of the settlement amount.^[FN3] Id.

By orders to show cause dated August 21, 2012 and August 23, 2012, Juda moved in the 2006 Action for orders, respectively, adjudicating Joseph to be in violation of the Settlement Agreement and extending his time to make the settlement payment. By orders dated September 10, 2012 and September 12, 2012, the court extended Juda's time to pay pursuant to the Settlement Agreement pending determination of the August 21, 2012 and August 23, 2012 motions. Id., Exs. E and F.

By Order and Decision dated November 28, 2012, as modified by orders dated December 5, 2012 and January 7, 2012, the court granted Juda an extension of 120 days (until April 30, 2013) to make the final payment of $700,000. Id., Ex G. The court granted this relief on two grounds. First, pursuant to CPLR 2004, the court found that there was good cause to extend the time for Juda to complete the settlement:

"[Joseph] brought the Astoria action and filed the lis pendens after entering into the [*4]Agreement. Regardless of his motives at the time, [Joseph] understood,no later than July 9, 2012, that his refusal to cancel the lis pendens and issue the requested releases was interfering with [Juda]'s ability to obtain refinancing. See affirmation of Juda Mochkin, dated July 5, 2012, ¶ 12.

Further, [Joseph] has not made any secret of his intentions to interfere with [Juda]'s ability to satisfy the terms of the Agreement. During a hearing on July 12, 2012, [Joseph] shouted words to the effect that [Juda] would be unable to get the property; a sentiment at odds with the parties' Agreement."

Id., at 7.

In addition, the court concluded that Joseph's filing of this action and the associated lis pendens violated the covenant of good faith and fair dealing implied in the Settlement Agreement. In this regard, the court reasoned that:

"As the Agreement itself expressly contemplated refinancing and [Joseph] was informed that his actions created an impediment to [Juda]'s performance, the court finds that, as a matter of law, [Joseph] cannot claim that [Juda] breached the Settlement Agreement by failing to tender payment by the deadline. See e.g. Gross v Neuman, 53 AD2d 2, 4 (1st Dept 1976) ("a party to a contract cannot rely on the failure of another to perform a condition precedent where he has frustrated or prevented the occurrence of the condition") (internal citations omitted). Unless the lis pendens is canceled and [Juda] is given an appropriate extension of time to complete the refinancing, [Joseph] cannot be permitted to exercise his option to purchase the property."

Id. at 8.

Besides extending Juda's time to complete the settlement payment, the court ordered the following:

"[I]f a refinancing by defendant Juda Mochkin of the property located at 838-840 Montgomery Street, Brooklyn, New York is accomplished and the $700,000 payment is made to plaintiff

Joseph Mochkin or placed in escrow with an agent approved by this court on behalf of plaintiff, the lis pendens that plaintiff filed against the subject property is canceled and the Astoria action is dismissed ..."

Id. at 10.

Most recently, by order to show cause, dated March 25, 2013, Juda sought, yet again, an order permitting him additional time to pay the settlement payment of $700,000 on account of actions taken by Joseph (i.e., the filing of the instant action and Notice of Pendency) that purportedly continued to impede Juda's ability to conclude the settlement. On April 22, 2013, the court, recognizing that an impasse had developed that was preventing the Settlement Agreement from being effectuated, issued a decision stating, in relevant part, that:

"[T]he 120 day extension provided in the November 28, 2012 Decision and Order for [Juda] to complete the settlement payment will not begin to run until the earlier of such time that: (i) the parties complete their appeals of the orders of this court (which, if that is their intent, the [*5]parties are ordered to pursue expeditiously), and an appellate decision is issued that resolves the question of whether [Juda]'s time to exercise his option has expired; or (ii) [Joseph], without the court's intervention, dismisses the Astoria action and cancels the lis pendens."

Mochkin v Mochkin, 39 Misc 3d 1223(A), 2012 NY Slip Op 5248(U), *5 (Sup Ct, NY County

2013).

II.Argument

In support of its motion to dismiss, movant argues that documentary evidence in the form of a corporate resolution and certification demonstrates that Juda was authorized by 513 to execute the Mortgage in his capacity as president of 513. See Miller aff., Ex. H. That being so, movant contends that it was entitled, as a matter of law, to rely upon Juda's apparent authority to act on behalf of 513. Thus, movant asserts that the complaint, which challenges the validity of the Mortgage based entirely on allegations that Juda had no authority to bind 513, must be dismissed.

In opposition, plaintiffs argue that the motion is a nullity because 5 Boros, the entity named as the moving party in the notice of motion and other moving papers, has no standing to bring this motion because it is not a party to this action. Plaintiffs stress that CPLR 3211 provides that only "[a] party may move for judgment dismissing one or more causes of asserted against him . . ." (emphasis added).

Plaintiffs further contend that 5 Boros' status as an assignee of Astoria does not make it a party to the litigation or otherwise help it. In this connection, plaintiffs note that Astoria is the only party they sued, and 5 Boros, whose encumbrance was recorded in February 2013 ten months after the Notice of Pendency was filed (and consequently, after it was on constructive notice of the allegations of plaintiffs' complaint), took its assignment subject to the outcome of plaintiffs' litigation against Astoria. See CPLR 6501("A person whose conveyance or incumbrance is recorded after the filing of the notice is bound by all proceedings taken in the action after such filing to the same extent as a party."). As such, plaintiffs argue that 5 Boros cannot claim that it was entitled to rely on Juda's "apparent authority" to act on behalf of 513, as could Astoria.

Completing their argument, plaintiffs assert that it is now too late for Astoria to bring this motion. That is because the time for Astoria to answer or move with respect to the complaint expired on April 5, 2013 (pursuant to the parties' stipulation) and Astoria neither interposed an answer, nor moved with respect to the complaint and is now in default. This same argument is the basis for plaintiffs' separate motion seeking a default judgment against Astoria. See affirmation of Edward N. Gewirtz in support of motion for default judgement, dated April 30, 2012, ¶ 5 and Ex. B.

None of plaintiffs' arguments, however, are sufficient to defeat the motion. As an initial matter, insofar as there is any confusion as to who the moving party is, the reply papers make clear - to the court's satisfaction — that it is Astoria that is bringing the instant motion pursuant to the parties' stipulation to extend Astoria's time to answer or otherwise respond to the complaint. The motion to dismiss the complaint, served one day before the expiration of the agreed-upon [*6]April 5, 2013 response deadline (see reply aff., Ex. A [affidavit of service]), adjourned Astoria's time to answer the complaint, and there is no default. See CPLR 3211(f) ("Service of a notice of motion under subdivision (a) or (b) before service of a pleading responsive to the cause of action or defense sought to be dismissed extends the time to serve the pleading until ten days after service of notice of entry of the order."); David D. Siegel, New York Practice § 272 (5th ed. 2011) ("a stipulation extending the answering time will also extend the time to make the CPLR 3211(a) motion").

It follows, therefore, that plaintiffs' motion for a default judgment, premised on Astoria's purported failure to answer or otherwise respond to the complaint, must be denied.

That it is Astoria that brings this motion, moots plaintiffs' contention that 5 Boros cannot rely on Juda's apparent authority because Astoria (as did the prior lenders) relied upon the pertinent documents, long before this action was commenced.^[FN4] The fact that Astoria assigned the mortgage to 5 Boros in February 2013 does not disqualify Astoria from subsequently bringing the instant motion. See CPLR 1018 ("Upon transfer of interest, the action may be continued by or against the original parties unless the court directs the person to whom the interest is transferred to be substituted or joined in the action"); Central Fed. Sav.v 405 W. 45th St., 242 AD2d 512, 512 (2d Dept 1997) ("an assignee of a mortgage can continue an action in the name of the original mortgagee, even in the absence of a formal substitution").^[FN5]

Turning to the merits of the motion, this court is of the opinion that Astoria was entitled to rely upon the documents presented to it that demonstrated Juda's authority to bind 513.^[FN6] See LZG Realty, LLC v H.D.W. 2005, 87AD3d 727 (2d Dept 2011), lv dismissed, 18 NY3d 920 (2012). In LZG, the court upheld the validity of two mortgages in the face of a challenge as to the authority of the signatory, stating:

"As far as the mortgagees are concerned, the law is clear that they do not have a duty of care to ascertain the validity of the documentation presented by an individual who claims to have the authority to act on behalf of a borrower corporation or entity. Accordingly, the mortgages are valid."

Id., 87AD3d at 729-30 (citations omitted). [*7]

Here, Juda signed the Mortgage and each mortgage consolidated to form the Mortgage, as president of 513. See Miller aff., Exs. B, D, E, and G. He presented documents authorizing 513 to give the Mortgage and authorizing him to act on behalf of 513 with respect to the Mortgage. Astoria, as it was entitled to do, relied upon Juda's apparent authority to act on 513's behalf as its president. Accordingly, Joseph cannot state a claim to discharge the Mortgage due to Juda's purported lack of authority.

In their supplemental papers, plaintiffs attempt to distinguish this case from LZG on the facts, asserting that the lender in LZG relied upon an operating agreement, whereas here the documents relied upon were corporate resolutions. However, as Astoria correctly observes, this is a distinction without legal consequence. In LZG, the Second Department did not address the question of which type of document must be presented to a lender to properly demonstrate the authority of an individual to act on behalf of a corporate entity in granting a mortgage. Rather, in finding that the two challenged mortgages were valid, the court focused on language in the operating agreement, which unambiguously attested that the individual that appeared at the closing on behalf of the purchasing entity had the authority to " [i]ncur any mortgage.'" LZG, 87AD3d at 729. Likewise, the corporate resolutions at issue here plainly attest to Juda's authority to grant the Mortgage on behalf of 513. See Miller aff., Ex. H.

Plaintiffs' further argument that this action is not ripe for dismissal and that discovery is necessary is also without merit. Documentary evidence such as the loan documents Astoria has furnished are the type of documents that appropriately support a CPLR 3211 motion to dismiss. See Sands Point Partners Private Client Group v Fidelity Natl. Tit. Ins. Co., 99 AD3d 982, 984 (2d Dept 2012) ("[m]aterials that clearly qualify as documentary evidence' include documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable'") (citations omitted). Here, the documents conclusively establish the only issue in this action — Juda's authority to execute the Astoria Mortgage — and therefore dismissal is warranted based on the documentary evidence.

Nevertheless, plaintiffs submit the excerpted deposition transcript of Martin Kurlander, the attorney who represented 513 in its formation and purchase of the subject property, for the purpose of raising an issue of fact as to Juda's authority. However, Mr. Kurlander's testimony, which indicates that Juda may have only been a 50% shareholder of the corporation, says absolutely nothing about Juda's authority to bind 513. Indeed, the corporate resolution that authorized Juda, as president of 513, to enter into the Mortgage states that: "[t]he certificate of incorporation of the corporation does not require any vote or consent of the shareholders to authorize the making of such mortgage." See Miller aff., Ex. H. Thus, the fact that Joseph may have held a 50% ownership interest in 513 does not vitiate Astoria's entitlement to rely on corporate documents that reflected Juda's authority to execute the Mortgage, and is not a sufficient reason to deny the motion.^[FN7]

Accordingly, it is

ORDERED that the motion to dismiss the complaint is granted and the complaint is hereby dismissed upon the merits with prejudice; and it is further

ORDERED that plaintiffs' motion for a default judgment against defendant Astoria [*8]Federal Savings and Loan is denied.

Dated: June 19, 2013

ENTER:

______________________

J.S.C.