The following papers numbered 1 to 6 were fully submitted on the 16th day of January, 2014.

Papers Numbered

Notice of Motion by Defendant Emerald Isle Lending

Company, Inc. to Dismiss the Cross Claims of Defendants

Stanislaw Mruczynski and Bielsko Corp.,

with Supporting Papers and Memorandum of Law

(dated September 25, 2013)....................................................................................... 1, 2

Affirmation and Affidavit by Defendants Stanislaw Mruczynski

and Bielsko Corp. in Opposition to Motion

(dated January 5 and 6, 2014).................................................................................... 3, 4

Affirmation in Reply by Defendant Emerald Isle Lending Company, Inc.

(dated January 14, 2014)............................................................................................ 5 [*2]

Plaintiff's Affirmation in Opposition to Motion

(dated January 15, 2014)............................................................................................ 6

Upon the foregoing papers, the pre-answer motion of defendant Emerald Isle Lending Company, Inc. to dismiss the cross claims of codefendants Stanislaw Mruczynski and Bielsko Corp. is granted, in part, and denied, in part, in accordance with the following.

The within foreclosure action relates to a certain mortgage on real property located at 263 Edgegrove Avenue, Staten Island, New York. Said mortgage was given by defendant James M. Samuel (hereinafter, "Samuel") on December 16, 2008 to plaintiff's predecessor-in-interest, Great American Mortgage Corp., to secure a note which he executed in the principal sum of $432,000.00 for the purchase of said premises.

Defendants Stanislaw Mruczynski and Bielsko Corp. (hereinafter, collectively, "Stanislaw") ^[FN1] interposed a verified answer dated February 8, 2013 wherein it is alleged that, unbeknownst to Stanislaw Mruczynski, and without his authority and consent, the subject property was fraudulently sold to defendant Samuel for the sum of $720,000.00 by its owner of record, Bielsko Corp. It is further alleged that Dariusz Mruczynski (Stanislaw's son, hereinafter, "Dariusz"), as attorney-in-fact for Bielsko Corp. pursuant to a forged Power of Attorney, fraudulently executed a deed dated December 16, 2008 conveying the subject property to Samuel. Notably, the mortgage which is the subject of the instant foreclosure action relates to this alleged "first fraudulent conveyance". Stanislaw Mruczynski further claims that unbeknownst to him, and without his authority or consent, two weeks later, i.e., on December 30, 2008, the subject property was, again, fraudulently sold to defendant RP Family Inc. (hereinafter, "RP Family") by Dariusz, as president of Bielsko Corp. pursuant to a forged Shareholders Agreement. Defendant Emerald Isle Lending Company, Inc. (hereinafter, "Emerald Isle") is the current holder of the mortgage given by RP Family on December 30, 2008 to secure a note in the principal sum of $115,571.00 for the purchase of said premises.

The gravamen of Stanislaw's answer is that since the third parties who fraudulently executed both deeds did not possess a fee or legal interest in the real property at issue, the underlying mortgages given to plaintiff's predecessor-in-interest and defendant Emerald Isle's predecessor-in-interest (Trustar Funding, LLC) are absolute nullities. Stated otherwise, the Stanislaw defendants maintain that the first fraudulent deed and mortgage, and the second fraudulent deed and mortgage are void and invalid as they are based on forgeries.

Presently before the Court is defendant Emerald Isle's pre-answer motion to dismiss certain cross claims interposed against it by the Stanislaw co-defendants, i.e., (1) the third cross claim for a judgment declaring the mortgage dated December 30, 2009 to be based upon a forgery and, therefore, void, (2) the sixth cross claim for conversion of the subject premises, and (3) the seventh cross claim for unjust [*3]enrichment. Dismissal is sought pursuant to CPLR 3211(a)(1), (3), (4), (5), (6) and (7) on the grounds of documentary evidence, lack of standing, prior action pending, collateral estoppel, failure to state a cause of action and the so-called federal bar of compulsory counterclaims under Rule 13 of the Federal Rules of Civil Procedure.

To the extent relevant with regard to the latter, Emerald Isle is the plaintiff in a certain Federal Court action pending in the Eastern District of New York ^[FN2] wherein, based upon RP Family's default in payment under the promissory note, monetary damages in the sum of $115,571.00 are sought from various parties involved in the second alleged fraudulent conveyance. It is undisputed that although Stanislaw Mruczynski appeared individually and as vice president of Bielsko Corp. in the action in the Eastern District, he failed to answer Emerald Isle's Fourth Amended and Supplemental Complaint wherein two causes of action relate to the Stanislaw defendants, i.e., the third cause of action for fraud as against Bielsko Corp and Dariusz Mruczynski, and the fifth cause of action as against Dariusz and Stanislaw Mruczynski for aiding and abetting fraud. Insofar as it appears on the papers before this Court, by Stipulation dated November 7, 2011, a Consent Judgment was entered on November 17, 2011 in favor of Emerald Isle and against RP Family on the first cause of action entitled "Action on a Promissory Note". Subsequently, on May 16, 2012, the Federal Court denied without prejudice third-party defendant/third-party plaintiff James Samuel's request for leave to implead nonparty Citimortgage, Inc., the plaintiff in this foreclosure action.

Turning, first, to Emerald Isle's contention that Stanislaw's cross claims are barred by the so-called federal bar of compulsory counterclaims (Fed Rules Civ Pro, rule 13, subd [a] [in US Code, tit 28, Appendix]), although movant correctly maintains that there is a "nexus of facts between the two cases" and certain of the participants in the alleged fraudulent conveyances are named parties in both actions, it is indisputably clear that the Federal Court matter is an action relating to the promissory note and does not involve an adjudication of the validity of either the mortgage given to Emerald Isle's predecessor-in-interest or the deed given to RP Family in connection with the alleged second fraudulent conveyance. Stated otherwise, assuming arguendo that the compulsory counterclaim rule in the Federal Courts would extend to bar the later assertion in the present State action of a contention that could have been raised by way of counterclaim in the prior Federal action between the two parties, the dispute in the instant foreclosure proceeding "arises out of [a] transaction or occurrence that is [not] the subject matter of [Emerald Isle's] claim [in the Federal Court action] " (Fed Rules Civ Pro, rule 13, subd [g] see generally, Gargiulo v Oppenheim, 63 NY2d 843; cf. Cummings v Dresher, 18 NY2d 105, 108-109 [Fuld, J., concurring]). Thus, it cannot [*4]be said that under the procedural compulsory counterclaim rule in the Federal courts, claim and issue preclusion would extend to bar the cross claims interposed by Stanislaw as against Emerald Isle in the present State court action.

As for the balance of Emerald Isle's motion, it is well established that in considering a motion to dismiss pursuant to CPLR 3211(a)(7), the pleadings are to be liberally construed (see CPLR 3026; Leon v Martinez, 84 NY2d 83). As such, the court will accept the factual averments in the verified answer as true, accord the crossclaiming defendants the benefit of every possible favorable inference, and determine only whether the proponent of the pleading has stated a cognizable cause of action (see Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 570-571);Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, 96 NY2d 300, 303). Further, in order to prevail on a motion to dismiss pursuant to CPLR 3211(a)(1), it is familiar law that the movant is required to demonstrate that "the documentary evidence utterly refutes plaintiff's allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Inc. Co. of NY, 98 NY2d 314, 326; see Goldman v Metropolitan Life Ins. Co., 5 NY3d at 571). In the absence of same, the motion will be denied.

Applying the foregoing principals to the case at bar, it is the opinion of this Court that the Stanislaw defendants have failed to set forth a cognizable cross claim as against Emerald Isle for its conversion of the subject premises by virtue of the mortgage which is said to encumber it. Simply stated, it is well established that conversion does not apply to real property. "A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession" (Colavito v New York Organ Donor Network, Inc., 8 NY3d 43, 49-50; see Pappas v Tzolis, 20 NY3d 228, 234). Moreover, since "[t]he subject matter of a conversion action must constitute identifiable tangible personal property[,] real property and interests in business opportunities will not suffice" (Arb Upstate Comminications LLC v R.J. Reuter, L.L.C., 93 AD3d 929, 931-932 [internal quotation marks omitted] see Thyroff v Nationwide Mut. Ins. Co., 8 NY3d 283, 289). In view of the foregoing, Stanislaw's sixth cross claim for conversion does not constitute a viable cause of action and must be dismissed.

Somewhat similarly, accepting Stanislaw's allegations as true and affording these crossclaiming defendants every possible favorable inference, as a court must on a motion to dismiss pursuant to CPLR 3211 (a)(7), the cross claim to recover damages from Emerald Isle for unjust enrichment has not been adequately pled and must be dismissed. In order to state a cause of action to recover damages for unjust enrichment, a plaintiff must allege that (1) the other party was enriched, (2) at the plaintiff's expense and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered (see Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182-183; Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421; Citibank, NA v Walker, 12 AD3d 480, 481; cf. Levin v Kitsis, 82 AD3d 1051, 1052-1053). Under the facts alleged, there are no indicia of enrichment by the moving [*5]defendant that was unjust, e.g., that Emerald Isle obtained the mortgage at issue without consideration (see Mandarin Trading Ltd. v Wildenstein, 16 NY3d at 182-183; cf. Levin v Kitsis, 82 AD3d at 1052-1053).

Finally, with regard to Stanislaw's remaining cross claim as against Emerald Isle which seeks a judgment declaring the mortgage dated December 30, 2009 to be void as it is based upon a forgery, in the opinion of this Court, Emerald Isle has failed to proffer documentary evidence which utterly refutes Stanislaw's allegations and conclusively establishes a defense to the cross claim as a matter of law (see Goshen v Mutual Life Inc. Co. of NY, 98 NY2d at 326; Goldman v Metropolitan Life Ins. Co., 5 NY3d at 571). As such, movant is not entitled to dismissal of Stanislaw's third cross claim pursuant to CPLR 3211(a)(1). Moreover, with respect to the branch of the motion which is to dismiss this cross claim for failure to state a cause of action (CPLR 3211 [a][7]), the moving defendant has not convinced this Court that a material fact alleged by Stanislaw "is not a fact at all" and that "no significant dispute exists regarding it" (Guggenheimer v Ginzburg, 43 NY2d 268, 275). Thus, dismissal of the third cross claim should not eventuate in any event.

Emerald Isles' remaining contentions have been considered and are without merit.

Accordingly, it is

ORDERED, that defendant Emerald Isle Lending Company's pre-answer motion to dismiss is granted to the extent of severing and dismissing the sixth and seventh cross claims asserted against this defendant in the verified answer dated February 8, 2012 of defendants Stanislaw Mruczynski and Bielsko Corp.; and it is further

ORDERED, that the balance of the motion to dismiss is denied; and it is further

ORDERED, that the movant's time to serve an answer is extended until ten (10) days after service upon it of a copy of this Decision and Order with notice of entry; and it is further

ORDERED, that the Clerk mark his records accordingly.

E N T E R,

Dated: March 17, 2014/s/ Philip G. Minardo

J.S.C.