The following papers read on this motion:Papers Numbered

Plaintiff Tracy Cohen, the administratrix of Malcolm S. Cohen's estate, moves pursuant to CPLR § 3211(b) to dismiss Defendants' Affirmative Defenses and Counterclaims, and pursuant to CPLR § 2221, to renew the plaintiff's motion for summary judgment.

This action was initially commenced pursuant to CPLR § 3213 as a motion for summary judgment in lieu of a complaint on January 18, 2013. By Decision and Order dated October 29, 2013, the Court denied the CPLR § 3213 motion for summary judgment and directed the plaintiff to serve and file a Complaint. Plaintiff filed its Complaint on November 22, 2013 and defendants served their Answer on January 3, 2014. Plaintiff then made a CPLR § 3211(b) motion to dismiss defendants' defenses and counterclaims. Defendants then served an Amended Answer that added a third counterclaim. Plaintiff makes this second motion pursuant to CPLR § 3211(b) to dismiss defendants' affirmative defenses and counterclaims in light of the Amended Answer and seeks summary judgment upon renewal of its earlier motion. Although this is not a standard motion for renewal as plaintiff does not necessarily present new facts not offered in the prior motion, the submission of pleadings constitutes the new material upon which the court may change its prior determination (see CPLR § 2221(e)).

It is undisputed that prior to his death in September 2009, Malcolm Cohen ("Cohen") acted as attorney for Gateway Builders Realty, Inc. ("Gateway"). According to defendants, Gateway retained Cohen on August 16, 2005 to provide legal services in connection with the purchase and financing of property located at 142 22nd Street, Brooklyn, New York (the "Property"). Over the next four years, Cohen represented Gateway in further refinancing transactions involving the Property, whereby Gateway would obtain a loan from a new lender and pay off its existing loan. It appears that Gateway obtained financing from at least four commercial lenders. During the course of his representation, Cohen also made a number of loans to Gateway.

On or about September 1, 2009, the loans from Cohen to Gateway were amended, restated, and consolidated into one debt totaling $325,000, pursuant to a new note and agreement (the "Consolidation Note" and the "Consolidation Agreement", respectively). In support of her motion, plaintiff submits the Consolidation Note, which reflects the consolidation of two prior notes given by Gateway to Cohen, dated November 8, 2006, and October 1, 2008, each for $100,000, with an additional loan of $125,000 from Cohen to Gateway. The Consolidated Note is secured by a mortgage on the Property and is guaranteed by defendant Yildirim, who is Gateway's principal. DISCUSSION

Defendants' three counterclaims and ninth ^[FN1] , tenth, eleventh, and twelfth affirmative defenses allege legal malpractice, unethical conduct, and breach of fiduciary duty by Cohen. To recover from an attorney under a theory of malpractice, one must prove "(1) the negligence of the attorney; (2) that the negligence was the proximate cause of the loss sustained; and (3) proof of actual damages" (Mendozo v Schlossman, 87 AD2d 606, 607 [2d Dept 1982]). Defendants argue that Cohen committed malpractice when, in negotiating loan documents with one of Gateway's lenders in 2008, he allowed the inclusion of provisions for significant prepayment penalties, in contravention of Gateway's express wishes. Yildirim, who states that he relied heavily on Cohen's legal advice because English is not his first language, claims that Gateway was unaware of the prepayment penalty, written in bold-face type in the loan documents, and only signed them when he was advised to do so by Cohen, who assured Gateway that the documents were the same as other loan documents Gateway had signed in the past which, he asserts, did not contain prepayment penalties. As a result of Cohen's negligence, defendants claim that Gateway became subject to a $819,000 prepayment penalty, a fact it did not become aware of until some unspecified time after Cohen's death in 2009. There is no allegation that defendants actually incurred or paid this penalty. Defendants also complain that Cohen subjected Gateway to excessive County Clerk recording fees by failing to provide for the assignment of notes and mortgages, which would have resulted in minimal fees, as opposed to allowing new mortgages and financing documents to be filed.

In their third counterclaim, defendants also accuse Cohen of ethical misconduct and breach of fiduciary duty, alleging that Cohen drafted the notes evidencing his loans to Gateway, including an 18% interest rate, without disclosing or obtaining Gateway's consent to his conflict of interest, in violation of New York's Code of Professional Responsibility. Defendants also complain that Cohen charged Gateway for these drafting services, and acted out of self interest by recommending that Gateway obtain refinancing so that Gateway could repay the money owed to him.

The Lawyer's Code of Professional Responsibility, DR5-104(A),^[FN2] in effect at the time, prohibited an attorney from entering into a business transaction with a client without making certain disclosures and obtaining written consent from that client, as Cohen is accused of doing. While a violation of the Code of Professional Responsibility does not alone give rise to a private cause of action (see DeStaso v Condon Resnick, LLP, 90 AD3d 809, 814 [2d Dept 2011]), defendants allege that Cohen's self-dealing gives rise to a breach of fiduciary duty claim. "In order to establish a breach of fiduciary duty, a plaintiff must prove the existence of a fiduciary relationship, misconduct by the defendant, and damages that were directly caused by the defendant's misconduct" (Daly v Kochanowicz, 67 AD3d 78 [2d Dept 2009](quoting Kurtzman v [*3]Berstol, 40 AD3d 588, 590 [2d Dept 2007]). It is well established that an attorney owes his client a fiduciary duty (see Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 9 [1st Dept 2008]). Defendants complain that Cohen's inclusion of the prepayment penalties and high interest rates, and his inappropriately charging legal fees for services "below the standard of care" from 2005 through 2009, constituted self-interest in lending money to Gateway. Plaintiff argues that defendants' third counterclaim for breach of fiduciary duty should be dismissed as duplicative of the two legal malpractice counterclaims, which are also redundant of each other. As defendants' third counterclaim contains the same allegations of fact and seeks the same relief as its first two counterclaims, it is dismissed as redundant (see Nevelson v Carro, 290 AD2d 399, 400 [1st Dept 2002] see also Murray Hill Investments v Parker Chapin Flattau & Klimpl, LLP, 305 AD2d 228, 229 [1st Dept 2003]).

Plaintiff asserts that defendants' remaining counterclaims are time-barred because claims based on legal malpractice have a three-year statute of limitations pursuant to CPLR § 214(6)^[FN3] . Accepting defendants' contention that Cohen's representation was continuous, the latest time that defendants' claims could have accrued was at Cohen's death in September 2009, which is more than three years before the instant action was commenced on January 18, 2013. Defendants argue that their counterclaims are not time barred because CPLR § 203(d) provides that a defense or counterclaim is not barred "if the defense or counterclaim arose from the transactions, occurrences, or series of transactions or occurrences, upon which a claim asserted in the complaint depends". This provision allows a defendant to assert an otherwise untimely claim that arises out of the same transaction as the claim asserted, but only as a shield for recoupment purposes and does not allow the defendant to obtain affirmative relief (see Carlson v Zimmerman, 63 AD3d 772 [2d Dept 2009]). Pursuant to CPLR § 203(d), defendants' counterclaims for legal malpractice are not time-barred insofar as defendants seek to set off their malpractice damages against any recovery that plaintiff may obtain and only insofar as the counterclaims arise from the same transaction and occurrence upon which plaintiff's claims rest (see Debevoise & Plimpton LLP v Candlewood Timber Group LLC, 102 AD3d 571, 572 [1st Dept 2013] see also United States Fidelity and Guaranty Co. v Delmar Development Partners, LLC, 22 AD3d 1017, 1020-21 [3d Dept 2005]).

Plaintiff argues that the first two counterclaims are indeed time barred because they rest upon allegations about transactions that are separate and distinct from the debt involved in the instant action. Defendants' counterclaims allege malpractice relating to a loan made by Silver Hill Financial ("Silver Hill") to Gateway on February 27, 2008, where defendants' claim that Cohen caused Gateway to enter into a loan agreement with a large prepayment penalty contrary to defendants' express wishes. Plaintiff asserts that Cohen's representation of Gateway regarding the loan from Silver Hill is a separate transaction, unrelated to the Consolidation Agreement, which was entered into on September 1, 2009, eighteen months after the Silver Hill transaction. Defendants' position is that their counterclaims involve Cohen's continuous legal representation of Gateway and Yildirim.

The court agrees with plaintiff that the Silver Hill transaction is a separate transaction and occurrence from the debt upon which plaintiff is suing. Therefore, defendants' counterclaims alleging malpractice in Cohen's representation of Gateway in the February 27, 2008 loan from Silver Hill to Gateway are time-barred. Moreover, it is noted that, based upon the documentary evidence of the loan documents, defendants' claims appear to be without merit in that all of the mortgages signed by Gateway prior to the Silver Hill transaction did include prepayment penalties. The remaining allegations contained in defendants' first counterclaim also ambiguously refer to separate transactions which apparently all occurred prior to the 2008 Silver Hill loan and are, in any event, entirely speculative. The first counterclaim is therefore dismissed.

Defendants' second counterclaim also alleges malpractice based on essentially the same allegations contained in the first counterclaim except that the damages relate to an alleged failure to assign various loans so as to avoid filing fees. Again, this claim is unrelated to the loans sued upon herein and, in any case, is contradicted by the documentary evidence submitted in reply. The second counterclaim is accordingly dismissed.

With respect to defendants' complaint of Cohen's self-interest in making the instant loan to the defendants and Cohen's failure to provide disclosure of his conflict of interest and obtain written consent to his conflicted representation, as required by the Code of Professional Responsibility, such claims arise out of the subject loans that Cohen made to Gateway on November 8, 2006, October 1, 2008, and a third loan made in 2009, concurrently with the Consolidation Agreement, which are the transactions sued upon. However, defendants fail to allege any actual damages sustained as a result of Cohen's alleged malpractice with respect to these loans, and have therefore failed to make out a cause of action for malpractice. As previously noted, the failure to comply with the Rules of Professional Responsibility does not alone support a cause of action for malpractice (see DeStaso v Condon Resnick, LLP, 90 AD3d 809 at 811]). Although defendants take issue with Cohen's legal fees for drafting the loan documents upon which plaintiff's claim is based, it is common for the borrower to pay the legal fees of the lender. As defendants clearly benefitted from Cohen's services in preparing such documents, defendants would not be entitled to recover such fees. Accordingly, defendants' first and second counterclaims are dismissed.

In addition to their counterclaims, defendants also assert a number of affirmative defenses, which plaintiff seeks to dismiss pursuant to CPLR § 3211(b). Plaintiff argues that defendants' first and fourth affirmative defenses for failure to state a cause of action and for lack of standing should be dismissed based on the court's October 29, 2013 decision and order. In the earlier decision, the court found that the Consolidation Note, which was signed by both defendants, was a proper subject of the CPLR § 3213 motion. To establish a prima facie entitlement to judgment as a matter of law, a lender must prove the following elements: (1) an underlying credit agreement, (2) a personal guarantee of the obligations of the credit agreement signed by the defendant, and (3) failure to make payment in accordance with the terms of the credit agreement and guaranty (see Northfork Bank Co. v Graphic Forms Associates, 36 AD3d 676 [2d Dept 2007] JP Morgan Chase Bank v Gamut-Mitchell, Inc., 27 AD3d 622 [2d Dept 2006]). Plaintiff has provided the Consolidation Agreement and Consolidation Note, entitling plaintiff to summary judgment on the issue of liability (see Carlson v Zimmerman, 63 AD3d 772 [*4][2d Dept 2009]). Further, defendants have admitted that Cohen loaned Gateway $325,000 but only claim in opposition that plaintiff should be precluded from collecting based on Cohen's alleged malpractice. Accordingly, defendants' first and fourth affirmative defenses are dismissed ^[FN4] .

Defendants' second and sixth affirmative defenses stating that "the allegations in the Complaint are barred by the terms of the agreements" and barred by documentary evidence are also dismissed. Defendants have not indicated which agreements or what documentary evidence supports their affirmative defenses. The documentary evidence in the record includes the Consolidation Agreement and the Consolidation Note, and defendants have failed to plead that anything in these documents would preclude the plaintiff from collecting on the debt. "Conclusory assertions will not defeat summary judgment . . . [t]he opponent of a properly made summary judgment motion must present evidentiary facts sufficient to raise a triable issue of fact" (Freedman v Chemical Construction Corp., 43 NY2d 260, 264 [1977]). Defendants assert that it is premature to dismiss these defenses because discovery is not complete. However, "[a]llegations of mere hope that the discovery will reveal something helpful. . . provide[s] no basis for postponing the determination of the plaintiff's motion" (Bryan v City of New York, 206 AD2d 448, 448 [2d Dept 1994]). Defendants' third affirmative defense alleging waiver and estoppel and eighth affirmative defense of unclean hands are similarly dismissed because defendants have merely stated a conclusion of law with no supporting facts (see Fireman's Fund Ins. Co. v Farrell, 57 AD3d 271 [2d Dept 2008]).

The fifth affirmative defense claiming that plaintiff's cause of action is barred by the statute of limitations is stricken. CPLR § 211 applies to an action upon a note which has no mortgage attached and provides for a twenty-year statute of limitations. An action to collect on a note secured by a mortgage is six years pursuant to CPLR § 213. Regardless of whether the Consolidation Note was secured by a mortgage, it was dated September 1, 2009 and this action was commenced on January 18, 2013. Plaintiff's claim is clearly not time barred. The seventh affirmative defense based on the statute of frauds is also stricken because plaintiff's claim rests on a written instrument evidencing an indebtedness. The statute of frauds is a legal principle providing that an agreement that, by its terms, is not to be performed within one year of the making thereof must be in writing in order to be enforceable (see Ryan v Kellogg Partners, 19 NY3d 1 [2012]). Defendants have pled no facts indicating why the statute of frauds would be implicated.

Defendants also assert the affirmative defense of usury under the General Obligations Law § 5-501. Plaintiff argues that defendants are precluded from asserting the defense of usury because General Obligations Law § 5-521 prohibits a corporation from asserting this defense. An individual guarantor of a corporate obligation is also precluded from asserting the defense of [*5]usury (see Schneider v Phelps, 41 NY2d 238 [1977]). Defendants argue, based on Schneider, that this provision does not apply to a loan made to an individual borrower to discharge his prior personal obligations. Schneider is distinguishable from the case at bar because the corporate borrower in Schneider was formed as a dummy corporation and the court found that the corporate form was used to conceal a usurious loan (see id. at 241). The defense of usury is available where a loan is made to discharge the personal debts and obligations of the individual, and an individual guarantor may interpose this defense where the loan is made to discharge the guarantor's personal obligations (see id. at 242). Here, the loan was made to Gateway, a corporation, and was personally guaranteed by Gateway's principal. The loan was not used to discharge Yildirim's personal obligations, but was used to discharge Gateway's obligations that were incurred through a series of real estate refinancing transactions. Yildirim, in his affidavit, states that the first loan from Cohen to Gateway made in November 2006 was due to Gateway's financial condition, its decision to refinance, and its need to generate cash flow. All loans from Cohen and from the other lenders were for the benefit of Gateway and there are no facts alleged indicating that the funds were ever used for Yildirim's personal obligations. Accordingly, the affirmative defense of usury is also dismissed.

Accordingly, plaintiff's motion for summary judgment is granted. Defendants' affirmative defenses and counterclaims are dismissed. Plaintiff's motion to amend the caption such that the name of the defendant Tony Yildrim reads "Tony Yildrim a/k/a Tony Yildirim" is also granted.

This constitutes the decision and order of the court.