Opinion
02-24-2015
Renardo CARNEY, et al., Plaintiffs–Respondents, v. Alphonso GIL, et al., Defendants, Kondaur Capital Corporation, Defendant–Appellant.
Pollock & Maguire, LLP, White Plains (Peter S. Dawson of counsel), for appellant. Nicholas Edelson, Brooklyn, for respondents.
Pollock & Maguire, LLP, White Plains (Peter S. Dawson of counsel), for appellant.
Nicholas Edelson, Brooklyn, for respondents.
FRIEDMAN, J.P., SWEENY, SAXE, FEINMAN, CLARK, JJ.
Opinion Order, Supreme Court, Bronx County (Wilma Guzman, J.), entered July 17, 2013, which denied defendant Kondaur Capital Corporation's motion for a default judgment on its counterclaims, unanimously affirmed, without costs.
The motion court properly found plaintiffs' excuse for their delay in replying to Kondaur's counterclaims and their statement of merit sufficient (see e.g. Navarro v. A. Trenkman Estate, Inc., 279 A.D.2d 257, 258, 719 N.Y.S.2d 34 [1st Dept.2001] ). That plaintiffs' excuse was not as detailed as Kondaur wished does not alter our conclusion (see Mediavilla v. Gurman, 272 A.D.2d 146, 148, 707 N.Y.S.2d 432 [1st Dept.2000] ). As the court noted, it is “the strong public policy of this State that matters be decided on their merits” (Navarro, 279 A.D.2d at 258, 719 N.Y.S.2d 34 ).
The first and second counterclaims seek a declaration that Kondaur's mortgage is a valid first lien against 302 Alexander Avenue. Relying on Real Property Law § 266, Kondaur contends that it was a good faith mortgagee for value and that the deceased John Carney (whose estate is a defendant) had the authority to mortgage the property. However, “a bona fide encumbrancer is only protected when the challenged conveyance is voidable, not when it is void” (Solar Line, Universal
Great Bhd., Inc. v. Prado, 100 A.D.3d 862, 864, 955 N.Y.S.2d 96 [2d Dept.2012] ; see also LaSalle Bank Natl. Assn. v. Ally, 39 A.D.3d 597, 599–600, 835 N.Y.S.2d 264 [2d Dept. 2007] ). The complaint, now verified by plaintiff Renardo Carney, sets forth a meritorious defense to these counterclaims by alleging that the transfer of the property from Carney Holdings, LLC (Holdings) to John Carney and defendant David Strause (guarantors of the mortgage later assigned to Kondaur) was invalid because it did not have the written approval of all of Holdings's members, as required by Holdings's operating agreement. Moreover, contrary to Kondaur's contention, the court did not determine whether the assignor of the mortgage knew of the alleged fraud or of “facts that would have led a reasonable mortgagee to make inquiry of the possible fraud at the time the mortgage was entered into” (see JP Morgan Chase Bank v. Munoz, 85 A.D.3d 1124, 1126, 927 N.Y.S.2d 364 [2d Dept.2011] ).
The third counterclaim seeks an equitable mortgage lien under principles of equitable subrogation. However, there was no unknown, intervening mortgage on 302 Alexander Avenue (see King v. Pelkofski, 20 N.Y.2d 326, 333–334, 282 N.Y.S.2d 753, 229 N.E.2d 435 [1967] ).
The fourth counterclaim seeks an equitable mortgage lien against 75% of 302 Alexander Avenue on the theory that defendants Strause and Alphonso Gill, and John Carney, each own or owned 25% of Holdings, which owned 302 Alexander Avenue. However, the complaint (again, now properly verified) implies that Gill tricked John Carney into creating Holdings and transferring his properties into it. It also raises questions as to whether Gill and Strause were unjustly enriched by obtaining 50% of Holdings.
We have considered Kondaur's remaining arguments and find them unavailing.