Court Opinion

ID: 9820040
Source: CourtListenerOpinion
Date Created: 2023-09-01 06:49:48.612876+00
Date Added: 2024-06-11T07:38:35.608686
License: Public Domain

Acosta, J.
dissents in a memorandum as follows: I dissent because I believe that a sophisticated investor can still be *406subjected to duress. And, although the majority seems to acknowledge this, it nonetheless affirms the dismissal of the complaint notwithstanding that the issue is raised in the context of a CPLR 3211 motion, where the court must accept each and every allegation as true and liberally construe the allegations in the light most favorable to the pleading party, and “determine only whether the facts as alleged fit within any cognizable legal theory” (Leon v Martinez, 84 NY2d 83, 87-88 [1994] [emphasis added]). In my opinion, the motion court erred in finding as a matter of law that plaintiff Klein’s payment to defendant of the disputed amount in satisfaction of the mortgage was voluntary, since plaintiffs allege in the complaint and in opposition to defendant’s motion that Klein made the payment to preserve the closing so as to refinance the mortgage with another lender (see Kilpatrick v Germania Life Ins. Co., 183 NY 163, 168-169 [1905]; 1300 Ave. P Realty Corp. v Stratigakis, 186 Misc 2d 745, 748-749 [App Term, 2d Dept 2000] [“Plaintiff’s opposition papers allege that payment in satisfaction of the mortgage was made to preserve the closing to refinance the mortgage, and under protest, and thus sufficiently raise issues of fact as to whether the payment of attorneys’ fees was voluntary”]).
Here, dismissal was not warranted pursuant to CPLR 3211 (a) (7), since a court may consider affidavits submitted by the plaintiff to remedy any defects in the complaint, and plaintiff clearly met this standard (Leon v Martinez, 84 NY2d at 88; Rovello v Orofino Realty Co., 40 NY2d 633, 636 [1976]). Specifically, in his complaint, plaintiff alleged that he “was told by Defendant that if he did not agree to pay the interest and other charges, the Defendant would appear at the closing and would not issue a satisfaction. Under the circumstances, Plaintiff had no choice but to pay the charges” (emphasis added). In his affidavit in opposition to the motion to dismiss, plaintiff averred, among other things, that “[t]he closing letter provided for an additional $186,578.24 in unsubstantiated fees and expenses ... I immediately telephoned Koshers and conveyed my shock at their attempt to hold me up. I demanded a breakdown.” Plaintiff did not close in May, and requested a new closing statement for June, which he received on June 3, 2013. According to plaintiff, the new payoff letter provided for only $1.86 less than the May letter. He also stated, “Koshers also told me, if I wanted him to show up at the closing, I had to pay $18,000.00 in advance representing June interest. I hand delivered to Defendant’s office the $18,000.00 interest payment . . . The interest on a per diem basis should only have been $4,885.00.” Thus, although plaintiff did not use the words *407“protest” or “duress,” it is clear that he paid under protest and duress.
Moreover, the documentary evidence submitted by plaintiffs in opposition to the motion reflects an outstanding balance as of March 31, 2013 equal to the principal amount, which was not due until November 1, 2015, and defendant’s sole submission in support of its contention that it is entitled to the disputed amount is an affidavit by its general counsel, which does not constitute documentary evidence for purposes of a motion to dismiss pursuant to CPLR 3211 (a) (1) (Tsimerman v Janoff, 40 AD3d 242 [1st Dept 2007]). Indeed, defendant’s general counsel’s statement, in his affidavit, that plaintiff Klein is a sophisticated real estate investor who did not show any reservation as to defendant’s payoff demands to allow him to close on the refinancing with the new lender is of no moment inasmuch as affidavits are not documentary evidence within the meaning of CPLR 3211 (a) (1), and are not properly considered pursuant to CPLR 3211 (a) (7) (Rovello v Orofino Realty Co., 40 NY2d 633, 636 [1976]).
As the Court held in Rovello v Orofino Realty Co. (40 NY2d at 635-636): “[A]ffidavits may be used freely to preserve inartfully pleaded, but potentially meritorious, claims. Modern pleading rules are ‘designed to focus attention on whether the pleader has a cause of action rather than on whether he has properly stated one.’ In sum, in instances in which a motion to dismiss made under CPLR 3211 (suhd [a], par 7) is not converted to a summary judgment motion, affidavits may be received for a limited purpose only, serving normally to remedy defects in the complaint, although there may be instances in which a submission by plaintiff will conclusively establish that he has no cause of action. It seems that after the amendment of 1973 affidavits submitted by the defendant will seldom if ever warrant the relief he seeks unless too the affidavits establish conclusively that plaintiff has no cause of action” (citations omitted and emphasis added). The majority, however, in relying on defendant’s affidavits, seems to treat the motion as one for summary judgment.
In addition, I disagree with the majority that Kilpatrick (183 NY 163) is inapposite. In Kilpatrick, the plaintiff had taken out an $80,000 mortgage on property in 1899 that required him to pay interest semiannually, and allowed the defendant to declare the full outstanding balance of principal, interest, and arrears due upon default. Under the terms of the mortgage, the plaintiff also had the option to pay the mortgage off in full between August 28, 1900 and August 1, 1901 if he paid a bonus of $1,000.
*408The plaintiff defaulted on his interest payment due on August 1, 1900, and the defendant instituted a foreclosure action. Thereafter, the plaintiff notified the defendant that he had arranged a new loan for $95,000, and intended to pay the entire amount of the mortgage with interest. The defendant responded by withdrawing the foreclosure action and informing the plaintiff that it would not accept the payment of principal and interest without the $1,000 bonus. The plaintiff paid the principal, interest and, under protest, the $1,000 bonus, and then sued to recover the $1,000.
The Court of Appeals held that the payment of the bonus was not voluntary. It found that by instituting the foreclosure action, the defendant had waived its right to the $1,000 bonus upon the plaintiff’s early satisfaction of the mortgage. The Court further found that, because the plaintiff had changed his position by obligating himself to a new loan, due to the defendant’s election to foreclose on the mortgage, the defendant was estopped from withdrawing the foreclosure action to restore the parties to their positions before the plaintiff’s default. Thus, the defendant had no right to the $1,000 bonus that it demanded.
The Court further found that because the defendant had no right to the payment, which the plaintiff protested, and the “plaintiff, in view of the way business is done in giving a new mortgage to pay off the old one, could not wait to make a tender and take legal action,” the payment was made to “free the property from the duress” (183 NY at 168-169). The plaintiff could “submit to the exaction and pay the bonus, and sue to recover it back, because such a payment is not voluntary” (id. at 169). The Court further explained: “Under these circumstances the compulsion was illegal, unjust and oppressive and the plaintiff having submitted under protest had the right to recover . . . The refusal of the defendant to accept the mortgage debt and interest unless the bonus was paid, placed the plaintiff in a position where he was compelled to submit to the exaction in order to receive a satisfaction of the defendant’s mortgage and secure the money on the new loan which would protect him in the emergency” (id.).
I also disagree with the majority’s reliance on Gimbel Bros. v Brook Shopping Ctrs. (118 AD2d 532 [2d Dept 1986]). The majority, as well as the motion court, seized on the statement in Gimbel that “[w]hen a party intends to resort to litigation in order to resist paying an unjust demand, that party should take its position at the time of the demand, and litigate the issue before, rather than after, payment is made” (Gimbel Bros., *409118 AD2d at 535). However, that statement was made in the context of a mistake of fact or law, without any element of coercion.
Specifically, in Gimbel Bros., the department store began opening for business on Sundays after certain laws, which prohibited public sales on Sundays, were found unconstitutional. The landlord demanded an extra payment for each Sunday that the store operated, although the lease, which was negotiated at a time when the store was not legally permitted to operate on Sundays, did not require such payments. The store acceded to the landlord’s demand for a period of months before ceasing such payments and suing to recover the Sunday charges already paid.
The sole issue with respect to the voluntary payment doctrine in Gimbel Bros, was whether payment of the charges was due to a mistake of fact or law. Without addressing duress or coercion, the court concluded that there was no mistake of fact or law that would enable the store to recover the Sunday charges already paid. Explaining that the store had paid the Sunday charges for a year and one half without making any effort to determine its rights, the court stated, “When a party intends to resort to litigation in order to resist paying an unjust demand, that party should take its position at the time of the demand, and litigate the issue before, rather than after, payment is made” (id.). The issue and the context for this statement were entirely different from those here, where plaintiffs claim they were coerced into making the payment by facing in only a matter of days the loss of the opportunity to refinance the mortgage.
Accordingly, I would reverse.