Lord-N-Fields Voice of Freedom Bible Church Community Workers Intl., Inc. v Kwan
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Lord-N-Fields Voice of Freedom Bible Church Community Workers Intl., Inc. v Kwan 2012 NY Slip Op 32151(U) August 2, 2012 Supreme Court, Suffolk County Docket Number: 2009-03156 Judge: Jeffrey Arlen Spinner Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE STATE OF VEW YORK IAS PART XXI - COUNTY OF SUFFOLK PRES EN7 : HON. JEFFREY ARLEN SPINNER Justice of the Supreme Court .......................................... CO LORD-N-FIELDS VOICE OF FREEDOM BIBLE CHURCH COMMUNITY WORKERS INTERNATIONAL INC, Plaintiff, 1NDE:X NO.: - against - 2009-03156 ALLEN KWAN, JACK WILSON, ANDREW CHEN, MTN SEQ NO: 00x1-CASE DISP FIRST BELL HARBOR DEVELOPMENT CORP ORIG MTN DATE: Oxxxx/O5/1o INC, MAIN STREET FUNDING CORP, PREMIERE HOMES DEVELOPMENT INC, BRADFORD FINAL MTN DATE: 1 xxxxO/l2/1 I CONSTRUCTION C O W , DAVID R. MALTZ & CO INC, MERS, as nominee for BNY MORTGAGE COMPANY LLC and EVERBANK, Defendants. .......................................... UPON the following paper(s) numbered 1- 15 read on the Motion and Cross Motions: Plaintiffs Motion [002] (Paper 1); Attorney General s Support C O1 (Paper 2); O2 Defendants MERS &Everbank s Cross Motion [003] (Papers 3-4); 0 Plaintiffs Opposition [003] (Paper 5 ) ; Defendant BRADFORD S Opposition [002] and Support [003] (Paper 6); 0 Attorney General s Opposition [003] (Paper 7); Defendants MERS &Everbank s Reply (Paper 8); Defendant CHEN s Cross Motion [004] (Papers 9-10); Plaintiffs Opposition [004] (Paper 11); Defendant CHEN s Reply (Paper 12); Defendants MERS &Everbank s Post-discovery Affirmations (Papers 13- 15) 0 0 OIWERED, that Plaintiffs application is liereby granted to the extent set forth hereiii below, and it is further ORDERED that Defelidants MERS &Everbank s application is hereby denied in all respects, and i t is further ORDERED that Defeendant CHEN s application is hereby denied in all respects Page 1 of 8 [* 2] Plaintiff moves this Coui-t [002] for an Order, pursuant to CPLR 3212, granting it partial summary judgment on its first. second. fifth and sixth causes of action, and severing the remainder of the issues. Defendants MERS, as nominee for BNY,and Everbank (collectively, the Banks ) cross-move this Court [003] for an order: (a) Awarding them summary judgment pursuant to CPLR 3212; and (b) Declaring that the transfer of property located at 120 Beaver ]lam Road, Bellport, New York, from Plaintiff to First Bell Harbor Development Inc, be deemed valid and not subject to the requirements of Religious Corporation Law $ 12 (l), in full force and effect; that all subsequent transfers of the said property and attached mongages, specifically held by the Banks, be deemed valid and in full force and effect; that the transfer of the said property from Plaintiff to First Bell Harbor Development Inc, be ratified and declared to duly constitute a valid transfer of property under Religious Corporation Law $ 12 (1); or, alternatively, that the Court order Plaintiff or the Banks to file a petition for ralification pursuant to Religious Corporation Law 5 12 (9). Defendant CHEN moves this Court [004] for an Order, pursuant -.o CPLR 321 l(a), dismissing all causes of action asserted against him based on documentary evidence. Plaintiff, Lord-N-Fields Voice Of Freedom Bible Church Conimunity Workers International, Inc., (the Church ), a domestic not-for-profit religious corporation, commenced the instant action after learning that the parcel of land on which its active place of worship is located was under foreclosure and scheduled for a public sale. By the Oder of this Court dated May 19, 20109, the auction was stayed and this action ensued. According to the Complaint, the Church was formed on April 1, 2003. On April 8, 2003, the Church received from an elderly parishioner title to a parcel of land (the Property ), comprising 5.5 acres of land improved by two buildings, located at 120 Beaver Dam Road, Bellport, Town of Brookhaven, County of Suffolk, State of New York. At the time of tlie conveyance, the Property represented 70% of the total assets of the Church. The purpose of the donation was to allow the Church to develop the Property into a senior citizen s housing complex for local Church residents, and to use the existing improvements thereon for other parish business. The Coinplaint further alleges that, in an effort to construct the senior citizen s housing, the Church s pastor, Reverend Fields, had laid the groundwork foi malting an application to the I owii of Brool<haven for municipal approval, obtaining necessary permits to develop the property for the intended purpose, and securing a requisite financing, in the course of which 17c \vas introduced to some of the Defendants. The same Defendants advised Reverend Fields that the Church. being a religious corporation. would be unable to obtain the requisite financing for tlie project, and that a business entity needed to be formed i n order to nialte the approprjate ap p I 1cat 1 on 1.0 r such fi nanc 1ng . Tlic C li~~rch not seek legal advice on that matter. Instead, the Church. through its President, did Ilc\7ei-endFields, and Defendant Kwan formed Defendant First Bell Harbor Development Inc, ( First Bell ) for the specific purpose of taking title to the Property. As a result of an alleged Page 2 of 8 [* 3] conspiracy and material fraud among several Defendants, on December 1 1, 2003, the Church deeded the Property to First Bell. The Church never entered into a contract for sale with, or received, any consideration from First Bell for the Property. Although the transfer of the Property? belonging to a religious corporation, required the approval of the Supreme Court of the State of New York, and the consent of the Attorney General of the State of New York, the same were neither sought nor obtained. On March 23, 2004, Defendant Kwan, allegedly holding 5 1 percent of First Bell s stock, deeded the Property froin First Bell to himself, individually, for no consideration, and without the knowledge of the Church, the Court, or the Attorney General. Simultaneously with the execution of the unauthorized deed from First Bell to Kwan, individually, he, assisted by some of the other Defendants, mortgaged the Property to Defendant MERS predecessor in interest in the amount of $330.000, by mortgage, dated March 23, 2004, and then to Defendant Everbank in the amount of $157,000, by mortgage, dated June 10, 2004. These encumbrances have effectively consurned most, if not all, of the equity of redemption in the Property. The Complaint alleges that these mortgages were arranged by Defendants Kwan, Wilson and Chen, each of whom received a portion of the proceeds, while the Church received no part of the proceeds froin either mortgage. When, in April 2007, it became apparent that the Town of Brookhaven would not approve the senior housing complex, the Church, through its attorney, made a written demand upon Kwan to deed the property back to the Church. However, despite Kwan s oral assurances, the Propt:rty was never deeded back to the Church, and while Kwan remains In title, both mortgages are now in default. The Church moves for partial summary judgment on its first, second, fifth and sixth causes of action, seeking an Order vacating the deed of conveyance froni the Church to First Bell, and froin First Bell to Kwan, individually, and cancelling the mortgage liens held by the Banks. Specifically, as to the first cause of action, tlie Church seeks a declaration that it is the owner of the Property. As to tlie second cause of action, the Church seeks imposition of a coiistiuctive trust on Kwan, for the benefit of the Church. As to the fifth cau,c,eof action, the Church seeks a dcclaration that the mortgages extended by MERS & Everbank never formed valid liens against the Property. As to the sixth cause of action, the Church seeks a pernianent iiijunction against Kwan and Maltz, prohjbiting them from conducting any auction, sale, hypothecation 01- othcr transf er of the Property, or from mortgaging or otherwise encumbering the Property. 1 11e Ch~~i-ch argues that since the transfer of the Property to Firs1 Bell was made in violatioil of ficl~g~ous Corporation Law 5 12 (1) ( RCL ), which recl~urtxapproval of the Supreiiie Court and consent ol the Attorney General, First Bell never obtained legal ti e to the Property, and therefore dl subsequent transfers of the Property, and the two mortgage liens subsequently recorded against it, are null and void. Page 3 of 8 [* 4] The Office of the Attorney General submitted an affirmation ili support the Church s motion, stating that, pursuant to RCL and Not-for-Profit Corporation Law ( IN-PCL ),its Office is entrusted with the responsibility to review real estate transactions involving not-for-profit corporations and religious corporations to ensure that they are protected from losing their property due to either poor decision or fraud. Accordingly, it is the Attorney General s position that, had his office been properly notified, as required by N-PCL 5 5 1 l(b), it would have objected to the transfer of the Property as unsupported by any contract, consideration or consent of the membership or the Board of Directors of the Church, and therefore not in the Church s best interest. The Banlts oppose the Church s motion, and cross-move for an order declaring that the initial transfer of the Property from the Church to First Bell be deemed valid, and not subject to the recluirements of RCL $ 12 (l), and therefore all subsequent translers of the Property and attached mortgages be deemed valid, because the transfer was not a sale, mortgage, or lease exceeding five years, all of which require the court and the Attorney General s approval. According to First Bell s corporate records, it was a transfer from the Church to an entity wholly owned and controlled by Reverend Fields and his family. Since the members of the Church maintained ownership and complete control of the Property after its transfer to First Bell, the Church was never in danger of losing the asset so transferred, malting the rnain purpose of RCL 5 12 ( I ) , protecting religious corporations from dissipating their assets, inapplicable herein. The Banks further argue that the transfer of the Property to First 3ell was ratified by the Church, and duly constitutes a valid transfer of Property under of RCL, 5 12 (l), because, despite its assertion to the contrary, the Church had knowledge of the requirements of RCL 8 12 (l), as it previously sought and obtained the Court s approval in connection with the sales of its properties in 2005, 2006, and 2007. In sum, the Church s calculated inaction, and its salient Itnowledgr: of the reqiiirenieiit of RCL 9 12 ( I ) , for a minimum of three years after the transfer has effectively ratified the conveyance of the Property from the Church to First Eell. I he Hanks further assert that the Church s allegation that it did not receive any consideration for the transfer is incorrect, since, through the Church s own admission, the transfer was executed fbr the purpose of obtaining financing for the intended use of the Property, which itself amounts t o a valid consideration. In the altcrnativc, the Baiilts arguc that they are entitled to an o r d mandating the Chui-ch lo file ~ a petitinn for ratification, pursuant to RCL $ 12 (91, ~vhlch allows for the ratification of a transfer of property Iron1 a religious corporation, after the transfer has been executed, or permittiii,g the Banl<s to clo so. I he C liurch opposes the Banlts cross-motion, arguing that the controlling provisions of RCI,are not discretionary. but are a iiianclate. Page 4 o f 8 [* 5] Defendant Bradford opposes the Church's motion, and supports the Banks' cross-motion. A party moving for Summary Judgment must make a prima facie showing of entitlement to judgment as a matter of law, offering sufficient evidence to demonstrate the absence of any inaterial issues of fact (see: Wiriegrtrtl v New York University Medical Center, 64 NY2d 851 [ 19851; Zrrckerman v City o New York, 49 NY2d 557 [ 19801). Once a pi+iiu,fucie showing is f made by the movant, the burden shifts to the party opposing the motion to produce evidentiary proof in admissible form sufficient to establish material issues of fact which require a trial (.see: Zayas v Half Hollow Hills Cent. Scltool Dist, 226 AD2d 71 3 [: Dept 19961). "[Iln determining ; a motion for summary judgment, evidence must be viewed in the light most favorable to the noninovant" (Penrsoiz v Dix McBride LLC, 63 AD3d 895 [:? Dept 20091). Since suininary judgment is the procedural equivalent of a trial, the motion should be denied if there is any doubt as to the existence of a triable issue or when a material issue o f fact is arguable ( ~ e e S f d i m v : IPT Trucking Inc, 203 AD2d 352 [2 Dept 19941). This action involves ~1 not-fbr-profit religious corporation, a clils:j of litigants that the Legislature had deterniinecl to be entitled to special safeguards. and it is governed by both RC'L and N-PCL. RCL 5 12(1) provides that "[a] religious corporation shall not se:ll, mortgage or lease for a term exceeding five years any of its real property without applying for and obtaining leave of the court" pursuant to N-PCL fj 5 1 1. N-PCL $5 5 1 l(a) provides that "[a] corporation required by law to obtain leave of court to sell, lease, exchange or otherwise dispose of all or substantially all its assets, shall present a verified petition to the supreme court," and it sets forth the contents of such a petition. "The purpose of these requirements is to protect the members of the religious corporation, the real parties i n interest, from loss through unwise bargains and from perversion of the use of the property." (see: Church o Gocl o Prospect Plaza v Fourth CIiwcIi o Christ, Scientist, f f f B r o o k l y ~76 AD2d 712, 716 [2 Dept 19801, afld 54 NY2d 742 [1981].) , Accordingly, these provisions expressly make authorization by the Supreme Court and the consent of the Attorney General a condition precedent to the conveyance of real property belonging to a Non-for-Profit religious corporation (.see C1zurr:h of Gocl of Prospect Plcrzcr 11 Foilrtlt Chrrrclz of Christ, Scientist, Brookljuz, 76 AD2d 7 12, supin). Therefore, until and LiiileSS leave o f the court has been obtained, on notice to the Attorney General, a religious corporalion cannot make a valid conveyance of its real property 1 ICIL', it I S admittcd that the 1ICL 12(1) requireiiient \vas not complied with i n that Icmc of court. on notice to the Attorney General, was never sought or obtained for the transfer of title to the I'ropcrty from the Church to Fii st Bell. This I S especially true slnce the Church consummated tliiee previous conveyances, all after obtaining approval of the Supreme Coui t 'Thus. the piirported conveyance to First Bell IS invalid and void, LI/? / ~ i / / o Page 5 of 8 [* 6] Since First Bell never obtained a valid legal tile to the Property. it could not have conveyed valid legal title to Kwan. Consequently, at the time the Banks made the two loans to Kwan, and took security interests in the Property, Kwan held no valid legal title to it. Accordingly, the purported conveyance from First Bell to Kwan' individually' is iiull and void. It follows, then, that mortgages held by the Banks also null aiid void, and must be discharged. Defendant Chen iiioves this Court [004]for an Order, pursuant ':o CPLR 321 l(a), dismissing all causes of action as asserted against him individually. The Church opposes Chen's application. On a pre-answer motion to dismiss pursuant to CPLR 321 1, the pleading is to be afforded a liberal construction, aiid plaintiffs allegations are accepted as true, aiid accorded the benefit of every possible favorable inference (.we: Leon v Martinez, 84 NY2d 83 [1994]). Pursuant to CPLK 321 l(a)(l), such an application may be granted only if documentary evidence submitted by the moving party utterly refutes the factual allegations of the complaint, and conclusively establishes a defense to the claims as a matter of law (see; GOSIZCIZ v Mutual Life Ins Co o iW, f 98 NY2d 3 14 [2002]). For evidence to qualify as "documentary," it must be unambiguous, authentic, and undeniable (see: Fontanetta v John Doe I , 73 AD3d 78 [2010]). Neither affidavits, deposition testimony, nor letters are considered "documentary evidence" within the intendment of CPLR 321 1 (a) (1) (see; Suclzmaclzer vMananer Grocery, 73 AD3d 1017 [2010]. I n support of his motion, Chen submits his attorney's affirmation, a copy of the deed from First Bell to Kwan, First Bell's corporate records (including the list of its shareholders and the election of Chen as a director), and very brief excerpts of unsigned and uncertified transcripts of depositions of Kwan and Reverend Fields. Contrary to Chen's contention, his submissions do not satisfy the standard described above, as they fail to refute the allegations of the complaint, including, among others, allegations of fraud. Accordingly, Chen's motion to dismiss the complaint is hereby denied. Chen's request, made in his Reply papers, that the Court treat hi:; motion pursuant to 321 1 (c) is also denicd. Aside from Chen's failure to serve adequate notice on all parties, the evidence offered by him denionstrates the existence of triable issues of [act as to his role and involveinenl i n the transactions in the case at bar I'he Court notcs that' although the deposition transcripts subniilted by thc I3anla and Cheii in slipport of their respective motions were not signed, and not certified by a reporter, they were propei 11, considered i n s ~ p p o r of the Defendants' motions, since the excerpts thereof incl~idetlin t the rccord were not challenged as inaccurate (lee Zrlof vZiebn, 81 AD3d 935 [2 Dept 201 11) Isor all the reasons stated herein above and i n the totality of thc papers submittcd herein. i t therc~i1r.e IS OI<DEREI), that the above referenced Motion 10021. is hereby granted in the following respects . . I t IS Page 6 of 8 [* 7] ORDERED ADJUDGED AND DECREED, that the conveyaiice of the Property from LORDN-FIELDS VOICE OF FREEDOM BIBLE CHURCH COMMUNITY WORKERS INTERNATIONAL INC, to FIRST BELL HARBOR DEVELOPMENT INC, as evidenced by deed, dated December 1 1 , 2003. and recorded in the Office of the Suffolk County Clerk in LiberD12292. Page 378, is null and void, ab Initio, and it is furthzr ORDERED ADJUDGED AND DECREED, that the conveyance of the Property from FIRST BELL HARBOR DEVELOPMENT, INC., to ALLEN KWAN is null and void, ab inilio, arid it is further ORDERED ADJUDGED AND DECREED, that mortgages held by MERS, as nominee for BNY Mortgage Company LLP and EVERBANK, are hereby anrulled, cancelled and discharged, of record; and it is further ORDERED, that the County of Suffolk Clerk is directed to caiicel a i d discharge of record the mortgages attached to the property located at 120 Beaver D m i Road. Bs1Ipol-t. Town of Broohhaven, County of Suffolli. State of New York (District: 0200; Scction: 976.10; Block, 03 .OO; I- 01: 004.000), given by Del endaiit KWAN to Defendants BNY Moi-tgage Contpany LLP and EVERBANK: and it is ftirther ORDERED, that the remaining claims are severed and continued; and it is further ORDERED, that the above referenced application LO031 of BNY/EVERBANK is hereby denied in all respects, and it is further ORDERED, that the above referenced application [004] of CHEN is hereby denied in all respects, and it is further ORDERED, that Counsel for Plaintiff is hereby directed to serve a copy of this Order, with Notice of Entry, upon Counsel for all other parties, the Clerk of this Court and the Suffolk County Clerk, within 20 days of entry of this Order by the Suffolk County Clerk. Dated: Riverhead, New York August 2,2012 i d SCAN I Page 7 o f 8 DO NOT SCAN I [* 8] TO: Scheyer & Jellenick 110 Lake Avenue South, Suite 46 Nesconset, NY 1 1767 Attorney General of NY S Alan B. Berltowitz, Assistant District Attorney 300 Motor Parkway, Suite 205 Hauppauge, NY 1 1788 Richard V. Archibald, PLLC 26 Court Street, Suite 71 1 Brooklyn, NY 1 1242 Andrew Chen, Esq. 1164 70th Street Brooklyn, NY 11228 Jack Wilson 86-1 6 Queens Blvd. Suite 207 Elmhurst, NY 1 1373 Premiere Homes Development, Inc. 86- 16 Queens Blvd. Suite 207 Elinhurst, NY 1 1373 Brief Carmen & Kleinian, LLP 805 Third Avenue, 1 1 t Floor New Yorlt, NY 110022 David R. Maltz & Co., Inc. 155 Terminal Drive Plainview. N Y I 1803 Spiegcl & Iltrera, P.A., P.C 45 .John Street, Suite 71 1 New York. N Y 10038 Page 8 of 8
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