Venture v Preferred Mut. Ins. Co.

[*1] Venture v Preferred Mut. Ins. Co. 2020 NY Slip Op 51067(U) Decided on September 22, 2020 Supreme Court, New York County Reed, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on September 22, 2020
Supreme Court, New York County

Daniel Venture, Isabel Venture, Plaintiff,

against

Preferred Mutual Insurance Company, JPMorgan Chase Bank, National Association, Defendant.



155587/2014



Plaintiffs:
Eric John Dinnocenzo
469 Seventh Avenue, Suite 1215. New York, NY 10018
By: Eric John Dinnocenzo Esq.

Defendant: Preferred Mutual Insurance Company
Methfessel & Werbel
112 West 3th Street, 17th Floor, New York, NY 10120
By: Frank J. Keenan Esq., and Frederic P. Gallin Esq.

Dodge & Monroy, P.C.
198 Marcus Avenue, Suite 208, Lake Success, NY 11402
By: Alejandro Monroy Esq., and Peter X. Dodge Esq.

Defendant: JPMorgan Chase Bank, National Association
Parker Ibrahim & Berg LLP
270 Davidson Avenue, 5th Floor, Somerset, NJ 08873
By: Vanessa Laurie Williams Esq.
Robert R. Reed, J.

The following e-filed documents, listed by NYSCEF document number (Motion 010) 241, 242, 243, 244, 245, 246, 247, 248, 249, 250, 251, 252, 253, 254, 255, 256, 257, 258, 259, 260, 261, 262, 263, 264, 268, 269, 270, 271 were read on this motion for JUDGMENT - SUMMARY.

Defendant JPMorgan Chase Bank, National Association (Chase) moves, pursuant to CPLR 3212 (a), for summary judgment dismissing the amended verified complaint (complaint) [*2]as to it. The complaint alleges the following five causes of action: (1) breach of contract (2) bad faith denial of insurance and breach of the implied covenant of good faith and fair dealing; (3) tortious interference with contract; (4) breach of fiduciary duty; and (5) a request for injunctive relief.

This action arises from a denial by defendant Preferred Mutual Insurance Company (PMIC) of a property insurance claim submitted by plaintiff Daniel Venture (Venture), pursuant to his insurance policy (Policy), after his house, in Roscoe, New York, burned down. PMIC denied the claim because it had determined that the fire had been set by Venture, or at his direction. See NYSCEF Doc No. 11. After Venture and his wife, Isabel Venture (collectively, plaintiffs), commenced this action, Chase, which had issued a mortgage to Venture on which Venture defaulted on April 1, 2009, moved to intervene. The motion to intervene was granted on November 2, 2017. Subsequently, Chase subrogated its interest in the mortgage to PMIC in exchange for a payment of $175,910.30. Thereafter, Chase moved to discontinue the foreclosure action, which motion was granted on July 25, 2019. Chase has since applied the payment it received from PMIC, under the Policy, to the amount owed under the mortgage, and executed a "Satisfaction of Mortgage" which was recorded on March 30, 2020. See NYSCEF Doc No. 249.The breach of contract claim alleges that:

"Chase's demand for and receipt of the insurance proceeds and transfer of the mortgage to Preferred was a violation of the terms of the mortgage and the policy."

NYSCEF Doc No.259, ¶ 40. Inasmuch as one cannot breach a contract to which one is not a party, and inasmuch as Chase was not a party to the Policy, Chase could not have breached the Policy. Nor did Chase breach Venture's mortgage. Real Property Law § 254 (4) provides, in relevant part that, with regard to insurance proceeds:

"If and so long as there exists any default by the mortgagor in the performance of any of the terms or provisions of the mortgage on his part to be performed the mortgagee shall not be obligated to pay over any of said insurance money received by him, . . . [I]f the entire principal of the mortgage shall have become payable by reason of default or maturity, the mortgagee shall apply said insurance money in satisfaction or reduction of the principal of the mortgage...."

Here, Venture's default was established in Chase's foreclosure action. See JP Morgan Chase Bank, N.A. v Venture, 148 AD3d 1269 (3d Dept 2017). Accordingly, Chase was justified in arranging to receive so much of the insurance proceeds as was needed to satisfy the mortgage. Moreover, Venture's mortgage requires plaintiff to obtain property insurance "to protect Lender and . . . nam[ing] Lender . . . as an additional loss payee" (NYSCEF Doc No. 254, ¶ 5) and the Policy provides for protection of the interests of a mortgagee and other creditors. See NYSCEF Doc No. 246, ¶ 15

The second cause of action alleges that "Chase took actions . . . in order to directly receive the insurance proceeds," thus defeating Venture's right thereto. Id. ¶ 51. As a nonparty to the Policy, Chase could no more breach the implied covenant of good faith with respect to the Policy, than it could breach the Policy directly. Chase had prevailed in its foreclosure action, and was, therefore, entitled to satisfy its mortgage. It committed no wrong in doing so.

The third cause of action alleges that "Chase intentionally induced [PMIC] to breach the insurance policy or render performance impossible by demanding that [PMIC] make payment to it directly." Id. ¶ 58. A plaintiff asserting a claim of tortious interference with contract must show, among other things, "an improper procuring of a breach." White Plains Coat & Apron [*3]Co. v Cintas Corp., Inc. 8 NY3d 422, 426 (2007); see also Normandy Real Estate Partners LLC v 24 E. 12th St. Assoc. LLC, 168 AD3d 429, 430 (1st Dept 2019). Here, as Venture was in default of his mortgage, Chase's action in securing satisfaction of its mortgage from PMIC was fully authorized by Real Property Law § 254 (4), and, therefore, not improper. Moreover, PMIC did not breach its contract with plaintiff, the Policy provides that "if a mortgagee is named on the 'Declarations', a loss payable . . . will be paid to the mortgagee and 'you', as interests appear." NYSCEF Doc No. 246, ¶ 15. Since Venture had defaulted on his mortgage, Chase's interest in the proceeds of the Policy were superior to that of plaintiffs, to the extent of Venture's indebtedness under the mortgage.

The fourth cause of action must be dismissed, because the relationship between a debtor, such as plaintiff, and a note-holding creditor, such as Chase, does not give rise to a fiduciary duty on the part of the latter. SNS Bank v Citibank, 7 AD3d 352, 354 (1st Dept 2004), citing Fallon v Wall St. Clearing Co., 182 AD2d 245, 250 (1st Dept 1992) (other citation omitted).

The fifth cause of action seeks injunctive relief setting aside the agreement between PMIC and Chase, or "extinguish[ing] the mortgage." Plaintiff defaulted on his mortgage, and thus Chase was within its rights in satisfying it from plaintiff's insurance policy. That being so, there is no basis for granting plaintiff the injunctive relief he seeks.

Accordingly, it is hereby

ORDERED that the motion of defendant JPMorgan Chase Bank, National Association to dismiss the complaint as against it is granted with costs as calculated by the Clerk upon the submission of an appropriate bill of costs; and it is further

ORDERED that the remainder of this action shall continue.

Dated: September 22, 2020
Robert R. Reed, J.S.C.