Justice Barbara Jaffe
In 2006, plaintiff Patmos Fifth Real Estate purchased a multi-unit building in Manhattan from defendant Mazl Building with a $9,350,000 loan from Mazl secured by a mortgage on the building due to be paid by 2007. As Patmos failed to maintain insurance for or pay taxes on the building, it borrowed $1,000,000 from defendant NYA Building Construction Corp., secured by a second mortgage on the building. Patmos subsequently commenced this action, asserting claims for conspiracy to commit fraud, fraud, and the violation of Real Property Law §320, seeking rescission of the consolidated mortgage, the condo mortgage and the deed. The court, among other things, determined that the deed does not demonstrate that it did not function as security for the amount outstanding on the consolidated mortgage and it is therefore reasonably inferred that the parties contemplated the plaintiff's continued ownership of the building notwithstanding its 2009 default. The court added that plaintiffs therefore stated a claim for violation of CPLR 320(a), as the defendants failed to extinguish the mortgagor's interest.
