Adam Plotch LLC v. World Savings Bank, FSB, 1:15-cv-06142

APL purchased Condominium Unit 32-2 in Staten Island at a 2009 foreclosure sale after a Board of Managers foreclosure for unpaid common charges.
Khan, the prior owner, executed a $195,000 mortgage to World Savings Bank, FSB (WSB) in March 2006 (the 2006 Mortgage); WSB was later acquired by Wells Fargo.
APL alleges the 2006 Mortgage is void under N.Y. Real Property Law § 329 because its property description omitted condominium common elements and thus contradicted public records; APL also seeks reforeclosure under RPAPL §§ 1503 et seq. because WSB was not named in the state foreclosure.
Wells Fargo moved to dismiss under Fed. R. Civ. P. 12(b)(1) and 12(b)(6), arguing the mortgage was valid, had priority over the common charge lien, APL lacked standing to challenge the mortgage, and the amount in controversy was insufficient for diversity jurisdiction.
The court found APL has statutory standing under RPL § 329 and that the amount in controversy requirement was met, but dismissed APL’s reforeclosure claim and RPL § 329 challenge because documentary evidence showed the 2006 Mortgage (1) was the first mortgage of record and therefore had priority over the December 2006 common charge lien that underlay the foreclosure sale, and (2) contained a sufficient property description referencing the deed that included the unit and common elements.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to challenge mortgage	APL may contest recorded instruments under RPL § 329 despite not being party to the mortgage	APL lacks contract-based standing because it is not a party or third-party beneficiary	Held for APL: statutory standing exists under RPL § 329
Amount-in-controversy for diversity jurisdiction	APL sought cancellation of a $195,000 mortgage and asked court to set redemption value ≥ $300,000 (claims satisfy jurisdiction)	Wells Fargo argued amount in controversy not met	Held for APL: $195,000 mortgage amount and requested relief satisfy § 1332
Right to reforeclose (RPAPL § 1503)	APL: foreclosure judgment was void as to WSB (not named), so purchaser may reforeclose to clear title	Wells Fargo: 2006 Mortgage was first mortgage of record and had priority over the common charge lien; APL purchased subject to mortgage	Held for Wells Fargo: reforeclosure claim dismissed; 2006 Mortgage had priority over the December 2006 common charge lien
Validity of mortgage description (RPL § 329)	APL: mortgage description omitted condominium unit/common elements, rendering it void/unrecordable	Wells Fargo: mortgage contained metes-and-bounds description and referred to an earlier deed that included unit and common elements; inquiry notice sufficient	Held for Wells Fargo: mortgage description was sufficient; RPL § 329 claim dismissed

Town of Babylon v. Fed. Hous. Fin. Agency, 699 F.3d 221 (2d Cir.) (standards for pleading and factual inference on Rule 12 motions)
Krys v. Pigott, 749 F.3d 117 (2d Cir.) (legal conclusions not entitled to factual-pleading assumption)
L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419 (2d Cir.) (documents contradicting allegations may be considered on a Rule 12 motion)
Leonard F. v. Israel Disc. Bank of New York, 199 F.3d 99 (2d Cir.) (scope of materials considered on a motion to dismiss)
Ashcroft v. Iqbal, 556 U.S. 662 (U.S.) (plausibility standard for complaints)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S.) (pleading standard requiring plausibility)
Hunt v. Washington State Apple Advert. Comm’n, 432 U.S. 333 (U.S.) (amount-in-controversy measured by value of object of litigation)
Pyskaty v. Wide World of Cars, LLC, 856 F.3d 216 (2d Cir.) (burden on plaintiff to establish reasonable probability of meeting amount in controversy; defendant must show to legal certainty otherwise)
St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (U.S.) (standard for jurisdictional amount showing to legal certainty)
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (U.S.) (jurisdiction is a threshold issue)
Plotch v. Citibank, N.A., 27 N.Y.3d 477 (N.Y.) (first mortgage of record concept and priority under RPL § 339-z)
Chemical Bank v. Levine, 91 N.Y.2d 738 (N.Y.) (duration and expiration rule for common charge liens)