"VOLUNTARY PAYMENT DOCTRINE" APPLIED
Within the context of a mortgage foreclosure case, a Kings County Supreme Court judge awarded the mortgagee legal fees in the amount of $27,500, as against the mortgagor, Resurrection Temple of Our Lord, Inc.
When the Temple later sought to exercise its right of redemption, the mortgagee sent a payoff letter which demanded $1,207,025.09; including $130,754.51 in legal fees. And the Temple paid that entire sum, without protest or raising any objection.
Some three years later, the Temple made a motion to recoup the excess legal fees that it had remitted. But the Kings County Supreme Court denied that request. And, on appeal, the Appellate Division, Second Department, noted that under the “voluntary payment doctrine” – when payments are made “with full knowledge of the facts and in the absence of fraud or mistake of material fact or law” – the recovery of any excess may be precluded.
As the AD2 noted:
Here, the defendant does not claim that the plaintiff engaged in fraud, that there was a mistake of law or fact, or that it levied a protest, in writing or otherwise, at any time prior to making its motion, inter alia, for reimbursement of the subject legal fees. Thus, the voluntary payment doctrine bars the defendant's recovery of payments it voluntarily made in connection with the plaintiff's payoff demand
The AD2 also didn’t think an “economic duress” argument applied here, as the mortgagee was said to be exercising a "legal right." (But given that multiples over the sum awarded by the court were demanded and collected as fees, we’re just not sure how “legal” such a demand was ….)
There will be no resurrecting that, unfortunately.
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DECISION