On February 8, 2023, the Second Department issued a decision in ECI Fin. Corp. v. Resurrection Temple of Our Lord, Inc., 2023 NY Slip Op. 00649, holding that a defendant could not recovery money it voluntarily paid the plaintiff, explaining:
Insofar as relevant here, in the judgment of foreclosure and sale, the Supreme Court awarded the plaintiff reasonable legal fees in the sum of $27,500. In October 2016, in connection with the defendant’s exercise of its right of redemption, the plaintiff sent the defendant a payoff letter demanding the total payoff sum of $1,207,025.09, which included a demand for $130,754.51 in legal fees (hereinafter the subject legal fees), among other things. The defendant paid the full payoff sum demanded, including the subject legal fees, without raising an objection at the time of payment.
In May 2019, the defendant moved, inter alia, for reimbursement of the subject legal fees, contending that the legal fees demanded by the plaintiff were far in excess of the legal fees awarded by the Supreme Court in the judgment of foreclosure and sale. The court, among other things, denied that branch of the defendant’s motion, and the defendant appeals.
The voluntary payment doctrine bars recovery of payments voluntarily made with full knowledge of the facts, and in the absence of fraud or mistake of material fact or law. There is a presumption that payments are voluntary. Additionally, in order for a protest of payment to be characterized as appropriate, it must be in writing and made at the time of payment.
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.
(Internal quotations and citations omitted).