text:
    [34 NE3d 363, 12 NYS3d 612]
    Aurora Loan Services, LLC, Respondent, v Monique Taylor, Also Known as Monique Pujol Taylor, et al., Appellants, et al., Defendants.
    Argued April 30, 2015;
    decided June 11, 2015

      POINTS OF COUNSEL

      Zinker & Herzberg, LLP, Hauppauge (Jeffrey Herzberg of counsel), for appellants.
    I. Aurora Loan Services, LLC did not possess a valid and enforceable mortgage as of the commencement of the mortgage foreclosure action. (Homecomings Fin., LLC v Guldi, 108 AD3d 506; Merritt v Bartholick, 36 NY 44; Kluge v Fugazy, 145 AD2d 537; Beak v Walts, 266 App Div 900; Flyer v Sullivan, 284 App Div 697; Corey v Collins, 10 AD3d 341; Bank of N.Y. Mellon v Gales, 116 AD3d 723; Barbarito v Zahavi, 107 AD3d 416; Deutsche Bank Natl. Trust Co. v Spa-nos, 102 AD3d 909, 21 NY3d 1068; MLCFC 2007-9 Mixed Astoria, LLC v 36-02 35th Ave. Dev., LLC, 116 AD3d 745.) II. Mortgage Electronic Registration Systems, Inc. never possessed a valid and enforceable mortgage lien. (Matter of MERSCORP, Inc. v Romaine, 8 NY3d 90; Bank of N.Y. v Silverberg, 86 AD3d 274; HSH Nordbank AG v Barclays Bank PLC, 42 Misc 3d 1231[A], 2014 NY Slip Op 50290[U]; Deutsche Bank Natl. Trust Co. v Pietranico, 33 Misc 3d 528, 102 AD3d 724.) III. An affidavit cannot substitute for the production and inspection of the original mortgage note or the assignment of the original mortgage note. (Schozer v William Penn Life Ins. Co. of N.Y., 84 NY2d 639; Kiamovich v Kiamovich, 85 AD3d 867; Posson v

      Przestrzelski, 111 AD3d 1235; US Bank N.A. v Eaddy, 109 AD3d 908; Wilson v Toussie, 260 F Supp 2d 530; Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674; Wells Fargo Bank, N.A. v Eisler, 118 AD3d 982.)

      Ballard Spahr LLP (Martin C. Bryce, Jr., of the Pennsylvania bar, admitted pro hac vice, of counsel), and Knuckles, Komosinski & Elliott, LLP, Elmsford (Michael Lee of counsel), for respondent.
    I. The Second Judicial Department correctly held that, as a matter of New York law, Aurora Loan Services, LLC possessed standing to commence this foreclosure action. (Baron Assoc., LLC v Garcia Group Enters., Inc., 96 AD3d 793; Barclay’s Bank of N.Y. v Smitty’s Ranch, 122 AD2d 323; Deutsche Bank Natl. Trust Co. v Pietranico, 33 Misc 3d 528; Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674; Slutsky v Blooming Grove Inn, 147 AD2d 208; Bank of N.Y. Mellon v Deane, 41 Misc 3d 494; State Bank v Central Mercantile Bank, 248 NY 428; Carlin v Jemal, 68 AD3d 655; Bank of N.Y. v Silverberg, 86 AD3d 274; Bank of N.Y. Mellon Trust Co. NA v Sachar, 95 AD3d 695.) II. Under New York law, Aurora Loan Services, LLC was not required to produce the original note to establish standing; rather, uncontroverted affidavit testimony demonstrating Aurora’s possession of the note prior to commencement of the foreclosure proceedings was sufficient to establish standing. (Barclay’s Bank of N.Y. v Smitty’s Ranch, 122 AD2d 323; Sam v Town of Rotterdam, 248 AD2d 850.) III. Although assignment of the mortgage was not required to confer standing to foreclose under New York law, Mortgage Electronic Registration Systems, Inc. had authority to, and did, effect a valid assignment of the mortgage to Aurora Loan Services, LLC. (Bank of N.Y. Mellon Trust Co. NA v Sachar, 95 AD3d 695; Bank of N.Y. v Silverberg, 86 AD3d 274; Shultis v Woodstock Land Dev. Assoc., 195 AD2d 677; Federal Deposit Ins. Corp. v 65 Lenox Rd. Owners Corp., 270 AD2d 303; Adelman v Fremd, 234 AD2d 488; Stein v American Mtge. Banking, 216 AD2d 458.)

      Hiscock & Barclay, LLP, Buffalo (Charles C. Martorana and Kimberly A. Colaiacovo of counsel), for MERSCORP Holdings, Inc. and another, amici curiae.
    I. Appellants lack standing to challenge Mortgage Electronic Registration Systems, Inc.’s assignment of their mortgage. (Matter of Holden, 271 NY 212; Jennings v Foremost Dairies, 37 Misc 2d 328; Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173; Strauss v Belle Realty Co., 98 AD2d 424.) II. The Mortgage Electronic Registration Systems, Inc.® system. (Horvath v Bank of N.Y., N.A., 641 F3d 617; In re Security Capital Assur. Ltd. Sec. Litig., 729 F Supp 2d 569; Matter of MERSCORP, Inc. v Romaine, 8 NY3d 90; Deerman v Federal Home Loan Mtge. Corp., 955 F Supp 1393.) III. Aurora Loan Services, LLC possessed standing to commence the foreclosure action. (Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674; Slutsky v Blooming Grove Inn, 147 AD2d 208; GRP Loan, LLC v Taylor, 95 AD3d 1172; Kondaur Capital Corp. v McCary, 115 AD3d 649; First Trust Natl. Assn. v Meisels, 234 AD2d 414; Weaver Hardware Co. v Solomovitz, 235 NY 321; Fryer v Rockefeller, 63 NY 268; Matter of Falls, 31 Misc 658, 66 App Div 616; Becker v Wells, 297 NY 275; Flyer v Sullivan, 284 App Div 697.) IV. Mortgage Electronic Registration Systems, Inc., as nominee, has authority to assign the mortgage. (Matter of Doniger v Rye Psychiatric Hosp. Ctr., 122 AD2d 873; Red Hook Cold Stor. Co. v Department of Labor of State of N.Y., 295 NY 1; Matter of Johnsen v ACP Distrib., Inc., 31 AD3d 172; Matter of El-Roh Realty Corp., 48 AD3d 1190; Zurich Am. Ins. Co. v ABM Indus., Inc., 397 F3d 158; Standard Bldrs. Supplies v Gush, 206 AD2d 720; Matter of Stralem, 303 AD2d 120; Allhusen v Caristo Constr. Corp., 303 NY 446; Sullivan v International Fid. Ins. Co., 96 AD2d 555; US Bank N.A. v Flynn, 27 Misc 3d 802.) V. The Taylor mortgage is valid. (Gibson v Thomas, 180 NY 483; Finn v Wells, 135 Misc 53; W.L. Dev. Corp. v Trifort Realty, 44 NY2d 489; People v Prince, 110 Misc 2d 55; Williams v Wisner Bldg. Co., Inc., 121 Miscc 32, 208 App Div 783; Munoz v Wilson, 111 NY 295; Wood v Travis, 231 App Div 331; In re Cushman Bakery, 526 F2d 23; Deutsche Bank Natl. Trust Co. v Pietranico, 33 Mise 3d 528; Wechsler v Hunt Health Sys., Ltd., 216 F Supp 2d 347.)
   OPINION OF THE COURT

Chief Judge Lippman.

The issue presented by this appeal is whether plaintiff Aurora Loan Services, LLC had standing to commence this mortgage foreclosure action. We now affirm that part of the Appellate Division order (114 AD3d 627 [2d Dept 2014]) upholding Supreme Court’s grant of summary judgment in favor of plaintiff, and hold that Aurora did have standing.

Defendant Monique Taylor executed and delivered an adjustable rate note dated July 5, 2006 to First National Bank of Arizona, wherein she agreed to repay the bank $600,000, with interest. To secure the payment, Monique and Leonard Taylor (the Taylors) executed a mortgage with the bank, granting Mortgage Electronic Registration Systems, Inc. (MERS), as nominee, a mortgage lien on the property located in Fleetwood, New York. The note, however, was not transferred to MERS with the mortgage.

Subsequent to the note’s execution, pursuant to a March 2006 pooling and servicing agreement (PSA), the loan was made part of a residential mortgage-backed securitization trust. Deutsche Bank Trust Company Americas, as trustee, became the owner of the note through an allonge indorsing the note to Deutsche, as required under the PSA. The allonge shows the chain of ownership of the note through indorsements from First National Bank of Arizona, to First National Bank of Nevada, to Residential Funding Company, LLC, to Deutsche.

On April 1, 2008, Aurora assumed servicer obligations under the PSA pursuant to a March 10, 2008 master servicing assignment and assumption agreement (MSAAA). The mortgage was subsequently assigned by MERS to Aurora on August 13, 2009, and recorded with the County Clerk on October 29, 2009.

Thereafter, the Taylors defaulted under the note and mortgage by failing to make the payment due on January 1, 2010, and each month thereafter. The Taylors have never disputed their obligation to make the payments or their default. Multiple notices of default were mailed to the Taylors through May of 2010.

On May 14, 2010, Deutsche, by limited power of attorney, granted Aurora the right to perform certain acts in the trustee’s name, including the execution of documents related to loan modification and foreclosure. Aurora, through its agents, asserts it took physical custody of the original note on May 20, 2010. Aurora commenced this foreclosure action by filing a summons and complaint with the Westchester County Clerk on May 24, 2010. These were personally served upon the Taylors on May 29, 2010. The Taylors filed an answer on June 29, 2010.

The Taylors filed a motion for summary judgment, asserting that Aurora did not have standing to bring this foreclosure action. Aurora cross-moved for summary judgment. In support of its cross motion, Aurora submitted the affidavit of Sara Holland (Holland affidavit), Aurora’s legal liaison, who stated that based on her “personal knowledge” of the facts as well as her “review of the note, mortgage and other loan documents” and “related business records . . . kept in the ordinary course of the regularly conducted business activity,” the “original Note has been in the custody of Plaintiff Aurora Loan Services, LLC and in its present condition since May 20, 2010.” Holland also stated that, “prior to the commencement of the action, Aurora Loan Services, LLC, has been in exclusive possession of the original note and allonge affixed thereto, indorsed to Deutsche Bank Trust Company Americas as Trustee, and has not transferred same to any other person or entity.” A copy of the note and allonge were attached to the affidavit.

Supreme Court denied the Taylors’motion for summary judgment, granted Aurora’s cross motion for summary judgment, and appointed a referee to determine the amount due under the note. Aurora then filed a motion for summary judgment of foreclosure and sale, which the Taylors opposed. The court granted that motion on April 29, 2013, adopting the referee’s recommendation without a hearing. The Taylors appealed both orders.

The Appellate Division affirmed the first order, concluding that Aurora had proven its standing as a matter of law. The Court concluded that, under New York law, the Holland affidavit demonstrated that Aurora had obtained physical possession of the original note prior to commencement of this foreclosure action, and that such was legally sufficient to establish standing. The Court specifically noted that the Taylors “offered no evidence to contradict those factual averments and, therefore, failed to raise a triable issue of fact with respect to [Aurora’s] standing” (114 AD3d at 629). However, the Court reversed the judgment of foreclosure and sale and remitted the matter to Supreme Court for further proceedings, concluding that Supreme Court erred in confirming the referee’s report because the referee had computed the amount due to Aurora without holding a hearing on notice to the Taylors (see id. at 629-630). One Justice dissented, arguing that the Holland affidavit was insufficient to confer standing on Aurora because it did not give sufficient “factual details” regarding the physical delivery of the note to Aurora (id. at 631, citing HSBC Bank USA v Hernandez, 92 AD3d 843, 844 [2d Dept 2012]). Thereafter, the Appellate Division granted the Taylors’ motion for leave to appeal, certifying the following question: “Was the decision and order of this Court . . . properly made?” (2014 NY Slip Op 70548[U] [2d Dept 2014].)

The critical issue we must resolve is whether the record demonstrates a basis for finding that Aurora had standing to commence this mortgage foreclosure action. The physical delivery of the note to the plaintiff from its owner prior to commencement of a foreclosure action may, in certain circumstances, be sufficient to transfer the mortgage obligation and create standing to foreclose (see e.g. Bank of N.Y. Mellon Trust Co. NA v Sachar, 95 AD3d 695 [1st Dept 2012]; Deutsche Bank Natl. Trust Co. v Pietranico, 33 Misc 3d 528, 535 [Sup Ct, Suffolk County 2011]; In re Escobar, 457 BR 229, 240 [ED NY 2011]).

Applying these principles of New York law, Aurora was vested with standing to foreclose. The evidence established that, as of 2006, Deutsche, as trustee under the PSA, became the lawful owner of the note. The Holland affidavit establishes that Aurora came into possession of the note on May 20, 2010, prior to the May 24, 2010 commencement of the foreclosure action. From these specific statements, together with proof of Aurora’s authority pursuant to the MSAAA and the limited power of attorney, the Appellate Division held, “[i]t can reasonably be inferred . . . that physical delivery of the note was made to the plaintiff” before the action was commenced (114 AD3d at 629).

Contrary to the Taylors’ assertions, to have standing, it is not necessary to have possession of the mortgage at the time the action is commenced. This conclusion follows from the fact that the note, and not the mortgage, is the dispositive instrument that conveys standing to foreclose under New York law. In the current case, the note was transferred to Aurora before the commencement of the foreclosure action — that is what matters.

A transfer in full of the obligation automatically transfers the mortgage as well unless the parties agree that the transferor is to retain the mortgage (Restatement [Third] of Property [Mortgages] § 5.4, Reporter’s Note, Comment b). The Taylors misconstrue the legal principle that “an entity with a mortgage but no note lack[s] standing to foreclose” (Knox v Countrywide Bank, 4 F Supp 3d 499, 508 [ED NY 2014]) to also mean the opposite — that an entity with a note but no mortgage lacks standing. Once a note is transferred, however, “the mortgage passes as an incident to the note” (Bank of N.Y. v Silverberg, 86 AD3d 274, 280 [2d Dept 2011]).

“[A]ny disparity between the holder of the note and the mortgagee of record does not stand as a bar to a foreclosure action because the mortgage is not the dispositive document of title as to the mortgage loan; the holder of the note is deemed the owner of the underlying mortgage loan with standing to foreclose” (14A Carmody-Wait 2d § 92:79 [2012] [citation omitted]).

Accordingly, the Taylors’ argument that Aurora lacked standing because it did not possess a valid and enforceable mortgage as of the commencement of this action is simply incorrect. The validity of the August 2009 assignment of the mortgage is irrelevant to Aurora’s standing.

The question that follows this analysis is whether Aurora adequately proved that it did, indeed, have possession of the note prior to commencement of this action. The Taylors argue that to demonstrate possession of the note Aurora had to produce the original mortgage note for examination, and that the Holland affidavit does not suffice. Additionally, the dissent at the Appellate Division concluded that the affidavit was lacking details regarding Aurora’s possession of the note.

As to production of the original note, there is no indication in the record that the Taylors ever requested such production in discovery or moved Supreme Court to compel such production. Although the Taylors assert that the best evidence rule should require production of the original, they fail to cite any authority holding that such is required in this context. Second, Ms. Holland asserts in her affidavit that she examined the original note herself, and the adjustable rate note attachments submitted with the moving papers clearly show the note’s chain of ownership through Deutsche.

Although the better practice would have been for Aurora to state how it came into possession of the note in its affidavit in order to clarify the situation completely, we conclude that, under the circumstances of this case, the court did not err in granting summary judgment to Aurora.

Insofar as Aurora argues that the Appellate Division erred in reversing the judgment of foreclosure, the issue is not properly before us because Aurora never obtained permission from the Appellate Division to appeal to this Court from the Appellate Division order (see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 151 n 3 [2002]).

Accordingly, the order of the Appellate Division, insofar as appealed from, should be affirmed, with costs, and the certified question answered in the affirmative.

Judges Read, Pigott, Rivera, Abdus-Salaam, Stein and Fa-hey concur.

Order, insofar as appealed from, affirmed, with costs, and certified question answered in the affirmative.


source: Caselaw Access Project

author: Stein, J.

license: Public Domain

text:
    [34 NE3d 357, 12 NYS3d 606]
    Brown & Brown, Inc., et al., Appellants, v Theresa A. Johnson et al., Respondents.
    Argued May 6, 2015;
    decided June 11, 2015

      POINTS OF COUNSEL

      Satterlee Stephens Burke & Burke LLP, New York City (Alun W. Griffiths, Thomas J. Cahill and Glenn C. Edwards of counsel), Ward Greenberg Heller & Reidy LLP, Rochester (Eric J. Ward and Tony R. Sears of counsel), and Littler Mendelson P.C., New York City {David S. Warner and James M. Witz of counsel), for appellants.
    I. The availability of partial enforcement should be determined under Florida law. (Welsbach Elec. Corp. v MasTec N. Am., Inc., 7 NY3d 624; Dym v Gordon, 16 NY2d 120; Cooney v Osgood Mach., 81 NY2d 66; Scheiber v St.

      John’s Univ., 84 NY2d 120; Sanders v Winship, 57 NY2d 391; Boss v American Express Fin. Advisors, Inc., 15 AD3d 306, 6 NY3d 242; Koob v IDS Fin. Servs., 213 AD2d 26; Hugh O’Kane Elec. Co., LLC v MasTec N. Am., Inc., 19 AD3d 126; Schultz v Boy Scouts of Am., 65 NY2d 189; Kilberg v Northeast Airlines, 9 NY2d 34.) II. The Fourth Department’s ruling precluding partial enforcement as a matter of law is reversible error under New York law. (Karpinski v Ingrasci, 28 NY2d 45; BDO Seidman v Hirshberg, 93 NY2d 382; Ashland Mgt. Inc. v Altair Invs. NA, LLC, 59 AD3d 97; Weiser LLP v Coopersmith, 74 AD3d 465; Malcolm Pirnie, Inc. v Werthman, 280 AD2d 934; Scott, Stackrow & Co., C.P.A.’s, P.C. v Skavina, 9 AD3d 805; Trans-Continental Credit & Collection Corp. v Foti, 270 AD2d 250; State of New York v Welch-Richards, 209 AD2d 847; Vega v Restani Constr. Corp., 18 NY3d 499; IRB-Brasil Resseguros, S.A. v Inepar Invs., S.A., 20 NY3d 310.)

      Phillips Lytle LLP, Buffalo (.Preston L. Zarlock and William J. Simon of counsel), for respondents.
    I. The Appellate Division correctly rejected the agreement’s Florida choice-of-law clause. (Purchasing Assoc. v Weitz, 13 NY2d 267; Reed, Roberts Assoc. v Strauman, 40 NY2d 303; Post v Merrill Lynch, Pierce, Fenner & Smith, 48 NY2d 84; BDO Seidman v Hirshberg, 93 NY2d 382; Gramercy Park Animal Ctr. v Novick, 41 NY2d 874; Del Monte Fresh Produce, N.A., Inc. v Chiquita Brands Intl. Inc., 616 F Supp 2d 805; Unisource Worldwide, Inc. v South Cent. Ala. Supply, LLC, 199 F Supp 2d 1194; Bingham v New York City Tr. Auth., 99 NY2d 355; Haynes v Haynes, 83 NY2d 954; Cooper v City of New York, 81 NY2d 584.) II. The Appellate Division did not abuse its discretion in refusing to partially enforce plaintiffs’ restrictive covenant. (Matter of De Zimm v Connelie, 64 NY2d 860; Pavlou v City of New York, 8 NY3d 961; Holterman v Holterman, 3 NY3d 1; Patrician Plastic Corp. v Bernadel Realty Corp., 25 NY2d 599; Matter of Von Bulow, 63 NY2d 221; AM Medica Communications Group v Kilgallen, 261 F Supp 2d 258; Levo v Greenwald, 66 NY2d 962; Scott, Stack-row & Co., C.P.A.’s, P.C. v Skavina, 9 AD3d 805; Fullman v R & G Brenner Income Tax Consultants, 24 Misc 3d 1214[A], 2009 NY Slip Op 51451 [U]; Pure Power Boot Camp, Inc. v Warrior Fitness Boot Camp, LLC, 813 F Supp 2d 489.) III. The Appellate Division did not abuse its discretion in denying plaintiffs’ belated and baseless claim that they required discovery. (Nadeau v Connell, 243 AD2d 1009; Arakelian v Omnicare, Inc., 735 F Supp 2d 22; Matter of Fishman [Commissioner of Labor], 268 AD2d 651; Mazzaferro v Barterama Corp.,
      218 AD2d 643; Bradley v Benchmark Mgt. Corp., 294 AD2d 879; Arrow Communication Labs. v Pico Prods., 206 AD2d 922; Progressive Cas. Ins. Co. v Baker, 290 AD2d 676; Meath v Mishrick, 68 NY2d 992; Elmont Open MRI & Diagnostic Radiology, P.C. v Travelers Indem. Co., 30 Misc 3d 126[A], 2010 NY Slip Op 52223[U]; M&T Bank v HR Staffing Solutions, Inc., 106 AD3d 1498.)
   OPINION OF THE COURT

Stein, J.

On this appeal, we hold that applying Florida law on restrictive covenants related to the non-solicitation of customers by a former employee would violate the public policy of this state. Therefore, the choice-of-law provision in the parties’ employment agreement purporting to apply Florida law is unenforceable as to the non-solicitation provision of that agreement. Applying New York law, we also conclude that factual issues exist which prevent us from determining whether partial enforcement of the agreement’s non-solicitation provision is appropriate. Hence, we remit for further proceedings.

L

Plaintiffs are insurance intermediaries. Plaintiff Brown & Brown, Inc. (BBI) is a Florida corporation. Its New York subsidiary, plaintiff Brown & Brown of New York, Inc. (BBNY), is licensed to handle insurance in New York. BBNY recruited defendant Theresa A. Johnson to leave her former job at Blue Cross/Blue Shield — where she was employed as an underwriter and actuary for over 20 years — to work for BBNY.

On Johnson’s first day, BBNYs employee gave her documents that included an employment agreement with a restrictive covenant. As relevant here, the agreement contained a Florida choice-of-law provision and a non-solicitation provision. The non-solicitation provision precluded Johnson, for two years following her termination of employment, from directly or indirectly soliciting, accepting or servicing any person or entity “that is a customer or account of the New York offices of [BBI and BBNY] during the term of this Agreement,” as well as certain prospective customers. In the discussions that took place before Johnson was hired, this agreement was never mentioned. While it is undisputed that Johnson and a representative of BBNY signed the agreement that first day, the parties dispute what occurred at the time of the signing.

After working solely in New York for several years, Johnson was terminated. Less than one month later, Johnson began working for defendant Lawley Benefits Group, LLC, a competitor of BBNY; her work with Lawley involved providing services to some of plaintiffs’ former customers. Plaintiffs commenced this action to enjoin alleged violations of the agreement by Johnson and to recover damages against both Johnson and Lawley. The complaint alleged, among other things, that Johnson breached the employment agreement by soliciting plaintiffs’ customers. Defendants answered the complaint and, within 10 weeks of commencement of the action and after only limited discovery, moved for summary judgment dismissing the complaint.

Supreme Court partially granted defendants’ motion for summary judgment, but did not dismiss the portion of the breach of contract cause of action against Johnson alleging that she violated the non-solicitation provision by using client relationships that she initially developed while working for plaintiffs. In doing so, the court found the choice-of-law provision in Johnson’s employment agreement to be unenforceable.

On the parties’ cross appeals, the Appellate Division modified Supreme Court’s order by, among other things, dismissing in its entirety the portion of the breach of contract cause of action based on the non-solicitation provision (115 AD3d 162 [4th Dept 2014]). The Court held that the Florida choice-of-law provision was unenforceable as against public policy, and that the non-solicitation provision was overbroad and unenforceable. The Appellate Division granted plaintiffs’ motion for leave to appeal, certified a question, and denied defendants’ cross motion for leave (2014 NY Slip Op 72307[U] [4th Dept 2014]).

IL

The employment agreement’s choice-of-law provision states that any disputes will be governed by Florida law. While parties are generally free to reach agreements on whatever terms they prefer, courts will not “enforce agreements . . . where the chosen law violates ‘some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal’ ” (Welsbach Elec. Corp. v MasTec N. Am., Inc., 7 NY3d 624, 629 [2006] [footnote omitted], quoting Cooney v Osgood Mach., 81 NY2d 66, 78 [1993]). This public policy exception is reserved “for those foreign laws that are truly obnoxious” (Cooney, 81 NY2d at 79; see Welsbach Elec. Corp., 7 NY3d at 629). The party seeking to invoke the exception bears a “ ‘heavy burden’ of proving that application of [the chosen] law would be offensive to a fundamental public policy of this State” (Welsbach Elec. Corp., 7 NY3d at 632; see Cooney, 81 NY2d at 80; Matter of Frankel v Citicorp Ins. Servs., Inc., 80 AD3d 280, 286 [2d Dept 2010]).

Here, to determine whether the public policy exception renders unenforceable the employment agreement’s choice of Florida law, we must compare the Florida statute concerning restrictive covenants in employment agreements to New York law on that subject. The law of the two states is similar to the extent that they both require restrictive covenants to be reasonably limited in time, scope and geographical area, and to be grounded in a legitimate business purpose (see Fla Stat § 542.335 [1]; Reed, Roberts Assoc. v Strauman, 40 NY2d 303, 307 [1976]). However, several aspects of the Florida statute differ significantly from New York law.

Specifically, Florida law requires a party seeking to enforce a restrictive covenant only to make a prima facie showing that the restraint is necessary to protect a legitimate business interest, at which point the burden shifts to the other party to show that the restraint is overbroad or unnecessary (see Fla Stat § 542.335 [1] [e]). If the latter showing is made, the court is required to “modify the restraint and grant only the relief reasonably necessary to protect” the employer’s legitimate business interests (Fla Stat § 542.335 [1] [c]). In contrast to this focus solely on the employer’s business interests, under New York’s three-prong test,

“[a] restraint is reasonable only if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public. A violation of any prong renders the covenant invalid” (BDO Seidman v Hirshberg, 93 NY2d 382, 388-389 [1999] [citations omitted]; see Natural Organics, Inc. v Kirkendall, 52 AD3d 488, 489 [2d Dept 2008], lv denied 11 NY3d 707 [2008]; D&W Diesel v McIntosh, 307 AD2d 750, 750-751 [4th Dept 2003]).

Whereas Florida shifts the burden of proof after the employer demonstrates its business interests (see Fla Stat § 542.335 [1] [c]), New York requires the employer to prove all three prongs of its test before the burden shifts (see BDO Seidman, 93 NY2d at 388-389; see also Natural Organics, Inc., 52 AD3d at 489). Further, Florida law explicitly prohibits courts from considering the harm or hardship to the former employee (see Fla Stat § 542.335 [1] [g] [1]). This directly conflicts with New York’s requirement that courts consider, as one of three mandatory factors, whether the restraint “impose[s] undue hardship on the employee” (BDO Seidman, 93 NY2d at 388-389).

Additionally, under Florida law, courts are required to construe restrictive covenants in favor of protecting the employer’s interests, and may not use any rules of contract interpretation that would require the construction of a restrictive covenant narrowly or against the restraint or drafter (see Fla Stat § 542.335 [1] [h]). In contrast, New York law provides that “Covenants not to compete should be strictly construed because of the ‘powerful considerations of public policy which militate against sanctioning the loss of a [person’s] livelihood’ ” (Gramercy Park Animal Ctr. v Novick, 41 NY2d 874, 874 [1977] [citations omitted], quoting Purchasing Assoc. v Weitz, 13 NY2d 267, 272 [1963]; see BDO Seidman, 93 NY2d at 389; Reed, Roberts Assoc., 40 NY2d at 307 [noting “stricter standard of reasonableness” in this area, and “judicial disfavor of these covenants”]; Goodman v New York Oncology Hematology, P.C., 101 AD3d 1524, 1526 [3d Dept 2012]).

Considering Florida’s nearly-exclusive focus on the employer’s interests, prohibition against narrowly construing restrictive covenants, and refusal to consider the harm to the employee —in contrast with New York’s requirements that courts strictly construe restrictive covenants and balance the interests of the employer, employee and general public — defendants met their “ lieavy burden’ of proving that application of Florida law [to the non-solicitation provision of the parties’ agreement] would be offensive to a fundamental public policy of this State” (Welsbach Elec. Corp., 7 NY3d at 632; see Cooney, 81 NY2d at 80). Accordingly, the employment agreement’s choice-of-law provision is unenforceable in relation to the non-solicitation provision, and New York law governs plaintiffs’ claim based on Johnson’s alleged breach thereof.

m.

We turn next to the question of whether the non-solicitation provision should be partially enforced. Under New York law, the restrictive covenant was overbroad to the extent that it prohibited Johnson from working with any of plaintiffs’ New York customers, even those Johnson had never met, did not know about and for whom she had done no work (see BDO Seidman, 93 NY2d at 392-393; Vital Crane Servs., Inc. v Micucci, 118 AD3d 1404, 1405 [4th Dept 2014]; Weiser LLP v Coopersmith, 74 AD3d 465, 467-468 [1st Dept 2010]; Scott, Stack-row & Co., C.P.A.’s, P.C. v Skavina, 9 AD3d 805, 806-807 [3d Dept 2004], lv denied 3 NY3d 612 [2004]). In light of this overbreadth, plaintiffs argue that the Appellate Division should have partially enforced the covenant, limiting the non-solicitation provision to prohibit Johnson only from soliciting any of plaintiffs’ customers with whom she interacted or whose files she had encountered while in plaintiffs’ employ. This Court has “expressly recognized and applied the judicial power to sever and grant partial enforcement for an overbroad employee restrictive covenant” (BDO Seidman, 93 NY2d at 394, citing Karpinski v Ingrasci, 28 NY2d 45, 51-52 [1971]; see Transcontinental Credit & Collection Corp. v Foti, 270 AD2d 250, 251 [2d Dept 2000]). Where

“the unenforceable portion is not an essential part of the agreed exchange, a court should conduct a case specific analysis, focusing on the conduct of the employer in imposing the terms of the agreement. Under this approach, if the employer demonstrates an absence of overreaching, coercive use of dominant bargaining power, or other anti-competitive misconduct, but lias in good faith sought to protect a legitimate business interest, consistent with reasonable standards of fair dealing, partial enforcement may be justified” (BDO Seidman, 93 NY2d at 394 [citation omitted]).

Here, although the covenant was imposed as a requirement of Johnson’s initial employment and was not presented to her until her first day of work, the parties dispute whether she understood the agreement, whether plaintiffs’ employee discussed or explained it to her, what such a discussion entailed, whether she was required to sign it that day, or if she could have sought advice from counsel and negotiated the terms of the agreement (see Vital Crane Servs., Inc., 118 AD3d at 1405; Scott, Stackrow & Co., C.P.A.’s, P.C., 9 AD3d at 807-808; compare BDO Seidman, 93 NY2d at 395). The parties’ conflicting affidavits and limited disclosure responses, together with the fact that Johnson had already left her prior employment — which could have caused her to feel pressure to sign the agreement rather than risk being unemployed — raise questions about whether plaintiffs engaged in overreaching or used coercive dominant bargaining power to obtain the restrictive covenant. Thus, on this record and at this early stage of the action when little discovery has taken place, dismissal of the portion of the breach of contract claim based on the non-solicitation provision in the employment agreement is inappropriate. Therefore, the Appellate Division order, insofar as appealed from, should be reversed, with costs, defendants’ motion for summary judgment, insofar as it sought to dismiss that portion of the first cause of action for breach of the non-solicitation provision of the employment agreement, denied and certified question answered in the negative.

Chief Judge Lippman and Judges Read, Pigott and AbdusSalaam concur; Judges Rivera and Fahey taking no part.

Order, insofar as appealed from, reversed, with costs, defendants’ motion for summary judgment, insofar as it sought to dismiss that portion of the first cause of action in the complaint for breach of the non-solicitation provision in the parties’ employment agreement, denied and certified question answered in the negative.