Opinion
No. 15877/13.
09-30-2014
Gloria GORDON, Ian Dyer, and Nelsie Dyer,, Plaintiffs, v. Clover BARRETT, Malco Realty, Inc., Malco Real Estate, Inc., Joseph Malvasio, a/k/a Joe Malvasio, Commercial Mortgage Fund USA, Inc., KR Management, LLC, and 646 East 96 Street Associates, LLC, Defendants.
Audrey A. Thomas, Esq., Law Offices of Audrey A. Thomas, P.C., Rosedale, Attorney for Plaintiffs. Martin Silver, P.C., Hauppage, Attorney for Defendant Malco Realty, Inc. (IP). David K. Fiveson, Esq., Butler, Fitzgerald, Fiveson & McCarthy, New York, for Attorney for Defendant 646 96 Street Associates, LLC (SP). Clover Barrett, P.C., Brooklyn, pro se.
Audrey A. Thomas, Esq., Law Offices of Audrey A. Thomas, P.C., Rosedale, Attorney for Plaintiffs.
Martin Silver, P.C., Hauppage, Attorney for Defendant Malco Realty, Inc. (IP).
David K. Fiveson, Esq., Butler, Fitzgerald, Fiveson & McCarthy, New York, for Attorney for Defendant 646 96 Street Associates, LLC (SP).
Clover Barrett, P.C., Brooklyn, pro se.
Opinion
DAVID I. SCHMIDT, J.
This action to set aside deeds to real property arises from an allegedly fraudulent mortgage-foreclosure rescue scheme orchestrated by defendant Joseph Malvasio, a/k/a Joe Malvasio, and the entities that either were affiliated with or acted on his behalf—Malco Realty, Inc., Malco Real Estate, Inc., Commercial Mortgage Fund USA, Inc., and KR Management, LLC (collectively with Mr. Malvasio, Malco). Plaintiff Gloria Gordon (plaintiff ) maintains that, in 2002, she unwittingly and under false pretenses conveyed title to her six-family house at 646 East 96th Street in Brooklyn (Block 4755, Lot 69) (the property) to a Malco entity for a fraction of its value and became Malco's tenant under a lease which contained an option for her to buy back her property at a stated price, but that Malco refused to honor the option and sold her property in Oct. 2012 to defendant 646 East 96 Street Associates, LLC (Associates). As part of this action, she sought to file a notice of pendency, dated Oct. 3, 2013, against the property. The County Clerk initially declined to accept her notice for filing because of a previously expired and vacated notice of pendency (a lapsed notice of pendency) she filed in connection with her 2004 action against Malco under index No. 19828/04 for specific performance of the sale/leaseback agreement and for a declaration that she was the true owner of the property (the prior action). On Oct. 8, 2013, the County Clerk, in accordance with an unopposed order to show cause of the same date, accepted for filing plaintiff's notice of pendency, pending a hearing on plaintiff's motion in Seq. No. 2 to deem such notice valid and effective. In addition, presently before the Court are two pre-answer motions to dismiss, one in Seq. No. 4 served by Associates, and the other in Seq. No. 3 served by plaintiff's former counsel Clover Barrett, Esq. (Barrett ) in the prior action.
For simplicity, the term “plaintiff” refers to Ms. Gordon exclusively. The other plaintiffs in this action are Ms. Gordon's son, Ian Dyer, and his wife and Ms. Gordon's daughter-in-law, Nelsie Dyer.
Ms. Barrett, the sole proprietor of Clover Barrett & Associates, P.C., formerly known as Clover Barrett, P.C., represented plaintiff in the corporate capacity, but she is sued here individually.
(1)
Initially, the Court will consider Associates' motion to dismiss plaintiff's claims of constructive trust and specific performance (the second and sixth causes of action against it, respectively), which constitute the entirety of plaintiff's claims against it. Associates offers four arguments in support of its request for dismissal. Its first argument for dismissal is that, under CPLR 3211(a)(1), the documentary evidence in the form of a title company's uncertified search establishes Associates' status as a bona fide purchaser for value, given that the proffered title search is silent about a lapsed notice of pendency and the prior action. “A motion pursuant to CPLR 3211(a)(1) to dismiss the complaint on the ground that the action is barred by documentary evidence may be granted only where the documentary evidence utterly refutes the plaintiff's factual allegations, thereby conclusively establishing a defense as a matter of law” (Mendelovitz v. Cohen, 37 AD3d 670, 670 [2d Dept 2007] ). “[T]o be considered documentary,' evidence must be unambiguous and of undisputed authenticity” (Fontanetta v.. Doe, 73 AD3d 78, 86 [2d Dept 2010] ). The proffered title search, which was not “certified” by the searching company (CPLR 4523 ), fails to establish conclusively Associates' status as a bona fide purchaser for value (see JP Morgan Chase Bank, N.A. v. Balliraj, 113 AD3d 821 [2d Dept 2014] ; Miller–Francis v. Smith–Jackson, 113 AD3d 28, 34 [1st Dept 2013] ). Thus, the branch of Associates' motion which is to dismiss the claims against it, pursuant to CPLR 3211(a)(1), is denied.
Associates' second argument for dismissal is that, under CPLR 3211(a)(4), the Court may, but need not, dismiss the present action because the prior action is “pending between the same parties on the same cause of action” (Whitney v. Whitney, 57 N.Y.2d 731, 732 [1982] ). Associates, however, was not a party to the prior action. Accordingly, the branch of Associates' motion which is to dismiss the claims against it, pursuant to CPLR 3211(a)(4), is denied in the Court's discretion (see A.F. Rockland Plumbing Sup. Corp. v. Hudson Shore Assoc. L.P., 96 AD3d 885, 886 [2d Dept 2012] ).
Associates' third argument for dismissal is that plaintiff's claims against it are time-barred in accordance with CPLR 3211(a)(5). The statute of limitations is generally triggered once a cause of action accrues; i.e., “when all of the facts necessary to the cause of action have occurred so that the party would be entitled to obtain relief in court” (Grynberg v. Giffen, 119 AD3d 526, 527 [2d Dept 2014] [internal quotation marks omitted] ). Associates maintains that plaintiff's conveyance of the property to a Malco entity in 2002 started the limitations clock, which ran out by the time she commenced the present action in 2013. The Court finds that Associates has failed to meet the initial burden of demonstrating, prima facie, that plaintiff's claims against it are time-barred. Plaintiff's claims against Associates arose in 2012 when it acquired the property from Malco, thus making her claims timely (see Carbon Cap. Mgt., LLC v. American Exp. Co., 88 AD3d 933, 932 [2d Dept 2011] ). Hence, the branch of Associates' motion which is to dismiss the claims against it, pursuant to CPLR 3211(a)(5), is denied.
Associates' fourth and final argument for dismissal is that plaintiff's complaint fails to state a cause of action against it under CPLR 3211(a)(7). Associates posits that it is a bona fide purchaser for value because, when it recorded its deed to the property from Malco, the notice of pendency in the prior action had already lapsed and plaintiff's sale/leaseback agreement with Malco was never recorded. Associates' position raises a threshold question of whether, at the time of its purchase of the property, it was chargeable with constructive or inquiry notice of plaintiff's competing claim by virtue of her lapsed notice of pendency.
“At common law, the doctrine of lis pendens provided that any person who purchased real property that was the subject of litigation was presumed to have constructive notice of the dispute and was bound by the judgment in the action as if he or she were a party to it” (Kolel Damsek Eliezer, Inc. v. Schlesinger, 90 AD3d 851, 855 [2d Dept 2011], lv dismissed 19 NY3d 919 [2012] ). Thus, a search of all court records was required under the common-law lis pendens doctrine to determine whether real property in which a purchaser sought an interest was the subject of pending litigation (id. ). Because this cumbersome process of searching through court records was seen as an intolerable burden effectively restraining alienation of real property, “the common-law lis pendens doctrine was replaced in most states by statutes requiring the filing of a notice of pendency before a would-be purchaser ... would be charged with notice of the prior interest” (Matter of Sakow, 97 N.Y.2d 436, 440–441 [2002] [internal citation omitted] ). This reduced the harshness of the former common-law rule because the notice of pendency is now filed with the records pertaining to the real property itself, and third persons are chargeable with knowledge only of what appears in the records filed in the central registry (see Kolel Damsek Eliezer, Inc., 90 AD3d at 855–856 ). The primary purpose of the notice of pendency procedure set forth in CPLR article 65 is to furnish a substitute for actual notice of pending litigation (see Da Silva, 76 N.Y.2d at 442 ).
The predecessor to current CPLR article 65 was a 1957 amendment to the Civil Practice Act. As explained by one court, the 1957 amendment was “radical in purpose, completely eliminating the long existing rule of the indefinite cont[i]nuance of a lis pendens once filed and perfected by the institution of an action” (Carvel–Dari Freeze Stores, Inc. v. Lukon, 219 N.Y.S.2d 716, 721 [Sup Ct, Suffolk County 1961] ).
On the other hand, once a notice of pendency expires, or is vacated or canceled, it is considered to be a “ity”—a “void” that cannot be filled (see Sakow, 97 N.Y.2d at 442 ). The authorities are nearly uniform in their conclusion that a lapsed notice of pendency in a subsisting action does not impart inquiry notice to a prospective purchaser despite his or her actual knowledge of the lapsed notice of pendency (see Polish Natl. Alliance of Brooklyn, U.S.A. v. White Eagle Hall Co., 98 A.D.2d 400, 405 [2d Dept 1983] [a lapsed notice of pendency could not affect the rights of contract vendees who acquired their interest in the property after the notice lapsed]; Walter v. State Bank of Albany, 73 A.D.2d 406, 408 [3d Dept 1980] [an expired notice of pendency had no effect as to the parties acquiring and/or perfecting an interest in real property after its expiration]; Bankers Trust Co. of Cal., N.A. v. Bok, 26 Misc.3d 1203[A], 2009 N.Y. Slip Op 52650[U] [Sup Ct, N.Y. County] [“A Notice of Pendency ... only serves as constructive notice while it is valid.... In the case at bar, there was only one Notice of Pendency, which ... expired long before (the property buyer) obtained title.”] [internal citations omitted]; but see Schoepp v. State of NY, 69 A.D.2d 917, 917 [3d Dept 1979] [the defendant was responsible for determining the disposition of the action in which the lis pendens was filed but later expired] ). The leading commentators on the CPLR concur that:
See also Robbins v. Goldstein, 32 A.D.2d 1047, 1047 (2d Dept 1969) (“Under CPLR 6515 an unextended notice of pendency has a life span of three years. The section is self-executing and failure to obtain an extension results in the death of the notice.”), appeal dismissed 26 N.Y.2d 749 (1970) ; Jericho Group, Ltd. v. Herzfeld & Rubin, P.C., 35 Misc.3d 1225(A), 2012 N.Y. Slip Op 50892(U) (Sup Ct, Kings County) (“Once vacated, the Notice of Pendency becomes and void and cannot thereafter be reinstated or restored.”).
“[O]ne who examines the records and discovers an expired notice is not charged with notice of a pending suit, even if that person actually knows the action has not yet been determined. Likewise, there is no duty to investigate to determine whether the suit is still pending.”
(13–6513 Weinstein–Korn–Miller, N.Y. Civ Prac CPLR ¶ 6513.04).
See also Pamela Ko & Jenean Taranto, Mortgage Liens in New York § 19:9 (2d ed 35 West's N.Y. Prac Series 2014) (a lapsed notice of pendency does not impair property rights of a subsequent transferee).
Thus, even if Associates actually knew of the existence of the lapsed notice of pendency in the prior action, such knowledge would not, in and of itself, defeat its status as a bona fide purchaser for value.
The next question is whether Associates was chargeable with inquiry notice of plaintiff's competing claim by virtue of her alleged possession or occupancy of the property. “Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on [or acquire] the property, and to all the world of the existence of any right which the person in possession is able to establish” (Phelan v. Brady, 119 N.Y. 587, 591 [1890] ; Vitale v. Pinto, 118 A.D.2d 774, 776 [2d Dept 1986] ). Where a claimant is in open possession of the property, the prospective purchaser “is presumed either to have made the inquiry, and ascertained the extent of [the] prior right, or to have been guilty of a degree of negligence ... fatal to [its] claim [that it is] ... a bona fide purchaser” (Williamson v. Brown, 15 N.Y. 354, 362 [1857] ).
Here, plaintiff has failed to raise an issue of fact as to whether she possessed or occupied any portion of the property at the time of Associates' purchase. Although she avers (in ¶ 2) of her affidavit that she currently occupies Apt. 1F and basement at the property, she further indicates (in ¶¶ 3 and 6) that, before Associates' purchase of the property, she maintained or kept Apt. 1F, excluded everyone from the basement, and rented the other five apartments at the property. She explains (in ¶ 2) what she means by the words maintaining or keeping Apt. 1F at the property:
Plaintiff's affidavit, dated Apr. 28, 2013, was submitted in opposition to an eviction proceeding instituted by Associates against her daughter-in-law in the Kings County Civil Court, Housing Part D (index No. 106204/12). Plaintiff submits that affidavit as Exhibit A to her memorandum of law, dated Aug. 6, 2013, served in this action. She has submitted no separate affidavit in opposition to Associates' motion.
“I have always maintained that apartment [1F] for my personal enjoyment, in that my son, his wife, ... and their minor children occupy the premises at my [apartment] and my personal property is kept and maintained inside the apartment and in the basement of the premises” (emphasis added).
Plaintiff's aforementioned explanation draws a line between maintaining/keeping an apartment versus occupying it. Whereas she maintained Apt. 1F and kept personal property in it, she did not occupy it. Rather, her son, daughter-in-law, and grandchildren occupied that apartment. Thus, plaintiff's own affidavit refutes her contention that she possessed or occupied any portion of the property before its acquisition by Associates.
Plaintiff has provided the Court with no proof that she resided or occupied the property at the time of its acquisition by Associates, such as utility bills, insurance policies, tax returns, bank accounts, voting records, motor-vehicle registration, and driver's license.
Further undermining plaintiff's position is an affidavit by Associates member Dov Kohen, also submitted by plaintiff. According to Mr. Kohen's affidavit (in ¶¶ 5 and 7):(1) he checked the DHCR records and found plaintiff's daughter-in-law as the sole tenant of record; (2) he “approached the occupant [at] the premises and asked her as to who was occupying the premises,” but “[s]he refused to answer [him and] ... only said I have a lawyer and ... I can't talk to you.”; and (3) the daughter-in-law, “as the sole named tenant, was thus served [with] a notice of eviction for failure to pay rent.” Mr. Kohen further states (in ¶ 9) that he has checked the property and has never met or observed plaintiff at the property. Mr. Kohen notes (in ¶ 9) that Apt. 1F is a one-bedroom unit lacking physical space for plaintiff to occupy because it is already occupied by two adults (plaintiff's son and her daughter-in-law) and their two children.
This is Mr. Kohen's affidavit, dated May 30, 2013. Like plaintiff's affidavit noted above, Mr. Kohen's affidavit was submitted in opposition to the eviction proceeding instituted by Associates against plaintiff's daughter-in-law. Plaintiff submits that affidavit as Exhibit B to her memorandum of law, dated Aug. 6, 2013, served in this action. Associates has submitted no separate affidavit in support of its motion.
Lastly, a Real Property Transfer Report on file with the City Register indicates that Associates' purchase price for the property was $290,000 when it acquired it from a Malco entity in Oct. 2012. Plaintiff has failed to provide the Court with any appraisal or other evidence that the purchase price was inadequate.
A review of the County Clerk's docket in this action reveals that on Dec. 16, 2013, plaintiff filed a Notice of Appraisal for the property. The appraisal values the property at $535,000 as of Nov. 19, 2013. It is based on comparable sales and involved no inspection of the exterior of the property. It was prepared for plaintiff's counsel in this action as the “client,” and its stated purpose was for “a mortgage finance transaction.” Because the appraisal is not referenced in plaintiff's later opposition to Associates' motion, plaintiff is deemed to have waived her reliance on that appraisal insofar as that motion is concerned. The Court has no duty to pore over the documents on file with the County Clerk to find intimations of defenses that plaintiff has not brought to the Court's attention.
Because plaintiff has failed to rebut Associates' prima facie showing that it was a bona fide purchaser for value, the remaining branch of Associates' motion which is to dismiss plaintiff's claims against it for failure to state a cause of action, pursuant to CPLR 3211(a)(7), is granted, and the complaint against Associates is dismissed without costs or disbursements.
(2)
Next in line for the Court's consideration is plaintiff's motion for an order, in effect, ratifying her notice of pendency that was filed in this action on Oct. 8, 2013. Associates opposes, citing a well-established prohibition against the filing of successive notices of pendency (see Jericho Group, Ltd. v. Herzfeld & Rubin, P.C., 35 Misc.3d 1225[A], 2012 N.Y. Slip Op 50892[U] [Sup Ct, Kings County] [collecting authorities] ).
The governing statute—CPLR 6516(c) —provides, in relevant part, that:
“[A] notice of pendency may not be filed in any action in which a previously filed notice of pendency affecting the same property had been cancelled or vacated or had expired or become ineffective.”
The operative test is whether the circumstances of the case evince a litigant's attempt, by way of commencing another action, to abuse the privilege accorded by a notice of pendency (see Deutsch v. Grunwald, 63 AD3d 872, 874 [2d Dept 2009] ). The bellwether decision on the subject of successive filings of notices of pendency—Israelson v. Bradley (308 N.Y. 511 [1955] )—presented a plaintiff who, after failing to serve timely a notice of pendency in a County Court action, commenced a Supreme Court action and filed a related notice of pendency, all the while seeking the same relief. The Court of Appeals vacated the second notice of pendency, given that, in both actions, the plaintiff was the same and sought the same relief, as well as failed to serve timely a notice of pendency in his later commenced County Court action.
In this case, the present action is not substantively different from the prior action, considering that, in both actions, plaintiff seeks rescission of her sale/leaseback agreement, together with a reconveyance to the property to her and related monetary damages. The allegations against Malco in the prior action are supplemented by the addition of Associates as a co-defendant in the present action, which alternatively refers to Malco and Associates by the same defined term “Defendants.” Indeed, the complaint in the present action does not even mention that Associates is the current registered owner of the property.
The addition to the present action of (1) plaintiff's son and daughter-in-law as co-plaintiffs and (2) plaintiff's former counsel Barrett as a co-defendant, neither of whom were named in the prior action, is a change of form, rather than of substance, and does not require a different result (see Weiner v. MKVII–Westchester, LLC, 292 A.D.2d 597, 600 [2d Dept 2002] ; Chiulli v. Cross Westchester Dev. Corp., 134 A.D.2d 559 [2d Dept 1987] ).
Accordingly, plaintiff's motion for an order, in effect, ratifying her notice of pendency that was previously filed in this action is denied. Plaintiff's notice of pendency, dated Oct. 3, 2013, and filed with the County Clerk on Oct. 8, 2013, is hereby vacated.
(3)
In conclusion, Barrett's motion can be quickly disposed. However denominated in the complaint, plaintiff's claims against Barrett sound in legal malpractice and, as such, are time-barred by the three-year statute of limitations, considering that Barrett's representation of plaintiff in the prior action ended no later than Feb. 27, 2009, when Barrett was relieved by court order entered on consent of plaintiff's successor counsel (see Biberaj v. Acocella, 2014 N.Y. Slip Op 06165 [2d Dept] ). Plaintiff's claims against Barrett are also barred by the doctrine of res judicata because in a separate action under index No. 4960/09 instituted by Barrett against her for unpaid legal fees arising from Barrett's representation of her in the prior action, the Appellate Division, Second Department (at 90 AD3d 973 [2011] ), upheld Barrett's default judgment against her. “A judgment by default which has not been vacated bars another action for the same relief and is conclusive as to any matters actually litigated or that might have been litigated” (Rizzo v. Ippolito, 137 A.D.2d 511, 513 [2d Dept 1988] [internal quotations omitted] ). Plaintiff's legal malpractice claim against Barrett might have been litigated in Barrett's action, considering that, pending Barrett's appeal to the Second Department, she (plaintiff) interposed an answer asserting legal malpractice and other counterclaims that mirror those which she asserts against Barrett in this action. Therefore, all of plaintiff's claims against Barrett are dismissed without costs or disbursements.
Plaintiff has failed to raise a question of fact as to whether the statute of limitations was tolled by the doctrine of continuous representation when, after Barrett was relieved, she refused to return the case file to plaintiff on account of her failure to pay Barrett's outstanding legal bills in the prior action.
Although Barrett did not attach a copy of the complaint to her moving papers, plaintiff did not object and, thus, has waived any objection to Barrett's failure to attach the complaint to her moving papers (see 141 Sunnyside LLC v. M. Zoarez, Inc., 41 Misc.3d 1224[A], 2013 N.Y. Slip Op 51826[U] [Sup Ct, Kings County] ).
Summary
The branch of Associates' motion for dismissal of plaintiff's complaint against it for failure to state a cause of action, pursuant to CPLR 3211(a)(7), is granted, and the complaint is dismissed against Associates without costs or disbursements. The remaining branches of Associates' motion for dismissal of plaintiff's complaint against it on the basis of documentary evidence, a prior action pending, and the statute of limitations, pursuant to CPLR 3211(a)(1), (4), and (5), respectively, are denied.
Plaintiff's motion for an order, in effect, ratifying her notice of pendency previously filed in this action is denied. Plaintiff's notice of pendency, dated Oct. 3, 2013, and filed with the County Clerk on Oct. 8, 2013, against defendants Clover Barrett, Malco Realty, Inc., Malco Real Estate Inc., Joseph Malvasio, a/k/a Joe Malvasio, Commercial Mortgage Fund USA, Inc., KR Management, LLC, and 646 East 96 Street Associates, LLC, regarding 646 East 96th Street, Brooklyn, New York 11236, Block 4755, Lot 69, is vacated. The County Clerk is directed to enter, in proper form, a notice of such vacatur in its minutes for this action (index No. 15877/13).
Barrett's motion for an order dismissing the complaint against her on the basis of, inter alia, statute of limitations and res judicata, pursuant to CPLR 3211(a)(5), is granted, and the complaint against Barrett is dismissed without costs or disbursements. The remainder of Barrett's motion is denied as academic.
The action is severed and continued against the remaining defendants. The caption is amended to delete 646 East 96 Street Associates, LLC and Clover Barrett as defendants and to read in its entirety as follows:
Gloria Gordon, Ian Dyer, and Nelsie Dyer, Plaintiffs,
against -Index No. 15877/13
Malco Realty, Inc., Malco Real Estate, Inc., Joseph Malvasio, a/k/a Joe Malvasio, Commercial Mortgage Fund USA, Inc., and KR Management, LLC, Defendants.
The remaining parties shall appear for a preliminary conference in the intake part at 360 Adams Street, Room 282, on November 10, 2014, at 9:30 a.m.
Associates' counsel Butler, Fitzgerald, Fiveson & McCarthy is directed to serve a copy of this decision, order, and judgment with notice of entry on the other parties who have appeared in this action and to file an affidavit of said service with the Court Clerk.
This constitutes the decision, order, and judgment of the Court.