Opinion
2013-3550/C
12-05-2019
In the MATTER OF the Application of Louis M. ROSENBLATT, Public Administrator of Queens County as Temporary Administrator of the Estate of Agatha Solomon, Deceased, to Vacate Deeds and Restore Legal Title.
Attorney for Petitioner: Gerard J. Sweeney, Esq., Counsel to the Public Administrator of Queens County, 1981 Marcus Avenue, Suite 200, Lake Success, New York 11042, (718) 459-9000 Attorney for Respondent: James P. Truitt III, Thomas G. Sherwood, LLC, 300 Garden City Plaza, Suite 222, Garden City, New York 11530, (516) 408-7030
Attorney for Petitioner: Gerard J. Sweeney, Esq., Counsel to the Public Administrator of Queens County, 1981 Marcus Avenue, Suite 200, Lake Success, New York 11042, (718) 459-9000
Attorney for Respondent: James P. Truitt III, Thomas G. Sherwood, LLC, 300 Garden City Plaza, Suite 222, Garden City, New York 11530, (516) 408-7030
Peter J. Kelly, S.
Based upon an increasingly frequent and distressing set of facts in Queens, the Public Administrator, as temporary administrator of the estate of Agatha Solomon, has again been compelled to commence a proceeding seeking to vacate two deeds and mortgages. The deeds, consecutively executed on January 24, 2014, allegedly represent conveyances of real property located on Gillmore Street in East Elmhurst, Queens (Elmhurst property), while the two mortgages were made by the grantee of the second deed, D & A Property Mgt. & Development L.L.C. (D & A Development).
The court previously granted that part of the petition seeking to vacate the deeds by order dated April 24, 2018. Now, the respondent mortgagee Gillmore Street Funding Associates (Funding Associates) moves to summarily dismiss that part of the petition requesting the vacature of the mortgages ( CPLR 3212 ) upon the ground that it is a bona fide encumbrancer for value ( Real Property Law § 266 ). It further seeks a declaration that the mortgages are first priority liens against the Elmhurst property, and that petitioner pay all sums due on the mortgages from the net proceeds collected from its sale at public auction. Alternatively, in the event the mortgages are set aside, Funding Associates seeks a declaration that it is equitably subrogated to a tax lien discharged by money received from the first mortgage.
The decedent died intestate on September 28, 2000 as sole owner of an unencumbered income producing two-family residence in Elmhurst. Thirteen years later, on August 23, 2013, decedent's nephew George filed a petition for letters of administration alleging he was the decedent's sole surviving distributee. His affidavit in support stated that letters were necessary to pay off decedent's debts, late fees due on the estate tax return, and an amount owed in a tax lien foreclosure proceeding. Allegedly, it was his intent to pay off the liens by mortgaging the premises upon transferring the property to himself "as the nearest statutory distributee."
However, George thereafter filed an affidavit renouncing his appointment in favor of a designee, Shaun, who was granted letters of administration on December 6, 2013. Shaun utilized the letters to execute a no-consideration deed transferring the Elmhurst property from the decedent's estate to George on January 24, 2014. Then, that same day, George in turn executed a no-consideration deed transferring the property to respondent D & A Development, a company that Shaun owned. This plan to convey two deeds in sequence was carried out pursuant to a written letter agreement (Letter Agreement), also executed by Shaun and George that same day, which provided that George would transfer title to Shaun, his "second cousin," because the property was subject to a tax lien foreclosure and George was advised that the property "can only be mortgaged by [Shaun's] company and there is no other way to pay the open tax lien." Shaun in turn promised that "D & A Development will apply to the Surrogate's Court for permission to distribute most of the loan proceeds for the purpose of renovating the premises and maintaining [George]." Finally, the agreement required that George decline representation by an attorney at the closing of the Elmhurst property.
Three days later and on January 27, 2014, D & A Development obtained a mortgage in the amount of $200,000.00 from the respondent mortgagee, D. Perla Associates L.P. ("Perla mortgage") which was recorded on March 28, 2014. Thereafter, on December 28, 2015, D & A Development obtained a second mortgage in the amount of $200,000.00 from the respondent Funding Associates which was recorded on February 26, 2016. A Consolidation, Modification and Extension Agreement ("C.M.E. Agreement") was signed contemporaneously therewith by Shaun as managing member of D & A Development, consolidating the two mortgages into a single lien ("Consolidated Mortgage") against the Elmhurst property in favor of Funding Associates in the principal amount of $400,000.00.
As could be anticipated, D & A Development defaulted on the Consolidated Mortgage, prompting Funding Associates to commence a foreclosure action in July, 2017. Upon learning of the foreclosure proceeding, George filed a petition to revoke Shaun's letters of administration and have himself appointed as administrator. George now alleged that Shaun had "obtained the letters by false suggestion of material fact ... in an attempt to defraud the Estate and its beneficiaries without the approval of the Court." Specifically, George averred that when he executed the documents for the administration proceeding he had been told by Shaun's attorney, Spivak, that he did not need to read them and was given verbal assurances that the transfer of the property to Shaun's company would be temporary. As a result, false documents were filed with the court stating that he was a sole distributee.
George admitted that this allegation was a "complete lie" because he had three sisters who were beneficiaries. Further, he claimed the statement in the affidavit renouncing his appointment in favor of his "second cousin" Shaun, whom was in better financial standing, "was totally false." Notably, Shaun was neither his "second cousin" nor a distributee. Finally, the provision in the Letter Agreement that an application would be made to the surrogate's court to distribute the mortgage proceeds was also false because no such application was ever made or, in fact, exists.
George's admission to the existence of other distributees was undisputed and it rebutted other false information provided in the affidavit of heirship by a "friend" in the administration proceeding.
Upon Shaun's default in the revocation proceeding, the court revoked letters on January 18, 2018, denied that part of the application to appoint George as successor and, instead, appointed the Public Administrator of Queens County as the temporary administrator of decedent's estate ( SCPA 901 ). The Public Administrator filed this petition forthwith seeking to vacate the two deeds dated January 24, 2014, the Perla mortgage dated January 27, 2014 and the Funding Associates mortgage dated December 28, 2015. The petition alleges that both Shaun and George entered into a fraudulent scheme to defraud decedent's distributees out of their vested interests in the Elmhurst property by obtaining letters of administration under the false pretense that George was the sole distributee of decedent's estate and then utilizing the letters to convey the property in a series of transactions to D & A Development. It is alleged that, since false pretenses were utilized to convey the Elmhurst property, the deeds were void ab initio and the mortgages thereon are likewise invalid.
Shaun and D & A Development filed a notice of appearance in this proceeding but they, along with George, defaulted in filing an answer. Following their default and the court's vacature of the two deeds, the Public Administrator and Funding Associates entered into an agreement on October 24, 2018 (Standstill Agreement), allowing for the sale of the Elmhurst property and the release of the Consolidated Mortgage lien, and providing for the deposit of the net proceeds in the estate account pending final adjudication of Funding Associates' claim to the net proceeds to the extent needed to satisfy D & A Development's mortgage indebtedness.
Eventually, on October 25, 2018, the Elmhurst property was sold by petitioner and the net proceeds have been deposited into the estate account. Deducted from the proceeds were payments for decedent's Federal and New York State estimated income taxes as well as a portion of the outstanding administration expenses of the Public Administrator.
As the party moving for summary judgment, respondent is required to make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issue of fact (see Ayotte v. Gervasio , 81 NY2d 1062, 1063 [1993], citing Alvarez v. Prospect Hosp. , 68 NY2d 320, 324 [1986] ; Vumbico v. Estate of Rose H. Wiltse , 156 AD3d 939, 940 [2d Dept 2017] ). Once this showing has been made, the burden then shifts to the petitioner who must produce evidentiary proof in admissible form sufficient to require a trial of the material issues of fact (see Hoover v. New Holland, Inc. , 23 NY3d 41, 56 [2014] ; Zuckerman v. City of New York , 49 NY2d 557, 562 [1980] ; Re-Max Classic Realty, Inc. v. Berger , 25 AD3d 680, 682 [2d Dept 2006] ).
Funding Associates alleges it is entitled to summary judgment dismissing the petition based upon its affirmative defense that it is a bona fide encumbrancer for value (see Real Property Law § 266 ).
A bona fide purchaser or encumbrancer for value is protected in its title unless the deed is void and conveys no title ( Marden v. Dorthy, 160 NY 39 [1899] ; see Faison v. Lewis , 25 NY3d 220, 224-226 [2015] ; ABN AMRO Mtge. Group, Inc. v. Stephens , 91 AD3d 801 [2d Dept 2012] ; Solar Line, Universal Great Bhd., Inc v. Prado, 100 AD3d 862 [2d Dept 2012] ), or it had previous notice of fraudulent intent by the grantor or fraud rendering void the title of the grantor ( Real Property Law § 266 ; see Feggins v. Marks, 171 AD3d 1014 [2d Dept 2019] ; Matter of Raccioppi, 128 AD3d 838, 839 [2d Dept 2015] ; LaSalle Bank National Assoc. v. Ally , 39 AD3d 597, 599-600 [2d Dept 2007] ; Karan v. Hoskins , 22 AD3d 638 [2d Dept 2005] ), or if it had knowledge of facts that would "excite the suspicion of an ordinarily prudent person" and it fails to make a reasonable inquiry thereof ( Booth v. Ameriquest Mtge. Co. , 63 AD3d 769 [2d Dept 2009], quoting Anderson v. Blood , 152 NY 285, 293 [1897] ; see Stout Street Fund I, L.P. v. Halifaz Group LLC, 148 AD3d 744, 746 [2d Dept 2017] ; Mortgage Elec. Registration Sys., Inc. v. Rambaran, 97 AD3d 802, 804 [2d Dept 2012] ).
Funding Associates' argument that it is a bona fide encumbrancer for value hinges, in the first instance, on the question whether the deeds executed on January 24, 2014 and subsequently vacated by this court were void ab initio or merely voidable. If a deed is void ab initio, then neither the grantee nor any subsequent grantee can acquire good title (see LaSalle Bank Nat. Assn. v. Ally , 39 AD3d at 600 ) and the mortgages that are based upon those deeds are likewise invalid (see Cruz v. Cruz , 37 AD3d 754 [2d Dept 2007] ; see also First Natl. Bank of Nev. v. Williams , 74 AD3d 740, 742 [2d Dept 2010] ; GMAC Mtge. Corp. v. Chan , 56 AD3d 521, 522 [2d Dept 2008] ). If, on the other hand, the deed is voidable, it validly transfers the grantor's interest until such time it is set aside (see Marden v. Dorthy , 160 NY at 50 ).
In support of the motion, Funding Associates submits copies of the pleadings and papers in this proceeding and the prior proceedings for letters of administration and revocation of Shaun's letters as well as the documentary evidence exchanged in the course of discovery including, but not limited to, copies of the two deeds, the Perla mortgage, the Funding Associates mortgage, the C.M.E. Agreement and a copy of the papers in the mortgage foreclosure proceeding it brought against Shaun and D & A Development. It also supplies an affidavit of its partner D.J. Houlihan Jr., a copy of a title report for the Elmhurst property dated 2015, copies of leases for the first and second floor rentals at the Elmhurst property, a copy of a tax lien certificate pertaining to the Elmhurst property, a certificate of tax lien discharge and a copy of the Standstill Agreement. Examinations before trial of the respondents apparently were not conducted as no transcripts have been provided.
The documentary evidence submitted by Funding Associates shows that the decedent's estate was targeted in a tax lien foreclosure rescue scheme whereby Shaun, a stranger to the estate, obtained letters of administration as a designee under the false pretense that George was decedent's sole distributee. Notwithstanding George's allegation that he was advised not to read the pleadings and papers, he is presumed to have known the contents of the documents he executed and also to have assented to them (see e.g. Prompt Mtge. Providers of N. America LLC v. Zarour , 155 AD3d 912, 914 [2d Dept 2017] ; Winnie Ng v. Wei Ji , 41 Misc 3d 130[A] [Sup Ct, App Term 2013] ). Had he been forthright, other interested parties would have been noticed ( SCPA 1003 ) and Shaun would have been ineligible to serve as administrator without the consent of all distributees who had equal priority with George ( SCPA 1001 [1], [6] ).
The undisputed evidence also proves that Shaun utilized the letters of administration to convey an apparent one-hundred percent (100%) fee simple ownership in title to the Elmhurst property to George by the administrator's deed and then, on that same day and pursuant to the Letter Agreement, George conveyed the same title and purported interest to Shaun's company, D & A Development. The logistics and effect of this scheme was to cheat the other distributees out of their vested title in the Elmhurst property and to cause them to be stripped of their equity once the Perla mortgage and Funding Associates mortgage were given and combined into the Consolidated Mortgage.
"A deed based on forgery or obtained by false pretenses is void ab initio, and a mortgage based on such a deed is likewise invalid" (Cruz at 754; see Matter of Bowser , 167 AD3d 1001, 1002 [2d Dept 2018] ; Ortiz v. Silver Invs., 165 AD3d 1156, 1157 [2d Dept 2018] ). "If a document purportedly conveying a property interest is void, it conveys nothing, and a subsequent bona fide purchaser or bona fide encumbrancer for value receives nothing" ( ABN AMRO Mtge. Group Inc. v. Stephens , 91 AD3d at 803 ; Solar Line, Universal Bhd. Inc., 100 AD3d at 863 ).
In similar cases where deeds were executed under the false pretense that the grantor was the sole distributee of the decedent, the deeds have been found to be void ab initio (see e.g. Cruz v. Cruz , 37 AD3d 754 ; see also First Natl. Bank of Nev. v. Williams , 74 AD3d 740 ; GMAC Mtge. Corp. v. Chan, 56 AD3d 521 ).
Funding Associates argues that the difference here is that the grantor, Shaun, was not the sole distributee but, rather, the administrator of decedent's estate clothed with power and authority under EPTL Article 11 to sell the Elmhurst property. In support of this argument, Funding Associates argues that the cases of Mu-Min v. Lee (2010 NY Slip Op. 31738[U], 2010 WL 28002029, 2010 NY Misc LEXIS 3053 [Sup Ct, Queens County] ) and Estate of Paccione (NYLJ, May 17, 2019 at 43 [Sur Ct, Queens County] ) are directly on point.
Contrary to Funding Associates' argument, the facts and legal holding in Estate of Paccione are not remotely similar. In that case, this Court granted the motion by the objectant-mortgagee for summary judgment dismissing the petition on the basis that petitioner failed to provide adequate evidence regarding its forgery allegation which would serve to overcome the mortgagee's prima facie showing of entitlement to summary judgment. In this matter, actual fraud has been clearly established.
In the Supreme Court case of Mu-Min v. Lee , the plaintiff-administrator sought to invalidate a deed she executed alleging that two individuals fraudulently induced her into conveying the deed as part of a mortgage rescue scheme whereby the mortgage would be satisfied in exchange for the temporary transfer of title in the real estate to them. The Supreme Court found the plaintiff-administrator was estopped from claiming a lack of authority to execute the deed and it was valid solely to the extent of conveying her individual ownership interest in the real property.
The facts of Mu-Min v. Lee differ from this case, however, in that the fiduciary in that matter had properly obtained letters. In this case, letters of administration were first obtained by a stranger to the estate, Shaun, under the fraudulent pretense that he was the designee of the sole heir of decedent's estate. The facts herein further differ since the letters were utilized to initiate a two-step sequence of deed transfers whereby first, a wrongfully appointed administrator conveyed title to a falsely-alleged sole distributee (George) who, in turn, conveyed a deed in his individual capacity to a company wholly owned by the same administrator. The facts in this case reveal a unique scheme to defraud the court and engage it as an accomplice to cheat other distributees out of their vested interests in real property through the unlawful procurement of letters of administration and sequential execution of two deeds.
With respect to the first deed, the facts of this case are more similar to Cruz v. Cruz, 37 AD3d 754 (cited with approval by Faison v. Lewis , 25 NY3d at 225-226 ; see also e.g. Matter of Bowser , 167 AD3d 1001 [2d Dept 2018] ), which affirmed the trial court's cancellation of a deed and mortgage that were obtained under the false pretense that the grantor was the "sole heir" when, in actuality, the decedent had six surviving children. The facts of this matter should mandate the same result since the grantor of the deed obtained letters of administration and conveyed the deed under the false pretense of being the designee of a sole heir. The use of letters of administration to facilitate this scheme with the intervention of an accomplice does not change this analysis. The Surrogate's Court has a tutelar responsibility to safeguard decedent's estates and prevent the filing of false petitions, particularly in light of the increasingly elaborate and fraudulent schemes it sees employed to strip distributees, especially those from predominantly minority populated areas of the county, of their vested title and equity in real estate.
The court therefore finds that the first deed dated January 24, 2014 from Shaun, as administrator of decedent's estate to George, was procured by false pretenses and is void ab initio. The grantee, George, received nothing from the first deed since it conveyed nothing and any subsequent bona fide purchaser or bona fide encumbrancer for value received nothing (see Jiles v. Archer, 116 AD3d 664 [2d Dept. 2014], quoting ABN AMRO Mtge. Group Inc. v. Stephens, 91 AD3d at 803 ). Funding Associates' Consolidated Mortgages is therefore entirely invalid to the extent they it is based on the void deed (see Marden, 160 NY 39 ; Cruz , 37 AD3d 754 ; see also First Natl. Bank of Nev. , 74 AD3d 740 ; GMAC Mtge. Corp. v. Chan , 56 AD3d 521 ).
Turning to the second deed dated January 24, 2014 from George, individually as grantor, to D & A Development as grantee, it is manifest that George acquired no power to convey any right, title or interest of the other co-tenants in the Elmhurst property by virtue of the first deed. Nonetheless, George was already vested with his own share of title to the Elmhurst property upon decedent's death since he was a distributee. It is well settled that title to real property vests in the decedent's distributee(s) as tenants in common at the time of decedent's death (see Waxson Realty Corp. v. Rothschild, 255 NY 332, 336 [1931] ; Matter of Blango , 166 AD3d 767, 768 [2d Dept 2018] ; Kraker v. Roll , 100 AD2d 424, 429 [1984] ). The vesting occurred by operation of law, regardless of the appointment of an administrator or the filing of new deeds (see Matter of Jemzura , 65 AD2d 656, 657 [3d Dept 1978] ; Singer v. Levine , 15 Misc 2d 785, 786-787 [Sup Ct Kings County 1958] ; Arlo 67 LLC v. Doyle , 2019 WL 4131029, 2019 Misc. LEXIS 4770 [Sup Ct, Kings County 2019] ).
George's signing of the second deed, individually, reflects his "assent of the will to the use of the paper" for the transfer even though the assent may have been "induced by fraud, mistake or misplaced confidence" ( Faison v. Lewis , 25 NY3d at 225, quoting Marden , 160 NY at 50 ; see also Rosen v. Rosen , 243 AD2d 618, 219 [2d Dept 1997] ). Due to his assent, George is estopped from denying the truth of the deed that he signed and it is deemed valid with respect to his part, although it is deemed invalid with respect to any of the other co-tenants who did not sign (see Kraker v. Roll , 100 AD2d at 431 ; see also Matter of Blango , 166 AD3d at 768-769 ; Mu-Min v. Lee , 2010 NY Slip Op. 31738[U], 2010 WL 28002029, 2010 NY Misc LEXIS 3053 ).
Therefore, the court finds although Funding Associates' Consolidated Mortgage is clearly invalid against the interests of any of the co-tenants (see generally Marden, 160 NY 39 ; Cruz , 37 AD3d 754 ), it is valid insofar as giving Funding Associates security "up to the interest of the mortgagor" ( Real Spec Ventures LLC v. Estate of Livingston Mandel Deans , 87 AD3d 1000, 1002 [2d Dept 2011] ; see Bayview Loan Servicing LLC v. White , 134 AD3d 755, 756 [2d Dept 2015] ; 123 Holding Corp. v. Exeter Holding, Ltd., 72 AD3d 1040, 1042-1043 [2d Dept 2010] ; see also Matter of Blango , 166 AD3d at 768 ). In this case, such interest is equivalent to that part of George's share in the Elmhurst property he conveyed to D & A Development.
Funding Associates has established that it did not have prior actual notice of the fraudulent activity engaged in by George, Shaun or D & A Development (see Real Property Law § 266 ; Feggins v. Marks, 171 AD3d 1014 ; Matter of Raccioppi, 128 AD3d at 839 ). Additionally, while the sequential execution of the deeds, including the conveyance of title to D & A Development for no consideration was, in the court's opinion, sufficient under these facts to provide constructive notice that D & A Development was not a bona fide purchaser for value, the documentary evidence submitted including the affidavit of Funding Associates' partner D.J. Houlihan Jr., the copy of the Perla mortgage, the prior deeds, the letters of administration, the 2015 title report and property appraisal, the investigation of George who was living at the property and copies of the leases and estoppel certificates obtained from tenants indicating that D & A Development was the owner, demonstrates that Funding Associates, in fact, conducted a reasonable inquiry into the possible defects in title attached to the Elmhurst property.
Consequently, the court finds Funding Associates has made a prima facie showing that it is a bona fide encumbrancer for value against the limited interest of the mortgagor, D & A Development.
In opposition to the branch of the motion by Funding Associates for summary judgment, the petitioner submits an affidavit of due diligence by its investigator together with exhibits showing that decedent's distributees are not merely limited to George and his three sisters, but potentially include approximately twenty (20) alleged distributees of decedent, all of them being in the class of issue of parents by representation, i.e. nieces, nephews, grandnieces and grandnephews (EPTL § 4-2.2 [a][5]). While this does not create an issue of fact requiring a trial as to the movant's status as a bona fide encumbrancer for value, it does serve to raise an issue as to the value of its interest.
Accordingly, based upon the evidence submitted, the branch of the motion by Funding Associates for summary judgment dismissing the petition based upon its affirmative defense that it is a bona fide encumbrancer for value on the entirety of the Elmhurst property ( Real Property Law § 266 ) is granted only to the extent that the Consolidated Mortgage is deemed to attach to the partial interest in the Elmhurst property conveyed by George to D & A Development.
Upon a search of the record, the petitioner is granted partial reverse summary judgment dismissing Funding Associate's first affirmative defense to the extent it claims to be a bona fide encumbrancer for value on the entirety of the Elmhurst property ( CPLR 3212 [b] ), except as stated above. The balance of this issue is reserved for a kinship trial to be scheduled in the proceeding for judicial settlement of the account of the Public Administrator of Queens County to determine the number of decedent's distributees and the value of George's ownership share as a result thereof.
Funding Associates next argues that it is entitled to the "net loan proceeds" pursuant to the Standstill Agreement and it seeks a determination that the Public Administrator violated the Standstill Agreement due to its use of the sale proceeds to pay $156,300.00 in Federal and New York State estimated income taxes as well various expenses of administration incurred totaling $8,235.39.
Funding Associates' argument raised in its motion papers concerning the alleged breach of the Standstill Agreement is procedurally improper. This proceeding seeks cancellation of the deeds and mortgages and does not involve an alleged breach of a separate agreement. Funding Associates may more properly raise its objections regarding petitioner's payment of administration expenses in the proceeding for the judicial settlement of the final account of the Public Administrator of Queens County. As an aside, the court notes, however, that estate expenses are entitled to priority in payment versus other claims ( SCPA 1811 ; EPTL § 13-1.3 ). Accordingly, this branch of the motion is denied without prejudice.
Funding Associates next argues that decedent's distributees are barred from asserting claims to the Elmhurst property upon the grounds of laches and equitable estoppel.
When applying the equitable doctrine of laches to an owner of real property who fails to assert his or her interest, it must be shown that the alleged owner "inexcusably failed to act when [the owner] knew, or should have known, that there was a problem with ... title to the property. In other words, for there to be laches, there must be present elements to create an equitable estoppel" ( Wilds v. Heckstall , 93 AD3d 661, 664 [2d Dept 2012], lv denied 19 NY3d 807 [2012], quoting Kraker v. Roll , 100 AD2d at 432-433 ). Equitable estoppel, in turn, "arises when a property owner stands by without objection while an opposing party asserts an ownership interest in the property and incurs expenses in reliance on that belief. The property owner must inexcusably delay in asserting a claim to the property, knowing that the opposing party has changed [its] position" causing irreversible detriment ( Wilds v. Heckstall , 93 AD3d at 664, quoting Bank of Am., N.A. v. 414 Midland Ave. Assoc., LLC , 78 AD3d 746, 750 [2d Dept 2010] ).
Funding Associates has failed to come forward with evidence that any distributees who acquired vested ownership interests in the Elmhurst property at the time of decedent's death, other than George, had actual or constructive knowledge of the scheme afoot involving Shaun and D & A Development. Laches and equitable estoppel do not apply to those distributees in the absence of evidence that they knew or should have known of the adverse claim to ownership of the real property yet stood by without objection. With respect to George, the issue is moot since he has defaulted in this proceeding and the court has determined that Funding Associates' Consolidated Mortgage is deemed valid to the extent of his share of the proceeds of the sale. Accordingly, this branch of the motion is denied.
Funding Associates seeks, in the alternative, summary judgment on its eleventh affirmative defense that it be equitably subrogated to the tax lien on the Elmhurst property that allegedly was satisfied from the Perla mortgage proceeds. The doctrine of equitable subrogation provides that where the "property of one person is used in discharging an obligation owed by another or a lien upon the property of another, under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the obligee or lien-holder" ( King v. Pelkofski , 20 NY2d 326, 333 [1967] ; see Lucia v. Goldman , 145 AD3d 767 [2d Dept 2016] ; Cashel v. Cashel , 94 AD3d 684, 688 [2d Dept 2012] ).
In support, Funding Associates submits a copy of the tax lien certificate, evidence of the lien's sale to the Bank of New York, as well as a tax lien discharge certificate dated August 12, 2014 which corresponds to the Block and Lot of the Elmhurst property and shows that the lien was paid by "Elite Abstract and Research LLC" approximately seven months after the Perla mortgage.
Notwithstanding evidence that the tax lien has been paid, the evidence fails to establish that the proceeds of either of the mortgages were allocated to satisfy these expenses. A mortgage loan closing statement for the Perla mortgage is not provided in the moving papers and the tax lien discharge certificate otherwise makes no reference to the mortgagor or mortgagee. In addition, it appears from Funding Associates' Loan Disbursement Schedule for the consolidated mortgages that the sum of $207,570.64 was used to pay off the "existing" Perla mortgage which was in the principal amount of $200,000.00, strongly suggesting that no proceeds from that loan was used to pay off the tax lien.
Finally, Funding Associates submits a new affidavit and exhibits in reply papers attempting to cure the imperfection of its moving papers. However, the introduction of brand new evidence in reply papers to cure deficiencies in the record is improper (see Pastore v. Utilimaster Corp. , 165 AD3d 685, 688 [2d Dept 2018] ; Lee v. Law Offs. of Kim & Bae, P.C. , 161 AD3d 964, 965-966 [2d Dept 2018] ; USAA Fed. Sav. Bank v. Calvin , 145 AD3d 704 [2d Dept 2016] ) and, in any event, the papers submitted contain contradictory evidence of payment amounts and entities by way of checks and statements.
Based upon the documentary evidence submitted, Funding Associates has failed to make a prima facie showing of entitlement to summary judgment on its eleventh affirmative defense that it is equitably subrogated for payoff of the tax lien from the Perla mortgage proceeds. Accordingly, the branch of Funding Associates motion for a declaration that it is equitably subrogated for payment of the tax lien is denied without prejudice to renewal upon the accounting of the Public Administrator (see e.g. Cruz v. Cruz , 37 AD3d at 754-755 ).