Summary
permitting relation back where plaintiff became aware at the original defendant's deposition, after the statute of limitations had expired, that the proposed party had been involved in the alleged scheme to defraud her
Summary of this case from Abdell v. City of New YorkOpinion
96-CV-5414 (JG)
May 19, 2000
RICHARD J. WAGNER, GERALDINE A. KENNEDY, Brooklyn Legal Services Corp. "A", Brooklyn, NY, Attorney for Plaintiff.
ANDREW PAUL COOPER, Andrew Paul Cooper Associates, Mineola, NY, Attorney for Defendant Joseph Indelicato.
MEMORANDUM AND ORDER
Defendant Joseph Indelicato has moved for summary judgment, contending that the claims against him are untimely. Finding the claims timely under the relation-back doctrine, I deny the motion.
BACKGROUND
The following background takes all the evidence in the light most favorable to plaintiff and gives her the benefit of all reasonable inferences. See Castle Rock Entertainment, Inc. v. Carol Publ'g Group, Inc., 150 F.3d 132, 137 (2d Cir. 1998).
Plaintiff Myrtice Walker purchased 779 Linwood Street in Brooklyn in 1981 for 8,000 in cash. (Deposition of Myrtice Walker ("Walker Deposition"), at 11, attached as Exh. H to Affidavit of Joseph Indelicato ("Indelicato Affidavit").) After encountering financial difficulties, Walker went to Berkeley Consultants in 1988 to take out a mortgage on the property. (Id. at 16.) She went to Berkeley because she had seen their advertisement in the newspaper. (Id. at 18.)
Her third visit to Berkeley came on May 6, 1988. She was accompanied only by her daughter, who was not an attorney. (Id. at 26-27.) At that meeting, defendant Baldassare Agro had Walker sign a series of documents, which he assured her she did not have to read. (Id. at 32.) Walker, who has difficulty reading, followed that advice and did not read the documents. (Id. at 65.) She believed she was signing loan papers. (Id. at 75.) Agro told Walker that she would be making payments of $775 per month on the mortgage. (Id. at 34.)
Rather than execute loan documents, Walker in reality signed a contract of sale conveying the property to Agro for $26,000. (Exh. A to Indelicato Affidavit.) She also signed a five-year lease with Agro, which required her to pay him $775 per month in rent. (Exh. C. to Indelicato Affidavit.)
Agro had asked defendant Joseph Indelicato before meeting with Walker if he could purchase Walker's property, and Indelicato gave him permission. (Deposition of Baldassare Agro, July 1, 1999 ("Agro 7/1/99 Deposition"), at 93-94, attached as Exh. A to Declaration of Andrew Paul Cooper ("Cooper Declaration").) Indelicato signed the lease between Agro and Walker as a witness. (Exh. C to Indelicato Affidavit.)
On June 14, 1988, Agro took out an $80,000 mortgage on the property from American Savings and Loan Association. (Exh. D to Indelicato Affidavit.) Indelicato was present at the mortgage closing. (Deposition of Baldassare Agro, Nov. 10, 1998 ("Agro 11/10/98 Deposition"), at 139, attached as Exh. B. to Cooper Declaration.) When Agro received the check, he endorsed it over to Indelicato. (Agro 7/1/99 Deposition at 97.)
When Walker's monthly payments arrived, Agro signed them over to Indelicato or Berkeley Consultants. (Agro 11/19/98 Deposition at 83.) Indelicato says he put the money in an account of Carpenter Court Realty, a corporation wholly owned by Indelicato, and then used the funds to make payments on the American Savings and Loan Association mortgage. (Indelicato Deposition at 10, 29, 33-34.)
On November 14, 1989, the property was conveyed to Carpenter Court Realty. (Defendant's Statement Pursuant to Local Civil rule 56.1(b), ¶ 8.) Agro was unaware of the conveyance; someone forged his name on the deed. (Agro 11/10/98 Deposition at 90.)
Walker stopped making payments to Agro in 1992 because she could not locate him. (Walker Deposition at 66-67.)
On March 29, 1993, American Savings and Loan initiated foreclosure proceedings against Agro and Carpenter Court because payments had not been made and because the conveyances had taken place without the bank's permission, in violation of the mortgage. (Exh. 5 to Declaration of Richard J. Wagner in Opposition to Motion for Summary Judgment ("Wagner Declaration").)
On January 26, 1994, Walker received a letter from the American Savings and Loan Association asking that she call to discuss the property. (Walker Deposition at 40-41; Exh. 4 to Wagner Declaration.) When she called the institution, she was told that Agro had taken out a mortgage on the property. (Id. at 41.) This is the first time she learned that she no longer owned the house and that it had been mortgaged by someone else. (Id.)
Walker initiated this action in the Supreme Court of the State of New York, County of Kings, on May 23, 1994, naming Agro, American Savings and Loan Association, and Carpenter Court Realty as defendants. The summons was served on Carpenter Court on June 14, 1994, and on Agro on June 18, 1994.
The case was subsequently removed to this court because of the involvement of the Resolution Trust Corporation (and later the Federal Deposit Insurance Corporation), which took over American Savings and Loan.
On December 8, 1998, Magistrate Judge Mann granted plaintiffs request to amend her complaint to add Indelicato as a defendant.
DISCUSSION
A. The Summary Judgment Standard
Summary judgment must be granted where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In determining whether material facts are in dispute, all ambiguities must be resolved and all inferences drawn in favor of the non-moving party. See Castle Rock Entertainment, Inc. v. Carol Publ'g Group. Inc., 150 F.3d 132, 137 (2d Cir. 1998).
The initial burden is upon the moving party to demonstrate the absence of any genuine issues of material fact. See Adams v. Department of Juvenile Justice, 143 F.3d 61, 65 (2d Cir. 1998). "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. In the language of the Rule, the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial."Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (citations and internal quotation marks omitted). The non-moving party cannot survive a properly supported motion for summary judgment by resting on the pleadings "without offering 'any significant probative evidence tending to support the complaint.'" Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986) (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253. 290 (1968)).
B. Timeliness of Complaint Against Carpenter Court
Indelicato first argues that the complaint is untimely as against Carpenter Court and that any attempt to have service on Indelicato relate back to that event must, by extension, fail.
The parties agree that the applicable statute of limitations is the six-year period for fraud actions in New York. See N.Y. C.P.L.R. § 213(8) (stating that the statute period begins running when the plaintiff "discovered the fraud, or could with reasonable diligence have discovered it").
Putting aside any argument regarding when Walker could have reasonably discovered the fraud, she contends that her action against Carpenter Court in 1994 was timely under the "continuing wrong" doctrine. "[I]n New York, '[d]espite the general principle that a cause of action accrues when the wrong is done, regardless of when it is discovered, certain wrongs are considered to be continuing wrongs, and the statute of limitations, therefore, runs from the commission of the last wrongful act.'" Leonhard v. United States, 633 F.2d 599, 613 (2d Cir. 1980) (quoting N.Y. C.P.L.R. § 203 note (McKinney 1972) (McLaughlin, Practice Commentaries C203:1)).
Walker contends, and I agree, that a reasonable jury could conclude that the ongoing receipt of Walker's payments, which she believed to be mortgage payments, was part of the scheme to defraud her. These payments, a reasonable jury could conclude, were designed both to fraudulently sustain Walker's belief that she still owned her home and to provide funds to allow the defendants to make payments on the mortgage they had taken out on the property. Therefore, whether these payments continued into 1990, as plaintiff's counsel contends in his memorandum of Law, or into 1992, as Walker stated in her deposition, the institution of the action in 1994 came within the six-year limitations period.
C. Timeliness of the Complaint Against Indelicato
Indelicato was not added as a defendant until 1998, beyond the six-year statute of limitations. The claim against him therefore survives only if it "relates back" to a timely filed claim, a question that must be decided according to New York law. See Fed.R.Civ.P. 15(c)(1) (allowing relation back when it "is permitted by the law that provides the statute of limitations applicable to the action"). When a plaintiff seeks to take advantage of the relation back doctrine in New York, she must make three showings:
(1) both claims arose out of same conduct, transaction or occurrence, (2) the new party is 'united in interest' with the original defendant, and by reason of that relationship can be charged with such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits and (3) the new party knew or should have known that, but for a . . . mistake by plaintiff as to the identity of the proper parties, the action would have been brought against him as well.Buran v. Coupal, 87 N.Y.2d 173, 178 (1995) (quoting Brock v. Bua, 443 N.Y.S.2d 407, 412 (2d Dep't 1981)); see also LL Plumbing Heating v. DePalo, 677 N.Y.S.2d 153, 154 (2d Dep't 1998) (party seeking to invoke relation-back doctrine bears burden of establishing prerequisites).
In this quotation, I have omitted the word "excusable" before mistake to avoid confusion. As discussed below, later in Buran, the New York Court of Appeals stripped the element of excusability from the test. See id. at 179.
Indelicato concedes that Walker satisfies the first requirement. (Memorandum of Law in Support of Motion for Summary Judgment at 13.) However, he contends that Walker has failed to establish the second and third elements.
The second element, unity of interest, is established where "the interest of the parties in the subject-matter is such that they stand or fall together and that judgment against one will similarly affect the other." LL Plumbing Heating, 677 N.Y.S.2d at 154 (quotation marks omitted). In other words, "interests will be united, only where one is vicariously liable for the acts of the other." Id. (quotation marks omitted). "Underlying the doctrine of vicarious liability . . ., is the notion of control. The person in a position to exercise some general authority or control over the wrongdoer must do so or bear the consequences." Id. (quotation marks omitted).
Here, a jury could reasonably conclude that there was a unity of interest between Indelicato personally and Agro. Taking the evidence in the light most favorable to Walker, Agro never took any actions while working for Indelicato without his authorization; he sought and obtained Indelicato's pennission to buy Walker's home; he immediately signed over to Indelicato personally the proceeds of the mortgage; he gave Indelicato Walker's "rent" payments; and, finally, the house was eventually conveyed (without Agro's knowledge and by use of a forged signature) to a corporation wholly owned by Indelicato. On these facts, a jury could reasonably conclude that Agro worked as Indelicato's agent throughout this transaction and that they were therefore united in interest. See id. (finding unity of interest when timely-served defendant acted as agent for later-added defendant).
I need not decide at this stage whether Indelicato could also be considered united in interest with Carpenter Court Realty. I also need not address plaintiff's "alter ego" argument.
Finally, I conclude that the third New York requirement for relation-back is met. Although this requirement is phrased similarly to the element of relation-back under federal law found in Federal Rule of Civil Procedure 15(c)(3), the two requirements are construed somewhat differently. In New York, courts considering this element typically deem dispositive the presence or absence of bad faith on the part of the party seeking the amendment. In fact, a recent decision by the First Department states that this requirement is satisfied if "the omission to name the new party in the original complaint was not an attempt to secure some tactical advantage in the litigation." Yaniv v. Taub, 683 N.Y.S.2d 35, 38 (1st Dep't 1998); see also Buran, 87 N.Y.2d at 181 (noting that courts should refuse to apply relation-back doctrine when "plaintiff omitted a
defendant in order to obtain a tactical advantage in the litigation [by] . . . intentionally decid[ing] not to assert a claim against a party known to be potentially liable"); Blakeslee v. Royal Ins. Co. of America, No. 93 Civ. 1633, 1998 WL 209623, at *6 (S.D.N.Y. Apr. 29, 1998) ("[U]nder this third prong of the test, courts should focus on whether the party invoking the relation back doctrine acted intentionally or in bad faith in not including all the appropriate parties in the original pleading.").
Given these principles, Indelicato's argument on this point clearly fails. He contends only that Walker's mistake in not naming him earlier was not "excusable" as that term is defined in Brock v. Bua, 443 N.Y.S.2d 407, 412 (2d Dep't 1981). This argument ignores the fact that the Court of Appeals has held that the mistake need not be "excusable" to satisfy this element of the relation-back test. Buran, 87 N.Y.2d at 179. In doing so, the court specifically rejected the portion of Brock on which Indelicato relies. See Buran, 87 N.Y.2d at 179.
Walker states that she did not name Indelicato as a defendant initially because it was not until Agro was deposed on November 10, 1998, that Indelicato's personal involvement in the alleged scheme to defraud her became apparent. Indelicato does not contend that this constitutes bad faith, nor does he claim that Walker consciously chose not to name him in order to secure some kind of tactical advantage. Instead, he argues that Agro's testimony provides insufficient evidence of Indelicato's involvement in any scheme to defraud Walker, an argument I have already rejected when discussing the unity of interest between Agro and Indelicato.
Finally, given that there was timely service on Carpenter Court Realty, Indelicato's wholly owned corporation, I find that he received adequate notice of this suit during the statute of limitations period.See Buran, 87 N.Y.2d at 180 (describing "'linchpin' of the relation back doctrine" as "notice to the defendant within the applicable limitations period" (quoting Schiavone v. Fortune, 477 U.S. 21, 31 (1986)).
CONCLUSION
For these reasons, Indelicato's motion for summary judgment is denied. The joint pretrial order shall be filed on or before May 31, 2000. There will be a final pretrial conference
on June 2, 2000, at 9:30 a.m. Jury selection and trial will take place on June 5, 2000, at 9:30 a.m.
So Ordered.