Opinion
Index No. 13965/1990
07-23-2014
ARNAV INDUSTRIES, INC., Plaintiff v. M.H.B. HOLDINGS, INC., 20-32-25 WEST CORP., MARTIN BRODY, RACHEL BRODY, PHILIP BRODY, HADASSAH BRODY, MORGREN CONSTRUCTION CORP., CITY OF NEW YORK, and PEOPLE OF THE STATE OF NEW YORK, Defendants
APPEARANCES: For Plaintiff Moshe Katlowitz Esq. and Elan Weinreb Esq. Katlowitz & Associates 270 Madison Avenue, New York, NY 10016 For Defendants Charles Mester Esq. Turk Roth Mester, LLP 377 5th Avenue, New York, NY 10016
APPEARANCES:
For Plaintiff
Moshe Katlowitz Esq. and Elan Weinreb Esq.
Katlowitz & Associates
270 Madison Avenue, New York, NY 10016
For Defendants
Charles Mester Esq.
Turk Roth Mester, LLP
377 5th Avenue, New York, NY 10016
DECISION AND ORDER LUCY BILLINGS, J.:
Plaintiff moves under C.P.L.R. § 5015(a)(3) to vacate a satisfaction of judgment executed December 30, 2006, and recorded January 5, 2007, by the Clerk of New York County, on the grounds that the satisfaction of judgment was forged and thus fraudulently executed. The decision of this motion requires the court to determine the permissible procedure for vacating a satisfaction claimed to be fraudulent, the timeliness standards that apply, and the standard of proof that the moving party must meet, as well as the application of C.P.L.R. §§ 4519, 4536, and 4538 in this context. The court concludes that plaintiff's motion under C.P.L.R. § 5015(a)(3) is a permissible vehicle for the relief sought and is timely, but that plaintiff has not met its heavy burden to succeed via this motion.
I. BACKGROUND FACTS
Plaintiff commenced this action against the Brody defendants in 1990 for $2,109,110.64, plus interest. On December 9, 1994, defendants M.H.B. Holdings, Inc., 20-35-25 West Corp., Martin Brody, Rachel Brody, Philip Brody, and Hadassah Brody (Brody defendants) entered a stipulation of settlement in which plaintiff agreed to accept a total of $240,000.00 in payments of $2,000.00 per month from the Brody defendants in full settlement of plaintiff's action against them. The December 1994 stipulation provided that, in the event the Brody defendants defaulted in their stipulated payments, plaintiff was entitled to a judgment against the Brody defendants in the full amount claimed, reduced by any payments made, plus interest. Upon the Brody defendants' subsequent default, plaintiff obtained a deficiency judgment entered March 20, 1997.
The parties then entered another stipulation dated April 12, 1997, to vacate the March 1997 judgment and modify the December 1994 stipulation. The April 1997 stipulation provided that, upon the Brody defendants' failure to make any payment by the date when due, plaintiff was entitled, without further notice, to enter a deficiency judgment against the Brody defendants. Upon their default under this stipulation, plaintiff obtained a default judgment entered February 28, 2006, against the Brody defendants for $4,408,406.64, including interest from December 10, 1992. The satisfaction of judgment executed December 30, 2006, and recorded January 5, 2007, now challenged, acknowledged that the Brody defendants had satisfied the February 2006 default judgment; bore the signature of Moshe Katlowitz, attorney for plaintiff; and was notarized by Naftali Ausch December 30, 2006.
II. PLAINTIFF'S CURRENT CLAIM
Plaintiff claims that the Brody defendants failed to remit any funds in satisfaction of the February 2006 judgment; denies Katlowitz's execution of the satisfaction of judgment December 30, 2006; and, on those grounds, moves to vacate the satisfaction pursuant to C.P.L.R. § 5015(a)(3). Plaintiff maintains that it delayed enforcement of the February 2006 judgment because it believed the Brody defendants lacked assets. Only when it investigated the Brody defendants' assets in contemplation of enforcing the judgment, did plaintiff discover the satisfaction March 11, 2013.
Katlowitz denies ever receiving authority from plaintiff to execute a satisfaction of judgment and meeting the notary public, as well as signing the satisfaction. He maintains that his signature was forged, pointing out that the final stroke of the signature on the satisfaction curves to the left, unlike his exemplars of his authentic signature. Besides the exemplars of Katlowitz's signature, which include copies of letters bearing his signature shortly before or after December 30, 2006, plaintiff presents affirmations by his colleagues who attest that they are familiar with his signature and that the signature on the satisfaction is not his. Although Katlowitz, a Sabbath observer, admits he was in New York City Saturday, December 30, 2006, so as to have executed the satisfaction after nightfall on that date before the Notary Public in New York County, he insists that such a possibility is inconsistent with his regular observance of the Sabbath at his residence in Kings County. Finally, Katlowitz recounts that his law firm records show no time recorded for services on behalf of or related to plaintiff on that date, but absent plaintiff's presentation of these records in support of its motion, Katlowitz's recitation of their contents is sheer hearsay. People v. Joseph, 86 N.Y.2d 565, 570 (1995); Fiallos v. New York Univ. Hosp., 85 A.D.3d 678, 678 (1st Dep't 2011); Lapin v. Atlantic Realty Apts. Co., LLC, 48 A.D.3d 337, 338 (1st Dep't 2008).
III. VACATUR OF A SATISFACTION OF JUDGMENT
A. The Permissible Procedure
C.P.L.R. § 5015(a) (3) provides that the court may relieve a party from a judgment upon a motion on the ground of fraud, misrepresentation, or other misconduct of an adverse party. Although C.P.L.R. § 5015(a)(3) does not expressly apply to a satisfaction of judgment, it does not prohibit the vacatur of a post-judgment satisfaction, discharge, or enforcement proceeding upon a motion for that relief. E.g., Bank Leumi Trust Co. of New York v. Toms, 117 A.D.3d 555, 556 (1st Dep't 2014); NYCTL 1998-2 Trust v. Ackerman, 82 A.D.3d 447, 447 (1st Dep't 2011); Friedman v. Janceski, 255 A.D.2d 227, 228 (1st Dep't 1998). See Matter of Hayes, 1 A. D. 3d. 789, 790 (3d Dep't 2003). The court also is empowered to vacate prior proceedings in the interest of substantial justice. Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 68 (2003); Goldman v. Cotter, 10 A.D.3d 289, 293 (1st Dep't 2004); Appalachian Ins. Co. v. General Elec. Co., 8 A.D.3d 109, 109 (1st Dep't 2004); Bay Crest Assn., Inc. v. Paar, 99 A.D.3d 744, 746 (2d Dep't 2012),
A new action for fraud would be required to vacate a satisfaction of judgment only where the grounds for the vacatur occurred outside the original litigation and are wholly unrelated to the basis for the prior judgment in the original action. Wolfert v. Buttolph, 206 A.D.2d 359, 359 (2d Dep't 1994). Plaintiff's claim of fraud in the execution of the satisfaction, based on the Brody defendants' nonpayment pursuant to the stipulated settlement, and their defense, that plaintiff's deceased owner Joseph Wassner accepted their payments in full satisfaction of the settlement, arise from the original litigation. Since the allegedly fraudulent satisfaction of judgment was procured in the course of the original litigation where the judgment was entered, a vacatur by a motion pursuant to C.P.L.R. § 5015(a)(3), instead of a separate action, is permissible. See Matter of New York Diet Drug Litig., 47 A.D.3d 586, 586 (1st Dep't 2008); Parker & Waichman v. Napoli, 29 A.D.3d 396, 399 (1st Dep't 2006); Friedman v. Janceski, 255 A.D,2d at 288.
B. Plaintiff's Timeliness
A motion for a vacatur based on fraud under C.P.L.R. § 5015(a)(3) must be brought within a reasonable time. Mark v. Lenfest, 80 A.D.3d 426, 426 (1st Dep't 2011); Indymac Bank, F.S.B. v. Yano-Horoski, 107 A.D.3d 672, 672 (2d Dep't 2013). When a fraud ought to have been discovered with reasonable diligence depends on when the circumstances suggest the probability of fraud to a person of ordinary intelligence. Sargiss v. Magarelli, 12 N.Y.3d 527, 532 (2009); Apt v. Morgan Stanley DW, Inc., 115 A.D.3d 466, 467 (1st Dep't 2014); Gutkin v. Siegal, 85 A.D.3d 687, 688 (1st Dep't 2011). The satisfaction was filed more than six years before plaintiff served this motion to vacate the satisfaction. Plaintiff, the moving party that bears the burden to establish the motion's timeliness, Taveras v. Philibert, 107 A.D.3d 492, 492 (1st Dep't 2013); Mark v. Lenfest, 80 A.D.3d at 426, provides no explanation for suddenly deciding to search for the Brody defendants' assets to enforce the February 2006 judgment in 2013, upon Joseph Wassner's death, or why such research in 2013 necessarily would lead plaintiff to discover the satisfaction of judgment.
Yet no circumstances in the record indicate that plaintiff knew facts from which to infer that a fraudulently executed satisfaction had been filed. See Trepuk v. Frank, 44 N.Y.2d 723, 724-25 (1978); Uni-Rty Corp. v. N. Y. Guangdong Fin., Inc., 117 A.D.3d 427, 427 (1st Dep't 2014); CSAM Capital, Inc. V. Lauder, 67 A.D.3d 149, 157 (1st Dep't 2009); Brady v. Murray, 30 A.D.3d 186, 186 (1st Dep't 2006). Nor was it unreasonable for plaintiff not to investigate for any satisfaction of the judgment or not to inspect the public record for any purpose before March 2 013 and to inspect the record only when plaintiff sought to enforce the judgment. Guedi v. Dana, 11 A.D.3d 368, 368 (1st Dep't 2004); McGuiness v. Standard Drywall Corp., 193 A.D.2d 518, 518 (1st Dep't 1993). See Jaliman v D.H. Blair & Co. Inc., 105 A.D.3d 646, 647 (1st Dep't 2013). Then, upon discovering the satisfaction March 11, 2013, plaintiff promptly moved to vacate the satisfaction less than a month later. See Mark v. Lenfest, 80 A.D.3d at 426; Guedj v. Dana, 11 A.D.3d at 368; McGuiness v. Standard Drywall Corp., 193 A.D.2d at 518.
IV. LACK OF A CLEAR AND CONVINCING SHOWING
A. Plaintiff's Lack of a Prima Facie Showing
Although an expert's opinion is not essential, more than a bare allegation of forgery is required to contest a signature's authenticity. Banco Popular N. Am. v. Victory Taxi Mgt., Inc., 1 N.Y.3d 381, 384 (2004) ; CIT Tech. Fin. Servs. I LLC v. Bronx Westchester Med. Group, P.C., 117 A.D.3d 567, 567 (1st Dep't 2014); Peyton v. State of Newburg, 14 A.D.3d 51, 54 (1st Dep't 2004). Where, as here, the signature is accompanied by a notary public's acknowledgment, it establishes a presumption of the notarized signature's due execution and genuineness, C.P.L.R. § 4538; Genger v. Arie Genger 1995 Life Ins. Trust, 84 A.D.3d 471, 471 (1st Dep't 2011); Artigas v. Renewal Arts Realty Corp., 22 A.D.3d 327, 328 (1st Dep't 2005); Seaboard Sur. Co. v. Earthline Corp., 262 A.D.2d 253, 253 (1st Dep't 1999); ABN AMRO Mtge . Group, Inc. v. Stephens, 91 A.D.3d 801, 803 (2d Dep't 2012), which may be rebutted only by clear and convincing evidence amounting to a "moral certainty." Genger v. Arie Genger 1995 Life Ins. Trust, 84 A.D.3d at 472; Neuman v. Neumann, 109 A.D.3d 886, 888 (2d Dep't 2013); John Deere Ins. Co. v. GBE/Alasia Corp., 57 A.D.3d 620, 622 (2d Dep't 2008). See Bryant v. Bryant, 58 A.D.3d 496, 496 (1st Dep't 2010).
Despite the affidavits from Katlowitz's colleagues attesting to familiarity with his signature and the inauthenticity of the signature on the satisfaction of judgment, a comparison of his signature samples presented by plaintiff shows nonuniform variations among every exemplar. Even assuming the authenticity of these samples presented by plaintiff is undisputed, see People v. Fields, 287 A.D.2d 577, 578 (2d Dep't 2001), they and all Katlowitz's signatures in the record, including the notarized signature on the satisfaction of judgment, are similar, but not identical, and all deviate from each other, such that the signature on the satisfaction is not so remarkably dissimilar as to constitute a certain forgery. See Smith v. Coughlin, 198 A.D.2d 726, 726-27 (3d Dep't 1993). Although Katlowitz's signature samples and his denial of his signature on the satisfaction fall short of prima facie clear and convincing evidence of a forgery, any comparison of his undisputed signatures with his disputed signature to establish that the latter is a forgery, in any event, only may be made at trial by a handwriting expert or by the trier of fact. C.P.L.R. §§ 4536, 4538; Felt v. Olson, 51 N.Y.2d 977, 979 (1980); People v. Hunter, 34 N.Y.2d 432, 435-36 (1974); People v. Fields, 287 A.D.2d at 578; Smith v. Coughlin, 198 A.D.2d at 726. See Olympus Servicing, L.P. v. Lee, 56 A.D.3d 537, 538 (2d Dep't 2008).
Nor does plaintiff support its prima facie claim with any evidence that the notarization was defective or fraudulent or that it was impossible for Katlowitz to have appeared before the Notary Public in New York County, where Katlowitz's office is, to execute the satisfaction December 30, 2006. Seaboard Sur. Co. v. Earthline Corp., 262 A.D.2d at 253; Olympus Servicing, L.P. v. Lee, 56 A.D.3d at 538. Thus, even without consideration of the Brody defendants' opposing evidence, plaintiff fails to meet its burden to show fraud in the duly acknowledged execution of the satisfaction of judgment, through clear and convincing evidence. Genger v. Arie Genger 1995 Life Ins. Trust, 84 A.D.3d at 471-72; John Deere Ins. Co. v. GBE/Alasia Corp., 57 A.D.3d at 622. See Neuman v. Neumann, 109 A.D.3d at 888.
B. Plaintiff's Failure to Remedy Its Deficient Showing
Further questioning plaintiff's forgery and fraudulent execution claim, defendant Martin Brody attests that his family, through their attorney, made all required payments to plaintiff under the 1997 stipulation. Aff. of Martin Brody ¶¶ 7-8. Since the 1997 stipulation permitted plaintiff to enter a default judgment without notice to the Brody defendants, Brody only discovered the judgment entered February 28, 2006, unexpectedly later in 2006. Surprised at his discovery, he approached Joseph Wassner, who agreed Brody had paid all amounts due and promised to instruct Katlowitz to eliminate the judgment against defendants. Id. ¶ 10.
In reply, Judah Wassner, plaintiff's Vice President and Chief Financial Officer and Joseph Wassner's son, explains that plaintiff accepted only $212,000.00 of the stipulated $240,000.00 total and refused further checks from the Brody defendants because they failed to tender timely payments. Aff. of Judah Wassner ¶¶ 13-14. Plaintiff attempts to substantiate Judah Wassner's account with plaintiff's schedules of payments from the Brody defendants, which show that only $212,000.00 out of the $240,000,00 settlement was paid. These schedules, however, simply end at January 2004, when the final monthly payment was not due until November 2004, and show that through January 2004 plaintiff regularly accepted payments whether made before or after the 15th of the month when they were due.
Judah Wassner also disclaims any agreement between Martin Brody and Joseph Wassner because he would not have made any such agreement without consulting his son. Id. ¶¶ 16-17. This attempt to portray another person's thought process, however, amounts to little more than speculation, particularly under circumstances that Judah Wassner did not witness, Gomez v. J.C. Penney Corp., Inc., 113 A.D.3d 571, 572 (1st Dep't 2014); Beloff v. Gerges, 80 A.D.3d 460, 460-61 (1st Dep't 2011); Caraballo v. Kinqsbridge Apt. Corp., 59 A.D.3d 270, 270 (1st Dep't 2009), and is too vague and ccnclusory to establish Joseph Wassner's deliberate, repetitive practice. See Rivera v. Anilesh, 8 N.Y.3d 627, 633-34 (2007). Finally, plaintiff presents a handwriting expert's affidavit that the signature on the satisfaction was a forgery.
While much of Judah Wassner's affirmation replies to Martin Brody's account opposing plaintiff's motion, its evidence of defendants' nonpayment to support the February 2006 judgment and nonsatisfaction of the judgment and the expert opinion of forgery are key elements of its motion in the first instance. Plaintiff may not present evidence in reply to remedy a fundamental deficiency in plaintiff's motion. Trizechahn, Inc. v. Timbil Chiller Maintenance Corp., 92 A.D.3d 409, 410 (1st Dep't 2012); Rozina v. Casa 74th Dev. LLC, 89 A.D.3d 508, 509 (1st Dep't 2011); Henry v. Pequaro, 72 A.D.3d 600, 602 (1st Dep't 2010). The court's consideration of this evidence prejudices the Brody defendants, who have had no opportunity to address plaintiff's schedule of payments and the opinion by plaintiff's handwriting expert and to present a rebuttal. See Sea Trade Mar. Corp. v. Coutsodontis, 111 A.D.3d 483, 486 (1st Dep't 2013); Kennelly v. Mobius Realty Holdings LLC, 33 A.D.3d 380, 381-82 (1st Dep't 2006).
Nevertheless, even were the court to consider all plaintiff's reply evidence, the record already before the court, including the duly executed instrument of acknowledgment accompanying the satisfaction itself, raises factual issues precluding any determination that the satisfaction was a forgery. First, because the veracity and weight of plaintiff's expert opinion that the signature on the satisfaction was forged only may be assessed by a trier of fact, Felt v. Olson, 51 N.Y.2d at 979; Matter of Svlvestri, 44 N.Y.2d 260, 266 (1978); Bryant v. Bryant, 58 A.D.3d at 496; see Dubose v. New York City Hous. Auth., 113 A.D.3d 423, 423 (1st Dep't 2014); Balzola v. Giese, 107 A.D.3d 587, 588 (1st Dep't 2013), the opinion is not, as a matter of law, clear and convincing evidence amounting to a moral certainty that the signature on the satisfaction, which appears legitimately executed and acknowledged, is a forgery. Genger v. Arie Genger 1995 Life Ins. Trust, 84 A.D.3d at 471-72. See Bryant v. Bryant, 58 A.D.3d at 496.
Second, contrary to plaintiff's claim that plaintiff refused further payments upon the Brody defendants' failure to tender timely payments for August and September 2003, Aff. of Moshe Katlowitz Exs. 4 and 5; Wassner Aff. ¶ 14, plaintiff's record shows that the Brody defendants continued to make payments to plaintiff, the final check in November 2004 being in full satisfaction of the stipulated settlement. Katlowitz Aff. Ex. 6. Plaintiff makes no showing of having affirmatively rejected the payments by the Brody defendants after September 2 003 or of having never negotiated these checks, leaving factual issues bearing on whether the stipulated settlement of $240,000.00 was fully satisfied.
V. C.P.L.R. § 4519
C.P.L.R. § 4519, which applies only at trial, does not bar reliance on Martin Brody's account, offered in opposition to plaintiff's motion, regarding Joseph Wassner's promise to instruct Katlowitz to eliminate the February 2006 default judgment. Phillips v. Kantor & Co., 31 N.Y.2d 307, 313, 315 (1972); Rosado v. Kulsakdinun, 32 A.D.3d 282, 284 (1st Dep't 2006); Salerno v. Geller, 278 A.D.2d 104, 104 (1st Dep't 2000); Lauriello v. Gallotta, 59 A.D.3d 497, 498 (2d Dep't 2009). Nor has Judah Wassner waived plaintiff's rights under C.P.L.R. § 4519 by claiming that Joseph Wassner would not have acted without first consulting his son, as these allegations concern only Judah Wassner's observations of his deceased father's conduct and not any specific communication or transaction with his father. Phillips v. Kantor & Co., 31 N.Y.2d at 313; Sepulveda v. Aviles, 308 A.D.2d 1, 11 (1st Dep't 2003). C.P.L.R. § 4519, when applicable at trial, however, will bar the Brody defendants, who are interested parties, from presenting testimony against plaintiff of Joseph Wassner's statements, unless plaintiff has waived that protection. Sepulveda v. Aviles, 308 A.D.2d at 10. As the Brody defendants concede that Joseph Wassner was the owner of plaintiff corporation, Brody Aff. ¶ 1, plaintiff is an entity that derives its "title or interest from, through or under" Joseph Wassner pursuant to C.P.L.R. § 4 519 and that therefore is entitled to its protection. See Herrman v. Sklover Group, 2 A.D.3d 307, 307 (1st Dep't 2003).
Nevertheless, while Joseph Wassner's statement that he would arrange for Katlowitz to eliminate the February 2006 default judgment may, at most, be probative of Joseph Wassner's intent, Brody Aff. ¶ 10, the statement does not vitiate Katlowitz's attestation that he never received authority to execute the satisfaction and, more importantly, that the signature was forged. Consequently, even if C.P.L.R. § 4519 barred reliance on Martin Brody's account of Joseph Wassner's statement in opposition to plaintiff's motion, the statement is not critical to the defeat of the motion.
V. DISPOSITION
Plaintiff's motion to vacate the satisfaction of judgment executed December 30, 2006, and recorded January 5, 2007, fails for all the reasons explained above. Even if the court considers all plaintiff's evidence under C.P.L.R. §§ 4536 and 4538 and excludes defendant Martin Brody's communications with plaintiff's deceased owner under C.P.L.R. § 4519, plaintiff must amass a stronger record, which must be assessed by a trier of fact, to establish a forged signature. Therefore the court denies plaintiff's motion. C.P.L.R. § 5015(a)(3). This decision constitutes the court's order. DATED: July 23, 2014
/s/_________
LUCY BILLINGS, J.S.C.