Opinion
904668-16
11-20-2018
BANK OF AMERICA, N.A., Plaintiff, v. UNKNOWN HEIRS OF the ESTATE OF Walter J. BREAKELL III if He be Living and if He be Dead, the Respective Heirs-at-Law, Next-of-Kin, Distributees, Executors, Administrators, Trustees, Devisees, Legatees, Assignees, Lienors, Creditors and Successors in Interest and Generally All Persons Having or Claiming Under, by or Through Said Inheritance, Any Right, Title or Interest in or to the Real Property Described in the Complaint, Walter J. Breakell III, David Breakell as Possible Heir of the Estate of Walter J. Breakell III, Susan Gresko as Possible Heir of the Estate of Walter J. Breakell III, Secretary of Housing and Urban Development, Niagara Mohawk Power Corporation dba National Grid, NYS Department of Taxation and Finance, United States of America Internal Revenue Service, and "John Doe" and "Jane Doe", the Last Two Names Being Fictitious, Said Parties Intended Being Tenants or Occupants, if any, Having or Claiming an Interest in, or Lien Upon the Premises Described in the Complaint, Defendants.
Aldridge Pite, LLP, By: Loudie Srebnick, Esq., 40 Marcus Drive, Suite 200, Melville, New York 11747, Attorneys for Plaintiff Englert, Coffey & McHugh, LLP, David Breakell and Joanne Breakell, By: Peter V. Coffey, Esq., 224 State Street, P.O. Box 1092, Schenectady, New York 12301, Attorneys for Defendants
Aldridge Pite, LLP, By: Loudie Srebnick, Esq., 40 Marcus Drive, Suite 200, Melville, New York 11747, Attorneys for Plaintiff
Englert, Coffey & McHugh, LLP, David Breakell and Joanne Breakell, By: Peter V. Coffey, Esq., 224 State Street, P.O. Box 1092, Schenectady, New York 12301, Attorneys for Defendants
David A. Weinstein, J. Plaintiff Bank of America ("BOA") commenced this foreclosure action by summons and complaint dated August 12, 2018, seeking, among other things, to foreclose a reverse mortgage covering property at 126 Old Niskayuna Road, Loudonville, New York 12211 (the "premises"), and to have a referee appointed to ascertain and compute the amount owed to the plaintiff due to the alleged default on the mortgage.
A reverse mortgage is " ‘designed to allow elderly homeowners to borrow money against the accumulated equity in their homes and, unlike traditional mortgages, ‘the borrower in a reverse mortgage receives periodic payments (or a lump sum) and need not repay the outstanding loan balance until certain triggering events occur’ ... The triggering even usually involves the death of the borrower or the sale of the home’ " (Wendover Fin. Servs. v. Ridgeway , 137 A.D.3d 1718, 1718, 28 N.Y.S.3d 535 [4th Dept. 2016], quoting Onewest Bank, FSB v. Smith , 135 A.D.3d 1063, 1063-1064, 22 N.Y.S.3d 674 [3d Dept. 2016] ).
Defendants Walter J. Breakell IV, Susan Gresko, David Breakell and Joanne Breakell appeared and answered the complaint. An amended complaint, dated August 29, 2018, was subsequently served on the parties, and these defendants served amended answers.
In their amended answers, defendants asserted a number of affirmative defenses, including the defense that the mortgage documents attached to the amended complaint do not properly describe the premises that were mortgaged (e.g., Affidavit of Loudie Srebnick ["Srebnick Aff"], Ex C [Answer of Walter Breakell IV and Susan Gresko] ¶ 13). Defendants David and Joanne Breakell specifically pled that the description of the premises in the mortgage was not what was intended by the lender and the borrower (Srebnick Aff, Ex C [Answer of David and Joanne Breakell] ¶¶ 7-12). Rather, they contended that the borrower, decedent Walter J. Breakell, III ("Walter III"), had the premises divided into two parcels, with one parcel consisting of 2.2 acres containing a main house and guest house ("Parcel One"), and the other consisting of 3.3 acres of vacant land ("Parcel Two") (id. ¶¶ 9-10). According to defendants, although they intended to take the mortgage only on Parcel One, plaintiff nevertheless is seeking to include both in the foreclosure, which was never the intent or understanding of the borrower in agreeing to the terms of the mortgage.
BOA has now moved for summary judgment based on the unpaid note, mortgage and evidence of default by the borrower. The motion is supported by the affirmation of attorney Loudie Srebnick with exhibits A-K attached thereto, which includes the note, mortgage, and the relevant assignment documentation, including that from the original lender, M & T Bank to BOA, dated June 25, 2010 (Srebnick Aff, Ex A, p. 40-42). In response to the affirmative defenses concerning the description of the premises, counsel contends that the allegations are conclusory and they should be stricken (Srebnick Aff ¶¶ 49-53).
Defendants have not submitted any opposition to BOA's motion; instead, David Breakell and Joanne Breakell cross-move for the equitable relief of reformation of the mortgage to correct the description of the premises contained therein due to an alleged scrivener's error and mutual mistake. The cross-motion is supported by an affidavit from Mr. Breakell ("Breakell Aff"), along with a memorandum of law. BOA has not submitted any papers in opposition to the cross-motion.
Although the cross motion is submitted only by two of the defendants, for simplicity's sake I refer to any submissions or statements made on the cross motion as made by "defendants."
As evidenced by the Deed, dated October 18, 2005 and filed with the Albany County Clerk on February 6, 2006, the premises had at one time been two separate but contiguous parcels (Breakell Aff ¶ 3, Ex B). The 2005 Deed merged Parcels One and Two into one property, also owned by Walter III (id. ).
According to Mr. Breakell, sometime in late December 2009 or early January 2010, Walter III decided he wanted a reverse mortgage (id. ¶ 2). Pursuant to a power of attorney that was executed by Walter III on October 18, 1995, Mr. Breakell acted as his father's attorney-in-fact with regard to mortgage negotiations (id. ). M & T Bank ("M & T") was contacted and, in a letter to Walter III dated March 19, 2010, agreed to provide a reverse mortgage loan on the premises (id. , Ex. E).
The Power of Attorney document contained in the cross-motion is a conformed version that indicates that the original is on file with Lavell & Finn, LLP.
In the March 19 letter, M & T listed the terms and conditions under which the mortgage would be provided, and such conditions included that M & T would "obtain a revised Title Insurance Policy reflecting the 2.2 acre parcel" (i.e. Parcel One) and that Walter III would "[s]ubmit a revised Deed showing the correct description of the 2.2 acre parcel" (id .). Walter III also had to establish an escrow holdback for completion of the following repairs on the structures located on that parcel (id. ).
According to Mr. Breakell, upon learning that M & T required a deed reflecting only the description for Parcel One, where the dwellings are located, his brother (who is an attorney) prepared such a deed. Walter III signed the new deed on March 24, 2010, and recorded it with the Albany County Clerk's office on March 25, 2010 (id. ¶ 5 & Ex D). M & T also had several e-mail exchanges with Mr. Breakell in which M & T indicated that the mortgage was for the 2.2 acre parcel (id. , Ex F). In an e-mail dated March 10, 2010, M & T Assistant Vice President and Reverse Mortgage Officer Sonja Hotaling requested that Mr. Breakell provide a letter from the Town of Colonie confirming that the 2.2 acre parcel could not be subdivided (id. ). On March 19, 2010, Ms. Hotaling again e-mailed, asking for a copy of the deed reflecting only the 2.2 acre parcel (id. ). On March 26, 2010, Walter III's son, and attorney, Walter J. Breakell IV, e-mailed Ms. Hotaling a copy of the Parcel One deed that was filed with the Albany County Clerk's Office on March 25, 2010 (id. ).
A review of the reverse mortgage between Walter III and M & T indicates that it was signed by Walter III on April 19, 2010, and subsequently filed with the Albany County Clerk's Office on August 6, 2010 (id. , Ex. G). For a description of the premises, the mortgage states "SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF" (id. at p.2). However, no such exhibit is attached. Instead, inserted between page 2 and 3 of the mortgage, is a two page document entitled "SCHEDULE C PROPERTY DESCRIPTION" that contains property descriptions for what is denoted as "Parcel A" and "Parcel B". According to defendants' memorandum of law ("MOL"), Parcel B is Parcel One, i.e. the parcel that according to defendants was intended for the mortgage, and its description is the same as the description of the property contained in the March 24, 2010 Deed (see MOL at 2; Breakell Aff, Exs D and G). Parcel A, on the other hand, described Parcel Two (the 3.3 acre property), and defendants contend that its inclusion reflects a mistake caused by a scrivener's error (MOL at 2). As a result, defendants request that the mortgage be reformed to reflect that it covers only the 2.2 acre parcel.
Discussion
A foreclosure plaintiff demonstrates its prima facie right to summary judgment "by submitting the mortgage and unpaid note, along with evidence of default in payments" (see PHH Mortg. Corp. v. Davis , 111 A.D.3d 1110, 1111, 975 N.Y.S.2d 480 [3d Dept. 2013] ). On the basis of the evidence set forth in BOA's papers, it has met its prima facie burden. Further, none of the defendants appearing in this matter have opposed BOA's motion. Instead, the moving defendants only seek reform of the mortgage to reflect the correct property description, but do not oppose the foreclosure to the extent it is so reformed. Thus, BOA is entitled to summary judgment (see Kuehne & Nagel, Inc. v. Baiden , 36 N.Y.2d 539, 544, 369 N.Y.S.2d 667, 330 N.E.2d 624 [1975] ["Facts appearing in the movant's papers which opposing party does not controvert, may be deemed admitted"] ). The question before me, then, is the nature of the mortgaged premises to be foreclosed, and in particular whether they are to be subject to reformation as per defendants' application.
For defendants to be entitled to reformation of the mortgage, they "must establish, by clear and convincing evidence, that the writing in question was executed under mutual mistake or unilateral mistake coupled with fraud" ( Vollbrecht v. Jacobson , 40 A.D.3d 1243, 1245, 838 N.Y.S.2d 188 [3d Dept. 2007] [citation omitted]; see also Greater New York Mut. Ins. Co. v. United States Underwriters Ins. Co. , 36 A.D.3d 441, 443, 827 N.Y.S.2d 147 [1st Dept. 2007] [reformation must be based on either mutual mistake or fraud and unilateral mistake] ).
Here, there is no evidence of fraud, defendants must therefore show "mutual mistake." To make such a showing, "it must be alleged that ‘the parties have reached an oral agreement and, unknown to either, the signed writing does not express the agreement’ " ( Greater New York Mut. Ins. Co. , 36 A.D.3d at 443, 827 N.Y.S.2d 147, quoting Chimart Assoc. v. Paul , 66 N.Y.2d 570, 573, 498 N.Y.S.2d 344, 489 N.E.2d 231 [1986] ; see also Slutzky v. Gallati , 97 A.D.2d 561, 561, 468 N.Y.S.2d 87 [3d Dept. 1983], lv denied 61 N.Y.2d 602, 472 N.Y.S.2d 1025, 460 N.E.2d 231 [1983] [mutual mistake involves omission of an agreed upon provision or insertion of one not agreed upon] ).
Furthermore, reformation premised on mutual mistake, "may not be granted upon probability or even upon a mere preponderance of evidence, but only upon certainty [that the alleged mistake occurred]" ( Slutzky , 97 A.D.2d at 561, 468 N.Y.S.2d 87 ). Indeed, there is a " ‘heavy presumption that a deliberately prepared and executed written instrument manifests[s] the true intention of the parties’ " ( Chimart Assoc. , 66 N.Y.2d at 574, 498 N.Y.S.2d 344, 489 N.E.2d 231, quoting Backer Mgt. Corp. v. Acme Quilting Co. , 46 N.Y.2d 211, 219, 413 N.Y.S.2d 135, 385 N.E.2d 1062 [1978] ; see also Wallace v. 600 Partners Co. , 86 N.Y.2d 543, 548, 634 N.Y.S.2d 669, 658 N.E.2d 715 [1995] [this rule "has even greater force in the context of real property transactions"]; RPL § 240[3] ["Every instrument creating, transferring, assigning or surrendering an estate or interest in real property must be construed according to the intent of the parties, so far as such intent can be gathered from the whole instrument, and is consistent with the rules of law"] ).
To overcome this presumption a "high order of evidence is required ... the proponent of reformation must ‘show in no uncertain terms, not only that mistake or fraud exists, but exactly what was really agreed upon between the parties’ " ( Chimart Assoc ., 66 N.Y.2d at 574, 498 N.Y.S.2d 344, 489 N.E.2d 231 [internal citations omitted] ). When a party comes forward with sufficient evidence to demonstrate that there was an undisputed mistake in the drafting of an instrument, either by the draftsman, or of either party, a court should direct that the instrument be corrected to reflect the parol agreement that the instrument was to originally embody (see Hart v. Blabey , 287 N.Y. 257, 262, 39 N.E.2d 230 [1942] [explaining the equitable relief available under reformation]; see also Wells Fargo Bank, NA v. Ambrosov , 120 A.D.3d 1225, 1226-27, 993 N.Y.S.2d 322 [2d Dept. 2014] [granting motion for reformation of mortgage property description based on scrivener's error] ).
Here, defendants have presented the requisite high order of evidence to demonstrate that the mortgage entered into with M & T was supposed to cover only Parcel One—the 2.2 acre parcel upon which Walter III's main house and guest house are located. The communications with M & T demonstrate that the bank repeatedly requested a deed for the 2.2 acre parcel and only intended to issue a mortgage for the 2.2 acre parcel with the dwellings. In response to M & T's requests, Walter III executed and recorded the March 24, 2010 deed and provided a copy to M & T. M & T then caused the mortgage to be recorded on August 6, 2010. It is clear that both M & T and Walter III meant for the mortgage to cover only the parcel described in the March 24, 2010 deed. It is also clear, from the face of the mortgage, that it contains a scrivener's error. Despite referencing a property description at "Exhibit A", no such "Exhibit A" is attached to the mortgage. The property description in the mortgage was haphazardly inserted between pages 2 and 3 and is labeled as "Schedule C"—although pursuant to the plain language of the mortgage, "Schedule C" is not the document that the parties intended to attach to the mortgage as the description of the premises.
The scrivener's error and mutual mistake is further proven by the Assignment of Mortgage from M & T to BOA, dated June 25, 2010 (Srebnick Aff at Ex A, p. 40-42). In this assignment document, the attached legal description of the mortgaged premises is not what is reflected on "Schedule C", but instead recites the property description that is contained in Walter III's March 24, 2010 deed for the 2.2 acre parcel, thus further demonstrating that the mortgage contains a scrivener's error that has resulted in a written instrument that the parties did not intend. BOA cannot now capitalize on the scrivener's error in order to foreclose on both Parcels One and Two, when neither M & T nor Walter III intended the mortgage to cover the latter (see Chimart Assoc ., 66 N.Y.2d at 574, 498 N.Y.S.2d 344, 489 N.E.2d 231 ; Greater New York Mut. Ins. Co. , 36 A.D.3d at 443, 827 N.Y.S.2d 147 ). Thus, defendants' cross-motion for reformation of the mortgage to describe the mortgaged premises as only the 2.2 acre parcel — as reflected in the March 24, 2010 Deed and the June 25, 2010 Assignment from M & T to BOA — is granted (see Ambrosov , 120 A.D.3d at 1226-27, 993 N.Y.S.2d 322 ).
The mortgage was subsequently assigned by BOA to Champion Mortgage Company ("Champion") in an Assignment of Mortgage dated October 10, 2012, but without a description of the premises (Srebnick Aff at Ex A, p. 43-44). Nationstar Mortgage LLC, doing business as Champion, assigned the mortgage back to BOA on March 31, 2016, but with an attached property description that appears to be taken from the mortgage, which incorrectly included both parcels, notwithstanding that Parcel Two was not contained in the original assignment (id. at 45-49).
Accordingly, the mortgage is reformed so that it is limited to Parcel One as defined above, and plaintiff's motion to foreclose on the mortgage, subject to this limitation, is granted.
This constitutes the Decision of the Court and counsel for the parties are directed to settle a proposed order and judgment reflecting the relief granted herein and submit it to the Court within 30-days of the date of this Decision. This Decision is being transmitted to the County Clerk for filing. The signing of this Decision and transmittal to the County Clerk shall not constitute notice of entry under CPLR Rule 2220, and counsel is not relieved from the applicable provisions of that Rule respecting to filing and service of Notice of Entry.