Opinion
22449/2008.
December 3, 2010.
Flamhaft Levy Hirsch Rendeiro, LLP, by Marvin Hirsch, Esq., Mineola, New York, for the Plaintiff.
Abraham V. West: Law Offices of Yvette V. Dudley, P.C., by Yvette V. Dudley, Esq., Springfield Gardens, New York, for the Defendant.
This motion is by defendant Abraham V. West for summary judgment on the cause of action for partition and sale, for leave to appoint a referee to hear and determine all payments and credits between plaintiff and defendant West and the rights of the parties with respect to each other in relation to the real property known as 145-113 Guy R. Brewer Boulevard, Jamaica, New York (the "Jamaica property"), for an accounting, for an award of costs and expenses, including reasonable attorneys' fees out of the proceeds of the partition sale, and for summary judgment dismissing the third cause of action asserted against him.
Plaintiff commenced this action by filing a copy of the summons with notice on June 26, 2008. Plaintiff alleges that she and defendant West were previously in a long-term personal relationship (they have a son together), and during such relationship, they purchased the Jamaica property as an investment property, and own it as tenants in common, with each seized with a 50% ownership interest. Plaintiff alleges that she no longer wishes to own the Jamaica property in common with defendant West, and the Jamaica property is so circumstanced that partition cannot be made without great prejudice to the owners.
Plaintiff also alleges that defendant Countrywide Home Loans, Inc. ("Countrywide") holds a mortgage as against the Jamaica property. Plaintiff further alleges that defendant West converted the net cash proceeds of the Countrywide mortgage loan and used them to purchase the real property known as Unit 1B, 1596 Unionport Road, Bronx, New York ("Bronx property"), solely in his own name and without her consent or permission. Defendant West allegedly, then fraudulently, transferred ownership of the Bronx property to Jean T. Hairston, a nonparty, purportedly without consideration, so to conceal from plaintiff his ownership interest in the Bronx property. Plaintiff seeks partition and sale of the Jamaica property, an accounting, money damages for conversion and to impose a constructive trust and an equitable lien against the Bronx property.
Defendant West served an answer, denying certain allegations of the complaint and asserting various affirmative defenses, including expiration of the statute of limitations, failure to join a necessary party, and that the record owner of the Bronx property was a bona fide purchaser for value. Defendant West also interposed three counterclaims, i.e., to quiet title to the Jamaica property, for partition and sale and an accounting with respect to the Jamaica property, and for an award of attorneys' fees. It is unclear from these submissions whether plaintiff has served a reply to the counterclaims, or whether defendant Countrywide has been joined as a party defendant in this action, or has appeared or answered the complaint.
Plaintiff opposes the motion only to the extent defendant West seeks summary judgment dismissing the third cause of action, and an award of attorneys' fees out of the proceeds of the sale of the Jamaica premises.
Upon the foregoing papers, the third cause of action asserted against defendant West sounds in conversion, fraud, and imposition of a constructive trust and an equitable lien in relation to defendant West's alleged misuse of the net cash proceeds from the refinancing of the Jamaica property.
Contrary to defendant West's contention, the three-year statute of limitations of CPLR 214 does not govern the causes of action asserted in the third cause of action. The six-year statute of limitations contained in CPLR 213(8) applies to the fraud and conversion causes of action asserted therein ( see, Ingrami v Rovner , 45 AD3d 806 [2nd Dept. 2007]). To the degree the third cause of action also may be read as an equitable claim for the imposition of a constructive trust and equitable lien, such claim also has a six-year statute of limitations, measured from the time of the wrongful conduct or event giving rise to a duty of restitution ( see, Maric Piping, Inc. v Maric, 271 AD2d 507 [2nd Dept. 2000]; Dybowski v Dybowska, 146 AD2d 604 [2nd Dept. 1989]). In this instance, defendant West's alleged deposit of the net cash proceeds into his personal bank account took place on or after November 14, 2002. As a consequence, the claims asserted against defendant West in the third cause of action in the complaint are timely interposed.
With respect to the cause of action for conversion and fraud, defendant West asserts he and plaintiff never had any agreement to share the refinance proceeds or use them to invest in any other property. Plaintiff, on the other hand, avers that she and defendant West agreed that defendant West would manage the Jamaica property, but that all profits therefrom would be shared equally by them. She also avers that they agreed the net cash proceeds from the refinancing of the Jamaica property would be used by them to pay for improvements to the Jamaica property, or obtain other investment property, but that notwithstanding such agreement, defendant West deposited such proceeds in the amount of $59,729.00 into his personal bank account, and thereafter, used $50,000.00 of those proceeds to acquire the Bronx property in his own name. She asserts that defendant West, in turn, sold the property to Jean T. Hairston, the mother of Joylette Hairston, the then fiancé of defendant West (now his wife), in January 2007. Summary judgment is inappropriate where, as here, there is the conflicting affidavit of plaintiff which creates triable issues of fact ( see, e.g., Matter of Estate of Raskas, 213 AD2d 718 [2nd Dept. 1995]).
To the extent defendant West also asserts plaintiff consented to his receipt of all the net cash proceeds, the document executed by plaintiff at the closing of the refinancing transaction constitutes, at most, an acknowledgment by plaintiff that defendant West received the net cash proceeds from the refinancing transaction. It is silent as to the purpose for which he received the funds. More importantly, that defendant West lawfully came into possession of the net cash proceeds does not mean he disposed of them in a manner consistent with the alleged agreement with plaintiff or plaintiff's rights (see, e.g., DiMarco v Baron Lincoln Mercury, Inc. , 24 AD3d 409 [2nd Dept. 2005]).
With respect to the cause of action for imposition of a constructive trust and an equitable lien, defendant West asserts Jean T. Hairston is entitled to rely upon Real Property Law section 266. Under that section, a bona fide purchaser for value is protected in his or her title unless he or she had previous notice of the alleged prior fraud by the seller ( see, Real Property Law § 266; Karan v Hoskins , 22 AD3d 638 , 638 [2nd Dept. 2005]; see also, LaSalle Bank Natl. Assn. v Ally , 39 AD3d 597 , 599-600 [2nd Dept. 2007]). Defendant West has failed to demonstrate that Jean T. Hairston lacked knowledge of any purported fraud committed by him vis-a-vis the net cash proceeds, and his purchase of the Bronx property. Notably, he has failed to present an affidavit of Jean T. Hairston in support of his motion.
Defendant West also asserts that Jean T. Hairston is a necessary party defendant with respect to the causes of action to impose an equitable lien and constructive trust against the Bronx property. Defendant West contends that he no longer owns the Bronx property and Jean T. Hairston is the present record owner of it.
The deed dated January 16, 2007 reflects that defendant West conveyed his ownership interest in the Bronx property to Jean T. Hairston. CPLR 1001(a) provides that "[p]ersons . . . who might be inequitably affected by a judgment in the action" are necessary parties whose joinder is required. To the extent plaintiff seeks to impose a constructive trust or equitable lien on the Bronx property, Jean T. Hairston is a necessary and indispensable party who must be joined as a party defendant ( see, RPAPL 1511; CPLR 1001[a]; Nixon v Barrow, 239 AD2d 326 [2nd Dept. 1997]; Ahders v Ahders, 176 AD2d 230 [2nd Dept. 1991]).
Dismissal for failure to join a necessary party should eventuate only as a last resort (see, Leeward Isles Resorts, Ltd. v Hickox , 61 AD3d 622 [1st Dept.], lv. to appeal dismissed, 13 NY3d 814; Siegel, New York Practice 4th ed § 133 [2005]). Plaintiff, therefore, is directed to join Jean T. Hairston as a necessary party defendant to this action within 20 days of service of a copy of this order with notice of entry. That branch of the motion by defendant West for summary judgment dismissing the third cause of action is denied with leave to renew with respect to the claims asserted therein for the imposition of a constructive trust and equitable lien in the event plaintiff fails to join Jean T. Hairston as a party defendant within 20 days of service of a copy of this order with notice of entry.
With respect to that branch of the motion by defendant West for summary judgment in relation to his counterclaims for partition and sale and an accounting, he has failed to demonstrate issue has been joined with respect to them. In addition, attorney's fees are incident to litigation and are not compensable in the absence of an agreement or statutory authority ( see, Hooper Associates, Ltd. v AGS Computers, Inc., 74 NY2d 487, 491). Defendant West has failed to demonstrate he and plaintiff have any agreement whereby she agrees to pay for his attorney's fees, and RPAPL 981 does not provide for an award of counsel fees as an incident to partition ( see, Fleming v Lundy, 156 AD2d 965 [4th Dept. 1989]).
However, because defendant West affirmatively consents to the partition and sale of the Jamaica property and an accounting, the Court shall consider his motion as one for reverse summary judgment on the causes of action asserted by plaintiff for partition and sale of the Jamaica property and an accounting.
The deed dated October 29, 1992 and recorded on November 16, 1992, confirms that plaintiff and defendant West each are seized of an undivided 50% ownership interest in the Jamaica property as tenants in common. In addition, it appears the Jamaica property cannot be partitioned without great hardship to plaintiff and defendant West insofar as there is no evidence the premises can be physically divided, and plaintiff and defendant West do not reside at the Jamaica property. Here, defendant West has established entitlement to reverse summary judgment in favor of plaintiff on the cause of action for partition and sale ( see, Donlon v Diamico , 33 AD3d 841 [2nd Dept. 2006]). A reference is necessary pursuant to RPAPL 913 because defendant Wet has failed to establish the mortgage interest of defendant Countrywide in the Jamaica property (RPAPL 911) and whether it encumbers the entire property or only a portion thereof, or whether such lien is the only lien or encumbrance of record against the Jamaica property.
Furthermore, prior to entry of an interlocutory judgment directing the sale of the Jamaica property, an accounting must be made of the income and expenses of the Jamaica property, including, but not limited to, mortgage and insurance costs, taxes, rents, and maintenance costs ( see, RPAPL 911, 915; McVicker v Sarma, 163 AD2d 721, 722 [3rd Dept. 1990]; Barol v Barol, 95 AD2d 942, 943 [3rd Dept. 1983]. Cf. RPAPL 945).
That branch of the motion by defendant West for summary judgment on his counterclaims for partition and sale of the Jamaica property and an accounting is granted only to the extent of granting summary judgment in favor of plaintiff on the causes of action for partition and sale of the Jamaica property and an accounting. The appointment of the referee, the accounting, and the entry of an interlocutory judgment shall await the disposition of the cause of action asserted by plaintiff to impose a constructive trust and equitable lien as against the Bronx property.