A claim for equitable subrogation "is one of the mechanisms by which the law of restitution and unjust enrichment will reallocate the burden of a given liability from one who has originally discharged it to another whom the law considers more appropriate to bear it" (Restatement [Third] of Restitution and Unjust Enrichment § 24, Comment a). Furthermore, the doctrine of equitable subordination has been applied to grant a lender a lien on real property in circumstances where a deed was determined to be a forgery, thereby rendering any subsequent mortgages invalid (see King v Pelkofski, 20 NY2d 326, supra; Cashel v Cashel, 94 AD3d 684 [2012]; Bank of N.Y. v Spadafora, 92 AD3d 629 [2012]; Federal Natl. Mtge. Assn. v Woodbury, 254 AD2d 182 [1998]; Great Eastern Bank v Chang, 227 AD2d 589 [1996]). However, in this matter, there has been no judicial determination that the Deed was a forgery.
In support of this argument, defendants rely on a wage acknowledgment form that plaintiff signed, which states that her hourly pay is $29.00 per hour, as well as plaintiff's deposition testimony, where she stated that she understood that the letter was an offer to be paid $29.00 per hour pursuant to the contract, and that the contract was for $29.00 when she signed it. The cases that defendants rely on discuss whether a party has ratified the contract such that it may no longer assert claims for fraud and fraudulent inducement, Sotheby's Fin. Servs., Inc. v. Baran, 2003 WL 21756126, at *5-6 (S.D.N.Y. July 29, 2003), aff'd, 107 F. App'x 235 (2d Cir. 2004), or that a deed was forged, Cashel v. Cashel, 94 A.D.3d 684, 686-687 (2d Dep't 2012), or that the principal did not authorize its agent to enter into the contract, Cologne Life Reinsurance Co. v. Zurich Reinsurance (N. Am.), Inc., 286 A.D.2d 118, 126-129 (1st Dep't 2001). In other words, these cases focus on parties' attempts to be relieved from contractual obligations.
In re Chateaugay Corp., 89 F.3d 942, 947 (2d Cir. 1996) (citations and alterations omitted); see also Cashel v. Cashel, 941 N.Y.S.2d 236, 239-40 (App. Div. 2012) (citing the same standard for equitable subrogation); NYP Holdings, Inc. v. McClier Corp., 881 N.Y.S.2d 407, 410-11 (App. Div. 2009) (same). Equitable subrogation may apply even if Defendant was unaware of Plaintiffs' pre-existing lien.
The plaintiffs were thereby not entitled to dismissal of the defendant's seventh (seeGolden Eagle Capital Corp. v. Paramount Mgt. Corp. , 88 A.D.3d 646, 648, 931 N.Y.S.2d 632 ), tenth (seeCashel v. Cashel , 94 A.D.3d 684, 686–687, 941 N.Y.S.2d 236 ), or sixteenth (seeStein v. Doukas, 98 A.D.3d 1026, 1028–1029, 950 N.Y.S.2d 773 ) affirmative defenses.
We agree with the Supreme Court that the plaintiff established its prima facie entitlement to judgment as a matter of law on a theory of equitable subrogation by submitting evidence that $ 453,900.03 of the proceeds of the subject mortgage were used to pay off the prior mortgage and taxes for which Angel was liable (seeCitimortgage, Inc. v. Chouen, 154 A.D.3d 914, 915, 63 N.Y.S.3d 443 ; Bank of N.Y. v. Penalver, 125 A.D.3d 795, 796, 1 N.Y.S.3d 835 ; LaSalle Bank Natl. Assn. v. Ally, 39 A.D.3d 597, 600, 835 N.Y.S.2d 264 ; Great E. Bank v. Chang, 227 A.D.2d 589, 589, 643 N.Y.S.2d 203 ). In opposition, Angel failed to raise a triable issue of fact as to whether the plaintiff actively engaged in any fraud, had actual notice of any fraud, or had unclean hands (seeLucia v. Goldman, 145 A.D.3d at 769, 44 N.Y.S.3d 89 ; see alsoCashel v. Cashel, 94 A.D.3d 684, 688, 941 N.Y.S.2d 236 ; cf.First Franklin Fin. Corp. v. Beniaminov, 144 A.D.3d at 977, 42 N.Y.S.3d 46 ; Crispino v. Greenpoint Mtge. Corp., 304 A.D.2d 608, 609–610, 758 N.Y.S.2d 367 ).Angel's remaining contentions are without merit.
Thus, the causes of action alleging breach of contract and breach of the implied duty of good faith and fair dealing are based on a theory of equitable subrogation. Pursuant to the doctrine of equitable subrogation, 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 N.Y.2d 326, 333, 282 N.Y.S.2d 753, 229 N.E.2d 435, quoting Restatement of Restitution § 162 ; seeLucia v. Goldman, 145 A.D.3d 767, 769, 44 N.Y.S.3d 89 ; Harris v. Thompson, 117 A.D.3d 791, 793, 985 N.Y.S.2d 713 ; Cashel v. Cashel, 94 A.D.3d 684, 688, 941 N.Y.S.2d 236 ).
Judgment was entered cancelling the Chase mortgage and imposing equitable liens on the property in favor of Chase in the total sum of $1,535,129.95. The plaintiff appeals.Under the doctrine of equitable subrogation, 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 N.Y.2d 326, 333, 282 N.Y.S.2d 753, 229 N.E.2d 435 [internal quotation marks omitted]; see Harris v. Thompson, 117 A.D.3d 791, 793, 985 N.Y.S.2d 713 ; Cashel v. Cashel, 94 A.D.3d 684, 688, 941 N.Y.S.2d 236 ). The plaintiff contends that the Supreme Court erred in awarding Chase equitable subrogation because, in light of the determination that it was not a bona fide encumbrancer for value, Chase should have been denied equitable subrogation under the doctrine of unclean hands (see Real Property Law § 265–a[2][a] ; Crispino v. Greenpoint Mtge. Corp., 304 A.D.2d 608, 758 N.Y.S.2d 367 ).
of equitable subrogation, 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 N.Y.2d 326, 333, 282 N.Y.S.2d 753, 229 N.E.2d 435 [internal quotation marks omitted] ). Here, the plaintiff established its prima facie entitlement to judgment as a matter of law on its equitable subrogation cause of action by submitting copies of the satisfaction of the prior mortgage and the payoff check made to the order of the prior mortgagee (see Harris v. Thompson, 117 A.D.3d 791, 793–794, 985 N.Y.S.2d 713 ).However, in opposition, Bella raised a triable issue of fact as to whether the plaintiff had actual knowledge of the fraud given that its attorney notarized the forged signature of the imposter (see e.g. Cashel v. Cashel, 94 A.D.3d 684, 687, 941 N.Y.S.2d 236 ; Crispino v. Greenpoint Mtge. Corp., 304 A.D.2d 608, 609, 758 N.Y.S.2d 367 ; cf. Harris v. Thompson, 117 A.D.3d at 794, 985 N.Y.S.2d 713 ). The hearsay documents submitted by the plaintiff in reply failed to conclusively refute the material issue of fact raised by Bella.
Here, BSD–M alleges that the plaintiff would be unjustly enriched if the court were to determine that she is entitled to a judgment declaring that she is the owner of the subject property and that the 10 disputed instruments are void and cancelled of record. However, as it is undisputed that the plaintiff is not presently in possession of the subject property, she has not yet been enriched and presently retains nothing sought to be recovered (see Cashel v. Cashel, 94 A.D.3d 684, 689, 941 N.Y.S.2d 236 ). Accordingly, the Supreme Court erred in granting BSD–M's motion for summary judgment on its first and second counterclaims (see generally Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 ).
The Supreme Court properly concluded that the defendant failed to demonstrate, prima facie, that the plaintiff lacks standing to maintain this action as the subrogee of its insured ( see 11 NYCRR 60–2.3; Cashel v. Cashel, 94 A.D.3d 684, 688, 941 N.Y.S.2d 236;Menorah Nursing Home v. Zukov, 153 A.D.2d 13, 17–18, 548 N.Y.S.2d 702). Thus, the court properly denied that branch of the defendant's motion which was for summary judgment dismissing the complaint based on lack of standing.