Opinion
No. 237620.
06-23-2015
Russell E. COOPER, Plaintiff, v. James E. PULLAR, Doris E. Pullar, Samuel J. Barr, Bank of America, N.A., First Niagara Bank, N.A. f/k/a First Niagara Bank s/b/m Hudson River Bank and Trust, New York State Department of Taxation and Finance and United States of America and Discover Bank, Defendants.
Gregory E. Schaaf, Esq., Englert, Coffey, McHugh & Fantauzzi, LLP, Schenectady, for the plaintiff. Gary A. Lefkowitz, Esq., Schiller & Knapp, LLP, Latham, for the defendant First Niagara Bank, N.A.
Gregory E. Schaaf, Esq., Englert, Coffey, McHugh & Fantauzzi, LLP, Schenectady, for the plaintiff.
Gary A. Lefkowitz, Esq., Schiller & Knapp, LLP, Latham, for the defendant First Niagara Bank, N.A.
RAYMOND J. ELLIOTT, III, J.
Plaintiff, Russell E. Cooper, moves for an order granting him summary judgment against Defendants James E. Pullar, Doris E. Pullar (hereinafter Defendants Pullar) and First Niagara Bank, N.A., (hereinafter Defendant First Niagara) and that Plaintiff be awarded the following relief: against Defendants Pullar, that Plaintiff be declared to be the title owner in fee simple of the subject real property located in the City of Troy, Rensselaer County, New York, and further directing Defendant Barr to deliver the deed to the property to Plaintiff; or in the alternative declare Plaintiff to be the title owner in fee simple of the property and directing the Sheriff of Rensselaer County to deliver to Plaintiff a Sheriff's deed to the property; and against Defendant First Niagara declaring the purported mortgage given to Defendant First Niagara by Defendant Samuel Barr to be null and void and of no effect.
Defendant, First Niagara, seeks an order denying Plaintiff's motion and has filed a cross-motion for summary judgment dismissing the complaint against it, with prejudice, and on the merits, with costs, disbursements and expenses.
Plaintiff commenced the underlying action against the Defendants by way of a Summons and Complaint, and Notice of Pendency dated September 20, 2012. The essence of Plaintiff's claim is as follows: that in October 1995, he entered into a 15 year Lease with Option to Buy (hereinafter Lease) for the subject property (hereinafter property) with the Defendants Pullar; that Defendants Pullar sold the premises to Defendant Barr, in December 2003; that Defendant Barr mortgaged the premises with Defendant First Niagara in December 2003 and with Defendant Bank of America in February 2008; that Plaintiff has fully complied with the terms of the Lease and made all the required payments; that since Plaintiff has fully complied with the Lease, Defendant Barr should be ordered to deed the premises to the Plaintiff; that since Barr's interest in the premises was subject to defeasance, the mortgages of Defendants First Niagara and Bank of America are null and void, and that since Barr's interest in the premises was subject to defeasance, the liens of the Defendants, New York State Department of Taxation and Finance, United States of America, and Discover Bank against the premises should be declared to be invalid.
The Court notes that it has issued two previous Decision and Orders involving this action. The first was dated June 24, 2013, and denied Plaintiff's motion for summary judgment against Defendants Pullar, denied Plaintiff's motion for a default judgment against Defendant First Niagara and Defendant Samuel Barr and granted Plaintiff's motion for a default judgment against Defendant Bank of America. The second was dated January 16, 2014, and granted Plaintiff's motion for a default judgment against Defendant Samuel Barr and held that any further proceedings relating to entry of a default judgment against Defendant Samuel Barr were deferred until disposal or trial of the claims against the non-defaulting Defendants.
In support of his motion, Plaintiff provides an Affidavit from himself and his wife, Pamela Cooper. Plaintiff asserts that he fully complied with the terms and obligations of the Lease and is therefore entitled to a deed to the property. Plaintiff states that he and his family began occupying the property in November of 1995, and that his full occupancy of the house was pursuant to the Lease he entered with Defendants Pullar. Plaintiff acknowledges that he did get behind in the lease payment to the Defendants Pullar but states that was due to extensive renovations that he and his wife undertook at the property. Plaintiff states that from 1997 to 1998 they spent approximately $40,000.00 remodeling the house. Plaintiff asserts that Schedule B attached to Defendants' Pullar Notice of Request for Dismissal of Motion for Summary Judgment shows that he made all payments to them. Plaintiff further states that the entry for 7–Dec–98, when Defendants Pullar state they sent a notice to terminate lease, shows that he paid the sum due within two days of the notice. Plaintiff states that he and his family have now lived in the house continuously for approximately 19 years.
Plaintiff asserts that he has been informed by his attorneys that on December 29, 2003, Defendants Pullar sold the property to Defendant Barr. At that time, Defendant Barr obtained a mortgage from Defendant First Niagara dated December 29, 2003, and recorded in the Rensselaer County Clerk's Office in 2003. Plaintiff states that at the time of the sale he didn't know who to make his payments to and continued making them to Defendants Pullar until they received notice to send the payment to Defendant Barr. Plaintiff asserts that he made every single payment to Defendant Barr. Plaintiff states that in December, 2003, a man came to the property to look inside and take pictures, but that his wife denied the man entry. Plaintiff states that his wife let the man in when he mentioned insurance, that he took a picture and left, and made no inquiry as to their occupancy.
In her Affidavit, Pamela Cooper, states that in December, 2003, a person came to the house to inspect it. She states that she refused him entry, but did eventually let him in. Pamela Cooper states he took a picture and left and never inquired as to the nature of their occupation of the property or their living arrangements.
Plaintiff states that pursuant to the "Schedule A Detailed Mortgage Schedule Fixed Rate Mortgage $90,000.00 Amortized Over 15 Years. Rate 8%" attached to the Lease, the last payment was due on October 1, 2010. Plaintiff asserts that he contacted Defendant Barr on the phone and informed him that he was exercising his option under the Lease and that upon making the final payment he wanted the deed. Plaintiff states that he called Defendant Barr on three occasions and that each time he had an excuse and kept putting Plaintiff off. Plaintiff states that he properly notified Defendant Barr of his intent to exercise his position under the Lease pursuant to paragraph 20 of the Lease. Plaintiff asserts that to date Defendant Barr has failed and refused to execute the deed called for in the Lease.
Plaintiff's Counsel argues that Defendants' Pullar Answer did not raise any affirmative defenses to the action but set forth several objections. Plaintiff's Counsel asserts that the objections involve the Plaintiff's failure to make payments under the Lease for certain months and that notices were sent by Defendants Pullar. Plaintiff's Counsel states that Exhibit B attached to Defendants' Pullar Notice of Request for Dismissal of Motion for Summary Judgment contradicts their claim as it shows that Plaintiff made all payments to them, even if some were made late. Plaintiff's Counsel further points out that Defendants Pullar stated in their papers that they have had nothing to do with the property since December 29, 2003. He argues that Defendants Pullar have no standing in this matter.
Plaintiff's Counsel asserts that Defendants Pullar's claims that Plaintiff failed to perform according to the terms of the Lease were based on minor failures and are inconsequential. Plaintiff's Counsel states that on two occasions the Defendants Pullar sent out notices of terminations when Plaintiff's payments were late. However, he asserts that Plaintiff ultimately made the payments, usually within two or three days of the notice, which Plaintiff accepted. Plaintiff's Counsel states that acceptance of the late payments after the notice constitutes waiver.
Plaintiff's Counsel argues that a tenant with an option to purchase is entitled to commence an action for specific performance. Plaintiff's Counsel states that Plaintiff seeks specific performance from Defendants Pullar's grantee, Defendant Barr. Plaintiff's Counsel asserts that Plaintiff is entitled to specific performance as he properly exercised his option to purchase under the Lease and was ready, willing and able to proceed with the sale.
Plaintiff's Counsel further argues that Defendant First Niagara is not a good faith purchaser for value and is therefore not entitled to protection under Real Property Law § 291. Plaintiff's Counsel asserts that since Defendant First Niagara acquired its interest in the property subsequent to Plaintiff's interest, Plaintiff's interest must prevail.
Plaintiff's Counsel recognizes that the issue here is that Defendant First Niagara is relying on the fact that its interest was recorded and the interest of Plaintiff was not recorded. Plaintiff's Counsel cites three pieces of case law to support his argument based on the facts and circumstances in this action. He asserts that Defendant First Niagara failed to investigate and make a reasonable inquiry as to the title of the tenant (Plaintiff) to the property, who was in possession of the property at the time of the mortgage, and is therefore not a good faith purchaser. (see, Williamson v. Brown, 15 N.Y. 354 (1857), Booth v. Ameriquest Mortgage Co., 63 AD3d 769 [2d Dept.2009], Vitale v. Pinto, 118 A.D.2d 774 [2d Dept.1986] ). Plaintiff's ounsel argues that the Lease states that the Landlord will not obtain further financing or further encumber the property as it may impair the title to be transferred to the tenant. Plaintiff's Counsel asserts that had Defendant First Niagara sufficiently inquired of the tenants as it was required to do, it would have determined Plaintiff's rights under the Lease and that the mortgage was prohibited and that Plaintiff's claim to title was superior.
Plaintiff's Counsel asserts that as of the January, 1999, payment made by Plaintiff, he was not simply just an owner of the equitable title, but a holder of an equitable mortgage in the property. He argues that Plaintiff was already a contract vendee with equitable title when Defendant First Niagara obtained its interest in the property. Plaintiff's Counsel states that Defendant First Niagara is not a good faith purchaser under Real Property Law § 291, not entitled to protection under the recording acts and its mortgage is subordinate to the interest of Plaintiff and null and void.
The Court notes that Plaintiff has attached copies of all of the pleadings to his motion papers.
Defendant First Niagara cross moves for summary judgment dismissing the complaint.Defendant First Niagara states that Defendant Barr owns the subject property having obtained title by Warranty Deed dated December 29, 2003, from Defendants Pullar. Also on that date, Defendant Barr gave Defendant First Niagara's predessor in interest a mortgage securing a loan of $57,000.00. The mortgage was recorded in the Rensselaer County Clerk's Office on December 29, 2003.
Defendant Barr defaulted on the mortgage and in August, 2011, Defendant First Niagara commenced an action for foreclosure entitled "First Niagara Bank, N.A. f/k/a First Niagara Bank s/b/m Hudson River Bank & Trust, Plaintiff, against Samuel Barr; Bank of America, N.A.; New York State Department of Taxation and Finance, United States of America; Pamela Cooper; Russ Cooper, Defendants " under Index No. 237620. Defendant First Niagara states that all Defendants were duly served in the foreclosure action, including Plaintiff and his wife Pamela Cooper, as tenants/occupants. Defendant First Niagara states that Plaintiff and his Wife were then substituted by name in the Order of Reference signed by the Honorable George B. Ceresia, Jr., dated June 5, 2012. Defendant First Niagara asserts that Plaintiff did not appear, answer or otherwise move with regard to the foreclosure action. A Judgment of Foreclosure and Sale was signed by the Honorable George B. Ceresia, Jr., dated October 10, 2012. A foreclosure sale was scheduled for January 9, 2013. This sale was stayed by Order of this Court dated February 4, 2013.
Defendant First Niagara states that it asserted four affirmative defenses in its Verified Answer and that Plaintiff's motion papers fail to address any of these defenses.
Defendant First Niagara argues that Plaintiff's claims are barred by the doctrine of res judicata based on the Judgment of Foreclosure and Sale dated October 10, 2012. Defendant First Niagara states that Plaintiff cannot claim ignorance of the foreclosure action as he was personally served at the mortgaged property. Defendant First Niagara asserts that in November, 2011, Plaintiff contacted Defendant's First Niagara attorney's office and offered to purchase the Barr mortgage and his offer was declined. Defendant First Niagara states that Plaintiff defaulted in the foreclosure action as he failed to answer or otherwise appear. Defendant First Niagara argues that the Judgment of Foreclosure and Sale is final as to all matters between it and Plaintiff on all matters which were or could have been litigated. Defendant First Niagara insists that this included the claims made by Plaintiff in his Complaint.
Defendant First Niagara further asserts that Plaintiff's claims are barred by the doctrine of collateral estoppel. Defendant First Niagara states that collateral estoppel applies where the issues have necessarily and finally decided and the parties have had a full opportunity to litigate those issues. Defendant First Niagara asserts that all of the issues surrounding the superiority of its mortgage, as well as its right to foreclose on Plaintiff's interest were necessarily and finally resolved by the Judgment of Foreclosure. Defendant First Niagara states that nothing prevented Plaintiff from appearing in the foreclosure action and fully litigating the claims he now raises in this action.
Defendant First Niagara asserts that its mortgage has priority over Plaintiff's unrecorded interests. At the time that Defendant First Niagara and Defendant Barr agreed to the mortgage, the Lease was unrecorded. Defendant First Niagara states that the Lease did not contain acknowledgments for Defendants' Pullar signatures and was therefore not in a form capable of being recorded. Defendant First Niagara asserts that Plaintiff could have recorded the Lease or a memorandum of the lease pursuant to Real Property Law § 294, but failed to do so. As he failed to record his interest, Plaintiff has not acquired any sort of lien or encumbrance on the property nor did he provide notice of his status as a contract vendee. Defendant First Niagara states that since the Lease was not recorded pursuant to Real Property Law § 291, Plaintiff's unrecorded interest is void against its recorded interest.
Defendant First Niagara states that the inquiry of a reasonably prudent lender would not have revealed Plaintiff's alleged interest. Defendant First Niagara argues that the doctrine of inquiry only required that it investigate those matters found within the recorded chain of title, which would have excited the suspicion of a reasonably prudent lender. Defendant First Niagara asserts that Plaintiff's possession of the property is insufficient to create a greater duty of inquiry as his possession was not inconsistent with the interest of either Defendants Pullar or Defendant Barr as landlords and mortgagors. Plaintiff's possession would not have led a reasonably prudent lender to even suspect that an unrecorded, unacknowledged purchase option existed citing Fekishazy v. Thomson, 204 A.D.2d 295 [3d Dept.1994]lv app. denied 84 N.Y.2d 844 [1994]app. dismissed 84 N.Y.2d 812 [1995] ). Defendant First Niagara states that Plaintiff's failure to record the Lease meant that there was nothing in the record chain of title that would have excited its suspicion and imposed a further duty to inquire. Based on the Affidavit of Heather Johnson, Vice President of First Niagara, sworn to January 23, 2013, Defendant First Niagara states that they had no actual notice of the Lease.
Defendant First Niagara states that even if it is not a bona fide purchaser that does not make its mortgage null and void. Defendant First Niagara argues that the loss of priority would only extend to so much of the mortgage as exceeds the mortgage liens already on the property. Defendant First Niagara states that the Lease secures a loan totaling $45,829.67 and that First Niagara's mortgage secures a loan for $57,000.00. Defendant First Niagara asserts that if Plaintiff is entitled to priority at all it is only in the amount of the difference of the two loans, $11,170.33. Defendant First Niagara states its mortgage is not null and void, it is a superior lien as to all sums above that amount.
Defendant First Niagara argues that the Vitale case cited by Plaintiff does not support the relief he seeks. Defendant First Niagara states that the option holder in that case had not defaulted on her lease terms, she properly exercised her rights under the agreement, the lease permitted mortgages up to $15,000.00, giving the mortgagee priority up that amount and the Court held that the mortagee's security interest should not be entirely subordinate to the plaintiff's right to the property. So, the relief was not a cancellation of the mortgage.
Defendant First Niagara states that the Lease was terminated based on Plaintiff's default on the terms of the Lease. Defendant First Niagara asserts that Plaintiff admits that he defaulted on the terms of the Lease. Defendant First Niagara states that the terms of the Lease state that in the event of "any default in the payment of rent ... the term herein shall terminate, and all rights of the Tenant under this Lease shall terminate ..." (Defendant First Niagara Exhibit F). The Lease further states in paragraph 20 the effect that defaulting on the terms of the Lease will have on the option to purchase. Defendant First Niagara also argues that Plaintiff did not properly exercise his rights under the Lease by giving the proper written notice of his intent to exercise the option to purchase.
Defendant First Niagara asserts that the Complaint does not state a cause of action against it as Plaintiff seeks to have Defendant First Niagara's mortgage declared null and void, but neither the facts or case law support this request. Defendant First Niagara states that the terms of the Lease only prevented Plaintiff from assigning his interest not the Defendants Pullar. Defendant First Niagara asserts that Plaintiff accepted and ratified the assignment by the Defendants Pullar to Defendant Barr. Defendant First Niagara states that its mortgage was recorded seven years before the transfer date provided for in the unrecorded Lease and that Plaintiff had notice of Defendant First Niagara's interest in the property. Defendant First Niagara states that the case law provided by Plaintiff does not state that its mortgage is null and void, but that it is subordinate to Plaintiff's interest to the extent it exceed the sum of the mortgage of record when Plaintiff signed the Lease.
Defendants Pullar have not filed any opposition to the motion. In reply, Plaintiff asserts that the Lease did not allow for any financing. Plaintiff states that Defendant First Niagara did not validly contradict or contradict at all certain points made by the Plaintiff in his motion papers. Plaintiff argues that Defendant First Niagara's citation to the recording acts raises the question that it should have had actual notice of Plaintiff's interest based on his occupancy of the property. Plaintiff reiterates that his interest is superior to that of Defendant First Niagara as First Niagara was not a good faith purchaser and not entitled to the protection under the recording act in Real Property Law § 291.
Plaintiff argues that neither res judicata or collateral estoppel can apply as Plaintiff was not named as a Defendant in "First Niagara Bank, N.A. f/k/a First Niagara Bank s/b/m Hudson River Bank & Trust, Plaintiff, against Samuel Barr; Bank of America, N.A.; New York State Department of Taxation and Finance, United States of America; Pamela Cooper; Russ Cooper, Defendants " under Index No. 237620. Plaintiff further argues that his interest as a contract vendee was not set forth in the Complaint or was it litigated or contested in anyway in the foreclosure proceeding. Plaintiff asserts that where a prior encumbrancer is joined in a foreclosure suit, the prior encumbrancer's interest must be specifically set forth in the complaint, general allegations are not enough to cut off the interest.
Summary judgment is a drastic remedy which will be granted only when the party seeking summary judgment has established that there are no triable issues of fact (Alvarez v. Prospect Hospital, 68 N.Y.2d 320 [1986] ). On a motion for summary judgment, the movant must establish, by admissible proof, the right to judgment as a matter of law. (Id. ). The burden shifts to the opponent of the motion to establish, by admissible proof, the existence of genuine issues of fact. (Zuckerman v. City of New York, 49 N.Y.2d 557 [1980] ). It is well established that on a motion for summary judgment, the court's function is issue finding, not issue determination, (Barr v. County of Albany, 49 N.Y.2d 557 [1980] ), and all evidence must be viewed in the light most favorable to the opponent to the motion. (Crosland v. New York City Transit Auth., 68 N.Y.2d 165 [1986] ).
In opposing a motion for summary judgment, one must produce evidentiary proof in admissible form ... mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient (Zuckerman v. City of New York, 49 N.Y.2d at 562 ). It is incumbent upon the non-moving party to lay bare his proof in order to defeat summary judgment. (O'Hara v. Tonner, 288 A.D.2d 513 [3d Dept.2001] ). Mere conclusionary assertions, devoid of evidentiary fact, are insufficient to raise a genuine triable issue of fact on a motion for summary judgment as is reliance upon surmise, conjecture or speculation. (Banco Popular North America v. Victory Taxi Management, Inc., 1 NY3d 381 [2004] ). The Court must view the evidence in a light most favorable to the non-moving party on a summary judgment motion, and give them all reasonable inferences that can be drawn from the evidence. (Negi v. Stop & Shop, Inc., 65 N.Y.2d 625 [1985] ).
Defendants Pullar have failed to appear in opposition to the motion for summary judgment and present proof sufficient to raise a genuine question of fact rebutting Plaintiff's prima facie showing or in support of the assertions they made in their Answer. Defendants Pullar had argued that at the time they transferred the property to Defendant Barr, the original Lease between them and Plaintiff was null and void and that Plaintiff had been properly notified. They further argued that Plaintiff did not adhere to the terms of the Lease, that he had become a month-to-month tenant and that Plaintiff had no claim to ownership of the property.
Defendants Pullar are pro se. The Court previously recognized a one page letter dated October 19, 2012, from James E. Pullar and a three page document with attached Exhibits dated January 31, 2013, denoted as "Notice of Request for Dismissal of Motion for Summary Judgement" as their Answer.
The failure by the Defendants Pullar to raise and/or assert each of their pleaded defenses in opposition to the Plaintiff's motion warrants dismissal of the same. (see, Kuehne & Nagel v. Baiden, 36 N.Y.2d 539 [1975] ) "Facts appearing in the movant's papers which the opposing party does not controvert, may be deemed to be admitted, and where there are cross motions for summary judgment, in the absence of either party challenging the verity of the alleged facts, as is true in the instant case, there is, in effect, a concession that no question of fact exists" (Id. at 544 )
"It is well-settled that ‘[p]redecessors in title who claim no interest in the property are neither necessary nor proper parties to an action to quiet title’ " (Chopra v. Metrocities Mortg. LLC, 29 Misc.3d 1206(A) [Sup.Ct. Kings Co.2010]quoting McGahey v. Topping, 255 A.D.2d 562, 563 [2d Dept.1998] ). Defendants Pullar stated in their papers that they have had nothing to do with the property since the transfer to Defendant Barr on December 29, 2003.
The Court will grant Plaintiff's motion for summary judgment against the Defendants Pullar.
"Res judicata serves to preclude the renewal of issues actually litigated and resolved in a prior proceeding as well as claims for different relief which arise out of the same "factual grouping" or "transaction", and which should have or could have been resolved in the prior proceeding" (Braustein v. Braustein, 114 A.D.2d 46, 53 [2d Dept.1985] ).
"Under the doctrine of res judicata, ‘once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy’ (O'Brien v. City of Syracuse, 54 N.Y.2d 353, 357 [1981] ), so long as "the party to be barred had a full and fair opportunity to litigate any cause of action arising out of the same transaction and the prior disposition was a final judgment on the merits" (Kinsman v. Turetsky, 21 AD3d 1246, 1246 [2005]lv denied 6 NY3d 702 [2005] )" (Tovar v. Tesoros Prop. Mgt., L.L.C., 119 AD3d 1127, 1128 [3d Dept.2014] ).
"The doctrine of collateral estoppel, a narrower species of res judicata, precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same" (Ryan v. New York Tel. Co., 62 N.Y.2d 494, 500 [1984] ). "The party seeking the benefit of collateral estoppel has the burden of demonstrating the identity of the issues in the present litigation and the prior determination, whereas the party attempting to defeat its application has the burden of establishing the absence of a full and fair opportunity to litigate the issue in the prior action" (Id. at 501 ).
" RPAPL § 1311 which requires the plaintiff in a mortgage foreclosure action to join, as a party defendant, any person ‘whose interest is claimed to be subject and subordinate to the plaintiff's lien.’ Under the statute, these necessary parties include ‘[e]very person having an estate or interest in possession in the property as tenant in fee,’ as well as all junior lienholders (RPAPL § 1311[1] ). Thus, tenants are clearly necessary parties to a foreclosure action" (Ridge Realty LLC v. Goldman, 263 A.D.2d 22, 25–26 [2d Dept.1999] ). "The rationale for joinder of tenants and junior lienholders ‘derives from the underlying objective of foreclosure actions—to extinguish the rights of redemption of all those who have a subordinate interest in the property and to vest complete title in the purchaser at the judicial sale’ " (Id. at 26, quoting Polish Natl. Alliance v. White Eagle Hall Co., 98 A.D.2d 400, 404 [2d Dept.1983] ). "Because of the failure to join these proprietary tenants as parties in the mortgage foreclosure proceeding (see, RPAPL § 1311 as to the naming of defendants), each tenant not named in the foreclosure proceeding continued to hold unextinguished interests, including a possessory right and a right of redemption" (Davis v. Cole, 193 Misc.2d 380, 382 [Sup.Ct. New York Co.2002]citing Ridge Realty LLC v. Goldman, 263 A.D.2d 22, 25–26 [2d Dept.1999] ).
Defendant First Niagara commenced an action for foreclosure entitled "First Niagara Bank, N.A. f/k/a First Niagara Bank s/b/m Hudson River Bank & Trust, Plaintiff, against Samuel Barr; Bank of America, N.A.; New York State Department of Taxation and Finance, United States of America; Pamela Cooper; Russ Cooper, Defendants " under Index No. 237620, in August, 2001. Defendant First Niagara states that all Defendants were duly served in the foreclosure action, including Plaintiff and his wife Pamela Cooper, as tenants/occupants. Defendant First Niagara states that Plaintiff and his Wife were then substituted by name in the Order of Reference signed by the Honorable George B. Ceresia, Jr., dated June 5, 2012. Defendant First Niagara asserts that Plaintiff did not appear, answer or otherwise move with regard to the foreclosure action. The Judgment of Foreclosure and Sale was signed by the Honorable George B. Ceresia, Jr., dated October 10, 2012.
The Court has before it proof that Plaintiff and his wife were served in the foreclosure action as tenants/occupants of the property. Plaintiff failed to appear, answer or assert in any way his claim to the property. The Court finds that nothing prevented the Plaintiff from appearing, asserting and litigating his rights to the property at the time the foreclosure proceeding was pending. At the time of the foreclosure action, Defendant First Niagara had no knowledge of Plaintiff's unrecorded Lease pertaining to the property. Defendant First Niagara acted property with regard to statute and served Plaintiff and his wife as tenants. By not asserting his claim to the property at that time, Plaintiff forfeited his claim to the property, as possession and title to the property could have been litigated in that proceeding. The Court finds that time and time again, Plaintiff "sat on his hands" and failed to assert his alleged right to the property. Plaintiff failed to protect his rights by never recording the Lease and then failed to appear and assert his alleged rights to the property in the foreclosure action.
The Court concludes that the issues litigated and resolved in the foreclosure proceeding and those issues now being raised by Plaintiff all arise out of the same transactions. The foreclosure proceeding determined any and all rights and interests anyone had in the property that was subject and subordinate to that of Defendant First Niagara.
The Court finds that Plaintiff's causes of action against Defendant First Niagara are barred under the doctrines of res judicata and collateral estoppel.
Even if the Court did not find that Plaintiff's claims against Defendant First Niagara were barred based on collateral estoppel and res judicata, it would further find that Defendant First Niagara is a bona fide mortgagee and that its recorded mortgage has priority over Plaintiff's unrecorded interest in accordance with Real Property Law § 291.
Real Property Law § 291 Recording of Conveyances states:
"A conveyance of real property, within the state, on being duly acknowledged by the person executing the same, or proved as required by this chapter, and such acknowledgment or proof duly certified when required by this chapter, may be recorded in the office of the clerk of the county where such real property is situated, and such county clerk shall, upon the request of any party, on tender of the lawful fees therefor, record the same in his said office. Every such conveyance not so recorded is void as against any person who subsequently purchases or acquires by exchange or contracts to purchase or acquire by exchange, the same real property or any portion thereof, or acquires by assignment the rent to accrue therefrom as provided in section two hundred ninety-four-a of the real property law, in good faith and for a valuable consideration, from the same vendor or assignor, his distributees or devisees, and whose conveyance, contract or assignment is first duly recorded, and is void as against the lien upon the same real property or any portion thereof arising from payments made upon the execution of or pursuant to the terms of a contract with the same vendor, his distributees or devisees, if such contract is made in good faith and is first duly recorded. Notwithstanding the foregoing, any increase in the principal balance of a mortgage lien by virtue of the addition thereto of unpaid interest in accordance with the terms of the mortgage shall retain the priority of the original mortgage lien as so increased provided that any such mortgage instrument sets forth its terms of repayment."
" RPL § 291 will act to void an unrecorded conveyance of an interest in property as against a recorded subsequent lien only when the subsequent transaction is made in good faith and the subsequent purchaser is a bona fide purchaser" (Vitale v. Pinto, 118 A.D.2d 774, 776 [2d Dept.1986] ).
"[W]here a purchaser has knowledge of any fact, sufficient to put him on inquiry as to the existence of some right or title in conflict with that he is about to purchase, he is presumed either to have made the inquiry, and ascertained the extent of such prior right, or to have been guilty of a degree of negligence equally fatal to his claim, to be considered as a bona fide purchaser" (Williamson v. Brown, 15 N.Y. 354, 362 [1857] ).
"If the facts within the knowledge of the purchaser are of such a nature, as, in reason, to put him upon inquiry, and to excite the suspicion of an ordinarily prudent person and he fails to make some investigation, he will be chargeable with that knowledge which a reasonable inquiry, as suggested by the facts, would have revealed" (Anderson v. Blood, 152 N.Y. 285, 293 [1897] ).
"Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on the property, and to all the world of the existence of any right which the person in possession is able to establish" (Phelan v. Brady, 119 N.Y. 587, 591–592 [1890] ). "The possession that will be equivalent to actual notice must be ‘inconsistent with the title of the apparent owner by the record’ " (Fekishazy v. Thomson, 204 A.D.2d 959, 962, [3d Dept.1994]quoting Holland v. Brown, 140 N.Y. 344, 348 [1893] ).
"[R]eliance upon a chain of title search does not inoculate a lender where other evident circumstances, in the exercise of reasonable diligence, would disclose an existing legal or equitable interest (Sweet v. Henry, 175 N.Y. 268 [1903] ). In the absence of disclosure based on constructive notice (see, e.g., Witter v. Taggart, 78 N.Y.2d 234 ) the issue of actual notice of a possessory interest must be examined (see, Schenectady Sav. Bank v. Wertheim, 237 A.D. 311affd 263 N.Y. 585 ). Although a purchaser may have a duty to ascertain the extent of the interest of a person who is in possession of the premises (see, Sweet v. Henry, supra ), in order for the possession to operate as the equivalent of actual notice, the possession must be ‘actual, open and visible occupation, inconsistent with the title of the apparent owner by the record; not equivocal, occasional or for a special or temporary purpose; neither can it be consistent with the title of the apparent owner by the record’ (Holland v. Brown, 140 N.Y. 344, 347–348 )" (Tompkins County Trust Company v. Talandis, 261 A.D.2d 808 [3d Dept.1999] ).
"To maintain an equitable quiet title claim, a plaintiff must allege actual or constructive possession of the property and the existence of a removable cloud on the property, which is an apparent title, such as in a deed or other instrument, that is actually invalid or inoperative" (Barberan v. Nationpoint, 706 F.Supp.2d 408, 418 [SDNY 2010], RPAPL § 1515 ).
The Court finds that there was no obligation on the part of Defendant First Niagara to further inquire of the Plaintiff as to his possessory rights at the time the mortgage was entered. In consideration of the totality of the circumstances of this action, Plaintiff's possession of the property was entirely consistent with his rights as a tenant and was not the equivalent of actual notice of his possessory interest of other than a tenant. Plaintiff's actual possession of the property was not inconsistent with the title of the apparent owner by the record, so his possession could not have provided notice of the lease. Plaintiff was not in hostile possession of the property. Defendant First Niagara was not in possession of any facts that would have excited the suspicion of an ordinary prudent person and put it on notice of the existence of any right or title conflict.
The Court will grant Defendant First Niagara's cross-motion by dismissing the complaint against it. The Court finds that Defendant First Niagara is a bona fide mortgagee and that its recorded mortgage has priority over Plaintiff's unrecorded interest in accordance with Real Property Law § 291.
The Court will not address the argument made by Defendant First Niagara that the loss of priority would only extend to so much of the mortgage as exceeds the mortgage liens already on the property. Defendant First Niagara stated that the Lease secures a loan totaling $45,829.67 and that Defendant First Niagara's mortgage secures a loan for $57,000.00. Defendant First Niagara asserted that if Plaintiff is entitled to priority at all it is only in the amount of the difference of the two loans, $11,170.33. This argument does not apply to this situation based on the terms of the Lease.
The Court further finds that the argument made by Defendant First Niagara that Plaintiff did not properly exercise his rights under the Lease by giving the proper written notice of his intent to exercise the option to purchase is without merit. The terms of the Lease provided that Plaintiff could exercise his option to purchase by notifying the Landlord in writing, personally or by Certified Mail Return Receipt Requested. Plaintiff averred that he notified Defendant Barr personally and spoke to him on several occasions. The Court received no response from Defendant Barr in opposition to this statement.
The Court will not dismiss the complaint with prejudice, or grant Defendant First Niagara's request for costs, disbursements and expenses associated with its motion.
The Court has further granted Plaintiff's motion for a default judgment against Defendant Barr and his motion for summary judgment against Defendants Pullar. Plaintiff's relief with regard to these motions, that he be declared the owner in fee simple to the subject property is granted. The Court will order Defendant Barr to execute and deliver the deed to the property to Plaintiff within thirty days of the date of this Decision and Order. In the event, Defendant Barr fails to execute and deliver the deed as directed by the Court, then Plaintiff's Counsel is directed to submit a proposed order to the Court which directs and authorizes the Rensselaer County Sheriff to execute on behalf of Defendant Barr the Deed to transfer title to the subject property, and deliver same to Plaintiff.
However, the Court finds that Plaintiff's title to the property is subject to the mortgage held by Defendant First Niagara as the mortgage on the property is superior to the unrecorded Lease. Defendant First Niagara has a valid and recorded lien on the property, regardless of who owns it.
Plaintiff argues that the terms of the Lease provide that no encumbrances could be placed on the property. This is not an issue for Defendant First Niagara, but it is an issue between Plaintiff and Defendant Barr. To the extent that Plaintiff has been impacted by the encumbrance that Defendant Barr placed on the property, Plaintiff may have a separate claim against him.Based on this Decision and Order, the Court will now lift the stay previously issued in "First Niagara Bank, N.A. f/k/a First Niagara Bank s/b/m Hudson River Bank & Trust, Plaintiff, against Samuel Barr; Bank of America, N.A.; New York State Department of Taxation and Finance, United States of America; Pamela Cooper; Russ Cooper, Defendants " under Index No. 237620, and allow the foreclosure to continue.
Obviously, Plaintiff and Defendant First Niagara can negotiate with one another to see if an agreement can be reached with regard to the property.
Accordingly, based on the foregoing, it is hereby
ORDERED, that Plaintiff's Motion for summary judgment against Defendants Pullar is granted, and it is further
ORDERED, that Defendant Barr is directed to execute and deliver the deed to the subject property to Plaintiff within thirty days of the date of this Decision and Order; and it is further
ORDERED, that in the event, Defendant Barr fails to execute and deliver the deed as directed by the Court, then Plaintiff's Counsel is directed to submit a proposed order to the Court which directs and authorizes the Rensselaer County Sheriff to execute on behalf of Defendant Barr the Deed to transfer title to the subject property and deliver same to Plaintiff; and it is further
ORDERED, that Defendant First Niagara's cross motion is granted to the extent the Complaint against it is dismissed; and it is further
ORDERED, that Defendant First Niagara's request for costs, disbursements and expenses associated with its motion is denied; and it is further
ORDERED, that the stay issued on "First Niagara Bank, N.A. f/k/a First Niagara Bank s/b/m Hudson River Bank & Trust, Plaintiff, against Samuel Barr; Bank of America, N.A.; New York State Department of Taxation and Finance, United States of America; Pamela Cooper; Russ Cooper, Defendants " under Index No. 237620 by Order of this Court dated February 4, 2013, is lifted and vacated.
This shall constitute the Decision, Order and Judgment of the Court. This Decision and Order is being returned to the attorney for the Plaintiff. All other papers are delivered to the Supreme Court Clerk for transmission to the Rensselaer County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Plaintiff is not relieved from the applicable provisions of that rule relating to filing, entry, and notice of entry.
Papers Considered:
1. Notice of Motion for Summary Judgment dated July 21, 2014; Attorney's Affirmation of Gregory E. Schaaf, Esq., dated July 21, 2013, with annexed Exhibits A–M; Affidavit of Russell E. Cooper sworn to July 3, 2014; Affidavit of Pamela Cooper sworn to July 3, 2014; Memorandum of Law dated July 22, 2014.
2. Notice of Cross–Motion dated August 20, 2014; Affidavit in Opposition of Gary A. Lefkowitz, Esq., sworn to August 20, 2014, with annexed Exhibits A–H; Memorandum of Law dated August 20, 2014.
3. Reply Memorandum of Law dated September 5, 2014.