Opinion
11458/09
10-15-2010
JPMorgan Chase Bank National Assoc., AS PURCHASE OF THE LOANS AND OTHER ASSETS OF WASHINGTON MUTUAL BANK FORMERLY KNOWN AS WASHINGTON MUTUAL BANK, FA., Plaintiffs, v. CV Oden Haedrich; GERALD G. WRIGHT, ESQ., AS PERSONAL NEEDS & PROPERTY MANAGEMENT GUARDIAN OF CV ODEN HAEDRICH & MARIE ROY-HAEDRICH; NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, , Defendants.
Attorneys of Record: Gerald Gardner Wright, Esq. Guardian of CV Oden Haedrich Hempstead Executive Plaza Rosicki, Rosicki & Associates, P.C. Attention: Edward Rugino, Esq. Attorneys for Plaintiff JPMorgan Chase Bank
Attorneys of Record:
Gerald Gardner Wright, Esq.
Guardian of CV Oden Haedrich
Hempstead Executive Plaza
Rosicki, Rosicki & Associates, P.C.
Attention: Edward Rugino, Esq.
Attorneys for Plaintiff JPMorgan Chase Bank
Thomas P. Phelan, J.
Gerald Wright, Esq., in his capacity as Guardian for the Personal Needs and Property Management of CV Oden Haedrich, an Incapacitated Person, moves for an order vacating all judgments of foreclosure, mortgages, notes and consolidation agreements and for an order staying the pending foreclosure proceeding.
On November 18, 1999, CV Oden Haedrich and Marie Roy Haedrich borrowed $212,000 from Washington Mutual Bank and utilized the proceeds thereof to purchase real property located at 63 Mead Street, Hempstead, New York (Rugino Aff. in Opp., ¶3). In connection therewith, Mr. and Mrs. Haedrich executed a mortgage and note encumbering the subject property in favor of the lender, Washington Mutual Bank (Id., Ex. B). Subsequent thereto on September 30, 2003, Mr. and Mrs. Haedrich borrowed additional funds from Washington Mutual Bank in the sum of $7,628.06 and executed a second mortgage and note encumbering the subject premises in favor of Washington Mutual Bank (Id., Ex. D). By an agreement also dated September 30, 2003 (the "Agreement"), the two mortgages were consolidated.
In or about 2005, attorney and movant herein, Gerald Wright, Esq., was appointed by this Court as Guardian of the Person and Property of CV Oden Haedrich and Marie Roy Haedrich (now deceased). Commencing on June 1, 2008, and continuing thereafter, neither Mr. and Mrs. Haedrich nor their Guardian tendered the monthly payment as required under the mortgage and as a result thereof in June 2009 the within foreclosure action was commenced by JP Morgan Chase Bank National Association ("JP Morgan Chase")* (Rugino Aff. in Opp., ¶8). Thereafter, on March 24, 2010, an Order of Reference was issued by this Court (Id.at ¶11). The instant application by Gerald Wright, Esq. subsequently ensued andis opposed in its entirety by JP Morgan Chase.
In support of the relief herein requested, Mr. Wright argues that in both 1999 and 2003, when the relevant mortgage documents were executed, Mr. and Mrs. Haedrich were both suffering from mentally debilitating conditions, including dementia, which deprived them of their capacity to understand the substance of the documents they signed, as well as the consequences emanating therefrom (Wright Aff., ¶¶3, 4). Counsel provides a letter from Dr. Mervin Sakowitz. M.D., dated July 27, 2010, wherein the physician states that Mrs. Haedrich was "my patient for one visit in 1990" and "probably had atypical Mycobacterium Avium Cellulare infection in her lungs" (Id., ¶4, Ex. A). Dr. Sakowitz further stated the he did not see Mrs. Haedrich "until 2004" at which time she had "chronic Mycobacterium Pneumonia"(Id.). With particular respect to Mr. Haedrich, Dr. Sakowitz states that he was "first seen in 2004" at which time he "gave a history of Alzheimer's Disease" (Id.).
In addition to the forgoing, counsel makes a reference to the testimony of Dr. Lipschutz, a psychiatrist, who allegedly testified during an Article 81 hearing as to Mrs. Haedrich's incapacity due to dementia (Id., ¶5). Counsel argues that due to the dementia of Mr. and Mrs. Haedrich, coupled with the Chronic Mycobacterium Avium Cellulare of Mrs. Haedrich, JP Morgan Chase, as the lender seeking to enforce the subject instruments, bears the burden of demonstrating that it had no knowledge of Mr. and Mrs. Haedrich's incapacity at the time the subject transactions were executed (Id., ¶7). In so arguing, counsel relies upon The Matter of Hermina Brunson, NYLJ January 7, 2010. The Court notes that the proper title of this case is In re Doar and the proper citation thereto is 28 Misc 3d 759 [Sup Ct, Queens Co., December 18, 2009, Thomas, J.].
Mental Hygiene Law §81.29(d) provides the following, in relevant part: "If the court determines that the person is incapacitated and appoints a guardian, the court may modify, amend or revoke... any contract, conveyance, or disposition during lifetime or to take effect upon death, made by the incapacitated person prior to the appointment of the guardian if the court finds that the previously executed... contract... was made while the person was incapacitated."
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* The Court notes that due to the insolvency of Washington Mutual Bank, the assets thereof were transferred to JP Morgan Chase, which ultimately commenced the within action.
As articulated by the Court of Appeals, "The avoidance of duties under an agreement entered into by those who have done so by reason of mental illness, but who have understanding, depends on balancing competing policy considerations." Such policy considerations encompass the need for "stability in contractual relations and protection of the expectations of parties who bargain in good faith" balanced against the equally important need to afford protection to individuals "who may understand the nature of the transaction but who, due to mental illness, cannot control their conduct" (Orterlere v Teachers' Retirement Board of the City of New York, 25 NY2d 196, 205 [1969]).
As a general proposition, a party's capacity to enter into a binding agreement is presumed (Horrell v Horrell, 73 AD3d 979 [2d Dept 2010]; see also Preshaz v Przyziazniuk, 51 AD3d 752 [2d Dept 2008]; Feiden v Feiden, 151 AD2d 889 [3d Dept 1989]). The burden of proving incompetence rests with the individual so asserting (Horrell v Horrell, 73 AD3d 79 [2d Dept 2010], Feiden v Feiden, 151 AD2d 889 [3d Dept 1989], see also Smith v Comas, 173 AD2d 535 [2d Dept 1991]). While generally "the contracts of a mentally incompetent person who has not been adjudicated insane are voidable" (Orterlere v Teachers' Retirement Board of the City of New York, 25 NY2d 196, 202 [1969]), where the other party to the contract is unaware of the party's incapacity, the transaction in issue is not voidable and the legal instrument will not be set aside (Id. at 205; Goldberg v McCord, 251 NY 28, 32 [1929]). Stated somewhat differently, there should be relief to the moving party herein "only if the other party knew or was put on notice as to the contractor's mental illness" (Orterlere v Teachers' Retirement Board of the City of New York, 25 NY2d 205).
An individual seeking to avoid the consequence of a contract due to incompetency must demonstrate that atthe time the agreement was executed he or she "was suffering from a mental illness or defect which rendered [the party] incapable of comprehending the nature of the transaction or making a rational judgment concerning the transaction, or that by reason of mental illness [the party] was unable to control [his or her] conduct" (Horrell v Horrell, 73 AD3d 979 [2d Dept 2010], quoting Lukaszuk v Lukaszuk, 304 AD2d 625 [2d Dept 2003]; see also Matter of Lee, 294 AD2d 366 [2d Dept 2002]; Gala v Magarinos, 245 AD2d 336 [2d Dept 1997]).
In the matter sub judice, the relevant transactions occurred on November 18, 1999, and September 30, 2003. However, the evidence proffered byMr. Wright is patently insufficient to demonstrate either that, at the time these transactions occurred, Mr. and Mrs. Haedrich were incompetent or that the lender "knew or was put on notice" of the purported incapacity with which Mr. and Mrs. Haedrich were afflicted (Orterlere v Teachers' Retirement Board of the City of New York, 25 NY2d 205).
Initially, the letter authored by Dr. Sakowitz is not in admissible form (CPLR § 2106). However, even disregarding this infirmity and fully crediting as true the assertions therein contained, same do not establish that at the time the subject transactions were consummated Mr. and Mrs. Haedrich were "incapable of comprehending the nature" of the documents they signed or that by virtue of mental disease "were unable to control [their] conduct" (Horrell v Horrell, 73 AD3d 979 [2d Dept 2010]). With regard to Mrs. Haedrich, Dr. Sakowitz did not opine that Mrs.
Haedrich suffered from a debilitating mental condition but merely stated that in 1990 she suffered from a lung infection and when he saw Mrs. Haedrich again in 2004, she suffered from chronic pneumonia.
As to Mr. Haedrich, Dr. Sakowitz stated that it was Mr. Haedrich himself who recited a history of Alzheimer's Disease. There is no indication in this letter that Dr. Sakowitz conducted any objective testing whatsoever to independently corroborate Mr. Haedrich's assertion and to confirm a diagnosis of Alzheimer's Disease. Further, even assuming there was competent medical evidence that in 2004 Mr. Haedrich indeed suffered from Alzheimer's Disease, it has been held that "one suffering from Alzheimer's disease is not presumed to be wholly incompetent" and "rather, it must be demonstrated that, because of the affliction, the individual was incompetent at the time of the challenged transaction" (Gala v Magarinos, 245 AD2d 336, 337 [2d Dept 1997]). Here, the record is completely devoid of any admissible medical evidence which demonstrates that in 1999 and 2003, Mr. Haedrich was rendered legally incompetent as a result of suffering from Alzheimer's disease (Id.).
Additionally, with respect to the psychiatric testimony of Dr. Lipschutz, to which Mr. Wright makes a brief reference, this Court has not been provided with a transcript thereof. However, even assuming Dr. Lipschutz testified that Mrs. Haedrich suffered from dementia, by counsel's own admission such testimony was adduced at an Article 81 hearing conducted in relation to Mrs. Haedrich. Thus, inasmuch as Mr. Wright was appointed as a guardian to Mrs. Haedrich on November 9, 2005, said hearing would have taken place in close temporal proximity thereto and any testimony adduced therein would not be dispositive as to Mrs. Haedrich's mental condition at the time the subject transactions were undertaken (Horrell v Horrell, 73 AD3d 979 [2d Dept 2010]).
Finally, counsel's reliance upon the case of In re Doar is unavailing. Unlike the facts as adduced herein, in Doar there was a confirmed diagnosis of chronic paranoid schizophrenia from which the alleged incapacitated person suffered at the very time the challenged mortgage documents were executed (In re Doar, 28 Misc 3d 759 [Sup Ct, Queens Co., December 18, 2009, Thomas, J.). Additionally, the mortgage in issue in Doar was a "reverse mortgage" (Id.). In the instant matter, there is no indication that the loan in issue was in the form of a reverse mortgage.
Based upon the foregoing, the motion by Gerald Wright, Esq, in his capacity as Guardian for the Personal Needs and Property Management of CV Oden Haedrich, an Incapacitated Person, for an order vacating all judgments of foreclosure, mortgages, notes and consolidation agreements and for an order staying the pending foreclosure proceeding is hereby denied.
This decision constitutes the order of the court.
Dated: October 15, 2010
THOMAS P. PHELAN, J.S.C.
Attorneys of Record:
Gerald Gardner Wright, Esq.
Guardian of CV Oden Haedrich
Hempstead Executive Plaza
Rosicki, Rosicki & Associates, P.C.
Attention: Edward Rugino, Esq.
Attorneys for Plaintiff JPMorgan Chase Bank