Opinion
INDEX NO. 500296/2019
10-27-2020
DAVID KRINSKY and SARAH KRINSKY, Plaintiffs, v. MENACHEM SHAGALOW, FAYE SHAGALOW, BEDFORD PARK DEVELOPMENT, INC., 1323 PRESIDENT ST SOVEREIGN LLC s/h/a JOHN DOE 1 and JOHN DOES 2 through 10, the latter names being fictitious but intending to designate persons or entities having or purporting to have an interest in the premises described in the Complaint herein, Defendants.
NYSCEF DOC. NO. 141 At an IAS Term, Part 19 of the Supreme Court of the State of New York, held in and for the County of Kings, at the Courthouse, at Civic Center, Brooklyn, New York, on the 27th day of October, 2020. PRESENT: HON. ROSEMARIE MONTALBANO, Justice. The following e-filed papers read herein:
| Notice of Motion//Cross Motion andAffidavits (Affirmations) Annexed | 78, 80-99 100-115 |
|---|---|
| Opposing Affidavits (Affirmations) | 101-115 119, 122-123 |
| Reply Affidavits (Affirmations) | 119, 122-123 137-139 |
New York State Courts Electronic Filing.
Upon the foregoing papers in this action to quiet title to the property at 1323 President Street In Brooklyn (Property), defendants Menachem Shagalow, Faye Shagalow, Bedford Park Development, Inc. (Bedford Park) and 1323 President St Sovereign LLC s/h/a John Doe 1 (collectively, the Shagalow Defendants) move (in motion sequence [mot. seq.] two) for an order, pursuant to CPLR 3211 (a) (1), (a) (5) and (a) (7), dismissing the first cause of action in the complaint.
Plaintiffs David Krinsky and Sarah Krinsky (collectively, Krinsky Plaintiffs) cross-move (in mot. seq. three) for an order: (1) converting the Shagalow Defendants' motion to dismiss into a summary judgment motion, pursuant to CPLR 3211 (c), and (2) granting them summary judgment on the first cause of action in their complaint, pursuant to CPLR 3212.
Background
The Instant Action
On January 4, 2019, the Krinsky Plaintiffs commenced this quiet title action by filing a summons and verified complaint asserting two causes of action for: (1) a judgment, pursuant to RPAPL article 15, determining the they are the true and lawful owners of the Property vested with unencumbered title to the Property, and that the Shagalow Defendants are forever barred from any and all claims to any estate or interest in the Property, and, alternatively, (2) adverse possession of the Property.
The complaint alleges that the Property was the subject of a mortgage foreclosure action, entitled Chase Manhattan Mortgage Corporation v Rachamin Anatian, et al, (Sup Ct, Kings County index No. 29880/98) (the Foreclosure Action) (complaint at ¶ 10). In the Foreclosure Action, a judgment of foreclosure and sale was allegedly entered on or about November 28, 2000 (id.). On or about July 31, 2001, Chase Manhattan Mortgage Corporation, the plaintiff in the Foreclosure Action, allegedly assigned its interests in the mortgage to Interboro Equities, LLC (Interboro) (id. at ¶ 11).
The Property was allegedly sold at an October 22, 2001 foreclosure sale and Interboro emerged as the successful bidder (id. at ¶¶ 12-13). The complaint alleges that "[a]fter the Foreclosure Sale, Interboro assigned its successful bid to David [Kinsky] (who was the sole member of Interboro) and Sarah [Krinsky]" (id. at ¶ 14). The Property was allegedly transferred to the Krinsky Plaintiffs pursuant to an October 22, 2001 referee's deed, which was recorded in the City Register's office on December 3, 2001 at Reel 5380, Page 882 (id. at ¶¶ 15-16). The complaint alleges that "[f]rom the time of the delivery of the Referee's Deed, Plaintiffs have been in exclusive and uninterrupted care, custody, and control of the Premises" (id. at ¶ 17).
The complaint further alleges that on or about April 16, 2003, two and a half years after entry of the foreclosure judgment and 18 months after the foreclosure sale, Yona Dorit Anatian (Anatian), the owner of the Property when the Foreclosure Action was commenced, moved for an order vacating the foreclosure judgment and the foreclosure sale and permitting Bedford Park to intervene (id. at ¶ 21). By a December 5, 2003 order, the court allegedly granted Anatian's motion only to the extent of vacating the foreclosure judgment, the foreclosure sale and the October 22, 2001 referee's deed (Vacatur Order) (id. at ¶ 22). Upon a motion to reargue, the court allegedly issued a November 8, 2004 order adhering to its determination (Reargument Order) (id. at ¶ 24).
The Shagalow Defendants allegedly appealed from both the Vacatur Order and the Reargument Order to the Appellate Division, Second Department, which issued an October 17, 2005 decision and order reversing the Reargument Order, vacating the Vacatur Order "insofar as the Vacatur Order vacated the Foreclosure Judgment and the Referee's Deed; and reinstated the Foreclosure Judgment, the Foreclosure Sale, and the Referee's Deed" (id. at ¶ 27). The complaint alleges that "[a]s a result of the Second Department's October 17, 2005 Decision & Order, ownership of the Premises was restored to Plaintiffs" (id. at ¶ 28). The Second Department's order was allegedly recorded with the City Register's office on May 8, 2006 under City Register File Number (CRFN) 2006000255377 (id. at ¶ 29).
Meanwhile, on or about July 3, 2001, after entry of the foreclosure judgment but prior to the foreclosure sale, Anatian allegedly executed a deed purporting to convey the Property to Bedford Park (Bedford Park Deed) (id. at ¶ 31). Bedford Park allegedly transferred the Property to Menachem Shagalow by a November 8, 2004 deed (Menachem Deed) (id. at ¶ 37). The complaint alleges that the Bedford Park and Menachem Deeds were both recorded on March 31, 2005 in the City Register's office under CRFN 2005000220055 and 2005000220056, respectively (id. at ¶ 39). The complaint further alleges that:
"[p]ursuant to a deed dated December 17, 2018 (the 'Shagalow Defendants Deed'), more than thirteen (13) years after the Second Department's October 17, 2005 Decision & Order which vacated the Vacatur Order and reinstated the Referee's Deed, Menachem purported to convey the Premises to himself and Faye, his wife" (id. at ¶ 45).The Shagalow Defendants Deed was allegedly recorded with the City Register's office on December 19, 2018 under CRFN 2018000417072 (id. at ¶ 46). The complaint alleges that:
"[s]ince Menachem had no interest in the Premises, and since the Referee's Deed and Foreclosure Judgment were reinstated by the Second Department's October 17, 2005 Decision & Order, the Shagalow Defendants['] Deed is insufficient to convey any interest in the Premises to the Shagalow Defendants" (id. at ¶ 47).
The Shagalow Defendants' Dismissal Motion
The Shagalow Defendants now move to dismiss the first cause of action seeking to quiet title to the Property based on: (1) documentary evidence that the Bedford Park Deed validly transferred title to the Property, and (2) the statute of limitations.
The Shagalow Defendants submit an affirmation from defendant Menachem Shagalow, the principal of Bedford Park, who affirms that after the referee's deed was vacated - but before the Second Department's reversal - "I recorded a deed that I purchased from the Antians, through . . . Bedford Park . . . and simultaneously transferred title to the Premises to myself, personally, by a deed from Bedford." Mr. Shagalow affirms that "[a]t that time, Plaintiffs had no interest in the Premises, other than their ownership of the mortgage through Interboro." Mr. Shagalow claims that:
"I had every right to rely on this Court's decision and order vacating the Referee's Deed and, thus, Bedford and I became the legal sequential owners of the Premises and the fact that an appeal by Plaintiff was pending or ultimately reversed this Court's Order did not vacate my ownership of the Premises."Mr. Shagalow contends that "[t]here was no notice of pendency filed against the Premises or stay pending an appeal when the Bedford Deed and the Shagalow Deed were recorded."
Mr. Shagalow further argues that the first cause of action in the complaint to quiet title to the Property is barred by the statute of limitations because "Plaintiffs took no action to quiet title or vacate the deed to me for over thirteen (13) years." Specifically, Mr. Shagalow affirms that "Plaintiffs had knowledge of the recording of the Bedford [Park] Deed and the Menachem Deed on March 31, 2005 and took no action with respect thereto for more than ten (10) years from the date said deeds were recorded."
The Krinsky Plaintiffs' Opposition and Summary Judgment Cross Motion
The Krinsky Plaintiffs, in opposition and in support of their summary judgment cross motion, submit an affidavit from David Krinsky, who asserts that "the Second Department's October 2005 Order . . . which reinstated the Referee's Deed through which my wife and I took title to the Premises - is dispositive of Defendants' motion and this action."
David Krinsky reiterated the background facts that are detailed in the verified complaint, including the foreclosure sale and the October 22, 2001 referee's deed, by which the Property was transferred to him and his wife. David Krinsky further describes the Vacatur Order, the Reargument Order and the Second Department's decision and order, by which the appellate court vacated the Vacatur Order and reinstated the judgment of foreclosure, the foreclosure sale and the referee's deed. David Krinsky asserts that "[a]s a result of the Second Department's October 2005 Order, ownership of the Premises was restored to Plaintiffs" and "[i]n order to protect and clarify the record [he] had the Second Department's October 2005 Order recorded in the City Register's Office."
David Krinsky further attests that "[f]rom the time of the delivery of the Referee's Deed, Sarah and I have been in exclusive and uninterrupted care, custody, and control of the Premises." Specifically, David Krinsky attests that he and his wife, upon receiving the October 22, 2001 referee's deed: (1) commenced and prosecuted summary proceedings to evict illegal squatters from the Property; (2) changed the locks on the Property; (3) expended significant sums gutting and preparing the Property for renovation; (4) engaged the services of an architect, and filed renovation plans with the Department of Buildings; (5) mortgaged the Property; (6) permitted their contractor to utilize the garage at the Property in exchange for maintenance services; and (7) paid all real estate taxes and insurance for the Property.
The Krinsky Plaintiffs submit a copy of the Second Department's October 2005 decision and order, in which the appellate court specifically held that the Supreme Court "improvidently exercised its discretion in vacating the order of reference, judgment of foreclosure and sale, and referee's deed . . ." and ordered that "the order of reference, judgment of foreclosure and sale, and referee's deed are reinstated." In addition, the Second Department determined that "the [appellees'] inexcusable delay of 18 months in moving, inter alia, to vacate . . . together with the detriment to the Krinskys caused by the delay warrants application of the doctrine of laches." The Krinsky Plaintiffs assert that "[t]o find that Defendants were able to somehow claim title to the Premises would eviscerate the letter and intent of the Second Department's October 2005 Reinstatement Order" and "render it meaningless."
The Krinsky Plaintiffs argue that Anatian's July 3, 2001 transfer of the Property to Bedford Park (after entry of the foreclosure judgment but prior to the foreclosure sale) resulted in Bedford Park taking the Property subject to the Property's existing mortgage. The Krinsky Plaintiffs note that Menachem Shagalow expressly admits in his moving affirmation that the Bedford Park and Shagalow Deeds "were subject to the mortgage owned by Interboro." The Krinsky Plaintiffs argue that "the existence of a notice of pendency is irrelevant where the purported purchaser [Menachem Shagalow] knows of the pending [foreclosure] action." Essentially, the Krinsky Plaintiffs argue that Menachem Shagalow and his company, Bedford Park, were not bona fide purchasers of the Property because they had actual knowledge of the pending Foreclosure Action.
The Krinsky Plaintiffs further contend that their quiet title claim is not barred by the statute of limitations because "the ten year statute of limitations applies to an action to quiet title only where - unlike here - the claimant is not in possession of the subject premises and seeks to recover it." The Krinsky Plaintiffs cite New York cases holding that parties seeking to quiet title of property where they are in possession may bring their quiet title claims at any time.
The Shagalow Defendants' Reply and Opposition to the Cross Motion
The Shagalow Defendants, in reply and in opposition to the cross motion, reiterate that "[b]ecause the Krinskys never filed a notice of pendency when they appealed the vacatur of the Referee's deed, the Krinskys cannot invalidate the Bedford/Menachem chain of deeds."
The Shagalow Defendants also submit a reply affirmation from Menachem Shagalow who challenges the Krinsky Plaintiffs' contention that they have been in possession, custody and control of the Property since they obtained the referee's deed on October 22, 2001. Menachem Shagalow contends that " Plaintiffs never moved into the house which has stood vacant , unoccupied and inhabitable for 14 years ." The Shagalow Defendants argue that the issue of whether the Krinsky Plaintiffs have been in possession of the Property is an issue of fact that precludes summary judgment.
The Krinsky Plaintiffs' Reply
The Krinsky Plaintiffs, in reply, note that the Shagalow Defendants have failed to address the Second Department's dispositive order vacating the Vacatur Order and reinstating the foreclosure judgment, the foreclosure sale and the referee's deed. The Krinsky Plaintiffs reiterate that the Shagalow Defendants' actual knowledge of the foreclosure action precludes them from claiming bona fide purchaser status, as a matter of law. The Krinsky Plaintiffs argue that "[s]ince Menachem (the principal of Bedford Park) was aware of the pendency of the Foreclosure Action at the time of the Bedford Park Deed and when that deed was recorded . . . he and Bedford Park are subject to all proceedings in the Foreclosure Action[,]" including the Second Department's order.
Discussion
Summary judgment is a drastic remedy that deprives a litigant of his or her day in, court, and thus, should only be employed when there is no doubt as to the absence of triable issues of material fact (Kolivas v Kirchoff, 14 AD3d 493 [2005]; see also Andre v Pomeroy, 35 NY2d 361, 364 [1974]). "The proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment, as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Manicone v City of New York, 75 AD3d 535, 537 [2010]).
"Under well-established common-law principles, a purchaser of real property is bound by the consequences of a lawsuit of which he has actual knowledge" (Da Silva v Musso, 76 NY2d 436, 439 [1990]; see also DeMaio v Capozello, 124 AD3d 823, 824 [2015] [holding that "(a) purchaser of real property who has actual knowledge of a pending lawsuit with respect to the property is bound by the consequences of that lawsuit"]; Serota v Power House Realty Corp., 274 AD2d 427, 427 [2000] [holding that "the respondents failed to meet their burden of establishing, in the first instance, that they were bona fide purchasers for value who acquired title to the property without actual knowledge of the plaintiffs' pending action for specific performance"]).
Here, the Shagalow Defendants had actual knowledge of the pending Foreclosure Action when Anatian transferred the Property to Bedford Park (Shagalow's company), and consequently, the Shagalow Defendants are not bona fide purchasers of the Property. The Shagalow Defendants thus took the Property subject to the Foreclosure Action, including the Second Department's decision and order, which reinstated the referee's deed and the Krinsky Plaintiffs' title to the Property. The Second Department's order is dispositive of the Krinsky Plaintiffs' first cause of action to quiet title to the Property.
The Shagalow Defendants' contention that the Krinsky Plaintiffs' quiet title claim is barred by the ten-year statute of limitations is rejected as the Krinsky Plaintiffs have demonstrated that they have been in possession of the Property since they obtained the referee's deed on October 22, 2001 (see Elam v Altered Ego Realty Holding Corp., 114 AD3d 901, 903 [2014]). Accordingly, it is
ORDERED that the Shagalow Defendants' dismissal motion (in mot. seq. two) is denied; and it is further
ORDERED that the Krinsky Plaintiffs' summary judgment cross motion (in mot. seq. three) is only granted to the extent that their first cause of action to quiet title to the Property is granted; and it is further
ORDERED AND ADJUDGED that the Krinsky Plaintiffs are the true and lawful owners of the Property vested with unencumbered title to the Property, and that the Shagalow Defendants are forever barred from any and all claims, to any estate or interest in the Property.
This constitutes the decision, order and judgment of the court.
ENTER,
/s/
J. S. C.