Opinion
29066/10
08-01-2016
Catherine Kupperstock, Plaintiff, v. Arie Kupperstock, as Administrator of the Estate of Zvi Kupperstock and ARIE KUPPERSTOCK, Defendants.
Following a non-jury trial held in this Part, based upon a preponderance of the testimony and credible evidence, this court finds and determines as follows:
Plaintiff and defendant Arie Kupperstock were married in September 13, 1981 in Switzerland and had four children. The family lived in a house located at 36 Shorthill Road, Forest Hills, New York, the subject property, which was allegedly purchased by the plaintiff in December 1987. Plaintiff filed for divorce in the summer of 1996, and plaintiff and defendant subsequently entered into a divorce agreement on March 3, 1997. Pursuant to the divorce agreement, plaintiff received the subject real property.
Plaintiff asserts that the defendant and his father, the decedent Zvi Kupperstock ("Zvi"), fraudulently obtained a mortgage in connection with subject property. The mortgage, which secured a loan in the amount of $840,000.00, was allegedly signed by plaintiff on January 29, 1994 in favor of Zvi. The mortgage required no payments of principal or interest until 2017. Plaintiff maintains that she purchased the subject property in cash for $580,000, and there was no mortgage on the property. Plaintiff asserts that she discovered the mortgage, by chance, in 2010 while using the ACRIS website to help her daughter register a mortgage. Plaintiff further asserts that she never knowingly executed any mortgage in connection with the subject property. She maintains that the mortgage was part of a scheme by defendant to seek retribution against her and control her following the deterioration of their marriage.
Defendant maintains that it is clear that the signatures on the mortgage belong to the plaintiff. Defendant further asserts that there is no evidence of any fraud, misrepresentation or other wrongdoing by the defendant relating to the subject mortgage. Indeed, defendant maintains that the plaintiff has failed to sustain her burden at trial.
The complaint alleges three causes of action. The first cause of action, pursuant to Article 15 of the RPAPL, seeks a declaration that defendant be barred from all claims to the subject property, adjudging the plaintiff to be the lawful owner vested with absolute title in the property and directing the Register of Queens County to cancel and discharge the mortgage. The second cause of action seeks monetary damages for fraud. Finally, the third cause of action seeks damages to recover for prima facie tort.
At the trial, plaintiff testified that she was raised in Zurich, Switzerland by a very wealthy family and had a sheltered childhood. She explained that growing up, she was "super-comfortable", never lacking for anything financially. She met the defendant in 1979 when she was 19 while at a Hebrew study program in Israel, and they were married in 1981. Plaintiff stated that after she and defendant were married, her father gave her an apartment building in her name in Zurich as a gift, from which she received income. She also testified that her father gave her other substantial gifts over the years.
According to the plaintiff, she believed that defendant's parents were people without any economic means. She testified that they lived a modest life, residing in a third floor walk-up apartment in Haifa, Israel. Plaintiff described the apartment as "simple", and stated that there was a stove and kitchen on the terrace. When plaintiff first saw the apartment, she described it as a "culture shock" to her. She also stated that defendant never told her that his family had money or was wealthy.
Plaintiff testified that she never borrowed any money from Zvi for the house or for any other reason. She testified that she never received cash or wire transfers from Zvi. When asked if defendant or Zvi ever told her that Zvi sent her money, she replied "no." She stated that she never believed that Zvi had any money to lend. Additionally, plaintiff testified that she did not know Zvi well inasmuch as he lived in Israel, and she and defendant lived in the United States. Further, plaintiff explained at trial that it was difficult for her to communicate with Zvi since he spoke Polish, Hebrew and Yiddish, languages which she did not speak. According to plaintiff, it would have been impossible for her to discuss an issue as complicated as a mortgage transaction with Zvi due to the language barriers.
Plaintiff also testified that she did not need a mortgage for the purchase of the house. She was unable to state with certainty, however, from which accounts the money to purchase the house came from. She testified that "there was always money around." She explained that defendant managed the family finances, and, thus, she did not know the source of the funds for the house. She was shown a copy of the mortgage, and although she stated that the signature on the document looks like hers, she has no idea how the signature got on the document. She denied ever meeting Alan Ehrlich, the attorney who allegedly prepared the mortgage, or Pablo Schachter, the notary public who allegedly witnessed the execution of the mortgage. Plaintiff reiterated that she never intended to give Zvi a mortgage nor did she intentionally sign a mortgage or mortgage note. Furthermore, plaintiff testified that in order to keep track of all of her assets, she and defendant prepared "asset lists" from 1993-1996. The asset list identified plaintiff as the owner of the house, but clearly stated that there was no mortgage on the house, and the house was free and clear of any obligation.
Plaintiff testified that defendant was involved in various types of scams, such as insurance fraud and credit card fraud. For example, she explained that defendant would obtain insurance under a false name, have an accident and then go to the hospital under the false name. Plaintiff stated that she was drawn into these scams by the defendant, but she was a young girl at the time, and did not know how to untangle herself from the schemes.
Plaintiff also testified about the state of her marriage. She stated that at the beginning, she and defendant had a very happy marriage. By 1994, however, she testified that defendant became abusive to her and the children and tried to control every facet of her life. She filed for divorce in the summer of 1996.
On direct examination, defendant, a Certified Public Accountant, initially testified that he and the plaintiff lived in two other apartments in Queens prior to moving to the subject property, which plaintiff purchased in 1987. Defendant then was asked questions regarding the scams and frauds plaintiff testified about. He denied ever using an alias to commit any type of fraud. However, he stated that plaintiff used various aliases, such as "Karen Levy" to make phony claims and commit fraud. Defendant testified that plaintiff was involved in many shady dealings, but he did not want to know about them and be complicit in these dealings.
Defendant also testified that in Israel, his father owned a trucking business, which he sold to the Israeli government in exchange for parcels of land. Defendant further testified as to the various transfers of money by his father to bank accounts in England and the United States that defendant had in his name. He also stated that Zvi transferred sums of money to the plaintiff. On cross examination, he testified that his father had menial jobs and did not own a car.
Defendant stated that plaintiff and Zvi had discussions, including face to face discussions, regarding using Zvi's money for the house. According to defendant, plaintiff agreed to give Zvi a mortgage. Zvi gave defendant permission to transfer money that defendant was holding for Zvi to the plaintiff. There was no documentary evidence submitted to corroborate defendant's claim that Zvi transferred money to the defendant or to the plaintiff.
Defendant stated that the mortgage was signed 1987 but was never recorded. Rather, it was kept in a safe in the house. Defendant explained that in 1993, when he and the plaintiff realized that the original mortgage was lost, they went to have a new mortgage prepared. Defendant testified that plaintiff retained attorney Alan Ehrlich to prepare the replacement mortgage documents. Defendant further stated that Ehrlich sent the mortgage documents to the plaintiff, and she took them to the office of an attorney on Metropolitan Avenue in Queens and signed them before a notary public, Pablo Schachter. Defendant also testified that he was not present when plaintiff signed the mortgage and was not involved in the plaintiff's signing of the mortgage or the notarization of the mortgage. He denied altering the amount, terms, interest rate or plaintiff's signature on the mortgage. He did not recall whether he wrote in the number "29" in the date of the mortgage. Defendant also testified that he did not record the mortgage until after plaintiff decided to terminate their marriage, after the submission of the divorce agreement to the court. Defendant reiterated that he had no doubt that the plaintiff borrowed $840,000 from Zvi.
Defendant disputed plaintiff's testimony that plaintiff and Zvi were unable to communicate. He stated that his father spoke many languages, such as Hebrew, English, Polish, German, Yiddish, Spanish and Arabic. He explained that plaintiff and Zvi were able to communicate in Hebrew and German together, and he also testified that Zvi knew enough English to negotiate a contract in English.
Plaintiff called John Paul Osborn, a Forensic Document Examiner, to testify. Mr. Osborn testified that he examined handwriting samples of the plaintiff, defendant and the notary public who witnessed the execution of the mortgage, Pablo Schachter. Mr. Osborn stated that the mortgage is dated January 29, 1994, and the "29" is handwritten. He opined that ofthe handwriting samples he reviewed, it is highly probable thatdefendant is the writer of the "29" on the mortgage.
Defendant called Dennis J. Ryan, a forensic document examiner, to testify on his behalf. He stated that he compared the signature of the plaintiff on the mortgage and the note with other known exemplars. He testified that in his opinion, plaintiff's signature was on the note and mortgage. Mr. Ryan testified that there is no indication of any forgery. According to Mr. Ryan, if the signature on the documents were forged, the signature would be more of a drawing or it could be shaky and tremulous. He testified that in the mortgage and the note, plaintiff's signature is free and naturally written.
Counsel for plaintiff read excerpts from the deposition of Alan Ehrlich, Esq., the attorney in Newark, New Jersey who allegedly prepared the mortgage. He testified at the deposition that he did not know the plaintiff or the defendant. He further did not recall preparing the mortgage document. He stated that he never worked as a real estate attorney and would have referred the drafting of a mortgage to the real estate attorney at his firm.
After hearing the testimony of all the witnesses and reviewing all the documentary evidence, the court finds that the plaintiff is the lawful owner of the subject property and further finds that the plaintiff is entitled to discharge of the mortgage herein. The court finds plaintiff's consistent testimony that she did not sign the mortgage and never received any money from Zvi to be highly credible.
There was no documentary evidence produced at the trial of any mortgage loan by Zvi to the plaintiff. (see Hopper v Lockey, 17 AD3d 912, 914 [2d Dept 2005][invalidating mortgage where there was insufficient documentary evidence of valid consideration].) The closing statement relating to the house as well as the asset list prepared by plaintiff and defendant never referred to a mortgage. Similarly, the 1997 divorce agreement, signed by both the plaintiff and the defendant, fails to mention a mortgage on the subject property. Indeed, the divorce agreement specifically stated that "[t]he Wife shall retain all of her right, title and interest in the real property known as 36 Shorthill Road... The Husband represents that he currently has no ownership in any real property and waives any claim to the actual or equitable ownership of the aforesaid real property." Under the agreement, defendant waives any claim to the house, and received a $500,000.00 payment from plaintiff's father. The court finds it highly unusual that the divorce agreement would specifically provide for the ownership of the subject property without noting the existence of a mortgage on the property. Moreover, neither was the mortgage reported as an asset of Zvi's estate following his death. None of the other financial documents introduced at trial support a finding that plaintiff gave a mortgage in favor of Zvi.
The court also finds plaintiff's testimony that she barely knew Zvi and would be unable to enter into a transaction with him to be credible. There was significant testimony that plaintiff was unable to communicate in the same language with Zvi, thus making it impossible for the two to enter into this type of agreement. Plaintiff testified that between 1981 and 1987, she could count on one hand the number of times she met Zvi. In any event, based on the evidence, the court finds that there was no reason for the plaintiff to accept a mortgage from Zvi. As noted above, plaintiff was of significant financial means and did not need to borrow money from Zvi. Plaintiff's father gave her large amounts of money before and during her marriage, including the apartment building in Zurich which produced income. As noted above, he also paid the defendant $500,000.00 under the divorce agreement, which allowed plaintiff to remain in the house.
The court further questions why the mortgage would not require any payments of principal or interest until 2017, when Zvi would be 114 years old. Moreover, the mortgage secures a loan in the sum of $840,000, although the subject property was purchased for $580,000. The court also notes that at the time of the alleged signing of the replacement mortgage in 1994, the marriage between plaintiff and defendant had deteriorated, and she claimed to be the victim of abuse by the defendant. At trial, defendant denied the allegations of domestic abuse but testified that he gave the children "a punch or two when they were lying and when they were behaving out of order..." It defies logic that plaintiff would sign a mortgage in favor of the defendant's father under those types of circumstances. These are facts that lend credibility to plaintiff's claim that she did not knowingly sign the mortgage.
Defendant asserts that the mortgage cannot be invalidated since a notarized signature on a mortgage document is presumed valid. It is true that a certificate of acknowledgment attached to an instrument such as a mortgage raises the presumption of due execution. (see Cunningham v Baldari, 100 AD3d 584, 585 [2d Dept 2012]; 39 Coll. Point Corp. v Transpac Capital Corp., 22 AD3d 663, 663 [2d Dept 2005].) However, as discussed above, plaintiff has rebutted the presumption of due execution through the testimony and documentary evidence submitted.
Defendant also contends that the mortgage cannot be invalidated because Mr. Ryan clearly testified that plaintiff's signature on the mortgage was not forged. However, even crediting Mr. Ryan's testimony, the credible evidence establishes that the plaintiff never intended to execute the mortgage and never intended to give a mortgage to Zvi. This is significant when coupled with the fact that Mr. Ehrlich, the attorney, does not recall preparing the mortgage or ever meeting the plaintiff. Plaintiff testified that the signature on the mortgage looks like hers but she further stated that she had no idea how it got on the document. During her testimony, plaintiff stated that she often signed documents that the defendant put in front of her, and, thus, could have unintentionally signed the mortgage. "A mortgage may not be enforced if the mortgagor did not intend to sign the instrument as a mortgage." (Lapis Enters. v International Blimpie Corp., 84 AD2d 286, 291 [2d Dept 1981].)
The second cause of action of the complaint seeks to recover damages for fraud. The elements of a cause of action for fraud are a material misrepresentation of fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages. (Summit Dev. Corp. v Interstate Masonry Corp., 140 AD3d 1152 [2d Dept 2016]; Ginsburg Dev. Cos., LLC v Carbone, 134 AD3d 890, 892 [2d Dept 2015].)
Although the court finds that there was sufficient credible evidence to invalidate the mortgage, the preponderance of the credible evidence does not support a finding of fraud against the defendant. At trial, plaintiff was asked to articulate a specific fraudulent action by defendant. She testified that she cannot state specifically how the defendant committed fraud. Additionally, there was no evidence presented at trial of any justifiable reliance by the plaintiff. Thus, plaintiff has failed to sustain her burden with respect to the cause of action for fraud.
The third cause of action of the complaint seeks to recover damages for prima facie tort. The elements of a cause of action for prima facie tort are intentional infliction of harm, resulting in special damages, without excuse or justification, by an act or series of acts that would otherwise be lawful. (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314 [1983]; Diorio v Ossining Union Free School Dist., 96 AD3d 710, 712 [2d Dept 2012].) Further, it must be shown that the tortfeasor's intent was motivated by malice or "disinterested malevolence." (Diorio v Ossining Union Free School Dist., 96 AD3d at 712.) At bar, the special damages alleged are plaintiff's attorneys' fees in having to invalidate the mortgage and mortgage note. However, such "financial demands" do not constitute special damages for purposes of prima facie tort. (see Cardo v Board of Mgrs., Jefferson Vil. Condo 3, 29 AD3d 930, 931 [2d Dept 2006]; Del Vecchio v Nelson, 300 AD2d 277, 278 [2d Dept 2002].)
Accordingly, it is ORDERED and ADJUDGED, that the plaintiff is entitled to judgment on the first cause of action of the complaint, and the Queens County Clerk is directed to mark the mortgage allegedly executed by Catherine Bollag to Zvi Kupperstock in the sum of eight hundred and forty thousand ($840,000.00) recorded in the Register's Office County of Queens on June 6, 1997 in Reel 4603, pages 863-868 covering the property known as 36 Shorthill Road, Forest Hills, NY, 11375, on the land and tax map of Queens County, cancelled and discharged of record and further cancelling the debts or obligations secured by such mortgage, upon the production and delivery to the Register of the County of Queens of a certified copy of this order and judgment with notice of entry plus payment of the statutory fees, if any, for the recording of this order and judgment, and it is further
ORDERED, that the second cause of action for fraud and the third cause of action for prima facie tort are dismissed.
The parties shall contact the Clerk of part 38 at (718) 298-1002 to arrange a time to retrieve the exhibits used at the trial.
This constitutes the Decision, Order and Judgment of the Court. Dated: August 1, 2016 CARMEN R. VELASQUEZ, J.S.C.