Opinion
No. 29690/05.
2012-10-18
WASHINGTON TEMPLE CHURCH OF GOD IN CHRIST, INC., Plaintiff, v. GLOBAL PROPERTIES AND ASSOCIATES, INC., Henry Spitzer and the City of New York,, Defendants. Ticor Title Insurance Company a/s/o Henry Spitzer, Third–Party Plaintiff, Global Properties and Associates, Inc., Third–Party Defendants. Global Properties and Associates, Inc., Fourth–Party Plaintiff, United General Title Insurance Company, Fourth–Party Defendant.
Jonathan M. Cader, Esq., Garden City, for Plaintiff. Max Markus Katz, P.C., New York City, for Defendant.
Jonathan M. Cader, Esq., Garden City, for Plaintiff. Max Markus Katz, P.C., New York City, for Defendant.
DAVID SCHMIDT, J.
The following papers numbered 1 to 5 read on this motion:
+-----------------------------------------------------------------------------+ ¦Papers ¦Numbered ¦ +------------------------------------------------------------------+----------¦ ¦Notice of Motion/Order to Show Cause/Petition/Cross Motion and ¦1–3 ¦ ¦Affidavits (Affirmations) Annexed ¦ ¦ +------------------------------------------------------------------+----------¦ ¦Opposing Affidavits (Affirmations) ¦4 ¦ +------------------------------------------------------------------+----------¦ ¦Reply Affidavits (Affirmations) ¦5 ¦ +------------------------------------------------------------------+----------¦ ¦Affidavit ¦ ¦ +-----------------------------------------------------------------------------+
Fourth-party defendant United General Insurance Company (United General) moves for summary judgment, pursuant to CPLR 3212, dismissing the fourth-party complaint of Global Properties and Associates, Inc. (Global) (motion sequence number 9).
Facts and Procedural Background
By deed dated September 27, 1976, the City of New York (the City) transferred title of the property listed as tax map designation Block 1212, Lot 4, in Brooklyn (the Property) to the successful bidder at a public auction, Washington Temple Church of God in Christ, Inc. (Washington Temple), for $850 (the Washington Temple Deed); that deed was recorded on October 21, 1976. By deed dated March 22, 1977, the City erroneously transferred title of the same parcel of Property, at another public auction, to non-party Darrell A. Shavers, for $250 (the Shavers Deed); that deed was recorded on June 16, 1977.
Mr. Shavers died on July 28, 2001. By deed dated December 24, 2004, Geraldine Shaver as Administratrix of the Estate of Darrell A. Shavers, Sr., and Individually, and by quitclaim deed dated January 7, 2005, Regina V. Shavers and Darrell V. Shavers Jr., transferred title to the Property to Global for $180,000 (the Global Deeds); the deeds were both recorded on April 1, 2005. At the time of that purchase, United General issued a title insurance policy to Global. By deed dated June 1, 2005, Global transferred title to the Property to defendant Henry Spitzer for $400,000 (the Spitzer Deed); that deed was recorded on June 13, 2005. At the time of that sale, third-party plaintiff Ticor Title Insurance Company (Ticor) issued a title insurance policy to Mr. Spitzer.
After Washington Temple acquired the property, it was held as a vacant lot continuously used for parking. In February 2005, shortly after it acquired the Property, Global posted a sign indicating that any vehicles parked there would be towed. Thereafter, on September 27, 2005, Washington Temple commenced the instant action against Global, Mr. Spitzer and the City, seeking to quiet title. Global asserted a cross-claim against the City, alleging that in the event that the court found Global liable to plaintiff, “such liability is the direct responsibility and incurred through the fault or acts” of the City, as well as a cause of action sounding in unjust enrichment. Mr. Spitzer also asserted a cross-claim against the City, virtually identical to that interposed by Global, as well as cross-claims against Global (the Washington Temple Action).
In August 2006, Washington Temple filed a motion for summary judgment; various cross motions were filed by the defendants. In a consent order dated January 17, 2007, all of the parties agreed that Ticor could intervene in the main action; by third-party summons and complaint dated February 16, 2007, Ticor commenced such action against Global (the Ticor Action). In its amended third-party complaint, Ticor seeks to recover the monies paid by Mr. Spitzer to Global on the grounds of, inter alia, breach of contract, breach of warranty, unjust enrichment and rescission.
As is relevant herein, by decision dated May 16, 2007, the Honorable Jack M. Battaglia, inter alia, granted Washington Temple's motion for summary judgment on its cause of action for a judgment declaring it to be owner of the Property; dismissed the cross-claims asserted by Global and Mr. Spitzer against the City; denied Global's cross-motion for summary judgment against the City on the issue of liability; granted the City's motion and cross motion for summary judgment; and denied Global's motion to dismiss the third-party complaint of Ticor (the May 16, 2007 Decision). Specifically, as is relevant herein, the Court stated that:
“[T]here can be no recovery here by Global Properties, Spitzer, or Ticor [against the City], because a diligent search of the public record would have revealed the successive deeds to Plaintiff and Shavers, without an intervening conveyance from Plaintiff to the City. At the least, any diligent searcher would have been put to a duty to investigate whether Shaver's estate and heirs held any interest in the Subject Property to convey.”
( id. at 11). In denying Global's pre-answer motion to dismiss the third-party complaint of Ticor, the court stated:
The Court also noted that “in counties using a block and lot' indexing system, a purchaser is charged with record notice of all matters indexed under the block and lot numbers corresponding to the purchaser's property, regardless of whether such information also appears in his or her direct chain of title” ( Id. at 7).
“[T]he third-party action arises out of facts and circumstances that must be characterized as at least unusual, involving a recorded title that provided Global, Spitzer, and Ticor with constructive notice that any interest Global or Spitzer might claim in the Subject Property derived from someone who was not the owner, as well as open and obvious possession of the Subject Property by the owner at all times during the transactional history.”
( Id. 12).
Global subsequently appealed the Court's Decision. By decision and order dated October 14, 2008, the Appellate Division affirmed the May 16, 2007 Decision, holding that Global “was charged with record notice of all matters indexed under the block and lot numbers corresponding to the premises, regardless of whether such information also appeared in its direct chain of title” (55 AD3d 727, 728) (internal citations omitted). The Appellate Division explained that:
“Since it is undisputed that the deed held by Washington Temple was recorded prior to the deed issued to Shavers, Global Properties cannot claim to have lacked knowledge or notice of the deed held by Washington Temple or that Washington Temple would assert a claim for relief.”
( Id.) (internal citations omitted).
On March 6, 2009, Global filed a motion for summary judgment in the Ticor Action and Ticor similarly cross-moved for summary judgment. By decision dated October 2, 2009, the Honorable Lawrence Knipel denied both applications, finding that:
“[M]ultiple outstanding questions of fact necessitate the denial of both Global and Ticor's summary judgment motions. As previously stated, the Court and the Appellate Division found that Global is chargeable with record notice of the Washington deed. Here, there are issues of whether both Global and Ticor are charged with notice of the defect in title at the time of the sale of the property from Global to Spitzer, including whether both parties entered into the contract under a mutual mistake of fact, which consequently voids the contract under the equitable remedy of rescission, or whether the sale from Global to Spitzer was fraudulent as a matter of law. Global argues that Ticor likewise failed to conduct a thorough title examination, which is the superseding cause of Spitzer's purchase, thereby breaking any causal link between Global's conduct and the damages Ticor, as Spitzer's subrogee, alleges it suffered. Consequently, Global's causal connection to Ticor's damages is also subject to resolution by the trier of fact. The Court further finds a question of fact as to whether Ticor was required to tender both insurable and marketable title to Spitzer under the contract's terms ( see Creative Living, Inc. v. Steinhauser, 78 Misc.2d 29 [1974] ).”
(the October 2007 Decision, p. 8–9). Both parties appealed. The Appellate Division affirmed that decision on May 17, 2011, holding that “[u]nder the unusual and particular facts and circumstances of this case, the Supreme Court properly concluded that there were issues of fact warranting denial of the motion and cross motion for summary judgment” (84 AD3d 1066, 1067 [2011] [internal citations omitted] ).
On November 10, 2009, Global commenced a fourth-party action in which it asserts four causes against United General, i.e., two in contract, one in negligence and one in indemnification arising under the policy of title insurance issued by United General to Global on April 1, 2005 (the Fourth–Party Action). The instant motion followed.
United General's Contentions
In support of its motion for summary judgment, United General alleges that on January 10, 2006, Global submitted a title claim to United General, seeking a defense to the Washington Temple Action. By letter dated January 26, 2006, United General denied coverage, based on the fact that Global had conveyed title of the Property, so that the title insurance was terminated. More specifically, United General argues, in reliance upon paragraph 2 of the Conditions and Stipulations of the policy, that pursuant to the terms, Global is not entitled to coverage because it no longer owned the Property when it filed its claim. That provision states that:
“The coverage of this policy shall continue in force as of Date of Policy in favor of an insured only so long as the insured retains an estate or interest in the land, or holds an indebtedness secured by a purchase money mortgage given by a purchaser from the insured, or only so long as the insured shall have liability by reason of covenants of warranty made by the insured in any transfer or conveyance of the estate or interest. This policy shall not continue in force in favor of any purchaser from the insured of either (1) an estate or interest in the land, or (ii) an indebtedness secured by a purchase money mortgage given to the insured.”
United General thus contends that since Global sold the Property to Mr. Spitzer before the instant action was commenced; the contract of sale did not include any warranty of title; and the Property was conveyed pursuant to a bargain and sale deed with covenants against grantor's acts, it has no liability to Global under the policy. On February 5, 2008 Global submitted a second claim to United General seeking a defense in the Ticor Action. By letter dated May 8, 2008, United General again denied the claim, based upon the terms of the policy. On February 15, 2008, Global submitted a third demand for coverage to United General; that request was also denied.
United General further argues that Global cannot succeed on its claim sounding in negligence, since any such claim merged into the policy pursuant to its terms. In this regard, paragraph 15(b) of the policy provides that “[a]ny claim of loss or damage, whether or not based on negligence, and which arises out of the status of the title to the estate or interest covered by or any action asserting such claim, shall be restricted by this policy.”
Global's Contentions
In opposition to the motion, Global argues that it is instructive to keep in mind the basic and underlying purpose of obtaining any type of insurance policy, i.e., to protect the policy holder from loss or damage and in the event of such loss or damage, to obtain reimbursement to put the holder in the same position that it would have been but for such loss. Thus, the purpose of obtaining title insurance from United General was to protect Global from any situation arising from circumstances such as those at issue in the actions now pending before this court.
Global further avers that the paragraph relied upon by United General in seeking to avoid liability was included because both parties believed that if Global, as the policy holder, transferred title without any covenants of warranty, it would not thereafter be held liable by any subsequent purchaser. Nonetheless, although United General is arguing that the Property was conveyed without any warranties, Ticor is seeking to recover damages from Global, asserting that such warranties remain in force. In this regard, Global points out that although it agrees with United General that it should not be held liable to Ticor under any cognizable theory or law, both Judge Knipel and the Appellate Division do not share this view, since its motion for summary judgment in the Ticor Action was denied. Global thus concludes that if both it and United General were mistaken about the intent of paragraph 2, it may be stricken from the policy of insurance, nunc pro tunc.
In addition, Global argues that if Ticor is successful on its claim of recession, the net result would be that the conveyance form Global to Mr. Spitzer would be treated as a nullity, so that it would still be the owner of the Property and the policy of insurance would still be in effect and Global will be the holder of an unmarketable title, the risk that it intended to protect itself from when it purchased title insurance from United General. Finally, Global argues that the extent of United General's liability towards Global cannot be determined until the Ticor Action is decided.
Global also argues that since the duty to defend under an insurance policy is exceedingly broad, United General should be called upon to defend it, no matter how groundless, false or baseless the suit may be. From this it follows that since both this court and the Appellate Division denied Global's motion for summary judgment dismissing the Ticor Action as against it, there certainly exists a question of act as to whether United General owes it a duty to defend.
Finally, Global argues that its claim of negligence as against United General is not precluded by the terms of the policy.
Ticor's Position
In a memorandum of law submitted in opposition to the motion, after discussing the various deeds pursuant to which property may be transferred and the warranties that may be included therein, Ticor argues that there is an implied warranty in the deed given to Mr. Spitzer by Global that Global had a title to convey. Although such warranty would ordinarily merge into the deed, that is not the case herein, since a purchaser may recover the purchase money on the ground of mistake of fact if he supposes that he purchased a good title, but the grantor had no title. Thus, since both Global and Mr. Spitzer shared the same mistake of fact, this mutual mistake entitles Ticor to the recession of the purchase as the subrogee of Mr. Spitzer, since without a meeting of the minds, the contract is voidable. Ticor further contends that recession is appropriate because the status quo can easily be restored “by the simple transfer of the purchase price from Global to Ticor, insofar as neither Spitzer nor Ticor received anything from Global other than a plain piece of paper carrying no legal significance.” Thus, since there is an implied warranty made by Global, United General is mistaken in its assertion that no coverage exists because title was transferred. In addition, it is clear that United General searched title for Global, so that questions of fact exist with regard to whether summary judgment should be granted in its favor because of it negligence in conducting the title search.
The Law
It is well established that summary judgment may be granted only when it is clear that no triable issues of fact exist (Alvarez v. Prospect Hosp., 68 N.Y.2d 320 [1986] ). The party moving for summary judgment “bears the initial burden of making a prima facie showing of its entitlement to judgment as a matter of law” (Holtz v. Niagara Mohawk Power, 147 A.D.2d 857, 858 [1989] ). Failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers ( see e.g. Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985];Dat v. City of New York, 271 A.D.2d 635, 635 [2000] ).
Once such a showing has been established, “the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action” (Alvarez, 68 N.Y.2d at 324, citing Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980] ). It is equally well settled that in making the determination of whether a movant has satisfied the requisite burden of proof, the nonmovant is entitled to the benefit of every favorable inference ( see e.g. Negri v. Stop & Shop, 65 N.Y.2d 625 [1985];Louniakov v. M.R.O.D. Realty, 282 A.D.2d 657 [2001] ). Finally, on such a motion, the court is not to determine credibility, but whether a factual issue exists (Capelin Assoc. v. Globe Mfg., 34 N.Y.2d 338 [1973] )
Turning to the merits of this case, the law is clear that:
“Insurance policies are, in essence, creatures of contract, and accordingly, subject to principles of contract interpretation ( see, Hartol Prods. Corp. v. Prudential Ins. Co. of Am., 290 N.Y. 44;Zasuly v. Mutual Benefit Health & Accident. Assn., 19 N.Y.2d 385). It is unquestionably the rule that “contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms which the parties have used, and if they are clear and unambiguous the terms are to be taken and understood in their plain, ordinary and proper sense” ( see, Hartol Prods. Corp. v. Prudential Ins. Co. of Am., 290 N.Y. 44, 47 [quoting Johnson v. Travelers Ins. Co., 269 N.Y. 401, 408] ).”
(In re Estates of Covert, 97 N.Y.2d 68, 76 [2001] ).
As is also relevant to the dispute now before the court, it is also well settled that “an insurer's duty to defend is broader than its duty to indemnify, and arises whenever the allegations in the complaint in the underlying action, construed liberally, suggest a reasonable possibility of coverage, or where the insurer has actual knowledge of facts establishing such a reasonable possibility” (Rhodes v. Liberty Mut. Ins. Co., 67 AD3d 881, 882 [2009] [internal citations omitted] ). In this regard, however, it is established that where a “[p]laintiff's claims under the insurance policies fall within the policies' exclusions ... defendant insurance companies are relieved of their obligations to defend and indemnify” (Zandri Constr. Co. v. Stanley H. Calkins, Inc., 54 N.Y.2d 999, 1001 [1981];accord Hartford Accident & Indem. Co. v. Reale & Sons, 228 A.D.2d 935, 936 [1996] [where an insured is denied coverage by exclusions, the insurer has no obligation to defend or indemnify it]; Ghaly v. First Am. Title Ins. Co., 260 A.D.2d 535, 535 [1999] [where an action reveals that it did not concern events covered under the terms of the policy of title insurance issued by the insurer, the insurer did not breach its contract with the insured when it refused to defend or indemnify them in the action] ).
“To be relieved of its duty to defend on the basis of a policy exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case” (Great Am. Restoration Servs. v. Scottsdale Ins. Co., 78 AD3d 773, 776 [2010], quoting Belt Painting v. TIG Ins. Co., 100 N.Y.2d 377, 383 [2003] [internal quotation marks omitted]; accord Consolidated Edison Co. v. Allstate Ins. Co., 98 N.Y.2d 208, 218 [2002] [generally, it is for the insured to establish coverage and for the insurer to prove that an exclusion in the policy applies to defeat coverage]; see also Technicon Elec. v. American Home Assur. Co., 74 N.Y.2d 66, 73–74 [1989],rearg. denied74 N.Y.2d 843 [1989] ). “The test for ambiguity is whether the language is susceptible of two reasonable interpretations,' and the focus of the test is on the reasonable expectations of the average insured' “ (MIC Prop. & Cas. Corp. v. Avila, 65 AD3d 1303, 1305 [2009],appeal dismissed 14 NY3d 75 [2010] [internal quotation marks omitted] ). “Accordingly, upon a motion such as this the court's duty is to compare the allegations of the complaint to the terms of the policy to determine whether a duty to defend exists” (Meyers & Sons v. Zurich American Ins. Group, 74 N.Y.2d 298, 302–303 [1989], citing Technicon Elecs., 74 N.Y.2d at 73).
It has also been held, in a case which alleged causes of action sounding in negligence as well as breach of contract, under circumstances where the title insurance policy in issue contained a clause that provided that all actions or proceedings against the insurer must be based on the provisions of this policy, that “[a]ny other action or actions or rights of action that the insured may have or may bring against this company in respect of other services rendered in connection with the issuance of this policy, shall be deemed to have merged in and be restricted to its terms and conditions” (Chu v. Chicago Title Ins. Co., 89 A.D.2d 574 [1982], citing Smirlock Realty v. Title Guar. Co., 70 A.D.2d 455 [1979],mod52 N.Y.2d 179 [1981];see also Citibank v. Chicago Title Ins. Co., 214 A.D.2d 212, 218 [1995],lv dismissed87 N.Y.2d 896 [1995] [a cause of action for negligence in conducting a title search does not lie, since Smirlock did not create a right of action on behalf of the insured against the title insurer for negligence in conducting a title search] ).
Discussion
Applying the above discussed general principles of law to the facts of this case, the court concludes that pursuant to the above quoted provisions of the title insurance policy issued by United General, its obligation to provide coverage to Global terminated when Global conveyed the Property to Mr. Spitzer, since the deed did not contain a warranty of title ( see generally Soldiers', Sailors', Marines' & Airmen's Club v. Carlton Regency, 30 Misc.3d 352, 362 [2010],affd95 AD3d 687 [2012] [coverage under the subject title insurance policy, which insured the developers' leasehold interest under the lease, ceased upon the developers' transfer of their interest in the leasehold, because the instrument was devoid of any covenant or warranty of title that would have continued coverage]; Carbone v. 243 E. 118th St., 2008 N.Y. Slip Op 33427U, 8–9 [2008], rearg. denied 2009 N.Y. Slip Op 31381U [2009] [title insurance coverage terminated when the insured LLC transferred the subject property to its members where the policy clearly provided that coverage would only continue after a conveyance of title if: (a) the insured retained an estate or interest in the land; or (b) coverage remained by virtue of a purchase money mortgage or covenants of warranty and it was not argued that coverage continued due to a purchase money mortgage or covenants of warranty] ).
Thus, since the exclusion of coverage after the Property was transferred is clear and unequivocal, United General has no duty to defend Global in the actions commenced against it. Further, controlling case law precedent establishes that all negligence claims merge into the subject policy of title insurance, so that Global similarly cannot succeed on its claim of negligence.
Conclusion
For the above stated reasons, the motion by United General for summary judgment dismissing the fourth-party complaint as against it is granted.
The foregoing constitutes the decision, order and judgment of the Court.