Opinion
101329/00.
Decided October 12, 2010.
Ayana Webb, David Smith, Peter Smith and Judith Smith were represented by Steve Newman, Esq., New York, New York.
These actions arise out of the allegedly fraudulent transfer of an apartment building located at 101 West 143rd Street in Manhattan (the "property"). The building was previously owned by the parties' mother, Rita Webb Smith, who died intestate on June 6, 1994.
Action No. 1 was settled pursuant to Stipulation of Settlement dated April 22, 2000.
The plaintiffs in Action No. 1 subsequently moved (under motion sequence number 002) for an order vacating the Stipulation of Settlement on the grounds, inter alia, that it was based on fraud. Specifically, Peter Smith claimed that he only learned after signing the Stipulation that Gladys Smith had transferred title to the property into her own name using a fraudulent power of attorney containing his forged signature.
Peter Smith was apparently incarcerated at Bare Hill Correctional Facility in Malone, New York near the Canadian border, at the time.
By Decision/Order dated July 7, 2005, this Court vacated the Stipulation of Settlement.
Defendant Gladys Smith subsequently moved in Action No. 1 (under motion sequence number 003) for an order: (i) setting aside the Order of this Court dated July 7, 2005; (ii) reinstating the Stipulation of Settlement; and (iii) staying all enforcement proceedings.
At or about the same time, plaintiffs Peter Smith and David Smith moved in Action No. 2 (under motion sequence number 001) for an order voiding the deed for the property on the ground that it was obtained through fraud.
By Order dated November 30, 2005, this Court (i) referred the issue of whether title to the property was transferred to defendant Gladys Smith using a fraudulent power of attorney to a Special Referee to hear and report with recommendations; and (ii) held both motions in abeyance pending the report of the Special Referee and a motion pursuant to CPLR 4403.
The matter was referred to Special Referee Leslie S. Lowenstein who held a hearing on January 4 and 5, 2006, at which several witnesses testified, including (i) Gladys Smith; (ii) Ruby R. Cusberth, who notarized the signature of Peter Smith upon a power of attorney and another document on June 22, 1994; (iii) Dennis Ryan, a forensic document examiner who the parties stipulated was qualified as an expert in the field of handwriting; (iv) Anthony Stone, a private investigator who was previously employed as a police lieutenant with the NYPD, and who notarized the signature of David Smith upon the power of attorney he gave to Gladys Smith; (v) Ruth Brayer, who the parties stipulated was a handwriting expert; (vi) Abena Smith; (vii) Peter Smith; (viii) Judith Smith; (ix) Ayana Webb; and (x) Jayne Dennis Knibb, Esq., who was retained in 1998 by Gladys Smith in connection with the refinancing of the property and who described the services she rendered in connection with the closing of the transaction on May 27, 1998, including the use of powers of attorney on behalf of Peter Smith and David Smith.
David Smith did not appear at the hearing to offer any testimony respecting the signature that appears on the power of attorney of April 3, 1998.
The Special Referee issued a 16-page Report with Recommendations dated February 15, 2006, in which he reviewed the substance of the various witnesses' testimony and assessed their credibility.
Special Referee Lowenstein concluded that the power of attorney executed by Peter Smith on June 22, 1994 running to Gladys Smith and Mark Smith, and the power of attorney executed by David Smith on April 3, 1998, running to Gladys Smith, were valid as of the May 27, 1998 closing. He further found that there was no proof or evidence establishing any impropriety in the transfer of the property from the Estate of Rita Webb Smith to Gladys Smith.
The Referee, therefore, recommended that the Court, "vacate its decision and order of July 7, 2005 and reinstate the underlying Stipulation of Settlement resolving the action."
Gladys Smith and Mark Smith then moved in Action No. 1 (under motion sequence number 005) for an order:
(1) confirming the Special Referee's Report on the ground that it is supported by the overwhelming preponderance of the evidence and that there remain no other issues in this action requiring a trial;
(2) setting aside the Order of this Court dated July 7, 2005;
(3) reinstating the Stipulation of Settlement;
(4) dismissing plaintiff's motion for an order voiding the deed transfer for the property; and
(5) submitting this Court's decision to the Surrogate's Court, New York County, so that the matter entitled, Judicial Settlement of the Account of Gladvs Smith and Mark Smith as Admipistrators of the Estate of Rita Webb Smith, Index No. 2400/94, may be finalized and be disposed of in such Court.
Peter Smith moved in Action No. 2 (under motion sequence number 003) for an order (i) declaring the deed void ab initio; and (ii) denying the motion for reconsideration of this Court's Order setting aside the Stipulation of Settlement.
By Decision/Order dated October 12, 2006, this Court found that the Special Referee's findings of fact, which in large part turned on the credibility of the various witnesses, were substantiated by the record.
Although counsel for plaintiffs argued in connection with those motions that the Special Referee should have considered whether or not the power of attorney was properly filed and recorded pursuant to EPTL 13-2.3 ("Powers of Attorney in relation to decedents' estates required to be in writing and recorded") and Uniform Rules of the Surrogate's Court 207.48 ("Filing and Recording of Powers of Attorney"), this Court determined that said issue, which was not previously raised, was outside the scope of this Court's reference to the Special Referee.
Moreover, this Court found that
although the recording of a power of attorney may impact the jurisdiction of the Surrogate over the grantor of the power of attorney, the attorney in fact named therein and other persons acting under the power of attorney (EPTL § 13-2.3[a]), this Court does not find any authority in the statute to support plaintiffs' argument that this Court must declare the Stipulation of Settlement of Action No. 1 and/or the transfer of the deed to be void, notwithstanding the finding of the Special Referee that the Powers of attorney were otherwise valid. See, Lorisa Capital Corp. v. Gallo, 119 AD2d 99 (2nd Dep't 1986), which found that a power of attorney was not void for failure to record it in the Surrogate's Court.
This Court, therefore, granted the motion by Gladys Smith and Mark Smith to confirm the Report of the Special Referee, and accordingly set aside the Order of this Court dated July 7, 2005 and reinstated the Stipulation of Settlement. This Court also denied the motion by Peter Smith to declare the deed void on the ground that it was obtained through fraud, and directed counsel for Gladys Smith and Mark Smith to serve a copy of this Court's October 12, 2006 Order with notice of entry upon the Surrogate's Court, New York County.
Peter Smith and David Smith now move pursuant to CPLR 2221(d)(3) to reargue this Court's October 12, 2006 Decision. Specifically, they seek an order reinstating this Court's July 7, 2005 Order voiding the Stipulation of Settlement, and vacating the transfer of the deed on the ground that the power of attorney at issue was not recorded with the Surrogate's Court, thereby violating EPTL 13-2.3(a) and Uniform Rules of the Surrogate's Court 207.48.
Pursuant to CPLR 2221(d)(3), a motion to reargue "shall be made within thirty days after service of a copy of the order determining the prior motion and written notice of its entry." The movants claim that they were never served with a copy of this Court's October 12, 2006 Order with written notice of entry. Thus, despite the passage of time since the issuance of this Court's prior Order, the instant application appears to be timely.
Peter Smith, David Smith and Ayana Webb, along with their counsel, (who also represents Judith Smith) appeared for the oral argument which was scheduled before this Court on July 23, 2010. Neither Gladys Smith nor Mark Smith submitted any papers in opposition to the instant motion, nor did either of them appear for the scheduled oral argument.
Pursuant to EPTL 13-2.3(a),
Every power of attorney relating to an interest in a decedent's estate and every conveyance or assignment of an interest in an estate, or similar instrument, which contains an express or implied authorization or delegation of power to act thereunder shall be in writing and acknowledged or proved in the manner prescribed by the laws of this state for the recording of a conveyance of real property and, subject to the rules or order of the surrogate hereinafter provided, shall be recorded in the office of the surrogate granting letters on such decedent's estate or, if no such letters have been granted, in the office of the surrogate having jurisdiction to grant them. Such recording confers on the surrogate jurisdiction over the grantor of such power of attorney, the attorney in fact therein named and any other person acting thereunder. No attorney in fact named in any power of attorney or in such other instrument nor any person acting thereunder shall perform any act under such instrument unless it has been duly recorded.
In Lorissa Capital Corp. v Gallo, supra at 109, the Appellate Division, Second Department, found that a power of attorney limited to the performance of realty management functions did "not relate to an interest in a decedent's estate' within the meaning of EPTL 13-2.3."
In contrast, the power of attorney at issue in the instant case does, in fact, relate to the interest of Peter Smith and David Smith in the estate of their mother, Rita Webb Smith. Thus, pursuant to EPTL 13.23, no actions taken pursuant to the power of attorney were effective unless it was duly recorded.
In the absence of any proof that the power of attorney was ever recorded in the Surrogate's Court, the instant motion for reargument must be granted.
Accordingly, based on the papers submitted and the oral argument held on the record on July 23, 2010, it is hereby
ORDERED that, upon reargument, the Stipulation of Settlement dated April 22, 2000 is once again vacated, and it is further
ORDERED and DECLARED that the deed for the property is declared to b void ab initio, and it is further
ORDERED that the above-captioned actions are transferred to the Surrogate's Court, New York County, and it is further
ORDERED that upon service of a copy of this order with notice of entry, the Clerk of this Court shall transfer the papers on file under Index Numbers 101329/00 and 603427/03 to the Clerk of the Surrogate's Court, New York County.
This constitutes the decision and order of this Court.